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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to 'SS'240.14a-11(c) or 'SS'240.14a-12
PARAVANT COMPUTER SYSTEMS, INC.
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(Name of Registrant as Specified in Its Charter)
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Name of Person(s) Filing Proxy Statement if other than the Registrant
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
N/A
(2) Aggregate number of securities to which transaction applies:
N/A
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which
the filing fee is calculated and state how it was determined):
N/A
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(4) Proposed maximum aggregate value of transaction:
N/A
(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
N/A
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PARAVANT COMPUTER SYSTEMS, INC.
1615A West Nasa Boulevard
Melbourne, Florida 32901
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
February 27, 1997
---------------
To the Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders of
Paravant Computer Systems, Inc. (the "Company") will be held at the Melbourne
Beach Hilton Oceanfront Hotel, 3003 U.S. Highway A1A, Indialantic, Florida
32903, on February 27, 1997 at 10:00 A.M. (local time) for the following
purposes:
1. To elect five directors to hold office until the next Annual Meeting
of Shareholders and until their respective successors are duly elected and
qualified; and
2. To transact such other business as may properly be brought before
the meeting or any adjournment thereof.
The Board of Directors has fixed January 3, 1997 as the record date for
the determination of the shareholders entitled to notice of and to vote at such
meeting or any adjournment thereof, and only shareholders of record at the close
of business on that date are entitled to notice of and to vote at such meeting.
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1996 is enclosed herewith.
You are cordially invited to attend the meeting. Whether or not you
plan to attend, you are urged to complete, date and sign the enclosed proxy and
return it promptly. If you receive more than one form of proxy, it is an
indication that your shares are registered in more than one account, and each
such proxy must be completed and returned if you wish to vote all of your shares
eligible to be voted at the meeting.
By Order of the Board of Directors,
William R. Craven
Secretary
Melbourne, Florida
January 28, 1997
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YOUR VOTE IS IMPORTANT.
THE ATTACHED PROXY STATEMENT SHOULD BE READ CAREFULLY. SHAREHOLDERS ARE URGED TO
SIGN, DATE AND MAIL THE ENCLOSED PROXY IN THE ENCLOSED POSTAGE PAID ENVELOPE. NO
ADDITIONAL POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES. YOU MAY REVOKE
YOUR PROXY AT ANY TIME BEFORE IT IS VOTED BY GIVING WRITTEN NOTICE TO THE
COMPANY. IF YOU ATTEND THE ANNUAL MEETING, YOU MAY VOTE IN PERSON THOUGH YOU
HAVE PREVIOUSLY SENT IN YOUR PROXY.
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PARAVANT COMPUTER SYSTEMS, INC.
1615A West Nasa Boulevard
Melbourne, Florida 32901
--------------------
P R O X Y S T A T E M E N T
--------------------
The enclosed proxy is solicited on behalf of the Board of Directors of
Paravant Computer Systems, Inc. (the "Company" or "PCS") pursuant to this proxy
statement (to be mailed on or about January 28, 1997) for use at the Annual
Meeting of Shareholders to be held at the time and place shown in the attached
notice of annual meeting and at any adjournment or postponement thereof (the
"Annual Meeting"). Shares represented by properly executed proxies, if returned
in time, will be voted at the Annual Meeting as specified or, if not otherwise
specified, in favor of the election as directors of the nominees named herein.
Such proxies are revocable at any time before they are exercised by written
notice to the Secretary of the Company or by your requesting the return of the
proxy at the Annual Meeting. Any later dated proxies will revoke proxies
submitted earlier.
RECORD DATE
The record date for the determination of holders of common stock, par
value $0.015 per share, of the Company ("Common Stock") who are entitled to
notice of and to vote at the Annual Meeting is January 3, 1997 (the "Record
Date").
VOTING SECURITIES
As of the Record Date, 7,959,886 shares of Common Stock of the Company
were outstanding. The number of outstanding shares of Common Stock, and, unless
otherwise stated, all other references contained in this proxy statement to
numbers of shares of Common Stock, give effect to the three-for-one stock split
effected by the Company on July 25, 1996, pursuant to which each holder of
shares of Common Stock of record on July 22, 1996 received two additional shares
of Common Stock for every share held on such date (the "Stock Split"). Holders
of record of Common Stock as of the Record Date will be entitled to one vote for
each share held. A majority of all shares of Common Stock issued, outstanding
and entitled to vote at the Annual Meeting, present in person or represented by
proxy, shall constitute a quorum. Abstentions and broker non-votes are
considered present for purposes of determining whether the quorum requirement is
met. A broker non-vote occurs when a nominee holds shares for a beneficial owner
but cannot vote on a proposal because the nominee does not have discretionary
voting power and has not received instructions from the beneficial owner as to
how to vote the shares. Brokers which are members of the New York Stock Exchange
or American Stock Exchange are permitted to vote their clients' proxies in their
own discretion as to the election of directors if such brokers have transmitted
proxy soliciting materials to their clients and the clients have not furnished
voting instructions by the date specified in the statement accompanying such
materials.
The election of directors shall be determined by a plurality of the
voting power present in person or represented by proxy at the Annual Meeting and
entitled to vote. Only shares that are voted in favor of a particular nominee
will be counted towards such nominee's achievement of a plurality. Shares
present at the Annual Meeting that are not voted for a particular nominee and
shares present by proxy where the shareholder properly withholds authority to
vote for such nominee will not be counted towards such nominee's achievement
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of a plurality. Broker non-votes are not considered "shares present" for voting
purposes and have no impact on the outcome of the proposal.
PRINCIPAL SHAREHOLDERS OF THE COMPANY
The following table sets forth, as of the Record Date, the beneficial
ownership of shares of Common Stock by (i) each person who is known by the
Company to own more than 5% of the outstanding shares of Common Stock, (ii) each
director of the Company and each executive officer of the Company listed in the
Summary Compensation Table and (iii) all of the Company's officers and directors
as a group:
<TABLE>
<CAPTION>
Percentage of
Amount and Nature of Outstanding Shares
Name and Address of Beneficial Owner(1) Beneficial Ownership(2) Owned(3)
- --------------------------------------- ----------------------- --------
<S> <C> <C>
Krishan K. Joshi(4)(5) 2,235,468 28.1%
Richard P. McNeight(5) 947,810 11.5%
William R. Craven(5) 483,649 6.1%
James E. Clifford(5) 13,500 * %
Michael F. Maguire(5) 13,500 * %
Lary J. Beaulieu(5) 206,201 2.6%
All officers and directors as a group (7 persons)(4)(5) 3,479,280 41.6%
</TABLE>
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* Less than 1%
(1) The address of each such person is c/o Paravant Computer Systems, Inc.,
1615A West Nasa Blvd., Melbourne, Florida 32901.
(2) A person is deemed to be the beneficial owner of securities that can be
acquired by such person within 60 days from the date of this Proxy
Statement upon the exercise of options or warrants. Each beneficial
owner's percentage ownership is determined by assuming that options or
warrants that are held by such person (but not those held by any other
person) and which are exercisable within 60 days from the date of this
Proxy Statement have been exercised. Unless otherwise noted, the Company
believes that all persons named in the table have sole voting and
investment power with respect to all shares of Common Stock beneficially
owned by them.
(3) Based on 7,959,886 shares of Common Stock outstanding on the Record Date.
(4) Includes 2,191,854 shares of Common Stock held by UES Florida, Inc. ("UES
Florida"), a wholly owned subsidiary of UES, Inc. ("UES"). Mr. Joshi,
Chairman and Chief Executive Officer of the Company, is the Chairman and
a director of UES, of which he owns 58% of the shares of its common stock
and which, as a result, he controls. With respect to the 2,191,854 shares
held by UES Florida, 445,848 of such shares are subject to an option
granted by UES Florida to Mr. Joshi. Both UES and UES Florida have
offices at 4402 Dayton-Xenia Road, Dayton, OH 45432.
(5) Includes options obtained from UES Florida covering 148,617 shares for
Mr. McNeight, 297,231 shares for Mr. Craven and 445,848 shares for Mr.
Joshi. Includes options granted under the Company's Incentive Stock
Option Plan, as amended (the "Incentive Plan"), covering 110,000 shares
for Mr. McNeight, 25,000 shares for Mr. Craven, 4,000 shares for each of
Messrs. Clifford and Maguire, 20,000 shares for Mr. Beaulieu and 25,000
shares for other officers and directors, options for 188,049 shares of
Common Stock granted to Mr. McNeight and 5,031 shares of Common Stock
granted to each of Mr. Craven and Mr. Beaulieu under a non-qualified
stock option plan which plan has been terminated and
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options granted under the Nonemployee Directors' Stock Option Plan (the
"Directors' Plan") covering 7,500 shares for each of Messrs. Clifford and
Maguire, all of which options are currently exercisable. Excludes options
granted under the Incentive Plan covering 140,000 shares for Mr.
McNeight, 60,000 shares for Mr. Craven, 40,000 shares for Mr. Beaulieu
and 35,000 shares for other officers and directors, all of which options
are not exercisable within 60 days of the date of this Proxy Statement.
Also excludes options to purchase 7,500 shares of Common Stock issuable
pursuant to options to be granted, under the Directors' Plan, to each of
Messrs. Clifford and Maguire, the current non-employee directors of the
Company, as of the date of the Annual Meeting.
ELECTION OF DIRECTORS
The Board of Directors has nominated the five individuals whose names
are set forth below for election to the Board of Directors, each to hold office
until the next Annual Meeting of Shareholders and until his successor is duly
elected and qualified. Unless otherwise specified, the enclosed proxy will be
voted in favor of the persons named below, all of whom are now directors of the
Company. In the event that any of such nominees for election at the Annual
Meeting should become unavailable for election for any reason not presently
known, it is intended that votes will be cast pursuant to the accompanying proxy
for such substitute nominees as the Board of Directors may designate unless the
Board of Directors reduces the number of directors. The directors are to be
elected by the affirmative vote of the holders of a plurality of the shares of
Common Stock entitled to vote and present in person or represented by proxy at
the Annual Meeting.
Recommendation of Board of Directors
The Board of Directors recommends a vote FOR election of the nominees
identified below as directors of the Company.
Information Regarding Nominees
The information set forth below, furnished to the Board of Directors by
the respective individuals, shows as to each nominee for election as a director
of the Company (i) his name and age; (ii) his principal position with the
Company; (iii) his principal occupation or employment, if different; and (iv)
the month and year in which he began to serve as a director.
<TABLE>
<CAPTION>
Present Position(s) Principal Occupation or Director
Name and Age with the Company Employment, If Different Since
- ------------ ------------------- ------------------------ -----
<S> <C> <C> <C>
Krishan K. Joshi (60) Chairman, Chief Executive Chairman and President of 1989
Officer and Director(1)(2) UES, Inc. (technology
development company)
Richard P. McNeight (46) President, Chief Operating 1994
Officer and Director(3)
William R. Craven (48) Vice President of 1994
Marketing, Director and
Secretary
James E. Clifford (60) Director(1)(2)(3)(4) President, Engineering 1995
Development Laboratories, Inc.
</TABLE>
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<TABLE>
<CAPTION>
Present Position(s) Principal Occupation or Director
Name and Age with the Company Employment, If Different Since
- ------------ ------------------- ------------------------ -----
<S> <C> <C> <C>
Michael F. Maguire (70) Director(3)(4) President, Maguire 1995
Investment Management, Inc.
</TABLE>
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(1) Member of Compensation Committee
(2) Trustee for Profit Sharing Plan
(3) Member of Audit Committee
(4) Member of Stock Option Committee
Biographical Information Regarding Directors and Executive Officers
Krishan K. Joshi. From 1976 to date, Mr. Joshi has served as founder,
chairman and president of UES, a technology development company. Following the
acquisition of a controlling interest in the Company by UES in December of 1989,
he became Chairman, Chief Executive Officer and President of the Company.
However, in April 1994, he resigned as President of the Company and continues to
serve as Chairman and Chief Executive Officer. Mr. Joshi spends less than 20% of
his time on Company affairs. He has also been Chairman of Astro Industries,
Inc., a manufacturer and distributor of aerospace wire and cable products, since
August 1980. He holds a Bachelor of Science degree in Mathematics and Physics
from Punjab University in India; a Bachelors degree in Aeronautical and
Astronautical Engineering from Ohio State University and Master of Science
degree in Engineering from the University of Dayton, Ohio; and has engaged in
Doctoral studies in Mechanical Engineering at the University of Cincinnati.
Richard P. McNeight. From 1984 until June 1994, Mr. McNeight served as
a Vice President and General Manager of the Company. He was appointed President
of the Company in June 1994. From 1982 to 1984, he was employed by Siemen's
Corporation as a senior member of its systems engineering staff. From 1972 to
1982, he worked for ITT's North Telecommunications Division in several positions
as a software engineering director and manager and engineer. Mr. McNeight holds
a Bachelors degree in Applied Science/Engineering from the University of
Wisconsin and a Masters degree in Computer Information/Control Engineering from
the University of Michigan.
William R. Craven. Mr. Craven joined the Company in September 1991 as a
Vice President in charge of Marketing and has served in that capacity
continually to the present. From 1990 to 1991, he was employed as a Vice
President of Marketing for Telxon Corp., a manufacturer of hand-held computers
and software systems. From 1982 to 1990, he served as a Vice President of Mead
Corp., a manufacturer of paper products and provider of electronic services, in
a variety of positions, including marketing, product development and joint
ventures. For three years during that period, he acted as President of Seiko
Mead Company, a Japanese-American joint venture established to manufacture color
computer printers and copiers. He was employed as a Director of Marketing by
Gentech Industries, a manufacturer of packaging materials and systems, from 1979
to 1982. He also served as Sales and Product Managers for Champion
International, a manufacturer of paper products, from 1971 until 1979. Mr.
Craven holds a Bachelor of Science degree in Physics and Mathematics from
Birmingham Southern College.
Lary J. Beaulieu. Since 1988, Mr. Beaulieu has been employed
continually by the Company in several capacities, including Director of
Engineering, Chief Engineer and Vice President of Engineering. From 1982 to
1988, he served as Manager of Inspection and Service Products, Engineering
Manager and New Product Design Manager for Schlumberger Technologies, a
manufacturer of service/inspection products. He worked in several engineering
positions from 1972 through 1981 for ITT's North Telecommunications Division.
Mr. Beaulieu holds Bachelor and Masters of Science degrees in electrical
engineering from Tufts University.
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Kevin J. Bartczak. Mr. Bartczak joined the Company as an officer in
February, 1995. From 1993 to 1995, he served as Chief Financial Officer,
Secretary and Director of Opto Mechanik, Inc. ("OMI"), a manufacturer of
electro-optical fire control and assemblies for weapons systems. On October 14,
1994, OMI filed for protection under Chapter 11 of the U.S. Bankruptcy Code and
was subsequently liquidated. Mr. Bartczak was employed from 1987 to 1993 as a
division controller of Harsco Corporation, a manufacturer of heavy equipment and
land combat systems. From 1984 to 1987, he was also employed as a division
controller of General Defense Corporation, a manufacturer and developer of
ammunition, radar guidance and weapon systems. Mr. Bartczak served from 1981 to
1984 as a division controller and manager of corporate accounting of Elkem Metal
Company, a producer of metal alloys. From 1979 to 1981, he functioned as senior
accountant for the Cyclops Corporation, a producer of specialty steel,
industrial and residential building products and consumer electronics. As a
certified public accountant, he worked as an audit supervisor for Arthur Young &
Co. from 1975 to 1979. Mr. Bartczak holds a Bachelor of Science degree in
Business Management from Indiana University of Pennsylvania.
James E. Clifford. From 1989 to date, Mr. Clifford has served as
President and Director of Engineering Development Laboratories, Inc., a
manufacturer of aircraft avionics and flight control electronics. From 1983 to
1989, Mr. Clifford served as President of Signal Technology Laboratories, Inc.
("STL"), a manufacturer and developer of militarized electronic defense systems,
and continues to serve as a director of STL. Mr. Clifford served as an officer
in the U.S. Air Force for 23 years, attaining the rank of Colonel specializing
in air lift and aircraft acquisition programs. Mr. Clifford holds Bachelors and
Masters of Science degrees in Electrical Engineering from Oklahoma State
University.
Michael F. Maguire. Since 1986, Mr. Maguire has been employed as
President of Maguire Investment Management, Inc., a consulting firm founded by
him. From 1973 through 1986, he was an officer of Harris Corp., a computer
manufacturer, attaining the position of senior vice president. From 1962 to
1973, Mr. Maguire served in various capacities with Perken Elmer, a manufacturer
of analytical instruments and life-science systems, including as an engineering
manager, vice president, general manager and group vice president. From 1950 to
1962, he held various engineering design and management positions with General
Electric, Pratt & Whitney, and Sperry Rand companies. He is currently a director
of Harris Computer Systems Corp., Concurrent Computer Systems Corp. and
Cyberguard Corp. Mr. Maguire also previously served as a director of OMI. In
1950, he received a Bachelor of Science degree in electrical engineering from
Rensselear Polytechnic Institute and in 1955 a Masters of Science degree from
the University of Connecticut.
Meetings and Committees of the Board
The Board of Directors of the Company held five meetings during fiscal
1996 and acted by written consent on three occasions. With the exception of Mr.
Clifford, who attended three of the five meetings of the Board of Directors
which occurred following his appointment as a director of the Company, all
directors attended 75% or more of the total number of meetings of the Board and
of the committees of which they were members.
The Audit Committee, the Stock Option Committee and the Compensation
Committee are the only standing committees of the Board. There is no formal
nominating committee; the Board of Directors performs this function.
The Audit Committee, which is currently composed of Mr. McNeight, its
Chairman, and Messrs. Clifford and Maguire, consults with the auditors of the
Company and such other persons as the members deem appropriate, reviews the
preparations for and scope of the audit of the Company's annual financial
statements, makes recommendations as to the engagement and fees of the
independent auditors, and performs such other duties relating to the financial
statements of the Company as the Board of Directors may assign from time to
time. The Audit Committee held two meetings during fiscal 1996.
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The Stock Option Committee, which is currently composed of Mr. Maguire,
its Chairman, and Mr. Clifford, has all of the powers of the Board of Directors,
including the authority to issue stock or other securities of the Company, in
respect of any matters relating to the administration of the Company's stock
option plans (other than the grant of options under the Non-Employee Directors'
Plan). The Stock Option Committee held one meeting during 1996.
The Compensation Committee, which is currently composed of Mr. Joshi,
its Chairman, and Mr. Clifford, reviews with the Board of Directors on a
periodic basis existing and proposed compensation plans, programs and
arrangements for executive officers and other employees. All recommendations
regarding compensation arrangements for Mr. Joshi are made solely by Mr.
Clifford. The Compensation Committee held no meetings during fiscal 1996.
Compliance with Section 16(a) of the Securities Exchange Act of 1934
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires officers and directors of the Company and holders of
more than 10% of the Common Stock (collectively, "Reporting Persons") to file
reports of ownership and changes in ownership of the Common Stock with the
Securities and Exchange Commission within certain time periods and to furnish
the Company with copies of all such reports. Based solely on its review of the
copies of such reports furnished to the Company by such Reporting Persons or on
written representations that no reports on Form 5 were required, the Company
believes that during the fiscal year ended September 30, 1996, all of the
Reporting Persons complied with their Section 16(a) filing requirements.
Directors' Compensation
Each director who is not an employee of the Company was paid $500 for
each meeting of the Board of Directors, as well as for each meeting of any
committee of the Board of Directors not held on a day during which a meeting of
the Board of Directors was held, attended by such director during fiscal 1996.
The Company also reimbursed each such director for all reasonable expenses
incurred by him in attending meetings. In addition, non-employee directors of
the Company are eligible to participate in the Director's Plan, pursuant to
which each non-employee director is automatically granted (i) upon becoming a
director of the Company, an option to purchase 7,500 shares of Common Stock and
(ii) each year, on the day of the Company's annual meeting of shareholders, an
option to purchase 7,500 shares of Common Stock. In connection with the
Company's initial public offering (the "IPO") in June 1996, the Company granted
to each of Messrs. Clifford and Maguire, pursuant to the Directors' Plan, an
option to purchase 7,500 shares of Common Stock.
Legal Proceedings
In March 1996, the Company's former counsel, Cascone & Cole, rendered
an invoice to the Company in the amount of approximately $365,000 for legal fees
and expenses to which such counsel claimed to be entitled in connection with its
representation of the Company for both general corporate services and services
relating to the IPO. As the Company had made prior payments to such counsel of
$130,000, the net amount claimed to be due was approximately $235,000. The
Company has contested the invoice and accrued an estimate for the settlement, if
any, of these fees. On March 27, 1996, Cascone & Cole filed an action in the
Supreme Court of the State of New York, County of New York, entitled Cascone &
Cole v. Paravant Computer Systems, Inc., Victor M. Wang, Duke & Company, Inc.,
Dean Petkanas and Eagle Group Incorporated (Index No. 96601634), against the
Company, the underwriter of the Company's IPO (the "Underwriter"), and certain
other defendants alleging, among other things, breach of contract, failure to
pay attorneys' fees, fraud, copyright infringement and defamation by the Company
in connection with the aforementioned services, as well as claiming a finder's
fee with respect to the Underwriter's relationship with the Company. Plaintiff
is seeking damages in the amount of approximately $28 million from the Company.
Plaintiff has filed a motion to increase its claims for legal
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services from approximately $365,000 to approximately $415,000, claiming there
is a balance due of $280,882 for legal services. The Company has filed an answer
denying the allegations made by plaintiff and has asserted defenses and
counterclaims against the plaintiff seeking, among other things, recovery of
amounts paid to plaintiff as well as punitive damages and court costs.
On September 18, 1996, a former controller of the Company filed an
action in the Circuit Court of the State of Florida, Brevard County, entitled
Christopher R. Exley v. Paravant Computer Systems, Inc., Richard P. McNeight,
William R. Craven, UES of Florida, Inc. and Krishan K. Joshi (Case No. 96-15091
CA), against the Company and certain of its officers, directors and principal
stockholders, alleging, among other things, retaliatory personnel actions by the
defendants. Plaintiff alleges that he was improperly terminated in December 1994
as a result of his refusal to account for certain transactions in a specified
manner. Plaintiff is seeking unspecified damages plus fees and costs.
The Company will vigorously defend itself in these matters. Management
of the Company believes that the ultimate resolution of these matters will not
have a material adverse effect on the Company.
The Company is not a party to or involved in any other pending legal
proceedings.
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth certain information regarding the
compensation in each of the last three fiscal years of the person who served as
the Company's Chief Executive Officer during the fiscal year ended September 30,
1996, and the three other highest paid executive officers who were serving as
officers at September 30, 1996 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
Long Term Compensation
-------------------------------------
Annual Compensation Awards Payouts
------------------------------ ------------------------- -------
Other
Annual Restricted Securities All Other
Compen- Stock Underlying LTIP Compen-
Name and Principal Fiscal sation Award(s) Options/ Payouts(1) sation
Position Year Salary ($) Bonus ($) ($) ($) SARs(#) ($) ($)
- ----------------------- ----- ---------- --------- ----- ----- ------- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Krishan K. Joshi(2)........... 1996 52,000 -0- -0- -0- -0- -0- -0-
Chairman and Chief 1995 45,200 -0- -0- -0- -0- -0- -0-
Executive Officer 1994 28,800 -0- -0- -0- -0- -0- -0-
Richard P. McNeight(3)........ 1996 139,500 18,000 -0- -0- 90,000 1,665 -0-
President and 1995 124,241 -0- -0- -0- 120,000 -0- -0-
Chief Operating Officer 1994 113,896 3,000 -0- -0- 188,049 723 -0-
William R. Craven............. 1996 118,038 14,000 -0- -0- 45,000 1,369 -0-
Vice President of Marketing 1995 106,616 -0- -0- -0- 15,000 -0- -0-
1994 90,964 1,000 -0- -0- 5,031 832 -0-
Lary J. Beaulieu.............. 1996 97,490 10,000 -0- -0- 30,000 1,205 -0-
Vice President of 1995 98,560 -0- -0- -0- 15,000 -0- -0-
Engineering 1994 96,615 9,109 -0- -0- 5,031 894 -0-
</TABLE>
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(1) Represents Company matching funds for 401(k) Profit Sharing Plan.
(2) Reflects compensation for Mr. Joshi's part-time work for the Company.
(3) Excludes personal use of Company automobile and computer equipment
estimated at $5,000 per year.
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Option/SAR Grants During Fiscal Year 1996
The following table provides information related to options granted to
the Named Executive Officers during the fiscal year ended September 30, 1996. No
stock appreciation rights were issued by the Company during fiscal 1996.
<TABLE>
<CAPTION>
Number of Percent of Total
Securities Options/SARs
Underlying Granted to Exercise or
Options/SARs Employees in Base Price Expiration
Name Granted(#)(1) Fiscal Year ($/Sh)(1) Date
- ---- ------------- ---------------- ----------- ----------
<S> <C> <C> <C> <C>
Krishan K. Joshi,
Chairman and Chief Executive Officer.............. -- -- -- --
Richard P. McNeight,
President and Chief Operating Officer (2)......... 90,000 25.0% 1.4667 11/16/00
William R. Craven,
Vice President of Marketing (2)................... 45,000 12.5% 1.3333 11/16/05
Lary J. Beaulieu,
Vice President of Engineering (2)................. 30,000 8.3% 1.3333 11/16/05
</TABLE>
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(1) All share numbers and exercise prices have been adjusted to give effect
to the Stock Split. The right to exercise the options is vested over a
three-year period from the date of grant in November 1995, with
one-third of the options subject to grant to become vested (and
consequently exercisable) on each of the first three anniversaries of
the date of grant.
(2) Excludes options for 40,000 shares, 25,000 shares and 15,000 shares of
Common Stock granted in November 1996 to Messrs. McNeight, Craven and
Beaulieu, respectively, under the Company's Incentive Plan at an
exercise price of $5.00 per share.
Aggregated Option/SAR Exercises During Fiscal Year 1996 and Fiscal Year End
Option/SAR Values
The following table provides information related to options exercised
by the Named Executive Officers during the fiscal year ended September 30, 1996
and the number and value of options and stock appreciation rights held at fiscal
year end which are currently exercisable. No options or stock appreciation
rights were exercised during the fiscal year ended September 30, 1996.
<TABLE>
<CAPTION>
Number of Securities Value of Unexercised
Shares Underlying Unexercised In-the-Money Options/SARs
Acquired on Value Options/SARs at FY-End(1) at FY-End($)(2)
Name Exercise (#) Realized($) Exercisable Unexercisable Exercisable Unexercisable
- ---- ------------ ----------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Krishan K. Joshi,
Chairman and Chief Executive Officer.. -- -- 445,848 -0- $2,441,464 $ -0-
Richard P. McNeight,
President and Chief Operating Officer. -- -- 446,667 100,000 1,795,772 443,030
William R. Craven,
Vice President of Marketing........... -- -- 327,262 35,000 1,768,173 153,293
Lary J. Beaulieu,
Vice President of Engineering......... -- -- 25,031 25,000 119,077 110,376
</TABLE>
- -------------
(1) All share numbers have been adjusted to give effect to the Stock Split.
(2) The values of Unexercised-In-the-Money Options/SARs represents the
aggregate amount of the excess of $5.625, the closing sales price for a
share of Common Stock (as adjusted to give effect to the Stock Split)
on September 30, 1996, over the relevant exercise price of all
"in-the-money" options held on such date. Excludes options for 40,000
shares, 25,000 shares and 15,000 shares of Common Stock granted in
November 1996 to Messrs. McNeight, Craven and Beaulieu, respectively,
under the Company's Incentive Plan at an exercise price of $5.00 per
share.
- 8 -
<PAGE>
<PAGE>
Incentive Stock Option Plan
Under the Company's Incentive Stock Option Plan, as amended (the
"Incentive Plan"), options to purchase a maximum of 1,455,000 shares of its
Common Stock may be granted to officers, directors and other key employees of
the Company. Options granted under the Incentive Plan are intended to qualify as
incentive stock options as defined in the Internal Revenue Code of 1986, as
amended (the "Code").
The Incentive Plan is administered by the Board of Directors and the
Stock Option Committee, which determines which persons are to receive options,
the number of options granted and the exercise prices thereof. In the event an
optionee voluntarily terminates his employment with the Company, the optionee
generally has the right to exercise his accrued options within five days of such
termination. If an optionee's employment is involuntarily terminated, other than
because of death, he has the right to exercise his accrued option within thirty
days of such termination. Upon death, the optionee's estate or heirs have one
year to exercise said optionee's accrued options. The maximum term of any option
is generally ten years, and the option price per share may not be less than the
fair market value of the Company's shares at the date the option is granted.
However, options granted to persons owning more than 10% of the Company's voting
shares may not have a term in excess of five years, and the option price per
share may not be less than 110% of fair market value. The Company may redeem any
accrued but unexercised option held by an optionee by paying him the difference
between the option exercise price and the then fair market value.
If the aggregate fair market value of the shares of Common Stock
(determined at the time the option is granted) with respect to which incentive
stock options are exercisable for the first time by such optionee during any
calendar year (under all such plans) exceeds $100,000, then only the first
$100,000 of such shares so purchased will be treated as incentive options and
any excess over $100,000 so purchased shall be treated as options which are not
incentive stock options. This rule shall be applied by taking options into
account in the order or sequence in which they are granted. Options must be
granted within ten years from the effective date of the Incentive Plan.
Options granted under the Incentive Plan are not transferable other
than by will or by the laws of descent and distribution. Options granted under
the Incentive Plan are protected by anti-dilution provisions increasing the
number of shares issuable thereunder and reducing the exercise price of such
option, under certain conditions. The Incentive Plan will terminate on December
22, 2004 or on such earlier date as the Board of Directors may determine. Any
option outstanding at the termination date will remain outstanding until it
expires or is exercised in full, whichever occurs first. As of January 27, 1997,
options to acquire an aggregate of 958,000 shares of the Company's Common Stock
at exercise prices ranging from $0.72 per share to $5.00 per share had been
granted under the Incentive Plan to key employees and directors (including
options to purchase 120,000 shares of Common Stock at an exercise price of $0.79
per share, 90,000 shares of Common Stock at an exercise price of $1.47 per
share, and 40,000 shares of Common Stock at an exercise price of $5.00 per
share, granted to Mr. McNeight; options to purchase 15,000 shares of Common
Stock at an exercise price of $0.72 per share, 45,000 shares of Common Stock at
an exercise price of $1.33 per share and 25,000 shares of Common Stock at an
exercise price of $5.00 per share, granted to Mr. Craven; and options to
purchase 15,000 shares of Common Stock at an exercise price of $0.72 per share,
30,000 shares of Common Stock at an exercise price of $1.33 per share and 15,000
shares of Common Stock at an exercise price of $5.00 per share, granted to Mr.
Beaulieu). In the case of options granted under the Incentive Plan to employees,
such options vest and are exercisable at a rate no greater than 33 1/3%
each continuous year in which the employee is employed on a full time basis by
the Company.
- 9 -
<PAGE>
<PAGE>
Nonemployee Directors' Stock Option Plan
In order to attract and retain the services of non-employee members of
the Board of Directors and to provide them with increased motivation and
incentive to exert their best efforts on behalf of the Company by enlarging
their personal stake in the Company, the Company has adopted the Nonemployee
Directors' Stock Option Plan (the "Director's Plan"), pursuant to which stock
options covering an aggregate of 45,000 shares of the Company's Common Stock may
be granted to such non-employee directors.
Pursuant to the Directors' Plan, each member of the Board of Directors
of the Company who is not an employee of the Company (or a subsidiary) (a
"Non-employee Director") and who is elected or re-elected as a director of the
Company by the shareholders at any annual meeting of shareholders commencing
with the Annual Meeting to which this Proxy Statement relates will receive, as
of the date of each such election or re-election, options to purchase 7,500
shares of the Company's Common Stock. In addition, each Non-employee Director
will receive options to purchase 7,500 shares of Common Stock upon his initial
election or appointment as director. All options granted under the Directors'
Plan are to be non-incentive options. Messrs. Clifford and Maguire, the current
Non-employee Directors, were each granted in May 1996 non-incentive options to
purchase 7,500 shares of Common Stock at an exercise price of $1.67 per share.
If reelected, Messrs. Clifford and Maguire will each be granted, as of the date
of the Annual Meeting, non-incentive options to purchase 7,500 shares of Common
Stock at the then current market price of the Common Stock.
401(k) Profit Sharing Plan
The Company's 401(k) Profit Sharing Plan (the "PSP") is qualified under
Sections 401(a) and 401(k) of the Code. The effective date of the PSP is January
1, 1990. This plan is administered under a Trust and two of the Company's
directors are currently serving as its trustees. All employees of the Company
who are 21 years or older, including its executive officers, are eligible to
participate in this plan after three months of employment.
Under the PSP, participating employees have the right to elect that
their contributions to this plan be made from deductions from the compensation
owed to them by the Company in an amount up to 15% of their compensation per
annum, not to exceed $9,500 in each of 1996 and 1997. In addition, the Company,
in its discretion, may make contributions to this plan of up to 1% of the
participant's annual compensation. Participating employees are entitled to full
distribution of their share of the Company's contribution under this plan upon
their death or total disability or when they reach retirement age (i.e., 65
years of age). If a participating employee's employment is terminated earlier,
such employee's share of the Company's contributions will depend upon the
employee's number of years of employment with the Company. All employees are
entitled to receive 25%, 50%, 75%, and 100%, respectively, of the Company's
contributions upon completion of 2, 3, 4, and 5 years of employment,
respectively.
All participating employees have the right to receive 100% of their own
contributions to the PSP upon any termination of employment. Apart from the
Company's and employees' contributions, they may receive investment earnings
relating to the funds in their account under this plan.
Description of Employment Agreements, Severance Arrangements and Change of
Control Arrangements
Richard P. McNeight is serving as the Company's President pursuant to
an employment agreement for three years commencing January 1, 1995, which
agreement provides for an initial annual compensation of $130,000, unspecified
bonuses, an increase of 10% in compensation in each of the second and third
years and a two-year non-competition covenant covering the rugged computer
business that commences after termination of employment.
- 10 -
<PAGE>
<PAGE>
William R. Craven entered into a three year employment contract with
the Company commencing January 1, 1995, which agreement provides for an initial
annual compensation of $110,000, unspecified bonuses, a 10% increase per annum
in each of the second and third years, and a similar two-year non-competition
covenant.
In February 1995, the Company entered into a three year employment
agreement with Kevin J. Bartczak which provides for his employment as Vice
President and Chief Financial Officer. This agreement established compensation
at the initial rate of $80,000 per year, increasing to $90,000 in the second
year and $100,000 in the third year, and provides for discretionary bonuses. In
addition, the agreement provides for the grant to Mr. Bartczak of options to
purchase up to 60,000 shares of Common Stock, subject to certain conditions. In
the event Mr. Bartczak's employment is terminated by the Company without cause,
he will be entitled to a severance amount equal to 6 months' salary (plus
certain health insurance expense amounts) if termination occurs during the first
two years under the agreement and 90 days' salary if termination occurs during
the third year.
CERTAIN TRANSACTIONS
Under the Company's $4,000,000 line of credit with National City Bank
in Dayton, Ohio, Krishan K. Joshi, the Company's Chairman, and UES, a company
controlled by Mr. Joshi which presently indirectly owns approximately 27.5% of
the Company's outstanding Common Stock, each guaranteed all amounts outstanding
under such line of credit. Similar guarantees involving Mr. Joshi and UES were
required for earlier loan arrangements between the Company and such bank. Upon
completion of the IPO, such guarantees were terminated. Mr. Joshi and UES may be
deemed to have benefitted from the elimination of such guarantees.
At September 30, 1995, the Company was a guarantor of certain debt of
UES. The debt included a $1,250,000 line of credit with a bank that was due on
demand and bore interest at the prime rate. The amount outstanding under the
agreement at September 30, 1995 was $779,715. The debt also included a
commercial note payable to the same bank bearing an initial interest rate of
8.75% adjusted monthly to 1.50% above the prime rate. Interest and principal
payments on this note were due in eighty-four monthly installments including
principal of $11,905 per payment, with final payment due in September 2001. The
amount outstanding under the commercial note payable at September 30, 1995 was
$845,235. Prior to the completion of the Company's IPO, the bank released the
Company from its guarantee.
Beaver Creek Enterprises, an Ohio partnership among certain UES
employees, including Mr. Joshi, owns a three bedroom residential condominium in
Melbourne, Florida, consisting of approximately 1,450 square feet. The
partnership rents this apartment to the Company at $1,000 per month ($750 per
month until July 1, 1996), which includes its apportioned real estate taxes,
pursuant to a month to month lease arrangement. For the fiscal years ended
September 30, 1996 and 1995, the Company paid such partnership $9,750 and
$9,000, respectively, for the use of such condominium. This apartment is used to
house the Company's executives, including Messrs. Craven and Joshi, when they
are visiting the Company's headquarters, as well as select customers.
In December 1991, Messrs. McNeight, Craven and Joshi were granted
options covering 148,617 shares, 297,231 shares and 445,848 shares,
respectively, of the Company's Common Stock held by UES Florida, a subsidiary of
UES and an affiliate of the Company, each at an adjusted exercise price of $.15
per share. In November 1993, Mr. McNeight was granted options to purchase 5,032
shares of the Company's Common Stock at an adjusted exercise price of $0.24 per
share under a non-qualified stock option plan previously maintained by the
Company, which has since been terminated, and, in November 1994, Mr. McNeight
was granted options under such plan to purchase 183,018 shares of the Company's
Common Stock at an adjusted exercise price of $3.20 per share. The exercise
prices of the foregoing options granted in 1991, 1993 and 1994 approximated the
estimated market value of the shares of Common Stock on the date of grant.
- 11 -
<PAGE>
<PAGE>
The Company had a payable to UES of $0 and $87,294 at September 30,
1996 and 1995, respectively, for reimbursement of accrued health insurance costs
paid by UES.
In March 1996, UES Florida and Messrs. McNeight and Craven and another
shareholder sold an aggregate of 925,743 shares of Common Stock to private
investors at a purchase price of $1.33 per share ("March 1996 Stock Purchase").
(Of the shares sold, UES Florida and Messrs. McNeight and Craven sold 745,743,
90,000, and 30,000 shares, respectively.) In connection with these transactions,
UES Florida, Messrs. McNeight and Craven and such other shareholder loaned to
the Company in April 1996, for working capital purposes, the sums of $646,294,
$78,000, $26,000 and $52,000, respectively, or an aggregate of $802,294 of the
proceeds realized from such sales, at an interest rate of 6% per annum. Such
amounts, plus accrued interest thereon, were repaid following the consummation
of the IPO with a portion of the IPO proceeds. At or following the time of the
March 1996 Stock Purchase, the private investors purchased an additional 155,322
shares from two other stockholders of the Company. In order to induce the
investors to purchase shares of Common Stock of the Company and thereby provide
UES Florida, Messrs. McNeight and Craven and the other shareholder lender with
funds which they loaned to the Company, the Company granted to the investors
certain "piggyback" registration rights to have their Common Stock registered
under the Securities Act of 1933, as amended. Accordingly, all 1,081,065 shares
of Common Stock acquired by the private investors were included in the
registration statement relating to the IPO.
SHAREHOLDER PROPOSALS
Shareholder proposals intended to be presented at the next annual
meeting of shareholders, to be held in 1998, must be received by the Company at
1615A West Nasa Boulevard, Melbourne, Florida 32901, Attention: Secretary by
September 30, 1997 to be included in the proxy statement and form of proxy
relating to that meeting.
AUDITORS
Representatives of KPMG Peat Marwick LLP are expected to attend the
Annual Meeting and, while they are not expected to make a statement, they will
have an opportunity to do so if they desire. They will also be available to
respond to appropriate questions.
OTHER INFORMATION
The cost of soliciting proxies will be borne by the Company. Following
the original mailing of proxy soliciting material, regular employees of the
Company may solicit proxies by mail, telephone, telegraph and personal
interview. Arrangements have been made with brokerage houses and other
custodians, nominees and fiduciaries which are record holders of the Company's
stock to forward proxy soliciting material and annual reports to the beneficial
owners of such stock, and the Company will reimburse such record holders for
their reasonable expenses incurred in providing such services. As of the date of
this Proxy Statement, the Company has not retained the services of a proxy
solicitor to assist in the solicitation of proxies.
A copy of the Company's Annual Report for the fiscal year ended
September 30, 1996 is enclosed.
- 12 -
<PAGE>
<PAGE>
OTHER MATTERS
The Board of Directors is aware of no other matters that are to be
presented to shareholders for formal action at the Annual Meeting. If, however,
any other matters properly come before the Annual Meeting or any adjournment
thereof, it is the intention of the persons named in the enclosed form of proxy
to vote such proxy in accordance with their judgment on such matters.
By Order of the Board of Directors,
William R. Craven
Secretary
Dated: Melbourne, Florida
January 28, 1997
- 13 -
<PAGE>
<PAGE>
ANNEX 1
PROXY PARAVANT COMPUTER SYSTEMS, INC.
PROXY SOLICITED BY THE BOARD OF DIRECTORS OF PARAVANT COMPUTER SYSTEMS, INC.
FOR THE ANNUAL MEETING OF SHAREHOLDERS -- FEBRUARY 27, 1997
The undersigned hereby appoints Richard P. McNeight, William R. Craven and
Kevin J. Bartczak, and each of them, as Proxies, each with full power of
substitution and resubstitution, to represent and to vote, as designated below,
all shares of Common Stock of Paravant Computer Systems, Inc. (the 'Company')
which the undersigned would be entitled to vote if personally present at the
Annual Meeting of Shareholders of the Company to be held at the Melbourne Beach
Hilton Oceanfront Hotel, 3003 U.S. Highway A1A, Indialantic, Florida 32903 at
10:00 A.M. (local time) on February 27, 1997, and at any adjournment or
postponement thereof.
1. Election of Directors
<TABLE>
<S> <C>
[ ] FOR all nominees listed below [ ] WITHHOLD APPROVAL to vote for all nominees listed
(except as marked to the contrary below) below
</TABLE>
Krishan K. Joshi, Richard P. McNeight, William R. Craven, James E. Clifford and
Michael F. Maguire
(INSTRUCTION: To withhold authority to vote for any individual nominee, write
that nominee's name in the space provided below)
- --------------------------------------------------------------------------------
2. In their discretion, the proxies are authorized to vote upon such other
business as may properly come before the annual meeting or any adjournment or
postponement thereof.
If no direction is given, this proxy will be voted FOR the election of the
nominees set forth in Proposal No. 1.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF THE NOMINEES
SET FORTH IN PROPOSAL NO. 1
TO BE VALID, THIS PROXY MUST BE SIGNED AND DATED ON THE REVERSE SIDE.
<PAGE>
<PAGE>
Please sign exactly as name appears
at left. When shares are held by
joint tenants, both should sign.
When signing as attorney, executor,
administrator, trustee or guardian,
please give your full title as
such. If a corporation, please sign
in full corporate name by president
or other authorized officer. If a
partnership, please sign in
partnership name by authorized
person.
Dated: ...........................
..................................
Signature
..................................
Signature
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS.
STATEMENT OF DIFFERENCES
The section symbol shall be expressed as ...'SS'
<PAGE>
