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AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON SEPTEMBER 3, 1998
REGISTRATION NO. 333-______
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
--------------------
PARAVANT COMPUTER SYSTEMS, INC.
(Exact name of Registrant as specified in its charter)
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<TABLE>
<S> <C>
FLORIDA 59-2209179
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
1615A WEST NASA BOULEVARD, MELBOURNE, FLORIDA 32901
(Address of Principal Executive Offices) (Zip Code)
</TABLE>
INCENTIVE STOCK OPTION PLAN
NON-QUALIFIED STOCK OPTION PLAN
NONEMPLOYEE DIRECTORS' STOCK OPTION PLAN
SPECIAL NON-QUALIFIED NON-PLAN STOCK OPTION AGREEMENTS
(Full title of the plans)
RICHARD P. MCNEIGHT
PARAVANT COMPUTER SYSTEMS, INC.
1615A WEST NASA BOULEVARD
MELBOURNE, FLORIDA 32901
(Name and address of agent for service)
(407) 727-3672
(Telephone number, including area code, of agent for service)
Copy to:
James Martin Kaplan, Esq.
Tenzer Greenblatt LLP
405 Lexington Avenue
New York, New York 10174
(212) 885-5000
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CALCULATION OF REGISTRATION FEE
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PROPOSED MAXIMUM
OFFERING PROPOSED MAXIMUM AMOUNT OF
TITLE OF SECURITIES TO BE REGISTERED AMOUNT TO BE REGISTERED(1) PRICE PER SHARE(2) AGGREGATE OFFERING PRICE(2) REGISTRATION FEE
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<S> <C> <C> <C> <C>
Common Stock, par value $.015 per
share 4,240,868 shares $1.689445568 $7,164,715.65 $2,113.59
====================================================================================================================================
</TABLE>
(1) Includes 1,938,382 shares of Common Stock offered pursuant to the reoffer
prospectus filed herewith (the "Reoffer Prospectus"). Of the shares of
Common Stock being registered hereunder, (i) an aggregate of 3,090,050
shares are reserved for issuance pursuant to options granted or available
for future grant under the Registrant's Incentive Stock Option Plan, the
Registrant's Non-Qualified Stock Option Plan, the Registrant's Nonemployee
Directors' Stock Option Plan and certain Special Non-Qualified Non-Plan
Stock Option Agreements (collectively, the "Plans"), including options to
acquire an aggregate of 787,564 shares of Common Stock granted to certain
affiliates of the Registrant, which shares are included in the Reoffer
Prospectus, (ii) an aggregate of 148,617 shares currently held by UES, Inc.
("UES"), the parent company of the Registrant prior to the Registrant's
June 1996 initial public offering (the "IPO"), are subject to certain
employee stock options granted by UES to certain affiliates of the
Registrant prior to the IPO (the "UES Options") and are included in the
Reoffer Prospectus, (iii) an aggregate of 743,079 shares were previously
acquired by certain affiliates of the Registrant upon exercise of UES
Options granted to them by UES prior to the IPO and are included in the
Reoffer Prospectus and (iv) an aggregate of 259,122 shares were previously
acquired by certain current and former affiliates of the Registrant upon
exercise of options granted to them under the Plans and are included in the
Reoffer Prospectus. Pursuant to Rule 416 of the Securities Act of 1933, as
amended (the "Act"), this Registration Statement also covers such number of
additional shares of Common Stock as may become available for issuance
pursuant to the Plans and the UES Options in the event of certain changes
in outstanding shares, including reorganizations, recapitalizations, stock
splits, stock dividends, reverse stock splits and similar transactions.
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<PAGE>
(2) Estimated solely for the purpose of calculating the registration fee. The
registration fee has been calculated in accordance with: (i) Rule 457(c) of
the Act with respect to the 743,079 shares held by the above-mentioned
affiliates of the Registrant as a result of the exercise of UES Options and
the 259,122 shares held by the above-mentioned current and former
affiliates and employees of the Registrant as a result of the exercise of
options granted under the Plans, based on the average of the high and low
prices of the Common Stock on September 1, 1998, which was $1.265625; and
(ii) Rule 457(h) of the Act, as follows: (I) in the case of 1,730,357
shares underlying options that remained available for grant under the Plans
on the date of filing of this Registration Statement, based on the average
of the high and low prices of the Common Stock on September 1, 1998, which
was $1.265625 and (II) in the case of 1,359,693 shares underlying options
outstanding under the Plans on the date of filing of this Registration
Statement and 148,617 shares underlying the UES Options outstanding on the
date of filing of this Registration Statement, based on the aggregate
exercise price of $3,706,321.93, the aggregate price at which the options
and the UES Options may be exercised, which averages $2.457268021 per
share.
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Explanatory Note:
The document containing the information called for in Part I of Form S-8
will be provided to participants in the Plans. Such information is not being
filed with or included in this Registration Statement in accordance with the
rules and regulations of the Securities and Exchange Commission (the
"Commission"). There is also included as part of Part I of this Registration
Statement a reoffer prospectus relating to the reoffer and resale of (i) up to
787,564 shares of Common Stock underlying options issued to certain affiliates
of the Registrant pursuant to the Registrant's Incentive Stock Option Plan, the
Registrant's Non-Qualified Stock Option Plan (which Plan has been terminated),
the Registrant's Nonemployee Directors' Stock Option Plan and certain Special
Non-Qualified Non-Plan Stock Option Agreements (collectively, the "Plans"),
(ii) up to 148,617 shares of Common Stock underlying employee stock options (the
"UES Options") granted to certain affiliates of the Registrant by UES Inc.
("UES"), the parent company of the Registrant prior to the Registrant's June
1996 initial public offering (the "IPO"), (iii) up to 743,079 shares of Common
Stock previously acquired by affiliates of the Registrant upon exercise of UES
Options granted to them by UES prior to the IPO and (iv) up to 259,122 shares of
Common Stock previously acquired by certain current and former affiliates and
employees of the Registrant upon exercise of options granted to them under the
Plans, in each case as permitted by General Instruction C to Form S-8.
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PARAVANT COMPUTER SYSTEMS, INC.
CROSS REFERENCE SHEET
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ITEM
NUMBER ITEM HEADING IN PROSPECTUS
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<S> <C> <C>
1. Forepart of Registration Statement and Outside
Front Cover Page of Prospectus.................... Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus..................................... Table of Contents; Available Information;
Documents Incorporated by Reference
3. Summary Information, Risk Factors and Ratio of
Earnings to Fixed Charges......................... Prospectus Summary; Risk Factors
4. Use of Proceeds................................... Use of Proceeds
5. Determination of Offering Price................... Not applicable
6. Dilution.......................................... Not applicable
7. Selling Security Holders.......................... Selling Securityholders
8. Plan of Distribution.............................. Plan of Distribution
9. Description of Securities to be Registered........ Not applicable
10. Interests of Named Experts and Counsel............ Not applicable
11. Material Changes.................................. Not applicable
12. Incorporation of Certain Information by
Reference......................................... Documents Incorporated by Reference
13. Disclosure of Commission Position on
Indemnification for Securities Act Liabilities.... Not applicable
</TABLE>
<PAGE>
<PAGE>
PROSPECTUS
1,938,382 Shares
PARAVANT COMPUTER SYSTEMS, INC.
Common Stock
(Par Value $.015 Per Share)
--------------------
This Prospectus relates to up to 1,938,382 shares (the "Shares") of
Common Stock, par value $.015 per share (the "Common Stock"), of Paravant
Computer Systems, Inc. (the "Company" or "Paravant"). The Shares registered
hereby include (i) up to 787,564 shares of Common Stock underlying options (the
"Affiliate Options") issued to certain affiliates of the Company pursuant to the
Company's Incentive Stock Option Plan, the Company's Non-Qualified Stock Option
Plan (which Plan has been terminated), the Company's Nonemployee Directors'
Stock Option Plan and certain Special Non-Qualified Non-Plan Stock Option
Agreements (collectively, the "Plans"), (ii) up to 148,617 shares of Common
Stock underlying employee stock options (the "UES Options") granted to certain
affiliates of the Company by UES Inc. ("UES"), the parent company of the Company
prior to the Company's June 1996 initial public offering (the "IPO"), (iii) up
to 743,079 shares of Common Stock previously acquired by certain affiliates of
the Company upon exercise of UES Options granted to them by UES prior to the IPO
and (iv) up to 259,122 shares of Common Stock previously acquired by certain
current and former affiliates and employees of the Company upon exercise of
options granted to them under the Plans. It is anticipated that the Shares will
be offered and sold by such individuals (the "Selling Securityholders") from
time to time in the over-the-counter market, or otherwise, at prices and terms
then prevailing or in negotiated transactions. The Company will receive none of
the proceeds from the sale of Shares by the Selling Securityholders hereunder.
All expenses of registration incurred in connection herewith are being borne by
the Company, but all selling and other expenses incurred by the Selling
Securityholders will be borne by the Selling Securityholders.
The proceeds received by the Company upon exercise of the Affiliate
Options will be approximately $2,252,986, assuming that all of such Affiliate
Options are exercised. However, there can be no assurance as to the number of
Affiliate Options, if any, which will be exercised. The Company will not receive
any of the proceeds from the exercise of the UES Options, or upon the resale by
any of the Selling Securityholders of any shares of Common Stock previously
acquired by them upon exercise of UES Options or options granted to them under
the Plans.
The sale of the Shares by the Selling Securityholders, or by pledgees,
donees, transferees or other successors in interest thereof, may be effected
from time to time in transactions (which may include block transactions) on the
Nasdaq National Market ("Nasdaq"), in the over-the-counter market or otherwise,
in private sales or in negotiated transactions, through the writing of options
on Shares, or a combination of such methods of sale, at fixed prices which may
be changed, at market prices prevailing at the time of sale, at prices related
to such prevailing market prices, or at negotiated prices. See "Selling
Securityholders" and "Plan of Distribution".
The Common Stock is listed on Nasdaq under the symbol "PVAT". On
September 1, 1998, the closing sale price per share of the Common Stock on
Nasdaq was $1.21875.
The address of the principal executive offices of the Company is 1615A
West Nasa Boulevard, Melbourne, Florida, 32901, and its telephone number at that
address is (407) 727-3672.
--------------------
THE SHARES OFFERED HEREBY ARE SUBJECT TO CERTAIN RISKS WHICH SHOULD BE
CAREFULLY CONSIDERED BY POTENTIAL INVESTORS. SEE "RISK FACTORS."
--------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES
AND EXCHANGE COMMISSION NOR HAS THE COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS. ANY REPRESENTATION
TO THE CONTRARY IS A CRIMINAL OFFENSE.
--------------------
The date of this Prospectus is September 3, 1998
<PAGE>
<PAGE>
AVAILABLE INFORMATION
Pursuant to the Securities Act of 1933, as amended (the "Securities
Act"), the Company has filed with the Securities and Exchange Commission (the
"Commission") a Registration Statement on Form S-8 (together with all amendments
and exhibits thereto, the "Registration Statement") of which this Prospectus is
a part. This Prospectus does not contain all the information set forth in the
Registration Statement, to which reference is hereby made for further
information. Statements made in this Prospectus as to the contents of any
contract, agreement or other document referred to are not necessarily complete.
With respect to each such contract, agreement or other document filed as an
exhibit to the Registration Statement, reference is hereby made to the exhibit
for a more complete description of the matter involved, and each such statement
shall be deemed qualified in its entirety by such reference. The Registration
Statement may be inspected and copies may be obtained from the Public Reference
Section at the Commission's principal office, 450 Fifth Street, N.W., Judiciary
Plaza, Washington, D.C. 20549, and at the New York Regional Office, 7 World
Trade Center, New York, New York 10048, upon payment of the fees prescribed by
the Commission.
The Company is subject to the requirements of the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and in accordance therewith is
required to file reports, proxy statements and other information with the
Commission. Such reports, proxy statements and other information filed with the
Commission by the Company can be inspected at the public reference facilities
maintained by the Commission at 450 Fifth Street, N.W., Washington, D.C. 20549,
or at the Regional Offices of the Commission located at Citicorp Center, 500
West Madison Street, Suite 1400, Chicago, Illinois 60661 and at 7 World Trade
Center, Suite 1300, New York, New York 10048. Copies of such materials can be
obtained from the Public Reference Section of the Commission at 450 Fifth
Street, N.W., Washington, D.C. 20549, at prescribed rates. In addition, the
Commission also maintains a Web site (http://www.sec.gov) that contains reports,
proxy and information statements and other information which have been filed
electronically with the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents filed with the Commission are incorporated into
this Registration Statement by reference:
(a) The Company's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1997;
(b) The Company's Quarterly Report on Form 10-QSB for the period ended
December 31, 1998;
(c) The Company's Quarterly Report on form 10-QSB for the period ended
March 31, 1998;
(d) The Company's Quarterly Report on Form 10-QSB for the period ended
June 30, 1998;
(e) The description of the Company's Common Stock, par value $.015 per
share, contained in the Company's Registration Statement on Form SB-2
(Registration No. 333-38279) filed with the Commission on October 20, 1997;
(f) The Company's Proxy Statement and Notice of Meeting relating to the
Special Meeting of Shareholders to be held on September 17, 1998, as filed with
the Commission on August 11, 1998; and
(g) All other reports filed by the Company pursuant to Section 13(a) or
15(d) of the Exchange Act since September 30, 1997.
All documents filed by the Company after the date of this Prospectus
pursuant to Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, prior to
the sale of all of the securities offered hereunder or the deregistration of all
such securities then remaining unsold, shall be deemed to be incorporated by
reference in this Prospectus and to be a part hereof from the date of filing of
such documents. Any statement contained in a document incorporated or
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deemed to be incorporated by reference herein shall be deemed to be modified or
superseded for purposes of this Prospectus to the extent that a statement
contained herein or in any other subsequently filed document which also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall not be deemed,
except as so modified or superseded, to constitute a part of this Prospectus.
The Company will provide without charge to each person, including any
beneficial owner of any of the Common Stock, to whom a copy of this Prospectus
has been delivered, upon the written or oral request of such person, a copy of
any and all of the documents referred to above which have been or may be
incorporated by reference in this Prospectus. Requests for such copies of any
document should be directed to William R. Craven, Secretary, 1615A West Nasa
Boulevard, Melbourne, Florida 32901, telephone number (407) 727-3672.
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<PAGE>
PROSPECTUS SUMMARY
Unless otherwise indicated, the information set forth in this
Prospectus gives effect to a three-for-one stock split of the Company's common
stock, par value $.045 per share ("Old Common Stock"), which was effected on
July 25, 1996 (the "Stock Split"). Pursuant to the Stock Split, each holder of
record of Common Stock on July 22, 1996 received two additional shares of Old
Common Stock for each share held on such date. In connection with the Stock
Split, the Company amended its Articles of Incorporation to decrease the par
value of its common stock from $.045 per share to $.015 per share, as a result
of which each share of Old Common Stock was converted into a share of common
stock, par value $.015 per share ("Common Stock"). In addition, in connection
with the Stock Split, the Company elected to effect a three-for-one split (the
"Warrant Split") of the Company's publicly traded redeemable warrants (the
"Warrants"), which Warrants originally represented the right to purchase one
share of Common Stock at an exercise price of $6.00 per share. As a result of
the Warrant Split, effective July 25, 1996, each holder of a Warrant thereafter
held, in lieu of one Warrant to purchase one share of Common Stock at an
exercise price of $6.00 per share, three Warrants, each to purchase one share of
Common Stock at an exercise price of $2.00 per share. Unless otherwise
indicated, the information set forth in this Prospectus gives effect to the
Warrant Split.
THE COMPANY
Paravant Computer Systems, Inc. (the "Company", "Paravant" or "PCS") is
a manufacturer of ruggedized, portable computers and communications interfaces
utilized in outdoor and medical settings. Paravant also offers extensive
customization services to modify its standard products to the specific needs of
end users. The Company's laptop and hand-held systems are designed and built to
function in adverse environments under harsh weather, climate and operational
conditions. Because the Company's products are insulated from temperature
extremes, flying debris, shock, vibration, moisture and humidity, they are able
to achieve high-level performance and reliability in difficult circumstances.
The Company's products are sold to U.S. and foreign military establishments,
other government agencies and commercial enterprises. In addition, the Company
has entered the medical market by selling to manufacturers of certain types of
implantable medical devices a computer device known as a "programmer," which
enables the implanted device to be externally reprogrammed.
MILITARY AND OTHER COMMERCIAL MARKETS. The hand-held and laptop
computers that the Company manufactures perform tasks and functions of an
extensive nature. In military applications, PCS's computers operate weapon
systems, provide radar displays, process incoming information, communicate with
other systems, train personnel in system's utilization and diagnose and maintain
equipment. In Raytheon's Hawk Anti-Aircraft Missile System, for example, PCS's
computers display radar information indicating the location of potential
targets, control the firing of missiles and serve as communicators of
information and orders. In the government and commercial areas, the Company's
products are used to collect, store, download and process data obtained in the
field. They are specifically utilized in environmental studies, land mapping and
surveys, oil exploration and medical testing.
The Company believes that it has several competitive advantages over
other companies selling similar products. Specifically, the Company believes
that, because it emphasizes ruggedization of its products from the selection and
design of components to assembly and encasement in sealed containers through the
extensive testing at various phases, it has achieved high levels of capability,
performance and reliability for its products. PCS also offers its customers
engineering services that modify its standard products for specialized
applications or provide complete integration of a variety of different
interfaces required for a specific application. Moreover, PCS's ability to
incorporate state-of-the-art communications interfaces into its products allows
computers to talk to one another and provide end-users with solutions to
important technical problems. Finally, the Company specializes in miniaturizing
electronic equipment, and, consequently, is able to place more computing power
or communications capability into smaller and lighter configurations. See "Risk
Factors", generally and "Risk Factors -- Competition".
Unlike PCS, PCS's competition typically does not design for
ruggedization from start to finish but rather purchases off-the-shelf computers
or electronics available in the commercial market and encases them in
protective, air-breathing boxes. These companies also generally do not provide
customization services, and furnish only limited communication capabilities for
their products, if at all. Naturally, given the higher levels of performance,
capability and reliability of PCS's computers, its products tend to be
substantially more expensive than those similar items offered by its
competitors. However, the Company generally does not manufacture the components
for its products. See "Risk Factors -- Competition."
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For the fiscal year ended September 30, 1997 and the nine months ended
June 30, 1998, approximately 95% and 97%, respectively, of PCS's total sales
were made, directly or indirectly, to the military market in the United States
and abroad. The remaining 5% and 3%, respectively, of its sales for such periods
were made to the government and commercial markets. Approximately 1% and 3%,
respectively, of its total sales for the same period were made by it directly to
foreign customers while additional sales of its products were made abroad by its
U.S. customers.
In the military market, the Company's customers include the Armed
Forces of the U.S. government, foreign governments and major aerospace companies
and prime military contractors, such as Raytheon Company, Lockheed Martin
Corporation and Texas Instruments. In regard to the government marketplace, PCS
has sold its products to the U.S. Environmental Protection Agency, the U.S.
Forestry Service, state Departments of Transportation and other government
agencies. In the commercial market, the Company's computers have been sold to
public utilities, timber and logging companies, surveyors, civil engineering
firms and railroads.
While the general trend in defense spending is toward reductions of
overall expenditures, current trends in U.S. military procurement and budgeting
policies appear to be favorable to the Company. In its attempt to economize, the
U.S. military tends to avoid expenditures on new large weapon systems and
special-function computers wherever possible. In contrast, much of the Company's
product emphasis is on upgrading and retro-fitting existing weapon systems in
order to increase their overall capabilities. In its product offerings, PCS also
stresses enhanced support for electronic warfare systems, diagnostics and
maintenance of military equipment as well as battlefield communications and data
processing. All of these areas are important to the U.S. military establishment
in its procurement policies and strategic plans. Finally, PCS's miniaturization
and customization capabilities, which make military electronic systems lighter
and more compact, lend themselves to greater application to military needs in
this age of rapid deployment of forces and equipment. Despite these factors, it
is uncertain whether continued downward trends in military spending may have
material adverse effects on the Company's future business. See "Risk Factors."
THE MEDICAL MARKET. The Company has begun designing and developing
computer devices known as "programmers" to be sold to manufacturers of certain
types of implantable medical devices, including drug delivery devices,
electroneurostimulators, defibrillators and ventricular assist devices.
Increasingly, such implantable devices are capable of being reprogrammed
externally by a programmer via a telemetry link, thereby enabling the physician
to alter the drug delivery rate or dispensing of medication. The Company
believes that many manufacturers of implantable devices would prefer to
outsource the design and production of these programmers, since the skills and
resources required to develop such programmers do not necessarily align with the
core competencies of the manufacturer -- i.e., the implant. To date, the Company
has secured development contracts with four manufacturers of implantable medical
devices in the implantable categories of drug pumps, neurostimulators,
defibrillators and ventricular assist devices. Although the Company believes
that, based on the reputation and experience it has developed in the military
market, it will be able to further penetrate the medical market by targeting
medical device manufacturers who, like the Company's military customers, require
expert electrical and mechanical engineering capabilities, strict documentation
control, adherence to multiple specifications and configuration control
management, there can be no assurance of such or that any programmers will be
successfully developed by the Company or, if developed, will meet with broad
market acceptance.
The Company was incorporated under the laws of the State of Florida in
June 1982. In June 1996, the Company consummated an initial public offering (the
"IPO") of Common Stock and Warrants.
The Company's principal executive offices are located at 1615A West
Nasa Boulevard, Melbourne, Florida 32901 and its telephone number is (407)
727-3672.
RECENT DEVELOPMENTS
PROPOSED ACQUISITION. On March 31, 1998, the Company announced that it
had entered into an agreement (the "Acquisition Agreement") to acquire
Engineering Development Laboratories, Incorporated ("EDL") and Signal Technology
Laboratories, Inc., EDL's majority-owned subsidiary ("STL" and, together with
EDL, "EDL-STL"). These privately-held affiliated companies are engaged in the
business of designing, developing and producing equipment to meet U.S. and
foreign government requirements. Pursuant to such agreement, which is subject to
approval by the Company's shareholders and certain other conditions set forth
therein, the Company will acquire all
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of the outstanding capital stock of EDL and substantially all of the business
and assets of STL, in consideration for which stock and assets the Company will
pay an aggregate consideration consisting of (i) approximately $8.7 million in
cash, (ii) three-year, $4.8 million notes bearing interest at the rate of 8% and
(iii) 3,950,000 shares of Common Stock (the "EDL-STL Acquisition"). In addition,
in connection with the EDL-STL Acquisition, a contingent cash earn-out will be
payable by the Company under specified circumstances over a period of up to five
years based on EDL-STL's future profits and, if paid, will be recorded as
additional compensation expense for the fiscal years ending September 30, 2000
to September 30, 2003. EDL, whose primary customers include the U.S. Air Force,
U.S. Navy and U.S. Marines and allied military forces, specializes in designing,
developing and producing avionics equipment used to modify the airborne
platforms employed by Special Operations forces. STL, whose customers include
several U.S. government agencies and government prime contractors, designs and
produces digital signal processing hardware, digital switch matrices for signal
routing purposes, and other products for signal enhancement and modification. It
is currently anticipated that the EDL-STL Acquisition, which is subject to
approval by the Company's shareholders and certain other conditions, will be
consummated on or about October 1, 1998; provided, however, that the parties
to the EDL-STL Acquisition have agreed that, by mutual agreement, the closing
date may be extended to a date not later than October 30, 1998 or, if necessary
to comply with certain regulatory requirements, to a date not later than
thirty-two days thereafter. Under the Acquisition Agreement, if the shareholders
of EDL-STL or the Company do not perform their respective obligations to
consummate the EDL-STL Acquisition, the non-performing party or parties would
be obligated to pay (or if the EDL-STL Acquisition is not approved by
shareholders of the Company pursuant to a vote in which any of the three
directors who are senior executive officers of the Company shall have not voted
all of his shares for approval of such Acquisition, the Company would be
obligated to pay) the other party liquidated damages of $1,000,000 plus certain
costs and expenses. A special meeting of the Company's shareholders at which the
shareholders will be asked to approve the EDL-STL Acquisition is currently
scheduled to be held on September 17, 1998 (the "Special Meeting of
Shareholders"). However, there can be no assurance that shareholder approval
will be obtained or that, if obtained, the EDL-STL Acquisition will be
consummated or, if consummated, that it will be consummated as currently
scheduled on October 1, 1998.
The Company intends to finance the cash portion of the consideration to
be paid by the Company in connection with the EDL-STL Acquisition. The Company
has received a conditional commitment from National City Bank, Dayton, Ohio for
floating rate financing in an amount up to $14,000,000 (the "EDL-STL Acquisition
Financing") under a revolving line of credit with a maturity date of December
31, 2001, convertible thereafter to five year term debt. Pursuant to the
conditional commitment, the rate of interest would be determined at a rate equal
to the Bank's prime rate, the federal funds rate or the LIBOR rate plus a margin
which ranges from 1.5% to 2% based on the debt to tangible net worth ratio at
the beginning of the applicable LIBOR rate contract period. The Company may
elect among the rates based upon conditions on the dates upon which funds are
drawn. The EDL-STL Acquisition Financing would be secured by a first security
interest in accounts, contract rights, inventory, equipment and other security
reasonably requested by the lender. It is anticipated that the loan agreement
applicable to the EDL-STL Acquisition Financing will include various loan
covenants and restrictions of a customary nature. Such covenants and
restrictions, while the EDL-STL Acquisition Financing is outstanding, under
certain circumstances, may limit the ability of the Company to pay cash
dividends, undertake additional acquisitions, make certain changes in the
Company's management, or otherwise limit obligations undertaken by, or
operations of, the Company. The Company anticipates obtaining the line of credit
immediately preceding the closing of the EDL-STL Acquisition. The ability of the
Company to close the EDL-STL Acquisition is dependent upon the Company's
obtaining the EDL-STL Acquisition Financing or other financing in a comparable
amount from another source. Under the terms of the acquisition agreement
relating to the EDL-STL Acquisition, the availability of the EDL-STL Acquisition
Financing is not a condition to the Company's obligation to close the
transaction.
In the event the EDL-STL Acquisition is consummated, the Company's
operations will become subject to certain additional risk factors related
thereto, which risk factors are described herein under "Risk Factors --
Additional Risks Related to the Proposed EDL-STL Acquisition."
A copy of the Acquisition Agreement has been included as an exhibit to
this Registration Statement, and the foregoing summary of certain terms and
provisions of the Acquisition Agreement is qualified in its entirety by
reference to the full text of the Acquisition Agreement. In addition, a more
detailed description of the EDL-STL Acquisition (including, without limitation,
a description of the background of and reasons for the EDL-STL Acquisition as
well as a description of the business of each of EDL and STL) is set forth in
the Company's Proxy Statement relating to the Special Meeting of the
Shareholders, which was filed with the Commission on August 11,
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1998. Copies of such Proxy Statement may be obtained from the Commission in the
manner described under the heading "Available Information."
PROPOSED NAME CHANGE. Consistent with the long range plans of the Board
of Directors to further diversify the business activities of the Company in the
defense, communications and related electronics industry, the Board has
recommended a change in the name of the Company from Paravant Computer Systems,
Inc. to Paravant Inc. in order to present a corporate identity which is not
limited solely to the Company's present core business. If the proposal to change
the name of the Company is approved at the Special Meeting of Shareholders, the
name change will be implemented by filing a name change amendment to the
Company's articles of incorporation within thirty days after such meeting.
ISO-9001 CERTIFICATION. On March 27, 1998, the Company's manufacturing
and assembly facilities and procedures were certified as being in compliance
with the quality and assurance standards of ISO-9001, an international standard
promulgated by the International Organization for Standardization, a worldwide
federation of standards bodies from approximately 100 countries. These standards
have been adopted by the European Economic Community as their preferred quality
standards and, to some degree, by the U.S. Department of Defense and the U.S.
Food and Drug Administration (the "FDA"). The Company believes that such
certification will enable it to increase its marketing opportunities in the
domestic and international military markets for ruggedized computers as well as
in the medical market for the Company's "programmers," although there can be no
assurance of such.
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THE OFFERING
<TABLE>
<S> <C>
Common Stock offered by the
Selling Securityholders.................................... 1,938,382 shares
Common Stock to be outstanding
after the Offering......................................... 9,131,492 shares (1)
Nasdaq symbol................................................ PVAT
Use of proceeds.............................................. Any and all Shares which may be sold pursuant to
this Prospectus will be sold by the Selling
Securityholders for their own accounts. The
Company will receive none of the proceeds from
the sale of Shares. The proceeds received by the
Company upon exercise of Affiliate Options by the
Selling Securityholders who hold such Affiliate
Options will be approximately $2,252,986, assuming
that all of such Affiliate Options are exercised.
However, there can be no assurance as to the
number of Affiliate Options, if any, which will be
exercised. Management anticipates that the net
proceeds of Affiliate Option exercises, if any, will
be allocated to working capital and general
corporate purposes, which will be applied, to the
extent necessary, to the Company's operations. The
Company will not receive any of the proceeds from
the exercise of UES Options by the holders thereof.
Risk Factors................................................. The securities offered hereby are speculative and
involve a high degree of risk and immediate
substantial dilution to investors, and should not be
purchased by investors who cannot afford the loss
of their entire investment. In addition, in the event
the EDL-STL Acquisition is consummated, the
Company's future operations will become subject to
certain additional risk factors related thereto. See
"Risk Factors" and "Dilution."
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(1) Based on 8,343,938 shares of Common Stock outstanding as of September 1,
1998, including (i) 148,617 shares of Common Stock underlying outstanding
UES Options, which shares are held by UES, (ii) 743,079 shares previously
acquired by certain affiliates of the Company upon exercise of UES Options
granted to them prior to the IPO and (iii) 259,122 shares of Common Stock
previously acquired by certain current and former affiliates and employees
of the Company upon exercise of options granted to them under the Plans.
Does not include (i) 572,129 shares of Common Stock issuable upon the
exercise of stock options (other than the Affiliate Options) outstanding
under the Plans at the date of this Prospectus, (ii) 1,730,357 shares of
Common Stock reserved for issuance upon exercise of stock options available
for future grant under the Plans, (iii) 5,089,803 shares of Common Stock
issuable upon the exercise of 5,089,803 Warrants outstanding as of September
1, 1998, (iv) 480,000 shares of Common Stock issuable upon the exercise of
warrants (the "Bridge Warrants") issued in connection with the Company's
August 1995 bridge financing (the "Bridge Financing"), (v) 288,000 shares of
Common Stock issuable upon the exercise of warrants (the "Underwriter's
Warrants") issued to Duke & Co., the underwriter engaged by the Company in
connection with the IPO (the "Underwriter"), and one of its designees, and
(vi) 47,982 shares of Common Stock underlying Warrants issuable upon
exercise of the Underwriter's Warrants. Also excludes an aggregate of
3,950,000 shares of Common Stock to be issued pursuant to the Acquisition
Agreement in the event the EDL-STL Acquisition is consummated.
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RISK FACTORS
An investment in the securities offered hereby is speculative in
nature, involves a high degree of risk and should only be made by investors who
can afford the loss of their entire investment. Prospective investors should
give careful attention to these risk factors, as well as to the other
information described elsewhere in this Prospectus, including the financial
statements and notes thereto, in evaluating the Company, its business and
management before making a decision to purchase the Common Stock. In addition to
the risks discussed below, businesses, including the Company's, are often
subject to risks not foreseen, anticipated or appreciated by its management.
This Prospectus contains certain "forward-looking statements" within
the meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements other than statements of historical information provided
herein are forward-looking statements and may contain information about
financial results, economic conditions, trends and known uncertainties. Actual
results could differ materially from those projected in the forward-looking
statements as a result of the risk factors set forth below and elsewhere in this
Prospectus, including but not limited to the budgetary and appropriations
policies of the Company's governmental customers, the competitive environment
for the Company's products and services, the timing of new orders and the degree
of market penetration of the Company's new products.
Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management's analysis, judgment,
belief or expectation only as of the date hereof. The Company undertakes no
obligation to publicly revise these forward-looking statements to reflect events
or circumstances that arise after the date hereof. In addition to the disclosure
contained herein, readers should carefully review any disclosure of risks and
uncertainties contained in other documents the Company files or has filed from
time to time with the Securities and Exchange Commission pursuant to the
Exchange Act.
SUBSTANTIAL DEPENDENCE UPON MILITARY SALES
The majority of PCS's sales have historically been to the United
States military, foreign military or military suppliers. The Company's future
success, if any, is highly dependent on the continued purchase by the military
of its portable computers or equipment manufactured by others which contain its
devices. For the fiscal years ending September 30, 1997 and 1996 and for the
nine months ended June 30, 1998 and 1997, direct and indirect sales of the
Company's products to the U.S. Department of Defense and foreign governments
represented approximately 95%, 96%, 97% and 95%, respectively, of its sales.
Attempts to reduce military expenditures have commenced worldwide for a
multitude of reasons, including budget deficit reduction and a perceived easing
of global tensions.
For the past several years, the uncertain defense budget situation has
caused delays in contract awards and reduced funding for various military
programs. Management expects that these downward trends will continue through
1999. Notwithstanding the foregoing, most of PCS's product sales to the U.S.
military have either been unaffected by such reductions in military spending or
have benefitted from increases in such funding. Management believes that this
has occurred because its products are often used for upgrades or retrofits of
existing military devices, electronic warfare systems, portable diagnostic and
maintenance equipment, lighter systems for rapid deployment and digitization of
the battlefield. However, although to date the Company has generally not been
adversely affected by delays in contract awards or reductions in spending, there
can be no assurance that any future delays or reductions will not have a
material adverse effect on the Company's business.
Recent announcements from the U.S. Congress and Defense Department
indicate that overall defense spending may stabilize or increase modestly;
however, it is extremely difficult to predict the amount or pattern of such
spending. Management believes that in the foreseeable future military spending
on new weapon systems will continue to be restricted to research and development
of military hardware already under development and to limited production of such
systems. During this period, the Company anticipates that the U.S. military will
still emphasize the upgrading, repair and extended use of older systems.
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One example of the U.S. military's deferring expenditures on new
weapon systems involves its handling of the F-16 and F-22 fighter planes.
Instead of replacing F-16's with the newer F-22's, the military has, in its
economizing efforts, sought to continue the F-16's in service for longer
periods. As a consequence, PCS's sales of its portable computers to Lockheed
Martin Corporation as part of that company's upgraded electronic maintenance
systems for F-16's actually increased in 1997 and 1998. Should the U.S. military
alter this policy and seek full-scale production of the F-22 planes, sales of
the Company's computers for such maintenance systems will, in all likelihood,
decrease.
In an effort to reduce expenses, the U.S. military has increased its
efforts to purchase commercial off-the-shelf computers for all applications,
including certain of the applications served by the Company's ruggedized
computers. Although management believes that the U.S. military will continue to
have a need for the Company's customized and ruggedized computer products, there
can be no assurance of such. Rather, the U.S. military may elect to purchase
off-the-shelf products exclusively or substantially reduce its purchases of
ruggedized computers. Any such elimination or substantial reduction of purchases
by the U.S. military of the Company's ruggedized computers would have a material
adverse effect on the Company's primary market and would therefore have a
significant adverse effect on the Company's business and prospects.
COMPLIANCE WITH REGULATORY OPERATIONAL STANDARDS
The Company's manufacturing and assembly facilities and procedures
have been certified as being in compliance with the quality and assurance
standards of ISO-9001, an international standard promulgated by the
International Organization for Standardization, a worldwide federation of
standards bodies from approximately 100 countries. These standards have been
adopted by the European Economic Community as their preferred quality standard
and, to some degree, by the U.S. Department of Defense and the FDA. The Company
has also obtained approval from the FDA to function as a contract manufacturer
for manufacturers of certain medical products. The Company believes that its
ISO-9001 certification will enable the Company to increase its marketing
opportunities in the domestic and international military markets for ruggedized
computers as well as in the medical market for the Company's "programmers,"
although there can be no assurance of such. Any failure by the Company to
maintain its compliance with such standards could prevent its expansion in such
markets and could have a material adverse effect on its direct and indirect
sales to the U.S. military as well as to certain foreign customers. Likewise,
any failure by the Company to maintain its FDA approval could materially and
adversely affect its sales in the medical market and its ability to expand into
such market.
GOVERNMENT REGULATION AND CONTRACTS
Commercial enterprises engaged primarily in supplying equipment and
services, directly or indirectly, to the United States government are subject to
special risks such as dependence on government appropriations, termination
without cause, contract renegotiation and competition for the available
Department of Defense ("DoD") business. PCS has no material DoD contracts,
however, that are subject to renegotiation in the foreseeable future and is not
aware of any proceeding to terminate material DoD contracts in which it may be
indirectly involved. In addition, many of the Company's contracts provide for
the right to audit its cost records and are subject to regulations providing for
price reductions if inaccurate cost information was submitted by PCS. See "Risk
Factor -- Competition."
DEPENDENCE ON MAJOR CUSTOMERS
The Company's business is substantially dependent on a relatively
small number of customers and DoD programs. In the fiscal years ended September
30, 1997 and 1996 and the nine months ended June 30, 1998, Raytheon Company's
Missile Systems Division (46%, 49% and 49%, respectively) and Lockheed Martin
Corporation (36%, 21% and 28%, respectively) accounted for an aggregate of 82%,
70% and 77%, respectively, of PCS's total sales. The loss of Raytheon or
Lockheed Martin as a customer could have a material adverse effect on PCS's
results of operations or financial condition. In recent years, there have been a
number of consolidations of various prime contractors serving the defense
industry. To date, the Company has not been adversely affected by any such
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consolidations and the Company does not anticipate that consolidations of
contractors will negatively impact the Company, although there can be no
assurance of such.
As of June 30, 1998, the Company's backlog was $9,367,564, consisting
of firm fixed price purchase orders, 77% of which was represented by large
orders from two customers: Medtronic, Inc. (61%), Raytheon Company (16%). The
remaining 23% of such backlog represented orders from approximately 9 other
customers. The Company currently expects to manufacture and deliver $7,913,503
of the products in backlog within the next 12 months, and to complete the
remaining $1,454,061 of products in backlog over the next 24 months. Although
all of the purchase orders included in the Company's backlog are expected to
generate profits within the Company's historical levels, there can be no
assurance of such. In addition, although the Company believes that the
completion of the orders constituting its backlog, and any new orders which may
be accepted by the Company in the future, should not result in additional
liquidity pressures that cannot be addressed in a manner consistent with the
Company's past practices, there can be no assurance that such completion of the
Company's backlog will not have a material adverse effect on the Company's
liquidity or financial condition. Likewise, the loss or diminution of orders
from any large customer or group of customers could have a substantial adverse
effect on the Company's business and prospects.
TECHNOLOGICAL OBSOLESCENCE OR FAILURE AND UNCERTAIN MARKET ACCEPTABILITY
The markets served by the Company are characterized by rapid
technological advances, changes in customer requirements and frequent new
product introductions and enhancements. PCS's business requires substantial
ongoing research and development efforts and expenditures, and its future
success will depend in large measure on its ability to enhance its current
products and develop and introduce new products that keep pace with
technological developments in response to evolving customer requirements.
Nevertheless, while the Company is under pressure to introduce new products
which embody recent technology, the Company is under less pressure than computer
companies serving either commercial markets or commercial applications within
the military. The Company's military customers buy the Company's products for
use in rugged tactical applications and place a high premium on low risk in
terms of performance and complete configuration control (i.e., once a specific
product configuration is selected, military customers often do not want the
product to change in order to ensure absolute software compatibility as well as
to ensure that spare parts and trained personnel will be able to consistently
and reliably support the products in the field for years). Typically, the
Company will trail the commercial market in terms of technology and the
Company's experience to date is that this is usually acceptable to the
risk-averse engineering community which the Company serves, since the customer
is afforded the opportunity to purchase "proven" technology. Many older
customers continue to buy the old product configurations and even new customers
sometimes adopt the older design products. However, most new customers start
buying the Company's most recently introduced products but will then want to buy
the identical product configuration over an extended period of time. Likewise,
in the medical market, the Company believes that, while it may be under pressure
to introduce new products which incorporate recent technology, the Company's
medical customers will seek to purchase "proven" technology and will not wish to
experience changes in the products selected. Accordingly, while the Company is
under continuing pressure to design new products, it is not under the same
degree of intense pressure as companies in the commercial market to offer the
latest technologies well ahead of its competitors. There can be no assurance,
however, that in the future the Company's failure to anticipate or respond
adequately to technological developments and changing customer requirements, the
occurrence of significant delays in new product development or introduction or
the technological failures of its products or the systems in which they are
incorporated would not result in a material loss of anticipated future revenues
and seriously impair PCS's competitiveness.
In addition, PCS may misgauge market needs and introduce products that
fail to gain the necessary market acceptance due to a variety of factors,
including pricing. Hence, it is also uncertain whether new products or
enhancements of existing products can be successfully marketed and sold by the
Company.
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RISKS OF FOREIGN SALES
For the fiscal years ended September 30, 1997 and 1996 and the nine
months ended June 30, 1998 and 1997, the Company derived approximately 1%, 18%,
3% and 1% of its total sales, respectively, from foreign markets. Although
foreign sales do not currently represent a significant portion of the Company's
revenue, such sales may represent a greater portion of the Company's future
revenues, although there can be no assurance of such. In addition, foreign sales
of Paravant products by both Raytheon and Lockheed Martin represent an important
percentage of their past and present sales opportunities. Foreign sales are
subject to numerous risks, including political and economic instability in
foreign markets, restrictive trade policies of foreign governments, inconsistent
product regulation by foreign agencies or governments, currency valuation
variations, exchange control problems, the imposition of product tariffs and the
burdens of complying with a wide variety of international and U.S. export laws
and differing regulatory requirements. To date, the Company's foreign sales have
been transacted in U.S. dollars and payments have generally been supported by
letters of credit. To the extent, however, that any future foreign sales are
transacted in a foreign currency or not supported by letters of credit, PCS
would also be subject to possible losses due to foreign currency fluctuations
and difficulties associated with collection of accounts receivable abroad.
SEASONALITY, COST OVERRUNS AND LONG SALES CYCLE
Because so much of its sales are related to the U.S. military and
government procurement, the Company's business is greatly influenced by the
timing of such purchases. Many U.S. military and government purchasing decisions
tend to be effectuated in the last portion of the Federal government's fiscal
year. As a consequence, a gradual increase of the Company's sales develops
during its first three quarters, but most sales actually occur in its fourth
quarter ending September 30th each year to correspond with such government
purchase decisions. This unevenness in sales generation and development can
exert significant pressure on management's capabilities and the Company's
resources. Although at times PCS has experienced strains on, and shortages of,
working capital resulting from such seasonality, the impact of such seasonality
has been significantly reduced in the fiscal years ending September 30, 1997 and
1998 as a result of the Company's increased backlog and revenues. However, there
can be no assurance that the adverse impact on the Company's working capital and
other resources resulting from the seasonality associated with U.S. military and
government purchases will not recur in the future.
For the most part, the Company enters into the equivalent of fixed
price contracts with its customers for the sales of its computer products and
engineering services. In the event that PCS has not properly estimated the costs
in advance of such sales or undergoes unforeseen difficulties in developing or
producing the products or services, its costs may exceed the prices previously
agreed upon or may be so great as to narrow significantly its expected profit
margins. Although the Company has not historically experienced cost overruns,
such cost overruns may in the future have a material adverse impact on the
Company's business and its profitability.
On the military side of its business, the Company often experiences a
lengthy sales cycle that, from beginning to end, may run for as many as five
years in some cases. There are generally a number of crucial points in this
cycle, including the identification of a product need in a military program, the
retention of the prime contractor, retention of subcontractors for each element,
assembly of elements for prototype systems, testing of such systems, funding for
production runs of the systems and execution of the production contracts for the
prime contractor and the sub-contractors. Not only does this cycle take a long
time, but it is also susceptible to failure at each crucial point.
In addition, the Company will also experience a lengthy sales cycle
with respect to its medical-related computer products, primarily due to the
length of time required to obtain approval of such products from the FDA. In
developing programmers for implantable medical device manufacturers, the Company
must first design each particular programmer based on the unique specifications
of the particular manufacturer with respect to its implantable medical device.
Once the programmer has been tested and approved by the manufacturer, the
manufacturer must thereafter submit the complete implantable device, including
the Company's programmer, for FDA approval, which can take from three to
eighteen months. Any delays in obtaining FDA approval for any such devices,
whether resulting from the portion of the device relating to the Company's
programmer or from the portion of the
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device developed by the manufacturer of the implantable device, could have a
material adverse effect on the Company's business and operations.
Consequently, the Company can and does invest heavily in time, money
and manpower to obtain subcontracts for military production runs on its products
and will invest heavily in time, money and manpower to design and implement its
medical computer products. In the final analysis, such investments may yield no
business at all or may take so long to develop that PCS's resources are strained
or other more profitable opportunities are missed.
COMPETITION
The Company competes in the rugged portable computer business with a
wide variety of computer manufacturers and repackagers, many of which are
larger, better known and have more resources in finance, technology,
manufacturing and marketing. PCS competes on the basis of customization
capabilities, price, performance, delivery and quality. In many situations, the
Company will not be the lowest-priced bidder.
Because a large portion of PCS's business is military-related, the
procurement procedure for militarized computers -- i.e., Indefinite Delivery,
Indefinite Quantity ("IDIQ") contracts -- could have a material adverse impact
on the Company's efforts to sell its computers to the U.S. military. IDIQ
represents large bulk purchasing of commercial and militarized computers. With
only a small portion of computers purchased being militarized, these large
umbrella contracts offer the U.S. government the lowest prices, but usually each
reaches hundreds of millions of dollars. As a result, only large companies can
afford to bid on these contracts, and smaller companies, like PCS, can be easily
locked out of the process unless they have formed strategic alliances with a
larger successful company or unless other means to avoid the impact of IDIQ's
are found. For the last five years, the Company has been able to sell its
computers to the U.S. military notwithstanding the IDIQ requirements because
such computers fall into product categories not currently covered by IDIQ
requirements. However, there can be no assurance that such IDIQ requirements
will not in the future have a material adverse effect on the Company's ability
to sell its computers to the U.S. military.
In the military and government markets, the Company will often be
engaged, directly or indirectly, in the process of seeking competitive bid or
negotiated contracts with government departments and agencies. These government
contracts are subject to specific rules and regulations with which the Company
may have difficulty complying. In most cases, the Company tends to be the high
priced bidder for military bids since, among other reasons, the Company designs
its computers on an overall basis to assure their ruggedness and use in the
worst circumstances and, therefore, employs more expensive components than its
competitors and makes extensive modifications and refinements of its computers
to meet the specifications and special needs of its customers. As a result, the
Company is occasionally one of only a few companies whose products meet the
required specifications designated by such customers.
In the medical market, the Company believes that many medical device
manufacturers either design and produce their own medical support devices such
as reprogrammers or hire a design consultant to design such devices and contract
with a third party to manufacture the devices. Although the Company believes
that it will compete based on its ability to offer a full design and production
service to medical device manufacturers, there can be no assurance of such, or
that the Company will be able to compete successfully with other computer
manufacturers who provide similar design and production services to medical
device manufacturers.
DEPENDENCE UPON KEY PERSONNEL AND ATTRACTION OF QUALIFIED PERSONNEL
The Company is highly dependent on the services of Richard P.
McNeight, its President and Chief Operating Officer. The Company has entered
into an employment contract with him effective through December 31, 1999. The
Company has also obtained "key-man" term insurance in the amount of $1,500,000
on his life. The loss of Mr. McNeight's services to the Company could materially
and adversely affect its business and operations.
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In recent years, as PCS's business has improved and Mr. McNeight has
assumed more day-to-day management responsibilities, Krishan K. Joshi, PCS's
Chairman and Chief Executive Officer, has spent considerably more of his time
managing the Company's acquisition opportunities. Management believes that Mr.
Joshi's diminished role with respect to the day-to-day operations of the Company
has not had, and will not have in the future, any adverse effects on the
Company's operations or financial condition.
Competition for qualified employees is intense, and the loss of any
such person or the inability to locate, attract, retain and motivate qualified
personnel required for the expansion of PCS's activities could materially and
adversely affect its business and operations. There can be no assurance that PCS
will be successful in this regard or, if successful, that the services of such
personnel can be secured on terms deemed favorable to it.
RELIANCE ON SUB-CONTRACTORS AND SUPPLIERS
The Company subcontracts the fabrication of its computer boards to a
few third party manufacturers. It purchases the metal cases, hard disk drives,
brackets, window panels and the keyboards for its portable computers from sole
sources such as Distec, Xcel and HiTech. PCS also licenses its software from
sole sources, including MicroSoft, Phoenix Technology, Magnavox and JFK
Associates. Many of its other components are furnished by outside suppliers.
Except for its software suppliers, it does not have written agreements with any
of these subcontractors or suppliers. This reliance on a few subcontractors,
sole sources and other suppliers can result, and has in the past resulted, in
some delays in deliveries as well as quality control and production problems. In
an attempt to minimize such problems, the Company has developed and keeps an
inventory of parts that are generally more difficult to obtain. However, any
interruption, suspension or termination of component deliveries from the
Company's suppliers could have a material adverse effect on its business.
Although management believes that in nearly every case alternative sources of
supply can be located, inevitably a certain amount of time would be required to
find substitutes. During any such interruption in supplies, the Company may have
to curtail the production and sale of its computers for an indefinite period.
Accordingly, any such interruption, suspension or termination of component
deliveries could have a material adverse effect on the Company's business.
NO ASSURANCE AS TO PROTECTION OF INTELLECTUAL PROPERTY; DEPENDENCE ON
INTELLECTUAL PROPERTY
The Company has no patent or copyright protection on its products. Its
ability to compete effectively with other companies will depend, in part, on its
ability to maintain the proprietary nature of its technologies. PCS intends to
rely substantially on unpatented proprietary information and know- how, and
there can be no assurance that others will not develop such information and
know-how independently or otherwise obtain access to its technology. In
addition, although management believes that the Company's technology does not
infringe patents or other rights owned by others, there can be no assurance that
third parties will not assert infringement claims against the Company in the
future or be successful in asserting such claims, as a result of which the
Company could be put in a position where it would be unable to license such
technology at a reasonable cost.
POSSIBLE PRODUCT LIABILITY
The risk that the Company's products may malfunction and cause a loss
of or error in data, loss of man hours, damage to, or destruction of, equipment
or delays is significant. Consequently, PCS, as a manufacturer of such
computers, may be subject to claims if such malfunctions or breakdowns occur.
The Company is not aware of any past or present claims against it. While PCS
presently maintains product liability insurance of $1,000,000, it cannot be
certain that such coverage will be adequate to satisfy future claims, if any.
In connection with products developed by the Company for sale in the
medical market, the Company requires that its contracts with its medical device
customers include provisions requiring such customers to indemnify the Company
or provide insurance for any claims brought against the Company as a result of
any malfunctions in the programmable devices sold by such customers. There can
be no assurance that any such indemnification or insurance will satisfy future
claims, if any. In addition, there can be no assurance that the Company will be
able
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to secure such provisions in future contracts with medical device manufacturers
or any future medical industry customers.
POSSIBLE NEED FOR ADDITIONAL FINANCING
The Company anticipates that the Company's existing working capital
and anticipated cash flow from the Company's operations, together with the
proceeds from the exercise of any Affiliate Options or other outstanding options
or warrants and the proceeds of the EDL-STL Acquisition Financing (or similar
financing) to fund the cash portion of the EDL-STL Acquisition and the future
operations of the acquired companies, will be sufficient to satisfy the
Company's cash requirements for at least twelve months. In the event the
Company's plans change (due to unanticipated expenses or difficulties or
otherwise), or if the Company's existing working capital and projected cash flow
otherwise prove insufficient to fund operations, the Company could be required
to seek additional financing sooner than currently anticipated. Except for the
Company's current bank loans and the EDL-STL Acquisition Financing, the Company
has no current arrangements with respect to, or sources of, additional
financing. Accordingly, there can be no assurance that additional financing will
be available to the Company when needed, on commercially reasonable terms, or at
all. The Company's inability to obtain such additional financing could have a
material adverse effect on the Company's long-term liquidity and on the proposed
business expansion plans of the Company.
ADDITIONAL RISKS RELATED TO THE PROPOSED EDL-STL ACQUISITION
As described elsewhere herein, the Company has entered into the
Acquisition Agreement, pursuant to which, subject to approval by the Company's
shareholders and certain other conditions set forth in the Acquisition
Agreement, the Company will purchase all of the outstanding capital stock of
EDL, a privately-held company which specializes in designing, developing and
producing avionics equipment used to modify the airborne platforms employed by
Special Operations forces, and substantially all of the business and assets of
STL, a privately-held company and majority-owned subsidiary of EDL which designs
and produces digital signal processing hardware, digital switch matrices for
signal routing purposes and other products for signal enhancement and
modification. It is currently anticipated that the EDL-STL Acquisition will be
consummated on or about October 1, 1998; however, there can be no assurance that
shareholder approval of the EDL-STL Acquisition will be obtained or that, if
obtained, the EDL-STL Acquisition will be consummated or, if consummated, that
it will be consummated as currently scheduled on October 1, 1998. In the event
the EDL-STL Acquisition is consummated, the Company's future operations will
become subject to certain additional risk factors related thereto, including the
following: (i) the fact that, during recent periods, the revenue and earnings of
EDL and STL were materially higher than those of earlier periods and that, in
evaluating the results of operations for such recent periods in relation to
those of prior periods and reasonable expectations for periods following the
consummation of the EDL-STL Acquisition, management may not have adequately
discounted its evaluation of recent periods, with the result that the EDL-STL
Acquisition could be less favorable to the Company and its shareholders than
anticipated by management; (ii) following the consummation of the EDL-STL
Acquisition, the Company may not be able to obtain the required consent of third
parties to transfer a major portion of the customers and business of STL to the
Company; (iii) the continuing successful operation of the businesses of EDL and
STL following the consummation of the EDL-STL Acquisition will largely depend on
the Company's retaining key management personnel of EDL and STL; (iv) the
Company may experience difficulties in assimilating the acquired businesses into
its business, and the process of combining the acquired businesses may cause an
interruption of, or a loss of momentum in, the Company's business; (v) the
issuance by the Company of 3,950,000 shares of Common Stock to the shareholders
of EDL and STL in connection with the EDL-STL Acquisition will cause dilution in
the ownership interest of the Company's existing shareholders, and the ownership
of such shares of Common Stock by the shareholders of EDL and STL following the
consummation of the EDL-STL Acquisition will provide them with the ability to
exercise substantial influence in the election of directors and other matters
submitted for approval by the Company's shareholders; and (vi) the EDL-STL
Acquisition may have a dilutive effect on the future book value per share and
earnings per share of the Company in the event the results achieved by the
Company following the acquisition of EDL and STL are less favorable than the
results which could have been achieved by the Company on a stand-alone basis.
-15-
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<PAGE>
RISKS ASSOCIATED WITH POSSIBLE FUTURE ACQUISITIONS
In addition to its internal growth strategies, the Company intends to
evaluate, on an ongoing basis, potential acquisitions of, or investments in,
businesses or assets which the Company believes will complement or enhance its
existing business and operations. While the Company regularly evaluates possible
acquisition opportunities, as of the date of this Prospectus the Company has no
current agreements, commitments, understandings or arrangements with respect to
any potential acquisition other than the EDL-STL Acquisition. There can be no
assurance that the EDL-STL Acquisition or any future acquisitions by the Company
will be successful or improve the Company's operating results. In addition, the
Company's ability to complete acquisitions will depend on the availability of
both suitable target businesses and acceptable financing. Any future
acquisitions, including the EDL-STL Acquisition, may result in a potentially
dilutive issuance of additional equity securities, the incurrence of additional
debt or increased working capital requirements. Any such acquisition may also
result in earnings dilution, the amortization of goodwill and other intangible
assets or other charges to operations, any of which could have a material
adverse effect on the Company's business, financial condition or results of
operations. Such acquisitions could involve numerous risks, including, without
limitation, difficulties in the assimilation of the operations, products,
services and personnel of any acquired company and the diversion of management's
attention from other business concerns. Although the Company will endeavor to
evaluate the risks inherent in a particular acquisition, there can be no
assurance that the Company will properly ascertain or assess all significant
risk factors prior to consummating any acquisition.
YEAR 2000 COMPLIANCE
The Company has conducted a comprehensive review of its
computer systems to identify any systems that could be affected by the "Year
2000" issue. The Year 2000 problem is the result of computer programs being
written using two digits rather than four to define the applicable year. Any
programs that have time-sensitive software may recognize a date using '00' as
the year 1900 rather than the year 2000. This could result in a major systems
failure or miscalculations. The Company has determined the Year 2000 problem
will not pose any operational problems for the Company's computer systems or
result in any material expense for the Company, as all programs currently being
used have already been modified or converted. However, the Company is still in
the process of assessing the potential effect on the Company should a
significant vendor, supplier or customer not be Year 2000 compliant in a timely
manner.
MANAGEMENT'S BROAD DISCRETION IN USE OF PROCEEDS
The proceeds to the Company from the exercise of the Affiliate Options
by the Selling Securityholders who hold such Affiliate Options will be
approximately $2,252,986 assuming that all such Affiliate Options are exercised.
However, there can be no assurance as to the number of Affiliate Options, if
any, which will be exercised. Management anticipates that the proceeds of
Affiliate Option exercises, if any, will be allocated to working capital and
general corporate purposes. Accordingly, the Company's management will have
broad discretion with respect to the application of such proceeds. The Company
will not receive any of the proceeds from the sale of Shares by the Selling
Securityholders or from the exercise of UES Options by the holders thereof.
CONCENTRATION OF OWNERSHIP
As of the date of this Prospectus, Krishan K. Joshi, the Company's
Chairman, Richard P. McNeight, the Company's President, and William R. Craven,
the Company's Vice President of Marketing, beneficially own approximately 23.2%,
12.1% and 6.0%, respectively, of the outstanding shares of Common Stock of the
Company (assuming no exercise of options or warrants held by persons other than
Messrs. Joshi, McNeight and Craven). Although such stockholders do not hold, in
the aggregate, a majority of the voting securities of the Company, their
significant beneficial holdings enable them to exercise substantial influence
over the Company.
-16-
<PAGE>
<PAGE>
NO DIVIDENDS
The Company has not paid any dividends on its shares of Common Stock
and intends to follow a policy of retaining any earnings to finance the
development and growth of its business. Accordingly, it does not anticipate the
payment of cash dividends in the foreseeable future. However, the payment of
dividends, if any, rests within the discretion of the Board of Directors and
will depend upon, among other things, the Company's earnings, its capital
requirements and its overall financial condition.
QUALIFICATION AND MAINTENANCE REQUIREMENTS FOR NASDAQ LISTING; MARKET VOLATILITY
The stock market has, from time to time, experienced significant price
and volume fluctuations that may be unrelated to the operating performance of
any particular company. In addition, the market prices of the securities of many
publicly-traded companies in the computer and defense industries have in the
past been, and can in the future be expected to be, especially volatile. Various
factors and events, including future announcements of new product and service
offerings by the Company or its competitors, and economic and other external
factors, as well as fluctuations in the Company's financial results, could have
a significant impact on the market prices of the Company's securities.
The Common Stock and Warrants are quoted on the Nasdaq National
Market. The Commission has approved rules imposing criteria for listing of
securities on the Nasdaq National Market, including standards for maintenance of
such listing. In order to qualify for initial quotation of securities on the
Nasdaq National Market, a company, among other things, must have at least
$4,000,000 in net tangible assets, $3,000,000 in market value of the public
float and a minimum bid price of $5.00 per share. For continued listing, a
company must have, among other things, either (i) $4,000,000 in net tangible
assets, a public float of at least 750,000 shares with a market value of at
least $5,000,000 and a minimum bid price of $1.00 per share or, alternatively,
(ii) a market capitalization of $50,000,000 or total assets and total revenues
of $50,000,000 each, a public float of at least 1,100,000 shares with a market
value of at least $15,000,000 and a minimum bid price of $5.00. If the Company
is unable to satisfy the Nasdaq National Market's maintenance criteria in the
future, its securities may be delisted from the Nasdaq National Market. In such
event, the Company would seek to list its securities on the Nasdaq Small
Capitalization Market. However, if it was unsuccessful, trading, if any, in the
Company's securities would thereafter be conducted in the over-the-counter
market in the so-called "pink sheets" or the NASD's "Electronic Bulletin Board".
As a consequence of such delisting, an investor would likely find it more
difficult to dispose of, or to obtain quotations as to, the price of the
Company's securities.
PENNY STOCK REGULATION
In the event that the Company is unable to satisfy the maintenance
requirements for the Nasdaq National Market and its Common Stock falls below the
minimum bid price of $5.00 per share for the initial quotation, the Company
would seek to list its securities on the Nasdaq Small Capitalization Market. If
it was unsuccessful, trading would be conducted on the "pink sheets" or the
NASD's "Electronic Bulletin Board". In the absence of the Common Stock being
quoted on Nasdaq, or the Company's having $2,000,000 in stockholders' equity,
trading in the Common Stock would be covered by Rule 15g-9 promulgated under the
Exchange Act, for non-Nasdaq and non-exchange listed securities. Under such
rule, broker-dealers who recommend such securities to persons other than
established customers and accredited investors must make a special written
suitability determination for the purchaser and receive the purchaser's written
agreement to a transaction prior to sale. Securities are exempt from this rule
if the market price is at least $5.00 per share.
The Commission adopted regulations that generally define a penny stock
to be any equity security that has a market price of less than $5.00 per share,
subject to certain exceptions. Such exceptions include an equity security listed
on Nasdaq and an equity security issued by an issuer that has (i) net tangible
assets of at least $2,000,000, if such issuer has been in continuous operation
for three years, (ii) net tangible assets of at least $5,000,000, if such issuer
has been in continuous operation for less than three years or (iii) average
revenue of at least $6,000,000 for the preceding three years. Unless an
exception is available, the regulations require the delivery, prior to any
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<PAGE>
transaction involving a penny stock, of a disclosure schedule explaining the
penny stock market and the risks associated therewith.
If the Company's securities were to become subject to the regulations
applicable to penny stocks, the market liquidity for the securities would be
severely affected, limiting the ability of broker-dealers to sell the securities
and the ability of the purchasers in this offering to sell their securities in
the secondary market. There is no assurance that trading in the Company's
securities will not be subject to these or other regulations that would
adversely affect the market for such securities.
POSSIBLE ISSUANCES OF PREFERRED STOCK
Shares of Preferred Stock of the Company may be issued by the Board of
Directors, without stockholder approval, on such terms as the Board may
determine. The rights of the holders of Common Stock will be subject to, and may
be adversely affected by, the rights of the holders of any Preferred Stock that
may be issued in the future. Although the ability to issue Preferred Stock may
provide flexibility in connection with possible acquisitions and other corporate
purposes, such issuance may make it more difficult for a third party to acquire,
or may discourage a third party from acquiring, a majority of the voting stock
of the Company. This result could prevent an increase in the market price of
PCS's Common Stock or cause a decline in such price. PCS has no current plans to
issue any shares of its Preferred Stock.
OUTSTANDING OPTIONS, WARRANTS, UNDERWRITER'S WARRANTS AND BRIDGE WARRANTS
As of September 1, 1998, the Company had outstanding options to
purchase an aggregate of 1,359,693 shares of Common Stock at exercise prices
ranging from $0.243 to $6.00. The Company also had outstanding Warrants,
Underwriter's Warrants and Bridge Warrants to purchase an aggregate of
5,089,803, 288,000 and 480,000 shares of Common Stock at exercise prices of
$2.00, $2.00 and $2.00, respectively. Exercise of any of the foregoing options
or warrants will have a dilutive effect on the Company's shareholders.
Furthermore, the terms upon which the Company may be able to obtain additional
equity financing may be adversely affected, since the holders of the options and
warrants can be expected to exercise them, if at all, at a time when the Company
would, in all likelihood, be able to obtain any needed capital on terms more
favorable to the Company than those provided in the options and warrants.
VOLATILITY OF STOCK AND WARRANT PRICES
The Company's Common Stock and Warrants have experienced substantial
price fluctuations since the IPO in June 1996. In addition, the stock market has
experienced significant price and volume fluctuations that have affected the
market prices of equity securities of many companies and that often have been
unrelated to the operating performance of such companies. These broad market
fluctuations may adversely affect the market price of the Company's Common Stock
and Warrants. In the past, following periods of volatility in the market price
of a company's securities, securities class action litigation has often been
instituted against such a company. Such litigation could result in substantial
costs and a diversion of management's attention and resources, which would have
a material adverse effect on the Company's business, operating results and
financial condition.
POSSIBLE CONTINGENT LIABILITY
In connection with the 1995 Bridge Financing involving certain private
investors which preceded the IPO, the Company may be deemed to have incurred a
technical violation of Section 5 of the Securities Act of 1933, as amended.
Accordingly, there may be a contingent liability associated with such matter.
However, management believes that there was no such violation, and the
possibility of such related liability is remote.
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<PAGE>
SHARES ELIGIBLE FOR FUTURE SALE
Sales of a substantial number of shares of Common Stock in the public
market following this offering could adversely affect the market price of such
shares. Upon the consummation of this offering, the Company will have 9,131,492
shares of Common Stock outstanding (assuming no exercise of outstanding options
or warrants other than Affiliate Options and UES Options held by the Selling
Securityholders), of which 6,918,019 shares will be freely tradeable without
restriction or further registration under the Securities Act. All of the
remaining 2,213,473 shares of Common Stock outstanding are "restricted
securities," as that term is defined under Rule 144 promulgated under the
Securities Act, and in the future may only be sold pursuant to a registration
statement under the Securities Act, in compliance with the exemption provisions
of Rule 144 (including, without limitation, certain volume limitations and
holding period requirements thereof) or pursuant to another exemption under the
Securities Act. In addition, the Company has agreed to register under the
Securities Act the sale by holders of the Bridge Warrants of the 480,000
aggregate shares of Common Stock issuable upon exercise of the Bridge Warrants
and, accordingly, once issued, such shares will be freely tradeable without
restriction or further registration under the Securities Act (provided that the
registration statement relating thereto is in effect at the time of such
issuance).
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<PAGE>
USE OF PROCEEDS
The proceeds received by the Company upon exercise of Affiliate
Options by the Selling Securityholders who hold such Affiliate Options will be
approximately $2,252,986, assuming that all of such Affiliate Options are
exercised. However, there can be no assurance as to the number of Affiliate
Options, if any, which will be exercised. Management anticipates that the net
proceeds of Affiliate Option exercises, if any, will be allocated to working
capital and general corporate purposes, which will be applied, to the extent
necessary, to the Company's operations. The Company will not receive any of the
proceeds from the exercise of UES Options by the holders thereof.
Any and all of the Shares which may be sold pursuant to this
Prospectus will be sold by the Selling Securityholders for their own accounts.
The Company will receive none of the proceeds from the sale of the Shares.
SELLING SECURITYHOLDERS
The Shares offered hereby will be offered and sold by the Selling
Securityholders and include (i) an aggregate of 787,564 shares to be acquired by
certain of the Selling Securityholders upon exercise of Affiliate Options held
by such Selling Securityholders, (ii) an aggregate of 148,617 shares to be
acquired by certain of the Selling Securityholders upon exercise of UES Options
held by such Selling Securityholders, (iii) an aggregate of 743,079 shares
previously acquired by certain of the Selling Securityholders upon exercise of
UES Options and (iv) an aggregate of 259,122 shares of Common Stock previously
acquired by certain current and former affiliates and employees of the Company
upon exercise of options granted to them under the Plans.
The number of shares of the Company's Common Stock owned beneficially
by each of the Selling Securityholders as of the date of this Prospectus, the
number of shares of the Company's Common Stock which may be offered by each of
the Selling Securityholders pursuant to this Prospectus and the amount and
percentage of shares to be owned by each of the Selling Securityholders assuming
the sale of all such shares are as follows:
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<TABLE>
<CAPTION>
SHARES TO BE OWNED AFTER SALE
OF SHARES REGISTERED FOR RESALE
-------------------------------
SHARES
BENEFICIALLY SHARES BEING PERCENT OF
NAME OF SELLING SECURITYHOLDER OWNED REGISTERED FOR RESALE(1) AMOUNT OUTSTANDING(2)
- ------------------------------ ----- ------------------------ ------ --------------
<S> <C> <C> <C> <C>
Krishan K. Joshi 1,938,237(3) 595,848 1,492,389 16.34%
Richard P. McNeight 1,031,145(4) 614,667 501,144 5.49%
William R. Craven 511,984(5) 415,263 156,387 1.71%
Kevin J. Bartczak 45,000(6) 90,000 -0- *
Lary J. Beaulieu 226,202(7) 83,032 181,170 1.93%
Michael F. Maguire 46,500(8) 36,500 10,000 *
John P. Singleton 78,000(9) 32,000 46,000 *
James E. Clifford 13,500 13,500 -0- *
Rajpaul Balwant 18,381 9,348 9,033 *
Susan W. Bazemore 10,182 2,348 7,834 *
Melissa Borton 7,592 1,342 6,250 *
Karen Brinson 3,848 3,848 -0- *
Ida B. Cardinale 1,342 1,342 -0- *
Meredith E. Connor, Jr 39,044 6,710 32,334 *
Richard A. Dunham 7,755 671 7,084 *
Daniel J. Fitzpatrick 12,182 2,348 9,834 *
Scott E. Krikke 12,348 2,348 10,000 *
Michael R. McCartney 14,280 8,048 6,232 *
W. Leon Mimbs 7,592 3,842 3,750 *
Dorothy S. Pugh 7,426 1,342 6,084 *
John B. Russell 1,500 500 1,000 *
Robert A. Schilling 21,355 3,354 18,001 *
Joseph M. Smith 1,342 1,342 -0- *
Kerry L. Starr 5,485 5,485 -0- *
Joseph F. Warro, Jr 16,023 3,354 12,669 *
</TABLE>
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* Less than 1%
(1) With respect to each of the Selling Securityholders other than Messrs.
Joshi, McNeight, Craven, Bartczak, Beaulieu, Maguire and Singleton, the
shares of Common Stock being registered for resale by such Selling
Securityholder pursuant to this Prospectus include shares of Common Stock
previously acquired by such Selling Securityholder upon exercise of options
granted to him or her under one or more of the Plans.
(2) Based on 9,131,492 shares of Common Stock outstanding following the
consummation of the offering.
(3) Includes 1,448,775 shares held by UES. Mr. Joshi, Chairman and Chief
Executive 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 1,448,775 shares held by UES, 148,617 of such
shares are subject to UES Options granted to Mr. Craven. Does not include
150,000 shares underlying Affiliate Options held by Mr. Joshi which are not
exercisable within 60 days of the date of this Prospectus; however, such
shares are included in the shares being registered for resale pursuant to
this Prospectus.
(4) Includes 193,334 shares underlying Affiliate Options held by Mr. McNeight.
Does not include 84,666 shares underlying Affiliate Options held by Mr.
McNeight which are not exercisable within 60 days of the date of this
Prospectus; however, such shares are included in the shares being registered
for resale pursuant to this Prospectus.
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<PAGE>
(5) Includes 148,617 shares underlying UES Options held by Mr. Craven and 58,366
shares underlying Affiliate Options held by Mr. Craven. Does not include
59,666 shares underlying Affiliate Options held by Mr. Craven which are not
exercisable within 60 days of the date of this Prospectus; however, such
shares are included in the shares being registered for resale pursuant to
this Prospectus.
(6) Includes 45,000 shares underlying Affiliate Options held by Mr. Bartczak.
Does not include 45,000 shares underlying Affiliate Options held by Mr.
Bartczak which are not exercisable within 60 days of the date of this
Prospectus; however, such shares are included in the shares being registered
for resale pursuant to this Prospectus.
(7) Includes 45,032 shares underlying Affiliate Options held by Mr. Beaulieu.
Does not include 38,000 shares underlying Affiliate Options held by Mr.
Beaulieu which are not exercisable within 60 days of the date of this
Prospectus; however, such shares are included in the shares being registered
for resale pursuant to this Prospectus.
(8) Includes 36,500 shares underlying Affiliate Options held by Mr. Maguire.
(9) Includes 32,000 shares underlying Affiliate Options held by Mr. Singleton
and 25,000 shares underlying Warrants held by Mr. Singleton.
PLAN OF DISTRIBUTION
The shares of Common Stock offered hereby may be sold or otherwise
disposed of from time to time by the Selling Securityholders, or by pledgees,
donees, transferees or other successors-in-interest thereof, should the Selling
Securityholders or any such other parties determine to make such sales. The
Company is unable to predict whether or when the Selling Securityholders or any
such other parties will determine to proceed with sales of Common Stock, as such
determination will be made by the Selling Securityholders or such other parties.
The sale or other disposition of Common Stock by the Selling Securityholders, or
by pledgees, donees, transferees or other successors-in-interest thereof, may be
effected from time to time in transactions (which may include block
transactions) on the Nasdaq National Market, the over-the-counter market or
otherwise, in private sales or in negotiated transactions, through the writing
of options on Common Stock, or a combination of such methods of sale, at fixed
prices which may be changed, at market prices prevailing at the time of sale, at
prices related to such prevailing market prices, or at negotiated prices. The
Selling Securityholders or such other parties may effect such transactions by
selling Common Stock to or through broker-dealers or otherwise, and such
broker-dealers may receive compensation in the form of discounts, concessions or
commissions from the Selling Securityholders and/or the purchasers of Common
Stock for whom such broker-dealers may act as agent or to whom they sell as
principal, or both (which compensation as to a particular broker-dealer might be
in excess of customary commissions). In addition, any shares of Common Stock
covered by this Prospectus which qualify for sale pursuant to Rule 144
promulgated under the Securities Act may be sold under Rule 144 rather than
pursuant to this Prospectus.
The Selling Securityholders and any broker-dealers that act in connection
with the sale of Common Stock hereunder might be deemed to be "underwriters"
within the meaning of Section 2(11) of the Securities Act and any commissions
received by them and any profit on the resale of Common Stock as principal might
be deemed to be underwriting discounts and commissions under the Securities Act.
The Company has agreed to pay all expenses of registration incurred in
connection herewith; provided, however, that all selling and other expenses
incurred by the Selling Securityholders will be borne by the Selling
Securityholders.
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<PAGE>
EXPERTS
The financial statements of the Company as of and for the years ended
September 30, 1997 and 1996 appearing in the Company's Annual Report on Form
10-KSB have been incorporated by reference herein and have been included in
reliance upon the report of KPMG Peat Marwick LLP, independent certified public
accountants, incorporated by reference herein, and upon the authority of said
firm as experts in accounting and auditing.
LEGAL MATTERS
The validity of the Shares has been passed upon by Tenzer Greenblatt LLP,
405 Lexington Avenue, New York, New York 10174.
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<PAGE>
================================================================================
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS NOT CONTAINED IN THIS PROSPECTUS AND, IF GIVEN OR MADE, SUCH
INFORMATION OR REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY ANY SECURITIES OTHER THAN THE SECURITIES TO
WHICH IT RELATES OR AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER TO BUY SUCH
SECURITIES IN ANY CIRCUMSTANCES IN WHICH SUCH OFFER OR SOLICITATION IS UNLAWFUL.
NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL, UNDER
ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN THE
AFFAIRS OF THE COMPANY SINCE THE DATE HEREOF OR THAT THE INFORMATION CONTAINED
HEREIN IS CORRECT AS OF ANY TIME SUBSEQUENT TO ITS DATE.
-----------------------
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
AVAILABLE INFORMATION..........................................................2
DOCUMENTS INCORPORATED BY REFERENCE............................................2
PROSPECTUS SUMMARY.............................................................4
RISK FACTORS...................................................................9
USE OF PROCEEDS...............................................................20
SELLING SECURITYHOLDERS.......................................................20
PLAN OF DISTRIBUTION..........................................................22
EXPERTS.......................................................................23
LEGAL MATTERS.................................................................23
</TABLE>
1,938,382 SHARES
PARAVANT COMPUTER
SYSTEMS, INC.
COMMON STOCK
----------
PROSPECTUS
----------
September 3, 1998
================================================================================
<PAGE>
<PAGE>
PART II
Item 3. Incorporation of Documents by Reference
The following documents filed with the Securities and Exchange
Commission (the "Commission") are incorporated into this Registration Statement
by reference:
(a) The Registrant's Annual Report on Form 10-KSB for the fiscal year
ended September 30, 1997;
(b) The Registrant's Quarterly Report on Form 10-QSB for the period
ended December 31, 1997;
(c) The Registrant's Quarterly Report on Form 10-QSB for the period
ended March 31, 1998;
(d) The Registrant's Quarterly Report on Form 10-QSB for the period
ended June 30, 1998;
(e) The description of the Registrant's Common Stock, par value $0.015
per share, contained in the Registrant's Registration Statement on SB-2
(Registration No. 333-38279) filed with the Commission on October 20, 1997;
(f) The Company's Proxy Statement and Notice of Meeting relating to the
Special Meeting of Shareholders to be held on September 17, 1998, as filed with
the Commission on August 11, 1998; and
(g) All other reports filed by the Registrant pursuant to Section 13(a)
or 15(d) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), since September 30, 1997.
All documents subsequently filed by the Registrant pursuant to Sections
13(a), 13(c), 14 and 15(d) of the Exchange Act prior to the filing of a
post-effective amendment which indicates that all securities offered have been
sold or which deregisters all securities then remaining unsold shall be deemed
to be incorporated by reference in this Registration Statement and to be a part
hereof from the date of filing of such documents.
Item 4. Description of Securities
Not applicable.
Item 5. Interests of Named Experts and Counsel
Not applicable.
Item 6. Indemnification of Directors and Officers
The Registrant's Board of Directors has authorized it to provide a
general indemnification to its officers, directors and employees regarding any
claims or liabilities incurred in the course of their employment.
The Florida Business Corporation Act ("FBCA") provides that each
officer and director of the Company shall be indemnified by the Registrant
against certain costs, expenses and liabilities which he or she may incur in his
or her capacity as such.
Section # 607.0850 of the FBCA "Indemnification of officers, directors,
employees and agents," provides:
<PAGE>
<PAGE>
(1) A corporation shall have power to indemnify any person who
was or is a party to any proceeding (other than an action by, or in the
right of, the corporation), by reason of the fact that he is or was a
director, officer, employee, or agent of the corporation or is or was
serving at the request of the corporation as a director, officer,
employee, or agent of another corporation, partnership, joint venture,
trust, or other enterprise against liability incurred in connection
with such proceeding, including any appeal thereof, if he acted in good
faith and in a manner he reasonably believed to be in, or not opposed
to, the best interests of the corporation and, with respect to any
criminal action or proceeding, had reasonable cause not to believe that
his conduct was unlawful. The termination of any proceeding by
judgment, order, settlement, or conviction or upon a plea of nolo
contendere or its equivalent shall not, of itself, create a presumption
that the person did not act in good faith and in a manner which he
reasonably believed to be in, or not opposed to, the best interests of
the corporation or, with respect to any criminal action or proceeding,
had reasonable cause to believe that his conduct was unlawful.
(2) A corporation shall have power to indemnify any person,
who was or is a party to any proceeding by or in the right of the
corporation to procure a judgment in its favor by reason of the fact
that he is or was a director, officer, employee, or agent of the
corporation or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust, or other enterprise, against
expenses and amounts paid in settlement not exceeding, in the judgment
of the board of directors, the estimated expense of litigating and the
proceeding to conclusion, actually and reasonably incurred in
connection with the defense or settlement of such proceeding, including
any appeal thereof. Such indemnification shall be authorized if such
person acted in good faith and in a manner he reasonably believed to be
in, or not opposed to, the best interests of the corporation, except
that no indemnification shall be made under this subsection in respect
of any claim, issue or matter as to which such person shall have been
adjudged to be liable unless, and only to the extent that, the court in
which such proceeding was brought, or any other court of competent
jurisdiction, shall determine upon application that, despite the
adjudication of liability but in view of all circumstances of the case,
such person is fairly and reasonably entitled to indemnify for such
expenses which such court shall deem proper.
(3) To the extent that a director, officer, employee, or agent
of a corporation has been successful on the merits or otherwise in
defense of any proceeding referred to in subsection (1) or subsection
(2), or in defense of any claim, issue, or matter therein, he shall be
indemnified against expenses actually and reasonably incurred by him in
connection therewith.
(4) Any indemnification under subsection (1) or subsection
(2), unless pursuant to a determination by a court, shall be made by
the corporation only as authorized in the specific case upon a
determination that indemnification of the director, officer, employee,
or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in subsection (1) or
subsection (2). Such determination shall be made:
(a) By the board of directors by a majority vote of a
quorum consisting of directors who were not parties to such
proceeding;
(b) If such a quorum is not obtainable, or even if
obtainable, by majority vote of a committee duly designated by
the board of directors (in which directors who are parties may
participate) consisting solely of two or more directors not at
the time parties to the proceeding;
(c) By independent legal counsel;
1. Selected by the board of directors
prescribed in paragraph (a) or the
committee prescribed in paragraph (b); or
II-2
<PAGE>
<PAGE>
2. If a quorum of the directors cannot be
obtainable for paragraph (a) and the
committee cannot be designated under
paragraph (b), selected by majority vote
of the full board of directors (in which
directors who are parties may
participate); or
(d) By the shareholders by a majority vote of a
quorum consisting of shareholders who were not parties to such
proceeding or, if no such quorum is obtainable, by a majority
vote of shareholders who were not parties to such proceeding.
(5) Evaluation of the reasonableness of expenses and authorization of
indemnification shall be made in the same manner as the determination that
indemnification is permissible. However, if the determination of permissibility
is made by independent legal counsel, persons specified by paragraph (4)(c)
shall evaluate the reasonableness of expenses and may authorize indemnification.
(6) Expenses incurred by an officer or director in defending a civil or
criminal proceeding may be paid by the corporation in advance of the final
disposition of such proceeding upon receipt of an undertaking by or on behalf of
such director or officer to repay such amount if he is ultimately found not to
be entitled to indemnification by the corporation pursuant to this section.
Expenses incurred by other employees and agents may be paid in advance upon such
terms or conditions that the board of directors deems appropriate.
(7) The indemnification and advancement of expenses provided pursuant
to this section are not exclusive, and a corporation may make any other or
further indemnification or advancement or expenses of any of its directors,
officers, employees, or agents, under any bylaw, agreement, vote of shareholders
or disinterested directors, or otherwise, both as to action in his official
capacity and as to action in another capacity while holding such office.
However, indemnification or advancement of expenses shall not be made to or on
behalf of any director, officer, employee, or agent if a judgment or other final
adjudication establishes that his actions, or omissions to act, were material to
the cause of action so adjudicated and constitute:
(a) A violation of the criminal law, unless the
director, officer, employee, or agent had reasonable cause to
believe his conduct was lawful or had no reasonable cause to
believe his conduct was unlawful;
(b) A transaction from which the director, officer,
employee, or agent derived an improper personal benefit;
(c) In the case of a director, a circumstance under
which the liability provisions of s.607.0834 are applicable;
or
(d) Willful misconduct or a conscious disregard for
the best interests of the corporation in a proceeding by or in
the right of the corporation to procure a judgment in its
favor or in a proceeding by or in the right of a shareholder.
(8) Indemnification and advancement of expenses as provided in this
section shall continue as, unless otherwise provided when authorized or
ratified, to a person who has ceased to be a director, officer, employee, or
agent and shall inure to the benefit of the heirs, executors, and administrators
of such a person unless otherwise provided when authorized or ratified.
(9) Unless the corporation's articles of incorporation provide
otherwise, notwithstanding the failure of a corporation to provide
indemnification, and despite any contrary determination of the board or of the
shareholders in the specific case, a director, officer, employee, or agent of
the corporation who is or was a party to a proceeding may apply for
indemnification or advancement of expenses, or both, to the court conducting the
proceeding, to the circuit court, or to another court of competent jurisdiction.
On receipt of an application, the court, after giving any
II-3
<PAGE>
<PAGE>
notice that it considers necessary, may order indemnification and advancement of
expenses, including expenses incurred in seeking court-ordered indemnification
or advancement of expenses, if it determines that:
(a) The director, officer, employee, or agent is
entitled to mandatory indemnification or advancement under
subsection (3), in which case the court shall also order the
corporation to pay the director reasonable expenses incurred
in obtaining court-ordered indemnification or advancement of
expenses;
(b) The director, officer, employee, or agent is
entitled to indemnification or advancement of expenses, or
both, by virtue of the exercise by the corporation of its
power pursuant to subsection (7); or
(c) The director, officer, employee, or agent is
fairly and reasonably entitled to indemnification or
advancement of expenses, or both, in view of all the relevant
circumstances, regardless of whether such person met the
standard of conduct set forth in subsection (1), subsection
(2), or subsection (7).
(10) For purposes of this section, the term "corporation" includes, in
addition the resulting corporation, any constituent corporation (including any
constituent of a constituent) absorbed in a consolidation or a merger, so that
any person who is or was a director, officer, employee or agent of a constituent
corporation, or is or was serving at the request of a constituent corporation as
a director, officer, employee or agent of another corporation, partnership,
joint venture, trust, or other enterprise, is in the same position under this
section with respect to the resulting or surviving corporation as he would have
with respect to such constituent corporation if its separate existence had
continued.
(11) For purposes of this section:
(a) The term "other enterprises" includes employee
benefit plans;
(b) The term "expenses" includes counsel fees,
including those for appeal;
(c) The term "liability" includes obligations to pay
a judgment, settlement, penalty, fine, (including an excise
tax assessed with respect to any employee benefit plan), and
expenses actually and reasonably incurred with respect to a
proceeding;
(d) The term "proceeding" includes any threatened,
pending, or completed action, suit, or other type of
proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal;
(e) The term "agent" includes a volunteer;
(f) The term "serving at the request of the
corporation" includes any service as a director, officer,
employee, or agent of the corporation that imposes duties on
such persons, including duties relating to an employee benefit
plan and its participants or beneficiaries; and
(g) The term "not opposed to the best interest of the
corporation" describes the actions of a person who acts in
good faith and in a manner he reasonably believes to be in the
best interest of the participants and beneficiaries of an
employee benefit plan.
(12) A corporation shall have power to purchase and maintain insurance
on behalf of any person who is or was a director, officer, employee, or agent of
the corporation or is or was serving at the request of the corporation as a
director, officer, employee, or agent of another corporation, partnership, joint
venture, trust or other enterprise
II-4
<PAGE>
<PAGE>
against any liability asserted against him and incurred by him in any such
capacity or arising out of his status as such, whether or not the corporation
would have the power to indemnify him against any such liability under the
provisions of this section.
Item 7. Exemption from Registration Claimed
Not applicable.
Item 8. Exhibits
<TABLE>
<CAPTION>
Exhibit Description
<S> <C>
4.1 Incentive Stock Option Plan of the Registrant as amended
(incorporated by reference to Exhibit 10.3B to the Registrant's
Quarterly Report on From 10-QSB for the period ended March 31,
1998).
4.2 Non-Qualified Stock Plan of the Registrant, filed herewith.
4.3 Nonemployee Directors' Stock Option Plan of the Registrant as
amended (incorporated by reference to Exhibit 10.14A to the
Registrant's Quarterly Report on From 10-QSB for the period
ended March 31, 1998).
4.4 Form of Stock Option Agreements under the Incentive Stock
Option Plan, filed herewith.
4.5 Form of Stock Option Agreement under the Non-Qualified Stock
Option Plan, filed herewith.
4.6 Form of Stock Option Agreement under the Nonemployee Directors'
Stock Option Plan, filed herewith.
4.7 1997 Special Option Agreements dated November 20, 1997 under
the Registrant's Special NonQualified Plan between the
Registrant and each of James E. Clifford, Michael F. Maguire
and John P. Singleton (incorporated by reference to Exhibit
10.31 to the Registrant's Annual Report on Form 10-KSB for the
year ended September 30, 1997).
4.8 Special Option Agreement under the Registrant's Special
Non-Qualified Plan dated June 18, 1998 between the Registrant
and John P. Singleton (incorporated by reference to Exhibit
10.32 to the Registrant's Quarterly Report on Form 10-QSB for
the quarterly period ended June 30, 1998).
4.9 Agreement Clarifying Prior Grant of Stock Options between the
Registrant and Michael F. Maguire dated as of June 18, 1998
(incorporated by reference to Exhibit 10.33 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 1998).
4.10 Articles of Incorporation of the Registrant, as amended
(incorporated by reference to Exhibit 3.1 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 1996).
4.11 Amended and Restated By-laws of the Registrant, as amended
(incorporated by reference to Exhibit 3.2 to the Registrant's
Quarterly Report on Form 10-QSB for the quarterly period ended
June 30, 1996).
</TABLE>
II-5
<PAGE>
<PAGE>
<TABLE>
<S> <C>
5.1 Opinion of Tenzer Greenblatt LLP, filed herewith.
23.1 Consent of KPMG Peat Marwick LLP, filed herewith.
23.2 Consent of Tenzer Greenblatt LLP (included in its opinion filed
as Exhibit 5.1).
24.1 Power of Attorney (see page II-8 of this Registration
Statement).
99.1 Acquisition Agreement dated as of March 31, 1998 by and among
the Registrant, Engineering Development Laboratories,
Incorporated, Signal Technology Laboratories, Inc. James E.
Clifford, Edward W. Stefanko, C. David Lamberston, C. Hyland
Schooley, Peter Oberbeck and Leo S. Torresari (incorporated by
reference to Exhibit 2.1 to the Registrant's Current Report on
Form 8-K dated March 31, 1998).
</TABLE>
Item 9. Undertakings
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 Act;
(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;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration
statement or any material change to such information in the
registration statement;
Provided, however, that paragraphs (1)(i) and (1)(ii) do not
apply if the registration statement is on Form S-3, Form S-8 or Form
F-3, and the information required to be included in a post-effective
amendment by those paragraphs is contained in periodic reports filed
with or furnished to the Commission by the Registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated
by reference in the registration statement.
(2) That, for the purpose of determining any liability under the Act,
each such post-effective amendment shall be deemed to be a new registration
statement relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the termination of
the offering.
The undersigned Registrant hereby undertakes that, for purposes of
determining any liability under the Act, each filing of the Registrant's annual
report pursuant to Section 13(a) or Section 15(d) of the Exchange Act (and,
where applicable, each filing of an employee benefit plan's annual report
pursuant to Section 15(d) of the Exchange Act) that is incorporated by reference
in the registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
II-6
<PAGE>
<PAGE>
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the Registrant
pursuant to the foregoing provisions, or otherwise, the Registrant has been
advised that in the opinion of the Securities and Exchange Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the Registrant of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of 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.
II-7
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, as amended,
the Registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned, thereunto
duly authorized, in the City of Melbourne, Florida, on this 2nd day of
September, 1998.
PARAVANT COMPUTER SYSTEMS, INC.
By: /s/Krishan K. Joshi
-------------------------------
Krishan K. Joshi
Chairman of the Board and
Chief Executive Officer
POWER OF ATTORNEY
KNOW ALL MEN BY THESE PRESENTS, that each individual whose signature
appears below constitutes and appoints each of Richard P. McNeight, William R.
Craven and Kevin J. Bartczak, and each of them, as his true and lawful
attorneys-in-fact and agents with full power of substitution and resubstitution,
for him and his name, place and stead, in any and all capacities, to sign any
and all amendments, including post-effective amendments, to this registration
statement, and to file the same, with all exhibits thereto, and all documents in
connection therewith, with the Securities and Exchange Commission, granting unto
said attorneys-in-fact and agents full power and authority to do and perform
each and every act and thing requisite and necessary to be done, as fully to all
intents and purposes as he might or could do in person, hereby ratifying and
confirming all that said attorneys-in-fact and agents, or his or their
substitute or substitutes, may lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Act of 1933, as amended,
this registration statement has been signed by the following persons in the
capacities and on the date indicated.
<TABLE>
<CAPTION>
NAME TITLE DATE
<S> <C> <C>
/s/Krishan K. Joshi Chairman, Chief Executive September 2, 1998
- ------------------------------------ Officer and Director
KRISHAN K. JOSHI (Principal Executive Officer)
/s/Richard P. McNeight President and Director September 2, 1998
- ------------------------------------
RICHARD P. MCNEIGHT
/s/William R. Craven Vice President, Director and September 2, 1998
- ------------------------------------ Secretary
WILLIAM R. CRAVEN
/s/Kevin Bartczak Treasurer, Vice President and Chief September 2, 1998
- ------------------------------------ Financial Officer (Principal
KEVIN BARTCZAK Financial Officer and Principal
Accounting Officer)
/s/Michael Maguire Director September 2, 1998
- ------------------------------------
MICHAEL MAGUIRE
/s/John P. Singleton Director September 2, 1998
- ------------------------------------
JOHN P. SINGLETON
</TABLE>
II-8
<PAGE>
<PAGE>
EXHIBIT 4.2
NON-QUALIFIED STOCK OPTION PLAN 1-NQ
------------------------------------
1. PURPOSE. This Plan (the "Plan 1-NQ"), is intended to promote the
growth and general prosperity of PARAVANT COMPUTER SYSTEMS, INC., (herein called
the "Company") by permitting the Company, by the granting of Options to purchase
shares of its common stock, to attract and retain the best available personnel
for positions of substantial responsibility, to provide entities which have
contractual relationships with the Company an incentive to meet important goals
and objectives, and to provide certain key employees and directors with an
additional incentive to contribute to the success of the Company.
2. ADMINISTRATION
(a) The Plan 1-NQ shall be administered by a committee of officers
of the Company which shall be appointed by the Board of Directors (the
"Committee").
(b) The Committee is authorized, subject to the provisions of the
Plan 1-NQ, to establish such rules and regulations as it may deem appropriate
for the conduct of meetings and proper administration of the Plan 1-NQ, and to
determine, in its sole discretion, the entities, the directors and key employees
who receive such options, the time the options shall be granted, the terms of
such option (which may differ from one another), and the number of shares to be
optioned to any entity or individual, and to do everything necessary or
appropriate to administer the Plan 1-NQ including but not limited to
interpreting the Plan 1-NQ. All decisions, determinations and interpretations of
the Committee
<PAGE>
<PAGE>
shall be final and binding on all entities or individuals.
3. ELIGIBILITY. The Committee may grant Options to any entity with
which the Company has, in the sole discretion of the Committee, an important
contractual relationship, or to any key employee or to any director of the
Company. Any entity or individual may hold more than one option.
4. STOCK. The stock to be subject to options under the Plan 1-NQ shall
be shares of the Company's Common Stock, par value $0.01 per share ("stock"),
either authorized and unissued or treasury shares. The aggregate number of
shares of stock for which options may be granted under the Plan 1-NQ shall not
exceed 384,258 shares, subject to adjustment in accordance with the terms of
paragraph 6 hereof. The shares subject to the unexercised portion of any
terminated or expired options under the Plan 1-NQ may again be subjected to
options under the Plan 1-NQ.
5. TERMS AND CONDITIONS OF OPTIONS. All options granted pursuant to
the Plan 1-NQ shall be authorized by the Committee and shall be evidenced by
stock option agreements in writing ("Stock Option Agreements" (Plan 1-NQ)) in
such form and containing such terms and conditions as the Committee shall
determine. The terms and conditions set forth in such option agreements shall
include:
(a). The option price per share ("Exercise Price") of each option
granted under the Plan 1-NQ shall be determined by the Committee.
(b). Each stock option agreement shall set forth the period for
which such option is granted, which shall not exceed
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<PAGE>
six (6) years from the date such option is granted (the "option period").
(c).(1) An option granted to an individual shall be transferable by
the Optionee only by will, trust or the laws of descent and distribution.
(2) An option granted to an entity shall be transferable only
to key employees of such entity on terms deemed appropriate by the Committee. An
option transferred by an entity to a key employee shall be subject to the
restrictions stated in Paragraph 5(c).(1) above.
(d). Each option may be exercised at any time during its option
period, subject to the restrictions in the stock option agreement under which it
is issued. An Option shall be exercised when written notice of such exercise has
been given to the Company at its principal business office by the person
entitled to exercise the Option and full payment for the shares with respect to
which the Option is exercised has been received by the Company. Until the
issuance of the stock certificates, no right to vote or receive dividends or any
other rights as a stockholder shall exist with respect to optioned shares
notwithstanding the exercise of the Option. No adjustment will be made for a
dividend or other rights for which the record date is prior to the date the
stock certificate is issued except as provided in paragraph 6 hereof.
(e). On the date of exercise, the Optionee shall make full payment
of the option price (i) in cash or its equivalent; (ii) with the consent of the
Committee, by tendering
3
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<PAGE>
previously acquired shares of stock (valued at their fair market value, as
determined by the Committee, as of the date of exercise) or (iii) with the
consent of the Committee, any combination of (i) and (ii).
(f). The granting of an option shall impose no obligation upon the
Optionee to exercise such option.
6. ADJUSTMENT IN THE EVENT OF CHANGE OF STOCK. In the event of any
change in the outstanding stock by reason of stock dividends, recapitalizations,
reorganizations, mergers, consolidations, split-ups, combinations or exchanges
of shares and the like, the number and kind of shares which thereafter may be
optioned and sold under the Plan 1-NQ, the number and kind of shares under
option in outstanding stock option agreements and the purchase price per share
thereof shall be approximately adjusted consistent with such change. The
determination of the Committee as to any adjustment shall be final and
conclusive.
7. GENDER. As used in this Plan 1-NQ, the masculine, feminine or
neuter gender and the singular or plural number shall be deemed to include the
others whenever the context so indicates or requires.
8. AMENDMENT, MODIFICATION AND TERMINATION OF THE PLAN 1-NQ. The Board
of Directors may terminate, amend, or modify the Plan 1-NQ, at any time;
provided, however, that no such amendment, modification, or termination of the
Plan 1-NQ shall in any manner affect any option heretofore granted to an
optionee under the Plan 1-NQ without the consent of the optionee.
4
<PAGE>
<PAGE>
9. TERM OF THE PLAN 1-NQ. The Plan 1-NQ is effective as of the 1st day
of September, 1993, having been approved by the Board of Directors by written
consent. The Plan 1-NQ shall terminate on the 31st day of August, 1996 or on
such earlier date as may be determined by the Board of Directors. Termination
of the Plan 1-NQ, however, shall not affect the rights of optionees under
options theretofore granted to them, and all unexpired options shall continue
in force and operation after termination of the Plan 1-NQ except as they may
lapse or be terminated by their own terms and conditions.
5
<PAGE>
<PAGE>
EXHIBIT 4.4
PARAVANT COMPUTER SYSTEMS, INC.
Incentive Stock Option Agreement
Agreement made this ___________________________day of ______________, between
PARAVANT COMPUTER SYSTEMS, INC., a Corporation (the "Company" or "PCS") and
_____________________, an employee (or independent director) of the Company
residing at ____________________________________________________________________
________________________ (the "Employee" or "Director").
NOW THEREFORE in consideration of the premises, it is agreed by and between
the parties hereto as follows:
1. Grant of Option
The Company hereby grants the Employee (Director) the right, privilege
and Option to purchase up to _____________ of its shares of Common Stock, par
value $________ per share, at an exercise price of $_________ per share in the
manner and subject to the conditions provided herein and in its Incentive Stock
Option Plan (the "Plan").
2. Times of Exercise
The Option covered by this Agreement may be exercised by the Employee
(Director) from ___________, until _____________, in whole or in part or
until its expiration or termination as provided herein or in the Plan. In the
case of an Employee, the option vests and may only be exercisable at a rate no
greater than 33 1/3% each continuous year in which the Employ is employed on a
full-time basis by the Company. (In the case of an independent Director, the
option vests and may only be exercisable after one full year's membership on
PCS's Board of Directors.)
3. Method of Exercise
The Option shall be exercised by delivering a written notice to a member
of the Stock Option Committee at the Company's principal offices, accompanied by
the Employee's (Director's) personal check in the appropriate amount for payment
of the exercise price for the number of shares of Common Stock of PCS, specified
to be purchased. The written notice shall indicate such number of shares to be
purchased and the total exercise price applicable thereto. The Company shall,
within 30 days of receiving such notice and the Employee's (Director's) check
covering the exercise price, deliver a stock certificate(s). The date of
delivery of such stock certificate(s) may be extended by mutual agreement of the
Company and the Employee (Director) or due to any law or regulation which may
require the Company to take action with respect to the shares covered by such
notice prior to issuance thereof.
4. Termination of Option
<PAGE>
<PAGE>
Except as otherwise stated herein, the Option, to the extent that it has
not been exercised, shall terminate upon the occurrence of any of the following
events:
(A) Within 5 days after the Employee (Director) voluntarily terminates
his employment with the Company but only to the extent that such Option has
become exercisable as of the date of termination of such Employee (Director);
(B) Within 30 days if such employment was terminated on a non-voluntary
basis other than death but only to the extent that such Option has become
exercisable as of the date of termination of such Employee (Director);
(C) Within one year after the Employee's (Director's) death by his or
her executor, administrator or personal representative but only to the extent
that such Option has become exercisable as of the date of death of such
employee; or
(D) _____________________________, ________________ (representing the
expiration of ten years from the grant of this option).
Questions, including but not limited to such voluntary or non-voluntary
termination, the disability of Employee and related treatment hereunder shall be
determined by the Stock Option Committee
5. Reclassification, Consolidation or Merger
This Option is subject to certain anti-dilution provisions set forth in
the Plan.
6. Rights Prior to Exercise of Option
This Option is non-assignable and non-transferable by the Employee,
except in the event of his or her death as specified in the Plan and during the
Employee's (Director's) lifetime is exercisable only by him or her. The Employee
(Director) shall have no rights as a stockholder of the Company merely because
he or she has been granted this Option. Such rights only accrue upon exercise of
the Option, in whole or in part, payment of the appropriate exercise price, and
issuance and delivery of the underlying shares as provided in this Agreement.
7. Restrictions on Dispositions
In order to realize the tax benefits allowed under Section 424(a) of the
Internal Revenue Code of 1954, as amended, regarding any gains derived from the
sale of the shares underlying this Option, no disposition of such shares may be
made by the Employee (Director) within two (2) years from the date of the
granting of this option or within one (1) year after the transfer of such shares
to the Employee (Director) and the Employee (Director) must remain in the employ
of the Company from the time the Option is granted until three (3)
<PAGE>
<PAGE>
months before its exercise and in the case of his or her disability twelve (12)
months before its exercise.
All shares acquired by the Employee (Director) shall be deemed
restricted securities as that term is defined under the Securities Act of 1933,
as amended (the "Act"), and may not be sold or transferred unless certain
conditions are met. It is understood that the shares so acquired hereunder are
to be purchased for investment only and not with a view to, or for, sale in
connection with any public offering or distribution. The stock certificates
representing such shares shall contain a legend delineating all the restrictions
to which such shares are subject.
8. Plan and Its Amendment
This Option has been granted pursuant to the Plan, adopted by the
Company's Board of Directors and its shareholders, and the Board of Directors
has reserved the right to amend or discontinue the Plan at any time as long as
such action does not impair this Option or any rights thereunder.
9. Binding Effect
This Agreement shall inure to the benefit of an be binding upon the
parties hereto and their respective heirs, executors, administrators and
assigns. The laws of the State of Florida shall govern the interpretation and
enforceability of this Agreement.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be executed
on the day and year first above written.
PARAVANT COMPUTER SYSTEMS, INC.
BY:______________________________
Richard P. McNeight
President
AGREED AND ACCEPTED BY:
___________________________________
Employee
(Director)
<PAGE>
<PAGE>
EXHIBIT 4.5
NON-QUALIFIED STOCK OPTION AGREEMENT (PLAN 1-NQ)
------------------------------------------------
THIS AGREEMENT dated as of the ______ day of __________, 1993, the ("Grant
Date") by and between PARAVANT COMPUTER SYSTEMS, INC., with its principal office
at 780 S. Apollo Boulevard, Atrium One, Melbourne, Florida 32901, (the
"Company") and __________________ ___________________________, (the "Optionee").
WITNESSETH:
WHEREAS, the Company has adopted a Non-Qualified Stock Option Plan (the
"Plan 1-NQ") to permit options to purchase shares of the Company's common stock
to be granted to certain key employees of the Company; and
WHEREAS, the Optionee is a key employee of the Company and the Company
desires him/her to so remain by providing him/her with a means to acquire or to
increase his/her proprietary interest in the Company's success;
NOW, THEREFORE, in consideration of the promises and of the covenants and
agreement herein set forth, the parties hereby mutually covenant and agree as
follows:
1. Subject to the terms and conditions of the Plan 1-NQ, a copy of which is
attached hereto as Exhibit "A" and made a part hereof, and this Agreement, the
Company grants to the Optionee the option to purchase from the Company all or
any part of an aggregate number of ____________ shares of common stock of the
Company, (hereinafter such shares of stock are referred to as the "Optioned
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Shares" and the option to purchase the Optioned Shares is referred to as the
"Option").
2. The price to be paid for the Optioned Shares shall be _________________
___________(____________)________________ per share.
3. Subject to the terms and conditions of the Plan 1-NQ and this Agreement,
stock may be purchased pursuant to this Option at any time and from time to time
during a period of six (6) years from the date hereof, in whole or in part,
provided, however, that no shares of the stock may be purchased during the first
twelve (12) month period following the date hereof. All options to purchase
stock subject to this Agreement must be exercised on or before
_________________, ____ at which time all unexercised options will expire.
4. The Option may be exercised only by written notice, delivered or mailed
by postpaid registered or certified mail addressed to the Secretary of the
Company at the corporate headquarters, specifying the number of Optioned Shares
being purchased in cash or its equivalent. Within five (5) business days
following the date of exercise, payment shall be made in full or by such other
payment means as shall be mutually agreeable. Such purchased shares shall be
forthwith delivered to Optionee.
5. (a) If the Optionee's position and/or employment with the Company is
terminated for good cause, this Option shall terminate simultaneously therewith
and Optionee shall have no further right to exercise an Option thereafter. For
purposes of this paragraph, "good cause" shall be determined by the Committee
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of the Board of Directors of the Company and any such determination shall be
final, binding and conclusive.
(b) If the Optionee's position and/or employment with the Company ceases
for any reason other than (i) termination for good cause as set forth in
paragraph 5(a) above; or, (ii) death or disability, the term of this Option
shall expire on a date not later than sixty (60) days after termination.
(c) If the Optionee's relationship with the Company ceases by reason of
disability or death within the meaning of Section 37(e)(3) of the Internal
Revenue Code of 1986, as amended, the term of the Option shall expire on a date
which is the earlier of (i) not later than twelve (12) months following the date
of death or disability; or (ii) ___________, ____.
6. The Option herein granted shall not be transferrable by the Optionee
otherwise than by will (or trust) or the laws of descent and distribution, and
may be exercised during the life of the Optionee only by the Optionee, except as
set forth in 5(c) above.
7. Concurrently with entering into this Agreement, Optionee agrees to
immediately enter into the Stock Redemption Plan 1-NQ, incorporated herein as
Exhibit "B". The Optionee agrees for himself/herself and his/her heirs,
legatees, and legal representatives, with respect to all shares of stock
acquired pursuant to the terms and conditions of this Agreement (or any shares
of stock issued pursuant to a stock dividend or stock split thereof or any
securities issued in lieu thereof or in substitution
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or exchange therefor) that he/she and his/her heirs, legatees, and legal
representatives will not sell or otherwise dispose of such shares except
pursuant to the terms and conditions of the Stock Redemption Agreement Plan 1-NQ
(Exhibit "B").
8. If any change is made in the shares subject to Plan 1-NQ or any Option
granted thereunder (through merger, consolidation, reorganization,
recapitalization, or change in capital structure), appropriate adjustment shall
be made by the Committee in the number of shares and kind of common stock for
which Options may be or may have been granted under the Plan 1-NQ, to the end
that the proportional interest shall be maintained as before the occurrence of
such an event.
9. Optionee hereby acknowledges and represents the following:
(a) Optionee acknowledges and understands that the Optioned Shares have
not been registered with the Securities and Exchange Commission under the
Securities Act of 1933, as amended, in reliance upon the exemption from
registration provided in Regulation D of the Act, nor with any state security
regulatory authority in reliance upon particular statutory transactional
exemptions. As such, the shares purchased under this Option Agreement, if
exercised, cannot be sold subsequently or otherwise transferred without prior
(i) registration under the Act and under applicable state law or (ii) receipt of
an opinion of counsel for the issuer to the effect that such proposed sale or
other transfer does not affect the exempt status of the original issuance and
sale
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of these shares and is in compliance with all applicable state and federal
security laws.
(b) That the Optionee acknowledges that the Optioned Shares being sold
to him/her under this Agreement shall be subject to the Stock Redemption
Agreement Plan 1-NQ.
(c) That Optionee will be acquiring the stock for his/her own investment
and personal interest in the Company and not for the account of any other
person, with no intention on his/her party of affecting a redistribution of such
stock or any part thereof.
(d) That Optionee has asked questions and received all answers to
information he/she considers pertinent to form a knowledgeable opinion about
this investment.
(e) That the Optionee understands and acknowledges that he/she shall not
be deemed for any purpose to be a shareholder of the Company with respect to any
of the Optioned Shares, except to the extent that the Option herein granted
shall have been exercised with respect thereto and a stock certificate issued
therefor.
(f) That the existence of the Option herein granted shall not affect in
any way the right or power of the Company or its shareholders to make or
authorize any or all adjustments, recapitalizations, reorganizations, or other
changes in the Company's capital structure or its business, or any merger or
consolidation of the Company, or any issue of bonds, debentures, preferred or
prior preference stock ahead of or affecting the common stock of the Company or
the rights thereof, or dissolution
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or liquidation of the Company, or any sale or transfer of all or any part of its
assets or business or any other corporate act or proceeding, whether of a
similar character or otherwise.
(g) That as a condition of the granting of the Option herein granted,
the Optionee agrees, for himself/herself, and his/her Personal Representative,
that any dispute or disagreements which may arise under or as a result of or
pursuant to this Agreement shall be determined by the Committee in its sole
discretion, and that any interpretation by the Committee of the terms of this
Agreement shall be final, binding and conclusive.
10. This Option shall not confer upon the Optionee any right with respect
to the continuance of the relationship between Optionee and the Company, nor
shall it interfere in any way with the right of the Company to terminate the
Optionee's relationship with the Company.
11. This Agreement shall be governed and interpreted by the laws of the
State of Florida.
12. As used in this Agreement, the masculine, feminine or neuter gender and
the singular or plural number shall be deemed to include the others whenever the
context so indicates or requires.
13. This Agreement and the Exhibits hereto constitute the entire agreement
between the parties with respect to the subject matter hereof, and no change or
modification shall be valid unless made in writing and signed by the party
against whom such change or modification is sought to be enforced.
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IN WITNESS WHEREOF, the Company has caused this instrument to be executed
by its duly authorized officers and its corporate seal hereunto affixed, and the
Optionee has hereunto affixed his/her hand the day and year first above written.
PARAVANT COMPUTER SYSTEMS, INC.
ATTEST: BY: ___________________________
President
________________________________
Secretary (Seal) "Company"
________________________________ BY: ___________________________
Witness
________________________________
Witness "Optionee"
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PARAVANT COMPUTER SYSTEMS, INC.
Agreement Relating to Stock Option
Which Is Not an "Incentive Option"
Pursuant to the Nonemployee Directors' Stock Option Plan
--------------------
Option granted in Melbourne, Florida, as of
(hereinafter referred to as the "Date of Grant") by PARAVANT COMPUTER SYSTEMS,
INC. (the "Corporation") to (the "Grantee"):
1. THE OPTION. The Corporation hereby grants to the Grantee, effective
on the Date of Grant, a stock option (the "Option") to purchase, on the terms
and conditions herein set forth, up to fully paid, non-assessable
shares of the Corporation's Common Stock, par value $0.015 per share (the
"Shares"), at the option price set forth in Section 2 below.
The Option is granted pursuant to the Corporation's Nonemployee
Directors' Stock Option Plan (the "Plan"), a copy of which is delivered herewith
by the Corporation and receipt thereof is acknowledged by the Grantee. The
Option is subject in its entirety to all the applicable provisions of the Plan
which are incorporated herein by reference.
2. THE PURCHASE PRICE. The purchase price of the Shares shall be $
per share (the "Option Price").
3. EXERCISE OF OPTION.
(a) Except as otherwise provided in the Plan and this Option
Agreement, the Option is exercisable over a period commencing on the date hereof
and ending at the close of business ten years from the Date of Grant (the
"Expiration Date"). The Option may be exercised from time to time during such
period as to the total number of Shares allowable under this Section 3(a), or
any lesser amount thereof, but only during the continuation of the Grantee's
service as a director of the Corporation. In the event the Grantee shall cease
to be a director of the Corporation for any reason other than death or
disability, this Option shall terminate on the earlier to occur of (i) ninety
(90) days after the date of termination of service and (ii) the Expiration Date.
If the Grantee shall die or become disabled within the meaning of Section
22(e)(3) of the Internal Revenue Code of 1986, as amended, while still serving
as a director or prior to the termination of this Option in accordance with the
preceding sentence, the Option shall terminate on the earlier of (i) the first
anniversary of the Participant's death or disability, as the case may be, and
(ii) the Expiration Date. In the event of the death of the Grantee, this Option
may be exercised by the person or persons entitled to do so under the Grantee's
will (a "legatee"), or, if the Grantee shall fail to make testamentary
disposition of this Option, or shall die intestate, by the Grantee's legal
representative (a "legal representative"). If this Option shall extend to 100 or
more Shares, then this Option may not be exercised for less than 100 Shares at
any one time, and if this Option shall extend to
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less than 100 Shares, then this Option must be exercised for all such Shares at
one time.
(b) Not less than five days nor more than thirty days prior to
the date upon which all or any portion of the Option is to be exercised, the
person entitled to exercise the Option shall deliver to the Corporation written
notice (the "Notice") of his election to exercise all or a part of the Option,
which Notice shall specify the date for the exercise of the Option and the
number of Shares in respect of which the Option is to be exercised. The date
specified in the Notice shall be a business day of the Corporation.
(c) On the date specified in the Notice, the person entitled
to exercise the Option shall pay to the Corporation the Option Price of the
Shares in respect of which the Option is exercised and the minimum amount of any
Federal and state withholding tax and any employment tax. The Option Price shall
be paid in full at the time of purchase, in cash or by check or with Common
Stock of the Corporation which has been owned by the Grantee for at least six
months prior to the exercise of the Option, the value of which shall be
determined in the same manner as provided for determining the fair market value
of a share of Common Stock as set forth in Section 7(a) of the Plan. If the
Option is exercised in accordance with the provisions of the Plan and this
Option Agreement, the Corporation shall deliver to such person certificates
representing the number of Shares or other securities in respect of which the
Option is being exercised, which Shares or other securities shall be registered
in his name.
4. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) The Grantee represents and warrants that he is acquiring
this Option and, in the event this Option is exercised, the Shares, for
investment, for his own account and not with a view to the distribution thereof,
and that he has no present intention of disposing of this Option or the Shares
or any interest therein or sharing ownership thereof with any other person or
entity.
(b) The Grantee agrees that he will not offer, sell,
hypothecate, transfer or otherwise dispose of any of the Shares unless either:
(i) A registration statement covering the Shares which are to
be so offered has been filed with the Securities and Exchange
Commission pursuant to the Securities Act of 1933 (the "Securities
Act") and such sale, transfer or other disposition is accompanied by a
prospectus relating to a Securities Act covering the Shares which are
to be sold, transferred or otherwise disposed of and meeting the
requirements of Section 10 of the Securities Act; or
(ii) Counsel satisfactory to the Corporation renders a
reasoned opinion in writing and addressed to the Corporation,
satisfactory in form and substance to the Corporation and its counsel,
that in the opinion of such counsel such proposed offer, sale, transfer
or other disposition of the Shares is
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exempt from the provisions of Section 5 of the Securities Act in view
of the circumstances of such proposed offer, sale, transfer or other
disposition.
(c) The Grantee acknowledges that (i) the Shares and this
Option constitute "securities" under the Securities Act and/or the Securities
Exchange Act of 1934 and/or the Rules and Regulations promulgated under said
acts; (ii) the Shares must be held indefinitely unless subsequently registered
under the Securities Act or an exemption from such registration is available;
and (iii) the Corporation shall not be obligated to issue or deliver any Shares
upon exercise of the Option if to do so would violate the Securities Act or any
state securities law and the Corporation shall have no obligation to file any
registration statement or take any other action required or permitted by any
such law.
(d) The certificate or certificates representing the Shares
shall have an appropriate legend refering to the terms of this Option.
(e) The Grantee is advised that he or his legatee or legal
representative, as the case may be and as defined above, may be required to make
an appropriate representation at the time of any exercise of this Option in form
and substance similar to the representations contained herein, relating to the
Shares then being purchased.
(f) The Grantee acknowledges that, in the event of termination
of his service as a director of the Corporation, his rights to exercise this
Option are restricted as set forth in Section 3(a) above.
5. SUCCESSORS AND ASSIGNS. This Option Agreement shall be binding upon
and shall inure to the benefit of any successor or assign of the Corporation
and, to the extent herein provided, shall be binding upon and inure to the
benefits of the Grantee's legatee or legal representative, as defined above.
6. ADJUSTMENT OF OPTIONS.
(a) The number of Shares issuable upon exercise of this
Option, or the amount and kind of other securities issuable in addition thereto
or in lieu thereof upon the occurrence of the events specified in Section 8 of
the Plan, and any changes to the Option Price or other terms contemplated
thereby, shall be determined and subject to adjustment, as the case may be, in
accordance with the procedures therein specified.
(b) Fractional shares resulting from any adjustment in options
pursuant to this Section may be settled in cash or otherwise as the appropriate
committee of the Board of Directors shall determine. Notice of any adjustment in
this Option and such adjustment (whether or not such notice is given) shall be
effective and binding for all purposes of the Plan.
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7. EXERCISE AND TRANSFERABILITY OF OPTION. During the lifetime of the
Grantee, this Option is exercisable only by him and shall not be assignable or
transferable by him and no other person shall acquire any rights therein, except
by will or the laws of descent and distribution or pursuant to a qualified
domestic relations order. If the Grantee, while still serving as a director of
the Corporation, shall die within the Option Period, his legatee or legal
representative shall have the rights provided in Section 3(a) above.
If the foregoing is in accordance with the Grantee's understanding and
approved by him, he may so confirm by signing and returning the duplicate of
this Option Agreement delivered for that purpose.
PARAVANT COMPUTER SYSTEMS, INC.
By
______________________________________
Name:
Title:
The foregoing is in accordance with my understanding and is hereby confirmed
and agreed to as of the Date of Grant.
_________________________________________
(Signature of Grantee)
_________________________________________
(Please print name)
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Exhibit 5.1
[LETTERHEAD OF TENZER GREENBLATT LLP]
September 3, 1998
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D. C. 20549-1004
Re: Paravant Computer Systems, Inc.
Gentlemen:
We have acted as counsel to Paravant Computer Systems, Inc., a Florida
corporation (the "Company"), in connection with the preparation and filing of a
Registration Statement on Form S-8 (the "Registration Statement") relating to
the registration under the Securities Act of 1933, as amended, and the rules and
regulations thereunder, of 4,240,868 shares of Common Stock, par value $.015 per
share ("Common Stock"), of the Company, of which 1,938,382 shares (the "Reoffer
Shares") are to be offered for resale pursuant to the reoffer prospectus (the
"Reoffer Prospectus") included as part of the Registration Statement. Of the
shares of Common Stock being registered pursuant to the Registration Statement,
(i) an aggregate of 3,090,050 shares (the "Option Shares") are reserved for
issuance pursuant to options ("Options") granted or available for future grant
under the Company's Incentive Stock Option Plan, the Company's Non-Qualified
Stock Option Plan, the Company's Nonemployee Directors' Stock Option Plan and
certain Special Non-Qualified Non-Plan Stock Option Agreements (collectively,
the "Plans"), including Options to acquire an aggregate of 787,564 shares of
Common Stock granted to certain affiliates of the Company, which shares are
included in the Reoffer Prospectus, (ii) an aggregate of 148,617 shares
currently held by UES, Inc. ("UES"), the parent company of the Company prior to
the Company's June 1996 initial public offering (the "IPO"), are subject to
certain employee stock options granted by UES to certain affiliates of the
Company prior to the IPO (the "UES Options") and are included in the Reoffer
Prospectus, (iii) an aggregate of 743,079 shares were previously acquired by
certain affiliates of the Company upon exercise of UES Options granted to them
by UES prior to the IPO and are included in the Reoffer Prospectus and (iv) an
aggregate of 259,122 shares were previously acquired by certain current and
former affiliates of the Company upon exercise of Options granted to them under
the Plans and are included in the Reoffer Prospectus. The shares of Common Stock
included in the Reoffer Prospectus are collectively referred to herein as the
"Reoffer Shares."
In connection with this opinion, we have examined originals, or copies
certified or otherwise identified to our satisfaction, of the Articles of
Incorporation of the Company, the By-Laws of the Company, each as amended to
date, the minutes and other records of the proceedings of the Board of Directors
and of the stockholders of the Company, the Plans and such other documents,
corporate and public records, agreements, and certificates of officers of the
Company and of public and other officials, and we have considered such questions
of law, as we have deemed necessary as a basis for the opinions hereinafter
expressed. In such examination we have assumed the genuineness of all signatures
and the authenticity of all documents submitted to us as originals and the
conformity to original documents of all documents submitted to us as certified
or photostatic copies. As to any facts material to this opinion, we have relied
upon statements and representations of officers and other representatives of the
Company.
Based on and subject to the foregoing, we hereby advise you that, in
our opinion, (i) the issuance and sale of the Option Shares upon exercise of
Options in accordance with the terms and subject to the conditions set forth in
the agreements pursuant to which the Options were or will be granted (the
"Option Agreements") have been duly authorized and, when the consideration for
any such Option Shares shall have been received by the Company and shares are
issued pursuant to such Options in accordance with the terms and subject to the
conditions set forth in the respective Option Agreements, such shares of Common
Stock will be validly issued, fully paid and nonassessable; and (ii) the Reoffer
Shares are validly issued, fully paid and nonassessable.
We are lawyers admitted to practice only in the State of New York and
we are expert in, and express opinions only as to, the laws of the State of New
York and of the federal laws of the United States of America.
We hereby consent to use and filing of this opinion in connection with
the Registration Statement and to the use of our name in the Registration
Statement under the caption "Legal Matters."
Very truly yours,
TENZER GREENBLATT LLP
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Exhibit 23.1
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
Board of Directors
Paravant Computer Systems, Inc.:
We consent to the use of our report incorporated herein by reference and to the
reference to our firm under the heading "Experts" in the Prospectus.
KPMG PEAT MARWICK LLP
Orlando, Florida
September 3, 1998
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