$20,000,000
9% SENIOR SUBORDINATED CONVERTIBLE DEBENTURES DUE 2003
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
PURCHASE AGREEMENT
EXECUTION COPY
New York, New York
September 22, 1995
FORUM CAPITAL MARKETS L.P.
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
Diagnostic/Retrieval Systems, Inc., a Delaware
corporation (the "Company"), proposes to issue and sell to Forum
Capital Markets L.P. (the "Initial Purchaser") $20,000,000
principal amount of its 9% Senior Subordinated Convertible
Debentures due 2003 (the "Debentures") to be issued pursuant to
the provisions of an indenture dated as of the date hereof (the
"Indenture") between the Company and The Trust Company of New
Jersey, as trustee (the "Trustee"). Such $20,000,000 aggregate
principal amount of Debentures are hereafter referred to as the
"Firm Debentures." Upon the request of the Initial Purchaser, as
provided in Section 2(b) of this Agreement, the Company shall
also issue and sell to the Initial Purchaser up to an additional
$5,000,000 aggregate principal amount of Debentures for the
purpose of covering over-allotments, if any. Such $5,000,000
aggregate principal amount of Debentures are hereinafter referred
to as the "Option Debentures." The Firm Debentures and Option
Debentures collectively constitute all of the Debentures. The
Company hereby confirms its agreement with the Initial Purchaser
with respect to the sale by the Company and the purchase by the
Initial Purchaser of the Debentures. The shares of the Company's
Class A common stock, par value $.01 per share (the "Common
Stock"), issuable upon conversion of the Debentures are
hereinafter referred to as the "Underlying Stock."
The Debentures will be offered and sold to the Initial
Purchaser without being registered under the Securities Act of
1933, as amended (the "Securities Act"), in reliance on an
exemption therefrom. The Company has prepared a preliminary
offering circular dated September 11, 1995 as amended by a
Supplement to the Preliminary Offering Circular dated September
14, 1995 (such preliminary offering circular , as amended, being
hereinafter referred to as the "Preliminary Offering Circular"),
and a final offering circular dated September 22, 1995 (such
offering circular being hereinafter referred to as the "Offering
Circular"), setting forth information regarding the Company, the
Debentures and the Underlying Stock. Unless stated to the
contrary, all references herein to the Offering Circular are to
the Offering Circular at the date and time that this Agreement is
executed and delivered by the parties hereto (the "Execution
Time") and are not meant to include any amendment or supplement,
or any information incorporated by reference therein, subsequent
to the Execution Time. The Company hereby confirms that it has
authorized the use of the Preliminary Offering Circular and the
Offering Circular in connection with the offering and sale of the
Debentures.
Holders (including subsequent transferees) of the
Debentures will have the registration rights set forth in the
Registration Rights Agreement (the "Registration Rights
Agreement"), dated concurrently herewith. Pursuant to the
Registration Rights Agreement, the Company has agreed to file
with the Securities and Exchange Commission (the "Commission") a
shelf registration statement pursuant to Rule 415 under the
Securities Act (the "Shelf Registration Statement") to cover
public resales of the Debentures and the Underlying Stock by the
Holders thereof.
Capitalized terms used herein without definition have
the respective meanings specified therefor in the Offering
Circular. For purposes hereof, "Rules and Regulations" means the
rules and regulations adopted by the Commission under the
Securities Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act") or the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), as applicable.
1. Representations and Warranties of the Company.
The Company represents and warrants to, and agrees with, the
Initial Purchaser of the date hereof, and as of the Closing Date
and each Option Closing Date (as defined in Section 2(b) hereof),
if any, as follows:
(a) The Offering Circular, as of its date, together
with each amendment or supplement thereto, as of its date,
contains all the information that, if requested by a prospective
purchaser, would be required to be provided pursuant to Rule
144A(d)(4) under the Securities Act. The Offering Circular does
not, and at the Closing Date and any Option Closing Date will
not, and any amendment or supplement thereto, if any, as of its
date, will not, contain any untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The preceding sentence does not
apply to information contained in or omitted from the Preliminary
Offering Circular or the Offering Circular (or any supplement or
amendment thereto) in reliance upon and in conformity with
written information furnished to the Company by or on behalf of
any Initial Purchaser specifically for use therein (the "Initial
Purchaser's Information"). The parties acknowledge and agree
that the Initial Purchaser's Information consists solely of the
last paragraph at the bottom of the front cover page concerning
the terms of the offering by the Initial Purchaser, the legend
concerning over-allotment and trading activities of affiliates on
the inside front cover page and the paragraphs under the caption
"Plan of Distribution" in the Offering Circular. The Company is
subject to Section 13 or 15(d) of the Exchange Act.
(b) The Company and each of its direct and indirect
corporate subsidiaries wherein are listed on Schedule I hereto
(collectively, the "Corporate Subsidiaries"), has been duly
organized and is validly existing as a corporation in good
standing under the laws of the state of its incorporation. Laurel
Technologies (the "Partnership," and together with the Corporate
Subsidiaries, the "Subsidiaries") is a partnership which has been
duly organized under the laws of the State of Pennsylvania. Each
of the Company and the Subsidiaries is duly qualified and
licensed and in good standing as a foreign corporation (or with
respect to the Partnership, as a foreign partnership) in each
jurisdiction in which its ownership or leasing of any properties
or the character of its operations require such qualification or
licensing, except where the failure to be so qualified or
licensed would not have a material adverse effect on the
condition, financial or otherwise, results of operations,
business or prospects of the Company and the Subsidiaries, taken
as a whole (a "Material Adverse Effect"). The Company owns,
either directly or through other Subsidiaries, one hundred
percent (100%) of the outstanding capital stock of each Corporate
Subsidiary, and the Company owns an eighty percent (80%) general
partnership interest in the Partnership, in each case free and
clear of all liens, charges, claims, encumbrances, pledges,
security interests defects or other restrictions or equities of
any kind whatsoever; and all outstanding capital stock of the
Corporate Subsidiaries has been validly issued and is fully paid
and non-assessable and not issued in violation of any preemptive
rights or applicable securities laws. Each of the Company and
the Subsidiaries has all requisite power and authority
(corporate, partnership and other), and has obtained any and all
necessary authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental
or regulatory officials and bodies, to own or lease its
properties and conduct its business as described in the Offering
Circular except for such authorizations, approvals, orders,
licenses, certificates, franchises and permits the failure to
obtain which would not have a Material Adverse Effect; each of
the Company and the Subsidiaries is and has been doing business
in compliance with all such authorizations, approvals, orders,
licenses, certificates, franchises and permits and all federal,
foreign, state and local laws, rules and regulations except where
failure to so comply would not have a Material Adverse Effect;
and neither the Company nor any of the Subsidiaries has received
any notice of proceedings relating to the revocation or
modification of any such authorization, approval, order, license,
certificate, franchise or permit which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.
(c) The Company had an authorized capitalization as of
the period indicated therein as set forth in the Offering
Circular and will have the adjusted capitalization as of the
period indicated therein, based upon the assumptions set forth
therein. Neither the Company nor any of the Subsidiaries is a
party to or bound by any instrument, agreement or other
arrangement, including, but not limited to, any voting trust
agreement, stockholders' agreement or other agreement or
instrument, affecting the securities or rights or obligations of
securityholders of the Company or any of the Subsidiaries or
providing for any of them to issue, sell, transfer or acquire any
capital stock, rights, warrants, options or other securities of
the Company or any of the Subsidiaries, except for this
Agreement, the Indenture, as set forth in the Offering Circular
and, with respect to the Partnership, its partnership agreement.
The Debentures and the Company's Capital Stock conform in all
material respects to all statements with respect thereto
contained in the Offering Circular. All issued and outstanding
shares of capital stock or other securities evidencing equity
ownership of each of the Company or any of the Subsidiaries have
been duly authorized and validly issued and are fully paid and
non-assessable, as applicable; the holders thereof have no rights
of rescission with respect thereto and are not subject to
personal liability by reason of being such holders; and none of
such securities were issued in violation of the preemptive rights
of any securityholder of the Company or any of the Subsidiaries
or similar contractual rights granted by the Company or any of
the Subsidiaries. The Debentures will be issued pursuant to the
terms and conditions of the Indenture, and the Indenture and the
Registration Rights Agreement will each conform to the
description thereof contained in the Offering Circular. At the
Closing Date, the Indenture will conform in all material respects
to the requirements of the Trust Indenture Act and the Rules and
Regulations applicable to an indenture which is qualified
thereunder. The Debentures have been duly authorized and, when
validly authenticated, issued, delivered and paid for in the
manner contemplated by the Indenture, will be duly authorized,
validly issued and outstanding obligations of the Company
entitled to the benefits of the Indenture. The shares of Common
Stock issuable upon conversion of the Debentures will, upon such
issuance, be duly authorized, validly issued, fully paid and non-
assessable, and the Company has duly authorized and reserved for
issuance upon conversion of the Debentures the shares of Common
Stock issuable upon such conversion. The Debentures and the
Underlying Stock are not and will not be subject to any
preemptive or other similar rights of any securityholder of the
Company or any of the Subsidiaries; all corporate action required
to be taken for the authorization, issue and sale of the
Debentures and the Underlying Stock has been duly and validly
taken; and the certificates representing the Debentures and the
Underlying Stock will be in due and proper form. Upon the
issuance and delivery pursuant to the terms of this Agreement and
the Indenture of the Debentures to be sold by the Company
hereunder and thereunder, the Initial Purchaser will acquire good
and marketable title thereto free and clear of any lien, charge,
claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever.
(d) The consolidated historical financial statements of
the Company and the Subsidiaries together with the related notes
thereto included in the Preliminary Offering Circular and the
Offering Circular fairly present the financial position, income,
changes in stockholders' equity, cash flow and results of
operations of the Company and the Subsidiaries at the respective
dates and for the respective periods to which they apply and such
historical financial statements have been prepared in conformity
with generally accepted accounting principles and the Rules and
Regulations, consistently applied throughout the periods
involved; the pro forma financial information included in each
Preliminary Offering Circular and the Offering Circular presents
fairly the information shown therein in accordance with Article
11 of Regulation S-X. Except as described in the Offering
Circular, there has been no material adverse change or
development involving a material prospective change in the
condition, financial or otherwise, or in the earnings, business
prospects, or results of operations of the Company or any of the
Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, since the date of the financial
statements included in the Offering Circular and the outstanding
debt, the property, both tangible and intangible, and the
businesses of each of the Company and the Subsidiaries conform in
all material respects to the descriptions thereof contained in
the Offering Circular. Financial information set forth in the
Offering Circular under the headings "SUMMARY CONSOLIDATED
FINANCIAL DATA," "SELECTED CONSOLIDATED FINANCIAL DATA,"
"CAPITALIZATION" and "MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS" fairly present, on
the basis stated in the Offering Circular, the information set
forth therein and have been derived from or compiled on a basis
consistent with that of the audited financial statements included
in the Offering Circular.
(e) Each of the Company and the Subsidiaries has filed
all material tax returns required to be filed by it in any
jurisdiction, other than those filings being contested in good
faith, and has paid all material federal, state, local and
foreign taxes shown to be due on such returns or claimed to be
due from such entities, other than those (i) currently payable
without penalty or interest or (ii) being contested in good
faith, in either case, for which the Company is liable, and has
established adequate reserves in the Company's financial
statements (in accordance with generally accepted accounting
principles) for such taxes which are not due and payable and
(iii) does not have any material tax deficiency or claims
outstanding, proposed or assessed against it.
(f) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Initial Purchaser in connection
with (i) the issuance by the Company of the Debentures or the
Underlying Stock, (ii) the purchase by the Initial Purchaser of
the Debentures from the Company or (iii) the consummation by the
Company of any of its obligations under this Agreement or the
Indenture.
(g) Each of the Company and the Subsidiaries maintain
liability, casualty and other insurance (subject to customary
deductions and retentions) with responsible insurance companies
against such risk companies engaged in similar businesses as the
Company and the Subsidiaries operate (which may include self-
insurance in comparable form to that maintained by such
responsible companies).
(h) There is no action, suit, proceeding, litigation or
governmental proceeding pending or, to the knowledge of the
Company, threatened against, or involving the properties or
businesses of, the Company or any of the Subsidiaries which
(i) questions the validity of the capital stock of the Company or
any of the Subsidiaries, this Agreement, the Indenture, the
Registration Rights Agreement or of any action taken or to be
taken by the Company or any of the Subsidiaries pursuant to or in
connection with this Agreement, the Indenture or the Registration
Rights Agreement or (ii) would have a Material Adverse Effect.
(i) The Company has full legal right, power and
authority to authorize, issue, deliver and sell the Debentures
and the Underlying Stock upon conversion of the Debentures, to
enter into this Agreement, the Indenture and the Registration
Rights Agreement and to consummate the transactions provided for
in such agreements; and this Agreement has been duly and properly
authorized, executed and delivered by the Company and when the
Company has duly executed and delivered the Registration Rights
Agreement and the Indenture and (assuming the due execution and
delivery therein by the Initial Purchasers) will constitute a
legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except to the
extent that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity)
and except to the extent that rights to indemnification and
contribution contained in this Agreement may be limited by
federal or state securities laws on public policy relating
thereto. None of the Company's issue and sale of the Debentures
and the Underlying Stock upon the conversion of the Debentures,
the execution or delivery of this Agreement, the Indenture and
the Registration Rights Agreement, its performance hereunder and
thereunder, its consummation of the transactions contemplated
herein and therein or the conduct by it and the Subsidiaries of
their businesses as described in the Offering Circular or any
amendments or supplements thereto conflicts or will conflict with
or results or will result in any breach or violation of any of
the terms or provisions of, or constitutes or will constitute a
default under, or results or will result in the creation or
imposition of any lien, charge, claim, encumbrance, pledge,
security interest, defect or other restriction or equity of any
kind whatsoever upon any property or assets of the Company or any
of the Subsidiaries pursuant to the terms of, (i) the certificate
of incorporation, by-laws or partnership agreement of the Company
or any of the Subsidiaries, (ii) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement or other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it is or may be bound or to
which its properties or assets is or may be subject, or any
indebtedness, or (iii) any statute, judgment, decree, order, rule
or regulation applicable to the Company or any of the
Subsidiaries of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body,
having jurisdiction over the Company or any of the Subsidiaries
or any of their respective activities or properties except, in
the case of clauses (ii) and (iii), such defaults, impositions
and violations that would not have a Material Adverse Effect.
(j) No consent, approval, authorization or order of,
and no filing with, any court, arbitrator, regulatory body,
government agency or other body, domestic or foreign, is required
for the execution, delivery or performance of this Agreement, the
Indenture, the Registration Rights Agreement or the transactions
contemplated hereby or thereby, except such as have been or may
be obtained under the Securities Act or may be required under
state securities or Blue Sky laws.
(k) Subsequent to the respective dates as of which
information is set forth in the Offering Circular, and except as
may otherwise be indicated or contemplated herein or therein,
unless the Company has notified the Initial Purchaser in writing
otherwise, neither the Company nor any of the Subsidiaries has
(i) issued any securities (other than upon exercise of options
outstanding on the date hereof pursuant to the Company's 1981
Incentive Stock Option Plan, 1981 Non-Qualified Stock Option Plan
and 1991 Stock Option Plan or upon conversion of the 8 1/2%
Convertible Subordinated Debentures due August, 1998 (the "1998
Debentures")), or incurred any material liability or obligation,
direct or contingent, for borrowed money not in the ordinary
course of business, (ii) entered into any material transaction
other than in the ordinary course of business or (iii) declared
or paid any dividend or made any other distribution on or in
respect of its capital stock of any class and there has not been
any material change in the capital stock (excluding changes
contemplated by clause (i) hereof) or any Material Adverse Change
in or affecting the general affairs, management, financial
operations, stockholders' equity or results of operation of the
Company or any of the Subsidiaries.
(l) Neither the Company nor any of its Subsidiaries (i)
is in violation of its certificate of incorporation, by-laws or
partnership agreement, as applicable, (ii) is in default in the
performance of any obligation, agreement or condition contained
in any license, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement, purchase
order, agreement or instrument evidencing an obligation for
borrowed money or other material agreement or instrument to which
the Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries may be bound or to which the
property or assets of the Company or any of the Subsidiaries is
subject or affected or (iii) is in violation in any respect of
any law, ordinance, governmental rule, regulation or court decree
to which it or its property or assets may be subject, except any
violation or default under the foregoing clauses (ii) or (iii) as
would not have a Material Adverse Effect.
(m) The Company believes that each of the Company and
the Subsidiaries is in compliance with all federal, state, local
and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and
wages and hours. There are no pending investigations involving
the Company or any of the Subsidiaries by the U.S. Department of
Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and
regulations. There is no unfair labor practice charge or
complaint against the Company or any of the Subsidiaries pending
before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or
threatened against or involving the Company or any of the
Subsidiaries. No representation question exists respecting the
employees of the Company or any of the Subsidiaries, and no
collective bargaining agreement or modification thereof is
currently being negotiated by the Company or any of the
Subsidiaries. No grievance or arbitration proceeding is pending
under any expired or existing collective bargaining agreements of
the Company or any of the Subsidiaries. No material labor
dispute with the employees of the Company or any of the
Subsidiaries exists or, to the knowledge of the Company, is
imminent.
(n) Except as identified on Schedule II attached
hereto, neither the Company nor any of the Subsidiaries
maintains, sponsors or contributes to any program or arrangement
that is an "employee pension benefit plan" an "employee welfare
benefit plan" or a "multi-employer plan" ("ERISA Plans") as such
terms are defined in Sections 3(2), 3(1) and 3(37), respectively,
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Except as identified on Schedule I attached
hereto, neither the Company nor any of the Subsidiaries maintains
or contributes to, now or at any time previously, a defined
benefit plan as defined in Section 3(35) of ERISA. No ERISA Plan
(or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code which could subject the Company or any
of the Subsidiaries to any material tax penalty on prohibited
transactions and which has not adequately been corrected. No
"accumulated funding deficiency" (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA
(other than events with respect to which the 30-day notice under
Section 4043 of ERISA has been waived) has occurred with respect
to any employee benefit plan which might reasonably be expected
to have a Material Adverse Effect. Each ERISA Plan is in
compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to such ERISA
Plan. Determination letters have been received from the Internal
Revenue Service with respect to each ERISA Plan which is intended
to comply with Code Section 401(a) stating that such ERISA Plan
and the attendant trust are qualified thereunder. Neither the
Company nor any of the Subsidiaries has ever completely or
partially withdrawn from a "multi-employer plan" as so defined.
(o) Neither the Company or any of the Subsidiaries, nor
any of its affiliates has taken or will take, directly or
indirectly, any action designed to or which has constituted or
which might be expected to cause or result in, under the Exchange
Act or otherwise, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of
the Debentures or otherwise.
(p) Each of the Company and the Subsidiaries (i) owns
or has the right to use, free and clear of all liens, claims,
encumbrances, pledges, security interests, and other adverse
interests of any kind whatsoever, all patents, trademarks,
service marks, trade names, copyrights, technology, and all
licenses and rights with respect to the foregoing, used in the
conduct of its business as now conducted or proposed to be
conducted without, to the best knowledge of the Company and the
Subsidiaries, infringing upon or otherwise acting adversely to
the right or claimed right of any person, corporation or other
entity, (ii) is not obligated or under any liability whatsoever
to make any payments by way of royalties, fees or otherwise to
any owner or licensee of, or other claimant to, any patent,
trademark, service xxxx, trade name, copyright, know-how,
technology or other intangible asset, with respect to the use
thereof or in connection with the conduct of its business or
otherwise and (iii) has not received any notice of infringement
of or conflict with asserted rights of others with respect to any
of the foregoing which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, might have
a Material Adverse Effect.
(q) Each of the Company and the Subsidiaries has good
and marketable title to, or valid and enforceable leasehold
estates in, all items of real and personal property which are
material to its business, in each case, except as disclosed in
the Offering Circular, free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects and
other restrictions that would have a Material Adverse Effect.
(r) KPMG Peat Marwick LLP are independent certified
public accountants of the Company as required by the Securities
Act and the Rules and Regulations.
(s) The Debentures satisfy the eligibility requirements
of Rule 144A(d)(3) under the Securities Act, and the Debentures
are eligible for trading in the Private Offerings, Resale and
Trading through Automated Linkages ("Portal") Market. The Common
Stock is listed on the American Stock Exchange.
(t) Other than payments required or allowed by
applicable law of the United States, neither the Company nor any
of the Subsidiaries has, nor to the knowledge of the Company, has
any officer, director or employee of the Company or any of its
Subsidiaries or any other person acting on behalf of the Company
or any of the Subsidiaries, for the benefit of the Company or any
such Subsidiaries at any time during the last five years, (i)
made any unlawful gift or contribution to any candidate for
federal, state, local or foreign political office, or failed to
disclose fully any such gift or contribution in violation of law,
or (ii) made any payment to any federal, state, local or foreign
governmental officer or official, which would be reasonably
likely to subject the Company or any of the Subsidiaries to any
damage or penalty in any civil, criminal or governmental
litigation or proceeding (domestic or foreign). Each of the
Company's and the Subsidiaries' internal accounting controls are
sufficient to cause the Company and the Subsidiaries to comply
with the Foreign Corrupt Practices Securities Act of 1977, as
amended.
(u) Except as set forth in the Offering Circular, no
officer, director or 5% or greater stockholder of the Company or
any of the Subsidiaries, or any "affiliate" or "associate" (as
these terms are defined in Rule 405 promulgated under the Rules
and Regulations) of any of the foregoing persons or entities, has
or has had, either directly or indirectly, (i) a material
interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed
to be furnished or sold by the Company or any of the Subsidiaries
or (B) purchases from or sells or furnishes to the Company or any
of the Subsidiaries any goods or services or (ii) a material
beneficiary interest in any contract or agreement to which the
Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries may be bound or affected.
Except as set forth in the Offering Circular or under the heading
"Certain Relationships and Related Transactions" in the Company's
Proxy Statement for the Annual Meeting of Stockholders on August
8, 1995, which is incorporated by reference in the Offering
Circular, there are no existing agreements, arrangements,
understandings or transactions, or proposed agreements,
arrangements, understandings or transactions, between or among
the Company or any of the Subsidiaries and any such officer,
director, 5% or greater stockholder, "affiliate" or "associate."
For the purpose of this subsection (u), interests which may be
excluded from disclosure pursuant to the instructions to items of
Regulation S-K shall be deemed to be per se not material.
(v) The minute books of each of the Company and the
Subsidiaries have been made available to the Initial Purchaser,
contain a complete summary of all meetings and actions of the
directors and stockholders of each of the Company and the
Subsidiaries since the time of their respective incorporation and
reflect all transactions referred to in such minutes accurately
in all respects.
(w) Neither the Company nor any of the Subsidiaries
has been notified or is otherwise aware that it is potentially
liable, or is considered potentially liable, under the
Comprehensive Environmental Response, Compensation and Liability
Act of 1980, as amended, or any similar law ("Environmental
Laws"). To the best of the Company's knowledge, the Company and
the Subsidiaries are in substantial compliance with all
applicable existing Environmental Laws, except for such instances
of non-compliance which would not have a Material Adverse Effect.
The term "Hazardous Material" means (i) any "hazardous substance"
as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (ii) any
"hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (iii) any petroleum or petroleum
product, (iv) any polychlorinated biphenyl and (v) any pollutant
or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulation under or within the
meaning of any other Environmental Law. To the best of the
Company's knowledge, no disposal, release or discharge of
"Hazardous Material" has occurred on, in, at or about any of the
facilities or properties of the Company or any of the
Subsidiaries.
(x) The Company is not an "investment company," a
company controlled by an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment
Company Act of 1940, as amended.
(y) None of the proceeds of the sale of the Debentures
will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any
other purpose which might cause any of the Debentures to be
considered a "purpose credit" within the meanings of Regulation
G, T, U or X of the Board of Governors of the Federal Reserve
Board.
(z) Neither the Company nor any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) of the
Company has, directly or through any agent, sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect
of, any "security" (as defined in the Securities Act), which is
or will be integrated with the sale of the Debentures in a manner
that would require the registration of the Debentures under the
Securities Act.
(aa) None of the Company, any affiliate (as such term
is defined in Rule 501(b) under the Securities Act) of the
Company and any other person acting on its or their behalf has
engaged, in connection with the offering of the Debentures, in
any form of general solicitation or general advertising within
the meaning of Rule 502(c) under the Securities Act.
(bb) Assuming the accuracy of the Initial Purchaser's
representations in Section 2(c) hereof and its compliance with
the agreements set forth therein, it is not necessary, in
connection with the issuance and sale of the Debentures and the
offer, resale and delivery of the Debentures in the manner
contemplated by this Agreement and the Offering Circular, to
register the Debentures under the Securities Act or to qualify
the Indenture under the Trust Indenture Act.
(cc) Liens (as defined in the Indenture) existing on
the date hereof which secure Senior Indebtedness (as defined in
the Indenture) do not individually or in the aggregate exceed
$1,000,000.
2. Purchase by the Initial Purchaser.
(a) On the basis of the representations, warranties
and agreements contained herein, and subject to the terms and
conditions set forth herein, the Company agrees to issue and sell
to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, the Firm Debentures at a purchase
price equal to 95% of the principal amount thereof.
(b) In addition, on the basis of the representations,
warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company hereby grants
an option to the Initial Purchaser to purchase any or all of the
Option Debentures at a price equal to 95% of the principal amount
thereof plus accrued interest from the Closing Date to the
applicable Option Closing Date. Such option will expire 45 days
after the date hereof, and may be exercised in whole or in part
from time to time only for the purpose of covering over-
allotments which may be made in connection with the offering and
distribution of the Firm Debentures upon notice by the Initial
Purchaser to the Company setting forth the aggregate principal
amount of Option Debentures as to which the Initial Purchaser is
then exercising the option and the time and date of delivery and
payment therefor. Any such time and date of delivery and payment
(an "Option Closing Date") shall be determined by the Initial
Purchaser, but shall not be later than five full business days
after the exercise of such option unless otherwise agreed by the
Company and the Initial Purchaser.
(c) The Initial Purchaser has advised the Company that
it is its intention, as promptly as it deems appropriate after
the Company shall have furnished the Initial Purchaser with
copies of the Offering Circular, to resell the Debentures
pursuant to the procedures and upon the terms set forth in the
Offering Circular, including not to solicit any offer to buy or
offer to sell the Debentures by means of any form of general
solicitation or general advertising (within the meaning of
Regulation D under the Securities Act) or in any manner involving
a public offering within the meaning of Section 4(2) of the
Securities Act. The Initial Purchaser warrants and agrees with
the Company that it has solicited and will solicit offers (the
"Exempt Resales") for Debentures only from, and will offer
Debentures only to, persons that it reasonably believes to be (i)
QIBs in transactions that meet the requirements for an exemption
from the registration requirements of the Securities Act under
Rule 144A or (ii) to a limited number of Institutional Accredited
Investors that execute and deliver a letter containing certain
representations and agreements in the form attached as Annex A of
the Offering Circular. The QIBs and the Institutional Accredited
Investors are referred to herein as "Eligible Purchasers." The
Initial Purchaser represents and warrants that it is an
Institutional Accredited Investor with such knowledge and
experience in financial and business matters as are necessary to
evaluate the merits and risks of an investment in the Debentures,
and is acquiring its interest in the Debentures not with a view
to the distribution or resale thereof, except resales in
compliance with the registration requirements or exemption
provisions of the Securities Act and that neither it, nor anyone
acting on its behalf, will offer the Debentures so as to bring
the issuance and sale of the Debentures within the provisions of
Section 5 of the Securities Act. The Initial Purchaser further
represents and warrants that it is not a pension or welfare plan
(as defined in Section 3 of ERISA) and is not acquiring the
Debentures on behalf of a pension or welfare plan. The Company
acknowledges and agrees that the Initial Purchaser may sell
Debentures to any affiliate of the Initial Purchaser and any such
affiliate may sell Debentures purchased by it to the Initial
Purchaser. The Initial Purchaser agrees that, prior to or
simultaneously with the confirmation of sale by it to any
purchaser of any of the Debentures purchased from the Company
pursuant hereto, the Initial Purchaser shall furnish to that
purchaser a copy of the Offering Circular (and any amendment
thereof or supplement thereto that the Company shall have
furnished to the Initial Purchaser prior to the date of such
confirmation of sale). In addition to the foregoing, the Initial
Purchaser agrees and understands that the Company and, for
purposes of the opinions to be delivered to the Initial Purchaser
pursuant to Sections 5(b) and (c) hereof, counsel to the Company
and to the Initial Purchaser, respectively, may rely upon the
accuracy and truth of the foregoing representations, warranties
and covenants in this Section 2 and the Initial Purchaser hereby
consents to such reliance.
(d) No form of general solicitation or general
advertising (within the meaning of Regulation D under the
Securities Act) has been or will be used by the Initial Purchaser
or any of its representatives in connection with the offer and
sale of any of the Debentures including, but not limited to,
articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over
television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general
advertising except pursuant to a registered public offering as
provided in the Registration Rights Agreement.
(e) The Initial Purchaser agrees that, in connection
with the Exempt Resales, it will solicit offers to buy the
Debentures only from, and will offer to sell the Debentures only
to, Eligible Purchasers.
3. Delivery of and Payment for the Debentures.
Delivery of, and payment for, the Firm Debentures shall be made
at 10:00 A.M., New York City time, on September 29, 1995, or at
such other date or time, not later than five full business days
thereafter, as shall be agreed by the Initial Purchaser and the
Company (such date and time being referred to herein as the
"Closing Date"). Delivery of, and payment for, the Firm
Debentures and the Option Debentures shall be made at the offices
of Xxxxxx Xxxx & Xxxxxx, New York, New York, or any such other
place as shall be agreed by the Initial Purchaser and the
Company. On the Closing Date, the Company shall deliver or cause
to be delivered to the Initial Purchaser certificates for the
Firm Debentures against payment to or upon the order of the
Company of the purchase price by wire or book-entry transfer of
immediately available funds. On each Option Closing Date, the
Company shall deliver or cause to be delivered to the Initial
Purchaser certificates for the Option Debentures purchased
thereat against payment to or upon the order of the Company of
the purchase price by wire or book-entry transfer of immediately
available funds. Upon delivery, the Debentures shall be in
global form, in such denominations and registered in such names,
or otherwise, as the Initial Purchaser shall have requested in
writing not less than two full business days prior to the Closing
Date. The Company shall make the certificates for the Debentures
available for inspection by the Initial Purchaser in New York,
New York, not later than one full business day prior to the
Closing Date.
4. Covenants and Agreements of the Company. The
Company covenants and agrees with the Initial Purchaser as
follows:
(a) during the period ending 90 days after the date
hereof to advise the Initial Purchaser promptly and, if
requested, confirm such advice in writing, of the happening of
any event which makes any statement of a material fact made in
the Offering Circular untrue or that requires the making of any
additions to or changes in the Offering Circular (as amended or
supplemented from time to time) in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading; to advise the Initial Purchaser promptly of
any order preventing or suspending the use of the Preliminary
Offering Circular or the Offering Circular, of the suspension of
the qualification of the Debentures for offering or sale in any
jurisdiction and of the initiation or threatening of any
proceeding for any such purpose; and to use its reasonable best
efforts to prevent the issuance of any such order preventing or
suspending the use of the Preliminary Offering Circular or of the
Offering Circular or suspending any such qualification and, if
any such suspension is issued, to use its reasonable best effort
to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchaser and
counsel for the Initial Purchaser, without charge, as many copies
of the Preliminary Offering Circular and the Offering Circular
(and of any amendments or supplements thereto) as may be
reasonably requested; to furnish to the Initial Purchaser on the
date hereof a copy of the independent accountants' report
included in the Offering Circular signed by the accountants
rendering such report; and the Company hereby consents to the use
of the Preliminary Offering Circular and the Offering Circular,
and any amendments and supplements thereto, in connection with
Exempt Resales of the Debentures;
(c) if the delivery of the Offering Circular is
required at any time in connection with the sale of the
Debentures and if at such time any events shall have occurred as
a result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material fact
or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which
they were made when the Offering Circular is delivered, not
misleading, or if for any other reason it shall be necessary at
such time to amend or supplement the Offering Circular in order
to comply with any law, to notify the Initial Purchaser
immediately thereof, and to promptly prepare and furnish to the
Initial Purchaser an amended Offering Circular or a supplement to
the Offering Circular so that statements in the Offering
Circular, as so amended or supplemented, will not, in light of
the circumstances under which they were made when it is so
delivered, be misleading, or so that the Offering Circular will
comply with applicable law. The Initial Purchaser's delivery of
any such amendment or supplement shall not constitute a waiver of
any of the conditions set forth in Section 5 hereof;
(d) during the five-year period following the Closing
Date, provided any of the Debentures remain outstanding, to
furnish to the Initial Purchaser all public reports and all
reports, documents, information and financial statements
furnished by the Company to the Commission pursuant to the
Indenture or the Exchange Act or any rule or regulation of the
Commission thereunder;
(e) during the three-year period following the Closing
Date, for so long as and at any time that it is not subject to
Section 13 or 15(d) of the Exchange Act, upon request of any
holder of the Debentures, to furnish to such holder, and to any
prospective purchaser or purchasers of the Debentures designated
by such holder, information satisfying the requirements of
subsection (d)(4) of Rule 144(A) under the Securities Act. This
covenant is intended to be for the benefit of the holders from
time to time of the Debentures, and prospective purchasers of the
Debentures designated by such holders;
(f) to use the proceeds from the sale of the
Debentures in the manner described in the Offering Circular under
the caption "Use of Proceeds";
(g) in connection with the offering of the Debentures,
to make its officers, employees, independent accountants and
legal counsel reasonably available upon request by the Initial
Purchaser;
(h) to use its reasonable best efforts to do and
perform all things required to be done and performed under this
Agreement by it that are within its control prior to or after the
Closing Date and to use reasonable efforts to satisfy all
conditions precedent on its part to the delivery of the
Debentures;
(i) except following the effectiveness of the Shelf
Registration Statement, to not authorize or knowingly permit any
person acting on its or their behalf to, solicit any offer to buy
or offer to sell the Debentures by means of any form of general
solicitation or general advertising (as such terms are used in
Regulation D under the Securities Act) or in any manner involving
a public offering within the meaning of Section 4(2) of the
Securities Act;
(j) to not, and to use its reasonable best efforts to
ensure that no affiliate (as such term is defined in Rule 501(b)
under the Securities Act) of the Company will, offer, sell or
solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Securities Act) which could be
integrated with the sale of the Debentures in a manner that would
require the registration of the Debentures under the Securities
Act;
(k) to not, so long as the Debentures are outstanding,
be or become, or be or become owned by, an open-end investment
company, unit investment trust or face-amount certificate company
that is or is required to be registered under Section 8 of the
Investment Company Act, and will not be or become, or be or
become owned by, a closed-end investment company required to be
registered, but not registered thereunder;
(l) to cooperate with the Initial Purchaser and
counsel for the Initial Purchaser to qualify the Debentures for
offering and sale under the securities laws of such jurisdictions
as the Initial Purchaser may reasonably request and to comply
with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Debentures;
provided, however, that in connection therewith the Company shall
not be required to qualify as a foreign corporation or to file a
general consent to service of process or to subject it to
taxation in any jurisdiction where it is not so qualified or so
subject;
(m) to use its reasonable best efforts to comply with
the Registration Rights Agreement and all agreements set forth in
the representation letters of the Company to The Depository Trust
Company relating to the approval of the Debentures for "book-
entry" transfers;
(n) in connection with the offering, until the Initial
Purchaser shall have notified the Company of the completion of
the resale of the Debentures, to not and use its reasonable best
efforts to not permit any affiliated purchasers (as defined in
Rule 10b-6 under the Exchange Act), either alone or with one or
more other persons, to bid for or purchase, for any account in
which it or any of its affiliated purchasers has a beneficial
interest, any Debentures, or attempt to induce any person to
purchase any Debentures; and to not and use its reasonable best
efforts to not permit any of its affiliated purchasers to make
bids or purchases for the purpose of creating actual, or
apparent, active trading in or of raising the price of the
Debentures;
(o) prior to the Closing Date, to not issue any press
release or other communication directly or indirectly or hold any
press conference with respect to the Company, its condition,
financial or otherwise, or earnings, business affairs or business
prospects, without the prior consent of the Initial Purchaser,
unless in the judgment of the Company and its counsel, and after
notification to the Initial Purchaser, such press release or
communication is required by law;
(p) to not take any action prior to the execution and
delivery of the Indenture which, if taken after such execution
and delivery, would have violated any of the covenants contained
in the Indenture; and
(q) to not take any action prior to the Closing Date
which in the Company's reasonable judgment would require the
Offering Circular to be amended or supplemented pursuant to
Section 4(c) hereof.
(r) to maintain a transfer agent and, if necessary
under the laws of the jurisdiction of incorporation of the
Company, a registrar (which may be the same entity as the
transfer agent) for the Common Stock.
(s) for a period of five (5) years from the date
hereof, to use its best efforts to maintain the PORTAL (or after
the Shelf Registration Statement, Nasdaq Stock Market listing)
listing of the Debentures), to the extent outstanding, and the
American Stock Exchange (or New York Stock Exchange or Nasdaq
Stock Market) listing of the Common Stock.
5. Payment of Expenses.
(a) The Company hereby agrees to pay all of the
following expenses and fees incident to the performance of the
obligations of the Company under this Agreement, the Indenture
and the Registration Rights Agreement, including, regardless of
whether any sale of the Debentures to the Initial Purchaser is
consummated (subject to paragraph (b) below): (i) the fees and
expenses of accountants and counsel for the Company, (ii) all
costs and expenses incurred in connection with the preparation,
duplication, printing (including mailing and handling charges),
delivery and mailing (including the payment of postage with
respect thereto) of each Preliminary Offering Circular and the
Offering Circular and any amendments and supplements thereto, in
quantities as hereinabove stated, (iii) the printing, engraving,
issuance and delivery of the Debentures, (iv) costs and expenses
of travel, food and lodging of Company personnel in connection
with the "road show," information meetings and presentations, (v)
fees and expenses of the transfer agent and registrar, (vi) fees
and expenses of the Trustee, including the Trustee's counsel, in
connection with the Indenture and the Debentures and (vii) the
fees payable to the NASD and, if any, the American Stock Exchange
incurred in connection with the listing of the Debentures and the
Underlying Stock for trading in the PORTAL Market and the
American Stock Exchange, respectively and (viii) all other costs
and expenses incident to the performance of its obligations
hereunder which are not specifically otherwise provided for in
this Section. In addition, at the Closing the Company will pay
or reimburse up to $100,000 of the Initial Purchaser's reasonable
and accountable out-of-pocket expenses, including but not limited
to legal (including all Blue Sky counsel fees and expenses),
travel, printing, roadshow (excluding lodging and travel expenses
of the Initial Purchaser's personnel in connection with the
roadshow which shall be the obligation of the Initial Purchaser)
expenses, in connection with the offering, purchase and sale of
the Debenture. The Company shall not be responsible for any
promotional or tombstone expenses, if any, related to the
Offering, purchase and sale of the Debentures. It is understood,
however, that except as provided in this Section, Section 7 and
Section 9 hereof or as otherwise agreed, the Initial Purchaser
will pay all of its own costs and expenses, incurred by it in the
performance of this Agreement.
(b) If this Agreement is terminated for any reason, the
Company shall reimburse and indemnify the Initial Purchaser for
its actual accountable out-of-pocket expenses, up to $50,000,
less any amounts already paid pursuant to Section 5(a) hereof.
Such expenses shall be paid by credit against the advance
provided above in Section 5(a).
6. Conditions of the Initial Purchaser's Obligations.
The obligations of the Initial Purchaser hereunder shall be
subject to the continuing accuracy of the representations and
warranties of the Company herein as of the date hereof and as of
the Closing Date and each Option Closing Date, if any, as if they
had been made on and as of the Closing Date or each Option
Closing Date, as the case may be; and the performance by the
Company on and as of the Closing Date and each Option Closing
Date, if any, of its covenants and obligations hereunder and to
the following further conditions:
(a) The Initial Purchaser shall not have advised the
Company that the Offering Circular, or any supplement or
amendment thereto, contains an untrue statement of fact which is
material, or omits to state a fact which is material and is
required to be stated therein or is necessary to make the
statements, in light of the circumstances under which they were
made, not misleading. No order suspending the sale of the
Securities in any jurisdiction shall have been issued on either
the Closing Date or the relevant Option Closing Date, if any, and
no proceedings for that purpose shall have been instituted or
shall be contemplated.
(b) On or prior to the Closing Date, the Initial
Purchaser shall have received from Xxxxxx Xxxx & Xxxxxx such
opinion or opinions with respect to the organization of the
Company, the validity of the Debentures, the Underlying Stock,
the Offering Circular and other related matters as the Initial
Purchaser may request and Xxxxxx Xxxx & Xxxxxx shall have
received such papers and information as they request to enable it
to pass upon such matters.
(c) At Closing Date, the Initial Purchaser shall have
received the favorable opinion of Skadden, Arps, Slate, Xxxxxxx &
Xxxx, counsel to the Company, dated the Closing Date, addressed
to the Initial Purchaser and in form and substance reasonably
satisfactory to Xxxxxx Xxxx & Xxxxxx, with respect to matters
customarily covered in opinions of counsel in like transactions.
(d) Skadden, Arps, Slate, Xxxxxxx & Xxxx shall state
in the opinion letter contemplated by Section 6(c) that such
counsel has participated in conferences with officers and other
representatives of each of the Company and the Subsidiaries and
representatives of the independent public accountants for the
Company and the Subsidiaries and the Initial Purchaser, at which
conferences the contents of the Offering Circular and related
matters were discussed, and, although such counsel is not passing
upon, and does not assume any responsibility for, the accuracy,
completeness or fairness of the statements contained in the
Offering Circular and have made no independent check or
verification thereof, on the basis of the foregoing, no facts
have come to the attention of such counsel which has lead them to
believe that the Offering Circular, as of its date contained an
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, except that such counsel
express no opinion or belief with respect to the financial
statements and related notes, the pro forma financial information
and other financial, statistical or accounting data included the
Offering Circular or excluded therefrom);
(e) On or prior to the Closing Date, Xxxxxx Xxxx &
Xxxxxx shall have been furnished such documents, certificates and
opinions as they may reasonably require for the purpose of
enabling them to review or pass upon the matters referred to in
subsection (c) of this Section 6 or in order to evidence the
accuracy, completeness or satisfaction of any of the
representations, warranties or conditions of the Company herein
contained.
(f) Prior to the Closing Date: (i) there shall have
been no material adverse change involving a prospective change in
the condition, financial or otherwise, prospects, stockholders'
equity or the business activities of the Company and the
Subsidiaries taken as a whole, whether or not in the ordinary
course of business, from the latest dates as of which such
condition is set forth in the Offering Circular; (ii) there shall
have been no transaction, not in the ordinary course of business,
entered into by the Company or any of the Subsidiaries, from the
latest date as of which the financial condition of the Company
and the Subsidiaries is set forth in the Offering Circular which
is materially adverse to the Company and the Subsidiaries taken
as a whole; (iii) neither the Company nor any of the Subsidiaries
shall be in default under any provision of any instrument
relating to any material outstanding indebtedness; (iv) no
material amount of the assets of the Company or any of the
Subsidiaries shall have been pledged or mortgaged, except as set
forth in the Offering Circular; (v) no action, suit or
proceeding, at law or in equity, shall have been pending or. to
the knowledge of the Company, threatened against the Company or
any of the Subsidiaries, or affecting any of their respective
properties or businesses, before or by any court or federal,
state or foreign commission, board or other administrative agency
wherein an unfavorable decision, ruling or finding may have a
Material Adverse Effect, except as set forth in the Offering
Circular; and (vi) no stop order shall have been issued under the
Securities Act and no proceedings therefor shall have been
initiated, threatened or contemplated by the Commission or any
state regulatory authority.
(g) At the Closing Date, the Initial Purchaser shall
have received a certificate of the Company signed by the
principal executive officer and by the chief financial or chief
accounting officer of the Company, in their capacities as such,
dated the Closing Date, to the effect that each of such persons
has carefully examined the Offering Circular, this Agreement and
the Indenture, and that:
i) the representations and warranties of the
Company in this Agreement, the Indenture and the
Registration Rights Agreement are true and correct, as
if made on and as of the Closing Date or such Option
Closing Date, as the case may be, and the Company has
complied with all agreements and covenants and
satisfied all conditions contained in this Agreement,
the Indenture and the Registration Rights Agreement on
its part to be performed or satisfied at or prior to
the Closing Date;
ii) no stop order suspending the qualification or
exemption from qualification of the Debentures shall
have been issued and no proceedings for that purpose
shall have been commenced or, to the knowledge of the
Company, be contemplated;
iii) since the date of the most recent financial
statements included in the Offering Circular, there has
been no material adverse change in the condition,
financial or otherwise business, prospects or results
of operation of the Company and the Subsidiaries, taken
as a whole, except as set forth in the Offering
Circular;
iv) none of the Offering Circular or any such
amendment or supplement includes any untrue statement
of a material fact or omits to state any material fact
required to be stated therein or necessary to make the
statements therein, in light of the circumstances under
which they were made, not misleading; and
v) subsequent to the respective dates as of which
information is given in the Offering Circular: (a)
neither the Company nor any of the Subsidiaries has
incurred up to and including the Closing Date or the
Option Closing Date, as the case may be, other than in
the ordinary course of its business, any material
liabilities or obligations, direct or contingent,
except as disclosed in the Offering Circular; (b)
neither the Company nor any of the Subsidiaries has
paid or declared any dividends or other distributions
on its capital stock; (c) neither the Company nor any
of the Subsidiaries has entered into any material
transactions not in the ordinary course of business,
except as disclosed in the Offering Circular; (d) there
has not been any material change in the capital stock
(other than pursuant to the Company's 1981 Incentive
Stock Option Plan, 1981 Non-Qualified Stock Option Plan
or 1991 Stock Option Plan or upon conversion of the
1998 Debentures); (e) neither the Company nor any of
the Subsidiaries has sustained any material loss or
damage to its property or assets, whether or not
insured; and (f) there is no litigation which is
pending or to the best of the Company's knowledge
threatened against the Company, any of the Subsidiaries
or any affiliated party of any of the foregoing which
would have a Material Adverse Effect and which is
required to be set forth in an amended or supplemented
Offering Circular which has not been set forth.
(h) On or before the date hereof the Initial Purchaser
shall have received a letter, dated such date, addressed to the
Initial Purchaser in form and substance satisfactory in all
respects to the Initial Purchaser and Xxxxxx Xxxx & Xxxxxx, from
KPMG Peat Marwick LLP:
i) confirming that they are independent certified
public accountants with respect to the Company within
the meaning of the Securities Act and the Exchange Act
and the applicable Rules and Regulations;
ii) stating that it is their opinion that the
consolidated financial statements and supporting
schedules of the Company and the Subsidiaries included
in the Offering Circular or incorporated by reference
therein comply as to form in all material respects with
the applicable accounting requirements of the
Securities Act; and
iii) stating that they have compared specific
dollar amounts, numbers of shares, percentages of
revenues and earnings, statements and/or other
financial information pertaining to the Company and the
Subsidiaries set forth in the Offering Circular in each
case to the extent that such amounts, numbers,
percentages, statements and information may be derived
from the general accounting records, including work
sheets, of the Company and/or the Subsidiaries and
excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the
application of specified readings, inquiries and other
appropriate procedures (which procedures need not
constitute an examination in accordance with generally
accepted auditing standards) set forth in the letter
and found them to be in agreement.
(i) At the Closing Date and each Option Closing Date,
if any, the Initial Purchaser shall have received from KPMG Peat
Marwick LLP a letter, dated as of the Closing Date or such Option
Closing Date, as the case may be, to the effect that they
reaffirm that statements made in the letter furnished pursuant to
subsection (h) of this Section 6, except that the specified date
referred to shall be a date not more than five (5) days prior to
the Closing Date or such Option Closing Date, as the case may be,
to the further effect that they have carried out procedures as
specified in clause (iii) of subsection (h) of this Section 6
with respect to certain amounts, percentages and financial
information as specified by the Initial Purchaser and deemed to
be a part of the Offering Circular and have found such amounts,
percentages and financial information to be in agreement with the
records specified in such clause (iii).
(j) On each of the Closing Date and each Option Closing
Date, if any, there shall have been duly tendered to the Initial
Purchaser the appropriate principal amount of Debentures.
(k) The Securities shall have been approved by the
National Association of Securities Dealers, Inc. for trading in
the PORTAL market.
(l) Trading in the Common Stock shall not have been
suspended by the American Stock Exchange at any time after
September 1, 1995.
(m) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange,
the American Stock Exchange or the over-the-counter market shall
have been suspended or limited, or minimum prices shall have been
established on either of such exchanges or such market by the
Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, or trading in
securities of the Company on any exchange or in the over-the-
counter market shall have been suspended or (ii) any moratorium
on commercial banking activities shall have been declared by
Federal or New York State authorities or (iii) an outbreak or
escalation of hostilities or a declaration by the United States
of a national emergency or war or such a material adverse change
in general economic, political or financial conditions (or the
effect of international conditions on the financial markets in
the United States shall be such) as to make it, in the judgment
of the Initial Purchaser, impracticable or inadvisable to proceed
with the offering or the delivery of the Debentures on the terms
and in the manner contemplated in the Offering Circular.
(n) The Company and the Initial Purchaser shall have
executed and delivered the Registration Rights Agreement on the
date of this Agreement.
(o) The Indenture shall have been duly executed and
delivered by the Company and the Trustee and the Debentures shall
have been duly executed and delivered by the Company and duly
authenticated by the Trustee.
(p) If any event shall have occurred that requires the
Company under Section 4(c) hereof to prepare an amendment or
supplement to the Offering Circular, such amendment or supplement
shall have been prepared, the Initial Purchaser shall have been
given a reasonable opportunity to comment thereon, and copies
thereof delivered to the Initial Purchaser.
(q) There shall not have occurred any invalidation of
Rule 144A under the Securities Act by any court or any withdrawal
or proposed withdrawal of any rule or regulation under the
Securities Act or the Exchange Securities Act by the Commission
or any amendment or proposed amendment thereof by the Commission
which in the judgment of the Initial Purchaser would materially
impair the ability of the Initial Purchaser to purchase, hold or
effect resales of the Debentures as contemplated hereby.
All opinions, letters, evidence and certificates
mentioned above or elsewhere in this Agreement shall be deemed to
be in compliance with the provisions hereof only if they are in
form and substance reasonably satisfactory to the Initial
Purchaser.
If any condition to the Initial Purchaser's obligations
hereunder to be fulfilled prior to or at the Closing Date or the
relevant Option Closing Date, as the case may be, is not so
fulfilled, the Initial Purchaser may terminate this Agreement or,
if the Initial Purchaser so elects, it may waive any such
conditions which have not been fulfilled or extend the time for
their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
the Initial Purchaser (for purposes of this Section 7, "Initial
Purchaser" shall include the officers, directors, partners,
employees and agents, and each person, if any, who controls the
Initial Purchaser ("controlling person") within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange
Act, from and against any and all losses, claims, damages,
expenses or liabilities, joint or several (and actions,
proceedings, suits and litigation in respect thereof),
whatsoever, as the same are incurred, to which the Initial
Purchaser or any such controlling person may become subject,
under the Securities Act, the Exchange Act or any other statute
or at common law or otherwise insofar as such losses, claims,
damages, expenses or liabilities arise out of or are based upon
any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Offering Circular or the
Offering Circular (as from time to time amended and supplemented)
or arise out of or are based upon the omission or alleged
omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein in the light
of the circumstances under which they were made, not misleading;
provided, however, that the Company shall not be liable in any
such case to the extent that any such loss, claim, damage,
expense or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Circular or the Offering
Circular or any such amendment or supplement in reliance upon and
in conformity with Initial Purchaser Information and provided,
further, that the Company shall not be liable to the Initial
Purchaser under the indemnity agreement in this subsection (a)
(i) with respect to any Preliminary Offering Circular to the
extent that any such loss, liability, claim, damage or expense of
the Initial Purchaser arises out of a sale of the Debentures by
such Purchaser to a person to whom there was not sent or given,
at or prior to the written confirmation of such sale, a copy of
the Offering Circular (or of the Offering Circular as then
amended or supplemented) if the Company has previously furnished
sufficient copies thereof to the Initial Purchaser a reasonable
time in advance and the loss, liability, claim, damage or expense
of Purchaser results from an untrue statement or alleged untrue
statement or omission or alleged omission of a material fact
contained in the Preliminary Offering Circular which was
corrected in the Offering Circular (or the Offering Circular as
amended or supplemented) or (ii) to the extent that any such
loss, claim, damage, expense or liability arises out of or is
based upon any action or failure to act by the Initial Purchaser,
that is found in a final judicial determination (or a settlement
tantamount thereto) to constitute bad faith, willful misconduct
or gross negligence on the part of the Initial Purchaser. The
indemnity agreement in this subsection (a) shall be in addition
to any liability which the Company may have at common law or
otherwise.
(b) The Initial Purchaser agrees to indemnify and hold
harmless the Company, each of its directors, each of its
officers, and each other person, if any, who controls the Company
within the meaning of the Securities Act, to the same extent as
the foregoing indemnity from the Company to the Initial Purchaser
but only with respect to statements or omissions, if any, made in
any Preliminary Offering Circular or the Offering Circular or any
amendment thereof or supplement thereto, with written information
furnished to the Company with respect to the Initial Purchaser by
the Initial Purchaser expressly for use in such Preliminary
Offering Circular or the Offering Circular or any amendment
thereof or supplement thereto. The Company acknowledges that the
Initial Purchaser Information constitutes the only information
furnished in writing by or on behalf of the Initial Purchaser
expressly for use in any Preliminary Offering Circular or the
Offering Circular.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action,
suit or proceeding, such indemnified party shall, if a claim in
respect thereof is to be made against one or more indemnifying
parties under this Section 7, notify each party against whom
indemnification is to be sought in writing of the commencement
thereof (but the failure to notify an indemnifying party shall
not relieve it from any liability which it may have under this
paragraph (a) or (b) of Section 7 unless and to the extent that
it has been prejudiced in a material respect by such failure or
from the forfeiture of substantial rights and defenses). In case
any such action, suit or proceeding is brought against any
indemnified party, and it notifies an indemnifying party or
parties of the commencement thereof, the indemnifying party or
parties will be entitled to participate therein, and to the
extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice
from such indemnified party, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party, which
may be the same counsel as counsel to the indemnifying party.
Notwithstanding the foregoing, the indemnified party or parties
shall have the right to employ its or their own counsel in any
such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the
employment of such counsel shall have been authorized in writing
by the indemnifying parties in connection with the defense of
such action at the expense of the indemnifying party, (ii) the
indemnifying parties shall not have employed counsel reasonably
satisfactory to such indemnified party to have charge of the
defense of such action within a reasonable time after notice of
commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or
additional to those available to one or all of the indemnifying
parties (in which case the indemnifying parties shall not have
the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees
and expenses of one additional counsel shall be borne by the
indemnifying parties. In no event shall the indemnifying parties
be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel
for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any
claim or action effected without its written consent.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes
claim for indemnification pursuant to this Section 7, but it is
judicially determined (by the entry of a final judgment or decree
by a court of competent jurisdiction and the expiration of time
to appeal or the denial of the last right of appeal) that such
indemnification may not be enforced in such case notwithstanding
the fact that the express provisions of this Section 7 provide
for indemnification in such case, or (ii) contribution under the
Securities Act may be required, then each indemnifying party, in
lieu of indemnifying such indemnified party, shall contribute to
the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or
litigation in respect thereof) (A) in such proportion as is
appropriate to reflect the relative benefits received by each of
the contributing parties, on the one hand, and the party to be
indemnified on the other hand, from the offering of the
Securities or (B) if the allocation provided by clause (A) above
is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of each of the
contributing parties, on the one hand, and the party to be
indemnified, on the other hand, in connection with the statements
or omissions that resulted in such losses, claims, damages,
expenses or liabilities, as well as any other relevant equitable
considerations. The relative benefits received by the Company,
on the one hand, and the Initial Purchaser, on the other, shall
be deemed to be in the same proportion as the total net proceeds
from the offering of the Debentures (before deducting expenses)
bear to the total discounts received by the Initial Purchaser
hereunder, in each case as set forth in the table on the Cover
Page of the Offering Circular. Relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchaser,
and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue
statement or omission. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or
litigation in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating, preparing or defending any such
action, claim, suit, proceeding or litigation. Notwithstanding
the provisions of this subsection (d), the Initial Purchaser
shall not be required to contribute any amount in excess of the
discount applicable to the Debentures purchased by the Initial
Purchaser hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the
Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 7, each person, if any, who controls the
Company within the meaning of the Securities Act, each executive
officer of the Company and each director of the Company shall
have the same rights to contribution as the Company, subject in
each case to this subsection (d). Any party entitled to
contribution will, promptly after receipt of notice of
commencement of any action, suit, proceeding or litigation
against such party in respect to which a claim for contribution
may be made against another party or parties under this
subsection (d), notify such party or parties from whom
contribution may be sought, but the omission so to notify such
party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may
have hereunder or otherwise than under this subsection (d), or to
the extent that such party or parties were not adversely affected
by such omission. The contribution agreement set forth above
shall be in addition to any liabilities which any indemnifying
party may have at common law or otherwise.
8. Representations and Agreements to Survive
Delivery. All representations, warranties and agreements
contained in this Agreement or contained in certificates of
officers of the Company submitted pursuant hereto shall be deemed
to be representations, warranties and agreements at the Closing
Date and each Option Closing Date, as the case may be, and the
agreements of the Company and the provisions with respect to the
payment of expenses contained in Sections 5 and 9 and the
respective indemnity agreements contained in Section 7 hereof
shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Initial Purchaser,
the Company, any of the Subsidiaries or any controlling person,
and shall survive termination of this Agreement or the issuance
and delivery of the Debentures to the Initial Purchaser.
9. Termination.
(a) Subject to subsection (b) of this Section 9, the
Initial Purchaser shall have the right to terminate this
Agreement (i) if any domestic or international event or act or
occurrence has disrupted, or in the Initial Purchaser's opinion
will in the immediate future disrupt the financial markets, or
(ii) if any adverse change in the financial markets shall have
occurred or (iii) if trading on the New York Stock Exchange, the
American Stock Exchange or in the over-the-counter market shall
have been suspended, or minimum or maximum prices for trading
shall have been fixed, or maximum ranges for prices for
securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other
government authority having jurisdiction; or (iv) if the United
States shall have become involved in a war or major hostilities,
or there shall have been an escalation in an existing war or
major hostilities, or a national emergency shall have been
declared in the United States; or (v) if a banking moratorium has
been declared by a state or federal authority; or (vi) if a
moratorium in foreign exchange trading has been declared; or
(vii) if the Company or any of the Subsidiaries shall have
sustained a loss material or substantial to the Company or any of
the Subsidiaries by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether
or not such loss shall have been insured, will, in the Initial
Purchaser's opinion, make it inadvisable to proceed with the
delivery of the Securities; or (viii) if there shall have been
such a material adverse change in the general market, political
or economic conditions in the United States or elsewhere, as in
the Initial Purchaser's judgment would make it inadvisable to
proceed with the offering, sale and/or delivery of the
Debentures.
(b) If this Agreement is terminated by the Initial
Purchaser in accordance with the provisions of Section 9(a) or if
this Agreement shall not be carried out within the time specified
herein, or any extension thereof granted to the Initial
Purchaser, by reason of any failure on the part of the Company to
perform any undertaking or satisfy any condition of this
Agreement by it to be performed or satisfied (including, without
limitation, pursuant to Section 6, 9 or 10 hereof), then the
Company shall promptly reimburse and indemnify the Initial
Purchaser for all of its out-of-pocket expenses, including the
fees and disbursements of counsel for the Initial Purchaser (less
amounts previously paid pursuant to Section 5). If the amount
previously paid pursuant to Section 5(a) above exceeds the
Initial Purchaser's out-of-pocket expenses, the Initial Purchaser
shall refund such excess to the Company. Notwithstanding any
contrary provision contained in this Agreement, any election
hereunder or any termination of this Agreement (including,
without limitation, pursuant to Sections 6, 9 and 10 hereof), and
whether or not this Agreement is otherwise carried out, the
provisions of Section 5 and Section 7 shall not be in any way
affected by such election or termination or failure to carry out
the terms of this Agreement or any part hereof.
10. Default by the Company. If the Company shall fail
at the Closing Date or any Option Closing Date, as applicable, to
sell and deliver the number of Securities which it is obligated
to sell hereunder on such date, then this Agreement shall
terminate (or, if such default shall occur with respect to any
Option Securities to be purchased on an Option Closing Date, the
Initial Purchaser may, at its option, by notice from the Initial
Purchaser to the Company, terminate the Initial Purchaser's
obligation to purchase Option Debentures from the Company on such
date) without any liability on the part of any non-defaulting
party other than pursuant to Sections 5, 7 and 9 hereof. No
action taken pursuant to this Section 10 shall relieve the
Company from liability, if any, in respect of such default.
11. Notices. All notices and communications
hereunder, except as herein otherwise specifically provided,
shall be given in writing and shall be deemed to have been duly
given if mailed or transmitted by any standard form of
telecommunication. Notices to the Initial Purchaser shall be
directed to it at Forum Capital Markets L.P., 00 Xxxxxx Xxxxxx,
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000, Attention: Mr. Xxxxx Xxxxxxx,
with a copy to Xxxxxx Xxxx & Xxxxxx, 0 Xxxxxxxx Xxxxx, Xxxxxxxx,
Xxxxxxxxxxx 00000, Attention: Xxx X. Xxxxxxxxxx, Esq. Notices to
the Company shall be directed to the Company at 0 Xxxxxx Xxx,
Xxxxxxxxxx, Xxx Xxxxxx 00000, Attention: President, with a copy
to Skadden, Arps, Slate, Xxxxxxx & Xxxx, 000 Xxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxx, Esq.
12. Parties. This Agreement shall inure solely to the
benefit of and shall be binding upon the Initial Purchaser, the
Company and the controlling persons, directors and officers
referred to in Section 7 hereof, and their respective successors,
legal representatives and assigns, and no other person shall have
or be construed to have any legal or equitable right, remedy or
claim under or in respect of or by virtue of this Agreement or
any provisions herein contained. No purchaser of Debentures from
the Initial Purchaser shall be deemed to be a successor by reason
merely of such purchase.
13. Construction. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the
State of New York without giving effect to choice of law or
conflict of laws principles.
14. Counterparts. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be
an original, and all of which taken together shall be deemed to
be one and the same instrument.
15. Entire Agreement; Amendments. This Agreement
constitutes the entire agreement of the parties hereto and
supersedes all prior written or oral agreements, understandings
and negotiations with respect to the subject matter hereof. This
Agreement may not be amended except in a writing signed by the
Initial Purchaser and the Company.
If the foregoing correctly sets forth the understanding
between the Initial Purchaser and the Company, please so indicate
in the space provided below for that purpose, whereupon this
letter shall constitute a binding agreement among us.
Very truly yours,
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx
-------------------------------
Name: Xxxx X. Xxxxxx
Title: Chief Executive Officer and
President
Confirmed and accepted as of
the date first above written.
FORUM CAPITAL MARKETS L.P.
By: /s/ Xxxxxxx X. XxXxxxx
----------------------------
Name: Xxxxxxx X. XxXxxxx
Title: Managing Director
SCHEDULE I
CORPORATE SUBSIDIARIES OF DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
Subsidiary
Precision Echo, Inc.
Photronics Corp.
Technology Applications & Service Company
DRS Systems Management Corporation
Ahead Technology, Inc.
OMI Acquisition Corp.
SCHEDULE II
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
BENEFIT PLANS
DIAGNOSTIC/RETRIEVAL SYSTEMS, INC.
CORPORATE HEADQUARTERS & DRS MILITARY SYSTEMS
Diagnostic/Retrieval Systems, Inc. Group Medical/Dental Plan
US Healthcare Patriot V. HMO Plan
Diagnostic/Retrieval Systems, Inc. Group Life Insurance Plan
(includes AD&D)
Diagnostic/Retrieval Systems, Inc. Long Term Disability Plan
DRS Retirement/Savings Plan (401K)
Diagnostic/Retrieval Systems, Inc. Reimbursement Account Plan
(IRC 125)
Short Term Disability Insurance provided by NJ State plan
PRECISION ECHO, INC.
Diagnostic/Retrieval Systems, Inc. Group Medical/Dental Plan
Xxxxxx Permanente HMO Plan
Diagnostic/Retrieval Systems, Inc. Group Life Insurance Plan
(includes AD&D)
Precision Echo, Inc. Long Term Disability Plan
DRS Retirement/Savings Plan (401K)
Diagnostic/Retrieval Systems, Inc. Reimbursement Account Plan
(IRC 125)
Short Term Disability Insurance provided by CA State plan
PHOTRONICS CORP.
Diagnostic/Retrieval Systems, Inc. Group Medical/Dental Plan
Diagnostic/Retrieval Systems, Inc. Group Life Insurance Plan
(includes AD&D)
Photronics Corp. Short Term Disability Plan
Photronics Corp. Long Term Disability Plan
DRS Retirement/Savings Plan (401K)
Diagnostic/Retrieval Systems, Inc. Reimbursement Account Plan
(IRC 125)
TECHNOLOGY APPLICATIONS & SERVICE CO.
Great West Life PPO Plan (Maryland Office)
Optima Xxxxxxx Access Health Plan (Virginia Office)
Xxxxxx Permanente HMO Plan (California Office)
Technology Applications & Service Co. Life Insurance Plan
(includes AD&D)
Technology Applications & Service Co. Short Term Disability Plan
Technology Applications & Service Co. Long Term Disability Plan
DRS Retirement/Savings Plan (401K)
TAS Employee Savings Plan (Predecessor organization's 401K in
termination process)
Flexible Benefits Account Plan
LAUREL TECHNOLOGIES
Blue Cross CPE Plan (Medical)
Laurel Technologies Group Life Insurance Plan
Laurel Technologies Short Term Disability Plan
Laurel Technologies Long Term Disability Plan
DRS Retirement/Savings Plan (401K)
OMI
Prudential HMO Plan
PruCare Plus Plan
Prudential DMO Plan
OMI Group Life Insurance Plan (includes AD&D)
OMI Short Term Disability Plan
OMI Long Term Disability Plan
