LETTER FOR COMMISSION ONLY -
NOT TO BE INCLUDED AS PART OF THE EDGAR FILING
April 23, 1999
Securities and Exchange Commission
Attn: Securities Division
450 Fifth Street, NW
Washington, DC 20549
Re: Secondary Offering of Securities on Form S-3 by Security
Holders
Dear Sirs:
The registration statement on Form S-3 submitted by Comptek
Research, Inc. relates to the proposed sale of up to $15 million
principal amount of convertible subordinated debentures and
related conversion shares. The registration involves a secondary
offering for the account of selling security holders and none of
the proceeds of the offering will go to Comptek.
The debentures were originally issued by Comptek in March 1999 in
a private placement pursuant to Rule 506 under Regulation D.
Sincerely,
/s/Christopher A. Head
Christopher A. Head
Executive Vice President
and General Counsel
(716) 677-4070 - telephone
(716) 677-0014 - fax
Registration No. 333-
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM S-3
REGISTRATION STATEMENT
UNDER THE SECURITIES ACT OF 1933
COMPTEK RESEARCH, INC.
(Exact Name of Registrant as Specified in its Charter)
NEW YORK 16-0959023
_______________________________ _____________________
(State or other Jurisdiction of (IRS Employer
Incorporation or Organization) Identification No.)
2732 TRANSIT ROAD
BUFFALO, NEW YORK 14224-2523
(716) 677-4070
_________________________________________________________________
(Address, including zip code, and telephone number, including
area code of Registrant's Principal Executive Offices)
CHRISTOPHER A. HEAD, ESQ.
COMPTEK RESEARCH, INC.
2732 TRANSIT ROAD
BUFFALO, NEW YORK 14224-2523
(716) 677-4070
___________________________________________________________________
(Address, including zip code, and telephone number,
including area code, of agent for service)
______________________________
Copies to:
JAMES R. TANENBAUM, ESQ.
STROOCK & STROOCK & LAVAN, LLP
180 MAIDEN LANE
NEW YORK, NY 10038
Approximate date of commencement of proposed sale to the public:
FROM TIME TO TIME AFTER THIS REGISTRATION STATEMENT BECOMES
EFFECTIVE.
If the only securities being registered on this Form are being
offered pursuant to dividend or interest reinvestment plans,
please check the following box. [ ]
If any of the securities being registered on this Form are to be
offered on a delayed or continuous basis pursuant to Rule 415
under the Securities Act of 1933, other than securities offered
only in connection with dividend or interest reinvestment plans,
check the following box. [x]
If this Form is filed to register additional securities for an
offering pursuant to Rule 462(b) under the Securities Act, please
check the following box and list the Securities Act registration
statement number of the earlier effective registration statement
for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule
462(c) under the Securities Act of 1933, check the following box
and list the Securities Act registration statement number of the
earlier effective registration statement for the same offering.
[ ]
If delivery of this Prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
<TABLE>
<CAPTION>
CALCULATION OF
REGISTRATION
FEE
Title of each Proposed Proposed
class of Amount to Maximum Maximum Amount of
Securities to be Offering Offering Registra-
be Registered Registered Price(1) Price tion Fee
-------------- ---------- ---------- ---------- ---------
<S> <C> <C> <C> <C>
8 1/2%
Convertible
Subordinated $15,000,000 100% $15,000,000 $4,170
Debentures due
2004
Common Stock,
par value $.02 1,578,947 --- --- ---
per share (2)
---------------------------------------------------
(1) Equals the aggregate principal amount of the securities being
registered.
(2) Such number represents the number of shares of common stock that
are currently issuable upon conversion of the debentures; pursuant
to Rule 416 under the Securities Act, the registrant is also
registering such indeterminate number of shares of common stock as
may be issued from time to time upon conversion of the debentures
as a result of the anti-dilution protection of the debentures.
Pursuant to Rule 457(i), no registration fee is required for these
shares.
</TABLE>
THE REGISTRANT HEREBY UNDERTAKES TO AMEND THIS REGISTRATION
STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS
EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER
AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH
SECTION 8(A) OF THE SECURITIES ACT OF 1933 OR UNTIL THIS
REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE
SEC, ACTING PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
PROSPECTUS
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE
CHANGED. THE SELLING HOLDERS MAY NOT SELL THESE SECURITIES UNTIL
THE REGISTRATION STATEMENT, FILED WITH THE SECURITIES AND
EXCHANGE COMMISSION, IS EFFECTIVE. THIS PROSPECTUS IS NOT AN
OFFER TO SELL THESE SECURITIES AND IS NOT SOLICITING AN OFFER TO
BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OF SALE IS NOT
PERMITTED.
SUBJECT TO COMPLETION, DATED APRIL ___, 1999
COMPTEK RESEARCH, INC.
$15,000,000
8 1/2% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2004
and
1,578,947 SHARES OF COMMON STOCK ISSUABLE UPON CONVERSION OF THE
DEBENTURES
By this prospectus, holders of Comptek Research, Inc. 8 1/2%
Convertible Subordinated Debentures due 2004 are offering to sell
an aggregate principal amount of $15,000,000 of the debentures
and/or up to 1,578,947 shares of our common stock in to which the
debentures are convertible. The debentures were issued by
Comptek at 100% of the principal amount in a private placement in
March 1999.
Interest on the principal amount of the debentures is payable in
arrears at the annual rate of 8 1/2% on October 1 and April 1 of
each year, beginning October 1, 1999. The holders of the
debentures may convert any principal amount of a debentures, in
multiples of $1,000, into common stock at a conversion price of
$9.50 per share, subject to adjustment in certain events. The
debentures, which are unsecured and rank below our existing and
future senior indebtedness, will mature on April 1, 2004, unless
earlier converted or redeemed.
On April 12, 1999, the closing price of our common stock on the
American Stock Exchange (symbol "CTK") was $8.125 per share.
Although our common stock is traded on the American Stock
Exchange, we do not intend to apply for listing of the debentures
on any securities exchange or for quotation through any automated
quotation system.
We will not receive any proceeds from the sale of the debentures
and the common stock into which the debentures are convertible by
the selling holders. We will pay all expenses (other than
selling commissions and fees and stock transfer taxes) of the
registration and sale of the debentures and the common stock.
The selling holders may offer the debentures or the shares of
common stock through brokers, dealers or agents or directly to
purchasers. These transactions may be effected at market prices
prevailing at the time of sale or at privately negotiated prices.
INVESTING IN THE DEBENTURES OR THE COMMON STOCK INTO WHICH THE
DEBENTURES ARE CONVERTIBLE INVOLVES A HIGH DEGREE OF RISK. SEE
"RISK FACTORS" COMMENCING ON PAGE 12 FOR A DISCUSSION OF SOME
IMPORTANT RISKS YOU SHOULD CONSIDER BEFORE BUYING ANY DEBENTURES
OR ANY SHARES OF COMMON STOCK.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE
SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE
SECURITIES OR PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
The date of this Prospectus is April __, 1999
TABLE OF CONTENTS
ABOUT THIS PROSPECTUS 7
FORWARD-LOOKING INFORMATION 7
HOW TO OBTAIN MORE INFORMATION 7
SUMMARY 9
The Company 9
Summary of the Debentures Offered by
Selling Security Holders 11
RISK FACTORS 12
Dependence on Future Military Spending 12
Dependence on U.S. Government Contracts:
Risks Inherent in U.S. Government Contracts 12
Fixed-Price Contracts 12
Ability to Assimilate Acquisitions
and Acquisition Strategy 13
Substantial Debt; Need for Additional Financing 13
International Sales 13
Competitive Environment 14
Subordination 14
Year 2000 Issue 14
Need for Additional Technical Personnel 15
Absence of Public Market;
Possible Volatility of Stock Price 15
USE OF PROCEEDS 15
RATIO OF EARNINGS TO FIXED CHARGES 15
RECENT DEVELOPMENTS 15
DESCRIPTION OF DEBENTURES 19
General 19
Form of Debentures 19
Conversion Rights 20
Penalty for Late Delivery of Conversion Shares 21
Subordination of Debentures 21
Optional Redemption 22
Certain Rights to Require Repurchase
of Debentures by the Company 22
Modification of the Indenture 24
Events of Default, Notice and Waiver 25
Consolidation, Merger, Sale or Conveyance 26
Marketability 26
Governing Law 26
Registration Rights Agreement 26
SELLING HOLDERS 27
PLAN OF DISTRIBUTION 28
LEGAL MATTERS 30
EXPERTS 30
ABOUT THIS PROSPECTUS
You should rely only on the information incorporated by reference
or provided in this prospectus or any prospectus supplement. We
have not authorized anyone else to provide you with different
information. The selling holders are not making an offer of
these securities in any state where the offer is not permitted.
You should not assume that the information in this prospectus or
any prospectus supplement is accurate as of any date other than
the date on the front of the document.
In this prospectus, references to "we," "us," "our," "Company,"
and "Comptek" refer to Comptek Research, Inc. and its
subsidiaries, and not to the selling security holders.
FORWARD-LOOKING INFORMATION
THIS PROSPECTUS INCLUDES "FORWARD-LOOKING STATEMENTS" WITHIN THE
MEANING OF THE PRIVATE SECURITIES LITIGATION REFORM ACT OF 1995.
THIS ACT PROVIDES A "SAFE HARBOR" FOR FORWARD-LOOKING STATEMENTS
TO ENCOURAGE COMPANIES TO PROVIDE PROSPECTIVE INFORMATION ABOUT
THEMSELVES SO LONG AS THEY IDENTIFY THESE STATEMENTS AS FORWARD-
LOOKING AND PROVIDE MEANINGFUL CAUTIONARY STATEMENTS IDENTIFYING
IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS TO DIFFER FROM
THE PROJECTED RESULTS. ALL STATEMENTS OTHER THAN STATEMENTS OF
HISTORICAL FACT WE MAKE IN THE PROSPECTUS OR IN ANY DOCUMENT
INCORPORATED BY REFERENCE ARE FORWARD-LOOKING. IN PARTICULAR,
THE STATEMENTS HEREIN REGARDING INDUSTRY PROSPECTS AND OUR FUTURE
RESULTS OF OPERATIONS OR FINANCIAL POSITION ARE FORWARD-LOOKING
STATEMENTS. FORWARD-LOOKING STATEMENTS REFLECT OUR CURRENT
EXPECTATIONS AND ARE INHERENTLY UNCERTAIN. OUR ACTUAL RESULTS
MAY DIFFER SIGNIFICANTLY FROM OUR EXPECTATIONS. THE SECTION
ENTITLED "RISK FACTORS" DESCRIBES SOME, BUT NOT ALL, OF THE
FACTORS THAT COULD CAUSE THESE DIFFERENCES.
HOW TO OBTAIN MORE INFORMATION
We file reports, proxy statements and other information with the
Securities and Exchange Commission. You may read any document we
file at the SEC's public reference rooms in Washington, D.C.,
Chicago, Illinois and New York, New York. Please call the SEC
toll free at 1-800-SEC-0330 for information about its public
reference rooms. You may also read our filings at the SEC's Web
site at http://www.sec.gov.
We have filed with the SEC a registration statement on Form S-3
under the Securities Act of 1933. This prospectus does not
contain all of the information in the registration statement. We
have omitted certain parts of the registration statement, as
permitted by the rules and regulations of the SEC. You may
inspect and copy the registration statement, including exhibits,
at the SEC's public reference facilities or Web site. Our
statements in this prospectus about the contents of any contract
or other document are not necessarily complete. You should refer
to the copy of each contract or other document we have filed as
an exhibit to the registration statement for complete
information.
The SEC allows us to "incorporate by reference" into this
prospectus the information we file with it. This means that we
can disclose important information to you by referring to you
those documents. This information we incorporate by reference is
considered a part of this prospectus, the later information we
file with the SEC will automatically update and supersede this
information. We incorporate by reference the documents listed
below and any future filings we make with the SEC under Sections
13(a), 13(c), 14 and 15(d) of the Securities Exchange Act of 1934
until this offering is completed:
- Our Annual Report on Form 10-K, as amended, for the year
ended March 31, 1998.
- Our Quarterly Reports on Form 10-Q for the interim periods
ended June 26, 1998, September 25, 1998, and December 25, 1998.
- Our Reports on Form 8-K dated March 26, 1999, October 13,
1998, September 1, 1998, July 27, 1998, and May 14, 1998.
- The description of our common stock contained in our
Registration Statement on Form 8-A filed July 1, 1987.
- The description of our Preferred Stock Purchase Rights
contained in our Report on Form 8-K dated April 16, 1999.
You may obtain copies of these documents (other than exhibits)
free of charge by contacting us orally or in writing at:
Comptek Research, Inc.
2732 Transit Road
Buffalo, New York 14224
Attn: Corporate Secretary
(716) 677-4070
(716) 677-0014 (fax)
You should rely only on the information incorporated by reference
or provided in this prospectus. We have not authorized anyone
else to provide you with different information. We are not
making an offer of these securities in any state where the offer
is not permitted. You should not assume the information in this
prospectus is accurate as of any date other than the date on the
front of those documents.
SUMMARY
This summary highlights information contained in this prospectus
or incorporated by reference into this prospectus from our
current filings with the SEC. This summary is not complete and
may not contain all of the information that you should consider
before investing in the debentures or common stock.
The Company
We develop and integrate surveillance and communications systems
used primarily for military applications. We provide engineering
and project management services for electronic warfare systems.
Our products and services enhance the operational performance and
readiness of existing weapons systems, as well as extend their
useful lives and survivability. We have been involved in either
the development, lifecycle support or testing of nearly all of
the major electronic warfare systems that have been fielded by
either the United States Air Force or United States Navy since
1974, including systems for B-1B Lancer and B-2A Spirit bombers;
EF-111 Raven, EA-6B Prowler and F/A-18 Hornet aircraft; and navy
surface combatants including AEGIS class destroyers and cruisers.
Our primary activities are:
- Tactical Systems. Comptek is a leading supplier of
electronic warfare systems used for the processing of intercepted
radar signals, threat analysis and counter measures. We also
provides command and control, mission planning and air combat
measurement instrumentation systems.
- Electronic Warfare Simulation/Stimulation and Training. We
specializes in the design, development and manufacture of
electronic environment simulators. We supply stimulators used to
test military electronics surveillance, equipment including
electronic warfare systems, radar warning receivers and
electronic counter-measures equipment.
- Engineering and Technical Services. We provide a wide range
of technical and engineering services, including systems design
and integration, software development and test, project
management and support for the design, operation, maintenance and
upgrade of weapon and information systems.
Our customers include the Department of Defense, all of the
branches of the United States Armed Forces, and certain foreign
governments. Our present prime contractor relationships include
the Boeing Company, GEC-Marconi Hazeltine Corporation, Lockheed
Martin Corporation, Northrop Grumman Corporation and the Raytheon
Company. International customers include the foreign governments
of Australia, Canada, France, Germany, Israel, Italy, Japan,
Sweden, Switzerland and the United Kingdom.
Expansion through acquisitions and increased international
activities have both been, and continue to be, important elements
of our business strategy. Over the last three years, we have
acquired three private companies. In March 1996, we acquired
Advanced Systems Development, Inc., a highly-specialized
developer of electronic warfare simulation/stimulation, training
and software validation systems related to electronic
surveillance. Largely as a result of the acquisition of Advanced
Systems Development, Inc., we substantially increased our
presence in international markets. Effective May 1, 1998, we
completed our acquisition of PRB Associates, Inc., a leader in
the development of military mission-planning and precision-
targeting systems.
On March 26, 1999, we completed the purchase of the business
operations and substantially all of the related assets and
liabilities of Amherst Systems, Inc., a firm specializing in
simulation/stimulation and evaluation systems for electronic
defense applications. We paid a purchase price of $30 million
and assumed Amherst Systems's long-term debt of $5.1 million. We
paid the purchase price by delivering to Amherst Systems $20
million in cash and $10 million in subordinated promissory notes
of Comptek.
Comptek's executive offices are located at 2732 Transit Road,
Buffalo, New York 14224-2423. Our telephone number is (716) 677-
4070.
We maintain a Web site at http://www.comptek.com . Information
contained on our Web site, however, is not part of this
prospectus.
<TABLE>
<CAPTION>
Summary of the Debentures Offered By Selling Security Holders
<S> <C>
Securities $15,000,000 principal amount of 8 1/2%
Offered Convertible Subordinated Debentures,
$1,000 par value, due 2004. See
"Description of Debentures."
1,578,947 shares of common stock issuable
upon conversion of the debentures.
Interest Rate 8 1/2% payable semi-annually in arrears.
Interest October 1 and April 1, commencing October
Payment Dates 1, 1999.
Maturity April 1, 2004.
Conversion The debentures are convertible into shares
of common stock of Comptek.
Conversion The debentures are convertible at a
Price conversion price of $9.50, subject to
adjustment as described herein, including
an adjustment if Comptek reports income
before extraordinary item and accounting
change diluted earnings per share of less
than $0.80 for its fiscal year ending
March 31, 2000. In such case, the
conversion price will be reset to $8.50
per share. See "Description of Debentures
- Conversion Rights."
Redemption The debentures are not redeemable by
Comptek prior to March 1, 2002.
Thereafter, the debentures will be
redeemable at Comptek's option at any
time, in whole or in part, together with
accrued and unpaid interest, as follows:
On or after: Premium:
March 1, 2002 103.4%
March 1, 2003 101.7%
March 1, 2004 and thereafter 100.0%
See "Description of Debentures - Optional
Redemption."
Change of Upon a change of control of Comptek, each
Control holder of the debentures may require us to
repurchase the debenture held by such
holder at 101% of the principal amount
thereof plus accrued and unpaid interest
to the date of repurchase. The term
"Change of Control" is defined in the
"Description of Debentures - Certain
Rights to Require Repurchase of Debentures
by the Company."
Ranking The debentures are unsecured and
subordinated to all senior indebtedness.
See "Description of Debentures -
Subordination of Debentures."
Use of Proceeds Comptek will not receive any of the
proceeds from the sale by selling security
holders of the debentures or the
underlying common stock.
</TABLE>
RISK FACTORS
You should carefully consider the risks and uncertainties
described below and the other information in this prospectus and
in any documents incorporated in the prospectus, before making an
investment decision.
DEPENDENCE ON FUTURE MILITARY SPENDING - SUBSTANTIALLY ALL OF OUR
SALES ARE DERIVED FROM MILITARY REQUIREMENTS.
We are subject to changes in national defense policies and
priorities and changes in government appropriations. In recent
years, a reduction in the defense budgets of many countries has
caused many defense-related government contractors to experience
declining revenues. There can be no assurance that a continued
decline in worldwide military spending will not have a material
adverse impact on our business, financial condition or results of
operations.
DEPENDENCE ON U.S. GOVERNMENT CONTRACTS; RISKS INHERENT IN U.S.
GOVERNMENT CONTRACTS - AS A U.S. GOVERNMENT CONTRACTOR WE ARE
SUBJECT TO SPECIALIZED RULES AND REGULATIONS.
Historically in excess of 85.0% of our revenues have been
attributable to contracts with departments and agencies of the
U.S. Government, specifically the Department of Defense ("DoD").
As a contractor and subcontractor to the U.S. Government, we are
is subject to various laws and regulations that are more
restrictive than those applicable to non-government contractors.
U.S. Government contracts are subject to special risks, such as:
- delay in funding;
- early termination;
- reduction or modification due to changes in policies or as
the result of budgetary constraints, political changes or other
factors that do not depend on Comptek;
- the U.S. Government's rights to technical data and to audit
financial data; and
- the ability of U.S. Government and its agencies unilaterally
to suspend contractors from receiving new contracts pending
resolution of alleged violations of procurement laws or
regulations.
Government agencies often have complex and time-consuming
procurement procedures. We generally obtain military contracts
through a competitive bidding process in which, in many
instances, numerous bidders participate. There can be no
assurance that we will continue to be successful in having our
bids accepted.
FIXED-PRICE CONTRACTS - OUR PERCENTAGE OF FIXED-PRICE CONTRACTS,
WHICH ARE A HIGHER RISK, IS INCREASING.
For the fiscal year ended March 31, 1998, approximately 29.0% of
our sales were recorded on fixed-price contracts, as opposed to
cost-plus or cost-sharing contracts. Under fixed-price
contracts, we assume the risk that increased or unexpected costs
may reduce profits or cause a loss. To the extent that actual
costs exceed the projected costs on which bids or contract prices
are based, Comptek could be materially adversely affected. Since
a majority of the contracts we acquired from Amherst Systems,
Inc. are fixed-price, we expect the percentage of fixed-price
work to increase. For the nine months ended December 25, 1998,
as adjusted to give effect to the business operations acquired
from Amherst Systems, Inc. 37.6% of the our sales would have been
fixed-price.
ABILITY TO ASSIMILATE ACQUISITIONS AND ACQUISITION STRATEGY -
THE INTEGRATION OF RECENT ACQUISITIONS AND THE MAKING OF FUTURE
ACQUISITIONS COULD ADVERSELY IMPACT OUR CURRENT OPERATIONS.
Our acquisitions of Advanced Systems Development in March 1996,
of PRB Associates in May 1998, and of the business operations of
Amherst Systems, Inc. in March 1999 are part of a business
development strategy which seeks internally- and externally-
generated sales growth in niche markets. While there are
currently no commitments with respect to any future acquisitions,
we frequently evaluate the strategic opportunities available to
us and, in the near-term or long-term future, expect to pursue
acquisitions of additional complementary products, technologies
or businesses. Such acquisitions may result in the diversion of
our attention from the day-to-day business operations and may
include numerous other risks, including difficulties in the
integration of the operations and products, integration and
retention of personnel of the acquired companies and certain
financial risks. Future acquisitions by us may result in
dilutive issuances of equity securities, the incurrence of
additional debt, reduction of existing cash balances,
amortization expenses related to goodwill and other intangible
assets and other charges to operations that may materially
adversely impact our business, financial condition or results of
operations.
SUBSTANTIAL DEBT; NEED FOR ADDITIONAL FINANCING - TO SERVICE OUR
SUBSTANTIAL DEBT AND MAKE FUTURE ACQUISITIONS, WE WILL REQUIRE A
SIGNIFICANT AMOUNT OF CASH. OUR ABILITY TO GENERATE CASH AND
BORROW ON ACCEPTABLE TERMS DEPENDS ON MANY FACTORS BEYOND OUR
CONTROL.
At December 25, 1998, our pro forma bank debt was $33.6 million
and our total pro forma funded debt was $55.6 million. Our
future growth will depend in part on additional acquisitions and
our ability to obtain additional financing on acceptable terms.
We will from time to time seek additional funding through public
or private financing, including equity or debt financing. If
additional funds are raised by issuing equity securities, our
stockholders may experience dilution. There can be no assurance
that we will be successful in securing additional financing or
that adequate funding will be available and, if available, will
be on terms that are acceptable to us. Further, debt may
continue to increase and there can be no assurance that we will
generate sufficient cash flow to meet our principal and interest
payment obligations.
INTERNATIONAL SALES - OUR ABILITY TO SELL PRODUCTS AND SERVICES
INTERNATIONALLY ARE SUBJECT TO U.S. GOVERNMENT EXPORT CONTROLS.
ALSO, GREATER RISKS ARE INHERENT IN DOING BUSINESS ON AN
INTERNATIONAL LEVEL.
We have recently placed greater emphasis on international sales
and have increased marketing expenses in order to compete in
international markets. Our products and services are subject to
export control regulations of the U.S. Government. In most
instances a specific export license is required for the sale of
our products and services directly to international customers.
Direct sales to foreign governments and international customers
were 13.4% of total sales in fiscal 1998. In addition to the
uncertainty as to our ability to maintain and expand an
international presence, there are certain risks inherent in doing
business on an international level, including:
- unexpected changes in regulatory requirements;
- problems and delays in collecting accounts receivable;
- tariffs and other trade barriers;
- difficulties in staffing and managing foreign operations;
and
- longer payment cycles and political instability.
Furthermore, effective patent, copyright, and trade secret
protection may be limited or unavailable under the laws of
certain foreign jurisdictions. There can be no assurance that
one or more of such factors will not have a material adverse
impact on our business, financial condition or results of
operations.
COMPETITIVE ENVIRONMENT - IN ADDITION TO COMPETING AGAINST LARGE
DEFENSE CONTRACTORS, SOME SMALL COMPETITORS RECEIVE CERTAIN
PREFERENCE IN BIDDING FOR WHICH WE DO NOT QUALIFY.
The defense industry is dominated by several large companies, all
of whom have much greater resources than we have. These
competitors include the Boeing Company, Lockheed Martin
Corporation, Raytheon Company, GEC-Marconi Hazeltine Corporation,
Northrop Grumman Corporation, United Industrial Corporation,
Unisys Corporation, Computer Sciences Corporation, TRW, Inc., and
Condor Systems, Inc. The size and reputation of many of these
companies may give them an advantage in competing for contracts.
We also compete with several small companies that can sometimes
take advantage of special government programs, such as small
business and small disadvantaged business set-asides whereby
competition is limited to qualifying small and small
disadvantaged businesses. In fiscal 1998 and earlier, we were
able to qualify for small business status when the standard used
was 750 employees or less. As a result of our acquisition of PRB
Associates, Inc. in May 1998, our total number of employees
increased to approximately 900, which is likely to result in our
not qualifying for small business status in most circumstances,
except where that standard used is 1,500 employees or less. As a
result of the acquisition of Amherst Systems, Inc., we now have
approximately 1,200 employees. For the fiscal year ended March
31, 1998, none of our sales was attributable to contracts which
were awarded as a small business set-aside. However,
approximately 10.0% of Amherst Systems, Inc. sales for its fiscal
year ended April 30, 1998 were small business set-aside contracts
or small business innovative research grants.
SUBORDINATION - OUR INDEBTEDNESS WHICH IS SENIOR IN RIGHT OF
PAYMENT TO THE DEBENTURES IS SUBSTANTIAL.
The debentures are expressly subordinated in right of payment to
all of our existing and future senior indebtedness, which
includes current and future borrowing under our bank line of
credit recently increased to $27.0 million. As of December 25,
1998 our pro forma aggregated senior indebtedness would have been
approximately $34.6 million. Neither the provisions of the
indenture nor the debentures limit our ability to incur
additional senior indebtedness or other indebtedness. The
indenture and the debentures do not contain any financial
covenants or similar restrictions on us. Therefore, the holders
of the debentures will have no protection, other than rights upon
"Events of Default" as described under "Description of
Debentures," from adverse changes in our financial condition. By
reason of the subordination of the debentures, in the event of
insolvency, bankruptcy, liquidation, reorganization, dissolution
or winding up of our business or upon our default in payment
with respect to any indebtedness of Comptek or an event of
default with respect to such indebtedness permitting the
acceleration thereof, our assets will be available to pay the
amounts due on the debentures only after all senior indebtedness
has been paid in full.
YEAR 2000 ISSUE
Numerous business publications and government reports have
alerted businesses and investors to the potential adverse impact
of computer programs failing to correctly recognize the Year
2000, a situation commonly referred to as the "Year 2000 Issue"
or the "Year 2000 Problem." We believe we are adequately
addressing modification or replacement of our internal operating
systems and our products. We do not currently anticipate that we
will incur material expenditures to complete any such
modification or replacement because we believe that a majority of
our systems and products are Year 2000 compliant, although there
can be no assurance in this regard. A failure of suppliers or
customers to successfully address the Year 2000 Issue, however,
could have a material adverse impact on our business, financial
condition or results of operations. The DoD and its departments
and agencies are our largest customer group, representing 87% of
our fiscal 1998 net sales. A failure by the DoD to adequately
address the Year 2000 Problem could, among other things, result
in payment delays and contract administration delays which may
result in a need for increased borrowing and interest expense to
satisfy our operational and capital expenditure needs.
NEED FOR ADDITIONAL TECHNICAL PERSONNEL
The defense electronics industry, similar to the commercial
electronics and software industries, is experiencing difficulties
in recruiting and retaining technical personnel. Although this
has not had a material adverse impact on us, there can be no
assurances that we will continue to be able to attract and retain
highly-skilled technical and professional employees.
ABSENCE OF PUBLIC MARKET; POSSIBLE VOLATILITY OF STOCK PRICE
Prior to the filing of the registration statement, there has been
no public market for the debentures and, it is unlikely that an
active or liquid trading market will develop or be sustained. The
market price of the common stock into which the debentures are
convertible could be subject to significant fluctuations in
response to various factors and events, including the liquidity
of the market for the common stock and variations in our
operating results. In addition, the stock market in recent years
has experienced broad price and volume fluctuations that often
have been unrelated to the operating performance of particular
companies. These market fluctuations also may adversely affect
the market price of the common stock.
USE OF PROCEEDS
Comptek will not receive any proceeds from the sale by any
selling security holder of the debentures or the underlying
common stock.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges for each of the periods
indicated is as follows:
<TABLE>
<CAPTION>
Nine Months
Ended
------------
Fiscal Year Ended March 31, Dec. Dec.
------------------------------- 26, 25,
1994 1995 1996 1997 1998 1997 1998
<S> <C> <C> <C> <C> <C> <C> <C>
Ratio of
earnings - - - 4.1x 5.5x 4.9x 3.2x
(loss) to
fixed charges
</TABLE>
In fiscal 1994, 1995 and 1996 fixed charges exceeded earnings by
$7.5 million, $1.1 million and $8.3 million, respectively.
For these ratios, "earnings (loss)" represents income or loss
before taxes plus fixed charges. Fixed charges consist of
interest expense, including amortization of debt issuance costs,
and that portion of rental expense we believe to be
representative of interest.
RECENT DEVELOPMENTS
In March 1999, we sold $15 million of 8 1/2% convertible
subordinated debentures in a private placement pursuant to
Regulation D under the Securities Act. We used the proceeds of
the sale, approximately $13.8 million, as part of the purchase
price of our acquisition of the business operations and related
assets and liabilities of Amherst Systems, Inc. We paid a
purchase price of $30 million and assumed long-term debt of $5.1
million. We paid the purchase price by delivering to Amherst
Systems $20 million in cash and $10 million in subordinated
promissory notes of Comptek. These promissory notes, which
mature on March 26, 2001, bear interest at the rate of 5.5% per
year compounded annually, payable at maturity. The promissory
notes are unsecured and subordinated to Comptek's senior
indebtedness and the debentures. At maturity, however, the
promissory notes may be replaced by indebtedness which would be
senior to the debentures.
Amherst Systems is a manufacturer of computer controlled
simulation/stimulation equipment and systems which are used to
test military avionics equipment including radar warning
receivers, radar counter-measures equipment, radars, and infrared
sensor systems. These systems are also used to train electronic
warfare ("EW") systems operators. Amherst Systems also produces
receiver systems used to verify simulation environments. Amherst
Systems has expertise in the development of large computer
programs for real-time processing, the design of high speed
digital processing hardware, the generation of embedded software
for digital signal processors, the development of wide band
microwave systems, and the development of microwave components.
Amherst Systems has experienced growth in its systems sales as
the systems it tests have grown more accurate and complex
necessitating a corresponding increase in the sophistication of
the Amherst Systems test equipment. Other factors driving growth
include the increase in sales of new products ranging from
portable units to very large systems installed in test
facilities, systems integration work and sales to overseas
customers. Sales for the eight months ended December 31, 1998
and for the fiscal year ended April 30, 1998, were $29.2 million
and $31.6 million, respectively. Amherst Systems customers
include the U.S. Air Force, Navy, and Army and major aerospace
prime contractors such as Lockheed, Boeing, and Northrop Grumman.
Contract backlog as of December 25, 1998 was $61.7 million, of
which $36.8 million was funded.
The following table set forth our short-term debt and
consolidated capitalization as of the dates indicated including:
- The pro forma capitalization of Comptek after giving effect
to the acquisition of the business operations and related assets
and liabilities of Amherst Systems; and
- Adjustments to reflect the sales of $15 million of 8 1/2%
subordinated convertible debentures.
<TABLE>
<CAPTION>
Capitalization
As of December 25, 1998
------------------------------------
As Adjusted for
----------------------
Amherst Sale of
Actual Acquisition Debentures
--------- -------- --------
(Unaudited)
(Dollars in
thousands)
<S> <C> <C> <C>
Short-term debt:
Current installments
of long-term debt $3,527 $4,181 $4,181
========= ========= =========
Long-term debt:
Due to Seller at
Closing (1) - 20,000 -
Revolving credit and
term loan facility 18,383 25,456 31,294
Notes payable to
Seller (2) - 10,000 10,000
8 1/2% convertible
subordinated
debentures - - 15,000
due 2004
-------- -------- --------
Total long-term
Debt 18,383 55,456 56,294
-------- -------- --------
Stockholders' equity (4):
Preferred stock,
$0.01 par value;
3,000,000 shares
authorized, none
issued - - -
Common stock, $0.02
par value;
10,000,000 shares
authorized;
5,515,168
shares issued (3) 110 110 110
Additional paid-in
Capital 16,082 16,082 16,082
Stock related awards
and loans (243) (243) (243)
Retained earnings 1,433 1,433 1,433
Treasury stock, at
cost,417,313 shares (3,229) (3,229) (3,229)
-------- ------- ---------
Total
Stockholders'
Equity 14,153 14,153 14,153
-------- --------- ---------
Total
Capitalization $32,536 $69,609 $70,447
======== ======== =========
________________
(1) The terms of the acquisition of the business operations of
Amherst Systems required us to pay $20.0 million in cash at
closing. For the purpose of this pro forma presentation, the
amount payable at closing has been presented as a liability in
the acquisition adjustments as a means to isolate the impacts of
the acquisition from those of the offering of the debentures.
(2) Reflects 5.5% subordinated notes payable to Seller twenty-
four months after closing.
(3) Excludes: (i) outstanding options to purchase 542,390 shares
of our common stock under Comptek's equity incentive plans, (ii)
outstanding options to purchase 103,000 shares under our stock
option plan for the non-employee directors; including 3,000
options which were granted contingent upon approval by
shareholders at the 1999 Annual Meeting of an increase in plan
reserves, and (iii) 1,500,000 additional shares of common stock
reserved for issuance upon conversion of the debentures. A total
of 328,459 options were exercisable under these plans as of
December 25, 1998 with exercises prices ranging from $3.25 to
$17.63.
(4) Assumes no conversion of the debentures.
</TABLE>
The following table presents unaudited pro forma summary
financial data as of the dates indicated with, and without, our
acquisition of the business operations and related assets and
liabilities of Amherst Systems and the sales of the debentures.
The pro forma statement of operations data gives effect to the
acquisition of PRB Associates as if this acquisition had occurred
on April 1, 1997. No pro forma effect is given to the
acquisition of PRB Associates to the pro forma balance sheet data
as our historical consolidated balance sheet as of December 25,
1998 already reflects this acquisition.
<TABLE>
<CAPTION>
Summary Pro Forma Financial Data
Pro Forma
Nine Months
Ended
Pro Forma Dec. 25,
Year Ended March 31, 1998 1998
------------------------- -----------
Including
Amherst
Before Acquisition
and
Amherst Sale of 1998
Acquisi- Debentures Pro Forma
tion (1) (2) (1)(2)
<S> <C> <C> <C>
Statement of Operations ---------- ----------- -----------
Data:
Net sales $101,300 $132,944 $105,409
Gross margin 19,994 27,202 25,591
Selling, general and
administrative 11,793 16,889 14,790
Research and 1,827 3,979 4,152
development
Other income 144 144 -
---------- ----------- -----------
Operating profit 6,518 6,478 6,649
Interest expense, net (1,651) (4,320) (3,399)
Minority interest (13) (13) -
---------- ----------- -----------
Income from
continuing
operations
before income
taxes 4,854 2,145 3,250
Income taxes (2,002) (589) (1,010)
---------- ----------- -----------
Income from
continuing
operations $2,852 $1,556 $2,240
========== ========== ===========
Basic earnings per $0.55 $0.30 $0.45
share
Diluted earnings per $0.54 $0.29 $0.43
share
Weighted average shares
outstanding - basic 5,184 5,184 5,027
Weighted average shares
outstanding - diluted 5,316 5,316 5,203
Other Data:
Depreciation and
amortization $3,138 $5,812 $2,942
Capital expenditures 2,502 4,550 1,833
Ratio of earnings
to fixed charges 2.8 1.4 1.8
Contract backlog 165,271 210,771 212,679
As of Dec. 25, 1998
Balance Sheet Data: Pro Forma
(3)
-----------
Cash and cash
equivalents $3,228
Working capital 18,095
Total assets 100,456
Long-term debt,
excluding current
installments 56,294
Stockholders' equity 14,153
_______________________
(1) Gives effect to Comptek's acquisition of PRB Associates,
Inc. as if such acquisition had occurred on April 1, 1997. The
March 31, 1998 pro forma uses PRB Associates's historical
financial statements for the year ended December 31, 1997.
(2) Further adjusted to give effect to the acquisition of the
business assets of Amherst Systems and the sale of the debentures
as if they had occurred on April 1, 1997. The March 31, 1998 pro
forma uses Amherst Systems's historical financial statements for
the year ended April 30, 1998. The December 1998 pro forma uses
Amherst Systems's historical financial statements for the nine-
months ended January 31, 1999.
(3) Gives effect to the acquisition of the business operations
of Amherst Systems and the sale of debentures, as if the
acquisition and the sale had occurred on December 25, 1998. No
pro forma effect has been given to the acquisition of PRB
Associates because Comptek's December 25, 1998 historical
consolidated balance sheet already reflects such acquisition.
</TABLE>
DESCRIPTION OF DEBENTURES
The 8 1/2% convertible subordinated debentures were issued under
an indenture, dated as of March 24, 1999, signed by Comptek and
The Bank of New York, as the trustee under the indenture. The
terms of the debentures include those stated in the indenture and
those made a part of the indenture by reference to the Trust
Indenture Act of 1939.
The following is a summary of certain provisions of the
debentures and the indenture (forms of each are included as
exhibits to the registration statement) does not purport to be
complete and is qualified in its entirety by reference to the
detailed provisions of the debenture and the indenture, including
the definitions of certain terms therein to which reference is
hereby made, for a complete statement of such provisions.
Wherever particular provisions or sections of the indenture or
terms defined therein are referred to herein, such provisions or
definitions are incorporated herein by reference.
General
The debentures are unsecured general obligations of Comptek,
subject to the rights of holders of senior indebtedness of
Comptek, and convertible into common stock as described under
"Conversion Rights" below. The debentures have been issued only
in denominations of $1,000 and multiples thereof and will mature
on April 1, 2004. The debentures bear interest payable
semiannually on April 1 and October 1 of each year, commencing
October 1, 1999, at the per annum rate of 8 1/2%. The first
payment will be for the period from the date of delivery to
October 1, 1999. We will pay interest on the debentures to the
persons who are registered holders of debentures at the close of
business on the September 15 or March 15 preceding the applicable
interest payment date. Principal (and premium, if any) and
interest will be payable, the debentures will be convertible and
exchangeable, and transfers thereof will be registrable, at the
office or agency of Comptek maintained for such purposes,
initially at the offices of the trustee. We may pay principal
and interest by check and may mail an interest check to a
holder's registered address. Holders must surrender debentures
to a paying agent to collect principal payments
Initially, The Bank of New York will act as paying agent,
registrar and conversion agent. We may change any paying agent,
registrar, conversion agent or co-registrar upon prior written
notice to the trustee and may act in any such capacity ourselves.
Form of Debentures
The debentures are in fully registered form without coupons in
denominations of $1,000 or any multiples thereof. A holder may
transfer or exchange debentures in accordance with the indenture.
No service charge will be made for any registration or transfer,
exchange or conversion of debentures, except for any tax or other
governmental charges that may be imposed in connection therewith.
The registrar need not transfer or exchange any debentures
selected for redemption. Also, in the event of a partial
redemption, the registrar need not transfer or exchange any
debentures for a period of 15 days before selecting debentures to
be redeemed. Except as described in "Certain Rights to Require
Repurchase of Debentures by the Company" below, the indenture
does not contain any provision requiring us to repurchase the
debentures at the option of the holders thereof in the event of a
leveraged buyout, recapitalization or similar restructuring of
Comptek, even though our credit worthiness and the market value
of the debentures may decline significantly as a result of such
transaction. The indenture does not protect holders of the
debentures against any decline in credit quality, whether
resulting from any such transaction or from any other cause. The
registered holder of a debenture may be treated as its owner for
all purposes.
Conversion Rights
The holders of the debentures are entitled at any time prior to
maturity, subject to prior redemption, to convert the debentures
or portions thereof (which are $1,000 or multiples thereof) into
shares of our common stock at the conversion price of $9.50 per
share (subject to adjustments as described below). No payment or
adjustment will be made for accrued interest on a converted
debenture. If any debenture not called for redemption is
converted between a record date for the payment of interest and
the next succeeding interest payment date, such debenture must be
accompanied by funds equal to the interest payable to the
registered holder on such interest payment date on the principal
amount so converted. We will not issue fractional interests in
shares of common stock upon conversion of the debentures and
instead will deliver a check for the fractional share based upon
the market value of the common stock on the last trading date
prior to the conversion date. If the debentures are called for
redemption, conversion rights will expire at the close of
business on the redemption date, unless we default in payment due
upon such redemption.
The conversion price is subject to adjustments, as set forth in
the indenture, in certain events, including:
- the payment of dividends or distributions on Comptek's
common stock in shares of capital stock;
- subdivisions or combinations of the common stock into a
greater or smaller number of shares of common stock;
- reclassification of the shares of common stock resulting in
an issuance of any shares of our capital stock;
- distribution of rights or warrants to all holders of common
stock entitling them to purchase common stock at less than the
then current price at that time; and
- the distribution to all holders of common stock of assets,
excluding certain cash dividends and distributions, or debt
securities or any rights or warrants to purchase securities of
Comptek; provided, however, that no adjustment will be required
if holders of the debentures receive notice of and are allowed to
participate in such transactions.
No adjustment will be required for rights to purchase common
stock pursuant to a plan we establish for reinvestment of
dividends or interest, or for a change in the par value of the
common stock. To the extent that debentures become convertible
into cash, no adjustment will be required thereafter as to cash.
No adjustment in the conversion price need be made unless such
adjustment would require a change of at least 1.0% in the
conversion price; however, any adjustment that would otherwise be
required to be made shall be carried forward and taken into
account in any subsequent adjustment. We may voluntarily reduce
the conversion price for a period of time.
The conversion price shall also be adjusted if Comptek reports
income before extraordinary item and accounting change diluted
earnings per share of less than $0.80 for its fiscal year ending
March 31, 2000. In such case, the conversion price will be reset
to $8.50 (or such other amount reflecting a 10.5% reduction to
the then current conversion price if an adjustment to the
conversion price had previously been made pursuant to the
provisions outlined above). Such reset conversion price would
take effect, if at all, at 8:00 a.m. as of the next business day
following the day on which we filed our Annual Report on Form 10-
K for the fiscal year ending March 31, 2000.
If we pay dividends on our common stock in shares of capital
stock or subdivide or combine the common stock or issue by
reclassification of our common stock any shares of our capital
stock or merges with, or transfers or leases substantially all of
its assets to, another corporation or trust, the holders of the
debentures then outstanding will be entitled thereafter to
convert such debentures into the kind and amount of shares of
capital stock, other securities, cash or other assets which they
would have owned immediately after such event had such debentures
been converted before the effective date of the transaction.
Any debentures called for redemption, unless surrendered for
conversion on or before the close of business on the redemption
date, are subject to being purchased from the holder of such
debentures at the redemption price by one or more investment
banks or other purchasers who may agree with us to purchase such
debentures and convert them into Comptek's common stock.
Penalty For Late Delivery of Conversion Shares
Holders of the debentures will be entitled to receive a penalty
payment from us if, upon delivering a properly executed
conversion notice and the debenture to be converted, we fail to
deliver, or cause to be delivered, the shares of our common stock
for which the debenture is being converted within three business
days after delivery of the conversion notice and the debentures
such third business day being the "Delivery Date." The penalty
payment will apply to the period beginning on the business day
after the Delivery Date and ending on the day we deliver such
shares of common stock to the holder and will accrue at a rate of
0.50% of the principal amount of the debentures subject to such
conversion notice.
Subordination of Debentures
The indebtedness evidenced by the debentures will be subordinated
and junior in right of payment to the extent set forth in the
indenture to the prior payment in full of amounts then due on all
senior indebtedness. No payment shall be made by us on account of
principal of (or premium if any) or interest on the debentures or
on account of the purchase or other acquisition of debentures, if
there shall have occurred and be continuing a default with
respect to any senior indebtedness permitting the holders to
accelerate the maturity thereof, and such default shall be the
subject of a judicial proceeding, or we shall have received
notice of such default from certain authorized persons, unless
and until such default or event of default shall have been cured
or waived or shall have ceased to exist. By reason of these
provisions, in the event of default on any senior indebtedness,
whether now outstanding or hereafter issued, and so long as such
default is continuing, payments of principal of (and premium, if
any) and interest on the debentures may not be permitted to be
made until such senior indebtedness is paid in full, or the event
of default on such Senior Indebtedness is cured or waived.
Upon any acceleration of the principal of the debentures or any
distribution of assets of Comptek upon any receivership,
dissolution, winding-up, liquidation, reorganization or similar
proceedings of Comptek, whether voluntary or involuntary, or in
bankruptcy or insolvency, all amounts due or to become due upon
all senior indebtedness must be paid in full before the holders
of the debentures or the trustee are entitled to receive or
retain any assets so distributed in respect of the debentures.
By reason of this provision, in the event of insolvency, holders
of the debentures may recover less, ratably, than holders of
senior indebtedness.
"Senior indebtedness" is defined to mean the principal, premium,
if any, interest on and all other amounts payable under or in
respect of our indebtedness (other than indebtedness owed to one
of our subsidiaries, our indebtedness which is expressly pari
passu with the debentures or indebtedness which is expressly
subordinated to the debentures). There is no limit on the
amount of senior indebtedness that we may incur.
Optional Redemption
The debentures will be subject to redemption, as a whole or in
part, at any time or from time to time commencing on or after
March 1, 2002 at our option on at least 30 days' and not more
than 60 days' prior notice by mail. The redemption prices
(expressed as a percentage of principal amount) are as follows
for the 12-month period beginning on or after March 1 of the
following years:
Redemption
Year Price
2002 103.4%
2003 101.7%
2004 and thereafter 100.0%
Certain Rights to Require Repurchase of Debentures by the
Company
In the event of any Change in Control (as described below) of
Comptek occurring after the date of issuance of the debentures
and on or prior to maturity, each holder of debentures will have
the right, at such holder's option, to require us to repurchase
all or any part of such holder's debentures on the date (the
"Repurchase Date") that is 75 days after the date we give notice
of the Change in Control at a price (the "Repurchase Price")
equal to 101.0% of the principal amount thereof, together with
accrued and unpaid interest to the Repurchase Date. On or prior
to the Repurchase Date, we are required to deposit with the
trustee or a Paying Agent an amount of money sufficient to pay
the Repurchase Price of the debentures that are to be repaid on
the Repurchase Date. Neither our Board of Directors nor the
trustee, acting alone or together, can modify or waive this
required repurchase of the debentures.
Our failure to repurchase the debentures when required under the
preceding paragraph will result in an event of default under the
indenture, whether or not such repurchase is permitted by the
subordination provisions of the indenture.
On or before the 15th day after the occurrence of a Change in
Control, Comptek is obligated to mail to all holders a notice of
the event constituting and the date of such Change in Control,
the Repurchase Date, the date by which the repurchase right must
be exercised, the repurchase price for debentures, and the
procedures that a holder must follow to exercise a repurchase
right. To exercise the repurchase right, a holder of a debenture
must deliver, on or before the 10th day prior to the Repurchase
Date, written notice to Comptek (or an agent designated by us for
such purpose) and to the trustee of the holder's exercise of such
right, together with the certificates evidencing the debentures
with respect to which the right is being duly exercised, duly
endorsed for transfer.
A "Change in Control" will occur when:
(1) all, or substantially all, of Comptek's assets are sold as
an entirety to any person or related group of persons;
(2) there shall be consummated any consolidation or merger of
Comptek
(A) in which Comptek is not the continuing or surviving
corporation (other than a consolidation or merger with a wholly-
owned subsidiary of Comptek in which all common shares
outstanding immediately prior to the effectiveness thereof are
changed into or exchanged for the same consideration) or
(B) pursuant to which the common stock is converted into cash,
securities, other property, in each case other than a
consolidation or merger of Comptek in which the holders of the
common stock immediately prior to the consolidation or merger
have, directly or indirectly, at least a majority of the common
stock of the continuing or surviving corporation immediately
after such consolidation or merger; or
(3) any person, or any persons acting together that would
constitute a "group" for purposes of Section 13(d) of the
Exchange Act, together with any affiliates thereof, acquires
beneficial ownership (as defined in Rule 13d-3 under the Exchange
Act) of at least 50.0% of the total voting power of all classes
of capital shares of Comptek entitled to vote generally in the
election of directors of Comptek.
Notwithstanding clause (3) above, a Change in Control will not be
deemed to have occurred solely by virtue of Comptek; any
subsidiary; any employee share purchase plan, share option plan,
or other share incentive plan or program; retirement plan or
automatic dividend reinvestment plan; or any substantially
similar plan of Comptek or any subsidiary or any person holding
our securities for or pursuant to the terms of any such employee
benefit plan, filing or becoming obligated to file a report under
or in response to Schedule 13D or Schedule 14D-1 (or any
successor schedule, form, or report) under the Exchange Act, as
amended, disclosing beneficial ownership by it of shares or
securities of Comptek, whether at least 50.0% of the total voting
power referred to in clause (3) above or otherwise. A
recapitalization or a leveraged buyout or similar transaction
involving members of management or their affiliates will
constitute a Change in Control if it meets the foregoing
definition.
Notwithstanding the foregoing, a Change in Control as described
above will not be deemed to have occurred if:
- the current market price of the common stock on the date of
a Change in Control is at least equal to 105.0% of the conversion
price of the debentures in effect immediately preceding the time
of such Change in Control;
- all of the consideration (excluding cash payments for
fractional shares) in the transaction giving rise to such Change
in Control to the holders of common stock consists of shares of
common stock that are, or immediately upon issuance will be,
listed on a national securities exchange or quoted on the Nasdaq
National Market, and as a result of such transaction the
debentures will become convertible solely into such shares of
common stock; or
- the consideration in the transaction giving rise to such
Change in Control to the holders of common stock consists of cash
or securities that are, or immediately upon issuance will be,
listed on a national securities exchange or quoted on the Nasdaq
National Market, or a combination of cash and such securities,
and the aggregate fair market value of such consideration (which,
in the case of such securities, will be equal to the average of
the daily closing prices of such securities during the 10
consecutive trading days commencing with the sixth trading day
following consummation of such transaction) is at least 105.0% of
the conversion price of the debentures in effect on the date
immediately preceding the closing date of such transaction.
There is no definition of the phrase "all or substantially all"
as applied to our assets and used in the definition of Change in
Control in the indenture, and there is no clear definition of the
phrase under applicable law. As a result of the uncertainty of
the meaning of this phrase, in the event we were to sell a
significant amount of our assets, the holders and us may disagree
over whether the sale gives rise to the right of holders to
require us to repurchase the debentures. In such event, the
holders would likely not be able to require us to repurchase
unless and until the disagreement were resolved in favor of the
holders.
The right to require us to repurchase debentures as a result of a
Change in Control could create an event of default under senior
indebtedness, as a result of which any repurchase could, absent a
waiver, be blocked by the subordination provisions of the
debentures. See "Subordination of Debentures" above. Our
ability to pay cash to the holders upon a repurchase may also be
limited by certain financial covenants contained in our senior
indebtedness.
In the event a Change in Control occurs and the holders exercise
their rights to require us to repurchase debentures, we intend to
comply with applicable tender offer rules under the Exchange Act,
including Rules 13e-4 and 14e-1, as then in effect, with respect
to any such purchase. The Change in Control purchase feature of
the debentures may in certain circumstances make more difficult
or discourage a takeover of Comptek and, thus, the removal of
incumbent management. The Change in Control purchase feature,
however, is not the result of management's knowledge of any
specific effort to accumulate common stock or to obtain control
of Comptek by means of a merger, tender offer, solicitation, or
otherwise, or part of a plan by management to adopt a series of
anti-takeover provisions. Instead, the Change in Control
purchase feature is a standard term contained in other similar
debt offerings.
The foregoing provisions would not necessarily afford holders of
debentures protection in the event of highly leveraged or other
transactions involving Comptek that may adversely affect holders
of debentures.
Modification of the Indenture
Under the indenture, with certain exceptions, our rights and
obligations with respect to the debentures and the rights of
holders of the debentures may only be modified by us and the
trustee with the written consent of the holders of not less than
66-2/3% in principal amount of the outstanding debentures.
However, without the consent of each holder of any debenture
affected, an amendment, waiver or supplement may not:
(a) reduce the amount of debentures whose holders may consent to
an amendment;
(b) reduce the rate or change the time of payment of interest on
any debenture;
(c) reduce the principal of or change the fixed maturity of any
debenture;
(d) make any debenture payable in money other than that stated
in the debenture;
(e) change the provisions of the indenture regarding the right
of the holders of a majority of the debenture to waive defaults
under the indenture or impair the right of any holder of
debentures to institute suit for the enforcement of any payment
of principal and interest on the debentures on and after their
respective due dates;
(f) make any change that adversely affects the right to convert
any debenture;
(g) make any change to the subordination or seniority of the
debentures that adversely affects the rights of any holder; or
(h) impair the right, as limited in the indenture, of any holder
to institute any suit or proceeding.
Events of Default, Notice and Waiver
The following is a summary of certain provisions of the indenture
relating to "Events of Default", notice and waiver.
The following are "Events of Default" under the indenture with
respect to the debentures:
(a) default in the payment of interest on the debentures when
due and payable which continues for 30 days;
(b) default in the payment of principal of (and premium, if any,
on) the debentures when due and payable, at maturity, upon
redemption or otherwise;
(c) our failure to perform any other covenant contained in the
indenture or the debentures which continues for 60 days after
notice as provided in the indenture;
(d) acceleration of any indebtedness for money borrowed
(including obligations under leases required to be capitalized on
the balance sheet of the lessee under generally accepted
accounting principles but not including any indebtedness or
obligation for which recourse is limited to property purchased)
in an aggregate principal amount in excess of $20.0 million,
whether existing on the date of the execution of the indenture or
thereafter created, if such indebtedness is not paid or such
acceleration is not annulled within ten days after notice to us
of such acceleration; and
(e) certain events of bankruptcy, insolvency or reorganization
relating to Comptek.
If an Event of Default occurs and is continuing with respect to
the debentures, either the trustee or the holders of at least a
majority in principal amount of the debentures may declare all of
the debentures to be due and payable immediately.
We will not (i) declare or pay any dividends or make any
distribution to holders of its capital stock or (ii) purchase,
redeem or otherwise acquire or retire for value any of its common
stock, or any warrants, rights or options, to purchase or acquire
any shares of its common stock (other than the debentures or any
other convertible indebtedness of ours that is neither secured
nor subordinated to the debentures), if at the time any of the
aforementioned Events of Default has occurred and is continuing
or would exist immediately after giving effect to such action.
The trustee may require indemnity reasonably satisfactory to it
before it enforces the indenture or the debentures. Subject to
certain limitations, holders of a majority in principal amount of
the debentures may direct the trustee in its exercise of any
trust or power. The trustee may withhold from holders of the
debentures notice of any default (except a default in payment of
principal or interest) if it determines that withholding notice
is in their interests. We are required to file with the trustee
annually an officer's statement as to the absence of defaults in
fulfilling any of its obligations under the indenture.
No consent of the holders of the debentures is required for
Comptek to consolidate with or merge into or transfer or lease
substantially all of its assets to another corporation or trust
which assumes the obligations of Comptek under the indenture and
debentures or for any reorganization within the meaning of
Section 368(a)(1)(B) of the Internal Revenue Code of 1986, as
amended (the "Code"); nor is any such consent of holders of the
debentures required for any amendment of the indenture or the
debentures by Comptek or the trustee to cure any ambiguity,
defect or inconsistency, or to provide for uncertificated
debentures in addition to certified debentures, or to make any
change that does not adversely affect the right of a holder of a
debenture.
Consolidation, Merger, Sale or Conveyance
The indenture provides that Comptek may not merge or consolidate
with, or sell or convey all, or substantially all, of its assets
to another person unless such person is a company or a trust;
such person assumes by supplemental indenture all the obligations
of Comptek under the debentures and the indenture; and
immediately after the transaction no default or Event of Default
shall exist.
Marketability
At present there is no public market for the debentures, and it
is not likely that a market will develop. The debentures were
initially sold pursuant to exemptions from registration under the
Securities Act. We filed a registration statement under the
Securities Act relating to the resale of the debentures and the
underlying shares of common stock. However, there can be no
assurance that we will be able to maintain the effectiveness of
the current registration statement as required. The absence of
such an effective registration statement may limit any holder's
ability to sell the debentures or the underlying shares of common
stock or could adversely affect the price at which the debentures
or the underlying shares of common stock can be sold.
Governing Law
The indenture and the debentures are governed by and construed in
accordance with the laws of the State of New York.
Registration Rights Agreement
Pursuant to a registration rights agreement entered into by us in
connection with the initial sale of the debentures, the
debentures and the underlying shares of common stock have been
registered under the Securities Act with the SEC. We have also
agreed to prepare and file such amendments and supplements to the
registration statement as may be necessary to keep the
registration statement effective until two years from the
effective date of the registration statement or such shorter
period when all the debentures and the Conversion Shares have
been sold thereby or until the debentures and the Conversion
Shares are no longer, by reason of Rule 144 promulgated under the
Securities Act or any other rule of similar effect, required to
be registered for the sale thereof by the Purchasers. The
Registration Rights Agreement entitles us to suspend temporarily
the right of holders of Registrable Securities to make
dispositions of Registrable Securities pursuant to the
registration statement if any event shall occur as a result of
which our Board of Directors shall determine that it is
necessary, based on the opinion of counsel for Comptek or for the
holders of a majority of the Registrable Securities, to amend or
supplement this prospectus relating to the registration statement
in order to make this prospectus not misleading in the light of
the circumstances existing at the time it is delivered to a
purchaser, prepare a supplement or post-effective amendment to
the registration statement or the related prospectus or any
document incorporated therein by reference or file any other
required document so that, as thereafter delivered to the
purchasers of the Registrable Securities, the prospectus will not
contain an untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not
misleading. Notwithstanding the foregoing, we shall not under
any circumstances be entitled to exercise its right to defer
sales of Registrable Securities except as follows: we may defer
sales of Registrable Securities for a period not to exceed an
aggregate of 60 days in any 365 day period, and the period in
which sales of Registrable Securities are suspended shall not
exceed 15 days unless we shall deliver to such holders of
Registrable Securities one or more subsequent notices to the
effect set forth above, each of which shall have the effect of
extending the period during which sales of Registrable Securities
are deferred by up to an additional 15 days, or such shorter
period of time as is specified in such subsequent notice.
SELLING HOLDERS
The debentures were originally issued by Comptek and sold to the
initial purchasers in transactions exempt from the registration
requirements of the Securities Act. We reasonably believed that
each such person was an "accredited investors," as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
Selling holders (which term includes their transferees, pledgees
or donees or their successors) may from time to time offer and
sell pursuant to this prospectus any or all of the debentures and
common stock into which the debentures are convertible.
The following table sets forth information, as of April 22, 1999,
with respect to the selling holders and the respective principal
amounts of debentures beneficially owned by each selling holder
that may be offered pursuant to this prospectus. The information
is based on information provided by or on behalf of the selling
holders. The selling holders may offer all, some or none of the
debentures or common stock into which the debentures are
convertible. Because the selling holders may offer all or some
portion of the debentures or the common stock, no estimate can be
given as to the amount of the debentures or the common stock that
will be held by the selling holders upon termination of any such
sales. In addition, the selling holders identified below may
have sold, transferred or otherwise disposed of all or a portion
of their debentures since the date on which they provided the
information regarding their debentures in transactions exempt
from the registration requirements of the Securities Act.
<TABLE>
<CAPTION>
Debentures Common Stock Common
Beneficially Owned Prior to Stock
Name Owned and the Offering Offered
Offered Hereby Hereby
--------------- -------------- ---------
Number Number
Principal of of
Amount %(1) Shares(2) %(3) Shares(2)
--------------- -------------- ---------
<S> <C> <C> <C> <C> <C>
CIBC Oppenheimer,
Corp. 2,500,000 16.7% 263,157 4.9% 368,421
Coastal
Convertibles Ltd. 500,000 3.3% 52,631 1.0% 52,631
Libertyview Fund,
LLC 100,000 .6% 10,526 .2% 10,526
Libertyview
Funds, L.P. 400,000 2.7% 42,105 .8% 42,105
Joseph Stechler &
Company,
Incorporated 2,000,000 13.3% 210,526 4.0% 210,526
Quasar Rabbico
N.V. 1,500,000 10.0% 157,894 3.0% 157,894
Warburg Pincus
Emerging Growth
Fund 7,000,000 46.7% 736,842 12.6% 736,842
Leonardo, L.P. 600,000 4.0% 15,789 1.2% 15,789
Ramius Fund, LTD. 250,000 1.7% 26,315 .5% 26,315
Raphael, L.P. 150,000 1.0% 15,789 .3% 15,789
__________
(1) Based on 15,000,000 principal amount of debentures
outstanding.
(2) Assumes conversion of all of the holder's debentures at a
conversion price of $9.50.
(3) Calculated based on Rule 13d-3(d)(i) of the Exchange Act using
5,100,619 shares of common stock outstanding as of April 22, 1999.
In calculating the percentage amount, we treat as outstanding the
number of shares of common stock issuable upon conversion of all of
that particular holder's debentures. We did not assume, however,
the conversion of any other holder's debentures.
</TABLE>
None of the selling holders has had any material relationship
with Comptek or its affiliates within the past three years. The
selling holders purchased all of the debentures in a private
transactions exempt from the registration requirements of the
Securities Act. All of the debentures were "restricted
securities" under the Securities Act prior to this registration.
The selling holders have represented to us that they purchased
the debentures for their own account for investment only and not
with a view toward selling or distributing them, except pursuant
to sales registered under the Securities Act or exemptions.
Comptek agreed with the selling holders to file the registration
statement to register the resale of the debentures and the
underlying shares of common stock. Comptek agreed to prepare and
file all necessary amendments and supplements to the registration
statement to keep it effective until the earlier of (1) two years
from the effective date of the registration statement and (2) the
date on which the debentures and the common stock into which the
debentures are convertible no longer qualify as "Registrable
Securities" under the Registration Rights Agreement.
Information concerning the selling holders may change from time
to time and any such changed information will be set forth in
supplements to this prospectus if and when necessary. In
addition, the per share conversion price, and, therefore, the
number of shares of common stock issuable upon conversion of the
debentures, is subject to adjustment under certain circumstances.
Accordingly, the aggregate principal amount of debentures and the
number of shares of common stock into which the debentures are
convertible may increase or decrease.
PLAN OF DISTRIBUTION
The selling holders and their successors (which term includes
their transferees, pledgees or donnes or their successors) may
sell the debentures and the common stock into which the
debentures are convertible directly to purchasers or through
underwriters, broker-dealers or agents, who may receive
compensation in the form of discounts, concessions or commissions
from the selling holders or the purchasers (which discounts,
concessions or commission as to any particular underwriter,
broker-dealer or agent may be in excess of those customary in the
types of transactions involved).
The debentures and the common stock into which the debentures are
convertible may be sold in one or more transactions at fixed
prices, at prevailing market prices at the time of sale, at
prices related to such prevailing market prices, at varying
prices determined at the time of sale, or at negotiated prices.
Such sales may be effected in transactions (which may involve
crosses or block transactions) (1) on any national securities
exchange or quotation service on which the debentures or the
common stock may be listed or quoted at the time of sale, (2) in
the over-the-counter market, (3) in transactions otherwise than
on such exchanges or services or in the over-the-counter market,
(4) through the writing of options (whether such options are
listed on an options exchange or otherwise), or (5) through the
settlement of short sales. In connection with the sale of the
debentures and the common stock into which the debentures are
convertible or otherwise, the selling holders may enter into
hedging transactions with broker-dealers or other financial
institutions which may in turn engage in short sales of the
debentures or the common stock into which the debentures are
convertible and deliver these securities to close out such short
positions, or loan or pledge the debentures or the common stock
into which the debentures are convertible to broker-dealers that
in turn may sell these securities.
The aggregate proceeds to the selling holders from the sale of
the debentures or common stock into which the debentures are
convertible offered by them hereby will be the purchase price of
such debentures or common stock less discounts and commissions,
if any. Each of the selling holders reserves the right to accept
and, together with their agents from time to time, to reject, in
whole or in part, any proposed purchase of debentures or common
stock to be made directly or through agents. Comptek will not
receive any of the proceeds from this offering.
Comptek's common stock is listed on the American Stock Exchange.
We do not intend to list the debentures for trading on any
national securities exchange or on the Nasdaq National Market and
can give no assurance about the development of any trading market
for the debentures.
In order to comply with the securities laws of some states, if
applicable, the debentures and common stock into which the
debentures are convertible may be sold in such jurisdictions only
through registered or licensed brokers or dealers. In addition,
in some states the debentures and common stock into which the
debentures are convertible may not be sold unless they have been
registered or qualified for sale or an exemption from
registration or qualification requirements is available and is
complied with.
The selling holders and any underwriters, broker-dealers or
agents that participate in the sale of the debentures and common
stock into which the debentures are convertible may be
"underwriters" within the meaning of Section 2(11) of the
Securities Act. Any discounts, commission, concessions or profit
they earn on any resale of the shares may be underwriting
discounts and commissions under the Securities Act. Selling
holders who are "underwriters" within the meaning of Section
2(11) of the Securities will be subject to the prospectus
delivery requirements of the Securities Act. The selling holders
have acknowledged that they understand their obligations to
comply with the provisions of the Exchange Act and the rules
thereunder relating to stock manipulation, particularly
Regulation M, and have agreed that they will not engage in any
transaction in violation of such provisions.
In addition, any securities covered by this prospectus which
qualify for sale pursuant to Rule 144 of the Securities Act may
be sold under Rule 144 rather than pursuant to this prospectus.
A selling holder may not sell any debentures or common stock
described herein and may not transfer, devise or gift such
securities by other means not described in this prospectus.
To the extent required, the specific debentures or common stock
to be sold, the names of the selling holders, the respective
purchase prices and public offering prices, the names of any
agent, dealer or underwriter, and any applicable commissions or
discounts with respect to a particular offer will be set forth in
an accompanying prospectus supplement or, if appropriate, a post-
effective amendment to the registration statement of which this
prospectus is a part.
The Registration Rights Agreement provides for cross-
indemnification of the selling holders and Comptek and their
respective directors, officers and controlling persons against
certain liabilities in connection with the offer and sale of the
debentures and the common stock, including liabilities under the
Securities Act. Comptek will pay substantially all of the
expenses incurred by the selling holders and Comptek incident to
the offering and sale of the debentures and the common stock,
provided that each selling holder will be responsible for payment
of commission, concessions and discounts of underwriters, broker
dealers or agents.
LEGAL MATTERS
The validity of the debentures and shares of common stock offered
hereby will be passed upon by Christopher A. Head, General
Counsel for Comptek. Mr. Head is an executive officer of
Comptek. As of April 22, 1999, Mr. Head owns less than one
percent of the outstanding shares of the Comptek.
EXPERTS
The consolidated financial statements and schedule of Comptek as
of March 31, 1998 and 1997, and for each of the years in the
three-year period ended March 31, 1998, have been incorporated by
reference herein and in the registration statement in reliance
upon the reports of KPMG LLP, independent certified public
accountants, upon the authority of said firm as experts in
accounting and auditing.
The financial statements for Amherst Systems for each of the
years in the three-year period ended April 30 1998 have been
incorporated by reference herein and in the registration
statement in reliance upon the report of KPMG LLP, independent
certified public accountants, upon the authority of said firm as
experts in accounting and auditing.
The financial statements for PRB Associates for the years ended
December 31, 1997 and 1996, have been incorporated by reference
herein and in the registration statement in reliance upon
Deloitte & Touche LLP, independent certified public accountants,
upon the authority of said firm as experts in accounting and
auditing.
No dealer, sales representative or any other person has been
authorized to give information or make any representation not
contained in this prospectus in connection with the offer made by
this prospectus and, if given or made, such information or
representation must not be relied upon as having been authorized
by Comptek. This prospectus does not constitute an offer to sell
or a solicitation of an offer to buy any securities other than
those specifically offered hereby or of any securities offered
hereby in any jurisdiction to any person to whom it is unlawful
to make an offer or solicitation in such jurisdiction. Neither
the delivery of this prospectus nor any sale made hereunder
shall, under any circumstances, create an implication that there
has been no change in our affairs since the date hereof or that
the information contained herein is correct as of any time
subsequent to the date hereof.
Part II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table sets forth estimated expenses in connection
with the issuance and distribution of the securities being
registered. All amounts shown are estimates, except for the SEC
registration fee. The listed expenses are payable by the Company.
<TABLE>
<S> <C>
4,170
Registration Fee:
500
Printing and Engraving Fee:
4,000
Accounting Fees:
8,000
Legal Fees:
1,100
Miscellaneous:
-------
17,770
Total
=======
</TABLE>
Item 15. Indemnification of Directors and Officers.
Article IX. of the Company's By-laws provides as follows:
Every person who is or was a director, officer or
employee of the corporation, or of any other
corporation which he served as such at the request of
the corporation, may in accordance with the second
paragraph of this Article IX be indemnified by the
corporation against any and all liability and
reasonable expense that may be incurred by him in
connection with or resulting from any claim, action,
suit or proceeding (whether brought by or in the right
of the corporation or such other corporation or
otherwise), civil or criminal, or in connection with an
appeal relating thereto, in which he may be involved,
as a party or otherwise, by reason of his being or
having been a director, officer or employee of the
corporation or such other corporation, or by reason of
any action taken or not taken in his capacity as such
director, officer or employee, whether or not he
continues to be such at the time such liability or
expense shall have been incurred, provided such person
acted, in good faith, in a manner he reasonably
believed to be in or not opposed to the best interests
of the corporation or such other corporation, as the
case may be, and, in addition in any criminal action or
proceeding, had no reasonable cause to believe that his
conduct was unlawful. As used in this Article IX, the
terms "liability" and "expense" shall include, but
shall not be limited to, court costs, counsel fees and
disbursements and amounts of judgements, fines or
penalties against, and amounts paid in settlement by, a
director, officer or employee. The termination of any
claim, action, suit or proceeding, civil or criminal,
by judgment, settlement (whether with or without court
approval), conviction or upon a pleas of guilty or nolo
contendere, or its equivalent, shall not create a
presumption that a director, officer or employee did
not meet the standards of conduct set forth in this
paragraph.
Expenses incurred with respect to any claim, action,
suit or proceeding of the character described in the
first paragraph of this Article IX may be advanced by
the corporation prior to the final disposition thereof
upon receipt of any undertaking by or on behalf of the
recipient to repay such amount unless it shall
ultimately be determined that he is entitled to
indemnification under this Article IX.
The rights of indemnification provided in this Article
IX shall be in addition to any other rights to which
any such director, officer or employee may otherwise be
entitled by contract, as a matter of law, by vote of
the stockholders, or otherwise; and in the event of any
such person's death, such rights shall extend to his
heirs and legal representatives.
Paragraph TENTH of the Company's Certificate of Incorporation
provides as follows:
TENTH: No director shall be personally liable to the
Corporation or any shareholder for damages for any
breach of duty as a director, except for (a) the
liability of any director if a judgment or other final
adjudication adverse to him establishes that (i) his
acts or omissions were in bad faith or involved
intentional misconduct or a knowing violation of law or
(ii) he personally gained in fact a financial profit or
other advantage to which he was not legally entitled or
(iii) his acts violated Section 719 of the New York
Business Corporation Law, or (b) the liability of any
director for any act or omission prior to the adoption
of this paragraph TENTH. Any repeal or modification of
this paragraph TENTH by the shareholders of the
corporation shall not, unless otherwise required by
law, adversely affect any right or protection of a
director existing at the time of such repeal or
modification with respect to acts or omissions
occurring prior to such repeal or modification. If the
New York Business Corporation Law is amended after
approval by the shareholders of this paragraph TENTH to
authorize corporate action further eliminating or
limiting the personal liability of directors, then the
liability of a director of the corporation shall be
eliminated or limited to the fullest extent permitted
by New York Business Corporation Law, as amended from
time to time.
Section 722 of the New York Business Corporation Law (the "BCL")
permits indemnification against judgments, fines and amounts paid
in settlement and reasonable expenses, including attorneys' fees,
actually and necessarily incurred as a result of legal actions or
proceedings. Under Section 723 of the BCL, if a litigant is
successful in the defense of such an action or proceeding, he or
she is automatically entitled to indemnification. Otherwise,
indemnification will depend upon whether or not the director or
officer has lived up to an appropriate standard of conduct in the
performance of his or her duties.
Item 16. Exhibits.
4.1(a) Indenture dated March 24, 1999 between the Registrant
and The Bank of New York, as Trustee.
4.1(b) Form of Debenture.
4.1(c) Form of Registration Rights Agreement.
5.1 Opinion of Christopher A. Head, counsel to the Company.*
12.1 Statement Re Computation of Ratios
15.1 Letter of KPMG LLP regarding unaudited interim
financial statements.
23.1 Consent of Christopher A. Head (included in
Exhibit 5).*
23.2 Consent of KPMG LLP, independent auditors for the Company.
23.3 Consent of KPMG LLP, independent auditors for Amherst
Systems, Inc.
23.4 Consent of Deloitte & Touche, LLP, independent auditors for
PRB Associates, Inc.
25.1 Form T-1 Statement of Eligibility and
Qualification under the Trust Indenture Act of 1939 of
the Trustee.*
___________________
*To be filed by amendment.
Item 17. Undertakings
I. Rule 415 Offering. The undersigned registrant hereby
undertakes:
1. To file, during any period in which offers or sales are
being made, a post-effective amendment to this
registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the
registration statement (or the most recent post-
effective amendment thereof) which, individually
or in the aggregate, represent a fundamental
change in the information set forth in the
registration statement. Notwithstanding the
foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of
securities offered would not exceed that which was
registered) and any deviation from the low or high
end of the estimated maximum offering range may be
reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b), in the
aggregate, the changes in volume and price
represent no more than a 20% change in the maximum
aggregate offering price set forth in the
"Calculation of Registration Fee" table in the
effective registration statement.
(iii) To include any material information with
respect to the plan of distribution not previously
disclosed in the registration statement or any
material change to such information in the
registration statement;
Provided, however, that paragraphs (i) and (ii)
above do not apply if the information required to
be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed
by the registrant pursuant to Section 13 or
Section 15(d) of the Securities Exchange Act of
1934 that are incorporated by reference in this
registration statement.
2. That for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration
statement relating to the securities offered pursuant
to this registration statement, and the offering of
such securities at that time shall be deemed to be the
initial bona fide offering thereof.
3. To remove from registration by means of a post-
effective amendment any of the securities being
registered which remain unsold at the termination of
the offering.
II. Filings Incorporating Subsequent Exchange Act Documents by
Reference.
The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities
Act of 1933, each filing of the registrant's annual report
pursuant to section 13(a) or section 15(d) of the Securities
Exchange Act of 1934 that is incorporated by reference in
this registration statement shall be deemed to be a new
registration statement relating to the securities offered
pursuant to this registration statement, and the offering of
such securities at that time shall be deemed to be the
initial bona fide offering thereof.
III. Acceleration of Effectiveness - Indemnification Undertaking.
Insofar as indemnification for liabilities arising under the
Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant
to the provisions described under Item 15 above, or
otherwise, the registrant has been advised that in the
opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the
Act and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other
that than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the
registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or
controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of
its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the
question whether such indemnification by it is against
public policy as expressed in the Act and will be governed
by the final adjudication of such issue.
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe
that it meets all the requirements for filing on Form S-3 and has
duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Buffalo,
New York on April 22, 1999.
COMPTEK RESEARCH, INC.
By: /s/John J. Sciuto
John J. Sciuto, Chairman
President and Chief
Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose
signature appears below constitutes and appoints Christopher A.
Head, his true and lawful attorney-in-fact and agent, with full
power of substitution and resubstitution, for him or her and in
his or her name, please and stead, in any and all capacities, to
sign any an all amendments (including post-effective amendments)
to this registration statement, and to file the same, with all
exhibits thereto and other documents in connection therewith,
with the Securities and Exchange Commission, granting unto said
attorney-in-fact and agent, full power and authority to do and
perform each and every act and thing requisite and necessary to
be done in and about the premises, as fully to all intents and
purposes as he or she might or could do in person, hereby
ratifying and confirming all that said attorney-in-fact and
agent, or his substitute, may lawfully do or cause to be done by
virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, this
registration statement has been signed below by the following
persons in the capacities indicated.
/s/Joseph A. Alutto April 22, 1999
Joseph A. Alutto, Director
/s/Laura L. Benedetti April 22, 1999
Laura L. Benedetti,
Chief Financial Officer
Vice President - Finance
and Treasurer
/s/John R. Cummings April 22, 1999
John R. Cummings, Director
/s/G. Wayne Hawk April 22, 1999
G. Wayne Hawk, Director
/s/Patrick J. Martin April 22, 1999
Patrick J. Martin, Director
/s/Wayne E. Meyer April 22, 1999
Wayne E. Meyer, Director
/s/James D. Morgan April 22, 1999
James D. Morgan, Director
/s/John J. Sciuto April 22, 1999
John J. Sciuto, Chairman,
Chief Executive Officer
and Director
/s/Henry P. Semmelhack April 22, 1999
Henry P. Semmelhack, Director
Exhibit Index
Number Description
4.1(a) Indenture dated March 24, 1999 between the Registrant
and The Bank of New York, as Trustee.
4.1(b) Form of Debenture (included in Exhibit 4.1(a)).
4.1(c) Form of Registration Rights Agreement.
5.1 Opinion of Christopher A. Head, counsel to the Company.*
12.1 Statement Re Computation of Ratios
15.1 Letter of KPMG LLP regarding unaudited interim
financial statements.
23.1 Consent of Christopher A. Head (included in
Exhibit 5).*
23.2 Consent of KPMG LLP, independent auditors for the
Company.
23.3 Consent of KPMG LLP, independent auditors for Amherst
Systems, Inc.
23.4 Consent of Deloitte & Touche, LLP, independent auditors
for PRB Associates, Inc.
25.1 Form T-1 Statement of Eligibility and Qualification under
the Trust Indenture Act of 1939 of the Trustee.*
__________________
*To be filed by amendment.
Exhibit 4.1(a)
COMPTEK RESEARCH, INC.
$20,000,000
8 1/2% Convertible Subordinated Debentures Due 2004
INDENTURE
Dated as of March 24, 1999
THE BANK OF NEW YORK,
AS TRUSTEE
TABLE OF CONTENTS
Page
ARTICLE I. DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions 1
SECTION 1.2. Other Definitions 5
SECTION 1.3. Incorporation by Reference to Trust
Indenture Act 6
SECTION 1.4. Rules of Construction 6
ARTICLE II. THE SECURITIES
SECTION 2.1. Form; Dating; Incorporation of
Form in Indenture 7
SECTION 2.2. Execution and Authentication 8
SECTION 2.3. Registrar and Agents 9
SECTION 2.4. Paying Agent to Hold Money in Trust 9
SECTION 2.5. Transfer and Exchange 10
SECTION 2.6. Replacement Securities 13
SECTION 2.7. Outstanding Securities 14
SECTION 2.8. Temporary Securities 14
SECTION 2.9. Cancellation 15
SECTION 2.10. Defaulted Interest 15
SECTION 2.11. Securityholder Lists 15
SECTION 2.12. Persons Deemed Owners 16
ARTICLE III. REDEMPTION
SECTION 3.1. Notices to Trustee 16
SECTION 3.2. Selection of Securities to be Redeemed 16
SECTION 3.3. Notice of Redemption by the Company 17
SECTION 3.4. Effect of Notice of Redemption 18
SECTION 3.5. Deposit of Redemption Price 18
SECTION 3.6. Securities Redeemed in Part 18
ARTICLE IV. COVENANTS
SECTION 4.1. Payment of the Securities 18
SECTION 4.2. Commission Reports 19
SECTION 4.3. Waiver of Stay, Extension or Usury Laws 19
SECTION 4.4. Notice of Default 19
SECTION 4.5. Compliance Certificates 19
SECTION 4.6. Limitation on Dividends and
Other Distributions 20
SECTION 4.7. Investment Company Act of 1940 20
SECTION 4.8. Due Execution, Delivery and Performance
of the Indenture 21
SECTION 4.9. Maintenance of Corporate Existence 21
SECTION 4.10. Failure to Timely Deliver Certificates
Upon Conversion 21
ARTICLE V. SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, etc. 21
SECTION 5.2. Successor Corporation or Trust Substituted 22
ARTICLE VI. DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default 23
SECTION 6.2. Acceleration 25
SECTION 6.3. Other Remedies 25
SECTION 6.4. Waiver of Defaults and Events of Default 25
SECTION 6.5. Control by Majority 26
SECTION 6.6. Rights of Holders to Receive Payment 26
SECTION 6.7. Collection Suit by Trustee 26
SECTION 6.8. Trustee May File Proofs of Claim 27
SECTION 6.9. Priorities 27
SECTION 6.10. Undertaking for Costs 28
SECTION 6.11. Limitation on Suits 28
ARTICLE VII. TRUSTEE
SECTION 7.1. Duties of Trustee. 29
SECTION 7.2. Rights of Trustee 30
SECTION 7.3. Individual Rights of Trustee 31
SECTION 7.4. Trustee's Disclaimer 31
SECTION 7.5. Notice of Defaults 31
SECTION 7.6. Reports by Trustee to Holders 32
SECTION 7.7. Compensation and Indemnity 32
SECTION 7.8. Replacement of Trustee 33
SECTION 7.9. Successor Trustee by Merger, etc. 34
SECTION 7.10. Eligibility; Disqualification 34
SECTION 7.11. Preferential Collection of Claims
Against Company 35
ARTICLE VIII. SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1. Satisfaction, Discharge and
Defeasance of the Securities 35
SECTION 8.2. Satisfaction and Discharge of Indenture 36
SECTION 8.3. Survival of Certain Obligations 36
SECTION 8.4. Application of Trust Money 36
SECTION 8.5. Paying Agent to Repay Monies Held 37
SECTION 8.6. Return of Unclaimed Monies 37
SECTION 8.7. Reinstatement 38
SECTION 8.8. Indemnity for Government Obligations 38
ARTICLE IX. AMENDMENTS AND WAIVERS
SECTION 9.1. Amendments and Waivers Without Consent of
Holders 38
SECTION 9.2. Amendments and Waivers with
Consent of Holders 39
SECTION 9.3. Compliance with Trust Indenture Act 40
SECTION 9.4. Revocation and Effect of Consents 40
SECTION 9.5. Notation on or Exchange of Securities 41
SECTION 9.6. Trustee to Sign Amendments, etc. 41
ARTICLE X. CONVERSION OF SECURITIES
SECTION 10.1. Right of Conversion; Conversion Price 42
SECTION 10.2. Issuance of Shares on Conversion 42
SECTION 10.3. No Adjustment for Interest or Dividends 43
SECTION 10.4. Adjustment of Conversion Price 43
SECTION 10.5. Notice of Adjustment of Conversion Price 47
SECTION 10.6. Notice of Certain Corporate Action 47
SECTION 10.7. Taxes on Conversions 49
SECTION 10.8. Fractional Shares 49
SECTION 10.9. Cancellation of Converted Securities 49
SECTION 10.10. Provisions in Case of Consolidation,
Merger or Sale of Assets 49
SECTION 10.11. Disclaimer by Trustee of Responsibility for
Certain Matters 50
SECTION 10.12. Covenant to Reserve Shares 50
ARTICLE XI. SUBORDINATION; SENIORITY
SECTION 11.1. Securities Subordinated to
Senior Indebtedness 51
SECTION 11.2. Company Not to Make Payments with Respect to
Securities in Certain Circumstances 52
SECTION 11.3. Subrogation of Securities 54
SECTION 11.4. Authorization by Holders of Securities 56
SECTION 11.5. Notices to Trustee 56
SECTION 11.6. Trustee's Relation to Senior Indebtedness 57
SECTION 11.7. No Impairment of Subordination 57
SECTION 11.8. Article 11 Not To Prevent Events of Default 58
SECTION 11.9. Paying Agents other than the Trustee 58
SECTION 11.10. Securities Senior to Subordinated
Indebtedness 58
ARTICLE XII. RIGHT TO REQUIRE REPURCHASE 58
SECTION 12.1. Right to Require Repurchase 58
SECTION 12.2. Notice; Method of Exercising Repurchase Right 58
SECTION 12.3. Deposit Of Repurchase Price 60
SECTION 12.4. Notes Not Repurchased On Repurchase Date 60
SECTION 12.5. Change In Control" Defined. 60
ARTICLE XII. MISCELLANEOUS
SECTION 13.1. Trust Indenture Act Controls 62
SECTION 13.2. Notices 62
SECTION 13.3. Communications by Holders with Other Holders 64
SECTION 13.4. Certificate and Opinion as to Conditions
Precedent 64
SECTION 13.5. Statements Required in Certificate
and Opinion 64
SECTION 13.6. Rules by Trustee and Agents 65
SECTION 13.7. Record Date 65
SECTION 13.8. Legal Holidays 65
SECTION 13.9. Governing Law 65
SECTION 13.10. No Adverse Interpretation of
Other Agreements 65
SECTION 13.11. No Recourse Against Others 65
SECTION 13.12. Successors 66
SECTION 13.13. Multiple Counterparts 66
SECTION 13.14. Table of Contents, Headings, etc. 66
SECTION 13.15. Severability 66
EXHIBIT A - FORM OF SECURITY
CROSS-REFERENCE TABLE
COMPTEK RESEARCH, INC.
Trust Indenture
Act Section Indenture
310(a)(1) 7.10; 12.1
(a)(2) 12.1
(a)(3) 12.1
(a)(4) 12.1
(a)(5) 12.1
(b) 7.10; 12.1
(c) 12.1
311(a) 7.11; 12.1
(b) 7.11; 12.1
(c) 12.1
312(a) 12.1
(b) 12.1; 12.3
(c) 12.1; 12.3
313(a) 7.6; 12.1
(b) 7.6; 12.1
(c) 7.6; 12.1
(d) 7.6; 12.1
314(a) 4.2; 12.1
(b) 12.1
(c) 12.1
(d) 12.1
(e) 12.1
(f) 12.1
315(a) 7.1; 12.1
(b) 7.1; 12.1
(c) 7.1; 12.1
(d) 7.1; 12.1
(e) 7.1; 12.1
316(a) 7.1; 12.1
(b) 7.1; 12.1
(c) 7.1; 12.1
317(a) 12.1
(b) 12.1
318(a) Not
Applicable
___________________
Note: This Cross-Reference Table shall not, for any purpose, be
deemed to be a part of the Indenture.
INDENTURE dated as of March 24, 1999 by and between
Comptek Research, Inc., a New York corporation (the "Company"),
and The Bank of New York, a New York banking corporation, as
trustee ("Trustee").
RECITALS OF THE COMPANY
Each party agrees as follows for the benefit of the
other party and for the equal and ratable benefit of the Holders
(as defined herein) of the Company's 8 1/2% Convertible
Subordinated Debentures due 2004 (the "Securities"):
ARTICLE I.
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1 Definitions.
"Affiliate" means any Person directly or indirectly
controlling or controlled by or under direct or indirect common
control with the Company. For the purposes of this definition,
"control" (including, with correlative meanings, the terms
"controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or
indirectly, of the power to direct or cause the direction of the
management or policies of such Person, whether through the
ownership of voting securities or by agreement or otherwise.
"Agent" means any Registrar, Paying Agent, Conversion
Agent, co-registrar or agent for service of notices and demands.
"Bankruptcy Law" means Title 11 of the U.S. Code or any
similar Federal or State law for the relief of debtors.
"Board of Directors of the Company" means the Board of
Directors of the Company or any committee of the Board of
Directors of the Company.
"Board Resolution" means a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors of the Company and to be
in full force and effect on the date of such certification, and
delivered to the Trustee.
"Business Day" means a day that is not a Legal Holiday.
"Capital Stock" means any and all shares or other
equivalents (however designated) of capital stock, including all
common stock and all preferred stock, in the case of a
corporation, or partnership interests or other equivalents
(however designated) in the case of a partnership or common
shares of beneficial interest or other equivalents (however
designated) in the case of a trust.
"Closing Price" means with respect to the shares of
Capital Stock of the Company on any day, (i) the reported last
sale price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the American Stock
Exchange (the "AMEX"), or (ii) if the shares of Capital Stock are
not listed or admitted to trading on the AMEX, the reported last
sale price regular way or, in case no such reported sale takes
place on such day, the average of the reported closing bid and
asked prices regular way, in either case on the principal
national securities exchange on which the shares of Capital Stock
are listed or admitted to trading, or (iii) if the shares of
Capital Stock are not listed or admitted to trading on any
national securities exchange, the average of the closing bid and
asked prices as furnished by any New York Stock Exchange member
firm selected from time to time by the Company for that purpose.
"Company" means the party named as such in this
Indenture until a successor replaces it pursuant to this
Indenture and thereafter means the successor.
"Corporate Trust Office" means the office of the
Trustee at which at any particular time its corporate trust
business shall be principally administered, which office at the
date of execution of this Indenture is located at 101 Barclay
Street, New York, New York 10286.
"Custodian" means any receiver, trustee, liquidator or
similar official under any Bankruptcy Law.
"Default" means any event which is, or after notice or
passage of time or both would be, an Event of Default.
"Dollar" or "$" means the lawful money of the United
States of America.
"Exchange Act" means the Securities Exchange Act of
1934, as amended.
"Holder" or "Securityholder" means the Person in whose
name a Security is registered on the Security Register.
"Indebtedness" as applied to any Person, means, without
duplication: (i) all indebtedness for borrowed money whether or
not evidenced by a promissory note, draft or similar instrument;
(ii) that portion of obligations with respect to any lease that
is properly classified as a liability on a balance sheet in
accordance with generally accepted accounting principles;
(iii) notes payable and drafts accepted representing extensions
of credit; (iv) any balance owed for all or any part of the
deferred purchase price of property or services, which purchase
price is due more than six months from the date of incurrence of
the obligation in respect thereof (except any such balance that
constitutes (a) a trade payable or an accrued liability arising
in the ordinary course of business or (b) a trade draft or note
payable issued in the ordinary course of business in connection
with the purchase of goods or services), if and to the extent
such debt would appear as a liability upon a balance sheet of
such Person prepared in accordance with generally accepted
accounting principles; (v) any debt of others described in the
preceding clauses (i) through (iv) which such Person has
guaranteed or for which it is otherwise liable; and (vi) any
deferral, amendment, renewal, extension, supplement or refunding
of any of the foregoing indebtedness; provided, however, that, in
computing the "Indebtedness" of any Person, there shall be
excluded any particular indebtedness if, upon or prior to the
maturity thereof and at the time of determination of such
indebtedness, there shall have been deposited with a depository
in trust money (or evidences of indebtedness if permitted by the
instrument creating such indebtedness) in the necessary amount to
pay, redeem or satisfy such indebtedness as it becomes due, and
the amount so deposited shall not be included in any computation
of the assets of such Person.
"Indenture" means this Indenture as amended or
supplemented from time to time.
"Initial Issue Date" means March 24, 1999, the first
date on which Debentures issued pursuant to this Indenture are
issued.
"Officer" means the Chairman of the Board, the
President, any Vice President, the Treasurer, the Secretary or
the Controller of the Company.
"Officers' Certificate" means a certificate signed by
two Officers or by an Officer and an Assistant Treasurer,
Assistant Secretary or Assistant Controller of the Company. See
Sections 13.4 and 13.5.
"Opinion of Counsel" means a written opinion from
Stroock & Stroock & Lavan LLP or any other legal counsel who is
reasonably acceptable to the Trustee. The counsel may be an
employee of or counsel to the Company or the Trustee. See
Sections 13.4 and 13.5.
"Person" means any individual, corporation,
partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government (or any agency,
instrumentality or political subdivision thereof).
"Redemption Date" when used with respect to any
Security to be redeemed, means the date fixed for such redemption
pursuant to this Indenture.
"Redemption Price" when used with respect to any
Security to be redeemed, means the price fixed for such
redemption pursuant to this Indenture as specified in the form of
Security annexed hereto as Exhibit A.
"Registration Statement" means the registration
statement that the Company is required to file with the
Securities and Exchange Commission pursuant to that certain
Registration Rights Agreement, dated as of March 24 1999, by and
between the Company and the Holders from time to time of the
Securities issued on the Initial Issue Date (and such other
Registration Rights Agreement as may be entered into in
connection with the issuance of any Securities issued after the
Initial Issue Date by and between the Company and the Holders
from time time of such Securities).
"Regular Record Date" means, with respect to any
Interest Payment Date, the September 15 or March 15 (whether or
not a Business Day), as the case may be, next preceding such
Interest Payment Date.
"Restricted Security" means the Securities, upon
original issuance thereof, and all Securities issued upon
registration of transfer thereof or in exchange therefor, and at
all times subsequent thereto, until, in the case of any such
Securities the earlier of the following: (i) such Securities
have been effectively registered under Section 5 of the
Securities Act and disposed of in accordance with a registration
statement covering them or (ii) such Securities have been
distributed to the public pursuant to Rule 144 of the Securities
Act (or any similar provisions then in force). When any Security
which is a Restricted Security ceases to be a Restricted
Security, such Restricted Security shall no longer be subject to
the transfer restrictions as imposed by Section 2.5(2) hereof.
"Securities Act" means the Securities Act of 1933, as
amended from time to time.
"Securities" means the securities in the form of
Exhibit A hereto that are issued under this Indenture as amended
or supplemented from time to time.
"Senior Indebtedness" means the principal, premium, if
any, and unpaid interest (including interest accruing on or after
the filing of any petition in bankruptcy or for reorganization
relating to the Company whether or not a claim for post-filing
interest is allowed in such proceeding), fees, charges, expenses,
reimbursement and indemnification obligations, and all other
amounts payable under or in respect of Indebtedness of the
Company, whether any such Indebtedness exists as of the date of
this Indenture or shall hereafter be created, incurred, assumed
or guaranteed, as may be amended from time to time and any
renewals, extensions, refundings, amendments and modifications of
any such indebtedness or obligations or of the instruments
creating or evidencing such indebtedness or obligations or
guarantees; provided, however, that Senior Indebtedness shall not
include (A) Indebtedness owed to a Subsidiary, (B) Indebtedness
of the Company which is expressly pari passu to the Securities or
(C) Subordinated Indebtedness.
"Subordinated Indebtedness" means the principal,
premium, if any, and interest on any Indebtedness of the Company
which by its terms is expressly subordinated in right of payment
to the Securities.
"Subsidiary" means a Person the majority of whose
voting stock is owned by the Company or a subsidiary of the
Company. Voting stock is Capital Stock having voting power under
ordinary circumstances to elect directors or similar positions.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.
Code 77aaa - 77bbbb) as amended by the Trust Indenture Reform
Act of 1990 and as in effect on the date of this Indenture.
"Trustee" means the party named as such in this
Indenture until a successor replaces it pursuant to this
Indenture and thereafter means the successor.
"Trust Officer", when used with respect to the Trustee,
means an officer of the Trustee assigned by the Trustee to
administer its corporate trust matters or any other officer of
the Trustee to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"United States" means the United States of America.
SECTION 1.2. Other Definitions.
Term Defined in Section
"Common Stock" 10.1
"Company Order" 2.2
"Conversion Agent" 2.3
"conversion price" 10.1
"current market price" 10.4
"Deliver Date" 4.10
"Event of Default" 6.1
"Interest Payment Date" 2.1
"Legal Holiday" 13.8
"Paying Agent" 2.3
"Payment or Distribution" 11.1
"Registered Accredited Investor Securities" 2.1
"Registrar" 2.3
"Rule 13e-3 Transaction" 10.6
"Security Register" 2.3
"U.S. Government Obligations" 8.1
SECTION 1.3. Incorporation by Reference to Trust Indenture Act.
Whenever this Indenture refers to a provision of the
TIA, the provision is incorporated by reference in and made a
part of this Indenture. The following TIA terms used in this
Indenture have the following meanings:
"Commission" means the Securities and Exchange
Commission.
"indenture securities" means the Securities.
"indenture security holder" means a
Securityholder.
"indenture to be qualified" means this Indenture.
"indenture trustee" or "institutional trustee"
means the Trustee.
"obligor" on the indenture securities means the
Company or any other obligor on the indenture
securities.
All other terms used in this Indenture that are defined
by the TIA, defined by TIA reference to another statute or
defined by Commission rules have the meanings assigned to them
therein.
SECTION 1.4. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has
the meaning assigned to it in accordance with United
States generally accepted accounting principles in
effect as of the time as to which such accounting
principles are to be applied;
(3) "or" is not exclusive; and
(4) words in the singular include the plural, and
in the plural include the singular.
ARTICLE II.
THE SECURITIES
SECTION 2.1. Form; Dating; Incorporation of Form in Indenture.
The aggregate principal amount of Securities which may
be authenticated and delivered under this Indenture is limited to
$20,000,000, except for Securities authenticated and delivered
upon registration of transfer of, or in exchange for, or in lieu
of, other Securities pursuant to Sections 2.3, 2.5, 2.6, 2.8, 3.6
or 9.5.
The Securities shall be known and designated as the 8
1/2% Convertible Subordinated Debentures due 2004 of the Company.
Their fixed maturity shall be April 1, 2004, and they shall bear
interest at the rate per annum of 8 1/2%, from and including the
date of issuance thereof until maturity or earlier redemption,
payable semiannually on April 1 and October 1 commencing October
1, 1999 (each an "Interest Payment Date"), until the principal
thereof is paid or made available for payment. Subject to
Section 2.10, such interest shall be paid to the Holder in whose
name each Security was registered at the close of business on the
Regular Record Date next preceding each Interest Payment Date.
The Company may at any time during the 30-day period
following the Initial Issue Date, without the consent of the
Holders of the Securities then outstanding, create and issue
additional Securities, in an aggregate principal amount equal to
an amount that when added to the aggregate principal amount of
Securities previously authenticated and delivered hereunder will
not exceed $20,000,000. Such Securities shall have the same
terms, conditions, rights and benefits as the Securities issued
on the Initial Issue Date and references in this Indenture to
"Securities" shall be construed accordingly. Purchasers of
Securities issued after the Initial Issue Date will be required
to pay the Company accrued interest from the Initial Issue Date
until the date of issuance of such Securities.
The Securities shall be redeemable as provided in
Article 3.
The Securities shall be subordinated in right of
payment to Senior Indebtedness, to the extent provided in
Article 11.
The Securities shall be convertible as provided in
Article 10.
The Securities and the Trustee's certificate of
authentication shall be substantially in the form of Exhibit A
which is incorporated in and made part of this Indenture. The
Securities may have notations, legends or endorsements required
by law, stock exchange rules, agreements to which the Company is
subject, or usage. The Company shall approve the form of the
Securities and any notation, legend or endorsement on them. Each
Security shall be dated the date of its authentication.
The terms and provisions contained in the Securities
shall constitute, and are hereby expressly made, a part of this
Indenture and to the extent applicable, the Company and the
Trustee, by their execution and delivery of this Indenture,
expressly agree to such terms and provisions and to be bound
thereby.
All Securities will be issued in fully registered form
in denominations of U.S. $1,000 and integral multiples thereof
(the "Registered Securities"), which Securities shall be in
substantially the form of Exhibit A hereto. The Registered
Securities which are Restricted Securities are hereinafter
collectively referred to as "Registered Accredited Investor
Securities."
SECTION 2.2. Execution and Authentication.
Two Officers shall sign the Securities for the Company
by manual or facsimile signature.
If one or both of the Officers whose signatures are on
a Security no longer holds that office at the time the Trustee
authenticates the Security, the Security shall nevertheless be
valid.
A Security shall not be valid until the Trustee
manually signs the certificate of authentication on the Security.
Such signature shall be conclusive evidence that the Security has
been authenticated under this Indenture. Notwithstanding the
foregoing, if any Security shall have been authenticated and
delivered hereunder but never issued and sold by the Company, and
the Company shall deliver such Security to the Trustee for
cancellation as provided in Section 2.9, for all purposes of this
Indenture such Security shall be deemed never to have been
authenticated and delivered hereunder and shall never be entitled
to the benefits of this Indenture.
The Trustee shall authenticate Securities for original
issue in the aggregate principal amount of up to $20,000,000 upon
the execution of the Indenture and a written order or orders of
the Company signed by two Officers or by an Officer and an
Assistant Treasurer of the Company (a "Company Order").
The Trustee may appoint an authenticating agent to
authenticate Securities. An authenticating agent may
authenticate Securities whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee
includes authentication by such agent. An authenticating agent
has the same rights as an Agent to deal with the Company or an
Affiliate.
The Securities shall be issuable only in registered
form without coupons. The Securities shall be issuable only in
denominations of $1,000 principal amount and any whole multiples
thereof.
SECTION 2.3. Registrar and Agents.
The Company shall maintain an office or agency where
Securities may be presented for registration of transfer or for
exchange ("Registrar"), an office or agency where Securities may
be presented for payment ("Paying Agent"), an office or agency
where Securities may be presented for conversion ("Conversion
Agent") and an office or agency where notices and demands to or
upon the Company in respect of the Securities and this Indenture
may be served. The Registrar shall keep a register of the
Securities (the "Security Register") and of their transfer and
exchange. The Company may have one or more co-registrars, one or
more additional Paying Agents and one or more additional
Conversion Agents. The Company or any Subsidiary may act as
Paying Agent and/or Conversion Agent. The term "Paying Agent"
includes any additional paying agent and the term "Conversion
Agent" includes any additional conversion agent.
The Company may change any Paying Agent, Registrar,
Conversion Agent or Co-Registrar on sixty (60) days' prior
written notice to the Trustee. The Company shall notify the
Trustee in writing of the name and address of any such Agent. If
the Company fails to maintain a Registrar, Paying Agent,
Conversion Agent or agent for service of notices and demands, or
fails to give the foregoing notice, the Trustee shall act as
such.
The Company initially appoints the Trustee as
Registrar, Paying Agent, Conversion Agent and agent for service
of notices and demands.
SECTION 2.4. Paying Agent to Hold Money in Trust.
At least one Business Day prior to each due date of the
principal of, premium if any, and interest on any Securities, the
Company shall deposit with each Paying Agent a sum in immediately
available funds sufficient to pay such principal, premium, if
any, and interest so becoming due. The Company shall require
each Paying Agent other than the Trustee to agree in writing that
it will hold in trust for the benefit of Holders of Securities or
the Trustee all money held by the Paying Agent for the payment of
principal of, premium if any, or interest on the Securities and
to notify the Trustee of any default by the Company (or any other
obligor on the Securities) in making any such payment. If the
Company or a Subsidiary acts as Paying Agent, it shall on or
before each due date of the principal of, premium, if any, or
interest on any Securities segregate the money and hold it as a
separate trust fund. The Company at any time may require a
Paying Agent to pay all money held by it to the Trustee and the
Trustee may at any time during the continuance of any payment
default, upon written request to a Paying Agent, require such
Paying Agent to forthwith pay in immediately available funds to
the Trustee all sums so held in trust by such Paying Agent. Upon
doing so, the Paying Agent (if other than the Company or a
Subsidiary thereof) shall have no further liability for the
money.
The final installment of principal of and premium, if
any, on each Security shall be payable only upon surrender of
such Security at the office or agency of the Company maintained
for such purpose. Payments of principal and premium, if any, and
interest on a Security shall be made at the office or agency of
the Company maintained for such purpose, or, in the case of any
such payments other than the final payment of principal and
premium, if any, at the Company's option, by check mailed to the
Person entitled thereto at such Person's address last appearing
on the Security Register maintained by the Registrar.
SECTION 2.5. Transfer and Exchange.
(1) When a Security is presented to the Registrar or a
co-registrar with a request to register the transfer thereof, the
Registrar or co-registrar shall register the transfer as
requested, and when Securities are presented to the Registrar or
a co-registrar with a request to exchange them for an equal
principal amount of Securities of other authorized denominations,
the Registrar shall make the exchange as requested provided that
every Security represented or surrendered for registration of
transfer or exchange shall be duly endorsed and accompanied by a
written instrument of transfer satisfactory to the Company and
the Registrar duly executed by the Holder or such Holder's
attorney-in-fact duly authorized in writing; provided, further,
that the Registrar or co-registrar, as the case may be, shall not
register the transfer of such Security if such Security is a
Restricted Security unless the conditions in Section 2.5(2)
hereof shall have been satisfied. The Holder of each Security,
including each Restricted Security, by such Holder's acceptance
thereof, agrees to be bound by the transfer restrictions set
forth herein and in the legend on such Security.
(2) Whenever any Restricted Security is presented or
surrendered for registration of transfer or exchange for a
Security registered in a name other than that of the Holder, no
registration of transfer or exchange shall be made unless:
(a) The registered Holder presenting such
Restricted Security for transfer shall have certified
to the Trustee in writing that the registered Holder is
transferring the Restricted Security to the Company; or
(b) The Trustee has received written
certification from the registered Holder, and a written
opinion of counsel acceptable in form and substance to
the Company and the Trustee, indicating that the
transfer is being made pursuant to an available
exemption from, or a transaction not otherwise subject
to, the registration requirements of the Securities
Act.
For purposes of this Section 2.5(2), such certification
to the Trustee in writing shall be in the form of the Transfer
Notice set forth on the reverse of such Security. The Trustee
shall be fully protected in relying on, and may assume
conclusively the correctness of the statement made in, any
certificate given pursuant to the Section 2.5(2).
(3) Each certificate evidencing Restricted Securities
shall bear a legend in substantially this following form:
THIS SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE
PURPOSE OF INVESTMENT AND NOT WITH A VIEW TO OR FOR
SALE IN CONNECTION WITH ANY DISTRIBUTION. THIS
SECURITY (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION
HEREIN MAY BE OFFERED, SOLD OR OTHERWISE TRANSFERRED IN
THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY
IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON AN
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT. THE HOLDER OF THIS SECURITY, BY ITS
ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT: (I) IT HAS
ACQUIRED A "RESTRICTED" SECURITY WHICH HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL NOT
OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT
(A) TO COMPTEK RESEARCH, INC., (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, OR (C) IN
ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, (AND
CONFIRMED IN AN OPINION OF COUNSEL ACCEPTABLE IN FORM
AND SUBSTANCE TO THE ISSUER OF THIS SECURITY IF THE
ISSUER SO REQUESTS) AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND
(III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED
TO, NOTIFY ANY PURCHASER OF THIS SECURITY FROM IT OF
THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE.
Subject to compliance with Section 2.5(6) hereof, the above
legend may be removed from a certificate when it no longer
evidences a Security which is a Restricted Security.
(4) To permit registrations of transfers and
exchanges, the Company shall issue and the Trustee or any
authenticating agent shall authenticate Securities at the
Registrar's or co-registrar's request. No service charge to any
Holder shall be made for any registration of transfer or exchange
of Securities but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge that may
be imposed in relation thereto, but this provision shall not
apply to any exchange pursuant to Section 2.8, 3.6, 9.5 or 10.2
not involving any transfer.
(5) The Registrar shall not be required (i) to issue,
register the transfer of or exchange Securities during a period
beginning at the opening of business 15 days before the day of
any selection of Securities for redemption under Section 3.2 and
ending at the close of business on the day of selection, or
(ii) to register the transfer or exchange of any Security so
selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(6) Any Restricted Security as to which the
restrictions on transfer set forth in Section 2.5(2) hereof shall
have expired in accordance with their terms or shall have
terminated may, upon surrender of such Restricted Security for
exchange to the Trustee in accordance with the provisions of this
Section 2.5(6) (accompanied, in the event that such restrictions
on transfer have terminated by reason of a transfer pursuant to
Rule 144 (or any successor provision), by an opinion of counsel
reasonably acceptable to the Company, addressed to the Company
and the Trustee and in form and scope reasonably satisfactory to
the Company, to the effect that the transfer of such Restricted
Security has been made in compliance with Rule 144 (or such
successor provision)), be exchanged for a new Security, of like
tenor and aggregate principal amount, which shall not bear the
restrictive legend required by Section 2.5(3) hereof. The
Company shall promptly inform the Trustee in writing of the
effective date of any registration statement registering the
Securities under the Securities Act.
(7) All notices and communications to be given to the
Holders and all payments to be made to Holders under the
Securities shall be given or made only to the registered Holders
as shown on the list of Holders maintained by the Registrar and
otherwise in accordance with the provisions of this Indenture.
The Trustee shall have no obligation or duty to
monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Indenture or under
applicable law with respect to any transfer of any interest in
any Security other than to require delivery of such certificates
and other documentation or evidence as are expressly required by,
and to do so if and when expressly required by, the terms of this
Indenture, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
SECTION 2.6. Replacement Securities.
If a mutilated Security is surrendered to the Trustee
or if the Holder of a Security presents evidence to the
satisfaction of the Company and the Trustee that the Security has
been lost, destroyed or wrongfully taken, the Company shall issue
and the Trustee shall authenticate a new Security in replacement
of and substitution for such Security if the requirements of the
Trustee and the Company are met. An indemnity bond may be
required by the Company or the Trustee that is sufficient in the
judgment of the Company to protect the Company and is sufficient
in the judgment of the Trustee to protect the Trustee or any
Agent from any loss which it may suffer if a Security is replaced
pursuant to this Section 2.6. The Company and the Trustee may
charge for their respective expenses incurred in replacing a
Security.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, the
Company in its sole discretion may, instead of issuing a new
Security, pay or authorize the payment or convert or authorize
the conversion of such Security.
Every new Security issued pursuant to this Section in
lieu of any destroyed, lost or stolen Security shall constitute
an original additional contractual obligation of the Company,
whether or not the destroyed, lost or stolen Security shall be at
any time enforceable by anyone, and shall be entitled to all the
benefits of this Indenture equally and proportionately with any
and all other Securities duly issued hereunder.
SECTION 2.7. Outstanding Securities.
Securities outstanding at any time are all Securities
theretofore authenticated and delivered under this Indenture
except: (a) Securities theretofore canceled by the Trustee or
delivered to the Trustee for cancellation; and (b) Securities in
exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other
than any Securities in respect of which there shall have been
presented to the Trustee proof satisfactory to it that such
Securities are held by a bona fide purchaser in whose hands such
Securities are valid obligations of the Issuer; provided, that in
determining whether the Securityholders of the requisite
principal amount of outstanding Securities are present at a
meeting of Securityholders for quorum purposes or have voted or
taken or concurred in any action under this Indenture, including
the making of any request, demand, authorization, direction,
notice, consent or waiver hereunder, Securities owned by the
Company or any other obligor upon the Securities or any Affiliate
of the Company or such other obligor shall be disregarded and
deemed not outstanding, except that, in determining whether the
Trustee shall be protected in relying upon any such determination
as to the presence of a quorum or upon any such request, demand,
authorization, direction, notice, consent or waiver, only
Securities which a Trust Officer of the Trustee actually knows to
be so owned shall be disregarded.
If a Security is replaced pursuant to Section 2.6, it
ceases to be outstanding until the Trustee receives proof
satisfactory to it that the replaced Security is held by a bona
fide purchaser.
If the Paying Agent (other than the Company or a
Subsidiary) holds on a Redemption Date or maturity date money
deposited with it by or on behalf of the Company sufficient to
pay the principal of, premium, if any, and accrued interest on
Securities payable on that date, then on and after that date such
Securities cease to be outstanding and interest on them ceases to
accrue.
A Security does not cease to be outstanding because the
Company or an Affiliate holds the Security.
SECTION 2.8. Temporary Securities.
Until definitive Securities are ready for delivery, the
Company may prepare and the Trustee shall authenticate temporary
Securities. Temporary Securities shall be substantially in the
form of definitive Securities but may have non-material
variations that the Company considers appropriate for temporary
Securities. Without unreasonable delay, the Company shall
prepare and the Trustee shall authenticate definitive Securities
in exchange for temporary Securities upon written order of the
Company signed by two Officers. Until so exchanged, temporary
Securities represent the same rights as definitive Securities.
Upon request of the Trustee, the Company shall provide an
Officers' Certificate to the effect that the temporary Securities
meet the requirements of the second sentence of this Section 2.8.
SECTION 2.9. Cancellation.
The Company at any time may deliver Securities to the
Trustee for cancellation. The Registrar, the Paying Agent and
the Conversion Agent shall forward to the Trustee any Securities
surrendered to them for transfer, exchange, payment or
conversion. The Trustee shall cancel all Securities surrendered
for transfer, exchange, payment or conversion and destroy
canceled Securities and deliver a certificate of such destruction
to the Company unless the Company directs the Trustee in writing
prior to such destruction to deliver canceled Securities to the
Company. Subject to Sections 2.6, 3.6 and the second paragraph
of Section 10.2, the Company may not issue Securities to replace
Securities that it has previously paid or delivered to the
Trustee for cancellation or that a Securityholder has converted
pursuant to Article 10 hereof.
SECTION 2.10. Defaulted Interest.
If the Company defaults in a payment of interest on
Securities when the same becomes due and payable and such default
continues for a period of 30 days, it shall pay the defaulted
interest to the Persons who are Holders of the Securities on a
subsequent special record date. After the deposit by the Company
with the Trustee of money sufficient to pay such defaulted
interest, the Trustee shall fix the special record date and
payment date. Each such special record date shall be not less
than 10 days prior to such payment date. Each such payment date
shall be not more than 60 days after the deposit by the Company
of money to pay the defaulted interest. At least 15 days before
the special record date, the Company shall mail to each Holder of
a Security, with a copy to the Trustee, a notice that states the
special record date, the payment date, and the amount of
defaulted interest to be paid.
SECTION 2.11. Securityholder Lists.
The Trustee shall preserve in as current a form as is
reasonably practicable the most recent list available to it of
the names and addresses of Securityholders, a copy of which list
shall be provided to the Company upon its written request. If
the Trustee is not the Registrar, the Registrar shall furnish to
the Trustee at least seven Business Days prior to each semiannual
interest payment date and at such other times as the Trustee may
reasonably request in writing a list in such form and as of such
date as the Trustee may require of the names and addresses of
Securityholders upon which the Trustee may conclusively rely.
The Trustee may destroy any such list upon receipt of a
replacement list. The Paying Agent will solicit from each
Securityholder a certification of social security number or
taxpayer identification number in accordance with its customary
practice and as required by law, unless the Paying Agent is in
possession of such certification. Each Paying Agent is
authorized to impose back-up withholding with respect to payments
to be made to Securityholders to the extent required by law.
SECTION 2.12. Persons Deemed Owners.
Prior to registration of transfer, the Company, the
Trustee and any agent of the Company or the Trustee may treat the
Person in whose name such Security is registered as the owner of
such Security and neither the Company, the Trustee nor any Agent
of the Company or the Trustee shall be affected by notice to the
contrary.
ARTICLE III.
REDEMPTION
SECTION 3.1. Notices to Trustee.
If the Company wants to redeem the Securities pursuant
to the optional redemption provisions of Paragraph 5 of the
Securities, it shall notify the Trustee of the Redemption Date
and the principal amount of Securities to be redeemed. The
notice shall be given to the Trustee in writing at least 60 days
prior to the Redemption Date (unless a shorter notice period
shall be satisfactory to the Trustee in its discretion) and
accompanied by an Officers' Certificate stating that the
redemption complies with the provisions of this Indenture.
Redemptions provided for in Paragraph 5 of the Securities shall
be effected as provided in said Paragraph 5 or as otherwise
agreed upon by the Company and the Trustee.
SECTION 3.2. Selection of Securities to be Redeemed.
If less than all the Securities are to be redeemed, the
Trustee shall select the Securities to be redeemed by lot or by
any other method that the Trustee considers fair and appropriate
under the circumstances. The Trustee shall promptly notify the
Company of the Securities to be so called for redemption. The
Trustee shall make the selection from Securities outstanding and
not previously called for redemption. The Trustee may select for
redemption portions of the principal of Securities that have
denominations larger than $1,000 principal amount. Securities
and portions of them it selects shall be in principal amounts of
$1,000 or multiples thereof. Provisions of this Indenture that
apply to Securities called for redemption also apply to portions
of Securities called for redemption. The Trustee's selection of
Securities for redemption by any method authorized by this
Section 3.2 shall be conclusively deemed reasonable.
Upon any redemption of less than all the Securities,
the Company and the Trustee, for the purpose of selecting
Securities to be redeemed, may treat as outstanding any
Securities surrendered for conversion during the period of 15
days next preceding the selection of the Securities and need not
treat as outstanding any Security authenticated and delivered
during such period in exchange for the unconverted portion of any
Security converted in part during such period.
SECTION 3.3. Notice of Redemption by the Company.
At least 30 days but not more than 60 days before a
Redemption Date, the Company shall mail a notice of redemption by
first-class mail to each Holder of Securities to be redeemed,
with a copy to the Trustee.
The notice shall identify the Securities to be redeemed
and shall state:
(1) the Redemption Date;
(2) the Redemption Price;
(3) the Conversion Price;
(4) the name and address of the Paying Agent
and the Conversion Agent;
(5) that Securities called for redemption
may be converted at any time before the close of
business on the Redemption Date and, if not converted
prior to the close of business on the Redemption Date,
the right of conversion will be lost;
(6) that Holders who want to convert
Securities must satisfy the requirements of Paragraph 8
thereof;
(7) that Securities called for redemption
must be surrendered to the Paying Agent to collect the
Redemption Price;
(8) that interest on Securities called for
redemption ceases to accrue on and after the Redemption
Date; and
(9) if any Security is being redeemed in
part, the portion of the principal amount of such
Security to be redeemed and that, after the Redemption
Date, upon surrender of such Security, a new Security
or Securities in principal amount equal to the
unredeemed portion thereof will be issued.
At the Company's written request, the Trustee shall
give the notice of redemption in the Company's name and at the
Company's expense. If a CUSIP number is listed in such notice or
printed on the Security, the notice shall state that no
representation is made as to the correctness or accuracy of such
CUSIP number.
SECTION 3.4. Effect of Notice of Redemption.
Once notice of redemption is mailed, Securities called
for redemption become due and payable on the applicable
Redemption Date and at the applicable Redemption Price. Upon
surrender to the Paying Agent, such Securities shall be paid at
the Redemption Price, plus accrued interest to the Redemption
Date.
SECTION 3.5. Deposit of Redemption Price.
On or before the Redemption Date, the Company shall
deposit with the Paying Agent (or if the Company or a Subsidiary
is the Paying Agent, shall segregate and hold in trust or cause
such Subsidiary to segregate and hold in trust) in immediately
available funds money sufficient to pay the Redemption Price of
and accrued interest on all Securities to be redeemed on that
date. The Trustee or the Paying Agent shall return to the
Company any money so deposited not required for that purpose.
SECTION 3.6. Securities Redeemed in Part.
Upon surrender of a Security that is redeemed in part,
the Trustee shall authenticate for the Holder, at the expense of
the Company, a new Security equal in principal amount to the
unredeemed portion of the Security surrendered.
ARTICLE IV.
COVENANTS
SECTION 4.1. Payment of the Securities.
The Company shall pay the principal of, premium, if
any, and interest on the Securities on the dates and in the
manner provided in the Securities and this Indenture. An
installment of principal, premium, if any, or interest shall be
considered paid on the date it is due if the Trustee or Paying
Agent (if other than the Company or a Subsidiary) holds on that
date money designated for and sufficient to pay the installment.
The Company shall pay interest on overdue principal and premium,
if any, at the rate borne by the Security; it shall pay interest,
including post-petition interest in the event of a proceeding
under any Bankruptcy Law, on overdue installments of interest at
the same rate to the extent lawful.
SECTION 4.2. Commission Reports.
The Company shall file with the Trustee, promptly after
filing with the Commission, copies of the annual reports and of
the information, documents and other reports (or copies of such
portions of any of the foregoing as the Commission may by rules
and regulations prescribe) which the Company is required to file
with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act. The Company shall also comply with the other
provisions of TIA 314(a).
So long as the Securities remain outstanding, the
Company shall cause its annual reports to stockholders
(containing audited financial statements) and any other financial
reports furnished by it to stockholders to be mailed to the
Holders at their addresses appearing in the Security Register
maintained by the Registrar.
SECTION 4.3. Waiver of Stay, Extension or Usury Laws.
The Company expressly waives (to the extent that it may
lawfully do so) any stay or extension law or any usury law or
other law that would prohibit or forgive the Company from paying
all or any portion of the principal of, premium, if any, or
interest on Securities as contemplated herein or in such
Securities, wherever enacted, now or at any time hereafter in
force, or that may affect the covenants or the performance of
this Indenture or the provisions of such Securities, and the
Company (to the extent that it may lawfully do so) hereby
expressly waives all benefit or advantage of any such law and
covenants that it will not hinder, delay or impede the execution
of any power herein granted to the Trustee, but will suffer and
permit the execution of every such power as though no such law
had been enacted.
SECTION 4.4. Notice of Default.
The Company will, so long as any Securities are
outstanding, deliver to the Trustee, within 10 days of becoming
aware of any Default or Event of Default in the performance of
any covenant, agreement or condition in this Indenture, an
Officers' Certificate specifying such Default or Event of
Default, the period of existence thereof and what action the
Company is taking or proposes to take with respect thereto.
SECTION 4.5. Compliance Certificates.
The Company will deliver to the Trustee, within 120
days after the end of each fiscal year of the Company (which as
of the date hereof is March 31), a written statement signed by
the principal executive officer, principal financial officer or
principal accounting officer of the Company, stating, as to each
signer thereof:
(1) that a review of the activities of the
Company during such year and of performance under this
Indenture has been made under his or her supervision;
(2) that to the best of his or her knowledge,
based on such review, the Company has kept, observed,
performed and fulfilled in all material respects each
and every condition and covenant contained in this
Indenture throughout such year, or, if there has been a
default in the fulfillment of any such condition or
covenant, specifying each such default known to him or
her and the nature and status thereof; and
(3) the conversion price (as described in
Article 10 of this Indenture) then in effect.
The Company will give the Trustee written notice of a
change in the fiscal year of the Company, within a reasonable
time after such change is effected.
SECTION 4.6. Limitation on Dividends and Other Distributions.
The Company will not declare or pay any dividends or
make any distribution to holders of its Capital Stock (other than
dividends or distributions payable in Capital Stock of the
Company), or purchase, redeem or otherwise acquire or retire for
value any of its Capital Stock or permit any Subsidiary to
purchase, redeem or otherwise acquire or retire for value any of
the Company's Capital Stock if at the time of any of the
aforementioned actions an Event of Default has occurred and is
continuing or would exist immediately after giving effect to such
action.
Notwithstanding the foregoing, the provisions of this
Section 4.6 will not prevent (i) the payment of any dividend
within 60 days after the date of declaration when the payment
would have complied with the foregoing provisions on the date of
declaration; or (ii) the retirement of any shares of the
Company's Capital Stock by exchange for, or out of the proceeds
of the substantially concurrent sale (other than to a Subsidiary)
of, other shares of its Capital Stock.
SECTION 4.7. Investment Company Act of 1940.
The Company is not, nor will it become, an "investment
company" or "promoter" or "principal underwriter" for an
"investment company," as such terms are defined in the Investment
Company Act of 1940, as amended, and the rules and regulations
thereunder.
SECTION 4.8. Due Execution, Delivery and Performance of
the Indenture.
The Company's execution, delivery and performance of
this Indenture and the Company's issuance of the Securities (a)
have been duly authorized under New York law by all requisite
corporate action by the Company, and (b) will not violate (1) any
law or the Articles of Incorporation or Bylaws, each as amended,
of the Company or of any subsidiaries of the Company.
SECTION 4.9. Maintenance of Corporate Existence.
While the Securities are outstanding, the Company shall
maintain its corporate existence.
SECTION 4.10. Failure to Timely Deliver Certificates
Upon Conversion. If the Holder of any Security or Securities has
strictly complied with the conversion requirements set forth in
Article X of this Indenture, in the Security and in the form of
conversion notice attached to the Security and has not received
certificates for the shares of Common Stock such Holder is
entitled to receive in accordance with such conversion within
three (3) Business Days after the date of delivery of the
properly executed conversion notice and the Securities subject to
conversion, all as provided in Article X of this Indenture, in
the Security and in the form of conversion notice attached to the
Security (the third Business Day following the date of such
delivery being the "Delivery Date"), then, beginning with the
Business Day following the Delivery Date, the Company shall pay
to such Holder, in cash, a penalty payment calculated as follows:
The penalty payment will apply to the period beginning on the
Business Day after the Delivery Date and ending on the day the
Company delivers, or causes the delivery of, the certificates for
the shares of Common Stock subject to such conversion to the
Holder and shall accrue at a rate of 0.50% of the principal
amount of the Securities subject to such conversion per day.
ARTICLE V.
SUCCESSOR CORPORATION
SECTION 5.1. When Company May Merge, etc.
The Company shall not consolidate with or merge into,
or transfer all or substantially all of its assets to, another
Person in any transaction in which the Company is not the
continuing or surviving entity, unless (i) the resulting,
surviving or transferee Person is a corporation which assumes by
supplemental indenture, in form satisfactory to the Trustee, all
the obligations of the Company under the Securities and this
Indenture or is a reorganization within the meaning of Section
368(a)(1)(B) of the Internal Revenue Code of 1986, as amended;
(ii) such corporation is organized and existing under the laws of
the United States, a State thereof or the District of Columbia
although it in turn may be owned by a foreign entity;
(iii) immediately after giving effect to such transaction no
Default or Event of Default shall have happened and be continuing
and the Officers' Certificate referred to in the following clause
reflects that such Officers are not aware of any such Default or
Event of Default that shall have happened and be continuing, and
(iv) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer and such supplemental indenture
comply with this Indenture, and thereafter all obligations of the
Company shall terminate.
SECTION 5.2. Successor Corporation or Trust Substituted.
Upon any consolidation or merger, or any transfer of
all or substantially all of the assets of the Company in
accordance with Section 5.1, the successor corporation formed by
such consolidation or into which the Company is merged or to
which such transfer is made shall succeed to, and be substituted
for, and may exercise every right and power of, the Company under
this Indenture with the same effect as if such successor
corporation has been named as the Company herein; the Company
shall thereupon be relieved of any further obligation or
liability hereunder or upon the Securities; and the Company as
the predecessor corporation may thereupon or at any time
thereafter be dissolved, wound up or liquidated. Such successor
corporation thereupon may cause to be signed, and may issue
either in its own name or in the name of Comptek Research, Inc.,
any or all of the Securities issuable hereunder which theretofore
shall not have been signed by the Company and delivered to the
Trustee; and, upon the order of such successor corporation,
instead of the Company, and subject to all the terms, conditions
and limitations in this Indenture prescribed, the Trustee shall
authenticate and shall deliver any Securities which previously
shall have been signed and delivered by the Officers to the
Trustee for authentication, and any Securities which such
successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit
under this Indenture as the Securities theretofore or thereafter
issued in accordance with the terms of this Indenture as though
all such Securities had been issued at the date of the execution
hereof.
ARTICLE VI.
DEFAULTS AND REMEDIES
SECTION 6.1. Events of Default.
An "Event of Default", wherever used herein, means any
one of the following events (whatever the reason for such Event
of Default and whether it shall be occasioned by the provisions
of Article 11 or be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order or
any court or any order, rule or regulation of any administrative
or governmental body):
(1) the Company defaults in the payment of
interest on any Security when the same becomes due and
payable and such default continues for a period of 30
days or more;
(2) the Company defaults in the payment of the
principal of or premium, if any, on any Security when
the same becomes due and payable at maturity, upon
redemption or otherwise;
(3) the Company fails to comply with any of its
other material covenants, agreements or conditions in
the Securities or this Indenture and such default
continues for the period and after the notice specified
in the last paragraph of this Section 6.1;
(4) there shall be a material default under any
bond, debenture, note or other evidence of Indebtedness
or under any mortgage, indenture or other instrument
under which there may be issued or by which there may
be secured or evidenced any Indebtedness of the Company
or any Subsidiary, whether any such Indebtedness now
exists or shall hereafter be created, if (a) either
(i) such event of default results from the failure to
pay any such Indebtedness at maturity or (ii) as a
result of such event of default, the maturity of such
Indebtedness has been accelerated prior to its stated
maturity and such acceleration was not rescinded or
annulled or the accelerated amount paid or discharged
within ten days after notice to the Company of such
acceleration, and (b) the principal amount of such
Indebtedness, together with the principal amount of any
other such Indebtedness in default for failure to pay
principal or interest thereon, or the maturity of which
has been so accelerated, aggregates $20,000,000 or
more;
(5) the Company pursuant to or within the meaning
of any Bankruptcy Law:
(a) commences a voluntary case or
proceeding,
(b) consents to the entry of an order
for relief against it in an involuntary case or
proceeding,
(c) consents to the appointment of a
Custodian of it or for all or any substantial part
of its property,
(d) makes a general assignment for the
benefit of its creditors; or
(e) admits in writing its inability to
pay its debts generally.
(6) a court of competent jurisdiction enters an
order or decree under any Bankruptcy Law:
(a) for relief against the Company in
an involuntary case or proceeding,
(b) appointing a Custodian of the
Company or for all or substantially all of its
property, or
(c) ordering the liquidation of the
Company,
and the order or decree remains unstayed and in effect
for 90 days.
(7) a Custodian shall be appointed out of Court
with respect to the Company or all or any substantial
part of its properties.
A default under clause (3) is not an Event of Default
until the Trustee notifies the Company, or the Holders of a
majority in principal amount of the Securities then outstanding
notify the Company and the Trustee in writing, of the default and
the Company does not cure the default within 60 days after
receipt of such notice. The notice must specify the default,
demand that it be remedied and state that the notice is a "Notice
of Default." The Trustee shall give such notice to the Company
only if directed to do so in writing by the Holders of a majority
in principal amount of the Securities then outstanding. Such
notice by the Trustee shall not be deemed to be a certification
by the Trustee as to whether an Event of Default has occurred.
SECTION 6.2. Acceleration.
If an Event of Default (other than an Event of Default
specified in Section 6.1(5) or 6.1(6)) occurs and is continuing,
the Trustee by notice to the Company, or the Holders of a
majority in principal amount of the Securities then outstanding
by notice to the Company and the Trustee, may declare to be due
and payable immediately the principal amount of the Securities
plus accrued interest to the date of acceleration. Upon any such
declaration, such amount shall be due and payable immediately,
and upon payment of such amount all of the Company's obligations
with respect to the Securities, other than obligations under
Section 7.7, shall terminate. If an Event of Default specified
in Section 6.1(5) or 6.1(6) occurs, all unpaid principal and
accrued interest on the Securities then outstanding shall become
and be immediately due and payable without any declaration or the
act on the part of the Trustee or any Holder. The Holders of a
majority in principal amount of the outstanding Securities by
written notice to the Trustee may rescind an acceleration and its
consequences if (x) all existing Events of Default, other than
the non-payment of the principal of the Securities, which have
become due solely by such declaration of acceleration, have been
cured or waived, (y) to the extent the payment of such interest
is lawful, interest on overdue installments of interest and
overdue principal and premium, if any, which has become due
otherwise than by such declaration of acceleration, has been
paid, and (z) the rescission would not conflict with any judgment
or decree of a court of competent jurisdiction. The Trustee may
rely upon such notice of rescission without any independent
investigation as to the satisfaction of conditions (x), (y) and
(z).
SECTION 6.3. Other Remedies.
If an Event of Default occurs and is continuing, the
Trustee may pursue any available remedy by proceeding at law or
in equity to collect the payment of principal of and premium, if
any, or interest on the Securities or to enforce the performance
of any provision of the Securities or this Indenture.
The Trustee may maintain a proceeding even if it does
not possess any of the Securities or does not produce any of them
in the proceeding. A delay or omission by the Trustee or any
Securityholder in exercising any right or remedy accruing upon an
Event of Default shall not impair the right or remedy or
constitute a waiver of or acquiescence in the Event of Default.
No remedy is exclusive of any other remedy. All available
remedies are cumulative.
SECTION 6.4. Waiver of Defaults and Events of Default.
Subject to Section 9.2, the Holders of a majority in
principal amount of the Securities then outstanding, on behalf of
all the Securityholders, by written notice to the Trustee may
waive a Default or Event of Default with respect to the
Securities and its consequences. When a Default or Event of
Default is waived, it is considered to be cured and ceases to
exist; but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 6.5. Control by Majority.
The Holders of a majority in principal amount of the
Securities then outstanding may direct in writing the time,
method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power
conferred on it. The Trustee, however, may refuse to follow any
direction that conflicts with law or this Indenture, or that the
Trustee determines may be unduly prejudicial to the rights of
other Securityholders, it being understood that (subject to
Section 7.1) the Trustee shall have no duty to ascertain whether
or not such actions or forbearances are unduly prejudicial to
such Securityholders, or that may involve the Trustee in personal
liability or for which the Trustee does not have indemnification
reasonably satisfactory to the Trustee pursuant to Sections
7.1(5) and 7.2(6); provided that, the Trustee may take any other
action deemed proper by the Trustee which is not inconsistent
with such direction.
SECTION 6.6. Rights of Holders to Receive Payment.
Subject to Article 11, notwithstanding any other provision of
this Indenture, the right of any Securityholder to receive
payment of principal of, premium, if any, and interest on the
Security, on or after the respective due dates expressed in the
Security, or to bring suit for the enforcement of any such
payment on or after such respective dates, is absolute and
unconditional and shall not be impaired or affected without the
consent of the Holder.
Notwithstanding any other provision of this Indenture,
the right of any Holder of any Security to convert such Security
or to bring suit for the enforcement of such right shall not be
impaired or affected without the written consent of the Holder.
SECTION 6.7. Collection Suit by Trustee.
If an Event of Default in payment of interest or
principal, and premium, if any, specified in Section 6.1(1) or
(2) occurs and is continuing, the Trustee may recover judgment in
its own name and as trustee of an express trust against the
Company or any other obligor on the Securities for the whole
amount of unpaid principal, and premium, if any, and accrued
interest remaining unpaid on the Securities, together with
interest on overdue principal, and premium, if any, and to the
extent that payment of such interest is lawful, interest on
overdue installments of interest, in each case at the rate borne
by the Securities and such further amount as shall be sufficient
to cover the costs and expenses of collection, including the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel.
SECTION 6.8. Trustee May File Proofs of Claim.
The Trustee may file such proofs of claim and other
papers or documents as may be necessary or advisable in order to
have the claims of the Trustee (including any claim for the
reasonable compensation, expenses, disbursements and advances of
the Trustee, its agents and counsel) and the Holders of
Securities allowed in any judicial proceedings relative to the
Company (or any other obligor upon the Securities), its creditors
or its property and shall be entitled and empowered to collect
and receive any monies or other property payable or deliverable
on any such claims and to distribute the same. Any Custodian in
any such judicial proceeding is hereby authorized by each
Securityholder to make such payments to the Trustee, and in the
event that the Trustee shall consent to the making of such
payments directly to the Holders of Securities, to pay to the
Trustee any amount due to it for the reasonable compensation,
expenses, disbursements and advances of the Trustee, its agents
and counsel, and any other amounts due the Trustee under Section
7.7.
Nothing herein contained shall be deemed to authorize
the Trustee to authorize or consent to or accept or adopt on
behalf of any Securityholder any plan or reorganization,
arrangement, adjustment or composition affecting the Securities
or the rights of any Holder thereof, or to authorize the Trustee
to vote in respect of the claim of any Securityholder in any such
proceedings.
SECTION 6.9. Priorities.
If the Trustee collects any money pursuant to this
Article 6, it shall pay out the money in the following order:
FIRST: to the Trustee amounts due under Section 7.7;
SECOND: to holders of any Senior Indebtedness as
required by Article 11;
THIRD: to the Holders of the Securities for amounts
due and unpaid on the Securities for principal,
premium, if any, Repurchase Price, if any, and
interest, ratably, without preference or priority of
any kind, according to the amounts due and payable on
the Securities for principal, premium, if any, and
interest, respectively; and
FOURTH: to the Company.
The Trustee may fix a record date and payment date for
any payment to Holders of Securities pursuant to this Section
6.9.
SECTION 6.10. Undertaking for Costs.
In any suit for the enforcement of any right or remedy
under this Indenture or in any suit against the Trustee for any
action taken or omitted by it as Trustee, a court in its
discretion may require the filing by any party litigant in the
suit of an undertaking to pay the costs of the suit, and the
court in its discretion may assess reasonable costs, including
reasonable attorney's fees, against any party litigant in the
suit, having due regard to the merits and good faith of the
claims or defenses made by the party litigant. This Section 6.10
does not apply to a suit by the Trustee, a suit by a Holder
pursuant to Section 6.6 or a suit by Holders of more than 10% in
principal amount of the Securities then outstanding or a suit by
any holder of Senior Indebtedness.
SECTION 6.11. Limitation on Suits.
A Securityholder may not pursue any remedy with respect
to this Indenture or the Securities unless:
(1) the Holder gives to the Trustee written
notice stating that an Event of Default is continuing;
(2) the Holders of at least 25% in aggregate
principal amount of the Securities at the time
outstanding make a written request to the Trustee to
pursue the remedy or initiate proceedings in respect of
an Event of Default;
(3) such Holder or Holders offer to the Trustee
security or indemnity against any loss, liability or
expense satisfactory to the Trustee;
(4) the Trustee does not comply with the request
within 60 days after receipt of notice, the request and
the offer of security or indemnity; and
(5) the Holders of a majority in aggregate
principal amount of the Securities at the time
outstanding do not give the Trustee a direction
inconsistent with the request during such 60-day
period.
A Securityholder may not use this Indenture to
prejudice the rights of any other Securityholder or to obtain a
preference or priority over any other Securityholder. Rights and
Remedies available to the SecurityHolder under this Indenture are
cumulative. Any delay or omission with respect to a Right or
Remedy shall not constitute waiver of such Right or Remedy.
ARTICLE VII.
TRUSTEE
SECTION 7.1. Duties of Trustee.
(1) The duties and responsibilities of the Trustee
shall be as provided by the TIA. If an Event of Default has
occurred and is continuing, the Trustee shall exercise its rights
and powers vested in it by this Indenture and use the same degree
of care and skill in their exercise as a prudent Person would
exercise or use under the circumstances in the conduct of his own
affairs.
(2) Except during the continuance of an Event of
Default and after the curing or waiving of all such Events of
Default which may have occurred:
(a) The Trustee need perform only those duties
that are specifically set forth in this Indenture, and
the Trustee shall not be liable except for the
performance of such duties as are specifically set
forth in this Indenture, and no others, and no implied
covenants or obligation shall be read into this
Indenture against the Trustee.
(b) In the absence of bad faith on its part, the
Trustee may conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, upon any statements, certificates or
opinions furnished to the Trustee and conforming to the
requirements of this Indenture. The Trustee, however,
shall examine the certificates and opinions to
determine whether or not they conform to the
requirements of this Indenture.
(3) The Trustee may not be relieved from liability for
its own negligent action, its own negligent failure to act, or
its own willful misconduct, except that:
(a) This paragraph does not limit the effect of
paragraph (2) of this Section 7.1.
(b) The Trustee shall not be liable for any error
in judgment made in good faith by a Trust Officer,
unless it is proved that the Trustee was negligent in
ascertaining the pertinent facts.
(c) The Trustee shall not be liable with respect
to any action it takes or omits to take in good faith
in accordance with a direction received by it pursuant
to Section 6.5.
(d) No provision of this Indenture shall require
the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the
performance of any of its duties hereunder or in the
exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that repayment of
such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(4) Every provision of this Indenture that in any way
relates to the Trustee is subject to paragraphs (1), (2) and (3)
of this Section 7.1 and subject to Sections 315 and 316 of the
TIA.
(5) Subject to subsection (3), the Trustee may refuse
to perform any duty or exercise any right or power unless,
subject to the provisions of the TIA, it receives indemnity
satisfactory to it against any loss, liability, expense or fee.
(6) The Trustee shall not be liable for interest on
any money received by it. Money held in trust by the Trustee
need not be segregated from other funds except to the extent
required by law.
SECTION 7.2. Rights of Trustee.
(1) The Trustee may rely on and shall be protected in
acting or refraining from acting upon any document believed by it
to be genuine and to have been signed or presented by the proper
Person. The Trustee need not investigate any fact or matter
stated in the document.
(2) Before the Trustee acts or refrains from acting,
it may require an Officers' Certificate or an Opinion of Counsel,
or both, which shall conform to Section 13.5. The Trustee shall
not be liable for any action it takes or omits to take in good
faith in reliance on such Officers' Certificate or Opinion of
Counsel.
(3) The Trustee may act through agents or attorneys
and shall not be responsible for the misconduct or negligence of
such agents or attorneys appointed with due care and shall not be
responsible for their supervision.
(4) The Trustee shall not be liable for any action it
takes or omits to take in good faith which it believes to be
authorized or within its rights or powers.
(5) The Trustee may consult with counsel of its choice
and the written advice of such counsel or any Opinion of Counsel
shall be full and complete authorization and protection in
respect of any action taken, suffered or omitted by the Trustee
hereunder in good faith and reliance thereon.
(6) The Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this
Indenture at the request or direction of any of the Holders of
Securities pursuant to this Indenture, unless such Holders shall
have offered to the Trustee security or indemnity satisfactory to
the Trustee against the costs, expenses and liabilities which
might be incurred by it in compliance with such request or
direction.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may
become the owner or pledgee of Securities and may otherwise deal
with the Company or its Affiliates with the same rights it would
have if it were not Trustee. Any Agent may do the same with like
rights. The Trustee, however, is subject to Sections 7.10 and
7.11.
SECTION 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity
or adequacy of this Indenture or the Securities, it shall not be
accountable for the Company's use of the proceeds from the
Securities, and it shall not be responsible for any statement of
the Company in the Indenture or any statement in the Securities
other than its certificate of authentication or in any document
used in the sale of the Securities other than any statement in
writing provided by the Trustee expressly for use in such
document.
SECTION 7.5. Notice of Defaults.
If a Default or Event of Default occurs and is
continuing and if such Default or Event of Default is actually
known to the Trustee, the Trustee shall mail to each Holder of
Securities notice of the Default or Event of Default within 90
days after it becomes known to the Trustee. Except in the case
of a default in payment of principal of, premium, if any, or
interest on any Security, the Trustee may withhold the notice if
and so long as a committee of its Trust Officers in good faith
determines that withholding the notice is in the interests of
Holders of Securities. Notwithstanding anything to the contrary
expressed in this Indenture, the Trustee shall not be deemed to
have knowledge of any Event of Default hereunder unless and until
a Trust Officer shall have actual knowledge thereof, or shall
have received written notice thereof from the Company at its
principal Corporate Trust Office as specified in Section 13.2.
The Trustee shall not be deemed to have actual knowledge of an
Event of Default hereunder, except in the case of an Event of
Default under Sections 6.1(1) or 6.1(2) (provided that the
Trustee is the Paying Agent), until a Trust Officer receives
written notice thereof from the Company or any Securityholder
that such a Default or an Event of Default has occurred.
SECTION 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with May 15
of the first year in which Securities are outstanding hereunder,
the Trustee, if required by the provisions of TIA 313(a), shall
mail to each Securityholder a brief report dated as of May 15 of
such year that complies with TIA 313(a). The Trustee also
shall comply with TIA 313(b), 313(c) and 313(d).
A copy of each report at the time of its mailing to
Securityholders shall be filed with the Securities and Exchange
Commission and each securities exchange, if any, on which the
Securities are listed. The Company agrees to notify the Trustee
in writing whenever the Securities become listed or delisted on
or from any securities exchange.
SECTION 7.7. Compensation and Indemnity
The Company shall pay to the Trustee from time to time,
and the Trustee shall be entitled to, reasonable compensation for
its services (which compensation shall not be limited by any
provision of law in regard to the compensation of a trustee of an
express trust). The Company shall reimburse the Trustee upon
request for all reasonable disbursements, expenses and advances
incurred or made by it. Such expenses may include, but shall not
be limited to, the reasonable compensation, disbursements and
expenses of the Trustee's agents, consultants and counsel.
The Company shall indemnify and defend the Trustee and
its officers, directors, stockholders, agents and employees for,
and hold them harmless against, any loss or liability incurred by
it in connection with the acceptance or administration of this
trust, including the costs and expenses of defending themselves
against any claim or liability in connection with the Securities
or the exercise or performance of any of the Trustee's powers or
duties hereunder. The Trustee shall notify the Company promptly
of any claim asserted against the Trustee for which it may seek
indemnity; provided, however, that any failure to so notify the
Company shall not relieve the Company of its indemnity
obligations hereunder except to the extent the Company's ability
to defend such claim shall be prejudiced thereby. The Company
shall assume the defense of any such claim at the Company's
expense with counsel reasonably satisfactory to the Trustee;
provided, however, that if the Trustee is advised by counsel that
the interests of the Company and the Trustee conflict, the
Trustee shall have the right to retain separate counsel at the
expense of the Company.
The Company need not reimburse the Trustee for any
expense or indemnify it against any loss or liability incurred by
it through the Trustee's proven negligence or willful misconduct.
The Company shall not be liable for any settlement of any claim
or action effected without the Company's consent, which consent
shall not be unreasonably withheld. To secure the Company's
payment obligations in this Section, the Trustee shall have a
lien prior to the Securities on all money or property held or
collected by the Trustee or any Paying Agent.
When the Trustee incurs expenses or renders services
after an Event of Default specified in Section 6.1 occurs, the
expenses and the compensation for the services are intended to
constitute expenses of administration under any applicable
bankruptcy or comparable law. The provisions of this Section
shall survive termination of this Indenture.
SECTION 7.8. Replacement of Trustee.
A resignation or removal of the Trustee and appointment
of a successor Trustee shall become effective only upon the
successor Trustee's acceptance of appointment as provided in this
Section 7.8.
The Trustee may resign by so notifying the Company in
writing at least 30 days prior to the date such resignation shall
become effective as specified therein. The Holders of a majority
in principal amount of the Securities then outstanding may remove
the Trustee by so notifying the Trustee in writing and may
appoint a successor Trustee with the Company's written consent,
which consent will not be unreasonably withheld. The Company may
remove the Trustee if:
(1) the Trustee fails to comply with Section
7.10;
(2) the Trustee is adjudged a bankrupt or an
insolvent;
(3) a receiver or other public officer takes
charge of the Trustee or its property; or
(4) the Trustee otherwise becomes incapable of
acting.
If the Trustee resigns or is removed or if a vacancy
exists in the office of Trustee for any reason, the Company shall
promptly appoint a successor Trustee, unless a successor Trustee
is appointed by the Holders in accordance with this Indenture.
If a successor Trustee does not take office within 45
days after the retiring Trustee resigns or is removed, the
retiring Trustee, the Company or the Holders of a majority in
principal amount of the Securities then outstanding may petition
any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10, any
Securityholder may petition any court of competent jurisdiction
for the removal of the Trustee and the appointment of a successor
Trustee.
A successor Trustee shall deliver a written acceptance
of its appointment to the retiring Trustee and to the Company.
Immediately after that, the retiring Trustee shall, upon payment
of its fees and expenses, transfer all property held by it as
Trustee to the successor Trustee, subject to the lien provided
for in Section 7.7, the resignation or removal of the retiring
Trustee shall become effective, and the successor Trustee shall
have all the rights, powers and duties of the Trustee under this
Indenture. Notwithstanding the replacement of the Trustee
pursuant to this Section 7.8, the Company's obligations under
Section 7.7 shall continue for the benefit of the retiring
Trustee with respect to its administration of the trusts
hereunder, including without limitation, the rights of the
retiring Trustee to indemnification and its rights to receive
expenses incurred by it and compensation earned by it under or
pursuant to the Indenture. A successor Trustee shall mail notice
of its succession to each Holder of Securities.
SECTION 7.9. Successor Trustee by Merger, etc.
If the Trustee consolidates with, merges or converts
into, or transfers all or substantially all of its corporate
trust assets to, another corporation, the successor corporation
without any further act shall be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
This Indenture shall always have a Trustee who
satisfies the requirements of TIA 310(a)(1). The Trustee shall
have a combined capital and surplus of at least $50,000,000 as
set forth in its most recent published annual report of
condition. The Trustee shall comply with TIA 310(b), including
the optional provision permitted by the second sentence of TIA
310(b)(9). The Trustee shall be organized in the United States
or any state thereof, shall be authorized to execute the
corporate trustee powers and shall be subject to supervision or
regulation by a federal or state authority.
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee is subject to TIA 311(a), excluding any
creditor relationship listed in TIA 311(b). A Trustee who has
resigned or been removed shall be subject to TIA 311(a) to the
extent indicated therein.
ARTICLE VIII.
SATISFACTION AND DISCHARGE OF INDENTURE
SECTION 8.1. Satisfaction, Discharge and Defeasance of the
Securities.
The Company shall be deemed to have paid and discharged
the entire indebtedness on the Securities after the date of the
deposit referred to in paragraph (1) below, the provisions of
this Indenture shall no longer be in effect in respect of the
Securities, and the Trustee, at the expense of the Company, shall
execute proper instruments acknowledging satisfaction and
discharge of such indebtedness; provided that the following
conditions shall have been satisfied:
(1) the Company has deposited or caused to be
deposited with the Trustee irrevocably as trust funds
in trust, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of the
Securities, with reference to this Section 8.1,
(a) money or (b) U.S. Government Obligations or (c) a
combination thereof, sufficient, in the opinion of a
nationally recognized firm of independent public
accountants expressed in a written certification
thereof delivered to the Trustee, to pay and discharge
the entire indebtedness on all the Securities for
principal, premium, if any, and interest, if any, to
the maturity date of the Securities as such principal,
premium, if any, or interest becomes due and payable in
accordance with the terms of this Indenture and the
Securities;
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company in
connection with all of the Securities, including all
fees and expenses of the Trustee; and
(3) the Company has delivered to the Trustee an
Opinion of Counsel and an Officers' Certificate, each
stating that all conditions precedent herein provided
for relating to the satisfaction and discharge of the
entire Indebtedness on the Securities and the discharge
of this Indenture and the termination of the Company's
obligations hereunder have been complied with.
"U.S. Government Obligations" means direct, non-
callable obligations of, or non-callable obligations guaranteed
by, the United States of America for the timely payment of which
obligation or guarantee the full faith and credit of the United
States of America is pledged.
SECTION 8.2. Satisfaction and Discharge of Indenture.
In addition to its rights under Section 8.1, the
Company may terminate all of its obligations under this Indenture
when:
(1) all of the Securities theretofore
authenticated and delivered (other than (a) Securities
which have been destroyed, lost or stolen and which
have been replaced or paid as provided in Section 2.6
hereof and (b) Securities for whose payment money has
theretofore been deposited with the Trustee or the
Paying Agent in trust or segregated and held in trust
by the Company and thereafter repaid to the Company or
discharged from such trust, as provided in Section 2.4
and Section 8.6 hereof) have been delivered to the
Trustee for cancellation (including any cancellation
resulting from the conversion of such Securities
pursuant to Paragraph 8 of the Securities); and
(2) the Company has paid or caused to be paid all
other sums payable hereunder by the Company in
connection with the outstanding Securities, including
all fees and expenses of the Trustee.
SECTION 8.3. Survival of Certain Obligations.
Notwithstanding the satisfaction and discharge of this
Indenture pursuant to Section 8.1, the respective obligations of
the Company specified in Sections 2.3, 2.4, 2.5, 2.6, 2.11, 4.1,
7.7, 8.5, 8.6, 8.7 and in Article 10 shall survive until the
Securities are no longer outstanding, and after the Securities
are no longer outstanding, or upon compliance with Section 8.2,
only the obligations of the Company in such Sections 7.7 and 8.6
shall survive. Nothing contained in this Article 8 shall
abrogate any of the obligations or duties of the Trustee under
this Indenture.
SECTION 8.4. Application of Trust Money.
(1) Subject to the provisions of Section 8.6, all
money and U.S. Government Obligations deposited with the Trustee
for the Securities pursuant to Section 8.1 or Section 8.2, and
all money received by the Trustee in respect of U.S. Government
Obligations deposited with the Trustee for the Securities
pursuant to Section 8.1 or Section 8.2 shall be held in trust and
reinvested by the Trustee in (a) U.S. Government Obligations or
(b) beneficial interests in one or more mutual funds which invest
all or substantially all of their assets in U.S. Government
Obligations and which are rated in the highest applicable rating
category by a nationally-recognized statistical rating
organization in accordance with the Company's written
instructions and applied by the Trustee in accordance with the
provisions of the Securities and this Indenture, to the payment,
either directly or through any Paying Agent (including the
Company or any Subsidiary acting as Paying Agent) as the Trustee
may determine, to the Persons entitled thereto, of the principal,
premium, if any, and interest, if any, on the Securities; but
such money need not be segregated from other funds except to the
extent required by law. Money and U.S. Government Obligations so
held in trust are not subject to the subordination provisions of
Article 11.
(2) The Trustee shall deliver or pay to the Company
from time to time upon the Company's written request any U.S.
Government Obligations or money held by it as provided in Section
8.1 or Section 8.2 which, in the written opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, are then
in excess of the amount thereof which then would have been
required to be deposited for the purpose for which such U.S.
Government Obligations, or money, were deposited or received.
SECTION 8.5. Paying Agent to Repay Monies Held.
Upon the satisfaction and discharge of this Indenture,
all monies then held by any Paying Agent under the provisions of
this Indenture shall, upon written demand of the Company, be
repaid to it or paid to the Trustee, and thereupon such Paying
Agent shall be released from all further liability with respect
to such monies.
SECTION 8.6. Return of Unclaimed Monies.
Any monies deposited with or paid to the Trustee or any
Paying Agent for the Securities, or then held by the Company in
trust, for the payment of any principal, premium, if any, and
interest, if any, on the Securities and not applied but remaining
unclaimed by the Holders of the Securities for two years after
the date upon which the principal of, premium, if any, and
interest, if any, on the Securities, as the case may be, shall
have become due and payable, shall, unless otherwise required by
mandatory provisions of applicable escheat or abandoned or
unclaimed property law, be repaid to the Company by such Trustee
or any Paying Agent on written demand by the Company or (if then
held by the Company or any Affiliate) shall be discharged from
such trust; and the Holders of the Securities entitled to receive
such payment shall thereafter look only to the Company for the
payment thereof; provided, however, that, before being required
to make any such repayment, the Trustee may, or shall at the
written request of the Company, at the expense of the Company,
cause to be published once in an authorized newspaper in the same
city in which the place of payment with respect to the Securities
shall be located and in an authorized newspaper in the City of
New York, or mail to each such Holder, a notice (in such form as
may be deemed appropriate by the Trustee) that said monies remain
unclaimed and that, after a date named therein, any unclaimed
balance of said monies then remaining will be returned to the
Company.
SECTION 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any
money or U.S. Government Obligations in accordance with Section
8.1 by reason of any legal proceeding or by reason of any order
or judgment of any court or governmental authority enjoining,
restraining or otherwise prohibiting such application, the
Company's obligations under this Indenture and the Securities
shall be revived and reinstated as though no deposit had occurred
pursuant to Section 8.1 until such time as the Trustee or Paying
Agent is permitted to apply all such money or U.S. Government
Obligations in accordance with Section 8.4; provided, however,
that if the Company has made any payment of principal of,
premium, if any, or interest on the Securities because of the
reinstatement of its obligations, the Company shall be subrogated
to the rights of the Holders of such Securities to receive such
payment from the money or U.S. Government Obligations held by the
Trustee or Paying Agent.
SECTION 8.8. Indemnity for Government Obligations.
The Company shall pay and indemnify the Trustee against
any tax, fee or other charge imposed on or assessed against U.S.
Government Obligations deposited with the Trustee pursuant hereto
or the principal and interest received on such U.S. Government
Obligations.
ARTICLE IX.
AMENDMENTS AND WAIVERS
SECTION 9.1. Amendments and Waivers Without Consent of Holders.
The Company, when authorized by Board Resolution, and
the Trustee at any time and from time to time, may amend or
supplement this Indenture, (any such amendment or supplement to
be in a form satisfactory to the Trustee) or the Securities
without notice to or consent of any Securityholder for any of the
following purposes:
(1) to comply with Section 5.1; or
(2) to provide for uncertificated Securities in
addition to or in place of certificated Securities; or
(3) to cure any ambiguity, defect or
inconsistency, or to make any other change that does
not adversely affect the interests or rights of the
Holders of Securities; or
(4) to add to the covenants of the Company, for
the benefit of the Holders or to surrender any right or
power herein conferred upon the Company; or
(5) to add any Event of Default.
The Trustee shall be entitled to receive upon request
an Officers' Certificate and an Opinion of Counsel to its
satisfaction with respect to any supplement to this Indenture
without consent of the Holders that all conditions precedent have
been satisfied.
SECTION 9.2. Amendments and Waivers with Consent of Holders.
With the written consent of the Holders of not less
than 66-2/3% in aggregate principal amount of the Securities at
the time outstanding, the Company, when authorized by Board
Resolution, and the Trustee may amend or supplement this
Indenture (any such amendment or supplement to be in a form
satisfactory to the Trustee) or the Securities for the purpose of
adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of any supplemental
indenture or of modifying in any manner the rights of the Holders
of the Securities. The Holders of a majority in principal amount
of the Securities then outstanding may waive compliance in a
particular instance by the Company with any provision of this
Indenture or the Securities without notice to any Securityholder.
Subject to Section 9.4, without the consent of each Holder of
Securities affected, however, an amendment, supplement or waiver,
including a waiver pursuant to Section 6.4, may not:
(1) reduce the amount of Securities whose Holders
must consent to an amendment or waiver;
(2) reduce the rate of or extend the time for
payment of interest on any Security;
(3) reduce the principal of or extend the fixed
maturity of any Security;
(4) waive (except unless theretofore cured) a
default in the payment of the principal of (and
premium, if any on), interest on or redemption amounts
with respect to any Security;
(5) make any Security payable in currency other
than that stated in the Security;
(6) make any change in Sections 6.4, 6.6 or 9.2;
(7) make any change that adversely affects the
right to convert any Security;
(8) make any change in Article 11 that adversely
affects the rights of any Securityholder; or
(9) impair the right of any Holder to institute
any suit or proceeding.
To secure a consent of the Holders under this Section,
it shall not be necessary for the Holders to approve the
particular form of any proposed amendment or waiver; rather, it
shall be sufficient if such consent approves the substance
thereof.
After an amendment under this Section becomes
effective, the Company shall mail to Securityholders a notice
briefly describing such amendment.
SECTION 9.3. Compliance with Trust Indenture Act.
Every amendment or supplement to this Indenture or the
Securities shall comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
Subject to this Indenture, each amendment, supplement
or waiver evidencing other action shall become effective in
accordance with its terms. Until an amendment, supplement or
waiver becomes effective, a consent to it by a Holder of a
Security is a continuing consent by the Holder even if notation
of the consent is not made on any Security. Any such Holder or
subsequent Holder, however, may revoke the consent as to his
Security or portion of a Security, if the Trustee receives the
notice of revocation before the date the amendment, waiver or
other action becomes effective.
The Company may, but shall not be obligated to, fix a
record date for the purpose of determining the Holders entitled
to consent to any amendment, supplement or waiver. If a record
date is fixed, then notwithstanding the provisions of the
immediately preceding paragraph, those Persons who were Holders
at such record date (or their duly designated proxies) and only
those Persons, shall be entitled to consent to such amendment,
supplement or waiver or to revoke any consent previously given,
whether or not such Persons continue to be Holders after such
record date. No consent shall be valid or effective for more
than 90 days after such record date unless consent from Holders
of the principal amount of Securities then outstanding required
hereunder for such amendment, supplement or waiver to be
effective shall have also been given and not revoked within such
90-day period.
After an amendment, waiver or other action becomes
effective, pursuant to Section 9.1 or Section 9.2, as the case
may be, it shall bind every Holder of a Security.
SECTION 9.5. Notation on or Exchange of Securities.
If an amendment, supplement or waiver changes the terms
of a Security, the Trustee may request the Holder of the Security
to deliver it to the Trustee. The Trustee may place an
appropriate notation on the Security about the changed terms and
return it to the Holder. Alternatively, if the Company or the
Trustee so determine, the Company in exchange for the Security
shall issue and the Trustee shall authenticate a new Security
that reflects the changed terms the cost and expense of which
will be borne by the Company.
SECTION 9.6. Trustee to Sign Amendments, etc.
The Trustee need not sign any amendment that adversely
affects its rights or interests, as determined by the Trustee in
its sole discretion. In signing or refusing to sign any
amendment the Trustee shall be entitled to receive and shall be
fully protected in relying upon, an Opinion of Counsel stating
that such amendment is authorized or permitted by this Indenture.
The Company may not sign an amendment until its Board of
Directors approves it.
ARTICLE X.
CONVERSION OF SECURITIES
SECTION 10.1. Right of Conversion; Conversion Price.
Subject to the provisions of Paragraph 8 of the
Securities, the Holder of any Security or Securities shall have
the right, at such Holder's option, at any time after the
effective date of the Registration Statement and before the close
of business on April 1, 2004 (except that, with respect to any
Security or portion of a Security which shall be called for
redemption, such right shall terminate at the close of business
on the Redemption Date fixed for redemption of such Security or
portion of a Security unless the Company shall default in payment
due upon redemption thereof), to convert, subject to the terms
and provisions of this Article 10, the principal of any such
Security or Securities or any portion thereof which is $1,000
principal amount or an integral multiple thereof into shares of
common stock of the Company, $.02 par value per share ("Common
Stock"), initially at the conversion price per share of $9.50 or,
in case an adjustment of such price has taken place pursuant to
the provisions of Section 10.4, then at the price as last
adjusted (such price or adjusted price being referred to herein
as the "conversion price"), upon surrender of the Security or
Securities, the principal of which is so to be converted,
accompanied by written notice of conversion duly executed, to the
Company, at any time during usual business hours at the office or
agency maintained by it for such purpose, and, if so required by
the Conversion Agent or Registrar, accompanied by a written
instrument or instruments of transfer in form satisfactory to the
Conversion Agent or Registrar duly executed by the Holder or his
duly authorized representative in writing. For convenience, the
conversion of any portion of the principal of any Security or
Securities into shares of Common Stock is hereinafter sometimes
referred to as the conversion of such Security or Securities.
SECTION 10.2. Issuance of Shares on Conversion.
As promptly as practicable after the surrender, as
herein provided, of any Security or Securities for conversion,
the Company shall deliver or cause to be delivered at its said
office or agency, to or upon the written order of the Holder of
the Security or Securities so surrendered, certificates
representing the number of fully paid and nonassessable shares of
Common Stock into which such Security or Securities may be
converted in accordance with the provisions of this Article 10.
Such conversion shall be deemed to have been made as of the close
of business on the date that such Security or Securities shall
have been surrendered for conversion by delivery thereof with a
written notice of conversion duly executed, so that the rights of
the Holder of such Security or Securities as a Securityholder
shall cease at such time and, subject to the following provisions
of this paragraph, the Person or Persons entitled to receive the
shares of Common Stock upon conversion of such Security or
Securities shall be treated for all purposes as having become the
record holder or holders of such shares of Common Stock at such
time and such conversion shall be at the conversion price in
effect at such time; provided, however, that no such surrender on
any date when the stock transfer books of the Company shall be
closed shall be effective to constitute the Person or Persons
entitled to receive the shares of Common Stock upon such
conversion as the record holder or holders of such shares of
Common Stock on such date, but such surrender shall be effective
to constitute the Person or Persons entitled to receive such
shares of Common Stock as the record holder or holders thereof
for all purposes at the close of business on the next succeeding
day on which such stock transfer books are open; and provided,
further, that in such event such conversion shall be at the
conversion price in effect on the date that such Security or
Securities shall have been surrendered for conversion by delivery
thereof, as if the stock transfer books of the Company had not
been closed. The Company shall give or cause to be given to the
Trustee written notice whenever the stock transfer books of the
Company shall be closed.
Upon Conversion of any Security which is converted in
part only, the Company shall execute and the Trustee shall
authenticate and deliver to or on the order of the Holder
thereof, at the expense of the Company, a new Security or
Securities of authorized denominations in principal amount equal
to the unconverted portion of such Security.
SECTION 10.3. No Adjustment for Interest or Dividends.
No payment or adjustment in respect of interest on the
Securities or dividends on the shares of Common Stock shall be
made upon the conversion of any Security or Securities; provided,
however, that if a Security or any portion thereof shall be
converted subsequent to any Regular Record Date and on or prior
to the next succeeding Interest Payment Date, the interest
falling due on such Interest Payment Date shall be payable on
such Interest Payment Date notwithstanding such conversion, and
such interest (whether or not punctually paid or duly provided
for) shall be paid to the Person in whose name such Security is
registered at the close of business on such Regular Record Date
and Securities surrendered for conversion during the period from
the close of business on any Regular Record Date to the opening
of business on the corresponding Interest Payment Date must be
accompanied by payment of an amount equal to the interest payable
on such Interest Payment Date.
SECTION 10.4. Adjustment of Conversion Price.
(1) In case the Company shall pay or make a dividend
or other distribution on any class of Capital Stock of the
Company in shares of Common Stock, the conversion price in effect
at the opening of business on the day following the date fixed
for the determination of stockholders entitled to receive such
dividend or other distribution shall be reduced by multiplying
such conversion price by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the
total number of shares constituting such dividend or other
distribution, such reduction to become effective immediately
after the opening of business on the day following the date fixed
for such determination.
(2) In case the Company shall issue rights or warrants
to all or substantially all holders of its shares of Common Stock
entitling them to subscribe for or purchase shares of Common
Stock (or securities convertible into or exchangeable for Common
Stock) at a price per share (or having a conversion or exchange
price per share) less than the current market price per share
(determined as provided in paragraph (6) of this Section 10.4) of
the shares of Common Stock on the date fixed for the
determination of stockholders entitled to receive such rights or
warrants, the conversion price in effect at the opening of
business on the day following the date fixed for such
determination shall be reduced by multiplying such conversion
price by a fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of business on
the date fixed for such determination plus the number of shares
of Common Stock which the aggregate of the subscription price of
the total number of shares of Common Stock so offered for
subscription or purchase (or the aggregate conversion of exchange
price of the convertible or exchangeable securities so offered)
would purchase at such current market price and the denominator
shall be the number of shares of Common Stock outstanding at the
close of business on the date fixed for such determination plus
the number of shares of Common Stock so offered for subscription
or purchase, such reduction to become effective immediately after
the opening of business on the day following the date fixed for
such determination. In the event that all of the shares of
Common Stock subject to such rights or warrants have not been
issued when such rights or warrants expire, then the conversion
price shall promptly be readjusted to the conversion price which
would then be in effect had the adjustment upon the issuance of
such rights or warrants been made on the basis of the actual
number of shares of Common Stock issued upon the exercise of such
rights or warrants. No adjustment will be required for rights to
purchase Common Stock pursuant to a Company plan for reinvestment
of dividends or interest, or for a change in the par value of the
Common Stock. For the purposes of this paragraph (2), the number
of shares of Common Stock at any time outstanding shall not
include shares held in the treasury of the Company but shall
include shares issuable in respect of scrip certificates issued
in lieu of fractions of shares of Common Stock. The Company will
not issue any rights or warrants in respect of shares of Common
Stock held in the treasury of the Company.
(3) In case the outstanding shares of Common Stock
shall be subdivided into a greater number of shares, the
conversion price in effect at the opening of business on the day
following the day upon which such subdivision becomes effective
shall be proportionately reduced, and, conversely, in case
outstanding shares of Common Stock shall each be combined into a
smaller number of shares, the conversion price in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately increased,
such reduction or increase, as the case may be, to become
effective immediately after the opening of business on the day
following the day upon which such subdivision or combination
becomes effective.
(4) In case the Company shall, by dividend or
otherwise, distribute to all or substantially all holders of
shares of Common Stock evidences of indebtedness or assets
(including securities, but excluding any (a) rights or warrants
referred to in paragraph (2) of this Section 10.4, (b) any
dividend or distribution not prohibited by Section 4.6 hereof and
(c) any dividend or distribution referred to in paragraph (1) of
this Section 10.4), the conversion price shall be adjusted so
that the same shall equal the price determined by multiplying the
conversion price in effect immediately prior to the close of
business on the day fixed for the determination of stockholders
entitled to receive such distribution by a fraction of which the
numerator shall be the current market price per share (determined
as provided in paragraph (6) of this Section) of the shares of
Common Stock on the date fixed for such determination less the
then fair market value as determined by the Board of Directors of
the Company (whose determination shall be conclusive and
described in a resolution of the Board of Directors of the
Company filed with the Trustee) of the portion of the assets or
evidences of indebtedness so distributed allocable to one share
of Common Stock and the denominator shall be such current market
price per share of the shares of Common Stock, such adjustment to
become effective immediately prior to the opening of business on
the day following the date fixed for the determination of
stockholders entitled to receive such distribution.
(5) In case the shares of Common Stock shall be
changed into the same or a different number of shares of any
class or classes of stock, whether by capital reorganization,
reclassification, or otherwise (other than a subdivision or
combination of shares or a stock dividend described in paragraph
(1) or (3) of this Section 10.4, or a consolidation, merger or
sale of assets described in Section 10.10), then and in each such
event the Holders of Securities shall have the right thereafter
to convert such Securities into the kind and amount of shares of
stock and other securities and property receivable upon such
reorganization, reclassification or other change, by holders of
the number of shares of Common Stock into which such Securities
might have been converted immediately prior to such
reorganization, reclassification or change.
(6) In case the Company shall report income before
extraordinary item and accounting charge diluted earnings per
share of less than $0.80 for its fiscal year ending March 31,
2000, the conversion price, as of 8:00 a.m. EST, in effect on the
Business Day following the day on which the Company files its
Annual Report on Form 10-K with respect to such fiscal year shall
be $8.50 (or such other amount reflecting a 10.5% reduction to
the then current conversion price if an adjustment to the
conversion price had previously been made pursuant to the
provisions of this Section 10.4).
(7) For the purpose of any computation under
paragraphs (2) and (4) of this Section, the current market price
per share of Common Stock on any date shall be deemed to be the
average of the Closing Prices for the 15 consecutive Business
Days selected by the Company commencing not more than 30 and not
less than 20 Business Days before the date in question.
(8) No adjustment in the conversion price shall be
required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (8)) would require an
increase or decrease of at least 1% in such price; provided,
however, that any adjustments which by reason of this paragraph
(8) are not required to be made shall be carried forward and
taken into account in any subsequent adjustment. All
calculations under this paragraph (8) shall be made to the
nearest cent.
(9) The Company may, but shall not be required to,
make such reductions in the conversion price, in addition to
those required by paragraph (1), (2), (3), (4), (5) and (6) of
this Section 10.4 as the Company's Board of Directors considers
to be advisable in order to avoid or diminish any income tax to
any holders of shares of Common Stock resulting from any dividend
or distribution of stock or issuance of rights or warrants to
purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reason. The Company's
Board of Directors shall have the power to resolve any ambiguity
or correct any error in the adjustments made pursuant to this
Section 10.4 and its actions in so doing shall be final and
conclusive.
(10) The adjustments provided for in this Section 10.4
shall be made successively whenever any event listed above shall
occur.
SECTION 10.5. Notice of Adjustment of Conversion Price.
Whenever the conversion price for the Securities is
adjusted as herein provided:
(1) the Company shall compute the adjusted
conversion price in accordance with Section 10.4 and
shall prepare an Officers' Certificate setting forth
the adjusted conversion price and showing in reasonable
detail the facts upon which such adjustment is based
and the computation thereof, and such certificate shall
forthwith be filed at each office or agency maintained
for the purpose of conversion of the Securities
pursuant to Section 2.3 and with the Trustee; and
(2) a notice stating that the conversion price
has been adjusted and setting forth the adjusted
conversion price shall as soon as practicable be mailed
by the Company to all Holders of the Securities at
their last addresses as they shall appear in the
Security Register.
(3) If the conversion price is adjusted and the
Company fails to file an Officers' Certificate with the
Trustee as provided by Section 10.5(1) and the Trustee
is acting as the Conversion Agent, the Trustee shall be
entitled to rely conclusively on the conversion price
set forth in the Officer's Certificate most recently
received by the Trustee (or as set forth in the
Securities and this Indenture if the conversion price
shall not have been adjusted).
SECTION 10.6. Notice of Certain Corporate Action.
(1) In case:
(a) the Company shall authorize the granting to
holders of its shares of Common Stock of rights or
warrants entitling them to subscribe for or purchase
any shares of Capital Stock of any class or of any
other rights; or
(b) of any reclassification of the shares of
Common Stock of the Company, or of any consolidation or
merger to which the Company is a party and for which
approval of any stockholders of the Company is
required, or of the sale or transfer of all or
substantially all of the assets of the Company; or
(c) of the voluntary or involuntary dissolution,
liquidation or winding up of the Company;
then the Company shall cause to be filed at each office or agency
maintained for the purpose of conversion of the Securities
pursuant to Section 2.3 and shall cause to be mailed to the
Trustee and all Holders of the Securities at their last addresses
as they shall appear in the Security Register, at least 20 days
(or 10 days in any case specified in clause (a) or (b) above)
prior to the applicable record date hereinafter specified, a
notice stating (x) the date on which a record is to be taken for
the purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the date as of which the
Holders of shares of Common Stock of record to be entitled to
such dividend, distribution, rights or warrants are to be
determined, or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation
or winding up is expected to become effective, and the date as of
which it is expected that holders of shares of Common Stock of
record shall be entitled to exchange their shares of Common Stock
for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Such notice shall also
state whether such transaction will result in any adjustment in
the conversion price applicable to the Securities and, if so,
shall state what the adjusted conversion price will be and when
it will become effective. Neither the failure to give the notice
required by this Section, nor any defect therein, to any
particular Holder shall affect the sufficiency of the notice or
the legality or validity of any such dividend, distribution,
right, warrant, reclassification, consolidation, merger, sale,
transfer, liquidation, dissolution or winding-up, or the vote on
any action authorizing such with respect to the other holders.
(2) In case the Company or any Affiliate of the
Company shall propose to engage in a "Rule 13e-3 Transaction" as
defined in the Commission's Rule 13e-3 under the Exchange Act,
the Company shall, no later than the date on which any
information with respect to such Rule 13e-3 Transaction is first
required to be given to the Commission or any other Person
pursuant to such Rule 13e-3, cause to be mailed to all Holders at
their last addresses as they shall appear in the Security
Register, a copy of all information required to be given to the
holders of the Company's Capital Stock pursuant to such Rule 13e-
3. The information required to be given under this paragraph
shall be in addition to and not in lieu of any other information
required to be given by the Company pursuant to this Section 10.6
or any other provision of the Securities or this Indenture.
SECTION 10.7. Taxes on Conversions.
The Company will pay any and all stamp or similar taxes
that may be payable in respect of the issuance or delivery of
shares of Common Stock on conversion of the Securities pursuant
hereto. The Company shall not, however, be required to pay any
tax which may be payable in respect of any transfer involved in
the issuance and delivery of shares of Common Stock in a name
other than that of the Holder of the Security or Securities to be
converted, and no such issuance or delivery shall be made unless
and until the Person requesting such issuance has paid to the
Company the amount of any such tax, or has established to the
satisfaction of the Company that such tax has been paid.
SECTION 10.8. Fractional Shares.
No fractional shares or scrip representing fractional
shares shall be issued upon any conversion of the Securities. If
any such conversion would otherwise require the issuance of a
fractional share an amount equal to such fraction multiplied by
the current market price per share of Common Stock (determined as
provided in paragraph (6) of Section 10.4) on the day of
conversion shall be paid to the Holder in cash by the Company.
SECTION 10.9. Cancellation of Converted Securities.
All Securities delivered for conversion shall be
delivered to the Trustee or the Conversion Agent to be canceled
by or at the direction of the Trustee or the Conversion Agent,
which shall dispose of the same as provided in Section 2.9.
SECTION 10.10. Provisions in Case of Consolidation, Merger or
Sale of Assets.
(1) In case of any consolidation of the Company with,
or merger of the Company into, any Person, or in case of any
merger of another Person into the Company (other than a
consolidation or merger which does not result in any
reclassification, conversion, exchange or cancellation of
outstanding shares of Common Stock), or in case of any sale or
transfer of all or substantially all of the assets of the
Company, the Person formed by such consolidation or resulting
from such merger or which acquires such assets, as the case may
be, shall execute and deliver to the Trustee a supplemental
indenture providing that the Holder of each Security then
outstanding shall have the right thereafter, during the period
such Security shall be convertible as specified in Section 10.1
to convert such Security only into the kind and amount of
securities, cash and other property receivable upon such
consolidation, merger, sale or transfer by a holder of the number
of shares of Common Stock into which such Security might have
been converted immediately prior to such consolidation, merger,
sale or transfer. Such supplemental indenture shall provide for
adjustments which, for events subsequent to the effective date of
such supplemental indenture, shall be as nearly equivalent as may
be practicable to the adjustments provided for in this Article
10. The above provisions of this Section 10.10 shall similarly
apply to successive consolidations, mergers, sales or transfers.
(2) The Trustee shall not be under any responsibility
to determine the correctness of any provisions contained in any
such supplemental indenture relating either to the kind or amount
of shares of stock or securities or property receivable by
Holders upon the conversion of their Securities after any such
reclassification, change, consolidation, merger, sale or
conveyance or to any adjustment to be made with respect thereto.
SECTION 10.11. Disclaimer by Trustee of Responsibility for
Certain Matters.
The Trustee and each Conversion Agent (other than the
Company or any Subsidiary) shall not at any time be under any
duty or responsibility to any Holder of the Securities to
determine whether any facts exist which may require any
adjustment of the conversion price, how it should be calculated
or what it should be, or with respect to the nature or extent of
any such adjustment when made, or with respect to the method
employed, or herein or in any supplemental indenture provided to
be employed, in making the same. The Trustee and each Conversion
Agent (other than the Company or any Subsidiary) shall not be
accountable with respect to the validity, value, kind or amount
of any shares of Common Stock, or of any securities or property,
which may at any time be issued or delivered upon the conversion
of any Security; and it makes no representation with respect
thereto. The Trustee and each Conversion Agent (other than the
Company or any Subsidiary) shall not be responsible for any
failure of the Company to issue, transfer or deliver any shares
of Common Stock or stock certificates or other securities or
property upon the surrender of any Security for the purpose of
conversion or, subject to Section 7.1, to comply with any of the
covenants of the Company contained in this Article 10.
SECTION 10.12. Covenant to Reserve Shares.
The Company covenants that it will at all times reserve
and keep available, free from preemptive rights, out of its
authorized shares of Common Stock, solely for the purpose of
issuance upon conversion of the Securities as herein provided,
such number of shares of Common Stock as shall then be issuable
upon the conversion of all outstanding Securities. The Company
covenants that all shares of Common Stock which shall be so
issuable shall be, when issued, duly and validly issued and fully
paid and non-assessable. For purposes of this Section 10.12, the
number of shares of Common Stock which shall be deliverable upon
the conversion of all outstanding Securities shall be computed as
if at the time of computation all outstanding Securities were
held by a single holder.
ARTICLE XI.
SUBORDINATION; SENIORITY
SECTION 11.1. Securities Subordinated to Senior Indebtedness.
(1) The Company agrees, and each Holder of the
Securities by his acceptance thereof likewise agrees, that the
payment of the principal of, premium, if any, and interest on the
Securities (all of the foregoing, a "Payment or Distribution") is
subordinated and junior in right of payment, to the extent and in
the manner provided in this Article 11, except as provided in
Article 8, to the prior payment in full in cash of all Senior
Indebtedness whether outstanding on the date hereof or hereafter
created, incurred, assumed or guaranteed.
A Payment or Distribution shall include any asset of
any kind or character, and may consist of cash, securities or
other property, by set-off or otherwise, and shall include,
without limitation, any purchase, redemption or other acquisition
of Securities or the making of any deposit of funds or securities
pursuant to this Indenture (including, without limitation, any
deposit pursuant to Article 8 hereof).
(2) The Senior Indebtedness of the Company shall
continue to be Senior Indebtedness and entitled to the benefit of
these subordination provisions irrespective of any amendment,
modification or waiver of any term of any instrument relating to
refinancing of the Senior Indebtedness.
(3) All the provisions of this Indenture and the
Securities shall be subject to the provisions of this Article 11
so far as they may be applicable thereto, except that nothing in
this Article 11 shall apply to claims for, or payments to, the
Trustee under or pursuant to Section 7.7.
(4) No right of any holder of any Senior Indebtedness
to enforce subordination as herein provided shall at any time or
in any way be affected or impaired by any failure to act on the
part of the Company, any Paying Agent, the Holders of the
Securities, the Trustee or the holders of the Senior
Indebtedness, or by any noncompliance by the Company, any Paying
Agent, the Holders of the Securities or the Trustee with any of
the terms, provisions and covenants of the Securities or this
Indenture, regardless of any knowledge thereof that any such
holder of Senior Indebtedness may have or be otherwise charged
with.
SECTION 11.2. Company Not to Make Payments with Respect to
Securities in Certain Circumstances.
No Payment or Distribution shall be made by the
Company, the Trustee or any Paying Agent on account of principal
of, premium, if any, or interest on the Securities, whether upon
stated maturity, upon redemption or acceleration, or otherwise,
or on account of the purchase or other acquisition of Securities,
whether upon stated maturity, upon redemption or acceleration, or
otherwise, if there shall have occurred and be continuing a
default with respect to any Senior Indebtedness permitting the
acceleration thereof or with respect to the payment of any Senior
Indebtedness and (a) such default is the subject of a judicial
proceeding or (b) written notice of such default has been given
to the Company by any holder or holders of any Senior
Indebtedness, unless and until such default or event of default
shall have been cured or waived or shall have ceased to exist.
Upon any acceleration of the principal of the
Securities or any payment by the Company or distribution of
assets of the Company of any kind or character, whether in cash,
property or securities, to creditors upon any dissolution or
winding up or liquidation or reorganization of the Company,
whether voluntary or involuntary, or in bankruptcy, insolvency,
receivership or other proceedings, all amounts due or to become
due upon all Senior Indebtedness shall first be paid in full in
cash, or payment thereof provided for to the satisfaction of the
holders thereof, before any Payment or Distribution is made on
account of the redemption price or principal of (and premium, if
any) or interest on the Securities; and (subject to the power of
a court of competent jurisdiction to make other equitable
provision, which shall have been determined by such court to give
effect to the rights conferred in this Article upon the Senior
Indebtedness and the holders thereof with respect to the
Securities or the Holders thereof or the Trustee, by a lawful
plan of reorganization or readjustment under applicable law) upon
any such dissolution or winding up or liquidation or
reorganization, any Payment or Distribution by the Company or
distribution of assets of the Company of any kind or character,
whether in cash, property or securities (other than securities of
the Company as reorganized or readjusted or securities of the
Company or any other company, trust or corporation provided for
by a plan of reorganization or readjustment, the payment of which
is junior or otherwise subordinate, at least to the extent
provided in this Article 11 with respect to the Securities to the
payment of all Senior Indebtedness at the time outstanding and to
the payment of all securities issued in exchange therefor to the
holders of the Senior Indebtedness at the time outstanding, and
the rights of the holders of Senior Indebtedness of the Company
are not altered by such plan of reorganization or readjustment),
to which the Holders of the Securities or the Trustee would be
entitled except for the provisions of this Article 11, shall be
paid by the Company or by any receiver, trustee in bankruptcy,
liquidating trustee, agent or other Person making such Payment or
Distribution directly to the holders of Senior Indebtedness of
the Company or their representative or representatives, or to the
trustee or trustees under any indenture pursuant to which any
instruments evidencing any Senior Indebtedness may have been
issued, as their respective interests may appear, to the extent
necessary to pay all Senior Indebtedness in full in cash, after
giving effect to any concurrent payment or distribution to or for
the holders of Senior Indebtedness, before any Payment or
Distribution is made to the Holders of the Securities or to the
Trustee, except that the Trustee will have a lien for the payment
of its fees and expenses.
In the event that, notwithstanding the foregoing, any
Payment or Distribution by the Company of any kind or character,
(whether such payment shall be in cash, property or securities)
which is prohibited by the foregoing, shall have been made to the
Trustee or the Holders of the Securities before all Senior
Indebtedness is paid in full in cash, or provision is made for
such payment to the satisfaction of the holders thereof, and if
such fact shall then have been or thereafter be made known to a
Trust Officer of the Trustee or, as the case may be, such Holder,
then and in such event such Payment or Distribution shall be paid
over by the Trustee (if the Notice required by Section 11.5 has
been timely received by the Trustee) or such Holder or delivered
to the holders of Senior Indebtedness or their representative or
representatives, or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any Senior
Indebtedness may have been issued, as their respective interests
may appear, for application to the payment of all Senior
Indebtedness remaining unpaid to the extent necessary to pay all
Senior Indebtedness in full in cash, after giving effect to any
concurrent Payment or Distribution to or for the holders of such
Senior Indebtedness, and, until so delivered, the same shall be
held in trust by any Holder of a Security as the property of the
holders of Senior Indebtedness.
The consolidation of the Company with, or the merger of
the Company into, another Person or the liquidation or
dissolution of the Company following the conveyance or transfer
of its property as an entirety, or substantially as an entirety,
to another corporation upon the terms and conditions provided in
Article 5 shall not be deemed a dissolution, winding up,
liquidation or reorganization for the purposes of this Section
11.2 if such other Person shall, as a part of such consolidation,
merger, conveyance or transfer, comply with the conditions stated
in Article 5. Nothing in this Section shall apply to claims of,
or payments to, the Trustee under or pursuant to Section 7.7.
The holders of Senior Indebtedness may, at any time and
from time to time, without the consent of or notice to the
Holders of the Securities, without incurring responsibility to
the Holders of the Securities and without impairing or releasing
the obligations of the Holders of the Securities hereunder to the
holders of Senior Indebtedness: (i) change the manner, place or
terms of payment or change or extend the time of payment of, or
renew or alter, Senior Indebtedness, or otherwise amend in any
manner Senior Indebtedness or any instrument evidencing the same
or any agreement under which Senior Indebtedness is outstanding;
(ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing Senior Indebtedness;
(iii) release any Person liable in any manner for the collection
of Senior Indebtedness; (iv) apply any amounts received to any
liability (other than Subordinated Indebtedness) of the Company
owing to holders of Senior Indebtedness; and/or (v) exercise or
refrain from exercising any rights against the Company and any
other Person.
SECTION 11.3. Subrogation of Securities.
Subject to the payment in full in cash of all amounts
then due (whether by acceleration of the maturity thereof or
otherwise) on account of all Senior Indebtedness at the time
outstanding, the Holders of the Securities shall be subrogated to
the rights of the holders of Senior Indebtedness to receive
Payments or Distributions of cash, property or securities of the
Company applicable to the Senior Indebtedness until the principal
of, premium, if any, and interest on the Securities shall be paid
in full; and, for the purposes of such subrogation, no Payments
or Distributions to the holders of Senior Indebtedness to which
the Holders of the Securities or the Trustee would be entitled
except for the provisions of this Article 11, and no payments
over pursuant to the provisions of this Article 11 to the holders
of Senior Indebtedness by Holders of the Securities or the
Trustee, shall, as between the Company, the Company's creditors
other than holders of Senior Indebtedness, and the Holders of the
Securities, be deemed to be a payment by the Company to or on
account of the Senior Indebtedness. It is understood that the
provisions of this Article 11 are and are intended solely for the
purpose of defining the relative rights of the Holders of the
Securities, on the one hand, and the holders of Senior
Indebtedness, on the other hand.
Nothing contained in this Article 11 or elsewhere in
this Indenture or in the Securities is intended to or shall
impair, as among the Company, its creditors other than the
holders of Senior Indebtedness, and the Holders of the
Securities, the obligation of the Company, which is absolute and
unconditional, to pay to the Holders of the Securities the
principal of, premium, if any, and interest on the Securities as
and when the same shall become due and payable in accordance with
their terms, or is intended to or shall affect the relative
rights of the Holders of the Securities and creditors of the
Company other than the holders of Senior Indebtedness, nor shall
anything herein or therein prevent the Trustee or the Holder of
any Security from exercising all remedies otherwise permitted by
applicable law upon default under this Indenture, subject to the
rights, if any, under this Article 11 of the holders of Senior
Indebtedness in respect of cash, property or securities of the
Company received upon the exercise of any such remedy. Nothing
in this Article 11 shall prevent conversions of Securities
pursuant to Article 10.
Upon any payment or distribution of assets of the
Company referred to in this Article 11, the Trustee, subject to
the provisions of Section 7.1, and the Holders of the Securities
shall be entitled to rely upon any order or decree made by any
court of competent jurisdiction in which any dissolution, winding
up, liquidation or reorganization proceedings are pending, or
certificate of the receiver, trustee in bankruptcy, liquidating
trustee, agent or other Person making such payment or
distribution, delivered to the Trustee or to the Holders of the
Securities, for the purpose of ascertaining the Persons entitled
to participate in such distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to
this Article 11.
SECTION 11.4. Authorization by Holders of Securities.
Each holder of a Security by his acceptance thereof
authorizes and directs the Trustee on his behalf to take such
action as may be necessary or appropriate to effectuate, as
between the Holder of the Security and the holders of Senior
Indebtedness, the subordination provided in this Article 11 and
appoints the Trustee his attorney-in-fact for any and all such
purposes including, without limitation, to execute, verify,
deliver and file any proofs of claim which any holder of Senior
Indebtedness may at any time require in order to prove and
realize upon any rights or claims pertaining to the Securities
and to effectuate the full benefit of the subordination contained
herein. If the Trustee shall fail to do so prior to 30 days
prior to the expiration of the period for filing such claims, any
such holder of Senior Indebtedness shall be deemed to be
irrevocably appointed the agent and attorney-in-fact of the
Holder to execute, verify, deliver and file any such proofs of
claim; provided that no holder of Senior Indebtedness shall incur
any liability for any failure to exercise its right to file any
such proofs of claim.
SECTION 11.5. Notices to Trustee.
The Company shall give prompt written notice to the
Trustee of any fact known to it which would prohibit the making
of any payment of moneys to or by the Trustee in respect of the
Securities pursuant to the provisions of this Article 11.
Notwithstanding the provisions of this Article 11 or any other
provision of this Indenture, the Trustee shall not be charged
with knowledge of the existence of any facts which would prohibit
the making of any payment of moneys to or by the Trustee in
respect of the Securities pursuant to the provisions of this
Article 11 unless and until a Trust Officer of the Trustee shall
have received at its Corporate Trust Office written notice
thereof from the Company or a holder or holders of Senior
Indebtedness or from any trustee or agent therefor; and, prior to
the receipt of any such written notice, the Trustee, subject to
the provisions of Section 7.1, shall be entitled in all respects
to assume that no such facts exist; provided, however, that if a
Trust Officer of the Trustee shall not have received at least
three Business Days prior to the date upon which by the terms
hereof any such moneys may become payable for any purpose
(including, without limitation, the payment of the principal of,
premium, if any, or interest on any Security) with respect to
such moneys the notice provided for in this Section 11.5, then,
anything herein contained to the contrary notwithstanding, the
Trustee shall have the full power and authority to receive such
moneys and to apply the same to the purpose for which they were
received and shall not be affected by any notice to the contrary
which may be received by it within three Business Days prior to
such date or at any time thereafter.
The Trustee shall be entitled to rely conclusively on
the delivery to it of a written notice by a Person representing
himself to be a holder of Senior Indebtedness (or a trustee on
behalf of such holder) to establish that such notice has been
given by a holder of Senior Indebtedness or a trustee or agent on
behalf of any such holder. In the event that the Trustee
determines in good faith that further evidence is required with
respect to the right of any Person as a holder of Senior
Indebtedness to participate in any payment or distribution
pursuant to this Article 11, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee
as to the amount of Senior Indebtedness held by such Person, the
extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the
rights of such Person under this Article 11, and if such evidence
is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such
Person to receive such payment.
SECTION 11.6. Trustee's Relation to Senior Indebtedness.
The Trustee in its individual capacity shall be
entitled to all the rights set forth in this Article 11 in
respect of any Senior Indebtedness at any time held by it, to the
same extent as any other holder of Senior Indebtedness, and
nothing in Section 7.11 or elsewhere in this Indenture shall
deprive the Trustee of any of its rights as such holder.
With respect to the holders of Senior Indebtedness, the
Trustee undertakes to perform or to observe only such of its
covenants and obligations as are specifically set forth in this
Article 11, and no implied covenants or obligations with respect
to the holders of Senior Indebtedness shall be read into this
Indenture against the Trustee. The Trustee shall not owe any
fiduciary duty to the holders of Senior Indebtedness and shall
not be liable to any such holder if it shall mistakenly pay over
or distribute to Holders of the Securities or the Company or any
other Person money or assets to which any holder of Senior
Indebtedness shall be entitled by virtue of this Article 11 or
otherwise.
SECTION 11.7. No Impairment of Subordination.
No right of any present or future holder of any Senior
Indebtedness to enforce subordination as herein provided shall at
any time in any way be prejudiced or impaired by any act or
failure to act on the part of the Company, the Trustee or the
Holder of any of the Securities or by any act, or failure to act,
in good faith, by any such holder of Senior Indebtedness, or by
any noncompliance by the Company, the Trustee or the Holder of
any of the Securities with the terms, provisions and covenants of
this Indenture, regardless of any knowledge thereof which any
such holder may have or otherwise be charged with.
SECTION 11.8. Article 11 Not To Prevent Events of Default.
The failure to make a payment on account of principal
of, premium, if any, or interest on the Securities by reason of
any provision in this Article 11 shall not be construed as
preventing the occurrence of an Event of Default with respect to
such Securities under Section 6.1.
SECTION 11.9. Paying Agents other than the Trustee.
In any case at any time any Paying Agent other than the
Trustee shall have been appointed by the Company and be then
acting hereunder, the term "Trustee" as used in this Article 11
shall in such case (unless the context shall otherwise require)
be construed as extending to and including such Paying Agent
within its meaning as fully for all intents and purposes as if
such Paying Agent were named in this Article 11 in addition to or
in place of the Trustee.
SECTION 11.10. Securities Senior to Subordinated Indebtedness.
The indebtedness represented by the Securities will be
senior and prior in right of payment to all Subordinated
Indebtedness, to the extent and in the manner provided in such
Subordinated Indebtedness.
ARTICLE XII.
RIGHT TO REQUIRE REPURCHASE
SECTION 12.1 Right to Require Repurchase.
In the event that there shall occur a Change in Control
(as defined in Section 12.5), each Holder shall have the right,
at such Holder's option, to require the Company to purchase, and
upon the exercise of such right, the Company shall, subject to
the provisions of Article XI, purchase, all or any part of such
Holder's Notes on the date (the "Repurchase Date") that is 75
days after the date the Company gives notice of the Change in
Control as contemplated in Section 12.2(1) at a price (the
"Repurchase Price") equal to 101% of the principal amount
thereof, together with accrued and unpaid interest to the
Repurchase Date. In connection with the exercise of the
repurchase right by a Holder prior to a Redemption Date, a
Holder's right to exercise his repurchase right shall terminate
at the close of business on the Business Day prior to the
Redemption Date.
SECTION 12.2. Notice; Method of Exercising Repurchase Right.
(1) On or before the 15th day after the occurrence of
a Change in Control, the Company or, at the request of the
Company, the Trustee (in the name and at the expense of the
Company), shall give notice of the occurrence of the Change in
Control and of the repurchase right set forth herein arising as a
result thereof by first-class mail, postage prepaid, to each
Holder of the Notes at such Holder's address appearing in the
Note Register. The Company shall also deliver a copy of such
notice of a repurchase right to the Trustee.
Each notice of a repurchase right shall state:
(a) the event constituting the Change in Control
and the date thereof;
(b) the Repurchase Date;
(c) the date by which the repurchase right must
be exercised;
(d) the Repurchase Price; and
(e) the procedures a Holder must follow to
exercise a repurchase right.
No failure of the Company to give the foregoing notice
shall limit any Holder's right to exercise a repurchase right.
The Trustee shall have no affirmative obligation to determine if
there shall have occurred a Change in Control.
(2) To exercise a repurchase right, a Holder shall
deliver to the Company (or an agent designated by the Company for
such purpose in the notice referred to in (1) above) and to the
Trustee on or before the tenth day prior to the Repurchase Date
(a) written notice of the Holder's exercise of such right, which
notice shall set forth the name of the Holder, the principal
amount of the Note or Notes (or portion of a Note) to be
repurchased and a statement that an election to exercise the
repurchase right is being made thereby and (b) the Note or Notes
with respect to which the repurchase right is being exercised,
duly endorsed for transfer to the Company. Such written notice
shall be irrevocable. If the Repurchase Date falls between any
Regular Record Date and the next succeeding Interest Payment
Date, Notes to be repurchased must be accompanied by payment from
the Holder of an amount equal to the interest thereon which the
registered Holder thereof is to receive on such Interest Payment
Date. A Holder that fails to exercise a repurchase right in
accordance with the terms hereof shall waive such repurchase
right but the rights of such Holder to receive principal of and
interest on the Notes and all other rights of such Holder under
this Indenture shall not be affected thereby.
(3) In the event a repurchase right shall be exercised
in accordance with the terms hereof, the Company shall on the
Repurchase Date pay or cause to be paid in cash to the Holder
thereof the Repurchase Price of the Note or Notes as to which the
repurchase right has been exercised. In the event that a
repurchase right is exercised with respect to less than the
entire principal amount of a surrendered Note, the Company shall
execute and deliver to the Trustee and the Trustee shall
authenticate for issuance in the name of the Holder a new Note or
Notes in the aggregate principal amount of the unrepurchased
portion of such surrendered Note.
SECTION 12.3. Deposit Of Repurchase Price.
On or prior to the Repurchase Date, the Company shall
deposit with the Trustee or with a Paying Agent (or, if the
Company is acting as its own Paying Agent, segregate and hold in
trust as provided in Section 2.4) an amount (in immediately
available funds) of money sufficient to pay the Repurchase Price
of the Notes which are to be repaid on the Repurchase Date.
SECTION 12.4. Notes Not Repurchased On Repurchase Date.
If any Note surrendered for repurchase shall not be so
paid on the Repurchase Date, the principal shall, until paid,
bear interest to the extent permitted by applicable law from the
Repurchase Date at the rate per annum borne by such Note.
SECTION 12.5. "Change In Control" Defined.
For purposes of this Article, "Change In Control" means
any of the following events that occur after the date of this
Indenture and on or prior to Maturity:
(1) all or substantially all of the Company's assets
are sold as an entirety to any person or related group of
persons;
(2) there shall be consummated any consolidation or
merger of the Company (a) in which the Company is not the
continuing or surviving corporation (other than a consolidation
or merger with a wholly-owned subsidiary of the Company in which
all Common Stock outstanding immediately prior to the
effectiveness thereof are changed into or exchanged for the same
consideration) or (b) pursuant to which the Common Stock are
converted into cash, securities or other property, in each case
other than a consolidation or merger of the Company in which the
holders of the Common Stock immediately prior to the
consolidation or merger have, directly or indirectly, at least a
majority of the common shares of the continuing or surviving
corporation immediately after such consolidation or merger; or
(3) any person, or any persons acting together which
would constitute a "group" for purposes of Section 13(d) of the
Securities Exchange Act of 1934 (a "Group"), together with any
Affiliates thereof, shall acquire beneficial ownership (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934)
of at least 50% of the total voting power of all classes of
capital shares of the Company entitled to vote generally in the
election of directors of the Company.
Notwithstanding anything to the contrary set forth in
this definition, a Change in Control shall not be deemed to have
occurred:
(A) under paragraph (3) above, solely by virtue of the
Company, any Subsidiary, any employee share purchase plan, share
option plan or other share incentive plan or program, retirement
plan or automatic dividend reinvestment plan or any substantially
similar plan of the Company or any Subsidiary or any Person
holding securities of the Company for or pursuant to the terms of
any such employee benefit plan, filing or becoming obligated to
file a report under or in response to Schedule 13D or Schedule
14D-1 (or any successor schedule, form or report) under the
Securities Exchange Act of 1934 disclosing beneficial ownership
by it of shares or securities of the Company, whether at least
50% of the total voting power referred to in paragraph (3) above,
or otherwise; a recapitalization or a leveraged buyout or similar
transaction involving members of management or their affiliates
will constitute a Change in Control if it meets the foregoing
definition; or
(B) under paragraphs (1), (2) or (3) above if:
(i) the Current Market Price of the Common Stock
on the date the Change in Control shall have occurred is at least
equal to 105% of the Conversion Price in effect immediately
preceding the time of such Change in Control; or
(ii) all of the consideration (excluding cash
payments for fractional shares) in the transaction giving rise to
such Change in Control to the holders of Common Stock consists of
common shares that are, or immediately upon issuance will be,
listed on a national securities exchange or quoted on the Nasdaq
National Market, and as a result of such transaction the Notes
become convertible solely into such common shares; or
(iii) the consideration in the transaction
giving rise to such Change in Control to the holders of Common
Stock consists of cash, securities that are, or immediately upon
issuance will be, listed on a national securities exchange or
quoted on the Nasdaq National Market, or a combination of cash
and such securities, and the aggregate fair market value of such
consideration (which, in the case of such securities, shall be
equal to the average of the daily Closing Prices of such
securities during the ten consecutive Trading Days commencing
with the sixth Trading Day following consummation of such
transaction) is at least 105% of the Conversion Price in effect
on the date immediately preceding the closing date of such
transaction.
If a Change in Control shall have occurred under
paragraph (2) above, the Company shall deliver the Officers'
Certificate and Opinion of Counsel called for under Section 13.4
as well as the notices called for under Section 10.5.
For purposes of this definition of Change of Control,
"Current Market Price" on any date means the average daily
Closing Prices for the five consecutive Trading Days selected by
the Company commencing not more than ten Trading Days before, and
ending not later than, the date in question; "Closing Price" for
any Trading Day means the last reported sale price (or, if none
on any day, the mean between the bid and asked quotations on such
day) of the securities in question for such date, in either case
on the New York Stock Exchange or, if the securities are not
listed or admitted to trading on such exchange, on the principal
national securities exchange on which such securities are listed
or admitted to trading or, if not listed or admitted to trading
on any national securities exchange, on The Nasdaq National
Market or, if the securities are not listed or admitted to
trading on any national securities exchange or quoted on the
Nasdaq National Market, the average of the closing bid and asked
prices in the over-the-counter market as furnished by any New
York Stock Exchange member firm selected by the Company for such
purpose; and "Trading Day", with respect to any stock exchange or
securities market, means any Monday, Tuesday, Wednesday, Thursday
or Friday on which such stock exchange or securities market is
open for business.
ARTICLE XIII.
MISCELLANEOUS
SECTION 13.1. Trust Indenture Act Controls.
If any provision of this Indenture limits, qualifies or
conflicts with another provision which is required to be included
in this Indenture by the TIA, the required provisions shall
control. The provisions of TIA Sections 310 through 317 that
impose duties on any Person (including the provisions
automatically deemed included herein unless expressly excluded by
this Indenture) are a part of and govern this Indenture, whether
or not physically contained herein.
SECTION 13.2. Notices.
Any notices or other communications required or
permitted hereunder shall be in writing, and shall be
sufficiently given if made by hand delivery, or first class mail,
postage prepaid (except that any notice by the Trustee to the
Company of a default or an Event of Default under this Indenture
shall be by registered or certified mail, postage prepaid, return
receipt requested), or by a nationally-recognized overnight
express courier service (which notices or communications shall be
deemed received, in the case of the Company, the business day
after the receipt thereof by such service and, in the case of the
Trustee, upon receipt), addressed as follows:
if to the Company:
Comptek Research, Inc.
2732 Transit Road
Buffalo, New York 14224
Attention: President
if to the Trustee:
The Bank of New York
Highwoods Center
10161 Centurion Parkway
Jacksonville, Florida 32256
Attention: Corporate Trust Department
The Company or the Trustee by notice to the other may designate
additional or different addresses as shall be furnished in
writing by either party. Any notice or communication to the
Company or the Trustee shall be deemed to have been given or made
as of the date so delivered if personally delivered, and five (5)
calendar days after mailing if sent by registered or certified
mail (except that a notice of change of address shall not be
deemed to have been given until actually received by the
addressee).
Any notice or communication mailed to a Securityholder
shall be mailed to the address of such Securityholder as it
appears on the registration books of the Registrar and shall be
sufficiently given if so mailed within the time prescribed.
Failure to mail a notice or communication to a
Securityholder or any defect in it shall not affect its
sufficiency with respect to other Securityholders. If a notice
or communication is mailed in the manner provided above, it is
duly given, whether or not the addressee receives it.
In case by reason of the suspension of regular mail
service, or by reason of any other cause, it shall be impossible
to mail any notice, as required by this Indenture, then such
method of notification as shall be made with the approval of the
Trustee shall constitute a sufficient mailing of such notice.
If the Company mails any notice or communication to
Securityholders, it shall mail a copy to the Trustee and all
Agents at the same time.
SECTION 13.3. Communications by Holders with Other Holders.
Securityholders may communicate pursuant to TIA
312(b) with other Securityholders with respect to their rights
under this Indenture or the Securities. The Company, the
Trustee, the Registrar and anyone else shall have the protection
of TIA 312(c).
SECTION 13.4. Certificate and Opinion as to Conditions
Precedent.
Upon any request or application by the Company to the
Trustee to take any action under this Indenture, the Company
shall furnish to the Trustee:
(1) an Officers' Certificate (which shall include
the statements set forth in Section 13.5) stating that,
in the opinion of the signers, all conditions
precedent, if any, provided for in this Indenture
relating to the proposed action have been complied
with; and
(2) an Opinion of Counsel (which shall include
the statements set forth in Section 13.5) stating that,
in the opinion of such counsel, all such conditions
precedent have been complied with.
SECTION 13.5. Statements Required in Certificate and Opinion.
Each Certificate and Opinion with respect to compliance
with a condition or covenant provided for in this Indenture shall
include:
(1) a statement that the Person making such
certificate or opinion has read such covenant or
condition;
(2) a brief statement as to the nature and scope
of the examination or investigation upon which the
statements or opinions contained in such certificate or
opinion are based;
(3) a statement that, in the opinion of such
Person, he has made such examination or investigation
as is necessary to enable him to express an informed
opinion as to whether or not such covenant or condition
has been complied with; and
(4) a statement as to whether or not, in the
opinion of such Person, such covenant or condition has
been complied with.
SECTION 13.6. Rules by Trustee and Agents.
The Trustee may make reasonable rules for action by or
at a meeting of Securityholders. The Registrar, Paying Agent or
Conversion Agent may make reasonable rules for its functions.
SECTION 13.7. Record Date.
Whenever the Company or the Trustee solicits an act of
Securityholders, the Company or the Trustee may fix in advance of
the solicitation of such act a date as the record date for
determining Securityholders entitled to perform said act. The
record date shall be not more than 15 days prior to the date
fixed for the solicitation of said act.
SECTION 13.8. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on
which banks or trust companies in the city in which either the
Trustee or the Company is located are not required to be open.
If a payment date is a Legal Holiday at a place of payment,
payment may be made at that place on the next succeeding day that
is not a Legal Holiday, and no interest shall accrue for the
intervening period.
SECTION 13.9. Governing Law.
The laws of the State of New York shall govern this
Indenture and the Securities without regard to principles of
conflicts of law. Each of the parties hereto agrees to submit to
the jurisdiction of the Courts of the State of New York and the
U.S. Federal Courts, in each case sitting in the Erie County, New
York, and waives any objection as to venue or forum non
conveniens.
SECTION 13.10. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another
indenture, loan or debt agreement of the Company or a Subsidiary.
Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 13.11. No Recourse Against Others.
No stockholder, director or officer, as such, past,
present or future, of the Company or of any successor corporation
or trust shall have any liability for any obligation of the
Company under the Securities or the Indenture or for any claim
based on, in respect of or by reason of, such obligations or
their creation. Each Holder of a Security by accepting a
Security waives and releases all such liability. The waiver and
release are part of the consideration for the issuance of the
Securities.
SECTION 13.12. Successors.
All agreements of the Company in this Indenture and the
Securities shall bind its successor. All agreements of the
Trustee in this Indenture shall bind its successor.
SECTION 13.13. Multiple Counterparts.
The parties may sign multiple counterparts of this
Indenture. Each signed counterpart shall be deemed an original,
but all of them together represent the same agreement.
SECTION 13.14. Table of Contents, Headings, etc.
The table of contents, cross-reference sheet and
headings of the Articles and Sections of this Indenture have been
inserted for convenience of reference only, are not to be
considered a part hereof, and shall in no way modify or restrict
any of the terms or provisions hereof.
SECTION 13.15. Severability.
In case any provision in this Indenture or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby, and a
Holder shall have no claim therefor against any party hereto.
(Signature page follows.)
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, all as of the date first written
above.
COMPTEK RESEARCH, INC.
a New York corporation
By: /s/John J. Sciuto
Name: John Sciuto
Title: Chairman, President and
Chief Executive Officer
THE BANK OF NEW YORK,
as Trustee
By: /s/Robert Seifert
Name: Robert Seifert
Title: Agent
EXHIBIT A
FORM OF SECURITY
[Attached]
FORM OF SECURITY
[FORM OF FACE OF SECURITY]
THIS SECURITY HAS BEEN ACQUIRED BY THE HOLDER FOR THE PURPOSE OF
INVESTMENT AND NOT WITH A VIEW TO OR FOR SALE IN CONNECTION WITH
ANY DISTRIBUTION. THIS SECURITY (OR ITS PREDECESSOR) HAS NOT
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), OR ANY STATE SECURITIES LAWS AND NEITHER THIS
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION
OR AN APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS
SECURITY IS HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON AN
EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF,
REPRESENTS, ACKNOWLEDGES AND AGREES FOR THE BENEFIT OF THE
COMPANY THAT: (I) IT HAS ACQUIRED A "RESTRICTED" SECURITY WHICH
HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL
NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY EXCEPT (A) TO
COMPTEK RESEARCH, INC., (B) PURSUANT TO A REGISTRATION STATEMENT
WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, OR
(C) IN ACCORDANCE WITH RULE 144 UNDER THE SECURITIES ACT OR
PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, (AND CONFIRMED IN AN OPINION
OF COUNSEL ACCEPTABLE IN FORM AND SUBSTANCE TO THE ISSUER OF THIS
SECURITY IF THE ISSUER SO REQUESTS) AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF
THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION; AND
(III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY
ANY PURCHASER OF THIS SECURITY FROM IT OF THE RESALE RESTRICTIONS
SET FORTH IN (II) ABOVE.
No. R-
COMPTEK RESEARCH, INC.
8-1/2% Convertible Subordinated Debenture Due 2004
COMPTEK RESEARCH, INC., a New York corporation,
promises to pay to _________________________________________ or
registered assigns, the principal sum of
____________________________________________ Dollars, on April 1,
2004.
Interest Payment Dates: April 1 and October 1
Record Dates: March 15 and September 15
Additional provisions of this Security are set forth on other
side of this Security.
Dated: March 24, 1999
CERTIFICATE OF AUTHENTICATION COMPTEK RESEARCH, INC.
The Bank of New York
as Trustee, certifies that this
is one of the Securities referred
to in the within mentioned By:___________________
Indenture. President, Chief Executive
Officer
By:______________________ and Chairman of the Board of
Authorized Signatory Directors
By:___________________
Chief Financial Officer, Vice
President
and Treasurer
SEAL
[FORM OF REVERSE OF SECURITY]
COMPTEK RESEARCH, INC.
8-1/2% Convertible Subordinated Debenture Due 2004
1. Interest. Comptek Research, Inc., a New York
corporation (the "Company"), promises to pay interest on the
principal amount of this Security at the rate per annum shown
above. The Company will pay interest semiannually on April 1 and
October 1 of each year beginning October 1, 1999. Interest on
the Securities will accrue from the most recent date to which
interest has been paid or, if no interest has been paid, from
March 24, 1999; provided that, if there is no existing Default in
the payment of interest, and if this Security is authenticated
between a record date referred to on the face hereof and the next
succeeding interest payment date, interest shall accrue from such
interest payment date. Interest will be computed on the basis of
a 360 day year of twelve 30-day months.
2. Method of Payment. The Company will pay interest
on the Securities (except defaulted interest) to the persons who
are the registered Holders of the Securities at the close of
business on the September 15 or March 15 immediately preceding
the interest payment date. Holders must surrender Securities to
a Paying Agent to collect principal and premium payments. The
Company will pay principal, premium and interest in money of the
United States that at the time of payment is legal tender for
payment of public and private debts. The Company, however, may
pay principal, premium and interest by its check payable in such
money. It may mail an interest check to a Holder's registered
address.
The payment of principal of and premium, if any, on this
Security shall be payable only upon surrender of this Security at
the office or agency of the Paying Agent in the Borough of
Manhattan, City and State of New York. Payments of principal of,
premium, if any, and interest on this Security shall be made at
the office or agency of the Trustee maintained in the Borough of
Manhattan, City and State of New York, or, in the case of any
such payments other than the payment of principal and premium, if
any, at the Company's option, by check mailed to the Person
entitled thereto at such Person's address last appearing on the
Company's register.
3. Registrar and Agents. Initially, The Bank of New
York will act as Registrar, Paying Agent, Conversion Agent and
agent for service of notices and demands. The Company may change
any Registrar, co-registrar, Paying Agent, Conversion Agent and
agent for service of notices and demands without notice. The
Company or any of its Subsidiaries may act as Paying Agent or
Conversion Agent. The address of The Bank of New York is 101
Barclay Street, New York, New York 10286.
4. Indenture; Limitations. The Company issued the
Securities under an Indenture, dated as of March 24, 1999 (the
"Indenture"), between the Company and The Bank of New York, as
trustee (the "Trustee"). Capitalized terms herein are used as
defined in the Indenture unless otherwise defined herein. The
terms of the Securities include those stated in the Indenture and
those made part of the Indenture by reference to the Trust
Indenture Act of 1939 (15 U.S. Code 77aaa-77bbbb) as in effect
on the date of the Indenture. The Securities are subject to all
such terms, and the Holders of the Securities are referred to the
Indenture and said Act for a statement of them.
The Securities are general unsecured obligations of the
Company limited to $20,000,000 principal amount. The Indenture
imposes certain limitations on the ability of the Company to,
among other things, make payments in respect of its Capital
Stock, merge or consolidate with any other Person and sell,
lease, transfer or otherwise dispose of its properties or assets.
5. Optional Redemption by the Company. The Company
may, at its option, at any time on or after March 1, 2002, redeem
all of the Debentures or some of them, on at least 30 days' but
not more than 60 days' written notice to each holder of
Debentures to be redeemed at his or her registered address, at
the redemption prices set forth below. The redemption prices
(expressed as a percentage of principal amount) are as follows
for the 12-month period beginning on or after March 1 of the
following years:
Redemption
Year Price
2002 103.4%
2003 101.7%
2004 and thereafter 100.0%
The Debentures may not be so redeemed before March 1, 2002.
6. Certain Rights to Require Repurchase of Debentures
by the Company. In the event that there shall occur a Change in
Control of the Company, each Holder shall have the right, at such
Holder's option, to require the Company to purchase, all or any
part of such Holder's Notes, 75 days after the date the Company
gives notice of the Change in Control as contemplated in the
Indenture, at a price equal to 101% of the principal amount
thereof, together with accrued and unpaid interest.
7. Notice of Redemption. Notice of redemption will be
mailed at least 30 days but not more than 60 days before the
Redemption Date to each Holder of Securities to be redeemed at
his registered address. Securities in denominations larger than
$1,000 principal amount may be redeemed in part, but only in
whole multiples thereof. On and after the Redemption Date
interest ceases to accrue on Securities or portions of them
called for redemption.
8. Conversion. A Holder of a Security may convert
such Security into shares of common stock of the Company after
the effective date of the Registration Statement and before the
close of business on April 1, 2004. If the Security is called
for redemption, the Holder may convert it at any time before the
close of business on the date fixed for such redemption. The
initial conversion price is $9.50 per share, subject to
adjustment in certain events. To determine the number of shares
issuable upon conversion of a Security, divide the principal
amount to be converted by the conversion price in effect on the
conversion date. The Company will deliver a check for any
fractional share.
To convert a Security, a Holder must (1) complete and
sign the conversion notice on the back of the Security,
(2) surrender the Security to the Conversion Agent, (3) furnish
appropriate endorsements and transfer documents if required by
the Registrar or Conversion Agent and (4) pay any transfer or
similar tax if required. No payment or adjustment is to be made
on conversion for interest accrued hereon or for dividends on
shares of common stock issued on conversion; provided, however,
that if a Security is surrendered for conversion after the record
date for a payment of interest and on or before the interest
payment date, then, notwithstanding such conversion, the interest
falling due to such interest payment date will be paid to the
Person in whose name the Security is registered at the close of
business on such record date and any Security surrendered for
conversion during the period from the close of business on any
regular record date to the opening of business on the
corresponding interest payment date must be accompanied by
payment of an amount equal to the interest payable on such
interest payment date. A Holder may convert a portion of a
Security if the portion is $1,000 principal amount or an integral
multiple thereof.
If the Company is a party to a consolidation or merger
or a transfer or lease of all or substantially all of its assets,
the right to convert a Security into shares of common stock may
be changed into a right to convert it into securities, cash or
other assets of the Company or another Person.
9. Subordination. This Security is subordinated to
all Senior Indebtedness of the Company. To the extent and in the
manner provided in the Indenture, Senior Indebtedness must be
paid before any payment may be made to any Holders of Securities.
Any Securityholder by accepting this Security agrees to such
subordination and authorizes the Trustee to give it effect.
In addition to all other rights of Senior Indebtedness
described in the Indenture, the Senior Indebtedness shall
continue to be Senior Indebtedness and entitled to the benefits
of the subordination provisions irrespective of any amendment,
modification or waiver of any term of any instrument relating to
the Senior Indebtedness or extension or renewal of the Senior
Indebtedness.
10. Denominations, Transfer, Exchange. The Securities
issued under the Indenture are in the aggregate principal amount
of up to $20,000,000. The Securities are in registered form
without coupons in denominations of $1,000 principal amount and
integral multiples thereof. A Holder may register the transfer
of or exchange Securities in accordance with the Indenture. The
Registrar may require a Holder, among other things, to furnish
appropriate endorsements and transfer documents and to pay any
taxes and fees required by law or permitted by the Indenture.
The Registrar need not register the transfer of or exchange any
Securities selected for redemption or register the transfer of or
exchange any Securities for a period of 15 days before a
selection of Securities to be redeemed.
11. Persons Deemed Owners. The registered Holder of a
Security may be treated as its owner for all purposes.
12. Unclaimed Money. If money for the payment of
principal or interest on any Securities remains unclaimed for two
years, the Trustee and the Paying Agent will pay the money back
to the Company at its written request. After that, Holders may
look only to the Company for payment.
13. Discharge Prior to Redemption or Maturity. The
Indenture will be discharged and canceled except for certain
sections thereof upon payment of all the Securities, or upon the
irrevocable deposit with the Trustee of funds or U.S. Government
Obligations maturing on or before such payment date or Redemption
Date, sufficient to pay principal, premium, if any, and interest
on such payment or redemption.
14. Amendment and Waiver. Subject to certain
exceptions, without notice to the Holders of the Securities, the
Indenture or the Securities may be amended with the consent of
the Holders of at least 66-2/3% in principal amount of the
Securities then outstanding and any existing default or
compliance with any provision may be waived with the consent of
the Holders of a majority in principal amount of the Securities
then outstanding. Without the consent of or notice to any
Securityholder, the Company may amend or supplement the Indenture
or the Securities to, among other things, provide for
uncertificated Securities, to cure any ambiguity, defect or
inconsistency or make any other change that does not adversely
affect the rights of any Securityholder.
15. Successors. When a successor assumes all the
obligations of its predecessor under the Securities and the
Indenture, the predecessor will be released from those
obligations.
16. Defaults and Remedies. If an Event of Default, as
defined in the Indenture (other than a Event of Default relating
to bankruptcy of the Company), occurs and is continuing, the
Trustee or the Holders of a majority in principal amount of
Securities may declare all the Securities to be due and payable
immediately in the manner and with the effect provided in the
Indenture. If an Event of Default relating to bankruptcy of the
Company occurs, then all Securities shall become immediately due
and payable without any declaration or act on the part of the
Trustee or any Holder. Holders of Securities may not enforce the
Indenture or the Securities except as provided in the Indenture.
The Trustee may require indemnity satisfactory to it, subject to
the provisions of the TIA, before it enforces the Indenture or
the Securities. Subject to certain limitations, Holders of a
majority in principal amount of the Securities then outstanding
may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Holders of Securities notice of any
continuing default (except a default in payment of principal or
interest) if it determines that withholding notice is in their
interests. The Company is required to file periodic reports with
the Trustee as to the absence of any Default or Event of Default.
17. Trustee Dealings with the Company. The Bank of New
York, the Trustee under the Indenture, in its individual or any
other capacity, may make loans to, accept deposits from, and
perform services for the Company or its Affiliates, and may
otherwise deal with the Company or its Affiliates, as if it were
not Trustee.
18. No Recourse Against Others. No stockholder,
director, officer or incorporator, as such, past, present or
future, of the Company or any successor corporation shall have
any liability for any obligation of the Company under the
Securities or the Indenture or for any claim based on, in respect
of or by reason of, such obligations or their creation. Each
Holder of a Security by accepting a Security waives and releases
all such liability. The waiver and release are part of the
consideration for the issuance of the Securities.
19. Authentication. This Security shall not be valid
until the Trustee signs the certificate of authentication on the
other side of this Security.
20. Abbreviations. Customary abbreviations may be used
in the name of a Securityholder or an assignee, such as: TEN COM
(=tenants in common), TEN ENT (=tenants by the entireties), JT
TEN (=joint tenants with rights of survivorship and not as
tenants in common), CUST (=Custodian), and U/G/M/A (=Uniform
Gifts to Minors Act).
The Company will furnish to any Securityholder upon
written request and without charge a copy of the Indenture. It
also will furnish the text of this Security in larger type.
Requests may be made to: Comptek Research, Inc., 2732 Transit
Road, Buffalo, New York 14224. Attention: President.
TRANSFER NOTICE
If you, the Holder, wants to assign this Security, fill in the
form below and have your signature guaranteed:
For value received, I or we assign and transfer this Security to
________________________________________________________________
(INSERT ASSIGNEE'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
________________________________________________________________
________________________________________________________________
________________________________________________________________
(Print or type assignee's name, address and zip code)
____________________________________________________________agent
to transfer this Security on the books of the Company. The agent
may substitute another to act for him.
In connection with the transfer of this Security, the
undersigned certifies that:
(Check one)
[ ] (a) This Security is being
transferred to Comptek Research, Inc.
[ ] (b) Transfer other than those
above in connection with which the
Company and the Trustee has received an
opinion of counsel (satisfactory to them
in form and substance) to the effect that
the transfer is being made pursuant to an
exemption from, or in a transaction not
subject to, the registration requirements
of the Securities Act.
Date:___________________________________________________________
Your
signature:______________________________________________________
(Sign exactly as your name appears on the other side
of this Security)
Signature Guaranteed
by*:________________________________________________________
* Signature must be guaranteed by an eligible guarantor
institution within the meaning of Securities and Exchange
Commission Rule 17Ad-15 (including banks, stock brokers, savings
and loan associations, national securities exchanges, registered
securities associations, clearing agencies and credit unions)
with membership or participation in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature
guarantee medallion program as may be approved by the Registrar
in addition to, or substitution for, STAMP, if this Security is
to be delivered other than to and in the name of the registered
holder.
IF NONE OF THE FOREGOING BOXES IS CHECKED, THE TRUSTEE SHALL NOT
BE OBLIGATED TO REGISTER THE TRANSFER OF THIS SECURITY UNLESS AND
UNTIL THE CONDITIONS TO ANY SUCH TRANSFER OF REGISTRATION SET
FORTH HEREIN, ON THE FACE HEREOF AND IN THE INDENTURE SHALL HAVE
BEEN SATISFIED.
CONVERSION NOTICE
To convert this Security into shares of common stock of the
Company, check the box:
To convert only part of this Security, state the principal amount
to be converted (which must be a minimum of $1,000 or any
multiple thereof):
$
________________________________________________________________
________________________________________________________________
_______________________________________________________________
If you want the Security certificate, if any, made out in another
person's name, fill in the form below:
(INSERT OTHER PERSON'S SOCIAL SECURITY OR
TAX IDENTIFICATION NUMBER)
________________________________________________________________
________________________________________________________________
________________________________________________________________
(Print or type assignee's name, address and zip code)
Date:.__________________________________________________________
Your
signature:._____________________________________________________
(Sign exactly as your name appears on the other side of this
Security)
Signature Guaranteed
By*:________________________________________________________
*Signature must be guaranteed by an eligible guarantor
institution within the meaning of Securities and Exchange
Commission Rule 17Ad-15 (including banks, stock brokers, savings
and loan associations, national securities exchanges, registered
securities associations, clearing agencies and credit unions)
with membership or participation in the Securities Transfer
Agents Medallion Program ("STAMP") or such other signature
guarantee medallion program as may be approved by the Registrar
in addition to, or substitution for, STAMP, if this Security is
to be delivered other than to and in the name of the registered
holder.
Exhibit 4.1(c)
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made
and entered into as of March 24, 1999, by and between COMPTEK
RESEARCH, INC., a New York corporation (the "Company"), and the
purchaser whose name and address is set forth on the signature
page hereof (the "Purchaser").
This Agreement is made pursuant to the Purchase Agreement,
dated as of March 19, 1999, between the Company and the Purchaser
(the "Purchase Agreement"). In order to induce the Purchaser to
enter into the Purchase Agreement, the Company has agreed to
provide for the benefit of the holders (initially consisting of
the Purchaser and the Other Purchasers as defined below) of the
Company's Transfer Restricted Securities (as defined below) the
registration rights set forth in this Agreement. The execution
of this Agreement is a condition to the Closing under the
Purchase Agreement.
The Company proposes to enter into substantially this same
form of registration rights agreement with certain other
investors (the "Other Purchasers") and expects to complete sales
of the Debentures to them. The Purchaser and the Other
Purchasers are hereinafter sometimes collectively referred to as
the "Purchasers," and this Agreement and the registration rights
agreements executed by the Other Purchasers are hereinafter
sometimes collectively referred to as the "Agreements."
The parties hereby agree as follows:
1. Definitions
As used in this Agreement, the following capitalized terms
shall have the following meanings:
Closing: Has the meaning such term is given in the Purchase
Agreement.
Closing Date: Has the meaning such term is given in the
Purchase Agreement.
Common Stock: The shares of common stock of the Company,
$.02 par value per share.
Debentures: The Company's 8 1/2% Convertible Subordinated
Debentures due April 1, 2004 being sold and issued pursuant to
the Purchase Agreement and the Indenture in an aggregate
principal amount of up to $20 million.
Effective Date: The date the Shelf Registration is declared
effective by the SEC.
Exchange Act: The Securities Exchange Act of 1934, as
amended from time to time.
Indemnified Holder: See Section 6(a).
Indenture: The Indenture, dated as of March 24, 1999,
between the Company and The Bank of New York, as Trustee.
NASD: National Association of Securities Dealers, Inc.
Person: Any individual, partnership, corporation, trust or
unincorporated organization, or government (or any agency,
instrumentality or political subdivision thereof).
Prospectus: The prospectus included in any Registration
Statement, as amended or supplemented by any prospectus
supplement, with respect to the terms of the offering of any
portion of the Transfer Restricted Securities, pursuant to any
registration covered by the Registration Statement and by all
other amendments and supplements to the prospectus, including
post-effective amendments and all material incorporated by
reference in such prospectus.
Registrable Securities: The Debentures and the shares of
Common Stock issuable upon conversion of the Debentures; provided
that a Debenture or a share of Common Stock, as the case may be,
ceases to be a Registrable Security when it is no longer a
Transfer Restricted Security.
Registration Expenses. See Section 5.
Registration Statement: Any registration statement of the
Company which covers any of the Transfer Restricted Securities
pursuant to the provisions of this Agreement, including the
Prospectus, amendments and supplements to such Registration
Statement, including post-effective amendments, and all exhibits
and all material incorporated by reference in such Registration
Statement.
Securities Act: The Securities Act of 1933, as amended from
time to time.
SEC: The Securities and Exchange Commission.
Selling Expenses: All underwriting discounts, selling
commissions and stock transfer taxes applicable to the
Registrable Securities.
Shelf Registration: See Section 3.
Transfer Restricted Debentures: The Debentures upon
original issuance thereof and at all times subsequent thereto
until the earlier of the following: (i) such Debentures have
been effectively registered under Section 5 of the Securities Act
and disposed of in accordance with the Registration Statement
covering them or (ii) such Debentures have been distributed to
the public pursuant to Rule 144 (or any similar provisions then
in force).
Transfer Restricted Securities: The Transfer Restricted
Debentures and the Transfer Restricted Shares.
Transfer Restricted Shares: The shares of Common Stock
issuable upon conversion of the Debentures until the earlier of
the following: (i) such shares of Common Stock have been
effectively registered under Section 5 of the Securities Act and
disposed of in accordance with the Registration Statement
covering them or (ii) such shares of Common Stock have been
distributed to the public pursuant to Rule 144 (or any similar
provisions then in force).
Trustee: The Trustee under the Indenture.
2. Securities Subject to this Agreement
(a) Registrable Securities. The securities entitled to the
benefits of this Agreement are the Registrable Securities.
(b) Holders of Registrable Securities. A Person is deemed to be
a holder of Registrable Securities whenever such Person is the
beneficial owner of Registrable Securities. The Company is
entitled to treat the record holder of Registrable Securities as
beneficial owner of Registrable Securities unless otherwise
notified by such holder.
3. Shelf Registration: Timing of Filing, Effectiveness and
Period of Usability
Subject to the provisions of Section 4 hereof, the Company
shall use its best efforts to file a "shelf" Registration
Statement (a "Shelf Registration") on Form S-3 or any other
appropriate form pursuant to Rule 415 (or similar rule that may
be adopted by the SEC) under the Securities Act for all the
Registrable Securities, which form shall be available for the
sale of the Registrable Securities in accordance with the
intended method or methods of distribution thereof, as promptly
as practicable after the Closing and in any event not later than
30 days after the Closing and to cause such Shelf Registration
Statement to be declared effective as promptly as practicable
after the Closing and in any event not later than 90 days after
the Closing.
The Company agrees to use its best efforts to keep the
Registration Statement continuously effective and usable for
resale of Registrable Securities until two (2) years from the
Effective Date or such shorter period which will terminate when
all the Registrable Securities covered by such Registration
Statement have been sold pursuant to such Registration Statement
or when all Registrable Securities otherwise have been sold
pursuant to Rule 144 or are freely tradeable in essentially the
same manner as contemplated in Section 4 below (the
"Effectiveness Period").
4. Registration Procedures
In connection with the Company's obligation to file a
Registration Statement as provided in Section 3 hereof, the
Company will as expeditiously as possible:
(a) before filing a Registration Statement or Prospectus or any
amendments or supplements thereto, furnish to Purchaser and the
holders of the Registrable Securities covered by such
Registration Statement a copy of all such documents proposed to
be filed, which documents will be subject to the review of
Purchaser and such holders and the Company will not file any
Registration Statement or amendment thereto or any Prospectus or
any supplement thereto to which the holders of a majority in
aggregate principal amount of the Registrable Securities covered
by such Registration Statement shall reasonably object (provided
that the Company may assume, for the purposes of the foregoing
that any holder of Registrable Securities has no objection if the
Company has not received notice from such holder within five
business days after delivery of such documents to such holder);
(b) prepare and file with the SEC such amendments and post-
effective amendments to the Registration Statement, and such
supplements to the Prospectus, as may be required by the rules,
regulations or instructions applicable to the registration form
utilized by the Company or by the Securities Act or rules and
regulations thereunder for shelf registration or otherwise
necessary to keep the Registration Statement effective for the
applicable period and cause the Prospectus as so supplemented to
be filed pursuant to Rule 424 under the Securities Act; and
comply with the provisions of the Securities Act with respect to
the disposition of all securities covered by such Registration
Statement during the applicable period in accordance with the
intended methods of disposition by the sellers thereof set forth
in such Registration Statement or supplement to the Prospectus;
(c) notify Purchaser and the holders of Registrable Securities
promptly, and confirm such advice in writing:
(1) when the Prospectus or any Prospectus supplement or post-
effective amendment has been filed, and, with respect to the
Registration Statement or any post-effective amendment, when the
same has become effective;
(2) of the issuance by the SEC of any stop order suspending the
effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose;
(3) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Registrable
Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose; and
(4) of the happening of any event which makes any statement made
in the Registration Statement, the Prospectus or any document
incorporated therein by reference untrue or which requires the
making of any changes in the Registration Statement, the
Prospectus or any document incorporated therein by reference in
order to make the statements therein not misleading.
(d) make every reasonable effort to obtain the withdrawal of any
order suspending the effectiveness of the Registration Statement
at the earliest possible moment;
(e) furnish, without charge, to Purchaser and each selling
holder of Registrable Securities, at least one conformed copy of
the Registration Statement and any post-effective amendment
thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits
(including those incorporated by reference);
(f) deliver to Purchaser and each selling holder of Registrable
Securities without charge, as many copies of the Prospectus
(including each preliminary prospectus) and any amendment or
supplement thereto as such Persons may reasonably request; the
Company consents to the use of the Prospectus or any amendment or
supplement thereto by each of Purchaser and the selling holders
of Registrable Securities in connection with the offering and
sale of the Registrable Securities covered by the Prospectus or
any amendment or supplement thereto;
(g) at least 14 days prior to filing of the Registration
Statement, use its best efforts to furnish by certified mail to
the beneficial holders of the Registrable Securities, at the
addresses of record specified on the transfer books held by the
Trustee, notice of the Company's intention to file a Registration
Statement and request that all holders of Registrable Securities
desiring to sell their Registrable Securities pursuant to the
Registration Statement notify the Company promptly in writing;
(h) cooperate with Purchaser and the selling holders of
Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to
be sold and not bearing any restrictive legends;
(i) use its best efforts to cause the Registrable Securities
covered by the Registration Statement to be registered with or
approved by such governmental agencies or authorities as may be
necessary to enable the seller or sellers thereof to consummate
the disposition of such Registrable Securities in such
jurisdictions within the United States of America as the sellers
may specify in response to inquiries to be made by the Company,
provided that the Company will not be required to qualify
generally to do business in any jurisdiction where it is not then
so qualified or to take any action which would subject it to
general service of process in any such jurisdiction where it is
not then so subject;
(j) if any event shall occur as a result of which the Board of
Directors of the Company shall determine that it is necessary,
based on the opinion of counsel for the Company or for the
holders of a majority of the Registrable Securities, to amend or
supplement the Prospectus in order to make the Prospectus not
misleading in the light of the circumstances existing at the time
it is delivered to a purchaser, prepare a supplement or post-
effective amendment to the Registration Statement or the related
Prospectus or any document incorporated therein by reference or
file any other required document so that, as thereafter delivered
to the purchasers of the Registrable Securities, the Prospectus
will not contain an untrue statement of a material fact or omit
to state any material fact necessary to make the statements
therein not misleading;
(k) obtain a CUSIP number for all Registrable Securities (unless
already obtained), not later than the Effective Date;
(l) make available for inspection during normal business hours
by a representative of the holders of a majority of Registrable
Securities and any attorney or accountant retained by such
representative, all material financial and other records,
pertinent and material corporate documents and properties of the
Company, and cause the Company's officers, directors and
employees to supply all material information reasonably requested
by such representative or any such attorney or accountant in
connection with the Registration Statement; provided that all
such records, information or documents shall be kept confidential
by such Persons unless disclosure of such records, information or
documents is required by court or administrative order or is
generally available to the public other than as a result of
disclosure in violation of this paragraph (l);
(m) otherwise use its best efforts to comply with all applicable
rules and regulations of the SEC, and make generally available to
their security holders an earning statement satisfying the
provisions of Section 11(a) of the Securities Act (in accordance
with Rule 158 thereunder or otherwise), no later than 45 days
after the end of the 12-month period (or 90 days, if such period
is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the Effective Date, which
statements shall cover said 12-month period;
(n) cause the Indenture to be qualified under the Trust
Indenture Act of 1939, as amended from time to time (the "TIA"),
and, in connection therewith, cooperate with the Trustee under
the Indenture and the holders of the Debentures to effect such
changes to the Indenture as may be required for the Indenture to
be so qualified in accordance with the terms of the TIA and
execute, and use their best efforts to cause the Trustee to
execute, all documents as may be required to effect such changes,
and all other forms and documents required to be filed with the
SEC to enable the Indenture to be so qualified in a timely
manner; and
(o) if at any time an event of the kind described in Section
4(j) shall occur, promptly notify Purchaser and the holders of
Registrable Securities that the use of the Prospectus must be
discontinued.
Each selling holder of Registrable Securities as to which
any registration is being effected agrees, as a condition to the
registration obligations with respect to such holder provided
herein, to furnish to the Company such information regarding the
distribution of such securities as the Company may from time to
time reasonably request.
Each holder of Registrable Securities agrees by acquisition
of such Registrable Securities that, upon receipt of any notice
from the Company described in paragraph 4(o), such holder will
forthwith discontinue disposition of Registrable Securities until
such holder's receipt of the copies of the supplemented or
amended Prospectus contemplated by Section 4(j) hereof, or until
it is advised in writing by the Company (which notice the Company
shall give as promptly as reasonably possible), that the use of
the Prospectus may be resumed, and has received copies of any
additional or supplemental filings which are incorporated by
reference in the Prospectus, and, if so directed by the Company,
such holder will deliver to the Company (at the Company's
expense) all copies, other than permanent file copies then in
such holder's possession, of the Prospectus covering such
Registrable Securities current at the time of receipt of such
notice.
Notwithstanding any other provision in this Agreement, the
Company shall not under any circumstances be entitled to exercise
its rights under Section 4(j) to defer sales of Registrable
Securities except as follows: the Company may defer sales of
Registrable Securities in accordance with Section 4(j) for a
period not to exceed an aggregate of sixty (60) days in any three
hundred sixty five (365) day period, and the period in which
sales of Registrable Securities are suspended shall not exceed
fifteen (15) days unless the Company shall deliver to such
holders of Registrable Securities one or more subsequent notices
to the effect set forth above, each of which shall have the
effect of extending the period during which sales of Registrable
Securities are deferred by up to an additional fifteen (15) days,
or such shorter period of time as is specified in such subsequent
notice.
5. Registration Expenses
(a) All expenses (other than Selling Expenses) incident to the
Company's performance of or compliance with this Agreement,
including without limitation:
(1) all registration, filing and listing fees;
(2) fees and expenses of compliance with securities or blue sky
laws (including reasonable fees and disbursements of one counsel
in connection with blue sky qualifications of the Registrable
Securities and determination of their eligibility for investment
under the laws of such jurisdictions as the holders of a majority
in principal amount of the Registrable Securities being sold may
reasonably designate);
(3) printing, messenger, telephone and delivery expenses;
(4) fees and disbursements of counsel for the Company;
(5) fees and disbursements of all independent certified public
accountants of the Company (including the expenses of any special
audit necessary to satisfy the requirements of the Securities Act
and any "cold comfort" letters required by or incident to such
performance);
(6) securities acts liability insurance if the Company so
desires;
(7) fees and expenses of other Persons retained by the Company;
and
(8) fees and expenses associated with any NASD filing required
to be made in connection with the Registration Statement
(all such expenses being herein called "Registration Expenses")
will be borne by the Company, regardless of whether the
Registration Statement becomes effective.
The Company will, in any event, pay its internal expenses
(including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties),
the expense of any annual audit, the fees and expenses incurred
in connection with the listing of the securities to be registered
on a securities exchange, rating agency fees and the fees and
expenses of any Person, including special experts, retained by
the Company.
6. Indemnification and Contribution
(a) Indemnification by the Company. The Company agrees, to
indemnify and hold harmless each holder of Registrable
Securities, its officers, directors, employees and agents and
each Person who controls such holder within the meaning of either
Section 15 of the Securities Act or Section 20 of the Exchange
Act (each such person being sometimes hereinafter referred to as
an "Indemnified Holder") from and against all losses, claims,
damages, liabilities and expenses (including reasonable costs of
investigation and legal expenses) arising out of or based upon
any untrue statement or alleged untrue statement of a material
fact contained in any Registration Statement or Prospectus or in
any amendment or supplement thereto or in any preliminary
prospectus, or arising out of or based upon any omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any such
untrue statement or omission or allegation thereof based upon
information furnished to the Company by such holder, or its
representatives, for use therein; provided, however, that the
Company shall not be liable in any such case to the extent that
any such loss, claim, damage, liability or expense arises out of
or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any preliminary
prospectus if (i) such holder failed to send or deliver a copy of
the Prospectus with or prior to the delivery of written
confirmation of the sale of Registrable Securities and (ii) the
Prospectus would have corrected such untrue statement or
omission; and provided further, that the Company shall not be
liable in any such case to the extent that any such loss, claim,
damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission in the Prospectus, if such untrue statement or
alleged untrue statement, omission or alleged omission is
corrected in an amendment or supplement to the Prospectus and if,
having previously been furnished by or on behalf of the Company
with copies of the Prospectus as so amended or supplemented, such
holder thereafter fails to deliver such Prospectus as so amended
or supplemented, prior to or concurrently with the sale of a
Registrable Security to the person asserting such loss, claim,
damage, liability or expense who purchased such Registrable
Security which is the subject thereof from such holder. This
indemnity will be in addition to any liability which the Company
may otherwise have. The Company will also indemnify
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of
the holders of Registrable Securities.
If any action or proceeding (including any governmental
investigation or inquiry) shall be brought or asserted against
any Indemnified Holder in respect of which indemnity may be
sought from the Company, such Indemnified Holder shall promptly
notify the Company in writing (but the omission to so notify the
Company shall not relieve it of any liability that it may have
against any Indemnified Holder otherwise than under this
subsection unless the Company has been materially prejudiced by
such delay), and the Company shall assume the defense thereof,
including the employment of counsel reasonably satisfactory to
such Indemnified Holder and the payment of all reasonable
expenses. Indemnified Holders shall have the right,
collectively, to employ their own counsel in any such action and
to participate in the defense thereof, but the fees and expenses
of such counsel shall be the expense of the Indemnified Holders
unless (a) the Company shall have failed to assume the defense of
such action or proceeding or (b) the named parties to any such
action or proceeding (including any impleaded parties) include
the Indemnified Holders and the Company, and the Indemnified
Holders shall have been advised by counsel that there may be one
or more legal defenses available to the Indemnified Holders which
are different from or additional to those available to the
Company (in which case, if the Indemnified Holders notify the
Company in writing that they elect to employ their own counsel at
the expense of the Company, the Company shall not have the right
to assume the defense of such action or proceeding on behalf of
the Indemnified Holders, it being understood, however, that the
Company shall not, in connection with any one such action or
proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of
the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of
attorneys at any time for the Indemnified Holders which firm
shall be designated in writing by the Indemnified Holders
representing at least a majority of the aggregate principal
amount of the outstanding Debentures). The Company shall not be
liable for any settlement of any such action or proceeding
effected without its written consent, but if settled with its
written consent, or if there be a final judgment for the
plaintiff in any such action or proceeding, the Company agrees to
indemnify and hold harmless the Indemnified Holders from and
against any loss or liability by reason of such settlement or
judgment. The Company shall not, without the prior written
consent of the Indemnified Holders, effect any settlement of any
pending or threatened proceeding in respect of which any
Indemnified Holder is or could have been a party and indemnity
could have been sought hereunder by such Indemnified Holder,
unless such settlement includes an unconditional release of such
Indemnified Holder from all liability or claims that are the
subject matter of such proceeding.
(b) Indemnification by Holder of Registrable Securities. Each
holder of Registrable Securities agrees to indemnify and hold
harmless the Company, its respective directors, officers,
employees and agents and each Person, if any, who controls the
Company within the meaning of either Section 15 of the Securities
Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to such holder, but only
with respect to information relating to such holder furnished in
writing by such holder, or its representatives, for use in any
Registration Statement or Prospectus, or any amendment or
supplement thereto, or any preliminary prospectus. In case any
action or proceeding shall be brought against the Company or its
respective directors, officers, employees or agents or any such
controlling person, in respect of which indemnity may be sought
against a holder of Registrable Securities, such holder shall
have the rights and duties given the Company, and the Company or
its respective directors, officers, employees or agents or such
controlling person shall have the rights and duties given to each
holder by the preceding paragraph. In no event shall the
liability of any selling holder of Registrable Securities
hereunder be greater in amount than the dollar amount of the
proceeds received by such holder upon the sale of the Registrable
Securities giving rise to such indemnification obligation. Each
holder of Registrable Securities will also indemnify
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, their officers and directors and each Person who
controls such Persons (within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act) to the same
extent as provided above with respect to the indemnification of
the Company. The Company and each holder of Registrable
Securities shall be entitled to receive indemnities from
underwriters, selling brokers, dealer managers and similar
securities industry professionals participating in the
distribution, to the same extent as provided above with respect
to information so furnished in writing by such Persons
specifically for inclusion in any Prospectus or Registration
Statement.
(c) Contribution. If the indemnification provided for in this
Section 6 is unavailable to an indemnified party under Section
6(a) or Section 6(b) hereof (other than by reason of exceptions
provided in those Sections) in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims,
damages, liabilities or expenses, (i) in such proportion as is
appropriate to reflect the relative benefits received by the
Company from the sale of the Debentures to Purchaser pursuant to
the Purchase Agreement on the one hand and each holder of
Registrable Securities from the offering of the Registrable
Securities by such holder, on the other hand, or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company on the one hand and
each holder of Registrable Securities on the other in connection
with the statements or omissions that resulted in such losses,
claims, damages, or liabilities, as well as the other relevant
equitable considerations. The relative benefits received by the
Company on the one hand and each holder of Registrable Securities
on the other shall be deemed to be in the same proportion as the
aggregate amount paid by Purchaser to the Company pursuant to the
Purchase Agreement for the Registrable Securities purchased by
such holder that were sold pursuant to the Registration Statement
bears to the difference (the "Difference") between the amount
such holder paid for the Registrable Securities that were sold
pursuant to the Registration Statement and the amount received by
such holder from such sale. The relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or the particular holder and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or
omission. The Company and the holders of Registrable Securities
agree that it would not be just and equitable if contributions
pursuant to this subsection (c) were to be determined by pro rata
allocation or by any other method of allocation that does not
take account of the equitable consideration referred to in the
first sentence of this subsection (c). The amount paid by an
indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection
(c) shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in connection with
investigation or defending against any action or claim that is
the subject of this subsection (c). Notwithstanding the
provision of this subsection (c), each holder of Registrable
Securities shall not be required to contribute any amount in
excess of the amount by which the Difference exceeds the amount
of any damages that such holder has otherwise been required to
pay by reason of such untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act), shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
7. Rule 144
During the Effectiveness Period and for so long as the
Company is subject to the reporting requirements of Section 13 or
15 of the Exchange Act, the Company covenants that it will file
the reports required to be filed by it under the Securities Act
and Section 13(a) or 15(d) of the Exchange Act and the rules and
regulations adopted by the SEC thereunder. If the Company is not
subject to the reporting requirements of Section 13 or 15 of the
Exchange Act, the Company also covenants that it will provide the
information required pursuant to Rule 144A(d)(4) under the
Securities Act upon the request of any holder of Registrable
Securities which continues to be "restricted securities" within
the meaning of Rule 144(a)(3) under the Securities Act and it
will take such further action as any holder of such Registrable
Securities may reasonably request, all to the extent required
from time to time to enable such holder to sell its Registrable
Securities without registration under the Securities Act within
the limitation of the exemptions provided by (a) Rule 144 under
the Securities Act, as such Rule may be amended from time to
time, so long as such provision does not require the public
filing of information relating to the Company which the Company
is not otherwise required to file, or (b) any similar rule or
regulation hereafter adopted by the SEC that does not require the
public filing of information relating to the Company. Upon the
request of any holder of Registrable Securities, the Company will
deliver to such holder a written statement as to whether it has
complied with such requirements.
8. Miscellaneous
(a) No Inconsistent Agreements. The Company will not on or
after the date of this Agreement enter into any agreement with
respect to their securities which is inconsistent with the rights
granted to the holders of Registrable Securities in this
Agreement or otherwise conflicts with the provisions hereof. The
rights granted to the holders of Registrable Securities hereunder
do not in any way conflict with and are not inconsistent with the
rights granted to the holders of the Company's securities under
any such agreements.
(b) Adjustments Affecting Registrable Securities. The Company
will not take any action, or permit any change to occur, with
respect to the Registrable Securities which would adversely
affect the ability of the holders of Registrable Securities to
include such Registrable Securities in a registration undertaken
pursuant to this Agreement.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended,
modified or supplemented, and waivers or consents to departures
from the provisions hereof may not be given unless the Company
has obtained the written consent of holders of a majority of the
Transfer Restricted Debentures and a majority of the Transfer
Restricted Shares. Notwithstanding the foregoing, a waiver of
consent to departure from the provision hereof that relates
exclusively to the rights of holders of Registrable Securities
whose securities are being sold pursuant to a Registration
Statement and that does not directly or indirectly affect the
rights of other holders of Registrable Securities may be given by
the holders of a majority of the Transfer Restricted Securities
being sold.
(d) Notices. All notices, requests, consents and other
communications hereunder shall be in writing, shall be mailed by
first-class registered or certified airmail, telecopier, or
nationally recognized overnight express courier postage prepaid,
and shall be deemed given when so mailed or if telecopied, when
receipt is acknowledged, and shall be delivered as addressed as
follows:
(1) if to the Purchaser, at the most current address given by
the Purchaser to the Company in accordance with the provisions of
this Section 8(d), which address initially is as set forth on the
signature page hereto;
(2) if to a holder of Registrable Securities, at its address of
record as indicated on the books of the transfer agent and
registrar for the Registrable Securities; and
(3) if to the Company, initially at its address set forth in the
Purchase Agreement and thereafter at such other address, notice
of which is given in accordance with the provisions of this
Section 8(d).
Copies of all such notices, demands or other communications
shall be concurrently delivered by the Person giving the same to
the Trustee under the Indenture at the addresses specified in the
Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each
of the parties, including without limitation and without the need
for an express assignment, subsequent holders of Registrable
Securities.
(f) Counterparts. This Agreement may be executed in any number
of counterparts and by the parties hereto in separate
counterparts, each of which when so executed shall be deemed to
be an original and all of which taken together shall constitute
one and the same agreement.
(g) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise
affect the meaning hereof.
(h) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO ITS RULES AS TO CONFLICTS OF LAW.
(i) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any
circumstance, is held invalid, illegal or unenforceable, the
validity, legality and enforceability of any such provision in
every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(j) Entire Agreement. This Agreement is intended by the parties
as a final expression of their agreement and intended to be a
complete and exclusive statement of the agreement and
understanding of the parties hereto in respect of the subject
matter hereof. There are no restrictions, promises, warranties
or undertakings, other than those set forth or referred to herein
with respect to the registration rights granted by the Company
with respect to the securities sold pursuant to the Purchase
Agreement. This Agreement supersedes all prior agreements and
understandings between the parties with respect to such subject
matter.
[signature page follows]
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COMPTEK RESEARCH, INC.
By:________________________________
Name: John Sciuto
Title: President and Chief
Operating Officer
Print or Type:
Name of Purchaser (Individual or
Institution):
___________________________________
Name of Individual representing
Purchaser (if an Institution):
___________________________________
Title of Individual representing
Purchaser (if an Institution):
___________________________________
Signature by:
Purchaser or Individual
representing Purchaser:
_________________________________
Address:
_________________________________
Telephone:
_______________________________
Telecopier:
_______________________________
Exhibit 12.1
<TABLE>
<CAPTION>
Statement Re Computation of Ratios
Nine
Months
Ended
Years Ended March 31, Dec.
25,
1998 1997 1996 1995 1994 1998
------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Income from $4,422 $3,621 $931 $(30) $(7,400) 3,911
continuing
Operations
Loss
associated
with - - (8,980) (1,033) (116) -
Aria
Wireless
Systems,
Inc.
_____________________________________________________________
4,422 3,621 (8,049) (1,063) (7,516) 3,911
_____________________________________________________________
Fixed
charges:
Interest 421 595 218 218 266 1,099
Interest 556 557 479 479 605 693
factor
portion
of
rentals
Amortization - - - - - 10
of debt
Issuance
costs
____________________________________________________________
Total 977 1,152 697 697 871 1,802
fixed ____________________________________________________________
charges
Income
before
income $5,399 4,773 ($7,352) ($366) $(6,645) 5,713
taxes and =============================================================
fixed
charges
Ratio of
earnings 5.5 4.1 - - - 3.2
(loss) =============================================================
to fixed
charges
(1)
(1) In Fiscal 1994, 1995, 1996 fixed charges exceeded earnings by $7.5
million, $1.1 million and $8.3 million, respectively.
</TABLE>
Exhibit 15.1
The Board of Directors
Comptek Research, Inc.:
With respect to this registration statement, we acknowledge our
awareness of the use herein of our reports dated July 17, 1998,
October 19, 1998, and January 21, 1999 related to our reviews of
interim financial information.
Pursuant to rule 436(c) under the Securities Act of 1933 (the
Act), such reports are not considered part of a registration
statement prepared or certified by an accountant or a report
prepared or certified by an accountant within the meaning of
section 7 and 11 of the Act.
Very truly yours,
/S/KPMG LLP
KPMG LLP
Buffalo, New York
April 22, 1999
Exhibit 23.2
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Comptek Research, Inc.:
We consent to the use of our reports dated May 14, 1998, on the
consolidated financial statements of Comptek Research, Inc. and
subsidiaries as of March 31, 1998 and 1997 and for each of the
years in the three-year period ended March 31, 1998 and the
related financial statement schedule incorporated by reference
herein and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/KPMG LLP
KPMG LLP
Buffalo, New York
April 22, 1999
Exhibit 23.3
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Comptek Research, Inc.
We consent to the use of our report dated June 12, 1998 on the
consolidated financial statements of Amherst Systems, Inc. as of
April 30, 1997 and 1998 and for each of the years in the three-
year period ended April 30, 1998, incorporated by reference
herein and to the reference to our firm under the heading
"Experts" in the prospectus.
/s/KPMG LLP
KPMG LLP
Buffalo, New York
April 22, 1999
Exhibit 23.4
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this registration
statement on Form S-3 of Comptek Research, Inc., of our report
dated March 27, 1998 with respect to the consolidated balance
sheets of PRB Associates, Inc., and Subsidiaries as of December
31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity, and cash flows for each of the
years in the two-year period ended December 31, 1997, which
appears in Form 8-K/A of Comptek Research, Inc. dated July 27,
1998.
/s/Deloitte & Touche LLP
Deloitte & Touche LLP
McLean, Virginia
April 20, 1999
