-----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, ElitYn2XDQeryG1rkCbZbtGri7b3FwF5/Qq9wNF9pIvDuITSg0O+dTWNUqDZfr4D 6Be4jFiq3NLkZ4HPOeBB+g== 0000912057-00-005529.txt : 20000214 0000912057-00-005529.hdr.sgml : 20000214 ACCESSION NUMBER: 0000912057-00-005529 CONFORMED SUBMISSION TYPE: 10QSB PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 19991231 FILED AS OF DATE: 20000211 FILER: COMPANY DATA: COMPANY CONFORMED NAME: BENTHOS INC CENTRAL INDEX KEY: 0000011390 STANDARD INDUSTRIAL CLASSIFICATION: MISCELLANEOUS MANUFACTURING INDUSTRIES [3990] IRS NUMBER: 042381876 STATE OF INCORPORATION: MA FISCAL YEAR END: 0930 FILING VALUES: FORM TYPE: 10QSB SEC ACT: SEC FILE NUMBER: 000-29024 FILM NUMBER: 534186 BUSINESS ADDRESS: STREET 1: 49 EDGARTON DRIVE CITY: NORTH FALMOUTH STATE: MA ZIP: 02556 BUSINESS PHONE: 5085631000 MAIL ADDRESS: STREET 1: 49 EDGERTON DR CITY: NORTH FALMOUTH STATE: MA ZIP: 02556 10QSB 1 FORM 10-QSB U.S. SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 FORM 10-QSB /X/ Quarterly report under Section 13 or 15(d) of the Securities Exchange Act of 1934 For the quarterly period ended DECEMBER 31, 1999 / / Transition report under Section 13 or 15(d) of the Exchange Act For the transition period from ____________ to ______________ Commission file number 0-29024 BENTHOS, INC. (Exact Name of Small Business Issuer as Specified in Its Charter) Massachusetts 04-2381876 (State or Other Jurisdiction of (I. R. S. Employer Corporation or Organization) Identification No.) 49 Edgerton Drive, North Falmouth, Massachusetts 02556 (Addresses of Principal Executive Offices) (Zip Code) (508) 563-1000 Issuer's Telephone Number Including Area Code Check whether the issuer (1) has filed all reports required to be filed by Section 13 or 15 (d) of the Exchange Act during the past 12 months (or for such shorter period that the issuer was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes X No ------- ------- State the number of shares outstanding of each of the issuer's classes of Common equity as of the latest practicable date: Common Stock par value $.06 2/3 1,375,294 (Class) (Outstanding stock at February 9, 2000) Transitional Small Business Disclosure Format (check one): Yes No X -------- -------- 2 BENTHOS, INC. AND SUBSIDIARY FORM 10-QSB FOR THE THIRTEEN WEEKS ENDED DECEMBER 31, 1999 INDEX
Page No. Face Sheet 1 Index 2 Part I FINANCIAL INFORMATION Item 1. Financial Statements Condensed Consolidated Balance Sheets (unaudited) 3 December 31, 1999 and September 30, 1999 Condensed Consolidated Statements of Earnings (unaudited) 4 Thirteen Weeks Ended December 31, 1999 and December 31, 1998 Condensed Consolidated Statements of Cash Flow (unaudited) 5 Thirteen Weeks Ended December 31, 1999 and December 31, 1998 Notes to Financial Statements 6-8 Item 2. Management's Discussion and Analysis 9-11 of Financial Condition and Results of Operations PART II OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K 12 Signatures 12
3 PART I - FINANCIAL INFORMATION Item 1. Financial Statements Benthos, Inc. and Subsidiary Condensed Consolidated Balance Sheets (in thousands, except per share amounts) (unaudited)
Assets December 31, 1999 September 30, 1999 ----------------- ------------------ Current Assets: Cash and Cash Equivalents $ 1,736 $ 2,930 Accounts Receivable, Net 3,438 2,432 Inventories 4,281 4,794 Prepaid Expenses and Other Current Assets 776 734 Deferred Tax Asset 1,299 1,299 -------- -------- Total Current Assets 11,530 12,189 Property, Plant and Equipment, Net 1,745 1,779 Other Assets, Net 4,756 4,819 -------- -------- $ 18,031 $ 18,787 ======== ======== Liabilities and Stockholders' Investment Current Liabilities: Current Maturities of Long Term Debt $ 786 $ 786 Accounts Payable 1,331 1,292 Accrued Expenses 1,704 2,311 Customer Deposits 247 391 -------- -------- Total Current Liabilities 4,068 4,780 -------- -------- Long-Term Debt, Net of Current Maturities 4,452 4,649 Stockholders' Investment: Common Stock, $.06 2/3 par value- Authorized - 7,500 shares Issued - 1,649 shares at December 31, 1999 and September 30, 1999 110 110 Capital in Excess of Par Value 1,546 1,546 Retained Earnings 8,516 8,437 Treasury Stock, at Cost (661) (735) -------- -------- Total Stockholders' Investment 9,511 9,358 -------- -------- $ 18,031 $ 18,787 ======== ========
See accompanying notes to Condensed Consolidated Financial Statements 4 Benthos, Inc. and Subsidiary Condensed Consolidated Statements of Earnings (in thousands, except per share amounts) (unaudited)
Thirteen Weeks Ended December 31, 1999 December 31, 1998 ----------------- ----------------- Net Sales $ 5,411 $ 3,835 Cost of Sales 3,286 2,344 ------- ------- Gross Profit 2,125 1,491 Selling, General & Administrative Expenses 1,345 905 Research and Development Expenses 464 285 Amortization of Goodwill and Other Acquired Intangibles 123 0 ------- ------- Income from Operations 193 301 Interest Income 28 36 Interest Expense (109) -- ------- ------- Income before Provision for Income Taxes 112 337 Provision for Income Taxes 34 121 ------- ------- Net Income $ 78 $ 216 ======= ======= Basic Earnings Per Share $ 0.06 $ 0.16 ======= ======= Diluted Earnings Per Share $ 0.06 $ 0.16 ======= ======= Common Shares Outstanding 1,368 1,350 ======= ======= Common Shares Outstanding, Assuming Dilution 1,412 1,381 ======= =======
See accompanying notes to Condensed Consolidated Financial Statements 5 Benthos, Inc. and Subsidiary Condensed Consolidated Statements of Cash Flow (in thousands) (unaudited)
Thirteen Weeks Ended December 31, 1999 December 31, 1998 ----------------- ----------------- Cash Flows From Operating Activities: Net Income $ 78 $ 216 Adjustments to Reconcile Net Income to Net Cash (Used In) Provided by Operating Activities: Depreciation and Amortization 347 160 Changes in Assets and Liabilities: Accounts Receivable (1,006) (175) Inventories 513 (251) Prepaid Expenses and Other Current Assets (42) 152 Accounts Payable & Accrued Expenses (568) (46) Customer Deposits (144) 13 ------- ------- Net Cash (Used In) Provided by Operating Activities (822) 69 Cash Flows from Investing Activities: Purchases of Property, Plant & Equipment (105) (18) (Increase) Decrease in Other Assets (70) 12 ------- ------- Net Cash by Used in Investing Activities (175) (6) Cash Flows from Financing Activities: Payments on long-term debt, net (197) --- ------- ------- Net (Decrease) Increase in Cash and Cash Equivalents (1,194) 63 Cash and Cash Equivalents, Beginning of Period 2,930 2,509 ------- ------- Cash and Cash Equivalents, End of Period $ 1,736 $ 2,572 ======= ======= Supplemental Disclosure of Cash Flow Information: Interest Paid $ 105 $ --- ======= ======= Income Taxes Paid, Net of Refunds $ 100 $ 29 ======= ======= Supplemental Disclosure of Noncash Activities: Issuance of Treasury Stock to the Company's ESOP $ 74 $ 42 ======= =======
See accompanying notes to Condensed Consolidated Financial Statements 6 Benthos, Inc. and Subsidiary Notes to Financial Statements (In thousands, except per share amounts) 1. Fiscal Periods The fiscal year of Benthos, Inc. (the Company) ends on September 30 each year. Interim quarters are comprised of 13 weeks unless otherwise noted and end on the Sunday closest to December 31, March 31, and June 30. All references in the unaudited condensed consolidated financial statements to fiscal periods ended on December 31, March 31, or June 30 mean the interim quarters referred to above. 2. Basis of Presentation The accompanying unaudited condensed consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission regarding interim financial reporting. Accordingly, they do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements and should be read in conjunction with the consolidated financial statements and notes thereto for the fiscal year ended September 30, 1999, included in the Company's previously filed Form 10-KSB. The accompanying condensed consolidated financial statements reflect all adjustments (consisting solely of normal, recurring adjustments) which are, in the opinion of management, necessary for a fair presentation of results for the interim periods presented. The results of operations for the interim period are not necessarily indicative of the results to be expected for the full fiscal year. Certain reclassifications have been made to the 1999 financial statements to conform with the 2000 presentation. 3. Acquisition On August 19, 1999, the Company acquired substantially all of the assets and assumed certain liabilities of Datasonics, Inc. for approximately $6,732, including acquisition costs. The acquisition was accounted for using the purchase method of accounting in accordance with Accounting Principles Board Opinion No. 16. Accordingly, the results of the operations of Datasonics have been included in the accompanying consolidated financial statements from the date of acquisition. Unaudited pro forma operating results for the Company, assuming the Acquisition of Datasonics occurred on October 1, 1998 are as follows:
Three Months Ended December 31, 1998 Pro forma net sales $5,973 ===== Pro forma net income $181 === Pro forma net income per share - Basic $.13 === Diluted $.13 ===
7 4. Inventories Inventories are stated at the lower of cost (first-in, first-out) or market and consist of the following:
December 31, 1999 September 30, 1999 ----------------- ------------------ Raw Materials $ 613 $ 891 Work-in-Process 3,607 3,861 Finished Goods 61 42 ----- ----- $4,281 $4,794 ======= ======
5. Earnings Per Share Basic earnings per share excludes dilution and is computed by dividing net earnings by the weighted average number of common shares outstanding for the period. Diluted earnings per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. Diluted earnings per share is computed based upon the weighted average number of common shares and dilutive common equivalent shares outstanding. Common stock options have a dilutive effect on earnings per share in all periods and are therefore included in the computation of diluted earnings per share. The Company has stock options for 135 shares of common stock at an average exercise price of $11.69 in the thirteen week period ended December 31, 1999 and had options for 92 shares of common stock at an average exercise price of $13.60 in the thirteen week period ended December 31, 1998, which have not been included in basic or diluted earnings per share as they are antidilutive. A reconciliation of basic and diluted shares outstanding is as follows:
Thirteen Weeks Ended December 31, 1999 1998 ----- ----- Weighted average common shares outstanding 1,368 1,350 Potential common shares pursuant to stock options 44 31 ----- ----- Diluted weighted average shares 1,412 1,381 ===== =====
8 6. Segment Reporting The Company views its operations and manages its business as two segments, Undersea Systems and Container Inspection Systems, as being strategic business units that offer different products. The Company evaluates performance of its operating segments based on revenues from external customers, income from operations and identifiable assets.
Thirteen Weeks Ended December 31, 1999 1998 ------- ------- Sales to Unafilliated Customers: Undersea Systems $ 4,076 $ 3,097 Container Inspection Systems 1,335 738 -------- -------- Total 5,411 3,835 Income (Loss) From Operations: Undersea Systems 213 451 Container Inspection Systems (20) (150) -------- -------- Total 193 301 Identifiable Assets: Undersea Systems 11,317 5,099 Container Inspection Systems 2,488 2,052 Corporate Assets 4,226 3,706 -------- -------- Total $ 18,031 $ 10,857
Revenues by geographic area for thirteen weeks ended December 31, 1999 and 1998 were as follows:
Geographic Area 1999 1998 ------- ------- United States $3,159 $1,347 Japan 693 348 Norway 240 671 Singapore -- 322 United Kingdom 278 691 Other 1,041 456 ------- ------- Total $5,411 $3,835
9 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations (Dollars in Thousands) Results of Operations -- First quarter of fiscal year 2000 compared with first quarter of fiscal year 1999. The following table presents, for the periods indicated, the percentage relationship of Condensed Consolidated Statements of Earnings items to total sales:
Thirteen Weeks Ended December 31, 1999 December 31, 1998 ----------------- ----------------- (unaudited) Net Sales 100.0% 100.0% Cost of Sales 60.7% 61.1% -------------- -------------- Gross Profit 39.3% 38.9% Selling, General & Administrative Expenses 24.8% 23.6% Research and Development Expenses 8.6% 7.4% Amortization of Goodwill and Other Acquired Intangibles 2.3% -- -------------- -------------- Income from Operations 3.6% 7.9% Interest Income .5% .9% Interest Expense (2.0)% -- -------------- -------------- Income Before Provision for Income Taxes 2.1% 8.8% Provision for Income Taxes .6% 3.2% -------------- -------------- Net Income 1.5% 5.6% ============== ==============
Sales. Net sales increased by 41.1% in the first quarter of fiscal year 2000 to $5,411 as compared to $3,835 in the first quarter of fiscal year 1999. Sales of the Undersea Systems Division increased by 31.6% to $4,076 in the first quarter of fiscal year 2000 as compared to $3,097 in the first quarter of fiscal year 1999. The increase resulted mainly from the inclusion of the sales of the product lines acquired from Datasonics, Inc. in August 1999 which were not in the results of the first quarter of fiscal year 1999 and reduced sales of hydrophones in the first quarter of fiscal year 2000 as compared to the first quarter of fiscal year 1999. Sales of the Container Inspection Systems Division increased by 80.9% to $1,335 in the first quarter of fiscal year 2000 as compared to $738 in the first quarter of fiscal year 1999. The increase resulted largely from the timing of market orders. Gross Profit. Gross Profit increased by 42.5% to $2,125 for the first quarter of fiscal year 2000 as compared to $1,491 for the first quarter of fiscal year 1999. As a percentage of sales, gross profit was 39.3% in the first quarter of fiscal year 2000 as compared to 38.9% in the first quarter of fiscal year 1999. The increase in gross profit percentage is attributed primarily to the higher sales mix of Container Inspection Systems Division products, which carry a higher gross profit than the products of the Undersea Systems Division. 10 Selling, General and Administrative Expenses. Selling, general and administrative expenses increased by 48.6% to $1,345 for the first quarter of fiscal year 2000 as compared to $905 in the first quarter of fiscal year 1999. As a percentage of sales, selling, general and administrative expenses increased to 24.8% in the first quarter of fiscal year 2000 as compared to 23.6% for the first quarter of fiscal year 1999. The increase in selling, general, and administrative dollars and percentage of sales is a result of the inclusion of expenses related to the acquisition of Datasonics, Inc. in August 1999 which were not in the results of the first quarter of fiscal year 1999 and other corporate expenses. Research and Development Expenses. Research and development expenses increased 62.8% to $464 for the first quarter of fiscal year 2000 as compared to $285 in the first quarter of fiscal year 1999. As a percentage of sales, research and development expenses increased to 8.6% of sales in the first quarter of fiscal year 2000 from 7.4% in the first quarter of fiscal year 1999. The increase in the overall level of expenditures is due to investments in new product development as well as the inclusion of the operating results of the acquisition of Datasonics, Inc. in August 1999 which were not included in the results of the first quarter of fiscal year 1999. The level of expenditures is consistent with the Company's current operational plans. Amortization of Goodwill and Other Acquired Intangibles. Amortization of goodwill and other acquired intangibles was $123 in the first quarter of fiscal year 2000 as a result of the acquisition of substantially all of the assets of Datasonics, Inc. in August 1999. Interest Income. Interest income decreased to $28 in the first quarter of fiscal year 2000 as compared to $36 in the first quarter of fiscal year 1999. The decrease in interest income was a result of lower invested cash balances, due in part to the acquisition of Datasonics, Inc. Interest Expense. Interest Expense increased to $109 in the first quarter of fiscal year 2000 as compared to $0 in the first quarter of fiscal year 1999. The increase in interest expense dollars was a result of the bank loan made in August 1999 to finance the acquisition of substantially all of the assets of Datasonics, Inc. Provision for Income Taxes. The provision for income taxes decreased to $34 in the first quarter of fiscal year 2000 as compared to $121 in the first quarter of fiscal year 1999. The effective tax rate used in the first quarter of fiscal year 2000 was 30.0% as compared to the rate of 35.9% used in the first quarter of fiscal year 1999. The rate used in the first quarter of fiscal year 2000 is lower than the statutory rate due primarily to the benefit from the Company's Foreign Sales Corporation. Liquidity and Capital Resources. The Company's cash and cash equivalents decreased $1,194 from September 30, 1999 to December 31, 1999. Cash of $822 was used in operating activities. Inventories provided $513 as inventory levels were more balanced with respect to shipments. Accounts receivable increased by $1,006 as a result of increased shipments and higher shipments in the latter part of the quarter. Accounts payable and accrued expenses used $568 as a result of profit sharing payments and inventory reduction. The Company has a $2,000 secured line of credit with a bank that was to have expired on January 31, 2000. The bank has extended that line to March 31, 2000 and is in the process of approving the extension to January 31, 2001. At December 31, 1999 there were no amounts outstanding under this line of credit. The Company believes it is well positioned to finance future working capital requirements and capital expenditures during the next twelve months through cash on hand, current earnings and available credit facilities. YEAR 2000 UPDATE PROGRAM The Company has monitored its Year 2000 program, and as of this date, no material problems have arisen since the end of calendar year 1999. All of the Company's computer systems are Year 2000 ready and no technology projects have been delayed due to the Year 2000 date change. 11 During 1998 and 1999 the company was actively engaged in addressing Year 2000 issues. State of Readiness: To manage its Y2K program, the Company divided its efforts into four program areas: - - Information Technology (computer hardware and software) - - Physical Plant (manufacturing equipment and facilities) - - Products (including product development) - - Extended Enterprise (suppliers and customers) For each of these program areas, the Company used a four-step approach: - - Ownership (creating awareness, assigning tasks) - - Inventory (listing items to be assessed for Y2K readiness) - - Assessment (prioritizing the inventoried items, assessing their Y2K readiness, planning corrective actions, developing initial contingency plans) - - Corrective Action Deployment (implementing corrective actions, verifying implementation, finalizing and executing contingency plans. Costs to Address Y2K Issues: The Company began incurring expenses in 1997 to resolve this issue. All expenditures have been expensed as incurred and have not had (and are not expected to have) a significant impact on the Company's ongoing results of operations. Risks of Y2K Issues and Contingency Plans: The Company assessed the Year 2000 issues relating to its physical plant, products and suppliers. The Company developed a contingency planning process to mitigate worst-case business disruptions such as delays in product delivery, which could potentially result from events such as supply chain disruptions. "Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995. The statements in this Quarterly Report on Form 10-QSB and in oral statements which may be made by representatives of the Company relating to plans, strategies, economic performance and trends and other statements that are not descriptions of historical facts may be forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking information is inherently subject to risks and uncertainties, and actual results could differ materially from those currently anticipated due to a number of factors which include: the timing of large project orders, competitive factors, shifts in customer demand, government spending, economic cycles, availability of financing as well as the factors described in this report. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results or outcomes may vary materially from those described herein as anticipated, believed, estimated, expected or intended. 12 Part II -- OTHER INFORMATION Item 6. Exhibits and Reports on Form 8-K (a) Exhibits The exhibits set forth in the Exhibit Index on the following page are filed herewith as a part of this report. (b) Reports on Form 8-K None SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. BENTHOS, INC By /s/ Francis E. Dunne, Jr. Francis E. Dunne, Jr. Vice President, Chief Financial Officer, and Treasurer (Principal Financial and Accounting Officer) DATE: February 9, 2000 BENTHOS, INC. EXHIBIT INDEX
Exhibit ------- 3.1 Restated Articles of Organization (1) 3.2 Articles of Amendment dated April 28, 1997 (2) 3.3 Articles of Amendment dated April 20, 1998 (5) 3.4 By-Laws (1) 3.5 By-Law Amendments adopted January 23, 1998 (4) 4.1 Common Stock Certificate (1) 10.1 Employment Contract with Samuel O. Raymond (1) 10.2 Amendment to Employment Contract with Samuel O. Raymond (2) 10.3 Employment Contract with John L. Coughlin (1) 10.4 Amended and Restated Employment Agreement with John L. Coughlin 10.5 Employee Stock Ownership Plan (1) 10.6 First Amendment to Employee Stock Ownership Plan (2) 10.7 Second Amendment to Employee Stock Ownership Plan (8) 10.8 Third Amendment to Employee Stock Ownership Plan (8) 10.9 401(k) Retirement Plan (1993)(1) 10.10 401(k) Retirement Plan (1999)(8) 10.11 First Amendment to 401(k) Retirement Plan (2) 10.12 Second Amendment to 401(k) Retirement Plan (2) 10.13 Third Amendment to 401(k) Retirement Plan (3) 10.14 Supplemental Executive Retirement Plan (1) 10.15 1990 Stock Option Plan (1)
Exhibit ------- 10.16 Stock Option Plan for Non-Employee Directors (1) 10.17 1998 Non-Employee Directors' Stock Option Plan (4) 10.18 Benthos, Inc. 2000 Stock Incentive Plan (9) 10.19 License Agreement between the Company and The Penn State Research Foundation dated December 13, 1993 (1) 10.20 Technical Consultancy Agreement between the Company and William D. McElroy dated July 12, 1994 (1) 10.21 Technical Consultancy Agreement between the Company and William D. McElroy dated October 1, 1996 (3) 10.22 General Release and Settlement Agreement between the Company and Lawrence W. Gray dated February 8, 1996 (1) 10.23 Line of Credit Loan Agreement between the Company and Cape Cod Bank and Trust Company dated September 24, 1990, as amended (1) 10.24 Commercial Mortgage Loan Extension and Modification Agreement between the Company and Cape Cod Bank and Trust Company, dated July 6, 1994 (1) 10.25 Credit Agreement between the Company and Cape Cod Bank and Trust Company dated August 18, 1999. 10.26 License Agreement between the Company and Optikos Corporation dated July 29, 1997 (3) 10.27 Hydrophone License Agreement between the Company and Syntron, Inc. dated December 5, 1996 (6) 10.28 Amendment Number 1 to Hydrophone License Agreement between the Company and Syntron, Inc. dated September 11, 1998 (6) 10.29 Asset Purchase Agreement among Benthos, Inc., Datasonics, Inc., and William L. Dalton and David A. Porta (7) 21 Subsidiaries of the Registrant (1) 27 Financial Data Schedule
(1) Previously filed as an exhibit to Registrant's Registration Statement on Form 10-SB filed with the Commission on December 17, 1996 (File No. O-29024) and incorporated herein by this reference. (2) Previously filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended March 30, 1997 (File No. O-29024) and incorporated herein by this reference. (3) Previously filed as an exhibit to Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended June 29, 1997 (File No. O-29024) and incorporated herein by this reference. (4) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 1997 (File No. O-29024) and incorporated herein by this reference. (5) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended March 31, 1998 (File No. 0-29024) and incorporated herein by this reference. (6) Previously filed as an exhibit to the Registrant's Quarterly Report on Form 10-QSB for the quarterly period ended December 31, 1998 (File No. 0-29024) and incorporated herein by this reference. (7) Previously filed as an exhibit to Registrant's Current Report on Form 8-K filed on or about August 27, 1999 (File No. O- 29024) and incorporated herein by this reference. (8) Previously filed as an exhibit to Registrant's Annual Report on Form 10-KSB for the fiscal year ended September 30, 1999 File No. 0-29024) and incorporated herein by this reference. (9) Previously filed as an exhibit to the Registrant's definitive proxy statement filed on Schedule 14A on or about January 18, 2000 EX-10.4 2 EXH 10.4 EXHIBIT 10.4 AMENDED AND RESTATED EMPLOYMENT AGREEMENT AGREEMENT made and entered into in North Falmouth, Massachusetts, between BENTHOS, INC., a Massachusetts corporation with a usual place of business situated at 49 Edgerton Drive, North Falmouth, Massachusetts 02556 (the "Company") and JOHN L. COUGHLIN, of 130 Pine Lake Road, Duxbury, Massachusetts 02332 (the "Executive"), effective as of the 1st day of October, 1999 (the "Effective Date"). WITNESSETH: WHEREAS, the Company and the Executive are currently parties to a certain Employment Agreement effective as of April 8, 1996 (the "Prior Employment Agreement"); WHEREAS, the Prior Employment Agreement has a term which ends on April 7, 2000; WHEREAS, the Company and the Executive want to amend and restate the Prior Employment Agreement in its entirety so that this Agreement will completely set forth the terms and conditions of the employment of the Executive by the Company from and after the Effective Date; and WHEREAS, subject to the terms and conditions of this Agreement, the Company wants to continue the employment of the Employee and the Employee wants to be employed by the Company. NOW, THEREFORE, in consideration of the premises, the mutual terms and conditions set forth herein and other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, the Company and the Executive hereby mutually agree as follows: 1. AMENDMENT AND RESTATEMENT OF THE EMPLOYMENT AGREEMENT. Pursuant to Section 17 of the Prior Employment Agreement, the Prior Employment Agreement is amended in its entirety and restated herein, and, as of the effective date of this Agreement, the Prior Employment Agreement will be null and void and all of the rights and obligations of the Company and the Executive with respect to the employment of the Executive by the Company from and after the Effective Date will be as set forth herein. The Executive hereby acknowledges that the Executive has received from the Company a Certificate of the Clerk of the Company certifying that a vote of the Board of Directors was duly adopted authorizing the amendment and restatement of the Prior Employment Agreement and the approval of this Agreement and that Stephen D. Fantone, Chairman of the Board of Directors of the Company, is authorized to execute this Agreement on behalf of the Company. The Executive also acknowledges that all of the obligations of the Company to the Executive pursuant to the Prior Employment Agreement have been fully satisfied. 2. EMPLOYMENT. The Company shall employ the Executive and the Executive will serve the Company as President and Chief Executive Officer of the Company upon the terms and conditions provided herein. In the discharge of the duties of the Executive hereunder, the Executive shall report to the Board of Directors of the Company. 3. TERM. Subject to earlier termination as hereinafter provided, the employment of the Executive hereunder shall be for a term of three (3) years, commencing on the Effective Date, and may be extended or renewed only by a written agreement executed and delivered by the Executive and an expressly authorized representative of the Company. The term of this Agreement, as from time to time extended or renewed, is hereafter referred to as "the term of this Agreement" or "the term hereof". 2 4. CAPACITY AND PERFORMANCE. (a) In addition to the duties set forth in Section 2 and without further compensation, the Executive shall serve as a Director of the Company if so elected or appointed from time to time. (b) During the term hereof, the Executive shall be employed by the Company on a full-time basis and shall perform such duties and responsibilities on behalf of the Company as may be designated from time to time by the Board of Directors of the Company. (c) During the term hereof, the Executive shall devote the full business time and the best efforts, business judgment, skill and knowledge of the Executive to the advancement of the business and interests of the Company and to the discharge of the duties of the Executive hereunder. The Executive shall not engage in any other business activity or serve in any industry, trade, professional, governmental, or academic position during the term of this Agreement, except as may be approved in advance by the Board of Directors of the Company. 5. COMPENSATION AND BENEFITS. As compensation for all services performed by the Executive hereunder during the term hereof and subject to the satisfactory performance of the duties and obligations of the Executive to the Company, the compensation and benefits to be earned by the Executive pursuant to this Agreement are as follows: (a) BASE SALARY. During the term hereof, the Company shall pay the Executive a base salary at the rate of One Hundred Eighty- Seven Thousand ($187,000) Dollars per annum, payable in accordance with the payroll practices of the Company for its 3 executives and subject to increase from time to time by the Board of Directors, in its sole discretion. Such base salary, as from time to time increased, is hereafter referred to as the "Base Salary". (b) QUALITATIVE BONUS. Subject to the terms and conditions hereof, with respect to fiscal year 2000 of the Company, the Executive will be eligible to receive a bonus based on the satisfaction of certain criteria which will be given to the Executive by the Board of Directors (the "Qualitative Bonus"). The Qualitative Bonus, if earned, for fiscal year 2000 will be paid within sixty (60) days of the end of the fiscal year. With respect to fiscal years of the Company after fiscal year 2000, the Board of Directors of the Company in its sole discretion will determine the amount of the Qualitative Bonus and the conditions which must be satisfied by the Executive for the Executive to be eligible to receive a Qualitative Bonus. Upon the payment of any Qualitative Bonus by the Company to the Executive, the Company will provide to the Executive a written explanation of the factors considered by the Company in awarding the Qualitative Bonus. Notwithstanding any other provision contained in this Agreement, the Executive will only be eligible for a Qualitative Bonus if the Executive is not in breach of this Agreement at the time such Qualitative Bonus is to be paid. In all events, any issues which may arise between the Company and the Executive with respect to the Qualitative Bonus shall be resolved by the Board of Directors of the Company in its sole discretion. (c) QUANTITATIVE BONUS. Subject to the terms and conditions hereof, the Executive will be eligible to receive a bonus based on the amount of operating income earned by 4 the Company in the 2000 fiscal year of the Company (the "Quantitative Bonus"). The Quantitative Bonus with respect to fiscal year 2000 will be computed by adding the sum of (i) one and two tenths (1.2%) per cent of the operating income of the Company for fiscal year 2000 up to a maximum of Two Million ($2,000,000) Dollars of operating income of the Company, plus (ii) one (1%) per cent of the operating income of the Company for fiscal year 2000 which exceeds Two Million ($2,000,000) Dollars. The Quantitative Bonus for fiscal year 2000 will be paid within sixty (60) days after the end of the fiscal year. For fiscal years of the Company after fiscal year 2000, the Board of Directors of the Company in its sole discretion will establish the formula by which any Quantitative Bonus will be earned by the Executive during the remainder of the term of this Agreement. Notwithstanding any other provision contained in this Agreement, the Executive will not be eligible for a Quantitative Bonus unless the Executive is employed by the Company and is not in breach of this Agreement on the date on which any Quantitative Bonus is to be paid. In all events, any issues which may arise between the Company and the Executive with respect to the Quantitative Bonus shall be resolved by the Board of Directors of the Company in its sole discretion. (d) PRORATION In the event this Agreement is terminated as a result of: (i) the death of the Executive pursuant to Section 6(a), (ii) the disability of the Executive pursuant to Section 6(b), (iii) by the Company for other than for cause pursuant to Section 6(d), or (iv) upon a Change of Control pursuant to Section 6(e), then the Qualitative Bonus and the Quantitative Bonus will be prorated as of the date of 5 termination of employment of the Executive. (e) OTHER BENEFITS. The Executive will be entitled to such annual vacation as shall be agreed upon between the Executive and the Board of Directors of the Company as well as any fringe benefits and perquisites that may from time to time be afforded generally to senior executive officers of the Company. Without limiting the generality of the foregoing, the Executive shall be entitled to participate in or receive benefits under any 401(k) plan, pension plan, employee stock ownership plan, retirement plan, life insurance, disability insurance, health and accident plan or other arrangement made available by the Company now or in the future, generally to the senior executive officers of the Company, subject to and on a basis consistent with the terms, conditions and overall administration of such plans and arrangements and of the terms of this Agreement. (f) EXPENSES. The Executive shall be entitled to receive prompt reimbursement for all reasonable expenses incurred by the Executive (in accordance with the policies and procedures established from time to time by the Board of Directors of the Company or any Committee thereof) in the performance of the duties of the Executive hereunder, provided such expenses are properly accounted for in accordance with the policies of the Company. (g) TAXES. All payments to the Executive pursuant to this Agreement shall be subject to all applicable federal, state and local withholding payroll and other taxes. 6. TERMINATION OF EMPLOYMENT AND SEVERANCE BENEFITS. Notwithstanding the provisions of Section 3 above, the employment of the Executive hereunder shall terminate prior to the 6 expiration of the term of this Agreement under the following circumstances: (a) DEATH. In the event of the death of the Executive during the term hereof, the employment of the Executive hereunder shall immediately and automatically terminate. In such event, the Company shall pay to the estate of the Executive any earned and unpaid Base Salary and any Qualitative Bonus or Quantitative Bonus shall be prorated through the date of death of the Executive. (b) DISABILITY. The Company may terminate the employment of the Executive hereunder in the event the Executive becomes disabled during the term hereof due to any illness, injury, accident or condition of either a physical or psychological nature and, as a result, is unable to perform substantially all of the duties and responsibilities of the Executive hereunder on a full time basis, for either (i) ninety (90) consecutive days, (ii) one hundred twenty (120) days cumulatively within any twelve (12) month period, or (iii) if in the opinion of a duly licensed physician the same is likely to occur. At the request of the Company the Executive shall submit to a medical examination by a physician selected by the Company to whom the Executive, or the duly appointed guardian of the Executive, if any, has no reasonable objection. If the Executive shall refuse to submit to such medical examination, then the determination of disability of the Executive by the Board of Directors shall be conclusive. During any period of disability of the Executive, the Board of Directors may designate another employee to act in the place of the Executive. Notwithstanding any such designation, the Executive shall continue to receive the Base Salary to the extent permitted by the then applicable benefit plans, 7 until the Executive becomes eligible for any disability income benefits under the disability income plan of the Company or the termination of the employment of the Executive, whichever shall first occur. While receiving disability income payments under any disability income plan of the Company, the Executive shall not be entitled to receive any Base Salary, Qualitative Bonus or Quantitative Bonus, but shall continue to participate in Company benefit plans under Section 5(e) hereof as long as the terms of such plans allow such participation by the Executive until the termination of the Employment of the Executive. The Executive hereby acknowledges that the termination of the Executive under this Section 6(b) does not violate the so-called Americans with Disabilities Act, the Family and Medical Leave Act or similar state statutes. (c) BY THE COMPANY FOR CAUSE. The Company may, immediately and unilaterally, terminate the Executive's employment hereunder "for cause" at any time during the term of this Agreement without prior written notice to the Executive. Termination of the Executive's employment by the Company shall constitute a termination "for cause" under this Section 6(c) if such termination, as determined by the Board of Directors, is for one or more of the following causes: (i) Willful failure of the Executive to perform (other than by reason of disability under Section 5(b), or gross negligence in the performance of, the duties and responsibilities of the Executive to the Company which results in demonstrable monetary harm to the Company; (ii) The commission by the Executive of any act or acts of dishonesty, a breach 8 of fiduciary duty, a material breach of the terms of this Agreement or any other agreement between the Executive and the Company, or a material violation of the written or established rules and policies of the Company as such rules and policies may from time to time be amended or modified by the Company; (iii) The commission by the Executive of an act of fraud or embezzlement; (iv) The conviction by the Executive of, or plea of no contest for, any felony; (v) The commission of an act by the Executive which constitutes unfair competition or a conflict of interest with the Company or which induces any customer, vendor, contractor, or affiliate or any prospective customer, vendor, contractor or affiliate of the Company to breach a contract with the Company or not to enter into a contract with the Company; or (vi) The commission of an act by the Executive which constitutes a willful violation of the federal or state securities laws. In the event of a termination "for cause" pursuant to any of the provisions of clauses (i) through (vi) above, inclusive, the Executive shall not be entitled to any severance or other termination benefits under this Agreement. The Executive will be paid any earned and unpaid Base Salary as of the termination date. (d) BY THE COMPANY OTHER THAN FOR CAUSE. (i) The Company may terminate the Executive's employment under this Agreement at any time without cause upon thirty (30) days written notice to the Executive or payment in lieu thereof if the Company elects to 9 accelerate the Executive's departure date. For the purposes hereof, if the Executive is not then in breach of this Agreement, and this Agreement is in effect on the last day of the term hereof, then a failure of the Company to extend or renew this Agreement, or to establish an agreement that is comparable to this Agreement, shall be deemed to be a termination other than for cause. For the purposes hereof, an agreement that provides the Executive with compensation approximately in the amount of the Base Salary hereunder for at least one year shall be deemed to be a "comparable" agreement. Subject to the provisions of Section 6(f), if the Executive is terminated by the Company other than for cause, the Company shall pay the Executive severance compensation as described in Section 6(d) (ii) below. (ii) In the event the Company exercises its right to terminate the Executive under this Section 6(d)(ii), the Company shall: (i) pay the Executive a severance payment equal to eighteen (18) months' Base Salary at the Executive's then current Base Salary, payable over eighteen (18) months in accordance with the Company's payroll practices and (ii) if the Executive is eligible for, and chooses to elect health insurance continuation in accordance with the Consolidated Omnibus Budget Reconciliation Act of 1985 ("COBRA"), pay the same portion of the premium payments of the Executive as were being paid by the Company prior to termination under COBRA for a period of either (i) eighteen (18) months, or (ii) until the Executive receives comparable health insurance from another employer, 10 whichever shall first occur. In addition, the Company shall provide the Executive with up to six (6) months of outplacement services not to exceed a value of $25,000. (e) UPON A CHANGE OF CONTROL. (i) If a Change of Control occurs and, within one (1) year following such Change of Control, the Company terminates the Executive's employment Other Than for Cause as defined in Section 6 (d) hereof, then and subject to the provisions of Section 6 (d) (i), the Company shall pay the Executive, within ten (10) business days of such termination, a lump sum payment equal to twice the then annual Base Salary of the Executive and if the Executive is eligible for, and chooses to elect health insurance continuation in accordance with the COBRA, pay the same portion of the premium payments of the Executive as were being paid by the Company prior to termination under COBRA for a period of eighteen (18) months, or until the Executive receives comparable health insurance from another employer, whichever shall first occur. In addition, the Company shall provide the Executive with up to twelve (12) months of outplacement services not to exceed a value of $25,000. (ii) Notwithstanding the foregoing or any other provision of this Agreement, the payments and benefits to which the Executive would be entitled pursuant to Section 6(e) as a result of a Change of Control shall be reduced to the maximum amount for which the Company will not be limited in its 11 deduction pursuant to Section 280G of the Internal Revenue Code of 1986, as amended, or any successor provision. (iii) A Change of Control shall be deemed to take place if at any time during the term hereof: (A) any Person or "group" (within the meaning of Section 13(d)(3) or 14(d)(2) of the Securities Exchange Act of 1934), other than the Company or any of its Affiliates, becomes a beneficial owner (within the meaning of Rule 13d-3 as promulgated under the Securities Exchange Act of 1934), directly or indirectly, of securities representing fifty (50%) percent or more of the total number of votes that may be cast for the election of directors of the Company and two-thirds (2/3) of the Board has not consented to such event prior to its occurrence or within sixty (60) days thereafter, provided that if the consent occurs after the event it shall only be valid for purposes of this Section 6(e) if a majority of the consenting Board is comprised of directors of the Company who were such immediately prior to the event; (B) any merger or consolidation involving the Company or any sale or other transfer of all or substantially all of the assets of the Company, or any combination of the foregoing, and two-thirds of the Board has not consented to such event prior to its occurrence or within sixty (60) days thereafter, provided that if the consent occurs after the event it shall only be valid for purposes of this Section 6(e) if a majority of the consenting Board is comprised of directors of the Company who were such immediately prior to the event; or (C) within twelve (12) months 12 after a tender offer or exchange offer for voting securities of the Company (other than by the Company) the individuals who were directors of the Company immediately prior thereto shall cease to constitute a majority of the Board. (f) THE COMPANY'S OBLIGATION TO PROVIDE SEVERANCE COMPENSATION. The severance payments and compensation set forth in Sections 6 (c), (d) and (e) shall be payable in conformity with the Company's payroll practices for the Executive's compensation as such practices may be modified from time to time and shall be subject to all applicable federal, state and local withholding, payroll and other taxes; PROVIDED, HOWEVER, if the Executive breaches the noncompetition or nonsolicitation obligations under Section 7 hereof, or if the Executive breaches the obligations of the Executive between the Executive and the Company set forth herein, the Company may immediately cease payment of all severance and/or benefits described in this Agreement. This cessation of severance and/or benefits shall be in addition to, and not as an alternative to, any other remedies in law or in equity available to the Company, including the right to seek specific performance or an injunction. The Executive hereby acknowledges that the Company would suffer irreparable harm if the Executive violates the noncompetition or nonsolicitation obligations under Section 7 hereof or if the Executive breaches the obligations hereunder and accordingly the Executive hereby agrees that the Company shall be entitled to preliminary and permanent injunctive relief. The Executive acknowledges that the Company shall not have any further obligations 13 to the Executive in the event of Executive's termination under Sections 6 (c), (d) or (e) except such further obligations as may be imposed by law. The Executive further acknowledges and agrees that the obligation of the Company to pay severance compensation to the Executive under this Agreement is contingent upon the Executive executing and delivering, all in form and substance satisfactory to the Company: (i) if the Executive is then a member of the Board of Directors of the Company, a resignation from the Board of Directors of the Company; (ii) a comprehensive general release of the Company by the Executive; (iii) a resignation as Chief Executive Officer and President of the Company and any other office the Executive may hold with the Company; and (iv) satisfactory evidence to the Company that the Executive has returned all property, confidential information and documents of the Company to the Company. The Executive acknowledges and agrees that the post-termination obligations set forth in Sections 7(a), 7(b) and 7(c) shall survive the termination of this Agreement whether or not the Executive signs the release or provides the resignations described in this Section. 7. NON-COMPETITION; NON-SOLICITATION. (a) NON-COMPETITION. During the period of the Executive's employment by the Company and for two (2) years after the Executive's employment terminates. The Executive shall not, alone or as a partner, joint venturer, officer, director, employee, agent, consultant, stockholder or investor of any company or business organization, engage in any business activity and/or accept employment with any 14 person or entity, which is directly or indirectly in competition with the products or services under consideration (which consideration can be reasonably demonstrated) being developed, drafted, manufactured, marketed, distributed, planned, sold or otherwise provided by the Company. Notwithstanding the foregoing, the record or beneficial ownership by the Executive of one (1%) per cent or less of the outstanding publicly traded capital stock of any such company shall not be deemed, in and of itself, to be in violation of this Section 7; PROVIDED, HOWEVER, that the Executive is not a partner, joint venturer, officer, director, employee, agent, independent contractor or consultant of such company. (b) CUSTOMER SOLICITATION. The Executive shall not, directly or indirectly, for himself or on behalf of others, during the Executive's employment by the Company and for a period of two (2) years after the Executive's employment terminates, solicit, divert, attempt to divert, accept the business of, or enter into any business relationship, involving activities competitive with the Company, with any former or current clients, customers, suppliers, contractors or affiliates of the Company made known to him during his employment, or in any way interfere with or disrupt any existing relationship between the Company and any of its clients, customers, suppliers, vendors, contractors or affiliates or others with whom the Company transacts business. (c) EMPLOYEE SOLICITATION. The Executive shall not, directly or indirectly, for himself or on behalf of others, during the Executive's employment by the Company and for a period of two (2) years after the Executive's employment terminates, hire, 15 attempt to hire, or knowingly permit any company or business organization by which the Executive is employed or which is directly or indirectly controlled by the Executive, to employ any employee of the Company or any employee who has left the employment of the Company within six (6) months of such employee's termination, or in any manner seek to solicit or induce any employee to leave his or her employment with the Company or otherwise assist in the recruitment of any such person. (d) NONCOMPETITION/NONSOLICITATION. In the event that the Executive's employment terminates because the term of this Agreement expires or is otherwise not renewed, it is agreed and understood that the Executive will be bound by the noncompetition and nonsolicitation obligations pursuant to Section 7 hereof. 8. ENFORCEMENT OF COVENANTS. The Executive acknowledges that the Executive has carefully read and considered all the terms and conditions of this Agreement, including the restraints imposed upon the Executive by Section 7 hereof. The Executive agrees that said restraints are necessary for the reasonable and proper protection of the Company and that such restraints are reasonable in respect to subject matter, length of time, and geographic area. The Executive further acknowledges that, were the Executive to breach any of the covenants contained in Section 7 hereof, the damage to the Company would be irreparable. The Executive therefore agrees that the Company, in addition to any other remedies available to the Company in law or in equity, shall be entitled to preliminary and permanent injunctive relief against any breach or threatened breach by the Executive of any of said covenants without posting bond. The Executive and the Company further agree 16 that, if one or more of the clauses contained in Section 7 shall for any reason be held to be excessively broad as to scope, activity, subject or otherwise so as to be unenforceable at law, such provision or provisions shall be construed by the appropriate judicial body by limiting or reducing it or them, so as to be enforceable to the maximum extent compatible with the applicable law as it shall then appear. 9. ARBITRATION. Any dispute, controversy or claim arising out of, in connection with, or relating to the performance of this Agreement shall be settled by arbitration in the City of Boston, Massachusetts, before a single arbitrator pursuant to the rules then in effect of the American Arbitration Association. The fees and expenses of the arbitrator shall be borne equally by the Executive and the Company. Any award shall be final, binding and conclusive upon the Executive and the Company and the judgment rendered thereon may be entered in any court having jurisdiction thereof. This Section 9 will not preclude or affect in any manner the rights of the Company to equitable relief pursuant to Section 8 of this Agreement. 10. CONFLICTING AGREEMENTS. The Executive hereby represents and warrants that the execution of this Agreement and the performance of the obligations of the Executive hereunder will not breach or be in conflict with any other agreement to which the Executive is a party or is bound and that the Executive is not now subject to any covenants against competition or similar covenants that would affect the performance of the Executive hereunder. The Executive will not disclose to or use on behalf of the Company any proprietary information of a third party without the consent of such third party. 11. ASSIGNMENT. The Executive acknowledges that the services to be rendered by the 17 Executive hereunder are unique and personal in nature. Accordingly, the Executive may not assign any of his rights or delegate any of his duties or obligations under this Agreement. The rights and obligations of the Company under this Agreement shall inure to the benefit of, and shall be binding upon, the successors and assigns of the Company. 12. SEVERABILITY. If any portion or provision of this Agreement shall to any extent be declared illegal or unenforceable by a court of competent jurisdiction, then the remainder of this Agreement, or the application of such portion or provision in circumstances other than those as to which it is so declared illegal or unenforceable, shall not be affected thereby, and each such portion and provision of this Agreement shall be valid and enforceable to the fullest extent permitted by law. 13. WAIVER. No waiver of any provision hereof shall be effective unless made in writing and signed by the waiving party. The failure of either party to require the performance of any term or obligation of this Agreement, or the waiver by either party of any breach of this Agreement, shall not prevent any subsequent enforcement of such term or obligation or be deemed a waiver of any subsequent breach. 14. NOTICES. Any and all notices, requests, demands and other communications provided for by this Agreement shall be in writing and shall be effective when delivered in person or deposited in the United States mail, postage prepaid, registered or certified, and addressed to the Executive at the last known address of the Executive on the books of the Company or, in the case of the Company, at its principal place of business, attention of the Chairman of the Board of Directors, or to such other address as either party may specify by notice to the other, with a copy to John T. Lynch, Esq., Davis, Malm & D'Agostine, P.C., One 18 Boston Place, 37th Floor, Boston, Massachusetts 02108. 15. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between the parties and supersedes all prior communications, agreements and understandings, written or oral, with respect to the terms and conditions of the Executive's employment, including the Executive's salary, bonus, or other compensation of any description, equity participation, pension, post-retirement benefits, severance or other remuneration, except for a certain Employee's Patent Agreement with Benthos, Inc., dated April 8, 1996 between the Company and the Executive, and a certain Incentive Stock Option Agreement, dated as of April 8, 1996 between the Company and the Executive, both of which shall remain in full force and effect. 16. AMENDMENT. This Agreement may be amended or modified only by a written instrument signed by the Executive and by an expressly authorized representative of the Company who is authorized by a vote of the Board of Directors of the Company to execute such amendment or modification on behalf of the Company. 17. HEADINGS. The headings and captions in this Agreement are for convenience only and in no way define or describe the scope or content of any provision of this Agreement. 18. COUNTERPARTS. This Agreement may be executed in two or more counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 19. GOVERNING LAW. This is a Massachusetts contract and shall be construed and enforced under and be governed in all respects by the laws of the Commonwealth of Massachusetts, without regard to the conflict of laws principals thereof, and this Agreement shall be 19 deemed to be performable in Massachusetts. Any claims or legal actions by one party against the other arising out of the relationship between the parties contemplated herein (whether or not arising under this Agreement) shall be commenced or maintained in any state or federal court located in Massachusetts, and the Executive hereby submits to the jurisdiction and venue of any such court. The Executive hereby further agrees that the language of all parts of this Agreement shall in all cases be construed as a whole according to its fair meaning and not strictly for or against either of the parties. IN WITNESS WHEREOF, this Agreement has been executed as a sealed instrument by the Company, by its duly authorized representative, and by the Executive, as of the date first above written. COMPANY: BENTHOS, INC. By: STEPHEN D. FANTONE --------------------------------------- Stephen D. Fantone Chairman of the Board of Directors on Behalf of the Board of Directors Executive: JOHN L. COUGHLIN ------------------------------------------- John L. Coughlin 20 EX-27 3 EXH 27
5 THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS OF BENTHOS, INC. AND SUBSIDIARY CONTAINED ELSEWHERE IN THIS QUARTERLY REPORT AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS. 1,000 3-MOS SEP-30-2000 DEC-31-1999 1,736 0 3,438 220 4,281 11,530 6,746 5,001 18,031 4,068 4,452 0 0 110 9,401 18,031 5,411 5,411 3,286 1,468 464 0 109 112 34 78 0 0 0 78 .06 .06 THE EARNINGS PER SHARE INFORMATION HAS BEEN PREPARED IN ACCORDANCE WITH SFAS NO. 128 AND BASIC DILUTED EARNINGS PER SHARE HAVE BEEN ENTERED IN PLACE OF PRIMARY AND FULLY DILUTED, RESPECTIVELY.
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