LETTER FOR COMMISSION ONLY -
NOT TO BE INCLUDED AS PART OF THE EDGAR FILING
June 25, 1999
James M. Daly, Esq.
Assistant Director
United States Securities and Exchange Commission
Division of Corporation Finance
450 Fifth Street, N.W., Mail Stop 4-6
Washington, D.C. 20549
Re: Comptek Research, Inc.
Registration Statement on Form S-2
File Number 333-77045
Dear Mr. Daly:
This letter is submitted on behalf of Comptek Research, Inc.
("Company") and sets forth the responses of the Company to the
comments of the staff of the Securities and Exchange Commission
("Commission") concerning the Registration Statement on Form S-3,
filed on April 26, 1999 (File No. 333-77045) (the "Registration
Statement"), which were sent by the Commission to the Company by
letter dated May 25, 1999. The comments of the staff are
reproduced below.
With this response letter, the Company is filing Amendment No. 1
to the Registration Statement ("Amendment No. 1"), which converts
the Registration Statement to Form S-2. Amendment No. 1 has been
marked to show changes from the initial filing. Capitalized
terms not defined herein have the same meaning as in Amendment
No. 1.
In addition to addressing the specific comments of the staff, we
have updated all financial information based on the Company's
audited results for the fiscal year ended March 31, 1999, which
were not available at the time of our initial filing. For
example, the ratio of earnings to fixed charges now includes the
full year for fiscal 1999, rather than the nine month period.
Incorporated by reference is the Company's Form 10-K Report for
the year ended March 31, 1999, in place of the prior year's 10-K
and interim 10-Q Reports. The Company expects to file the
current 10-K Report on or before June 29, 1999, and, in any
event, will have it filed prior to requesting acceleration of the
effectiveness of the Registration Statement.
Form S-3 Eligibility
Convertible Subordinated Debentures
1. We note that you seek to register a secondary offering
consisting of convertible debentures and the related common
shares issuable upon conversion of the debentures held by
the selling security holders listed at page 27 of the
prospectus. Please note that you can only register a
secondary offering of outstanding securities, "if securities
of the same class are listed and registered on a national
securities exchange or are quoted on the automated quotation
system of a national securities association." See
Instruction I.B.3 of Form S-3. Accordingly, it appears that
you can not conduct a secondary offering of the convertible
debentures covered by this registration statement because
the offering does not meet the applicable transaction
requirements of Form S-3. Revise the registration statement
accordingly.
We have amended the Registration Statement to Form S-2.
Common Shares to be Issued Upon Conversion of the Debentures
2. According to the selling security holder table at page 27,
CIBC Oppenheimer Corp. and Warburg Pincus Emerging Growth
Fund propose to sell securities, including the common shares
to be issued upon conversion of the debentures, in a
secondary offering covered by this registration statement.
Please note that any selling security holder that is either
a registered broker/dealer, or engaged in the activities of
a broker/dealer, or affiliated in any manner with a
registered broker/dealer, will be considered a statutory
"underwriter" in the offering, and the offering will
constitute a primary offering of securities by the company.
Revise the prospectus so that each applicable selling
security holder is identified as an underwriter in the
offering and register the offering as a primary offering by
the company.
CIBC Oppenheimer Corp. does not hold any securities. We
have revised the "Plan of Distribution" wherein the
affiliations of Warburg Pincus Emerging Growth Fund and
Joseph Stechler & Company Incorporated have been disclosed
and each of those entities has been identified as an
underwriter.
Primary Offering by Comptek
3. As indicated in the comments above, you can not register
either the debentures or the common shares to be issued upon
conversion of the debentures as a secondary offering by the
selling security holders on Form S-3. In addition, we also
note that in order to conduct a primary offering of these
securities on Form S-3, you must satisfy the eligibility
requirements for a primary offering as described in
Instruction I.B.1 of the form. According to this
instruction, in order to use Form S-3 for a primary
offering, the aggregate market value of your voting and non-
voting common equity held by non-affiliates must be $75
million dollars or more. Based on this criteria, it appears
that you do not qualify to use Form S-3 for a primary
offering. Please re-file the registration statement on the
appropriate form, as Form S-3 is not available for either a
secondary or primary offering by the company or the selling
security holders.
We have amended the Registration Statement to Form S-2.
Plain English Disclosure Compliance
4. Notwithstanding the unavailability of Form S-3 for this
offering, we have the following comments on the disclosure
provided. Please note that the following comments would
only apply to a valid secondary offering by selling security
holders registered on Form S-3. When you re-file the
registration statement on the appropriate form, please
ensure that all portions of the revised registration
statement are consistent with the plain English rules.
General
5. Do not use the generic term "Company" in your document.
This term is not descriptive and may be confusing to the
reader. Either use the proper name of the company or use
pronouns such as "us" or "we" when the company's identity is
clear from context. Also, revise the related reference
under, "About This Prospectus."
All references to the "Company" have been removed.
6. Throughout the document, we note you define terms in
quotation marks and parenthetical phrases. For example, you
define "DOD," "EW," "Repurchase Price," "Repurchase Date"
and "Code." Defined terms should not appear in the forepart
of the prospectus. These sections include cover page,
summary or risk factors. They should also be used
sparingly, if at all, in the remainder of the document. In
most cases, defined terms will not be necessary because they
are already clear from context or easily explained by a
brief description in the prospectus. Revise accordingly.
We have removed all unnecessary definitions.
7. We also note that some of the sections in your document
contain parenthetical phrases that disrupt the flow of
information and make these sentences very long. As a
result, investors will have to read them several times to
figure out what you are disclosing. You should attempt to
eliminate parenthetical phrases throughout your document.
If the information in the parenthetical phrases is important
enough to be included in the disclosure, include it in its
own sentence.
We have complied with this comment.
8. As a related matter, we note that some of the sentences in
your document are too long to understand on the first
reading because you have embedded lists of information in
paragraph form. See, for example, the footnotes to the
tables in the "Recent Developments" section and page 28
under "Plan of Distribution." Rather than include these
lists in the paragraph, break them out into bullet points,
with one bullet point for each list item. Also, avoid using
small roman numerals throughout your document, as they are
more difficult to follow than letters or Arabic numbers.
We have complied with this comment.
9. Whenever possible, you should minimize the use of footnotes
in your document. If the footnotes apply to the entire
table or chart or to an entire column of information, then
include it in the narrative discussion. In most cases, the
information in the footnotes could be presented in the
textual disclosure preceding or following the table without
causing confusion. Please revise where appropriate. See
"Recent Developments," and the selling security holder table
at page 27.
We have complied with this comment.
Cover Page
10. Using all capital letters in legends and headings of the
document makes the information difficult to read. Except
for the first word in each sentence, use lower case letters.
If you want to emphasize information, use methods like
bolded letters or italics. Revise the legends and section
headings throughout the document.
We have complied with this comment.
11. Your cover page includes more information than is required
by Item 501 of Regulation S-K. For example, you disclose
information regarding the private placement of the
debentures, the terms of the debentures, the use of proceeds
and the plan of distribution. Only the information required
by Item 501 and information essential to an investment
decision should be disclosed on the cover page. Remove all
other information from the cover page. If you believe this
information is material to the offering, disclose this
information elsewhere in the prospectus.
We have complied with this comment.
12. Please identify the selling security holders on the cover
page by providing a page reference to the table in the
prospectus. Our suggested disclosure for the first sentence
of this page is, "The selling security holders, as listed on
page 27, offer for sale." Any additional information
regarding the selling security holders should appear under
the appropriate section of the prospectus.
We have complied with this comment.
Forward Looking Information
13. To present the information in the prospectus from an
investor's perspective, we suggest that you move this
information so that it appears after the risk factors.
We have complied with this comment.
14. We also note that the prospectus states that it includes
forward-looking statements within the meaning of the
Litigation Reform Act. Please be advised that we are not
making any determination as to whether the disclosures,
including the cautionary language or the placement of
disclosures, satisfy the requirements of the Litigation
Reform Act and the applicable sections of the Securities Act
and the Exchange Act.
We have complied with this comment.
How to Obtain More Information, pages 2-3
15. We suggest that you move this section to the back of the
document.
We have complied with this comment.
Summary, Pages 9-11
16. Although the summary is not required to contain all of the
material information regarding the offering, it can not be
qualified by a statement such as, "this summary is not
complete." Please revise.
We have complied with this comment.
17. We note the table summarizing the terms of the debentures.
Please ensure that you use a font size and layout that are
easy to read.
We have complied with this comment.
Risk Factors, page 12-15
18. Revise your risk factor subheadings so that you are stating
a fact or uncertainty about your business and then
summarizing the risks that may result from these facts and
events. For example, the subheading "Fixed-Price Contracts
- Our Percentage of Fixed-Priced Contracts, Which Are A
Higher Risk, Is Increasing," does not convey the risk
associated with fixed-price contracts, as they relate to
your business. Review and revise each subheading to ensure
that it discloses the specific risk that you are discussing
in the text of the risk factor. See Item 503(c) of
Regulation S-K.
We have complied with this comment.
19. Item 503(c) of Regulation S-K states that registrants should
not "present risk factors that could apply to any issuer or
to any offering," For example, see "International Sales -
." The listed risk factors could apply to nearly any issuer
in your industry and even other industries. If you elect to
retain these risk factors, you must clearly explain how they
apply to your industry, company, or offering.
We have complied with this comment.
20. As a related matter, avoid the generic conclusions you make
in most of your risk factors that the risk discussed would
have a material adverse effect on your operations or
financial condition. Instead, replace the language with
specific disclosure of how your operations or financial
results would be affected.
We have complied with this comment.
Description of Debentures, pages 19-26
21. We note that you seek to qualify the completeness of the
disclosure in this section "in its entirety" by reference to
the related documents found outside the prospectus. Please
note that the text of the prospectus must be materially
complete, and all text suggesting that it is not materially
complete should be modified.
We have complied with this comment.
22. We note the extensive use of legalese in this section and
the following sections of the prospectus. Whenever
possible, you should avoid the use of legalistic words and
phrases. For example, you use the term "such". "Such" is
legalese for "this", "these", or "the". Some other examples
include legalistic words like "herein," "thereof," "hereby,"
"therewith," "certain" "hereafter", "thereby" and
"pursuant." Please replace all legalistic terms throughout
your prospectus with concrete, everyday words that mean the
same thing.
We have complied with this comment.
23. We also suggest that you rewrite these sections to eliminate
the unnecessarily long sentences which make the disclosure
difficult to read and follow. For example, see the
discussion of Rule 144 on page 27. Instead of using long,
verbose sentences that contain legalese, shorten the
sentences and use everyday, concrete language.
We have complied with this comment.
Part II of the Registration Statement, Signatures
24. Please note that the principal executive officer and the
principal financial or accounting officer must sign the
registration statement in this capacity. See Instruction 1
to Part II, Signatures of Form S-3.
We have complied with this comment.
Should the staff of the Commission have any comments or questions
regarding Amendment No. 1 or this response letter, please call
the undersigned at (716) 677-4070.
Sincerely,
/s/Christopher A. Head
Christopher A. Head
Executive Vice President and General Counsel
cc: Christopher Doyle, Esq.
Registration No. 333-77045
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________
AMENDMENT NO. 1
TO FORM S-3 CONVERTING TO
FORM S-2
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
Identification No.) Incorporation or Organization)
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 this Form is a post-effective amendment filed pursuant to
Rule 462(d) under the Securities Act, check the following box and
list the Securities Act registration statement number of the
earlier effective registration statements for the same offering.
[ ]
If delivery of this Prospectus is expected to be made pursuant to
Rule 434, please check the following box. [ ]
-------------------------
<PAGE i>
<TABLE>
<CAPTION>
<BOLD><ITALIC>C
alculation Of
Registration
Fee</ITALIC></B
OLD>
Proposed
Maximum
Offering Proposed
Title of each Price Maximum Amount of
class of Amount to Per Aggregate Regis-
Securities to be Security Offering tration
be Registered Registered (1) Price Fee
<S> <C> <C> <C> <C>
8 1/2%
Convertible
Subordinated $15,000,000 100% $15,000,000 $4,170(3)
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.
(3) Previously
paid.
</TABLE>
<ITALIC>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.</ITALIC>
<PAGE iii>
<BOLD><ITALIC>Prospectus
The information in this prospectus is not complete and may be
changed. The selling security 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 June ___, 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</ITALIC></BOLD>
The selling security holders, as listed on page 20, are offering
for sale our 8 1/2% convertible subordinated debentures and shares
of our common stock into which the debentures are convertible.
The debentures and the shares are being offered on a continuous
basis until at least June __, 2001 or the earlier sale of all the
debentures and shares of common stock.
The debentures and shares of common stock may be sold at market
prices prevailing at the time of sale or at privately negotiated
prices.
On June 14, 1999, the closing price of our common stock on the
American Stock Exchange symbol "CTK" was $8.4375 per share. We
do not intend to apply for listing of the debentures on any
securities exchange or for quotation through any automated
quotation system.
Eight and one-half percent (8 1/2%) annual interest is payable on
the debentures on October 1 and April 1 each year, beginning
October 1, 1999 until converted to common stock or maturity at
April 1, 2004. The debentures are convertible into shares of
common stock at the rate of $9.50 per share, subject to
adjustments in certain events.
<BOLD><ITALIC>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 7 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. </BOLD>
The date of this Prospectus is June __, 1999</ITALIC>
<PAGE 1>
<ITALIC><BOLD>Table Of Contents</BOLD>
About This Prospectus 3
Summary 4
Risk Factors 6
Forward-Looking Information 9
Use Of Proceeds 9
Ratio Of Earnings To Fixed Charges 9
Recent Developments 9
Description Of Debentures 12
Selling Security Holders 20
Plan Of Distribution 21
Legal Matters 23
Experts 23
How To Obtain More Information 23
</ITALIC>
<PAGE 2>
<BOLD><ITALICS>About This Prospectus</BOLD></ITALICS>
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 security 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. This
prospectus is accompanied by a copy of Comptek's Form 10-K Annual
Report for the year ended March 31, 1999.
In this prospectus, references to "we," "us," "our," and
"Comptek" refer to Comptek Research, Inc. and its subsidiaries,
unless the context otherwise requires, and not to the selling
security holders.
<PAGE 3>
<BOLD><ITALICS>Summary</BOLD>
This summary highlights information contained in this prospectus
or incorporated by reference into this prospectus from our
current filings with the SEC. </ITALICS>
<BOLD>Overview</BOLD>
Comptek develops and integrates 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
specialize 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 U.S. 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.
<PAGE 4>
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.
<BOLD>Summary of the Debentures and Common Stock Offered By
Selling Security Holders</BOLD>
Securities $15,000,000 aggregate principal amount of
Offered 8 1/2% 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.
<PAGE 5>
<BOLD><ITALICS>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.<ITALICS>
We are dependent on future military spending because
substantially all of our sales are derived from military
requirements.</BOLD>
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 affect our
ability to increase revenues and may result in declines in future
revenues and may have a material adverse impact on our business,
financial condition or results of operations.
<BOLD>We are heavily dependent on U.S. Government contracts and
as a U.S. Government contractor we are subject to specialized
rules and regulations.</BOLD>
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. As a
contractor and subcontractor to the U.S. Government, we are
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 which would affect our ability to increase revenues
and may result in declines in future revenues.
<BOLD>Our risk of sustaining a loss is greater with a fixed-price
contract as opposed to a cost-plus contract. Our percentage of
fixed-price contracts is increasing.</BOLD>
For the fiscal year ended March 31, 1999, 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 sustain a loss under the contract.
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 and therefore increase our exposure to
potential
<PAGE 6>
losses on individual contracts. For the fiscal year ended March
31, 1999, as adjusted to give effect to the business operations
acquired from Amherst Systems, 40.2% of the our sales would have
been fixed-price.
<BOLD>The integration of our recent acquisitions and the making
of future acquisitions could adversely impact our current
operations.</BOLD>
Our acquisitions of Advanced Systems Development in March 1996,
of PRB Associates in May 1998, and of the business operations of
Amherst Systems 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 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
* financial risks,
Future acquisitions by us may result in:
* dilutive issuances of equity securities;
* the incurrence of additional debt;
* reduction of existing cash balances; and
* amortization expenses related to goodwill and other
intangible assets and other charges to operations.
<BOLD>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.</BOLD>
At March 31, 1999, our bank debt was $26.1 million and our total
funded debt was $53.6 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.
<BOLD>Our ability to sell products and services internationally
are subject to U.S. Government export controls that could
prevent, or significantly delay, our making international sales.
</BOLD>
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.
Failure to receive, or a delay in receiving, these export
licenses would greatly limit our ability to increase sales.
Direct sales to foreign governments and international customers
were 12.8% of total sales in fiscal 1999.
<PAGE 7>
<BOLD>In addition to competing against large defense contractors
with greater financial resources we also have many small
competitors that receive certain preference in bidding for which
we do not qualify.</BOLD>
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. Since we no longer qualify for
these bidding preferences, our competitive bidding position has
been affected and, in certain instances makes it more difficult
for us to win new contracts.
<BOLD>The debentures are subordinated to our current senior
indebtedness and all of future senior indebtedness.</BOLD>
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 March 31, 1999
our senior indebtedness was $26.1 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. 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 our assets will be
available to pay the amounts due on the debentures only after all
senior indebtedness has been paid in full.
<BOLD>A failure of our computer programs, or the computer
programs of our customers or suppliers, to correctly recognize
the Year 2000 could have a material adverse impact on our
business.</BOLD>
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 Department of Defense
and its agencies are our largest customer group, representing
87.2% of our fiscal 1999 net sales. A failure by the Department
of Defense 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.
<PAGE 8>
<BOLD>There is currently no liquid market for the debentures and,
since we do not intend to list the debentures on any exchange, we
do not anticipate one will develop.</BOLD>
There has been no public market for the debentures, and we
believe it is unlikely that an active or liquid trading market
will develop or be sustained.
<ITALIC> <BOLD>Forward-Looking Information</BOLD>
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 above
section entitled "Risk Factors" describes some, but not all, of
the factors that could cause these differences.
<BOLD>Use Of Proceeds</BOLD></ITALIC>
Comptek will not receive any proceeds from the sale by any
selling security holder of the debentures or the underlying
common stock.
<BOLD><ITALIC>Ratio Of Earnings To Fixed
Charges</BOLD></ITALIC>
The ratio of earnings to fixed charges for each of the periods
indicated is as follows:
Fiscal Year Ended March 31,
1995 1996 1997 1998 1999
Ratio of
Earnings - - 4.1x 5.5x 3.2x
(loss) to
fixed charges
.
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.
<BOLD><ITALIC>Recent Developments</BOLD></ITALIC>
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 net 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
<PAGE 9>
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 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.
Amherst Systems' contract backlog as of March 31, 1999 was $63.7
million, of which $57.2 million was funded.
<BOLD>Summary Pro Forma Financial Data</BOLD>
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
including:.
* 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.
* The March 31, 1998 pro forma uses PRB Associates' historical
financial statements for the year ended December 31, 1997.
* The March 31, 1998 pro forma uses Amherst Systems'
historical financial statements for the year ended April 30,
1998. The December 1998 pro forma uses Amherst Systems'
historical financial statements for the nine-months ended January
31, 1999.
* No pro forma balance sheet data is provided as the effect of
the related transactions are already included in our historical
March 31, 1999 consolidated balance sheet.
<PAGE 10>
<TABLE>
<CAPTION>
Pro Forma
Year Ended March 31,
1998
Including
Before AmherstAcqui-
Amherst sition and Year Ended
Acquisi- Sale of March 31,
tion Debentures 1999
Statement of Operations
Data:
<S> <C> <C> <C>
Net sales $101,300 $132,944 $143,845
Gross Margins 19,994 27,202 33,792
Selling, general and 11,793 16,889 21,163
Administrative
Research and development 1,827 3,979 4,823
Other income 144 144 -
-------- ----------- ---------
Operating profit 6,518 6,478 7,806
Interest expense , net (1,651) (4,320) (3,362)
Minority interest (13) (13) -
-------- ----------- ---------
Income from continuing
operations before 4,854 2,145 4,444
income taxes
Income taxes (2,002) (589) (1,638)
-------- ---------- ---------
Income from continuing $2,852 $1,556 2,806
operations ======== ========== =========
Basic earnings per share $0.55 $0.30 $0.56
Diluted earnings per share $0.54 $0.29 $0.54
Weighted average shares 5,184 5,184 5,044
Outstanding - basic
Weighted average shares 5,316 5,316 5,211
Outstanding - diluted
Other Data:
Depreciation and $3,138 $5,812 $5,283
Amortization
Capital expenditures $2,502 $4,550 $4,258
Ratio of earnings to fixed 2.8 1.4 2.0
Charges
Contract backlog $165,271 $210,771 $191,266
</TABLE>
_______________________
(1) 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.
<PAGE 11>
<BOLD><ITALIC>Description Of Debentures</BOLD></ITALIC>
The 8 1/2% convertible subordinated debentures were issued under
an indenture, dated as of March 24, 1999, between 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 summary of the material terms of the debentures and the
indenture , a form of each is included as an exhibit to the
registration statement, is qualified by reference to the detailed
provisions of the debenture and the indenture, including the
definitions of certain terms to which we make reference in this
summary.
<BOLD>General</BOLD>
The debentures are unsecured general obligations of Comptek,
subject to the rights of holders of our senior indebtedness, and
convertible into our 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.
<BOLD>Form of Debentures</BOLD>
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 require us to repurchase the debentures 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 our credit quality. The
registered holder of a debenture may be treated as its owner for
all purposes.
<BOLD>Conversion Rights</BOLD>
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
<PAGE 12>
called for redemption is converted between a record date for the
payment of interest and the next succeeding interest payment
date, the relevant debenture must be accompanied by funds equal
to the interest payable to the registered holder on the next
interest payment date on the principal amount to be 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 in certain events,
including:
* the payment of dividends or distributions on our common
stock in shares of capital stock;
* subdivisions or combinations of our common stock into a
greater or smaller number of shares of common stock;
* reclassification of the shares of our common stock resulting
in an issuance of any shares of our capital stock;
* distribution of rights or warrants to all holders of our
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.
We do not have to adjust the conversion price unless the
adjustment would be 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 downward 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) if we report income before extraordinary item and
accounting change diluted earnings per share of less than $0.80
for our fiscal year ending March 31, 2000. This adjustment 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;
* subdivide or combine the common stock;
* issue by reclassification of our common stock any shares of
our capital stock; or
<PAGE 13>
* merge with, or transfer or lease substantially all of our
assets to, another corporation or trust
The holders of the debentures then outstanding will be entitled
to convert their debentures into the kind and amount of shares of
capital stock, other securities, cash or other assets which they
would have owned immediately if they had converted their
debentures 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.
<BOLD>Penalty For Late Delivery of Conversion Shares</BOLD>
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.
The penalty payment will apply to the period beginning on the
business day after delivery was due and ending on the day we
actually make delivery. The penalty payment would accrue at a
rate of 0.50% of the principal amount of the debentures.
<BOLD>Subordination of Debentures</BOLD>
The indebtedness evidenced by the debentures is subordinated
and junior in right of payment to the prior payment in full of
all of our senior indebtedness. We will not pay principal of (or
premium if any) or interest on the debentures, if there shall
have occurred and be continuing a default with respect to any of
our 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 debentures or any
distribution of our assets 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
of our assets. Because of this provision, in the event of
insolvency, holders of the debentures may recover less, ratably,
than holders of senior indebtedness.
"Senior indebtedness" is 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, 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.
<PAGE 14>
<BOLD>Optional Redemption</BOLD>
At our option we may redeem the debentures, as a whole or in
part, at any time or from time to time commencing on or after
March 1, 2002. We must give holders of the debentures at least
30 days' and not more than 60 days' prior notice by mail. The
redemption prices 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%
<BOLD>Certain Rights to Require Repurchase of Debentures by the
Company</BOLD>
In the event of any Change in Control (as described below) of
Comptek occurring on or prior to maturity, each holder of
debentures will have the right, to require us to repurchase all
or any part of such holder's debentures. We would have to
repurchase the debentures 75 days after the date we give notice
of the Change in Control at a price equal to 101.0% of the
principal amount, together with accrued and unpaid interest to
the date of repurchase. On or prior to the date of repurchase,
we would be 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 date of
repurchase.
Our failure to repurchase the debentures under these
circumstances, would 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, we would be obligated to mail to all holders of the
debentures a notice of:
* the event constituting and the date of such Change in
Control,
* the date on which the repurchase will be made,
* 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 date of
repurchase, written notice to us (or an agent designated by us
for such purpose) and to the trustee of the holder's desire to
exercise the right, together with the certificates evidencing the
debentures, duly endorsed for transfer.
<PAGE 15>
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
<PAGE 16>
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 that
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, 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. 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, 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 securities.
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.
<BOLD>Modification of the Indenture</BOLD>
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;
<PAGE 17>
(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.
<BOLD>Events of Default, Notice and Waiver</BOLD>
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 us.
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.
If any Events of Default have occurred and are continuing or
would exist immediately after giving effect to such action, we
will not (i) declare or pay any dividends or make any
distribution to holders of our capital stock or (ii) purchase,
redeem or otherwise acquire or retire for value any of our common
stock, or any warrants, rights or options, to purchase or acquire
any shares of our common stock (other than the debentures or any
other convertible indebtedness of ours that is neither secured
nor subordinated to the debentures).
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 (1)
Comptek to consolidate with or merge into or transfer or lease
substantially all of its assets to another corporation or trust
which assumes the
<PAGE 18>
obligations of Comptek under the indenture and debentures or (2)
for any reorganization within the meaning of Section 368(a)(1)(B)
of the Internal Revenue Code of 1986, as amended; no 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.
<BOLD>Consolidation, Merger, Sale or Conveyance</BOLD>
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.
<BOLD>Marketability</BOLD>
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.
<BOLD>Governing Law</BOLD>
The indenture and the debentures are governed by and construed in
accordance with the laws of the State of New York.
<BOLD>Registration Rights Agreement</BOLD>
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 shares
of common stock offered hereby have been sold thereby, or
<PAGE 19>
* 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.
<BOLD>Selling Security Holders</BOLD>
The debentures were originally issued by us 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
security holders ( 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 term "selling
security holders" includes their transferees, pledgees or donees
or their successors
The following table sets forth information, as of June 16, 1999,
with respect to the selling security holders and the respective
principal amounts of debentures beneficially owned by each that
may be offered pursuant to this prospectus. The information is
based on information provided by or on behalf of the selling
security holders. The selling security holders may offer all,
some or none of the debentures or common stock into which the
debentures are convertible. Because the selling security 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
security holders upon termination of any such sales. In
addition, the selling security 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 Owned
Beneficially Bene-ficially
Name Owned and Offered and Hereby
Offered Hereby
Principal Number of
Amount %(1) Shares(2) %(3)
<S> <C> <C> <C> <C>
Centura Small-Cap 400,000 2.7% 42,105 .8%
Equity Fund
DS Founders Group, 200,000 1.3% 21,052 .4%
LP
Leonardo, LP 600,000 4.0% 63,157 1.2%
Libertyview Funds, 800,000 5.3% 84,210 1.6%
L.P.
Libertyview Fund, 200,000 1.3% 21,052 .4%
LLC
Joseph Stechler &
Company, 2,000,000 13.3% 210,526 4.0%
Incorporated
Manu Shah Living 250,000 1.7% 26,315 .5%
Trust
Quasar Rabbico 1,500,000 10.0% 157,894 3.0%
N.V.
Ramius Fund, LTD. 400,000 2.7% 42,105 .8%
Raphael, L.P. 200,000 1.3% 21,052 .4%
Raphael II, L.P. 150,000 1.0% 15,789 .3%
Shrem, Fudim, 200,000 1.3% 21,052 .4%
Kelner & Co.,
Ltd.
Strong River 500,000 3.3% 52,631 1.0%
Investments,
Inc.
The Canada-Israel 100,000 .07% 10,526 .2%
Opportunity
Fund, LP
Warburg Pincus
Emerging 7,000,000 46.7% 736,842 12.7%
Growth Fund
Coastal 500,000 3.3% 52,631 1.0%
Convertible LTD.
</TABLE>
<PAGE 20>
None of the selling security holders has had any material
relationship with Comptek or its affiliates within the past three
years. The selling security 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 security 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 security 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 security 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.
<BOLD>Plan Of Distribution</BOLD>
The selling security holders and 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
security holders. These 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;
<PAGE 21>
(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 security 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 security 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 security 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. We will not receive any of the proceeds from
this offering.
Our 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.
Both Warburg Pincus Emerging Growth Fund and Joseph Stechler &
Company, Incorporated are affiliated with a registered broker-
dealer and because of such affiliation will be "underwriters"
within the mening of Section 2(11) of the Securities Act. Each
of the other selling security 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 security 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 security 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 security 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.
<PAGE 22>
To the extent required, the specific debentures or common stock
to be sold, the names of the selling security 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 security 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 security 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.
<BOLD>Legal Matters</BOLD>
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 June 16, 1999, Mr. Head owns less than one
percent of the outstanding shares of the Comptek.
<BOLD>Experts</BOLD>
The consolidated financial statements and schedule of Comptek as
of March 31, 1999 and 1998, and for each of the years in the
three-year period ended March 31, 1999, 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 in this
prospectus by reference from Comptek's Form 8-K, and have been
audited by Deloitte & Touche, LLP, independent auditors, as
stated in their report which is incorporated herein by reference
as has been so incorporated in reliance upon the report of such
firm given upon their authority as experts in accounting and
auditing.
<BOLD>How To Obtain More Information</BOLD>
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-2
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
<PAGE 23>
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 have filed 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. We
incorporate by reference the documents listed below:
* Our Annual Report on Form 10-K, for the year ended March 31,
1999.
* 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 filed April 19, 1999.
* Information on our acquisition of PRB Associates, Inc.
contained in our Report on Form 8-K/A filed July 27, 1998.
* Information on our acquisition of the business operations,
assets and liabilities of Amherst Systems, Inc. contained in our
Report on Form 8-K filed April 12, 1999.
You may obtain copies of these documents 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 this prospectus or the date of a subsequent
amendment.
<PAGE 24>
<ITALICS>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.</ITALICS>
<PAGE 25>
<BOLD><ITALICS>Part II
Information Not Required In Prospectus</ITALICS>
Item 14. Other Expenses of Issuance and Distribution.
</BOLD>
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>
<BOLD>Item 15. Indemnification of Directors and Officers.</BOLD>
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
<PAGE 26>
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.
<PAGE 27>
<BOLD>Item 16. Exhibits.</BOLD>
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.
10.1 Registrant's 1992 Equity Incentive Plan, as
amended.
10.1a Registrant's 1998 Equity Incentive Stock Plan
10.1b Form of incentive stock option agreement and non-
qualified stock agreement issued under Registrant's
Equity Incentive Plan to plan participants, including
executive officers.
10.1c Non-Qualified Stock Option Agreement dated June 20,
1996 by and between Registrant and John J. Sciuto.
10.2 1994 Stock Option Plan for Non-Employee Directors, as
amended.
10.3 Employment agreement between Registrant and John J.
Sciuto.
10.3a Employment agreement between Registrant and Christopher
A. Head.
10.3b Employment agreement between Registrant and Laura L.
Benedetti.
10.3c Employment agreement between Registrant and James D.
Morgan.
10.3d Loan Agreement between Comptek Federal Systems, Inc.
(wholly-owned subsidiary of the Registrant) and John
Sciuto.
10.3e Loan Agreement, dated February 3, 1999, between Comptek
Federal Systems, Inc. (wholly-owned subsidiary of the
Registrant) and John J. Sciuto
10.3f Employment agreement between PRB Associates, Inc.
(wholly-owned subsidiary of the Registrant) and
Lawrence M. Schadegg.
10.3g Restricted Stock Agreement between Registrant and
Lawrence M. Schadegg.
10.3h Employment agreement between Registrant and Charles E.
Dowdell
10.5 Interest Rate Swap Agreement, dated May 1, 1998, between
Registrant and KeyBank,
N.A.
10.5a Loan Agreement, dated May 14, 1998, between Registrant
and Manufacturers and Traders Trust Company.
<PAGE 28>
0.5b Loan Agreement, dated March 24, 1999, between
Registrant and Manufacturers and Traders Trust Company
10.6 Real property lease between Registrant and Southern Maryland
Property Management
Associates premises at 43865 Airport View Drive,
Hollywood, MD
10.6a Real property lease between Registrant and Charles E.
Dowdell and Nancy L. Dowdell for 30 Wilson Road,
Williamsville, NY
11 Reconciliation of Basic and Diluted EPS Comptuations.
12.1 Statement Re Computation of Ratios
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.
23.2 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.
___________________
<BOLD>Item 17. Undertakings</BOLD>
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;
<PAGE 29>
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. 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.
<PAGE 30>
<BOLD><ITALIC>Signatures</BOLD></ITALIC>
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-2 and has
duly caused this registration statement to be signed on its
behalf by the undersigned, thereunto duly authorized, in Buffalo,
New York on June 25, 1999.
COMPTEK RESEARCH, INC.
By: /s/John J. Sciuto
-------------------------
John J. Sciuto, Chairman
President and Chief
Executive Officer
<PAGE 31>
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* June 25, 1999
Joseph A. Alutto, Director
/s/Laura L. Benedetti* June 25, 1999
Laura L. Benedetti,
Chief Financial Officer
Vice President - Finance
and Treasurer (principal accounting
and financial officer)
/s/John R. Cummings* June 25, 1999
John R. Cummings, Director
/s/G. Wayne Hawk* June 25, 1999
G. Wayne Hawk, Director
/s/Patrick J. Martin* June 25, 1999
Patrick J. Martin, Director
/s/Wayne E. Meyer* June 25, 1999
Wayne E. Meyer, Director
/s/James D. Morgan* June 25, 1999
James D. Morgan, Director
/s/John J. Sciuto* June 25, 1999
John J. Sciuto, Chairman,
Chief Executive Officer
and Director (principal executive officer)
/s/Henry P. Semmelhack* June 25, 1999
Henry P. Semmelhack, Director
*By: /s/Christopher A. Head June 25, 1999
Christopher A. Head
Attorney-in-fact
<PAGE 32>
<BOLD>Exhibit Index</BOLD>
Number Description
4.1(a) Indenture dated March 24, 1999 between the
Registrant and The Bank
of New York, as Trustee. (f)
4.1(b) Form of Debenture (included in Exhibit 4.1(a)). (f)
4.1(c) Form of Registration Rights Agreement. (f)
5.1 Opinion of Christopher A. Head, counsel
to the Company. (#)
10.1 Registrant's 1992 Equity Incentive Plan,
as amended. (a)
10.1a Registrant's 1998 Equity Incentive Stock Plan (e)
10.1b Form of incentive stock option agreement and
non-qualified stock agreement issued under
Registrant's Equity Incentive Plan to plan
participants, including executive officers.
(c)
10.1c Non-Qualified Stock Option Agreement dated
June 20, 1996 by and between Registrant and
John J. Sciuto.
(c)
10.2 1994 Stock Option Plan for Non-Employee
Directors, as amended. 38
10.3 Employment agreement between Registrant and
John J. Sciuto. (d)
10.3a Employment agreement between Registrant and
Christopher A. Head. (d)
10.3b Employment agreement between Registrant and
Laura L. Benedetti. (d)
10.3c Employment agreement between Registrant and
James D. Morgan. (d)
10.3d Loan Agreement between Comptek Federal Systems,
Inc. (wholly-owned subsidiary of the
Registrant) and John Sciuto. (b)
10.3e Loan Agreement, dated February 3, 1999, between
Comptek Federal Systems, Inc. (wholly-owned
subsidiary of the Registrant) and John J.
Sciuto 49
10.3f Employment agreement between PRB Associates,
Inc. (wholly-owned subsidiary of the Registrant)
and Lawrence M. Schadegg. (d)
10.3g Restricted Stock Agreement between Registrant
and Lawrence M. Schadegg. (d)
10.3h Employment agreement between Registrant and
Charles E. Dowdell 55
10.4 Interest Rate Swap Agreement, dated May 1,
1998, between Registrant and KeyBank, N.A. (d)
<PAGE 33>
10.5a Loan Agreement, dated May 14, 1998, between
Registrant and Manufacturers and Traders
Trust Company. (d)
10.5b Loan Agreement, dated March 24, 1999, between
Registrant and Manufacturers and Traders
Trust Company 66
10.5 Real property lease between Registrant and
Southern Maryland Property Management
Associates premises at 43865 Airport View
Drive, Hollywood, MD 176
10.6a Real-property lease between Registrant and
Charles E. Dowdell and Nancy L. Dowdell for
30 Wilson Road, Williamsville, NY 181
11.1 Reconciliation of Basic and Diluted EPS
Comptuations. 213
12.1 Statement Re Computation of Ratios 214
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. 215
- ----------------------
LOCATION OF EXHIBITS
_______________
Exhibit
No.
(#) To be filed by amendment
(a) Designates Exhibit annexed to the Company's Form 10-Q for
the quarter ended September 29, 1995
(b) Designates Exhibit annexed to the Company's Form 10-Q for
the quarter ended September 27, 1996.
(c) Designates Exhibit annexed to the Company's Form 10-K for
the year ended March 31, 1997.
(d) Designates Exhibit annexed to the Company's Form 10-K for
the year ended March 31, 1998.
(e) Designates Exhibit annexed to the Company's 1998
Definitive Proxy Statement (filed July 8, 1998).
(f) Designates Exhibit annexed to the Company's Registration
Statement, #333-77045, dated April 26, 1999.
<PAGE 34>
EXHIBIT 10.2
1994 STOCK OPTION PLAN
FOR
NON-EMPLOYEE DIRECTORS,
AS AMENDED
ARTICLE 1 - ESTABLISHMENT, PURPOSE, AND DURATION
1.1 Establishment of the Plan. Comptek Research, Inc., a New
York corporation with its corporate headquarters located at
2732 Transit Road, Buffalo, NY 14224 ("Comptek"), hereby
establishes a stock option plan for non-employee members of
its Board of Directors (the "Plan"). All options granted
under the Plan will be Nonqualified Stock Options ("NQSO").
Upon ratification by affirmative vote of a majority of
Shares voting at Comptek's 1994 Annual Meeting of
Shareholders, the Plan shall become effective as of
December 10, 1993, (the "Effective Date") and shall remain
in effect as provided in 1.3 herein. Options may be
granted prior to shareholder ratification of the Plan;
provided, however, that in the event shareholder
ratification of the Plan is not obtained at Comptek's 1994
Annual Meeting of Shareholders, this Plan shall
automatically terminate and all outstanding Options granted
shall become null and void.
1.2 Purpose of the Plan. The purpose of the Plan is to attract
and retain the services of experienced and knowledgeable
independent directors for the benefit of Comptek and its
shareholders, and to encourage share ownership by members
of the Board of Directors of Comptek who are not employees,
in order to promote long-term shareholder value through
ownership of common stock.
1.3 Duration of the Plan. Subject to the right of the Board of
Directors of Comptek to terminate the Plan at any time
pursuant to Article 7 hereof, the Plan shall remain in
effect until all Shares subject to the Plan shall have been
purchased or acquired according to the Plan's provisions.
However, in no event may an Option be granted under the
Plan on or after December 9, 2003.
ARTICLE 2 - DEFINITIONS
Whenever used in the Plan, the following terms shall have the
meaning set forth below:
(a) "Agreement" shall mean any written agreement, contract, or
other instrument or document evidencing any Option granted
pursuant to the Plan.
(b) "Board" means the Board of Directors of Comptek Research,
Inc., as constituted from time to time.
(c) "Change in Control" means any of the following events:
(i) The acquisition by any person (within the meaning of in
Sections 13(d) or 14(d) of the Exchange Act) of
beneficial ownership (within the meaning of Rule 13d-3
promulgated under the Exchange Act) of thirty-three
percent (33%) or more of the combined voting power of
Comptek's then outstanding voting securities; or
(ii) The individuals who, as of the date hereof, are
members of the Board (the "Incumbent Board"), cease for
any reason to constitute a majority of the Board. For
purposes of this definition, if the election, or
nomination for election by Comptek's shareholders, of
any new Director was approved by a vote of a majority
of the Incumbent Board, such new Director shall be
deemed a member of the Incumbent Board; or
(iii) Approval by shareholders of Comptek of (a) a
merger or consolidation involving Comptek if the
shareholders of Comptek, immediately before such merger
or consolidation, do not as a result of such merger or
consolidation, own, directly or indirectly more than
sixty-seven percent (67%) of the combined voting power
of the then outstanding voting securities of the
corporation resulting from such merger of consolidation
in substantially the same proportion as their ownership
of the combined voting power of the voting securities
of Comptek outstanding immediately before such merger
or consolidation, or (b) a complete liquidation or
dissolution of Comptek or an agreement for the sale or
other disposition of all or substantially all of the
assets of Comptek.
Notwithstanding the foregoing, a Change in Control shall
not be deemed to occur pursuant to subsection (i), solely
because thirty-three percent (33%) or more of the combined
voting power of Comptek's then outstanding securities is
acquired by (A) a trustee or other fiduciary holding
securities under one or more employee benefit plans
maintained by Comptek or any of its Subsidiaries or (B) any
corporation which, immediately prior to such acquisition,
is owned directly or indirectly by the shareholders of
Comptek in the same proportion as their ownership of stock
in Comptek immediately prior to such acquisition.
(d) "Code" means the Internal Revenue Code of 1986, as amended
from time to time.
(e) "Committee" means the committee specified in Article 3.
(f) "Director" means a member of the Board.
(g) "Disability" means a permanent and total disability, within
the meaning of Code Section 22(e)(3) as determined by the
Committee in good faith, upon receipt of sufficient
competent medical advice from one or more individuals,
selected by the Committee, who are qualified to give
professional medical advice.
(h) "Eligible Director" means a member of the Board who is not
an employee of Comptek or any of its Subsidiaries.
(i) "Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time.
(j) "Fair Market Value" of a Share of common stock shall be (i)
the closing sale price of a Share of common stock as
reported on the principal securities exchange on which
Shares of common stock are then listed or admitted to
trading on the day as of which such determination of Fair
Market Value is to be made, or if no trading shall have
occurred on such day, then on the latest preceding day on
which trading shall have occurred or (ii) if not so traded,
the average of the closing bid and ask prices as reported
on the National Association of Securities Dealers Automated
Quotation System or if not so reported, as furnished by any
member of the National Association of Securities Dealers,
Inc. selected by the Board, on the day as of which such
determination of Fair Market Value is to be made, or if no
sales shall have occurred on such day, then on the latest
preceding day on which sales shall have occurred. In the
event that the price of a share of common stock shall not
be reported in any manner described in the preceding
sentence, the Fair Market Value of a Share of common stock
shall be determined by the Board in its absolute
discretion.
(k) "Option" means an Option to purchase Shares granted
pursuant to Article 5 hereof.
(l) "Option Certificate" means a certificate setting forth the
terms and provisions applicable to Options granted to
Participants.
(m) "Option Price" means the price at which a Share may be
purchased by a Participant pursuant to an Option.
(n) "Participant" means an Eligible Director who has been
granted an Option under the Plan.
(o) "Shares" means shares of common stock of Comptek Research,
Inc., par value of $0.02 per share.
(p) "Subsidiary" means any corporation in which Comptek owns
directly, or indirectly through subsidiaries, at least
fifty percent (50%) of the total combined voting power of
all classes of stock, or any other entity (including, but
not limited to, partnerships and joint ventures) in which
Comptek owns at least fifty percent (50%) of the combined
equity thereof.
ARTICLE 3 - ADMINISTRATION
3.1 The Committee. The Board shall appoint a committee to be
known as the Directors' Stock Option Plan Committee (the
"Committee"), which shall consist of at least three
Directors to administer the Plan as contemplated by Rule
16b-3 pursuant to the Exchange Act, or any successor or
replacement rule. Committee members shall receive no
additional compensation for such service. Eligible
Directors who are eligible for options under the Plan may
vote on matters affecting the administration of the Plan
and may serve as members of the Committee.
3.2 Authority of the Committee. The Committee shall have full
power except as limited by law or by the Certificate of
Incorporation or Bylaws of Comptek, and subject to the
provisions herein, to administer the Plan, and to construe
and interpret the Plan and any agreement or instrument
entered into under the Plan. The Committee, however, shall
have no discretion with respect to the eligibility or
selection of directors to receive Options under the Plan,
the number of shares of stock subject to any such Options,
of the Plan, or the purchase price thereunder, the vesting
period, or the timing of Option grants The Committee shall
not have the authority to take any action which would
result in the loss of eligibility of grants under the Plan
for the "formula based" exemption under Rule 16b-
3(c)(ii)(A) of the Exchange Act. The determination of the
Committee in the administration of the Plan, as described
herein, shall be final and conclusive and binding upon all
persons including, without limitation, Comptek, its
shareholders and persons granted options under the Plan.
The Secretary of Comptek shall be authorized to implement
the Plan in accordance with its terms and to take such
actions of a ministerial nature as shall be necessary to
effectuate the intent and purposes thereof.
3.3 No Guaranteed Term of Office. Nothing in this Plan or any
modification hereof, and no grant of an Option, or any term
thereof, shall be deemed an agreement or condition
guaranteeing to any Eligible Director any particular term
of office or limiting the right of Comptek, the Board, or
the shareholders to terminate the term of office of any
Eligible Director under the circumstances set forth in the
Comptek's Certificate of Incorporation or By-Laws, or as
otherwise provided by law.
ARTICLE 4 - SHARES SUBJECT TO THE PLAN
4.1 Number of Shares. Subject to adjustment as provided in
Section 4.2 herein, the total number of Shares available
for grant under the Plan shall be 100,000 Shares. The
Shares may be authorized but unissued Shares, reacquired
Shares or a combination thereof.
4.2 Adjustments in Available Shares and Options. In the event
of any merger, reorganization, consolidation,
recapitalization, separation, liquidation, stock dividend,
split-up, share combination, or other change in the capital
structure of Comptek affecting the Shares, such adjustment
shall be made in the number of Shares which may be granted
under the Plan, and in the number of and/or price of Shares
subject to outstanding Options under the Plan, as may be
determined to be appropriate and equitable by the
Committee, in its sole discretion, to prevent dilution or
enlargement of rights under the Plan or any Option;
provided that the number of Shares subject to any Option
shall always be a whole number.
ARTICLE 5 - STOCK OPTIONS
5.1 Grant of Options.
Subject to the terms and provisions of the Plan, an
Option to purchase 10,000 Shares will automatically be
granted on December 10, 1993, to each then-Eligible
Director. Each director who becomes an Eligible Director
after December 10, 1993, will automatically be granted
options on 10,000 Shares at the time he becomes a non-
employee member of the Board of Directors. Each Eligible
Director shall automatically receive an additional Option
to purchase 1,000 Shares, effective at the close of
business five (5) business days after the 1994 Annual
Meeting of Shareholders and each Annual Meeting thereafter,
provided the individual in all respects continues to be an
Eligible Director. Further, each Eligible Director or
director who becomes an Eligible Director, shall
automatically receive an option to purchase 5,000 Shares as
of the beginning of the calendar quarter immediately
following such director first acquiring ownership of at
least 5,000 Shares. Provided, however, (i) any Eligible
Director who already owns at least 5,000 Shares as of July
25, 1997, shall automatically receive such 5,000 Share
option-grant as of October 1, 1997, and (ii) each director
who becomes an Eligible Director after July 25, 1997, and
then owns at least 5,000 Shares shall automatically receive
such 5,000 Share option-grant as of the beginning of the
calendar quarter immediately following such director
becoming an Eligible Director. As provided in Section 4.1
herein, at no time shall more than 100,000 Shares be
available for grant under the Plan.
5.2 Option Certificate. Each Option grant shall be evidenced
by an Option Certificate that shall specify the Option
Price, the Option duration, the number of Shares to which
the Option pertains, and such other provisions as the
Committee shall determine.
5.3 Option Price. The Option Price for each Share subject to
the Option shall be equal to one hundred percent (100%) of
the Fair Market Value of a Share on the date the Option is
granted.
5.4 Duration of Options. Each Option shall expire on the tenth
(10th) anniversary date of its grant.
5.5 Exercise of Options. Subject to Sections 5.7 and 5.10
hereof, and all other restrictions and conditions set forth
in this Plan, Options granted under the Plan shall be
exercisable one (1) year after the date of grant.
5.6 Payment. Options shall be exercised by the delivery of a
written notice of exercise to the Secretary of Comptek,
setting forth the number of Shares with respect to which
the Option is to be exercised, accompanied by full payment
for the Shares.
The Option Price upon exercise of any Option shall be
payable to Comptek in full either: (a) in cash or its
equivalent, or (b) by tendering previously acquired Shares
having an aggregate Fair Market Value at the time of
exercise equal to the total Option Price.
As soon as practicable after receipt of a written
notification of exercise and full payment, Comptek shall
deliver to the Participant, in the name or names designated
by the Participant, Share certificates in an appropriate
amount based upon the number of Shares purchased under the
Option(s).
5.7 Termination of Membership on Comptek's Board of Directors.
(a) Termination by Death. If the service on the Board by a
Participant is terminated by reason of death, all
outstanding Options granted to that Participant shall
remain exercisable at any time prior to the expiration
date, or for one (1) year after the date of death,
whichever period is shorter, by such person or persons
as shall have been named as the Participant's
beneficiary, or by such persons that have acquired the
Participant's rights under the Option by will or by the
laws of descent and distribution.
(b) Termination by Disability. If the service on the Board
by a Participant is terminated by reason of Disability,
all outstanding Options granted to that Participant
shall remain exercisable at any time prior to their
expiration date, or for one (1) year after the date of
such termination, whichever period of shorter.
(c) Termination of Director's Service for Other Reasons.
If the service on the Board by a Participant shall
terminate for any reason other than the reasons set
forth in subsections (a) and (b) of this Section 5.7,
all outstanding Options granted to that Participant
shall remain exercisable for a period ending on the
expiration date of the Option or for six (6) months
after such termination, whichever period is shorter.
5.8 Forfeiture of Options. Unless an Option is otherwise
exercisable pursuant to Section 5.7 hereof, no Option may
be exercised unless the Participant is a member of the
Board at the time of exercise and shall have been
continuously in office since the grant of the Option.
5.9 Nontransferability of Options. No Option granted under the
Plan may be sold, transferred, pledged, assigned, or
otherwise alienated or hypothecated, except in accordance
with the Participant's beneficiary designation, by will, or
by the laws of descent and distribution, or pursuant to the
requirements of a Qualified Domestic Relations Order.
Further, all Options granted to a Participant under the
Plan shall be exercisable during his lifetime only by such
Participant or his guardian or legal representative.
5.10 Change in Control. Upon the occurrence of a Change in
Control, unless otherwise specifically prohibited by the
terms of applicable law or regulation, any and all Options
granted hereunder shall become immediately exercisable.
ARTICLE 6 - BENEFICIARY DESIGNATION
Each Participant under the Plan may, from time to time, name any
beneficiary or beneficiaries (who may be named contingently or
successively) to whom any benefit under the Plan shall accrue in
case of his death. Each such designation shall revoke all prior
designations by the same Participant, shall be in a form
prescribed by Comptek, and will be effective only when filed by
the Participant in writing with the Secretary of Comptek during
the Participant's lifetime. In the absence of any such
designation, benefits remaining at the Participant's death shall
accrue to the Participant's estate.
ARTICLE 7 - AMENDMENT, MODIFICATION, AND TERMINATION
Amendment, Modification, and Termination. The Plan may be
amended at any time and from time to time by the Board as the
Board shall deem advisable; provided, however, that no amendment
shall become effective without shareholder approval if such
shareholder approval is required by law, rule or regulation; and
provided further, to the extent required by Rule 16b-3 under
Section 16 of the Exchange Act, in effect from time to time, Plan
provisions relating to the amount, price and timing of Options
shall not be amended more than once every six months, except that
the foregoing shall not preclude any amendment to comport with
changes in the Internal Revenue Code of 1986, the Employee
Retirement Income Security Act of 1974 or the rules thereunder in
effect from time to time. No amendment of the Plan shall
materially and adversely affect any right of any participant with
respect to any Option theretofore granted without such
Participant's written consent.
ARTICLE 8 - WITHHOLDING
8.1 Tax Withholding. Comptek shall have the power and the
right as set forth in this Article 9 to deduct or withhold,
or require a Participant to remit to Comptek, an amount
sufficient to satisfy any and all Federal, state, and
local, taxes (including the Participant's FICA obligation)
required by law to be withheld with respect to any taxable
event arising out of or as a result of this Plan.
8.2 Share Withholding. With respect to tax withholding
required upon the exercise of Options, or upon any other
taxable event hereunder, a Participant may elect, subject
to the approval of the Board, in its discretion, to satisfy
the withholding requirement, in whole or in part, by having
Comptek withhold a number of Shares, the Fair Market Value
of which, in itself or when added to a cash payment made by
the Participant to Comptek, equals the amount of tax
required to be withheld. Any such election shall be made
in conformity with Rule 16b-3e promulgated under the
Exchange Act, including all requirements as to the timing
of the election and the exercise thereof.
ARTICLE 9 - SUCCESSORS
All obligations of Comptek under the Plan, with respect to
Options granted hereunder, shall be binding on any successor to
Comptek, whether the existence of such successor is the result of
a direct or indirect purchase, merger, consolidation or
otherwise, of all or substantially all of the business and/or
assets of Comptek.
ARTICLE 10 - LEGAL CONSTRUCTION
10.1 Gender and Number. Except where otherwise indicated by the
context, any masculine term used herein also shall include
the feminine; the plural shall include the singular and the
singular shall include the plural.
10.2 Requirements of Law. The granting of Options and the
issuance of Shares under the Plan shall be subject to all
applicable laws, rules and regulations, and to such
approvals by any governmental agencies or national
securities exchanges as may be required.
10.3 Securities Law Compliance. Transactions under this Plan
are intended to comply with all applicable conditions of
Rule 16b-3 of the Exchange Act.
10.4 Governing Law. To the extent not preempted by Federal law
(or foreign law, in the case of grants to Employees who are
not United States residents), the Plan, and any agreement
hereunder, shall be construed in accordance with and
governed by the laws of the State of New York.
10.5 Severability. In the event any provision of the Plan or
any action taken thereunto shall be held illegal or invalid
for any reason, the illegality or invalidity shall not
affect the remaining parts of the Plan, and the Plan shall
be construed and enforced as if the illegal or invalid
provision had not been included, and the illegal or invalid
action shall be deemed null and void.
EXHIBIT 10.3e
LOAN AGREEMENT
AGREEMENT dated as of February 3, 1999, by and between
Comptek Federal Systems, Inc., a New York Corporation, having its
principal office at 2732 Transit Road, Buffalo, New York 14224
(ACFS@), and John J. Sciuto, residing at 6392 Black Walnut Court,
East Amherst, New York 14051 (the ABorrower@).
WITNESSETH:
WHEREAS, the Borrower currently has a loan from CFS pursuant
to a loan agreement dated July 9, 1996 (the "1996 Loan") with an
outstanding unpaid principal balance of $118,415; and
WHEREAS, the Borrower and CFS wish to provide for an
additional loan or loans not to exceed one hundred thousand
dollars ($100,000).
NOW, THEREFORE, in consideration of the mutual covenants
contained herein and for other good and valuable consideration,
the parties hereto agree as follows:
1. Loan.
CFS hereby agrees, on the terms and conditions set forth
herein, to loan to Borrower the aggregate principal amount of up
to one hundred thousand dollars ($100,000). Such loan shall be
evidenced by and repayable in accordance with the Promissory
Notes of the Borrower payable to the order of CFS in the form of
Exhibits A and B attached hereto (the APromissory Notes@). The
Promissory Notes shall include both funds applied to purchase
shares of Comptek Research, Inc. and funds used to pay
alternative minimum tax related to the exercise of incentive
stock options.
2. Application of Incentive Compensation.
The Borrower hereby agrees to pay over to CFS to be applied
against the outstanding balance of principal and interest on the
Promissory Note related to stock purchases, a minimum of twenty-
five percent (25%) of the gross amount of any incentive
compensation paid to the Borrower by Comptek Research, Inc. or
any of its affiliates, such payment by the Borrower to be made
within ten (10) days of the Borrower=s receipt of such incentive
compensation. Provided, however, that such minimum application
on incentive compensation shall only be effective following the
completion of the repayment of the 1996 Loan.
3. Election to Apply Additional Incentive Compensation
Amounts.
In addition to the amount specified in paragraph 2, the
Borrower may, at his sole election, direct that a greater
percentage of any incentive compensation payable to him be
applied to the Promissory Note.
4. Use of Proceeds.
The Borrower agrees that the principal amount of the loan or
loans provided pursuant to this Loan Agreement will be used
solely to purchase shares of Comptek Research, Inc. and the
payment of alternative minimum tax.
5. Further Actions.
Promptly upon the request of Comptek, the Borrower shall
execute and deliver, or cause to be executed and delivered, each
writing, and take or cause to be taken each other action, that
Comptek shall deem necessary or desirable in connection with the
transaction contemplated by this Loan Agreement
6. Governing Law.
This Loan Agreement shall be governed by the laws of the
State of New York, without giving effect to the principles of
conflicts of law.
IN WITNESS WHEREOF, the parties have caused this Loan
Agreement to be duly executed as of the day and year first above
written.
COMPTEK FEDERAL SYSTEMS, INC.
By: /s/Paul Typrak
Paul Tyrpak, Vice President
/s/John J. Sciuto
John J. Sciuto, Individually
Exhibit A
Purchase of Shares
PROMISSORY NOTE
$______________
Buffalo, NY
February 3, 1999
FOR VALUE RECEIVED, the undersigned, John J. Sciuto,
residing at 6392 Black Walnut Court, East Amherst, New York 14051
(the ABorrower@), HEREBY PROMISES TO PAY to the order of COMPTEK
FEDERAL SYSTEMS, INC., a New York, corporation (AComptek@), at
the offices of Comptek, 2732 Transit Road, Buffalo, New York
14224, the principal amount of
__________________________________________ and 00/100 Dollars
($__________________ ) in lawful money of the United States on or
before the Final Payment Date as specified herein. The AFinal
Payment Date@ shall be deemed to be the earliest to occur of the
following dates: (i) January 31, 2004; (ii) the ninetieth (90th)
day after the day on which Borrower ceases to be employed by
either Comptek or one of its affiliates; (iii) the tenth (10th)
day after the date of an Event of Default (as defined herein).
The Borrower further agrees to pay interest, as hereinafter
provided, in like money at such office on the unpaid principal
amount hereof from time to time outstanding, and on any other
amount payable by the Borrower hereunder to the extent permitted
by applicable law, from the date hereof through and including the
Payment Date, at the rate of three and seven-tenths percent
(3.7%) per annum, based on actual days outstanding and a 360-day
year.
The Borrower hereby agrees to pay principal and interest due
hereunder no later than the Final Payment Date. If any principal
or accrued interest remain unpaid after the Payment Date (the
AAggregate Past Due Balance@), the Borrower agrees to pay
interest on the Aggregate Past Due Balance at the rate of twelve
percent (12%) per annum based on the actual days outstanding
between the Payment Date and the date of repayment of the entire
Aggregate Past Due Balance and a 360-day year.
The Borrower may prepay at any time, without penalty, any
amounts due hereunder.
Each of the following occurrences shall constitute an event
of default (AEvent of Default@): (a) failure of Borrower to apply
at least twenty-five percent (25%) of the gross amount of any
incentive compensation payment received by Borrower from Comptek
or its affiliates, while this Promissory Note is outstanding, to
the payment of principal outstanding on this Promissory Note as
provided for in the Loan Agreement, dated as of the date hereof,
(the "1999 Loan Agreement") by and between Comptek and the
Borrower; (b) an Event of Default or failure to pay any amount
under the Promissory Note dated July 9, 1996 by Borrower to
Comptek.
This Promissory Note shall be governed by, and construed and
interpreted in accordance with, the laws of the State of New
York, without regards to conflicts of law principles, except as
preempted by Federal law.
Anything in the foregoing to the contrary notwithstanding,
it is understood and agreed that this Note is evidence solely
for, and there shall be payable hereunder only, so much of said
principal sum of and
__________________________________________________ 00/100
Dollars ($_________________ ) as shall have been advanced by
Comptek to John J. Sciuto pursuant to the 1999 Loan Agreement.
The failure to assert any right hereunder shall not be
deemed a waiver of such right.
John J. Sciuto
Exhibit B
AMT
PROMISSORY NOTE
$____________
Buffalo, NY
February 3, 1999
I, JOHN J. SCIUTO, residing at 6392 Black Walnut Court, East
Amherst, New York 14051, for value received, hereby agree to pay
COMPTEK FEDERAL SYSTEMS, INC. ("CFS"), at the principal offices
of CFS, 2732 Transit Road, Buffalo, New York 14224, the principal
sum of __________________________ and 00/100 Dollars
$____________ in lawful money of the United States without
interest thereon on demand following either (i) the termination
of my employment by COMPTEK RESEARCH, INC. or (ii) my disposition
prior to February 3, 2001 of all, or a portion of, the ________
shares of COMPTEK common stock represented by certificate
BU_________ dated _______, ___ 1999.
If as of February 3, 2001, JOHN J. SCIUTO has not left the
employ of COMPTEK RESEARCH, INC. and has not disposed of such
_________ shares represented by certificate BU__________, then
this Note shall be deemed to be canceled as of such date.
This Note may be pre-paid in whole or in part without
penalty.
Anything in the foregoing to the contrary notwithstanding,
it is understood and agreed that this Note is evidence solely
for, and there shall be payable hereunder only, so much of said
principal sum of $____________ as shall have been advanced by CFS
to JOHN J. SCIUTO pursuant to the Loan Agreement dated February
3, 1999, by and between CFS and JOHN J. SCIUTO.
The failure to assert any right hereunder shall not be
deemed a waiver of such right.
__________________________________
John J. Sciuto
EXHIBIT 10.3h
EMPLOYMENT AGREEMENT
FOR
CHARLES E. DOWDELL
THIS AGREEMENT, made as of the 18th day of March, 1999, by and
between CHARLES E. DOWDELL, residing at 5121 Donnington Road,
Clarence, NY 14031 (hereinafter "Employee"), and COMPTEK-AMHERST,
INC., a New York corporation which is a wholly-owned subsidiary
of Comptek Research, Inc., having its office and principal place
of business at 30 Wilson Road, Williamsville, New York
(hereinafter called the "Corporation").
W I T N E S S E T H :
WHEREAS, immediately prior to the execution of this
Agreement, Employee was employed as President of Amherst Systems,
Inc., and it is the intention of the parties that he be employed
by the Corporation in such position; and
WHEREAS, Employee acknowledges that he has and will continue
to develop specialized knowledge of, and personal relationships
with, the Corporation's customers and their products and
operations; and
WHEREAS, this Agreement is one of several similar agreements
by and between the Corporation and certain key executives; and
WHEREAS, it is the intention of the parties to have this
Agreement and such similar Agreements construed in a consistent
manner in accordance with the laws of the State of New York; and
WHEREAS, the Corporation wishes to be reasonably assured
that Employee will continue as an employee and desires to retain
his services, realizing that if he were to enter into competition
with the Corporation it would suffer financial loss; and
WHEREAS, concurrently with the execution and delivery of
this Agreement, Comptek Research, Inc. ("Buyer") is purchasing
certain assets from Amherst Systems, Inc., ("Amherst"), the
Corporation and Employee wish to provide for continued employment
of Employee with the Corporation upon the terms and conditions
set forth in this Agreement;
NOW, THEREFORE, in consideration of mutual covenants and
obligations contained herein, the parties hereto agree as
follows:
1. Term of Employment. The Corporation hereby employs
Employee and Employee agrees to work for the Corporation for a
period of three (3) years beginning March 18, 1999, and ending
March 31, 2002, subject, however, to earlier termination as
provided in paragraphs 4, 5, 11, and 12.
2. Duties and Responsibilities. Employee agrees that
during the term of this Agreement his principal area of
responsibility shall be that of executive level management of the
Corporation. Employee shall devote his full business time and
best efforts, skills, and ability to promote the business of the
Corporation and perform for the Corporation such duties as are
customarily performed by a management or executive employee
having responsibility in such areas, and such other duties as may
be assigned to him by the Chairman of the Board of Directors of
the Corporation and serve as an officer and/or a director of the
Corporation if duly elected. Employee shall have such power and
authority as shall reasonably be required to enable him to
perform his duties hereunder in an efficient manner; provided
that in the exercising of such power and authority and the
performance of such duties, he shall at all times be subject to
the supervision and direction of the Chairman of the Board, and
the authority and control of the Board of Directors, of the
Corporation.
3. Remuneration.
(a) So long as Employee is employed by the Corporation, he will
be paid a salary at such rate as may be fixed from time to time
by the Board of Directors of the Corporation, but not less than
One Hundred Sixty-seven Thousand Six Hundred Twenty-seven and
20/100 Dollars ($167,627.20) per year (his current "Base
Salary"), payable in approximately equal installments at such
intervals as the Corporation pays the salaries of its executive
employees generally.
(b) It is understood that temporary disability (of less
than six (6) months in duration) will not result in termination
of Employee's employment, during which period of time Employee's
then Base Salary shall continue in effect.
(c) Employee will be entitled to reimbursement for all
reasonable travel and other business expenses incurred by him.
Employee will be included in any group life insurance, medical
insurance, pension, profit-sharing plans or other benefits which
the Corporation may have in force from time to time for its
executive personnel, provided, however, group medical insurance
will not be materially less favorable to Employee than is the
case as of the date of this Agreement. Such benefits and any
resulting payments thereunder shall be in addition to his Base
Salary and shall continue in force during any period of Base
Salary continuation.
4. Death Benefits.
(a) If Employee should die while still in the employ of
the Corporation, the Corporation will pay to his designated
beneficiary
(i) his Base Salary in effect at the time of death for
the balance of the month in which his death
occurs, plus
(ii) in each of the first twelve months following
the month in which his death occurs, an amount
equal to one twelfth (1/12) of his Base Salary in
effect at the time of death.
(b) If the designated beneficiary is not alive at the time
of the making of any of such payments, the payments shall be made
in equal shares to such of the children of Employee as shall be
surviving at the time of each of such payments; or, if Employee
has no surviving designated beneficiary or children at the time
of the making of any such payments, then a lump sum payment shall
be made to Employee's estate in accordance with paragraph 13 of
this Agreement.
5. Termination of Employment Due to Illness or
Disability.
(a) In the event of the disability or illness of Employee
rendering him substantially unable to render service to the
Corporation of the character contemplated by this Agreement for a
period in excess of six (6) months, the Corporation shall have
the right to terminate this Agreement upon giving not less than
thirty (30) days' advance written notice given after such six (6)
month period of its intention to terminate Employee. If Employee
shall have resumed his duties hereunder within such thirty-day
period and shall have continuously performed his duties for at
least two (2) consecutive months thereafter, such notice of
termination shall be deemed of no force or effect and this
Agreement shall thereupon continue in full force, as though such
notice of termination had not been given. In the event a
question arises hereunder as to Employee's incapacity to perform
his regular duties, Employee shall be examined by a physician
selected by the Corporation and Employee, and such physician's
determination shall be final and conclusive and binding on all
parties for the purposes hereof.
(b) Upon termination of his employment because of such
illness or disability, the Corporation shall pay to Employee in
each of the first twelve months following the effective date of
such termination, a monthly termination payment equal to one
twelfth (1/12) of his Base Salary in effect at the time of such
termination.
(c) In the event of Employee's death after such
termination on account of such illness or disability, but before
the completion of the making of the payments to which he became
entitled as provided for above, the Corporation shall make such
payments to Employee's designated beneficiary; or, if the
designated beneficiary is not alive at the time of the making of
any of such payments, the payments shall be made in equal shares
to such of the children of Employee as shall be surviving at the
time of each of such payments; or, if Employee has no surviving
designated beneficiary or children at the time of the making of
any such payments, then a lump sum payment shall be made to the
Employee's estate in accordance with paragraph 13 of this
Agreement.
6. Non-Competition. It is understood and agreed that
during the term of his employment by the Corporation, and, in the
event that he resigns or is discharged, for a period of one (1)
year following the effective date of termination of his
employment by the Corporation, for whatever reason, or the period
of time remaining on the Non-Competition Agreement between
Employee and Buyer, whichever is longer in duration, Employee
shall not engage directly or indirectly in any business in the
continental United States which is substantially similar to the
business of the Corporation, either as a proprietor, stockholder
(other than as a holder of less than 5% of any class of the
securities of a corporation registered under the Securities
Exchange Act of 1934, as amended), partner, officer, employee or
otherwise, unless the Corporation has first consented in writing
thereto. In addition to the foregoing covenants, it is also
understood and agreed that during the greater of (i) one (1) year
following Employee's termination of employment with the
Corporation, for whatever reason, or (ii) the length of time
remaining pursuant to any noncompetition agreement by and between
the Corporation (or any affiliate of the Corporation) and
Employee in effect, or to be put into effect, as of the date of
this Agreement, Employee shall not solicit any of the
Corporation's customers with which he dealt while he was employed
by the Corporation, either on behalf of himself or any other
person or entity engaged in any business substantially similar to
the business of the Corporation, unless the Corporation has first
consented in writing thereto.
7. Trade Secrets. In the course of performing his
duties, Employee will be engaged in the development, manufacture
and sale of a variety of computer hardware and software products
based upon experimental and inventive work, and Employee will
receive, and acknowledges that he has received, confidential
information of the Corporation including, without limitation,
information not available to competitors relating to the
Corporation's existing and contemplated products, manufacturing
procedures, methods, machines, computations, technology,
formulae, trade secrets, know-how, research and development
programs, discoveries, improvements and ideas (regardless of
whether or not patentable), customer information, all of which is
hereinafter referred to as "Trade Secrets." Employee agrees that
he will not, either during his employment or subsequent to the
termination of his employment by the Corporation, directly or
indirectly disclose, publish or otherwise divulge any Trade
Secrets to anyone outside the Corporation or use such information
in any manner which would adversely affect the business or
business prospects of the Corporation, without prior written
authorization from the Corporation to do so. Without limiting
the generality of the foregoing, Employee agrees that while
employed by the Corporation he will not, except with the prior
written consent of a duly authorized superior officer of the
Corporation, disclose or otherwise divulge to any unauthorized
person, any Trade Secrets and that if, at the time of the
termination of his employment by the Corporation he is in
possession of any documents or other written materials
constituting, containing or reflecting Trade Secrets, he will
return and surrender all such documents and written materials to
the Corporation upon leaving its employ. The restrictions and
protection provided for in this paragraph shall be in addition to
any protection afforded to Trade Secrets by law or equity.
8. Inventions. Employee agrees that all inventions,
discoveries and improvements, and all new ideas for manufacturing
and marketing products of the Corporation, which Employee has
conceived or may conceive while employed by the Corporation,
whether during or outside business hours, on the premises of the
Corporation or elsewhere, alone or in collaboration with others,
or which he has acquired or may acquire from others, and whether
or not the same can be patented or registered under patent,
copyright, or trademark laws, shall be and become the sole and
exclusive property of the Corporation. Employee agrees to
promptly disclose and fully acquaint the President or the
Chairman of the Board of the Corporation with any such
inventions, discoveries, improvements and ideas which he has
conceived, made or acquired, and shall, at the request of the
Corporation, make a written disclosure of the same and execute
such applications, assignments, and other written instruments as
may reasonably be required to grant to the Corporation sole and
exclusive right, title and interest thereto and therein and to
enable the Corporation to obtain and maintain patent, copyright,
and trademark protection therefor.
9. Non-Solicitation and Non-Interference. For a period of
one (1) year following Employee's termination of employment,
Employee shall not, directly or indirectly, on his own behalf of
another person or entity (i) contact, solicit, offer to hire or
hire any person who was, within a period of six months prior to
such termination, employed by the Corporation; (ii) communicate
nor have contact with the Corporation's employees, customers,
suppliers, other persons with whom the Corporation may then have
business relations which communication or contact may interfere
with or otherwise interrupt the Corporation's operations,
employment or business relationships with such persons, or (iii)
by any means issue or communicate any private or public statement
which may be critical or disparaging of the Corporation, its
products, services, officers, directors or employees.
10. Enforcement of Covenants. The Corporation's
obligation to make any or all of the payments provided for under
this Agreement is conditioned upon and shall cease and terminate
in the event of a material breach by Employee of any of the
covenants contained herein. Employee acknowledges that such
payments are full and adequate compensation for his
non-competition with the Corporation.
The Corporation, however, shall not cease to perform any of
its covenants made under this Agreement, including without
limitation the payment of money, until any alleged material
breach of this Agreement by Employee has been adjudicated by a
court of competent jurisdiction.
Employee understands and agrees that because of the personal
relationships with the Corporation's customers which he has and
will continue to form during his employment, and because of the
specialized knowledge which he will develop of the Corporation's
and of its customers' products, services, or operations,
potential irreparable damage would result to the Corporation from
his competing with it or divulging its Trade Secrets as
restricted by this Agreement. Accordingly, Employee expressly
agrees that in addition to any and all remedies available to it,
the Corporation shall have the remedies of money damages and a
restraining order, or an injunction, and of any other appropriate
equitable relief, without the necessity of posting any bond or
surety, in the event that there is a breach of any covenants
contained in this Agreement.
11. Termination of Employment by the Corporation. The
Corporation may, of its own volition, terminate Employee's
employment at any time, other than on account of illness or
disability, upon giving at least thirty (30) days' advance
written notice to Employee of the date when such termination
shall become effective. In the event of such termination,
Employee during his life shall be entitled to receive, so long as
he shall not breach (and shall not have breached) any of the
provisions of this Agreement, or have been terminated for cause,
monthly payments for a period of twelve months next succeeding
the effective date of termination, each payment equal to one
twelfth (1/12) of his Base Salary in effect at the time of such
termination. Employee's employment shall be deemed to be
terminated for cause where the Corporation determines, in good
faith, that there has been continuing neglect by Employee of his
duties hereunder, continuing after written notice and a thirty
(30) day period in which to cure, or willful and material
misconduct on his part in connection with the performance of such
duties, where Employee suffers a loss of his/her security
clearance at the level which is in effect at the date of this
Agreement, or where Employee has been convicted of a felony or a
misdemeanor involving moral turpitude. If the Corporation
terminates Employee's employment for cause, Employee will be
entitled to receive his Base Salary only through the date such
termination of employment is effective.
12. Termination of Employment by Employee. Employee may,
of his own volition, terminate his employment at any time upon
giving at least thirty (30) days' advance written notice to the
President or the Chairman of the Board of Directors of the
Corporation of the date when such termination shall become
effective. If Employee terminates his employment, Employee will
be entitled to receive his Base Salary only through the date such
termination of employment is effective.
13. Designation of Beneficiary; Lump Sum Payments. A
designated beneficiary entitled to receive the benefits payable
following the death of Employee under paragraph 4, or payable
following the death of Employee after termination of employment
under paragraph 5, shall be named in a written designation filed
with the Secretary of the Corporation. Such written designation
may be revoked or amended by Employee at any time. If no such
written designation of beneficiary shall be filed with the
Secretary of the Corporation, or if the designated beneficiary is
not alive at the time of any payment to be made, the same shall
be paid in equal shares to such of the children of Employee as
shall be surviving at the time of such payment. If Employee has
no surviving designated beneficiary or children at the time of
any payment to be made under paragraph 4 or paragraph 5, the same
shall be paid to Employee's estate in cash. In determining the
eligibility and status of persons entitled to receive payments
under paragraphs 4 and 5 of this Agreement, the Corporation may
rely on its records and the good faith determinations of its
officers. In no event shall the Corporation be liable to any
person for any sums paid to any other persons pursuant to such
records and determinations.
14. Assignments, etc. Neither Employee nor any
beneficiary designated to receive payments under this Agreement
shall have any power to transfer, assign, anticipate, mortgage or
otherwise encumber in advance any of the benefits payable
hereunder, nor shall such benefits be subject to seizure for the
payment of any debts or judgments or any of them or be
transferable by operation in law in the event of bankruptcy,
insolvency or otherwise. The Corporation may assign this
Agreement, at its sole discretion, to its parent, subsidiary or
any affiliated entity.
15. Participation in Other Plans. Nothing in this
Agreement shall affect any right which Employee may otherwise
have to participate in, or under any other retirement plan or
agreement which the Corporation may now or hereafter provide.
16. Binding Agreement. This Agreement shall be binding
upon the parties hereto, their heirs, executors, administrators
or successors.
17. Revocation. This Agreement may be amended or revoked
at any time only by mutual written agreement of the parties.
18. Cumulative Remedies. Any of the remedies provided for
herein shall be in addition to any remedy available to either of
the parties at law or equity.
19. Savings Clause. If any part of this Agreement shall
be determined to be unreasonable in duration or in area, then
this Agreement is intended to and shall extend only for such
period of time and in such area as is determined to be
reasonable.
20. New York Law. This Agreement shall be construed in
accordance with and governed by the laws of the State of New
York.
IN WITNESS WHEREOF, Employee has hereunto set his hand and
seal, and the Corporation has caused these presents to be
executed by its Chairman of the Board and its corporate seal to
be affixed hereto, the day and year first above written.
/s/Charles E. Dowdell
___________________________________
Charles E. Dowdell
COMPTEK-AMHERST, INC.
By: /s/John J. Sciuto
John J. Sciuto
Chairman
(Corporate Seal)
STATE OF NEW YORK )
: SS.:
COUNTY OF ERIE )
On this 25th day of March, 1999, before me personally came John
J. Sciuto to me known, who, being by me duly sworn, did depose
and say that he resides at E. Amherst, NY; that he is Chairman of
the Board of COMPTEK-AMHERST, INC., the corporation described in
and which executed the above instrument; that he knows the seal
of said corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by the order of the
board of directors of said corporation, and that he signed his
name thereto by like order.
/s/Randy C. Fahs
________________________________
Notary Public
STATE OF NEW YORK )
: SS.:
COUNTY OF ERIE )
On this 12th day of March, 1999, before me personally came
Charles E. Dowdell, to me personally known and known to me to be
the same person described in and who executed the foregoing
instrument and acknowledged that he executed the same.
/s/Carol M. Mueller
___________________________________
Notary Public
CORPORATE REVOLVING AND TERM LOAN AGREEMENT
BETWEEN
MANUFACTURERS AND TRADERS TRUST COMPANY
AND
COMPTEK RESEARCH, INC.
DATED MARCH __, 1999
TABLE OF CONTENTS
Page
1. DEFINITIONS. 1
a. Accumulated Funding Deficiency. 1
b. Acquisition 1
c. Acquisition Document 1
d. Affiliate 2
e. Applicable Margin 2
f. Bankruptcy Law 4
g. Bank's Prime Rate 4
h. CERCLA 5
i. Comptek-Amherst. 5
j. Comptek Federal. 5
k. Control. 5
l. Distribution. 6
m. EBITDA. 6
n. Environmental Law. 7
o. ERISA. 7
p. Event of Default. 7
q. Governmental Authority 10
r. Hazardous Material 10
s. Internal Revenue Code. 10
t. Law. 11
u. Libor Rate 11
v. Libor Rate Business Day. 11
w. Libor Rate Election. 11
x. Libor Rate Period 12
y. Libor Rate Period Commencement Date. 12
z. Libor Rate Portion. 12
aa. Loan. 12
bb. Loan Document. 12
cc. Material Adverse Effect. 13
dd. Other Obligor 13
ee. Pension Plan. 14
ff. Permitted Investment 14
gg. Permitted Lien. 15
hh. Permitted Loan. 16
ii. Person. 18
jj. Post-Acquisition Subsidiaries. 18
kk. Potential Event of Default. 18
ll. PRB 18
mm. Prohibited Transaction. 18
nn. Related Entity. 19
oo. Release. 19
pp. Reportable Event. 19
qq. Revolving Loan. 19
rr. Revolving Loan Maturity Date. 19
ss. Seller 19
ss. Subordinated Debenture Document 20
tt. Subsidiary 20
uu. System. 20
vv. Term Loan I. 21
ww. Term Loan II. 21
xx. Year 2000 Compliant. 21
2. REVOLVING LOANS. 21
a. Making and Obtaining Revolving Loans. 22
b. Revolving Loan Note. 23
c. Repayment. 24
d. Optional Repayment in Advance. 24
e. Interest. 24
f. Facility Fee. 27
g. Late Charge. 27
h. Non-Usage Fee. 27
i. General Provisions as to Repayment and Payment. 29
j. Libor Rate Election. 30
k. Extension of Revolving Loan Maturity Date. 31
3. TERM LOAN I. 32
a. Making and Obtaining Term Loan I. 32
b. Term Loan I Note. 32
c. Repayment. 33
d. Optional Repayment in Advance. 33
e. Interest. 34
f. Late Charge. 36
g. General Provisions as to Repayment and Payment. 37
h. Libor Rate Election. 38
4. TERM LOAN II. 39
a. Making and Obtaining Term Loan II. 39
b. Term Loan II Note. 40
c. Repayment. 40
d. Optional Repayment in Advance. 41
e. Interest. 41
f. Late Charge. 44
g. General Provisions as to Repayment and Payment. 44
h. Libor Rate Election. 45
5. PREREQUISITES TO LOAN. 47
a. No Default. 47
b. Representations and Warranties. 47
c. Proceedings. 48
d. Receipt by Bank. 48
6. REPRESENTATIONS AND WARRANTIES. 55
a. Use of Proceeds. 56
b. Consummation of Acquisition 56
c. Subordinated Debt 56
d. Subsidiaries; Affiliates 57
e. Good Standing; Qualification; Authority. 57
f. Control 57
g. Compliance. 57
h. Environmental Matters. 58
i. Legality. 60
j. Documents 62
k. No Waiver or Default 63
l. Representations and Warranties 63
m. Fiscal Year. 63
n. Financial Information 63
o. Material Adverse Effects; Distributions. 65
p. Tax Returns and Payments 65
q. Certain Indebtedness 65
r. Pension Obligations. 66
s. Leases. 67
t. Assets; Liens and Encumbrances 67
u. Investments 67
v. Loans. 67
w. Judgments and Litigation. 68
x. Transactions with Affiliates 68
y. Default 69
z. Full Disclosure. 69
aa. Year 2000 Compliance 69
7. AFFIRMATIVE COVENANTS. 70
a. Good Standing; Qualification. 70
b. Compliance. 70
c. Working Capital. 72
d. Net Worth. 72
e. Combined Fixed Charges Coverage. 73
f. Maximum Funded Debt. 74
g. Maximum Senior Funded Debt. 75
h. Accounting; Reserves; Tax Returns. 76
i. Financial and Other Information; Certificates of No
Default. 76
j. Payment of Certain Indebtedness. 79
k. Maintenance of Title and Assets; Insurance. 80
l. Inspections. 80
m. Pension Obligations. 81
n. Changes in Management, Ownership and Control. 82
o. Judgments. 82
p. Litigation. 83
q. Liens and Encumbrances. 84
r. Defaults and Material Adverse Effects. 84
s. Additional Guaranties, Security Agreements, Patent
Collateral Assignments and Security Agreements and
Trademark Collateral Assignments and Security
Agreements and Copyright Security Agreements. 85
t. Further Actions Concerning Collateral. 85
u. Year 2000 Compliance. 86
v. Further Actions. 86
8. NEGATIVE COVENANTS. 87
a. Fiscal Year. 87
b. Certain Indebtedness. 87
c. Pension Obligations. 88
d. Liens and Encumbrances. 89
e. Capital Expenditures. 89
f. Operating Leases. 89
g. Investments. 89
h. Loans. 90
i. Transactions with Affiliates. 90
j. Distributions. 90
k. Corporate and Other Changes. 91
l. Sale of Receivables. 91
m. Stock of or Ownership Interest in Subsidiary. 91
n. Full Disclosure. 92
9. INDEBTEDNESS IMMEDIATELY DUE. 92
10. EXPENSES; INDEMNIFICATION. 93
a. Loan Document Expenses. 93
b. Collection Expenses. 93
c. Expenses Due to Law Changes. 94
d. Libor Expenses. 95
e. Environmental Indemnification. 96
11. NOTICES. 97
12. MISCELLANEOUS. 98
a. Term; Survival. 98
b. Survival; Reliance. 98
c. Right of Setoff. 99
d. Assignment or Grant of Participation. 100
e. Binding Effect. 100
f. Entire Agreement, Modifications and Waivers. 100
g. Rights and Remedies Cumulative. 101
h. Requests. 101
i. Extent of Consents and Waivers. 102
j. Directly or Indirectly. 102
k. Accounting Terms and Computations. 102
l. Reference to Law. 102
m. Reference to Governmental Authority. 102
n. Severability. 103
o. Governing Law. 103
p. Headings. 103
13. CONSENTS AND WAIVERS RELATING TO LEGAL PROCEEDINGS. 103
a. JURISDICTIONAL CONSENTS AND WAIVERS. 104
b. WAIVER OF TRIAL BY JURY AND CLAIMS TO
CERTAIN DAMAGES 105
CORPORATE REVOLVING AND TERM LOAN AGREEMENT
This Agreement is made this ___ day of March 1999
between Manufacturers and Traders Trust Company, a New York
banking corporation having its chief executive office at One M&T
Plaza, Buffalo, New York 14240, (the "Bank") and Comptek
Research, Inc., a New York business corporation having its chief
executive office at 2732 Transit Road, Buffalo, New York 14224,
(the "Borrower").
The Bank and the Borrower agree as follows:
1. DEFINITIONS. For purposes of this Agreement:
a. Accumulated Funding Deficiency. "Accumulated
Funding Deficiency" has the meaning given to such term in Section
412(a) of the Internal Revenue Code.
b. Acquisition . The "Acquisition" means the
acquisition by the Borrower of certain assets of the Seller.
c. Acquisition Document "Acquisition Document"
means, as may have heretofore been amended or supplemented, (i)
an Asset Purchase Agreement, dated December 23, 1998, among the
Borrower, the Seller and ASI Acquisition Corp. pursuant to which
the Borrower agrees to make the Acquisition, (ii) any exhibit or
schedule referred to in such Asset Purchase Agreement or
otherwise related thereto or (iii) any agreement, instrument or
other writing heretofore or hereafter delivered or to be
delivered pursuant to such Asset Purchase Agreement or in
connection therewith.
d. Affiliate . "Affiliate" means, other than all
Related Entities, (i) any Person who or that now or hereafter has
Control of or is now or hereafter under common Control with any
Related Entity or over whom or which any Related Entity now or
hereafter has Control, (ii) any Person who is now or hereafter
related by blood, adoption or marriage to any Person referred to
in clause (i) of this sentence or now or hereafter resides in the
same home as any such Person, (iii) any Person who is now or
hereafter a director or officer of any Related Entity or has
functions with respect to any Related Entity similar to those of
a director or officer of a corporation or (iv) any Person who is
now or hereafter related by blood, adoption or marriage to any
Person referred to in clause (iii) of this sentence or now or
hereafter resides in the same home as any such Person or over
whom or which any such Person now or hereafter has Control.
e. Applicable Margin . "Applicable Margin" means,
for any purpose set forth in the following chart for any period
consisting of three calendar months beginning with the third
month of any fiscal quarter of the Borrower, the margin for such
purpose determined from such chart:
For purposes of the foregoing chart, "Ratio" means, for any
period consisting of three calendar months beginning with the
third month of any fiscal quarter of the Borrower, the ratio of
(i) the total of (A) the aggregate outstanding principal amounts
of all Revolving Loans at the end of the preceding fiscal quarter
of the Borrower, (B) the outstanding principal amount of Term
Loan I at the end of such preceding fiscal quarter, (C) the
outstanding principal amount of Term Loan II at the end of such
preceding fiscal quarter and (D) the aggregate outstanding
principal amounts at the end of such preceding fiscal quarter of
all other indebtedness and other obligations arising from the
borrowing of any money by any Related Entity or the deferral of
the purchase price or capital lease of any asset by any Related
Entity to (ii) EBITDA for the preceding four fiscal quarters of
the Borrower minus consolidated capital expenditures of the
Borrower for such preceding four fiscal quarters; provided,
however, that, for purposes of calculating such ratio, (I) EBITDA
and consolidated capital expenditures of the Borrower for the
four fiscal quarters of the Borrower ending on July 2, 1999 shall
be deemed to be the annualized EBITDA and consolidated capital
expenditures of the Borrower for the fiscal quarter of the
Borrower ending on July 2, 1999, (II) EBITDA and consolidated
capital expenditures of the Borrower for the four fiscal quarters
of the Borrower ending on October 1, 1999 shall be deemed to be
the annualized EBITDA and consolidated capital expenditures of
the Borrower for the two fiscal quarters of the Borrower ending
on October 1, 1999 and (III) EBITDA and consolidated capital
expenditures of the Borrower for the four fiscal quarters of the
Borrower ending on December 31, 1999 shall be deemed to be the
annualized EBITDA and consolidated capital expenditures of the
Borrower for the three fiscal quarters of the Borrower ending on
December 31, 1999.
f. Bankruptcy Law . "Bankruptcy Law" means any
bankruptcy or insolvency Law or any other Law relating to the
relief of debtors, the readjustment, composition or extension of
indebtedness, liquidation or reorganization.
g. Bank's Prime Rate__ The "Bank's Prime Rate" means
the rate announced by the Bank as the prime rate of interest of
the Bank, whether or not such rate is actually the lowest or best
rate charged by the Bank in connection with any loan or other
extension of credit made by the Bank.
h. CERCLA . "CERCLA" means the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980,
as amended.
i. Comptek-Amherst. "Comptek-Amherst" means
Comptek-Amherst, Inc., a New York business corporation.
j. Comptek Federal. "Comptek Federal" means Comptek
Federal Systems, Inc., a New York business corporation.
k. Control. "Control" means, with respect to any
Person, whether direct or indirect, (i) the power to vote 5% or
more of the outstanding shares of any class of stock of such
Person ordinarily having the power to vote for the election of
directors of such Person or 5% or more of any class of other
ownership interest in such Person ordinarily having the power to
vote for the election of, appoint or otherwise designate Persons
having functions with respect to such Person similar to those of
directors of a corporation or the power to direct or cause the
direction of the management and policies of such Person, (ii) the
beneficial ownership of 5% or more of the outstanding shares of
any class of stock of such Person or 5% or more of any class of
other ownership interest in such Person or (iii) the power to
direct or cause the direction of the management and policies of
such Person, whether by ownership of any stock or other ownership
interest, by agreement or otherwise.
l. Distribution. "Distribution" means, with respect
to any Person, (i) any dividend or other distribution, whether in
cash or in the form of any other asset, on account of any of its
stock or any other ownership interest therein or (ii) any payment
on account of the purchase other than pursuant to any Acquisition
Document, redemption, retirement or other acquisition of any of
its stock or any other ownership interest therein.
m. EBITDA. "EBITDA" means, for any period, (i) the
total of (A) consolidated net income of the Borrower for such
period, (B) consolidated interest expense of the Borrower for
such period, (C) consolidated charges against income of the
Borrower for foreign, federal, state and local income taxes for
such period, (D) consolidated extraordinary losses of the
Borrower to the extent included in determining such consolidated
net income, (E) consolidated equity losses of affiliates to the
extent included in such consolidated net income, (F) consolidated
depreciation expense of the Borrower for such period, (G)
consolidated amortization expense of the Borrower for such period
and (H) consolidated other non-cash charges of the Borrower for
such period minus (ii) the total of (A) consolidated
extraordinary gains of the Borrower to the extent included in
determining such consolidated net income and (B) consolidated
equity gains of affiliates to the extent included in determining
such consolidated net income.
n. Environmental Law. "Environmental Law" means any
Law relating to public health or safety or protection of the
environment, including, but not limited to, (i) CERCLA and
(ii) the Resource Conservation and Recovery Act, as amended.
o. ERISA. "ERISA" means the Employee Retirement
Income Security Act of 1974, as amended.
p. Event of Default. An "Event of Default" occurs
or exists if (i) the Borrower (A) defaults for more than 10 days
in the repayment when due of any of the principal amount of any
Loan, the payment when due of any interest payable pursuant to
this Agreement or any other amount payable by the Borrower to the
Bank pursuant to this Agreement, (B) defaults for more than 30
days in the performance when due of any obligation owing by the
Borrower pursuant to Section 7 of this Agreement or (C) defaults
in the performance when due of any other obligation owing by the
Borrower to the Bank pursuant to this Agreement, (ii) any Related
Entity or Other Obligor defaults in the performance when due,
whether by acceleration or otherwise, of any obligation
(including, but not limited to, any obligation to pay any money,
whether for any principal, interest, fee, charge, cost or expense
or otherwise), whether now existing or hereafter arising or
accruing, to the Bank or any other Person other than, in the case
of any Person other than the Bank, any obligation to pay any
money in connection with any indebtedness of $250,000 or less,
the maturity of any such obligation is accelerated or there
occurs or exists any event or condition that, whether immediately
or after notice, lapse of time or both notice and lapse of time
and whether or not waived, would constitute a default with
respect to or permit the acceleration of the maturity of any such
obligation, (iii) other than as permitted by this Agreement, any
Related Entity or Other Obligor is dissolved, ceases to exist,
participates or agrees to participate in any merger,
consolidation or other absorption, assigns or otherwise transfers
or disposes of all or substantially all of his, her or its
assets, makes or permits what might be a fraudulent transfer or
fraudulent conveyance of any of his, her or its assets, makes any
bulk sale, sends any notice of any intended bulk sale, dies,
becomes incompetent or insolvent (however such insolvency is
evidenced), generally fails to pay his, her or its debts as they
become due, fails to pay, withhold or collect any tax as required
by any Law, suspends or ceases his, her or its business or has
served, filed or recorded against him, her or it or any of his,
her or its assets any judgment, order or award of any
Governmental Authority or arbitrator or any lien, (iv) any
Related Entity or Other Obligor has any receiver, trustee,
custodian or similar Person for him, her or it or any of his, her
or its assets appointed (whether with or without his, her or its
consent), makes any assignment for the benefit of creditors or
commences or has commenced against him, her or it any case or
other proceeding pursuant to any Bankruptcy Law or any formal or
informal proceeding for the dissolution, liquidation or winding
up of the affairs of or the settlement of claims against him, her
or it, (v) any representation or warranty made in this Agreement
proves to have been incorrect or misleading in any material
respect as of the date of this Agreement or, except to the extent
updated in a certificate executed by the President or a Vice
President of the Borrower and the chief financial officer of the
Borrower and received by the Bank before any time as of which
such representation or warranty is deemed to have been made, as
of such time, (vi) any representation or warranty heretofore or
hereafter made, or any financial statement heretofore or
hereafter provided, to the Bank by or on behalf of any Related
Entity or Other Obligor proves, as of the date thereof, to have
been incorrect or misleading in any material respect or before
the execution and delivery to the Bank by the Borrower of this
Agreement there occurred and was not disclosed to the Bank any
material adverse change in any information disclosed in any such
representation or warranty heretofore so made or any financial
statement heretofore so provided, (vii) there occurs or exists
with respect to any Pension Plan any Prohibited Transaction,
Reportable Event or other event or condition that, in the opinion
of the Bank, constitutes or will or might constitute grounds for
the institution by the Pension Benefit Guaranty Corporation of
any proceeding under ERISA seeking the termination of such
Pension Plan or the appointment of a trustee to administer such
Pension Plan, the Pension Benefit Guaranty Corporation institutes
any proceeding under ERISA seeking the termination of any Pension
Plan or the appointment of a trustee to administer any Pension
Plan, any Person other than the Pension Benefit Guaranty Corpora
tion institutes any proceeding under ERISA seeking the termina
tion of any Pension Plan or the appointment of a trustee to
administer any Pension Plan that is, in the opinion of the Bank,
likely to result in the termination of such Pension Plan, any
trustee is appointed by a United States District Court to admin
ister any Pension Plan, any Pension Plan is terminated or there
are vested unfunded liabilities under any Pension Plan that, in
the opinion of the Bank, have or will or might have any Material
Adverse Effect or (viii) the Borrower ceases to own directly or
indirectly at least 100% of the outstanding shares of each class
of stock of Comptek Federal, PRB and Comptek-Amherst or ceases to
own directly or indirectly at least 51% of the outstanding shares
of each class of stock of each Related Entity other than Comptek
Federal, PRB and Comptek-Amherst.
q. Governmental Authority . "Governmental Authority"
means any government, political subdivision, court, agency,
central bank or other entity, body, organization or group
exercising any executive, legislative, judicial, fiscal,
monetary, regulatory or administrative function of government.
r. Hazardous Material . "Hazardous Material" means
(i) any "hazardous substance" as such term is defined in 42
U.S.C. 9601(14), (ii) any "hazardous waste" as such term is
defined in 42 U.S.C. 6903(5), (iii) any pollutant, contaminant
or hazardous, dangerous or toxic chemical, material, waste or
other substance for purposes of any other Environmental Law
relating to or imposing any liability or standard of conduct with
respect to any pollutant, contaminant or hazardous, dangerous or
toxic chemical, material, waste or other substance or (iv) any
petroleum product used for fuel or lubrication.
s. Internal Revenue Code. The "Internal Revenue
Code" means the Internal Revenue Code of 1986, as amended.
t. Law. "Law" means any statute, ordinance,
regulation, rule, interpretation, decision, guideline or other
requirement enacted or issued by any Governmental Authority,
whether or not having the force of law.
u. Libor Rate . "Libor Rate" means, for any period,
as determined by the Bank from any broker, quoting service or
commonly available source utilized by the Bank, the London
interbank offered rate for United States dollar deposits in the
London interbank eurodollar market at approximately 11:00 a.m.
London, England time (or as soon thereafter as practicable) on
the date that is two Libor Rate Business Days before the first
day of such period for deposits to be delivered on the first day
of such period for a period equal to such period.
v. Libor Rate Business Day. "Libor Rate Business
Day" means any day on which in both New York, New York and
London, England banks are open to conduct regular business.
w. Libor Rate Election. "Libor Rate Election" means
any oral (including, but not limited to, telephonic), written or
other (including, but not limited to, facsimile) election to have
the interest charged for any period with respect to a portion of
the aggregate outstanding principal amounts of all Revolving
Loans or a portion of the outstanding principal amount of Term
Loan I or Term Loan II determined by reference to the Libor Rate
for such period.
x. Libor Rate Period . "Libor Rate Period" means any
period for which interest is to be charged with respect to any
Libor Rate Portion at a rate determined by reference to the Libor
Rate for such period pursuant to a Libor Rate Election.
y. Libor Rate Period Commencement Date. "Libor Rate
Period Commencement Date" means the date on which any Libor Rate
Period begins.
z. Libor Rate Portion. "Libor Rate Portion" means
any portion of the aggregate outstanding principal amounts of all
Revolving Loans or any portion of the outstanding principal
amount of Term Loan I or Term Loan II with respect to which
interest is to be charged for any period at a rate determined by
reference to the Libor Rate for such period pursuant to a Libor
Rate Election.
aa. Loan. "Loan" means any Revolving Loan, Term Loan
I or Term Loan II.
bb. Loan Document. "Loan Document" means (i) this
Agreement, as now existing or hereafter modified, (ii) any other
agreement or instrument referred to in Section 5d or 7s of this
Agreement (including, but not limited to, any Continuing,
Absolute and Unconditional Guaranty Agreement referred to in
clause (ix) of Section 5d of this Agreement or any General
Security Agreement, Patent Collateral Assignment and Security
Agreement or Trademark Collateral Assignment and Security
Agreement referred to in clause (x) of such Section 5d), as
originally existing or thereafter modified, or (iii) any
replacement of any such other agreement or instrument, as
originally existing or thereafter modified.
cc. Material Adverse Effect. "Material Adverse
Effect" means any material adverse effect on (i) the ability of
the Borrower to repay when due any of the principal amount of any
Loan or to pay when due any interest payable pursuant to this
Agreement, any other amount payable by the Borrower to the Bank
pursuant to this Agreement or any other indebtedness or other
obligation of the Borrower to the Bank, whether now existing or
hereafter arising or accruing, (ii) the ability of any Related
Entity to perform when due any obligation pursuant to any Loan
Document or (iii) any Related Entity or the business, operations,
assets, affairs or condition (financial or other) of any Related
Entity.
dd. Other Obligor . "Other Obligor" means, other than
all Related Entities, any Person (i) who or that is now or
hereafter directly or indirectly liable, whether directly or
indirectly or absolutely or contingently, for the payment of any
indebtedness or other obligation of the Borrower to the Bank,
whether now existing or hereafter arising or accruing, or (ii)
any asset of whom or which now or hereafter directly or
indirectly secures the payment of any such indebtedness or other
obligation.
ee. Pension Plan. "Pension Plan" means (i) any
pension plan, as such term is defined in Section 3(2) of ERISA,
(A) that has heretofore been or is hereafter established or
maintained by any Related Entity or any other Person that is,
together with any Related Entity, a member of a controlled group
of corporations for purposes of Section 414(b) of the Internal
Revenue Code or is under common control with any Related Entity
for purposes of Section 414(c) of the Internal Revenue Code, (B)
to which contributions have heretofore been or are hereafter made
by any Related Entity or any such other Person or (C) to which
any Related Entity or any such other Person has heretofore agreed
or hereafter agrees or otherwise has heretofore incurred or
hereafter incurs any obligation to make contributions or (ii) any
trust heretofore or hereafter created under any such pension
plan.
ff. Permitted Investment . "Permitted Investment"
means (i) any investment by any Related Entity in (A) any readily
marketable direct obligation of the United States maturing within
one year after the date of its acquisition thereof, (B) any time
deposit maturing within one year after the date of its
acquisition thereof and issued by any banking institution that is
incorporated under any statute of the United States or any state
of the United States and has a combined capital and surplus of
not less than $500,000,000, (C) any demand or savings deposit
with any such banking institution, (D) any security of any
Subsidiary if such security is owned by it on the date of this
Agreement or (E) any security fully and accurately described
under the heading "Permitted Investments" in Exhibit A attached
to and made a part of this Agreement, (ii) any investment made by
any Related Entity through the Bank or any affiliate of the Bank
or (iii) any other investment by any Related Entity provided that
the total of all such other investments does not at any time
exceed $500,000 in the aggregate for all Related Entities.
gg. Permitted Lien. "Permitted Lien" means (i) any
lease of any asset by any Related Entity as a lessor in the
ordinary course of its business and without interference with the
conduct of its business or operations, (ii) any pledge or deposit
made by any Related Entity in the ordinary course of its business
(A) in connection with any workers' compensation, unemployment
insurance, social security or similar Law or (B) to secure the
payment of any indebtedness or other obligation in connection
with any letter of credit, bid, tender, trade or government
contract, lease, surety, appeal or performance bond or Law, or
any similar indebtedness or other obligation, not incurred in
connection with the borrowing of any money or the deferral of the
payment of the purchase price or capital lease of any asset,
(iii) any attachment, levy or similar lien with respect to any
Related Entity arising in connection with any action or other
legal proceeding so long as (A) the validity of the claim or
judgment secured thereby is being contested in good faith by
appropriate proceedings promptly instituted and diligently
conducted, (B) adequate reserves have been appropriately estab
lished for such claim or judgment, (C) the execution or other
enforcement of such attachment, levy or similar lien is effec
tively stayed and (D) neither such claim or judgment nor such
attachment, levy or similar lien has any Material Adverse Effect,
(iv) any statutory lien in favor of the United States for any
amount paid to any Related Entity as a progress payment pursuant
to any government contract, (v) any statutory lien securing the
payment of any tax, assessment, fee, charge, fine or penalty
imposed by any government or political subdivision upon any
Related Entity or any of the assets, income and franchises of any
Related Entity but not yet required by Section 7j of this
Agreement to be paid, (vi) any statutory lien securing the
payment of any claim or demand of any materialman, mechanic,
carrier, warehouseman, garageman or landlord against any Related
Entity but not yet required by such Section 7j to be paid, (vii)
any reservation, exception, encroachment, easement, right-of-way,
covenant, condition, restriction, lease or similar title excep
tion or encumbrance affecting the title to any real property of
any Related Entity but not interfering with the conduct of its
business or operations, (viii) any security interest, mortgage or
other lien or encumbrance in favor of the Bank, (ix) any other
security interest, mortgage or other lien provided that the total
of the indebtedness and other obligations the payment of which is
secured by all such other security interests, mortgages and other
liens does not at any time exceed $500,000 in the aggregate for
all Related Entities or (x) any security interest, mortgage or
other lien or encumbrance existing on the date of this Agreement
and fully and accurately described under the heading "Permitted
Liens" in Exhibit A attached to and made a part of this
Agreement.
hh. Permitted Loan. "Permitted Loan" means (i) any
loan, advance or other extension of credit made by any Related
Entity to the Borrower or by any Related Entity to any other
Related Entity that (A) is a guarantor, without any limitation as
to amount, of the payment of all indebtedness and other
obligations of the Borrower to the Bank, whether now existing or
hereafter arising or accruing, pursuant to a guaranty agreement
in form and substance satisfactory to the Bank and (B) has
granted to the Bank pursuant to a security agreement in form and
substance satisfactory to the Bank as security for the payment,
without any limitation as to amount, of all such indebtedness and
other obligations a security interest in all of its personal
property and fixtures that has been perfected and is subject to
no security interest, mortgage or other lien or encumbrance other
than Permitted Liens, (ii) any deferral of the purchase price of
any inventory or service sold by any Related Entity in the
ordinary course of its business, (iii) any advance made by any
Related Entity in the ordinary course of its business to any of
its officers and employees for out-of-pocket expenses incurred by
such officer or employee on its behalf in the conduct of its
business or operations, (iv) any loan, advance or other extension
of credit that is made by any Related Entity in the ordinary
course of its business to any Person other than any of its
officers and employees and is related to the conduct of its
business or operations, (v) any other loan, advance or other
extension of credit made by any Related Entity provided that the
aggregate outstanding principal amounts of all such other loans,
advances and other extensions of credit do not at any time exceed
$500,000 for all Related Entities or (iv) any loan, advance or
other extension of credit fully and accurately described under
the heading "Permitted Loans" in Exhibit A attached to and made a
part of this Agreement.
ii. Person. "Person" means (i) any individual,
corporation, partnership, limited liability company, joint
venture, trust or unincorporated association, (ii) any
Governmental Authority or (iii) any other entity, body,
organization or group.
jj. Post-Acquisition Subsidiaries. "Post-Acquisition
Subsidiaries" means collectively (i) Comptek Federal, (ii) PRB,
(iii) Comptek-Amherst, (iv) Comptek Research International Corp.,
a New York business corporation, (v) Comptek Research, Ltd., a
Virgin Islands business corporation, and (vi) DeVoe and Matthews,
L.C., a Florida limited liability company.
kk. Potential Event of Default. "Potential Event of
Default" means any event or condition that, after notice, lapse
of time or both notice and lapse of time, would constitute an
Event of Default.
ll. PRB . "PRB" means PRB Associates, Inc., a
Maryland business corporation.
mm. Prohibited Transaction. "Prohibited Transaction"
(i) has the meaning given to such term in Section 4975(c) of the
Internal Revenue Code and (ii) means any transaction prohibited
by Section 406(a) of ERISA.
nn. Related Entity. "Related Entity" means the
Borrower, any of the Post-Acquisition Subsidiaries or any other
Subsidiary.
oo. Release. "Release" means any "release" as such
term is defined in 42 U.S.C. 9601(22).
pp. Reportable Event. "Reportable Event" has the
meaning given to such term in Section 4043(b) of ERISA.
qq. Revolving Loan. "Revolving Loan" means any loan
by the Bank to the Borrower pursuant to Section 2a of this
Agreement.
rr. Revolving Loan Maturity Date. The "Revolving
Loan Maturity Date" means (i) January 31, 2001 or (ii) any
subsequent January 31 to which the date on which the Borrower is
required to repay the aggregate outstanding principal amounts of
all Revolving Loans is extended by the Bank pursuant to Section
2k of this Agreement.
ss. Seller . The "Seller" means Amherst Systems,
Inc., a Delaware business corporation.
tt. Subordinated Debenture Document . "Subordinated
Debenture Document" means, as may have heretofore been amended or
supplemented, (i) the Confidential Private Placement Memorandum
referred to in Section 6c of this Agreement, (ii) any
subordinated debenture referred to in such Section 6c or (iii)
any other agreement, instrument or other writing heretofore or
hereafter delivered or to be delivered in connection with the
private placement referred to in such Section 6c.
uu. Subsidiary . "Subsidiary" means any Person of
which the Borrower now or hereafter has beneficial ownership,
whether direct or indirect, of (i) 50% or more of the outstanding
shares of any class of stock ordinarily having the power to vote
for the election of directors of such Person or 50% or more of
any class of other ownership interest ordinarily having the power
to vote for the election of, appoint or otherwise designate
Persons having functions with respect to such Person similar to
those of directors of a corporation or the power to direct or
cause the direction of the management and policies of such Person
or (ii) such lower percentage of the outstanding shares of any
class of such stock or any class of such other ownership interest
as is sufficient to render such Person a subsidiary of the
Borrower for purposes of generally accepted accounting principles
as in effect at the time of determination of the status of such
Person for purposes of this sentence.
vv. System. "System" means, with respect to any
Person, any hardware (including, but not limited to, embedded),
software, firmware or other computer system, equipment or
application that (i) is now or hereafter owned, leased or used by
or supplied to such Person or with which any such hardware
(including, but not limited to, embedded), software, firmware or
other computer system, equipment or application now or hereafter
exchanges data, (ii) now or hereafter receives, transmits,
retransmits, processes, manipulates, stores, retrieves or
otherwise uses data and (iii) is now or hereafter material to the
conduct of the business or operations of such Person.
ww. Term Loan I. "Term Loan I" means the loan by the
Bank to the Borrower pursuant to Section 3a of this Agreement.
xx. Term Loan II. "Term Loan II" means the loan by
the Bank to the Borrower pursuant to Section 4a of this
Agreement.
yy. Year 2000 Compliant. "Year 2000 Compliant"
means, with respect to any System of any Person, that such System
is able to accurately accommodate information as to dates after
December 31, 1999 and to accurately process data from, into and
between the twentieth and twenty-first centuries (including, but
not limited to, data relating to leap years).
2. REVOLVING LOANS.
a. Making and Obtaining Revolving Loans. Upon and
subject to each term and condition of this Agreement, at any time
and from time to time during the period beginning on the date of
this Agreement and ending on the day before the Revolving Loan
Maturity Date, the Borrower may obtain Revolving Loans from the
Bank, and the Bank shall make Revolving Loans to the Borrower.
The principal amount of each Revolving Loan shall be an integral
multiple of $10,000, and the Borrower shall not at any time
permit (i) the aggregate outstanding principal amounts of all
Revolving Loans to exceed $27,000,000 minus the total of (A) the
aggregate face amounts of all letters of credit issued for the
account of any Related Entity by the Bank and outstanding at such
time and (B) the aggregate amounts of all draws under any letter
of credit issued for the account of any Related Entity by the
Bank for which the Bank has not been reimbursed at such time or
(ii) the aggregate outstanding principal amounts of all Revolving
Loans any portion of the proceeds of which is to be used for
working capital of the Borrower or any loan or advance by the
Borrower to any other Related Entity to be used for working
capital of such other Related Entity to exceed $20,000,000. The
Bank may treat as made by the Borrower and rely upon, and the
Borrower shall be bound by, any oral (including, but not limited
to, telephonic), written or other (including, but not limited to,
facsimile) request for a Revolving Loan that the Bank believes in
good faith to be valid and to have been made in the name or on
behalf of the Borrower by any officer of the Borrower, and the
Bank shall not incur any liability to the Borrower or any other
Person as a direct or indirect result of honoring such request
and making such Revolving Loan. Each request for a Revolving
Loan (i) shall state (A) the amount requested as the principal
amount of such Revolving Loan and (B) the business day of the
Bank on which such Revolving Loan is requested to be made and
(ii) shall be irrevocable. Any request for a Revolving Loan may
be combined with a Libor Rate Election relating to such Revolving
Loan. Any request for a Revolving Loan need not be honored by
the Bank unless such request is received by the Bank (i) at least
three but not more than five Libor Rate Business Days before the
date such Revolving Loan is requested to be made if such request
is combined with a Libor Rate Election relating to such Revolving
Loan or (ii) by 10:00 a.m. eastern United States time on the date
such Revolving Loan is requested to be made if such request is
not combined with a Libor Rate Election relating to such
Revolving Loan.
b. Revolving Loan Note. The Bank shall set forth on
the schedule attached to and made a part of the Revolving Loan
Note referred to in clause (i) of Section 5d of this Agreement or
any similar schedule or loan account (including, but not limited
to, any similar schedule or loan account maintained in
computerized records) annotations evidencing (i) the date and
principal amount of each Revolving Loan, (ii) the date and amount
of each payment applied to the outstanding principal amount of
such Revolving Loan Note, (iii) such outstanding principal amount
after each Revolving Loan and each such payment, (iv) each Libor
Rate Portion for Revolving Loans, (v) each Libor Rate Period,
Libor Rate Period Commencement Date, Libor Rate and rate of
interest for each Libor Rate Portion for Revolving Loans and (vi)
the date and amount of each payment applied to any Libor Rate
Portion for Revolving Loans. Each such annotation shall, in the
absence of manifest error, be conclusive and binding upon the
Borrower. No failure of the Bank to make and no error by the
Bank in making any annotation on such attached schedule or any
such similar schedule or loan account shall affect the obligation
of the Borrower to repay the principal amount of each Revolving
Loan, the obligation of the Borrower to pay interest on the
outstanding principal amount of each Revolving Loan or any other
obligation of the Borrower to the Bank pursuant to this
Agreement.
c. Repayment. The Borrower shall repay the
aggregate outstanding principal amounts of all Revolving Loans to
the Bank on the Revolving Loan Maturity Date, when the Borrower
shall pay to the Bank all interest payable pursuant to this
Agreement in connection with any Revolving Loan and remaining
unpaid and all other amounts payable by the Borrower to the Bank
pursuant to this Agreement in connection with any Revolving Loan
and remaining unpaid.
d. Optional Repayment in Advance. Except during any
Libor Rate Period for any Libor Rate Portion for Revolving Loans,
the Borrower shall have the option of repaying the outstanding
principal amount of any Revolving Loan to the Bank in advance in
full or part at any time and from time to time without any
premium or penalty.
e. Interest. From and including the date the first
Revolving Loan is made to but not including the date the
aggregate outstanding principal amounts of all Revolving Loans
are repaid in full, the Borrower shall pay to the Bank interest,
calculated on the basis of a 360-day year for the actual number
of days of each year (365 or 366, as applicable), on such
aggregate outstanding principal amounts at a rate per year that
shall (i) on each day beginning before the maturity, whether by
acceleration or otherwise, of such aggregate outstanding
principal amounts be (A) except for any Libor Rate Portion for
Revolving Loans if such a day falls in any Libor Rate Period for
such Libor Rate Portion, the rate per year, expressed as a
percentage, that is the rate in effect such day as the Bank's
Prime Rate or (B) for any Libor Rate Portion for Revolving Loans
if such day falls in any Libor Rate Period for such Libor Rate
Portion, the rate per year, expressed as a percentage, that is
the total of (I) the Applicable Margin and (II) the rate obtained
by dividing (1) the Libor Rate for such Libor Rate Period by (2)
expressed as a decimal, the difference between 100% and the
maximum percentage of reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal
percentage of reserve requirement) for such day specified by
Regulation D of the Board of Governors of the Federal Reserve
System for the Bank with respect to eurocurrency liabilities and
(ii) on each day subsequent to the last day described in clause
(i) of this sentence be the rate per year, expressed as a
percentage, that is the total of (A) 3% and (B) the rate in
effect such subsequent day as the Bank's Prime Rate; provided,
however, that (1) such interest shall not be charged as provided
in clause (i)(B) of this sentence, and shall be charged as
provided in clause (i)(A) of this sentence, with respect to any
Libor Rate Portion for Revolving Loans during any Libor Rate
Period for such Libor Rate Portion if before such Libor Rate
Period begins (a) any Governmental Authority asserts that it is
unlawful, or the Bank determines that it is unlawful, for the
Bank to charge interest with respect to such Libor Rate Portion
during such Libor Rate Period at a rate determined by reference
to a Libor Rate, (b) the Bank determines that sufficient United
States dollar deposits are not available for such Libor Rate
Period to the Bank or any participant in such Libor Rate Portion
to the extent of its interest in such Libor Rate Portion or (c)
the Bank determines that information necessary to determine the
rate to be charged pursuant to such clause (i)(B) is unavailable,
(2) such interest shall cease to be charged as provided in such
clause (i)(B), and shall begin to be charged as provided in such
clause (i)(A), with respect to any Libor Rate Portion for
Revolving Loans during any Libor Rate Period for such Libor Rate
Portion if any Governmental Authority asserts that it is
unlawful, or the Bank determines that it is unlawful, for the
Bank to continue to charge interest with respect to such Libor
Rate Portion during such Libor Rate Period at a rate determined
by reference to a Libor Rate, (3) in no event shall such interest
be payable at a rate in excess of the maximum rate permitted by
applicable law and (4) solely to the extent necessary to result
in such interest not being payable at a rate in excess of such
maximum rate, any amount that would be treated as part of such
interest under a final judicial interpretation of applicable law
shall be deemed to have been a mistake and automatically canceled
and, if received by the Bank, shall be refunded to the Borrower,
it being the intention of the Bank and the Borrower that such
interest not be payable at a rate in excess of such maximum rate.
Except as otherwise provided in Section 2c of this Agreement, (i)
a payment of such interest shall become due on the first day of
each calendar month, beginning on the first day of the first
calendar month after the calendar month in which the first
Revolving Loan is made, except for any of such interest payable
with respect to any Libor Rate Portion for Revolving Loans for
any Libor Rate Period for such Libor Rate Portion, and (ii) all
of such interest payable with respect to any Libor Rate Portion
for Revolving Loans for any Libor Rate Period for such Libor Rate
Portion shall become due on the day after the last day in such
Libor Rate Period.
f. Fees. Upon the execution and delivery to the
Bank of this Agreement by the Borrower, the Borrower shall pay to
the Bank in connection with Revolving Loans (i) a facility fee of
$150,000 and (ii) a supplemental revolving loan fee equal to 1%
of the difference between $20,000,000 and the amount of the
proceeds of the initial private placement of subordinated
debentures referred to in Section 6c of this Agreement.
g. Late Charge. If any of the principal amount of
any Revolving Loan is not repaid, or any interest payable
pursuant to this Agreement in connection with any Revolving Loan
is not paid, within ten days after the date it becomes due,
whether by acceleration or otherwise, the Borrower shall pay to
the Bank on demand made by the Bank a late charge of the greater
of (i) 5% thereof or (ii) $50.
h. Non-Usage Fee. For each period (i) beginning on
the date of this Agreement and ending on the last day of the
calendar quarter containing such date, (ii) consisting of a
calendar quarter beginning after the calendar quarter containing
the date of this Agreement and ending before the calendar quarter
containing the day before the Revolving Loan Maturity Date or
(iii) beginning on the first day of the calendar quarter
containing the day before the Revolving Loan Maturity Date and
ending on such day, the Borrower shall pay to the Bank on demand
made by the Bank a non-usage fee equal to the product obtained by
multiplying (A) the difference between (I) $27,000,000 minus the
total of (1) the daily average during such period of the
aggregate face amounts of all letters of credit issued for the
account of any Related Entity by the Bank and outstanding at any
time during such period and (2) the daily average during such
period of the aggregate amounts of all draws under any letter of
credit issued for the account of any Related Entity by the Bank
for which the Bank had not been reimbursed at any time during
such period and (II) the daily average during such period of the
aggregate outstanding principal amounts of all Revolving Loans
first by (B) the Applicable Margin and then by (C) the fraction
obtained by dividing the number of days in such period by 360;
provided, however, that (I) in no event shall there be payable
any such non-usage fee that would result in interest being
payable on the outstanding principal amount of any Revolving Loan
at a rate in excess of the maximum rate permitted by applicable
law and (II) solely to the extent necessary to result in such
interest not being payable at a rate in excess of such maximum
rate, any amount that would be treated as part of such interest
under a final judicial interpretation of applicable law shall be
deemed to have been a mistake and automatically canceled and, if
received by the Bank, shall be refunded to the Borrower, it being
the intention of the Bank and the Borrower that such interest not
be payable at a rate in excess of such maximum rate.
i. General Provisions as to Repayment and Payment.
Repayment of the principal amount of each Revolving Loan, payment
of all interest payable pursuant to this Agreement in connection
with any Revolving Loan and payment of all other amounts payable
by the Borrower to the Bank pursuant to this Agreement in
connection with any Revolving Loan shall be made in lawful money
of the United States and immediately available funds at the
banking office of the Bank located at One Fountain Plaza,
Buffalo, New York, or at such other office of the Bank as may at
any time and from time to time be specified in any notice given
to the Borrower by the Bank. Such repayment or payment shall be
made without any setoff or counterclaim and free and clear of and
without any deduction or withholding for any tax, assessment,
fee, charge, fine or penalty imposed by any Governmental
Authority; provided, however, that, if such deduction or
withholding is required by any Law, (i) such repayment or payment
shall include such additional amount as necessary to result in
the net amount of such repayment or payment after such deduction
or withholding not being less than the amount of such repayment
or payment without such deduction or withholding, (ii) the
Borrower shall make such deduction or withholding and (iii) the
Borrower shall pay the amount of such deduction or withholding as
required by such Law. No such repayment or payment shall be
deemed to have been received by the Bank until received by the
Bank at the office of the Bank determined in accordance with the
second preceding sentence, and any such repayment or payment
received by the Bank at such office after 2:00 p.m. eastern
United States time on any day shall be deemed to have been
received by the Bank at the time such office opens for business
on the next business day of the Bank. If the time by which any
of the principal amount of any Revolving Loan is to be repaid is
extended by operation of law or otherwise, the Borrower shall pay
interest on the outstanding portion thereof during such period of
extension as provided in Section 2e of this Agreement.
j. Libor Rate Election. At any time and from time
to time, the Borrower may irrevocably make a Libor Rate Election
relating to Revolving Loans that specifies (i) the Libor Rate
Business Day that is to be the Libor Rate Period Commencement
Date for the Libor Rate Period elected pursuant to such Libor
Rate Election, (ii) whether a one-month, two-month, three-month
or six-month option is elected as to the length of such Libor
Rate Period and (iii) expressed as a dollar amount, (A) any
portion of the principal amount of any Revolving Loan requested
to be made on such Libor Rate Period Commencement Date to which
such Libor Rate Election relates and (B) any portion of the
aggregate outstanding principal amounts of all Revolving Loans
made or requested to be made prior to such Libor Rate Period
Commencement Date to which such Libor Rate Election relates;
provided, however, that (I) such Libor Rate Period may not extend
beyond the Revolving Loan Maturity Date, (II) such Libor Rate
Election may not change any election made pursuant to any prior
Libor Rate Election and (III) such Libor Rate Election need not
be honored by the Bank if (1) such Libor Rate Election is
received by the Bank more than five or less than three Libor Rate
Business Days before such Libor Rate Period Commencement Date,
(2) any Event of Default occurs or exists before or on such Libor
Rate Period Commencement Date or (3) the total of the dollar
amounts specified in clause (iii) of this sentence is not at
least $100,000. Each Libor Rate Period shall end on the day
before the numerically corresponding day (or, if there is no
numerically corresponding day, the last day) of the calendar
month that is the number of months (one month, two months, three
months or six months) corresponding to the option elected
pursuant to such Libor Rate Election, except that, if such
numerically corresponding day (or such last day) is not a Libor
Rate Business Day, such Libor Rate Period shall end on the day
before the first Libor Rate Business Day following such
numerically corresponding day (or such last day) unless such
first Libor Rate Business Day does not fall in the same calendar
month as such numerically corresponding day (or such last day),
in which case such Libor Rate Period shall end on the day before
the Libor Rate Business Day immediately preceding such
numerically corresponding day (or such last day). The Bank may
treat as made by the Borrower and rely upon, and the Borrower
shall be bound by, any Libor Rate Election relating to any
Revolving Loan that the Bank believes in good faith to be valid
and to have been made in the name or on behalf of the Borrower by
any officer of the Borrower, and the Bank shall not incur any
liability to the Borrower or any other Person as a direct or
indirect result of honoring such Libor Rate Election.
k. Extension of Revolving Loan Maturity Date. At
least 30 but not more than 90 days before the Revolving Loan
Maturity Date, the Borrower may request that the Revolving Loan
Maturity Date be extended for one year by executing and
delivering to the Bank an extension request in the form of
Exhibit B attached to and made a part of this Agreement. If
prior to the Revolving Loan Maturity Date the Bank executes and
delivers to the Borrower such extension request, the Revolving
Loan Maturity Date shall automatically be extended to the date
specified in such extension request. If the Bank does not so
execute and deliver such extension request, the Revolving Loan
Maturity Date shall remain the same.
3. TERM LOAN I.
a. Making and Obtaining Term Loan I. Upon and
subject to each term and condition of this Agreement, on the date
of this Agreement, the Borrower shall obtain Term Loan I from the
Bank, and the Bank shall make Term Loan I to the Borrower. The
principal amount of Term Loan I shall be $13,750,000.
b. Term Loan I Note. The Bank shall set forth on
the schedule attached to and made a part of the Term Loan I Note
referred to in clause (ii) of Section 5d of this Agreement or any
similar schedule or loan account (including, but not limited to,
any similar schedule or loan account maintained in computerized
records) annotations evidencing (i) each Libor Rate Portion for
Term Loan I, (ii) each Libor Rate Period, Libor Rate Period
Commencement Date, Libor Rate and rate of interest for each Libor
Rate Portion for Term Loan I and (iii) the date and amount of
each payment applied to any Libor Rate Portion for Term Loan I.
Each such annotation shall, in the absence of manifest error, be
conclusive and binding upon the Borrower. No failure of the Bank
to make and no error by the Bank in making any annotation on such
attached schedule or any such similar schedule or loan account
shall affect the obligation of the Borrower to repay the
principal amount of Term Loan I, the obligation of the Borrower
to pay interest on the outstanding principal amount of Term
Loan I or any other obligation of the Borrower to the Bank
pursuant to this Agreement.
c. Repayment. The Borrower shall repay the
principal amount of Term Loan I to the Bank in 74 installments,
with the first of such installments to become due on the first
day of the first calendar month after the calendar month in which
Term Loan I is made and one of such installments to become due on
the first day of each succeeding calendar month through the first
day of the seventy-fourth calendar month after the calendar month
in which Term Loan I is made, when the Borrower shall repay the
outstanding principal amount of Term Loan I to the Bank and pay
to the Bank all interest payable pursuant to this Agreement in
connection with Term Loan I and remaining unpaid and all other
amounts payable by the Borrower to the Bank pursuant to this
Agreement in connection with Term Loan I and remaining unpaid.
Each of the first 73 of such installments shall be $125,000, and
the last of such installments shall be $4,625,000.
d. Optional Repayment in Advance. Except during any
Libor Rate Period for any Libor Rate Portion for Term Loan I, the
Borrower shall have the option of repaying the outstanding
principal amount of Term Loan I to the Bank in advance in full or
part at any time and from time to time; provided, however, that
(i) the amount of any such repayment in part shall be an integral
multiple of $10,000 and (ii) upon making any such repayment in
full the Borrower shall pay to the Bank all interest payable
pursuant to this Agreement in connection with Term Loan I and
remaining unpaid and all other amounts payable by the Borrower to
the Bank pursuant to this Agreement in connection with Term Loan
I and remaining unpaid. Each such repayment in part shall be
applied to the installments of the principal amount of Term Loan
I in the inverse order of such installments becoming due.
e. Interest. From and including the date Term Loan
I is made to but not including the date the outstanding principal
amount of Term Loan I is repaid in full, the Borrower shall pay
to the Bank interest, calculated on the basis of a 360-day year
for the actual number of days of each year (365 or 366, as
applicable), on such outstanding principal amount at a rate per
year that shall (i) on each day beginning before the maturity,
whether by acceleration or otherwise, of such outstanding
principal amount be (A) except for any Libor Rate Portion for
Term Loan I if such a day falls in any Libor Rate Period for such
Libor Rate Portion, the rate per year, expressed as a percentage,
that is the rate in effect such day as the Bank's Prime Rate or
(B) for any Libor Rate Portion for Term Loan I if such day falls
in any Libor Rate Period for such Libor Rate Portion, the rate
per year, expressed as a percentage, that is the total of (I) the
Applicable Margin and (II) the rate obtained by dividing (1) the
Libor Rate for such Libor Rate Period by (2) expressed as a
decimal, the difference between 100% and the maximum percentage
of reserve requirement (including, but not limited to, any
emergency, supplemental or other marginal percentage of reserve
requirement) for such day specified by Regulation D of the Board
of Governors of the Federal Reserve System for the Bank with
respect to eurocurrency liabilities and (ii) on each day
subsequent to the last day described in clause (i) of this
sentence be the rate per year, expressed as a percentage, that is
the total of (A) 3% and (B) the rate in effect such subsequent
day as the Bank's Prime Rate; provided, however, that (1) such
interest shall not be charged as provided in clause (i)(B) of
this sentence, and shall be charged as provided in clause (i)(A)
of this sentence, with respect to any Libor Rate Portion for Term
Loan I during any Libor Rate Period for such Libor Rate Portion
if before such Libor Rate Period begins (a) any Governmental
Authority asserts that it is unlawful, or the Bank determines
that it is unlawful, for the Bank to charge interest with respect
to such Libor Rate Portion during such Libor Rate Period at a
rate determined by reference to a Libor Rate, (b) the Bank
determines that sufficient United States dollar deposits are not
available for such Libor Rate Period to the Bank or any
participant in such Libor Rate Portion to the extent of its
interest in such Libor Rate Portion or (c) the Bank determines
that information necessary to determine the rate to be charged
pursuant to such clause (i)(B) is unavailable, (2) such interest
shall cease to be charged as provided in such clause (i)(B), and
shall begin to be charged as provided in such clause (i)(A), with
respect to any Libor Rate Portion for Term Loan I during any
Libor Rate Period for such Libor Rate Portion if any Governmental
Authority asserts that it is unlawful, or the Bank determines
that it is unlawful, for the Bank to continue to charge interest
with respect to such Libor Rate Portion during such Libor Rate
Period at a rate determined by reference to a Libor Rate, (3) in
no event shall such interest be payable at a rate in excess of
the maximum rate permitted by applicable law and (4) solely to
the extent necessary to result in such interest not being payable
at a rate in excess of such maximum rate, any amount that would
be treated as part of such interest under a final judicial
interpretation of applicable law shall be deemed to have been a
mistake and automatically canceled and, if received by the Bank,
shall be refunded to the Borrower, it being the intention of the
Bank and the Borrower that such interest not be payable at a rate
in excess of such maximum rate. Except as otherwise provided in
Section 3c or 3d of this Agreement, (i) a payment of such
interest shall become due on the first day of each calendar
month, beginning on the first day of the first calendar month
after the calendar month in which Term Loan I is made, except for
any of such interest payable with respect to any Libor Rate
Portion for Term Loan I for any Libor Rate Period for such Libor
Rate Portion, and (ii) all of such interest payable with respect
to any Libor Rate Portion for Term Loan I for any Libor Rate
Period for such Libor Rate Portion shall become due on the day
after the last day in such Libor Rate Period.
f. Late Charge. If any of the principal amount of
Term Loan I is not repaid, or any interest payable pursuant to
this Agreement in connection with Term Loan I is not paid, within
ten days after the date it becomes due, whether by acceleration
or otherwise, the Borrower shall pay to the Bank on demand made
by the Bank a late charge of the greater of (i) 5% thereof or
(ii) $50.
g. General Provisions as to Repayment and Payment.
Repayment of the principal amount of Term Loan I, payment of all
interest payable pursuant to this Agreement in connection with
Term Loan I and payment of all other amounts payable by the
Borrower to the Bank pursuant to this Agreement in connection
with Term Loan I shall be made in lawful money of the United
States and immediately available funds at the banking office of
the Bank located at One Fountain Plaza, Buffalo, New York, or at
such other office of the Bank as may at any time and from time to
time be specified in any notice given to the Borrower by the
Bank. Such repayment or payment shall be made without any setoff
or counterclaim and free and clear of and without any deduction
or withholding for any tax, assessment, fee, charge, fine or
penalty imposed by any Governmental Authority; provided, however,
that, if such deduction or withholding is required by any Law,
(i) such repayment or payment shall include such additional
amount as is necessary to result in the net amount of such
repayment or payment after such deduction or withholding not
being less than the amount of such repayment or payment without
such deduction or withholding, (ii) the Borrower shall make such
deduction or withholding and (iii) the Borrower shall pay the
amount of such deduction or withholding as required by such Law.
No such repayment or payment shall be deemed to have been
received by the Bank until received by the Bank at the office of
the Bank determined in accordance with the second preceding
sentence, and any such repayment or payment received by the Bank
at such office after 2:00 p.m. eastern United States time on any
day shall be deemed to have been received by the Bank at the time
such office opens for business on the next business day of the
Bank. If the time by which any of the principal amount of Term
Loan I is to be repaid is extended by operation of law or
otherwise, the Borrower shall pay interest on the outstanding
portion thereof during such period of extension as provided in
Section 3e of this Agreement.
h. Libor Rate Election. At any time and from time
to time, the Borrower may irrevocably make a Libor Rate Election
relating to Term Loan I that specifies (i) the Libor Rate
Business Day that is to be the Libor Rate Period Commencement
Date for the Libor Rate Period elected pursuant to such Libor
Rate Election, (ii) whether a one-month, two-month, three-month
or six-month option is elected as to the length of such Libor
Rate Period and (iii) expressed as a dollar amount, the portion
of the outstanding principal amount of Term Loan I to which such
Libor Rate Election relates; provided, however, that (I) such
Libor Rate Period may not extend beyond the date the last
installment of the principal amount of Term Loan I is scheduled
to become due, (II) such Libor Rate Election may not change any
election made pursuant to any prior Libor Rate Election and
(III) such Libor Rate Election need not be honored by the Bank if
(1) such Libor Rate Election is received by the Bank more than
five or less than three Libor Rate Business Days before such
Libor Rate Period Commencement Date, (2) any Event of Default
occurs or exists before or on such Libor Rate Period Commencement
Date or (3) the dollar amount specified in clause (iii) of this
sentence is not at least $100,000. Each Libor Rate Period shall
end on the day before the numerically corresponding day (or, if
there is no numerically corresponding day, the last day) of the
calendar month that is the number of months (one month, two
months, three months or six months) corresponding to the option
elected pursuant to such Libor Rate Election, except that, if
such numerically corresponding day (or such last day) is not a
Libor Rate Business Day, such Libor Rate Period shall end on the
day before the first Libor Rate Business Day following such
numerically corresponding day (or such last day) unless such
first Libor Rate Business Day does not fall in the same calendar
month as such numerically corresponding day (or such last day),
in which case such Libor Rate Period shall end on the day before
the Libor Rate Business Day immediately preceding such
numerically corresponding day (or such last day). The Bank may
treat as made by the Borrower and rely upon, and the Borrower
shall be bound by, any Libor Rate Election relating to Term
Loan I that the Bank believes in good faith to be valid and to
have been made in the name or on behalf of the Borrower by any
officer of the Borrower, and the Bank shall not incur any
liability to the Borrower or any other Person as a direct or
indirect result of honoring such Libor Rate Election.
4. TERM LOAN II.
a. Making and Obtaining Term Loan II. Upon and
subject to each term and condition of this Agreement, on the
Revolving Loan Maturity Date, the Bank shall make Term Loan II to
the Borrower, and the Borrower shall obtain Term Loan II from the
Bank. The principal amount of Term Loan II shall be equal to the
lesser of (i) the aggregate outstanding principal amounts of all
Revolving Loans or (ii) $27,000,000.
b. Term Loan II Note. The Bank shall set forth on
the schedule attached to and made a part of the Term Loan II Note
referred to in clause (iii) of Section 5d of this Agreement or
any similar schedule or loan account (including, but not limited
to, any similar schedule or loan account maintained in
computerized records) annotations evidencing (i) each Libor Rate
Portion for Term Loan II, (ii) each Libor Rate Period, Libor Rate
Period Commencement Date, Libor Rate and rate of interest for
each Libor Rate Portion for Term Loan II and (iii) the date and
amount of each payment applied to any Libor Rate Portion for Term
Loan II. Each such annotation shall, in the absence of manifest
error, be conclusive and binding upon the Borrower. No failure
of the Bank to make and no error by the Bank in making any
annotation on such attached schedule or any such similar schedule
or loan account shall affect the obligation of the Borrower to
repay the principal amount of Term Loan II, the obligation of the
Borrower to pay interest on the outstanding principal amount of
Term Loan II or any other obligation of the Borrower to the Bank
pursuant to this Agreement.
c. Repayment. The Borrower shall repay the
principal amount of Term Loan II to the Bank in 48 installments,
with the first of such installments to become due on the first
day of the first calendar month after the calendar month in which
Term Loan II is made and one of such installments to become due
on the first day of each succeeding calendar month through the
first day of the forty-eighth calendar month after the calendar
month in which Term Loan II is made, when the Borrower shall
repay the outstanding principal amount of Term Loan II to the
Bank and pay to the Bank all interest payable pursuant to this
Agreement in connection with Term Loan II and remaining unpaid
and all other amounts payable by the Borrower to the Bank
pursuant to this Agreement in connection with Term Loan II and
remaining unpaid. Such installments shall either be equal in
amount or consist of installments equal in amount followed by one
installment as nearly equal in amount to the others as possible.
d. Optional Repayment in Advance. Except during any
Libor Rate Period for any Libor Rate Portion for Term Loan II,
the Borrower shall have the option of repaying the outstanding
principal amount of Term Loan II to the Bank in advance in full
or part at any time and from time to time; provided, however,
that (i) the amount of any such repayment in part shall be an
integral multiple of $10,000 and (ii) upon making any such
repayment in full the Borrower shall pay to the Bank all interest
payable pursuant to this Agreement in connection with Term Loan
II and remaining unpaid and all other amounts payable by the
Borrower to the Bank pursuant to this Agreement in connection
with Term Loan II and remaining unpaid. Each such repayment in
part shall be applied to the installments of the principal amount
of Term Loan II in the inverse order of such installments
becoming due.
e. Interest. From and including the date Term Loan
II is made to but not including the date the outstanding
principal amount of Term Loan II is repaid in full, the Borrower
shall pay to the Bank interest, calculated on the basis of a
360-day year for the actual number of days of each year (365 or
366, as applicable), on such outstanding principal amount at a
rate per year that shall (i) on each day beginning before the
maturity, whether by acceleration or otherwise, of such
outstanding principal amount be (A) except for any Libor Rate
Portion for Term Loan II if such a day falls in any Libor Rate
Period for such Libor Rate Portion, the rate per year, expressed
as a percentage, that is the rate in effect such day as the
Bank's Prime Rate or (B) for any Libor Rate Portion for Term Loan
II if such day falls in any Libor Rate Period for such Libor Rate
Portion, the rate per year, expressed as a percentage, that is
the total of (I) the Applicable Margin and (II) the rate obtained
by dividing (1) the Libor Rate for such Libor Rate Period by (2)
expressed as a decimal, the difference between 100% and the
maximum percentage of reserve requirement (including, but not
limited to, any emergency, supplemental or other marginal
percentage of reserve requirement) for such day specified by
Regulation D of the Board of Governors of the Federal Reserve
System for the Bank with respect to eurocurrency liabilities and
(ii) on each day subsequent to the last day described in clause
(i) of this sentence be the rate per year, expressed as a
percentage, that is the total of (A) 3% and (B) the rate in
effect such subsequent day as the Bank's Prime Rate; provided,
however, that (1) such interest shall not be charged as provided
in clause (i)(B) of this sentence, and shall be charged as
provided in clause (i)(A) of this sentence, with respect to any
Libor Rate Portion for Term Loan II during any Libor Rate Period
for such Libor Rate Portion if before such Libor Rate Period
begins (a) any Governmental Authority asserts that it is
unlawful, or the Bank determines that it is unlawful, for the
Bank to charge interest with respect to such Libor Rate Portion
during such Libor Rate Period at a rate determined by reference
to a Libor Rate, (b) the Bank determines that sufficient United
States dollar deposits are not available for such Libor Rate
Period to the Bank or any participant in such Libor Rate Portion
to the extent of its interest in such Libor Rate Portion or (c)
the Bank determines that information necessary to determine the
rate to be charged pursuant to such clause (i)(B) is unavailable,
(2) such interest shall cease to be charged as provided in such
clause (i)(B), and shall begin to be charged as provided in such
clause (i)(A), with respect to any Libor Rate Portion for Term
Loan II during any Libor Rate Period for such Libor Rate Portion
if any Governmental Authority asserts that it is unlawful, or the
Bank determines that it is unlawful, for the Bank to continue to
charge interest with respect to such Libor Rate Portion during
such Libor Rate Period at a rate determined by reference to a
Libor Rate, (3) in no event shall such interest be payable at a
rate in excess of the maximum rate permitted by applicable law
and (4) solely to the extent necessary to result in such interest
not being payable at a rate in excess of such maximum rate, any
amount that would be treated as part of such interest under a
final judicial interpretation of applicable law shall be deemed
to have been a mistake and automatically canceled and, if
received by the Bank, shall be refunded to the Borrower, it being
the intention of the Bank and the Borrower that such interest not
be payable at a rate in excess of such maximum rate. Except as
otherwise provided in Section 4c or 4d of this Agreement, (i) a
payment of such interest shall become due on the first day of
each calendar month, beginning on the first day of the first
calendar month after the calendar month in which Term Loan II is
made, except for any of such interest payable with respect to any
Libor Rate Portion for Term Loan II for any Libor Rate Period for
such Libor Rate Portion, and (ii) all of such interest payable
with respect to any Libor Rate Portion for Term Loan II for any
Libor Rate Period for such Libor Rate Portion shall become due on
the day after the last day in such Libor Rate Period for such
Libor Rate Portion.
f. Late Charge. If any of the principal amount of
Term Loan II is not repaid, or any interest payable pursuant to
this Agreement in connection with Term Loan II is not paid,
within ten days after the date it becomes due, whether by
acceleration or otherwise, the Borrower shall pay to the Bank on
demand made by the Bank a late charge of the greater of (i) 5%
thereof or (ii) $50.
g. General Provisions as to Repayment and Payment.
Repayment of the principal amount of Term Loan II, payment of all
interest payable pursuant to this Agreement in connection with
Term Loan II and payment of all other amounts payable by the
Borrower to the Bank pursuant to this Agreement in connection
with Term Loan II shall be made in lawful money of the United
States and immediately available funds at the banking office of
the Bank located at One Fountain Plaza, Buffalo, New York, or at
such other office of the Bank as may at any time and from time to
time be specified in any notice given to the Borrower by the
Bank. Such repayment or payment shall be made without any setoff
or counterclaim and free and clear of and without any deduction
or withholding for any tax, assessment, fee, charge, fine or
penalty imposed by any Governmental Authority; provided, however,
that, if such deduction or withholding is required by any Law,
(i) such repayment or payment shall include such additional
amount as is necessary to result in the net amount of such
repayment or payment after such deduction or withholding not
being less than the amount of such repayment or payment without
such deduction or withholding, (ii) the Borrower shall make such
deduction or withholding and (iii) the Borrower shall pay the
amount of such deduction or withholding as required by such Law.
No such repayment or payment shall be deemed to have been
received by the Bank until received by the Bank at the office of
the Bank determined in accordance with the second preceding
sentence, and any such repayment or payment received by the Bank
at such office after 2:00 p.m. eastern United States time on any
day shall be deemed to have been received by the Bank at the time
such office opens for business on the next business day of the
Bank. If the time by which any of the principal amount of Term
Loan II is to be repaid is extended by operation of law or
otherwise, the Borrower shall pay interest on the outstanding
portion thereof during such period of extension as provided in
Section 4e of this Agreement.
h. Libor Rate Election. At any time and from time
to time, the Borrower may irrevocably make a Libor Rate Election
relating to Term Loan II that specifies (i) the Libor Rate
Business Day that is to be the Libor Rate Period Commencement
Date for the Libor Rate Period elected pursuant to such Libor
Rate Election, (ii) whether a one-month, two-month, three-month
or six-month option is elected as to the length of such Libor
Rate Period and (iii) expressed as a dollar amount, the portion
of the outstanding principal amount of Term Loan II to which such
Libor Rate Election relates; provided, however, that (I) such
Libor Rate Period may not extend beyond the date the last
installment of the principal amount of Term Loan II is scheduled
to become due, (II) such Libor Rate Election may not change any
election made pursuant to any prior Libor Rate Election and
(III) such Libor Rate Election need not be honored by the Bank if
(1) such Libor Rate Election is received by the Bank more than
five or less than three Libor Rate Business Days before such
Libor Rate Period Commencement Date, (2) any Event of Default
occurs or exists before or on such Libor Rate Period Commencement
Date or (3) the dollar amount specified in clause (iii) of this
sentence is not at least $100,000. Each Libor Rate Period shall
end on the day before the numerically corresponding day (or, if
there is no numerically corresponding day, the last day) of the
calendar month that is the number of months (one month, two
months, three months or six months) corresponding to the option
elected pursuant to such Libor Rate Election, except that, if
such numerically corresponding day (or such last day) is not a
Libor Rate Business Day, such Libor Rate Period shall end on the
day before the first Libor Rate Business Day following such
numerically corresponding day (or such last day) unless such
first Libor Rate Business Day does not fall in the same calendar
month as such numerically corresponding day (or such last day),
in which case such Libor Rate Period shall end on the day before
the Libor Rate Business Day immediately preceding such
numerically corresponding day (or such last day). The Bank may
treat as made by the Borrower and rely upon, and the Borrower
shall be bound by, any Libor Rate Election relating to Term Loan
II that the Bank believes in good faith to be valid and to have
been made in the name or on behalf of the Borrower by any officer
of the Borrower, and the Bank shall not incur any liability to
the Borrower or any other Person as a direct or indirect result
of honoring such Libor Rate Election.
5. PREREQUISITES TO LOAN. The obligation of the Bank
to make any Loan shall be conditioned upon the following:
a. No Default. (i) There not having occurred or
existed at any time during the period beginning on the date of
this Agreement and ending at the time such Loan is to be made and
there not existing at the time such Loan is to be made any Event
of Default or Potential Event of Default that has not been waived
by the Bank in writing or cured and (ii) the Bank not believing
in good faith that any Event of Default or Potential Event of
Default has so occurred or existed, so exists or, if such Loan is
made, will occur or exist;
b. Representations and Warranties. (i) Each
representation and warranty made in this Agreement being true and
correct in each material respect as of the date of this Agreement
and, except to the extent updated in a certificate executed by
the President or a Vice President of the Borrower and the chief
financial officer of the Borrower and received by the Bank before
the time such Loan is to be made, as of such time, (ii) each
other representation and warranty made to the Bank by or on
behalf of any Related Entity or Other Obligor before the time
such Loan is to be made being true and correct in each material
respect as of the date thereof, (iii) each financial statement
provided to the Bank by or on behalf of any Related Entity or
Other Obligor before the time such Loan is to be made being true
and correct in each material respect as of the date thereof and
(iv) the Bank not believing in good faith that (A) any such
representation or warranty, except to the extent so updated, was
or is other than true and correct in each material respect as of
any date or time of determination of the truth or correctness
thereof, (B) any event or condition the occurrence,
non-occurrence, existence or non-existence of which is a subject
of any such representation or warranty would or might have any
Material Adverse Effect or (C) any such financial statement was
other than true and correct in each material respect as of the
date thereof;
c. Proceedings. The Bank being satisfied as to each
corporate or other proceeding in connection with any transaction
contemplated by this Agreement; and
d. Receipt by Bank. The receipt by the Bank at or
before the time such Loan is to be made of the following, in form
and substance satisfactory to the Bank:
i. If such Loan is the first Revolving Loan, a
Revolving Loan Note, appropriately completed and duly executed by
the Borrower;
ii. If such Loan is Term Loan I, a Term Loan I Note,
appropriately completed and duly executed by the Borrower;
iii. If such Loan is Term Loan II,
a Term Loan II Note, appropriately
completed and duly executed by the Borrower;
iv. If such Loan is a Revolving Loan, a request for
such Loan determined by the Bank to meet the requirements for
such a request set forth in Section 2a of this Agreement;
v. If such Loan is the first Loan, Continuing,
Absolute and Unconditional Guaranty Agreements, appropriately
completed and duly executed by Comptek-Amherst, guaranteeing,
without any limitation as to amount, the payment of all
indebtedness and other obligations of the Borrower and Comptek
Federal to the Bank, whether now existing or hereafter arising or
accruing, and (B) whether or not such Loan is the first Loan,
evidence that neither such Continuing, Absolute and Unconditional
Guaranty Agreement has been terminated as provided therein;
vi. (A) If such Loan is the first Loan, a General
Security Agreement, appropriately completed and duly executed by
Comptek-Amherst, securing, without any limitation as to amount,
the payment of all indebtedness and other obligations of
Comptek-Amherst to the Bank, whether now existing or hereafter
arising or accruing, and (B) whether or not such Loan is the
first Loan, evidence that such General Security Agreement has not
been terminated as provided therein;
vii. (A) If such Loan is the first Loan, a Copyright
Security Agreement, appropriately completed and duly executed by
Comptek-Federal, securing, without any limitation as to amount,
the payment of all indebtedness and other obligations of
Comptek-Federal to the Bank, whether now existing or hereafter
arising or accruing, and covering, among other assets, all
copyrights, copyright registrations and copyright applications of
Comptek-Federal and (B) whether or not such Loan is the first
Loan, evidence that such Copyright Security Agreement has not
been terminated as provided therein;
viii. If such Loan is the first Loan, an updated
Credit Facility Questionnaire, appropriately completed and duly
executed by each Related Entity;
ix. (A) If such Loan is the first Loan, a
Ratification and Modification of Continuing, Absolute and
Unconditional Guaranty Agreements, appropriately completed and
duly executed by the Post-Acquisition Subsidiaries other than
Comptek-Amherst, ratifying and amending the Continuing, Absolute
and Unconditional Guaranty Agreements heretofore executed and
delivered to the Bank by the Borrower and the Post-Acquisition
Subsidiaries other than Comptek-Amherst and (B) whether or not
such Loan is the first Loan, evidence that no such Continuing,
Absolute and Unconditional Guaranty Agreement has been terminated
as provided therein;
x. (A) If such Loan is the first Loan, a
Ratification and Modification of Security Agreements,
appropriately completed and duly executed by the Post-Acquisition
Subsidiaries other than Comptek-Amherst, ratifying and amending
the General Security Agreements, Patent Collateral Assignment and
Security Agreements and Trademark Collateral Assignment and
Security Agreements heretofore executed and delivered to the Bank
by the Borrower and the Post-Acquisition Subsidiaries other than
Comptek-Amherst and (B) whether or not such Loan is the first
Loan, evidence that no such General Security Agreement, Patent
Collateral Assignment and Security Agreement or Trademark
Collateral Assignment and Security Agreement has been terminated
as provided therein;
xi. Whether or not such Loan is the first Loan,
evidence that no guaranty agreement, security agreement, patent
collateral assignment and security agreement, trademark
collateral assignment and security agreement or copyright
security agreement referred to in Section 7s of this Agreement
has been terminated as provided therein;
xii. If such Loan is the first Loan, (A) an Assignment
of Representations, Warranties, Covenants and Indemnities,
appropriately completed and duly executed by the Borrower,
securing, without any limitation as to amount, the payment of all
indebtedness and other obligations of the Borrower to the Bank,
whether now existing or hereafter arising or accruing, and
covering representations, warranties, covenants and indemnities
pursuant to any Acquisition Agreement and (B) an Acknowledgment
and Consent, appropriately completed and duly executed by the
Seller and ASI Acquisition Corp.;
xiii. If such Loan is the first Loan, an Assumption
Agreement, appropriately completed and duly executed by the
Borrower and Comptek-Amherst and assuming certain indebtedness
and other obligations of the Seller to the Bank and M&T Financial
Corporation;
xiv. If such Loan is the first Loan, a letter agreement
with the Bank, appropriately completed and duly executed by the
Seller, regarding unsecured subordinated promissory notes issued
by the Borrower to the Seller in connection with the Acquisition;
xv. If such Loan is the first Loan, an opinion of
Christopher A. Head, internal counsel to the Borrower;
xvi. If such Loan is the first Loan, an opinion from
Phillips, Lytle, Hitchcock, Blaine & Huber, LLP, counsel to the
Seller, addressed to the Borrower and permitting reliance by the
Bank thereon;
xvii. If such Loan is the first Loan, an opinion
from Charles E. Matthews, counsel to the Seller and ASI
Acquisition Corp., addressed to the Borrower and permitting
reliance by the Bank thereon;
xviii. If such Loan is the first Loan, a certificate
executed by the President or a Vice President of the Borrower and
the chief financial officer of the Borrower and stating that (A)
there did not occur or exist at any time during the period
beginning on the date of this Agreement and ending at the time
such Loan is to be made and there does not exist at the time such
Loan is to be made any Event of Default or Potential Event of
Default and (B) each representation and warranty made in this
Agreement was true and correct in each material respect as of all
times during the period beginning on the date of this Agreement
and ending at the time such Loan is to be made and is true and
correct in each material respect as of the time such Loan is to
be made, except to the extent updated in a certificate executed
by the President or a Vice President of the Borrower and the
chief financial officer of the Borrower and received by the Bank
before the time such Loan is to be made;
xix. If such Loan is the first Loan, evidence that each
Related Entity is at the time such Loan is to be made (A) in good
standing under the law of the jurisdiction in which it is
organized and (B) duly qualified and in good standing as a
foreign Person of its type authorized to do business in each
jurisdiction in which such qualification is necessary;
xx. If such Loan is the first Loan, a copy of each
certificate or articles of incorporation or organization,
by-laws, operating or partnership agreement or other charter,
organizational or governing document of each Related Entity
certified by its Secretary or a Person having functions with
respect to it similar to those of the Secretary of a corporation
to be complete and accurate at the time such Loan is to be made;
xxi. If such Loan is the first Loan, evidence of the
taking and the continuation in full force and effect at the time
such Loan is to be made of each corporate or other action of any
Related Entity necessary to authorize the obtaining of all Loans
by the Borrower, the execution, delivery to the Bank and perfor
mance of each Loan Document by each Person other than the Bank
who or that is contemplated by such Loan Document as a party
thereto and the imposition or creation of each security interest,
mortgage and other lien and encumbrance imposed or created
pursuant to any Loan Document;
xxii. If such Loan is the first Loan, evidence (A)
that no asset subject to any security interest, mortgage or other
lien or encumbrance pursuant to any Loan Document is at the time
such Loan is to be made subject to any other security interest,
mortgage or other lien or encumbrance, except for Permitted
Liens, and (B) of the making of each recording and filing, and
the taking of each other action, deemed necessary or desirable by
the Bank at the sole option of the Bank to perfect or otherwise
establish, preserve or protect the priority of any such security
interest, mortgage or other lien or encumbrance;
xxiii. If such Loan is the first Loan, evidence that
each requirement contained in any Loan Document with respect to
insurance is being met at the time such Loan is to be made;
xxiv. Each additional agreement, instrument and
other writing (including, but not limited to, (A) each agreement,
instrument and other writing intended to be filed or recorded
with any Governmental Authority to perfect or otherwise
establish, preserve or protect the priority of any security
interest, mortgage or other lien or encumbrance created or
imposed pursuant to any Loan Document and (B) if such Loan is not
the first Loan, each item referred to in any of clauses (i)
through (xxiii) of this Section 5d) required by any Loan Document
or deemed necessary or desirable by the Bank at the sole option
of the Bank;
xxv. Payment of all costs and expenses payable pursuant
to Section 10a of this Agreement at or before the time such Loan
is to be made; and
xxvi. Immediately available funds equal to the
portion of the principal amount of such Loan representing the
interest of any participant in the indebtedness of the Borrower
pursuant to this Agreement arising from such Loan.
6. REPRESENTATIONS AND WARRANTIES. Except as fully
and accurately described in Exhibit A attached to and made a part
of this Agreement, the Borrower represents and warrants to the
Bank, and, except to the extent updated in a certificate executed
by the President or a Vice President of the Borrower and the
chief financial officer of the Borrower and received by the Bank
before the time any Loan is made, the Borrower shall be deemed to
represent and warrant to the Bank as of such time, as follows:
a. Use of Proceeds. The proceeds of each Revolving
Loan will be used only (i) for working capital of the Borrower,
(ii) to pay existing indebtedness of the Borrower to the Bank,
(iii) for loans and advances by the Borrower to any other Related
Entity to be used for working capital of such other Related
Entity and (iv) to finance in part the Acquisition. The proceeds
of Term Loan I will be used only to refinance existing
indebtedness of the Borrower to the Bank arising pursuant to a
term loan in the original principal amount of $15,000,000 made by
the Bank to the Borrower on or about May 14, 1998. The proceeds
of Term Loan II will be used only to pay the outstanding
principal amounts of all Revolving Loans.
b. Consummation of Acquisition . The Acquisition is
being consummated simultaneously with the making of the first
Revolving Loan in accordance with each material requirement of
any Acquisition Document, except insofar as agreed to by the Bank
in writing prior to such consummation.
c. Subordinated Debt . Before the making of the
first Revolving Loan, the Borrower will have received the
proceeds of an initial private placement of subordinated
debentures in the aggregate principal amount of at least
$15,000,000 as described in a Confidential Private Placement
Memorandum dated March 15, 1999 a correct and complete copy of
which the Borrower has heretofore delivered to the Bank.
d. Subsidiaries; Affiliates . The Borrower has
(i) no Subsidiary or (ii) no Affiliate that is not an individual.
e. Good Standing; Qualification; Authority. Each
Related Entity (i) is duly organized, validly existing and in
good standing under the law of the jurisdiction in which it is
organized, (ii) is duly qualified and in good standing as a
foreign Person of its type authorized to do business in each
jurisdiction in which such qualification is necessary and (iii)
has the power and authority to conduct its business and
operations as now and as anticipated that its business and
operations will hereafter be conducted, own each of its assets
and use each of its assets as now and as anticipated that such
asset will hereafter be used.
f. Control . There is no Person other than all
Related Entities who or that, insofar as any Related Entity has
knowledge or reason to know, has (i) Control over any Related
Entity or (ii) the right pursuant to any agreement with any
Person having such Control to acquire such Control.
g. Compliance. The present and anticipated conduct
of the business and operations of each Related Entity, the
present and anticipated ownership and use of each asset of each
Related Entity, the present and anticipated use of each asset
leased by any Related Entity as a lessee and the generation,
treatment, storage, recycling, transportation and disposal by any
Related Entity of any Hazardous Material are in compliance in
each material respect with each applicable Law (including, but
not limited to, each applicable Environmental Law). Each
trademark, service mark, trade name, patent, copyright, license
and franchise, and each authorization, certification,
certificate, approval, permit and consent from, registration and
filing with, declaration, report and notice to and other act by
or relating to any Person necessary for the present or
anticipated conduct of the business or operations of any Related
Entity, the present or anticipated ownership or use of any asset
of any Related Entity, the present or anticipated use of any
asset leased by any Related Entity as a lessee or the generation,
treatment, storage, recycling, transportation or disposal by any
Related Entity of any Hazardous Material has been duly obtained,
made, given or done and is in full force and effect. Each
Related Entity (i) has taken or caused to be taken each action
necessary to preserve and protect each such trademark, service
mark, trade name, patent, copyright, license and franchise with
respect to it and (ii) is in compliance in each material respect
with (A) each such authorization, certification, certificate,
approval, permit and consent with respect to it, (B) each
certificate or articles of incorporation or organization,
by-laws, operating or partnership agreement or other charter,
organizational or governing document of it and (C) each agreement
and instrument to which it is a party or by which it or any of
its assets is bound.
h. Environmental Matters. To the best of the
knowledge of each Related Entity after due inquiry:
i. There has not been any Release or threatened
Release of any Hazardous Material at, in, on or under any
property now or previously owned, leased as a lessee or used by
any Related Entity that, whether alone or together with any other
such Release or threatened Release or other such Releases and
threatened Releases, has had or (so far as any Related Entity can
foresee) will or might have any Material Adverse Effect;
ii. No property now or previously owned, leased as a
lessee or used by any Related Entity and no property to or from
which any Related Entity has transported or arranged for the
transportation of any Hazardous Material has been listed or
proposed for listing on the National Priorities List pursuant to
CERCLA, the Comprehensive Environmental Response, Compensation
and Liability Information System or any other list of sites
requiring investigation or clean-up that is maintained by any
Governmental Authority, except for any such listing that could
not have any Material Adverse Effect;
iii. There is no active or abandoned underground
storage tank at, in, on or under any property now or previously
owned, leased as a lessee or used by any Related Entity that,
whether alone or together with any other such storage tank or
other such storage tanks, has had or (so far as any Related
Entity can foresee) will or might have any Material Adverse
Effect;
iv. There is no polychlorinated biphenyl or friable
asbestos present at, in, on or under any property now or
previously owned, leased as a lessee or used by any Related
Entity that, whether alone or together with any other such
polychlorinated biphenyl, other such polychlorinated biphenyls or
any other friable asbestos, has had or (so far as any Related
Entity can foresee) will or might have any Material Adverse
Effect; and
v. There exists no condition at, in, on or under any
property now or previously owned, leased as a lessee or used by
any Related Entity that, after notice, lapse of time or both
notice and lapse of time, would or might give rise to any
material liability under any Environmental Law.
i. Legality. The obtaining of each Loan by the
Borrower, the Acquisition and the issuance of the subordinated
debentures referred to in Section 6c of this Agreement (i) are
and will be in furtherance of the purposes of the Borrower and
within the power and authority of the Borrower, (ii) do not and
will not (A) violate or result in any violation of any Law or any
judgment, order or award of any Governmental Authority or
arbitrator or (B) violate, result in any violation of, constitute
(whether immediately or after notice, lapse of time or both
notice and lapse of time) any default under or result in or
require the imposition or creation of any security interest in or
mortgage or other lien or encumbrance upon any asset of the
Borrower pursuant to (I) the certificate or articles of
incorporation or other charter document of the Borrower, (II) the
by-laws or other organizational document of the Borrower, (III)
any shareholder agreement, voting trust or similar arrangement
applicable to any stock of the Borrower, (IV) any resolution or
other action of record of the shareholders or board of directors
of the Borrower or (V) any agreement or instrument to which the
Borrower is a party or by which the Borrower or any asset of the
Borrower is bound and (iii) have been duly authorized by each
necessary action of the shareholders or board of directors of the
Borrower. The execution, delivery to the Bank and performance of
each Loan Document by each Person other than the Bank who or that
is contemplated by such Loan Document as a party thereto and the
imposition or creation of each security interest, mortgage and
other lien and encumbrance imposed or created pursuant thereto
(i) do not and will not (A) violate or result in any violation of
any Law or any judgment, order or award of any Governmental
Authority or arbitrator or (B) violate, result in any violation
of, constitute (whether immediately or after notice, lapse of
time or both notice and lapse of time) any default under or,
other than pursuant to any Loan Document, result in or require
the imposition or creation of any security interest in or
mortgage or other lien or encumbrance upon any asset of such
Person pursuant to any agreement or instrument to which such
Person is a party or by which such Person or any asset of such
Person is bound and (ii) if such Person is not an individual, (A)
are and will be in furtherance of the purposes of such Person and
within the power and authority of such Person, (B) do not and
will not violate, result in any violation of or result in or
require the imposition or creation of any security interest in or
mortgage or other lien or encumbrance upon any asset of such
Person pursuant to (I) any certificate or articles of
incorporation or organization, by-laws, operating or partnership
agreement or other charter, organizational or governing document
of such Person, (II) any shareholder agreement, voting trust or
similar arrangement applicable to any stock of or other ownership
interest in such Person or (III) any resolution or other action
of record of any such shareholders or members of such Person, any
board of directors or trustees of such Person or any other Person
responsible for governing such Person and (C) have been duly
authorized by each necessary action of any such shareholders,
members, board of directors or trustees or other Person. Each
authorization, certification, certificate, approval, permit,
consent, franchise and license from, registration and filing
with, declaration, report and notice to and other act by or
relating to any Person required as a condition of the obtaining
of any Loan by the Borrower, the execution, delivery to the Bank
or performance of any Loan Document by any Person other than the
Bank who or that is contemplated by such Loan Document as a party
thereto or the imposition or creation of any security interest,
mortgage or other lien or encumbrance imposed or created pursuant
to any Loan Document has been duly obtained, made, given or done
and is in full force and effect. Each Loan Document has been
duly executed and delivered to the Bank by each Person other than
the Bank who or that is contemplated by such Loan Document as a
party thereto.
j. Documents . The Borrower has heretofore delivered
to the Bank a correct and complete copy of (i) the Asset Purchase
Agreement referred to in clause (i) of Section 1c of this
Agreement and (ii) each Subordinated Debenture Document.
k. No Waiver or Default . The Borrower (i) except
with the prior written consent of the Bank, has not waived any
condition of the Borrower's obligation to consummate the
Acquisition or the issuance of the subordinated debentures
referred to in Section 6c of this Agreement and (ii) is not and
will not be in default in any material respect under any
Acquisition Document or Subordinated Debenture Document.
l. Representations and Warranties . (i) Each
representation and warranty made in any Acquisition Document or
Subordinated Debenture Document by the Borrower is true and
correct in each material respect, and (ii) each representation
and warranty made in any Acquisition Document or Subordinated
Debenture Document by any party other than the Borrower is, to
the best of the knowledge of the Borrower, true and correct.
m. Fiscal Year. The fiscal year of each Related
Entity is the year ending March 31.
n. Financial Information . The Borrower has
heretofore delivered to the Bank a copy of Form 10-Q Report of
the Borrower filed with the Securities and Exchange Commission on
February 5, 1999 and a copy of each of the following financial
statements:
i. Audited consolidated statements of income and cash
flows of the Borrower for its fiscal year ended March 31, 1998;
ii. An audited consolidated balance sheet of the
Borrower dated as of March 31, 1998;
iii. Unaudited consolidated statements of income and
cash flows of the Borrower for its fiscal quarter ended
December 25, 1998; and
iv. An unaudited consolidated balance sheet of the
Borrower dated as of December 25, 1998.
Each such financial statement (i) is correct and complete in each
material respect, (ii) is in accordance with the records of each
Person that is a Related Entity on the date thereof, (iii)
presents fairly (subject to normal and nonmaterial year-end
adjustments if the fiscal period covered thereby is not a fiscal
year of the Borrower or the date thereof is not the last day of
such a fiscal year) the results of the consolidated operations
and consolidated cash flows of the Borrower for the fiscal period
covered thereby, or the consolidated financial position of the
Borrower as of the date thereof, in conformity with generally
accepted accounting principles applied consistently with the
application of such principles with respect to the preceding
fiscal period of the Borrower and (iv) if a balance sheet,
reflects each indebtedness and other obligation of any Person
that is a Related Entity on the date thereof as of such date that
has had or (so far as any such Person can foresee) will or might
have any Material Adverse Effect.
o. Material Adverse Effects; Distributions. Since
December 25, 1998, (i) there has not occurred or existed any
event or condition that has had or (so far as any Related Entity
can foresee) will or might have any Material Adverse Effect, and
(ii) no Related Entity has declared, paid, made or agreed or
otherwise incurred any obligation to declare, pay or make any
Distribution.
p. Tax Returns and Payments . Each Related Entity
has duly (i) filed each tax return required to be filed by it and
(ii) paid or caused to be paid each tax, assessment, fee, charge,
fine and penalty that has been imposed by any Governmental
Authority upon it or any of its assets, income and franchises and
has become due.
q. Certain Indebtedness . No Related Entity has any
indebtedness or other obligation (i) arising from the borrowing
of any money or the deferral of the payment of the purchase price
of any asset or (ii) pursuant to any guaranty or other contingent
obligation (including, but not limited to, any obligation to
(A) maintain the net worth of any other Person, (B) purchase or
otherwise acquire or assume any indebtedness or other obligation
or (C) provide funds for or otherwise assure the payment of any
indebtedness or other obligation, whether by means of any
investment, by means of any purchase, sale or other acquisition
or disposition of any asset or service or otherwise), except for
indebtedness and other obligations (I) to the Bank, (II)
constituting unsecured normal trade debt incurred upon customary
terms in the ordinary course of its business or (III) arising
from the endorsement in the ordinary course of its business of
any check or other negotiable instrument for deposit or
collection.
r. Pension Obligations. No Pension Plan was or is a
multiemployer plan, as such term is defined in Section 3(37) of
ERISA. The present value of all benefits vested under any
Pension Plan does not exceed the value of the assets of such
Pension Plan allocable to such vested benefits. Since
September 2, 1974, (i) no Prohibited Transaction that could
subject any Pension Plan to any tax or penalty imposed pursuant
to the Internal Revenue Code or ERISA has been engaged in by any
Pension Plan, (ii) there has not occurred or existed with respect
to any Pension Plan any Reportable Event or Accumulated Funding
Deficiency or any event or condition that (A) but for a waiver by
the Internal Revenue Service would constitute an Accumulated
Funding Deficiency, (B) after notice, lapse of time or both
notice and lapse of time will or might constitute a Reportable
Event or (C) constituted or will or might constitute grounds for
the institution by the Pension Benefit Guaranty Corporation of
any proceeding under ERISA seeking the termination of such
Pension Plan or the appointment of a trustee to administer such
Pension Plan, (iii) no Pension Plan has been terminated, (iv) no
trustee has been appointed by a United States District Court to
administer any Pension Plan, (v) no proceeding seeking the
termination of any Pension Plan or the appointment of a trustee
to administer any Pension Plan has been instituted, and (vi) no
Related Entity has made any complete or partial withdrawal from
any Pension Plan.
s. Leases. No Related Entity is obligated (whether
as a lessee or otherwise) pursuant to any capital or operating
Lease. Each capital or operating lease pursuant to which any
Related Entity is obligated (whether as a lessee or otherwise)
entitles each lessee thereunder to undisturbed possession of each
asset leased thereby during the full term thereof.
t. Assets; Liens and Encumbrances . (i) Immediately
after the consummation of the Acquisition, the Borrower will have
good and marketable title to all assets of the Seller to be
acquired by the Borrower pursuant to any Acquisition Document,
and none of such assets will be subject to any security interest,
mortgage or other lien or encumbrance, except for Permitted
Liens, and (ii) each Related Entity has good and marketable title
to each asset it purports to own, and no such asset is subject to
any security interest, mortgage or other lien or encumbrance,
except for Permitted Liens.
u. Investments . No Related Entity has any
investment (whether by means of any purchase or other acquisition
of any security or interest, by means of any capital contribution
or otherwise) in any other Person, except for Permitted
Investments.
v. Loans. No Related Entity has made any loan,
advance or other extension of credit with respect to which any
sum is owing to it, except for Permitted Loans.
w. Judgments and Litigation. There is no
outstanding judgment, order or award of any Governmental
Authority or arbitrator that is against or otherwise involves any
Related Entity or any asset of any Related Entity. Any pending
or threatened claim, audit, investigation or action or other
legal proceeding by or before any Governmental Authority or
before any arbitrator that (i) is against or otherwise involves
any Related Entity or any asset of any Related Entity and (ii)
has had or (so far as any Related Entity can foresee) will or
might have any Material Adverse Effect has been disclosed to the
Bank and reflected in a document filed by the Borrower with the
Securities and Exchange Commission. No pending or threatened
claim, audit, investigation or action or other legal proceeding
by or before any Governmental Authority or before any arbitrator
renders invalid or questions the validity of any Acquisition
Agreement or Loan Document or any action taken or to be taken
pursuant to any Acquisition Agreement or Loan Document. No
audit, investigation or action or other legal proceeding referred
to in the second sentence of this Section 6w has had or (so far
as any Related Entity can foresee) will or might have any
Material Adverse Effect.
x. Transactions with Affiliates . There exists no
agreement, arrangement, transaction or other dealing (including,
but not limited to, the purchase, sale, lease, exchange or other
acquisition or disposition of any asset and the rendering of any
service) between any Related Entity and any Affiliate, except for
agreements, arrangements, transactions and other dealings in the
ordinary course of business of any Related Entity upon fair and
reasonable terms no less favorable to it than would apply in a
comparable arm's length agreement, arrangement, transaction or
other dealing with a Person who or that is not an Affiliate.
y. Default . There does not exist, and immediately
after the consummation of the Acquisition there will not have
occurred or existed, any Event of Default or Potential Event of
Default.
z. Full Disclosure. Neither any Acquisition
Document or Loan Document nor any certificate, financial
statement or other writing heretofore provided to the Bank by or
on behalf of any Related Entity or Other Obligor contains any
statement of fact that is incorrect or misleading in any material
respect or omits to state any fact necessary to make any
statement of fact contained therein not incorrect or misleading
in any material respect. No Related Entity has failed to
disclose to the Bank any fact that has had or (so far as any
Related Entity can foresee) will or might have any Material
Adverse Effect.
aa. Year 2000 Compliance . Each Related Entity has
assessed or is assessing all Systems relating to such Related
Entity to determine the extent to which such Systems are Year
2000 Compliant. The expense of correcting and deploying all of
such Systems that are not Year 2000 Compliant and testing such
Systems to confirm that such Systems are Year 2000 Compliant and
the consequences of all of such Systems that fail to be Year 2000
Compliant so failing (so far as any Related Entity can foresee)
will not have any Material Adverse Effect.
7. AFFIRMATIVE COVENANTS. During the term of this
Agreement, the Borrower shall do the following unless the prior
written consent of the Bank to not doing so shall have been
obtained by the Borrower:
a. Good Standing; Qualification. Cause each of
Related Entity at all times to (i) maintain its corporate,
partnership or other existence in good standing and (ii) remain
or become and remain duly qualified and in good standing as a
foreign Person of its type authorized to do business in each
jurisdiction in which such qualification is or becomes necessary;
b. Compliance. (i) Cause each of Related Entity at
all times to (A) conduct its business and operations, own and use
each of its assets, use each asset leased by it as a lessee, and
generate, treat, store, recycle, transport and dispose of all
Hazardous Material in its possession or control, in compliance in
each material respect with each applicable Law (including, but
not limited to, each applicable Environmental Law), (B) maintain
in full force and effect, preserve and protect each trademark,
service mark, trade name, patent, copyright, license and
franchise, and obtain, make, give or do and maintain in full
force and effect each authorization, certification, certificate,
approval, permit and consent from, registration and filing with,
declaration, report and notice to and other act by or relating to
any Person, necessary for the conduct of its business or
operations, the ownership or use of any of its assets, the use of
any asset leased by it as a lessee or the generation, treatment,
storage, recycling, transportation or disposal of any Hazardous
Material in its possession or control and (C) remain in
compliance in each material respect with (I) each such
authorization, certification, certificate, approval, permit,
consent, franchise and license, (II) each certificate or articles
of incorporation or organization, by-laws, operating or
partnership agreement or other charter, organizational or
governing document of it and (III) each agreement and instrument
to which it is a party or by which it or any of its assets is
bound, (ii) immediately upon acquiring knowledge or reason to
know of any notice or allegation that any Related Entity (A) has
not complied in any material respect with any applicable Law
(including, but not limited to, any Environmental Law) in the
conduct of its business or operations, the ownership or use of
any of its assets, the use of any asset leased by it as a lessee
or the generation, treatment, storage, recycling, transportation
or disposal of any Hazardous Material in its possession or
control, (B) has not maintained in full force and effect,
preserved or protected any such trademark, service mark, trade
name, patent, copyright, license or franchise or obtained, made,
given, done or maintained in full force and effect any such
authorization, certification, certificate, approval, permit,
consent, registration, filing, declaration, report, notice or
act, (C) has not complied in any material respect with any such
license, franchise, authorization, certification, certificate,
approval, permit, consent, certificate or articles of
incorporation or organization, by-laws, operating or partnership
agreement, other charter, organizational or governing document,
agreement or instrument or (D) is or may be liable for any cost
associated with or damage resulting from any Release, threatened
Release or clean-up of any Hazardous Material, provide to the
Bank a certificate executed by the President or a Vice President
of the Borrower and specifying the nature of such notice or
allegation and what action the Borrower has taken, is taking or
proposes to take with respect thereto and (iii) immediately upon
acquiring knowledge or reason to know of any development with
respect to any such notice or allegation theretofore disclosed by
the Borrower to the Bank that has or (so far as any Related
Entity can foresee) will or might have any Material Adverse
Effect, provide to the Bank a certificate executed by the
President or a Vice President of the Borrower and specifying the
nature of such development and what action the Borrower has
taken, is taking or proposes to take with respect thereto;
c. Working Capital. Assure that the consolidated
net working capital of the Borrower is at least (i) $17,000,000
at all times during the period beginning on the date of this
Agreement and ending on March 30, 1999 and (ii) $18,000,000 at
all times thereafter;
d. Net Worth. Assure that the consolidated tangible
net worth of the Borrower is not less than (i) minus $32,000,000
at all times during the period beginning on the date of this
Agreement and ending on March 30, 2000, (ii) minus $27,000,000 at
all times during the period beginning on March 31, 2000 and
ending on March 30, 2001 and (iii) minus $21,000,000 at all times
thereafter;
e. Combined Fixed Charges Coverage. Assure that (i)
annualized EBITDA for the fiscal quarter of the Borrower ending
on July 2, 1999 is at least 110% of the annualized total of (A)
consolidated interest expense of the Borrower for such fiscal
quarter, (B) the aggregate scheduled payments of principal for
all Related Entities for such fiscal quarter with respect to
indebtedness, (C) the aggregate capital expenditures for all
Related Entities for such fiscal quarter, (D) consolidated income
and franchise tax expense of the Borrower for such fiscal quarter
and (E) the aggregate Distributions for all Related Entities for
such fiscal quarter, (ii) annualized EBITDA for the two fiscal
quarters of the Borrower ending on October 1, 1999 is at least
110% of the annualized total of such consolidated interest
expense, aggregate scheduled payments of principal, aggregate
capital expenditures, consolidated income and franchise tax
expense and aggregate Distributions for such two fiscal quarters,
(iii) annualized EBITDA for the three fiscal quarters of the
Borrower ending on December 31, 1999 is at least 110% of the
annualized total of such consolidated interest expense, aggregate
scheduled payments of principal, aggregate capital expenditures,
consolidated income and franchise tax expense and aggregate
Distributions for such three fiscal quarters, (iv) for each
period consisting of four fiscal quarters of the Borrower,
beginning with the period consisting of the four such fiscal
quarters ending on March 31, 2000 and ending with the period
consisting of the four such fiscal quarters ending on
December 29, 2000, EBITDA is at least 120% of the total of such
consolidated interest expense, aggregate scheduled payments of
principal, aggregate capital expenditures, consolidated income
and franchise tax expense and aggregate Distributions for such
four fiscal quarters and (v) for each period consisting of four
fiscal quarters of the Borrower, beginning with the period
consisting of the four such fiscal quarters ending on March 31,
2001, EBITDA is at least 125% of the total of such consolidated
interest expense, aggregate scheduled payments of principal,
aggregate capital expenditures, consolidated income and franchise
expense and aggregate Distributions for such four fiscal
quarters;
f. Maximum Funded Debt. Assure that (i) the total
of (A) the aggregate outstanding principal amounts of all
Revolving Loans on July 2, 1999, (B) the outstanding principal
amount of Term Loan I on July 2, 1999 and (C) the aggregate
outstanding principal amounts on July 2, 1999 of all other
indebtedness and other obligations arising from the borrowing of
any money by any Related Entity or the deferral of the purchase
price or capital lease of any asset by any Related Entity does
not exceed 650% of (I) annualized EBITDA for the fiscal quarter
of the Borrower ending on July 2, 1999 minus (II) consolidated
capital expenditures of the Borrower for such fiscal quarter,
(ii) the total of (A) the aggregate outstanding principal amounts
of all Revolving Loans on October 1, 1999, (B) the outstanding
principal amount of Term Loan I on October 1, 1999 and (C) the
aggregate outstanding principal amounts on October 1, 1999 of all
other indebtedness and other obligations arising from any such
borrowing, deferral of a purchase price or capital lease does not
exceed 650% of (I) annualized EBITDA for the two fiscal quarters
of the Borrower ending on October 1, 1999 minus (II) consolidated
capital expenditures of the Borrower for such two fiscal
quarters, (iii) the total of (A) the aggregate outstanding
principal amounts of all Revolving Loans on December 31, 1999,
(B) the outstanding principal amount of Term Loan I on
December 31, 1999 and (C) the aggregate outstanding principal
amounts on December 31, 1999 of all other indebtedness and other
obligations arising from any such borrowing, deferral of the
purchase price or capital lease does not exceed 650% of (I)
annualized EBITDA for the three fiscal quarters of the Borrower
ending on December 31, 1999 minus (II) consolidated capital
expenditures of the Borrower for such three fiscal quarters and
(iv) the total of (A) the aggregate outstanding principal amounts
of all Revolving Loans at the end of each period consisting of
four fiscal quarters of the Borrower, beginning with the period
consisting of the four such fiscal quarters ending on March 31,
2000, (B) the outstanding principal amount of Term Loan I at the
end of such period, (C) the outstanding principal amount of Term
Loan II at the end of such period and (D) the aggregate
outstanding principal amounts at the end of such period of all
other indebtedness and other obligations arising from any such
borrowing, deferral of a purchase price or capital lease does not
exceed (I) 550% of (1) EBITDA for such period minus (2)
consolidated capital expenditures of the Borrower for such period
if such period ends on March 31, 2000 or (II) 500% of (1) EBITDA
for such period minus (2) consolidated capital expenditures of
the Borrower for such period if such period ends after March 31,
2000;
g. Maximum Senior Funded Debt. Assure that (i) the
total of (A) the aggregate outstanding principal amounts of all
Revolving Loans on July 2, 1999, (B) the outstanding principal
amount of Term Loan I on July 2, 1999 and (C) the aggregate
outstanding principal amounts on July 2, 1999 of all other
indebtedness and other obligations arising from the borrowing of
any money by any Related Entity or the deferral of the purchase
price or capital lease of any asset by any Related Entity, except
for indebtedness and other obligations the payment of which is
subordinated to the payment of indebtedness and other obligations
to the Bank, does not exceed 350% of (I) annualized EBITDA for
the fiscal quarter of the Borrower ending on July 2, 1999 minus
(II) consolidated capital expenditures of the Borrower for such
fiscal quarter, (ii) the total of (A) the aggregate outstanding
principal amounts of all Revolving Loans on October 1, 1999, (B)
the outstanding principal amount of Term Loan I on October 1,
1999 and (C) the aggregate outstanding principal amounts on
October 1, 1999 of all other indebtedness and other obligations
arising from any such borrowing, deferral of a purchase price or
capital lease, except for indebtedness and other obligations so
subordinated, does not exceed 350% of (I) annualized EBITDA for
the two fiscal quarters of the Borrower ending on October 1, 1999
minus (II) such consolidated capital expenditures for such two
fiscal quarters, (iii) the total of (A) the aggregate outstanding
principal amounts of all Revolving Loans on December 31, 1999,
(B) the outstanding principal amount of Term Loan I on December
31, 1999 and (C) the aggregate outstanding principal amounts on
December 31, 1999 of all other indebtedness and other obligations
arising from any such borrowing, deferral of a purchase price or
capital lease, except for indebtedness and other obligations so
subordinated, does not exceed 350% of (I) annualized EBITDA for
the three fiscal quarters of the Borrower ending on December 31,
1999 minus (II) such consolidated capital expenditures for such
three fiscal quarters and (iv) the total of (A) the aggregate
outstanding principal amounts of all Revolving Loans at the end
of each period consisting of four fiscal quarters of the
Borrower, beginning with the period consisting of the four such
fiscal quarters ending on March 31, 2000, (B) the outstanding
principal amount of Term Loan I at the end of such period, (C)
the outstanding principal amount of Term Loan II at the end of
such period and (D) the aggregate outstanding principal amounts
at the end of such period of all other indebtedness and other
obligations arising from any such borrowing, deferral of a
purchase price or capital lease, except for indebtedness and
other obligations so subordinated, does not exceed 300% of (I)
EBITDA for such period minus (II) such consolidated capital
expenditures for such period;
h. Accounting; Reserves; Tax Returns. Cause each
Related Entity at all times to (i) maintain a system of
accounting established and administered in accordance with
generally accepted accounting principles, (ii) establish each
reserve it is required by generally accepted accounting
principles to establish and (iii) file each tax return it is
required to file;
i. Financial and Other Information; Certificates of
No Default. Provide to the Bank, in form satisfactory to the
Bank, (i) within 60 days after the end of each fiscal quarter of
each fiscal year of the Borrower, consolidating and consolidated
statements of income and cash flows of the Borrower for such
fiscal quarter and the period from the beginning of such fiscal
year to the end of such fiscal quarter and a consolidating and
consolidated balance sheet of the Borrower as of the end of such
fiscal quarter, each to be in reasonable detail, to set forth
comparative consolidated figures for the corresponding period in
the preceding fiscal year of the Borrower and to be certified by
the chief financial officer of the Borrower to be correct and
complete, to be in accordance with the records of each Related
Entity and to present fairly, subject to normal and nonmaterial
year-end adjustments, the results of the operations and cash
flows of the Borrower for such fiscal quarter and the period from
the beginning of such fiscal year to the end of such fiscal
quarter, and the financial position of the Borrower as of the end
of such fiscal quarter, in conformity with generally accepted
accounting principles applied consistently with the application
of such principles with respect to the preceding fiscal quarter
of the Borrower, (ii) within 90 days after the end of each fiscal
year of the Borrower, consolidating and consolidated statements
of income and cash flows of the Borrower for such fiscal year and
a consolidating and consolidated balance sheet of the Borrower as
of the end of such fiscal year, each to be in reasonable detail,
to set forth comparative consolidated figures for the preceding
fiscal year of the Borrower and to be certified by an independent
certified public accountant acceptable to the Bank to present
fairly the results of the operations and cash flows of the
Borrower for such fiscal year, and the financial position of the
Borrower as of the end of such fiscal year, in conformity with
generally accepted accounting principles applied consistently
with the application of such principles with respect to the
preceding fiscal year of the Borrower and to have been based upon
an audit by such accountant that was made in accordance with
generally accepted auditing standards and accordingly included
such tests of accounting records and such other accounting
procedures as such accountant deemed necessary in the
circumstances, (iii) together with each statement of income and
balance sheet required to be delivered by the Borrower to the
Bank pursuant to clause (i) or (ii) of this Section 7i, a
certificate (A) executed by the President or a Vice President of
the Borrower and the chief financial officer of the Borrower, (B)
setting forth whatever computations are required to establish
whether the Borrower was in compliance with (I) each of the
covenants contained in Sections 7c, 7d, 7e, 7f and 7g of this
Agreement during the period covered by such statement of income
and (II) if the period covered by such statement of income is a
fiscal year of the Borrower, each of the covenants contained in
Sections 8e and 8f of this Agreement during such period, (C)
stating that the signers of such certificate have reviewed this
Agreement and have made or have caused to be made under their
supervision a review of the business, operations, assets, affairs
and condition (financial or other) of each Related Entity during
the period beginning on the first date covered by such statement
of income and ending on the date of such certificate and (D) if
during the period described in clause (iii)(C) of this Section 7i
there did not occur or exist and there does not then exist any
Event of Default or Potential Event of Default, so stating or, if
during such period any Event of Default or Potential Event of
Default occurred or existed or any Event of Default or Potential
Event of Default then exists, stating the nature thereof, the
date of occurrence or period of existence thereof and what action
the Borrower has taken, is taking or proposes to take with
respect thereto, (iv) as soon as available, (A) each financial
statement, report, notice and proxy statement sent or made
available by the Borrower to holders of its securities generally
and (B) each publicly available periodic or special report,
registration statement, prospectus and other written
communication other than a transmittal letter filed by the
Borrower with and each publicly available written communication
received by the Borrower from any securities exchange or the
Securities and Exchange Commission, (v) within 30 days after the
end of each calendar quarter, a report concerning the readiness
of the Systems of each Related Entity to be Year 2000 Compliant,
(vi) within 30 days after the date of this Agreement, a true and
correct copy of each Acquisition Document not heretofore provided
to the Bank and (vii) promptly upon the request of the Bank, all
additional information relating to any Related Entity or the
business, operations, assets, affairs or condition (financial or
other) of any Related Entity that is so requested;
j. Payment of Certain Indebtedness. Cause each
Related Entity to pay, before the end of any applicable grace
period, each tax, assessment, fee, charge, fine and penalty
imposed by any Governmental Authority upon it or any of its
assets, income and franchises and each claim and demand of any
materialman, mechanic, carrier, warehouseman, garageman or
landlord against it; provided, however, that no such tax,
assessment, fee, charge, fine, penalty, claim or demand shall be
required to be so paid so long as (i) the validity thereof is
being contested in good faith by appropriate proceedings promptly
instituted and diligently conducted, (ii) adequate reserves have
been appropriately established therefor, (iii) the execution or
other enforcement of any lien resulting therefrom is effectively
stayed and (iv) the nonpayment thereof does not have any Material
Adverse Effect;
k. Maintenance of Title and Assets; Insurance.
Cause each Related Entity to (i) at all times maintain good and
marketable title to each asset it purports to own, (ii) at all
times maintain each of its tangible assets in good working order
and condition, (iii) at any time and from time to time make each
replacement of any of its tangible assets necessary or desirable
for the conduct of its business or operations, (iv) at all times
keep each of its insurable tangible assets insured with
financially sound and reputable insurance carriers against fire
and other hazards to which extended coverage applies in such
manner and to the extent that the amount of insurance carried on
such asset shall not be less than the greater of (A) the
replacement value of such asset and (B) the percentage of the
actual cash value of such asset required by the policy providing
such insurance in order that it shall not become its own insurer
for any part of an otherwise recoverable loss with respect to
such asset and (v) at all times keep adequately insured with
financially sound and reputable insurance carriers against
business interruption and liability on account of damage to any
Person or asset or pursuant to any applicable workers'
compensation Law;
l. Inspections. Upon the request of the Bank,
promptly permit each officer, employee, accountant, attorney and
other agent of the Bank to (i) visit and inspect each of the
premises of each Related Entity, (ii) examine, audit, copy and
extract each record of each Related Entity and (iii) discuss the
business, operations, assets, affairs and condition (financial or
other) of each Related Entity with each responsible officer of
each Related Entity and each independent accountant of each
Related Entity;
m. Pension Obligations. (i) Promptly upon acquir
ing knowledge or reason to know of the occurrence or existence
with respect to any Pension Plan of any Prohibited Transaction,
Reportable Event or Accumulated Funding Deficiency or any event
or condition that (A) but for a waiver by the Internal Revenue
Service would constitute an Accumulated Funding Deficiency, (B)
after notice, lapse of time or both notice and lapse of time will
or might constitute a Reportable Event or (C) constitutes or will
or might constitute grounds for the initiation by the Pension
Benefit Guaranty Corporation of any proceeding under ERISA
seeking the termination of such Pension Plan or the appointment
of a trustee to administer such Pension Plan, provide to the Bank
a certificate executed by the President or a Vice President of
the Borrower and the chief financial officer of the Borrower and
specifying the nature of such Prohibited Transaction, Reportable
Event, Accumulated Funding Deficiency, event or condition, what
action the Borrower has taken, is taking or proposes to take with
respect thereto and, when known, any action taken or threatened
by the Internal Revenue Service, the Department of Labor or the
Pension Benefit Guaranty Corporation with respect thereto and
(ii) promptly upon acquiring knowledge or reason to know of (A)
the institution by the Pension Benefit Guaranty Corporation or
any other Person of any proceeding under ERISA seeking the
termination of any Pension Plan or the appointment of a trustee
to administer any Pension Plan or (B) the complete or partial
withdrawal or proposed complete or partial withdrawal by any
Related Entity from any Pension Plan, provide to the Bank a
certificate executed by the President or a Vice President of the
Borrower and the chief financial officer of the Borrower and de
scribing such proceeding, withdrawal or proposed withdrawal;
n. Changes in Management, Ownership and Control.
Promptly upon acquiring knowledge or reason to know of any change
in (i) the identity of the Chairman, President or chief executive
officer of any Related Entity, (ii) the beneficial ownership of
any stock of or other ownership interest in any Related Entity by
any Person having Control of any Related Entity or (iii) Control
of any Related Entity, provide to the Bank a certificate executed
by the President or a Vice President of the Borrower and the
President or a Vice President of the Borrower and specifying such
change;
o. Judgments. Promptly upon acquiring knowledge or
reason to know of any judgment, order or award of any
Governmental Authority or arbitrator that (i) is against or
otherwise involves any Related Entity or any asset of any Related
Entity, (ii) has or (so far as any Related Entity can foresee)
will or might have any Material Adverse Effect or (iii) renders
invalid any Acquisition Document or Loan Document or any action
taken or to be taken pursuant to any Acquisition Document or Loan
Document, provide to the Bank a certificate executed by the
President or a Vice President of the Borrower and specifying the
nature of such judgment, order or award and what action the
Borrower has taken, is taking or proposes to take with respect
thereto;
p. Litigation. (i) Promptly upon acquiring knowl
edge or reason to know of the commencement or threat of any
claim, audit, investigation or action or other legal proceeding
by or before any Governmental Authority or before any arbitrator
that (A) is against or otherwise involves any Related Entity or
any asset of any Related Entity and (I) either involves in excess
of $250,000 or results in excess of $500,000 in the aggregate for
all Related Entities being involved in all claims, audits,
investigations and actions and other legal proceedings by or
before any Governmental Authority or before any arbitrator
against or otherwise involving any Related Entity or any asset of
any Related Entity or (II) seeks injunctive or similar relief,
(B) has or (so far as any Related Entity can foresee) will or
might have any Material Adverse Effect or (C) questions the
validity of any Acquisition Document, Subordinated Debenture
Document or Loan Document or any action taken or to be taken
pursuant to any Acquisition Document, Subordinated Debenture
Document or Loan Document, provide to the Bank a certificate
executed by the President or a Vice President of the Borrower and
specifying the nature of such claim, audit, investigation or
action or other legal proceeding and what action the Borrower has
taken, is taking or proposes to take with respect thereto and
(ii) promptly upon acquiring knowledge or reason to know of any
development with respect to any claim, audit, investigation or
action or other legal proceeding theretofore disclosed by the
Borrower to the Bank that has or (so far as any Related Entity
can foresee) will or might have any Material Adverse Effect,
provide to the Bank a certificate executed by the President or a
Vice President of the Borrower and specifying the nature of such
development and what action the Borrower has taken, is taking or
proposes to take with respect thereto;
q. Liens and Encumbrances. Promptly upon acquiring
knowledge or reason to know that any asset of any Related Entity
has or may become subject to any security interest, mortgage or
other lien or encumbrance other than Permitted Liens, provide to
the Bank a certificate executed by the President or a Vice
President of the Borrower and specifying the nature of such
security interest, mortgage or other lien or encumbrance and what
action the Borrower has taken, is taking or proposes to take with
respect thereto;
r. Defaults and Material Adverse Effects. Promptly
upon acquiring knowledge or reason to know of the occurrence or
existence of (i) any Event of Default or Potential Event of
Default or (ii) any event or condition that has or (so far as any
Related Entity can foresee) will or might have any Material
Adverse Effect, provide to the Bank a certificate executed by the
President or a Vice President of the Borrower and the chief
financial officer of the Borrower and specifying the nature of
such Event of Default, Potential Event of Default, event or
condition, the date of occurrence or period of existence thereof
and what action the Borrower has taken, is taking or proposes to
take with respect thereto;
s. Additional Guaranties, Security Agreements, Patent
Collateral Assignments and Security Agreements, Trademark
Collateral Assignments and Security Agreements and Copyright
Security Agreements. Cause each Person that becomes a
Subsidiary after the date of this Agreement to execute and
deliver to the Bank, in form and substance satisfactory to the
Bank, (i) a guaranty agreement guaranteeing, without any
limitation as to amount, the payment of all indebtedness and
other obligations of the Borrower to the Bank, whether then
existing or thereafter arising or accruing, (ii) a security
agreement (A) securing, without any limitation as to amount, the
payment of all such indebtedness and other obligations and (B)
covering all personal property and fixtures of such Person, (iii)
a patent collateral assignment and security agreement (A)
securing, without any limitation as to amount, the payment of all
such indebtedness and other obligations and (B) covering, among
other things, all patents, patent registrations and patent
applications of such Person, (iv) a trademark collateral
assignment and security agreement (A) securing, without any
limitation as to amount, the payment of all such indebtedness and
other obligations and (B) covering, among other things, all
trademarks, trademark registrations and trademark applications of
such Person and (v) a copyright security agreement (A) securing,
without any limitation as to amount, the payment of all such
indebtedness and other obligations and (B) covering, among other
things, all copyrights, copyright registrations and copyright
applications of such Person;
t. Further Actions Concerning Collateral. Without
limiting any right or remedy of the Bank pursuant to any Loan
Document or otherwise, promptly upon the request of the Bank made
after the occurrence or existence of any Event of Default,
execute and deliver or cause to be executed and delivered each
writing, and take or cause to be taken each other action, that
the Bank shall deem necessary or desirable at the sole option of
the Bank, whether in the exercise of any right or remedy of the
Bank pursuant to any Loan Document or otherwise, to perfect or
otherwise establish, preserve or protect the priority of any
security interest, mortgage or other lien or encumbrance in or on
any collateral or other security (including, but not limited to,
any copyright or copyrightable material or any account the
account debtor of which is located outside the United States or
is a Governmental Authority) created or imposed pursuant to any
Loan Document;
u. Year 2000 Compliance. In sufficient time before
December 31, 1999 cause each Related Entity to (i) correct and
redeploy all Systems relating to such Related Entity that are not
Year 2000 Compliant and (ii) test all Systems relating to such
Related Entity to confirm that such Systems are Year 2000
Compliant; and
v. Further Actions. Promptly upon the request of
the Bank, execute and deliver or cause to be executed and
delivered each writing, and take or cause to be taken each other
action, that the Bank shall deem necessary or desirable at the
sole option of the Bank in connection with any transaction
contemplated by any Loan Document.
8. NEGATIVE COVENANTS. During the term of this
Agreement, the Borrower shall not, without the prior written
consent of the Bank, do, attempt to do or agree or otherwise
incur, assume or have any obligation to do, and the Borrower
shall assure that, without the prior written consent of the Bank,
no Related Entity does, attempts to do or agrees or otherwise
incurs, assumes or has any obligation to do, any of the
following:
a. Fiscal Year. Change its fiscal year;
b. Certain Indebtedness. (i) Create, incur, assume
or have any indebtedness or other obligation (A) arising from the
borrowing of any money or the deferral of the payment of the
purchase price of any asset or (B) pursuant to any guaranty or
other contingent obligation (including, but not limited to, any
obligation to (I) maintain the net worth of any other Person,
(II) purchase or otherwise acquire or assume any indebtedness or
other obligation or (III) provide funds for or otherwise assure
the payment of any indebtedness or other obligation, whether by
means of any investment, by means of any purchase, sale or other
acquisition or disposition of any asset or service or otherwise),
except for indebtedness and other obligations (1) to the Bank,
(2) to the Seller pursuant to any Acquisition Document, (3)
pursuant to any Subordinated Debenture Document, (4) constituting
unsecured normal trade debt incurred upon customary terms in the
ordinary course of its business, (5) arising from the endorsement
in the ordinary course of its business of any check or other
negotiable instrument for deposit or collection, (6) the total of
which does not at any time exceed $500,000 in the aggregate for
all Related Entities or (7) fully and accurately described under
the heading "Permitted Indebtedness" in Exhibit A attached to
and made a part of this Agreement, or (ii) prepay, redeem or
repurchase any such indebtedness or other obligation (A) to the
Seller pursuant to any Acquisition Document or (B) pursuant to
any Subordinated Debenture Document;
c. Pension Obligations. (i) Engage in any Prohibit
ed Transaction with respect to any Pension Plan, (ii) permit to
occur or exist with respect to any Pension Plan any Accumulated
Funding Deficiency or any event or condition that (A) but for a
waiver by the Internal Revenue Service would constitute an
Accumulated Funding Deficiency or (B) constitutes or will or
might constitute grounds for the institution by the Pension
Benefit Guaranty Corporation of any proceeding under ERISA
seeking the termination of such Pension Plan or the appointment
of a trustee to administer such Pension Plan, (iii) make any
complete or partial withdrawal from any Pension Plan, (iv) fail
to make to any Pension Plan any contribution that it is required
to make, whether to meet any minimum funding standard under ERISA
or any requirement of such Pension Plan or otherwise, or (v)
terminate any Pension Plan in any manner, or otherwise take or
omit to take any action with respect to any Pension Plan, that
would or might result in the imposition of any lien upon any
asset of any Related Entity pursuant to ERISA;
d. Liens and Encumbrances. Cause or permit, whether
upon the happening of any contingency or otherwise, any of its
assets to be subject to any security interest, mortgage or other
lien or encumbrance, except for Permitted Liens;
e. Capital Expenditures. Make (whether by means of
any purchase or other acquisition of any asset, by means of any
capital lease or otherwise) capital expenditures exceeding (i)
$2,400,000 in the aggregate for all Related Entities during the
fiscal year of the Borrower ending on March 31, 1999 or (ii)
$3,750,000 in the aggregate for all Related Entities during any
fiscal year of the Borrower ending after March 31, 1999;
f. Operating Leases. Create, incur, assume or have
any indebtedness or other obligation for fixed payments not fully
reimbursable by the United States government (whether rentals,
taxes, premiums for insurance or otherwise) pursuant to any
operating lease (whether as a lessee or otherwise) exceeding
$5,500,000 in the aggregate for all Related Entities during any
fiscal year of the Borrower;
g. Investments. Make any investment (whether by
means of any purchase or other acquisition of any security or
interest, by means of any capital contribution or otherwise) in
any Person, except for (i) Permitted Investments and (ii) the
transfer by the Borrower to Comptek-Amherst as a capital
contribution thereto assets acquired from the Seller in the
Acquisition and assets of the Advanced Systems Division of the
Borrower;
h. Loans. (i) Make any loan, advance or other
extension of credit, except for Permitted Loans, or (ii) forgive
any indebtedness or other obligation arising from any loan,
advance or other extension of credit made by it;
i. Transactions with Affiliates. In the ordinary
course of its business or otherwise, enter into, assume or permit
to exist any agreement, arrangement, transaction or other dealing
(including, but not limited to, the purchase, sale, lease,
exchange or other acquisition or disposition of any asset and the
rendering of any service) between it and any Affiliate or
otherwise deal with any Affiliate, except for (i) reasonable
compensation for services actually performed, (ii) advances made
in the ordinary course of its business to any Affiliate who is
one of its officers and employees for out-of-pocket expenses
incurred by such Affiliate on its behalf in the conduct of its
business or operations, (iii) agreements, arrangements,
transactions and other dealings in the ordinary course of its
business upon fair and reasonable terms no less favorable to it
than would apply in a comparable arm's-length agreement,
arrangement, transaction or other dealing with a Person who or
that is not an Affiliate and (iv) agreements, arrangements,
transactions and other dealings fully and accurately described
under the heading "Permitted Affiliate Transactions" in Exhibit A
attached to and made a part of this Agreement;
j. Distributions. Declare, pay or make any
Distribution, except for (i) dividends payable solely in any of
its stock and (ii) cash dividends paid to the Borrower, Comptek
Federal, PRB or Comptek-Amherst by any Subsidiary (A) all of the
outstanding shares of stock of which other than shares required
by any applicable Law to enable any individual to serve as a
director of such Subsidiary or (B) all ownership interests in
which are owned by the Borrower, Comptek Federal, PRB or
Comptek-Amherst at the time of such payment;
k. Corporate and Other Changes. (i) Assign, sell,
lease as a lessor or otherwise transfer or dispose of all or
substantially all of its assets, (ii) dissolve or participate in
any merger, consolidation or other absorption, (iii) acquire all
or substantially all of the assets of any other Person, (iv) do
business under or otherwise use any name other than its true name
and names listed under the heading "Fictitious Names" in Exhibit
A attached to and made a part of this Agreement or (v) make any
change in its corporate or other business structure, any of its
business objectives and purposes or its business or operations
that would or might have any Material Adverse Effect;
l. Sale of Receivables. Assign, sell or otherwise
transfer or dispose of any of its notes receivable, accounts
receivable and chattel paper, whether with or without recourse;
m. Stock of or Ownership Interest in Subsidiary.
Issue or sell any stock of or other ownership interest in any
Subsidiary, except (i) to the minimum extent required by any
applicable Law to enable any individual to serve as a director of
such Subsidiary, (ii) as a Distribution to the shareholders of or
holders of other ownership interests in such Subsidiary and (iii)
to any Related Entity; or
n. Full Disclosure. Provide to the Bank or permit
to be provided to the Bank on its behalf any certificate,
financial statement or other writing that contains any statement
of fact that is incorrect or misleading in any material respect
or omits to state any fact necessary to make any statement of
fact contained therein not incorrect or misleading in any materi
al respect.
9. INDEBTEDNESS IMMEDIATELY DUE. Upon or at any time
or from time to time after the occurrence or existence of any
Event of Default other than, with respect to the Borrower, an
Event of Default described in clause (iv) of Section 1p of this
Agreement, the aggregate outstanding principal amounts of all
Loans, all interest payable pursuant to this Agreement and
remaining unpaid and all other amounts payable by the Borrower to
the Bank pursuant to this Agreement and remaining unpaid shall,
at the sole option of the Bank and without any notice, demand,
presentment or protest of any kind (each of which is knowingly,
voluntarily, intentionally and irrevocably waived by the
Borrower), become immediately due. Upon the occurrence or
existence of, with respect to the Borrower, any Event of Default
described in such clause (iv), such aggregate outstanding
principal amounts, all such interest and all such other amounts
shall, without any notice, demand, presentment or protest of any
kind (each of which is knowingly, voluntarily, intentionally and
irrevocably waived by the Borrower), automatically become
immediately due. Upon such aggregate outstanding principal
amounts, all such interest and all such other amounts becoming
immediately due, any obligation of the Bank to make any
additional Loan shall terminate.
10. EXPENSES; INDEMNIFICATION.
a. Loan Document Expenses. The Borrower shall pay
to the Bank on demand made by the Bank each cost and expense
(including, but not limited to, (i) the reasonable fees of
counsel to the Bank for time actually expended or to be expended
but not in excess of $30,000 other than with respect to, as
determined by the Bank, special issues relating to the perfection
of security interests in collateral, (ii) the disbursements of
counsel to the Bank and (iii) each documentary stamp or other
excise or property tax, assessment, fee and charge) incurred by
the Bank in connection with (i) the preparation of, entry into or
performance of any Loan Document, whether or not any Loan is
made, or (ii) any modification of or release, consent or waiver
relating to any Loan Document, whether or not such modification,
release, consent or waiver becomes effective.
b. Collection Expenses. The Borrower shall pay to
the Bank on demand made by the Bank each cost and expense
(including, but not limited to, the reasonable fees and
disbursements of counsel to the Bank, whether retained for
advice, litigation or any other purpose) incurred by the Bank in
endeavoring to (i) collect any of the outstanding principal
amount of any Loan, any interest payable pursuant to this
Agreement and remaining unpaid or any other amount payable by the
Borrower to the Bank pursuant to this Agreement and remaining
unpaid, (ii) preserve or exercise any right or remedy of the Bank
relating to, enforce or realize upon any collateral,
subordination, guaranty, endorsement or other security or
assurance of payment, whether now existing or hereafter arising,
that now or hereafter directly or indirectly secures the
repayment or payment of or is otherwise now or hereafter directly
or indirectly applicable to any of such outstanding principal
amount, any such interest or any such other amount, (iii)
preserve or exercise any right or remedy of the Bank pursuant to
any Loan Document or (iv) defend against any claim, regardless of
the basis or outcome thereof, asserted against the Bank as a
direct or indirect result of the entry into any Loan Document,
except for any claim for any tax imposed by any Governmental
Authority upon any income of the Bank or any interest or penalty
relating to any such tax.
c. Expenses Due to Law Changes. The Borrower shall
pay to the Bank on demand made by the Bank each amount necessary
to compensate the Bank for any liability, cost or expense that is
a direct or indirect result of (i) any increase in the amount of
capital required or expected to be maintained by the Bank or any
bank holding company of the Bank with respect to any Loan or the
obligation of the Bank to make any Loan that is due to (A) after
the date of this Agreement, the enactment or issuance of or any
change in any Law relating to capital adequacy of banks and
banking holding companies or (B) the compliance by the Bank or
such bank holding company with any request or direction relating
to such capital made or issued by any Governmental Authority
after the date of this Agreement or (ii) any imposition or
application of or increase in any reserve or similar requirement
applicable to assets or liabilities of, deposits with or credit
extended by the Bank, or for the account of the Bank, that
increases the cost to the Bank of making, funding or maintaining
any Loan and is due to, after the date of this Agreement, the
enactment or issuance of or any change in any Law, except for any
reserve or similar requirement reflected in the rate of interest
charged on any Libor Rate Portion. The determination by the Bank
of the amount necessary to compensate the Bank for any such
liability, cost or expense shall, in the absence of manifest
error, be conclusive and binding upon the Borrower.
d. Libor Expenses. The Borrower shall pay to the
Bank upon demand made by the Bank each amount necessary to
compensate the Bank for any liability, cost or expense that is a
direct or indirect result of, whether by reason of any reduction
in yield, by reason of the liquidation or reemployment of any
deposit or other funds acquired by the Bank, by reason of the
fixing of the rate of interest payable with respect to any Libor
Rate Portion or otherwise, (a) any attempt by the Borrower to
revoke any Libor Rate Election or repay in full or part any Libor
Rate Portion during any Libor Rate Period for such Libor Rate
Portion, (b) any failure by the Borrower to fulfill by the date
that any Revolving Loan the request for which is combined with a
Libor Rate Election is to be made by the Bank any condition upon
which the making of such Loan is conditioned or (c) the maturity,
whether by acceleration or otherwise, of the aggregate
outstanding principal amounts of all Loans. The determination by
the Bank of the amount necessary to compensate the Bank for any
such liability, cost or expense shall, in the absence of manifest
error, be conclusive and binding upon the Borrower.
e. Environmental Indemnification. The Borrower
shall indemnify the Bank and each officer, employee, accountant,
attorney and other agent of the Bank on demand made by the Bank
against each liability, cost and expense (including, but not
limited to, the reasonable fees and disbursements of counsel to
the Bank or such officer, employee, accountant, attorney or other
agent, whether retained for advice, litigation or any other
purpose, and all costs of any investigation, monitoring, removal,
remediation or restoration) imposed on, incurred by or asserted
against the Bank or such officer, employee, accountant, attorney
or other agent as a direct or indirect result of (i) any Release
or threatened Release of any Hazardous Material at, in, on or
under any property now or previously owned, leased as a lessee or
used by any Related Entity, (ii) any active or abandoned
underground storage tank at, in, on or under any such property,
(iii) any polychlorinated biphenyl or friable asbestos at, in, on
or under any such property, (iv) the existence of any condition
at, in, on or under any such property that gives or might give
rise to any liability pursuant to any Environmental Law or
(v) any Related Entity transporting or arranging for the
transportation of any Hazardous Material to or from any property.
11. NOTICES. Each notice and other communication by
the Bank to the Borrower, or by the Borrower to the Bank,
relating to this Agreement (a) shall be given in writing
(including, but not limited to, facsimile), (b) if given by
facsimile, shall be directed to the intended recipient thereof at
the last telephone number for receipt of facsimiles by such
intended recipient shown in the following sentence or at such
other telephone number for receipt of facsimiles by such intended
recipient as may at any time or from time to time be specified in
any notice given by such intended recipient to the giver of such
notice as provided in this sentence, (c) if given otherwise,
shall be directed to such intended recipient at the address of
such intended recipient shown in the following sentence or at
such other address as may at any time or from time to time be
specified in any notice given by such intended recipient to the
giver of such notice as provided in this sentence and (d) if sent
by mail or overnight courier service, shall be deemed to have
been given when deposited in the mail, first-class or certified
postage prepaid, or accepted by any post office or overnight
courier service for delivery and to have been received by such
intended recipient upon the earlier of (i) the actual receipt
thereof or (ii) three days after being so deposited or accepted.
Each such notice and other communication shall (a) if to the
Bank, be directed to (i) if given by facsimile, Manufacturers and
Traders Trust Company, Attention: Western New York Commercial
Banking Department, at 716-848-7318 or (ii) if given otherwise,
Manufacturers and Traders Trust Company, One Fountain Plaza,
Buffalo, New York 14240, Attention: Western New York Commercial
Banking Department, or (b) if to the Borrower, be directed to (i)
if given by facsimile, Comptek Research, Inc., Attention:
Christopher A. Head, General Counsel, at 716-677-0014 or (ii) if
given otherwise, Comptek Research, Inc., 2732 Transit Road,
Buffalo, New York 14224, Attention: Christopher A. Head, General
Counsel.
12. MISCELLANEOUS.
a. Term; Survival. The term of this Agreement shall
be the period beginning on the date of this Agreement and ending
on the later of (i) the Revolving Loan Maturity Date or (ii) the
date the principal amount of each Loan, all interest payable
pursuant to this Agreement and all other amounts payable by the
Borrower to the Bank pursuant to this Agreement have been fully
and indefeasibly repaid, paid or otherwise discharged. The
obligation of the Borrower to pay liabilities, costs and expenses
described in Section 10 of this Agreement shall survive beyond
the term of this Agreement.
b. Survival; Reliance. Each representation,
warranty, covenant and agreement of the Borrower contained in
this Agreement shall survive the making of each Loan and the
execution and delivery to the Bank of each Loan Document and
shall continue in full force and effect during the term of this
Agreement. Each such representation, warranty, covenant and
agreement shall be presumed to have been relied upon by the Bank
regardless of any investigation made or not made, or any
information possessed or not possessed, by the Bank.
c. Right of Setoff. Upon and at any time and from
time to time after any occurrence or existence of any Event of
Default, except to the extent prohibited by any applicable Law,
(i) the Bank shall have the right, at the sole option of the Bank
and without any notice or demand of any kind (each of which is
knowingly, voluntarily, intentionally and irrevocably waived by
the Borrower), to place an administrative hold on, and set off
against the aggregate outstanding principal amounts of all Loans,
all interest payable pursuant to this Agreement and remaining
unpaid and all other amounts payable by the Borrower to the Bank
pursuant to this Agreement and remaining unpaid, each
indebtedness and other obligation of the Bank in any capacity to,
in any capacity and whether alone or otherwise, the Borrower,
whether now existing or hereafter arising or accruing, whether or
not then due and whether pursuant to any deposit account or
otherwise, and (ii) each holder of any participation in any
unpaid indebtedness of the Borrower to the Bank pursuant to this
Agreement shall have the right, at the sole option of such holder
and without any notice or demand of any kind (each of which is
knowingly, voluntarily, intentionally and irrevocably waived by
the Borrower), to place an administrative hold on, and set off
against such unpaid indebtedness, to the extent of such holder's
participation in such unpaid indebtedness, each indebtedness and
other obligation of such holder in any capacity to, in any
capacity and whether alone or otherwise, the Borrower, whether
now existing or hereafter arising or accruing, whether or not
then due and whether pursuant to any deposit account or
otherwise. Such setoff shall become effective at the time the
Bank or such holder opts therefor even though evidence thereof is
not entered on the records of the Bank or such holder until
later.
d. Assignment or Grant of Participation. The Bank
shall have the right to assign or otherwise transfer or grant any
participation in this Agreement, any indebtedness or other
obligation of the Borrower pursuant to this Agreement or any
right or remedy of the Bank pursuant to this Agreement. The
Borrower shall not assign or otherwise transfer any right or
indebtedness or other obligation of the Borrower pursuant to this
Agreement without the prior written consent of the Bank, and any
such assignment or other transfer without such prior written
consent shall be void. No consent by the Bank to any such
assignment or other transfer shall release the Borrower from any
such indebtedness or other obligation.
e. Binding Effect. This Agreement shall be binding
upon the Borrower and each direct or indirect successor and
assignee of the Borrower and shall inure to the benefit of and be
enforceable by the Bank and each direct or indirect successor and
assignee of the Bank.
f. Entire Agreement, Modifications and Waivers.
This Agreement contains the entire agreement between the Bank and
the Borrower with respect to the subject matter of this Agreement
and supersedes each action heretofore taken or not taken, each
course of conduct heretofore pursued, accepted or acquiesced in,
and each oral or written agreement and representation heretofore
made, by or on behalf of the Bank or the Borrower with respect
thereto. No action heretofore or hereafter taken or not taken,
no course of conduct heretofore or hereafter pursued, accepted or
acquiesced in, no oral or written agreement or representation
heretofore made, and no oral agreement or representation
hereafter made, by or on behalf of the Bank or the Borrower shall
modify or terminate this Agreement, impair or otherwise adversely
affect any indebtedness or other obligation of the Bank or the
Borrower pursuant to this Agreement or any right or remedy of the
Bank or the Borrower pursuant to this Agreement or arising as a
result of this Agreement or operate as a waiver of any such right
or remedy. No modification of this Agreement or waiver of any
such right or remedy shall be effective unless made in a writing
duly executed by the Bank and the Borrower and specifically
referring to such modification or waiver.
g. Rights and Remedies Cumulative. All rights and
remedies of the Bank or the Borrower pursuant to this Agreement
or arising as a result of this Agreement shall be cumulative, and
no such right or remedy shall be exclusive of any other such
right or remedy. For example, all rights and remedies of the
Bank pursuant to Section 9 of this Agreement shall be in addition
to all other rights and remedies of the Bank, whether pursuant to
any Loan Document or applicable law.
h. Requests. Each request of the Bank pursuant to
this Agreement may be made (i) at any time and from time to time,
(ii) at the sole option of the Bank and (iii) whether or not any
Event of Default or Potential Event of Default has occurred or
existed.
i. Extent of Consents and Waivers. Each consent and
waiver of the Bank or the Borrower contained in this Agreement
shall be deemed to have been given to the extent permitted by
applicable law.
j. Directly or Indirectly. Any provision of this
Agreement that prohibits or has the effect of prohibiting any
Related Entity from taking any action shall be construed to
prohibit it from taking such action directly or indirectly.
k. Accounting Terms and Computations. Each
accounting term used in this Agreement shall be construed as of
any time in accordance with generally accepted accounting
principles as in effect at such time. Each accounting
computation that this Agreement requires to be made as of any
time shall be made in accordance with such principles as in
effect at such time, except where such principles are
incompatible with any requirement of this Agreement.
l. Reference to Law. Any reference in this
Agreement to any Law shall be deemed to be as of any time a
reference to such Law as in effect at such time or, if such Law
is not in effect at such time, a reference to any similar Law in
effect at such time.
m. Reference to Governmental Authority. Any
reference in this Agreement to any Governmental Authority shall
be deemed to be as of any time after such Governmental Authority
ceases to exist a reference to the successor of such Governmental
Authority at such time.
n. Severability. Whenever possible, each provision
of this Agreement shall be interpreted in such manner as to be
effective and valid under applicable law. If, however, any such
provision shall be prohibited by or invalid under such law, it
shall be deemed modified to conform to the minimum requirements
of such law, or, if for any reason it is not deemed so modified,
it shall be prohibited or invalid only to the extent of such
prohibition or invalidity without the remainder thereof or any
other such provision being prohibited or invalid.
o. Governing Law. This Agreement shall be governed
by and construed, interpreted and enforced in accordance with the
internal law of the State of New York, without regard to
principles of conflict of laws.
p. Headings. In this Agreement, headings of
sections are for convenience of reference only and have no
substantive effect.
13. CONSENTS AND WAIVERS RELATING TO LEGAL
PROCEEDINGS.
a. JURISDICTIONAL CONSENTS AND WAIVERS. THE
BORROWER KNOWINGLY, VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY
(i) CONSENTS IN EACH ACTION AND OTHER LEGAL PROCEEDING COMMENCED
BY THE BANK IN CONNECTION WITH ANY LOAN, ANY LOAN DOCUMENT OR ANY
COLLATERAL, SUBORDINATION, GUARANTY, ENDORSEMENT OR OTHER
SECURITY OR ASSURANCE OF PAYMENT, WHETHER NOW EXISTING OR
HEREAFTER ARISING, THAT NOW OR HEREAFTER DIRECTLY OR INDIRECTLY
SECURES THE REPAYMENT OR PAYMENT OF OR IS OTHERWISE NOW OR
HEREAFTER DIRECTLY OR INDIRECTLY APPLICABLE TO ANY OF THE
PRINCIPAL AMOUNT OF ANY LOAN, ANY INTEREST PAYABLE PURSUANT TO
THIS AGREEMENT OR ANY OTHER AMOUNT PAYABLE BY THE BORROWER TO THE
BANK PURSUANT TO THIS AGREEMENT TO THE PERSONAL JURISDICTION OF
ANY COURT THAT IS EITHER A COURT OF RECORD OF THE STATE OF NEW
YORK OR A COURT OF THE UNITED STATES LOCATED IN THE STATE OF NEW
YORK, (ii) WAIVES EACH OBJECTION TO THE LAYING OF VENUE OF ANY
SUCH ACTION OR OTHER LEGAL PROCEEDING, (iii) WAIVES PERSONAL
SERVICE OF PROCESS IN EACH SUCH ACTION AND OTHER LEGAL
PROCEEDING, (iv) CONSENTS TO THE MAKING OF SERVICE OF PROCESS IN
EACH SUCH ACTION AND OTHER LEGAL PROCEEDING BY REGISTERED MAIL
DIRECTED TO THE BORROWER AT THE LAST ADDRESS OF THE BORROWER
SHOWN IN THE RECORDS RELATING TO THIS AGREEMENT MAINTAINED BY THE
BANK, WITH SUCH SERVICE OF PROCESS TO BE DEEMED COMPLETED FIVE
DAYS AFTER THE MAILING THEREOF, AND (v) CONSENTS TO EACH FINAL
JUDGMENT THAT IS OBTAINED AS A DIRECT OR INDIRECT RESULT OF ANY
SUCH ACTION OR OTHER LEGAL PROCEEDING BEING SUED UPON IN ANY
COURT HAVING JURISDICTION WITH RESPECT THERETO AND ENFORCED IN
THE JURISDICTION IN WHICH SUCH COURT IS LOCATED AS IF ISSUED BY
SUCH COURT.
b. WAIVER OF TRIAL BY JURY AND CLAIMS TO CERTAIN
DAMAGES. EACH OF THE BANK AND THE BORROWER KNOWINGLY,
VOLUNTARILY, INTENTIONALLY AND IRREVOCABLY WAIVES EACH RIGHT IT
MAY HAVE TO A TRIAL BY JURY WITH RESPECT TO, AND EACH RIGHT TO
ASSERT ANY CLAIM FOR DAMAGES (INCLUDING, BUT NOT LIMITED TO,
PUNITIVE DAMAGES) IN ADDITION TO ACTUAL AND CONSEQUENTIAL DAMAGES
IN, ANY ACTION OR OTHER LEGAL PROCEEDING, WHETHER BASED ON ANY
CONTRACT OR NEGLIGENT, INTENTIONAL OR OTHER TORT OR OTHERWISE, IN
CONNECTION WITH (i) ANY LOAN, ANY LOAN DOCUMENT OR ANY
COLLATERAL, SUBORDINATION, GUARANTY, ENDORSEMENT OR OTHER
SECURITY OR ASSURANCE OF PAYMENT, WHETHER NOW EXISTING OR
HEREAFTER ARISING, THAT NOW OR HEREAFTER DIRECTLY OR INDIRECTLY
SECURES THE REPAYMENT OR PAYMENT OF OR IS OTHERWISE NOW OR HEREAF
TER DIRECTLY OR INDIRECTLY APPLICABLE TO ANY OF THE PRINCIPAL
AMOUNT OF ANY LOAN, ANY INTEREST PAYABLE PURSUANT TO THIS
AGREEMENT OR ANY OTHER AMOUNT PAYABLE BY THE BORROWER TO THE BANK
PURSUANT TO THIS AGREEMENT OR (ii) ANY ACTION HERETOFORE OR
HEREAFTER TAKEN OR NOT TAKEN, ANY COURSE OF CONDUCT HERETOFORE OR
HEREAFTER PURSUED, ACCEPTED OR ACQUIESCED IN, OR ANY ORAL OR
WRITTEN AGREEMENT OR REPRESENTATION HERETOFORE OR HEREAFTER MADE,
BY OR ON BEHALF OF THE OTHER IN CONNECTION WITH ANY LOAN, ANY
LOAN DOCUMENT OR ANY SUCH COLLATERAL, SUBORDINATION, GUARANTY,
ENDORSEMENT OR OTHER SECURITY OR ASSURANCE OF PAYMENT. THIS
SECTION 13b IS A MATERIAL INDUCEMENT FOR EACH OF THE BANK AND THE
BORROWER IN CONNECTION WITH ITS ENTRY INTO THIS AGREEMENT.
The Bank and the Borrower have caused this Agreement to
be duly executed on the date shown at the beginning of this Agree
ment.
MANUFACTURERS AND TRADERS TRUST COMPANY
By___________________________________________________
Mark E. Hoffman
Vice President
COMPTEK RESEARCH, INC.
By___________________________________________________
John J. Sciuto
Chairman, President and Chief Executive
Officer
BFLODOCS:192106_6 (448@03)
ACKNOWLEDGMENTS
STATE OF NEW YORK )
: SS.
COUNTY OF ERIE )
On the ______ day of March in the year 1999, before me
personally came Mark E. Hoffman, to me known, who, being by me
duly sworn, did depose and say that he resides at 120 Dorset
Drive, Tonawanda, New York 14223; that he is a Vice President of
Manufacturers and Traders Trust Company, the corporation
described in and which executed the above instrument; and that he
signed his name thereto by order of the board of directors of
said corporation.
__________________________________________
Notary Public
STATE OF NEW YORK )
: SS.
COUNTY OF ERIE )
On the 24th day of March in the year 1999, before me
personally came John J. Sciuto, to me known, who, being by me
duly sworn, did depose and say that he resides at 6392 Black
Walnut Court, East Amherst, New York 14051; that he is the
Chairman, President and Chief Executive Officer of Comptek
Research, Inc., the corporation described in and which executed
the above instrument; and that he signed his name thereto by
order of the board of directors of said corporation.
/s/Susan C. Wiktorowski
Notary Public
EXHIBIT A
EXHIBIT B
________________
Manufacturers and Traders Trust Company
One M&T Plaza
Buffalo, New York 14240
Ladies and Gentlemen:
We refer to a Corporate Revolving and Term Loan
Agreement, dated March ___, 1999, between you and us (the
"Loan Agreement"). In this letter, the term "Revolving Loan
Maturity Date" has the meaning given it in the Loan
Agreement.
Pursuant to Section 2k of the Loan Agreement, we
are requesting that the Revolving Loan Maturity Date be
extended from January 31, ___ to January 31, ___. We
acknowledge that, if prior to the Revolving Loan Maturity
Date you execute and deliver to us this letter, the
Revolving Loan Maturity Date shall automatically be extended
to January 31, ___ and that, if you do not so execute and
deliver this letter, the Revolving Loan Maturity Date shall
remain January 31, ___.
Very truly yours,
COMPTEK RESEARCH, INC.
By
_______________________________________
Title
Accepted and agreed to this
_____ day of ________________.
MANUFACTURERS AND TRADERS TRUST COMPANY
By________________________________________________
Title
EXHIBIT 10.6
Exhibit 8.2(c)
LEASE AGREEMENT
LESSOR: LESSEE:
Southern Maryland Property PRB Associates,
Inc.
Management Associates
52-1289011 52-1097906
THIS LEASE, made effective as of May 1, 1998, by and between
Southern Maryland Property Management Associates,
hereinafter called "SMPMA" or "Landlord", and PRB
Associates, Inc., hereinafter called "PRB" or "Tenant",
Witnesseth:
I
SMPMA hereby leases to PRB its facilities located at 43865
Airport View Drive, Hollywood, MD 20636. These facilities
and this lease comprise two physical structures containing
75,510 +/- square feet and adjoining parking lots and all
reasonable rights for ingress and egress. It is expressly
agreed by the parties hereto that the leased property shall
be used only as an office building and general purpose
computer laboratory facility.
II
The term of this lease is for a period of three years, from
May 1, 1998 to April 30, 2001. This lease is hereby
declared as subject to a financing document executed in
connection with a commercial loan issued by Nations Bank, NA
to SMPMA in order to finance the costs of the acquisition of
the real and personal property leased hereunder. This lease
replaces the lease dated March 1, 1997 which is hereby
terminated effective as of May 1, 1998.
III
PRB shall pay to SMPMA, at the address specified herein or
furnished pursuant hereto, during the lease term, a "triple
net" annual rental of $1,200,609.00 (hereinafter called net
rent) in equal monthly installments of $100,050.75. Rent
shall be prorated for any partial months during the term of
the lease.
All rent payments are to be made by PRB to SMPMA at the
address contained herein or provided pursuant hereto, and
are due and payable on the first day of each month for which
said rent applies.
IV
It is the intention of the parties that the rent herein
specified shall be net to SMPMA in each year during the term
of this lease, that all costs, expenses and obligations of
every kind relating to the leased property including, but
not limited to, real estate and personal property taxes and
grounds maintenance of the access drive and areas adjacent
to the subject building, and maintenance of the facility and
systems, except as provided in Article XII below or as
otherwise specifically provided in this lease shall be paid
by PRB, and that SMPMA shall be indemnified by PRB against
such cost, expenses and obligations. The net rent shall be
paid to SMPMA without notice or demand and without
abatement, deduction or setoff except as otherwise
specifically provided in this lease. PRB is not obligated
to make any mortgage or loan payments incurred by SMPMA.
V
From the date hereof until the termination of this lease,
PRB shall keep the leased premises and property insured, at
its sole expense, against claims for personal injury or
property damage under a policy of general public liability
insurance with limits of at least $1,000,000/1,000,000 for
bodily injury and $250,000 for property damage. Such
policies shall name PRB, SMPMA, and Nations Bank, N.A. as
the insureds. Prior to occupancy, PRB shall deliver to
SMPMA, and Nations Bank binders of properly endorsed
policies certifying that such insurance is in full force and
effect.
From the date hereof until the termination hereof PRB shall
keep the building and the building service equipment
covered, at its sole expense, by fire and extended coverage
insurance in an amount equal to 100% of the full replacement
cost of the building and the building service equipment.
Any policy providing such coverage shall contain the so-
called special coverage all risk endorsement and the full
replacement cost endorsement.
All insurance required to be maintained by PRB shall be
effected by valid and enforceable policies issued by
insurers of recognized responsibility satisfactory to SMPMA.
All policies of insurance shall name PRB, SMPMA, and Nations
Bank, N.A. as the insured as their respective interests may
appear. If SMPMA so requires, the policies of insurance
shall be payable to the holder of any mortgage, as the
interest of such holder may appear, pursuant to a standard
mortgage clause. All such policies shall, to the extent
obtainable, provide that any loss shall be payable to SMPMA
or to the holder of any mortgage notwithstanding any act or
negligence of PRB which might otherwise result in forfeiture
of such insurance. All such policies shall, to the extent
obtainable contain an agreement by the insurers that such
policies shall not be canceled without at least thirty days'
prior written notice to SMPMA and to the holder of any
mortgage to whom loss hereunder may be payable.
VI
Subject to the terms of Article XII below, PRB shall, at all
times during the term, and at its own expense, make all
necessary repairs and replacements to the leased property
and to the pipes, heating system, plumbing system,
structural integrity, window glass, fixtures, and all other
appliances and appurtenances belonging thereto, all
equipment used in connection with the leased property, and
the sidewalks, curbs, parking areas and driveway adjoining
or appurtenant to the leased property. Such repairs and
replacements shall be of good quality and class. On default
of PRB in making such repairs or replacements, the Landlord
may, but shall not be required to, make such repairs and
replacements for the Tenant's account, and the expense
thereof shall constitute and be collectable as additional
rent.
VII
The Landlord shall not be liable for injury or damage to
persons or property occurring within the leased property,
unless caused by or resulting from the affirmative and
willful negligence of the Landlord or any of the Landlord's
agents, servants, or employees in the operation or
maintenance of the leased property or the building
containing the leased property.
Except where caused by the Landlord's affirmative and
willful act of negligence, the Landlord shall not be liable
for any failure or water supply, gas, or electric current;
or for any injury or damage to person or property caused by
gasoline, oil, steam, gas, or electricity, or hurricane,
tornado, flood, wind, or similar storms or disturbances, or
water, rain, or snow which may leak or flow from the street,
sewer, gas mains, or any subsurface area or from any part of
the building or buildings; or for any interference with
light or air.
VIII
If Tenant defaults in any condition or covenant of this
Lease or in performing the same and fails to correct such
default within ten (10) days of written notice thereof from
Landlord, the Landlord may at its option terminate this
Lease, provided if such default, other than a default in
payment of rent, cannot be rectified within said ten (10)
day notice period, Tenant shall be deemed to have complied
if Tenant shall have commenced to correct such default
during such notice period and shall diligently complete such
correction until compliance is had.
In the event of a default in the payment of rent or any
installment thereof for ten (10) days after the same is due,
Landlord may at its option without notice of any kind
terminate this lease or avail itself of the right to re-
enter and take possession of the premises by force or
otherwise or by any process of law or equity, all notice
(including notice to quit) being hereby waived by Tenant and
in the event of such a reentry Landlord may re-let the
premises and the rent obtained from such re-letting shall be
deemed the reasonable rental value hereof and the Tenant
hereunder shall remain liable to Landlord for any deficiency
in the rent herein reserved for the remainder of the term.
Additionally, in the event of a default hereunder which is
not cured within 10 days after notice to Tenant, the
Landlord may accelerate the due dates of all rental payments
due from the Tenant to the Landlord under this Lease by
requiring the payments of all such sums by the Tenant to the
Landlord. All amounts of rent required to be paid by the
Tenant to the Landlord under the Lease shall be immediately
due and payable on the date specified in the Landlord's
notice.
Should a receiver or receivers be appointed or should a
Trustee in Bankruptcy be appointed for the assets of the
Tenant, or should the Tenant make an assignment for the
benefit of his creditors, then this Lease should not be
construed as an asset in the hands of such receiver,
receivers, trustee or assignee, but the Landlord shall be
entitled to re-enter and take possession and cancel and
annul this Lease at its option. Tenant shall be liable for
any attorney's fees incurred by Landlord in pursuing its
rights under this lease after a default by Tenant.
IX
The Tenant shall not have the privilege or right of
assigning or transferring this Lease, or subleasing any
portion or portions of the premises, without first obtaining
the prior written consent of the Landlord.
X
Tenant agrees that if such property is sold or disposed of
in any manner whatsoever, including a sale at foreclosure,
that Tenant shall continue to be bound to the successor
owners under the same terms and conditions as set forth
above and will attorn to and acknowledge the purchaser as
Landlord under this Lease, unless the holder of the Deed of
Trust shall, at or prior to the sale or within 60 days
thereafter, notify the Tenant in writing to vacate and
surrender the leased premises within 90 days from the date
of sale, then and in the event of such notice, this Lease
shall terminate and expire at the end of such 90 day period.
XI
This lease contains the entire agreement between the
parties, and any executory agreement hereafter made shall be
ineffective to change, modify, or discharge it in whole or
in part, unless such executory agreement is in writing and
signed by both parties.
XII
Capital expenditures incurred to repair (if the same is
deemed a capital expenditure under applicable Federal income
tax regulations) (the "Regulations") or replace existing
equipment, machinery or structures shall be amortized using
the straight line method over the useful life of the repair
or replacement as determined by the Regulations, with rent
due under this lease to cover only the percentage of the
capital expenditures which is equal to the percentage of the
useful life of the repair or replacement which will occur
during the term of this lease. Tenant will not incur any
capital expenditures for which Landlord would have any
liability under the terms of this Article XII without the
prior written consent of the Landlord, such consent not to
be unreasonably withheld or delayed. Notwithstanding the
foregoing terms of this Article XII, Landlord shall not be
obligated to make any contribution for a repair or
replacement required due to the negligence of the Tenant
(including failure to properly service or maintain equipment
or machinery) or which is covered by insurance which Tenant
is obligated to maintain under this lease.
WITNESS: SOUTHERN MARYLAND PROPERTY,
MANAGEMENT ASSOCIATES
/s/Christine M. Magee By/s/Richard A. Bos
(SEAL)
Richard A. Bos, General
Partner
/s/Christine M. Magee By/s/Daniel T. Doherty
(SEAL)
Daniel T. Doherty, Genera'.
/s/Christine M. Magee By/s/Allan D. Crane
(SEAL)
Allan D. Crane, General
Partner
/s/Christine M. Magee By/s/James N. Agamaite
(SEAL)
James N. Agamaite, General
Partner
/s/Christine M. Magee By/s/Lawrence M. Schadegg
(SEAL)
Lawrence M. Schadegg, General
Partner
WITNESS: PRB ASSOCIATES, INC.
/s/Christine M. Magee By/s/Lawrence M. Schadegg
(SEAL)
CHARLES E. AND NANCY L. DOWDELL
As Sublessor
and
AMHERST SYSTEMS INC.
As Sublessee
AMENDED AND RESTATED
SUBLEASE AGREEMENT
Dated as of May 31, 1995
Town of Amherst Industrial Development Agency
Industrial Development Revenue Bonds
(1995 Amherst Systems Inc. Project)
AMENDED AND RESTATED
SUBLEASE AGREEMENT
THIS AMENDED AND RESTATED SUBLEASE AGREEMENT (the "Sublease
Agreement") made and entered into as of June 1, 1995 by and
between CHARLES E. DOWDELL AND NANCY L. DOWDELL (collectively, the
"Sublessor"), individuals residing at 300 Clearfield Drive,
Williamsville, New York 14221, party of the first part, and
AMHERST SYSTEMS INC., a corporation organized and existing under
and by virtue of the laws of the State of Delaware (the
"Sublessee"), having its principal office at 30 Wilson Road,
Amherst, New York 14225, party of the second part:
WITNESSETH:
WHEREAS, the New York State Industrial Development Agency
Act, constituting Title 1 of Article 18-A of the General Municipal
Law, Chapter 24 of the Consolidated Laws of New York, as amended
(the "Enabling Act") authorizes and provides for the creation of
industrial development agencies in the several counties, cities,
villages and towns in the State of New York and empowers such
agencies, among other things, to acquire, construct, reconstruct,
lease, improve, maintain, equip and furnish land, any building or
other improvement, and all real and personal properties, including
but not limited to machinery and equipment deemed necessary in
connection therewith, whether or not now in existence or under
construction, which shall be suitable for manufacturing,
warehousing, research, commercial or
-3-
industrial purposes or other economically sound purposes
identified and called for to implement a state designated urban
cultural park management plan as provided in title G of the
parks, recreation and historic preservation law and which may
include or mean an industrial pollution control facility, a
recreation facility, educational or cultural Facility, a horse
racing facility or a railroad facility, to the end that such
agencies may be able to promote, develop, encourage, assist and
advance the job opportunities, health, general prosperity and
economic welfare of the people of the State of New York and to
improve their prosperity and standard of living; and
WHEREAS, pursuant to and in accordance with the provisions of
the Enabling Act the Town of Amherst Industrial Development Agency
(the "Agency") was established by Chapter 579 of the 1973 Laws of
New York, as amended (together with the Enabling Act, the "Act")
for the benefit of the Town of Amherst and the inhabitants
thereof; and
WHEREAS, to accomplish the purpose of the Act the Agency has
entered into negotiations with the Sublessor and the Sublessee to
induce such entities to commence with the acquisition and
construction of an addition to a research facility (the
"Facility,) located within the Town of Amherst, to be leased to
the Sublessor for sublease to the Sublessee; and
- 4 -
WHEREAS, the Facility consists of a garage, an approximately
39,416 square foot building and the construction of an
approximately 10,363 square foot addition to the building situated
on a combined parcel of real property of approximately 8.5 acres
of land commonly known as 30 Wilson Road, Amherst, New York; and
WHEREAS, the Facility will be used for engineering research
and development, for studies for computer program development for
electronic circuit design, and for prototype fabrication; and
WHEREAS, the Project consists of the acquisition and
construction of the Facility; and
WHEREAS, in furtherance of the purpose of the Act the Agency,
on March 17, 1995, adopted a resolution authorizing the Project,
and undertaking to permit the issuance of its industrial
development revenue bonds to finance such Project and thereupon to
lease the Facility to the Sublessor for sublease to the Sublessee;
and
WHEREAS, pursuant to said resolution the Sublessor and the
Sublessee have proceeded with the Project; and
- 5 -
WHEREAS, the Sublessor is empowered to enter into the
transactions contemplated by this Sublease Agreement and to carry
out its obligations hereunder; and
WHEREAS, the Sublessee is not prohibited under the terms of
any outstanding trust indentures, deeds of trust, mortgages, loan
agreements or other instruments or evidence of indebtedness of
whatever nature from entering into this Sublease Agreement and
discharging and performing all covenants and obligations on its
part to be performed under and pursuant to this Sublease
Agreement, as hereinafter referred to, and the Sublessee hereby
affirmatively so warrants and represents; and
WHEREAS, the Agency, in order to provide funds for a portion
of the cost of the Project and for incidental and related costs
thereto, will issue and sell its Industrial Development Revenue
Bonds (1995 Amherst Systems Inc. Project), in the aggregate
principal amount of $3,320,000 (the "Bonds") pursuant to the Act,
a resolution of the Agency adopted on March 17, 1995 and an
Indenture of Mortgage and Agreement, dated as of May 1, 1995 (the
"Indenture"), between the Agency and Key Bank of New York, as
Bondholder (together with any subsequent holder of the Bonds, the
"Bondholder"), securing the Bonds; and
- 6 -
WHEREAS, pursuant to a Lease Agreement dated as of May 1,
1995 between the Agency and the Sublessor (the "Lease Agreement"),
the Agency has leased the Facility to the Sublessor;
WHEREAS, this Sublease Agreement is authorized pursuant to
the Lease Agreement;
WHEREAS, the Sublessor and the Sublessee previously entered
into a Sublease Agreement dated as of December 1, 1991 pursuant to
which the Sublessor leased a portion of the Facility to the
Sublessee (the '11991 Sublease"); and
WHEREAS, the Sublessor and the Sublessee wish to amend and
restate the terms of the 1991 Sublease to include the entire
Facility as the leased premises and restate the 1991 Sublease in
its entirety as set forth herein.
NOW, THEREFORE, in consideration of the premises and the
respective representations and agreements hereinafter contained,
the 1991 Sublease is hereby amended and restated in its entirety
and the parties hereto agree as follows:
Section 1. Definitions.
Any term used in this Sublease Agreement but not defined
herein shall have the meaning set forth for such term in Appendix
A attached hereto.
-7-
Section 2. Construction.
In this Sublease Agreement, unless the context otherwise
requires:
(a) The terms "hereby", "hereof", "hereto", "herein",
"hereunder" and any similar terms, as used in this Sublease
Agreement, refer to this Sublease Agreement, and the term
"hereafter" shall mean after, and the term 1~heretoforell shall
mean before the date of the execution and delivery of this
Sublease Agreement.
(b) Words of masculine gender shall mean and include
correlative words of the feminine and neuter genders and words
importing the singular number shall mean and include the plural
number and vice versa.
(c) Words importing persons shall include firms,
associations, partnerships (including limited partnerships),
trusts, corporations and other legal entities, including public
bodies, as well as natural persons.
(d) Any headings preceding the texts of the several
Sections of this Sublease Agreement, and any table of contents
appended to copies hereof, shall be solely for convenience of
reference and shall not constitute a part of this Sublease
Agreement, nor shall they affect its meaning, constructions or
effect.
- 8 -
Section 3. Representations and Warranties by Sublessee.
The Sublessee makes the following representations and
warranties to the Agency, the Bondholder and the Sublessor:
(a) The Sublessee is a corporation duly organized, validly
existing and in good standing under the laws of the State of
Delaware, is not in violation of any provision of its certificate
of incorporation or by-laws, and is qualified to do business and
is in good standing in the State, has the corporate power and
authority to own its property and assets, to carry on its business
as now being conducted by it and to execute, deliver and perform
this Sublease Agreement. The Sublessee is duly qualified to do
business in every jurisdiction in which such qualification is
necessary, including the State.
(b) The execution, delivery and performance of this Sublease
Agreement and the consummation of the transactions herein
contemplated have been duly authorized by all requisite corporate
action on the part of the Sublessee and will not violate any
provision of law, any order of any court or agency of government,
or the certificate of incorporation or by-laws of the Sublessee,
or any indenture, agreement or other instrument to which the
Sublessee is a party or by which it or any of its property is
bound, or be in conflict with or result in a breach of or
constitute (with due notice and/or lapse of time) a default under
any such indenture, agreement or other instrument or result in the
imposition of any lien, charge or encumbrance of any
- 9 -
nature whatsoever other than Permitted Encumbrances (as defined in
the Lease Agreement).
(c) The assistance of the Agency in the financing of a
portion of the costs of the Project and the leasing thereof to
the Sublessor for sublease to the Sublessee has induced the
Sublessee to proceed with the Project in the Town of Amherst.
(d) The Sublessee shall operate the Facility or cause the
Facility to be operated in accordance with this Sublease
Agreement and as a qualified "project" in accordance with and as
defined under the Act.
(e) The completion of the Project did not result in the
removal of an industrial, manufacturing, warehousing or
commercial plant or facility of the Sublessee from one area of
the State to another area of the State or in the abandonment of
one or more of such plants or facilities of the Sublessee within
the State.
(f) This Sublease Agreement constitutes the legal, valid
and binding obligation of the Sublessee enforceable against the
Sublessee in accordance with its terms.
Section 4. Lease of Facility and Rent.
The Sublessor hereby leases to the Sublessee and the
Sublessee hereby leases from the Sublessor the Facility for and
during the term herein provided and upon and subject to the terms
and conditions herein set forth. The Sublessee shall at all
- 10 -
times during the term of this Sublease Agreement occupy, use and
operate the Facility as a research facility in accordance with
the provisions of the Act as a qualified "project" and for the
general purposes specified in the recitals to this Sublease
Agreement, except that upon the occurrence of damage,
destruction, or condemnation, the Sublessee need not so occupy,
use and operate the Facility for a period not to exceed one year.
The term of this Sublease Agreement shall commence on the
date of the execution and delivery of this Sublease Agreement and
shall expire on May 31, 2004, unless sooner terminated pursuant to
the terms of this Sublease Agreement. Provided that the Sublessee
is not in default hereunder, the Sublessee shall have the option
of extending the term for two additional periods of three years
each (each such period being a "Renewal Term"). To exercise its
option as to either such Renewal Term, the Sublessee must give
written notice to the Sublessor at least six (6) months prior to
the expiration of the initial term or the Renewal Term, as the
case may be. The rent for each Renewal Term shall be as set forth
in this Section 4. If the Sublessee does not exercise its option
as to any Renewal Term, this Sublease Agreement shall expire at
the end of the initial term or the initial Renewal Term, as the
case may be and the Sublessee's option as to any remaining Renewal
Term shall be void.
In the event that the Lease Agreement expires or is
terminated prior to the term of this Sublease Agreement or any of
- 11 -
the Renewal Terms, as the case may be, and the Sublessor acquires
fee title to the Facility, the Sublessee and the Sublessor shall
be deemed to have entered into a new lease agreement for the
balance of the term hereof on the same terms and conditions set
forth herein, modified, however, to take into account the
termination of the Lease Agreement. The Sublessor and the
Sublessee agree to execute and deliver a new lease agreement
reflecting such new lease.
During the initial term of this Sublease Agreement or any
Renewal Term, as the case may be, the Sublessee agrees to make
rental payments to the Sublessor, or its designee, as set forth
below. Such payments shall be made in immediately available
funds on the first day of each month.
The monthly rental payments shall be as follows:
June 1, 1995 to November 30, 1997 $50,229 per month
December 1, 1997 to November 30, 2000 $53,962 per month
December 1, 2000 to May 31, 2004 $59,355 per month
First Renewal Term -
June 1, 2004 to May 31, 2007 $64,747 per month
Second Renewal Term -
June 1, 2007 to May 31, 2010 $70,556 per month
Any installment of rent or additional rent not received
within ten (10) days after it is due shall be subject to a late
- 12 -
charge of two percent (2%) of such installment and interest at a
rate of 12% per year from the due date to the date paid.
Section 5. Grant of Security Interest; Assignment of
Sublease Agreement.
In order to secure the payment of sublease rentals and all
the obligations of the Sublessee hereunder, the Sublessee hereby
grants a security interest to the Sublessor in all of the
Sublessee's right, title, if any, and interest in and to the
fixtures constituting part of the Facility Realty and the Facility
Equipment and the proceeds thereof.
The Sublessee acknowledges, agrees and consents to (i) the
assignment by the Sublessor pursuant to the Lease Agreement of all
of its right, title and interest in and to this Sublease Agreement
to the Agency and the subsequent assignment of substantially all
of the Agency's right, title and interest in this Sublease
Agreement to the Bondholder pursuant to the Indenture; and (ii)
the assignment by Sublessor to Bondholder pursuant to the
collateral lease assignment.
Section 6. Dissolution or Merger of Sublessee; Restrictions
on Sublessee.
The Sublessee covenants and agrees that at all times during
the term of this Sublease Agreement, it will (i) maintain its
corporate existence, (ii) continue to be a corporation subject to
service of process in the State and either organized under the
laws of the State, or organized under the laws of any other state
of the United States and duly qualified to do business as a
foreign corporation in the State, (iii) not liquidate, wind-up or
dissolve or otherwise dispose of all or substantially all of its
property, business or assets remaining after the execution and
delivery of this Sublease Agreement, and (iv) not consolidate with
or merge into another corporation or permit one or more
corporations to consolidate with or merge into it. The Sublessee
may, however, without violating the foregoing, consolidate with or
merge into another corporation, or permit one or more corporations
to consolidate with or merge into it, or sell or otherwise
transfer all or substantially all of its property, business or
assets to another such corporation (and thereafter liquidate,
wind-up or dissolve or not, as the Sublessee may elect) if (i) the
Sublessee is the surviving, resulting or transferee corporation,
as the case may be, or (ii) in the event that the Sublessee is not
the surviving, resulting or transferee corporation, as the case
may be, such corporation (A) is a solvent corporation subject to
service of process in the State and either organized under the
laws of the State, or organized under the laws of any other state
of the United States and duly qualified to do business as a
foreign corporation in the State, (B) assumes in writing all of
the obligations of the Sublessee contained in this Sublease
Agreement and all other Security
- 14 -
Documents (as defined in the Indenture) to which the Sublessee
shall be a party and in the opinion of counsel, who is acceptable
to the Bondholder, (x) such corporation shall be bound by all of
the terms applicable to the Sublessee of this Sublease Agreement
and all other Security Documents to which the predecessor
Sublessee corporation shall have been a party, and (y) such action
does not legally impair the security for the Bondholder afforded
by the Security Documents, and (C) has a net worth (as determined
in accordance with generally accepted accounting principles and
certified by an independent public accountant) after the merger,
consolidation, sale or transfer at lease equal to that of the
Sublessee immediately prior to such merger, consolidation, sale or
transfer.
Section 7. Financial Statements and No-Default
Certificates.
(a) The Sublessee agrees to furnish to the Agency and the
Bondholder as soon as available and in any event within ninety
(90) days after the end of each of its Fiscal Years, financial
statements of the Sublessee audited by an independent certified
public accountant.
(b) The Sublessee shall deliver to the Agency and the
Bondholder with each delivery required by Section 7 (a) hereof, a
certificate of an Authorized Representative of the Sublessee as to
whether or not, as of the close of such preceding Fiscal Year
- 15 -
of the Sublessee, and at all times during such Fiscal Year, the
Sublessee was in compliance with all the provisions which relate
to the Sublessee in this Sublease Agreement and in any other
Security Document to which it shall be a party, and if such
Authorized Representative shall have obtained knowledge of any
default in such compliance or notice of such default, he shall
disclose in such certificate such default or defaults or notice
thereof and the nature thereof, whether or not the same shall
constitute an Event of Default hereunder, and any action proposed
to be taken by the Sublessee with respect thereto. In addition,
upon twenty (20) days prior request by the Agency or the
Bondholder, the Sublessee will execute, acknowledge and deliver to
the Agency and the Bondholder a certificate of an Authorized
Representative of the Sublessee either stating that to his
knowledge no default or breach exists hereunder or specifying each
such default or breach of which he has knowledge.
Section 8. Liability .
The Sublessee shall defend, indemnify and hold harmless the
Sublessor, the Bondholder and the Agency, and their respective
members, agents and employees from and against all causes of
action, claims, damages, losses and expenses, including bodily
injury or death, or damage to or destruction of property, arising
from or out of the Sublessee's use or occupancy of this Premises
or arising from any negligent act or omission of the Sublessee or
- 16 -
the Sublessor's agents, employees, or invitees. The Sublessor
agrees to indemnify the Sublessee and its agents and employees
from and against all causes of action, claims, damages, losses and
expenses, including bodily injury or death or damage to or
destruction of property arising from any negligent act or omission
of the Sublessor or the Sublessor's agents, employees or invitees.
Section 9. Utilities.
The Sublessee shall be responsible for all gas, water,
telephone service, electricity, sewer and other utility services
used in or to be supplied to the Facility. The Sublessor shall
not be liable for any failure of a utility company or
governmental authority to supply such service or for any loss,
damage or injury caused by or related to such service.
Section 10. Events of Default.
Any one or more of the following events shall constitute an
"Event or Default" hereunder;
(a), Failure of the Sublessee to pay any rental that has
become due and payable by the terms hereof and a continuation of
such failure for thirty (30) days after the Sublessee receives
written notice from the Sublessor or any assignee of Sublessor;
(b) Failure of the Sublessee to observe and perform any
covenant, condition or agreement hereunder on its part to be
- 17 -
performed (except as set forth in subparagraph (a) above) and (1)
continuance of such failure for a period of thirty (30) days after
receipt by the Sublessee from the Sublessor or any assignee of
Sublessor of written notice specifying the nature of such default,
or (2) if by reason of the nature of such default the same can be
remedied, but not within the said thirty (30) days, the Sublessee
fails to proceed with reasonable diligence after receipt of said
notice to cure the same or fails to continue with reasonable
diligence its efforts to cure the same;
(c) If the Sublessee shall (i) apply for or consent to the
appointment of or the taking of possession by a receiver,
liquidator, custodian or trustee of itself or of all or a
substantial part of its property, (ii) admit in writing its
inability , or be generally unable, to pay its debts as such debts
become due, (iii) make a general assignment for the benefit of its
creditors, (iv) commence a voluntary case under the Federal
Bankruptcy code (as now or hereafter in effect), (v) file a
petition seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up, or composition
or adjustment of debts, (vi) fail to controvert in a timely or
appropriate manner, or acquiesce in writing to, any petition filed
against itself in an involuntary case under such Bankruptcy Code,
or (vii) take any action for the purpose of effecting any of the
foregoing;
- 18 -
(d) A proceeding or case shall be commenced, without the
application or consent of the Sublessee, in any court of competent
jurisdiction, seeking, (i) liquidation, reorganization,
dissolution, winding-up or composition or adjustment of debts,
(ii) the appointment of a trustee, receiver, liquidator, custodian
or the like of the Sublessee or of all or any substantial part of
its assets, or (iii) similar relief under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition
or adjustment of debts, and such proceeding or case shall continue
undismissed, or an order, judgment or decree approving or ordering
any of the foregoing shall be entered and continue unstayed and in
effect, for a period of sixty (60) days; or any order for relief
against the Sublessee shall be entered in an involuntary case
under such Bankruptcy Code;
(e) Any representation or warranty made (i) by the Sublessee
in the application and related materials submitted to the Agency
for approval of the Project, (ii) by the Sublessee herein or (iii)
in any report, certificate, financial statement or other
instrument furnished pursuant hereto or any of the foregoing shall
prove to be false, misleading or incorrect in any material respect
as of the date made;
Whenever any Event of Default shall have occurred and be
continuing, the Sublessor may evict the Sublessee upon 30 days
notice and the Sublessor shall be entitled to all rents accrued
to the date of eviction. In addition, with respect to the Event
- 19 -
of Default described in subparagraph (a) of this Section 10, the
Sublessee shall continue to be liable to the Sublessor for the
rents specified in this Sublease Agreement less the amount the
Sublessor realizes from renting the Facility or parts of the
Facility to other parties plus reasonable expenses associated with
obtaining such alternate renters contingent on the Sublessor
making a good faith effort to minimize the Sublessor's damages by
renting the Facility or Parts of the Facility to other parties.
Section 11. Assignment and Subletting.
The Sublessee shall not, without the prior written consent of
Sublessor, the Agency and the Bondholder, (which consent shall not
be unreasonably withheld), have the right to assign this Sublease
Agreement, or sublet, or encumber the Facility in whole or in
part, or permit any other person or entity to occupy or use same.
No attempted assignment or subletting, whether or not with the
consent of the Sublessor, the Agency and the Bondholder shall
relieve the Sublessee from liability for payment of rent or other
sums due hereunder, or from being bound by any of the terms,
conditions, covenants and agreement of this Sublease Agreement.
In the event that the Sublessor, the Agency and the
Bondholder consent to any proposed assignment, subletting,
encumbrance, or granting of a right of use or occupancy, such
consent shall not be deemed to be a consent to any other or
- 20 -
further assignment, subletting, encumbrance or granting of a
right of use or occupancy.
Section 12. Estoppel Certificate.
The Sublessee and the Sublessor shall, from time to time,
upon not less than ten (10) days' prior written request by the
other party, execute, acknowledge and deliver to the other party a
written estoppel certificate in such form as such other party may
reasonably require, certifying that this Sublease Agreement is
unmodified and in full force and effect (or if there have been
modifications that the same is in full force and effect as
modified and stating the modifications), the dates to which the
rent and other charges have been paid, whether or not to the best
of the executing party's knowledge the other par ty is in default
hereunder, and if so, specifying the nature of the default, and
such other matters as may be required by the Sublessor, the
Sublessee, the Agency or the Bondholder.
Section 13. Sublease Agreement for Benefit of Agency and
Bondholder.
It is understood and agreed by the parties hereto that this
Sublease Agreement is entered into in part for the benefit of the
Agency and the Bondholder, all of whom shall be entitled in the
same manner as set forth in the Lease Agreement and the Indenture
- 21 -
to enforce performance and observance of this Sublease Agreement
to the same extent as if they were parties signatory hereto.
Section 14. Damage, Destruction and Condemnation .
(a) In the event that at any time during the term of this
Sublease Agreement the whole or part of the Facility shall be
damaged or destroyed, or taken or condemned by a competent
authority for any public use or purpose, or by agreement between
the Agency and those authorized to exercise such right, or if the
temporary use of the Facility shall be so taken by condemnation or
agreement (a "Loss Event"):
(i) The Agency shall have no obligation to rebuild,
replace, repair or restore the Facility,
(ii) The Sublessee shall give written notice within ten
(10) days of the occurrence of a Loss Event to the Agency and the
Sublessor and the Bondholder, generally describing the nature and
extent thereof.
(b) Upon the occurrence of a Loss Event which results in
insurance proceeds of $50,000 or more, the Net Proceeds derived
therefrom shall be paid to the Bondholder and deposited in the
Renewal Fund and the Sublessee shall either:
(i) At its own cost and expense (except to the extent
paid from the Net Proceeds deposited in the Renewal Fund as
provided below and in the Indenture), promptly and diligently
rebuild, replace, repair or restore the Facility to substantially
- 22 -
its condition immediately prior to the Loss Event, or to a
condition of at least equivalent value, operating efficiency and
function, regardless of whether or not the Net Proceeds derived
from the Loss Event shall be sufficient to pay the cost thereof,
and the Sublessee shall not by reason of payment of any such
excess costs be entitled to any reimbursement from the Agency,
the Sublessor or the Bondholder, nor shall the rent or other
amounts payable by the Sublessee under this Sublease Agreement be
abated, postponed or reduced, or
(ii) Surrender all its rights to the Facility and the
Renewal Fund and pay to the Sublessor the fair market value of
the Facility before the Loss Event less the amount in the Renewal
Fund and less the fair market value of the Facility after the
Loss Event. If the Sublessor selects this option, all its
obligations under this Sublease shall cease as of the later of
the dates the Sublessor is so notified or the date the Sublessor
quits the Facility.
Not later than ninety (90) days after the occurrence of a
Loss Event, the Sublessee shall advise the Agency and the
Bondholder in writing of the action to be taken by the Sublessee
under this Section 5.1(b), a failure to so timely notify being
deemed an election in favor of subdivision (i) above.
If the Sublessee shall elect to or shall otherwise be
required to rebuild, replace, repair or restore the Facility as
set forth in subdivision (i) above, the Bondholder shall disburse
- 23 -
the Net Proceeds from the Renewal Fund in the manner set forth in
the Indenture to pay or reimburse the Sublessee, at the election
of the Sublessee, either as such work progresses or upon the
completion thereof, provided, however, the amounts so disbursed
by the Bondholder to the Sublessee shall not exceed the actual
cost of such work.
(c) All such rebuilding, replacements, repairs or
restorations shall:
(i) Automatically be deemed a part of the Facility and
owned by the Agency and be subject to this Sublease Agreement and
the lien and security interest of the Indenture,
(ii) Be in accordance with plans and specifications and
cost estimates approved in writing by the Bondholder (which
approvals shall not be unreasonably withheld),
(iii)Not change the nature of the Facility as a
qualified "project" as defined in and as contemplated by the Act,
and
(iv) Be effected with due diligence in a good and
workmanlike manner, in compliance with all applicable legal
requirements and be promptly and fully paid for by the Sublessee
in accordance with the terms of the applicable contract(s)
therefor.
(e) The Agency, the Bondholder, the Sublessor and the
Sublessee shall cooperate and consult with each other in all
matters pertaining to the settlement, compromising, arbitration
- 24 -
or adjustment of any claim or demand on account of any Loss
Event, and the settlement, compromising, arbitration or
adjustment of any such claim or demand shall be subject:
(i) In the case of all such settlements, compromises,
arbitrations or adjustments of less than $250,000, to the
approval of the Sublessee (such approval not to be unreasonably
withheld), and
(ii) In the case of all such settlements, compromises,
arbitrations or adjustments of $250,000 or more, to the approval
of the Sublessor and of the Sublessee and the Bondholder (such
approvals not to be unreasonably withheld).
(g) The Sublessee (either on behalf of itself or any further
Sublessees) shall be entitled to any insurance proceeds or
condemnation award, compensation or damages attributable to
improvements, machinery, equipment or other property installed on
or about the Facility Realty but which, at the time of such damage
or taking, is not part of the Facility and is owned by the
Sublessee or any further Sublessees.
Section 15. Recording.
This Sublease Agreement as originally executed or a
memorandum thereof shall be recorded by the Sublessee subsequent
to the recordation of the Lease Agreement in the office of the
County Clerk of Erie County, or in such other office as may at
the time be provided by law as the proper place for the
- 25 -
recordation thereof. The security interest of the Sublessor
created herein and the assignment of such security interest to the
Agency shall be perfected by the filing of financing statements by
the Sublessee which fully comply with the New York Uniform
Commercial Code - Secured Transactions (the "Code") in the office
of the Secretary of State in the State of New York, and in the
appropriate office of the County Clerk of Erie County. The
Sublessee shall file or cause to be filed all necessary
continuation statements within the time prescribed by the Code in
order to continue (or attach and perfect) the security interest
created by this Sublease Agreement, to the end that the rights of
the Agency and the Bondholder in the Facility (and in the
assignment to the Agency and thence to the Bondholder of the rents
payable under this Sublease Agreement) shall be fully preserved as
against creditors or purchasers for value from the Agency, the
Sublessor or the Sublessee. The Sublessee hereby irrevocably
constitutes and appoints the Bondholder as its attorney-in-fact
(and acknowledges that such appointment is coupled with an
interest) to execute and deliver on the Sublessee's behalf any and
all financing or continuation statements or any other instruments
which the Bondholder may deem necessary or proper to preserve or
protect such security interest.
- 26 -
Section 16. Miscellaneous.
This Sublease Agreement shall inure to the benefit of, and
shall be binding upon, the Agency, the Bondholder, the Sublessor
and the Sublessee, and their respective successors and assigns.
This Sublease Agreement shall be governed by, and construed
in accordance with, the laws of the State.
The Sublessee represents that it is, and covenants that
throughout the term of this Sublease Agreement it shall remain, a
corporation organized under the laws of the State of Delaware
(subject to the provisions of Section 6 hereof) and duly qualified
to do business and in good standing under the laws of the State.
This Sublease Agreement shall not be assigned, modified,
amended (except as provided in the definition of Agency's Reserved
Rights in the Lease Agreement), rescinded, terminated, repealed or
canceled without the prior written consent of the Agency and the
Bondholder.
The Sublessee shall not seek to recover from the Agency or
the Bondholder any moneys paid to any of them pursuant to this
Sublease Agreement, whether by reason of set-off, counterclaim or
deduction or for any reason whatsoever. The Sublessee covenants
and agrees that: whenever the consent or approval of the Sublessor
is required or permitted under this Sublease Agreement, the
written consent or approval of the Agency and the Bondholder shall
first be obtained before taking any action or omitting to
- 27 -
take any action for which such consent or permission is needed by
the Sublessor; simultaneously to give to the Agency and the
Bondholder copies of all notices and communications by the
Sublessee under this Sublease Agreement; and that the Bondholder
and the Agency shall not be obligated by reason of the assignment
of this Sublease Agreement or otherwise to perform or be
responsible for the performance of any duties or obligations of
the Sublessor hereunder; and not to make any prepayments of rents
or other sums due hereunder to the Sublessor unless such
prepayments shall also be simultaneously applied as a prepayment
of such rents or other sums due under the Lease Agreement.
The Sublessee hereby waives the provisions of Section 227 of
the New York Real Property Law or any Law of like import now or
hereafter in effect.
All notices, certificates or other communications hereunder
shall be sufficient if sent by registered or certified United
States mail, postage prepaid, addressed, if to the Sublessor, to
Charles E. Dowdell and Nancy L. Dowdell, 300 Clearfield Drive,
Williamsville, New York 14221 with a copy to: Hodgson, Russ,
Andrews, Woods & Goodyear, 1800 One M&T Plaza, Buffalo, New York
14203, Attention: Harry G. Meyer, and if to the Sublessee, to
Amherst Systems Inc., 30 Wilson Road, Williamsville, New York
14221, Attention: Donald A. Hess, with a copy to: Phillips, Lytle,
Hitchcock, Blaine & Huber, 3400 Marine Midland Center, Buffalo,
New York 14203, Attention: John A. Pappano.
- 28 -
This Sublease Agreement shall completely and fully supersede
all other prior understandings or agreements, both written and
oral, between the Sublessor and the Sublessee relating to the
Facility.
If any clause, provision or section of this Sublease
Agreement be ruled invalid by any court of competent jurisdiction,
the invalidity of such clause, provision or section shall not
affect any of the remaining provisions hereof.
The Sublessee will permit the Sublessor, the Bondholder and
the Agency , or their duly authorized agents, at all reasonable
times to enter upon the Facility Realty and to examine and inspect
the Facility and exercise their respective rights hereunder, under
the Lease Agreement and under the Indenture with respect to the
Facility.
This Sublease Agreement shall become effective upon its
delivery. It may be simultaneously executed in several
counterparts, each of which shall be an original and all of which
shall constitute but one and the same instrument.
It is the intention of the parties hereto that this Sublease
Agreement be a "net lease" and that all expenses, including
payments in lieu of real estate taxes, taxes, assessments,
repairs, maintenance, insurance, water and sewer charges,
utilities and all other amounts expended in connection with the
Facility be borne by the Sublessee and all of the rent be
- 29 -
available for debt service on the Bonds, and this Sublease
Agreement shall be construed to effect such intent.
The parties do hereby expressly waive all rights to trial by
jury on any cause of action directly or indirectly involving the
terms, covenants or conditions of this Sublease Agreement or the
Facility or any matters whatsoever arising out of or in any way
connected with this Sublease Agreement.
The provisions of this Sublease Agreement relating to waiver
of a jury trial and the right of re-entry or re-possession shall
survive the termination or expiration of this Sublease Agreement.
The provisions of this Sublease Agreement relating to waiver
of a jury trial and the right of re-entry or re-possession shall
survive the termination or expiration of this Sublease Agreement.
The date of this Sublease Agreement shall be for reference
purposes only.
IN WITNESS WHEREOF, Charles E. Dowdell and Nancy L. Dowdell,
the Sublessor have duly signed their names hereto and Amherst
Systems, Inc. the Sublessee has caused its corporate name to be
duly adopted by its Board of Directors as of the day and year
first above written.
/s/ Charles E. Dowdell
Charles E. Dowdell
/s/Nancy L. Dowdell
Nancy L. Dowdell
AMHERST SYSTEMS, INC.
By: /s/Donald A. Hess
Donald A. Hess
Vice President
MEMORANDUM OF
AMENDED AND RESTATED
SUBLEASE
NAME AND ADDRESS OF Charles E. Dowdell and
SUBLESSOR: Nancy L. Dowdell
300 Clearfield Drive
Williamsville, New York 14221
NAME AND ADDRESS OF Amherst Systems, Inc.
SUBLESSEE: 30 Wilson Road
Williamsville, New York 14221
DATE OF SUBLEASE: Dated as of May 31, 1995.
DESCRIPTIONS OF See Schedule A attached hereto
LEASED PREMISES: and made a part hereof.
TERM OF LEASE: June 1, 1995 to May 31, 2004
OPTIONS TO RENEW: Under the terms of the Sublease
The sublessee has the option to
Renew the term for two
additional three year periods.
IN WITNESS WHEREOF, the Sublessor and the Sublessee have
executed this Memorandum of Amended and Restated Sublease pursuant
to the provisions of New York Real Property Law Section 291(c) as
of the 31st day of May 1995.
SUBLESSOR: /s/Charles E. Dowdell
Charles E. Dowdell
/s/Nancy L. Dowdell
Nancy L. Dowdell
SUBLESSEE: AMHERST SYSTEMS, INC.
By: /s/Donald A. Hess
Donald A. Hess, Vice President
- 2 -
STATE OF NEW YORK )
: SS.
COUNTY OF ERIE )
On this 31st day of May 1995, before me personally came
Charles E. Dowdell and Nancy L. Dowdell, to me know and known to
me to be the same persons described in and who executed the
foregoing instrument, and such persons jointly and severally
acknowledged the execution thereof.
/s/Wendy K. Fechter
Notary Public
STATE OF NEW YORK )
: SS.
COUNTY OF ERIE )
On this 31st day of May 1995, before me personally came
Donald A. Hess, to me personally known, who, being by me duly
sworn, did depose and say that deponent resides at Town of
Amherst, New York; that deponent is the Vice President of Amherst
Systems, Inc., the corporation described in and which executed the
foregoing instrument; and that deponent signed such instrument by
order of the Board of Directors of said corporation.
/s/Wendy K. Fechter
Notary Public
SCHEDULE A
ALL THAT TRACT OR PARCEL OF LAND, situate in the Town
of Amherst, County of Erie and State of New York, being
part of Lot No. 9, Township 11, Range 7 of the Holland Land
Company's Survey and being more particularly bounded and
described as follows:
BEGINNING at a point in the southerly line of Wilson
Road (f/k/a Lexington Road) 582.00 feet westerly from the
intersection of the southerly line of Wilson Road with the
westerly line of Youngs Road; thence southerly along the
easterly line of ,'Parcel B" as shown on Map filed in Erie
County Clerk's Office under Cover No. 1436 and parallel
with the east line of Lot 9 and at an interior angle of 890
411, a distance of 597.42 feet to a point in the easterly
line of "Parcel B" as shown on aforementioned map; thence
westerly along a line parallel with Wilson Road and forming
an interior angle of 900 191, a distance of 159.42 feet to
a point; thence northerly at an interior angle of 900, a
distance of 97.50 feet to a point; thence westerly at an
exterior angle of 900, a distance of 219.97 feet to a
point; thence northerly at an interior angle of 900, a
distance of 37.50 feet to a point; thence westerly at an
exterior angle of 900, a distance of 379.84 feet to a
point; thence northerly along a line parallel with the east
line of Lot 9, and forming an interior angle of 890 41', a
distance of 262.42 feet to a point; thence easterly along a
line parallel to Wilson Road 50.00 feet to a point; thence
northerly along a line parallel to the east line of Lot 9,
200.00 feet to a point in the south line of Wilson Road;
thence easterly along the south line of Wilson Road, 710.00
feet to the point or place of beginning.
Exhibit 11.1
<TABLE>
<CAPTION>
COMPTEK RESEARCH, INC. AND SUBSIDIARIES
RECONCILIATION OF BASIC AND DILUTED EPS COMPUTATIONS
Years Ended March 31,
1998, 1997 and 1996
(In thousands, except per share amounts)
For the Year Ended March 31,
1999 1998 1997
<S> <C> <C> <C>
Basic EPS
Net income (Numerator) $3,380 $2,695 $2,173
====== ====== ======
Shares Outstanding 5,044 5,184 5,207
(Denominator) ====== ====== ======
Net income per share - $0.67 $0.52 $0.42
Basic ====== ====== ======
Diluted EPS
Net income (Numerator) $3,380 $2,695 $2,173
====== ====== ======
Shares Outstanding 5,044 5,184 5,207
Dilutive effect of
stock options after
Application of 167 132 29
Treasury stock ------ ------ ------
Method
Shares Outstanding 5,211 5,316 5,236
(Denominator) ====== ====== ======
Net income per share - $0.65 $0.51 $0.42
Diluted ====== ====== ======
</TABLE>
Exhibit 12.1
<TABLE>
<CAPTION>
Statement Re Computation Ratios
Years Ended March 31,
--------------------------------------------------
1999 1998 1997 1996 1995
<S> <C> <C> <C> <C> <C>
Pretax Income
from
continuing
operations $5,634 $4,422 $3,621 $713 $(30)
Loss
Associated
with
Aria
Wireless
Systems,
Inc. - - - (8,980) (1,033)
------ ------ ------ -------- -------
5,634 4,422 3,621 (8,267) (1,063)
------ ------ ------ -------- -------
Fixed
Charges:
Interest 1,521 421 595 218 73
Interest
Factor
Portion
of rentals 1,010 556 557 479 531
Amortization
of debt
Issuance
costs 13 - - - -
------ ------ ------ -------- -------
Total
Fixed
Charges 2,544 977 1,152 697 604
------ ------ ------ ------- -------
Income before
Income
taxes and
fixed
charges $8,178 $5,399 $4,773 ($7,570) ($459)
====== ====== ====== ======== =======
Ratio of
Earnings
(loss)
to fixed
charges (1) 3.2 5.5 4.1 - -
====== ====== ====== ======== =======
(1)In Fiscal 1996 and 1995, fixed charges exceeded earnings by
$8.3
million and $1.1 million,
respectively
</TABLE>
EXHIBIT 25.1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
__________________
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE
TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
__________________
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A
TRUSTEE
PURSUANT TO SECTION 305(b)(2) 3___3
__________________
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
13-5160382
(I.R.S. employer identification no.)
48 Wall Street, New York, New York 10286
(Address of principal executive offices) (Zip Code)
___________________
The Bank of New York
10161 Centurion Parkway
Towermarc Plaza, 2nd Floor
Jacksonville, Florida 32256
Attn: Ms. Sandra Carreker
(904) 998-4700
(Name, address and telephone number of agent for service)
____________________
COMPTEK RESEARCH, INC.
(Exact name of obligor 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 and telephone number of principal executive
offices)
__________________
Christopher A. Head, Esq.
Comptek Research, Inc.
2732 Transit Road
Buffalo, New York 14224-2523
(716) 677-4070
(Address and telephone number of agent for service)
Copies to:
James R. Tanenbaum, Esq.
Stroock & Stroock & Lavan, LLP
180 Maiden Lane
New York, NY 10038
________________________
Debt Securities
(Title of the indenture securities)
1. General Information.
Furnish the following information as to the trustee--
Name and address of each examining or supervising
authority to which it is subject.
Superintendent of Banks of the State of New York
2 Rector Street
New York, N.Y. 10006, and Albany, N.Y. 12203
Federal Reserve Bank of New York
33 Liberty Plaza
New York, N.Y. 10045
Federal Deposit Insurance Corporation
Washington, D.C. 20429
New York Clearing House Association
New York, N.Y.
Whether it is authorized to exercise corporate trust
powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each
such affiliation.
None. (See Note on page 4.)
3-15 Not Applicable
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the
Commission, are incorporated herein by reference as an
exhibit hereto, pursuant to Rule 7a-29 under the Trust
Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
(1) A copy of the Organization Certificate of the Bank of
New York (formerly Irving Trust Company) as now in effect,
which contains the authority to commence business and a
grant of powers to exercise corporate trust powers.
(Exhibit 1 to Amendment 1 to Form T-1 filed with
Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and
Exhibit 1 to Form T-1 filed with Registration Statement No.
33-29637.)
(4) A copy of the existing By-laws of the Trustee.
(Exhibit 4 to Form T-1 filed with Registration Statement No.
33-31019.)
(6) The consent of the Trustee required by Section 321(b)
of the Act. (Exhibit 6 to Form T-1 filed with Registration
No. 33-44051.)
(7) A copy of the latest report of condition of the Trustee
published pursuant to law or the requirements of its
supervising or examining authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by
the Trustee of all facts on which to base a responsive answer to
Item 2, the answer to said Item is based on incomplete
information.
Item 2 may, however, be considered as correct unless amended by
an amendment to this Form T-1.
SIGNATURE
Pursuant to the requirements of the Act, the Trustee,
The Bank of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City
of Jacksonville and the State of Florida, on the 21st day of
April, 1999.
THE BANK OF NEW YORK
By: /S/Sandra Carreker
Sandra Carreker, Agent
EXHIBIT 6 TO FORM T-1
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the
Trust Indenture Act of 1939, in connection with the proposed
issuance of Comptek Research Incorporated Debt Securities,
The Bank of New York hereby consents that reports of
examinations by Federal, State, Territorial or District
Authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
THE BANK OF NEW YORK
By:__________________________
Sandra Carreker, Agent
EXHIBIT 6 TO FORM T-1
CONSENT OF TRUSTEE
Pursuant to the requirements of Section 321(b) of the
Trust Indenture Act of 1939, in connection with the proposed
issuance of Comptek Research Incorporated Debt Securities,
The Bank of New York hereby consents that reports of
examinations by Federal, State, Territorial or District
Authorities may be furnished by such authorities to the
Securities and Exchange Commission upon request therefor.
THE BANK OF NEW YORK
By: /S/ Sandra Carreker____
Sandra Carreker, Agent
SIGNATURE
Pursuant to the requirements of the Act, the Trustee,
The Bank of New York, a corporation organized and existing
under the laws of the State of New York, has duly caused
this statement of eligibility to be signed on its behalf by
the undersigned, thereunto duly authorized, all in the City
of Jacksonville and the State of Florida, on the 21st day of
April, 1999.
THE BANK OF NEW YORK
By: /S/ Sandra Carreker___
Sandra Carreker, Agent
EXHIBIT 7 TO FORM T-1
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries, a member of the
Federal Reserve System, at the close of business December
31, 1998, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the
provisions of the Federal Reserve Act.
Dollar Amounts
in Thousands
ASSETS
Cash and balances due from
depository institutions:
Noninterest-bearing balances
and currency and coin $ 3,951,273
Interest-bearing balances 4,134,162
Securities:
Held-to-maturity securities 932,468
Available-for-sale securities 4,279,246
Federal funds sold and securities
purchased under agreements to resell 3,161,626
Loans and lease financing receivables:
Loans and leases,
net of unearned income 37,861,802
LESS: Allowance for loan and
lease losses 619,791
LESS: Allocated transfer
risk reserve 3,572
Loans and leases, net of unearned
income and allowance and reserve 37,238,439
Assets held in trading accounts 1,551,556
Premises and fixed assets (including
capitalized leases) 684,181
Other real estate owned 10,404
Investments in unconsolidated
subsidiaries and associated
companies 196,032
Customers' liability to this bank
on acceptances outstanding 895,160
Intangible assets 1,127,376
Other assets 1,915,742
Total assets $60,077,664
LIABILITIES
Deposits:
In domestic offices $27,020,578
Noninterest-bearing 11,271,304
Interest-bearing 15,749,274
In foreign offices, Edge and
Agreement subsidiaries, and IBFs 17,197,743
Noninterest-bearing 103,007
Interest-bearing.. 17,094,736
Federal funds purchased and securities
sold under agreements to repurchase
in domestic offices of the bank and
of its Edge and Agreement
subsidiaries, and in IBFs:
Federal funds purchased
1,761,170
Demand notes issued to the
U.S. Treasury
125,423
Trading liabilities
1,625,632
Other borrowed money:
With remaining maturity of one year
or less
1,903,700
With remaining maturity of more
than one year through three years
0
With remaining maturity of more
than three years
31,639
Bank's liability on acceptances
executed and outstanding 900,390
Subordinated notes and debentures
1,308,000
Other liabilities
2,708,852
Total liabilities
54,583,127
EQUITY CAPITAL
Common stock
1,135,284
Surplus
764,443
Undivided profits and capital
reserves
3,542,168
Net unrealized holding gains (losses)
on available-for-sale securities
82,367
Cumulative foreign currency
translation adjustments (
29,725)
Total equity capital
5,494,537
Total liabilities and equity capital
$60,077,664
I, Thomas J. Masiro, Senior Vice President and
Comptroller of the above-named bank do hereby declare that
this Report of Condition has been prepared in conformance
with the instructions issued by the Board of Governors of
the Federal Reserve System and is true to the best of my
knowledge and belief.
Thomas J. Masiro
We, the undersigned directors, attest to the
correctness of this Report of Condition and declare that it
has been examined by us and to the best of our knowledge and
belief has been prepared in conformance with the
instructions issued by the Board of Governors of the Federal
Reserve System and is true and correct.
Thomas A. Renyi )
Gerald L. Hassell ) Directors
Allen R. Griffith )
