SECURITIES AND EXCHANGE COMMISSION
WASHINGTON , D.C. 20549
FORM 10-K
FOR ANNUAL AND TRANSITION REPORTS
PURSUANT TO SECTIONS 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934.
|X| ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934
For the fiscal year ended July 31, 1999
|_| TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
Commission file number: 0-7928
COMTECH TELECOMMUNICATIONS CORP.
(Exact Name of Registrant as Specified in its Charter)
Delaware 11-2139466
(State or Other Jurisdiction of (I.R.S. Employer Identification No.)
Incorporation or Organization)
105 Baylis Road
Melville, New York
(Address of Principal Executive Offices)
11747
(Zip Code)
Registrant's telephone number, including area code (516) 777-8900
Securities registered pursuant to Section 12(b) of the Act:
None
Securities registered pursuant to Section 12(g) of the Act:
Common Stock, par value $.10 per share
Series A Junior Participating Cumulative Preferred
Stock par value $.10 per share
(Title of Class)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. YES: |X| NO: |_|
Indicate by check mark if disclosure of delinquent filers pursuant to Item
405 of Regulation S-K is not contained herein, and will not be contained, to the
best of registrant's knowledge, in definitive proxy or information statements
incorporated by reference in Part III of this Form 10-K or any amendment to this
Form 10-K. |X|
The aggregate market value of the registrant's voting stock held by
non-affiliates of the registrant, computed by reference to the closing sales
price as quoted on the Nasdaq National Market on October 22, 1999 was
approximately $52,208,352.
DOCUMENTS INCORPORATED BY REFERENCE.
Certain portions of the document listed below have been incorporated by
reference into the indicated Part of this Annual Report on Form 10-K:
Proxy Statement for Annual Meeting
of Shareholders to be held December 14, 1999 Part III
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INDEX
PART I
ITEM 1. BUSINESS 1
Overview 1
Telecommunications Transmission Business
Segment Overview 2
RF Microwave Amplifier Business Segment Overview 3
Mobile Data Communications Services Business
Segment Overview 4
Sales, Marketing and Customer Support 5
Compliance with Federal, State and Local Environment
Protection Laws 5
Backlog 5
Manufacturing and Service 6
Patents and Licenses 6
Competition 7
Key Personnel/Employees 7
Disclosure Regarding Forward-Looking Statements 7
ITEM 2. PROPERTIES 8
ITEM 3. LEGAL PROCEEDINGS 8
ITEM 4. SUBMISSION OF MATTERS TO A VOTE
OF SECURITY HOLDERS 8
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS 8
Dividends 9
Approximate Number of Equity Security Holders 9
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA 9
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF
OPERATIONS 11
Overview 12
Results of Operations
Comparison of Fiscal 1999 and 1998 12
Comparison of Fiscal 1998 and 1997 13
Liquidity and Capital Resources 14
Year 2000 Compliance 15
ITEM 8. FINANCIAL STATEMENTS AND
SUPPLEMENTARY DATA 16
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH
ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE 16
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS
OF REGISTRANT 16
ITEM 11. EXECUTIVE COMPENSATION 16
ITEM 12. SECURITY OWNERSHIP OF CERTAIN
BENEFICIAL OWNERS AND MANAGEMENT 16
ITEM 13. CERTAIN RELATIONSHIPS AND
RELATED TRANSACTIONS 16
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT
SCHEDULE AND REPORTS ON FORM 8-K 17
SIGNATURE 19
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
AND SCHEDULE F-1
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Note: As used in this Annual Report on Form 10-K, the terms "Comtech,"
"we" and "our company" mean Comtech Telecommunications Corp., Comtech's
subsidiaries and Comtech's predecessor corporation.
All shares and per share information has been adjusted to reflect the
three-for-two stock split that occurred in July 1999. See Comtech's Form 8-K
dated July 6, 1999.
PART I
ITEM 1. BUSINESS
Overview
We design, develop, produce and market sophisticated components and
systems that are used by telecommunication and defense systems and
telecommunications service providers in a broad range of applications. Revenue
growth over the past five years has been driven by the global expansion of
telecommunications services such as satellite systems, cable television,
cellular telephone systems, PCS telephony and the Internet. We meet the high
performance requirements of our telecommunications customers by drawing upon
proprietary expertise in key microwave amplification and transmission
technologies developed over more than 32 years of operations.
A majority of our sales in fiscal 1999 were of products developed by us
within the last 5 years, including, for example, linear amplifiers sold to
cellular and PCS telephony system manufacturers for testing their systems'
amplifiers, and turbo codec modems sold to satellite systems integrators and
service providers for use in voice, data, video and fax transmission. Our
internally funded and customer funded research and development expenses
aggregated $3.8 million, $1.7 million and $1.5 million in fiscal 1999, 1998 and
1997, representing 10.0%, 5.6% and 6.0% of our net sales in those fiscal years.
We conduct our business through three decentralized but complementary
product and service segments: telecommunications transmission, RF microwave
amplifiers, and our development-stage mobile data communication services
business that we acquired in 1998.
Telecommunications transmission -- modems, frequency up converters
and down converters, solid state, high-power amplifiers, satellite very
small aperture (VSAT) transceivers and antennas for satellite ground
station applications and adaptive modems and microwave radios for
over-the-horizon microwave communications systems. Customers include,
among others, satellite systems integrators and communication service
providers and oil companies.
RF microwave amplifiers -- solid state, high-power, broadband
amplifier products in the microwave and radio frequency (RF) spectrums for
a wide range of applications, including testing amplifiers used in the
cellular and wireless industries and amplifiers in jamming and
identification, friend or foe (IFF) defense systems. Customers include,
among others, communication service providers, cellular and PCS telephony
manufacturers and defense contractors.
Mobile data communications services -- Secure, real time two-way
messaging links between mobile platforms, such as land vehicles, rail and
aircraft, remotely placed fixed site sensors and user headquarters through
our Germantown, Maryland gateway satellite earth station. The network
employs leased satellite capacity and direct line or Internet links
between our gateway and user headquarters. Depending upon the end-user's
needs, our system can be configured to provide a wide range of non-voice
applications, ranging from simple location tracking to messaging, e-mail,
broadcasting of information, meter and other sensor reading, and monitor
and control of gauges and sensors.
In June 1999, the U. S. Army awarded us a contract which, subject to
government funding and deployment decisions, provides for the purchase of
up to $418.2 million in mobile transceiver units and global data messaging
communication services over an eight-year period. We have not yet received
significant orders under this contract, which can be terminated by the
U.S. Army at any time for its convenience, and we cannot assure you that
we will receive any such orders.
Sales for use by international customers represented approximately
60.1%, 46.5%, and 57.3% of our net sales in fiscal years 1999, 1998 and
1997, respectively. We believe that the global expansion of
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telecommunications, particularly in developing countries in Asia, South America,
the Middle East and Europe, represents a key opportunity for the continued
growth of our telecommunications business. Included as international sales are
sales made to domestic companies for inclusion in products which will be sold to
international customers.
Our product designs are based on both analog and digital microwave
technologies. Digital microwave technology can significantly enhance performance
of telecommunications systems. We have invested significant resources in
developing our technological expertise, and work closely with customers and
potential customers to develop product lines in market niches where we believe
our expertise can enable us to become a leading supplier.
Our three business segments -- telecommunications transmission, RF
microwave amplifiers and our development-stage mobile data communications
services business -- operate through individual operating units, each of which
maintains its own sales, marketing, product development and manufacturing
functions. We believe that this organizational structure allows the key
personnel of each operating unit to be more responsive to their particular
markets and customers. Brief descriptions of our business segments and operating
units follow.
Telecommunications Transmission Business Segment
The demand for telecommunications is increasing worldwide as emerging
economies seek to modernize their infrastructure and as increasingly
information-intensive markets introduce new telecommunications services. The
telecommunications industry has expanded rapidly during the last decade due to
technological advances and deregulation. Advances in technology have lowered
per-unit communications costs, increased product reliability and encouraged a
proliferation of new and enhanced communications products and services.
In making procurement decisions, customers for telecommunications
equipment must weigh the relative costs and advantages of the six presently
available transmission technologies: copper cable, fiber optic cable, high
frequency radio systems, wireless microwave systems, over-the-horizon microwave
systems and satellite systems. Rarely is a complete communications network or
system based solely on one of these technologies. Transmission can be routed
through a combination of technologies, each employed where most cost-effective.
Our products are used in satellite, over-the-horizon microwave, terrestrial
line-of-sight microwave and wireless.
Satellite communications systems have grown and diversified in
response to demand for efficient and accurate long distance voice
and video communication and digital information exchange. In a
satellite communications system, information is relayed to and from
microwave transmitting and receiving stations on the ground by means
of a low earth orbit (LEO), medium earth orbit (MEO), or
geostationary earth orbit (GEO) satellites, which are generally
placed in an orbit from 600 to 22,300 miles above the earth's
equator. Satellite communications systems are particularly useful
where long-range, high capacity and high quality point-to-point or
point-to-multipoint communication is desirable. As few as three GEO
satellites can provide global communications coverage. These
systems, which use microwave technology, are well suited for rapid
introduction of service in remote areas or where communication
alternatives are unavailable, such as mobile, shipboard or defense
applications.
Over-the-horizon microwave communication systems transmit signals
over distances from 30 to 600 miles by reflection of the transmitted
signals off the troposphere, an atmospheric layer located
approximately seven miles above the earth's surface. The net effect
is that the signal is reflected by a large number of scattering
particles in the troposphere which, in turn, directs a portion of
the transmitted signal energy well beyond line-of-sight. Such
systems offer a high level of reliability and security.
Wireless and line-of-sight microwave communications systems,
generally used for point-to-point communications, employ signals
with extremely short wave-lengths which travel only in line-of-sight
paths over relatively short distances, generally under 30 miles, can
be quickly and easily installed, require relatively low initial
capital investment and can be upgraded and expanded over time.
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High frequency (HF) radio systems employ long wavelengths which are
propagated beyond line-of-sight distances either by surface waves
traveling along the earth's perimeter or by skywave reflection of
the transmitted waves off different layers of the ionosphere.
Fiber optic cable is best suited to high-volume, point-to-point,
short- or long-distance links where its advantages -- capacity,
quality and security -- justify the long lead time and high cost to
equip and install a network.
Copper cable, the traditional transmission medium most familiar to
consumers, is being replaced and supplemented by the other media,
particularly for high-volume and long distance transmissions where
it has substantial capacity, cost and reliability limitations.
Our Comtech Systems, Inc. subsidiary, located in St. Cloud, Florida,
designs, markets, manufactures and installs telecommunication products for
domestic and international applications. It also supplies telecommunication
systems by combining its products with equipment manufactured by our other
Comtech operating units and third parties.
Comtech Systems Inc.'s product line consists primarily of equipment for
over-the-horizon microwave systems and networks. It has a turnkey capability
that ranges from system and network planning through equipment and system
training and operation and maintenance programs. Comtech Systems Inc.'s markets
its products and services to oil and gas companies and other commercial users,
foreign defense commands and system prime contractors. We believe that Comtech
Systems Inc.'s products, which employ adaptive modem digital transmission
technology, offer high-speed data benefits over the traditional analog
over-the-horizon microwave products offered by most of its competitors.
Our Comtech Communications Corp. subsidiary located in Tempe, Arizona,
designs and manufactures equipment used in commercial and defense satellite
communications. The equipment includes modems, frequency up converters and down
converters, solid state power amplifiers and satellite VSAT transceivers, which
combine our frequency converters with solid state, high-power amplifiers. These
products comprise a broad range of receiving and transmitting equipment offering
a variety of state-of-the-art technical capabilities with respect to
performance, complexity and value. Comtech Communications Corp. recently
introduced its own turbo codec modem product line. This forward error correction
solution offers significantly improved performance, power and bandwidth
performance over traditional systems.
Our Comtech Antenna Systems, Inc. subsidiary, located in St. Cloud,
Florida, designs, manufactures, and markets a wide variety of fiberglass and
aluminum antennas for over-the-horizon microwave and satellite communication
applications, including distributed network programming, cable and broadcast
television and radio as well as other forms of information and entertainment
distribution. Comtech Antenna Systems, Inc. designs antennas for specific types
of telecommunications systems and, typically, sells standardized products to
independent distributors, prime contractors and end user customers. Comtech
Antenna Systems Inc.'s antenna product line includes fixed and mobile antenna
systems and specialized multi-beam satellite antenna systems that are capable of
receiving signals simultaneously from many independent satellites located up to
60 degrees apart.
RF Microwave Amplifier Business Segment
Amplifiers are a class of electronic apparatus that reproduce signals with
greater power, current or voltage amplitude. Indispensable in the world of
signal processing, amplifiers can be as tiny as a microchip for a hearing aid or
as massive as a multi-story building for transmitting radio signals to submerged
submarines or to outer space. Although the majority of amplifier applications
are satisfied by solid state transistor and integrated circuit technology,
vacuum tubes still play an important role in the very high-power microwave
applications. Because of their greater instantaneous bandwidths, greater
reliability and generally smaller size, however, solid state amplifiers are
constantly being sought as replacements for vacuum tube amplifiers for all
applications throughout the useable frequency spectrum.
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We are one of a small number of companies producing solid state,
high-power, broadband RF amplifier products that use the microwave and radio
frequency (RF) spectrums in a wide range of applications. Our products amplify
energy for applications including wireless, telecommunications, instrumentation,
and defense systems.
In telecommunications, solid state, high power amplifiers are used to
amplify signals for radiation from transmitting antennas in satellite or other
wireless telecommunications systems. They are also used to amplify signals in
defense and airport radar and electronic jamming systems. In the laboratory,
solid state, high-power amplifiers are used to test the performance of
high-power microwave and wireless electronic system components by simulating
operating environment conditions.
Solid state, high-power amplifiers are also used in electromagnetic
compatibility and susceptibility testing. The proliferation of electronic
systems in products such as automobiles, computers, wireless telephones, radios,
televisions, medical equipment, sound amplifiers, aircraft and other products
has led to increasingly serious problems with electromagnetic interference.
Manufacturers, therefore, test these electronic systems for electromagnetic
compatibility and susceptibility using solid state, high-power RF microwave
amplifiers such as those we manufacture. For example, such testing may be used
to determine whether the various electronic systems in a commercial aircraft are
likely to be affected by the use of laptop computers, wireless telephones or
video games by passengers in flight.
Our Comtech PST Corp. subsidiary, located in Melville, New York, designs,
develops, manufactures and markets solid state, high-power large signal
amplifiers in the microwave and RF spectrums for communications, defense and
instrumentation applications where they are employed to amplify microwave or RF
energy for the emission of signal. Comtech PST Corp. sells its products to
domestic and foreign commercial users, governmental agencies and prime
contractors. We believe it is an innovative supplier of solid state, high-power
amplifiers and related power processing equipment, which also replace amplifiers
using vacuum tube systems.
Mobile Data Communications Services Business Segment
The demand for mobile data communications services and products has
increased dramatically over the past years for both government and commercial
applications. This demand is driven by digital technology advances coupled with
the desire to locate, track, manage, monitor and communicate with mobile and
fixed assets. The transmission of these services may be done over various
systems, i.e., terrestrial, cellular or satellite, depending on the most
cost-effective approach to meet the application's requirements.
Through our Comtech Mobile Datacom Corp. subsidiary, we have developed and
have begun marketing a satellite-based data communications system for the land
transportation, remote sensing, utility and aviation markets. Applications
include asset tracking (using information obtained from the Global Positioning
Satellite system), two-way mobile messaging, e-mail and automated reading of
sensors including meters and gauges. Through our satellite earth station gateway
in Germantown, Maryland, we can route signals to and from mobile or fixed,
remote terminals via leased satellite. Customers can access their message or
data through an Internet connection or a direct line to their personal web
sites. We developed our system, including our mobile terminals and the software
to operate our gateway data processing system, through a combination of internal
development and government contract funding.
Comtech Mobile Datacom Corp. acquired the assets of its predecessor
company, Mobile Datacom Corp., in 1998. Mobile Datacom Corp. was formed in 1993
by its President and CEO, Joel R.Alper, along with a number of senior executive
and technical personnel formerly employed by COMSAT Corp., which transferred its
mobile data communication technology to Mobile Datacom Corp. and provided a
portion of its initial funding for the company. Over the intervening years,
Mobile Datacom Corp. made successive improvements in its technology through
development contracts with a variety of government agencies, and provided
limited commercial services in the land transportation and aviation markets.
In early 1999, Comtech Mobile Datacom Corp. lead a multi-company team in
competing for the U.S. Army's Movement Tracking System, a system to be deployed
by the Army for global use in tracking its assets and communicating by message
in real time with these vehicles from fixed and mobile command centers. The
contract was awarded to Comtech Mobile Datacom Corp. in June 1999. The contract
allows for purchases of up to $418.2 million of equipment and services over an
eight-year period, and is also open to other government agencies to procure
their tracking and messaging requirements. In September 1999, Comtech Mobile
Datacom completed the
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first major milestone in the contract, a validation demonstration involving
communicating between mobile terminals in Germany and Texas, over two satellite
links with the respective ground stations interconnected via the Internet.
Sales, Marketing and Customer Support
Each of our operating units conducts its own sales and marketing efforts.
In some instances, our operating units may bundle other units' products. Sales
and marketing strategies vary with particular markets served and include direct
sales through sales, marketing and engineering personnel, sales through
independent representatives, value-added resellers or a combination of the
foregoing. Our operating units enter into sales distribution agreements for
certain products with distributors. Unlike sales representatives, who merely
find customers on a commission basis, some of our distributors purchase products
from us for resale. We intend to continue to expand domestic and international
marketing efforts through both independent sales representatives, distributors
and value-added resellers.
Our management, technical and marketing personnel establish and maintain
relationships with customers. Our strategy includes a commitment to provide
ongoing customer support for our systems and equipment. This support involves
providing direct access to engineering staff or trained technical
representatives to resolve technical or operational problems.
Our international sales from all three business segments represented
approximately 60.1%, 46.5% and 57.3% of total net sales in fiscal 1999, 1998 and
1997, respectively. International sales are expected to continue to increase due
to the global expansion of telecommunications and microwave instrumentation and
we expect that international sales will remain a substantial portion of our
total sales for the foreseeable future.
Domestic commercial sales represented approximately 24.3%, 34.0% and 25.7%
and U.S. government sales represented 15.6%, 19.5% and 17.0% of our net sales in
fiscal 1999, 1998 and 1997, respectively.
Sales to one customer in fiscal 1999 and to different customers in fiscal
1998 and 1997 represented 27.0%, 12.2% and 10.2% of our consolidated net sales,
respectively.
Compliance with Federal, State and Local Environment Protection Laws
We are subject to a variety of local, state and federal governmental
regulations relating to the storage, discharge, handling, emission, generation,
manufacture and disposal of toxic or other hazardous substances used to
manufacture our products, particularly in connection with the fabrication of
fiberglass antennas by Comtech Antenna Systems, Inc. We believe that we are
currently in compliance in all material respects with such regulations and that
we have obtained all necessary environmental permits to conduct our business. To
date, compliance with federal, state or local environment protection laws has
not had a material effect on our capital expenditures, earnings or competitive
position, and we do not expect that such compliance will have a material effect
in the future.
Backlog
Our backlog as of July 31, 1999 and 1998 was approximately $38.6 million
and $15.4 million, respectively. We expect that a substantial majority of the
backlog as of July 31, 1999 will be recognized as sales during fiscal 2000. We
received payments in respect of progress billings and advance payments
aggregating approximately $2.9 million as of July 31, 1999 in connection with
orders included in the backlog at that date. Approximately 2.7% of that backlog
consisted of U.S. government contracts, subcontracts and government funded
programs, approximately 92.1% consisted of orders for use by foreign customers
or domestic companies whose products will be sold to foreign customers and
approximately 5.2% consisted of orders for use by domestic commercial customers.
Our backlog at July 31, 1999 included a $100,000 funded order under the Mobile
Datacom Corp.'s contract with the U.S. Army.
Our backlog consists solely of orders believed to be firm. In the case of
contracts with departments or agencies of the U.S. government, orders are only
included in backlog to the extent funding has been obtained for such orders. All
of the contracts in our backlog are subject to cancellation at the convenience
of the customer or for default in the event that we are unable to perform the
contract.
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Variations in backlog from time to time are attributable, in part, to the
timing of our preparation and submission of contract proposals, the timing of
contract awards and the delivery schedules on specific contracts. As a result,
we believe our backlog at any point in the fiscal year is not necessarily
indicative of the total sales anticipated for any particular future period. Our
Comtech Antenna and Comtech Communications businesses, as well as a significant
portion of Comtech PST's business, operate under short lead times and usually
generate sales out of inventory.
Manufacturing and Service
Our manufacturing operations consist principally of the assembly and
testing of electronic products we design and build from purchased fabricated
parts, printed circuits and electronic components and, in the case of antennas,
the casting of fiberglass antennas. We employ formal quality management programs
and other training programs, including International Standards Organization's
(ISO 9000) quality procedure registration programs. Our Comtech PST Corp.
operating unit has been qualified for ISO 9001 and we are in the process of
qualifying our other operating units.
Our ability to deliver products to customers on a timely basis is
dependent, in part, upon the availability and timely delivery by subcontractors
and suppliers of the components and subsystems that are used by us in
manufacturing our products. Electronic components and raw materials used in our
products are generally obtained from independent suppliers. Some components are
standard items and are available from a number of suppliers. Others are
manufactured to our specifications by subcontractors. We obtain certain
components and subsystems from a single source or a limited number of sources.
We believe that most components and equipment are available from existing or
alternative suppliers and subcontractors. A significant interruption in the
delivery of such items could have a material adverse effect on our business and
results of operations. See "Mobile Data Communications Services Business
Segment" for a further description of manufacturing operations in that segment.
The technology used in our products is subject to rapid development and
frequent change. Our business position is in large part contingent upon the
continuous refinement of our scientific and engineering expertise and the
development, either through internal research and development or acquisitions,
of new or enhanced products and technologies.
We reported research and development expenses of $2.0 million, $1.3
million and $1.0 million in fiscal 1999, 1998 and 1997, respectively,
representing 5.3%, 4.4% and 4.1% of total net sales, respectively, for such
years. A portion of our research and development efforts relates to the
adaptation of our basic technology to specialized customer requirements and is
recoverable under such contracts, and such expenditures are not included in our
research and development expenses for financial reporting purposes. During
fiscal 1999, 1998 and 1997, we were reimbursed by customers for such activities
in the amounts of $1.8 million, $356,000 and $436,000, respectively.
Accordingly, our aggregate research and development expenditures (internal and
customer funded) were 10.0%, 5.6% and 6.0% of net sales in fiscal 1999, 1998 and
1997, respectively.
Patents and Licenses
Although we own or hold licenses for a number of patents, patents and
licenses have been of substantially less significance in our business than our
scientific and engineering know-how, production techniques, the timely
application of our technology and the design development and marketing
capabilities of our personnel. We rely on the laws of unfair competition,
restrictions in licensing agreements and confidentiality agreements to protect
such knowledge and techniques.
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Competition
Our businesses are highly competitive and characterized by rapid
technological change. In addition, the number of potential customers for our
products is limited. Our growth and financial condition depend, among other
things, on our ability to keep pace with such changes and developments and to
respond to the sophisticated requirements of an increasing variety of electronic
equipment users. Many of our competitors are substantially larger, have
significantly greater financial, marketing, research and development,
technological and operating resources and broader product lines than we do. A
significant technological breakthrough by others, including smaller competitors
or new companies could have a material adverse effect on our business. In
addition, certain of our customers have technological capabilities in our
product areas and could choose to replace our products with their own should
they decide it would be advantageous for them to do so.
In the market for mobile data communications services, there are several
much larger competitors with existing systems. The most prominent of these
competitors is Qualcomm Incorporated, which has sold over 250,000 mobile units
and provides messaging and maintenance services to over 850 transportation
companies in the United States alone. Existing competitors are aggressively
pricing their products and services and may continue to do so in the future. We
anticipate that new competitors will enter the market in the future. Competitors
continue to offer new value-added products and services, which we may be unable
to match on a timely or cost-effective basis. Increased competition may impact
margins throughout the industry.
We believe that competition in our telecommunications transmission and RF
amplifier business segments' markets is based primarily on price, product
performance, reputation, delivery times and customer support. Due to our
decentralized organizational structure and proprietary know-how, we believe we
have the ability to develop, produce and to deliver equipment on a
cost-effective basis faster than many of our competitors.
Key Personnel/Employees
We believe our success is dependent upon the continued contributions of
our key management personnel, including the key management at each of our
operating units, and depends to a significant extent upon our President and
Chief Executive Officer, Fred Kornberg. Many of our key personnel, particularly
the key engineers, would be difficult to replace, and are not subject to
employment or non-competition agreements. The development of our mobile data
communications services business is particularly dependent upon Joel R. Alper,
the President of Comtech Mobile Datacom. Our growth and future success will
depend in large part upon our ability to attract and retain highly qualified
engineering, sales and marketing personnel. Competition for such personnel from
other companies, academic institutions, government entities and other
organizations is intense. Although we believe we have been successful to date in
recruiting and retaining key personnel, we may not be successful in attracting
and retaining the personnel we require in order to continue to grow and operate
profitably. The management skills that have been appropriate for our business in
the past may not continue to be appropriate if our business continues to grow
and diversify.
At July 31, 1999, we had 268 employees, 132 of whom were engaged in
production and production support, 89 in research and development and other
engineering support and 49 in marketing and administrative functions. None of
the employees are represented by a labor union. We believe that our employee
relations are good.
Disclosure Regarding Forward-Looking Statements
The Private Securities Litigation Reform Act of 1995 provides for
forward-looking statements. Certain information in Items 1,2,3,7 and 8 of this
Form 10-K include information that is forward-looking, such as our anticipated
sales levels, our anticipated liquidity and capital requirements and the results
of legal proceedings. The matters referred to in forward-looking statements
could be affected by the risks and uncertainties involved in our business. These
risks and uncertainties include, but are not limited to, the effect of economic
and market conditions, unpredictable reductions in funding for government
defense expenditures, and the risks associated with international sales,
including fluctuations in foreign currency exchange rates, political and
economic instability, availability of suitable export financing, export license
requirements, tariff regulations and other U.S. and foreign regulations that may
apply to the export of our products, as well as certain other risks described
above in this Item under "Backlog,"
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"Competition" and "Key Personnel/Employees" and below in Item 3 in "Legal
Proceedings" and in Item 7 in "Management's Discussion and Analysis of Financial
Condition and Results of Operations." Subsequent written and oral
forward-looking statements attributable to us or persons acting on our behalf
are expressly qualified in their entirety by the cautionary statements in this
paragraph and elsewhere in this Form 10-K.
ITEM 2. PROPERTIES
Our corporate offices are located in a portion of the 46,000-square foot
facility on two acres of land in Melville, New York which also houses Comtech
PST.
We lease the facility in Melville, New York from a partnership controlled
by our Chairman, Chief Executive Officer and President. The lease, as amended,
provides for our exclusive use of the premises as they now exist for an initial
term of ten years through December 2001. We have the option to extend the term
of the lease for an additional ten-year period and a right of first refusal in
the event of a sale of the facility. The base annual rental under the lease is
subject to adjustments. We believe that the terms of this lease are not less
advantageous to us than those that would have been available to us from an
unrelated party.
We lease the 32,000-square foot facility on eight acres of land used by
Comtech Antenna Systems, Inc. and Comtech Systems, Inc. in St. Cloud, Florida
from a Florida land trust controlled by our Senior Vice President and Chief
Financial Officer. The lease provides for our exclusive use of the premises as
they now exist for a term expiring September 2003. We have the option to extend
the term of the lease for an additional five-year period. The base annual rental
under the lease is subject to adjustments. We believe that the terms of this
lease are not less advantageous to us than those that would have been available
to us from an unrelated party.
We lease a 20,000-square foot building in Tempe, Arizona for our Comtech
Communications Corp. operating unit from an unrelated third party. The lease
provides for the exclusive use of the premises as they now exist for a term of
three years through April 2001.
We lease 7,100-square feet of space located in Germantown, Maryland that
is used by Comtech Mobile Datacom Corp. from an unrelated third party. This
lease provides for the exclusive use of the premises as they now exist through
August 2004. We have a one-time option to terminate the lease effective August
31, 2003 by providing at least six months' notice and paying $17,500. The base
annual rental under this lease is subject to adjustments.
ITEM 3. LEGAL PROCEEDINGS
We are subject to certain legal actions which arise out of the normal
course of business. We believe that the outcome of these actions will not have a
material effect on our consolidated financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
No matters were submitted to our stockholders during the fourth quarter of
the fiscal year ended July 31, 1999.
PART II
ITEM 5. MARKET FOR REGISTRANT'S COMMON
EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock trades on the Nasdaq National Market under the symbol
"CMTL." The following table shows the quarterly range of the high and low sale
prices for our common stock as reported by the Nasdaq National Market. Such
prices do not include retail markups, markdowns, or commissions.
8
<PAGE>
Common Stock
------------
High (1) Low (1)
-------- -------
Fiscal Year Ended 7-31-98
First Quarter $ 3 5/12 $ 2 1/3
Second Quarter 3 1/16 2 5/6
Third Quarter 6 1/24 4
Fourth Quarter 6 1/2 4 1/6
Fiscal Year Ended 7-31-99
First Quarter 6 1/2 3 1/3
Second Quarter 6 1/2 4 1/3
Third Quarter 5 11/12 3 5/6
Fourth Quarter 18 2/3 5 1/4
(1) Amounts adjusted to reflect a three-for-two stock split effective
July 30, 1999.
Dividends
We have never paid cash dividends on our common stock and we intend to
continue this policy for the foreseeable future. We expect to use earnings to
finance the development and expansion of our business. Our Board of Directors
reviews our dividend policy periodically. The payment of dividends in the future
will depend upon our earnings, capital requirements, financial condition and
other factors considered relevant by our Board of Directors.
Approximate Number of Equity Security Holders
As of October 22, 1999, there were approximately 770 holders of the
Company's common stock. Such number of record owners was determined from the
Company shareholders' records and does not include beneficial owners of the
Company's common stock held in the names of various security holders, dealers
and clearing agencies.
ITEM 6. SELECTED CONSOLIDATED FINANCIAL DATA
(in thousands except per share amounts)
The following table shows selected historical consolidated financial data for
Comtech. Detailed historical financial information is included in the audited
consolidated financial statements for fiscal years 1999 and 1998.
<TABLE>
<CAPTION>
Year Ended July 31,
1999 1998 1997 1996 1995
-------- -------- -------- -------- --------
<S> <C> <C> <C> <C> <C>
Consolidated Statement
of Operations Data:
Net sales $ 37,886 30,114 24,746 20,916 16,455
Cost of sales 26,405 21,330 17,670 14,819 12,096
Gross profit 11,481 8,784 7,076 6,097 4,359
-------- -------- -------- -------- --------
Expenses:
Selling, general and 6,632 6,013 5,415 5,015 4,658
administrative
Research and development 2,022 1,319 1,023 741 1,036
-------- -------- -------- -------- --------
8,654 7,332 6,438 5,756 5,694
-------- -------- -------- -------- --------
Operating earnings (loss) 2,827 1,452 638 341 (1,335)
Other expenses (income):
Interest expense 204 234 284 302 341
Interest income (65) (36) (33) (60) (171)
Other income (39) (30) (151) -- (20)
-------- -------- -------- -------- --------
</TABLE>
9
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C>
Income (loss) from continuing
operations before income taxes 2,727 1,284 538 99 (1,485)
Income tax (benefit) expense (3,754) 180 54 27 17
-------- -------- -------- -------- --------
Income (loss) from continuing
operations 6,481 1,104 484 72 (1,502)
Discontinued operations:
Loss from operations of discontinued
segment (less applicable income tax benefit
of $320) (622) -- -- -- --
Loss on disposal of discontinued segment
(including provision of $430 for operating
losses during phase out period, less (594) -- -- -- --
applicable income tax benefit of $306)
-------- -------- -------- -------- --------
Net income (loss) $ 5,265 1,104 484 72 (1,502)
======== ======== ======== ======== ========
Basic income (loss) per share: (1)
Income (loss)from continuing $ 1.56 0.28 0.13 0.02 (0.39)
operations
Loss from discontinued operations (0.29) -- -- -- --
-------- -------- -------- -------- --------
Basic income (loss) per share $ 1.27 0.28 0.13 0.02 (0.39)
======== ======== ======== ======== ========
Diluted income (loss) per share: (1)
Income (loss) from continuing $ 1.42 0.27 0.12 0.02 (0.39)
operations
Loss from discontinued operations (0.27) -- -- -- --
-------- -------- -------- -------- --------
Diluted income (loss) per share $ 1.15 0.27 0.12 0.02 (0.39)
======== ======== ======== ======== ========
(1)Reflects three-for-two stock split
effective July 30, 1999
Weighted average number
common shares outstanding -
Basic computation 4,143 3,902 3,873 3,887 3,885
Potential dilutive common shares 430 264 33 105 --
-------- -------- -------- -------- --------
Weighted average number of common
and common equivalent shares
outstanding assuming dilution -
Diluted computation 4,573 4,166 3,906 3,992 3,885
======== ======== ======== ======== ========
</TABLE>
<TABLE>
<CAPTION>
As of July 31,
-----------------------------------------------
Consolidated Balance Sheet Data: 1999 1998 1997 1996 1995
------- ------- ------- ------- -------
<S> <C> <C> <C> <C> <C>
Total assets $29,847 19,710 17,960 16,629 16,783
Working capital 10,192 8,917 7,930 7,797 7,681
Long-term debt, less current installments 959 1,445 1,310 1,875 2,277
Stockholders' equity 18,357 12,093 10,878 10,301 10,081
</TABLE>
10
<PAGE>
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
Overview
We design, develop, produce and market sophisticated components and
systems that are used by telecommunication and defense systems and
telecommunications service providers in a broad range of applications. A
substantial portion of our business is derived from a limited number of
relatively large customer contracts, the timing of which cannot be predicted.
Accordingly, we experience significant fluctuations in sales and operating
results from quarter to quarter.
Our business consists of three segments: telecommunications transmission;
RF microwave amplifiers; and mobile data communications services, which is a
development-stage business. We began reporting financial results on a segment
basis in fiscal 1999. Our sales are made to domestic and international
customers, both commercial and governmental. International sales are expected to
increase in the foreseeable future due to the growing worldwide demand for
wireless and satellite telecommunications and our expanded line of product
offerings to meet these demands.
Sales consist of stand-alone products and systems, although for the past
five years we have endeavored to achieve greater product sales as a percentage
of total sales, due to generally higher gross profit margins on products rather
than systems.
We generally recognize income under contracts only when the products are
shipped. However, when the performance of a contract will extend beyond a
12-month period, income is recognized on the percentage-of-completion method.
Our gross profit is affected by a variety of factors, including the mix of
products, systems and equipment sold, production efficiency and price
competition.
Selling, general and administrative expenses consist primarily of salaries
and benefits for marketing, sales and administrative employees, advertising and
trade show costs, professional fees and amortization of deferred compensation.
Deferred compensation consists of restricted stock awards granted to certain
operating management personnel. Under these grants, the employees purchased
shares of our common stock at prices representing a discount to the then market
value. The stock is subject to certain restrictions which lapse after ten years
and which may be removed earlier upon achievement of certain business unit
performance goals.
Our research and development expenses relate to both existing product
enhancement and new product development. A portion of our research and
development efforts is related to specific contracts and is recoverable under
those contracts because they are funded by the customers. Such customer-funded
expenditures are not included in research and development expenses for financial
reporting purposes but are reflected in cost of sales.
As of the end of fiscal 1998, we had a 100% valuation allowance against
our gross deferred tax assets. During fiscal 1999, based on our assessment of
the recoverability of the deferred tax assets, we concluded that a full
valuation allowance was no longer necessary given our estimates of future
earnings and the expected timing of temporary difference reversals. Accordingly,
we reduced the valuation allowance to $777,000 and recorded a corresponding
one-time $4.6 million benefit for income taxes in fiscal 1999.
In the first quarter of fiscal 1999, through newly formed wholly-owned
subsidiaries Comtech Mobile Datacom, our Mobile data communications services
business, and Comtech Wireless, Inc., our wireless local loop business, we
acquired the assets and assumed certain liabilities of two businesses. Both
acquisitions were accounted for using the purchase method of accounting. The
goodwill resulting from the purchase of the mobile data communications services
business (i.e., the excess of the purchase price over the fair value of the net
assets acquired and liabilities assumed) is being amortized over a 20-year
period. In June 1999, the U.S. Army awarded us a contract which, subject to
government funding and deployment decisions, provides for the purchase of up to
$418.2 million in mobile terminal units and global data communications services
over an eight-year period. Although sales will be dependent upon annual
government funding we are anticipating there will be sales under this
11
<PAGE>
contract in fiscal 2000. Sales for the mobile data communications segment in
fiscal 1999 were approximately $300,000.
Comtech Wireless, Inc. designs and manufactures wireless local loop
systems for the rural and remote telephony market. Due to disappointing results
and uncertain prospects, in September 1999 the Board of Directors approved a
plan to liquidate Comtech Wireless, Inc. by January 31, 2000 and the results of
operations for the segment have been shown as a discontinued operation in the
consolidated financial statements as of and for the year ended July 31, 1999.
Comtech Wireless, Inc. did not have any sales in fiscal 1999 and negligible
revenues are anticipated in fiscal 2000.
Results of Operations
The following table sets forth, for the periods indicated, certain income
and expense items expressed as a percentage of our net sales:
Fiscal Year
Ended July 31,
-------------------------------
1999 1998 1997
------ ------ ------
Net sales 100.0% 100.0% 100.0%
Gross margin 30.3 29.2 28.6
Selling, general and administrative expenses 17.5 20.0 21.9
Research and development expenses 5.3 4.4 4.1
Operating income from continuing operations 7.5 4.8 2.6
Interest expense (income) net 0.4 0.8 (1.0)
Income before income taxes 7.2 4.3 2.2
Net income 13.9 3.7 2.0
Comparison of Fiscal 1999 and 1998
Net Sales Consolidated net sales were $37.9 million and $30.1 million for fiscal
1999 and 1998, respectively, representing an increase of $7.8 million or 25.8%.
This increase was due primarily to increased sales by our telecommunications
transmission segment of over-the-horizon microwave equipment, principally to one
customer, a major U.S. prime contractor. Total sales to this customer during
fiscal 1999 were approximately $10.2 million, representing 27.0% of the total
net sales. The total order received from this customer in fiscal 1999 was
approximately $42.5 million and the contract balance of approximately $32.3
million is expected to be recognized as revenue in fiscal 2000 and 2001. There
were no other customers for which total sales in fiscal 1999 represented 10% or
more of net sales. In fiscal 1998, sales to a different customer represented
12.2% of total net sales. Included in the telecommunications transmission
segment are sales of our satellite equipment products, which increased in fiscal
1999 by approximately 65.8%, due to additional product offerings. Sales from our
RF microwave amplifier segment declined by approximately 14.9% compared to
fiscal 1998, due to the timing of receipt of follow-on orders. International
sales increased by approximately $8.8 million or 62.7%, representing 60.1% and
46.5% of total net sales for fiscal 1999 and 1998, respectively. Domestic sales
decreased by $1.0 million or 9.9%, representing 24.3% and 34.0%, of total net
sales for fiscal 1999 and 1998, respectively. U.S. government sales increased by
$20,000 or .3%, representing 15.6% and 19.5% of total net sales for fiscal 1999
and 1998, respectively.
Gross Profit Gross profit was $11.5 million and $8.8 million for fiscal 1999 and
1998, respectively, representing an increase of $2.7 million or 30.7%. The
increase was due primarily to the increase in sales volume in fiscal 1999
compared to fiscal 1998. Gross margin as a percentage of net sales was 30.3% and
29.2% in fiscal 1999 and 1998, respectively, due primarily to increased sales of
products coupled with lower per unit costs.
Selling, General and Administrative Selling, general and administrative expenses
were $6.6 million and $6.0 million in the fiscal 1999 and 1998, respectively,
representing an increase of $619,000 or 10.3%. This increase
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<PAGE>
was due primarily to higher sales commissions, marketing personnel expenses,
deferred compensation and other administrative expenses. As a percentage of net
sales, these expenses were 17.5% and 20.0% in fiscal 1999 and 1998,
respectively. Although increased expenses were required to support the higher
sales volume in fiscal 1999 compared to fiscal 1998, these expenses increased at
a lower rate than the increase in sales. In addition, the increased expenditures
reflect those required by our mobile data communications services segment which
was formed in fiscal 1999.
Research and Development Research and development expenses were $2.0 million and
$1.3 million in fiscal 1999 and 1998, respectively, representing an increase of
$703,000 or 53.3%. We are continually enhancing and developing new products and
technologies. In fiscal 1999, the research and development expenses were
primarily for developing additional satellite product offerings and redesigning
components of over-the-horizon microwave products. Whenever possible, we seek
customer funding for research and development to adapt our products to
specialized customer requirements. During fiscal 1999 and 1998, we were
reimbursed $1.8 million and $356,000, respectively, which amounts are not
reflected in the reported research and development expenses.
Operating Income As a result of the foregoing factors, we had operating income,
from continuing operations, of $2.8 million and $1.5 million in fiscal 1999 and
1998, respectively, representing an increase of $1.4 million or 94.7%.
Interest Expense Interest expense was $204,000 and $234,000 for fiscal 1999 and
1998, respectively, representing a decrease of $30,000 or 12.8%. Interest
expense in both years was due primarily to interest associated with our capital
lease obligations.
Interest Income Interest income was $65,000 and $36,000 for fiscal 1999 and
1998, respectively, representing an increase of $29,000 or 80.6%. The increase
was due primarily to the increase in the amount of cash available to invest in
fiscal 1999 as compared to fiscal 1998. Interest income was primarily derived
from the cash on hand in excess of working capital requirements that is invested
in highly liquid, short-term money-market funds consisting primarily of direct
obligations of the U.S. government.
Income Taxes The benefit for income taxes applicable to continuing operations in
fiscal 1999 was $3.8 million compared to the provision for income taxes of
$180,000 in fiscal 1998. Due to our net operating loss carryforwards and other
temporary differences between recognition of income for financial reporting and
income tax purposes, we had deferred tax assets of $5.4 and $5.3 million in
fiscal 1999 and 1998, respectively. As of July 31, 1998, we assessed a 100%
valuation allowance against this deferred tax asset. During fiscal 1999, we
concluded that a full valuation allowance was no longer necessary given our
estimates of future earnings based on substantial new contracts entered into and
the expected timing of temporary difference reversals. Accordingly, we reduced
the valuation allowance to $777,000 during fiscal 1999. The effect of this
change resulted in a tax benefit to us in fiscal 1999 of $4.6 million, which was
partially offset by the provision for the current year's income tax expense.
Discontinued Operations In September 1999, we adopted a plan, effective as of
July 31, 1999, to liquidate the wireless local loop business. The loss from
operations, net of a tax benefit, for fiscal 1999, was $622,000. The loss on the
disposition of the segment, net of a tax benefit, was $594,000, which includes a
provision of $430,000 for operating losses expected to be incurred during the
phase-out period. The liquidation is expected to be completed by January 31,
2000.
Comparison of Fiscal 1998 and 1997
Net Sales Consolidated net sales were $30.1 million and $24.7 million in fiscal
1998 and 1997, respectively, representing an increase of $5.4 million or 21.7%.
This increase was due primarily to increased domestic and U.S. government sales
of high-power amplifiers and increased international sales of over-the-horizon
microwave equipment, partially offset by decreased international sales of
satellite communication products. International sales decreased by approximately
$184,000 or .6% representing 46.5% and 57.3% of total net sales for fiscal 1998
and 1997, respectively. Domestic sales increased by $2.9 million or 60.9%
representing 34.0% and 25.7% of total net sales. U.S. government sales increased
by $1.7 million or 39.9% representing 19.5% and 17.0% of total net sales in
fiscal 1998 and 1997, respectively. Sales to one customer in fiscal 1998 and
sales to different customers in fiscal 1997 represented 12.2% and 10.2% of
consolidated net sales for fiscal 1998 and 1997, respectively.
13
<PAGE>
Gross Profit Gross profit was $8.8 million and $7.1 million for fiscal 1998 and
1997, respectively, representing an increase of $1.7 million. The primary reason
for this increase was a net increase in sales volume in fiscal 1998. Gross
profit, as a percentage of net sales, was relatively unchanged.
Selling, General and Administrative Selling, general and administrative expenses
were $6.0 million and $5.4 million in fiscal 1998 and 1997, respectively,
representing an increase of $598,000 or 11%. This increase was due primarily to
the increased expenses required to support the higher level of sales in the
fiscal 1998 period, including higher bid and proposal expenses, sales
commissions, marketing personnel expenses and other administrative expenses. As
a percentage of sales, however, these expenses decreased to 20.0% in fiscal
1998, from 21.9% in fiscal 1997.
Research and Development Research and development expenses were $1.3 million and
$1.0 million in fiscal 1998 and 1997, respectively, representing an increase of
$296,000 or 28.9%. Research and development expenses as a percentage of net
sales were 4.4% and 4.1%. This increase was primarily due to increased expenses
for general product improvements and for the development of a CSAT transceiver
and VSAT modem and a complement of additional product offerings to the
"fly-away" and "quick deployment" antenna product lines. Whenever possible, we
seek customer funding for research and development to adapt our products to
specialized customer requirements. During fiscal 1998 and 1997, we were
reimbursed $356,000 and $436,000, respectively, which amounts are not reflected
in the reported research and development expenses.
Operating Income As a result of the foregoing factors, we reported operating
income of $1.5 million in fiscal 1998 compared to operating income of $638,000
in fiscal 1997, representing an increase of $814,000 or 127.6%.
Interest Expenses Interest expense was $234,000 and $284,000 in the fiscal 1998
and 1997, respectively. Interest expense in both years was due primarily to
interest associated with our capital lease obligations.
Interest Income Interest income for fiscal 1998 and 1997 was $36,000 and
$33,000, respectively. This increase was due primarily to the increase in the
amount of cash available to invest in fiscal 1998. Interest income in fiscal
1997 included approximately $14,000 that was received from a customer for
extended payment terms.
Other Income We reported other income of $30,000 and $151,000 in fiscal 1998 and
1997, respectively. Other income in fiscal 1998 was due primarily to the gain on
a foreign currency exchange rate and to the sale of scrap materials. In fiscal
1997, the primary components were the result of a gain on the sale of a storage
facility, the sale of fully depreciated equipment and a finder's fee we earned,
offset by the write-off of other miscellaneous items.
Income Taxes The provision for income taxes was $180,000 and $54,000 in fiscal
1998 and 1997, respectively. This was comprised of $45,000 and $20,000 for
federal income tax and $135,000 and $34,000 for state income taxes in fiscal
1998 and 1997, respectively. Net operating loss carryforwards were available to
offset corporate federal income tax and we were generally subject only to the
alternative minimum tax. At such dates, we believed our tax benefits were
subject to a 100% valuation allowance as of July 31, 1998 and 1997 due to
earnings fluctuations inherent in our operations and recent operating losses.
Liquidity and Capital Resources
Our cash and cash equivalents position increased by $3.2 million from $2.7
million at July 31, 1998 to $5.9 million at July 31, 1999. Restricted cash of
$22,000, which was securing standby letters of credit at July 31, 1998, was no
longer required at the end of fiscal 1999. In fiscal 1999, operating activities
provided net cash of $4.9 million, investing activities used net cash of $1.2
million and financing activities used net cash of $598,000. During fiscal 1999,
we acquired the assets and assumed certain liabilities of two businesses: a
mobile data communications services business and a wireless local loop business.
The total consideration for these acquisitions of approximately $978,000 was
financed by a cash payment of $200,000, a non-recourse note of $250,000 and the
issuance of restricted stock and warrants. As of July 31, 1999, one of these
acquisitions, the wireless local loop business, was classified as a discontinued
operation and certain adjustments were made and expenses accrued, as a result of
this decision.
14
<PAGE>
Accounts receivable as of July 31, 1999 decreased by $1.0 million from
July 31, 1998 to July 31, 1999 due primarily to the timing of the shipments and
subsequent collections. The allowance for doubtful accounts decreased by
$25,000. We review our allowance for doubtful accounts periodically and believe
it adequately reflects the collectibility of our receivables based on past
experience and our credit standards. Generally, foreign customers are required
to secure payment by an irrevocable letter of credit before an order is
accepted.
Inventory increased by $1.3 million from July 31, 1998 to July 31, 1999
due primarily to the higher level of backlog of orders. We generally operate on
a job-order cost basis, that is, costs are incurred as work-in-process inventory
for specific contracts or jobs. Accordingly, inventory levels will vary as a
function of our order backlog. We do have some product lines which require a
more rapid delivery response to customers' requirements and require us to
provide for a level of "off-the-shelf" equipment inventory availability. The
only other general inventory that we maintain is for basic components which are
common to many of our products. Inventory reserves increased by $341,000.
Inventory reserves are reviewed on an ongoing basis and adjustments are made as
needed.
Net intangible assets at July 31, 1999 of $1.6 million represent goodwill
as a result of our acquisition of a mobile data communications services business
and entry into that segment. The amortization period for this asset is 20 years.
Accounts payable increased by $372,000 from July 31, 1998 to July 31,
1999, due primarily to the timing of the purchases and to the higher volume of
inventory purchased due to the increased level of sales and backlog.
Accrued expenses and other current liabilities increased by $2.4 million
from July 31,1998 to July 31, 1999. This was due primarily to the increase in
customer advances and deposits and, to a lesser extent, to accrued wages and
benefits. Whenever possible, we require advance payments, deposits or
"milestone" payments on long-term contracts in order to provide working capital
while the contract is in process. Accrued wages and benefits are primarily a
function of the number of employees. At July 31,1999, we had 268 employees
compared to 216 employees at July 31,1998.
During fiscal 1999, we made leasehold improvements and purchases of
machinery and equipment of $1.1 million, of which $136,000 was financed by
capital leases.
All of our long-term debt consists of capital lease obligations. Principal
payments on long-term debt of $821,000 were made during fiscal 1999, resulting
in long-term debt, including the current portion, of $1.6 million.
We have an $8.0 million secured credit facility from Republic National
Bank of New York. The line of credit, which is to be used for working capital
requirements, is for a term of one year and bears interest on borrowing of
90-day LIBOR plus 1.50 % (6.875% at July 31,1999). During fiscal 1999, we drew
advances in the aggregate of $850,000 which were totally repaid by July 31,
1999. The credit facility expires December 31, 1999. We have renewed and
received increases in this line of credit annually since 1996.
We believe that our working capital position and available credit
facilities are sufficient to meet our cash requirements during the next year at
our current business levels. However, given the potential for receipt of large
orders under the U.S. Army contract, or the growth of our business beyond
expected levels, we may seek additional external financing.
Year 2000 Compliance
Management has initiated a company-wide program and has developed a formal
plan of implementation to prepare for the Year 2000. This includes taking
actions designed to ensure that our information technology systems, products and
infrastructure are Year 2000 compliant and that its customers, suppliers and
service providers have taken similar action. With respect to Year 2000 internal
issues, we have evaluated our information technology systems, products,
equipment and other facilities systems, and management believes that all are
Year 2000 compliant. With respect to our external Year 2000 issues, we are
surveying our customers, suppliers and service providers primarily through
written correspondence. Despite the efforts to survey customers, suppliers and
service providers, management cannot be certain as to the actual Year 2000
readiness of these third parties. To the extent any of our suppliers or service
providers are not Year 2000 ready, we believe that we will be able to obtain
other
15
<PAGE>
suppliers or service providers without a significant interruption to our
business. Based upon responses to our inquiries of third parties, we currently
believe we do not have a need for a contingency plan. Certain experts who have
studied the issue have published reports indicating that the Year 2000 problem
could be substantially more severe in developing economies than in the United
States. A significant amount of our sales are for customers in developing
countries.
Our management currently believes that the costs related to our compliance
with the Year 2000 issue will not have a material adverse effect on our
consolidated financial position, results of operations or cash flows.
ITEM 7A. QUANTATATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The Company's earnings and cash flows are subject to fluctuations due to
changes in interest rates primarily from its investment of available cash
balances in money market funds. Under its current policies, the Company does not
use the interest rate derivative instruments to manage exposure to interest rate
changes.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Independent Auditors' Report, Consolidated Financial Statements, Notes to
Consolidated Financial Statements and related financial schedule are listed in
the index to Consolidated Financial Statements and Schedule annexed hereto.
ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON
ACCOUNTING AND FINANCIAL DISCLOSURE
None
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF REGISTRANT
Certain information concerning the directors and officers of the Company
is incorporated by reference to the Proxy Statement of the Company for the
Annual Meeting of Stockholders to be held December 14, 1999 (the "Proxy
Statement") which will be filed with the Securities and Exchange Commission no
more than 120 days after the close of its fiscal year.
ITEM 11. EXECUTIVE COMPENSATION
Information regarding executive compensation is incorporated by reference
to the Company's Proxy Statement which will be filed with the Securities and
Exchange Commission no more than 120 days after the close of its fiscal year.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
Information regarding security ownership of certain beneficial owners and
management is incorporated by reference to the Company's Proxy Statement which
will be filed with the Securities and Exchange Commission no later than 120 days
after the close of its fiscal year.
16
<PAGE>
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Information regarding certain relationships and related transactions is
incorporated by reference to the Company's Proxy Statement which will be filed
with the Securities and Exchange Commission no more than 120 days after the
close of its fiscal year.
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENT SCHEDULE AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. and 2. Financial Statements and Financial Statement Schedule
The Financial Statements filed as part of this report are listed in the
accompanying Index to Consolidated Financial Statements and Schedule.
(b) In July 1999, the Company filed a report on Form 8-K with respect to
the declaration of a three-for-two stock split, in the form of a 50%
stock dividend, by the Board of Directors. The additional shares
were distributed July 30, 1999 to stockholders of record on the
close of business on July 16, 1999.
(c) Exhibit index
17
<PAGE>
Exhibit Incorporated By
Number Description of Exhibit Reference to Exhibit
- -------- ------------------------------------------------- --------------------
3(a) Certificate of Incorporation of the Registrant Exhibit 3(a) of the
Registrant's 1987
Form 10-K
3(b) Amendment of the Certificate of Incorporation Exhibit 3(b) to the
affecting the 5 to 1 reverse stock split Registrant's 1991
Form 10-K
3(c) Amended and restated By-Laws of the Registrant Exhibit 3(c) of
Registrant's 1998
Form 10-K
3(d) Amendment to the Certificate of Incorporation Exhibit 3(d) to the
increasing authorized shares to 12 million Registrant's 1994
Form 10-K
3(e) Amendment to the Certificate of Incorporation Exhibit 3(e) to
increasing the authorized shares to 15 million Registrant's 1998
Form 10-K
3(f) Form of Certificate of Designation of the Series A Exhibit 4(1) to the
Junior Participating Preferred Stock Registrant's Form
8-A/A dated
December 23, 1998
4(a) Rights Agreement dated as of December 15, 1998 Exhibit 4(1) to the
between the Registrant and American Stock Registrant's Form
Transfer and Trust Company, as Rights Agent 8-A/A dated
December 23, 1998
10(a) Amended and restated Employment Agreement dated Exhibit 10(a) of
January 14, 1998 between the Registrant and Fred the Registrant's
Kornberg 1998 Form 10-K
10(b) 1982 Incentive Stock Option and Appreciation Plan Exhibit A to the
Registrant's Proxy
Statement dated
October 29, 1982
10(c) Lease and amendment thereto on the Melville Exhibit 10(k) to
Facility the Registrant's
1992 Form 10-K
10(d) Amended and restated 1993 Incentive Stock Option Appendix A to the
Plan Registrant's Proxy
Statement dated
November 3, 1997
10(e) Time Accelerated Restricted Stock Purchase Exhibit 10(j) to
Agreements between Registrant and Principals of the Registrant's
Comtech Communications Corp. operating unit 1994 Form 10-K
10(f) Time Accelerated Restricted Stock Purchase
Agreements between Registrant and Principals of
Comtech Mobile Datacom Corp. operating unit
10(g) Movement Tracking System Contract between Comtech
Mobile Datacom Corp. and U.S. Army's CECOM
Acquisition Center dated June 24, 1999 (certain
portions of this agreement have been omitted and
filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment)
10(h) License Agreement between Vistar
Telecommunications Inc. and Comtech Mobile
Datacom Corp. dated August 31, 1999 (certain
portions of this agreement have been omitted and
filed separately with the Securities and Exchange
Commission pursuant to a request for confidential
treatment)
21 Subsidiaries of the Company
23 Consent of KPMG LLP
27 Financial Data Schedule
Exhibits to this Annual Report on Form 10-K are available from the Company upon
request and payment to the Company for the cost of reproduction.
18
<PAGE>
SIGNATURE
Pursuant to the requirements of Section 13 or 15 (d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be signed on
its behalf by the undersigned, thereunto duly authorized.
COMTECH TELECOMMUNICATIONS CORP.
October 19, 1999 By: s/Fred Kornberg
- ---------------- ------------------------------------
(Date) Fred Kornberg, Chairman of the Board
and Chief Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
Signature Title
--------------------------- -----------------------------
October 19, 1999 s/ Fred Kornberg Chairman of the Board
- ------------------ --------------------------- Chief Executive Officer
(Date) Fred Kornberg and President
(Principal Executive Officer)
October 19, 1999 s/ J. Preston Windus Senior Vice President
- ------------------ --------------------------- Chief Financial Officer
(Date) J. Preston Windus
October 19, 1999 s/ George Bugliarello Director
- ------------------ ---------------------------
(Date) George Bugliarello
October 19, 1999 s/ Richard L. Goldberg Director
- ------------------ ---------------------------
(Date) Richard L. Goldberg
October 19, 1999 s/ Gerard R. Nocita Director
- ------------------ ---------------------------
(Date) Gerard R. Nocita
October 19, 1999 s/ John B. Payne III Director
- ------------------ ---------------------------
(Date) John B. Payne III
October 19, 1999 s/ Sol S. Weiner Director
- ------------------ ---------------------------
(Date) Sol S. Weiner
19
<PAGE>
COMTECH TELECOMMUNICATIONS CORP. AND SUBSIDIARIES
Index to Consolidated Financial Statements and Schedule
Page
----
Independent Auditors' Report F-2
Consolidated Financial Statements:
Balance Sheets at July 31, 1999 and 1998 F-3
Statements of Operations for each of the years in the three-year
period ended July 31, 1999 F-4
Statements of Stockholders' Equity for each of the years in the
three-year period ended July 31, 1999 F-5
Statements of Cash Flows for each of the years in the
three-year period ended July 31, 1999 F-6, F-7
Notes to Consolidated Financial Statements F-8 - F-20
Additional Financial Information Pursuant to the Requirements of
Form 10-K:
Schedule II - Valuation and Qualifying Accounts and Reserves S-1
Schedules not listed above have been omitted because they are either
not applicable or the required information has been given
elsewhere in the consolidated financial statements or notes
thereto.
F-1
<PAGE>
[LOGO] KPMG
Independent Auditors' Report
The Board of Directors and Stockholders
Comtech Telecommunications Corp.:
We have audited the consolidated financial statements of Comtech
Telecommunications Corp. and subsidiaries as listed in the accompanying index.
In connection with our audits of the consolidated financial statements, we also
have audited the financial statement schedule II as listed in the accompanying
index. These consolidated financial statements and financial statement schedule
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these consolidated financial statements and financial
statement schedule based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonably assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the consolidated financial statements referred to above present
fairly, in all material respects, the financial position of Comtech
Telecommunications Corp. and subsidiaries as of July 31, 1999 and 1998, and the
results of their operations and their cash flows for each of the years in the
three-year period ended July 31, 1999 in conformity with generally accepted
accounting principles. Also in our opinion, the related financial statement
schedule II, when considered in relation to the basic consolidated financial
statements taken as a whole, presents fairly, in all material respects, the
information set forth therein.
/s/ KPMG LLP
KPMG LLP
Melville, New York
September 24, 1999
F-2
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Consolidated Balance Sheets
July 31, 1999 and 1998
<TABLE>
<CAPTION>
Assets 1999 1998
------------ ------------
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 5,896,000 2,724,000
Restricted cash -- 22,000
Accounts receivable, less allowance for doubtful
accounts of $145,000 in 1999 and $170,000 in 1998 5,152,000 5,932,000
Inventories, net 7,879,000 6,135,000
Prepaid expenses and other current assets 138,000 276,000
Deferred tax asset - current 1,658,000 --
------------ ------------
Total current assets 20,723,000 15,089,000
Property, plant and equipment, net 4,310,000 4,314,000
Intangible assets, net of amortization of $78,000 1,623,000 --
Other assets 274,000 307,000
Deferred tax asset - non current 2,917,000 --
------------ ------------
$ 29,847,000 19,710,000
============ ============
Liabilities and Stockholders' Equity
Current liabilities:
Current installments of long-term debt (including payable to
related party of $316,000 in 1999 and $309,000 in 1998) $ 605,000 804,000
Accounts payable 3,763,000 2,588,000
Accrued expenses and other current liabilities 6,026,000 2,780,000
Net liabilities of discontinued operation 137,000 --
------------ ------------
Total current liabilities 10,531,000 6,172,000
Long-term debt, less current installments (including payable to
related party of $501,000 in 1999 and $817,000 in 1998) 959,000 1,445,000
------------ ------------
Total liabilities 11,490,000 7,617,000
------------ ------------
Stockholders' equity:
Preferred stock, par value $.10 per share; shares authorized and
unissued 2,000,000 -- --
Common stock, par value $.10 per share; authorized 15,000,000
shares; issued, 4,471,368 shares in 1999 and
4,008,006 shares in 1998 447,000 401,000
Additional paid-in capital 23,801,000 22,055,000
Accumulated deficit (4,746,000) (10,011,000)
------------ ------------
19,502,000 12,445,000
Less:
Treasury stock (82,500 shares in 1999 and 1998) (184,000) (184,000)
Deferred compensation (961,000) (168,000)
------------ ------------
18,357,000 12,093,000
------------ ------------
Commitments and contingencies
$ 29,847,000 19,710,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements
F-3
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Consolidated Statements of Operations
Years ended July 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
------------ ------------ ------------
<S> <C> <C> <C>
Net sales $ 37,886,000 30,114,000 24,746,000
------------ ------------ ------------
Costs and expenses:
Cost of sales 26,405,000 21,330,000 17,670,000
Selling, general and administrative 6,632,000 6,013,000 5,415,000
Research and development 2,022,000 1,319,000 1,023,000
------------ ------------ ------------
35,059,000 28,662,000 24,108,000
------------ ------------ ------------
Operating income from continuing operations 2,827,000 1,452,000 638,000
Other expenses (income):
Interest expense 204,000 234,000 284,000
Interest income (65,000) (36,000) (33,000)
Other (39,000) (30,000) (151,000)
------------ ------------ ------------
Income from continuing operations before
income taxes 2,727,000 1,284,000 538,000
Provision (benefit) for income taxes (3,754,000) 180,000 54,000
------------ ------------ ------------
Income from continuing operations 6,481,000 1,104,000 484,000
Discontinued operations (Note 13):
Loss from operations of discontinued segment
(net of applicable income tax benefit of $320,000) (622,000) -- --
Loss on disposal of segment, including provision
of $430,000 for operating losses during phase-out period
(net of applicable income tax benefit of $306,000) (594,000) -- --
------------ ------------ ------------
Net income $ 5,265,000 1,104,000 484,000
============ ============ ============
Basic income (loss) per share:
Income from continuing operations $ 1.56 0.28 0.13
Loss from discontinued operations (.29) -- --
------------ ------------ ------------
Basic income per share $ 1.27 0.28 0.13
============ ============ ============
Diluted income (loss) per share:
Income from continuing operations $ 1.42 0.27 0.12
Loss from discontinued operations (.27) -- --
------------ ------------ ------------
Diluted income per share $ 1.15 0.27 0.12
============ ============ ============
Weighted average number of common
shares outstanding - Basic computation 4,143,000 3,902,000 3,873,000
Potential dilutive common shares 430,000 264,000 33,000
------------ ------------ ------------
Weighted average number of common and common
equivalent shares outstanding assuming dilution -
Diluted computation 4,573,000 4,166,000 3,906,000
============ ============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-4
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Consolidated Statements of Stockholders' Equity
Years ended July 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Common stock Additional Treasury stock
--------------------------- paid-in Accumulated ---------------------------
Shares Amount capital deficit Shares Amount
------ ------ ------- ------- ------ ------
<S> <C> <C> <C> <C> <C> <C>
Balance July 31, 1996 3,911,016 $ 391,000 $ 22,105,000 $(11,599,000) 22,500 $ (180,000)
Amortization of deferred compensation -- -- -- -- -- --
Forfeiture of unvested restricted shares
issued pursuant to employee stock award
agreement -- -- (211,000) -- -- --
Purchase of treasury shares 60,000 (4,000)
Stock options exercised 64,590 7,000 100,000 -- -- --
Net income -- -- -- 484,000 -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance July 31, 1997 3,975,606 398,000 21,994,000 (11,115,000) 82,500 (184,000)
Amortization of deferred compensation -- -- -- -- -- --
Stock options exercised 32,400 3,000 61,000 -- -- --
Net income -- -- -- 1,104,000 -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance July 31, 1998 4,008,006 401,000 22,055,000 (10,011,000) 82,500 (184,000)
Amortization of deferred compensation -- -- -- -- -- --
Stock issued in acquisition of
Mobile Datacom 150,000 15,000 513,000 -- -- --
Restricted shares issued pursuant to
employment stock award agreement 225,000 22,000 1,034,000 -- -- --
Stock options exercised 88,362 9,000 199,000 -- -- --
Net income -- -- 5,265,000 -- --
------------ ------------ ------------ ------------ ------------ ------------
Balance July 31, 1999 4,471,368 $ 447,000 $ 23,801,000 $ (4,746,000) 82,500 $ (184,000)
============ ============ ============ ============ ============ ============
<CAPTION>
Deferred Stock-
compen- holders'
sation equity
------ ------
<S> <C> <C>
Balance July 31, 1996 $ (416,000) $ 10,301,000
Amortization of deferred compensation 43,000 43,000
Forfeiture of unvested restricted shares
issued pursuant to employee stock award
agreement 158,000 (53,000)
Purchase of treasury shares -- (4,000)
Stock options exercised -- 107,000
Net income -- 484,000
------------ ------------
Balance July 31, 1997 (215,000) 10,878,000
Amortization of deferred compensation 47,000 47,000
Stock options exercised -- 64,000
Net income -- 1,104,000
------------ ------------
Balance July 31, 1998 (168,000) 12,093,000
Amortization of deferred compensation 248,000 248,000
Stock issued in acquisition of
Mobile Datacom -- 528,000
Restricted shares issued pursuant to
employment stock award agreement (1,041,000) 15,000
Stock options exercised -- 208,000
Net income -- 5,265,000
------------ ------------
Balance July 31, 1999 $ (961,000) $ 18,357,000
============ ============
</TABLE>
See accompanying notes to consolidated financial statements.
F-5
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows
Years ended July 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Cash flows from operating activities:
Net income $ 5,265,000 1,104,000 484,000
Adjustments to reconcile net income to net cash
provided by (used in) operating activities:
Loss from discontinued operations 1,216,000 -- --
Gain on sale of property -- -- (72,000)
Depreciation and amortization 1,510,000 1,206,000 1,055,000
Increase (decrease) in bad debt allowance (25,000) 68,000 74,000
Provision (reduction of) inventory reserves 341,000 (127,000) 466,000
Deferred income tax provision (benefit) (4,575,000) -- --
Changes in assets and liabilities, net of effects of acquisitions:
Restricted cash securing letter of credit obligations 22,000 68,000 130,000
Accounts receivable 1,006,000 (449,000) (2,158,000)
Inventories (1,724,000) 548,000 (495,000)
Prepaid expenses and other current assets 138,000 (45,000) (35,000)
Other assets 9,000 (3,000) (48,000)
Accounts payable 372,000 (277,000) 828,000
Accrued expenses and other current liabilities 2,376,000 479,000 527,000
----------- ----------- -----------
Net cash provided by continuing operations 5,931,000 2,572,000 756,000
Net cash used by discontinued operations (988,000) -- --
----------- ----------- -----------
Net cash provided by operating activities 4,943,000 2,572,000 756,000
----------- ----------- -----------
Cash flows from investing activities:
Purchases of property, plant and equipment (1,000,000) (312,000) (903,000)
Sale of property, plant and equipment -- -- 127,000
Payment for business acquisitions net of cash received (173,000) -- --
----------- ----------- -----------
Net cash used in investing activities (1,173,000) (312,000) (776,000)
----------- ----------- -----------
Cash flows from financing activities:
Borrowings under line of credit facility 850,000 1,900,000 1,150,000
Repayments of borrowings under line of credit facility (850,000) (1,900,000) (1,150,000)
Principal payments on long-term debt (821,000) (874,000) (649,000)
Proceeds from issuance of common stock:
Purchase of treasury stock -- -- (4,000)
Stock options 208,000 64,000 107,000
Restricted stock 15,000 -- --
----------- ----------- -----------
Net cash used in financing activities (598,000) (810,000) (546,000)
----------- ----------- -----------
</TABLE>
(Continued)
F-6
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Consolidated Statements of Cash Flows, Continued
<TABLE>
<CAPTION>
1999 1998 1997
----------- ----------- -----------
<S> <C> <C> <C>
Net increase (decrease) in cash and cash equivalents $ 3,172,000 1,450,000 (566,000)
Cash and cash equivalents at beginning of period 2,724,000 1,274,000 1,840,000
----------- ----------- -----------
Cash and cash equivalents at end of period $ 5,896,000 2,724,000 1,274,000
=========== =========== ===========
Supplemental cash flow disclosure
Cash paid during the period for:
Interest $ 204,000 234,000 284,000
=========== =========== ===========
Income taxes $ 169,000 22,000 38,000
=========== =========== ===========
</TABLE>
See accompanying notes to consolidated financial statements.
F-7
<PAGE>
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Notes to Consolidated Financial Statements
July 31, 1999 and 1998
(1) Summary of Significant Accounting and Reporting Policies
(a) Principles of Consolidation
The accompanying consolidated financial statements include the accounts
of Comtech Telecommunications Corp. and its subsidiaries (the
Company), all of which are wholly-owned. All significant
intercompany balances and transactions have been eliminated in
consolidation.
(b) Nature of Business
We design, develop, produce and market sophisticated components and
systems that are used by telecommunications and defense systems and
service providers in a broad range of applications.
The Company's business is highly competitive and characterized by rapid
technological change. In addition, the number of potential customers
for the Company's products is limited. The Company's growth and
financial position depends, among other things, on its ability to
keep pace with such changes and developments and to respond to the
sophisticated requirements of an increasing variety of electronic
equipment users. Many of the Company's competitors are substantially
larger, have significantly greater financial, marketing and
operating resources and broader product lines than does the Company.
A significant technological breakthrough by others, including
smaller competitors or new companies, could have a material adverse
effect on the Company's business. In addition, certain of the
Company's customers have technological capabilities in the Company's
product areas and could choose to replace the Company's products
with their own.
International sales expose the Company to certain risks, including
barriers to trade, fluctuations in foreign currency exchange rates
(which may make the Company's products less price competitive),
political and economic instability, availability of suitable export
financing, export license requirements, tariff regulations, and
other United States and foreign regulations that may apply to the
export of the Company's products, as well as the generally greater
difficulties of doing business abroad. The Company attempts to
reduce the risk of doing business in foreign countries by seeking
contracts denominated in U.S. dollars, advance payments and
irrevocable letters of credit in its favor.
(c) Revenue Recognition
Revenues on long-term, fixed price contracts are generally recorded based
on the relationship of total costs incurred to date to total
projected final costs or, alternatively, as deliveries are made.
Revenue under cost reimbursement contracts are recorded as costs are
incurred.
Revenues on other contract orders are recognized under the units of
delivery method. Under this method, revenues are recorded as units
are delivered with the related cost of sales recognized on each
shipment based upon a percentage of estimated final contract costs.
Contract costs include material, direct labor, manufacturing
overhead and other direct costs. Retainages and estimated earnings
in excess of amounts billed on certain multi-year programs are
reported as unbilled receivables.
(Continued)
F-8
<PAGE>
Revenue not associated with long-term contracts are generally recognized
when the earnings process is complete, generally upon shipment or
customer acceptance.
Provision for anticipated losses on uncompleted contracts is made in the
period in which such losses are determined.
(d) Cash and Cash Equivalents
Cash equivalents consist of highly liquid direct obligations of the U.S.
government with a maturity at acquisition of three months or less.
Cash equivalents of July 31, 1999 and 1998 amounted to $2,258,000
and $1,991,000. These investments are carried at cost plus accrued
interest, which approximates market. The Company had $22,000 of
restricted cash securing letter of credit obligations with a
financial institution at July 31, 1998.
(e) Statement of Cash Flows
The Company acquired equipment financed by capital leases in the amounts
of $136,000, $1,207,000 and $48,000 in 1999, 1998 and 1997,
respectively.
(f) Inventories
Work-in-process inventory reflects all accumulated production costs, which
are comprised of direct production costs and overhead, reduced by
amounts attributable to units delivered. These inventories are
reduced to their estimated net realizable value by a charge to cost
of sales in the period such excess costs are determined.
Raw materials and components and work-in-process inventory are stated at
the lower of cost or market, computed on the first-in, first-out
(FIFO) method.
(g) Long-Lived Assets
The Company's plant and equipment, which are recorded at cost, are
depreciated or amortized over their estimated useful lives (building
and improvements - 40 years, equipment - three to eight years) under
the straight-line method. Capitalized values of properties under
leases are amortized over the life of the lease or the estimated
life of the asset, whichever is less. Intangible assets, consisting
of goodwill resulting from acquisitions, is being amortized over
twenty years. The Company reviews its long-lived assets for
impairment whenever events or circumstances indicate that the
carrying amount of an asset may not be recoverable. If the sum of
the expected cash flows, undiscounted and without interest, is less
than the carrying amount of the asset, an impairment loss is
recognized as the amount by which the carrying amount of the asset
exceeds its fair value.
(h) Other Assets
Included in other assets at July 31, 1999 and 1998 is approximately
$350,000 less accumulated amortization, which relates to an
intellectual property rights agreement being amortized over the
eight-year term of the agreement. At July 31, 1999 and 1998,
accumulated amortization related to this purchased technology was
approximately $232,000 and $190,000, respectively. The Company
assesses the recoverability of the intangible asset by determining
whether the amortization of purchased technology over its remaining
life can be recovered through undiscounted future operating cash
flows from product sales utilizing the technology.
(i) Research and Development Costs
The Company charges research and development costs to operations as
incurred, except in those cases in which such costs are reimbursable
under customer-funded contracts. In fiscal 1999, 1998 and 1997, the
Company was reimbursed by customers for such activities in the
amount of $1,779,000, $356,000 and $436,000, respectively.
(Continued)
F-9
<PAGE>
(j) Income Taxes
Income taxes are accounted for under the asset and liability method.
Deferred tax assets and liabilities are recognized for the future
tax consequences attributable to differences between the financial
statement carrying amounts of existing assets and liabilities and
their respective tax bases and operating loss and tax credit
carryforwards. Deferred tax assets and liabilities are measured
using the enacted tax rates expected to apply to taxable income in
the years in which those temporary differences are expected to be
recovered or settled. The effect on deferred tax assets and
liabilities of a change in tax rates is recognized in income in the
period that includes the enactment date.
(k) Earnings Per Share
The Company calculates earnings per share ("EPS") in accordance with the
Statement of Financial Accounting Standards ("SFAS") No. 128,
"Earnings per Share". Basic EPS are computed based on the weighted
average number of shares outstanding. Diluted EPS reflects the
maximum dilution from potential common stock issuable pursuant to
the exercise of stock options and warrants, if dilutive, outstanding
during each period. All share and per share amounts have been
restated to reflect a three-for-two stock split effective July 30,
1999 (Note 9(e)).
(l) Financial Instruments
Management of the Company believes that the book value of its monetary
assets and liabilities approximates fair value as a result of the
short-term nature of such assets and liabilities. Management further
believes that the fair market value of long-term debt relating to
capital leases does not differ materially from its carrying value.
(m) Use of Estimates
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates
and assumptions that affect the reported amount of assets and
liabilities, and disclosure of contingent assets and liabilities at
the date of the financial statements and the reported amounts of
revenues and expenses during the reported period. Actual results may
differ from those estimates.
(n) Accounting for Stock-Based Compensation
The Company records compensation expense for employee stock options only
if the current market price of the underlying stock exceeds the
exercise price on the date of the grant. The Company has elected not
to implement the fair value based accounting method for employee
stock options of SFAS No. 123, "Accounting for Stock-Based
Compensation", but has elected to disclose the pro forma net income
per share for employee stock option grants made beginning in fiscal
1996 as if such method had been used to account for stock-based
compensation cost as described in SFAS No. 123.
(o) Reporting Comprehensive Income
The Company has adopted SFAS No. 130, "Reporting Comprehensive Income,"
which requires companies to report all changes in equity during a
period, except those resulting from investment by owners and
distribution to owners, for the period in which they are recognized.
Comprehensive income is the total of net income and all other
nonowner changes in equity (or other comprehensive income) such as
unrealized gains/losses on securities classified as
available-for-sale, foreign currency translation adjustments and
minimum pension liability adjustments.
Comprehensive and other comprehensive income must be reported on the face
of annual financial statements or in the case of interim reporting,
the footnote approach may be utilized. The Company's operations did
not give rise to items includible in comprehensive income which were
not already included in net income. Accordingly, the Company's
comprehensive income is the same as its net income for all periods
presented.
F-10
<PAGE>
(2) Accounts Receivable
Accounts receivable consist of the following at July 31, 1999 and 1998:
<TABLE>
<CAPTION>
1999 1998
---------- ----------
<S> <C> <C>
Accounts receivable from commercial customers $3,924,000 4,302,000
Unbilled receivables (including retainages) on
contracts-in-progress 1,154,000 1,531,000
Amounts receivable from the United States
government and its agencies 219,000 269,000
---------- ----------
5,297,000 6,102,000
Less allowance for doubtful accounts 145,000 170,000
---------- ----------
Accounts receivable, net $5,152,000 5,932,000
========== ==========
</TABLE>
In the opinion of management, substantially all of the unbilled
balances will be billed and collected during fiscal 2000.
(3) Inventories
Inventories consist of the following at July 31, 1999 and 1998:
1999 1998
---------- ----------
Raw materials and components $3,553,000 3,365,000
Work-in-process 5,798,000 4,932,000
---------- ----------
9,351,000 8,297,000
Less:
Progress payments 302,000 1,333,000
Reserve for anticipated losses on
contracts and inventory reserves 1,170,000 829,000
---------- ----------
Inventories, net $7,879,000 6,135,000
========== ==========
(4) Property, Plant and Equipment
Property, plant and equipment consists of the following at July 31, 1999
and 1998:
<TABLE>
<CAPTION>
1999 1998
----------- -----------
<S> <C> <C>
Equipment $ 9,574,000 8,918,000
Leasehold improvements 427,000 352,000
Facilities financed by capital lease 3,365,000 3,365,000
Equipment financed by capital lease 4,219,000 3,802,000
----------- -----------
17,585,000 16,437,000
Less accumulated depreciation and amortization 13,275,000 12,123,000
----------- -----------
$ 4,310,000 4,314,000
=========== ===========
</TABLE>
Depreciation and amortization expense on property, plant and equipment
amounted to approximately $1,152,000, $1,103,000 and $994,000 for
the years ended July 31, 1999, 1998 and 1997, respectively.
F-11
<PAGE>
(5) Accrued Expenses and Other Current Liabilities
Accrued expenses and other current liabilities consist of the following at
July 31, 1999 and 1998:
1999 1998
---------- ----------
Customer advances and deposits $2,798,000 652,000
Accrued wages and benefits 1,603,000 1,068,000
Accrued commissions 915,000 452,000
Other 710,000 608,000
---------- ----------
$6,026,000 2,780,000
========== ==========
(6) Short-Term Borrowings
In December 1998, the Company obtained an $8,000,000 secured credit
facility from Republic National Bank of New York. The line of credit
which is to be used for working capital requirements is for a term
of one year and bears interest on borrowings at 90 day LIBOR plus
1.50%. There were no borrowings outstanding at July 31, 1999.
(7) Long-Term Debt
Long-term debt consists of the following at July 31, 1999 and 1998:
1999 1998
---------- ----------
Obligations under capital leases $1,564,000 2,249,000
Less current installments 605,000 804,000
---------- ----------
$ 959,000 1,445,000
========== ==========
The obligations under capital leases relate to the Melville, New York
facilities, as well as certain equipment, the net carrying value of
which was $2,087,000 and $2,517,000 at July 31, 1999 and 1998,
respectively.
Future minimum lease payments under capital leases as of July 31, 1999
are:
Years ending July 31,:
2000 $ 725,000
2001 563,000
2002 315,000
2003 137,000
2004 51,000
----------
Total minimum lease payments 1,791,000
Less amounts representing interest
(at rates varying from 6.8% to 10.8%) 227,000
----------
1,564,000
Less current installments 605,000
----------
Obligations under capital leases, net
of current installments $ 959,000
==========
F-12
<PAGE>
In December 1991, the Company and a partnership controlled by the
Company's Chairman, Chief Executive Officer and President entered
into an agreement in which the Company leases from the partnership
its corporate headquarters and Melville production facility. The
lease is for a ten-year period and provides for annual rentals of
approximately $448,000 for fiscal 1999, subject to annual
adjustments equal to the lesser of 5% or the change in the Consumer
Price Index. For financial reporting purposes, the Company has
capitalized this lease at inception in the amount of $2,450,000, net
of deferred interest of $1,345,000. The outstanding balance at July
31, 1999 and 1998 approximated $817,000 and $1,105,000,
respectively.
(8) Income Taxes
The provision (benefit) for income taxes on continuing operations
included in the accompanying consolidated statements of operations
consists of the following:
Year ended July 31,
-------------------
1999 1998 1997
----------- ----------- -----------
Federal -current $ 60,000 45,000 20,000
Federal -deferred (3,949,000) -- --
State and local - current 135,000 135,000 34,000
----------- ----------- -----------
$(3,754,000) 180,000 54,000
=========== =========== ===========
The provision (benefit) for income taxes on income from continuing
operations was ($3,754,000), $180,000 and $54,000 for fiscal 1999,
1998 and 1997, respectively and differed from the amounts computed
by applying the U.S. Federal income tax rate of 34% as a result of
the following:
<TABLE>
<CAPTION>
1999 1998 1997
---- ---- ----
Amount Rate Amount Rate Amount Rate
------ ---- ------ ---- ------ ----
<S> <C> <C> <C> <C> <C> <C>
Computed "expected" tax
expense $ 927,000 34.0% 437,000 34.0% 183,000 34.0%
Increase (reduction) in income
taxes resulting from:
Change in the beginning
of the year valuation
allowance for deferred
tax assets (4,544,000) (166.6) (93,000) (7.2) 264,000 49.6
Utilization of tax benefit
carryforward (223,000) (8.2) (299,000) (23.3) (430,000) (79.9)
State and local income tax,
net of Federal benefit 86,000 3.2 135,000 10.5 34,000 6.3
Other -- -- -- -- 3,000 --
----------- ------ ------- ---- ------ ----
Effective tax rate $(3,754,000) (137.6)% 180,000 14.0% 54,000 10.0%
=========== ====== ======= ==== ====== ====
</TABLE>
As of July 31, 1999, the Company has net operating loss carryforwards
of approximately $10,260,000 for income tax purposes of which
$4,843,000 expires in 2004, $1,473,000 expires in 2005, $415,000
expires in 2009 and $3,529,000 expire in 2010 through 2012.
F-13
<PAGE>
The tax effects of temporary differences that give rise to significant
portions of the deferred tax assets and liabilities at July 31, 1999
and 1998 are presented below.
<TABLE>
<CAPTION>
1999 1998
---- ----
<S> <C> <C>
Deferred tax assets:
Allowance for doubtful accounts receivable $ 60,000 60,000
Inventory reserve 646,000 496,000
Plant and equipment, principally due to capitalized
leases and differences in depreciation (16,000) 27,000
Compensated absences, principally due to accrual
for financial reporting purposes 395,000 331,000
Deferred compensation 250,000 154,000
Net operating loss carryforwards 3,490,000 3,726,000
Investment tax credit carryforwards 440,000 440,000
Alternative minimum tax credit carryforwards 87,000 87,000
----------- -----------
Total gross deferred tax assets 5,352,000 5,321,000
Less valuation allowance (777,000) (5,321,000)
----------- -----------
Net deferred tax assets $ 4,575,000 --
=========== ===========
</TABLE>
The Company provides for income taxes under the provisions of SFAS No.
109, "Accounting for Income Taxes". SFAS 109 requires an asset and
liability based approach in accounting for income taxes. In
assessing the realizability of deferred tax assets and liabilities,
management considers whether it is more likely than not that some
portion or all of them will not be realized. At July 31, 1998 the
Company had a 100% valuation allowance against these gross deferred
tax assets. During fiscal 1999, the Company concluded that a full
valuation allowance was no longer necessary given its estimates of
future earnings, which include substantial long-term contracts
entered into in the first and fourth quarters of fiscal 1999 and the
expected timing of temporary difference reversals. Accordingly, the
Company reduced the valuation allowance to $777,000 during fiscal
1999 and recorded deferred tax assets of $4,575,000 of which
$3,155,000 was recorded in the fourth quarter. The Company must
generate approximately $13,500,000 of taxable income to fully
utilize its deferred tax assets. Management believes it is more
likely than not that the results of future operations will generate
sufficient taxable income to realize the net deferred tax assets.
(9) Stockholders' Equity
(a) Option and Warrant Plans and Agreements
The Company has several option and warrant plans and agreements as
follows:
1982 Incentive Stock Option Plan - The 1982 Incentive Stock Option and
Appreciation Plan provided for the granting to key employees and
officers of incentive stock options to purchase up to 240,000 shares
of the Company's common stock through September 29, 1992 at prices
not less than the fair market value of such shares on the date the
option is granted. The plan expired on September 29, 1992. Options
granted to purchase an aggregate of 16,350 shares remain
outstanding.
1993 Incentive Stock Option Plan - The 1993 Incentive Stock Option Plan,
as amended, provides for the granting to key employees and officers
of incentive and non-qualified stock options to purchase up to
1,042,500 shares of the Company's common stock at prices generally
not less than the fair market value at the date of grant with the
exception of anyone who, prior to the grant, owns more than 10% of
the voting power, the exercise price cannot be less than 110% of the
fair market value. In addition, it provides formula grants to
non-employee members of the Board of Directors. The term of the
options may be no more than ten years. However, for incentive stock
options granted to any employee who, prior to the granting of the
option, owns stock representing more than 10% of the voting power,
the option term may be no more than five years. The plan expires in
2002, unless terminated earlier by the Board of Directors under
conditions specified in the plan. As of July 31, 1999, the Company
had granted incentive stock options representing the right to
purchase an aggregate of 1,029,015 shares at prices ranging between
$1.50 - $7.50 per share, of which 69,600 options were canceled and
888,045 are outstanding at July 31, 1999. To date, 71,370 shares
have been exercised.
F-14
<PAGE>
Warrant Issued Pursuant to Acquisition of CMDC - As part of the asset
purchase agreement for the acquisition of Mobile Datacom Corp. (see
Note 12), which was incorporated into the Company as a wholly-owned
subsidiary, Comtech Mobile Datacom Corp., the Company issued
warrants to the owners and creditors to purchase 150,000 shares of
the Company's common stock at an exercise price of $6.57. The
warrants, which contain transferability restrictions, are
exercisable for a period of five years commencing September 24,
1998, and shares purchased through the exercise of these warrants
contain voting restrictions. Due to the transferability and voting
restrictions and other conditions, no value was ascribed to these
warrants for purposes of determining the cost of the acquisition.
(b) Option Activity
The following table sets forth summarized information concerning the
Company's stock options:
Number Weighted
of average exercise
shares price
------ -----
Outstanding at July 31, 1996 363,870 $ 2.42
Granted 43,500 2.16
Expired/canceled (21,810) 2.85
Exercised (64,590) 1.65
--------
Outstanding at July 31, 1997 320,970 2.55
Granted 583,125 2.99
Expired/canceled (13,500) 2.13
Exercised (32,400) 2.00
--------
Outstanding at July 31, 1998 858,195 2.65
Granted 140,250 6.08
Expired/canceled (5,688) 5.90
Exercised (88,362) 2.43
-------- --------
Outstanding at July 31, 1999 904,395 $ 3.40
======== ========
Options exercisable at
July 31, 1999 367,437 $ 2.93
Options available for
grant at July 31, 1999 83,085
The options outstanding as of July 31, 1999 are summarized in ranges as
follows:
Weighted Number of Weighted
Range of average options average
exercise price exercise price outstanding remaining life
-------------- -------------- ----------- --------------
$ 1.50 - 2.50 $ 2.08 123,870 6 years
2.51 - 4.99 3.09 663,525 8 years
5.00 - 7.50 6.55 117,000 7 years
F-15
<PAGE>
(c) Stock-Based Compensation Plans
The Company has two stock option plans, the 1982 Incentive Stock Option
and Appreciation Plan and the 1993 Incentive Stock Option Plan. The
Company accounts for these plans under APB Opinion No. 25, under
which no compensation cost has been recognized. Had compensation
cost for these plans been determined consistent with SFAS No. 123,
the Company's net income and income per share would have been
reduced to the following pro forma amounts:
1999 1998 1997
----------- ----------- -----------
Net income As reported $ 5,255,000 1,104,000 484,000
Pro forma $ 4,836,000 817,000 475,000
Net income
per share As reported Basic $ 1.27 0.28 0.13
Diluted $ 1.15 0.27 0.12
Pro forma Basic $ 1.17 0.21 0.12
Diluted $ 1.06 0.19 0.12
The full impact of calculating compensation cost for stock options under
SFAS No. 123 is not reflected in the pro forma net income and net
income per share amounts presented above because compensation cost
is reflected over the option's vesting period and compensation cost
for options granted prior to August 1, 1995 was not considered.
The per share weighted-average fair value of stock options granted
during 1999 and 1998 was $3.19 and $2.30, respectively, on the date
of grant using the Black Scholes option-pricing model with the
following weighted-average assumptions:
1999 - expected dividend yield of 0%, risk-free interest rate of 5.86%,
expected volatility of 69.5% and an expected option life of 10
years.
1998 - expected dividend yield of 0%, risk-free interest rate of 6%,
expected volatility of 63.32% and an expected option life of 10
years.
1997 - expected dividend yield of 0%, risk-free interest rate of 6%,
expected volatility of 64.49% and an expected option life of 10
years.
(d) Restricted Common Stock
In February 1994, a total of 180,000 (after effect of three-for-two
stock split - see Note 9(e)) restricted shares of the Company's
common stock were granted by the Board of Directors to the principal
officers of one of the Company's operating units, Comtech
Communications Corp, ("CCC"), at a cost of $.10 per share. The award
relates to services to be provided over future years and, as a
result, the stock awards are subject to certain restrictions which
may be removed earlier upon CCC attaining certain business plan
milestones, as provided in the agreement, but no later than ten
years from the date of the award. The excess of market value over
cost of the shares awarded of $633,000 was recorded as deferred
compensation and is being amortized to expense over a ten-year
period subject to the aforementioned accelerated provisions, if
appropriate, as evaluated on an annual basis. The deferred
compensation is reflected as a reduction of stockholders' equity in
the accompanying consolidated balance sheet. During fiscal 1997,
60,000 of such shares were forfeited due to the termination of an
officer's employment prior to vesting.
In October 1998, a total of 225,000 (after effect of three-for-two
stock split - see Note 9(e)) restricted shares of the Companys'
common stock were granted by the Board of Directors to the principal
officers and employees of the Companys' new subsidiary, Comtech
Mobile Datacom Corp.("CMDC"), at a cost of $.10 per share. The award
relates to services to be provided over future years and, as a
result, the stock awards are subject to certain restrictions which
may be removed earlier upon CMDC attaining certain business plan
milestones, as provided in the agreement, but no later than ten
years from the date of the award. The excess of market value over
cost of the
F-16
<PAGE>
shares awarded of $1,041,000 was recorded as deferred compensation
and is being amortized to expense over a ten-year period subject to
the aforementioned accelerated provisions, if appropriate, as
evaluated on an annual basis. The deferred compensation is reflected
as a reduction of stockholders' equity in the accompanying
consolidated balance sheet as of July 31,1999.
(d) Stock Split
On July 6, 1999, the Company's Board of Directors authorized a
three-for-two stock split effected in the form of a 50% stock
dividend payable July 30, 1999 to stockholders of record on July 16,
1999. All share and per share amounts in the accompanying
consolidated financial statements have been restated to reflect the
stock split.
(10) Segment and Principal Customer Information
Effective July 31, 1999, the Company adopted SFAS No. 131,"Disclosures
about Segments of an Enterprise and Related Information." Reportable
operating segments are determined based on the Company's management
approach. The management approach, as defined by SFAS No. 131, is
based on the way that the chief operating decision-maker organizes
the segments within an enterprise for making operating decisions and
assessing performance. While the Company's results of operations are
primarily reviewed on a consolidated basis, the chief operating
decision-maker also manages the enterprise in four segments:
(I)Telecommunications Transmission, (II) RF Microwave Amplifiers,
(III) Mobile Data Communications Services and (IV) Wireless Local
Loop, which is being discontinued. Telecommunications Transmission
products include modems, frequency converters, satellite VSAT
transceivers and antennas and over-the-horizon microwave
communications products and systems. RF Microwave Amplifier products
include high-power amplifier products that use the microwave and
radio frequency spectrums. Mobile Data Communications Services
include two-way messaging links between mobile platforms or remote
sites and user headquarters using satellite, terrestrial microwave
or Internet links. Corporate assets consist principally of cash,
deferred tax assets and intercompany receivables. Corporate losses
result from such corporate expenses as legal, accounting and
executive. Sales between segments were negligible. Eliminations
consist of intercompany balances.
(in thousands)
<TABLE>
<CAPTION>
Mobile Data Corporate
Telecommunications RF Microwave Communications and
Fiscal 1999 Transmission Amplifiers Services Others Eliminations Total
----------- ------------ ---------- -------- ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Net sales $23,045 14,523 318 -- 37,886
Operating income (loss) 2,296 2,503 (309) (1,663) 2,827
Interest income 10 -- 55 65
Interest expense 38 152 11 3 204
Depreciation and
amortization 461 714 87 248 1,510
Expenditure for
long-lived assets 791 326 1,734 3 2,854
Total assets 16,907 8,409 2,691 15,494 (13,654) 29,847
<CAPTION>
Mobile Data Corporate
Telecommunications RF Microwave Communications and
Fiscal 1998 Transmission Amplifiers Services Others Eliminations Total
----------- ------------ ---------- -------- ------ ------------ -----
<S> <C> <C> <C> <C> <C> <C>
Net sales $13,047 17,067 -- -- 30,114
Operating income (loss) 123 2,565 -- (1,236) 1,452
Interest income -- -- 36 36
Interest expense 52 160 -- 22 234
Depreciation and
amortization 506 653 -- 47 1,206
Expenditure for
long-lived assets 669 850 -- -- 1,519
Total assets 4,433 9,207 -- 11,930 (5,860) 19,710
</TABLE>
(continued)
F-17
<PAGE>
<TABLE>
<S> <C> <C> <C> <C> <C> <C>
Net sales $12,513 12,233 -- -- 24,746
Operating income (loss) 356 1,296 -- (1,014) 638
Interest income -- 14 -- 19 33
Interest expense 58 214 -- 12 284
Depreciation and
amortization 515 550 -- (10) 1,055
Expenditure for
long-lived assets 440 511 -- -- 951
Total assets 8,116 9,346 -- 12,502 (12,004) 17,960
</TABLE>
Sales to one customer in fiscal 1999 and to different customers in fiscal
1998 and 1997 represented 27.0% and 12.2% and 10.2% of the
consolidated net sales, respectively. Such sales were made from the
Telecommunications Transmission business segment in 1999 and 1997,
and from the RF Microwave Amplifier business segment in 1998.
During fiscal 1999, 1998 and 1997, approximately 16%, 20% and 17%,
respectively, of the Company's net sales resulted from contracts
with the United States government and its agencies. Export sales
comprised 60%, 46% and 57% of net sales in fiscal 1999, 1998 and
1997, respectively. Export sales include sales to domestic companies
for inclusion in products which will be sold to international
customers.
(11) Commitments and Contingencies
(a) Operating Leases
The Company is obligated under noncancellable operating lease
agreements. At July 31, 1999, the future minimum lease payments
under operating leases are as follows:
2000 $ 355,000
2001 355,000
2002 193,000
2003 196,000
-------------
$ 1,099,000
=============
Lease expense charged to operations was $301,000, $140,000 and $123,000 in
fiscal 1999, 1998 and 1997, respectively.
(b) United States Government Contracts
Certain of the Company's contracts are subject to audit by applicable
governmental agencies. Until such audits are completed, the ultimate
profit on these contracts cannot be determined; however, it is
management's belief that the final contract settlements will not
have a material adverse effect on the Company's consolidated
financial condition.
(c) Litigation
The Company is subject to certain legal actions which arise out of the
normal course of business. It is management's belief that the
outcome of these actions will not have a material adverse effect on
the Company's consolidated financial position.
F-18
<PAGE>
(d) Employment Contract
Mr. Kornberg, the Company's Chairman of the Board of Directors, Chief
Executive Officer and President is employed pursuant to an agreement
which was amended and restated in January 1998 which provides, among
other things, for his employment until 2003 at a current basic
compensation of $295,000 per annum plus such additional amounts, if
any, as the Board of Directors may from time to time determine.
(12) Acquisitions
In the first quarter of fiscal 1999, the Company formed two
subsidiaries, Comtech Mobile Datacom Corp. ("CMDC") and Comtech
Wireless, Inc. ("CWI") to acquire the assets and assume certain
liabilities of two businesses. The purchase price of the business
acquired by CMDC amounted to $628,000 consisting of cash of
$100,000, 150,000 shares of restricted common stock, valued at
$528,000, and warrants to purchase 150,000 shares of common stock at
an exercise price of $6.57 per share. The purchase price of the
business acquired by CWI amounted to $350,000 consisting of $100,000
of cash and a non-recourse note payable of $250,000. The assets
acquired were inventories and equipment. Both acquisitions were
accounted for as purchases whereby the assets and liabilities of the
businesses acquired were consolidated with those of the Company from
their respective acquisition dates. The excess of the purchase price
over the fair value of the net assets of the business acquired by
CMDC approximated $1,701,000 and is being amortized over a 20-year
period. This amount is included in intangible assets in the
accompanying consolidated balance sheet. Effective July 31, 1999,
the operations of the business acquired by CWI are being
discontinued (see Note 13). The pro forma effect of the acquisition
of CMDC was not material to the results of operations for the years
ended July 31,1999 and 1998.
(13) Discontinued Operations
Based upon CWI's disappointing fiscal 1999 results of operations and its
uncertain future prospects, in September 1999, the Board of
Directors approved a plan to liquidate CWI by January 31, 2000. The
consolidated financial statements of the Company have been
reclassified to reflect the effects of the Company's decision to
account for the disposal of CWI as a discontinued operation.
Accordingly, costs and expenses, assets and liabilities, and cash
flows associated with CWI have been excluded from the respective
captions in the accompanying consolidated balance sheet, statements
of operations and statements of cash flows. Components of amounts
included in the net liabilities of discontinued operations in the
accompanying consolidated balance sheet are as follows:
July 31, 1999
-------------
Inventory $ 293,000
Provision for operating losses during phase-out period (430,000)
----------
$ (137,000)
==========
The Company expects to liquidate the operations of CWI by January 31,
2000 and has estimated a loss of $470,000 on disposal of CWI's
assets and $430,000 for operating losses through January 31, 2000.
CWI had no revenue in fiscal 1999 and expenses of $942,000.
(14) Stockholder Rights Plan
On December 15, 1998, the Company's Board of Directors approved the
adoption of a stockholder rights plan in which one stock purchase
right ("Right") was distributed as a dividend on each outstanding
share of the Company's common stock to stockholders of record at the
close of business on January 4, 1999. Under the plan, the Rights
will be exercisable only if triggered by a person or group's
acquisition of 15% or more of the Company's common stock. If
triggered, each Right, other than Rights held by the acquiring
person or group, would entitle its holder to purchase a specified
number of the Company's common shares for 50% of
F-19
<PAGE>
their market value at that time. Unless a 15% acquisition has
occurred, the Rights may be redeemed by the Company at any time
prior to the termination date of the plan.
This Right to purchase common stock at a discount will not be
triggered by a person's or group's acquisition of 15% or more of the
common stock pursuant to a tender or exchange offer which is for all
outstanding shares at a price and on terms that Comtech's Board of
Directors determines (prior to acquisition) to be adequate and in
the best interest of the Company and its stockholders. The Rights
will expire on December 15, 2008.
F-20
<PAGE>
Schedule II
COMTECH TELECOMMUNICATIONS CORP.
AND SUBSIDIARIES
Valuation and Qualifying Accounts and Reserves
Years ended July 31, 1999, 1998 and 1997
<TABLE>
<CAPTION>
Column A Column B Column C Column D Column E
-------- -------- -------- -------- --------
Additions
---------
(1) (2)
Charged to
Balance at Charged to other Transfers Balance at
beginning cost and accounts - (deductions) end of
Description of period expenses describe describe period
----------- --------- -------- -------- -------- ------
<S> <C> <C> <C> <C> <C>
Allowance for doubtful accounts -
accounts receivable:
Year ended July 31,:
1999 $ 170,000 -- -- (25,000)(D) 145,000
1998 102,000 96,000 (C) -- (28,000)(D) 170,000
1997 28,000 85,000 (C) -- (11,000)(D) 102,000
Inventory reserves:
Year ended July 31,:
1999 $ 829,000 341,000 (A) -- -- 1,170,000
1998 956,000 -- -- (127,000)(B) 829,000
1997 490,000 466,000 (A) -- -- 956,000
</TABLE>
(A) Increase in reserves for contract and other adjustments.
(B) Reduction of excess reserves for contract and other adjustments.
(C) Increase in allowance for doubtful accounts.
(D) Write-off of uncollectible receivables.
S-1
TIME ACCELERATED RESTRICTED STOCK PURCHASE AGREEMENT
AGREEMENT dated September 24, 1998 between Comtech Telecommunications
Corp., a Delaware corporation ("Comtech"), and Ronald Johnson ("Employee").
WHEREAS, Employee is employed by Comtech's wholly-owned subsidiary,
Comtech Mobile Datacom Corporation ("CMDC"), and Comtech and Employee desire to
(a) provide additional incentives to Employee in connection with Employee's
responsibilities for the management and growth of the business of CMDC, and (b)
more closely align Employee's interests with the interests of stockholders of
Comtech, through, in relation to both objectives, the sale and issuance to
Employee of restricted shares of Common Stock of Comtech.
NOW, THEREFORE, Comtech and Employee agree as follows:
1. Definitions
(a) "Comtech" means Comtech Telecommunications Corp., a Delaware
corporation.
(b) "Escrow Agent" means the Escrow Agent as defined in the Escrow
Agreement in the form annexed hereto as Exhibit A.
(c) "Cumulative CMDC Pre-Tax Profits" means CMDC's aggregate income
before income taxes minus CMDC's aggregate losses in the period from inception
of operations of CMDC to the end of the relevant fiscal year. Determinations of
such amounts shall be made in accordance with generally accepted accounting
principles, with the exception that no effect shall be given to
(i) interest or like charges or accruals ("Capital Charges") in
respect of Comtech cash advances to CMDC that are less than $1.5
million plus the amount of dividends paid by CMDC to Comtech
during the relevant fiscal year;
(ii) Capital Charges in excess of 1/2% above the average rate of
interest then charged to Comtech for all borrowings by Comtech, on
Comtech cash advances to CMDC exceeding $1.5 million at any time
outstanding plus the amount of dividends paid by CMDC to Comtech
during the relevant fiscal year;
(iii) general or administrative expenses of Comtech, including
charges for management or corporate services provided by Comtech
to CMDC; or
(iv) the sale of shares of Comtech Common Stock to Employee and
other employees of CMDC, or the repurchase of same.
1
<PAGE>
(d) "Net Cash Borrowings" means the cumulative amount of cash advances
to CMDC by Comtech.
(e) "Net Cash Flow" means total cash refunds by CMDC to Comtech, net of
cash advances by Comtech to CMDC.
(f) "Restricted Shares" means the Shares subject to the restrictions
against transfer provided in Section 3 hereof and which are required to be
resold to Comtech under certain circumstances as provided in Section 3 hereof.
(g) "Unrestricted Shares" means Shares as to which all restrictions
against transfer and the obligation to resell to Comtech have lapsed.
(h) "Shares" shall have the meaning provided in Section 2 hereof.
2. Sale and Purchase of Shares
On the terms, and subject to the conditions hereinafter provided,
simultaneously with the execution and delivery of this Agreement, (i) Comtech is
selling and issuing to Employee, and Employee is purchasing from Comtech, 20,000
shares of Common Stock, par value $.10 per share, of Comtech (the "Shares");
(ii) Employee is paying to Comtech by certified or bank cashier's check a total
purchase price for the Shares of $2,000 (i.e., $.10 per share); and (iii)
Employee is depositing the Shares with the Escrow Agent, to be held by the
Escrow Agent pursuant and subject to the terms of an Escrow Agreement in the
form annexed hereto as Exhibit A.
3. Restrictions
(a) The Shares shall not be transferred until such time as they shall
become "Unrestricted Shares" pursuant to Section 4 hereof (the Shares subject to
such restriction being hereinafter referred to as "Restricted Shares"). As used
in this Agreement, "transfer" shall include, without limitation, any sale,
assignment, gift, pledge, hypothecation, bequest, devise, encumbrance, or other
disposition, whether voluntary or by operation of law. Any attempted transfer of
Restricted Shares (other than to Comtech pursuant to the provisions of Section 4
of this Agreement) shall be null and void and Comtech shall not give effect on
its records to any such attempted transfer.
(b) Employee authorizes Comtech and its transfer agents not to transfer
any certificates of Comtech Common Stock on its books and records transferred in
violation of this Agreement, and further agrees that any such purported transfer
shall be void and of no effect.
(c) An original of this Agreement shall be kept in the files of Comtech
at its principal office and reference to this Agreement shall be endorsed on all
stock certificates subject to this Agreement, now or hereafter issued, by
writing or stamping thereon a legend in substantially the following form:
2
<PAGE>
"Sale, assignment, gift, bequest, devise, pledge,
hypothecation, encumbrance or other disposition of the shares
represented by this Certificate is restricted by the terms of
a Restricted Stock Agreement, dated September __, 1998, a
copy of which, and any amendments thereto, may be examined at
the principal office of Comtech Telecommunications Corp."
(d) Employee shall possess all rights as a stockholder (including,
without limitation, voting rights, rights to dividends, if any, declared and
rights on liquidation) except such as are expressly restricted by the provisions
of this Agreement.
4. Lapse of Restrictions; Forfeiture of Shares
(a) One-sixth of the Shares shall become Unrestricted Shares, subject
to satisfying the tax withholding requirements contained in Subsection 4(d)
hereof, upon the first anniversary of the date hereof.
(b) Subject to satisfying the tax withholding requirements contained in
Subsection 4(d) hereof, the remaining five-sixths of the Shares shall become
Unrestricted Shares on the tenth anniversary of the date hereof, except that
such Shares shall become Unrestricted Shares on an accelerated basis in the
one-sixth increments set forth in the following schedule after the Performance
Criteria set forth therein are achieved:
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- --------------------
o Fiscal year-end cumulative CMDC net sales One-sixth (1/6)
of $3,000,000 and Net Cash Borrowings at of Shares purchased
that time of less than $1,000,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $500,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$500,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $2,000,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$100,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $3,000,000 and fiscal year Net of Shares purchased
Cash Flow of $1,500,000 or more
3
<PAGE>
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- --------------------
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $7,000,000 and fiscal year Net of Shares purchased
Cash Flow of $2,500,000 or more
(c) Notwithstanding anything to the contrary contained in this
Agreement, but subject to satisfying the tax withholding requirements contained
in Subsection 4(d) hereof, (i) all Restricted Shares shall become Unrestricted
Shares upon termination of Employee's employment with CMDC by reason of his
death, total and permanent disability (as determined in accordance with the
policies and practices of Comtech), normal retirement (at or after age 70 or,
with the consent of Comtech, before age 70), or early retirement at Comtech's
request; and (ii) upon discharge of Employee by CMDC other than for cause (which
for this purpose shall mean Employee's willful misconduct, dereliction of duty,
or conviction for a crime involving moral turpitude).
(d) If, at the time any Shares become Unrestricted Shares, Comtech
determines that it has withheld an amount which is less than the withholding
that may be required pursuant to the Internal Revenue Code or other applicable
law, Employee shall forthwith pay to Comtech the amount of monies necessary to
satisfy such withholding or equivalent requirements. Until the payment of such
monies or, alternatively the execution and delivery by Employee of an agreement
satisfactory to Comtech in it sole discretion providing for the payment of such
monies, the Unrestricted Shares shall not be released to Employee pursuant to
the terms of the Escrow Agreement. If payment of such monies is not made or such
agreement is not entered into, such Unrestricted Shares shall, at Comtech's
direction, be sold by Employee to Comtech for a purchase price equal to the
purchase price per share provided in Section 2 hereof, adjusted, as appropriate
for any subsequent stock-split, recapitalization or the like.
(e) In the event of Employee's termination of employment with CMDC for
any reason other than those specified in Subsection 4(c) hereof (including,
without limitation, any voluntary termination of employment) all Restricted
Shares shall be sold by Employee to Comtech, for the price and otherwise in the
manner provided in Subsection 4(d) hereof.
5. Representations and Warranties of Employee
Employee represents and warrants as follows:
(a) Assuming that Comtech has transferred to Employee good and
marketable title to the Shares, Employee has not taken any action or permitted
any action to occur, nor will employee take any action or permit any action to
occur, that would result in the Shares becoming subject to any claim, lien,
pledge or encumbrance of any nature whatsoever.
4
<PAGE>
(b) Employee has full legal power and capacity to execute and deliver
this Agreement, and such execution and delivery and Employee's acceptance of
employment with CMDC contemporaneously with the execution and delivery of this
Agreement are not in violation of any other agreement, instrument or obligation
to which Employee is a party, including, without limitation, any employment
agreement or non-competition agreement of any kind whatsoever.
(c) This Agreement constitutes the legal, valid and binding obligation
of Employee.
(d) Employee has not employed any broker or finder or incurred any
liability for any brokerage fees or commissions or finders' fees in connection
with this Agreement.
(e) Employee is acquiring the Shares for investment purposes only and
not with a view to distribution, and acknowledges that he has been advised by
his counsel, and understands, that the Shares have not been registered under the
Securities Act of 1933, as amended, and under the securities laws, may not be
sold or transferred unless registered under such Act or pursuant to an exemption
from such registration and that a restrictive legend to that effect shall be
placed on the certificate(s) representing the Shares. Employee has further been
advised by his counsel with respect to making an election pursuant to Section
83(b) of the Internal Revenue Code and has chosen, or will choose, whether to
make such election as he deems appropriate.
6. Representations and Warranties of Comtech
Comtech represents and warrants as follows:
(a) Comtech is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware with full power and legal right
to execute and deliver this Agreement and perform its obligations hereunder.
(b) The execution and delivery of this Agreement by Comtech and the
performance by it of its obligations hereunder have been duly authorized by all
necessary corporate action and do not violate the terms of any outstanding
agreements to which it is a party. This Agreement constitutes the legal, valid
and binding obligation of Comtech.
7. Certain Employment Matters
(a) The purchase of Shares hereunder shall not preclude Employee from
being eligible to participate in any other plans, programs or benefits otherwise
available to employees of Comtech or its subsidiaries. Nothing in this Agreement
shall be construed to constitute or be evidence of an agreement or
understanding, express or implied, on the part of Comtech or CMDC to employ
Employee for any specific period of time.
(b) In consideration of his employment with CMDC and the sale and
issuance of the Shares to him pursuant to this Agreement, Employee shall not,
during the period he is employed by CMDC and for one year thereafter following
Employee's voluntary termination of is employment by CMDC, in any manner,
directly or indirectly, engage anywhere in the United States in any
5
<PAGE>
business which competes with the business in which CMDC or Comtech or any of its
other subsidiaries is engaged at any time during the period in which Employee is
employed by CMDC, and he shall not, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be employed by, or connected in any manner with any corporation,
firm or business that is so engaged; provided, however, that nothing herein
contained shall prohibit Employee from owning not more than 5% of the
outstanding stock of any publicly held corporation. If any restriction set forth
in this Subsection 7(b) is found by a court of competent jurisdiction or
arbitrator to be unenforceable because it extends for too long a period of time
or over too great a range of activities or in too broad a geographic area, it
shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(c) Employee shall hold in a fiduciary capacity for the benefit of CMDC
and Comtech all confidential information, knowledge or data relating to CMDC and
Comtech or any of its other subsidiaries, and their respective businesses
obtained by Employee before or during the period in which he is employed by
CMDC.
(d) The restrictions contained in Subsections (b) and (c) of this
Section 7 are necessary for the protection of the business and goodwill of CMDC
and Comtech and are considered by Employee to be reasonable to such purpose.
Employee agrees that any breach of such Subsections (b) and (c) will cause CMDC
and/or Comtech substantial and irreparable damage and therefore, in the event of
any such breach, in addition to such other remedies which may be available, CMDC
and/or Comtech shall have the right to seek specific performance and injunctive
relief.
8. Liability of Comtech
The liability of Comtech under this Agreement is limited to the
obligations expressly set forth herein and nothing herein contained shall be
construed to impose any liability on Comtech in favor of Employee with respect
to any loss, cost or expense which Employee may incur or suffer in connection
with or arising out of this Agreement, including, without limitation, Employee's
purchase of the Shares.
9. Voting Concerning Certain Corporate Matters
(a) Employee agrees to have counted for purposes of a quorum, and to
vote, all Restricted Shares (whether such vote shall be by written consent or by
vote, in person or, if requested by Comtech, by proxy, at a meeting of
shareholders of Comtech) for the election to Comtech's Board of Directors of the
nominees from time to time designated by the Board of Directors of Comtech.
(b) To facilitate, and not in limitation of, the agreement contained in
Subsection 9(a) hereof, Employee irrevocably appoints the Chairman of the Board
and the Secretary of Comtech, and their respective successors in office, and
each of them, with full power of substitution, as the lawful proxy for Employee
as to all Restricted Shares, to vote all Restricted Shares which Employee is
entitled to vote, for and in the name, place and stead of Employee, at any
annual, special or other meeting of the holders of shares of Comtech Common
Stock and at any adjournment thereof, or
6
<PAGE>
pursuant to any consent in lieu of a meeting, for the election to Comtech's
Board of Directors of the nominees designated by the Board of Directors of
Comtech. The foregoing proxy is coupled with an interest and therefore not
terminable by Employee without the consent of Comtech.
10. Additional Restricted Shares.
Employees agrees that the term "Restricted Shares" shall include any
shares or other securities which he may receive or be entitled to receive as a
result of the ownership of the original Restricted Shares whether the same are
issued as a result of a share split, share dividend, recapitalization, or other
subdivision or consolidation of shares effected without receipt of consideration
by Comtech or the result of the merger or consolidation of Comtech or sale of
assets of Comtech.
11. Binding Agreement
This Agreement shall inure to the benefit of, and be binding upon,
Comtech and its successors and assigns and Employee and his heirs, personal
representatives, successors and assigns.
12. Notices
Any notice, request or other communication hereunder shall be in
writing and shall be deemed to have been duly given if hand delivered or mailed
by registered or certified mail, return receipt requested, addressed as herein
set forth, or to such other address as may be designated by a notice given
pursuant hereto, which change of address notice shall be effective upon receipt
thereof.
If to Comtech:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Attention: Fred Kornberg, President
Copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Robert A. Cantone, Esq.
If to Employee:
9966 Foxbourgh Circle
Rockville, MD 20850
7
<PAGE>
13. Survival.
All of the representations, warranties, agreements and covenants
contained herein or made or deemed to have been made pursuant hereto or in
connection with the transactions contemplated hereby shall survive the execution
and delivery hereof and the consummation of the transactions contemplated
hereby.
14. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one
instrument.
16. Expenses
Employee and Comtech shall each bear all the expenses incurred by them
or it in connection with this Agreement and the transactions contemplated
hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, Comtech and Employee have caused this Agreement to
be executed as of the date first above written.
COMTECH TELECOMMUNICATIONS CORP.
By:
----------------------------------
Authorized Signatory
By:
----------------------------------
Ronald Johnson
9
<PAGE>
TIME ACCELERATED RESTRICTED STOCK PURCHASE AGREEMENT
AGREEMENT dated September 24, 1998 between Comtech Telecommunications
Corp., a Delaware corporation ("Comtech"), and Leslie Snively ("Employee").
WHEREAS, Employee is employed by Comtech's wholly-owned subsidiary,
Comtech Mobile Datacom Corporation ("CMDC"), and Comtech and Employee desire to
(a) provide additional incentives to Employee in connection with Employee's
responsibilities for the management and growth of the business of CMDC, and (b)
more closely align Employee's interests with the interests of stockholders of
Comtech, through, in relation to both objectives, the sale and issuance to
Employee of restricted shares of Common Stock of Comtech.
NOW, THEREFORE, Comtech and Employee agree as follows:
1. Definitions
(a) "Comtech" means Comtech Telecommunications Corp., a Delaware
corporation.
(b) "Escrow Agent" means the Escrow Agent as defined in the Escrow
Agreement in the form annexed hereto as Exhibit A.
(c) "Cumulative CMDC Pre-Tax Profits" means CMDC's aggregate income
before income taxes minus CMDC's aggregate losses in the period from inception
of operations of CMDC to the end of the relevant fiscal year. Determinations of
such amounts shall be made in accordance with generally accepted accounting
principles, with the exception that no effect shall be given to
(i) interest or like charges or accruals ("Capital Charges")
in respect of Comtech cash advances to CMDC that are less
than $1.5 million plus the amount of dividends paid by CMDC
to Comtech during the relevant fiscal year;
(ii) Capital Charges in excess of 1/2% above the average
rate of interest then charged to Comtech for all borrowings
by Comtech, on Comtech cash advances to CMDC exceeding $1.5
million at any time outstanding plus the amount of dividends
paid by CMDC to Comtech during the relevant fiscal year;
(iii) general or administrative expenses of Comtech,
including charges for management or corporate services
provided by Comtech to CMDC; or
(iv) the sale of shares of Comtech Common Stock to Employee
and other employees of CMDC, or the repurchase of same.
<PAGE>
(d) "Net Cash Borrowings" means the cumulative amount of cash advances
to CMDC by Comtech.
(e) "Net Cash Flow" means total cash refunds by CMDC to Comtech, net
of cash advances by Comtech to CMDC.
(f) "Restricted Shares" means the Shares subject to the restrictions
against transfer provided in Section 3 hereof and which are required to be
resold to Comtech under certain circumstances as provided in Section 3 hereof.
(g) "Unrestricted Shares" means Shares as to which all restrictions
against transfer and the obligation to resell to Comtech have lapsed.
(h) "Shares" shall have the meaning provided in Section 2 hereof.
2. Sale and Purchase of Shares
On the terms, and subject to the conditions hereinafter provided,
simultaneously with the execution and delivery of this Agreement, (i) Comtech is
selling and issuing to Employee, and Employee is purchasing from Comtech, 35,000
shares of Common Stock, par value $.10 per share, of Comtech (the "Shares");
(ii) Employee is paying to Comtech by certified or bank cashier's check a total
purchase price for the Shares of $3,500 (i.e., $.10 per share); and (iii)
Employee is depositing the Shares with the Escrow Agent, to be held by the
Escrow Agent pursuant and subject to the terms of an Escrow Agreement in the
form annexed hereto as Exhibit A.
3. Restrictions
(a) The Shares shall not be transferred until such time as they shall
become "Unrestricted Shares" pursuant to Section 4 hereof (the Shares subject to
such restriction being hereinafter referred to as "Restricted Shares"). As used
in this Agreement, "transfer" shall include, without limitation, any sale,
assignment, gift, pledge, hypothecation, bequest, devise, encumbrance, or other
disposition, whether voluntary or by operation of law. Any attempted transfer of
Restricted Shares (other than to Comtech pursuant to the provisions of Section 4
of this Agreement) shall be null and void and Comtech shall not give effect on
its records to any such attempted transfer.
(b) Employee authorizes Comtech and its transfer agents not to
transfer any certificates of Comtech Common Stock on its books and records
transferred in violation of this Agreement, and further agrees that any such
purported transfer shall be void and of no effect.
(c) An original of this Agreement shall be kept in the files of
Comtech at its principal office and reference to this Agreement shall be
endorsed on all stock certificates subject to this Agreement, now or hereafter
issued, by writing or stamping thereon a legend in substantially the following
form:
2
<PAGE>
"Sale, assignment, gift, bequest, devise, pledge, hypothecation,
encumbrance or other disposition of the shares represented by this
Certificate is restricted by the terms of a Restricted Stock
Agreement, dated September __, 1998, a copy of which, and any
amendments thereto, may be examined at the principal office of Comtech
Telecommunications Corp."
(d) Employee shall possess all rights as a stockholder (including,
without limitation, voting rights, rights to dividends, if any, declared and
rights on liquidation) except such as are expressly restricted by the provisions
of this Agreement.
4. Lapse of Restrictions; Forfeiture of Shares
(a) One-sixth of the Shares shall become Unrestricted Shares, subject
to satisfying the tax withholding requirements contained in Subsection 4(d)
hereof, upon the first anniversary of the date hereof.
(b) Subject to satisfying the tax withholding requirements contained
in Subsection 4(d) hereof, the remaining five-sixths of the Shares shall become
Unrestricted Shares on the tenth anniversary of the date hereof, except that
such Shares shall become Unrestricted Shares on an accelerated basis in the
one-sixth increments set forth in the following schedule after the Performance
Criteria set forth therein are achieved:
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- -------------------
o Fiscal year-end cumulative CMDC net sales
of $3,000,000 and Net Cash Borrowings at One-sixth (1/6)
that time of less than $1,000,000 of Shares purchased
o Fiscal year-end Cumulative CMDC Pre-Tax
Profits of $500,000 and Net Cash One-sixth (1/6)
Borrowings at such time of less than of Shares purchased
$500,000
o Fiscal year-end Cumulative CMDC Pre-Tax
Profits of $2,000,000 and Net Cash One-sixth (1/6)
Borrowings at such time of less than of Shares purchased
$100,000
o Fiscal year-end Cumulative CMDC Pre-Tax
Profits of $3,000,000 and fiscal year Net One-sixth (1/6)
Cash Flow of $1,500,000 or more of Shares purchased
3
<PAGE>
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- -------------------
o Fiscal year-end Cumulative CMDC Pre-Tax
Profits of $7,000,000 and fiscal year Net One-sixth (1/6)
Cash Flow of $2,500,000 or more of Shares purchased
(c) Notwithstanding anything to the contrary contained in this
Agreement, but subject to satisfying the tax withholding requirements contained
in Subsection 4(d) hereof, (i) all Restricted Shares shall become Unrestricted
Shares upon termination of Employee's employment with CMDC by reason of his
death, total and permanent disability (as determined in accordance with the
policies and practices of Comtech), normal retirement (at or after age 70 or,
with the consent of Comtech, before age 70), or early retirement at Comtech's
request; and (ii) upon discharge of Employee by CMDC other than for cause (which
for this purpose shall mean Employee's willful misconduct, dereliction of duty,
or conviction for a crime involving moral turpitude).
(d) If, at the time any Shares become Unrestricted Shares, Comtech
determines that it has withheld an amount which is less than the withholding
that may be required pursuant to the Internal Revenue Code or other applicable
law, Employee shall forthwith pay to Comtech the amount of monies necessary to
satisfy such withholding or equivalent requirements. Until the payment of such
monies or, alternatively the execution and delivery by Employee of an agreement
satisfactory to Comtech in it sole discretion providing for the payment of such
monies, the Unrestricted Shares shall not be released to Employee pursuant to
the terms of the Escrow Agreement. If payment of such monies is not made or such
agreement is not entered into, such Unrestricted Shares shall, at Comtech's
direction, be sold by Employee to Comtech for a purchase price equal to the
purchase price per share provided in Section 2 hereof, adjusted, as appropriate
for any subsequent stock-split, recapitalization or the like.
(e) In the event of Employee's termination of employment with CMDC for
any reason other than those specified in Subsection 4(c) hereof (including,
without limitation, any voluntary termination of employment) all Restricted
Shares shall be sold by Employee to Comtech, for the price and otherwise in the
manner provided in Subsection 4(d) hereof.
5. Representations and Warranties of Employee
Employee represents and warrants as follows:
(a) Assuming that Comtech has transferred to Employee good and
marketable title to the Shares, Employee has not taken any action or permitted
any action to occur, nor will employee take any action or permit any action to
occur, that would result in the Shares becoming subject to any claim, lien,
pledge or encumbrance of any nature whatsoever.
4
<PAGE>
(b) Employee has full legal power and capacity to execute and deliver
this Agreement, and such execution and delivery and Employee's acceptance of
employment with CMDC contemporaneously with the execution and delivery of this
Agreement are not in violation of any other agreement, instrument or obligation
to which Employee is a party, including, without limitation, any employment
agreement or non-competition agreement of any kind whatsoever.
(c) This Agreement constitutes the legal, valid and binding obligation
of Employee.
(d) Employee has not employed any broker or finder or incurred any
liability for any brokerage fees or commissions or finders' fees in connection
with this Agreement.
(e) Employee is acquiring the Shares for investment purposes only and
not with a view to distribution, and acknowledges that he has been advised by
his counsel, and understands, that the Shares have not been registered under the
Securities Act of 1933, as amended, and under the securities laws, may not be
sold or transferred unless registered under such Act or pursuant to an exemption
from such registration and that a restrictive legend to that effect shall be
placed on the certificate(s) representing the Shares. Employee has further been
advised by his counsel with respect to making an election pursuant to Section
83(b) of the Internal Revenue Code and has chosen, or will choose, whether to
make such election as he deems appropriate.
6. Representations and Warranties of Comtech
Comtech represents and warrants as follows:
(a) Comtech is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware with full power and legal right
to execute and deliver this Agreement and perform its obligations hereunder.
(b) The execution and delivery of this Agreement by Comtech and the
performance by it of its obligations hereunder have been duly authorized by all
necessary corporate action and do not violate the terms of any outstanding
agreements to which it is a party. This Agreement constitutes the legal, valid
and binding obligation of Comtech.
7. Certain Employment Matters
(a) The purchase of Shares hereunder shall not preclude Employee from
being eligible to participate in any other plans, programs or benefits otherwise
available to employees of Comtech or its subsidiaries. Nothing in this Agreement
shall be construed to constitute or be evidence of an agreement or
understanding, express or implied, on the part of Comtech or CMDC to employ
Employee for any specific period of time.
(b) In consideration of his employment with CMDC and the sale and
issuance of the Shares to him pursuant to this Agreement, Employee shall not,
during the period he is employed by CMDC and for one year thereafter following
Employee's voluntary termination of is employment by CMDC, in any manner,
directly or indirectly, engage anywhere in the United States in any
5
<PAGE>
business which competes with the business in which CMDC or Comtech or any of its
other subsidiaries is engaged at any time during the period in which Employee is
employed by CMDC, and he shall not, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be employed by, or connected in any manner with any corporation,
firm or business that is so engaged; provided, however, that nothing herein
contained shall prohibit Employee from owning not more than 5% of the
outstanding stock of any publicly held corporation. If any restriction set forth
in this Subsection 7(b) is found by a court of competent jurisdiction or
arbitrator to be unenforceable because it extends for too long a period of time
or over too great a range of activities or in too broad a geographic area, it
shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(c) Employee shall hold in a fiduciary capacity for the benefit of
CMDC and Comtech all confidential information, knowledge or data relating to
CMDC and Comtech or any of its other subsidiaries, and their respective
businesses obtained by Employee before or during the period in which he is
employed by CMDC.
(d) The restrictions contained in Subsections (b) and (c) of this
Section 7 are necessary for the protection of the business and goodwill of CMDC
and Comtech and are considered by Employee to be reasonable to such purpose.
Employee agrees that any breach of such Subsections (b) and (c) will cause CMDC
and/or Comtech substantial and irreparable damage and therefore, in the event of
any such breach, in addition to such other remedies which may be available, CMDC
and/or Comtech shall have the right to seek specific performance and injunctive
relief.
8. Liability of Comtech
The liability of Comtech under this Agreement is limited to the
obligations expressly set forth herein and nothing herein contained shall be
construed to impose any liability on Comtech in favor of Employee with respect
to any loss, cost or expense which Employee may incur or suffer in connection
with or arising out of this Agreement, including, without limitation, Employee's
purchase of the Shares.
9. Voting Concerning Certain Corporate Matters
(a) Employee agrees to have counted for purposes of a quorum, and to
vote, all Restricted Shares (whether such vote shall be by written consent or by
vote, in person or, if requested by Comtech, by proxy, at a meeting of
shareholders of Comtech) for the election to Comtech's Board of Directors of the
nominees from time to time designated by the Board of Directors of Comtech.
(b) To facilitate, and not in limitation of, the agreement contained
in Subsection 9(a) hereof, Employee irrevocably appoints the Chairman of the
Board and the Secretary of Comtech, and their respective successors in office,
and each of them, with full power of substitution, as the lawful proxy for
Employee as to all Restricted Shares, to vote all Restricted Shares which
Employee is entitled to vote, for and in the name, place and stead of Employee,
at any annual, special or other meeting of the holders of shares of Comtech
Common Stock and at any adjournment thereof, or
6
<PAGE>
pursuant to any consent in lieu of a meeting, for the election to Comtech's
Board of Directors of the nominees designated by the Board of Directors of
Comtech. The foregoing proxy is coupled with an interest and therefore not
terminable by Employee without the consent of Comtech.
10. Additional Restricted Shares.
Employees agrees that the term "Restricted Shares" shall include any
shares or other securities which he may receive or be entitled to receive as a
result of the ownership of the original Restricted Shares whether the same are
issued as a result of a share split, share dividend, recapitalization, or other
subdivision or consolidation of shares effected without receipt of consideration
by Comtech or the result of the merger or consolidation of Comtech or sale of
assets of Comtech.
11. Binding Agreement
This Agreement shall inure to the benefit of, and be binding upon,
Comtech and its successors and assigns and Employee and his heirs, personal
representatives, successors and assigns.
12. Notices
Any notice, request or other communication hereunder shall be in
writing and shall be deemed to have been duly given if hand delivered or mailed
by registered or certified mail, return receipt requested, addressed as herein
set forth, or to such other address as may be designated by a notice given
pursuant hereto, which change of address notice shall be effective upon receipt
thereof.
If to Comtech:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Attention: Fred Kornberg, President
Copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Robert A. Cantone, Esq.
If to Employee:
290 W. Prestwick Way
Castle Rock, CO 80104
7
<PAGE>
13. Survival.
All of the representations, warranties, agreements and covenants
contained herein or made or deemed to have been made pursuant hereto or in
connection with the transactions contemplated hereby shall survive the execution
and delivery hereof and the consummation of the transactions contemplated
hereby.
14. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one
instrument.
16. Expenses
Employee and Comtech shall each bear all the expenses incurred by them
or it in connection with this Agreement and the transactions contemplated
hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, Comtech and Employee have caused this Agreement to
be executed as of the date first above written.
COMTECH TELECOMMUNICATIONS CORP.
By: _________________________
Authorized Signatory
__________________________
Leslie Snively
9
<PAGE>
TIME ACCELERATED RESTRICTED STOCK PURCHASE AGREEMENT
AGREEMENT dated September 24, 1998 between Comtech Telecommunications
Corp., a Delaware corporation ("Comtech"), and Dan Veeneman ("Employee").
WHEREAS, Employee is employed by Comtech's wholly-owned subsidiary,
Comtech Mobile Datacom Corporation ("CMDC"), and Comtech and Employee desire to
(a) provide additional incentives to Employee in connection with Employee's
responsibilities for the management and growth of the business of CMDC, and (b)
more closely align Employee's interests with the interests of stockholders of
Comtech, through, in relation to both objectives, the sale and issuance to
Employee of restricted shares of Common Stock of Comtech.
NOW, THEREFORE, Comtech and Employee agree as follows:
1. Definitions
(a) "Comtech" means Comtech Telecommunications Corp., a Delaware
corporation.
(b) "Escrow Agent" means the Escrow Agent as defined in the Escrow
Agreement in the form annexed hereto as Exhibit A.
(c) "Cumulative CMDC Pre-Tax Profits" means CMDC's aggregate income
before income taxes minus CMDC's aggregate losses in the period from inception
of operations of CMDC to the end of the relevant fiscal year. Determinations of
such amounts shall be made in accordance with generally accepted accounting
principles, with the exception that no effect shall be given to
(i) interest or like charges or accruals ("Capital Charges") in
respect of Comtech cash advances to CMDC that are less than $1.5
million plus the amount of dividends paid by CMDC to Comtech
during the relevant fiscal year;
(ii) Capital Charges in excess of 1/2% above the average rate of
interest then charged to Comtech for all borrowings by Comtech, on
Comtech cash advances to CMDC exceeding $1.5 million at any time
outstanding plus the amount of dividends paid by CMDC to Comtech
during the relevant fiscal year;
(iii) general or administrative expenses of Comtech, including
charges for management or corporate services provided by Comtech
to CMDC; or (iv) the sale of shares of Comtech Common Stock to
Employee and other employees of CMDC, or the repurchase of same.
1
<PAGE>
(d) "Net Cash Borrowings" means the cumulative amount of cash advances
to CMDC by Comtech.
(e) "Net Cash Flow" means total cash refunds by CMDC to Comtech, net
of cash advances by Comtech to CMDC.
(f) "Restricted Shares" means the Shares subject to the
restrictions against transfer provided in Section 3 hereof and which are
required to be resold to Comtech under certain circumstances as provided in
Section 3 hereof.
(g) "Unrestricted Shares" means Shares as to which all restrictions
against transfer and the obligation to resell to Comtech have lapsed.
(h) "Shares" shall have the meaning provided in Section 2 hereof.
2. Sale and Purchase of Shares
On the terms, and subject to the conditions hereinafter provided,
simultaneously with the execution and delivery of this Agreement, (i) Comtech is
selling and issuing to Employee, and Employee is purchasing from Comtech, 25,000
shares of Common Stock, par value $.10 per share, of Comtech (the "Shares");
(ii) Employee is paying to Comtech by certified or bank cashier's check a total
purchase price for the Shares of $2,500 (i.e., $.10 per share); and (iii)
Employee is depositing the Shares with the Escrow Agent, to be held by the
Escrow Agent pursuant and subject to the terms of an Escrow Agreement in the
form annexed hereto as Exhibit A.
3. Restrictions
(a) The Shares shall not be transferred until such time as they
shall become "Unrestricted Shares" pursuant to Section 4 hereof (the Shares
subject to such restriction being hereinafter referred to as "Restricted
Shares"). As used in this Agreement, "transfer" shall include, without
limitation, any sale, assignment, gift, pledge, hypothecation, bequest, devise,
encumbrance, or other disposition, whether voluntary or by operation of law. Any
attempted transfer of Restricted Shares (other than to Comtech pursuant to the
provisions of Section 4 of this Agreement) shall be null and void and Comtech
shall not give effect on its records to any such attempted transfer.
(b) Employee authorizes Comtech and its transfer agents not to
transfer any certificates of Comtech Common Stock on its books and records
transferred in violation of this Agreement, and further agrees that any such
purported transfer shall be void and of no effect.
(c) An original of this Agreement shall be kept in the files of
Comtech at its principal office and reference to this Agreement shall be
endorsed on all stock certificates subject to this Agreement, now or hereafter
issued, by writing or stamping thereon a legend in substantially the following
form:
2
<PAGE>
"Sale, assignment, gift, bequest, devise, pledge, hypothecation,
encumbrance or other disposition of the shares represented by this
Certificate is restricted by the terms of a Restricted Stock Agreement,
dated September __, 1998, a copy of which, and any amendments thereto,
may be examined at the principal office of Comtech Telecommunications
Corp."
(d) Employee shall possess all rights as a stockholder (including,
without limitation, voting rights, rights to dividends, if any, declared and
rights on liquidation) except such as are expressly restricted by the provisions
of this Agreement.
4. Lapse of Restrictions; Forfeiture of Shares
(a) One-sixth of the Shares shall become Unrestricted Shares, subject
to satisfying the tax withholding requirements contained in Subsection 4(d)
hereof, upon the first anniversary of the date hereof.
(b) Subject to satisfying the tax withholding requirements contained
in Subsection 4(d) hereof, the remaining five-sixths of the Shares shall become
Unrestricted Shares on the tenth anniversary of the date hereof, except that
such Shares shall become Unrestricted Shares on an accelerated basis in the
one-sixth increments set forth in the following schedule after the Performance
Criteria set forth therein are achieved:
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- -------------------
o Fiscal year-end cumulative CMDC net sales One-sixth (1/6)
of $3,000,000 and Net Cash Borrowings at of Shares purchased
that time of less than $1,000,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $500,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$500,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $2,000,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$100,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $3,000,000 and fiscal year Net of Shares purchased
Cash Flow of $1,500,000 or more
3
<PAGE>
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- -------------------
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $7,000,000 and fiscal year Net of Shares purchased
Cash Flow of $2,500,000 or more
(c) Notwithstanding anything to the contrary contained in this
Agreement, but subject to satisfying the tax withholding requirements contained
in Subsection 4(d) hereof, (i) all Restricted Shares shall become Unrestricted
Shares upon termination of Employee's employment with CMDC by reason of his
death, total and permanent disability (as determined in accordance with the
policies and practices of Comtech), normal retirement (at or after age 70 or,
with the consent of Comtech, before age 70), or early retirement at Comtech's
request; and (ii) upon discharge of Employee by CMDC other than for cause (which
for this purpose shall mean Employee's willful misconduct, dereliction of duty,
or conviction for a crime involving moral turpitude).
(d) If, at the time any Shares become Unrestricted Shares, Comtech
determines that it has withheld an amount which is less than the withholding
that may be required pursuant to the Internal Revenue Code or other applicable
law, Employee shall forthwith pay to Comtech the amount of monies necessary to
satisfy such withholding or equivalent requirements. Until the payment of such
monies or, alternatively the execution and delivery by Employee of an agreement
satisfactory to Comtech in it sole discretion providing for the payment of such
monies, the Unrestricted Shares shall not be released to Employee pursuant to
the terms of the Escrow Agreement. If payment of such monies is not made or such
agreement is not entered into, such Unrestricted Shares shall, at Comtech's
direction, be sold by Employee to Comtech for a purchase price equal to the
purchase price per share provided in Section 2 hereof, adjusted, as appropriate
for any subsequent stock-split, recapitalization or the like.
(e) In the event of Employee's termination of employment with CMDC
for any reason other than those specified in Subsection 4(c) hereof (including,
without limitation, any voluntary termination of employment) all Restricted
Shares shall be sold by Employee to Comtech, for the price and otherwise in the
manner provided in Subsection 4(d) hereof.
5. Representations and Warranties of Employee
Employee represents and warrants as follows:
(a) Assuming that Comtech has transferred to Employee good and
marketable title to the Shares, Employee has not taken any action or permitted
any action to occur, nor will employee take any action or permit any action to
occur, that would result in the Shares becoming subject to any claim, lien,
pledge or encumbrance of any nature whatsoever.
4
<PAGE>
(b) Employee has full legal power and capacity to execute and
deliver this Agreement, and such execution and delivery and Employee's
acceptance of employment with CMDC contemporaneously with the execution and
delivery of this Agreement are not in violation of any other agreement,
instrument or obligation to which Employee is a party, including, without
limitation, any employment agreement or non-competition agreement of any kind
whatsoever.
(c) This Agreement constitutes the legal, valid and binding obligation
of Employee.
(d) Employee has not employed any broker or finder or incurred any
liability for any brokerage fees or commissions or finders' fees in connection
with this Agreement.
(e) Employee is acquiring the Shares for investment purposes only and
not with a view to distribution, and acknowledges that he has been advised by
his counsel, and understands, that the Shares have not been registered under the
Securities Act of 1933, as amended, and under the securities laws, may not be
sold or transferred unless registered under such Act or pursuant to an exemption
from such registration and that a restrictive legend to that effect shall be
placed on the certificate(s) representing the Shares. Employee has further been
advised by his counsel with respect to making an election pursuant to Section
83(b) of the Internal Revenue Code and has chosen, or will choose, whether to
make such election as he deems appropriate.
6. Representations and Warranties of Comtech
Comtech represents and warrants as follows:
(a) Comtech is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware with full power and legal right
to execute and deliver this Agreement and perform its obligations hereunder.
(b) The execution and delivery of this Agreement by Comtech and the
performance by it of its obligations hereunder have been duly authorized by all
necessary corporate action and do not violate the terms of any outstanding
agreements to which it is a party. This Agreement constitutes the legal, valid
and binding obligation of Comtech.
7. Certain Employment Matters
(a) The purchase of Shares hereunder shall not preclude Employee from
being eligible to participate in any other plans, programs or benefits otherwise
available to employees of Comtech or its subsidiaries. Nothing in this Agreement
shall be construed to constitute or be evidence of an agreement or
understanding, express or implied, on the part of Comtech or CMDC to employ
Employee for any specific period of time.
(b) In consideration of his employment with CMDC and the sale and
issuance of the Shares to him pursuant to this Agreement, Employee shall not,
during the period he is employed by CMDC and for one year thereafter following
Employee's voluntary termination of is employment by CMDC, in any manner,
directly or indirectly, engage anywhere in the United States in any
5
<PAGE>
business which competes with the business in which CMDC or Comtech or any of its
other subsidiaries is engaged at any time during the period in which Employee is
employed by CMDC, and he shall not, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be employed by, or connected in any manner with any corporation,
firm or business that is so engaged; provided, however, that nothing herein
contained shall prohibit Employee from owning not more than 5% of the
outstanding stock of any publicly held corporation. If any restriction set forth
in this Subsection 7(b) is found by a court of competent jurisdiction or
arbitrator to be unenforceable because it extends for too long a period of time
or over too great a range of activities or in too broad a geographic area, it
shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(c) Employee shall hold in a fiduciary capacity for the benefit of
CMDC and Comtech all confidential information, knowledge or data relating to
CMDC and Comtech or any of its other subsidiaries, and their respective
businesses obtained by Employee before or during the period in which he is
employed by CMDC.
(d) The restrictions contained in Subsections (b) and (c) of this
Section 7 are necessary for the protection of the business and goodwill of CMDC
and Comtech and are considered by Employee to be reasonable to such purpose.
Employee agrees that any breach of such Subsections (b) and (c) will cause CMDC
and/or Comtech substantial and irreparable damage and therefore, in the event of
any such breach, in addition to such other remedies which may be available, CMDC
and/or Comtech shall have the right to seek specific performance and injunctive
relief.
8. Liability of Comtech
The liability of Comtech under this Agreement is limited to the
obligations expressly set forth herein and nothing herein contained shall be
construed to impose any liability on Comtech in favor of Employee with respect
to any loss, cost or expense which Employee may incur or suffer in connection
with or arising out of this Agreement, including, without limitation, Employee's
purchase of the Shares.
9. Voting Concerning Certain Corporate Matters
(a) Employee agrees to have counted for purposes of a quorum, and to
vote, all Restricted Shares (whether such vote shall be by written consent or by
vote, in person or, if requested by Comtech, by proxy, at a meeting of
shareholders of Comtech) for the election to Comtech's Board of Directors of the
nominees from time to time designated by the Board of Directors of Comtech.
(b) To facilitate, and not in limitation of, the agreement contained
in Subsection 9(a) hereof, Employee irrevocably appoints the Chairman of the
Board and the Secretary of Comtech, and their respective successors in office,
and each of them, with full power of substitution, as the lawful proxy for
Employee as to all Restricted Shares, to vote all Restricted Shares which
Employee is entitled to vote, for and in the name, place and stead of Employee,
at any annual, special or other meeting of the holders of shares of Comtech
Common Stock and at any adjournment thereof, or
6
<PAGE>
pursuant to any consent in lieu of a meeting, for the election to Comtech's
Board of Directors of the nominees designated by the Board of Directors of
Comtech. The foregoing proxy is coupled with an interest and therefore not
terminable by Employee without the consent of Comtech.
10. Additional Restricted Shares.
Employees agrees that the term "Restricted Shares" shall include any
shares or other securities which he may receive or be entitled to receive as a
result of the ownership of the original Restricted Shares whether the same are
issued as a result of a share split, share dividend, recapitalization, or other
subdivision or consolidation of shares effected without receipt of consideration
by Comtech or the result of the merger or consolidation of Comtech or sale of
assets of Comtech.
11. Binding Agreement
This Agreement shall inure to the benefit of, and be binding upon,
Comtech and its successors and assigns and Employee and his heirs, personal
representatives, successors and assigns.
12. Notices
Any notice, request or other communication hereunder shall be in writing
and shall be deemed to have been duly given if hand delivered or mailed by
registered or certified mail, return receipt requested, addressed as herein set
forth, or to such other address as may be designated by a notice given pursuant
hereto, which change of address notice shall be effective upon receipt thereof.
If to Comtech:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Attention: Fred Kornberg, President
Copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Robert A. Cantone, Esq.
If to Employee:
11754 Lone Tree
Columbia, MD 20144
7
<PAGE>
13. Survival.
All of the representations, warranties, agreements and covenants
contained herein or made or deemed to have been made pursuant hereto or in
connection with the transactions contemplated hereby shall survive the execution
and delivery hereof and the consummation of the transactions contemplated
hereby.
14. Governing Law
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
15. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one
instrument.
16. Expenses
Employee and Comtech shall each bear all the expenses incurred by them or
it in connection with this Agreement and the transactions contemplated hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, Comtech and Employee have caused this Agreement to be
executed as of the date first above written.
COMTECH TELECOMMUNICATIONS CORP.
By:_______________________________________
Authorized Signatory
_______________________________________
Dan Veeneman
9
<PAGE>
TIME ACCELERATED RESTRICTED STOCK PURCHASE AGREEMENT
AGREEMENT dated September 24, 1998 between Comtech Telecommunications
Corp., a Delaware corporation ("Comtech"), and Brent Taylor ("Employee").
WHEREAS, Employee is employed by Comtech's wholly-owned subsidiary,
Comtech Mobile Datacom Corporation ("CMDC"), and Comtech and Employee desire to
(a) provide additional incentives to Employee in connection with Employee's
responsibilities for the management and growth of the business of CMDC, and (b)
more closely align Employee's interests with the interests of stockholders of
Comtech, through, in relation to both objectives, the sale and issuance to
Employee of restricted shares of Common Stock of Comtech.
NOW, THEREFORE, Comtech and Employee agree as follows:
1. Definitions
(a) "Comtech" means Comtech Telecommunications Corp., a Delaware
corporation.
(b) "Escrow Agent" means the Escrow Agent as defined in the Escrow
Agreement in the form annexed hereto as Exhibit A.
(c) "Cumulative CMDC Pre-Tax Profits" means CMDC's aggregate income
before income taxes minus CMDC's aggregate losses in the period from inception
of operations of CMDC to the end of the relevant fiscal year. Determinations of
such amounts shall be made in accordance with generally accepted accounting
principles, with the exception that no effect shall be given to
(i) interest or like charges or accruals ("Capital Charges") in
respect of Comtech cash advances to CMDC that are less than
$1.5 million plus the amount of dividends paid by CMDC to
Comtech during the relevant fiscal year;
(ii) Capital Charges in excess of 1/2% above the average rate of
interest then charged to Comtech for all borrowings by
Comtech, on Comtech cash advances to CMDC exceeding $1.5
million at any time outstanding plus the amount of dividends
paid by CMDC to Comtech during the relevant fiscal year;
(iii) general or administrative expenses of Comtech, including
charges for management or corporate services provided by
Comtech to CMDC; or
(iv) the sale of shares of Comtech Common Stock to Employee and
other employees of CMDC, or the repurchase of same.
<PAGE>
(d) "Net Cash Borrowings" means the cumulative amount of cash advances
to CMDC by Comtech.
(e) "Net Cash Flow" means total cash refunds by CMDC to Comtech, net of
cash advances by Comtech to CMDC.
(f) "Restricted Shares" means the Shares subject to the restrictions
against transfer provided in Section 3 hereof and which are required to be
resold to Comtech under certain circumstances as provided in Section 3 hereof.
(g) "Unrestricted Shares" means Shares as to which all restrictions
against transfer and the obligation to resell to Comtech have lapsed.
(h) "Shares" shall have the meaning provided in Section 2 hereof.
2. Sale and Purchase of Shares
On the terms, and subject to the conditions hereinafter provided,
simultaneously with the execution and delivery of this Agreement, (i) Comtech is
selling and issuing to Employee, and Employee is purchasing from Comtech, 35,000
shares of Common Stock, par value $.10 per share, of Comtech (the "Shares");
(ii) Employee is paying to Comtech by certified or bank cashier's check a total
purchase price for the Shares of $3,500 (i.e., $.10 per share); and (iii)
Employee is depositing the Shares with the Escrow Agent, to be held by the
Escrow Agent pursuant and subject to the terms of an Escrow Agreement in the
form annexed hereto as Exhibit A.
3. Restrictions
(a) The Shares shall not be transferred until such time as they shall
become "Unrestricted Shares" pursuant to Section 4 hereof (the Shares subject to
such restriction being hereinafter referred to as "Restricted Shares"). As used
in this Agreement, "transfer" shall include, without limitation, any sale,
assignment, gift, pledge, hypothecation, bequest, devise, encumbrance, or other
disposition, whether voluntary or by operation of law. Any attempted transfer of
Restricted Shares (other than to Comtech pursuant to the provisions of Section 4
of this Agreement) shall be null and void and Comtech shall not give effect on
its records to any such attempted transfer.
(b) Employee authorizes Comtech and its transfer agents not to transfer
any certificates of Comtech Common Stock on its books and records transferred in
violation of this Agreement, and further agrees that any such purported transfer
shall be void and of no effect.
(c) An original of this Agreement shall be kept in the files of Comtech
at its principal office and reference to this Agreement shall be endorsed on all
stock certificates subject to this Agreement, now or hereafter issued, by
writing or stamping thereon a legend in substantially the following form:
2
<PAGE>
"Sale, assignment, gift, bequest, devise, pledge,
hypothecation, encumbrance or other disposition of the
shares represented by this Certificate is restricted by the
terms of a Restricted Stock Agreement, dated September __,
1998, a copy of which, and any amendments thereto, may be
examined at the principal office of Comtech
Telecommunications Corp."
(d) Employee shall possess all rights as a stockholder
(including, without limitation, voting rights, rights to dividends, if
any, declared and rights on liquidation) except such as are expressly
restricted by the provisions of this Agreement.
4. Lapse of Restrictions; Forfeiture of Shares
(a) One-sixth of the Shares shall become Unrestricted Shares,
subject to satisfying the tax withholding requirements contained in
Subsection 4(d) hereof, upon the first anniversary of the date hereof.
(b) Subject to satisfying the tax withholding requirements
contained in Subsection 4(d) hereof, the remaining five-sixths of the
Shares shall become Unrestricted Shares on the tenth anniversary of
the date hereof, except that such Shares shall become Unrestricted
Shares on an accelerated basis in the one-sixth increments set forth
in the following schedule after the Performance Criteria set forth
therein are achieved:
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- -------------------
o Fiscal year-end cumulative CMDC net sales One-sixth (1/6)
of $3,000,000 and Net Cash Borrowings at of Shares purchased
that time of less than $1,000,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $500,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$500,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $2,000,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$100,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $3,000,000 and fiscal year Net of Shares purchased
Cash Flow of $1,500,000 or more
3
<PAGE>
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- -------------------
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $7,000,000 and fiscal year Net of Shares purchased
Cash Flow of $2,500,000 or more
(c) Notwithstanding anything to the contrary contained in this
Agreement, but subject to satisfying the tax withholding requirements contained
in Subsection 4(d) hereof, (i) all Restricted Shares shall become Unrestricted
Shares upon termination of Employee's employment with CMDC by reason of his
death, total and permanent disability (as determined in accordance with the
policies and practices of Comtech), normal retirement (at or after age 70 or,
with the consent of Comtech, before age 70), or early retirement at Comtech's
request; and (ii) upon discharge of Employee by CMDC other than for cause (which
for this purpose shall mean Employee's willful misconduct, dereliction of duty,
or conviction for a crime involving moral turpitude).
(d) If, at the time any Shares become Unrestricted Shares, Comtech
determines that it has withheld an amount which is less than the withholding
that may be required pursuant to the Internal Revenue Code or other applicable
law, Employee shall forthwith pay to Comtech the amount of monies necessary to
satisfy such withholding or equivalent requirements. Until the payment of such
monies or, alternatively the execution and delivery by Employee of an agreement
satisfactory to Comtech in it sole discretion providing for the payment of such
monies, the Unrestricted Shares shall not be released to Employee pursuant to
the terms of the Escrow Agreement. If payment of such monies is not made or such
agreement is not entered into, such Unrestricted Shares shall, at Comtech's
direction, be sold by Employee to Comtech for a purchase price equal to the
purchase price per share provided in Section 2 hereof, adjusted, as appropriate
for any subsequent stock-split, recapitalization or the like.
(e) In the event of Employee's termination of employment with CMDC for
any reason other than those specified in Subsection 4(c) hereof (including,
without limitation, any voluntary termination of employment) all Restricted
Shares shall be sold by Employee to Comtech, for the price and otherwise in the
manner provided in Subsection 4(d) hereof.
5. Representations and Warranties of Employee
Employee represents and warrants as follows:
(a) Assuming that Comtech has transferred to Employee good and
marketable title to the Shares, Employee has not taken any action or permitted
any action to occur, nor will employee take any action or permit any action to
occur, that would result in the Shares becoming subject to any claim, lien,
pledge or encumbrance of any nature whatsoever.
4
<PAGE>
(b) Employee has full legal power and capacity to execute and deliver
this Agreement, and such execution and delivery and Employee's acceptance of
employment with CMDC contemporaneously with the execution and delivery of this
Agreement are not in violation of any other agreement, instrument or obligation
to which Employee is a party, including, without limitation, any employment
agreement or non-competition agreement of any kind whatsoever.
(c) This Agreement constitutes the legal, valid and binding obligation
of Employee.
(d) Employee has not employed any broker or finder or incurred any
liability for any brokerage fees or commissions or finders' fees in connection
with this Agreement.
(e) Employee is acquiring the Shares for investment purposes only and
not with a view to distribution, and acknowledges that he has been advised by
his counsel, and understands, that the Shares have not been registered under the
Securities Act of 1933, as amended, and under the securities laws, may not be
sold or transferred unless registered under such Act or pursuant to an exemption
from such registration and that a restrictive legend to that effect shall be
placed on the certificate(s) representing the Shares. Employee has further been
advised by his counsel with respect to making an election pursuant to Section
83(b) of the Internal Revenue Code and has chosen, or will choose, whether to
make such election as he deems appropriate.
6. Representations and Warranties of Comtech
Comtech represents and warrants as follows:
(a) Comtech is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware with full power and legal right
to execute and deliver this Agreement and perform its obligations hereunder.
(b) The execution and delivery of this Agreement by Comtech and the
performance by it of its obligations hereunder have been duly authorized by all
necessary corporate action and do not violate the terms of any outstanding
agreements to which it is a party. This Agreement constitutes the legal, valid
and binding obligation of Comtech.
7. Certain Employment Matters
(a) The purchase of Shares hereunder shall not preclude Employee from
being eligible to participate in any other plans, programs or benefits otherwise
available to employees of Comtech or its subsidiaries. Nothing in this Agreement
shall be construed to constitute or be evidence of an agreement or
understanding, express or implied, on the part of Comtech or CMDC to employ
Employee for any specific period of time.
(b) In consideration of his employment with CMDC and the sale and
issuance of the Shares to him pursuant to this Agreement, Employee shall not,
during the period he is employed by CMDC and for one year thereafter following
Employee's voluntary termination of is employment by CMDC, in any manner,
directly or indirectly, engage anywhere in the United States in any
5
<PAGE>
business which competes with the business in which CMDC or Comtech or any of its
other subsidiaries is engaged at any time during the period in which Employee is
employed by CMDC, and he shall not, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be employed by, or connected in any manner with any corporation,
firm or business that is so engaged; provided, however, that nothing herein
contained shall prohibit Employee from owning not more than 5% of the
outstanding stock of any publicly held corporation. If any restriction set forth
in this Subsection 7(b) is found by a court of competent jurisdiction or
arbitrator to be unenforceable because it extends for too long a period of time
or over too great a range of activities or in too broad a geographic area, it
shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(c) Employee shall hold in a fiduciary capacity for the benefit of CMDC
and Comtech all confidential information, knowledge or data relating to CMDC and
Comtech or any of its other subsidiaries, and their respective businesses
obtained by Employee before or during the period in which he is employed by
CMDC.
(d) The restrictions contained in Subsections (b) and (c) of this
Section 7 are necessary for the protection of the business and goodwill of CMDC
and Comtech and are considered by Employee to be reasonable to such purpose.
Employee agrees that any breach of such Subsections (b) and (c) will cause CMDC
and/or Comtech substantial and irreparable damage and therefore, in the event of
any such breach, in addition to such other remedies which may be available, CMDC
and/or Comtech shall have the right to seek specific performance and injunctive
relief.
8. Liability of Comtech
The liability of Comtech under this Agreement is limited to the
obligations expressly set forth herein and nothing herein contained shall be
construed to impose any liability on Comtech in favor of Employee with respect
to any loss, cost or expense which Employee may incur or suffer in connection
with or arising out of this Agreement, including, without limitation, Employee's
purchase of the Shares.
9. Voting Concerning Certain Corporate Matters
(a) Employee agrees to have counted for purposes of a quorum, and to
vote, all Restricted Shares (whether such vote shall be by written consent or by
vote, in person or, if requested by Comtech, by proxy, at a meeting of
shareholders of Comtech) for the election to Comtech's Board of Directors of the
nominees from time to time designated by the Board of Directors of Comtech.
(b) To facilitate, and not in limitation of, the agreement contained in
Subsection 9(a) hereof, Employee irrevocably appoints the Chairman of the Board
and the Secretary of Comtech, and their respective successors in office, and
each of them, with full power of substitution, as the lawful proxy for Employee
as to all Restricted Shares, to vote all Restricted Shares which Employee is
entitled to vote, for and in the name, place and stead of Employee, at any
annual, special or other meeting of the holders of shares of Comtech Common
Stock and at any adjournment thereof, or
6
<PAGE>
pursuant to any consent in lieu of a meeting, for the election to Comtech's
Board of Directors of the nominees designated by the Board of Directors of
Comtech. The foregoing proxy is coupled with an interest and therefore not
terminable by Employee without the consent of Comtech.
10. Additional Restricted Shares.
Employees agrees that the term "Restricted Shares" shall include any
shares or other securities which he may receive or be entitled to receive as a
result of the ownership of the original Restricted Shares whether the same are
issued as a result of a share split, share dividend, recapitalization, or other
subdivision or consolidation of shares effected without receipt of consideration
by Comtech or the result of the merger or consolidation of Comtech or sale of
assets of Comtech.
11. Binding Agreement
This Agreement shall inure to the benefit of, and be binding upon,
Comtech and its successors and assigns and Employee and his heirs, personal
representatives, successors and assigns.
12. Notices
Any notice, request or other communication hereunder shall be in
writing and shall be deemed to have been duly given if hand delivered or mailed
by registered or certified mail, return receipt requested, addressed as herein
set forth, or to such other address as may be designated by a notice given
pursuant hereto, which change of address notice shall be effective upon receipt
thereof.
If to Comtech:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Attention: Fred Kornberg, President
Copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Robert A. Cantone, Esq.
If to Employee:
21312 Glendevon Ct.
Germantown, MD 20876
7
<PAGE>
13. Survival.
All of the representations, warranties, agreements and covenants
contained herein or made or deemed to have been made pursuant hereto or in
connection with the transactions contemplated hereby shall survive the execution
and delivery hereof and the consummation of the transactions contemplated
hereby.
14. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one
instrument.
16. Expenses
Employee and Comtech shall each bear all the expenses incurred by them
or it in connection with this Agreement and the transactions contemplated
hereby.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, Comtech and Employee have caused this Agreement to
be executed as of the date first above written.
COMTECH TELECOMMUNICATIONS CORP.
By:
---------------------------------------
Authorized Signatory
By:
---------------------------------------
Brent Taylor
9
<PAGE>
TIME ACCELERATED RESTRICTED STOCK PURCHASE AGREEMENT
AGREEMENT dated September 24, 1998 between Comtech Telecommunications
Corp., a Delaware corporation ("Comtech"), and Joel Alper ("Employee").
WHEREAS, Employee is employed by Comtech's wholly-owned subsidiary,
Comtech Mobile Datacom Corporation ("CMDC"), and Comtech and Employee desire to
(a) provide additional incentives to Employee in connection with Employee's
responsibilities for the management and growth of the business of CMDC, and (b)
more closely align Employee's interests with the interests of stockholders of
Comtech, through, in relation to both objectives, the sale and issuance to
Employee of restricted shares of Common Stock of Comtech.
NOW, THEREFORE, Comtech and Employee agree as follows:
1. Definitions
(a) "Comtech" means Comtech Telecommunications Corp., a Delaware
corporation.
(b) "Escrow Agent" means the Escrow Agent as defined in the Escrow
Agreement in the form annexed hereto as Exhibit A.
(c) "Cumulative CMDC Pre-Tax Profits" means CMDC's aggregate income
before income taxes minus CMDC's aggregate losses in the period from inception
of operations of CMDC to the end of the relevant fiscal year. Determinations of
such amounts shall be made in accordance with generally accepted accounting
principles, with the exception that no effect shall be given to
(i) interest or like charges or accruals ("Capital Charges") in
respect of Comtech cash advances to CMDC that are less than
$1.5 million plus the amount of dividends paid by CMDC to
Comtech during the relevant fiscal year;
(ii) Capital Charges in excess of 1/2% above the average rate of
interest then charged to Comtech for all borrowings by
Comtech, on Comtech cash advances to CMDC exceeding $1.5
million at any time outstanding plus the amount of dividends
paid by CMDC to Comtech during the relevant fiscal year;
(iii)general or administrative expenses of Comtech, including
charges for management or corporate services provided by
Comtech to CMDC; or
<PAGE>
(iv) the sale of shares of Comtech Common Stock to Employee and
other employees of CMDC, or the repurchase of same.
(d) "Net Cash Borrowings" means the cumulative amount of cash advances
to CMDC by Comtech.
(e) "Net Cash Flow" means total cash refunds by CMDC to Comtech, net of
cash advances by Comtech to CMDC.
(f) "Restricted Shares" means the Shares subject to the restrictions
against transfer provided in Section 3 hereof and which are required to be
resold to Comtech under certain circumstances as provided in Section 3 hereof.
(g) "Unrestricted Shares" means Shares as to which all restrictions
against transfer and the obligation to resell to Comtech have lapsed.
(h) "Shares" shall have the meaning provided in Section 2 hereof.
2. Sale and Purchase of Shares
On the terms, and subject to the conditions hereinafter provided,
simultaneously with the execution and delivery of this Agreement, (i) Comtech is
selling and issuing to Employee, and Employee is purchasing from Comtech, 35,000
shares of Common Stock, par value $.10 per share, of Comtech (the "Shares");
(ii) Employee is paying to Comtech by certified or bank cashier's check a total
purchase price for the Shares of $3,500 (i.e., $.10 per share); and (iii)
Employee is depositing the Shares with the Escrow Agent, to be held by the
Escrow Agent pursuant and subject to the terms of an Escrow Agreement in the
form annexed hereto as Exhibit A.
3. Restrictions
(a) The Shares shall not be transferred until such time as they shall
become "Unrestricted Shares" pursuant to Section 4 hereof (the Shares subject to
such restriction being hereinafter referred to as "Restricted Shares"). As used
in this Agreement, "transfer" shall include, without limitation, any sale,
assignment, gift, pledge, hypothecation, bequest, devise, encumbrance, or other
disposition, whether voluntary or by operation of law. Any attempted transfer of
Restricted Shares (other than to Comtech pursuant to the provisions of Section 4
of this Agreement) shall be null and void and Comtech shall not give effect on
its records to any such attempted transfer.
(b) Employee authorizes Comtech and its transfer agents not to transfer
any certificates of Comtech Common Stock on its books and records transferred in
violation of this Agreement, and further agrees that any such purported transfer
shall be void and of no effect.
(c) An original of this Agreement shall be kept in the files of
Comtech at its principal office and reference to this Agreement shall be
endorsed on all stock certificates subject to this
2
<PAGE>
Agreement, now or hereafter issued, by writing or stamping thereon a legend in
substantially the following form:
"Sale, assignment, gift, bequest, devise, pledge,
hypothecation, encumbrance or other disposition of the shares
represented by this Certificate is restricted by the terms of
a Restricted Stock Agreement, dated September __, 1998, a
copy of which, and any amendments thereto, may be examined at
the principal office of Comtech Telecommunications Corp."
(d) Employee shall possess all rights as a stockholder (including,
without limitation, voting rights, rights to dividends, if any, declared and
rights on liquidation) except such as are expressly restricted by the provisions
of this Agreement.
4. Lapse of Restrictions; Forfeiture of Shares
(a) One-sixth of the Shares shall become Unrestricted Shares, subject
to satisfying the tax withholding requirements contained in Subsection 4(d)
hereof, upon the first anniversary of the date hereof.
(b) Subject to satisfying the tax withholding requirements contained in
Subsection 4(d) hereof, the remaining five-sixths of the Shares shall become
Unrestricted Shares on the tenth anniversary of the date hereof, except that
such Shares shall become Unrestricted Shares on an accelerated basis in the
one-sixth increments set forth in the following schedule after the Performance
Criteria set forth therein are achieved:
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- --------------------
o Fiscal year-end cumulative CMDC net sales One-sixth (1/6)
of $3,000,000 and Net Cash Borrowings at of Shares purchased
that time of less than $1,000,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $500,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$500,000
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $2,000,000 and Net Cash of Shares purchased
Borrowings at such time of less than
$100,000
3
<PAGE>
Number of Shares
that become
Performance Criteria Unrestricted Shares
-------------------- --------------------
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $3,000,000 and fiscal year Net of Shares purchased
Cash Flow of $1,500,000 or more
o Fiscal year-end Cumulative CMDC Pre-Tax One-sixth (1/6)
Profits of $7,000,000 and fiscal year Net of Shares purchased
Cash Flow of $2,500,000 or more
(c) Notwithstanding anything to the contrary contained in this
Agreement, but subject to satisfying the tax withholding requirements contained
in Subsection 4(d) hereof, (i) all Restricted Shares shall become Unrestricted
Shares upon termination of Employee's employment with CMDC by reason of his
death, total and permanent disability (as determined in accordance with the
policies and practices of Comtech), normal retirement (at or after age 65 or,
with the consent of Comtech, before age 65), or early retirement at Comtech's
request; and (ii) upon discharge of Employee by CMDC other than for cause (which
for this purpose shall mean Employee's willful misconduct, dereliction of duty,
or conviction for a crime involving moral turpitude).
(d) If, at the time any Shares become Unrestricted Shares, Comtech
determines that it has withheld an amount which is less than the withholding
that may be required pursuant to the Internal Revenue Code or other applicable
law, Employee shall forthwith pay to Comtech the amount of monies necessary to
satisfy such withholding or equivalent requirements. Until the payment of such
monies or, alternatively the execution and delivery by Employee of an agreement
satisfactory to Comtech in its sole discretion providing for the payment of such
monies, the Unrestricted Shares shall not be released to Employee pursuant to
the terms of the Escrow Agreement. If payment of such monies is not made or such
agreement is not entered into, such Unrestricted Shares shall, at Comtech's
direction, be sold by Employee to Comtech for a purchase price equal to the
purchase price per share provided in Section 2 hereof, adjusted, as appropriate
for any subsequent stock-split, recapitalization or the like.
(e) In the event of Employee's termination of employment with CMDC for
any reason other than those specified in Subsection 4(c) hereof (including,
without limitation, any voluntary termination of employment) all Restricted
Shares shall be sold by Employee to Comtech, for the price and otherwise in the
manner provided in Subsection 4(d) hereof.
5. Representations and Warranties of Employee
Employee represents and warrants as follows:
(a) Assuming that Comtech has transferred to Employee good and
marketable title to the Shares, Employee has not taken any action or permitted
any action to occur, nor will employee
4
<PAGE>
take any action or permit any action to occur, that would result in the Shares
becoming subject to any claim, lien, pledge or encumbrance of any nature
whatsoever.
(b) Employee has full legal power and capacity to execute and deliver
this Agreement, and such execution and delivery and Employee's acceptance of
employment with CMDC contemporaneously with the execution and delivery of this
Agreement are not in violation of any other agreement, instrument or obligation
to which Employee is a party, including, without limitation, any employment
agreement or non-competition agreement of any kind whatsoever.
(c) This Agreement constitutes the legal, valid and binding obligation
of Employee.
(d) Employee has not employed any broker or finder or incurred any
liability for any brokerage fees or commissions or finders' fees in connection
with this Agreement.
(e) Employee is acquiring the Shares for investment purposes only and
not with a view to distribution, and acknowledges that he has been advised by
his counsel, and understands, that the Shares have not been registered under the
Securities Act of 1933, as amended, and under the securities laws, may not be
sold or transferred unless registered under such Act or pursuant to an exemption
from such registration and that a restrictive legend to that effect shall be
placed on the certificate(s) representing the Shares. Employee has further been
advised by his counsel with respect to making an election pursuant to Section
83(b) of the Internal Revenue Code and has chosen, or will choose, whether to
make such election as he deems appropriate.
6. Representations and Warranties of Comtech
Comtech represents and warrants as follows:
(a) Comtech is a corporation duly organized, existing and in good
standing under the laws of the State of Delaware with full power and legal right
to execute and deliver this Agreement and perform its obligations hereunder.
(b) The execution and delivery of this Agreement by Comtech and the
performance by it of its obligations hereunder have been duly authorized by all
necessary corporate action and do not violate the terms of any outstanding
agreements to which it is a party. This Agreement constitutes the legal, valid
and binding obligation of Comtech.
7. Certain Employment Matters
(a) The purchase of Shares hereunder shall not preclude Employee from
being eligible to participate in any other plans, programs or benefits otherwise
available to employees of Comtech or its subsidiaries. Nothing in this Agreement
shall be construed to constitute or be evidence of an agreement or
understanding, express or implied, on the part of Comtech or CMDC to employ
Employee for any specific period of time.
5
<PAGE>
(b) In consideration of his employment with CMDC and the sale and
issuance of the Shares to him pursuant to this Agreement, Employee shall not,
during the period he is employed by CMDC and for one year thereafter following
Employee's voluntary termination of his employment by CMDC, in any manner,
directly or indirectly, engage anywhere in the United States in any business
which competes with the business in which CMDC or Comtech or any of its other
subsidiaries is engaged at any time during the period in which Employee is
employed by CMDC, and he shall not, directly or indirectly, own, manage,
operate, join, control or participate in the ownership, management, operation or
control of, or be employed by, or connected in any manner with any corporation,
firm or business that is so engaged; provided, however, that nothing herein
contained shall prohibit Employee from owning not more than 5% of the
outstanding stock of any publicly held corporation. If any restriction set forth
in this Subsection 7(b) is found by a court of competent jurisdiction or
arbitrator to be unenforceable because it extends for too long a period of time
or over too great a range of activities or in too broad a geographic area, it
shall be interpreted to extend only over the maximum period of time, range of
activities or geographic area as to which it may be enforceable.
(c) Employee shall hold in a fiduciary capacity for the benefit of CMDC
and Comtech all confidential information, knowledge or data relating to CMDC and
Comtech or any of its other subsidiaries, and their respective businesses
obtained by Employee before or during the period in which he is employed by
CMDC.
(d) The restrictions contained in Subsections (b) and (c) of this
Section 7 are necessary for the protection of the business and goodwill of CMDC
and Comtech and are considered by Employee to be reasonable to such purpose.
Employee agrees that any breach of such Subsections (b) and (c) will cause CMDC
and/or Comtech substantial and irreparable damage and therefore, in the event of
any such breach, in addition to such other remedies which may be available, CMDC
and/or Comtech shall have the right to seek specific performance and injunctive
relief.
8. Liability of Comtech
The liability of Comtech under this Agreement is limited to the
obligations expressly set forth herein and nothing herein contained shall be
construed to impose any liability on Comtech in favor of Employee with respect
to any loss, cost or expense which Employee may incur or suffer in connection
with or arising out of this Agreement, including, without limitation, Employee's
purchase of the Shares.
9. Voting Concerning Certain Corporate Matters
(a) Employee agrees to have counted for purposes of a quorum, and to
vote, all Restricted Shares (whether such vote shall be by written consent or by
vote, in person or, if requested by Comtech, by proxy, at a meeting of
shareholders of Comtech) for the election to Comtech's Board of Directors of the
nominees from time to time designated by the Board of Directors of Comtech.
(b) To facilitate, and not in limitation of, the agreement contained in
Subsection 9(a) hereof, Employee irrevocably appoints the Chairman of the Board
and the Secretary of Comtech, and
6
<PAGE>
their respective successors in office, and each of them, with full power of
substitution, as the lawful proxy for Employee as to all Restricted Shares, to
vote all Restricted Shares which Employee is entitled to vote, for and in the
name, place and stead of Employee, at any annual, special or other meeting of
the holders of shares of Comtech Common Stock and at any adjournment thereof, or
pursuant to any consent in lieu of a meeting, for the election to Comtech's
Board of Directors of the nominees designated by the Board of Directors of
Comtech. The foregoing proxy is coupled with an interest and therefore not
terminable by Employee without the consent of Comtech.
10. Additional Restricted Shares.
Employees agrees that the term "Restricted Shares" shall include any
shares or other securities which he may receive or be entitled to receive as a
result of the ownership of the original Restricted Shares whether the same are
issued as a result of a share split, share dividend, recapitalization, or other
subdivision or consolidation of shares effected without receipt of consideration
by Comtech or the result of the merger or consolidation of Comtech or sale of
assets of Comtech.
11. Binding Agreement
This Agreement shall inure to the benefit of, and be binding upon,
Comtech and its successors and assigns and Employee and his heirs, personal
representatives, successors and assigns.
12. Notices
Any notice, request or other communication hereunder shall be in
writing and shall be deemed to have been duly given if hand delivered or mailed
by registered or certified mail, return receipt requested, addressed as herein
set forth, or to such other address as may be designated by a notice given
pursuant hereto, which change of address notice shall be effective upon receipt
thereof.
If to Comtech:
Comtech Telecommunications Corp.
105 Baylis Road
Melville, New York 11747
Attention: Fred Kornberg, President
Copy to:
Proskauer Rose LLP
1585 Broadway
New York, New York 10036
Attention: Robert A. Cantone, Esq.
7
<PAGE>
If to Employee:
22 Sandalfoot Court
Potomac, MD 20854
13. Survival.
All of the representations, warranties, agreements and covenants
contained herein or made or deemed to have been made pursuant hereto or in
connection with the transactions contemplated hereby shall survive the execution
and delivery hereof and the consummation of the transactions contemplated
hereby.
14. Governing Law
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
15. Counterparts
This Agreement may be executed in counterparts, each of which shall be
deemed an original and all of which, taken together, shall constitute one
instrument.
16. Expenses
Employee and Comtech shall each bear all the expenses incurred by them
or it in connection with this Agreement and the transactions contemplated
hereby.
REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
8
<PAGE>
IN WITNESS WHEREOF, Comtech and Employee have caused this Agreement to
be executed as of the date first above written.
COMTECH TELECOMMUNICATIONS CORP.
By:
-----------------------------------
Authorized Signatory
-----------------------------------
Joel Alper
9
SOLICITATION/CONTRACT/ORDER FOR COMMERCIAL ITEMS
OFFEROR TO COMPLETE BLOCKS 12, 17, 23, 24, & 30
- --------------------------------------------------------------------------------
1. REQUISITION NUMBER
MPR PAHTV98023
- --------------------------------------------------------------------------------
2. CONTRACT NO.
DAAB15-99-D-0014
- --------------------------------------------------------------------------------
3. AWARD/EFFECTIVE DATE
99/06/24
- --------------------------------------------------------------------------------
4. ORDER NUMBER
- --------------------------------------------------------------------------------
5. SOLICITATION NUMBER
DAAB15-99-R-0004
- --------------------------------------------------------------------------------
6. SOLICITATION ISSUE DATE
- --------------------------------------------------------------------------------
7. FOR SOLICITATION INFORMATION CALL:
a. NAME
Daniel Keyes
b. TELEPHONE NUMBER (No collect calls)
(703) 325-8718
- --------------------------------------------------------------------------------
8. OFFER DUE DATE/LOCAL TIME
- --------------------------------------------------------------------------------
9. ISSUED BY CODE W73QLH
CECOM Acquisition Center - Washington
2461 Eisenhower Ave., Hoffman I, Room 284
Alexandria, Virginia 22331-0700
- --------------------------------------------------------------------------------
10. THIS ACQUISITION IS
[X] UNRESTRICTED
[ ] SET ASIDE: % FOR
[ ] SMALL BUSINESS
[ ] SMALL DISADV. BUSINESS
[ ] 8(A)
SIC:
SIZE STANDARD:
- --------------------------------------------------------------------------------
11. DELIVERY FOR FOB DESTINATION UNLESS BLOCK IS MARKED
[ ] SEE SCHEDULE
- --------------------------------------------------------------------------------
12. DISCOUNT TERMS
- --------------------------------------------------------------------------------
13a. [ ] THIS CONTRACT IS A RATED ORDER UNDER DPAS (15 CFR 700)
- --------------------------------------------------------------------------------
13b. RATING
- --------------------------------------------------------------------------------
14. METHOD OF SOLICITATION
[ ] RFQ. [ ] IFB [X] RFP
- --------------------------------------------------------------------------------
15. DELIVER TO CODE
To be identified on each delivery oder
- --------------------------------------------------------------------------------
16. ADMINISTERED BY CODE
Same as Block 9
- --------------------------------------------------------------------------------
17a. CONTRACTOR/OFFEROR CODE 04NA3
Comtech Mobile Datacom Corp.
19540 Amaranth Drive FACILITY
Germantown, MD 20874 CODE
TELEPHONE NO. (301) 428-2101
- --------------------------------------------------------------------------------
17b. [ ] CHECK IF REMITTANCE IS DIFFERENT AND PUT SUCH ADDRESS IN OFFER
<PAGE>
- --------------------------------------------------------------------------------
18a. PAYMENT WILL BE MADE BY CODE
To be identified on each delivery order
- --------------------------------------------------------------------------------
18B. SUBMIT INVOICES TO ADDRESS SHOWN IN BLOCK 18a UNLESS BLOCK BELOW IS CHECKED
[X] SEE ADDENDUM
- --------------------------------------------------------------------------------
19. ITEM NO.
- --------------------------------------------------------------------------------
20. SCHEDULE OF SUPPLIES/SERVICES
See 1449, Part I.b
(Attach Additional Sheets as Necessary)
- --------------------------------------------------------------------------------
21. QUANTITY
- --------------------------------------------------------------------------------
22. UNIT
- --------------------------------------------------------------------------------
23. UNIT PRICE
- --------------------------------------------------------------------------------
24. AMOUNT
- --------------------------------------------------------------------------------
25. ACCOUNTING AND APPROPRIATION DATA
See Continuation of 1449, Part I.a
- --------------------------------------------------------------------------------
26. TOTAL AWARD AMOUNT (For Govt. Use Only)
$100,000.00
- --------------------------------------------------------------------------------
27a. [X] SOLICITATION INCORPORATES BY REFERENCE FAR 52.212-1, 52.212-4, FAR
52.212-3 AND 52.212-5 ARE ATTACHED.ADDENDA [X]ARE [ ]ARE NOT ATTACHED.
- --------------------------------------------------------------------------------
27b. [X] CONTRACT/PURCHASE ORDER INCORPORATES BY REFERENCE FAR 52.212-4,
52.212-5 IS ATTACHED. ADDENDA [X] ARE [ ] ARE NOT ATTACHED.
- --------------------------------------------------------------------------------
28. [X] CONTRACTOR IS REQUIRED TO SIGN THIS DOCUMENT AND RETURN _2_ COPIES
TO ISSUING OFFICE, CONTRACTOR AGREES TO FURNISH AND DELIVER ALL ITEMS
SET FORTH OR OTHERWISE IDENTIFIED ABOVE AND ON ANY ADDITIONAL SHEETS
SUBJECT TO THE TERMS AND CONDITIONS SPECIFIED HEREIN.
- --------------------------------------------------------------------------------
29. [X] AWARD OF CONTRACT: REFERENCE See Part I.a. OFFER DATED
_________________, YOUR OFFER ON SOLICITATION (BLOCK 5) INCLUDING
ANY ADDITIONS OR CHANGES WHICH ARE SET FORTH HEREIN, IS ACCEPTED
AS TO ITEMS.
- --------------------------------------------------------------------------------
30a. SIGNATURE OF OFFEROR/CONTRACTOR
_____________________________________
- --------------------------------------------------------------------------------
30b. NAME AND TITLE OF SIGNER (TYPE OR PRINT)
Joel R. Alper
President
- --------------------------------------------------------------------------------
30c. DATE SIGNED
June 24, 1999
- --------------------------------------------------------------------------------
31a. UNITED STATES OF AMERICA (SIGNATURE OF CONTRACTING OFFICER)
- --------------------------------------------------------------------------------
31b. NAME OF CONTRACTING OFFICER (TYPE OR PRINT)
Kevin S. Sommer
- --------------------------------------------------------------------------------
31c. DATE SIGNED
6/24/99
- --------------------------------------------------------------------------------
32a. QUANTITY IN COLUMN 21 HAS BEEN
[ ] RECEIVED
[ ] INSPECTED
[ ] ACCEPTED, AND CONFORMS TO THE CONTRACT, EXCEPT AS NOTED
<PAGE>
- --------------------------------------------------------------------------------
32b. SIGNATURE OF AUTHORIZED GOVT. REPRESENTATIVE
- --------------------------------------------------------------------------------
32c. DATE
- --------------------------------------------------------------------------------
33. SHIP NUMBER
[ ] PARTIAL
[ ] FINAL
- --------------------------------------------------------------------------------
34. VOUCHER NUMBER
- --------------------------------------------------------------------------------
35. AMOUNT VERIFIED CORRECT FOR
- --------------------------------------------------------------------------------
36. PAYMENT
[ ] COMPLETE
[ ] PARTIAL
[ ] FINAL
- --------------------------------------------------------------------------------
37. CHECK NUMBER
- --------------------------------------------------------------------------------
38. S/R ACCOUNT NUMBER
- --------------------------------------------------------------------------------
39. S/R VOUCHER NUMBER
- --------------------------------------------------------------------------------
40. PAID BY
- --------------------------------------------------------------------------------
41a. I CERTIFY THIS ACCOUNT IS CORRECT AND PROPER FOR PAYMENT
- --------------------------------------------------------------------------------
41b. SIGNATURE AND TITLE OF CERTIFYING OFFICER
- --------------------------------------------------------------------------------
41c. DATE
- --------------------------------------------------------------------------------
42a. RECEIVED BY (Print)
- --------------------------------------------------------------------------------
42b. RECEIVED AT (Location)
- --------------------------------------------------------------------------------
42c. DATE REC'D (YY/MM/DD)
- --------------------------------------------------------------------------------
42d. TOTAL CONTAINERS
- --------------------------------------------------------------------------------
AUTHOIRZED FOR LOCAL REPRODUCTION
SEE PAGE 2 FOR QMB CONTROL NUMBER AND PAPERWORK
STANDARD FORM 1449 (10-95)
Prescribed by GSA-FAR (48 CFR) 53.212
BURDEN STATEMENT
<PAGE>
DAAB15-99-D-0014
PART 1.a: CONTINUATION OF SF FORM 1449
BLOCKS 27.a AND 29: The contractor's proposal for the "Movement Tracking System"
(MTS), Volume I - Technical, dated 17 March, 1999 updated through 9 June, 1999,
attached hereto as Attachment III.e, is hereby incorporated into the contract.
In addition to the contractor's proposal and the identified FAR provisions and
clauses which have been incorporated by reference into the contract, the
following documents comprise this solicitation/contract:
PART DESCRIPTION FILE
PART I: SF 1449
SF1449 Solicitation/Contract Order for Commercial Items Cover Sheet 1449.doc
I.a Continuation of SF 1449 1a.doc
I.b Contract Line Item Number (CLIN) List: 1b.xls
PART II: CLAUSES
II.a FAR Clause 52.212-4 and Addenda, Contract Terms 2.a-b-c.doc
and Conditions - Commercial Items
II.b FAR Clause 52.212-5, Contract Terms and Conditions 2.a-b-c.doc
Required to Implement Statues or Executive Orders -
Commercial Items
II.c DFARS Clause 252.212-7001, Contract Terms and 2.a-b-c.doc
Conditions Required to Implement Statutes or
Executive Orders Applicable to Defense Acquisitions
of Commercial Items and DFARS Clause 252.227-7013,
Rights in Technical Data - Non-Commercial Items
PART III: ATTACHMENTS
III.a MTS Statement of Objectives 3-a.doc
III.b MTS Statement of Work and Specification 3-b.doc
Appendix I: Applicable Documents
Appendix II: Definitions
Appendix III: Equipment Specification
III.c DD Form 254, DoD Contract Security Classification Specification
III.d Offeror's Certification of Requirements
III.e Proposal
Part I.a: CONTINUATION OF SF 1449
File Name: 1-a 1
<PAGE>
DAAB15-99-D-0014
BLOCK 6, SOLICITATION ISSUE DATE: 5 February, 1999.
BLOCK 8, OFFEROR DUE DATE/LOCAL TIME: N/A
BLOCK 9: This is an indefinite-delivery/indefinite-quantity (ID/IQ) contract
with centralized ordering. The ordering office is identified at Block 9 on the
face of the SF 1449.
BLOCK 10, SIC: 3812, SIZE STANDARD: 750
BLOCK 11: Delivery of the supplies shall be in accordance with FAR Clause
52.247-35, FOB Destination, Within Consignee's Premises, and FAR Clause
52.247-48, FOB Destination-Evidence of Shipment.
BLOCK 15, DELIVERY REQUIREMENTS: Supplies/services shall be delivered within the
timeframes set forth in the respective delivery orders. Orders shall be
considered received as follows:
(a) If express mailed, no later than two days from the date of the express
mailing;
(b) If sent via regular mail, no later than five days from the date of mailing;
or
(c) If faxed or electronically transmitted, on the date of the transmission.
BLOCK 17b - REMITTANCE ADDRESS: Comtech Mobile Datacom, 19540 Amaranth Drive,
Germantown, MD 20874
BLOCK 18.a - INVOICES: Invoices, prepared in accordance with Part II.a,
paragraph (g) of this contract, shall be submitted to the address identified in
each delivery order.
BLOCKS 19 THROUGH 24 - SCHEDULE OF SUPPLIES/SERVICES:
(a) This is an ID/IQ contract with firm-fixed price (FFP) contract line item
numbers (CLINs). The purpose of the acquisition is to acquire commercially
available equipment and services to provide a worldwide two-way data
communication and Global Positioning Satellite (GPS) based geo-location
capability between handheld units, mobile units mounted in vehicles, and
computer based control stations which send and receive data as well as display
other users' GPS location.
(b) The Government guarantees to place as a minimum, orders with an aggregate
total of at least $100,000. The aggregate total of delivery orders issued under
this contract shall not exceed $418.2 million; i.e., the contract ceiling.
(c) The total contract life, subject to exercise of FAR Clause 52.217-9, Option
to Extend the Term of the Contract, is 96 months from receipt of the notice to
proceed (issued pursuant to Part II.a, paragraph (u) of this contract). The
ordering period for hardware (units and sub-units) is 60 months and the ordering
period for all other CLINs is 96 months. The Government is in no way bound to
extend the ordering period beyond the base contract period of 12 months.
Part I.a: CONTINUATION OF SF 1449
File Name: 1-a 2
<PAGE>
DAAB15-99-D-0014
(d) The Master CLIN List is at Part I.b of this contract. The CLINs are divided
into eight series:
SERIES DESCRIPTION
------ -----------
0xxx Series Base Year CLINs
lxxx Series Second Year CLINs
2xxx Series Third Year CLINs
3xxx Series Fourth Year CLINs
4xxx Series Fifth Year CLINs
5xxx Series Sixth Year CLINs
6xxx Series Seventh Year CLINs
7xxx Series Eighth Year CLINs
The lxxx through 7xxx series CLINs are subject to "Option to Extend the Term of
the Contract".
(e) The following is a summary of the CLINs contained in each year. (Note: The
'x' in each CLIN represents the applicable series; i.e., year, identified in the
preceding paragraph.):
CLIN DESCRIPTION
---- -----------
x001 Mobile Unit VI
x002 Mobile Unit VI Sub-Units
x003 Mobile Unit VI Replaceable Items
x004 Mobile Unit VI, Commercial Manual
x005 Mobile Unit VI, MTS Manual and Training Materials
x006 Mobile Unit V2
x007 Mobile Unit V2 Sub-Unit
x008 Mobile Unit V2 Replaceable Units
X009 Mobile Unit V2, Commercial Manual
X010 Mobile Unit V2, MTS Manual and Training Materials
X011 Control Station
x012 Control Station Sub-Units
x013 Control Station Replaceable Items
x014 Control Station, Commercial Manual
X015 Control Station, MTS Manual and Training Materials
x016 Monthly Project Status Report
x017 Quarterly Logistics and Maintenance Report
x018 Worldwide Web Site
X019 Technical Support Services
x020 Air Time Per Unit
x021 Maintenance
Part I.a: CONTINUATION OF SF 1449
File Name: 1-a 3
<PAGE>
DAAB15-99-D-0014
BLOCK 25 - ACCOUNTING AND APPROPRIATION DATA:
(a) The Accounting and Appropriation Data for this contract is as follows:
2182035 86D 6D12 P5110 25CZ S20113 $100,000.00
PROM J6-8-2M241-J6-EH
ACRN: AA
(b) The aforementioned funds are obligated to cover the minimum guaranteed
quantity (as set forth in paragraph b of Blocks 19 through 24). The contractor
is not authorized to submit an invoice for this amount at this time. These
funds, or any portion of these funds, may either be used to fund a future
delivery order(s), or shall be de-obligated once the minimum guaranteed quantity
is ordered under the contract.
(c) Accounting and Appropriation Data for each delivery order shall be
identified on the respective delivery order.
END OF PART I.A
Part I.a: CONTINUATION OF SF 1449
File Name: 1-a 4
<PAGE>
<TABLE>
DAAB15-99-D-0014
<CAPTION>
SECTION I.b - CLIN LIST (BASE YEAR THROUGH OPTION YEAR 3)
<S> <C> <C> <C> <C> <C> <C> <C>
BASE OPTION YR OPTION YR OPTION YR
YEAR ONE TWO THREE
UNIT 0xxx 1xxx 2xxx 3xxx
OEM/ OF UNIT UNIT UNIT UNIT
CLIN DESCRIPTION REFERENCES MAKE/MODEL EASUR PRICE PRICE PRICE PRICE
Mobile Unit V1 (MUV1)
x001 Mobile Unit V1 Part IIIb, Appendix III MU-V1 ea $XX $XX $XX $XX
z002 Mobile Unit V1 Sub-units
x002AA Mobile Terminal with Mag Part IIIb, Appendix III MT2010-1MM ea $XX $XX $XX $XX
Mount & Extra Battery (SCI)
includes subCLIN 003AB
(1 ea)
x002AB PCMCIA and Cable Ass'y for Part IIIb, Appendix III ELAN/SL232 ea $XX $XX $XX $XX
PLGER Port PC Card
x002AC Palmtop and battery set, Part IIIb, Appendix III HP 360 LX (HP) ea $XX $XX $XX $XX
includes messaging
software, subCLINs
003AD-AG (1 ea)
x002AD Transit Case Part IIIb, Appendix III Case V1 (ESC) ea $XX $XX $XX $XX
x003 Mobile Unit V1
Replaceable Items
x003AA MT 2010 Battery - Mobile Part IIIb, Appendix III V1-BA-001(SCI) ea $XX $XX $XX $XX
Terminal
x003AB 10 ft cable fm Tx/Rx and Part IIIb, Appendix III V1-CBL-020(SCI)ea $XX $XX $XX $XX
2-Item Power Adapter
x003AC PCMCIA and Cable Ass'y Part IIIb, Appendix III ELAN/SL232
for PLGER Port PC Card ea $XX $XX $XX $XX
x003AD Synch Cable Part IIIb, Appendix III HP/F1238 ea $XX $XX $XX $XX
x003AE Power Cable Part IIIb, Appendix III HP ea $XX $XX $XX $XX
x003AF Battery Set (Extra battery) Part IIIb, Appendix III HP ea $XX $XX $XX $XX
x003AG World Wide Battery Charger Part IIIb, Appendix III HP/F1218#ABA ea $XX $XX $XX $XX
x004 Mobile Unit V1,
Commercial Manual Part IIIb, Para 6.5 Include in Clin x001
x005 Mobile Unit V1, MTS Manual Part IIIb, Para 6.5 ea $XX $XX $XX $XX
and Training Materiel
Mobile Unit V2 (MUV2)
x006 Mobile Unit V2 Part IIIb, Appendix III MU-V2 ea $XX $XX $XX $XX
x007 Mobile Unit V2 Sub-units
x007AA Mobile Terminal with Part IIIb, Appendix III MT2010-1 (SCI) ea $XX $XX $XX $XX
Extra Battery
x007AB Laptop Computer w. battery Part IIIb, Appendix III HHC 133 (PGI) ea $XX $XX $XX $XX
& extra battery, mappin
messaging software,
subCLINs 008AD-AF (1 ea)
x007AC Keyboard Part IIIb, Appendix III PGI ea $XX $XX $XX $XX
x007AD Hard Drive (HHC-133) Part IIIb, Appendix III HHC133-HD(PGI) ea $XX $XX $XX $XX
x007AE Transit Case Part IIIb, Appendix III Case V2 (ESC) ea $XX $XX $XX $XX
x008 Mobile Unit V2 Replaceable
Items
x008AA MT 2010 Battery - Mobile Part IIIb, Appendix III V1-BA-001 SCI) ea $XX $XX $XX $XX
Terminal
x008AB Keyboard (HHC-133) Part IIIb, Appendix III PS2 (PGI) ea $XX $XX $XX $XX
x008AC Battery (HHC-133) Part IIIb, Appendix III HHC133-BA(PGI) ea $XX $XX $XX $XX
x008AD Data Cable (HHC-133) Part IIIb, Appendix III HHC133-DC(PGI) ea $XX $XX $XX $XX
1
<PAGE>
DAAB15-99-D-0014
SECTION I.b - CLIN LIST (BASED YEAR THROUGH OPTION YEAR 3)
BASE OPTION YR OPTION YR OPTION YR
YEAR ONE TWO THREE
UNIT 0xxx 1xxx 2xxx 3xxx
OEM/ OF UNIT UNIT UNIT UNIT
CLIN DESCRIPTION REFERENCES MAKE/MODEL EASUR PRICE PRICE PRICE PRICE
x008AE Power Cable (HHC-133) to Part IIIb, Appendix III HHC133-PC(PGI) ea $XX $XX $XX $XX
DC Power
x008AF Battery Charger (HHC-133) Part IIIb, Appendix III HHC133-BC(PGI) ea $XX $XX $XX $XX
(World-wide)
x009 Mobile Unit V2, Commercial Part IIIb, Para 6.5 Included in
Manual Clin x006
x010 Mobile Unit V2, MTS Part IIIb, Para 6.5 ea $XX $XX $XX $XX
Manuals and Training
Materie
Control Station (CS)
x011 Control Station Part IIIb, Appendix III CS-1 ea $XX $XX $XX $XX
x012 Control Station Sub-units
x012AA Mobile Terminal and Extra Part IIIb, Appendix III MT2010-1 (SCI) ea $XX $XX $XX $XX
Battery and subCLIN 013
x012AB Laptop Computer w. battery Part IIIb, Appendix III DC2020 (SCI) ea $XX $XX $XX $XX
& extra battery, mappin
messaging software, &
subCLIN 013AD (1 ea)
x012AC Hard Disk DC 2020 Laptop Part IIIb, Appendix III CS-HD-001(SCI) ea $XX $XX $XX $XX
x012AD Printer and 2 batteries, Part IIIb, Appendix III HP 340CBi (HP) ea $XX $XX $XX $XX
w. subCLINs 0013AE-AG(1
x012AE Transit Case Part IIIb, Appendix III Case CS (ESC) ea $XX $XX $XX $XX
x013 Control Station
Replaceable Items
x013AA MT 2010 Battery, Mobile Part IIIb, Appendix III V1-BA-001(SCI) ea $XX $XX $XX $XX
Terminal
x013AB 100 FT Cable & Power Part IIIb, Appendix III CS-CPC-100(SCI)ea $XX $XX $XX $XX
Converter
x013AC Battery DC 2020 Laptop Part IIIb, Appendix III CS-BA-001(SCI) ea $XX $XX $XX $XX
x013AD Battery Charger DC 2020 Part IIIb, Appendix III CS-BC-001(SCI) ea $XX $XX $XX $XX
Laptop
x013AE Printer Cartridge HP 340CBi Part IIIb, Appendix III 51625A (HP) ea $XX $XX $XX $XX
x013AF Printer Cable HP 340CBi Part IIIb, Appendix III C2991A (HP) ea $XX $XX $XX $XX
(10 Ft)
x013AG Battery Charger HP 340BCi Part IIIb, Appendix III C3004A (HP) ea $XX $XX $XX $XX
(World-wide) - Printer
x013AH Battery HP 340CBi - Part IIIb, Appendix III C3059A (HP) ea $XX $XX $XX $XX
Printer
x014 Control Station, Part IIIb, Para 6.5 Include in
Commercial Manual Clin x011
x015 Control Station, MTS Manual Part IIIb, Para 6.5 ea $XX $XX $XX $XX
and Training Materiels
Documentation, Reports and
Support Services
x016 Monthly Project Status Part IIIb, para 6.7.1 Monthly$XX $XX $XX $XX
Report
x017 Quarterly Logistics and Part IIIb, para 6.7.2 Quarterly$XX $XX $XX $XX
Maintenance Report
x018 Worldwide Web Site Part IIIb, para 6.7.3 Yearly $XX $XX $XX $XX
x019 Technical Support Services
x019AA Program Manager Part IIIb, para 6.11 hour $XX $XX $XX $XX
x019AB Site Leader Part IIIb, para 6.11 hour $XX $XX $XX $XX
2
<PAGE>
DAAB15-99-D-0014
SECTION I.b - CLIN LIST (BASED YEAR THROUGH OPTION YEAR 3)
BASE OPTION YR OPTION YR OPTION YR
YEAR ONE TWO THREE
UNIT 0xxx 1xxx 2xxx 3xxx
OEM/ OF UNIT UNIT UNIT UNIT
CLIN DESCRIPTION REFERENCES MAKE/MODEL EASUR PRICE PRICE PRICE PRICE
x019AC Mechanical Installer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AD Systems Trainer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AE Senior Engineer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AF Junior Engineer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AG Senior Software Analyst Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AH System Analyst Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AI Software Programmer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AJ Test Analyst Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AK Mechanical Engineer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AL Mechanical Fabricator Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AM Electrical Engineer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AN Electrical Fabricator Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AO Technical Writer Part IIIb., para 6.11 hour $XX $XX $XX $XX
x019AP Clerical Part IIIb., para 6.11 hour $XX $XX $XX $XX
x020 Air Time Per Unit Part IIIb., para 6.9
x020AA Mobile Unit V1 Part IIIb., para 6.9 Day $XX $XX $XX
x020AB Mobile Unit V2 Part IIIb., para 6.9 Day $XX $XX $XX
x020AC Control Station Part IIIb., para 6.9 Day $XX $XX $XX
x021 Maintenance
x021AA Maintenance: x001 Part IIIb., para 6.4.6 MU-V1 Month $XX
x021AB Maintenance: x006 Part IIIb., para 6.4.6 MU-V2 Month $XX
x021AC Maintenance: x0011 Part IIIb., para 6.4.6 CS-1 Month $XX
3
</TABLE>
<PAGE>
<TABLE>
DAAB15-99-D-0014
SECTION I.b - CLIN LIST (BASED YEAR 4 THROUGH OPTION YEAR 7)
<CAPTION>
<S> <C> <C> <C> <C> <C> <C> <C> <C>
BASE YR OPTION YR OPTION YR OPTION YR
FOUR FIVE SIX SEVEN
UNIT 4xxx 5xxx 6xxx 7xxx
OEM/ OF UNIT UNIT UNIT UNIT
CLIN DESCRIPTION REFERENCES MAKE/MODEL EASUR PRICE PRICE PRICE PRICE
Mobile Unit V1 (MUV1)
x001 Mobile Unit V1 Part IIIb, Appendix III MU-V1 ea $XX
x002 Mobile Unit V1 Sub-units
x002AA Mobile Terminal with Mag Part IIIb, Appendix III MT2010-1MM(SCI)ea $XX
Mount & Extra Battery
includes subCLIN 003AB
(1 ea)
x002AB PCMCIA and Cable Ass'y Part IIIb, Appendix III ELAN/SL232PC
for PLGER Port Card ea $XX
x002AC Palmtop and battery set, Part IIIb, Appendix III HP360 LX (HP) ea $XX
includes messaging
software, subCLINs
003AD-AG (1 ea)
x002AD Transit Case Part IIIb, Appendix III Case VI (ESC) ea $XX
x003 Mobile Unit VI
Replaceable Items
x003AA MT 2010 Battery - Part IIIb, Appendix III VI-BA-001(SCI) ea $XX $XX $XX $XX
Mobile Terminal
x003AB 10 ft cable fm Tx/Rx and Part IIIb, Appendix III VI-CBL-020(SCI)ea $XX $XX $XX $XX
2-Item Power Adapter
x003AC PCMCIA and Cable Ass'y for Part IIIb, Appendix III ELAN/SL232PC
PLGER Port Card ea $XX $XX $XX $XX
x003AD Synch Cable Part IIIb, Appendix III HP/F1238 ea $XX $XX $XX $XX
x003AE Power Cable Part IIIb, Appendix III HP ea $XX $XX $XX $XX
x003AF Battery Set (Extra battery) Part IIIb, Appendix III HP ea $XX $XX $XX $XX
x003AG World Wide Battery Charger Part IIIb, Appendix III HP/F1218#ABA ea $XX $XX $XX $XX
x004 Mobile Unit V1, Commercial Part IIIb, Para 6.5 Included in
Manual Clin x001
x005 Moblie Unit V1, MTS Manual Part IIIb, Para 6.5 ea $XX
and Training Materiels
Mobile Unit V2 (MUV2)
x006 Mobile Unit V2 Part IIIb, Appendix III MU-V2 ea $XX
x007 Mobile Unit V2 Sub-units
x007AA Mobile Terminal with Extra Part IIIb, Appendix III MT2010-1(SCI) ea $XX
Battery
x007AB Laptop Computer w. battery Part IIIb, Appendix III HHC 133 (PGI) ea $XX
& extra battery, mapping
messaging software,
subCLINs 008AD-AF (1 ea)
x007AC Keyboard Part IIIb, Appendix III PGI ea $XX
x007AD Hard Drive (HHC-133) Part IIIb, Appendix III HHC 133-HD(PGI)ea $XX
x007AE Transit Case Part IIIb, Appendix III Case V2 (ESC) ea $XX
x008 Mobile Unit V2 Replaceable
Items
4
<PAGE>
DAAB15-99-D-0014
SECTION I.b - CLIN LIST (BASED YEAR 4 THROUGH OPTION YEAR 7)
BASE YR OPTION YR OPTION YR OPTION YR
FOUR FIVE SIX SEVEN
UNIT 4xxx 5xxx 6xxx 7xxx
OEM/ OF UNIT UNIT UNIT UNIT
CLIN DESCRIPTION REFERENCES MAKE/MODEL EASUR PRICE PRICE PRICE PRICE
x008AA MT2010 Battery - Mobile Part IIIb, Appendix III V1-BA-001(SCI) ea $XX $XX $XX $XX
Terminal
x008AB Keyboard (HHC-133) Part IIIb, Appendix III PS2(PGI) ea $XX $XX $XX $XX
x008AC Battery (HHC-133) Part IIIb, Appendix III HHC133-BA(PGI) ea $XX $XX $XX $XX
x008AD Data Cable (HHC-133) Part IIIb, Appendix III HHC133-DC(PGI) ea $XX $XX $XX $XX
x008AE Power Cable (HHC-133) to Part IIIb, Appendix III HHC133-PC(PGI) ea $XX $XX $XX $XX
DC Power
x008AF Battery Charger (HHC-133) Part IIIb, Appendix III HHC133-BC(PGI) ea $XX $XX $XX $XX
Worldwide
x009 Mobile Unit V2, Commercial Part IIIb, Para 6.5 Included in
Manual Clin x006
x010 Mobile Unit V2, MTs Manuals Part IIIb, Para 6.5 ea $XX
and Training Materiel
Control Station
x011 Control Station (CS) Part IIIb, Appendix III CS-1 ea $XX
x012 Control Station Sub-units
x012AA Mobile Terminal and Extra Part IIIb, Appendix III MT2010-1(SCI) ea $XX
Battery and subCLIN 013
x012AB Laptop Computer w. battery Part IIIb, Appendix III DC2020(SCI) ea $XX
& extra battery, mapping
messaging software, &
subCLIN 013AD (1 ea)
x012AC Hard Disk DC 2020 Laptop Part IIIb, Appendix III CS-HD-001(SCI) ea $XX
x012AD Printer and 2 batteries, Part IIIb, Appendix III HP 340CBi(HP) ea $XX
w. subCLINs 0013AE-AG (1
x012AE Transit Case Part IIIb, Appendix III Case CS (ESC) ea $XX
x013 Control Station
Replacement Items
x013AA MT 2010 Battery, Mobile Part IIIb, Appendix III V1-BA-001(SCI) ea $XX $XX $XX $XX
Terminal
x013AB 100 FT Cable & Power Part IIIb, Appendix III CS-CPC-100(SCI)ea $XX $XX $XX $XX
Converter
x013AC Battery DC 2020 Laptop Part IIIb, Appendix III CS-BA-001(SCI) ea $XX $XX $XX $XX
x013AD Battery Charger DC 2020 Part IIIb, Appendix III CS-BC-001(SCI) ea $XX $XX $XX $XX
Laptop
x013AE Printer Cartridge HP 340CBi Part IIIb, Appendix III 51625A (HP) ea $XX $XX $XX $XX
x013AF Printer Cable HP 340CBi Part IIIb, Appendix III C2991A(HP) ea $XX $XX $XX $XX
(10 Ft)
x013AG Battery Charger HP 340BCi Part IIIb, Appendix III C3004A (HP) ea $XX $XX $XX $XX
(World-wide) - Printer
x013AH Battery HP 340CBi - Printer Part IIIb, Appendix III C3059A (H) ea $XX $XX $XX $XX
x014 Control Station, Commercial Part IIIb.,Para 6.5 Included in
Manual Clin x011
x015 Control Station, MTS Manual Part IIIb.,Para 6.5 ea $XX
and Training Materiels
Documentation, Reports and
5
<PAGE>
DAAB15-99-D-0014
SECTION I.b - CLIN LIST (BASED YEAR 4 THROUGH OPTION YEAR 7)
BASE YR OPTION YR OPTION YR OPTION YR
FOUR FIVE SIX SEVEN
UNIT 4xxx 5xxx 6xxx 7xxx
OEM/ OF UNIT UNIT UNIT UNIT
CLIN DESCRIPTION REFERENCES MAKE/MODEL EASUR PRICE PRICE PRICE PRICE
Support Services
x016 Monthly Project Status Part IIIb., para 6.7.1 Monthly$XX $XX $XX $XX
Report
x017 Quarterly Logistics and Part IIIb., para 6.7.2 Quarterly$XX $XX $XX $XX
Maintenance Report
x018 Worldwide Web Site Part IIIb., para 6.7.3 Yearly $XX $XX $XX $XX
x019 Technical Support Services
x019AA Program Manager Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AB Site Leader Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AC Mechanical Installer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AD Systems Trainer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AE Senior Engineer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AF Junior Engineer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AG Senior Software Analyst Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AH System Analyst Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AI Software Programmer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AJ Test Analyst Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AK Mechanical Engineer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AL Mechanical Fabricator Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AM Electrical Engineer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AN Electrical Fabricator Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AO Technical Writer Part IIIb., para 6.11 hour$XX $XX $XX $XX
x019AP Clerical Part IIIb., para 6.11 hour$XX $XX $XX $XX
x20 Air Time Per Unit
x020AA Mobile Unit V1 Part IIIb., para 6.9 Day $XX $XX $XX $XX
x020AB Mobile Unit V2 Part IIIb., para 6.9 Day $XX $XX $XX $XX
x020AC Control Station Part IIIb., para 6.9 Day $XX $XX $XX $XX
x021 Maintenance
6
<PAGE>
DAAB15-99-D-0014
SECTION I.b - CLIN LIST (BASED YEAR 4 THROUGH OPTION YEAR 7)
BASE YR OPTION YR OPTION YR OPTION YR
FOUR FIVE SIX SEVEN
UNIT 4xxx 5xxx 6xxx 7xxx
OEM/ OF UNIT UNIT UNIT UNIT
CLIN DESCRIPTION REFERENCES MAKE/MODEL MEASURE PRICE PRICE PRICE PRICE
x021AA Maintenance: x001 Part IIIb. Para 6.4.6 MU-V1 Month $XX $XX $XX $XX
x021AB Maintenance: x006 Part IIIb. Para 6.4.6 MU-V2 Month $XX $XX $XX $XX
x021AC Maintenance: x0011 Part IIIb. Para 6.4.6 CS-1 Month $XX $XX $XX $XX
7
</TABLE>
<PAGE>
DAAB15-99-D-0014-99-D-0014
In accordance with FAR 12.302, Tailoring of Provisions and Clauses for the
Acquisition of Commercial Items, FAR Clause 52.212-4 is tailored as follows to
reflect special contact terms and conditions that are unique for this contract.
This tailored clause supersedes the version of FAR Clause 52.212-4 that was
incorporated by reference into the contract.
Part II.a
FAR CLAUSE 52.212-4 AND ADDENDA
CONTRACT TERMS AND CONDITIONS-COMMERCIAL ITEMS,
(APR 98)
(a) Inspection/Acceptance.
(1) The Contractor shall only tender for acceptance those items that conform to
the requirements of this contract. The Government reserves the right to inspect
or test any supplies or services that have been tendered for acceptance. The
Government may require repair or replacement of nonconforming supplies or
reperformance of nonconforming services at no increase in contract price. The
Government must exercise its post-acceptance rights (1) within a reasonable time
after the defect was discovered or should have been discovered; and (2) before
any substantial change occurs in the condition of the item, unless the change is
due to the defect in the item.
(2) A Defense Contract Management Command representative shall inspect and
accept supplies at the place of origin. At the option of the Administrative
Contracting Officer (ACO), alternate release procedures, in accordance with
Defense Acquisition Regulation Supplement (DFARS) 246.471 (b) and DFARS Appendix
F, may be utilized. The using activity representative, as stated on each
delivery order, shall inspect and accept services at the using activity.
(b) Assignment. The Contractor or its assignee's rights to be paid amounts due
as a result of performance of this contract, may be assigned to a bank, trust
company, or other financing institution, including any Federal lending agency in
accordance with the Assignment of Claims Act (31 U.S.C. 3727).
(c) Changes. The Government reserves the right to issue unilateral modifications
to effect administrative changes. All other changes in the terms and conditions
of this contract may be made only by written agreement of the parties.
(d) Disputes. This contract is subject to the Contract Disputes Act of 1978, as
amended (41 U.S.C. 601-613). Failure of the parties to this contract to reach
agreement on any request for equitable adjustment, claim, appeal or action
arising under or relating to this contract shall be a dispute to be resolved in
accordance with the clause at FAR 52.233-1, Disputes, which is incorporated
herein by reference. The Contractor shall proceed diligently with performance of
this contract, pending final resolution of any dispute arising under the
contract.
(e) Definitions. The clause at FAR 52.202-1, Definitions, is incorporated herein
by reference.
(f) Excusable delays. The Contractor shall be liable for default unless
nonperformance is caused by an occurrence beyond the reasonable control of the
Contractor and without its fault or negligence such as, acts of God or the
public enemy, acts of the Government in either its sovereign or contractual
capacity, fires, floods, epidemics, quarantine restrictions, strikes, and
unusually severe weather. The Contractor
Part II: CLAUSES
Part II.a: Addendum to FAR Clause 52.212-4
File Name: 2-a-b-c.doc 1
<PAGE>
DAAB15-99-D-0014
shall notify the Contracting Officer in writing as soon as it is reasonably
possible after the commencement of any excusable delay, setting forth the full
particulars in connection therewith, shall remedy such occurrence with all
reasonable dispatch, and shall promptly give written notice to the Contracting
Officer of the cessation of such occurrence.
(g) Invoice. The Contractor shall submit an original invoice and three copies
(or electronic invoice, if authorized,) to the address designated in the
contract to receive invoices. An invoice must include:
(1) Name and address of the Contractor;
(2) Invoice date;
(3) Contract number, contract line item number and, if applicable, the order
number; (4) Description, quantity, unit of measure, unit price and extended
price of the items delivered; (5) Shipping number and date of shipment including
the bill of lading number and weight of shipment if shipped on Government bill
of lading; (6) Terms of any prompt payment discount offered; (7) Name and
address of official to whom payment is to be sent; and (8) Name, title, and
phone number of person to be notified in event of defective invoice. Invoices
will be handled in accordance with the Prompt Payment Act (31 U.S.C. 3903) and
Office of Management and Bud(yet (OMB) Circular A-125, Prompt Payment.
Contractors are encouraged to assign an identification number to each invoice.
(h) Patent indemnity. The Contractor shall indemnity the Government and its
officers, employees and agents against liability, including costs, for actual or
alleged direct or contributory infringement of, or inducement to infringe, any
United States or foreign patent, trademark or copyright, arising out of the
performance of this contract, provided the Contractor is reasonably notified of
such claims and proceedings.
(i) Payment. Payment shall be made for items accepted by the Government that
have been delivered to the delivery destinations set forth in this contract. The
Govemment will make payment in accordance with the Prompt Payment Act (31 U.S.C.
3903) and Office of Management and Budget (OMB) Circular A125, Prompt Payment.
Unless otherwise provided by an addendum to this contract, the Government shall
make payment in accordance with the clause at FAR 52.232-33, Mandatory
Information for Electronic Funds Transfer Payment, which is incorporated herein
by reference. In connection with any discount offered for early payment, time
shall be computed from the date of the invoice. For the purpose of computing the
discount earned, payment shall be considered to have been made on the date which
appears on the payment check or the specified payment date if an electronic
funds transfer payment is made.
(1) Termination for the Government's convenience. The Govemment reserves the
right to terminate this contract or any part hereof, for its sole convenience.
In the event of such termination, the Contractor shall immediately stop all work
hereunder and shall immediately cause any and all of its suppliers and
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subcontractors to cease work. Subject to the terms of this contract, the
Contractor shall be paid a percentage of the contract price reflecting the
percentage of the work performed prior to the notice of termination, plus
reasonable charges the Contractor can demonstrate to the satisfaction of the
Government using its standard record keeping system, have resulted from the
termination. The Contractor shall not be required to comply with the cost
accounting standards or contract cost principles for this purpose. This
paragraph does not give the Government any right to audit the Contractor's
records. The Contractor shall not be paid for any work performed or costs
incurred which reasonably could have been avoided.
(m) Termination for Cause. The Government may terminate this contract, or any
part hereof, for cause in the event of any default by the Contractor, or if the
Contractor fails to comply with any contract terms and conditions, or fails to
provide the Government upon request, with adequate assurances of future
performance. In the event of termination for cause, the Government shall not be
liable to the Contractor for any amount for supplies or services not accepted or
for any portion of the contract minimum guaranteed quantity remaining at the
time of termination, and the Contractor shall be liable to the Government for
any and all rights and remedies provided by law. If it is determined that the
Government improperly terminated this contract for default, such termination
shall be deemed a termination for convenience.
(n) Title. Unless specified elsewhere in this contract, title to items furnished
under this contract shall pass to the Government upon acceptance, regardless of
when or where the Government takes physical possession.
(o) Warranty. The Contractor warrants and implies that the items delivered
hereunder are merchantable and fit for use for the particular purpose described
in this contract. Additional warranty requirements are discussed in Part III.b.,
paragraph 6.4.
(p) Limitation of liability. Except as otherwise provided by an express or
implied warranty, the Contractor will not be liable to the Government for
consequential damages resulting from any defect or deficiencies in accepted
items.
(q) Other compliances. The Contractor shall comply with all applicable Federal,
State and local laws, executive orders, rules and regulations applicable to its
performance under this contract.
(r) Compliance with laws unique to Government contracts. The Contractor agrees
to comply with 31 U.S.C. 1352 relating to limitations on the use of appropriated
funds to influence certain Federal contracts; 18 U.S.C. 431 relating to
officials not to benefit; 40 U.S.C 327, et seq., Contract Work Hours and Safety
Standards Act; 41 U.S.C. 51-58, Anti-Kickback Act of 1986; 41 U.S.C. 265 and 10
U.S.C. 2409 relating to whistle blower protections; 49 U.S.C 40118, Fly
American; and 41 U.S.C. 423 relating to procurement integrity.
(s) Order of Precedence. Any inconsistencies in this solicitation or contract
shall be resolved by giving precedence in the following order:
(1) Offeror's executed Certification of Requirements (Part III.d);
(2) the schedule of supplies/services (i.e., Blocks 19 through 24 of the
Standard Form 1449 as set forth at Contract Parts I.a and I.b.);
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(3) the Assigmnents, Disputes, Payments, Invoice, Other Compliances, and
Compliance with Laws Unique to Government Contracts paragraphs of this clause;
(4) FAR Clause 52.212-5 (as set forth at Contract Part II.b)
(5) DFARS Clause 252.212-7001 (as set forth at Contract Part II.c);
(6) other provisions (i.e., Addendum to FAR Provision 52.212-1,
Intructions to Offeror-Commercial Items, FAR Provision 52.212-3, DFARS Provision
252.212-7000, FAR Provision 52.219-23, and DFARS Provision 252.225-7006, as set
forth at solicitation/contract Parts IV.a, IV.b, IV.c, IV.d, IV.e and IV.f
respectively);
(7) other paragraphs of this clause as tailored;
(8) the Standard Form 1449, excluding the schedule of supplies/services;
(9) the Statement of Work (SOW) and Specification (excluding Appendices I
and II) (at Part III.b);
(10) SOW Appendix III (at Part III.b);
(11) SOW Appendix II (at Part III.b);
(12) SOW Appendix I (at Part III.b)
(13) Other documents, exhibits, and attachments; and
(14) the Contractor's proposal (excluding the executed Offeror's
Certification of Requirements) incorporated into this contract per Part 1.a,
Blocks 27.a and 29.
(t) Postaward Conference. The Contractor agrees to attend a postaward conference
convened by the contracting activity or contract administration office in
accordance with Federal Acquisition Regulation Subpart 42.5.
(u) Notice To Proceed. The Contractor shall take no actions on this contract, or
incur any costs, without the Contracting Officer's official notice to proceed.
It is anticipated that this notice to proceed will generally be issued when the
Contracting Officer determines that there is no threat of protest. All delivery
dates based upon "days after effective date of contract" shall be interpreted as
"days after receipt of notice to proceed."
(v) Only New Equipment and Reconditioned Parts. Only new equipment shall be
delivered under this contract. The Contracting Officer will not grant approval
for used or reconditioned equipment. Components of such equipment may be
reconditioned provided such components are drawn from stockage which does not
differentiate between new and reconditioned components.
(w) Alternative Sourcing.
(1) An alternative source is another means of supply for a functionally
equivalent item for an existing proposed item. Alternative sourcing is a
post-award contract activity. Alternative sources will
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not be considered during the pre-award phase of the contract. It is a means of
enabling contractors to overcome market conditions beyond their control.
(2) When an alternate source is proposed, the contractor shall complete the
certification found at the end of this provision that the proposed alternate
item is equal or better in functionality and performance than the existing
proposed item. Acceptability of proposed alternative sources is at the sole
discretion of the Contracting Officer and no delivery of items from an
alternative source will be allowed without formal modification to the contract.
(3) Normally, the pricing for alternative-sourced items will be the same as
the original proposed item for which an alternative source is proposed. However,
a downward price adjustment may be required at the time of alternative sourcing
if the pricing for the item is no longer comparative to concurrent "street
pricing". However, all sources for any one given CLIN/sub-CLIN will be priced
the same in the resulting contract modification.
(4) Delivery orders may state a preferred source for an item. However, it
will be at the discretion of the contractor which item will be shipped. Also,
the contractor shall not mix sources for a given CLIN/sub-CLIN on the individual
delivery orders.
(5) Prior to accepting an alternative-source proposal, the Government may
require the Contractor to conduct a Government-witnessed demonstration to
validate that the proposed product(s) are capable of performing in a manner
equal to or better than the existing product.
ALTERNATIVE SOURCE CERTIFICATION
Except as expressly identified in writing as part of the altemative-source
proposal, I, _______, represent that the additional item offered as an
alternative source for an existing item provided under the contract (each
identified below) is equal to or better in functionality and performance than
the existing item, and that it satisfies all of the requirements set forth in
Part III.a of the contract
EXISTING ITEM ALTERNATIVE SOURCE ITEM
Signature:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
Date:_ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _
(x) Licenses.
(1) Software and software documentation delivered under this contract shall
be subject to the terms of this clause and the governing commercial product
license, to the extent the latter is consistent with Federal law and FAR 12.212.
Notwithstanding the foregoing, the commercial product license shall apply only
if a copy of the license is provided with the delivered product. In the event of
conflict between this clause and the commercial software product license, this
clause shall govern.
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(2) All software shall be licensed and priced for use on a single computer
or for use on any computer at a particular site. The Government shall pay the
charge set forth in Part 1.b for each copy of the software which the Government
acquires.
(3) The license shall be in the name of the U. S. Government.
(4) The license shall be perpetual (also referred to as a nonexclusive,
paid-up, world-wide license).
(5) Software and software documentation shall be provided with license
rights no less than rights provided with the software and the software
documentation when sold to the public.
(6) The license shall apply to any software changes or new releases.
(y) Continued Performance.
(1) The requirements of this contract have been identified by the U. S.
Government as being essential to the mission and operational readiness of the U.
S. Army operating world-wide. Therefore, the contractor may be required to
perform this contract during crisis situations, including war or a state of
emergency, subject to the requirements and this provision.
(2) The contractor shall be responsible for performing all requirements of
this contract notwithstanding a crisis situation including the existence of any
state of war, whether declared or undeclared, or state of emergency, by the
United States or the host nation, commencement of hostilities, internal strife,
rioting, civil disturbances, or activities of any type which would endanger the
welfare and security of U. S. Forces in the host nation. Failure to perform may
subject the contractor to a termination of this contract for cause. If a crisis
situation is determined, an equitable adjustment will be negotiated.
(3) Crisis situations shall be determined by the overseas theater
Commander-In-Chief or when Defense Readiness Condition (DEFCON) Three (3) is
declared for that area.
(4) Contractor personnel and dependents may be integrated into
Government contingency plans and afforded the same rights, privileges,
protection, and priority as U. S. Government personnel. The Government may
provide security, housing, and messing facilities for contractor personnel and
dependents should conditions warrant.
(5) The contractor further agrees to assure that formal company
policies and procedures effectively address the obligations in this clause, and
that all employees associated with this contract are fully aware of those
specified policies, procedures, and obligations.
(z) Clauses Incorporated by Reference. In accordance with FAR 52.252-2, this
contract incorporates the following FAR clauses by reference with the same force
and effect as if they were given in full text:
52.204-2, Security Requirements (AUG 1996)
52.216-18, Ordering (OCT 1995): Paragraph (a)...Such orders may be issued from
the date of the notice to proceed (pursuant to paragraph (u) of this clause)
through:
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- FOR REPLACEABLE ITEMS, REPORTS, THE WORLDWIDE WEB SITE, MAINTENANCE, AND
TECHNICAL SUPPORT: the 96th month and
- FOR ALL OTHER SUPPLIES AND SERVICES: the 60th month.
52.216-19, Delivery-Order Limitations (OCT 1995): (a) Minimum order ...
less than $1,000,... (b) Maximum order... (1)$50 million ... (2) ... $100
million ... (3) ... seven .... (d) ... five...
52.216-22, Indefinite Quantity (OCT 1995): (d) ... 45 days after expiration
of the contract term.
52.217-9, Option to Extend the Term of the Contract (MAR 1989): (a) ...
the term of the contract... (c) ... 96 months.
52.223-3, Hazardous Material Identification and Material Safety Data (JAN 1997)
52.232-18, Availability of Funds (APR 1984)
52.232-19, Availability of Funds for the Next Fiscal Year (The blanks
will be completed at the issuance of a delivery order when this clause would be
applicable.) (APR 1984)
52.245-2, Government Property (Fixed-Price Contracts) (DEC 1989)
52.247-35, FOB Designation, Within Consignee's Premises (APR 1984)
52.247-48, FOB Designation - Evidence of Shipment (JUL 1995)
(aa) Release of Contract. The contractor agrees that subsequent to issuance of
the notice to proceed (pursuant to paragraph (u) above), the Government may post
an electronic copy of this contract on the CECOM Acquisition Center - Washington
World Wide Web (WWW) with unlimited access thereto.
(ab) Release of Unit Prices. Upon award of the contract, the contractor's unit
prices will be made publicly available pursuant to FAR 15.503(b)(1)(iv).
However, pursuant to FAR 15.503(b)((1)(iv), in no event shall the contractor's
cost breakdown, profit overhead rates, trade secrets, manufacturing processes
and techniques, or other confidential business information be disclosed. Also,
pursuant to 10 U.S.C. section 2305(g)(1), the unit prices of unsuccessful
offerors will not be released.
(ac) E: Mail Clauses
1. 52.6110 - Mandatory Use of Contractor to Government E: Mail
(a) Unless exempted by the Contracting Officer in writing, communications
after contract award shall be transmitted via electronic mail
(e-mail). This shall include all communication between the Government
and the contractor except Contract Awards, Contract Modifications,
Proposals, Procurement Sensitive Information, Classified Information
and Proprietary Information. Return receipt will be used if a
commercial application is available. CECOM will announce commercial
applications for these items when they are available. At that time the
above items will also be sent via e-mail.
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(b) The format for all communication shall be compatible with the
following: Microsoft Word Office 97, Microsoft Excel Office 97, and
Microsoft Access Office 97.
(c) Files larger than one (1) megabyte must use alternate means of
transmission such as Zip Compression/Inflation, File Transfer
Protocol, Winfax or any Fax Modem. (Note: This includes both the text
message and the attachment). If an attachment is in binary format, the
number of bytes for the attachment increases by 33%. Large items can
be put on disk and mailed with the Contracting Officer's approval.
(d) A copy of all communications, with the exception of technical reports,
shall be provided to the contract specialist.
(e) The following examples include, but are not limited to, the types of
communication that shall be transmitted via e-mail:
Routine Letters
Requests for Proposals under the contract
Price Issues (except contractor pricing data)
Contract Data Requirements List Submittals
Contract Data Requirements List Comments
Approvals/Disapprovals by the Government
Technical Evaluations of Contract Items
Clarifications
Configuration Control
Drawings (not to exceed 1/2 megabyte)
Revised Shipping Instructions
Change Order Directions
(f) In order to be contractually binding, all Government
communications must be sent from the Contracting Officer's e-mail
address and contain the /a/ symbol above the Contracting Officer's
signature block. The contractor shall designate the personnel with
signature authority who can contractually bind the contractor. All
binding contractor communication shall be sent from this contractor
e-mail address.
(g) The Government reserves the right to upgrade to more advanced
commercial applications at any time during the life of the contract.
(h) Upon award, the Contractor shall provide the Contracting Officer with
a list of e-mail addresses for all administrative and Technical
personnel assigned to this contract. If known, the contractor shall
also furnish the email addresses of the Administrative Contracting
Officer, DFAS and DCAA cognizant personnel.
(i) The Contracting Officer's e-mail address is:
[email protected]
The Contract Specialist's e-mail address is:
[email protected]
The Technical Point of Contact's e-mail address is:
[email protected]
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(End of Clause)
2. 52.7055 - Mandatory Use of Government to Government E: Mail
(a) Unless exempted by the Procuring Contracting Officer in writing,
communication after contract award between Government agencies shall
be transmitted via electronic mail (e-mail).
(b) The following examples include, but are not limited to, the types of
communication that shall be transmitted via e-mail:
Instructions to Contract Ordering Officer
Instructions to Administrative Contracting Officer*
Instructions to other Defense Contract Management Command personnel*
Instructions to Defense Finance Administration Services
Instructions to Defense Contract Audit Agency
*Includes Government to Government data not covered by the
Government's Defense Contract Management Contract ALERTS Program. Audits
and audit requests shall be processed through the Source Selection/PRAG
Branch, e-mail box [email protected]:monmouth.mil.
(c) See Part II.a Clause 52.6110, Mandatory Use of Contractor to Government
Electronic Mail, for further guidance.
(End of Clause)
(ad) Year 2000 Warranty (Commercial Items)
(a) The contractor warrants that any hardware or firmware (as these terms
are generally defined), computer database, computer software, computer
program(s), or commercial computer software (as those terms are defined in DFARS
252.227-7013 and 252.227-7014) products delivered under this contract shall be
able to accurately process date/time data and date related data from, into and
between the twentieth and twenty-first centuries, and the years 1999 and 2000,
including leap year calculations. Processing date/time data and date related
data correctly shall include but not be limited to, correctly calculating,
comparing, and sequencing the date/time data and date related data and shall be
transparent to the user. Contractor provided products, when used in combination
with other products, shall accurately process date/time data provided that such
other products properly exchange date/time data with them. The contractor
warrants that any system delivered under this contract which includes any
hardware, firmware or software (as defined above), shall correctly process date
and date related data as an entire system and individually, from the date of
contract award. Any items that are not compliant with the above requirements
shall be identified by the contractor, prior to contract award, and shall be
upgraded to be compliant prior to Contract award at no additional cost to the
Government, if: (1) the contract proposes those noncompliant items to satisfy a
technical requirement and (2) the noncompliant item has a path identified by the
manufacturer to be made compliant. It is the intent of the Government to not
purchase any new items under this contract that are not compliant or that will
not be made compliant by contract award.
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(b) All warranties in the foregoing paragraph shall run from date of
delivery to 30 April 2001. Should a warranted item fail to meet the requirements
set out in the foregoing paragraph, the Contractor agrees to correct or replace
the item at no cost to the Government. The parties agree that this correction or
replacement shall not act as a limitation of remedies and that the Government
may seek such additional remedies as may be available through this contract or
at law or equity.
(c) This clause takes precedence over any other warranty or disclaimer
thereof in this contract. It is in addition to the rights and remedies set forth
in any other warranty for this item.
(End of Clause)
(ae) INVITED CONTRACTOR OR TECHNICAL REPRESENTATIVE STATUS:
REPUBLIC OF KOREA
1. Invited contractor or technical representative status under the U.S.-ROK
SOFA is subject to the written approval of HQ USFK, ACofS, Acquisition
Management.
2. The contracting officer will coordinate with HQ USFA, ACofS, Acquisition
Management, in accordance with DFARS, subject 225.8, and USFA Reg 700-19. The
ACofS, Acquisition Management, will determine the appropriate contractor status
under the SOFA and notify the contracting of the determination.
3. Subject to the above approval, the contractor, including their employees
and lawful dependents, may be accorded such privileges and exemptions as
specified in the U.S.-ROK SOFA, and implemented per USFK Reg 700-19, subject to
the conditions and limitations imposed by the SOFA and this regulation. Those
privileges and exemptions may be furnished during the performance period of the
contract, subject to their availability and provided the invited contractor of
technical representative status is not withdrawn by USFK.
4. The contractor officials and employees performing under this contract
colectively and separately warrant that they are not now performing, nor will
perform during the period of this contract, any contract services or otherwise
engage in business activities in the ROK other than those pertaining to the U.S.
armed forces.
5. During performance of the work in the ROK required by this contract, the
contractor will be governed by USFK regulations pertaining to the direct hiring
and the personnel administration of Korean National employees.
6. The authorities of the ROK will have the right to exercise jurisdiction
over invited contractors and technical representatives, including officials and
employees and their dependents, for offenses committed in the ROK and punishable
by the laws of the ROK. In recognition of the role of such persons in the
defense of the ROK, they will be subject to the provisions of Article XXII,
U.S.-ROK SOFA, related Agreed Minutes and Understandings on Implementation. In
those cases in which the authorities of the ROK decide not to exercise
jurisdiction, they shall notify the U.S. military authorities as soon as
possible. On such notification, the military authorities will have the right to
exercise such jurisdiction over the persons referred to, as is conferred on them
by law of the United States.
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7. Invited contractors and technical representatives agree to cooperate
fully with the USFK sponsoring agency and responsible officer on all matters
pertaining to logistic support. In particular, contractors will provide prompt
and accurate reporting of changes in employee status as required by this
regulation to the assigned sponsoring agency. Except for contractor air crews
flying Military Airlift Command missions, all U.S. contractors performing work
on United States Air Force classified contracts will report to the nearest
Security Police Information Security Section for the geographical area where the
contract is to be performed.
8. Invited contractor and technical representative status will be withdrawn
by USFK on-
a. Completion or termination of the contract
b. Proof that the contractor of employees are engaged in business
activities in the ROK other than those pertaining to U.S. armed
forces.
c. Proof that the contractor or employees are engaged in practices
illegal in the ROK USFK regulations.
9. It is agreed that the withdrawal of the invited contractor or technical
representative status or any of the privileges associated herewith by the U.S.
Government, will not constitute grounds for excusable delay by the contractor in
the performance of the contract nor will it justify or excuse the contractor
defaulting the performance of this contract; and such withdrawal will not serve
as a basis for the filing of any claims against the U.S. Government if the
withdrawal is made for the reasons stated in subparagraph h above. Under no
circumstances will the withdrawal of such status or privileges be considered or
construed as a breach of contract by the U.S. Government. The determination to
withdraw SOFA status and privileges by USFK shall be final and binding on the
parties unless it is patently arbitrary, capricious, and lacking in good faith.
(End of Clause)
(af) Technical Representative SOFA benefits (ROK ONLY). Article I of the SOFA
14th Joint Committee Meeting allows USFK to provide benefits to technical
representatives. The following benefits are conferred under this contract to
those designated as technical representatives:
1. Access to and movement between U.S. armed forces facilities and areas as
provided for in Article X, Access of Vessels and Aircraft.
2. Entry into the ROK as provided for in Article VIII, Entry and Exit.
3. Exemption from customs duties and other such charges as provided for in
Article IX, Customs and Duties.
4. Use of nonappropriated fund organizations as provided for in Article
XIII, Nonappropriated Fund Organizations.
5. Exemption from foreign exchange controls as provided for in Article
XVIII, Foreign Exchange Controls.
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6. Use of military banking facilities as provided for in Article XIX,
Military Payment Certificates.
7. Use of military post offices as provided for in Article XX, Military
Post Offices.
8. Use of utilities and services as provided for in Article VI, Utilities
and Services.
9. Exemption from the laws and regulations of the ROK with respect to terms
and conditions of employment as provided for in Article XVII, Labor. (However,
contractors that directly hire Korean Nationals must comply with USFK Reg
690-1, and other applicable USFK regulations concerning the employment of Korean
Nationals.)
10. Exemption from ROK taxes as provided for in Article XIV, Taxation.
11. Although subject to ROK criminal jurisdiction, contractor personnel
shall be granted the protections as provided for in Article XXII, Criminal
Jurisdiction.
12. Licensing and registration of privately owned vehicles as provided for
in Article XXIV, Vehicle and Driver's Licenses.
(ag) LOGISTIC SUPPORT (ROK ONLY)
a. Logistic support, corporate and individual, may be provided to USFK
invited contractors and technical representatives only in accordance with the
U.S. ROK SOFA, USFK regulations, subject to availability, and on a reimbursable
basis. Based upon eligibility, individuals may be provided the below listed
logistic support based on Individually Sponsored Status (unless specifically
excluded by the terms of the contract).
THE CONTRACT PROVIDES THE PRIVILEGES LISTED AT PARAGRAPHS (1), (2), (3),
AND (12) BELOW, ONLY.
(1) SOFA status for contractor employee (excludes employee's
dependents).
(2) Duty-free importation privileges in accordance with SOFA and USFK
regulations.
(3) DD Form 1173 (Uniformed Services Identification and Privilege
Card).
(4) USFK Form 73 (USFK Ration Control Plate) family size - one (for
employee only).
(5) PX or BX privileges family size--one
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(6) Commissary privileges (only authorized if contractor employee is
going to be in the ROK for more than 60 days; family size--one).
(7) Class VI store privileges (family size--one).
(8) Purchase of gasoline and POL products at PX or BX facilities.
(9) Military postal service privileges (Army post office and fleet post
office).
(10) Military banking and credit union privileges.
(11) Motor vehicle operator's permit.
(12) Registration of one privately owned vehicle per family.
(13) Registration of pets and firearms.
(14) Medical services on a reimbursable basis.
(15) Dental services for emergency care only on a reimbursable basis.
(16) Mortuary services on a reimbursable basis.
To be individually sponsored for ration control purposes, the contractor
employee must be in a paid status of 30 hours or more per week on this
contract, and be other than local hire / local hire / local hire AND perform in
ROK less than 1 year / 1 year or more / less than 1 year (respectively). If paid
status is 29 or less hours per week on this contract, no support will be
authorized.
No support for dependents is authorized.
Local hire is defined as a U.S. or third-country national employee who is
ordinarily resident in the U.S. but was hired in the ROK and has no
transportation agreement with the employer.
b. Corporation Logistic Support. USFK may provide logistic support to
corporations that have been designated as invited contractors or technical
representatives by HQ USFK, AcofS, Acquisition as follows:
(1) SOFA status exemptions. (See above).
(2) Use of postal facilities for corporate mail. For shipments through
the APO, shipments shall meet the size, weight, and other limitations
prescribed by the U.S. Postal Service. Packages shall not exceed 70
pounds and the combined length and girth shall not be more than 108"
Additionally, packages shall be labeled to indicate that the contents
are exempt from customs and are for official use only. CORPORATE OR
APO USE HAS NOT BEEN EXTENDED UNDER THE CONTRACT.
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All other corporate logistic support (fuel purchases and registration of
company~-owned vehicles authorized) must be coordinated between the contracting
office and the USFK sponsoring agency and approved by the USFK sponsoring agency
before contract performance in ROK.
(ah) Electronic Ordering. The Government anticipates the utilization of
electronic ordering during the life of this contract. Therefore, the contractor
should anticipate the use of a mutually agreeable system with the ability to
send, receive and process delivery/task orders electronically. This will be
established at no additional cost to the Government.
END OF PART II.A
Part II: CLAUSES
Part II.a: Addendum to FAR Clause 52.212-4
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NOTE: A FAR Reference column has been added to the table in paragraphs
(b) and (c)for ease of contract administrafion.
Part II.b
FAR CLAUSE 52.212-5
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT
STATUTES OR EXECUTIVE ORDERS-COMMERCIAL ITEMS
(OCT 98)
(a) The Contractor agrees to comply with the following FAR clauses, which are
incorporated in this contract by reference, to implement provisions of law or
executive orders applicable to acquisitions of commercial items:
(1) 52.222-3, Convict Labor (E.O. 11755); and
(2) 52.233-3, Protest After Award (31 U.S.C. 3553).
(b) The Contractor agrees to comply with the FAR clauses in this paragraph (b)
which the contracting officer has indicated as being incorporated in this
contract by reference to implement provision of law or executive orders
applicable to acquisitions of commercial items or components:
(Contracting Officer check as appropriate)
CLAUSE # CLAUSE TITLE FAR REFERENCE
X 52.203-6 Restrictions on Subcontractor Sales to 3.503-2
the Government, with Alternate 1(41
U.S.C. 253g and 10 U.S.C. 2402)
RESERVED
X 52.219-8 Utilization of Small Business Concerns 19.708(a)
and Small Disadvantaged Business
Concerns (15 U.S.C. 637(d)(2) and (3))
X 52.219-9 Small, Small Disadvantaged and Women- 19.708(b)(1)
Owned Small Business Subcontracting
Plan (15 U.S.C. 637(d)(4))
52.219-14 Limitation on Subcontracting (15 U.S.C. 19.508(e)
637 (a)(14))
X 52.219-23 Notice of Price Evaluation Adjustment 19.1104
for Small Disadvantaged Business
Concerns (Pub. L. 103-355, section 7102,
and 10 U.S.C. 2323)(If the offeror
elects to waive the adjustment, it shall
so indicate in its offer).
Alternate I of 52.219-23 19.1104
X 52.222-26 Equal Opportunity (E.O. 11246) 22.810(e)
X 52.222-35 Affirmative Action for Disabled Veterans 22.1308(a)
and Veterans of the Vietnam Era
(38 U.S.C. 4212)
X 52.222-36 Affirmative Action for Workers with 22.1408
Disabilities (29 U.S.C. 793)
X 52.222-37 Employment Reports on Disabled Veterans 22.1308(b)
and Veterans of the Vietnam Era (38
U.S.C. 4212)
Part II: CLAUSES
Part II.b: FAR Clause 52.212-5
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15
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52.225-3 Buy American Act-Suppliese (41 U.S.C. 10) 25.109(d)
52.225-9 Buy American Act-Trade Agreements Act- 25.407(a)(2)
Balance of Payments Program (41 U.S.C.
10, 19 U.S.C. 2501-2582)
RESERVED
52.225-18 European Union Sanction for End Products 25.1003(a)
(E.O. 12849)
52.225-19 European Union Sanction for Services 251003(b)
(E.O. 12849)
52.225-21 Buy American Act-North American Free Trade 25.408(a)(4)
Agreement Implementation Act-Balance of
Payments Program (41 U.S.C. 10, Pub. L
103-187)
Alternate I of 52.225-21 25.408(a)(4)
52.239-1 Privacy or Security Safeguards (5 39.106
U.S.C. 552a)
X 52.247-64 Preference for Privately Owned U.S.-Flag 47.507(a)
Commercial Vessels (46 U.S.C. 1241)
c) The Contractor agrees to comply with the FAR clauses in this paragraph (c),
applicable to commercial services, which the Contracting Officer has indicated
as being incorporated in this contract by reference to implement provisions of
law or executive orders applicable to acquisitions of commercial items or
components:
(Contracting officer check as appropriate)
CLAUSE # CLAUSE TITLE FAR REFERENCE
52.222-41 Service Contract Act of 1965, As amended 22.1006(a)
(41 U.S.C. 351, et seq)
52.222-42 Statement of Equivalent Rates for Federal 22.1006(b)
Hires (29 U.S.C. 206 and 41 U.S.C. 351,
et seq.)
52.222-43 Fair Labor Standards Act and Service 22.1006(C)(1)
Contract Act-Price Adjustment (Multiple
Year and Option Contracts) (29 U.S.C. 206
and 41 U.S.C. 351 et seq.)
52.222-44 Fair Labor Standards Act and Service 22.1006(c)(2)
Contract Act-Price Adjustment
(29 U.S.C. 206 and 41 U.S.C. 351 et seq.)
52.222-47 SCA Minimum Wages and Fringe Benefits 22.1006(d)
Applicable to Successor Contract Pursuant 22.1012-3(d)(1)
to Predecessor Contractor Collective
Bargaining Agreement (CBA) (41 U.S.C.
351 et seq.)
(d) Comptroller General Examination of Record. The Contractor agrees to comply
with the provisions of this paragraph (d) if this contract was awarded using
other than sealed bid, is in excess of the simplified acquisition threshold, and
does not contain the clause at 52.215-2, Audit and Records - Negotiation:
(1) The Comptroller General of the United States, or an authorized
representative of the Comptroller General, shall have access to and right to
examine any of the Contractor's directly pertinent records involving
transactions related to this contract.
(2) The Contractor shall make available at its offices at all
reasonable times the records, materials, and other evidence for examination,
audit, or reproduction, until 3 years after final payment under this
Part II: CLAUSES
Part II.b: FAR Clause 52.212-5
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DAAB15-99-D-0014
contract or for any shorter period specified in FAR Subpart 4.7 , Contractor
Records Retention, of the other clauses of this contract. If this contract is
completely or partially terminated, the records relating to the work terminated
shall be made available for 3 years after any resulting final termination
settlement. Records relating to appeals under the disputes clause or to
litigation or the settlement of claims arising under or relating to this
contract shall be made available until such appeals, litigation, or claims are
finally resolved.
(3) As used in this clause, records include books, documents, accounting
procedures and practices, and other data, regardless of type and regardless of
form. This does not require the Contractor to create or maintain any record
that the Contractor does not maintain in the ordinary course of business or
pursuant to a provision of law.
(e) Notwithstanding the requirements of the clauses in paragraphs (a), (b), (c)
or (d) of this clause, the Contractor is not required to include any FAR clause,
other than those listed below (and as may be required by an addenda to this
paragraph to establish the reasonableness of prices under Part 15), in a
subcontract for commercial items or commercial components--
(1) 52.222-26, Equal Opportunity (E.O. 11246);
(2) 52.222-35, Affumative Action for Special Disabled and Vietnam Era
Veterans (38 U.S.C. 2012(a));
(3) 52.222-36, Affirmative Action for Workers with Disabilities (29 U.S.C.
793); and
(4) 52.247-64, Preference for Privately-Owned U.S.-Flagged Commercial
Vessels (46 U.S.C. 1241) (flow down not required for subcontracts awarded
beginning May 1, 1996.)
(End of Clause)
END OF PART II.B
Part II: CLAUSES
Part II.b: FAR Clause 52.212-5
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DAAB15-99-D-0014
NOTE: A DFARS Reference column has been added to the table in paragraph (b) for
ease of contract administration.
Part II.c
DFARS CLAUSE 252.212-7001
CONTRACT TERMS AND CONDITIONS REQUIRED TO IMPLEMENT
STATUTES OR EXECUTIVE ORDERS APPLICABLE TO DEFENSE
ACQUISITIONS OF COMMERCIAL ITEMS
(MAR 98)
(a) The Contractor agrees to comply with the Defense Federal Acquisition
Regulation Supplement (DFARS) clause 252.247-7023, Transportation of Supplies by
Sea, which is included in this contract by reference to implement 10 U.S.C.
2631.
(b) The Contractor agrees to comply with any clause that is checked on the
following list of DFARS clauses which, if checked, is included in this contract
by reference to implement provisions of law or Executive Orders applicable to
acquisitions of commercial items or components.
(Contracting officer check as appropriate)
CLAUSE # CLAUSE TITLE DFARS REFERENCE
X 252.205-7000 Provision of Information to Cooperative 205.470-2
Agreement Holders (10 U.S.C. 2416)
252.206-7000 Domestic Source Restriction (10 U.S.C. 206.302-3-70
2304)
252.219-7001 Notice of Partial Small Business Set-Aside 219.508(d)
with Preferential Consideration for Small
Disadvantage Business Concerns (__ Alternate
I) (Section 9004, Pub.L. 101-165 (10
U.S.C. 2301 (repealed) note))
252.219-7002 Notice of Small Disadvantaged Business 219.508-70
Set-Aside (__ Alternate I)(15 U.S.C.644)
X 252.219-7003 Small Business and Small Disadvantage 219.708(b)(1)(A)
Business Subcontracting Plan (DoD Contracts)
(15 U.S.C. 637)
X 252.219-7005 Incentive for Subcontracting With Small 219.708(c)(1)
Business, Small Disadvantage Businesses,
Historically Black Colleges and
Universities and Minority Institutions
(___ Alternate I) (Section 9004, Pub. L.
101-165 (10 U.S.C. 2301 (repealed)
note)) Para (a): one
252.219-7006 Notice of Evaluation Preference for Small 219.7003
Disadvantaged Business Concerns
(___ Alternate I) (15 U.S.C. 644)
X 252.225-7001 Buy American Act and Balance of Payment 225.109(d)
Program (41 U.S.C. 10a-10d, E.O. 10582)
X 252.219-7007 Buy American Act-Trade Agreements- 225.407(a)(2)
Balance of Payments
Part II: CLAUSES
Part II.c: DFARS Clause 252.212-7001
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DAAB15-99-D-0014
Program (__ Alternate I) (41 U.S.C. 10a-10d,
19 U.S.C. 2501-2518, and 19 U.S.C. 3301
Note).
252.225-7012 Preference for Certain Domestic Commodities 225.7002-4(a)
252.225-7014 Preference for Domestic Speciality Metals 225.7002-4(c)
(10 U.S.C. 2241 note)
252.225-7015 Preference for Domestic Hand or Measuring 225.7002-4(d)
Tools (10 U.S.C. 2241 note)
252.225-7021 Trade Agreements (__ Alternate I)(19 U.S.C.
2501-2518 and 19 U.S.C. 3301 note).
252.225-7027 Restriction on Contingent Fees for Foreign 225.7308(a)
Military Sales (22 U.S.C. 2779)
252.225-7028 Exclusionary Policies and Practices of 225.7308(b)
Foreign Governments (22 U.S.C. 2755)
252.225-7029 Restriction on Acquisition of Air Circuit 225.7016-4
Breakers (10 U.S.C. 2534(a)(3))
252.225-7036 Buy American Act-North American Free Trade 225.408(a)(4)
Agreement Implementation Act-Balance of
Payments Program (___ Alternate I) (41 U.S.C.
10a-10d and 19 U.S.C. 3301 note).
X 252.227-7015 Technical Data-- Commerical Items (10 227.7102-3
U.S.C. 2320)
X 252.225-7037 Validation of Restrictive Markings on 227.7102-3(c)
Technical Data (10 U.S.C. 2321) 227.7103-6(e)(4)
252.243-7002 Certification of Requests for Equitable 243.205-72
Adjustment (10 U.S.C. 2410)
X 252.247-7024 Notification of Transportation of Supplies 247.573(c)
by Sea (10 U.S.C. 2631)
(c) In addition to the clauses listed in paragraph (e) of the Contract Terms and
Conditions Required to Implement Statutes or Executive Orders-Commercial Items
clause of this contract, if applicable, in subcontracts for commercial items or
commercial components, awarded at any tier under this contract:
__252.225-7014, Preference for Domestic Specialty Metals, Alternate I
(10 U.S.C. 2241 note).
(End of Clause)
DFARS CLAUSE 252.227-7013
RIGHTS IN TECHNICAL DATA - NONCOMMERCIAL ITEMS
(NOV 1995)
The above clause is hereby incorporated by reference.
Part II: CLAUSES
Part II.c: DFARS Clause 252.212-7001
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DAAB15-99-D-0014
END OF PART II.C
Part 11: CLAUSES
Part II.c: DFARS Clause 252.212-7001
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DAAB15-99-D-0014
PART 111.a
Statement of Objectives
for the
Movement Tracking System (MTS)
1. Program Goals.
The MTS is a world-wide, data communications capability for locating and
managing the movement of logistics and combat support vehicles. MTS will provide
in-transit visibility and velocity management of logistics and other Army combat
support assets anywhere from the sustaining base to the theater of operations.
MTS will be used to support missions throughout the full range of military
operations from peacetime to war. MTS will provide commanders with near
real-time data for location and status of logistics and combat support movement.
MTS will provide key capabilities to enable and enhance in-transit visibility
and velocity management such as the ability to reroute supplies due to changing
priorities, helping avoid hazards, and maintaining updated unit status. The MTS
capability will improve the efficiency and the effectiveness of distribution of
resources and assets.
2. Program Objectives.
The Army will field an effective capability in response to the MTS mission needs
statement and MTS Operational Requirements Document (ORD). The MTS capability
will be consistent with the Army Force and Combat Service Support initiatives.
The Army recognizes that the key technologies required for MTS are available as
commercial or non-developmental items. However, the commercial satellite
communication services are not as prevalent and may be characterized as emerging
and not stable in terms of capability and service availability on a world-wide
basis. The Army recognizes that the acquisition and fielding of the MTS must be
accomplished at the same time that necessary technology and services are
advancing. Therefore, the Army will acquire the MTS with an initial set of
capabilities and provisions for Pre-Planned Product Improvements (P3I),
technology insertion, and technology additions consistent with the baseline
requirements and subsequent requirements of the ORD.
The MTS program is an integration program expected to leverage commercial items,
non-developmental items, and commercial communication services. MTS will
incorporate elements such as Global Positioning System (GPS), geographic
information system (GIS) mapping technologies, automatic identification
technologies (AIT), Information Security (INFOSEC), and encryption techniques,
Communications Security (COMSEC), and commercial satellite services.
In order to provide a baseline capability in the short term, the MTS will be
procured with a set of initial capabilities followed by P3I, technology
insertion, and technology additions. A key objective is to develop a system
architecture capable of accommodating system evolution without redesign. The
initial requirements must provide a significant, identifiable operational
capability and be supportable in the Army operational environment.
Another key objective is to provide the necessary software and hardware
modularity in the system design so that system elements can be separated from
the others for specialized upgrades. P3I, technology insertion, and technology
additions will provide incremental upgrades that will incorporate additional
functionality as stated in the MTS technical specifications. P3I,
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DAAB15-99-D-0014
technology insertion, and technology additions will also be utilized to
incorporate additional services and technology improvements to include access to
multiple satellite service providers. This approach will allow the program to
achieve overall capability through fielding and support of incremental upgrades
to the baseline operational capability.
3. System/contract management
A Government/Contractor Integrated Product Team (IPT) will be established to
provide assistance, oversight, and review as the MTS proceeds through its
acquisition lifecycle. The EPT will execute the program using a plan and
schedule that will be developed after contract award.
4. Specific Objectives
Provide world-wide MTS operational capability; articulate a stable system design
and architecture that provides for system evolution.
5. System Design and Integration
Provide a modular software and hardware system design with an upgrade path for
system evolution.
Maximize use of commercial, non-developmental items, and open systems. Provide
capability that satisfies Information Security (INFOSEC) requirements for
sensitive but unclassified data as specified in MTS technical specifications,
use current robust industry encryption standards, and plan for cost-effective
future encryption improvements.
Provide necessary interfaces as specified in MTS technical specifications.
Perform total system integration (total system integration responsibility) prior
to delivery. All operating and system support software will be loaded. All
components will be integrated, configured, tested, and each equipment set will
be made operational.
6. Validation Demonstration and Deployment
Conduct a Government-witnessed demonstration to validate that the system is
capable of performing as claimed in the winning proposal. The demonstration will
be scheduled in accordance with the MTS contract requirements. Deliver equipment
in accordance with MTS contract requirements.
7. Operations and Support
Develop operations training and maintenance training.
Provide responsive, customer focused, full-service assistance program as
described in the MTS SOW/specification. This will include a problem report and
tracking process, telephonic trouble shooting assistance and problem resolution,
and feedback.
Provide an order processing and tracking information service for delivery/task
orders via email, World Wide Web or satellite messaging.
8. System Evolution and P3I.
Design the MTS using highly modular elements allowing easy upgrade and system
evolution to include future access to multiple satellite service providers.
<PAGE>
DAAB15-99-D-0014
Conduct operational evaluation and pre-planned product improvements resulting in
delivery of objective requirements.
9. System Cost.
Minimize cost of upgrades to objective requirements.
Minimize recurring unit cost of handheld, mobile, and control stations.
Minimize system life cycle costs.
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DAAB15-99-D-0014
MOVEMENT TRACKING SYSTEM SPECIFICATION
AND STATEMENT OF WORK
TABLE OF CONTENTS
PART III.b
MOVEMENT TRACKING SYSTEM
STATEMENT OF WORK AND SPECIFICATION
1. PURPOSE
2. SCOPE
3. OPERATIONAL ENVIRONMENT
4. APPLICABLE DOCUMENTS
5. TERMS AND DEFINITIONS
6. FUNCTIONAL REQUIREMENTS
6.1. Provision of Equipment
6.1.1 General
6.1.2 Validation Demonstration
6.1.3 System Integration
6.1.4 Delivery Requirements
6.1.5 Post Award Testing
6.2 GOVERNMENT FURNISHED PROPERTY (GFP)
6.3 CUSTOMER ASSISTANCE
6.3.1 Telephonic Assistance
6.3.2 Order Processing Tracking Information
6.4 WARRANTY
6.4.1 Warranty Period
6.4.2 Return to Service
6.4.3 Replacement Parts
6.4.4 Warranty Conditions
6.4.5 Post Warranty Maintenance
6.5 HARDWARE AND SOFTWARE DOCUMENTATION
6.6 CONFIGURATION MANAGEMENT
6.6.1 Correction of Safety Hazards or Equipment Malfunctions
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DAAB15-99-D-0014
6.6.2 Current Technology Substitutions/Insertions/Additions
6.6.3 Replaceable Items
6.7 CONTRACT MANAGEMENT
6.7.1 Monthly Project Status Reports
6.7.2 Quarterly Logistics and Maintenance Report
6.7.3 World-Wide Web Site
6.8 SECURITY
6.9 USAGE TIME/AIR TIME
6.10 PART NUMBERS
6.11 TECHNICAL SUPPORT SERVICES
6.11.1 General
6.11.2 Site Surveys
6.11.3 On-Site Installation and Training
6.11.4 Relocation of Equipment
6.11.5 Post-Installation Support
6.11.6 Engineering Studies and Documentation
6.11.7 Impact Studies
6.11.8 Development/Modification of Software Programs to
Achieve Additional Functionality
6.11.9 Development and Documentation of A-Kits for Different
Families of Vehicles
6.11.10 CONUS and OCONUS Shipping and Delivery
6.11.11 Additional System Integration
6.11.12 Demonstration Support
END OF STATEMENT OF WORK
APPENDIX I
TO THE MTS STATEMENT OF WORK AND SPECIFICATION
APPLICABLE DOCUMENTS
I.1 TECHNICAL ARCHITECTURE DOCUMENTS
I.2 GPS USER EQUIPMENT INTERFACE CONTROL DOCUMENT FOR THE RS-232/RS-422 INTER-
FACE OF DoD STANDARD GPS UE RADIO RECEIVERS
2
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DAAB15-99-D-0014
END OF APPENDIX I TO STATEMENT OF WORK
APPENDIX II
TO THE MTS STATEMENT OF WORK AND SPECIFICATION
DEFINITIONS
II.1 DEFINITIONS
END OF APPENDIX II TO STATEMENT OF WORK
APPENDIX III
TO THE MTS STATEMENT OF WORK AND SPECIFICATION
EQUIPMENT SPECIFICATION
III.1 INTRODUCTION
III.2 GENERAL PERFORMANCE REQUIREMENTS
III.2.1 Commercial Equipment
III.2.2 Only New Equipment
III.2.3 World-wide Usage/Operating Authority
III.2.4 Federal Communications Commission (FCC) Certification
III.2.5 Year 2000 Warranty--Commercial Supply Items
III.2.6 Compliance with Joint Technical Architecture-Army (JTA-A)
III.2.7 Power Requirements
III.2.8 User Replaceable Components
III.2.9 Commercial Software
III.2.10 Handheld Mobile Unit (V1)
III.2.11 Vehicle Mounted Mobile Unit (V2)
III.2.12 Control Station
III.2.13 GPS
III.2.14 System Operational Requirements
EXHIBIT-A
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DAAB15-99-D-0014
SAFE SEPARATION DISTANCE BETWEEN AN RF SOURCE AND UNSHIELDED MUNITIONS
CONTAINING 10 mA NO-FIRE CURRENT ELECTRO-EXPLOSIVE DEVICES(EEDs)
III.2.14 Transit Cases
III.2.15 Pre-Planned Product Improvements (P3I)
4
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DAAB15-99-D-0014
PART III.b
MOVEMENT TRACKING SYSTEM
STATEMENT OF WORK AND SPECIFICATION
1. PURPOSE
The purpose of this procurement is to provide GPS, commercial computer
equipment; system support software; installation kits (A-Kit), air time,
associated documentation and reports; integration; maintenance; and technical
support services and services to provide a world-wide two-way data
communications and geo-location capability between mobile units (Handheld Mobile
Unit [V1] and Vehicle Mounted Mobile Unit [V2], also called B-Kits) and
designated control points (Control Stations). To the extent practical, the
equipment shall represent state-of-the-art technology. MTS will support
military operations on a world-wide basis in peacetime, peacekeeping and wartime
operations. MTS system components shall be capable of operating without the use
of direct telephone (land line or cellular) connections or LAN/WAN/INTERNET
direct connectivity.
2. SCOPE
The equipment and services shall support the MTS program and operate in an open
systems environment on a world-wide basis. This environment requires solutions
that are compliant with open systems standards defined in the Department of Army
Joint Technical Architecture - Army (JTA-A). As part of the technical support
services provided under this contract, the Contractor may perform engineering
studies, technical services, develop device drivers to facilitate the passing of
data to an open systems environment compliant with the JTA-A and interfaces, and
develop A-Kits to facilitate vehicle integration.
The U.S. Army, other U.S. Armed Services, Department of Defense (DoD) Agencies,
other U.S. Federal Government Agencies, and foreign allied military services
shall be authorized to order from this contract.
3. OPERATIONAL ENVIRONMENT
The Control Station will be operated in a fixed, heated/cooled environment
(operation center, etc.), but is required to be transportable and capable of
being interfaced to a LAN, and wide area network (WAN) for subsequent passing of
data. No dedicated power generation equipment is required. The Control Station
equipment requires standard 110-volt (CONUS) or 220-volt (OCONUS) 50/60 Hz
commercial power. Devices to protect against power surges (e.g., surge
suppressers) are required in CONUS and OCONUS. The Control Station is also
required to operate from battery power. The V1 and V2 units will be operated in
a mobile environment inside a vehicle. V1 units require battery power and an
additional connection for operation from vehicle power. V2 units, mounted in a
vehicle, require power from the vehicle only when the engine is running. The V2
shall be capable of operating from standard 110-volt (CONUS) or 220-volt
(OCONUS) 50/60 Hz commercial power.
4. APPLICABLE DOCUMENTS
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DAAB15-99-D-0014
The documents listed in Appendix I to this statement of work form a part of the
technical specifications set forth in this statement of work and specification.
In the event of conflict between the documents listed and the contents of this
statement of work and specification, this statement of work and specification
shall govern.
5. TERMS AND DEFINITIONS
Definitions and meanings of data processing, data communications, and
information systems terms used in this statement of work and specification which
are not defined herein or in Appendix II shall be interpreted in accordance with
FIPS PUB 11-3, Guideline: American National Dictionary for Information Systems.
6. FUNCTIONAL REQUIREMENTS
The Contractor shall deliver supplies and services set forth in this statement
of work and specification pursuant to issuance of delivery/task orders. Except
as stated herein, the Contractor, acting independently, and not as an agent of
the Government, shall furnish all management, personnel, equipment, software,
services, travel, and other items necessary to deliver the supplies and
services.
6.1 Provision of Equipment
6.1.1 General
Appendix III, Equipment Specification, represents minimum requirements. At a
minimum, the Contractor shall provide equipment that satisfies the minimum
requirements set forth in Appendix III.
6.1.2 Validation Test
a. Within 30 to 60 days after contract award, the Contractor shall conduct a
contractor funded Government witnessed test at the contractor's facility to
demonstrate that the Contractor's proposed MTS is capable of performing in a
manner equal to or better than the contract requirements.
b. The test shall be conducted over a two day period. The Control Station shall
be located at the Contractor's facility. A V1 and V2 unit shall be located in
Heidleberg, Germany, and a V1 and V2 unit shall be located in Fort Hood, Texas.
The V1 and V2 units shall be placed in a contractor provided vehicle (permanent
installation of the V2 is not required) at each location. The Contractor's
driver shall be accompanied by one or more Government witnesses and shall follow
a Government prescribed route. Communications between the various units shall be
established and geolocation of units shall be demonstrated. The full range of
MTS capabilities shall be demonstrated.
c. At least 15 days prior to commencement of the test, the Contractor shall
deliver to the Government a test plan which includes an agenda, procedures, and
any constraints. The Government may approve or reject the test plan. If the plan
is rejected the Government win return the plan with the necessary changes. The
Government reserves the right to have at least five Government-designated
representatives witness the test. The test may be witnessed by the Army
Operational Evaluation Command.
d. All approvals (e.g., landing rights) required to conduct the test are the
sole responsibility of the contractor.
6
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DAAB15-99-D-0014
e. The Contractor shall successfully complete the test of all equipment and
functions. In the event that the Contractor fails to successfully complete all
aspects of the test, the Government may, at its option, extend the test period
on a day-by-day basis. Failure to complete any part of the test may result in
the termination of the contract at no cost to the Government.
f. Within one day after successful completion of the test, the Contractor shall
deliver to the Contracting Officer a summary of the test results
6.1.3 System Integration
Prior to delivering equipment under this contract, the Contractor shall fully
test, configure, integrate, and make operational each equipment platform. The
integration process shall include loading the required operating and system
support software and integrating all Contractor-provided equipment.
6.1.4 Delivery Requirements
The Contractor shall deliver equipment to any CONUS location within 30 days of
receipt of a delivery order. All shipping costs shall be included in the price
of the end item. All components of an order shall be shipped concurrently to the
same address, unless otherwise instructed by the Contracting Officer. A packing
list shall be placed in each shipping container. The Contractor shall pack each
applicable component in its transit case(s) prior to shipping. The transit
case(s), containing the configuration and/or components, shall be appropriately
packed and shipped in standard commercial wrappings; e.g., shrink wrappings.
Each unit shipped shall have its own users manual packed in the transit case.
6.1.5 Post Award Testing
a. The MTS components may be subjected to Nuclear, Biological, Chemical (NBC)
Contamination testing and High Altitude Electro-Magnetic Pulse (HAEMP) testing
by the Government after contract award. Pending results of the tests, the
Contracting Officer may request a proposal in accordance with the Current
Technology Substitutions/Insertions/Additions Clause (6.6.2) to upgrade the MTS
components to meet the Government's NBC, HAEMP, and other requirements.
Presently, the NBC and HAEMP requirements are internal to the Government and do
not reflect the current requirements of this solicitation.
b. MTS will also be required to obtain a safety release based on signal
radiation.
c. MTS will also undergo computer security standard C2 certification to
determine its level of protection.
6.2 GOVERNMENT FURNISHED PROPERTY (GFP)
a. NIMA/DMA maps will be provided as GFP on this contract.
b. Other GFP on this contract will be provided as required for any future
testing and development.
6.3 CUSTOMER ASSISTANCE
6.3.1 Repair Assistance
a. The Contractor shall provide support via a local and/or toll-free telephone
number(s) to users in the following areas of operation: CONUS, Alaska, Hawaii,
Germany, and Korea. A telephone
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number shall also be provided for all other world-wide users. At a minimum, the
telephonic support shall consist of the services set forth at paragraph 6.3.2.
b. The Contractor shall provide a staffed telephonic support service, answering
machine service, email, World-Wide Web, and satellite message service during the
Principle Period of Operation (PPO). The PPO hours for CONUS, Alaska and Hawaii
are Monday through Friday, 8:00 am. through 5:00 p.m. local time, excluding U.S.
Government holidays. The PPO for Germany and Korea is Monday through Friday,
8:00 a.m. through 5:00 p.m., OCONUS local time, excluding U.S. Government
holidays and OCONUS Host Nation holidays.
c. The Contractor shall provide answering machine service, email, World-Wide
Web, and satellite message service to receive problem reports from users Outside
of Principle Period of Operations (OPPO). The OPPO hours for CONUS, Alaska and
Hawaii are Monday through Friday, 5:01 p.m. through 7:59 a.m., local time and 24
hours a day Saturday, Sunday and U.S. Government holidays. The OPPO hours for
Germany and Korea are Monday through Friday, 5:01 p.m. through 7:59 a.m., OCONUS
local time and 24 hours a day Saturday, Sunday and U.S. Government holidays and
OCONUS Host Nation holidays.
d. The support personnel shall receive problem reports and attendant requests
for assistance and perform the necessary actions to facilitate the timely
resolution of reported problems. The support personnel shall be sufficiently
proficient in spoken and written American English so that they can effectively
communicate with users
6.3.2 Order Processing/Tracking Information
During the PPO hours, as requested, the telephonic support personnel shall
provide users with current order processing and tracking information applicable
to given delivery/task orders. Examples of such information are the date the
Contractor received the delivery/task orders, the scheduled delivery dates, and
the shipment status. The telephone support personnel shall receive problems with
an order and attendant requests for assistance and perform the necessary actions
to facilitate the timely (less than 9 business hours) resolution of reported
problems.
6.4 WARRANTY REMEDIES AND PROCEDURES
The contractor shall be obligated, under the provisions of the Warranty for
items delivered pursuant to this contract, to repair or replace or otherwise
provide a remedy for warranted items only if damage or loss results from or is
caused by the warranted item. The Contractor is not obligated to provide repair,
replacement or other remedies in the event that damage or loss is the result of
or is caused by actions or events other than the warranted item, to include such
causes as: (1) misuse or abuse of the item beyond the use contemplated in the
Specification; (2) accidental damage, to include aircraft crashes; (3) combat
damage; (4) natural disasters, to include flood, earthquake, hurricane, tornado;
and (5) fires or explosions not originating on or within the warranted item.
6.4.1 Warranty Period
The Contractor shall provide a minimum thirty six (36) month warranty including
parts and labor for all equipment delivered under this contract. All warranties
for items accepted on the same date shall be for the same duration. The warranty
period shall begin upon Government acceptance of the MTS equipment and items.
For the purposes of warranty, software or firmware shall be considered
equipment. The warranty may include on-site procedures or mail-
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in or a combination of both. The Government reserves the right to carry in MTS
equipment for repair at no additional cost to the Government.
If mail-in/carry-in procedures are provided, the Contractor shall provide
no-cost repair for MTS equipment delivered to the Contractor by mail or
commercial carrier. The Contractor shall bear all shipping and packaging costs
both from and to Government sites. The Contractor shall be responsible for the
equipment from time of shipment until safe return to the Government site.
6.4.2 Return to Service
Equipment located in CONUS, Alaska, Hawaii, Germany, Korea and Southwest Asia
(including but not limited to Kuwait, Saudi Arabia, Bahrain and Qatar), shall be
returned to a fully operational status or replaced with a fully operational unit
within seventy two (72) hours of a bona fide attempt to report the problem to
the Contractor using the services provided pursuant to paragraph 6.3. Equipment
located in all other locations shall be returned to a fully operational status
or replaced with a fully operational unit within two hundred forty (240) hours
of a bona fide attempt to report the problem to the Contractor using the
services provided pursuant to paragraph 6.3. A bona fide attempt is established
once the user has established contact with the staffed telephone support service
or after a user leaves an answering machine service message or receives a
delivery receipt notice to an email, World-Wide Web or satellite message request
for service.
6.4.3 Replacement Parts
a. When the Contractor replaces a defective part during the warranty period, the
newly installed part shall become Government property. The defective part shall
become the property of the Contractor, except the Government reserves the right
to retain defective disk drives containing sensitive or classified material
which is required by statute or regulation to be destroyed or retained by the
Government. The Contractor shall ensure that the hard drives are separately
priced as a sub-component CLIN.
b. The effective warranty for all replacement items installed during the initial
warranty period shall be equal to the remaining warranty period on the original
item or 90 calendar days, whichever is greater.
c. Only new parts or parts certified by the Original Equipment Manufacturer
(OEM) as equal to new shall be used in effecting warranty repairs. Additionally,
all replacement parts shall be equal to or better than the replaced parts in
terms of quality and performance.
6.4.4 Warranty Conditions
The Government may upgrade equipment delivered under this contract by inserting
items or attaching other devices such as third party cards or disk drives
without voiding the applicable warranty. Substitutions and additions of
equipment not manufactured or supplied by the Contractor shall be subject to the
following:
a. The Contractor shall not be responsible for damage caused to the original
equipment provided the damage results from the use of third-party equipment.
b. The Contractor shall not be responsible for defects or overall system
performance degradation if such defects or performance degradation result from
the use of third-party equipment.
6.4.5 Post Warranty Maintenance
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The contractor shall propose follow on post initial warranty maintenance on a
monthly fixed price basis for all items in accordance with the provisions of
paragraph 6.4.
6.5 HARDWARE AND SOFTWARE DOCUMENTATION
a. Commercial Manuals. The Contractor shall provide commercial quality
documentation for all hardware and software delivered under this contract in
accordance with commercial practices. To the extent that it is consistent with
commercial practices, the hardware and software documentation shall be provided
as separately orderable items and not included in the equipment prices.
b. MTS Manuals and Training Material. The contractor shall provide commercial
quality data to the Government in the form of MTS users manuals and training
documentation for the V1, V2, and Control Station. The users manuals and
training documentation shall include step by step procedures for set-up
hear-down, power on, power off, concept of operations, diagrams of all
equipment, shall also include a discussion of the purpose, function and
operation of all switches and connectors, full discussion of operating
procedures, troubleshooting and a Frequently Asked Question section.
c. The contractor shall submit a draft for all contractor developed
documentation 45 days after contract award date. The Government has 20 days to
review and submit comments. The final documentation shall be submitted to the
Government within 30 days.
6.6 CONFIGURATION MANAGEMENT
6.6.1 Correction of Safety Hazards or Equipment Malfunctions
a. In accordance with commercial practices, the Contractor shall notify the
Contracting Officer and the PM office of all OEM-sponsored changes to correct
safety hazards or equipment malfunctions.
b. The Contractor shall implement changes to correct safety hazards in
accordance with commercial practices. The implementation shall be in accordance
with a mutually agreed-upon schedule. All such changes shall be implemented at
no additional cost to the Government.
c. During the equipment warranty period or during any period in which
post-warranty repair services are procured, the Contractor shall implement
changes to correct equipment malfunctions in accordance with commercial
practices. The implementation shall be in accordance with a mutually agreed-upon
schedule. These changes shall be made at no additional cost to the Government.
6.6.2 Current Technology Substitutions/Insertions/Additions
a. The Contractor shall propose changes within the general scope of the contract
for the purpose of product substitutions, technology insertions, and/or
additions to assure that state-of-the-art, commercial items are available for
delivery in accordance with the contract terms and conditions.
(1) Product substitutions are replacement of contract items which have been
officially announced as either out-of-production or no longer supported by the
OEM. Substituted items shall be at the same or greater performance for the same
or lesser price of the contract item being replaced.
(2) Technology insertions are upgrades and advancements in technology for
existing contract items.
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(3) Additions provide for new functionality not available on the contract. A
new CLIN or sub-CLIN will be added to the contract for the addition of the new
item.
b. The offer of product substitution, insertion, or addition shall include
information sufficient to determine that the proposal satisfies the terms and
conditions of the contract and in particular, this section of the SOW. The
proposal shall be subject to negotiations and shall, as a minimum, include the
following information:
(1) A description, in detail, of the difference between the existing contract
item(s) and the product substitution or technology insertion and a specific
analysis of the comparative advantages and disadvantages of each. For additions,
the proposal shall provide a complete description of the new item and a
correlative analysis of how the new item will benefit the Government.
(2) A discussion of how specific contract items would be changed if the proposal
is accepted (e.g., if new equipment is offered to replace currently installed,
will the old equipment be exchanged for the new equipment and on what basis).
(3) A statement as to how the changes will affect performance, costs, etc., and
an item-by-item summary of any "street pricing" (including source of the "street
price") and any GSA pricing (including GSA Schedule Number).
(4) If applicable, an evaluation of all the effects the change would have on the
Contract Life Costs, maintenance, personnel, site modifications, and energy
consumption, etc.
(5) An analysis of a timeframe in which the change should be instituted to
obtain maximum benefit to the Government for the remainder of the contract.
c. The Contractor shall manage and propose product substitutions, technology
insertions, and additions in a timely manner in order to allow sufficient time
for Government evaluation approval and to provide, without a lapse in
availability, Government-approved products throughout the entire ordering period
of the contract. (Government review times will vary depending upon the
complexity and newness of the item.)
d. The Government reserves the right to request a proposal for technology
additions. Upon the Government's request the Contractor shall prepare a proposal
that complies with the requirements of paragraph 6.11.l.b.
e. The Government shall not reimburse the Contractor for proposal costs for
product substitutions, technology insertions, and additions.
f. All approved changes shall be determined to be within the general scope of
the contract and to be in the best interest of the Government. The decision as
to the acceptability of such a proposal shall be at the sole and exclusive
discretion of the Contracting Officer and is not subject to the Disputes clause
of this contract. Acceptance of such a proposal shall be made by issuance of a
written modification to this contract. Unless and until such a modification is
issued to the Contractor, the Contractor remains obligated to perform in
accordance with the terms of the existing contract.
g. In the event the contract modification results in equipment changes to any of
the basic computer configurations, the Government may require the Contractor to
perform a Government witnessed demonstration prior to the first delivery of the
revised configuration(s). As a minimum, the Contractor shall demonstrate that
the equipment is capable of performing in a
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manner equal to or better than the applicable Contractor's certified benchmark
test results and is capable of successfully performing. In such an event, the
Contractor shall perform the demonstration within 15 days after the Contracting
Officer's request for the demonstration. At least seven days prior to the
demonstration, the Contractor shall deliver to the Government a plan that
outlines the agenda, procedures, and any constraints related to the
demonstration.
h. All new equipment shall be backward compatible with hardware previously
purchased under this contract.
6.6.3 Replaceable Items
The contractor shall offer replaceable items such as external antennas, cables,
power cords, batteries, printer cartridges, etc., as separately orderable items
for the MTS Control Station, V1, and V2.
6.6.4 Sub-units
The contractor shall offer components of each MTS control Station, V1, and V2. A
sub-unit is a subassembly of the parent item such as a laptop computer,
software, transit case, printer, hard drive, etc. These are items that are
typically user removable and installable in the event of field loss or damage. A
sub-unit/subassembly is NOT typically a circuit card assembly or other items
requiring specialized skill to remove and install (except hard drives). These
items are to be determined by the offeror, however, in aggregate all sub-units
shall make up the unit.
6.7 CONTRACT MANAGEMENT
With the exception of excusable delays as set forth in Part II.a, paragraph (f),
the Contractor shall be liable for non-performance under this contract. In
addition to the reporting requirements set forth in this paragraph, the
Contractor shall notify the Contracting Officer in writing as soon as it is
reasonably possible when non-performance is imminent or has occurred.
6.7.1 Monthly Project Status Reports
a. The Contractor shall provide monthly project status reports. At a minimum,
the reports shall include the following information for the reporting period:
(1) Summary of Equipment Orders: This shall include the orders received,
deliveries made, and the delivery location and required and actual delivery
dates of each order
(2) Summary of Technical Support Services Orders: This shall include the orders
received, deliveries made, and the delivery location and required and actual
delivery dates of each order
(3) Summary of Warranty Repairs: This shall include identification of pertinent
dates (e.g., date notified of problem, date item received by contractor, date
repaired, date returned to unit, etc.)
(4) Summary of Maintenance Provided: This shall include identification of
pertinent dates (e.g., date notified of problem, date repaired, etc.) and
provide a consolidated failure rate (Mean Time Between Failure (MTBF) rate) and
projected life expectancy values. This shall be recorded at the sub-component
level in order to facilitate future repair/support budgets.
(5) Current Technology Substitutions/Insertions/Additions Proposal Information
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(6) Dollar Value of Delivery/Task Orders
(7) Concerns, Risks (to include those which are Government attributed), Issues,
and Potential Mitigating Actions
(8) Air Time usage/ seventy five percent or greater of purchased usage
b. The first reporting period shall be from receipt of the first delivery/task
order through the end of the next full calendar month. All subsequent reporting
periods shall be from the first calendar day of the month through the last
calendar day of the month. The monthly reports shall be submitted to the
Government Program Manager (PM) within ten workdays from the end of the
reporting period. The monthly status report shall be subject to Government
approval. Any revisions to the report shall be submitted to the PM within three
workdays of receipt of Government comments.
c. The report shall be delivered in hard and soft copy formats to the PM, the
COR, and the Contracting Officer within two workdays following approval by the
PM. The Government is currently using MS Word 6.0 and Excel 5.0. The soft copy
report shall be provided in the same or compatible format.
d. The Contractor shall attend meetings with the PM as necessary to discuss
issues and concerns relating to the contract. The location of each meeting will
be within the National Capital Region or at Ft Lee, VA.
6.7.2 Quarterly Logistics and Maintenance Report
a. The Government has a requirement to track logistics and maintenance
information. The Contractor shall provide a Quarterly Logistics and Maintenance
Report which contains information on all equipment delivered under the contract,
(i.e., those components which are separately priced) for input into the
Government's database. The report shall contain, at a minimum, the following
information:
(1) Control Number (a number to track transactions)
(2) Delivery Order Number
(3) CLIN
(4) Description
(5) Manufacturer, including Commercial and Government Entity (CAGE) code
(6) Model/Part Number
(7) Serial Number
(8) Delivery point (including Unit/organization, Unit Identification Code (UIC),
and DoD Activity Address
Code (DODAAC))
(9) Warranty Start Date
(10)Maintenance Start Date and Expiration Date (excluding warranty)
(11)Quarterly and Cumulative Air Time Usage by Unit
(12)Air Time Start Date
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b. The report shall be provided on a quarterly basis. The first reporting period
shall be from receipt of the first delivery order through the end of the first
complete Government fiscal quarter. All subsequent reporting periods shall be
from the first calendar day of the fiscal quarter through the last calendar day
of the fiscal quarter. The report shall be submitted to the PM within ten
workdays from the end of the reporting period. The report shall be subject to
the PM approval. Any revisions to the report shall be submitted to the PM within
three workdays of receipt of Government comments.
c. The report shall be delivered to the PM within two workdays following
approval by the PM and shall be posted to the Web site pursuant to and in
accordance with paragraph 6.7.3. The report shall be submitted in a format that
is consistent with the Contractor's commercial practices.
6.7.3 World-Wide Web Site
a. Within 60 days after the effective date of the contract, the Contractor shall
provide a Web site that shall be available on a 24-hour basis. The Web site
shall be a restricted site, accessible only to military and DoD civilian
employees with a .mil email address. As a minimum, the Web site shall include,
or provide hyperlinks to, the following downloadable information.
(1) Quarterly Logistics and Maintenance Report (delivered pursuant to paragraph
6.7.2). This information, and any updates to this information, shall be posted
to the Web site within 48 hours of Government approval. The Contractor may
restrict access to the Quarterly Logistics and Maintenance Report that is posted
on the Web Site to those individuals identified by the PM.
(2) Copies of Device Drivers. The Government desires that all drivers needed to
adequately operate the MTS equipment be posted to the Web site. At a minimum,
the Contractor shall post to the Web site those drivers that were developed by
the Contractor for use under this contract. Any initial drivers shall be posted
to the Web site within 60 days after the contract effective date. New/updated
drivers shall be posted to the Web site within 48 hours of Government approval.
In the event that drivers are updated, the original version shall be maintained
on the Web site.
(3) Ordering Catalog. At a minimum, this catalog shall contain sufficient
information to allow users to prepare a delivery order and to determine which
contract line items (to include pertinent terms and conditions) best meet
operational requirements. With the exception of during the last contract year,
the ordering guide shall contain, at a minimum, CLINs and prices for a two-year
period (i.e., the then current year and subsequent year). The ordering guide
shall be subject to Government approval prior to posting on the Web site. Any
revisions to the information shall be submitted to the PM within three workdays
of receipt of Government comments. The approved ordering catalog shall be posted
to the Web site within 60 days after contract effective date. An updated version
of the catalog shall be posted to the Web site within two days of any changes to
the information contained in the catalog. No orders shall actually be placed
through the Web site.
(4) Application Load Procedures and Tapes. The Contractor shall post the
software load procedures on the Web site. New/revised software load procedures
and/or tapes shall be posted to the Web site within 48 hours of availability.
(5) Other Information Normally Provided to Commercial Customers. The Contractor
shall post to the Web site any other information which is normally provided to
commercial customers via a Web site and which the Contractor feels would be
useful to MTS users.
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b. The downloadable electronic documents shall be readable and printable using
software applications that are compatible with MS Office Suite.
6.8 SECURITY
a. The Contractor shall ensure that Contractor personnel have the necessary
Government security clearances. The highest clearance level required under the
contract will be Secret as established by DD Form 254, Contract Security
Classification Specification, at Part III, Attachment III.b of the contract. The
Contractor shall not claim lack of security clearances as a reason for
non-compliance. The specific security access requirements will be set forth in
each respective delivery/task order.
b. As necessary for performance on this contract, the Government will provide
assistance to the Contractor in gaining access to Government facilities,
including controlled access areas.
6.9 USAGE TIME/AIR TIME
a. It is anticipated that the equipment proposed will require access to a
commercial communications provider. All costs for such usage shall be at a fixed
price for continuous unlimited usage on a daily, continuous 24 hour period,
basis, i.e. $X/per day/per unit, unlimited use. Daily unlimited use shall work
this way. A day of unlimited use shall be charged against a specific serialized
unit once that unit sends a message, or other traffic on that day, then within
that same 24 hour period that specific unit shall be afforded complete unlimited
access. No other notification to the contractor shall be required other than to
send a message. For these purposes, the sending of an acknowledgment "ACK" to a
received message shall also constitute activation of that days air time on and
for that unit. Usage of days of air time may not be continuous, but shall be
tracked by the contractor to inform the user, via the World-Wide Web Site, of
how many days of usage are remaining.
b. The contractor shall include a minimum 400 days of unlimited usage air time
in the price of both mobile units (V1 and V2) and Control Station. The 400 days
included with the units are required to be used within a maximum period of eight
years from contract award. Additional days of air time shall be separately
priced. All air time provided with the equipment, for equipment purchased on the
same date, shall be for the same duration. Availability of connection to a
commercial communications provider shall commence upon Government acceptance of
the system, with the 400 days ready for use. The charging or decrementing of
days used shall commence once a specific unit is activated with a message being
sent. The contractor shall have an accounting system that tracks usage time/air
time and allows the Government to obtain records of this usage by accessing the
contractor established WEB page (CLIN x018), with a method provided to allow a
user to query a specific unit to obtain the number of prepaid days of unlimited
use remaining. All MTS units which have reached 75% of the initial 400 days of
usage time/air time or subsequently purchased air time shall also be identified
in the database.
c. The contractor shall also provide monthly notification when 75% of the
initial 400 days or any subsequently purchased usage time/air time has been
expended for any of the MTS units. This list shall be included in the monthly
Project Status Report submitted under CLIN 0016.
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d. The Government also has the option of purchasing MTS units and usage time/air
time in groups/pools of units. In these cases, the usage time/air time shall be
tracked by total usage time/air time of the group/pool rather than by the
individual MTS unit.
e. Prior to the end of this contract, the contractor should provide a means by
which the Government may acquire and pay for subsequent usage time/air time
usage for systems they already own.
f. The data contained in the table below is provided as information only. The
numbers are estimates. Actual government usage is unknown and is dependent on
many factors such as the addition of applications identified in Paragraph
III.2.15 of this document. This information is not meant to change or modify the
Government's requirement for "fixed price for continuous unlimited usage on a
daily basis, i.e. $X/per day/per unit unlimited use."
ANTICIPATED
MESSAGE USAGE PROFILE
Daily In-Use Time Yearly Days of Text Message Send
Operation Frequency *
200 (war) Send 1 test message
every 5 minutes
Control Station 24 hours 90 (peacetime)
V1 and V2 20 hours 200 (war) Send 2-3 text
Mobile messages per hour
90 (peacetime) and Send 1 GPS
position update
every 5 minutes
* Each text message estimated at 100 alphanumeric characters
6.10 PART NUMBERS
The contractor shall implement and use a part number scheme to facilitate
reporting. Each part number shall be unique. The contractor shall also maintain
a contractor to OEM part number cross reference as part of the web site. Major
components should have unique serial numbers affixed to each unit.
6.11 TECHNICAL SUPPORT SERVICES
6.11.1 General
a. When ordered, the Contractor shall provide technical support services that
are within the scope of this section. Technical support services include:
(1) Site surveys
(2) On-site installations and training
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(3) Relocation of equipment
(4) Post-installation support
(5) Engineering studies and documentation
(6) Integration/interface impact studies
(7) Development/modification of software programs to achieve additional
functionality
(8) Development and documentation of A-Kits for different families
of vehicles
(9) Expedited Delivery and OCONUS shipping
(10)Additional System Integration
(11)Demonstration Support
b. Labor Categories and Tasks:
(1) Program Manager - Lead task order, maintain cost, technical, schedule and
overall management of resources to accomplish task requirements
(2) Site Leader - Serve as senior contractor POC at a field site with total
knowledge of task areas and authority to manage personnel
(3) Mechanical Installer - Capable of following drawings and installation
criteria, making changes to vehicles and installing A-Kits into vehicles and
performing overall system or installation tests
(4) System Trainer - Capable of training the system operation to soldiers
(5) Senior Engineer - Capable of analyzing requirements and designing system
changes
(6) Junior Engineer - Capable of supporting the analysis of requirements and
designing system changes
(7) Senior Software Analyst - Capable of working with software requirements and
to plan changes to design based upon new/changed requirements
(8) System Analyst - Capable of integrating across all system requirements to
produce new/modified requirements
(9) Software Programmer - Capable of making software changes to implement
new/changed requirements
(10) Test Analyst - Capable of testing hardware/software changes to task
requirements
(11) Mechanical Engineer - Capable of designing A-Kit mechanical components
based upon requirements
(12) Mechanical Fabricator - Capable of fabricating/assembling A-Kit mechanical
components
(13) Electrical Engineer - Capable of designing A-Kit electrical components
based upon requirements
(14) Electrical Fabricator - Capable of fabricating/assembling A-Kit electrical
components
(15) Technical Writer - Capable of producing technical documentation for task
order requirements
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(16) Clerical - Capable of using automated tools for the production of
documentation; capable of performing final proofing, making changes and
providing general clerical support to task order areas
c. Prior to issuance of a task order for technical support services, the
Contracting Officer will provide the Contractor with a request for a proposal,
which includes a description of the task(s) to be performed. Within 15 days of
receipt of the request, the Contractor shall deliver to the Contracting Officer
a proposal for performing the services. The proposal shall contain sufficient
detail to enable the Government to determine the acceptability of the proposal
and shall include, as a minimum:
(1) A brief description of the technical approach which demonstrates the
Contractor's understanding of the requirement
(2) A proposed milestone chart
(3) Proposed labor categories from the Master CLIN listing and the number of
hours proposed for each category, and
(4) Proposed other direct costs (ODCs), to include any proposed travel costs,
which are consistent with the Joint Travel Regulation.
d. The Government reserves the right to accept or reject any proposal for
technical support services. This decision shall be final and not subject to the
"Disputes" clause of this contract. After the Government has reviewed and
accepted the Contractor's proposal (negotiations may be required), subject to
availability of funds, a firm-fixed-price task order will be issued. The
Contractor shall then perform the technical support services in accordance with
the approved proposal.
6.11.2 Site Surveys
a. The Contractor shall perform site surveys in accordance with approved
proposals submitted pursuant to paragraph 6.11.1.b. The primary purpose of the
survey is to provide a detailed scope of work required for the later
installation/fielding of MTS equipment, and for the purpose of fitting the
system to a new vehicle family. The Government will make available a
representative sample of any vehicle for contractor access.
b. Within seven days after completion of the survey, the Contractor shall
deliver a survey report to the Government official identified on the applicable
task order. The report shall include a description of any actions (e.g., site
modifications) which must be completed prior to installation of the MTS
equipment and it shall be sufficiently detailed to facilitate successful
installation of the equipment. The report shall be subject to Government
approval. Any revisions to the report shall be submitted to the Government
official within three workdays of receipt of Government comments.
c. The Government will be responsible for performing site modifications (e.g.,
A/C, power, etc.) which are identified in the survey report.
d. In instances where work to be performed by the Contractor requires
interaction with existing facilities and equipment, the Contractor shall be
responsible for any damage to existing facilities or equipment resulting from
the Contractor's efforts.
6.11.3 On-Site Installation and Training
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a. The Contractor shall perform on-site installation of MTS equipment in
accordance with approved proposals submitted pursuant to paragraph 6.11.1.b.
Installation services include both initial installation and upgrades to existing
MTS equipment, as well as conducting training on the equipment installation, use
and maintenance.
b. After installation is completed, the Contractor shall restore any
Contractor-used Government work and storage areas to a clean condition.
c. The contractor may be required to supplement training data provided under
paragraph 6.5.b in a more military style:
(1) Training Analysis Process. A front end training analysis will be
accomplished to develop a general training concept, a training Master Task List
(MTL), and identify the Terminal Learning Objectives and Enabling Learning
Objectives to support each task. Subject matter experts (SME) will subsequently
review the analysis. Following approval of the MTL, a Task Selection Matrix
(TSM) will be developed, critical tasks identified for training, and methods of
training will be determined. An Instructional Media Design Report (IMDR)
(details the flow, appearance, and subject matter of the interactive courseware)
will be completed and training scenarios reflecting operational environments
will be developed. From the approved TSM, tests for each task will be developed,
draft Programs of Instruction (POI), Lesson Plans (LP) Storyboards, Handouts
(HO), Practical Exercises (PE), and a Training Database will be developed. As
the system matures, a Detailed Task Selection Matrix will be developed to
identify step-by-step procedures required to accomplish each task. Draft
Training Packages and supporting documentation will be tested and adjusted prior
to the Operational Test (OT). SME support will be provided/coordinated by USA
Combined Arms Support Command (CASCOM) throughout the development process. The
development contractors will visit and/or coordinate directly with designated
Points of Contact (POC)
(2) Multimedia Training. Multimedia Training shall be the primary method of
training for the MTS. The multimedia training will be on a separate CD ROM that
must be periodically updated to reflect the changes to the system. It will
satisfy the majority of the requirements for extension, sustainment, collective,
and instructor and key personnel (IKP) training for the mobile unit operator and
Control Station operator.
(a) The V2 and Control Station system software shall contain a Training Menu
Option which will allow the selection for training and training support
functions and will replicate the prime system. Training will address the user by
name based on log-in information and will provide the supervisor with the
ability to manage the training environment to include establishing training
requirements, selecting specific material for students, setting performance
criteria, and producing training reports and comprehensive end of course tests.
Interactive multimedia training is the required medium to train and evaluate the
user's performance.
(b) The Multimedia Training will consist of two major elements: training and
help. Multimedia Help shall be accessible from two different means: Menu
Selectable Help and Context Sensitive Help (to at least 4 levels). To the extent
possible, commercial software with help utilities will be incorporated. The
multimedia training (CD ROM) will include as a minimum a V1 Operator Course, a
V2 Operator Course and a Control Station Operator Course. System Administration
and System Support will be provided by the contractor.
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(c) A multimedia package will be developed. It must have hooks embedded into the
prime system software (embedded training) so the user can obtain access to the
training system and receive training by clicking on the hyper text, go to
training, and return to the work area (training itself may be on CD-ROM). This
will be an option load with the prime system. The training package must also be
capable of operating separately, to provide the capability for conduct of
initial or sustainment training; it will be MTS specific and capable of use on
any compatible DOS computer. Training screens will be identical to the prime
system screens and help capabilities.
(3) Paper-Based Training. Paper-based training will be developed for designated
tasks and those tasks not identified for embedded training. These packages must
contain approved task lists, Programs of Instruction (POIs) and Lesson Plans (to
include handouts, slides, practical exercises and tests) to assist the unit in
conducting sustainment training.
(4) System Extension Training (SET). A training team will conduct operator and
Control Station operator training at each training location. The extension
packages will include training for all critical tasks identified during the
Front End Analysis and the design and development efforts that were selected for
training. The approved training package will be utilized to provide this initial
training. The training will be provided on-site at each extension location that
has system hardware being fielded to that site. Representative system hardware
will be utilized. Monitorship and on-the-job training will occur following
classroom training and system extension. The purpose of the monitorship is to
ensure training effectiveness. Over-the-shoulder individual assistance will be
provided as required, until the training team is satisfied that the operators
and managers have the capability to exercise the system to its full capacity.
The team will ensure full conversion and operation of the system prior to
departure from the installation.
(5) Unit / Sustainment Training. Multimedia Embedded Training (EI) will be
provided with the system and will have hooks resident in the system software to
effect ET. Training CD-ROM disks will also be provided. A complete copy of the
system extension training package, to include those tasks not selected for ET
(including POI, Lesson Plans, and any other paper-based material), will be
provided to units for unit sustainment training. Commanders of TOE / TDA units
are responsible for conducting unit sustainment training as required.
(6) Training Evaluation and Manual Verification. USA CASCOM training evaluators
will conduct a training Operational Test and Readiness Evaluation (OTRE) of the
final training package when the operational test players are being trained. An
OTRE will be conducted for all training provided. The training will include ET,
Help, the Program of Instruction (POI), Task Selection Matrix (TSM), Lesson
Plans (LP)/Story Boards, Practical Exercises (PE), test, tutorials and manuals
(on-line and paper-based). USA CASCOM will issue a training Operational Test
Readiness Statement (OTRS) through TRADOC to OPTEC as a result of the OTRE. To
insure a successful OTRE, the PM MTS should request a customer test by USA
CASCOM at any time prior to the OT.
6.11.4 Relocation of Equipment
The Contractor shall assist in, or perform, the relocation of MTS equipment in
accordance with approved proposals submitted pursuant to paragraph 6.11.1.b. The
extent of the services to be performed by the Contractor will vary by task order
from minimal involvement (e.g., survey assistance) to total responsibility for
the relocation.
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6.11.5 Post-Installation Support
Pursuant to approved proposals submitted in accordance with paragraph 6.11.1.b,
the Contractor shall provide post-installation support and guidance to assist
users in successful transition to MTS equipment. Such services can relate to
general system operations or to specific tasks; e.g., porting data files.
6.11.6 Engineering Studies and Documentation
a. Pursuant to approved proposals submitted in accordance with paragraph
6.11.1.b, the Contractor shall perform engineering studies. These studies shall
be related to the present and possible future physical and performance
characteristics of equipment used in support of the system. Examples of such
studies could include, but are not limited to system engineering feasibility
studies, network studies, technology assessment studies, and quality-related
practices studies. These studies may respond to, but are not limited to, the
following: (1) An unexpected decreased level of system responsiveness; (2)
Planned expansions of computing services or network connectivity; and (3) Sudden
changes in traffic and data storage requirements which adversely affect network
performance.
b. All engineering studies shall be subject to Government approval. Any
revisions to the studies shall be submitted to the Government official within
three workdays of receipt of the Government comments.
6.11.7 Impact Studies
a. During the life of the contract it is anticipated that changes will be made
to the interfacing system/support software and/or equipment purchased from
sources other than the MTS Contractor, which may require integration into the
MTS configuration.
b. In such cases, pursuant to paragraph 6.11.1.b, the Government may request the
Contractor provide an impact study which addresses, at a minimum, the following:
(1) A description of any MTS equipment modifications and/or additions (including
any device drivers) necessary to at least maintain the current level of system
performance.
(2) A description of any revisions and/or additions to system application and/or
Government owned system support software which are necessary to at least
maintain the current level of system performance.
(3) A price proposal for effecting the necessary changes to the MTS equipment
(including any device drivers) identified pursuant to paragraph (1) above.
(4) A proposed schedule to implement the recommended changes identified in the
impact study.
c. All impact studies shall be subject to Government approval. Any revisions to
the studies shall be submitted to the Government official within three workdays
of receipt of the Government comments.
d. The Government reserves the right to have the Contractor implement the
changes identified in the approved study. The proposed price shall be subject to
negotiations. If accepted by the Government, a contract modification will be
executed to effect the change.
e. In the event the contract modification results in equipment changes to any of
the basic computer configurations, the Government may require the Contractor to
perform a Government-
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witnessed demonstration prior to the first delivery of the revised
configuration(s). As a minimum, the Contractor shall demonstrate that the
equipment is capable of performing in a manner equal to or better than the
Contractor's certified benchmark test results and is capable of successfully
executing. In such an event the Contractor shall perform the demonstration
within 15 days after the Contracting Officer's request for the demonstration. At
least seven days prior to the demonstration, the Contractor shall deliver to the
Government a plan that outlines the agenda, procedures, and any constraints
related to the demonstration.
6.11.8 Development/Modification of Software Programs to Achieve Additional
Functionality
The Contractor shall perform software development to achieve additional
functionality in accordance with approved proposals submitted pursuant to
paragraph 6.11.1.c.
6.11.9 Development and Documentation of A-Kits for Different Families of
Vehicles
a. The Contractor shall perform non-recurring engineering to support the
development, qualification and Government acceptance for production of specified
A-Kits. A-Kits are the mechanical mounting devices for mounting mobile units to
a vehicle in accordance with approved proposals submitted pursuant to paragraph
6.11.1.c. A-Kits shall include the necessary shock, vibration and electrical
isolation required based on the operational profile of the vehicle, and shall
include cable harnesses, cable egress panels, etc. needed for installation of
the required equipment. Typically, the contractor shall work with designated
Government or vehicle contractor personnel in the design, development and
prototyping of an A-Kit. Subsequent to development of an A-Kit, that equipment
will be added by contract modification as a separately orderable CLIN on the
contract.
b. It is anticipated that, over the life of this contract, several sets of
A-Kits and documentation will need to be developed, one for each vehicle type.
The contractor shall provide technical data to the Government to allow
subsequent development of Integrated Logistics Support (ILS) products for the
vehicles on to which the MTS will be installed. The data the contractor shall
provide will allow the government to provision, catalog, document and support
MTS A-kit parts. The contractor shall also provide data sufficient to allow the
government to produce a technical manual documenting installation of the A-kit
in the selected vehicle and installation of the B-kit (mobile unit) to the A-kit
and repairs of the MTS A-kit. The contractor shall provide all data necessary to
allow the government to produce installation and maintenance instructions for
the MTS A-kit on a vehicle.
(1) Maintenance Analysis and Parts Provisioning Drawing Package; The contractor
shall provide a complete MTS A-kit drawing package for each designated vehicle.
The drawing package shall include a top level or top level drawings, the drawing
tree or drawing structure and all individual piece part and component drawings,
all assembly and manufacturing instructions. The drawing package may be in
contractor format. The drawing package may be supplemented with additional
narTative information to complete these requirements. The drawings or
supplemental documentation to the drawing package shall include:
Material Data Safety Sheets
Complete warranty information
Wear limits for wear parts
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Torque Values for all fasteners
Scheduled Maintenance Requirements
Lubrication requirements
Troubleshooting procedures
Safety/hazard precautions
Requirements for special tools
Copy right release for all data provided
All instructions required to install the MTS A-kit on the designated vehicle
including all steps required to modify the vehicle to accept the MTS A-kit, and
all steps to install the B-kit on the A-kit
All drawings and publication data shall be in the English language
(2) Parts Provisioning; The contractor shall provide the government the
following data for each MTS A-kit part:
Complete set of approved supplier service drawings
Component manufacturer part numbers
Component manufacturer Cage Codes to be stamped or typed on the drawing.
Unit Package quantities
Weights and Dimensions
Shelf Life limitations
Optimum Quantity Prices
Available Reliability or Projected Failure Rate Data
Repair Kit information
Each and Unit Package Prices
Dimensional Data for all hardware (nuts, bolts washers)
All drawing and publication data shall be in the English language
(3) Publications Support; The contractor shall provide the government any
available commercial off the shelf manual/ literature and all necessary
technical data to develop initial installation, operations, maintenance, repair,
service, inspection storage and test procedures required to use and maintain the
MTS A-Kit.
6.11.10 CONUS and OCONUS Shipping and Delivery
a. The Contractor shall pack each applicable component in its transit case(s)
prior to shipping. This transit case(s), containing the configuration and/or
components, shall be appropriately packed and shipped in standard commercial
wrappings; e.g., shrink wrappings. Each unit shipped shall have its own users
manual packed in the shipping container.
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b. The Government may require expedited andlor OCONUS shipments during the term
of the contract. A packing list shall be placed in each shipping container.
6.11.11 Additional System Integration
a. The contractor may be required to perform integration services at field
locations to support the initial installation or troubleshooting of the system
surveys in accordance with approved proposals submitted pursuant to paragraph
6.11.1.b. Any such requirement will be identified to the contractor in a
separately issued task order. The Contractor shall be responsible for all items
provided to the Contractor until they are safely returned to the Government in
the condition in which they were provided. It is anticipated that over the life
of the contract additional system integration services may be required. In such
cases, these requirements may be added to this contract by contract
modification. In such an event, the Contracting Officer will request a proposal
from the Contractor. The request will include a description of the integration
and the operational environment; the typical configuration(s); the specific
performance requirements; the loading and operating instructions; test criteria
and data; and access to any required application software.
b. Prior to the first delivery of equipment that has been integrated pursuant to
a contract line item number (CLIN) that has been added, the Government may
require the Contractor to conduct a Government-witnessed demonstration to
validate that the integration configuration is capable of successfully executing
the requirement. In such an event, the Contractor shall perform the
demonstration within 15 days after the Contracting Officer's request for the
demonstration. At least 7 days prior to the demonstration, the Contractor shall
deliver to the Government a plan that outlines the agenda, procedures, and any
constraints. The Government reserves the right to have at least two
Government-designated representatives witness each demonstration.
6.11.12 Demonstration Support
The contractor may be required to provide technical/support staff to assist the
government at system demonstrations and/or briefings. Any such requirement will
be identified to the contractor in a separately issued task order.
END OF STATEMENT OF WORK
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APPENDIX I
TO THE MTS STATEMENT OF WORK AND SPECIFICATION
APPLICABLE DOCUMENTS
In the event that any of the documents listed in this Appendix have been
canceled or superseded, the most recent document in effect at the time of
release of the solicitation shall govern.
I.1 TECHNICAL ARCHITECTURE DOCUMENTS
The following technical architecture documents are available on the World-Wide
Web at the identified URLs.
Department of the Army Joint Technical Architecture - Army (JTA-A), Version 5.0,
dated 11 September 1997, available at:
http://www.hqda.army.mil/techarch/jtaa50/jtaa50.htm
I.2 GPS USER EQUIPMENT INTERFACE CONTROL DOCUMENT FOR
THE RS-232/RS422 INTERFACE OF DoD STANDARD GPS UE RADIO RECEIVERS
a. Department of Defense ICD-GPS-153 GPS User Equipment Interface Control
Document for the RS-232/RS422 Interface of DoD Standard GPS UE Radio Receivers,
dated 27 June 1995, is available at the Global Positioning System (GPS) Joint
Program Office (JPO), SMC/CZ (AFMC), P.O. Box 92960, Los Angeles Air Force Base,
CA 90009-2960. The POC is Mr. Del Crane whose email address is
[email protected] mil.
b. The ICD-GPS-153 document is export controlled technical data with military
application controlled under the Arms Export Control Act as implemented by the
International Traffic in Arms Regulation. Distribution of the ICD-GPS-153 is
authorized to Department of Defense and DoD Contractors only. However, the
document can be released to prospective contractors provided they registered
with and receive authorization from the Defense Logistics Agency (DLA). DLA has
a web site that explains the procedure and requirements at:
http://www.dlsc.dla.mil/ccal
DLA also has a telephone information number 1-800-352-3572. The registration and
authorization process takes approximately five to ten working days. Offerors;
are encouraged to start the registration process as soon as possible.
END OF APPENDIX I TO STATEMENT OF WORK
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APPENDIX II
TO THE MTS STATEMENT OF WORK AND SPECIFICATION
DEFINITIONS
II.1 DEFINITIONS
II.1.1 A-Kit: That mechanical device which provides a mounting capability
between a vehicle and the Vehicle Mounted Mobile Unit (V2).
II.1.2 B-Kit: The Vehicle Mounted Mobile Unit (V2).
II.1.3 Continental United States (CONUS): All locations and sites within
the 48 contiguous states, including the District of Columbia.
II.1.4 Days: Unless otherwise noted as "working days", all references to days
shall refer to calendar days.
II.1.5 Equipment: The term equipment as used throughout the specification
refers to hardware, software, and/or firmware.
II.1.6 Hours: Unless otherwise noted as "business" hours, all references to
hours shall refer to wall clock hours.
II.1.7 INFOSEC: The term INFOSEC as used throughout the specification refers
to Information Security which includes the protection of all MTS data,
message contents, and position report contents.
II.1.8 World-wide: This encompasses the physical face of the planet between
70 degrees north latitude and 70 degrees south latitude to include all
oceans and islands.
II.1.9 Outside the Continental United States (OCONUS): All locations outside
the 48 contiguous states of the United States.
II.1.10 State-of-the-Art Technology: Commercial products that represent recent
product designs and performance features. It does not include out-of-date,
discontinued hardware and software.
II.1.11 System Modularity: Equipment that is developed as a series of smaller
parts ("modules" or "system elements") that can be functionally separated from
the other system parts in order to facilitate integration and specialized
upgrades.
II.1.12 Year 2000 Compliant: Year 2000 compliant means information technology
purchased under this contract that complies with Part III.a, Appendix III,
paragraph III.2.5 of this contract.
END OF APPENDIX II TO STATEMENT OF WORK
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APPENDIX III
TO THE MTS STATEMENT OF WORK AND SPECIFICATION
EQUIPMENT SPECIFICATION
III.1 INTRODUCTION
All equipment delivered under this contract shall satisfy the general
performance requirements set forth at paragraph 111.2.
III.2 GENERAL PERFORMANCE REQUIREMENTS
III.2.1 Commercial Equipment
All equipment delivered under this contract shall be commercial items as defined
in the Federal Acquisition Regulation (FAR) Clause 52.202-1. To allow for system
modularity and commonality of parts, the same hardware may be used in all three
configurations.
III.2.2 Only New Equipment
Only new equipment shall be delivered under this contract. The Contracting
Officer will not grant approval for used or reconditioned equipment. Components
of such equipment may be reconditioned provided such components are drawn from
stockage that does not differentiate between new and reconditioned components.
III.2.3 World-wide Usage/Operating Authority
a. MTS shall be physically capable of transmitting and receiving messages
world-wide. The initial version of MTS shall also have the legal authority to
operate in as many countries as possible. Not later than June 7, 2000, MTS shall
have the legal authority to operate in the following countries:
a. United States (to include Alaska, Hawaii, and territories)
b. Honduras
c. Panama
d. Germany
e. Netherlands
f. Belgium
g. Italy
h. Turkey
i. Austria
j. Hungary
k. Bosnia
1. Croatia
m. Japan
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n. Republic of South Korea
o. Israel
p. Egypt
q. Saudi Arabia
r. Kuwait
b. There shall be no additional fee for landing rights, backhaul, tariff or any
other additional cost for air time. The Contractor shall include all such
expenses in their price proposal such that the government pays one fixed rate,
regardless of location.
III.2.4 Federal Communications Commission (FCC) Certification
All applicable hardware components shall meet, as appropriate, the requirements
of the FCC Class A. The FCC Class A qualification for all MTS equipment shall
remain unchanged after installation of contractor-provided internal devices. All
applicable hardware components for Outside Continental United States (OCONUS)
shall meet the International Special Committee on Radio Interference (CISPR) 22,
Class A (International) standards for Radio Frequency Interference/
Electromagnetic Interference (RFI/EMI), be Underwriters and European Community
(CE) certified.
III.2.5 Year 2000 Warranty--Commercial Supply Items
The contractor shall ensure products provided under this contract, to include
hardware, software, firmware and middleware, whether acting alone or combined as
a system, are Year 2000 compliant as defined in FAR Part 39 and as specified in
Part.II a (ac) of this solicitation document.
III.2.6 Compliance with Joint Technical Architecture-Army (JTA-A)
All applicable equipment components provided under this contract shall meet the
requirements of the JTA-A. The JTA-A is the minimal set of rules governing the
arrangement, interaction, and interdependence of the parts or elements that
together may be used to form an Army information system. Its purpose is to
ensure that a conformant system satisfies a specified set of requirements. The
JTA-A applies to all systems that produce, use, or exchange information
electronically. The JTA-A will be used by anyone involved in the management,
development, or acquisition of new or improved Army Information Systems. The
JTA-A uses the concept of a Common Operating Environment (COE) that provides a
re-useable set of common software services via standard application programming
interfaces (APIs).
Any computer provided as part of the solution for paragraphs III.2.11 (V2) and
III.2.12 (Control Station) shall conform to the Windows Operating System as
defined by the Win32 APIs, Microsoft Win32 Programmers Reference Manual, Volumes
1-5, 1993, Microsoft Press. Commercial software provided shall have documented
and published APIs to allow integration with other applications which may
evolve.
III.2.7 Power Requirements
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a. The V1 shall be primarily powered by one or more internal batteries. Fully
charged batteries shall allow for sending 36 position reports and 36 text
messages with a message size of approximately 100 characters over a minimum
period of at least 12 hours. The V1 shall also come with a vehicle power
adapter to enable operations from vehicular supplied power which is nominally
between 12-32 volts direct current.
b. The V2 shall operate from vehicular supplied power which is nominally between
12-32 volts direct current. Vehicle power is used only when the V2 unit is
mounted in the vehicle and when the engine is running. The V2 shall be capable
of operating from standard 110-volt (CONUS) or 220-volt (OCONUS) 50/60 Hz
commercial power.
c. The Control Station equipment shall be autosensing between 110 and 220 volts
alternating current and between 60 and 50 Hz. The Control Station shall have one
or more internal batteries.
d. All equipment (V1, V2, and Control Station) shall be properly protected from
electrical damage due to fluctuations in power, nearby lightning and high power
microwaves to acceptable industry standards. Employment of user replaceable one
time use fuses is not allowed.
e. All equipment shall be certified by Underwriters Laboratory or an equivalent
laboratory.
f. The V2 shall have an integral backup power source that will allow the
operator to send a minimum of five position reports and five 100 character text
messages over a 90-minute period when the primary power source is depleted or
not available. The V2 shall have an indicator to inform the operator that he is
operating on backup power. V2 shall be capable of receiving messages for up to 8
hours using integral backup power.
III.2.8 User Replaceable Components
All user-replaceable components; e.g., batteries, diskettes, shall be
replaceable by the user without requiring special tools or a maintenance
technician.
III.2.9 Commercial Software
All commercial software fixes, patches, and revisions available free to licensed
users within the general public shall be provided free to the Government.
III.2.10 Handheld Mobile Unit (V1)
These requirements are applicable only to the Handheld Mobile Unit [V1].
a. Have integrated send/receive messaging capability per III.2.14.a.
b. Have integrated GPS capability.
c. Does not require a graphical map.
d. Contain the required battery.
e. Have one transit case per V1 as specified in III.2.13.
f. Reserved
g. Be water-resistant to the point that it remains fully functional in
the rain.
h. Requires an alphanumeric text display.
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i. Have an RS-232/RS-422 Interface conforming to the DoD Standard GPS User
Equipment Interface of Radio Receivers, if applicable.
III.2.11 Vehicle Mounted Mobile Unit (V2)
These requirements are applicable only to the V2.
a. Have integrated send/receive messaging capability per HI.2.14.a.
b. Have integrated GPS capability.
c. Have the capability to display full color graphical maps as described in
paragraph III.2.11.g.
d. Have one transit case per V2 as specified in III.2.13.
e. Ability to integrate with (mount, operate and draw power from) the host
vehicle without the need to relocate vehicle components or externally mount
non-antenna components. The first vehicle to use the MTS is the PLS. Some, but
not all, possible additional vehicles are the HEMTT, HET, M915 Tractor,
M800-series and M900-series (5-Ton), M35-series (2.5-Ton), LMTV, FMTV, FOX
(NBC), M1114/M998 (MP/C2) HMMWV, all wheeled ambulances and all recovery
vehicles.
f. Withstand shock and vibration experienced by the host vehicle without
becoming inoperable, when installed with an A-Kit developed per 6.11.9.
g. Provide computer imaging which simultaneously displays digital maps with
computer generated icons representing the geographic positions of user selected
MTS equipped operations. The MTS will utilize standard digital mapping data and
the map media provided by Defense Mapping Agency (now known as NIMA). V2 users
shall be able to view their location on the map. Additionally, both the V2 and
Control Station shall come configured with a commercial world-wide map to give
initial map background capability to the MTS in the event that a NIMA map is not
available. The resolution of this commercial map shall include at least country
boundaries, major cities and major highways and shall be zoomable to several
levels of granularity. Easy transition between this commercial world-wide map
and a user loaded NIMA map shall be provided.
h. Have the capability to perform the same functions as a Control Station, i.e.
to become a Control Station in a headquarters/operations center. The V2 shall
be capable of operating from standard 110-volt (CONUS) or 220-volt (OCONUS)
50/60 Hz commercial power. LAN/WAN connectivity is not required. The mobile unit
(except A-Kit mounting bracket and cables) must be easily installed and removed
in less than 10 minutes.
i. Two type II PCMCIA slots that can function as a type III PCMCIA slot,
available for future uses to be determined by the Government.
j. Have an RS-232/RS-422 Interface, available for future uses to be determined
by the Government
k. Have an additional RS-232/RS-422 Interface conforming to the DoD Standard GPS
User Equipment Interface of Radio Receivers, if applicable
III.2.12 Control Station
These requirements are applicable only to the Control Station.
a. Have integrated send/receive messaging capability per III.2.14.a
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b. Have integrated GPS capability
c. Have a separate transit case(s) as specified in III.2.13
d. Contain the required battery.
e. Be furnished with a portable color inkjet printer, capable of at least 300 x
300 dots per inch resolution, at least 3 pages per minute print speed, have an
industry standard 10 foot parallel cable
f. Weigh 30 pounds or less when stored in its transit case
g. The Control Station shall be a portable system capable of being set up in a
fixed environment. This requires that the Control Station be operable within 15
minutes of set up. All antenna cable length for the Control Station shall be at
least 100 feet
h. Be a laptop computer running in a windows operating system and shall be
capable of minimally storing sufficient map backgrounds for a 300 mile square
area of operations
i. Have the capability of using standard CD ROMS issued by NIMA containing
military map backgrounds
j. Be capable of loading map backgrounds to a mobile unit via a computer to
computer connection if the V2 cannot self-load the data
k. Provide computer imaging which simultaneously displays full color digital
maps, as described in paragraph III.2.11.g, with computer generated icons which
represent the geographic positions of operator selected MTS users. User with
Control Stations shall be able to view their own and subordinate users
l. Mapping product shall be expandable to have active layers in order to provide
pull down map data, such as bridge and road classifications, vehicle and cargo
locations and unclassified situational awareness overlays
m. Minimum Control Station hardware requirements:
Pentium 266 (P266) class processor
20x CDROM drive
128MB RAM
3.5" 1.44MB Floppy Drive
5.0 GB Hard drive
Active Matrix display
Two type II PCMCIA slots that can function as a type III PCMCIA slot,
available for future uses to be determined by the Government
RS-232 port, available for future uses to be determined by the Government
n. The Control Station software application shall also be capable of executing
as another active application on another Government provided computer which is
running in a Windows operating system environment.
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o. Have an additional RS-232/RS-422 Interface conforming to the DoD Standard GPS
User Equipment Interface of Radio Receivers, if applicable.
III.2.13 GPS
GPS has two signals. One signal is referred to as military requiring decryption
to obtain the precise location data and one is commercial. MTS shall use GPS
Joint Program Office (JPO) approved military GPS. However offerors may propose
either the military or civilian signal to meet requirements as follows:
a. If the military GPS signal is proposed then the embedded circuit design shall
be DoD GPS Joint Program Office (JPO) approved prior to submission of proposals.
Requirements for obtaining DoD GPS JPO approval can be obtained from that
organization. See Appendix I, Paragraph 1.2 b of this document for the address
and point of contact.
b. If the initial MTS does not have approved embedded military GPS then it shall
have an embedded commercial GPS capability with an external electronic interface
to a DoD PLGR such that the PLGR location data can be automatically sent to MTS
and override the commercial GPS data. The physical PLGR interface connection to
the MTS shall be readily accessible. Instructions for obtaining the PLGR
Interface Control Document are located at Appendix I, Paragraph I.2 b of this
document.
III.2.14 System Operational Requirements
These requirements are applicable to the entire system and all three
configurations (V1, V2 and Control Station).
a. The system shall provide near-real time two way data/messaging communications
between MTS equipped users (those with V1s, V2s, and Control Stations) at any
distance on a worldwide basis. The Government desires world-wide messaging
capability and availability at time of contract award. World-wide is defined at
Paragraph II.1.8.
b. The MTS will utilize standard digital mapping data and the map media provided
by Defense Mapping Agency (now known as NIMA) in ARC Digitized Raster Graphics
(ADRG), Compressed ADRG (CADRG) or Controlled Image Base (CIB) format.
c. The MTS shall provide the following transfer time for each message. Message
transfer time measurement shall start from the time the operator initiates
message transmission and ends when the message is received by a recipients unit
(CS, V1, V2).
100 Byte Messages
- ---------------------------
Delivery Percentile Delivery Time will be less than n (seconds)
95% 90
85% 30
75% 15
50% 6
32
<PAGE>
DAAB15-99-D-0014
Position Reports
- ---------------------------
Delivery Percentile Delivery Time will be less than n (seconds)
95% 15
85% 15
75% 3
50% 3
d. The system shall be capable of operating (tracking locations of users and
communicating) at any location world-wide and shall provide the capability for
delivery of messages to multiple recipients with a single transmission from the
sender.
e. The MTS system components, the V1, V2 and Control Stations, shall be capable
of operating without the use of direct telephone (landline or cellular)
connections or LAN/WAN/INTERNET direct connectivity. The Control Station
configuration, only, shall be capable of operating via telephone (landline or
cellular) as an alternate means of communication.
f. The system shall be operable immediately upon world-wide deployment without
changing any equipment, reconfiguring of equipment, or installation of new
equipment. The configuration of internal addresses in any software table is
permitted, so long as not to exceed 10 minutes and is able to be performed by
the end user.
g. Updating a user identification contained in the MTS shall require a minimum
of operator input and be completed in less than 2 minutes.
h. MTS message and position transmission and reception will use a system
designed to lower interception, detection, exploitation and jamming of message
traffic.
i. Provide both user definable, fixed format and user generated data
('free-text') communications between MTS equipped users.
j. Provide scheduled and on demand transmission of geographic positioning data.
k. The system shall be capable of displaying last known and current location of
selected MTS users along with the time/date of the last location report.
1. Permit installation and operation while wearing cold weather clothing and
Mission Oriented Protective Posture gear.
m. Permit installation while wearing Night Vision devices.
n. The system will not emit any noise that is higher than 70dB(A) at the
operators positions.
o. All MTS displays shall have automatic or operator adjustable brightness and
contrast controls.
p. All WS components shall be capable of surviving temperatures ranging from -25
to 120 degrees Fahrenheit. All MTS components that are exposed to the elements
(e.g. antennas, cables/connectors, etc.) must be able to operate in temperatures
ranging from -25 to 120 degrees Fahrenheit. MTS components that are operated
from a heated/cooled environment (cab of vehicle, operation center, etc.) must
be capable of operating within the temperature range of 25 to 100 degrees
Fahrenheit and the associated humidity ranges.
33
<PAGE>
DAAB15-99-D-0014
q. The Control Station shall have the capability to poll mobile units for data
at anytime.
r. MTS is an unclassified system. The MTS shall employ a commercial INFOSEC
capability to ensure against enemy exploitation of vehicle location and
logistics information through unauthorized access to message content. The MTS
shall employ INFOSEC measures that require the MTS operator to identify himself
to the MTS network This identification procedure shall be periodically updated.
The system shall notify the primary controlling station of failed operator
identification attempts. The Control Station shall have the capability to
prevent the operator in question from transmitting and receiving any messages.
s. Support objectives for initial operational capability shall be full organic
support. The use of built in test/built in test equipment, if feasible, will
reduce the maintenance burden.
t. System must fit into existing and future operational architectures without
creating new military occupational specialties (MOS) or creating a burden on
current MOS.
u. RESERVED
v. The Contractor shall certify with the submission of the proposal, that V1
and V2 Mobile Units are safe to use as close as five inches from unsbielded
munitions that contain 10 mA no-fire current, electro-explosive devices (EEDs).
This certification shall be required for each type of RF component provided on
the Contract, throughout the life of the Contract. A determination of the
required safe separation distance can be made by referring to the graph entitled
"Safe Separation Distance Between an RF Source and Unshielded Munitions
Containing 10 mA No-fire Current Electro-Explosive Devices (EEDs)" in Exhibit-A.
This graph relates safe separation distances to irradiated output power as a
function of operating frequency. Although many ordnance items have no EEDs, and
other items have EEDs that are less sensitive to RF energy, this requirement
represents a worst-case scenario that ensures safe operation around what
frequently is unknown ordnance (unknown to transporters and others).
Transmitters, RF Relays and any other emitter shall be furnished, with a
warning label that clearly indicates the safe separation distance that must be
maintained between ordnance and the irradiating source.
w. The MTS shall provide positive acknowledgement to the message sender/user.
34
<PAGE>
DAAB15-99-D-0014
EXHIBIT-A
SAFE SEPARATION DISTANCE BETWEEN A RF SOURCE AND UNSHIELDED
MUNITIONS CONTAINING 10 mA NO-FIRE CURRENT ELECTRO-EXPLOSIVE
DEVICES (EEDs)
[GRAPH OMITTED]
NOTE: The lines in the above graph are only a visual representation and may not
be accurate. Actual values for plotting all Slopes and Horizontals shall be
calculated using the equations provided in the chart.
III.2.15 Transit Cases
a. Ruggedized, reusable, rigid transit cases shall be provided for the V1, V2,
and the Control Station for use in storing and transporting the configurations
by surface or air. Each MTS configuration, V1, V2 and the Control Station shall
have a separate transit case. The transit cases shall be of sufficient size to
accommodate all component/items each of the configurations, an extra battery,
and related documentation.
35
<PAGE>
DAAB15-99-D-0014
b. Environmental and Weight Requirements. Transit cases shall protect the
components from damage resulting from dropping during cargo loading and
unloading; when transported as loose cargo over unpaved secondary roads; and
from water vapor, humidity, salt, and fog. The transit cases shall be capable
of withstanding temperatures ranging from -54 to 74 degrees C or -65 to 165
degrees F and relative humidity ranging from 0 to 100% over the temperature
extremes. The weight of equipment placed in the transit case shall be uniformly
distributed within the case in relation to the handles. The weight limit per
pair of handles of a case loaded with its equipment shall not exceed 37 lbs. The
weight for a loaded case with a single handle shall not exceed 18 lbs.
c. Contents. Transit cases shall contain inserts to protect the contents from
damage during transit and storage. Inserts shall be split so as to be an
integral part of the top and bottom pieces of the transit case. Cushioning
material used for the inserts shall be permanent, reusable, and have a
non-flaking surface.
d. Inventory List. Each transit case shall have a durable and permanent
inventory list of all items in the case. Graphic packing instructions shall be
affixed to the inside top cover and visible to the user.
e. Handles Location. The transit case handles shall be installed sufficiently
above the center of gravity of the equipment to ensure carrying stability and
preclude uncontrolled swinging or tilting of the case when lifted. Additionally,
the handles shall be positioned to allow the lifters to easily carry the transit
cases through doorways. When not in use, handles shall return to a closed
position by a spring-loaded mechanism or simple restraining mechanism. Clasps
shall be easily accessible and operable by personnel utilizing Mission Oriented
Protective Posture (MOPP) Gear or wearing low-temperature, protective gloves.
f. Labeling. Labels shall be placed horizontally (to the front of the case) and
externally on the top of each transit case in a consistent manner to identify:
(1) gross or loaded weight, (2) volume in cubic feet and cubic centimeters, and
(3) external linear dimensions in inches and centimeters. All transit cases with
a total loaded case weight between 35 and 70 pounds shall be clearly marked as
"TWO-PERSON LIFT" and all cases with a total loaded weight exceeding 70 pounds
shall be clearly marked as "FOUR-PERSON LIFT".
g. Attributes. The transit cases shall contain an automatic, pressure-vacuum
relief valve that shall accommodate transportation by air. The cases shall allow
stacking of up to four like cases, that are loaded, on one another with no
skidding.
h. Color. Transit cases shall be olive drab green in color.
III.2.16 Pre-Planned Product Improvements (P31) Expandability
a. As a future growth capability, MTS will be capable of interfacing with
several types of systems, such as, receiving, storing and transmitting data from
Automated Identification Technology (AIT), i.e., bar code readers, radio
frequency tags, etc. MTS must also provide the capability for electronic linkage
to and from an Army specified Standard Army Management Information System
(STAMIS), command and control system via LAN/WAN, satellite or other
communications system. MTS may be used as a wireless conduit for data transfer.
MTS will also have the capability to receive, store, transmit vehicle
diagnostic/prognostic data.. MTS will transition to the GPS Receiver Application
Module/Selective Availability Anti-Spoofing Module (GRAM/SAASM). This growth
capability is required in the initial contract, but exact interfaces
36
<PAGE>
DAAB15-99-D-0014
will be specified and developed via a future contract modification. MTS will be
capable of migrating to future mapping products produced by NIMA.
37
<PAGE>
DAAB15-99-D-0014
b. Other areas identified for future growth capability, include the capability
to interface with multiple satellite service providers. The capability to
provide position location in the absence of the GPS signal. Interface with
Transportation Coordinators'-Automated Information for Movements System
(TC-AIMS) II, the Army Battle Command System (ABCS) (to include Maneuver Control
System (MCS), Force XXI Battle Command Brigade and Below (FBCB2) and Combat
Service Support Computer System (CSSCS)) in order to update ABCS' situational
awareness and logistical picture with MTS equipped units TC AIMS II Interface.
MTS will allow soldiers to conduct operations with night vision devices. The MTS
will provide migration paths to achieve higher levels of classification and
LPI/LPD. The MTS will provide High Altitude Electro-Magnetic Pulse (HAEMP)
protection. The MTS, will provide NBC Contamination survivability. The MTS shall
provide HAEMP, ECM, ECCM, and EM Interference, etc. survivability. Capability
for dead reckoned positions.
END OF APPENDIX III TO STATEMENT OF WORK
38
<PAGE>
APPENDAGE# 1 TO DD FORM 254
SAFEGUARDING "FOR OFFICIAL USE ONLY" (FOUO) INFORMATION
Provided by the Security Support Division
Directorate for Intelligence & Information Security
1. The "For Official Use Only" (FOUO) marking is assigned to information at the
time of its creation in a DOD User Agency. It is not authorized as a substitute
for a security classification marking but it is used on official government
information that may be withheld from the public under exemptions 2 through 9 of
the Freedom of Information Act.
2. Other non-secutity markings, such as "Limited Official Use" and "Official Use
Only" are used by non-DoD User Agencies for the same type of information and
should be safeguarded and handled in accordance with instructions received from
such agencies.
3. Use of the above markings does not mean that the information cannot be
released to the public, only that it must be reviewed by the Government prior to
its release to determine whether a significant and legitimate government purpose
is served by withholding the information or portions of it.
4. IDENTIFICATION MARKINGS
a. An unclassified document containing FOUO information will be marked
"FOR OFFICIAL USE ONLY" at the bottom of the front cover (if any), on the
first page, on each page containing FOUO information, on the back page, and on
the outside of the back cover (if any). No portion marking will be shown.
b. Within a classified document an individual page that contains FOUO and
classified information will be marked at the top and bottom with the highest
security classification appearing on the page. If an individual portion contains
FOUO information but no classified information, the portion will be marked,
"FOUO".
c. Any "FOR OFFICIAL USE ONLY" information released to a contractor by a DoD
User Agency is requi!red to be marked with the following statement prior to
transfer.
THIS DOCUMENT CONTAINS INFORMATION EXEMPT FROM MANDATORY DISCLOSURE UNDER THE
FOIA. EXEMPTIONS ----------- APPLY
d. Removal of the "FOR OFFICIAL USE ONLY" marking can only be accomplished by
the originator or other competent authority. When "FOR OFFICIAL USE ONLY" status
is terminated, all known holders will be notified to the extent practical.
S. DISSEMINATION: Contractors may disseminate "FOR OFFICIAL USE ONLY"
information to their employees and subcontractors who have a need for the
information in connection with a classified contract.
6. STORAGE During working hours, "FOR OFFICIAL USE ONLY" information shall be
placed in an out-of-sight location if the work area is accessible to persons who
do not have a need for the information. During nonworking hours, the information
shall be stored to preclude unauthorized access. Filing such material with other
unclassified records in unlocked files or desks, is adequate when internal
building security is provided during
<PAGE>
nonworking hours. When such internal security control is not exercised, locked
buildings or rooms will provide adequate after-hours protection or the material
can be stored in locked receptacles such as file cabinets, desks or bookcases.
7. TRANSMISSION: "FOR OFFICIAL USE ONLY" information may be sent via first-class
mail or parcel post. Bulky shipments may be sent by fourth-class mail.
8. DISPOSITION: When no longer needed, FOUO information may be disposed of by
tearing each copy into pieces to preclude reconstructing, and placing it in a
regular trash container or as directed by the User Agency.
9. UNAUTHORIZED DISCLOSURE: Unauthorized disclosure of "FOR OFFICIAL USE ONLY"
information does not constitute a security violation but the releasing agency
should be informed of any unauthorized disclosure. The unauthorized disclosure
of FOUO information protected by the Privacy Act may result in criminal
sanctions.
<PAGE>
APPENDAGE #2 TO DD FORM 254
ADDITIONAL SECURITY GUIDELINES FOR COMSEC
Provided by Security Support Division
Directorate for Intelligence & Information Security
ADDITIONAL COMSEC GUIDELINES
Contractor Generated COMSEC Material: Any material generated by the contractor
(including, but not limited to: correspondence, drawings, models, mockups,
photographs, schematics, status programs and special inspection reports,
engineering notes, computations and training aids) will be classified according
to its own content Classification guidance will be taken from other elements of
this Contract Security Classification Specification, DD Form 254, Government
furnished equipment or data, or special instructions issued by the Contracting
Officer, or his/her duly appointed representative.
REQUIREMENTS
1. Contractor employees or cleared commercial carriers shall not carry
classified COMSEC material on commercial passenger aircraft anywhere in the
world without the approval of the procuring and/or the administrative
contracting officer.
2. No contractor generated COMSEC or government furnished material may be
provided to the Defense Technical Information Center (DTIC). Contractor
generated technical reports will bear the statement "Not Releasable to the
Defense. Technical Information Center per DOD Directive, 5100-38."
3. No contractor generated COMSEC or government furnished material may be
provided to the Defense Documentation Center. Contractor generated technical
reports will bear the statement "Not Releasable to the Defense Documentation
Center per DOD Instruction 5100.28."
4. Classified paper COMSEC material may be destroyed by burning, pulping, or
pulverizing. When a method other than burning is used, all residue must be
reduced to pieces 5mm or smaller in any dimension. When classified COMSEC
material other than paper is to be destroyed, specific guidance must be obtained
from the User Agency.
5. The following downgrading and declassification notation applies to all
classified COMSEC information provided to and generated by the contractor.
DERIVED FROM: NSA/CSSM-123-2
DECLASSIFY ON: Source marked "OADR"
DATE OF SOURCE: (Date of document from which information is derived)
6. All contractor personnel to be granted access to classified COMSEC
information must be U.S. citizens granted FINAL clearance by the government
prior to being given access. Immigrant aliens, interim cleared personnel, or
personnel holding a contractor granted CONFIDENTIAL clearance are not eligible
for access to classified COMSEC information released or generated under this
contract without the express
<PAGE>
permission of the Director, NSA. If applicable; contractor personnel having
access to TOP SECRET COMSEC material must comply with AR 380-40, Chapter 8 and
be registered in the Department of the Army Cryptographic Access Program
(DACAP).
7. Unclassified COMSEC information released or generated under this contract
shall be restricted in its dissemination to personnel involved in the contract.
Release in open literature or exhibition of such information without the express
written permission of the Director, NSA, is strictly prohibited.
S. Recipients of COMSEC information under this contract may not release
information to subcontractors without permission of the User Agency.
9. The requirements of DOD 5220-22-M National Industrial Security Program
Operating Manual (NISPOM) and COMSEC Supplements are applicable to this effort.
10. Additional notices to be affixed to the cover and title or first page of
contractor generated COMSEC documents:
a. "COMSEC MATERIAL - ACCESS BY CONTRACTOR PERSONNEL RESTRICTED TO U.S.
CITIZENS HOLDING FINAL GOVERNMENT CLEARANCE."
b. "THIS PUBLICATION OR INFORMATION IT CONTAINS MAY NOT BE RELEASED TO
FOREIGN NATIONALS WITHOUT PRIOR SPECIFIC APPROVAL FROM THE DIRECTOR, NSA. ALL
APPROVALS WILL IDENTIFY THE SPECIFIC INFORMATION AND COPIES OF THIS PUBLICATION
AUTHORIZED FOR RELEASE TO SPECIFIC FOREIGN HOLDERS. ALL REQUESTS FOR ADDITIONAL
ISSUANCES MUST RECEIVE PRIOR SPECIFIC APPROVAL FROM THE DIRECTOR, NSA."
2
<PAGE>
DAAB15-99-D-0014
PART III.d
NOTE: Offerors take exception to requirements at their own risk.
Tbe Government may choose not to negotiate with any offerer who takes exception
to any requirement.
OFFEROR'S CERTIFICATION OF REQUIREMENTS
Except as noted below, the offeror hereby certifies that their proposal
submitted in response to solicitation DAAB 15-99-R-0004 meets all the
requirements of the solicitation (including Part III.b). This applies to all
proposed products and products proposed under Part III.b, paragraph 6.6.2,
Current Technology Substitutions/Insertions/Additions. In the event that the
offeror is awarded the contract and fails to successfully complete the
validation demonstration required by Part III.b, paragraph 6.1.2, of the
solicitation, or that the offered products or services fail to meet the
requirements, the Government may require the contractor, at no additional cost,
to make any changes necessary to the products or services. or the Government may
terminate the contract at no cost to the Government and may award the contract
to the offeror who is next in line for award. In the latter case, the offeror
shall not be entitled to the contract guaranteed amount.
Paragraph # Exception and Rationale for Exception
- ----------- --------------------------------------------------
- ----------- --------------------------------------------------
- ----------- --------------------------------------------------
- ----------- --------------------------------------------------
- ----------- --------------------------------------------------
- ----------- --------------------------------------------------
- ----------- --------------------------------------------------
Signature:
Print/Type Name: Joel R. Alper
Title: President
Part IV: PROVISIONS
Part IV.g: Offeror's Certification of Requirements
File Name: Tab 2, Vol 4 Contracts.doc
43
<PAGE>
DEPARTMENT OF DEFENSE
CONTRACT SECURITY CLASSIFICATION SPECIFICATION
(The requirements of the DoD Industrial Security Manual apply
to all security aspects of this effort.)
1. CLEARANCE AND SAFEGUARDING
a. FACILITY CLEARANCE REQUIRED
SECRET
----------------------------------------------------------------------------
b. LEVEL OF SAFEGUARDING REQUIRED
NONE
________________________________________________________________________________
2. THIS SPECIFICATION IS FOR: (X and complete as applicable)
[X] a. PRIME CONTRACT NUMBER
DAAB15-99 D-0014
----------------------------------------------------------------------------
[ ] b. SUBCONTRACT NUMBER
----------------------------------------------------------------------------
[ ] c. SOLICITATION OR OTHER NUMBER
DAAB15-99-R-0004
----------------------------------------------------------------------------
DUE DATE (YYMMDD)
________________________________________________________________________________
3. THIS SPECIFICATION IS: (X and complete as applicable)
[X] a. ORIGINAL (Complete date in all cases) Date (YYMMDD)
98 03 02
----------------------------------------------------------------------------
[X] b. REVISED Revision No. Date (YYMMDD)
(Supersedes all previous specs) 001 99 05 10
----------------------------------------------------------------------------
[ ] c. FINAL Date (YYMMDD)
(Complete item 5 in all cases)
----------------------------------------------------------------------------
________________________________________________________________________________
4. IS THIS A FOLLOW-ON CONTRACT? [ ] YES [X] NO. If yes, complete the
following:
Classified material received or generate under ____________________________
(Preceding Contract Number) is transferred to this follow-on contract.
________________________________________________________________________________
5. IS THIS A FINAL DD FORM 254? [ ] YES [X] NO. If yes, complete the
following:
In response to the contractor's request dated _______________, retention of
the identified classified material is authorized for this period of
_____________________
________________________________________________________________________________
6. CONTRACTOR (Include Commercial and Government Entity (CAGE) Code)
________________________________________________________________________________
a. NAME, ADDRESS AND ZIP CODE b. CAGE CODE c. COGNIZANT SECURITY OFFICE
(Name, Address and Zip Code)
Comtech Mobile Datacom Corp.
19540 Amaranth Drive 04NA3
Germantown, MD 20874
________________________________________________________________________________
7. SUBCONTRACTOR
________________________________________________________________________________
a. NAME, ADDRESS AND ZIP CODE b. CAGE CODE c. COGNIZANT SECURITY OFFICE
(Name, Address and Zip Code)
________________________________________________________________________________
<PAGE>
8. ACTUAL PERFORMANCE
________________________________________________________________________________
a. LOCATION b. CAGE CODE c. COGNIZANT SECURITY OFFICE
(Name, Address and Zip Code)
TBD
________________________________________________________________________________
9. GENERAL IDENTIFICATION OF THIS PROCUREMENT
To acquire commercial communications equipment, associated computers, integation
services, maintenance, airtime, and technical support services to support the
U.S. Army Movement Tracking System (MTS).
________________________________________________________________________________
10. THIS CONTRACT WILL REQUIRE ACCESS TO: YES NO
a. COMMUNICATION SECURITY (COMSEC) INFORMATION [X] [ ]
b. RESTRICTED DATA [ ] [X]
c. CRITICAL NUCLEAR WEAPON DESIGN INFORMATION [ ] [X]
d. FORMERLY RESTRICTED DATA [ ] [X]
e. INTELLIGENCE INFORMATION:
(1) Sensitive Compartmented Information (SCI) [ ] [X]
(2) Non-SCI [ ] [X]
f. SPECIAL ACCESS INFORMATION [ ] [X]
g. NATO INFORMATION [ ] [X]
h. FOREIGN GOVERNMENT INFORMATION [ ] [X]
i. LIMITED DISSEMINATION INFORMATION [ ] [X]
j. FOR OFFICIAL USE ONLY INFORMATION [X] [ ]
k. OTHER (specify) [ ] [X]
________________________________________________________________________________
11. IN PERFORMING THIS CONTRACT, THE CONTRACTOR WILL: YES NO
a. HAVE ACCESS TO CLASSIFIED INFORMATION ONLY AT
ANOTHER CONTRACTOR'S FACILITY OR A GOVERNMENT
ACTIVITY [ ] [X]
b. RECEIVE CLASSIFIED DOCUMENTS ONLY [ ] [X]
c. RECEIVE AND GENERATE CLASSIFIED MATERIAL [ ] [X]
d. FABRICATE, MODIFY, OR STORE CLASSIFIED HARDWARE [ ] [X]
e. PERFORM SERVICES ONLY [X] [ ]
f. HAVE ACCESS TO U.S. CLASSIFIED INFORMATION
OUTSIDE THE U.S., PUERTO RICO, U.S. POSSESSIONS
AND TRUST TERRITORIES [ ] [X]
g. BE AUTHORIZED TO USE THE SERVICES OF DEFENSE
TECHNICAL INFORMATION CENTER (DTIC) OR OTHER
SECONDARY DISTRIBUTION CENTER [ ] [X]
h. REQUIRE A COMSEC ACCOUNT [ ] [X]
i. HAVE TEMPEST REQUIREMENTS [ ] [X]
j. HAVE OPERATIONS SECURITY (OPSEC) REQUIREMENTS [ ] [X]
k. BE AUTHORIZED TO USE THE DEFENSE COURIER SERVICE [ ] [X]
l. OTHER (Specify) [ ] [X]
________________________________________________________________________________
DD Form 254, DEC 90 Part III.c Previous editions are obsolete USAPPC V1.00
<PAGE>
12. PUBLIC RELEASE. Any information (classified or unclassified) pertaining to
this contract shall not be released for public dissemination except as
provided by the Industrial Security Manual or unless it has been approved
for public relase by appropriate U.S. Government authority. Proposed public
releases shall be submitted for approval prior to release
[ ] Direct [X] Through (Specify):
CECOM Aquisition Center - Washington
2461 Eisenhowere Ave., Hoffman 1, Rm 284
Alexandria, VA 22331-0700
to the Directorate for Freedom of Information and Security Review, Office
of the Assistant Secretary of Defense (Public Affairs)* for review.
* In the case of non-DoD User Agencies, requests for disclosure shall be
submitted to that agency.
________________________________________________________________________________
13. SECURITY GUIDANCE. The security classification guidance needed for this
classified effort is identified below. If any difficulty is encountered
in applying this guidance or if any other contributing factor indicates a
need for changes in this guidance, the contractor is authorized and
encouraged to provide recommended changes; to challenge the guidance or the
classification assigned to any information or material furnished or
generated under this contract; and to submit any questions for
interpretation of this guidance to the official identified below. Pending
final decision, the information involved shall be handled and protected at
the highest level of classification assigned or recommended. (Fill in as
appropriate for the classifed effort. Attach, or forward under separate
correspondence, any documents/guides/extracts referenced herein. Add
additional pages as needed to provide complete guidance.)
All Contractor personnel requiring access to a facility where services are to be
performed shall have SECRET clearances. Contractor personnel will be required to
work in a limited and controlled access areas. Contractor personnel may be
exposed to cryptographic equipment and documentation up to the SECRET level.
The Contractor shall furnish personnel clearance information in accordance with
the National Industrial Security Program Operating Manual (NISPOM) to the
Security Office at the location where services are to be performed.
The information contained in this form is certified to the best of my knowledge
as being accurate and complete.
FOUO Protection - Appendage #1
CONSEC - Appendage #2
________________________________________________________________________________
14. ADDITIONAL SECURITY REQUIREMENTS. Requirements, [ ] YES [x] No
in addition to ISM requirements, are established
for this contract. (If Yes, identify the
pertinent contractual clauses in the contract
document itself, or provide an appropriate
statement which identifies the additional
requirements. Provide a copy of the requirements
to the cognizant security office. Use Item 13
if additional space is needed.)
________________________________________________________________________________
15. INSPECTIONS. Elements of this contract are [ ] YES [x] No
outside the inspection responsibility of the
cognizant security office. (If Yes, explain
and identify specific areas or elements carved out
and the activity responsible for inspections.
Use Item 13 if additional space is needed.)
________________________________________________________________________________
16. CERTIFICATION AND SIGNATURE. Security requirements stated herein are
complete and adequate for safeguarding the classified information to be
released or generated under this classified effort. All questions shall be
referred to the official named below.
- --------------------------------------------------------------------------------
a. TYPED NAME OF b. TITLE c. TELEPHONE
CERTIFYING OFFICIAL (Include Area Code)
HERBERT R. ANDRESEN Product Manager, MTS (804) 734-6047
- --------------------------------------------------------------------------------
d. ADDRESS (Include Zip Code)
Department of Army
PM GCSS-ARMY
800 Lee Ave., Ft. Lee, VA 23801-1718
- --------------------------------------------------------------------------------
e. Signature
________________________________________________________________________________
<PAGE>
17. REQUIRED DISTRIBUTION
[X] a. CONTRACTOR
[ ] b. SUBCONTRACTOR
[X] c. COGNIZANT SECURITY OFFICE FOR PRIME AND SUBCONTRACTOR
[ ] d. U.S. ACTIVITY RESPONSIBLE FOR OVERSEAS SECURITY ADMINISTRATION
[X] e. ADMINISTRATIVE CONTRACTING OFFICER
[ ] f. OTHERS AS NECESSARY
________________________________________________________________________________
DD Form 254 Reverse, DEC 90 Part III.c USAPPC V1.00
LICENSE AGREEMENT
Between
Vistar Telecommunications Inc.
Suite 1410, 427 Laurier Avenue West
Ottawa, Ontario, Canada, K1G 3J4
(hereinafter referred to as "Vistar")
And
Comtech Mobile Datacom Corp.
19540 Amaranth Dr. P.O. Box 2126
Germantown, Maryland, USA, 20875-2126
(hereinafter referred to as "CMDC")
WHEREAS, Vistar and CMDC entered into a Memorandum of Agreement (MOA) dated
December 12, 1997 intending to pursue opportunities related to the development
and supply of mobile satellite terminals for use on domestic and international
satellite systems and having identified an opportunity with the United States
Department of Defense under the Commercial Operations and Support Savings
Initiative (the "Project");
WHEREAS, Vistar intended to provide engineering capabilities with respect to
designing and prototyping mobile satellite terminals;
WHEREAS, CMDC intended to provide engineering capabilities with respect to
designing and producing satellite access and control equipment and is a supplier
of mobile satellite equipment to the American Government and commercial users;
WHEREAS, pursuant to the said MOA the Parties intended to enter into a
Development and Supply Contract (DSC) within 90 days;
WHEREAS, the Parties commenced performance of their respective obligations but
failed to enter into a DSC;
WHEREAS, CMDC is now desirous of licensing certain Vistar Technology for the
purpose of continuing with the Project, including the development and marketing
of Mobile Satellite Terminals;
WHEREAS, Vistar is desirous of granting CMDC certain rights to license its MST
Technology;
NOW THEREFORE, in mutual consideration, the payment and sufficiency of which is
hereby expressly acknowledged by both Vistar and CMDC, the Parties hereby agree
as follows:
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1. DEFINITIONS
Defined terms used in this License Agreement shall have the meanings set forth
below:
1.1 "Background Technology" shall mean all technology incorporated into
the MST that is not first conceived, developed or reduced to practice
as part of the activities carried out by the Parties pursuant to the
terms of this Agreement and/or the MOA. Background Technology
includes, without limitation, any hardware and software designs that
come with Vistar to this Agreement and are proprietary to, or the
Confidential Information of Vistar, its subcontractors or any other
supplier of Vistar.
1.2 "CECOM" shall mean the United States Army Communications - Electronics
Command.
1.3 "Confidential Information" or "Information" shall mean all materials
relating to the business or affairs of either Party whether of a
financial, technical operation or economic nature including, without
limitation, MTS Technology, Background Technology, all unpublished
know-how, technical data, techniques, records, formulae, processes,
designs, sketches, photographs, plans, drawings, specifications,
samples, reports, studies, manuals, documents, prototypes, business
plans, equipment, working materials, lists of customers, findings,
inventions and ideas whether patentable or not, whether they be trade
secrets or not and whether they be in written, machine readable,
graphic or oral form, that are now or hereafter owned or acquired by
the Disclosing Party and disclosed to the Receiving Party. It is
expressly understood that Confidential Information shall include all
copies and/or reproductions made by the Receiving Party of Information
originally provided under this License Agreement and that all
Confidential Information shall at all times remain the property of the
Disclosing Party. Confidential Information does not include
information which the Receiving Party can clearly demonstrate to the
satisfaction of the Disclosing Party:
(i) is at the time of disclosure, or thereafter becomes, a part of
the public domain through no act or error by the Receiving Party;
or
(ii) was in the lawful possession of the Receiving Party before
disclosure by the Disclosing Party as shown by competent written
evidence and was not already subject to an agreement between the
Parties restricting the disclosure of the said Confidential
Information; or
(iii)is developed independently by the Receiving Party prior to
receipt of the Information from the Disclosing Party, as shown by
competent written evidence; or
(iv) is required to be released under court order or government
regulation, provided that, to the extent permitted by law, the
Disclosing Party is promptly given a copy of such order and the
Receiving Party co-operates with the Disclosing Party if the
Disclosing Party elects to dispute such requirement for
disclosure.
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1.4 "Deliverables" shall mean the items including, without limitation, the
Technology stipulated in Schedules A and B that one Party to this
Agreement is obligated to provide to the other.
1.5 "Disclosing Party" shall mean the Party to this Agreement that
discloses Confidential Information to the Receiving Party.
1.6 "Dispute" shall mean any disagreement or dispute arising under, out
of, in connection with or relating to the intent or operation of this
License Agreement.
1.7 "Effective Date" shall mean the date upon which this License Agreement
becomes effective, which shall be deemed by the Parties to be
_________________ .
1.8 "Intellectual Property" shall mean all forms of intellectual property
pertaining to the subject matter of this License Agreement, and may
include, without limitation, all right, title and interest in and to
all:
(i) issued patents and all filed or pending applications for patents,
including any continuations, continuations in part, re-issues,
re-examinations, substitutions and extensions thereof, in any
country or other jurisdiction in the world; (ii) trade secrets,
and all trade secret rights and equivalent rights arising under
the common law, state law, Federal law, Provincial law and laws
of foreign countries; (iii) mask works, copyrights, other
literary property or authors' rights, whether or not protected by
copyright or as a mask work, under common law, state law, Federal
law, Provincial law and laws of foreign countries; (iv)
proprietary indicia, trademarks, trade names, symbols, logos
and/or brand names under common law, state law, Federal law,
Provincial law and laws of foreign countries; and (v) other
Confidential Information.
1.9 "Intellectual Property Rights" shall mean all forms of intellectual
property rights and protection in any country or other jurisdiction of
the world that may be obtained for, or pertain to Intellectual
Property.
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1.10 "License" shall mean the license, granted by Vistar to CMDC, subject
to the terms and conditions of this Agreement, including, without
limitation, those set out in Section 3.
1.11 "License Agreement" or "Agreement" shall mean this legal document and
the Schedules hereto, containing the rights and obligations of the
Parties, including, without limitation, those relating to the
Deliverables and the licensing by Vistar to CMDC of certain rights in
the MST Technology.
1.12 "Marks" shall mean all trademarks, trade names, symbols, brand names,
logos and other proprietary indicia wherein a Party to this Agreement
has a right, title or interest.
1.13 "Material Breach" unless otherwise stated, shall mean a failure by one
Party to perform a material covenant, condition or obligation of this
Agreement.
1.14 "Mobile Satellite Terminal" or "MST" shall mean a terminal containing
MST Technology.
1.15 "Mobile Satellite Terminal Technology", "MST Technology" or
"Technology" shall mean the Vistar proprietary terminal design
contained within the Vistar Deliverables including all Intellectual
Property Rights therein licensed to CMDC pursuant to the terms of this
Agreement.
1.16 "Receiving Party" shall mean the Party to this Agreement that receives
Confidential Information from the Disclosing Party.
1.17 "Royalty" or "Royalties" shall mean the payments which CMDC is
obligated to pay Vistar in accordance with the terms of Section 3.3 of
this Agreement.
1.18 "Specifications" shall mean the MTS system and terminal specifications
attached hereto as Schedule C.
1.19 "Term" shall have the meaning set forth in Section 5 of this License
Agreement.
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2. DELIVERABLES
2.1 Vistar Deliverables.
Vistar hereby agrees to provide to CMDC the Deliverables in accordance
with the terms of Schedule A. Upon CMDC's receipt of such Deliverables,
and upon Vistar's receipt of payment for such Deliverables in accordance
with the terms of Section 4, Vistar agrees to grant CMDC the License
described in Section 3.
2.2 CMDC Deliverables.
CMDC hereby agrees to provide to Vistar the Deliverables set out in
Schedule B. It is expressly understood that Vistar requires such CMDC
Deliverables inasmuch as the said CMDC Deliverables are required by Vistar
in order for it to commence and/or continue performance of Vistar's
obligations. Such CMDC Deliverables, including but not limited to PCB
boards, enclosures, components and connectors associated with the
prototype Rev D units shall be manufactured, provided and assembled in
accordance with the requirements set out in the Vistar Deliverables.
2.3 Inventory in Stock.
Vistar agrees to provide to CMDC, in a timely manner, for use by CMDC and
or its manufacturer, any inventory held by Vistar on May 14, 1999 of
applicable parts for up to six (6) prototype boards.
2.4 CMDC Indemnification.
Any costs incurred by CMDC and/or its manufacturer relating to the
obligations of this Section are the responsibility of CMDC. Subject to the
terms of this Agreement, including, without limitation, Section 7, CMDC
assumes liability associated with the obligations of CMDC under this
Section and indemnifies Vistar for any losses and/or damages incurred by
Vistar in connection with CMDC's failure to perform its obligations under
this Section.
2.5 Vistar Indemnification.
Subject to the terms of this Agreement, including without limitation,
Section 7, Vistar assumes liability associated with the obligations of
Vistar under this Section 2 and indemnifies CMDC for any losses and/or
damages incurred by CMDC in connection with Vistar's failure to perform
its obligations under this Section.
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3. LICENSE AND ROYALTIES
3.1 No Transfer of Technology.
Except as expressly set out in this Section 3, this Agreement shall not
result in a conveyance, transfer of title, license, or grant of any rights
in any technology or Intellectual Property of one Party to another.
3.2 Mobile Satellite Terminal License.
In consideration of CMDC's obligations under this Agreement, Vistar hereby
grants to CMDC during the Term of this Agreement only:
(i) a non-exclusive, non-transferable license to use, modify,
maintain, lease or sell Mobile Satellite Terminals containing MST
Technology;
(ii) subject to the provisions of Subsection 3.2(iv), a non-exclusive,
non-transferable license to provide, to the MST manufacturers
selected by CMDC, the MST Technology excluding Source Code
required by such manufacturers for the sole purpose of
manufacturing MSTs. However, the Parties expressly agree that in
the event the manufacturer selected by CMDC is not located in the
United States or Canada, CMDC must obtain the prior written
consent of Vistar, which consent shall not be unreasonably
withheld, for release of MST Technology to the Manufacturer;
(iii)notwithstanding Subsection 3.2(i) above, subject to the
requirement to obtain Vistar's prior written consent in each
case, which consent shall not be unreasonably withheld, and
subject to the terms of Subsection 3.2(iv) as well as any other
commercially reasonable terms stipulated by Vistar, Vistar agrees
to grant CMDC the right to sub-license MST Technology, on a case
by case basis, to third parties. The Parties hereby acknowledge
that such commercial terms may, in Vistar's sole discretion,
include amendments to, or replacements of, the terms respecting
Royalties. In such an event, the Parties agree, for the purposes
of only the specific sub-license under consideration, to enter
into a written agreement reflecting any such amendments. In the
event that Vistar grants its consent to a sub-license it is
expressly understood that CMDC remains responsible for the
payment to Vistar of all Royalties associated with MSTs
sub-licensed in accordance with the terms of this Subsection
3.2(iii) and/or for any other payments due to Vistar pursuant to
the said modifications to the Royalty terms;
iv) In the event that MST Technology, or part thereof is authorized
by Vistar for release to a third party manufacturer pursuant to
Subsection 3.2(ii) above, or the granting of a sub-license to a
third party is authorized by Vistar pursuant to Subsection
3.2(iii) then as a pre-condition to the said authorization coming
into effect, CMDC must enter into (i) a sub-license agreement, in
a form satisfactory to Vistar, with such third party stipulating
the terms of the
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sub-license; and (ii) a Confidentiality Agreement in the form set
out in Schedule D with such third party and Vistar. CMDC hereby
agrees to indemnify Vistar for all losses and/or damages
including, without limitation, legal fees, resulting from the
breach of such agreement by such third party.
3.3 Royalties.
(i) CMDC will also pay to VISTAR, upon successful production and sale
of Mobile Satellite Terminals, a Royalty calculated at the rate
of XX dollars ($XX) per MST for up to and including
each of the first ten thousand (10,000) terminals produced and
sold, and XX dollars ($XX) per terminal for each and every
terminal produced and sold thereafter.
(ii) Unless the Term of this Agreement is extended pursuant to Section
6.2, the Royalty shall be payable for a period of six (6) years
commencing on the production of the first commercial MST. In the
event that the Term of the Agreement is extended pursuant to
Section 6.2 then the Royalty shall continue to be payable to
Vistar for an additional period equivalent to the length of the
extension to the Term. It is expressly agreed that in accordance
with this methodology, CMDC's obligations to pay Royalties will
continue after the expiration of the Term of the Agreement until
the expiration of the periods of time described in this
Subsection.
(iii)Royalties shall be paid on a quarterly basis with the payments
reflecting the Royalties associated with MSTs produced and sold
during the immediately preceding quarter. A report detailing the
Royalty calculation shall be provided with each Royalty payment.
On an annual basis, at Vistar's option, Vistar can request an
audit of the Royalty calculation. The audit will be at Vistar's
expense unless it is determined through the audit that CMDC
failed to pay any Royalties owing to Vistar under this Agreement,
exceeding five percent (5%) of the Royalty amount paid by CMDC in
which case, CMDC shall bear all costs of the audit.
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4. MILESTONE AND PAYMENT
4.1 Vistar Schedule of Milestones and Corresponding CMDC Payments.
Milestone
Milestone Date Milestone Description Amount
- -------------------------- ------------------------------------ ----------------
WEEK 2 Letter of Intent May 14, 1999 Rev C Documentation Package:
o Softcopy Schematic
o Softcopy (Board) Layout $XX
o Softcopy Mechanical Drawing
of Enclosure
o Bill of Materials (Costed)
o Specifications for Custom
o Order Parts (Hardcopy)
o Test Proecedure (Softcopy)
o Softcopy (or hardcopy)
mechanical drawing of antenna
- -------------------------- ------------------------------------ ----------------
WEEK 14, AUG. 9, 1999 Execution of Transfer of Licensing $XX
Agreement
WEEK 8, 6/25/99 Rev D Schematic and
WEEK 10, 7/13/99 BOM (Prototype Build)
WEEK 11, 7/23/99 Rev D Layout Sent for Board Build $XX
WEEK 17, 8/26/99 Start of Rev D Test $XX
WEEK 11, 7/23/99 Rev D Enclosure Drawings $XX
WEEKS 17-23
8/26-10/7 Rev D Test
WEEK 24, 10/14 Deliver Rev D Hardware-Golden Boards
Deliver Rev D Documentation
WEEK 25, 10/21 Deliver Rev D Software $XX
Deliver Test Equipment (Item 2),
OS License (Item 4)
COMPLETION TOTAL $XX
- -------------------------- ------------------------------------ ----------------
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4.2 Payment Terms.
Subject to the terms of this Agreement, CMDC shall pay, and VISTAR agrees
to accept the sum of XX dollars ($XX)
in satisfaction of its obligation to provide Deliverables in accordance
with this Agreement. The Parties agree that payment for Vistar
Deliverables shall be made in accordance with the above Mileston Schedule.
Vistar shall invoice CMDC immediately upon completion of a Milestone. All
Milestone payments shall be paid by CMDC net thirty (30) days from receipt
of an invoice.
4.3 CMDC Schedule of Milestones.
Milestone Date Milestone Description
- ------------------------------------------------------------------------
8/26/99 Two Prototype Rev D Boards ready for Test
9/2/99 Two Sets of Test Housings
5. TAXES
Except for taxes on the income of Vistar, CMDC shall be responsible for any and
all taxes of whatever nature due or arising under or out of this Agreement. All
rates and/or prices set forth in Subsections 3.3, 4.1(i), 15.19 and 15.20 are
exclusive of any and all taxes, levies, assessments, surcharges, duties or
similar items assessed by a government body, and CMDC shall be solely and
exclusively responsible for collection, remittance and/or compliance with any
such taxes.
6. TERM
6.1 Initial Term.
This License Agreement shall come into force on the Effective Date and
shall remain in effect for a period of six (6) years from the production
of the first commercial MST or, in the event that CMDC fails to
commercially produce MSTs, eighteen (18) months from the Effective Date.
6.2 Extension to Initial Term.
At CMDC's option, and subject to CMDC's obligations in Subsection 3.3(ii)
the Term may be extended for four (4) subsequent one year periods. In the
event that CMDC wishes to exercise an option to extend the Term of this
Agreement, then prior to the expiration of the current Term it must
provide Vistar with no less than sixty (60) days prior written notice of
its intent to extend the Term. In no event shall the Term of this
Agreement exceed ten (10) years.
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7. LIABILITY
7.1 LIMITATION OF LIABILITY.
IN NO EVENT SHALL EITHER PARTY BE LIABLE TO THE OTHER PARTY OR ANY OTHER
ENTITY FOR ANY SPECIAL, CONSEQUENTIAL, INCIDENTAL, OR INDIRECT DAMAGES,
HOWEVER CAUSED, ON ANY THEORY OF LIABILITY, AND REGARDLESS OF WHETHER SUCH
PARTY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. THIS LIMITATION
SHALL APPLY NOTWITHSTANDING ANY FAILURE OF ESSENTIAL PURPOSE OF ANY
LIMITED REMEDY.
7.2 Monetary Limitation.
As a material condition of Vistar entering into this Agreement, and in
regard to any causes of action arising out of or related to this Agreement
including, but not limited to, claims of negligence, breach of contract or
breach of warranty or otherwise, or any other claim whether in contract,
tort or any other legal theory, CMDC agrees that the liability of Vistar
shall in no event exceed the total amount already paid by CMDC to Vistar,
including all Royalties, under this Agreement.
8. INTELLECTUAL PROPERTY RIGHTS AND CONFIDENTIALITY
8.1 Intellectual Property Rights.
(i) CMDC acknowledges that VISTAR owns:
a. Background Technology, and the Intellectual Property Rights
therein;
b. the MST Technology including, without limitation, all
hardware and software designs and implementations associated
with the MST Technology and the Intellectual Property Rights
therein; and
c. other Vistar Confidential Information including all
Intellectual Property Rights therein.
(ii) VISTAR acknowledges that CMDC owns:
a. the Intellectual Property Rights to those additional
components of the MST which are not MST Technology or Vistar
Background Technology as defined in this Agreement; and
b. other CMDC Confidential Information including without
limitation to the Specifications and all Intellectual
Property Rights therein.
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8.2 Use of Marks.
All documents (in whatever form, including machine readable or electronic
form) and other product materials owned by a Party must contain all proper
Marks, legends, copyright notices and patent markings reflecting the
Intellectual Property Rights of that Party in such documents and
materials. This License Agreement gives neither Party any proprietary or
other rights whatsoever in the other Party's Marks.
8.3 Confidentiality.
Each Party agrees:
(i) to observe confidentiality with respect to the other Party's
Confidential Information;
(ii) not to disclose, or permit any third party or entity access to,
the Confidential Information (or any portion thereof) without
prior written permission of the Disclosing Party; and
(iii)to ensure that any employees, or any authorized third parties
who receive access to the Confidential Information, are advised
of the confidential and proprietary nature thereof and are
prohibited from copying, utilizing or otherwise revealing the
Confidential Information; and
(iv) without limiting the foregoing, each Party agrees to employ with
regard to the Confidential Information procedures no less
restrictive than the procedures used by such Party to protect its
own similar confidential and proprietary information, but at a
minimum commercially reasonable procedures.
8.4 Breach and Survival.
It is expressly agreed and understood by the Parties that a breach of this
Section 8 shall be deemed a Material Breach of this Agreement which breach
will give rise to injuries that are not fully compensable by damages.
Accordingly, the Party not in breach shall be entitled to apply for
equitable relief. This Section 8 shall survive the expiration or
termination of the Agreement in any manner whatsoever.
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9. INTELLECTUAL PROPERTY RIGHTS INDEMNITY
9.1 Defense by CMDC.
Except as provided in Subsection 9.2 below, CMDC shall defend, at
its own expense, any action brought against Vistar to the extent
that such action is based upon an IP Claim that the use of MST by
CMDC, its permitted licenses and/or assigns infringes any
Intellectual Property rights of a third party.
9.2 Defense by Vistar.
(i) Vistar shall defend, at its expense, any action brought against
CMDC to the extent that it is based on a claim that the use of
the MST Technology developed by Vistar infringes any Intellectual
Property Right of any third party ("IP Claim" or "IP Claimant").
CMDC agrees to notify Vistar promptly in writing of any IP Claim,
to permit Vistar to defend, compromise or settle such IP Claim
and to provide reasonably available information and assistance
regarding such IP Claim; provided that if Vistar fails to retain
defense counsel for any such claim, CMDC may retain its own
defense counsel and defend against such IP Claim.
(ii) Should the MST Technology in the opinion of Vistar's Legal
Counsel, be likely to become the subject of an IP Claim, Vistar
shall either:
a. Procure for CMDC, at no cost to CMDC, the right for CMDC to
continue exercising the rights granted under the CMDC
License;
b. Replace or modify the MST Technology at no cost to CMDC to
make the MST Technology non-infringing, provided that the
replacement or modified MST Technology provides
substantially similar functionality and performance; or
c. If neither a. or b. is technically feasible, terminate
CMDC's then existing rights under this Agreement and refund
of all amounts already paid to Vistar by CMDC under this
Agreement, including all Royalties.
9.3 Limitation. Vistar shall have no liability for any IP Claim to the
extent that it is based upon the operation or use of CMDC or third
party designs, applications, products or materials not supplied,
specified or approved by Vistar in writing and such IP Claim would not
have occurred but for the use of such unapproved CMDC or third party
designs, applications, products or materials, even if the operation or
use of such designs, applications, products or materials is permitted
by the terms of CMDC's License.
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9.4 Notification of Unauthorized Use. Each Party shall promptly notify the
other in writing upon its discovery of any allegedly unauthorized use
or infringement of the MST Technology or the Confidential Information.
In the event that an action is brought regarding such allegedly
unauthorized use or infringement, the Parties shall co-operate and
provide full information and assistance to each other in connection
with any such action or proceeding.
10. REPRESENTATIONS, WARRANTIES
10.1 General Representations and Warranties.
Each Party represents and warrants to the other Party that:
(i) it is authorized to enter into this License Agreement and to
perform its obligations hereunder;
(ii) except as otherwise set forth in this License Agreement, it will
not impair or encumber, in any manner, the Intellectual Property
Rights or other ownership rights of the other Party;
(iii)the execution of this Agreement does not violate any applicable
law, statute or breach any agreement or covenant to which it is a
party or is bound; and
(iv) the performance of its rights and obligations under this
Agreement will not infringe up on any third party's trademark,
copyright, patent or trade secret.
10.2 Vistar Warranties:
(i) Vistar represents and warrants that the MST Technology
Deliverables provided by Vistar under this Agreement are designed
to be used prior, to, during and after Calendar year 2000 A.D.,
and that the said MST Technology will operate during each such
time period without error relating to date data, specifically
including any error relating to, or the product of, date data
which represents or references different centuries or more than
one century.
(ii) The MST Technology shall substantially conform to and achieve the
functionality stated in the Specifications.
10.3 No Other Representations, Warranties or Guarantees.
EXCEPT FOR THE EXPRESS WARRANTIES STATED HEREIN, NEITHER PARTY IS
PROVIDING TO THE OTHER PARTY ANY OTHER EXPRESS OR IMPLIED WARRANTIES UNDER
THIS AGREEMENT, INCLUDING, WITHOUT LIMITATION, ANY IMPLIED WARRANTIES OF
MERCHANTABILITY OR FITNESS FOR A PARTICULAR PURPOSE.
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11. TERMINATION
11.1 Early Termination.
(i) Either Party. This License Agreement shall terminate, without
notice,
a. upon the institution by either Party of insolvency,
receivership or bankruptcy proceedings,
b. upon the institution against either Party of insolvency,
receivership or bankruptcy proceedings, if such proceedings
are not dismissed within ninety (90) days of the Party's
receipt of notice of such proceedings against it;
c. upon either Party's making an assignment for the benefit of
creditors of all or part of its assets, or
d. upon either Party's dissolution or ceasing to do business or
upon a decision by the Shareholders and/or Board of
Directors of either Party to cease to do business.
(ii) Upon the occurrence of any of the events set forth in Subsection
11.1 (i), the Party making the filing, assignment, receiving
notice thereof, or dissolving or ceasing to do business shall
immediately inform the other Party in writing of such event.
(iii)Upon the occurrence of any of the events in Subsection 11.1(i),
in the event that Vistar is the party with respect to which the
event occurred, CMDC shall be entitled to exercise the rights set
out in Section 12.
11.2 Termination for Material Breach.
Except in the case of a Material Breach of Sections 8, in the event
of a Material Breach of any provision of this License Agreement, the
non-breaching Party may terminate this License Agreement by giving
thirty (30) days prior written notice to the breaching Party;
provided, however, that this License Agreement shall not terminate
if the breaching Party has cured the breach prior to the expiration
of such thirty (30) day period, or if subject to the terms of this
Agreement any Dispute regarding such breach has been referred to
Arbitration in accordance with the provisions of Section 13. In the
event of a Material Breach of Sections 8, if the breach is not
capable of being cured to the reasonable satisfaction of the
non-breaching Party, the Party not in default may elect to terminate
this License Agreement upon ten (10) business days prior written
notice to the Party in default. In such circumstances, the Agreement
shall terminate at the conclusion of this notice period unless
otherwise mutually agreed upon by the Parties.
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11.3 Effects of Termination.
In addition to pursuing the remedies available under the law, in the
event of the termination of this Agreement by CMDC,
Vistar may revoke CMDC's License upon five days written advance
notice. Upon receipt of such notice CMDC shall:
(i) immediately cease all development and marketing of MSTs and
all use of Vistar Confidential Information, Marks, equipment,
materials and documentation; and
(ii) Pay all amounts owing to Vistar including all amounts owing as
a result of Section 4 and Subsections 3.3 and 15.19.
12. SOURCE CODE
Vistar shall deliver into escrow the VSLP source code for the Viterbi decoder
and frequency estimator modules. The Parties hereby agree that the escrow agent
shall be legal counsel for Vistar, more particularly:
Nelligan Power
Law Offices
66 Slater Street, 19th Floor
Ottawa, Ontario
K1P 5H1
Attention: Stephanie M. Traynor
Upon the occurrence of an event set out in Subsection 11.1(i), provided only
that Vistar is the party with respect to which the event occurred, the above
described source code shall be released to CMDC and Vistar shall be deemed to
have granted CMDC a license to such source code on the same terms as set out in
Subsection 3.2.
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13. ARBITRATION AND DISPUTE RESOLUTION
13.1 Disputes.
In the event of any Dispute, each Party shall provide the other Party with
written notice setting forth the outstanding issues and positions of such
Party regarding such Dispute. It shall be the obligation and
responsibility of each Party to use his or her best efforts, in good
faith, to resolve any such Dispute, in co-operation with appropriate
representatives of both Parties, as soon as reasonably possible.
13.2 Arbitration.
If the Parties are unable to resolve a Dispute within thirty (30) days of
their initial discussions concerning such Dispute, except for Disputes
arising under Section 8, any such Dispute shall be settled by arbitration
in accordance with the Ontario Arbitration Act. The Parties shall mutually
select a single arbitrator. If the Parties are unable to agree on the
selection of an arbitrator within thirty (30) days of starting their
selection process, then the number of arbitrators shall be three (3), and
each Party shall select one arbitrator and the two arbitrators shall
mutually select and agree upon the third arbitrator. The Parties shall
provide the arbitrators and any expert witnesses with all information and
resources they may require to make their decision. Any failure of either
Party to comply with such request of the arbitrators shall be deemed a
Material Breach of this License Agreement. An arbitration decision shall
be binding. The prevailing Party may enter such decision in any court
having competent jurisdiction and failure to comply with such arbitration
decision shall result in a Material Breach by the non-complying Party. The
arbitration proceeding shall be conducted in the English language in
Ottawa, Ontario, unless the Parties agree in writing to conduct the
arbitration in another location. Failure of either Party to attend
arbitration shall result in a Material Breach by the absent Party.
14. CECOM OBLIGATIONS
Vistar acknowledges and agrees to be bound by the flowdown clauses imposed by
CECOM set forth in Schedule E attached hereto and incorporated by reference
herein. For the purpose of this Schedule, Vistar is deemed to be the "Seller"
and CMDC is deemed to be the "Buyer" therein. As an exception to Subsection
15.2, Vistar acknowledges and agrees that the rights of the Government of the
United States as reflected in Schedule E shall be governed by the U.S. Federal
Laws and to the extent that State law may apply, by the laws of the State of
Maryland. Vistar's obligations with respect to Schedule E shall terminate
concurrent with the termination of CMDC's obligations thereunder.
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15. GENERAL PROVISIONS
15.1 Independent Contractors.
The relationship of Vistar and CMDC established by this License
Agreement is that of independent contractors, and nothing contained
in this License Agreement shall be construed to
(i) give either Party the power to direct and control the day-to-day
activities of the other,
(ii) constitute the Parties as Partners, joint venturers, co-owners or
otherwise as participants in a joint or common undertaking, or
(iii)allow either Party to create or assume any obligation on behalf
of the other Party for any purpose whatsoever.
15.2 Governing law.
This License Agreement shall be governed by and construed under the laws
of the Province of Ontario and the laws of Canada, without reference to
conflicts of law principles thereof.
15.3 Notices.
All formal notices hereunder shall be in writing and shall be deemed
effective upon receipt when delivered by hand, overnight delivery courier,
by facsimile transmission (provided such notice is also given in any of
the other manners set forth herein) or when mailed by registered or
certified mail (return receipt requested), postage prepaid, to the Parties
at the addresses listed below (or at such other address for a Party as
shall be specified by like notice).
If to Vistar:
Vistar Telecommunications, Inc.
Suite 1410, 427 Laurier Avenue West
Ottawa, Ontario K1G 3J4
Attention: Vice President, Technology and Programs
If to CMDC:
Comtech Mobile Datacom Corp.
19540 Amaranch Drive
P.O. Box 2126
Germantown, MD 20875-2126
Attention: Joel Alper, President
17
<PAGE>
15.4 Assignability and Binding Effect.
CMDC may not assign this License Agreement to any third party without the
prior written consent of Vistar, which consent shall not be unreasonably
withheld.
15.5 Inurement.
Subject to the terms and conditions of this License Agreement, this
License Agreement shall be binding upon and inure to the benefit of the
Parties hereto and their permitted successors and assigns.
15.6 Amounts in U.S. Currency.
Except as otherwise specified in this License Agreement, all amounts
payable under this Agreement or the Schedules are in the currency of the
United States.
15.7 Pre-Printed Terms Void.
The pre-printed terms on any order, acknowledgment, packing slip or
similar document provided by one Party to the other in connection with
this License Agreement shall be of no force or effect.
15.8 Notice of Actions.
Each Party agrees to notify the other Party immediately upon the
commencement of or threat of commencement of any claim, suit or action
brought or that may be brought against either Party, where the outcome of
such claim, suit or action may affect the rights or obligations of either
Party under this License Agreement.
15.9 Headings.
The headings contained in this License Agreement are for convenience of
reference only and shall not control the interpretation of any term or
condition contained herein.
15.10 Severability.
If any provision of this License Agreement is invalid, illegal or
unenforceable in any jurisdiction, such provision shall be deemed amended
to conform to applicable laws so as to be valid and enforceable, or, if it
cannot be so amended without materially altering the intention of the
Parties hereto, it shall be stricken, and the remainder of this License
Agreement shall remain in full force and effect.
18
<PAGE>
15.11 Cumulation of Remedies.
Except as otherwise expressly stated in this License Agreement, all
remedies available to either Party for breach of this License Agreement
are cumulative and may be exercised concurrently or separately and the
exercise of any one remedy shall not be deemed an election of such remedy
to the exclusion of other remedies.
15.12 Equitable Relief.
The Parties agree that certain breaches of this Agreement may give rise to
injuries that are not fully compensable by damages. Therefore, the Parties
acknowledge and agree that in addition to any other remedies available at
law, and notwithstanding the provisions of Section 12.2, a Party shall be
entitled to apply to a court of competent jurisdiction and seek injunctive
or other equitable relief, including, without limitation, specific
performance, from the other Party to enjoin any breach by the other Party
of the provisions of this Agreement.
15.13 Interest.
Any amount that is not paid when due will bear interest until fully paid
at the rate of the lesser of (i) one percent and one half (1.5%), per
month compounded monthly, or (ii) the highest rate permitted by applicable
law. Vistar shall also be entitled to recover its costs and expenses, if
any, incurred in collecting such amount. Vistar's entitlement to interest
shall in no way effect CMDC's obligations to make payments in accordance
with Section 4 of this Agreement, and Vistar's acceptance of such interest
shall not be deemed to be waiver of any of CMDC's obligations respecting
payments.
15.14 Waiver.
No term or provision hereof shall be deemed waived and no breach excused
unless such waiver or consent shall be in writing and signed by the Party
claimed to have waived or consented, and such written waiver shall only
serve to waive or excuse, as the case may be, the particular breach to
which it applies and no other.
15.15 Force Majeure.
Each Party shall be excused from performance under this License Agreement
and shall have no liability to the other Party for any period if it is
prevented from performing any of its obligations (other than payment
obligations) in whole or in part, as a result of delays caused by an act
of God, war, civil disturbance, company or industry-wide labour disputes,
or other cause beyond its reasonable control and such non-performance
shall not be a default under, or grounds for termination of this License
Agreement. However, if a Force Majeure event continues for more than one
hundred and eighty (180) days, then the Party whose performance is not
affected by the Force Majeure shall have the right to terminate this
License Agreement.
19
<PAGE>
15.16 Schedules.
Schedules A, B, C, D and E of this License Agreement form part of and are
incorporated into this License Agreement as fully and effectively as if
they were set forth in this License Agreement. In the event of any
conflict or inconsistency between the provisions of this License Agreement
and one or more of the Schedules, the conflict or inconsistency shall be
resolved in favour of the License Agreement.
15.17 Acknowledgment.
Each Party acknowledges that it has read this License Agreement, including
the Schedules attached hereto and forming part hereof, and each Party
understands and agrees to be bound by its terms and conditions.
15.18 Changes to this License Agreement.
No changes to any provision of this License Agreement, including the
Schedules hereto, shall be effective unless reduced to writing and signed
by the Parties hereto.
15.19 Expenses.
Travel and living expenses incurred by Vistar shall be invoiced to CMDC at
cost with associated receipts. Travel and living expenses must be
authorized in advance by CMDC.
15.20 Operating Systems.
To the extent permitted by law or Vistar's existing contractual
obligations, Vistar agrees to make available to CMDC the Precise MQX
Operating System license associated with the CMDC terminal for a price of
$XX.
15.21 Survival.
Except as otherwise provided in this License Agreement, the provisions of
Sections 4, 5, 7, 8, 9, 10 and 15 with the exception of Subsections 15.15,
15.17, 15.18, 15.19, 15.20 and Subsections 3.1, 3.3 and 13.2, as well as
the guarantees and/or indemnifications in Subsections 3.2(iii) and 3.2(iv)
shall survive the termination or rescission of this License Agreement for
any reason. Nothing in this License Agreement shall be construed so as to
extend or override a statutory limitation on the time within which any
action or actions based on this License Agreement may be brought.
20
<PAGE>
15.22 Publicity.
Any press release or other publication by either Party regarding the
existence or terms of this License Agreement must be approved by both
Parties prior to its publication.
15.23 Entire Agreement.
This License Agreement, together with Schedules A, B, C, D and E set forth
and constitutes the entire agreement by and between the Parties with
respect to the development and licensing of MST Technology and supersedes
any and all prior agreements, understandings and representations made by
the Parties concerning the subject matter of this Agreement. For greater
certainty it is expressly acknowledged and agreed that co-incident with
the execution of this agreement the MOA and amendments thereto shall be
terminated and each Party releases the other of all obligations under that
agreement.
21
<PAGE>
WHEREOF, Vistar and CMDC have caused this License Agreement to be duly
executed by their respective authorized representatives as of the Effective
Date.
Vistar Telecommunications, Inc. (Vistar) Comtech Mobile Datacom Corp.
(CMDC)
By: By:
/s/ /s/
Name: Dr. Michael Zuliani Name: Joel Alper
Title:President and Chief Executive Officer Title: President
Date: August 31, 1999 Date: August 9, 1999
22
Exhibit 21
SUBSIDIARIES
The following is a list of the subsidiaries of the Company as of October 22,
1999:
Subsidiary State of Incorporation
- ---------- ----------------------
Telecommunications Transmission Business Segment
CASI - Comtech Antenna Systems, Inc. Delaware
CCC - Comtech Communications Corp. Delaware
CSI - Comtech Systems, Inc. Delaware
RF Microwave Amplifier Business Segment
CPST - Comtech PST Corp. New York
Mobile Data Communications Services Business Segment
CMDC - Comtech Mobile Datacom Corp. Delaware
[LOGO] KPMG
Independent Auditors' Consent
The Board of Directors
Comtech Telecommunications Corp.:
We consent to incorporation by reference in the Registration Statement (No.
2-89857) on Form S-8 of Comtech Telecommunications Corp. of our report dated
September 24, 1999, relating to the consolidated balance sheets of Comtech
Telecommunications Corp. and subsidiaries as of July 31, 1999 and 1998 and the
related consolidated statements of operations, stockholders' equity and cash
flows for each of the years in the three-year period ended July 31, 1999 and
related schedule II, which report appears in the July 31, 1999 annual report on
Form 10-K of Comtech Telecommunications Corp. and subsidiaries.
/s/ KPMG LLP
KPMG LLP
Melville, New York
October 27, 1999
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<ARTICLE> 5
<LEGEND>
This schedule contains summary financial information extracted from Consolidated
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<MULTIPLIER> 1,000
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<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUL-31-1999
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