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EXHIBIT 1.1
ELECTRONIC RETAILING SYSTEMS INTERNATIONAL, INC.
$147,312,000 Representing 147,312 Units
Consisting of
13 1/4% Senior Discount Notes Due 2004
and Warrants to Purchase
2,538,258 Shares of Common Stock
PURCHASE AGREEMENT
January 20, 1997
Credit Suisse First Boston Corporation
UBS Securities LLC
In care of Credit Suisse First Boston Corporation
As Representative of the Several Initial Purchasers
00 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Electronic Retailing Systems International, Inc., a Delaware
corporation (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to Credit Suisse First Boston Corporation and
UBS Securities LLC (collectively, the "Initial Purchasers") 147,312 units (the
"Units"), each consisting of 13 1/4% Senior Discount Notes Due 2004 with a
principal amount at maturity of $1,000 (collectively, the "Notes") and one
warrant (collectively, the "Warrants") to purchase 17.23 shares of the common
stock, par value $.01 per share, of the Company ("Common Stock"). The Notes will
be issued pursuant to an indenture dated as of January 24, 1997 (the
"Indenture"), between the Company and United States Trust Company of New York,
as trustee (in such capacity, the "Trustee"). The Warrants will be issued
pursuant to a warrant agreement (the "Warrant Agreement") dated as of January
24, 1997, between the Company and American Stock Transfer & Trust Company, as
warrant agent (in such capacity, the "Warrant Agent"). The Units, Notes and
Warrants are referred to herein collectively as the "Offered Securities".
Holders (including subsequent transferees) of the Notes will
have the registration rights set forth in the Registration Rights Agreement of
even date herewith (the
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"Registration Rights Agreement"), between the Company and the Initial
Purchasers. Pursuant to the Registration Rights Agreement, the Company has
agreed to file with the Securities and Exchange Commission (the "Commission")
(i) a registration statement (the "Exchange Offer Registration Statement") under
the Securities Act of 1933, as amended (the "Securities Act"), registering an
issue of a series of senior discount notes (the "Exchange Notes") identical in
all material respects to the Notes (except that the Exchange Notes will not
contain terms with respect to transfer restrictions) to be offered in exchange
for the Notes (the "Exchange Offer") and (ii) under certain circumstances, a
shelf registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement").
This Agreement, the Indenture, the Warrant Agreement and the
Registration Rights Agreement are referred to herein collectively as the
"Operative Documents".
The Company hereby agrees with the several Initial Purchasers
as follows:
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Initial Purchasers
that:
a. A preliminary offering circular and an offering circular
relating to the Offered Securities to be offered by the Initial
Purchasers have been prepared by the Company. Such preliminary offering
circular and offering circular, as supplemented as of the date of this
Agreement, and any other document approved by the Company for use in
connection with the contemplated resale of the Offered Securities, are
hereinafter collectively referred to as the "Offering Document". On the
date of this Agreement, the Offering Document does not include any
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, not misleading. The preceding
sentence does not apply to statements in or omissions from the Offering
Document based upon written information furnished to the Company by any
Initial Purchaser through Credit Suisse First Boston Corporation
("CSFBC") specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section
6(b) hereof.
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b. The Company has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Offering Document; and the
Company is duly qualified to do business as a foreign corporation in
good standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would not
individually or in the aggregate have a material adverse effect on the
Company and its subsidiaries taken as a whole.
c. Each significant subsidiary of the Company (as defined in
Regulation S-X of the Securities Exchange Act of 1934 (the "Exchange
Act")) has been duly incorporated and is an existing corporation in
good standing under the laws of the jurisdiction of its incorporation,
with power and authority (corporate and other) to own its properties
and conduct its business as described in the Offering Document; each
significant subsidiary of the Company is duly qualified to do business
as a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to so qualify
would not individually or in the aggregate have a material adverse
effect on the Company and its subsidiaries taken as a whole; all of the
issued and outstanding capital stock of each significant subsidiary of
the Company has been duly authorized and validly issued and is fully
paid and nonassessable; and the capital stock of each significant
subsidiary owned by the Company, directly or through subsidiaries, is
owned (except as disclosed in the Offering Document) free from liens,
encumbrances and defects.
d. The Indenture and the Warrant Agreement have been duly
authorized by the Company; the Offered Securities have been duly
authorized by the Company; and when the Offered Securities are
delivered and paid for pursuant to this Agreement on the Closing Date
(as defined below), the Indenture and the Warrant Agreement will have
been duly executed and delivered by the Company, such Offered
Securities will have been duly executed, authenticated, issued and
delivered by the Company or the Trustee, as applicable, and will
conform
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in all material respects to the description thereof contained in the
Offering Document, and the Indenture, the Warrant Agreement and such
Offered Securities will constitute valid and legally binding
obligations of the Company, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or
affecting creditors' rights and to general principles of equity.
e. The Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and conforms in all material
respects to the description thereof contained in the Offering Document.
The Registration Rights Agreement constitutes a valid and legally
binding obligation of the Company and is enforceable in accordance with
its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity.
f. When the Offered Securities are delivered and paid for
pursuant to this Agreement on the Closing Date, the Warrants will be
convertible into the shares of Common Stock ("Underlying Shares") of
the Company in accordance with their terms; the Underlying Shares
initially issuable upon conversion of such Warrants have been duly
authorized and reserved for issuance upon such conversion and, when
issued upon such conversion, will be validly issued, fully paid and
nonassessable; the outstanding Common Stock has been duly authorized
and validly issued, is fully paid and nonassessable and conforms in all
material respects to the description thereof contained in the Offering
Document; and the stockholders of the Company have no preemptive rights
with respect to the Offered Securities or the Underlying Shares.
g. To the Company's knowledge as of the date of this
Agreement, no consent, approval, authorization, or order of, or filing
with, any governmental agency or body or any court is required for the
consummation by the Company of the transactions contemplated by the
Operative Documents or in connection with the issuance and sale of the
Offered Securities, except as may be required under the Securities Act
with respect to the
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Registration Rights Agreement and the transactions contemplated
thereunder.
h. The execution, delivery and performance by the Company of
the Operative Documents, and the issuance and sale of the Offered
Securities and compliance with the terms and provisions thereof, will
not result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any statute, rule, regulation or
order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, or any agreement or instrument to
which the Company or any such subsidiary is a party or by which the
Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject except for
such breaches, violations or defaults that would not individually or in
the aggregate result in a material adverse effect on the Company and
its subsidiaries taken as a whole, or the charter or by-laws of the
Company or any such subsidiary, and the Company has full power and
authority to authorize, issue and sell the Offered Securities as
contemplated by this Agreement.
i. This Agreement has been duly authorized, executed and
delivered by the Company.
j. The Company and its subsidiaries have good and marketable
title to all real properties and all other properties and assets owned
by them, in each case (except as disclosed in the Offering Document)
free from liens, encumbrances and defects except for such liens,
encumbrances or defects which would not individually or in the
aggregate have a material adverse effect on the Company and its
subsidiaries taken as a whole; and the Company and its subsidiaries
hold any leased real or personal property under valid and enforceable
leases with only such exceptions as would not individually or in the
aggregate have a material adverse effect on the Company and its
subsidiaries.
k. The Company and its subsidiaries (i) possess adequate
certificates, authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now operated by
them except for such certificates, authorities or permits the failure
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to possess which would not individually or in the aggregate have a
material adverse effect on the Company and its subsidiaries taken as a
whole and (ii) have not received any notice of proceedings relating to
the revocation or modification of any such certificate, authority or
permit that is reasonably likely to individually or in the aggregate
have a material adverse effect on the Company and its subsidiaries
taken as a whole.
l. No labor dispute with the employees of the Company or any
subsidiary exists or, to the knowledge of the Company, is imminent that
is reasonably likely to have a material adverse effect on the Company
and its subsidiaries taken as a whole.
m. The Company and its subsidiaries own, possess or can
acquire on reasonable terms adequate trademarks, trade names and other
rights to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
"intellectual property rights") necessary to conduct the business now
operated by them, or presently employed by them with such exceptions as
do not individually or in the aggregate have a material adverse effect
on the Company and its subsidiaries taken as a whole, and (except as
disclosed in the Offering Document) have not received any notice of
infringement of or conflict with asserted rights of others with respect
to any intellectual property rights that is reasonably likely
individually or in the aggregate to have a material adverse effect on
the Company and its subsidiaries taken as a whole.
n. Except as disclosed in the Offering Document, neither the
Company nor any of its subsidiaries is in violation of any statute,
rule, regulation, decision or order of any governmental agency or body
or any court, domestic or foreign, relating to the use, disposal or
release of hazardous or toxic substances or relating to the protection
or restoration of the environment or human exposure to hazardous or
toxic substances (collectively, "environmental laws"), owns or operates
any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any
claim relating to any environmental laws, which violation,
contamination, liability or claim would individually or
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in the aggregate have a material adverse effect on the Company and such
subsidiaries taken as a whole; and the Company is not aware of any
pending investigation which is reasonably likely to lead to such a
claim.
o. Except as disclosed in the Offering Document, there are no
pending actions, suits or proceedings against or affecting the Company,
any of its subsidiaries or any of their respective properties that are
reasonably likely to individually or in the aggregate have a material
adverse effect on the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole, or would materially and adversely affect the ability
of the Company to perform its obligations under the Operative
Documents, or which are otherwise material in the context of the sale
of the Offered Securities; and no such actions, suits or proceedings
are, to the Company's knowledge, threatened or contemplated.
p. The financial statements included in the Offering Document
present fairly in all material respects the financial position of the
Company and its consolidated subsidiaries as of the dates shown and
their results of operations and cash flows for the periods shown, and
such financial statements have been prepared in conformity with the
generally accepted accounting principles in the United States applied
on a consistent basis except as otherwise specified therein.
q. Since the date of the latest audited financial statements
included in the Offering Document, except as disclosed in the Offering
Document, there has been no material adverse change, nor any
development or event involving a prospective material adverse change,
in the condition (financial or other), business, properties or results
of operations of the Company and its subsidiaries taken as a whole and,
except as disclosed in the Offering Document, there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock.
r. The Company has applied for an order under Section 3(b)(2)
of the Investment Company Act of 1940 (the "Investment Company Act")
declaring that it is not an investment company by virtue of the fact
that it is primarily engaged in a business other than that of
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investing, reinvesting, owning, holding or trading in securities or,
alternatively, for an order under Section 6(c) of the Investment
Company Act exempting it from all provisions of the Investment Company
Act. The Company is not, and after giving effect to the offering and
sale of the Offered Securities and the application of the proceeds
thereof as described in the Offering Document, will not be, required to
register as an investment company under the Investment Company Act
(whether as an open-end investment company, unit investment trust or
face-amount certificate company or closed-end investment company);
provided, however, that the Company makes no representation as to its
status under the Investment Company Act following the expiration of the
60 day exemption provided for in Section 3(b)(2) of the Investment
Company Act, which will terminate on March 15, 1997, unless extended by
the Securities and Exchange Commission.
s. No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as any of the Offered Securities
are listed on any national securities exchange registered under Section
6 of the Exchange Act or quoted in a U.S. automated interdealer
quotation system.
t. Assuming the accuracy of the representations and warranties
and compliance with the covenants of the Initial Purchasers in Section
3 hereof, the offer and sale of the Offered Securities in the manner
contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act by reason of Section 4(2) thereof
and Regulation S thereunder ("Regulation S"); and it is not necessary
to qualify an indenture in respect of the Offered Securities under the
United States Trust Indenture Act of 1939, as amended (the "Trust
Indenture Act").
u. None of the Company, any of its directors, or any person
acting on its or their behalf (other than the Initial Purchasers) (i)
has, within the six-month period prior to the date hereof, offered or
sold in the United States or to any U.S. person (as such terms are
defined in Regulation S) any of the Offered Securities, any security of
the same class or series (within the meaning of Rule 144A(d)(3) under
the Securities Act) as any of the Offered Securities or any depositary
shares representing the right to receive any such securities
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or (ii) has offered or will offer or sell the Offered Securities (A) in
the United States by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the
Securities Act or (B) with respect to any such securities sold in
reliance on Rule 903 of Regulation S, by means of any directed selling
efforts within the meaning of Rule 902(b) of Regulation S. The Company,
its directors and any person acting on its or their behalf have
complied and will comply with the offering restrictions requirements of
Regulation S. The Company has not entered and will not enter into any
contractual arrangement with respect to the distribution of the Offered
Securities except for this Agreement and the Registration Rights
Agreement.
v. The Company is subject to Section 13 or 15(d) of the
Exchange Act.
w. The proceeds to the Company from the offering of the
Offered Securities will be used as contemplated in the Offering
Document.
2. Purchase, Sale and Delivery of Offered Securities. On the
basis of the representations, warranties and agreements herein contained, but
subject to the terms and conditions herein set forth, the Company agrees to sell
to the Initial Purchasers, and the Initial Purchasers agree, severally and not
jointly, to purchase from the Company the respective number of Units set forth
opposite the names of the several Initial Purchasers on Schedule A hereto at a
purchase price of $678.83 per Unit.
The Company will deliver against payment of the purchase price
the Offered Securities in the form of one or more permanent global Securities in
definitive form (the "Global Securities") deposited with the Trustee as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent global Securities
will be held only in book-entry form through DTC, except in the limited
circumstances described in the Offering Document. Payment for the Offered
Securities shall be made by the Initial Purchasers in Federal (same-day) funds
by official check or checks (or wire transfer to an account in New York
previously designated to CSFBC by the Company at a bank acceptable to CSFBC)
drawn to the order of the Company at the office of Cravath, Swaine & Xxxxx at
10:00 a.m. (New
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York time) on January 24, 1997, or at such other time not later than seven full
business days thereafter as CSFBC and the Company determine, such time being
herein referred to as the "Closing Date", against delivery to the Trustee as
custodian for DTC of the Global Securities representing all of the Securities.
The Global Securities will be made available for checking at the office of the
Trustee at least 24 hours prior to the Closing Date.
3. Representations by Initial Purchasers; Resale by Initial
Purchasers. a. Each Initial Purchaser severally represents and warrants to the
Company that it is an "accredited investor" within the meaning of Regulation D
under the Securities Act.
b. Each Initial Purchaser severally acknowledges that the
Offered Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for
the account or benefit of, U.S. persons except in accordance with
Regulation S or pursuant to an exemption from the registration
requirements of the Securities Act. Each Initial Purchaser severally
represents and agrees that it has offered and sold the Offered
Securities, and will offer and sell the Offered Securities only in
accordance with Rule 903 or Rule 144A under the Securities Act ("Rule
144A") or, in the case of CSFBC or any other Initial Purchaser
authorized by CSFBC, to a limited number of Institutional Accredited
Investors (as hereinafter defined) in accordance with subsection (c).
Accordingly, neither such Initial Purchaser nor any of its affiliates,
nor any person acting on its or their behalf, has engaged or will
engage in any directed selling efforts with respect to the Offered
Securities, and such Initial Purchaser, its affiliates and all persons
acting on its or their behalf have complied and will comply with the
offering restrictions requirement of Regulation S and any applicable
foreign securities laws, regulations or restrictions, in connection
with the offering of the Offered Securities outside the United States.
Terms used in this subsection (b) have the meanings given to them by
Regulation S.
c. CSFBC and any other Initial Purchaser authorized by CSFBC
may offer and sell Offered Securities in definitive, fully registered
form to a limited number of institutions, each of which is
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reasonably believed by the applicable Initial Purchaser to be an
"accredited investor" within the meaning of Rule 501(a)(1), (2), (3) or
(7) under the Securities Act or an entity in which all of the equity
owners are accredited investors within the meaning of Rule 501(a)(1),
(2), (3) or (7) under the Securities Act (each, an "Institutional
Accredited Investor"); provided, however, that each such Institutional
Accredited Investor executes and delivers to such Initial Purchaser and
the Company, prior to the consummation of any sale of Offered
Securities to such Institutional Accredited Investor, an Accredited
Investor Letter in substantially the form attached as Annex A to the
Offering Document (an "Accredited Investor Letter").
d. Each Initial Purchaser severally agrees that it and each of
its affiliates has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities
except for any such arrangements with the other Initial Purchasers or
affiliates of the other Initial Purchasers or with the prior written
consent of the Company.
e. Each Initial Purchaser severally agrees that it and each of
its affiliates will not offer or sell the Offered Securities in the
United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertisement, article, notice or
other communication published in any newspaper, magazine or similar
media or broadcast over television or radio or (ii) any seminar or
meeting whose attendees have been invited by any general solicitation
or general advertising. Each Initial Purchaser severally agrees, with
respect to resales made in reliance on Rule 144A of any of the Offered
Securities, to deliver either with the confirmation of such resale or
otherwise prior to settlement of such resale a notice to the effect
that the resale of such Offered Securities has been made in reliance
upon the exemption from the registration requirements of the Securities
Act provided by Rule 144A.
f. Each of the Initial Purchasers severally represents and
agrees that (i) it has not offered or
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sold, and will not offer or sell, in the United Kingdom, by means of
any document, any Offered Securities other than to persons whose
ordinary business it is to buy or sell shares or debentures, whether as
a principal or agent, or in circumstances which do not constitute an
offer to the public within the meaning of the Public Offers of
Securities Regulations 1995, (ii) it has complied and will comply with
all applicable provisions of the Financial Services Act 1986 with
respect to anything done by it in relation to the Offered Securities
in, from or otherwise involving the United Kingdom and (iii) it has
only issued or passed on and will only issue or pass on in the United
Kingdom any document received by it in connection with the issue of the
Offered Securities to a person who is of a kind described in Article
11(3) of the Financial Services Act 1986 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
4. Certain Agreements of the Company. The Company agrees with
the several Initial Purchasers that:
a. The Company will advise CSFBC promptly of any proposal to
amend or supplement the Offering Document and will not effect such
amendment or supplementation without CSFBC's consent, which consent
shall not be unreasonably withheld or delayed. If, at any time prior to
the completion of the resale of the Offered Securities by the Initial
Purchasers, any event occurs as a result of which the Offering Document
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, not misleading, the Company promptly will notify
CSFBC of such event and promptly will prepare, at its own expense, an
amendment or supplement which will correct such statement or omission.
Neither CSFBC's consent to, nor the Initial Purchasers' delivery to
offerees or investors of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 5.
b. The Company will furnish to CSFBC copies of any preliminary
offering circular, the Offering Document and all amendments and
supplements to such
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documents, in each case as soon as available and in such quantities as
CSFBC reasonably requests, and the Company will furnish to CSFBC on the
business day following the date hereof three copies of the Offering
Circular (as defined below) signed by a duly authorized officer of the
Company, one of which will include the independent accountants' reports
therein manually signed by such independent accountants. At any time
when the Company is not subject to Section 13 or 15(d) of the Exchange
Act, for so long as any Offered Securities are outstanding, the Company
will promptly furnish or cause to be furnished to CSFBC (and, upon
request, to each of the other Initial Purchasers) and, upon request of
holders and prospective purchasers of the Offered Securities, to such
holders and purchasers, copies of the information required to be
delivered to holders and prospective purchasers of the Offered
Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) in order to permit compliance with Rule
144A in connection with resales by such holders of the Offered
Securities. The Company will pay the expenses of printing and
distributing to the Initial Purchasers all such documents.
c. The Company will arrange for the qualification of the
Offered Securities for sale and the determination of their eligibility
for investment under the laws of such jurisdictions in the United
States and Canada as CSFBC shall reasonably designate and will continue
such qualifications in effect so long as required for the resale of the
Offered Securities by the Initial Purchasers; provided that the Company
will not be required to qualify as a foreign corporation or to file a
general consent to service of process in any such jurisdiction.
d. During the lesser of (i) the period of seven years after
the Closing Date and (ii) for so long as any Offered Securities are
outstanding, the Company will furnish to CSFBC and, upon request, to
each of the other Initial Purchasers, as soon as practicable after the
end of each fiscal year, a copy of its annual report to shareholders
for such year; and the Company will furnish to CSFBC and, upon request,
to each of the other Initial Purchasers (i) as soon as available, a
copy of each report and any definitive proxy statement of the Company
filed with the Commission under the
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Exchange Act or mailed to shareholders and (ii) from time to time, such
other information concerning the Company as CSFBC may reasonably
request.
e. During the period of three years after the Closing Date or,
if earlier, until such time as the Offered Securities are no longer
restricted securities (as defined in Rule 144 of the Securities Act),
the Company will, upon request, furnish each of the Initial Purchasers
and any holder of Offered Securities a copy of the restrictions on
transfer applicable to the Offered Securities.
f. During the period of three years after the Closing Date,
the Company will not, and will not permit any of its directors to,
resell any of the Offered Securities that have been reacquired by any
of them.
g. The Company has applied for an order under Section 3(b)(2)
of the Investment Company Act declaring that it is not an investment
company by virtue of the fact that it is primarily engaged in a
business other than that of investing, reinvesting, owning, holding or
trading in securities or, alternatively, for an order under Section
6(c) of the Investment Company Act exempting it from all provisions of
the Investment Company Act. In the event such an order is not granted,
the Company will take such action consistent with the Indenture as may
be prudent to seek to avoid becoming subject to regulation under the
Investment Company Act; however, there is no assurance that under such
circumstances such regulation could be avoided.
h. The Company will pay all expenses incidental to the
performance of its obligations under the Operative Documents, including
(i) the fees and expenses of the Trustee and the Warrant Agent, and the
professional advisers of each; (ii) all expenses in connection with the
execution, issue, authentication, packaging and initial delivery of the
Offered Securities, the preparation and printing of the Operative
Documents, the Offered Securities, the Offering Document and amendments
and supplements thereto, and any other document relating to the
issuance, offer, sale and delivery of the Offered Securities; and (iii)
the cost of qualifying the Offered Securities for trading in the
Private Offerings, Resale and Trading through Automated
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Linkages (PORTAL) market and any expenses incidental thereto. The
Company will also pay or reimburse the Initial Purchasers (to the
extent incurred by them) for any reasonable expenses (including
reasonable fees and disbursements of counsel) incurred in connection
with qualification of the Offered Securities for sale under the laws of
such jurisdictions in the United States and Canada as CSFBC reasonably
designates and the printing of memoranda relating thereto, if any, for
all travel expenses of the Initial Purchasers and the Company's
officers and employees and any other expenses of the Initial Purchasers
and the Company in connection with attending or hosting meetings with
prospective purchasers of the Offered Securities from the Initial
Purchasers and for expenses incurred in distributing preliminary
offering circulars and the Offering Document (including any amendments
and supplements thereto).
i. In connection with the offering, until CSFBC shall have
notified the Company and the other Initial Purchaser of the completion
of the resale of the Offered Securities, neither the Company nor any of
its directors has or will, either alone or with one or more other
persons, bid for or purchase for any account in which it or any of its
directors has a beneficial interest any Offered Securities or the
Common Stock or attempt to induce any person to purchase any Offered
Securities for the purpose of creating actual, or apparent, active
trading in, or of raising the price of, the Offered Securities.
j. For a period of 150 days after the date of the initial
offering of the Offered Securities by the Initial Purchasers, neither
the Company nor any of its subsidiaries will offer, sell, contract to
sell, pledge or otherwise dispose of, directly or indirectly, any
United States dollar denominated debt securities issued or guaranteed
by the Company or any such subsidiary and having a maturity of more
than one year from the date of issue (other than the Offered Securities
or in connection with the Exchange Offer or the Shelf Registration
Statement and other than in connection with the creation of a Joint
Venture (as defined in the Indenture)). The Company will not at any
time offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any securities under circumstances where such
offer, sale, pledge, contract
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or disposition would cause the exemption afforded by Section 4(2) of
the Securities Act or the safe harbor of Regulation S thereunder to
cease to be applicable to the offer and sale of the Offered Securities.
k. The Company will use its reasonable best efforts to cause
the Offered Securities to be eligible for trading on the PORTAL trading
system of the National Association of Securities Dealers, Inc. upon
issuance.
5. Conditions of the Obligations of the Initial Purchasers.
The obligations of the several Initial Purchasers to purchase and pay for the
Offered Securities will be subject to the accuracy of the representations and
warranties on the part of the Company herein, to the accuracy of the statements
of officers of the Company made pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions precedent:
a. The Initial Purchasers shall have received a letter, dated
the date of this Agreement, of Price Waterhouse LLP ("PW") confirming
that they are independent accountants within the meaning of the
Securities Act and the applicable published rules and regulations
thereunder ("Rules and Regulations") and to the effect that:
(i) the consolidated financial statements
examined by them and included in the Offering
Document comply as to form in all material respects
with the applicable accounting requirements of the
Securities Act and the related published Rules and
Regulations;
(ii) on the basis of a reading of the latest
available interim consolidated financial statements
of the Company, inquiries of officials of the Company
who have responsibility for financial and accounting
matters and other specified procedures, nothing came
to their attention that caused them to believe that:
(A) the unaudited consolidated
financial statements included in the
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Offering Document do not comply as to form in
all material respects with the applicable
accounting requirements of the Securities Act
and the related published Rules and
Regulations or any material modifications
should be made to such unaudited consolidated
financial statement for them to be in
conformity with generally accepted accounting
principles;
(B) at the date of the latest
available consolidated balance sheet read by
PW, or at a subsequent specified date not more
than five business days prior to the date of
this Agreement, there was any change in the
capital stock or any increase in short-term
indebtedness or long-term debt of the Company
and its consolidated subsidiaries or, at the
date of the latest available balance sheet
read by PW, there was any decrease in
consolidated net current assets or net assets,
as compared with amounts shown on the latest
unaudited consolidated balance sheet included
in the Offering Document; or
(C) for the period of the closing
date of the latest unaudited consolidated
statement of operations included in the
Offering Document to the closing date of the
latest available unaudited consolidated
statement of operations read by PW there were
any decreases, as compared with the
corresponding period of the previous year, in
consolidated net revenue, net operating income
or in the ratio of earnings to fixed charges;
except in all cases as set forth in clauses (B) and
(C) above for changes, increases or decreases which
are described in such letter; and
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(iii) they have compared specified dollar
amounts (or percentages derived from such dollar
amounts) and other financial information contained in
the Offering Document (in each case to the extent
that such dollar amounts, percentages and other
financial information are derived from the general
accounting records of the Company and its
subsidiaries subject to the internal controls of the
Company's accounting system or are derived directly
from such records by analysis or computation) with
the results obtained from inquiries, a reading of
such general accounting records and other procedures
specified in such letter and have found such dollar
amounts, percentages and other financial information
to be in agreement with such results, except as
otherwise specified in such letter.
b. Subsequent to the execution and delivery of this Agreement,
there shall not have occurred (i) a change in U.S. or international
financial, political or economic conditions or currency exchange rates
or exchange controls that would, in the reasonable judgment of CSFBC,
be likely to prejudice materially the success of the proposed issue,
sale or distribution of the Offered Securities, whether in the primary
market or in respect of dealings in the secondary market, or (ii)(A)
any change, or any development or event involving a prospective change,
in the condition (financial or other), business, properties or results
of operations of the Company or its subsidiaries which, in the
reasonable judgment of a majority in interest of the Initial
Purchasers, including CSFBC, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the offering
or the sale of and payment for the Offered Securities; (B) any
suspension or limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on
such exchange, or any suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market; (C) any
banking moratorium declared by U.S. Federal or New York authorities; or
(D) any outbreak or escalation of major hostilities in which the United
States is involved, any declaration of war by Congress or any other
substantial national or international
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calamity or emergency if, in the reasonable judgment of a majority in
interest of the Initial Purchasers, including CSFBC, the effect of any
such outbreak, escalation, declaration, calamity or emergency makes it
impractical or inadvisable to proceed with completion of the offering
or sale of and payment for the Offered Securities.
c. (i) The Initial Purchasers shall have received an opinion,
dated the Closing Date, of Xxxxxxx, Xxxxxxxx & Xxxxxxxx, counsel for
the Company, to the effect that:
(A) as of the Closing Date, such counsel have no reason
to believe the Company's offering circular dated January 21,
1997 (the "Offering Circular") contained any untrue statement
of a material fact or omitted to state any material fact
required to be stated therein or necessary in order to make
the statements therein, in light of the circumstances under
which they were made, not misleading; the descriptions in the
Offering Circular of legal and governmental proceedings and
contracts are accurate in all material respects and in all
material respects fairly describe such items (it being
understood that such counsel need express no opinion as to the
financial statements or other financial data contained in the
Offering Document);
(B) the Company has been duly incorporated and is an
existing corporation in good standing under the laws of the
State of Delaware, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Offering Document; and the Company is duly
qualified to do business as a foreign corporation in good
standing in all other jurisdictions in which its ownership or
lease of property or the conduct of its business requires such
qualification, except where the failure to so qualify would
not individually or in the aggregate have a material adverse
effect on the Company and its subsidiaries taken as a whole;
(C) the Principal Subsidiary (as defined in the Offering
Document) has been duly incorporated and is an existing
corporation in
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good standing under the laws of the jurisdiction of its
incorporation, with power and authority (corporate and other)
to own its properties and conduct its business as described in
the Offering Document; and such subsidiary is duly qualified
to do business as a foreign corporation in good standing in
all other jurisdictions in which its ownership or lease of
property or the conduct of its business requires such
qualification, except where the failure to so qualify would
not individually or in the aggregate have a material adverse
effect on the Company and its subsidiaries taken as a whole;
all of the issued and outstanding capital stock of such
subsidiary has been duly authorized and validly issued and is
fully paid and nonassessable; and the capital stock of such
subsidiary owned by the Company is owned, to the best of such
counsel's knowledge, free from liens, encumbrances and defects
(except as disclosed in the Offering Document);
(D) the Indenture and the Warrant Agreement have been
duly authorized, executed and delivered by the Company; the
Offered Securities have been duly authorized, executed,
authenticated, issued and delivered and conform in all
material respects to the description thereof contained in the
Offering Document; and the Indenture, the Warrant Agreement
and such Offered Securities constitute valid and legally
binding obligations of the Company, enforceable in accordance
with their terms, subject to bankruptcy, insolvency,
fraudulent transfer, reorganization, moratorium and similar
laws of general applicability relating to or affecting
creditors' rights and to general principles of equity;
(E) the Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and conforms
in all material respects to the description thereof contained
in the Offering Document, and constitutes a valid and legally
binding obligation of the Company enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of
general applicability relating to or affecting
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creditors' rights and to general principles of equity (except
that no opinion need be expressed with respect to the
indemnification or construction provisions contained therein);
(F) the Warrants are convertible into the Underlying
Shares of the Company in accordance with their terms; the
Underlying Shares initially issuable upon conversion of such
Warrants have been duly authorized and reserved for issuance
upon such conversion and, when issued upon such conversion,
will be validly issued, fully paid and nonassessable; the
outstanding Common Stock has been duly authorized and validly
issued, is fully paid and nonassessable and conforms in all
material respects to the description thereof contained in the
Offering Document; and the stockholders of the Company have no
preemptive rights with respect to the Offered Securities or
the Underlying Shares;
(G) to such counsel's knowledge, no consent, approval,
authorization or order of, or filing with, any governmental
agency or body or any court is required for the consummation
by the Company of the transactions contemplated by the
Operative Documents or in connection with the issuance and
sale of the Offered Securities, except as may be required
under the Securities Act with respect to the Registration
Rights Agreement and the transactions contemplated thereunder;
(H) to such counsel's knowledge, the execution, delivery
and performance by the Company of the Operative Documents, and
the consummation by the Company of the transactions
contemplated thereby, will not result in a breach or violation
of any of the terms and provisions of, or constitute a default
under, any statute, rule, regulation or order of any
governmental agency or body or any court, domestic or foreign,
having jurisdiction over the Company or any subsidiary of the
Company or any of their properties, or any agreement or
instrument to which the Company or any such subsidiary is a
party or by which the Company or any such subsidiary is bound
or to which any of the properties of the Company or any such
subsidiary is subject except for such
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breaches, violations or defaults that would not individually
or in the aggregate result in a material adverse effect on the
Company and its subsidiaries taken as a whole, or the charter
or by-laws of the Company or any such subsidiary, and the
Company has full power and authority to authorize, issue and
sell the Offered Securities as contemplated by this Agreement;
(I) this Agreement has been duly authorized, executed
and delivered by the Company;
(J) to the knowledge of such counsel, the Company and
the Principal Subsidiary possess adequate certificates,
authorities or permits issued by appropriate governmental
agencies or bodies necessary to conduct the business now
operated by them except for such certificates, authorities or
permits failure to possess which would not, individually or in
the aggregate, have a material adverse effect on the Company
and the Principal Subsidiary taken as a whole and have not
received any notice of proceedings relating to the revocation
or modification of any such certificate, authority or permit
that are reasonably likely individually or in the aggregate to
have a material adverse effect on the Company and the
Principal Subsidiary taken as a whole; and
(K) to such counsel's knowledge, except as disclosed in
the Offering Document, there are no pending actions, suits or
proceedings against or affecting the Company, any of its
subsidiaries or any of their respective properties that are
reasonably likely individually or in the aggregate to have a
material adverse effect on the condition (financial or other),
business, properties or results of operations of the Company
and its subsidiaries taken as a whole, or would materially and
adversely affect the ability of the Company to perform its
obligations under the Operative Documents, or which are
otherwise material in the context of the sale of the Offered
Securities; and, to such counsel's knowledge, no such actions,
suits or proceedings are threatened;
Such counsel may state in such opinion that no opinion
is being expressed therein with
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respect to or under the Investment Company Act of 1940 or any
Blue Sky laws or the registration requirements of the
Securities Act, or any rules and regulations thereunder, or
the effects of any such provision.
(ii) The Initial Purchasers shall have received an
opinion, dated the Closing Date, of Xxxxxx Xxxxxxx & Xxxx LLP,
special counsel for the Company, to the effect that:
(A) based upon and subject to certain assumptions,
no securities of the same class (within the meaning of
Rule 144A(d)(3) under the Securities Act) as any of the
Offered Securities are listed on any national securities
exchange registered under Section 6 of the Exchange Act
or quoted in a U.S. automated interdealer quotation
system;
(B) as of the Closing Date, the statements
contained in the Offering Circular in the second
paragraph under the caption "Risk Factors--Use of
Proceeds; Investment Company Act Considerations" and in
the first sentence of the penultimate paragraph under
such caption fairly describe in all material respects
the matters discussed therein;
(C) based upon and subject to certain assumptions
and qualifications, the temporary exemption provided for
in Section 3(b)(2) of the Investment Company Act exempts
both companies that are investment companies within the
meaning of paragraph (1) of Section 3(a) of the
Investment Company Act and of paragraph (3) of Section
3(a) of the Investment Company Act and that therefore
(1) as a result of the filing of the Application for an
Order Pursuant to Section 3(b)(2) or, alternatively,
pursuant to Section 6(c) of the Investment Company Act
by the Company on January 15, 1997, the Company is not,
and after giving effect to the offering and sale of the
Offered Securities and the application of the proceeds
thereof as described in the Offering Document, will not
be, required to register
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as an investment company under the Investment Company
Act (whether as an open-end investment company, unit
investment trust or face-amount certificate company or
closed-end investment company) during the 60 day
exemption period provided for in Section 3(b)(2) of the
Investment Company Act and (2) the statement contained
in the Offering Document in the third sentence of the
third paragraph under the caption "Risk Factors--Use of
Proceeds; Investment Company Act Considerations" is in
all material respects an accurate description of the
effect of the filing of an application for exemption
under Section 3(b)(2) of the Investment Company Act;
provided, however, that counsel will express no opinion
as to the Company's status under the Investment Company
Act following the expiration of such exemption, which
will terminate on March 15, 1997, unless extended by the
Commission; and
(D) based upon and subject to certain assumptions,
the offer and sale of the Offered Securities in the
manner contemplated by this Agreement will be exempt
from the registration requirements of the Securities Act
by reason of Section 4(2) thereof and Regulation S; and
it is not necessary to qualify an indenture in respect
of the Offered Securities under the Trust Indenture Act.
d. The Initial Purchasers shall have received from Cravath,
Swaine & Xxxxx, counsel for the Initial Purchasers, such opinion or
opinions, dated the Closing Date, with respect to the incorporation of
the Company, the validity of the Offered Securities, the Offering
Document, the exemption from registration for the offer and sale of the
Offered Securities by the Company to the several Initial Purchasers and
the resales by the several Initial Purchasers as contemplated hereby
and other related matters as CSFBC may require, and the Company shall
have furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
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(e) The Initial Purchasers shall have received a certificate,
dated the Closing Date, of the President or any Vice President and a
principal financial or accounting officer of the Company in which such
officers, to the best of their knowledge after reasonable
investigation, shall state that the representations and warranties of
the Company in this Agreement are true and correct, that the Company
has complied with all agreements and satisfied all conditions on its
part to be performed or satisfied hereunder at or prior to the Closing
Date and that, subsequent to the date of the most recent financial
statements in the Offering Document there has been no material adverse
change, nor any development or event involving a prospective material
adverse change, in the condition (financial or other), business,
properties or results of operations of the Company and its subsidiaries
taken as a whole except as set forth in or contemplated by the Offering
Document or as described in such certificate.
(f) The Initial Purchasers shall have received a letter, dated
the Closing Date, of PW which meets the requirements of subsection (a)
of this Section, except that the specified date referred to in such
subsection will be a date not more than five business days prior to the
Closing Date for the purpose of this subsection.
The Company will furnish the Initial Purchasers with such
conformed copies of such opinions, certificates, letters and documents as the
Initial Purchasers reasonably request. CSFBC may in its sole discretion waive on
behalf of the Initial Purchasers compliance with any conditions to the
obligations of the Initial Purchasers hereunder.
6. Indemnification and Contribution. a. The Company will
indemnify and hold harmless each Initial Purchaser against any losses,
claims, damages or liabilities, joint or several, to which such Initial
Purchaser may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of any material
fact contained in the Offering Document, or any amendment or supplement
thereto, or any related preliminary offering circular or any documents
referred to therein, or arise out of or are based upon the
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omission or alleged omission to state therein a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading and will
reimburse each Initial Purchaser for any legal or other expenses
reasonably incurred by such Initial Purchaser in connection with
investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity
with written information furnished to the Company by any Initial
Purchaser through CSFBC specifically for use therein, it being
understood and agreed that the only such information consists of the
information described as such in subsection (b) below; provided
further, however, that with respect to any untrue statement or omission
or alleged untrue statement or omission made in the preliminary
offering circular, the indemnity agreement contained in this subsection
(a) shall not inure to the benefit of any Initial Purchaser that sold
the Offered Securities to the person asserting any such losses, claims,
damages or liabilities to the extent that any such loss, claim, damage
or liability of such Initial Purchaser results from the fact that there
was not sent or given to such person, on or prior to the written
confirmation of such sale, a copy of the offering circular, as amended
and supplemented, provided that (I) the Company shall have previously
furnished copies thereof to such Initial Purchaser in accordance with
this Agreement and (II) such furnished offering circular, as amended
and supplemented, would have corrected any such untrue statement or
omission or alleged untrue statement or omission.
b. Each Initial Purchaser will severally and not jointly
indemnify and hold harmless the Company against any losses, claims,
damages or liabilities to which the Company may become subject, under
the Securities Act or the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue
statement of any material fact contained in the Offering Document, or
any
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amendment or supplement thereto, or any related preliminary offering
circular or any documents referred to therein, or arise out of or are
based upon the omission or the alleged omission to state therein a
material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading,
but in each case only to the extent that such untrue statement or
alleged untrue statement or omission or alleged omission was made in
reliance upon and in conformity with written information furnished to
the Company by such Initial Purchaser through CSFBC specifically for
use therein, and will reimburse any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
any such loss, claim, damage, liability or action as such expenses are
incurred, it being understood and agreed that the only such information
furnished by any Initial Purchaser consists of the following
information in the Offering Document furnished on behalf of each
Initial Purchaser: the table at the bottom of the cover page concerning
the terms of the offering by the Purchasers, the legends concerning
over-allotments and stabilizing on page 5 of the Offering Document and
the table, the final two sentences of the second paragraph, the fourth
paragraph and the third sentence of the sixth paragraph under the
heading "Plan of Distribution" in the preliminary offering circular and
the offering circular.
c. Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action or proceeding
(including a governmental investigation), such indemnified party will,
if a claim in respect thereof is to be made against the indemnifying
party under subsection (a) or (b) above, notify the indemnifying party
of the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under subsection (a) or
(b) above except to the extent that it is prejudiced or harmed in any
material respect by failure to give such prompt notice. In case any
such action is brought against any indemnified party and it notifies
the indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate therein and, to the extent that
it may wish, jointly with any other indemnifying party
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similarly notified, to assume the defense thereof, with one counsel
(and local counsel as necessary) reasonably satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified party
in connection with the defense thereof other than reasonable costs of
investigation. No indemnifying party shall, without the prior written
consent of the indemnified party, not to be unreasonably withheld,
effect any settlement of any pending or threatened action in respect of
which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party
from all liability on any claims that are the subject matter of such
action. No indemnifying party shall be liable for any amounts paid in
settlement of any action or claim without its written consent, which
consent shall not be unreasonably withheld.
d. If the indemnification provided for in this Section is
unavailable or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above for any reason other than as provided in
subsection (c) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the
losses, claims, damages or liabilities referred to in subsection (a) or
(b) above (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Initial Purchasers on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) 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 the Company on the one hand and
the Initial Purchasers on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or
liabilities as well as any other relevant equitable considerations. The
relative benefits received by the Company on the one hand and the
Initial
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Purchasers on the other shall be deemed to be in the same proportion as
the total net proceeds from the offering (before deducting expenses)
received by the Company bear to the total discounts and commissions
received by the Initial Purchasers from the Company under this
Agreement. The 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 the Initial
Purchasers and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement
or omission. The amount paid by an indemnified party as a result of the
losses, claims, damages or liabilities referred to in the first
sentence of this subsection (d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding the provisions of
this subsection (d), (i) no Initial Purchaser shall be required to
contribute any amount in excess of the amount by which the total price
at which the Offered Securities purchased by it were resold exceeds the
amount of any damages which such Initial Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and (ii) no person guilty of a fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to a contribution from any person who
was not guilty of such fraudulent misrepresentation. The Initial
Purchasers' obligations in this subsection (d) to contribute are
several in proportion to their respective purchase obligations and not
joint.
e. The obligations of the Company under this Section shall be
in addition to any liability which the Company may otherwise have and
shall extend, upon the same terms and conditions, to each officer,
director, employee, representative and agent of the Initial Purchasers
and to each person, if any, who controls any Initial Purchaser within
the meaning of the Securities Act or the Exchange Act; and the
obligations of the Initial Purchasers under this Section shall be in
addition to any liability which the respective Initial Purchasers may
otherwise have and shall extend, upon
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the same terms and conditions, to each officer, director, employee,
representative and agent of the Company and to each person, if any, who
controls the Company within the meaning of the Securities Act or the
Exchange Act.
7. Default of Initial Purchasers. If any Initial Purchaser
defaults in its obligation to purchase Offered Securities hereunder and the
aggregate number of Offered Securities that such defaulting Initial Purchaser
agreed but failed to purchase does not, together with all offered securities
failed to be purchased by other Initial Purchasers, exceed 10% of the total
number of Offered Securities, CSFBC may make arrangements satisfactory to the
Company for the purchase of such Offered Securities by other persons, including
any of the Initial Purchasers, but if no such arrangements are made by the
Closing Date, the non-defaulting Initial Purchasers shall be obligated
severally, in proportion to their respective commitments hereunder, to purchase
the Offered Securities that such defaulting Initial Purchasers agreed but failed
to purchase. If any Initial Purchaser so defaults and the aggregate number of
Offered Securities with respect to which such default or defaults occur exceeds
10% of the total number of Offered Securities and arrangements satisfactory to
CSFBC and the Company for the purchase of such Offered Securities by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any nondefaulting Initial Purchaser
or the Company, except as provided in Section 8. As used in this Agreement, the
term "Initial Purchaser" includes any person substituted for an Initial
Purchaser under this Section. Nothing herein will relieve a defaulting Initial
Purchaser from liability for its default.
8. Survival of Certain Representations and Obligations. The
respective indemnities, agreements, representations, warranties and other
statements of the Company or its officers and of the several Initial Purchasers
set forth in or made pursuant to this Agreement will remain in full force and
effect, regardless of any investigation, or statement as to the results thereof,
made by or on behalf of any Initial Purchaser, the Company or any of their
respective representatives, officers or directors or any controlling person, and
will survive delivery of and payment for the Offered Securities. If this
Agreement is terminated pursuant to Section 7 or if for any reason the
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purchase of the Offered Securities by the Initial Purchasers is not consummated,
the Company shall remain responsible for the expenses to be paid or reimbursed
by it pursuant to Section 4 and the respective obligations of the Company and
the Initial Purchasers pursuant to Section 6 shall remain in effect. If the
purchase of the Offered Securities by the Initial Purchasers is not consummated
for any reason other than solely because of the termination of this Agreement
pursuant to Section 7 or the occurrence of any event specified in clause (B),
(C) or (D) of Section 5(b)(ii), the Company will reimburse the Initial
Purchasers for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
9. Notices. All communications hereunder will be in writing
and, if sent to the Initial Purchasers, will be mailed, delivered or telecopied
and confirmed to the Initial Purchasers c/o Credit Suisse First Boston
Corporation, 00 Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000, Attention: Investment
Banking Department--Transactions Advisory Group, or, if sent to the Company,
will be mailed, delivered or telegraphed and confirmed to it at 000 Xxxxxxx
Xxxx, Xxxxxx, XX Attention: President; provided, however, that any notice to an
Initial Purchaser pursuant to Section 6 will be mailed, delivered or telegraphed
and confirmed to such Initial Purchaser.
10. Successors. This Agreement will inure to the benefit of
and be binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 6, and no other person will have any
right or obligation hereunder, except that holders of Offered Securities shall
be entitled to enforce the agreements for their benefit contained in the second
and third sentences of Section 4(b) hereof against the Company as if such
holders were parties thereto. No purchaser of any of the Offered Securities from
the Initial Purchasers shall be deemed a successor merely by reason of such
purchase.
11. Representation of Initial Purchasers. CSFBC will act for
the several Initial Purchasers in connection with this purchase, and any action
under this Agreement taken by CSFBC will be binding upon all the Initial
Purchasers.
12. Counterparts. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
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13. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD
TO PRINCIPLES OF CONFLICTS OF LAWS.
The Company hereby submits to the nonexclusive jurisdiction of
the Federal and state courts in the Borough of Manhattan in The City of New York
in any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
If the foregoing is in accordance with your understanding of
our agreement, please sign and return to CSFBC a counterpart hereof, whereupon
this Agreement will become a binding agreement among the Company and the several
Initial Purchasers in accordance with its terms.
Very truly yours,
ELECTRONIC RETAILING SYSTEMS
INTERNATIONAL, INC.,
by
------------------------
Name:
Title:
The foregoing Purchase
Agreement is hereby confirmed
and accepted as of the date
first above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
UBS SECURITIES LLC
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:_________________________
Name:
Title:
33
33
SCHEDULE A
Initial Purchasers Units
------------------ -----
Credit Suisse First Boston Corporation . . . . . . . . 95,753
UBS Securities LLC . . . . . . . . . . . . . . . . . . 51,559
------
147,312
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