-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, CEF+nPWkRLaOGvcWzFbBUCe7q2waIOX6mx3h7NnJYCuasoSrzGMRjTAnW4p4WJgC od0o2EUkXXe0Hr5k1HGTSg== 0000950117-99-001405.txt : 19990713 0000950117-99-001405.hdr.sgml : 19990713 ACCESSION NUMBER: 0000950117-99-001405 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990712 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PARAVANT INC CENTRAL INDEX KEY: 0000944405 STANDARD INDUSTRIAL CLASSIFICATION: ELECTRONIC COMPUTERS [3571] IRS NUMBER: 592209179 STATE OF INCORPORATION: FL FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-82649 FILM NUMBER: 99662461 BUSINESS ADDRESS: STREET 1: 1615A WEST NASA BLVD CITY: MELBOURNE STATE: FL ZIP: 32901 BUSINESS PHONE: 4077273672 MAIL ADDRESS: STREET 1: 1615A WEST NASA BLVD CITY: MELBOURNE STATE: FL ZIP: 32901 FORMER COMPANY: FORMER CONFORMED NAME: PARAVANT COMPUTER SYSTEMS INC /FL/ DATE OF NAME CHANGE: 19950424 S-3 1 PARAVANT INC. S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JULY 12, 1999 REGISTRATION STATEMENT NO. 333- ________________________________________________________________________________ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 ------------------------ FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------ PARAVANT INC. (EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER) FLORIDA 59-2209179 (STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) IDENTIFICATION NUMBER)
1615A WEST NASA BOULEVARD MELBOURNE, FLORIDA 32901 (407) 727-3672 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES) KEVIN J. BARTCZAK VICE PRESIDENT, CHIEF FINANCIAL OFFICER AND TREASURER PARAVANT INC. 1615A WEST NASA BOULEVARD MELBOURNE, FLORIDA 32901 (407) 727-3672 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE) ------------------------ COPIES OF COMMUNICATIONS TO: ROBERT N. BLACKFORD, ESQ. HOLLAND & KNIGHT LLP 200 SOUTH ORANGE AVENUE, SUITE 2600 ORLANDO, FLORIDA 32801 (407) 425-8500 APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after this Registration Statement becomes effective. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. [x] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering. [ ] If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of earlier effective registration statement for the same offering. [ ] If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] ------------------------ CALCULATION OF REGISTRATION FEE
PROPOSED MAXIMUM PROPOSED MAXIMUM TITLE OF SHARES AMOUNT TO BE OFFERING PRICE AGGREGATE AMOUNT OF TO BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION FEE Common Stock, par value $.015 per share. 5,443,775(2) 4.22 22,972,731 6,386
(1) Estimated pursuant to Rule 457(c) under the Securities Act solely for purposes of calculating the Registration Fee. The fee is based upon the average high and low price for shares of Common Stock of the registrant reported on the Nasdaq National Market System on July 6, 1999. (2) Includes 45,000 shares of common stock issuable upon exercise of outstanding warrants. Pursuant to Rule 416 of the Securities Act, this Registration Statement also relates to such additional indeterminate number of shares of common stock as may become issuable by reason of stock splits, dividends and similar adjustments in accordance with the antidilution provisions of such warrants. ------------------------ THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. ________________________________________________________________________________ SUBJECT TO COMPLETION, DATED JULY 9, 1999 PROSPECTUS PARAVANT INC. 5,443,775 SHARES OF COMMON STOCK ------------------------ This is an offering of shares of common stock of Paravant Inc. The selling stockholders identified in this prospectus are offering all of these shares. We will not receive any of the proceeds from the sale of these shares by the selling stockholders. The selling stockholders may from time to time sell these shares to or through one or more underwriters, directly to other purchasers or through agents, on the Nasdaq National Market in ordinary brokerage transactions, in negotiated transactions or otherwise, at market prices prevailing at the time of sale, at prices related to the then-prevailing market price or at negotiated prices. For additional information on the methods of sale, you should refer to the section entitled 'Plan of Distribution.' Our common stock is listed on the Nasdaq National Market under the symbol 'PVAT'. ------------------------ INVESTING IN THE COMMON STOCK INVOLVES RISKS. SEE 'RISK FACTORS' BEGINNING ON PAGE 5 FOR A DISCUSSION OF FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS. ------------------------ NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED ON THE ADEQUACY OR ACCURACY OF THE DISCLOSURES IN THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. ------------------------ THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. THE SELLING STOCKHOLDERS MAY NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED. THE DATE OF THIS PROSPECTUS IS JULY 9, 1999. WHERE YOU CAN FIND MORE INFORMATION We are subject to the informational requirements of the Securities Exchange Act of 1934 and file reports, proxy statements and other information with the SEC. You may read and copy these materials at the SEC's Public Reference Room at 450 Fifth Street, NW, Washington D.C. 20549. You may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330. The SEC maintains an Internet web site at http://www.sec.gov that contains reports, proxy and information statements and other information regarding registrants that file electronically with the SEC. We have filed with the SEC a registration statement on Form S-3, of which this prospectus is a part, under the Securities Act of 1933 to register the offering of these shares. This prospectus, which is a part of the registration statement, does not contain all of the information shown in the registration statement. In addition, certain documents filed by us with the SEC have been incorporated into this prospectus by reference or omitted from this prospectus as permitted by the rules and regulations of the SEC. Statements in this prospectus concerning the contents of any of these documents are not necessarily complete. With respect to each of these documents that were filed with the SEC as an exhibit to the registration statement, you are referred to the exhibit for a more complete description, and each of these statements is qualified in its entirety by this reference. INCORPORATION BY REFERENCE The SEC permits us to 'incorporate by reference' information into this prospectus. This means that we may refer you to important information about us provided in other documents on file with the SEC. The information incorporated by reference is considered to be part of this prospectus, unless that information has been updated in this prospectus. In addition, we may, from time to time, update information in this prospectus or in another document that is incorporated by reference. Whenever we file a document with the SEC that updates information in this prospectus or in any other document incorporated by reference, the new information will be considered to replace the old information. Any statement in this document that is subsequently updated will no longer be considered a part of this prospectus. The following documents that we previously filed with the SEC are incorporated into this prospectus by reference: (1) Annual Report on Form 10-KSB for the year ended September 30, 1998. (2) Quarterly Report on Form 10-QSB for the quarter ended December 31, 1998. (3) Quarterly Report on Form 10-QSB for the quarter ended March 31, 1999. (4) Current Reports on Form 8-K filed on June 3, 1999, April 21, 1999, and October 23, 1998 (as amended on December 22, 1998 and December 23, 1998). (5) Form 8-A (with respect to the description of our common stock contained in that document) filed on May 30, 1996. (6) Proxy Statement filed on January 19, 1999. All documents we file under Sections 13(a), 13(c), 14 or 15(d) of the Securities Exchange Act after the date of this prospectus and before termination of the offering of these shares are also incorporated by reference into this prospectus as of the date of filing of those documents. We will provide without charge to any person who receives a copy of this prospectus, on the written or oral request of that person, a copy of any or all of the information that has been incorporated by reference into this prospectus. We will not provide exhibits to any of those documents unless the exhibits are specifically incorporated by reference into this prospectus. You may make written or oral requests to us, attention William R. Craven, Secretary, at 1615A West Nasa Boulevard, Melbourne, Florida 32901, telephone number (407) 727-3672. 2 PROSPECTUS SUMMARY This summary highlights information contained elsewhere in this prospectus or incorporated into this prospectus by reference. It is not complete and may not contain all of the information that you should consider before investing in our common stock. You should read this entire prospectus carefully before deciding whether to purchase shares of our common stock. THE COMPANY We serve the defense industry with a range of electronic products engineered to meet applications within aircraft support, fire control and signal intelligence. We also offer software design and integration services and extensive customization services to modify our standard products to the specific needs of end users. Our products have a reputation for high-level performance and reliability in difficult circumstances. We were incorporated in Florida in June 1982 under the name Paravant Computer Systems, Inc. We completed our IPO in June 1996. We changed our name to Paravant Inc. in November 1998. In October 1998, we completed the acquisitions of the stock of EDL, a manufacturer of various military-qualified avionics for U.S. and friendly foreign airborne applications, and assets of STL, a designer and producer of instruments and devices used in governmental signal collection and analysis laboratories located in the U.S. and foreign countries. Products. We offer signal processing equipment, aircraft support technology and a line of rugged, portable computers. We make a standard line of digital signal processing equipment that we offer to the signal intelligence community as standard commercial off-the-shelf items. We typically package the electronic equipment in standard format industrial racks. We work to continually upgrade the performance and capabilities of this line. The equipment is available for a variety of signal processing applications. In the area of aircraft support, we design upgrades and improvements to rotary wing and fixed wing aircraft used primarily by the U.S. Special Operations Forces. We offer a range of upgrades to improve and update the aircraft. Past upgrades include the NVIS lighting flight controls that permit the use of night vision goggles while operating the aircraft. Other products include an in-flight video recorder and rear color displays. We have also developed a highly cost-effective autopilot system, the AHHS, that allows the pilot of an older helicopter to automatically hold altitude and/or hover position at low flight levels, resulting in increased safety for the crew. Our ruggedized computers are designed to meet and exceed certain military specifications for operations in harsh environments and for insulation from electromagnetic interference. In the military area, our computers are incorporated into aircraft and shipboard diagnostics, testing and maintenance systems, controller and radar displays for missile systems, performance recorders in training exercises, mission loaders and verifiers of data and field command control systems. In the medical area, we offer custom platforms, including medical power supplies, custom interfaces to support telemetry hardware and protocols, a display, and various forms of input devices. These products permit the medical practitioner to communicate with and adjust implanted medical devices. Customization. We provide our customers and end users with engineering services to modify or adjust our products to meet their specific needs and requirements. Because our competitors generally do not provide customization services for electronics, we believe that these services distinguish our products in the marketplace. Customers. We sell our products, directly or indirectly, to the U.S. military and foreign allied military establishments; large aerospace and military contractors supplying these military establishments; 3 government agencies regulating environmental, geologic and forestry matters; state departments of transportation; forest product companies; and medical device manufacturers. Our principal executive offices are located at 1615A West Nasa Boulevard, Melbourne, Florida 32901 and our telephone number is (407) 727-3672. RECENT DEVELOPMENTS Warrant Redemption. On June 8, 1999, we completed the redemption of warrants to purchase our common stock that were issued in connection with our IPO and a 1995 private placement. A total of 5,125,837 warrants were exercised before the June 8 deadline, increasing the total number of shares of common stock outstanding to 17,426,568 as of June 15, 1999. Termination of General Atronics Letter of Intent. On April 5, 1999, we signed a letter of intent to acquire General Atronics Corporation, a privately-held high technology defense electronics company. On June 2, 1999, we announced that we reached a mutual agreement with General Atronics to terminate our discussions regarding our proposed acquisition of General Atronics. THE OFFERING Securities Offered........................ Up to 5,443,775 shares of common stock, 45,000 of which are issuable upon the exercise of outstanding warrants. Common Stock Outstanding as of June 15, 1999.................................... 17,426,568 shares(1) Use of Proceeds........................... We will not receive any proceeds from the sale of this common stock by the selling stockholders. Risk Factors.............................. Our common stock is speculative and involves a high degree of risk and should not be purchased by investors who cannot afford the loss of their entire investment. See 'Risk Factors.' Nasdaq National Market symbol............. 'PVAT'
- ------------ (1) Includes all of the common stock being offered by the selling stockholders except the 45,000 issuable upon the exercise of outstanding warrants held by The Equity Group, Inc. Does not include a total of 1,971,421 shares of common stock reserved for issuance upon the exercise of outstanding stock options and warrants and 1,237,442 shares of common stock reserved for issuance upon the exercise of future stock options granted. 4 RISK FACTORS You should carefully consider the following risk factors and other information contained and incorporated by reference into this prospectus before deciding to invest in our common stock. This section includes or refers to forward-looking statements. You should refer to the explanation of the qualification and limitations on those forward-looking statements discussed on Page 11 of this prospectus. OUR SUCCESS DEPENDS UPON MILITARY AND SIGNAL INTELLIGENCE COMMUNITY EXPENDITURES Most of our historical sales have been to the United States military, foreign allied militaries, military suppliers or the signal intelligence community. Our future success depends on the military's continued purchase of our portable computers or equipment manufactured by others which contain our devices and the signal intelligence community's continued purchase of our digital processing equipment. Many governments have attempted to reduce military expenditures for a number 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. We expect that these downward trends will continue for the foreseeable future. Although to date we have generally not been adversely affected by delays in contract awards or reductions in spending, any future delays or reductions may have a material adverse effect on our business. Recent announcements from the U.S. Congress and Department of Defense indicate that overall defense spending may stabilize or increase modestly; however, we cannot predict the amount or pattern of this spending. We believe 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 those systems. During this period, we anticipate that the U.S. military will still emphasize the upgrading, repair and extended use of older systems. Should the U.S. military alter this policy and seek full-scale production of new systems, sales of our products may decrease. WE MUST COMPLY WITH REGULATORY OPERATIONAL STANDARDS TO EXPAND OUR SALES Our manufacturing and assembly facility and procedures in Melbourne have been certified as compliant 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. The European Economic Community has adopted this standard as its preferred quality standard, as has, to some degree, the Department of Defense and the FDA. The FDA has also approved us as a contract manufacturer for manufacturers of specific medical products. Our Dayton, Ohio facilities are not so certified, nor do we intend to have those facilities become ISO-certified in the near future. If we fail to maintain compliance with these standards for our Melbourne facility, we may be unable to expand our presence in the domestic and international military markets for ruggedized computers, which could have a material adverse effect on our direct and indirect sales to the U.S. military as well as to foreign customers. Further, if we fail to maintain FDA approval, our sales in the medical market and our ability to expand into this market could be materially and adversely affected. WE ARE SUBJECT TO GOVERNMENT REGULATION AND RISKS RELATED TO THE TERMS OF GOVERNMENT CONTRACTS As a supplier of equipment and services, directly or indirectly, to the United States government, we are subject to risks of dependence on government appropriations, termination of contracts without cause, contract renegotiation, and competition for the available Department of Defense business. While we believe we do not have a material amount of our business subject to contracts with the Department of Defense allowing renegotiation, we could become subject to these terms in the future. In addition, many of our government contracts provide the Department 5 of Defense the right to audit our cost records and are subject to regulations providing for price reductions if we submit inaccurate cost information. A SIGNIFICANT AMOUNT OF OUR REVENUES COMES FROM A FEW CUSTOMERS Our business substantially depends on a relatively small number of customers and Department of Defense programs. In recent fiscal years, Raytheon Company's Missile Systems Division and Lockheed Martin Corporation have accounted for a significant portion of our total sales. In addition, as of March 31, 1999, our backlog was approximately $18.8 million, consisting of firm fixed price purchase orders, 78% of which was represented by large orders from 3 customers. If we experience a loss or diminution of orders from any of these customers, our results of operations or financial condition could be materially and adversely affected. Also, in recent years prime contractors serving the defense industry have undergone consolidation. The reduction in the number of defense contractors could negatively impact on our business. OUR QUARTERLY RESULTS FLUCTUATE SIGNIFICANTLY We experience, and expect to continue to experience, significant fluctuations in our results of operations from quarter to quarter. Because so much of our sales are related to the U.S. military and government procurement, our business is greatly influenced by the timing of these purchases. Variations in the timing of deliveries under outstanding purchase orders, variations in the size of purchase orders and related deliveries, and the cancellations or reductions of purchase orders are all factors that could cause our quarterly results to vary. Consequently, our results of operations for a particular quarter may not meet the expectations of public market analysts and investors. This could materially and adversely affect the price of our common stock. THE COMPLETION OF OUR BACKLOG MAY NOT BE PROFITABLE AND COULD ADVERSELY EFFECT OUR LIQUIDITY The purchase orders included in our backlog may not generate profits within historical levels. In addition, the completion of the orders constituting our backlog, and any new orders which may be accepted by us, could result in additional liquidity pressures that cannot be addressed in a manner consistent with our past practices. If we fail to obtain additional purchase orders before completion of our backlog, our liquidity, results of operations and financial condition could be materially and adversely affected. WE MUST DEVELOP NEW PRODUCTS AND ENHANCE CURRENT PRODUCTS TO KEEP UP WITH RAPID TECHNOLOGICAL CHANGE Rapid technological advances, changes in customer requirements, and frequent new product introductions and enhancements characterize our markets. Our business requires substantial ongoing research and development efforts and expenditures, and our future success will depend in large measure on our ability to enhance our current products and develop and introduce new products that keep pace with technological developments in response to evolving customer requirements. In addition, we may misgauge market needs and introduce products that fail to gain the necessary market acceptance due to a variety of factors, including pricing. If we fail to anticipate or respond adequately to technological developments and changing customer requirements, or experience significant delays in new product development or introduction or technological failures of our products or the systems in which they are incorporated, we could face a material loss of anticipated future revenues and a serious impairment of our competitiveness. 6 OUR SALES CYCLE IS LENGTHY On the military side of our business, we often experience a lengthy sales cycle that, from beginning to end, may run for as long as five years. There are generally a number of crucial points in this cycle, including: identifying a product need in a military program; retaining the prime contractor; retaining the subcontractors for each element; assembling the elements for prototype systems; testing of the systems; funding for production runs of the systems; and executing 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, we will also experience a lengthy sales cycle with respect to our medical-related computer products, primarily due to the length of time required to obtain approval of these products from the FDA. In developing programmers for implantable medical device manufacturers, we 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 our programmer, for FDA approval, which can take from three to eighteen months. Any delays in obtaining FDA approval for any of these devices, whether resulting from the portion of the device relating to our programmer or from the portion of the device developed by the manufacturer of the implantable device, could have a material adverse effect on our business and operations. Consequently, we invest heavily in time, money and manpower to obtain subcontracts for military production runs on our products and to design and implement our medical computer products. Delays in our sales cycle could materially and adversely affect our results of operations and financial condition. Further, our investments may yield no business at all or may take so long to develop that our resources are strained or other more profitable opportunities are missed. OUR MARKETS ARE HIGHLY COMPETITIVE We compete 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 financial, technological, manufacturing and marketing resources than we do. We compete in the aircraft support business with original aircraft manufacturers such as Sikorsky and in the signal intelligence business with the former E Systems Division of Raytheon and a specialty division of TRW. In the medical systems business, we compete with medical systems integrators and the in-house engineering groups of our customers. We compete on the basis of customization capabilities, price, performance, delivery and quality. In many situations, we are the highest-priced bidder by a large margin. For computer applications where harsh environmental and operational conditions prevail, customers are sometimes willing to pay our higher prices. However, in less demanding conditions, our computer products are at a competitive disadvantage and our sales are adversely affected. Military procurement policies requiring purchases of computers for the military under Indefinite Delivery, Indefinite Quantity contracts may seriously restrict our selling efforts to the military. These contracts encourage large purchases of computers and favor large companies with the resources to handle orders of that magnitude. Unless we can form strategic alliances with larger military contractors, our sale of computers to the military may be materially and adversely affected by these policies. In the military and government markets, we will often be engaged, directly or indirectly, in the process of seeking competitive bid or negotiated contracts with government departments and 7 agencies. We may have difficulty complying with the rules and regulations that apply to these government contracts. WE RELY ON A FEW SUB-CONTRACTORS AND SUPPLIERS FOR KEY COMPONENTS We subcontract the fabrication of our computer boards to a few third party manufacturers and the fabrication of some electronic circuitboards for our digital signal processing equipment to Catalina Research. We purchase the metal cases, hard disk drives, brackets, window panels and the keyboards for our portable computers from sole sources such as Distec, Xcel and HiTech. We also license our software from sole sources, including Microsoft, Phoenix Technology, Magnavox and JFK Associates. Outside suppliers furnish many of the other components we use. Except for our software suppliers, we do not have written agreements with any of these subcontractors or suppliers. This reliance on a few subcontractors, sole sources and other suppliers may result in delays in deliveries and may result in quality control and production problems. During any interruption in supplies, we may have to curtail the production and sale of our computers for an indefinite period. Accordingly, any interruption, suspension or termination of component deliveries from our suppliers could have a material adverse effect on our business. PROTECTION OF OUR INTELLECTUAL PROPERTY IS LIMITED We have no patent or copyright protection for our products. Our ability to compete effectively with other companies depends on our ability to maintain the proprietary nature of our technologies. We intend to rely substantially on unpatented proprietary information and know-how. Others may develop this information and know-how independently or otherwise obtain access to our technology, which could have a material adverse effect on our business. In addition, although we do not believe that any of our technologies infringes on the rights of others, we may face these claims in the future. Infringement claims could result in substantial costs and diversion of our resources. A claimant could obtain equitable relief preventing us from selling the allegedly infringing product. In such a case, we could attempt to obtain a license from the claimant covering the intellectual property, but the terms of that license may not be acceptable. PRODUCT DEFECTS COULD RESULT IN LIABILITY Our products may malfunction and cause a loss of or error in data, loss of man hours, damage to, or destruction of, equipment, or delays. Consequently, we may be subject to claims if malfunctions or breakdowns occur. While we maintain product liability insurance, our coverage may not be adequate to satisfy future claims. Our sales contracts for medical products require our customers to indemnify us from or provide insurance for any claims brought against us as a result of any malfunctions in the programmable devices sold by our customers. These rights may not be adequate to satisfy future claims. Further, we may not be able to secure these provisions in future sales contracts. Liability for product malfunctions or breakdowns in excess of our insurance coverage could have a material adverse effect on our financial condition and results of operations. WE MAY NEED ADDITIONAL FINANCING While we anticipate that our existing working capital and anticipated cash flow from operations will be sufficient to satisfy our cash requirements for at least twelve months, if our plans change or existing working capital and projected cash flow are insufficient to fund operations, we could be required to seek additional financing. Except for our current line of credit, we have no current arrangements with respect to, or sources of, additional financing. Accordingly, additional financing may not be available to us when needed on acceptable terms, or at all. If we fail to obtain additional financing, our long-term liquidity and our expansion plans could be materially and adversely affected. 8 RISKS ASSOCIATED WITH OUR ACQUISITION STRATEGY We evaluate, on an ongoing basis, potential acquisitions of, or investments in, businesses that complement or expand our existing operations. We cannot assure that any future acquisitions will be successful or improve our operating results. In addition, our ability to complete acquisitions will depend on the availability of both suitable target businesses and acceptable financing. Any future acquisitions may result in a dilutive issuance of additional equity securities, the incurrence of additional debt or increased working capital requirements. Any 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 our business, financial condition or results of operations. Future acquisitions may divert management's attention from our operations and entail difficulties assimilating the operations, products, services and personnel of any acquired company. Although we attempt to evaluate the risks inherent in any particular acquisition, we may not properly ascertain or assess all significant risks before consummating any acquisition. YEAR 2000 COMPLIANCE ISSUES COULD ADVERSELY AFFECT OUR BUSINESS We recognize that Year 2000 issues could result in system failures or miscalculations, resulting in disruptions of operations. We have engaged in an evaluation of the Year 2000 readiness of our information technology and non-information technology systems. We believe that the worst-case Year 2000 scenario for our products would require users to enter time and date information after 0100 hours on January 1 and reboot the products. Because our customer base changes from year to year, we have been unable to identify our primary customers in the Year 2000. If our customers have Year 2000 compliance problems, we could face delays in receiving payments, adversely affecting our sales and cash flow. Our contracts department has developed a contingency plan to mitigate the effect of our customers' Year 2000 problems. OUR DIRECTORS AND OFFICERS CAN EXERCISE CONTROL THROUGH THEIR OWNERSHIP OF COMMON STOCK As of June 15, 1999, our directors and executive officers beneficially owned approximately 34.4% of our common stock. Although they do not hold, in the aggregate, a majority of our common stock, their ownership enables them to substantially control the election of directors and the results of any other matters submitted to a vote of stockholders. OUR STOCK PRICE AND LIQUIDITY COULD BE ADVERSELY AFFECTED IF WE FAIL TO MEET THE REQUIREMENTS OF THE NASDAQ NATIONAL MARKET SYSTEM Our common stock is quoted on the Nasdaq National Market System. To remain listed, we must have, among other things, either $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, 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 we fail to satisfy the Nasdaq National Market's maintenance criteria in the future, our common stock could be delisted. We would then seek to list its securities on the Nasdaq SmallCap Market. However, if we were unsuccessful, trading in our common stock would thereafter be conducted in the over-the-counter market in the so-called 'pink sheets' or the NASD's Electronic Bulletin Board. A delisting would make it more difficult to dispose of or to obtain quotations as to the price of our common stock. THE ISSUANCE OF PREFERRED STOCK COULD ADVERSELY AFFECT OUR STOCK PRICE Our board may issue shares of preferred stock, without stockholder approval, on such terms as it may determine. The rights of the holders of common stock will be subject to, and may be 9 adversely affected by, the rights of the holders of any preferred stock that may be issued in the future. If we issue preferred stock, a third party may find it more difficult to acquire, or may be discouraged from acquiring, a majority of our common stock, even if our stockholders believe that such an acquisition would be in their interests. This could prevent an increase or cause a decline in the price of our common stock. OUR STOCK PRICE MAY CONTINUE TO BE VOLATILE The price of our common stock has fluctuated substantially since our IPO in June 1996 and may continue to do so. 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 these companies. These broad market fluctuations may adversely affect the price of our common stock. Following periods of volatility in stock prices, some companies have faced securities class action litigation. If we were to face this type of litigation, which often results in substantial costs and a diversion of management's attention and resources, our business, operating results and financial condition could be materially and adversely affected. THE SALE, OR THE POSSIBILITY OF A SALE, OF A LARGE NUMBER OF THE SHARES COVERED BY THIS PROSPECTUS COULD CAUSE OUR STOCK PRICE TO FALL All of the shares of our common stock covered by this prospectus that were issued to shareholders of EDL and STL are subject to a lock-up agreement. Under this agreement, these shares will become eligible for sale on April 1, 2000. As this date approaches, the price of our common stock may fall. Mr. Joshi, our Chairman and Chief Executive Officer, beneficially owns a majority of the other shares covered by this prospectus. If he sold large amounts of this common stock, the price of our common stock would probably fall. In addition, these sales, or the possibility of these sales, could make it more difficult for us to sell common stock in the future. WE MUST RETAIN OUR KEY EXECUTIVES We are highly dependent on the services of our executive officers. We have entered into employment contracts with each of them other than Mr. Joshi. Each employment agreement has a term expiring more than twelve months after the date of this prospectus. The loss of the services of any of these executive officers could materially and adversely affect our business and operations. FOREIGN SALES ENTAIL UNIQUE RISKS We derived approximately 5% and 1% of our total sales from foreign markets for the fiscal years ended September 30, 1998 and 1997, respectively. We expect that foreign sales will represent a greater portion of our revenues in the future. In addition, foreign sales of our products by both Raytheon and Lockheed Martin represent an important percentage of their sales opportunities. The following risks associated with foreign sales could materially and adversely affect our business: political and economic instability; restrictive trade policies of foreign governments; inconsistent product regulation by foreign agencies or governments; currency valuation variations; exchange control problems; imposition of product tariffs; and burdens of complying with a wide variety of international and U.S. export laws and differing regulatory requirements. To date, we have transacted our foreign sales in U.S. dollars, and payments have generally been supported by letters of credit. If any future foreign sales are transacted in a foreign currency or 10 not supported by letters of credit, we could face losses due to foreign currency fluctuations and difficulties associated with collection of accounts receivable abroad. In the event any of these risks occur, there could be a material adverse effect on our business, financial condition or results of operations. WE HAVE NOT PAID AND DO NOT ANTICIPATE PAYING ANY DIVIDENDS We have not paid any dividends on our common stock and intend to follow a policy of retaining any earnings to finance the development and growth of our business. Accordingly, we do not anticipate the payment of cash dividends in the foreseeable future. However, the payment of dividends rests within the discretion of the board and will depend upon, among other things, our earnings, capital requirements, overall financial condition and any restrictions appearing in our current loan agreements. FORWARD-LOOKING STATEMENTS This prospectus contains and incorporates by reference forward-looking statements. The factors identified under 'Risk Factors' are important factors (but not necessarily all important factors) that could cause our actual results to differ materially from those expressed in any forward-looking statement. Where any forward-looking statement includes a statement of the assumptions or bases underlying that forward-looking statement, we caution that, while the assumptions or bases are believed to be reasonable and are made in good faith, assumed facts or bases almost always vary from actual results. The differences between assumed facts or bases and actual results can be material, depending on the circumstances. Where, in any forward-looking statement, we express an expectation or belief as to future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis. We cannot assure that the statement of expectation or belief will result or be achieved or accomplished. The words 'believe,' 'expect,' 'estimate,' 'project,' 'anticipate,' 'intend,' 'will,' 'could' and 'may' and similar expressions identify the forward-looking statements. RECENT DEVELOPMENTS Warrant Redemption. On June 8, 1999, we completed the redemption of warrants to purchase our common stock that were issued in connection with our IPO and a 1995 private placement. A total of 5,125,837 warrants were exercised before the June 8 deadline, increasing the total number of shares of common stock outstanding to 17,426,568 as of June 15, 1999. Termination of General Atronics Letter of Intent. On April 5, 1999, we signed a letter of intent to acquire General Atronics Corporation, a privately-held high technology defense electronics company. On June 2, 1999, we announced that we reached a mutual agreement with General Atronics to terminate our discussions regarding our proposed acquisition of General Atronics. USE OF PROCEEDS We will not receive any proceeds from the sale of common stock by the selling stockholders. 11 SELLING STOCKHOLDERS The following table sets forth the number of shares of common stock beneficially owned by each of the selling stockholders as of June 15, 1999, and covered by this prospectus, and the nature of any relationship that the selling stockholders have had within the past three years with us. The shares offered by this prospectus may be offered from time to time by the selling stockholders named below.
COMMON STOCK COMMON STOCK OWNED PRIOR COMMON STOCK OWNED AFTER TO THIS OFFERING BEING OFFERED THIS OFFERING(1) ---------------------------- ------------- ----------------------------------- NAME OF SELLING STOCKHOLDER SHARES % SHARES SHARES % --------------------------- ------ - ------ ------ - UES Inc.(2)............................... 1,408,775 8.1% 1,408,775 0 * James E. Clifford(3)(4)................... 695,666 4.0% 682,167 13,499 * Edward W. Stefanko(3)(5).................. 882,166 5.1% 882,166 0 * C. David Lambertson(3)(6)................. 882,167 5.1% 882,167 0 * C. Hyland Schooley(3)(7).................. 652,750 3.8% 651,750 1,000 * Leo S. Torresani(3)(8).................... 325,875 1.9% 325,875 0 * Peter Oberbeck(3)(9)...................... 325,875 1.9% 325,875 0 * Christopher J. Clifford(10)............... 100,000 * 100,000 0 * Lisa A. Merkadeau(11)..................... 100,000 * 100,000 0 * The Equity Group, Inc.(12)................ 45,000 * 45,000 0 * John G. Gruenwald(13)..................... 15,500 * 10,000 5,500 * Larry E. Clay(14)......................... 14,000 * 10,000 4,000 * Ray A. Cox(14)............................ 10,000 * 10,000 0 * David Ponitz(14).......................... 10,000 * 10,000 0 * Total................................ 5,467,774 31.4% 5,443,775 23,999 *
- ------------ * Less than one percent. (1) Assumes that The Equity Group, Inc. exercises its warrant to purchase 45,000 shares covered buy this prospectus, that all shares held by the selling stockholder and covered by this prospectus will be offered and sold, and that the shares will not be sold to affiliates of the selling stockholder. (2) Mr. Krishan K. Joshi, the Chairman, President and Chief Executive Officer of Paravant, is the Chairman and a director of UES, and he owns approximately 74% of the outstanding voting stock of UES. UES intends to offer its shares covered by this prospectus to its shareholders, including Mr. Joshi. See 'Plan of Distribution.' (3) Messrs. Clifford, Stefanko, Lambertson, Schooley, Torresani and Oberbeck were all shareholders of EDL or STL. Paravant completed the acquisition of EDL and STL on October 8, 1998 in exchange for the Paravant shares received by them and covered by this prospectus, $8.7 million in cash and three-year $4.8 million notes bearing interest at the rate of 8%. In addition, a contingent cash earn-out will be payable by Paravant under specified circumstances over a period of up to five years based on the future profits of EDL and STL. (4) Mr. James Clifford is Paravant's Vice President of Mergers and Acquisitions and a director. (5) Mr. Stefanko is Paravant's President of EDL Operations. (6) Mr. Lambertson is Senior Vice President, Engineering of EDL. (7) Mr. Schooley is Paravant's President of STL Operations. (8) Mr. Torresani is Vice President, Business Development, of STL. (9) Mr. Oberbeck is a retired former employee of STL. (10) Mr. Christopher Clifford is the son of Mr. James Clifford. (11) Ms. Merkadeau is the daughter of Mr. James Clifford. (12) On April 15, 1998, The Equity Group, Inc. was issued a warrant to purchase these 45,000 shares of common stock pursuant to Sections 4(2) and 4(6) of the Securities Act and Rule 506 of Regulation D thereunder. The warrants are exercisable until April 14, 2003 and have an exercise price of $2.75 per share. (13) Mr. Gruenwald is the Vice President of Finance of UES. (14) Messrs. Clay, Cox and Ponitz are directors of UES. 12 PLAN OF DISTRIBUTION The common stock covered by this prospectus may be offered and sold from time to time by the selling stockholders. The selling stockholders will act independently of Paravant in making decisions with respect to the timing, manner and size of each sale. As used herein, 'selling stockholders' includes pledgees, donees, transferees and other successors in interest to the selling stockholders selling shares received from a selling stockholder after the date of this prospectus. Sales may be made on the Nasdaq National Market in ordinary brokerage transactions or otherwise, at market prices prevailing at the time of the sale, at prices related to the then-prevailing market price or in negotiated transactions, including pursuant to an underwritten offering or pursuant to one or more of the following methods: (1) purchases by a broker-dealer as principal and resale by the broker-dealer for its account pursuant to this prospectus; (2) ordinary brokerage transactions and transactions in which a broker solicits purchasers; (3) block trades in which a broker-dealer so engaged will attempt to sell the shares as agent but may take a position and resell a portion of the block as principal to facilitate the transaction; and (4) exchange in distributions in accordance with applicable rules. In effecting sales, broker-dealers engaged by the selling stockholders may arrange for other broker-dealers to participate. Broker-dealers may receive commissions or discounts from the selling stockholders in amounts to be negotiated immediately before the sale. In connection with distributions of the common stock or otherwise, the selling stockholders may enter into hedging transactions with broker-dealers. In connection with these transactions, broker-dealers may engage in short sales of the common stock in the course of hedging the positions they assume with the selling stockholders. The selling stockholders may also sell the common stock short and redeliver the common stock to close out the short positions. The selling stockholders may also enter into option or other transactions with broker-dealers which require the delivery to the broker-dealer of common stock, which the broker-dealer may resell or otherwise transfer. The selling stockholders may also loan or pledge common stock to a broker-dealer and the broker-dealer may sell the shares so loaned, or upon a default the broker-dealer may effect sales of the pledged shares. In connection with sales of common stock, underwriters or agents may receive compensation from the selling stockholders or from purchasers of the shares for whom they may act as agents, in the form of discounts, concessions or commissions. Underwriters may sell shares to or through dealers and the dealers may receive compensation in the form of discounts, concessions or commissions from the underwriters and/or commissions from the purchasers for whom they act as agents. Underwriters, dealers and agents that participate in the distribution of common stock may be deemed to be underwriters, and any discounts or commissions received by them from the selling stockholders and any profit on the resale of shares by them may be deemed to be underwriting discounts and commissions under the Securities Act. The selling stockholders may agree to indemnify any broker-dealer or agent that participates in transactions involving sales of common stock against certain liabilities, including liabilities under the Securities Act. We have informed the selling stockholders that the anti-manipulation rules under the Securities and Exchange Act may apply to sales of their shares in the market and to the activities of the selling stockholders and their affiliates. These rules prohibit, with certain exceptions, a selling stockholder or its affiliate from bidding for or purchasing for an account in which the selling stockholder or affiliate has a beneficial interest any stock that is the subject of a distribution during a defined restricted period. The offering of the common stock pursuant to this prospectus will terminate at the time when all of the shares offered pursuant to this prospectus have been sold by the selling stockholders. Each of the selling stockholders other than UES is party to a lock-up agreement contained in Paravant's acquisition agreement for EDL and STL. This lock-up agreement generally prohibits these selling stockholders from selling or otherwise disposing of any of the common stock until April 1, 2000. The lock-up will expire before that date upon the occurrence of certain events, 13 including a change in control of Paravant or the sale by UES and Mr. Joshi of 800,000 or more shares of Paravant. Those selling stockholders have agreed to waive the provisions of this section upon the sale of the shares covered by this prospectus by UES so long as 800,000 or more shares are not sold to persons other than Mr. Joshi. UES intends to offer its Paravant shares covered by this prospectus to its current shareholders based on the class and proportion of UES shares owned by these shareholders. Mr. Joshi owns approximately 74% of the outstanding voting shares of UES and intends to purchase the Paravant shares to be offered to him in connection with this prospectus. UES intends to offer the Paravant shares to its shareholders at a discount from the current market price of the Paravant shares or in exchange for the redemption of certain classes of UES stock. LEGAL MATTERS Holland & Knight LLP, Orlando, Florida, will pass upon certain legal matters in connection with the offering and sale of the common stock covered by this prospectus. EXPERTS The financial statements of Paravant as of September 30, 1998, and for each of the years in the two year period ended September 30, 1998, and the combined financial statements of EDL and STL as of September 30, 1998 and for the year then ended and for the nine month period ended October 4, 1997, have been incorporated by reference into this prospectus and in the registration statement on Form S-3 in reliance upon the reports of KPMG LLP, independent certified public accountants, incorporated by reference into this prospectus, and upon the authority of said firm as experts in accounting and auditing. DISCLOSURE OF SEC POSITION ON INDEMNIFICATION FOR SECURITIES ACT LIABILITIES Paravant'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 provides that each officer and director of Paravant shall be indemnified by Paravant against certain costs, expenses and liabilities which he or she may incur in his or her capacity as such. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers, and controlling persons, we have been advised that in the opinion of the SEC this indemnification is against public policy as expressed in the Securities Act and is, therefore unenforceable. 14 _________________________________ ________________________________ WE HAVE NOT AUTHORIZED ANY DEALER, SALESPERSON OR OTHER PERSON TO GIVE ANY INFORMATION OR TO REPRESENT ANYTHING NOT CONTAINED IN THIS PROSPECTUS. YOU MUST NOT RELY UPON ANY UNAUTHORIZED INFORMATION. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY TO ANY PERSON IN ANY JURISDICTION WHERE AN OFFER OR SOLICITATION IS UNLAWFUL. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY SALE SHALL UNDER ANY CIRCUMSTANCES CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROSPECTUS OR THAT THE INFORMATION CONTAINED IN THIS PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS. ------------------------ TABLE OF CONTENTS
PAGE ---- Where You Can Find More Information......................... 2 Incorporation by Reference.................................. 2 Prospectus Summary.......................................... 3 Risk Factors................................................ 5 Forward-Looking Statements.................................. 11 Recent Developments......................................... 11 Use of Proceeds............................................. 11 Selling Stockholders........................................ 12 Plan of Distribution........................................ 13 Legal Matters............................................... 14 Experts..................................................... 14 Disclosure of SEC Position on Indemnification for Securities Act Liabilities........................................... 14
_________________________________ ________________________________ PARAVANT INC. 5,443,775 SHARES OF COMMON STOCK --------------------- PROSPECTUS --------------------- July 9, 1999 _________________________________ ________________________________ PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. The following table sets forth the fees and expenses in connection with the issuance and distribution of the securities being registered hereunder. SEC registration fee........................................ $ 6,836 Printing expenses........................................... 5,000 Accounting fees and expenses................................ 4,500 Legal fees and expenses..................................... 15,000 Miscellaneous fees and expenses............................. 1,664 ------- Total.................................................. $33,000 ------- -------
All of the above expenses except the SEC registration fee are estimated. Paravant will bear all of these expenses. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Paravant'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 provides that each officer and director of Paravant shall be indemnified by Paravant against certain costs, expenses and liabilities which he or she may incur in his or her capacity as such. ITEM 16. EXHIBITS. The following exhibits either are filed herewith or incorporated by reference to documents previously filed or will be filed by amendment, as indicated below:
EXHIBIT DESCRIPTION - ------- ----------- 4.1 -- Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3(I) of Paravant's Annual Report on Form 10-KSB for the year ended September 30, 1998). 4.2* -- Amended and Restated Bylaws. 4.3 -- Specimen Common Stock Certificate (incorporated by reference from Exhibit 4.1 to Paravant's Registration Statement on Form SB-2 filed on May 16, 1996). 4.4 -- Acquisition Agreement by and among Paravant, Engineering Development Laboratories, Incorporated, Signal Technology Laboratories, Inc., James E. Clifford, Edward W. Stefanko, C. David Lambertson, C. Hyland Schooley, Peter Oberbeck, and Leo S. Torresani (incorporated by reference from Exhibit 2.1 to Paravant's Current Report on Form 8-K dated October 8, 1998). 4.5* -- Common Stock Purchase Warrant issued by Paravant to The Equity Group, Inc. 5.1* -- Opinion of Holland & Knight LLP at to validity of certain common stock being offered. 23.1* -- Consent of Holland & Knight LLP (included in Exhibit 5.1). 23.2* -- Consent of KPMG LLP. 24.1* -- Power of Attorney (included on pages II-3 and II-4).
- ------------ * Filed herewith. ITEM 17. UNDERTAKINGS. Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the indemnification provisions described herein, or otherwise, the registrant has been advised that in the opinion of II-1 the SEC such indemnification is against public policy as expressed in the Securities 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 Securities Act and will be governed by the final adjudication of such issue. 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 to include any material information with respect to the plan of distribution not previously disclosed in this Registration Statement or any material change to such information in this Registration Statement. (2) That, for the purpose of determining any liability under the Securities Act, each 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. Paravant hereby undertakes that, for purposes of determining any liability under the Securities Act, each filing of Paravant's annual report pursuant to Section 13(a) or 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 this Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein and the offering of such securities at the time shall be deemed to be the initial bona fide offering thereof. II-2 SIGNATURES Pursuant to the requirements of the Securities Act, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereto duly authorized, in the City of Dayton, State of Ohio, on July 9, 1999. PARAVANT INC. By: /s/ KRISHAN K. JOSHI ................................... KRISHAN K. JOSHI, CHAIRMAN, PRESIDENT AND CHIEF EXECUTIVE OFFICER POWER OF ATTORNEY KNOW ALL MEN BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Krishan K. Joshi and William R. Craven and each of them acting alone, his true and lawful attorneys-in-fact and against, each with full power of substitution and resubstitution, for him and in 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 other documents in connection therewith, with the Securities and Exchange Commission granting unto said attorneys-in-fact and agents, and each of them, 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 each said attorneys-in-fact and agents or any of them, or their or his substitute or substitutes, may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Act, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
/s/ KRISHAN K. JOSHI .......................................... Chairman, President, Chief Executive July 9, 1999 (KRISHAN K. JOSHI) Officer and Director (Principal Executive Officer) /s/ KEVIN J. BARTCZAK Vice President, Chief Financial July 9, 1999 ......................................... Officer and Treasurer (Principal (KEVIN J. BARTCZAK) Financial and Accounting Officer) /s/ WILLIAM R. CRAVEN Vice President, Secretary and July 9, 1999 ......................................... Director (WILLIAM R. CRAVEN) /s/ RICHARD P. MCNEIGHT President, Paravant Computer July 9, 1999 ......................................... Systems, and Director (RICHARD P. MCNEIGHT) /s/ JAMES E. CLIFFORD Vice President, Mergers and July 9, 1999 ......................................... Acquisitions, and Director (JAMES E. CLIFFORD) /s/ C. HYLAND SCHOOLEY President, STL of Ohio, and Director July 9, 1999 ......................................... (C. HYLAND SCHOOLEY)
II-3
SIGNATURE TITLE DATE --------- ----- ---- /s/ EDWARD W. STEFANKO President, EDL, and Director July 9, 1999 ......................................... (EDWARD W. STEFANKO) /s/ MICHAEL MAGUIRE Director June 26, 1999 ......................................... (MICHAEL MAGUIRE) /s/ JOHN P. SINGLETON Director June 22, 1999 ......................................... (JOHN P. SINGLETON)
II-4 INDEX TO EXHIBITS
PAGE EXHIBIT DESCRIPTION NUMBER - ------- ----------- ------ 4.1 -- Amended and Restated Articles of Incorporation (incorporated by reference from Exhibit 3(I) of Paravant's Annual Report on Form 10-KSB for the year ended September 30, 1998)....................................... 4.2* -- Amended and Restated Bylaws.............................. 4.3 -- Specimen Common Stock Certificate (incorporated by reference from Exhibit 4.1 to Paravant's Registration Statement on Form SB-2 filed on May 16, 1996)............. 4.4 -- Acquisition Agreement by and among Paravant, Engineering Development Laboratories, Incorporated, Signal Technology Laboratories, Inc., James E. Clifford, Edward W. Stefanko, C. David Lambertson, C. Hyland Schooley, Peter Oberbeck, and Leo S. Torresani (incorporated by reference from Exhibit 2.1 to Paravant's Current Report on Form 8-K dated October 8, 1998).......................................... 4.5* -- Common Stock Purchase Warrant issued by Paravant to The Equity Group, Inc. ....................................... 5.1* -- Opinion of Holland & Knight LLP at to validity of certain common stock being offered................................ 23.1* -- Consent of Holland & Knight LLP (included in Exhibit 5.1).............................................. 23.2* -- Consent of KPMG LLP...................................... 24.1* -- Power of Attorney (included on pages II-3 and II-4)......
- ------------ * Filed herewith. EX-4 2 EXHIBIT 4.2 EXHIBIT 4.2 AMENDED AND RESTATED BY-LAWS OF PARAVANT INC. ARTICLE I- OFFICES The principal office of the Corporation shall be established and maintained at 1615A West Nasa Boulevard, in the City of Melbourne, County of Brevard, State of Florida. The Corporation may also have offices at such places within or without the State of Florida as the Board of Directors may from time to time establish. ARTICLE II - SHAREHOLDERS 1. MEETINGS. The annual meeting of the Shareholders of this Corporation shall be held on the 15th day of February of each year or at such other time and place designated by the Board of Directors of the Corporation. Business transacted at the annual meeting shall include the election of Directors of the Corporation and all other matters properly before the Board of Directors. If the designated day shall fall on a Sunday or legal holiday, then the meeting shall be held on the first business day thereafter. 2. SPECIAL MEETINGS. Special meetings of the Shareholders shall be held when directed by the President or the Board of Directors, or when requested in writing by the holders of not less than 10% of all the shares entitled to vote at the meeting. A meeting requested by Shareholders shall be called for a date not less than 10 nor more than 60 days after the request is made unless the Shareholders requesting the meeting designate a later date. The call for the meeting shall be issued by the Secretary, unless the President, Board of Directors, or Shareholders requesting the meeting shall designate another person to do so. 3. PLACE. Meetings of Shareholders shall be held at the principal place of business of the Corporation or at such other place as may be designated by the Board of Directors. 4. NOTICE. Written notice to each Shareholder entitled to vote stating the place, day and hour of the meeting and, in the case of a special meeting, the purpose or purposes for which the meeting is called, shall be delivered not less than 10 nor more than 60 days before the meeting. If any Stockholder shall transfer his stock after notice, it shall not be necessary to notify the transferee. Any Stockholder may waive notice of any meeting either before, during or after the meeting. 5. QUORUM. The majority of the Shares entitled to vote, represented in person or by Proxy, shall constitute a Quorum at a meeting of Shareholders, but in no event shall Quorum consist of less than one third (1/3) of the shares entitled to vote at the meeting. After a Quorum has been established at a Shareholders meeting, the subsequent withdrawal of Shareholders, so as to reduce the number of shares entitled to vote at the meeting below the number required for a Quorum, shall not effect the validity of any action taken at the meeting or any adjournment thereof. 6. PROXY. Every Shareholder entitled to vote at a meeting of Shareholders, or to express consent or dissent without a meeting, or his duly authorized attorney-in-fact, may authorize another person or persons to act for him by Proxy. The Proxy must be signed by the Shareholder or his attorney-in-fact. No Proxy shall be valid after the expiration of eleven months from the date thereof, unless otherwise provided in the Proxy. ARTICLE III - DIRECTORS 1. BOARD OF DIRECTORS. The business of the Corporation shall be managed and its corporate powers exercised by a Board of Directors. The Board of Directors of the Corporation shall consist of not less than one (1) nor more than fifteen (15) members, each of whom shall be of full age. It shall not be necessary for Directors to be Stockholders. The number of members of the Board of Directors shall be determined from time to time by the Board of Directors. 2. ELECTION AND TERM OF DIRECTORS. Directors shall be elected at the annual meeting of Stockholders and each Director elected shall hold office until his successor has been elected and qualified, or until his prior resignation or removal. 2 3. VACANCIES. Any vacancy occurring in the Board of Directors or a committee thereof, including any vacancy created by reason of an increase in the number of Directors, may be filled by the affirmative vote of a majority of the remaining Directors, though less than a quorum of the Board of Directors, or by the shareholders. A Director elected to fill a vacancy shall hold office until such Director's successor has been elected and qualified or until such Director's earlier resignation, removal from office, or death. 4. REMOVAL OF DIRECTORS. Any or all of the Directors may be removed with or without cause by vote of a majority of all of the Directors or stock outstanding and entitled to vote at a special meeting of Directors and/or Stockholders called for such purposes. 5. RESIGNATION. A Director may resign at any time by giving written notice to the Board, the President or the Secretary of the Corporation. Unless otherwise specified in the notice, the resignation shall take effect upon receipt thereof by the Board of such officer, and the acceptance of the resignation shall not be necessary to make it effective. 6. QUORUM OF DIRECTORS. A majority of the Directors shall constitute a quorum for the transaction of business. If at any meeting of the Board there shall be less than a quorum present, majority of those present may adjourn the meeting from time to time until a quorum is obtained, and no further notice thereof need be given other than by announcement at the meeting which shall be so adjourned. 7. PLACE AND TIME OF BOARD MEETINGS. The Board may hold its meeting at the office of the Corporation or at such other places either within or without the State of Florida as it may from time to time determine. 8. NOTICE OF MEETINGS OF THE BOARD. A regular annual meeting of the Board may be held without the notice at such time and place as it shall from time to time determine. Special meetings of the Board shall be held upon notice to Directors and may be called by the President upon three days notice to each Director either personally or by the mail, telefax or wire; special meetings shall be called by the President or by the Secretary in a like manner on written request of two Directors. Notice of a meeting need not be given 3 to any Director who submits a waiver of notice whether before or after the meeting or who attends the meeting without protesting prior thereto or at its commencement, the lack of notice to him. 9. REGULAR ANNUAL MEETING. A regular annual meeting of the Board shall be held immediately following the annual meeting of Stockholders at the place of such annual meeting of Stockholders. 10. EXECUTIVE AND OTHER COMMITTEES. The Board, by resolution, may designate two or more of their members to any committee. To the extent provided in said resolution, or these By-Laws, such committee may exercise the powers of the Board, concerning the management of the business of the Corporation. 11. COMPENSATION. No compensation shall be paid to Directors, as such, for their services, but by resolution of the Board, a fixed sum and expense for actual attendance, each regular or special meeting of the Board may be authorized. Nothing herein contained shall be constructed to preclude any Director from serving the Corporation in any other capacity and receiving compensation thereof. ARTICLE IV - OFFICERS 1. OFFICERS, ELECTION AND TERM a) The Board may elect or appoint a Chairman, a President, one or more Vice Presidents, a Secretary and a Treasurer, and such other officers as it may determine, who shall have such duties and powers as hereinafter provided. b) All officers shall be elected or appointed to hold office until the meeting of the Board following the next annual meeting of Stockholders and until their successors have been elected or appointed and qualified. c) Any two or more offices may be held by the same person. 2. REMOVAL, RESIGNATION, SALARY, ETC. a) Any officer elected or appointed by the Board may be removed by the Board with or without cause. 4 b) In the event of the death, resignation or removal of an officer, the Board in its discretion may elect or appoint a successor to fill the unexpired term. c) Any officer elected by the Shareholders may be removed only by vote of the Shareholders unless otherwise provided by the Shareholders. d) The salaries of all officers shall be fixed by the Board. e) The directors may require any Officer to give security for the faithful performance of his duties. 3. DUTIES. The officers of this Corporation shall have the following duties: The President shall be the chief executive or operating officer of the Corporation, shall have general and active management of the business and affairs of the Corporation, subject to the directions of the Board of Directors, and shall preside at all meetings of the Shareholders and Board of Directors. The Secretary shall have custody of, and maintain, all of the corporate records except the financial records; shall record the minutes of all meetings of the Shareholders and Board of Directors, send all notices of all meetings and perform such other duties as may be prescribed by the Board of Directors or the President. The Treasurer shall have custody of all corporate funds and financial records, shall keep full and accurate accounts of receipts and disbursements and render accounts thereof at the annual meetings of Shareholders and whenever else required by the Board of Directors or the President, and shall perform such other duties as may be prescribed by the Board of Directors or the President. 4. REMOVAL OF OFFICERS. An officer or agent elected or appointed by the Board of Directors may be removed by the Board whenever in its judgment, the best interests of the Corporation will be served thereby. Any vacancy in any office may be filled by the Board of Directors. ARTICLE V - STOCK CERTIFICATES 1. ISSUANCE. Every holder of shares in this Corporation shall be entitled to have a certificate or certificates representing all shares of which he is entitled. No certificate shall be issued for any share until such is fully paid. 5 2. FORM. The shares of the Corporation shall be represented by certificates or shall be uncertificated securities. Any certificates representing the shares of the Corporation shall be in such form consistent with the law and the Articles of Incorporation of the Corporation as the Board of Directors may from time to time prescribe. Each certificated shall be signed by the Chairman of the Board, the President or a Vice President and by the Secretary or an Assistant Secretary of the Corporation and may be sealed with the seal of the Corporation or a facsimile thereof. The signatures of officers upon a certificate may be facsimile signatures only to the extent permitted by law. 3. TRANSFER OF STOCK. The Corporation shall register a stock certificate presented to it for transfer if the certificate is properly endorsed by the holder of record or by his duly authorized attorney, subject to any restrictive legends thereon. 4. LOST, STOLEN OR DESTROYED CERTIFICATES. If the Shareholder shall claim to have lost or destroyed a certificate of shares issued by the Corporation, a new certificate shall be issued upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed, and at the discretion of the Board of Directors, upon the deposit of a bond or other indemnity in such amount and with such sureties, if any, as the Board may reasonably require. ARTICLE VI - BOOKS AND RECORDS 1. BOOKS AND RECORDS. This Corporation shall keep correct and complete books and records of account and shall keep minutes of the proceedings of its Shareholders, Board of Director and committees of Directors. This Corporation shall keep at its registered office or principal place of business a record of its Shareholders, giving the names and addresses of all Shareholders and the number of the shares held by each. Any books, records and minutes may be in written form or in any other form capable of being converted into written form within a reasonable time. 2. SHAREHOLDERS' INSPECTION RIGHTS. Any person who shall have been a holder of record or shares or of voting trust certificates thereof at least six months immediately preceding his demand or shall be the holder of record of, or the holder of record of voting trust certificates for, at 6 least five percent for the outstanding shares of the Corporation, upon written demand stating the purpose thereof, shall have the right to examine, in person or by agent or attorney, at any reasonable time, for any proper purpose, its relevant books and records of accounts, minutes and records of Shareholders and to make extracts therefrom. 3. FINANCIAL INFORMATION. Not later than four months after the close of each fiscal year, this Corporation shall prepare a balance sheet showing in reasonable detail the financial condition of the Corporation as of the close of its fiscal year, and a profit and loss statement showing the results of the operations of the Corporation during its fiscal year. Upon the written request of any Shareholders or holder of voting trust certificates for shares of the Corporation, the Corporation shall mail each Shareholder or holder of voting trust certificates a copy of the most recent such balance sheet and profit and loss statement. The balance sheets and profit loss statements shall be filed in the registered office of the Corporation of this state, shall be kept for at least five years, and shall be subject to inspection during business hours by any Shareholder or holder of voting trust certificates, in person or by agent. ARTICLE VII - DIVIDEND The Board may out of funds legally available therefor, at any regular or special meeting, declare dividends upon the capital stock of the Corporation as and when it deems expedient. Before declaring any dividend there may be set apart out of any funds of the Corporation available for dividends, such sum or sums as the Board from time to time in their discretion deem proper for working capital or as a reserve fund to meet contingencies or for equalizing dividends or for such other purposes as the Board shall deem conducive to the interests of the Corporation. ARTICLE VIII - CORPORATE SEAL The seal of the Corporation shall be circular in form and bear the name of the Corporation, the year of its organization and the words "CORPORATE SEAL, FLORIDA." The seal may be used by causing it to be impressed directly on the instrument or writing to be sealed, or upon adhesive substance affixed thereto. The seal on the certificates for shares or on any corporate obligation for the payment of money may be facsimile, engraved or printed. 7 ARTICLE IX - EXECUTION All corporate instruments and documents shall be signed or countersigned, executed, verified or acknowledged by such officer or other person or persons as the Board may from time to time designate. ARTICLE X - FISCAL YEAR The fiscal year shall begin the first day of October in each year. ARTICLE XI - NOTICE AND WAIVER OF NOTICE Whenever any notice is required by these By-Laws to be given, personal notice is not meant unless expressly so stated, and any notice so required shall be deemed to be sufficient if given by depositing the same in the post office box in a sealed post-paid wrapper, or with an express mail or delivery service addressed to the person entitled thereto at his last known post office or business address or by telefaxing the same to such person using his appropriate telefax number, and such notice shall be deemed to have been given on the day of such mailing or sending of the telefax. Stockholders not entitled to vote shall not be entitled to receive notice of any meetings except as otherwise provided by Statute. Whenever any notice is required to be given under the provisions of any law, or under the provisions of the Articles of Incorporation of the Corporation, or these By-Laws, a waiver thereof in writing, signed by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE XII - CONSTRUCTION Whenever a conflict arises between the language of these By-Laws and the Articles of Incorporation, the Articles of Incorporation shall govern. ARTICLE XIII - BUSINESS 1. CONDUCT OF BUSINESS WITHOUT MEETINGS. Any action of the stockholders may be taken without a meeting if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock of each voting group entitled to vote thereon having not less than the minimum number of votes with respect to each voting group that would be necessary to authorize or take such action at a meeting at which all voting groups and shares entitled to vote thereon were present and voted. 8 Any action of the Directors or a committee of Directors may be taken without a meeting if consent in writing, setting forth the action so taken, shall be signed by each of the Directors or members of such committee. Any actions taken pursuant to this Article XIII shall be filed with the Secretary of the Corporation as part of the proceedings of the stockholders, Directors or committee, as the case may be. 2. MANAGEMENT BY STOCKHOLDER. In the event the Stockholders are named in the Articles of Incorporation and are empowered therein to manage the affairs of the Corporation in lieu of Directors, the Stockholders of the Corporation shall be deemed Directors for the purposes of these By-Laws and whenever the words "directors", "board of directors" or "board" appear in these By-Laws those words shall be taken to mean Stockholders. The Shareholders may, by majority vote, create a board of directors to manage the business of the Corporation and exercise its corporate powers. ARTICLE XIV - AMENDMENTS These By-Laws may be altered or repealed and By-Laws may be made at any annual meeting of the Stockholders or at any special meeting thereof if notice of the proposed alteration or repeal to be made be contained in the notice of such special meeting, by the affirmative vote of a simple majority of such shares issued and outstanding and entitled to vote thereat, or by the affirmative vote of a simple majority of the Board at any regular meeting of the Board or at any special meeting of the Board if notice of the proposed alteration or repeal to be made, be contained in the notice of such special meeting. Dated: May 19, 1999 9 EX-4 3 EXHIBIT 4.5 EXHIBIT 4.5 PARAVANT COMPUTER SYSTEMS, INC. COMMON STOCK PURCHASE WARRANT For the Purchase of 45,000 shares This certifies that, for value received, The Equity Group Inc. (the "Holder") is entitled, subject to the terms and conditions hereinafter set forth, at any time, and from time to time, and prior to and including April 14, 2003 (the "Expiration Date"), to purchase up to a total of forty-five thousand shares (the "Stock") of the common stock ("Common Stock"), of Paravant Computer Systems, Inc. and its successors and assigns, a Florida corporation, (the "Company"), at a price of two dollars and seventy-five cents ($2.75) per share, in lawful funds of the United States of America payable in cash or by certified or official bank check, such price and the number of shares purchasable being subject to adjustment as set forth in this Common Stock Purchase Warrant (the "Warrant"). This Warrant is subject to the following further terms and conditions: 1. EXERCISE The purchase rights represented by this Warrant are exercisable, at the option of the Holder, in whole at any time. Upon presentation and surrender of this Warrant, with the Subscription Form annexed hereto duly executed, together with payment of the Purchase Price of the shares of Common Stock thereby purchased, at the principal office of the Company, the Holder shall be entitled to receive a certificate or certificates representing the shares of Common Stock so purchased. The term Holder shall include any person to whom this Warrant has been transferred. All shares which may be issued upon the exercise of this Warrant will, upon issuance, be fully paid and non-assessable and free from all taxes, liens and charges with respect thereto. In the case of the purchase of less than all the shares purchasable under this Warrant, the Company shall cancel this Warrant upon the surrender hereof and shall execute and deliver a new Warrant of like tenor for the balance of the shares purchasable hereunder. 2. REGISTRATION If the Company shall at any time and from time to time, propose the registration under the Securities Act of 1933 as amended (the "Act") of any securities of the Company, the Company shall give at least thirty (30) days' written notice of each such proposed registration to the Holder and will permit the Holder to include in each such registration this Warrant and/or all of the shares of common stock issued or issuable upon the exercise of this Warrant (the "Stock") as the Holder specifies. The Holder shall exercise the "piggy-back registration rights" under this Section by giving written notice to the Company within thirty (30) days of the Holder's receipt of the notice of the proposed registration. The term "registration statement" as used in this Section being deemed to include any form which may be used to register a distribution of securities to the public for cash, a post-effective amendment to the registration statement, or a notification and offering circular pursuant to a Regulation A offering when necessary to perfect an exemption thereunder. The Company shall: (i) prepare and file with the appropriate state Blue Sky authorities the necessary documents to register or qualify such Warrant and/or Stock, and (ii) use its best efforts to cause such registration statement to become effective and to keep such registration statement and Blue Sky filings correct and effective until such time as an amendment is required to be filed pursuant to the provisions of Section 10(a) (3) of the Act. If, for any reason, during the term of this Warrant, the Holder is not afforded an opportunity to exercise the "piggy-back registration rights" and include all of the shares underlying the Warrant in an effective registration statement, then the Expiration Date shall be extended until 90 days after a registration statement, which includes all the shares underlying the Warrant is declared effective by the Securities and Exchange Commission. The Company shall bear all costs and expenses of any registration statement (and all amendments and supplements thereto) relating to the registration of the Warrant and/or Stock and any related underwriting agreement, including printing, legal and accounting expenses, and SEC filing fees, expenses and transfer agency fees, but the Company shall have no obligation to pay or otherwise bear (i) any portion of the fees or disbursements of any counsel which any Holder may retain in connection with the registration of the Warrant and/or Stock, (ii) any portion of the underwriter's commission, discounts and expenses attributable to such Warrant and/or Stock being offered and sold by the Holder or (iii) any applicable stock transfer taxes. The Company shall indemnify and hold harmless the Holder and any underwriter (as defined in the Act) for such Holder, and each person, if any, who controls the Holder or underwriter within the meaning of the Act, against all losses, claims, damages or liabilities, joint or several, to which such Holder or underwriter or controlling person may be subject, under the Act or otherwise, insofar as such losses, claims, damages or liabilities, joint or several, to which such Holder or underwriter or controlling person may be subject, under the Act or otherwise, are caused by any untrue statement or alleged untrue statement of a material fact contained in any registration statement under which shares of Common Stock were registered under the Act, or qualified under the Blue Sky laws of applicable jurisdictions, pursuant to this Section 2, any prospectus contained therein, or any amendment or supplement thereto, or arising out of or based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, except insofar as such losses, claims, damages or liabilities arise out of or are based upon any untrue statement or alleged untrue statement or omission based upon and made in conformity with information furnished to the Company in writing by the Holder or by any underwriter for the Holder expressly for use therein. 2 Legend. The Company may imprint on all certificates representing shares of Common Stock, or shares issued in substitution or exchange therefor, the following legend: "These shares have not been registered under the Securities Act of 1933, as amended, and may not be sold, assigned or otherwise transferred without registration thereunder unless Paravant Computer Systems, Inc. has received the written opinion of counsel satisfactory to it that, after investigation of the relevant facts, such counsel is of the opinion that such sale, assignment or transfer does not involve a transaction requiring registration under the Securities Act of 1933, as amended." 3. COMPANY'S ACKNOWLEDGMENT OF OBLIGATIONS The Company will, at the time of the exercise of this Warrant, upon the request of the Holder, acknowledge in writing its continuing obligation to afford to any holder of Common Stock any rights (including without limitation, any right to registration of the shares of Common Stock) to which such holder shall continue to be entitled after such exercise in accordance with the provisions of this Warrant, provided, however, that if the Holder shall fail to make any such request, such failure shall not affect the continuing obligation of the Company to afford to the Holder any such rights. 4. ADJUSTMENTS In case the Company shall at any time subdivide its outstanding shares of Common Stock into a greater number of shares, the Purchase Price in effect immediately prior to such subdivision shall be proportionately reduced and the number of shares of Common Stock purchasable hereunder shall be proportionately increased. In case the outstanding shares of the Common Stock of the Company shall be combined into a smaller number of shares, the Purchase Price in effect immediately prior to such combination shall be proportionately increased and the number of shares of Common Stock purchasable hereunder shall be proportionately reduced. Except upon consolidation or reclassification of the shares of Common Stock of the Company as provided for in this paragraph, the Purchase Price in effect at any time may not be adjusted upward or increased in any manner whatsoever. If any capital reorganization or reclassification of the capital stock of the Company (other than as provided in the prior paragraph), or consolidation or merger of the Company with another corporation, or the sale or conveyance of all or substantially all of its assets to another corporation shall be effected, then, as a condition of such reorganization, reclassification, consolidation, merger, sale or conveyance, lawful and adequate provision shall be made whereby the Holder shall thereafter have the right to purchase and receive upon the basis and upon the terms and conditions specified in this Warrant and in lieu of the shares of the 3 Common Stock of the Company immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby, such shares of stock, securities or assets as may be issued or payable with respect to or in exchange for a number of outstanding shares of such Common Stock equal to the number of shares of such Common Stock immediately theretofore purchasable and receivable upon the exercise of the rights represented hereby had such reorganization, reclassification, consolidation, merger, sale or conveyance not taken place. In any such case appropriate provision shall be made with respect to the rights and interests of the Holder to the end that the provisions hereof (including without limitation provisions for adjustment of the Purchase Price and of the number of shares purchasable upon the exercise of this Warrant) shall thereafter be applicable, as nearly as may be in relation to any stock, securities or assets thereafter deliverable upon the exercise hereof. (a) Upon any increase or decrease in the number of shares of Common Stock purchasable upon the exercise of this Warrant then, and in each such case, the Company within 30 days thereafter shall give written notice thereof, pursuant to Section 9, which notice shall state the increased or decreased number of shares purchasable upon the exercise of this Warrant, setting forth in reasonable detail the method of calculation and the facts upon which such calculations are based. Where appropriate, such notice may be given in advance and included as a part of the notice required to be mailed under the provisions of paragraph (b) of this subsection. (b) In case at any time: The Company shall declare any dividend upon its Common Stock payable otherwise than in cash or in Common Stock of the Company or payable otherwise than out of net income or retained earnings of the Company; or The Company shall offer for subscription to the holders of its Common Stock any additional shares of stock of any class or any other securities convertible into or exchangeable for shares of stock or any rights or options to subscribe thereto; or There shall be any capital reorganization or reclassification of the capital stock of the Company, or a sale or conveyance of all or substantially all of the assets of the Company, or a consolidation or merger of the Company with another corporation; or There shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in any one or more of said cases, the Company shall give written notice, pursuant to Section 9, at the earliest time legally practicable (and not less than 60 days before any record date or other date set for definitive action) of the date on which (A) the books of the Company shall close or a 4 record shall be taken for such dividend, distribution or subscription rights or options or (B) such reorganization, reclassification, sale, conveyance, consolidation, merger, dissolution, liquidation or winding up shall take place, as the case may be. Such notice shall also specify the date as of which the holders of the Common Stock of record shall participate in said dividend, distribution, subscription rights or options or shall be entitled to exchange their Common Stock for securities or other property deliverable upon such reorganization, reclassification, sale, conveyance, consolidation, merger, dissolution, liquidation, or winding up, as the case may be (on which date, in the event of voluntary or involuntary dissolution, liquidation or winding up of the Company, the right to exercise this Warrant shall cease and terminate). 5. REPLACEMENT Upon receipt by the Company of evidence reasonably satisfactory to it of the loss, theft, destruction or mutilation of this Warrant, and, in case of loss, theft or destruction, of indemnity or security reasonably satisfactory to it, and reimbursement to the Company of all reasonable expenses incidental thereto, and upon surrender and cancellation of this Warrant, if mutilated, the Company will make and deliver a new Warrant of like tenor, in lieu of this Warrant. 6. NO FRACTIONAL SHARES The Company shall not be required to issue stock certificates representing fractions of shares of Common Stock, but may at its option in respect of any final fraction of a share make a payment in cash based on the Purchase Price. 7. RESERVATION OF SHARES The Company will reserve and keep available a sufficient number of shares of Common Stock to satisfy the requirements of this Warrant and any other outstanding Warrants. Before taking any action which would cause an adjustment reducing the Purchase Price below the then par value of the shares of Common Stock issuable upon exercise of this Warrant, the Company will take any corporate action which may, in the opinion of its counsel, be necessary in order that the Company may validly and legally issue fully paid and nonassessable shares of such Common Stock at such adjusted Purchase Price. 8. MERGER, ETC. The Company shall not effect any consolidation, merger or sale of substantially all of its property to any other corporation, unless prior to or simultaneously with the consummation thereof the successor corporation (if other than the Company) resulting from such consolidation or merger or the corporation purchasing such assets shall assume by written instrument executed and mailed or 5 delivered to the Holder at the address indicated in Section 9, the obligation of such corporation to deliver to the Holder shares of stock, securities or property as, in accordance with the provisions of this Warrant, the Holder may be entitled to purchase and to perform and to observe each and every covenant and condition of this Warrant to be performed and observed by the Company. 9. REPRESENTATIONS AND WARRANTIES This Warrant has been issued to the Holder by the Company in reliance upon the following representations and warranties given by the Holder to the Company: (i) the Holder is an "accredited investor" within the meaning of Securities and Exchange Commission Regulation D ("Regulation D") and has provided written confirmation to the Company of such status: (ii) the Holder understands that this Warrant is, and any Common Stock to be purchased upon any exercise hereof will be, "restricted securities" within the meaning of Regulation D and, as such, this Warrant and such Common Stock will not have been registered under the Federal Securities Act of 1933, as amended (the "Securities Act") and will be subject to restrictions on transferability imposed by the Securities Act, including the restriction that neither this Warrant nor any of such Common Stock may be sold, transferred, or pledged unless first registered under the Securities Act or, in the opinion of counsel to the Company ("Company Counsel"), an exemption from such registration is then available; (iii) the Holder further understands that any exercise of this Warrant for the purchase of Common Stock shall require a confirmation, to the satisfaction of Company Counsel that such purchase of Common Stock will be carried out pursuant to a then existing exemption from registration under the Securities Act; (iv) the Holder, in connection with its acquisition of this Warrant further represents and warrants that it has relied upon decisions made by its properly authorized officers who have such knowledge, sophistication and experience in business and financial matters as to be capable of evaluating the merits and risks of an investment in this Warrant and to fully understand the nature, scope and duration of the limitations on transfer contained in this Warrant and that the Holder can bear the economic risk of its investment herein and can afford a complete loss of any such investment; and (v) with respect to any possible exercise of this Warrant, the Holder understands that any such exercise shall be subject to restrictions and limitations which are comparable to those set forth herein with respect to the acquisition by the Holder of this Warrant. 10. NOTICES All notices, requests, consents and other communications hereunder shall be in writing and shall be deemed to have been made when delivered or mailed first-class postage prepaid: (i) if to the Holder, at 800 Third Avenue, New York, New York 10022 or at such other address as may have been furnished to the Company in writing by the Holder; 6 (ii) if to the Company, at 1615A West Nasa Boulevard, Melbourne, Florida 32901, Attention of the Secretary, or at such other address as may have been furnished to the Holder in writing by the Company. WITNESS the seal of the Company and the signatures of its duly authorized officers. Dated: ____________________, 199__ PARAVANT COMPUTER SYSTEMS, INC. By:_________________________________ Attest:___________________________ (SECRETARY) 7 SUBSCRIPTION FORM TO BE EXECUTED BY THE HOLDER UPON EXERCISE OF THE WARRANT PARAVANT COMPUTER SYSTEMS, INC. The undersigned hereby exercises the right to purchase 45,000 shares of stock covered by this Warrant on at the Purchase Price of $2.75 according to the conditions thereof and herewith makes payment of the Purchase Price of such shares in full. Signature _____________________________ Address _____________________________ _____________________________ 8 EX-5 4 EXHIBIT 5.1 EXHIBIT 5.1 [LETTERHEAD OF HOLLAND & KNIGHT LLP] July 9, 1999 Paravant Inc. 1615A West Nasa Boulevard Melbourne, Florida 32901 Ladies and Gentlemen: We refer to the registration statement of Paravant Inc., a Florida corporation (the "Company") on Form S-3 (the "Registration Statement"), which is to be filed with the Securities and Exchange Commission (the "Commission") concurrently herewith, covering the registration under the Securities Act of 1933, as amended (the "Securities Act"), of 5,398,775 shares of the Company's Common Stock, par value $.015 per share, that are currently outstanding (the "Issued Shares") and 45,000 shares of the Company's Common Stock issuable upon the exercise of a warrant issued on April 15, 1998 (the "Warrant Shares") (the Issued Shares and the Warrant Shares are collectively referred to as the "Shares"), to be sold by certain selling stockholders of the Company. This opinion is being delivered pursuant to the requirements of Item 601(b)(5) of Regulation S-B promulgated by the Commission under the Securities Act. This opinion letter is governed by, and shall be interpreted in accordance with, the Legal Opinion Accord (the "Accord") of the ABA Section of Business Law (1991). As a consequence, it is subject to a number of qualifications, exceptions, definitions, limitations on coverage and other limitations, all as more particularly described in the Accord, and this opinion letter should be read in conjunction therewith. As counsel for the Company, we have examined the Registration Statement, and we are familiar with the proceedings taken by the Company relating to it. We also have examined the Articles of Incorporation and the By-laws of the Company and such Company records, certificates and other documents as we have considered necessary or appropriate for the purposes of this opinion. In addition, we have made such investigations and have examined such certificates of public officials and officers of the Company and such other documents and records as we deemed necessary for purposes of this opinion. In our examination, we have assumed the genuineness of all signatures on all documents submitted to us as originals, the authenticity of all documents submitted to us as originals or certified, photostatic or facsimile copies, and the conformity to Paravant Inc. July 9, 1999 Page 2 - ------------------------ the originals of all documents submitted to us as copies. We also have relied upon the accuracy of the aforementioned certificates of public officials and, as to matters of fact, of officers of the Company. We have also relied on Company records and have assumed the accuracy and completeness thereof. Based upon the foregoing, it is our opinion that (i) the Issued Shares have been duly authorized and are validly issued, fully paid and non-assessable, (ii) the Warrant Shares have been duly authorized, and (iii) the Warrant Shares, when issued and paid for upon the exercise of the related warrant in accordance with the terms of that warrant, will be validly issued, fully paid and non-assessable. We hereby consent to the use of our name in the Registration Statement as counsel who will pass upon the legality of the Shares for the Company and as having prepared this opinion, and to the use of this opinion as an exhibit (Exhibit 5.1) to the Registration Statement. In giving this consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the rules and regulations of the Securities and Exchange Commission promulgated thereunder. Very truly yours, HOLLAND & KNIGHT LLP /s/ Holland & Knight LLP EX-23 5 EXHIBIT 23.2 EXHIBIT 23.2 Board of Directors Paravant 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. /s/ KPMG LLP Orlando, Florida July 9, 1999 -----END PRIVACY-ENHANCED MESSAGE-----