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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of
the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): August 19, 1997
DSSI CORPORATION
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(Exact Name of Registrant as Specified in its Charter)
Pennsylvania 0-17293 22-2795073
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(State or Other (Commission File Number) (I.R.S. Employer
Jurisdiction of Identification Number)
Incorporation)
P.O. Box 1570, West Chester, PA 19380
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(Address of Principal Executive Offices Zip Code
Registrant's telephone number, including area code: (610) 696-3479
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Item 7. Financial Statements and Exhibits
(a) Financial Statements of Business Acquirer:
Not Applicable
(b) Pro Forma Financial Information:
Not Applicable
(c) Exhibits:
Number Item
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A Stock Purchase Agreement, without Exhibits
and Schedules
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Drug Screening Systems, Inc.
Dated: September 11, 1997 /S/ Patrick J. Brennan
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Patrick J. Brennan
Vice President and
Chief Financial Officer
<PAGE>
Appendix A
STOCK PURCHASE AGREEMENT
This Stock Purchase Agreement (this "Agreement") is entered into as of
August 18, 1997 by and between DSSI Corporation, a Pennsylvania corporation (the
"Company"), and Michael J. Blumenfeld ("Purchaser").
Background
Purchaser, on the terms and subject to the conditions of this
Agreement, desires to purchase from the Company, and the Company desires to
issue and sell to Purchaser, 10,000,000 shares of the Company's common stock,
$.01 par value per share (the "Company Common Stock"), for an aggregate purchase
price of $2,000,000.
Therefore, in consideration of the foregoing and the respective
representations, warranties, covenants, and agreements set forth in this
Agreement and other good and valuable consideration, the receipt and sufficiency
of which all parties mutually acknowledge, the Company and Purchaser hereby
agree as follows:
Article I
The Purchase and Sale of the Shares
1.01 Purchase and Sale of the Shares. At the Closing (as defined
below), and subject to the terms and conditions set forth in this Agreement,
Purchaser will purchase from the Company, and the Company will issue and sell to
Purchaser, 10,000,000 shares of the Company Common Stock (the "Shares"), free
and clear of any liens, encumbrances, pledges, restrictive agreements, or
adverse claims of any nature.
1.02 Purchase Price. The aggregate purchase price for the Shares
will be $2,000,000 (the "Purchase Price") in immediately available funds.
Article II
The Closing
2.01 Closing; Closing Date. Unless this Agreement has been
terminated pursuant to Section 7.01, and subject to the satisfaction or waiver
of the conditions set forth in Article V, the issuance and sale of the Shares
contemplated by this Agreement (the "Closing") will take place at the offices of
the Company on September 2, 1997 (provided, that the conditions set forth in
Article V have been satisfied or waived at or prior to such time) or as soon as
practicable (but not later than five business days) after satisfaction of the
conditions set forth in Article V, or at such time, date, and place as the
Company and Purchaser agree. The date on which the Closing takes place is
referred to as the "Closing Date".
2.02 Deliveries by Purchaser. Purchaser will deliver or cause to be
delivered the following at Closing, and it will be a condition to the Company's
obligations under this Agreement that all of the following be delivered at
Closing:
(a) A wire transfer for the Purchase Price in immediately
available funds to the account established for the benefit of
the Company, titled "DSSI Corporation d/b/a Collegiate Pacific
Inc.", at BankOne Texas, N.A. in Dallas, Texas.
(b) Such other documents and instruments as may be necessary to
carry out the transactions contemplated by this Agreement.
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2.03 Deliveries by the Company. The Company will deliver or cause
to be delivered the following at Closing, and it will be a condition to
Purchaser's obligations under this Agreement that all of the following be
delivered at Closing:
(a) A certificate or certificates representing the Shares, in such
denominations and registered in such names as Purchaser shall
request at least two days prior to the Closing Date.
(b) Opinion of counsel for the Company, substantially in the form of
Exhibit A.
(c) A certificate of the secretary of the Company, substantially in the
form of Exhibit B.
(d) A closing certificate executed by an officer of the Company,
substantially in the form of Exhibit C.
(e) Such other documents and instruments as may be necessary to
carry out the transactions contemplated by this Agreement.
Article III
Representations and Warranties of the Company
The Company hereby represents and warrants to Purchaser that the
statements in this Article III are true and correct as of the date of this
Agreement.
3.01 Organization, Good Standing, and Qualification. The Company is
a corporation duly organized, validly existing, and in good standing under the
laws of the Commonwealth of Pennsylvania, has all requisite corporate power and
authority to own, lease, and operate its properties and to carry on its business
as presently conducted. The Company is qualified to do business and is in good
standing in each jurisdiction in which the failure to so qualify would have a
Material Adverse Effect. As used in this Agreement, "Material Adverse Effect"
means a material adverse effect on, or a material adverse change in, or a group
of such effects on or changes in, the business, operations, financial condition,
results of operations, assets, or liabilities of the Company.
3.02 Authorization. The Company has all requisite power and
authority to execute and deliver this Agreement, to perform its obligations
hereunder, and to consummate the transactions contemplated hereby. The execution
and delivery of this Agreement by the Company and the consummation by the
Company of the transactions contemplated hereby have been duly authorized by all
necessary corporate action, and no other corporate proceedings on the part of
the Company are required to authorize the transactions contemplated hereby. This
Agreement constitutes a legal, valid, and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except as may be
limited by (a) applicable bankruptcy, insolvency, reorganization, or other laws
of general application relating to or affecting the enforcement of creditors'
rights generally and (b) the effect of rules of law governing the availability
of equitable remedies.
3.03 Capitalization.
(a) The authorized capital stock of the Company consists of (i)
20,000,000 shares of the Company Common Stock, of which
4,446,017 are issued and outstanding, and (ii) 2,000 shares of
Class "A" Preferred Stock, $.01 par value per share, none of
which are issued and outstanding. At Closing, in addition to
the issuance and sale of the Shares to Purchaser, the Company
will issue and sell 1,500,000 shares of the Company Common
Stock, at a purchase price of $.20 per share, to persons other
than Purchaser.
The Company has reserved 500,000 shares of the Company Common
Stock for issuance under the Company's 1994 Stock Option Plan
under which options to purchase 345,000 shares are
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outstanding. The Company has issued and outstanding warrants
to purchase an aggregate of 408,998 shares of the Company
Common Stock. Except for shares reserved for issuance under
the 1994 Stock Option Plan and for the outstanding warrants,
no other shares of capital stock of the Company are reserved
for any purpose. Each of the outstanding shares of capital
stock of the Company is duly authorized, validly issued, and
fully paid and nonassessable, and has not been issued in
violation of (nor are any of the authorized shares of capital
stock subject to) any preemptive or similar rights.
(b) Except as provided in this Agreement or as set forth in
Schedule 3.03(b), there are no options, warrants, or other
rights, agreements, or commitments of any nature to which the
Company is a party or by which it is bound relating to the
issued or unissued capital stock or other securities of the
Company or obligating the Company to grant, issue, or sell any
shares of its capital stock or other securities. Except as set
forth in Schedule 3.03(b), there are no agreements,
arrangements, or commitments of any nature pursuant to which
any person or entity is or may be entitled to receive any
payment based on the revenues or earnings, or calculated in
accordance therewith, of the Company.
(c) There are no obligations, contingent or otherwise, of the
Company to (i) repurchase, redeem, or otherwise acquire any
shares of the Company Common Stock or other capital stock or
securities of the Company; or (ii) provide material funds to,
or make any material investment in (in the form of a loan,
capital contribution, or otherwise), or provide any guarantee
with respect to the obligations of any person or entity.
3.04 Subsidiaries. The Company does not presently own or control,
directly or indirectly, any interest in any other corporation, partnership,
trust, joint venture, association, or other entity.
3.05 No Conflict. The execution, delivery, and performance of this
Agreement, and the consummation by the Company of the transactions contemplated
hereby, do not and will not (i) contravene or conflict with the Articles of
Incorporation or Bylaws of the Company; (ii) constitute a violation of any
provision of any federal, state, local, or foreign law binding upon or
applicable to the Company; or (iii) constitute a default or require any consent
under, give rise to any right of termination, cancellation or acceleration of,
or to a loss of any benefit to which the Company is entitled under, or result in
the creation or imposition of any lien, claim, or encumbrance on any assets of
the Company under, any contract to which the Company is a party or any permit,
license, or similar right relating to the Company or by which the Company may be
bound or affected.
3.06 Valid Issuance of Stock. The Shares, when issued, sold, and
delivered in accordance with the terms of this Agreement for the consideration
provided for herein, will be duly and validly issued, fully paid and
nonassessable.
3.07 Governmental Consents. Except as provided in Section 5.01(f)
and Section 5.01(g), no consent, approval, order, or authorization of, or
registration, qualification, designation, declaration, or filing with, any
federal, state, or local governmental authority on the part of the Company is
required in connection with the consummation of the transactions contemplated by
this Agreement.
3.08 Litigation. There is no claim, action, suit, litigation,
proceeding, arbitration, or investigation of any kind, at law or in equity
(including actions or proceedings seeking injunctive relief), pending or, to the
knowledge of the Company, threatened against the Company or any properties or
rights of the Company, or relating to this Agreement or the transactions
contemplated by this Agreement, including, without limitation, any claims for
indemnification raised by Casco Standards, Inc. against the Company pursuant to
the Purchase and Sale Agreement dated March 14, 1997. The Company is not subject
to any continuing order of, consent decree, settlement agreement, or other
similar written agreement with, or continuing investigation by, any governmental
entity, or any judgment, order, writ, injunction, decree, or award of any
governmental entity or arbitrator.
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3.09 Permits; Compliance. The Company is in possession of all
franchises, grants, authorizations, licenses, permits, easements, variances,
exemptions, consents, certificates, approvals, and orders necessary to own,
lease, and operate its properties and to carry on its business as it is now
being conducted (collectively, the "Company Permits"), and there is no action,
proceeding, or investigation pending or threatened regarding suspension or
cancellation of any of the Company Permits.
3.10 Compliance with Law and Charter Documents. The Company is not
in violation or default of any provisions of its Articles of Incorporation or
Bylaws, both as amended to date. The Company has complied and is in compliance
in all material respects with all applicable statutes, laws, regulations, and
executive orders of the United States of America and all states, foreign
counties, and over governmental bodies and agencies having jurisdiction over the
Company's business or properties.
3.11 Registration Rights. The Company is not currently subject to
any grant or agreement to grant to any person or entity any rights (including
piggyback registration rights) to have any securities of the Company registered
with the United States Securities and Exchange Commission ("SEC") or any other
governmental authority.
3.12 Title to Property and Assets. Except as set forth on Schedule
3.12, the Company does not own any real property and does not have any assets.
With respect to the property and assets it leases, the Company is, except as set
forth in Schedule 3.12, in compliance with such leases in all material respects.
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3.13 Material Contracts. The Company has no (a) agreement,
contract, or other arrangement, whether written or oral, providing for the pay-
ment by the Company of $25,000 or more or (b) other agreement, contract, or
other arrangement that is material to the business of the Company.
3.14 SEC Documents.
(a) The Company has furnished to Purchaser copies of the Company's
Annual Report on Form 10-KSB for the year ended June 30, 1996,
the Company's Quarterly Report on Form 10-QSB for the quarter
ended March 31, 1997, and the Company's Proxy Statement for
the Annual Meeting of the Shareholders dated May 23, 1997
(collectively, the "SEC Documents"). Each of the SEC
Documents, as of the respective date thereof, did not, and
each of the registration statements, reports, and
proxy statements filed by the Company with the SEC after the
date thereof and prior to the Closing will not, as of the date
thereof, contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under
which they are made, not misleading. The Company is not a
party to any material contract, agreement, or other
arrangement which was required to have been filed as an
exhibit to the SEC Documents that is not so filed.
(b) The SEC Documents include the Company's audited financial
statements (the "Audited Financial Statements") for the year
ended June 30, 1996 and its unaudited financial statements as
of and for the nine-month period ended March 31, 1997 (the
"Balance Sheet Date"). Since the Balance Sheet Date, the
Company has duly filed with the SEC all registration
statements, reports, and proxy statements required to be filed
by it under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), and the Securities Act of 1933, as
amended (the "Securities Act"). The audited and unaudited
financial statements of the Company included in the SEC
Documents filed prior to the date hereof fairly present, in
conformity with generally accepted accounting principles
("GAAP") applied on a consistent basis (except as may be
indicated in the notes thereto), the financial position of the
Company as at the date thereof and the results of their
operations and cash flows for the periods then ended (subject
to normal year and audit adjustments in the case of unaudited
interim financial statements).
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(c) Except as and to the extent reflected or reserved against in
the Company's unaudited financial statements for the
nine-month period ending March 31, 1997 (including the notes
thereto), the Company has no liabilities (whether accrued or
unaccrued, liquidated or unliquidated, secured or unsecured,
joint or several, due or to become due, vested or unvested,
executory, determined or determinable) other than: (i)
liabilities incurred in the ordinary course of business since
the Balance Sheet Date, and (ii) liabilities with respect to
agreements listed in Schedule 3.14(c).
3.15 Employees; Employee Benefits.
(a) The Company has no employees other than those listed on
Schedule 3.15(a). The Company has not received any notice, and
has no knowledge of any threatened labor or civil rights
dispute, controversy, or grievance or any other unfair labor
practice proceeding or breach of contract claim or action with
respect to claims of, or obligations to, any present or former
employee or group of employees of the Company.
(b) Except as set forth on Schedule 3.15(b), the Company does not
maintain, sponsor, contribute to, or provide any benefits
under (i) any "employee benefit plan" (as defined in the
Employee Retirement Income Security Act of 1974, as amended);
(ii) any plan or policy providing for any "fringe benefits";
(iii) any bonus, incentive, compensation, deferred
compensation, profit sharing, stock, severance, retirement,
health, life, disability, group insurance, employment, stock
option, stock purchase, stock appreciation right, supplemental
unemployment, layoff, consulting, or other similar plan; or
(iv) any agreement, policy, or understanding (whether written
or oral, qualified or nonqualified, currently effective or
terminated) ((i) through (iv) are collectively referred to as
"Employee Plans"). There is no claim pending arising out of or
related to any Employee Plan by any person or entity
(including any governmental entity) against the Company nor is
any such claim threatened. The Company has no continuing
liability or other obligations arising under any previously
terminated or transferred Employee Plans.
3.16 Tax Matters.
(a) The Company has filed on a timely basis all Tax Returns
required to have been filed by it and has paid on a timely
basis all Taxes required to be shown thereon as due. All such
Tax Returns are true, complete, and correct in all material
respects. No director, officer, or employee of the Company
having responsibility for Tax matters has reason to believe
that any Taxing authority has valid grounds to claim or assess
any additional Tax with respect to the Company in excess of
the amounts shown in the financial statements delivered to
Purchaser for the periods covered thereby. As used in this
Agreement, (l) "Taxes" means (x) all federal, state,
local, foreign, and other net income, gross income, gross
receipts, sales, use, ad valorem, value added, intangible,
unitary, capital gain, transfer, franchise, profits, license,
lease, service, service use, withholding, backup withholding,
payroll, employment, estimated, excise, severance, stamp,
occupation, premium, property, prohibited transactions,
windfall or excess profits, customs, duties or other taxes,
fees, assessments or charges of any kind whatsoever together
with any interest and any penalties, additions to tax or
additional amounts with respect thereto, (y) any liability for
payment of amounts described in clause (x) whether as a result
of transferee liability, of being a member of an affiliated,
consolidated, combined, or unitary group for any period, or
otherwise through operation of law, and (z) any liability for
the payment of amounts described in clauses (x) or (y) as a
result of any tax sharing, tax indemnity or tax allocation
agreement or any other express or implied agreement to
indemnify any other person for Taxes; and the term "Tax" means
any one of the foregoing Taxes; and (2) "Tax Returns"
means all returns, reports, forms, or other information
required to be filed with respect to any Tax.
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(b) With respect to all amounts in respect of Taxes imposed upon
the Company or for which the Company is or could be liable,
whether to Taxing authorities (as, for example, under law) or
to other persons or entities (as, for example, under tax
allocation agreements), and with respect to all taxable
periods or portions of periods ending on or before the Closing
Date, all applicable Tax laws and agreements have been fully
complied with, and all such amounts required to be paid by the
Company to taxing authorities or others have been paid.
(c) The Company has not received notice that the Internal Revenue
Service or any other Taxing authority has asserted against the
Company any deficiency or claim for additional Taxes in
connection with any Tax Return, and no issues have been raised
(and are currently pending) by any taxing authority in
connection with any Tax Return. The Company has not received
notice that it is or may be subject to Tax in a jurisdiction
in which it has not filed or does not currently file Tax
Returns.
3.17 Indebtedness. The Company has no outstanding indebtedness that
the Company has directly or indirectly created, incurred, assumed, or
guaranteed.
3.18 Environmental Matters.
(a) During the period that the Company has leased or owned its
properties or owned or operated any facilities, there have
been no disposals, releases, or threatened releases of
Hazardous Materials (as defined below) on, from, or under such
properties or facilities in violation of applicable law. The
Company has no knowledge of any presence, disposals, releases,
or threatened releases of Hazardous Materials on, from, or
under any of such properties or facilities, which may have
occurred prior to the Company having taken possession of any
of such properties or facilities in violation of applicable
law. For purposes of this Agreement, the terms "disposal",
"release", and "threatened release" shall have the definitions
assigned thereto the Comprehensive Environmental Response,
compensation and Liability Act of 1980, 42 U.S.C. Section 9601
et seq., as amended ("CERCLA"). For the purposes of this
Section 3.17 "Hazardous Materials" shall mean any hazardous or
toxic substance, material, or waste which is or becomes prior
to the Closing regulated under, or defined as a "hazardous
substance", "pollutant", "contaminant", "toxic chemical",
"hazardous material", "toxic substance", or "hazardous
chemical" under (1) CERCLA; (2) the Emergency Planning and
Community Right-to-Know Act, 42 U.S.C. Section 11001 et seq.;
(3) the Hazardous Materials Transportation Act, 49 U.S.C.
Section 1801, et seq.; (4) the Toxic Substances Control Act,
15 U.S.C. Section 2601 et seq.; (5) the Occupational Safety
and Health Act of 1970, 29 U.S.C. Section 651 et seq.; or (6)
regulations promulgated under any of the above statutes.
(b) None of the Company's properties or facilities is in violation
of any federal, state, or local law, ordinance, regulation, or
order relating to industrial hygiene or to the environmental
conditions on, under, or about such properties or facilities,
including, but not limited to, soil and ground water
conditions. During the time that the Company has owned or
leased its properties and facilities, neither the Company nor,
to the Company's knowledge, any third party, has used,
generated, manufactured, or stored on, under, or about such
properties or facilities or transported to or from such
properties or facilities any Hazardous Materials in violation
of applicable law.
(c) During the time that the Company has owned or leased its
properties and facilities, there has been no litigation
brought or threatened against the Company, or any settlement
reached by the Company with, any party or parties alleging the
presence, disposal, release, or threatened release of any
Hazardous Materials on, from, or under any of such properties
or facilities.
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(d) During the period that the Company has owned or leased its
properties and facilities, no Hazardous Materials have been
transported from such properties or facilities to any site or
facility now listed on the National Priorities List, at 40
C.F.R. Part 300, or any list with a similar scope or purpose
published by any state authority in violation of applicable
law.
3.19 Full Disclosure. The representations and warranties contained
in this Agreement, as modified or qualified by the Schedules, are true and
complete in all material respects and do not omit to state any materiel fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
Article IV
Representations and Warranties of Purchaser
Purchaser hereby represents and warrants to the Company that the
statements in this Article IV are true and correct as of the date of this
Agreement.
4.01 Investment Intent. Purchaser is acquiring the Shares for his
own account for investment purposes and not with a view to the distribution
thereof within the meaning of the Securities Act.
4.02 Restricted Securities. Purchaser understands that the Shares
constitute "restricted securities" within the meaning of Rule 144 under the
Securities Act and may not be sold, pledged, or otherwise disposed of unless
they are subsequently registered under the Securities Act and applicable state
securities laws or unless an exemption from registration is available.
4.03 Accredited Investor. Purchaser is an "accredited investor"
within the meaning of Rule 501 under the Securities Act.
4.04 Restrictive Legend. Purchaser understands that each
certificate representing the Shares shall be stamped or otherwise imprinted with
a legend substantially in the following form (in addition to any legend that may
now or hereafter be required by applicable state law):
THE SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR UNDER THE SECURITIES
LAWS OF ANY STATE. THESE SECURITIES ARE SUBJECT TO RESTRICTIONS ON
TRANSFERABILITY AND RESALE AND MAY NOT BE TRANSFERRED OR RESOLD EXCEPT
AS PERMITTED UNDER THE ACT AND THE APPLICABLE STATE SECURITIES LAWS,
PURSUANT TO REGISTRATION OR EXEMPTION THEREFROM. THE ISSUER OF THESE
SECURITIES MAY REQUIRE AN OPINION OF COUNSEL TO THE ISSUER TO THE
EFFECT THAT ANY PROPOSED TRANSFER OR RESALE IS IN COMPLIANCE WITH THE
ACT AND ANY APPLICABLE STATE SECURITIES LAWS.
4.05 No Non-Competition Obligation. Purchaser is not a party to any
agreement, whether with Sports Supply Group, Inc. or any other entity, pursuant
to which he has agreed not to compete with such entity or pursuant to which the
transactions contemplated by this Agreement would be prohibited or limited in
any material manner.
<PAGE>
Article V
Closing Conditions
5.01 Conditions to Purchaser's Obligations at Closing. The
obligations of Purchaser to purchase the Shares and the other transactions
contemplated by this Agreement are subject to the fulfillment or waiver, on or
before the Closing, of each of the following conditions:
(a) Each of the representations and warranties of the Company
contained in this Agreement must be true and correct in all
material respects on and as of the Closing Date as though made
on and as of the Closing Date.
(b) The Company must have performed and complied in all material
respects with all agreements, obligations, and conditions
contained in this Agreement that are required to be performed
or complied with by it on or before the Closing and will have
obtained all approvals, consents, and qualifications necessary
to complete the purchase and sale of the Shares.
(c) Each of the required items set forth in Section 2.03 must have
been executed and delivered.
(d) The Company's Board of Directors shall have taken such actions
so that, immediately after the Closing, the Board of Directors
shall consist of one designee of the existing Board of
Directors with the remaining members to consist of persons
designated by Purchaser (which shall in any event never be
less than two members of the Company's Board of Directors).
(e) The Company's Board of Directors must have taken all steps
required by the Pennsylvania Business Corporation Law to
propose and adopt an amendment to the Company's Articles of
Incorporation changing the name of the Company from "DSSI
Corporation" to "Collegiate Pacific Inc.", which shall be
conditioned upon and effective at Closing.
(f) The Company shall have complied with its obligations under
Section 14(f) of the Exchange Act.
(g) The Company must have taken all steps required by applicable
law, including the filing of a proxy statement with the SEC,
to seek shareholder approval of this Agreement and the
transactions contemplated hereby.
(h) The Company must have delivered to Purchaser audited financial
statements for the fiscal year ended June 30, 1997, including
balance sheets and statements of income, cash flow, and
changes in stockholders' equity for such period, prepared in
accordance with GAAP applied on a consistent basis throughout
such period, the results of which are not materially adverse
as compared with the results reported in the Audited Financial
Statements and the unaudited financial statements of the
Company as of and for the nine-month period ended March 31,
1997.
(i) The Company must have terminated all consulting, employment,
or other agreements, contracts, or understandings between the
Company and any person, including any agreement, whether
written or oral, between the Company and Patrick J. Brennan,
except that payments to, or on behalf of, Mr. Brennan may be
phased out during the thirty (30) day period following the
Closing Date as also provided in Section 6.06.
5.02 Conditions to the Company's Obligations at Closing. The
obligations of the Company to issue and sell the Shares and the other
transactions contemplated by this Agreement are subject to the fulfillment or
waiver, on or before the Closing, of each of the following conditions:
<PAGE>
(a) Each of the representations and warranties of Purchaser
contained in this Agreement must be true and correct in all
material respects on and as of the Closing Date as though made
on and as of the Closing Date.
(b) Purchaser must have performed and complied in all material
respects with all agreements, obligations, and conditions
contained in this Agreement that are required to be performed
or complied with by it on or before the Closing and will have
obtained all approvals, consents, and qualifications necessary
to complete the purchase and sale of the Shares.
(c) Each of the required items set forth in Section 2.02 must have
been executed and delivered.
Article VI
Covenants
6.01 Affirmative Covenants of the Company. The Company hereby
covenants and agrees that, prior to the Closing, the Company, except as
otherwise contemplated by this Agreement, will (a) not purchase any assets in
excess of $10,000 or incur any liabilities in excess of $2,000 per month, except
as provided in Schedule 6.01(a); (b) not take or permit any action that would
cause the conditions on the obligations of the parties to effect the
transactions contemplated by this Agreement not to be fulfilled, including,
without limitation, by taking or causing to be taken any action that would cause
the representations and warranties made by the Company in this Agreement not to
be true and correct; (c) not increase the compensation payable to or to become
payable to any stockholder, director, or officer of the Company; (d) not declare
or pay any dividend on, or make any other distribution in respect of,
outstanding shares of capital stock; (e) effect any reorganization or
recapitalization; (f) split, combine, or reclassify any of its capital stock or
issue or authorize or propose the issuance of any other securities in respect
of, in lieu of or in substitution for, shares of its capital stock; (g) not
issue, deliver, award, grant, or sell, or authorize or propose the issuance,
delivery, award, grant, or sale (including the grant of any security interests,
liens, claims, pledges, limitations in voting rights, charges, or other
encumbrances) of, any shares of any class of its capital stock or other
securities (including shares held in treasury), any securities convertible into
or exercisable or exchangeable for any such shares or other securities, or any
rights, warrants, or options to acquire any such shares or other securities; (h)
not acquire or agree to acquire, by merging or consolidating with, by purchasing
an equity interest in or a portion of the assets of, or by any other manner, any
business or any division thereof, or otherwise acquire or agree to acquire any
assets of any other entity; (i) not adopt or propose to adopt any amendments to
its Articles of Incorporation or bylaws or similar organizational documents; (j)
incur any obligation for borrowed money indebtedness, whether or not evidenced
by a note, bond, debenture, or similar instrument; and (k) take all reasonable
steps to cause to be fulfilled the conditions precedent to Purchaser's
obligations to consummate the transactions contemplated by this Agreement that
are dependent on the actions of the Company.
6.02 Access and Information. The Company has caused and will, until
the Closing Date, continue to cause Purchaser to have reasonable access to the
Company's directors, officers, employees, agents, assets, and properties and all
relevant books, records, and documents of or relating to the business and assets
of the Company during normal business hours and will furnish to Purchaser such
information, financial records, and other documents relating to the Company and
its operations and business as Purchaser may reasonably request.
6.03 Supplemental Disclosure. The Company will promptly supplement
or amend each of the Schedules with respect to any matter that arises or is
discovered after the date of this Agreement that, if existing or known at the
date of this Agreement, would have been required to be set forth or listed in
the Disclosure Schedule; provided that, for purposes of determining the rights
and obligations of the parties under this Agreement (other than the obligations
of the Company under this Section 6.03), any such supplemental or amended
disclosure will not be deemed to have been disclosed to Purchaser unless
Purchaser otherwise expressly consents in writing.
<PAGE>
6.04 Publicity. Purchaser and the Company will cooperate with each
other in the development and distribution of all news releases and other public
disclosures relating to the transactions contemplated by this Agreement.
6.05 Reservation of Common Stock. Prior to Closing, the Company
will take all actions required by the laws of the Commonwealth of Pennsylvania
and the Company's Articles of Incorporation and Bylaws to reserve 400,000 shares
of the Company Common Stock to be issued at Purchaser's discretion to members of
the Company's Board of Directors designated by Purchaser.
Section 6.06 Termination of COBRA Coverage with U.S. Healthcare. Within
thirty (30) days of Closing, the Company will take all steps required by
applicable law to terminate its agreement with U.S. Healthcare for the provision
of COBRA benefits to Company employees.
Section 6.07 Delivery of Proxy. Simultaneous with the execution of this
Agreement, the Company shall deliver the proxy from persons representing a
majority of the issued and outstanding shares of Company Common Stock approving
this Agreement and the transactions contemplated hereby, including the proposed
change in Company operations by Purchaser.
Section 6.08 Delivery of Information. Purchaser hereby covenants and
agrees to provide such information as may be reasonably requested by the Company
and as required by applicable law to enable the Company to fulfill its
obligations as set forth in Section 5.01(g).
Article VII
Miscellaneous
7.01. Termination. This Agreement and the transactions contemplated
by this Agreement may be terminated and abandoned (a) at any time prior to the
Closing by mutual written consent of the Company and Purchaser; or (b) by either
Purchaser, on the one hand, or the Company, on the other hand, if a condition to
performance by the terminating party or parties under this Agreement has not
been satisfied or waived prior to September 30, 1997. Notwithstanding the
foregoing clause (b), (i) Purchaser may not terminate this Agreement if the
event giving rise to its termination right results from Purchaser's willful
failure to perform or observe any of its covenants or agreements set forth in
this Agreement or if Purchaser is, at such time, in breach of this Agreement,
and (ii) the Company may not terminate this Agreement if the event giving rise
to its termination right results from the willful failure of the Company to
perform or observe any of its covenants or agreements set forth in this
Agreement or if the Company is, at such time, in breach of this Agreement. Upon
termination of this Agreement pursuant to Section 7.01, this Agreement (except
for Section 7.02, Section 7.04, and Section 7.10) will become void, there will
be no liability on the part of the Purchaser, on the one hand, or the Company,
on the other hand, to the other and all rights and obligations of each party to
this Agreement will cease, except that nothing in this Agreement will relieve
any party of any liability for any willful breach of such party's
representations, warranties, covenants, or agreements contained in this
Agreement.
7.02 Notices. All notices that are required or may be given
pursuant to this Agreement must be in writing and delivered personally, by a
recognized courier service, by a recognized overnight delivery service, by
telecopy, or by registered or certified mail, postage prepaid, to the parties at
the following addresses (or to the attention of such other person or such other
address as any party may provide to the other parties by notice in accordance
with this Section 8.02):
<PAGE>
If to Purchaser:
---------------
Michael J. Blumenfeld
13950 Semlac Drive
Farmers Branch, Texas 75234
Telecopy: (214) 739-1639
with a copy to:
Alan J. Bogdanow
Hughes & Luce, L.L.P.
1717 Main Street
Suite 2800
Dallas, Texas 75201
Telecopy: (214) 939-5849
If to the Company:
-----------------
DSSI Corporation
P.O. Box 1570
West Chester, Pennsylvania 19380
Attention: Patrick Brennan
Telecopy: (610) 696-3479
with a copy to:
Robert W. Berend
Wachtel & Masyr, LLP
110 E. 59th Street
New York, NY 10022
Telecopy: (212) 909-9455
Any such notice or other communication will be deemed to have been given and
received (whether actually received or not) on the day it is personally
delivered or delivered by courier or overnight delivery service or sent by
telecopy or, if mailed, when actually received.
7.03 Survival of Representations and Warranties. All represen-
tations and warranties made in or pursuant to this Agreement will survive the
execution and delivery of this Agreement and the consummation of the trans-
actions contemplated hereby and continue for a period ending on the third
anniversary of this Agreement. All statements contained in any schedule,
certificate, or other writing delivered in connection with this Agreement or the
transactions contemplated by this Agreement will constitute representations and
warranties under this Agreement. Each party agrees that no other party to this
Agreement will be under any duty, express or implied, to make any investigation
of any representation or warranty made by any other party to this Agreement, and
that no failure to so investigate will be considered negligent or unreasonable.
7.04 Attorneys' Fees and Costs. If attorneys' fees or other costs
are incurred to secure performance of any obligations under this Agreement, or
to establish damages for the breach thereof or to obtain any other appropriate
relief, whether by way of prosecution or defense, the prevailing party will be
entitled to recover reasonable attorneys' fees and costs incurred in connection
therewith.
7.05 Further Assurances. Each party agrees to execute any and all
documents and to perform such other acts as may be reasonably necessary or
expedient to further the purposes of this Agreement and the transactions
contemplated by this Agreement.
<PAGE>
7.06 No Brokers. Each party to this Agreement represents to the
other party that it has not incurred and will not incur any liability for
brokerage fees or agents' commissions in connection with this Agreement or the
transactions contemplated by this Agreement, and agrees that it will indemnify
and hold harmless the other party against any claim for brokerage and finders'
fees or agents' commissions in connection with the negotiation or consummation
of the transactions contemplated by this Agreement.
7.07 Counterparts. This Agreement may be executed in one or more
counterparts for the convenience of the parties to this Agreement, all of which
together will constitute one and the same instrument.
7.08 Assignment. Neither this Agreement nor any of the rights,
interests, or obligations under this Agreement will be assigned or delegated by
the Company or Purchaser, without the prior written consent of the other party;
provided, however, that Purchaser may assign its rights, but not the
liabilities, arising under this Agreement to an affiliate of Purchaser without
the prior written consent of the Company. This Agreement is not intended to
confer any rights or benefits to any person or entity other than the parties to
this Agreement.
7.09 Entire Agreement. This Agreement and the related documents
contained as Exhibits and Schedules to this Agreement or expressly contemplated
by this Agreement contain the entire understanding of the parties relating to
the subject matter hereof and supersede all prior written or oral and all
contemporaneous oral agreements and understandings relating to the subject
matter hereof. This Agreement cannot be modified or amended except in writing
signed by the party against whom enforcement is sought. The Exhibits and
Schedules to this Agreement are hereby incorporated by reference into and made a
part of this Agreement for all purposes.
7.10 Governing Law. This Agreement will be governed by, and
construed in accordance with, the substantive laws of the State of Texas, with-
out giving effect to any conflicts-of-law, rule, or principle that might require
the application of the laws of another jurisdiction.
IN WITNESSES WHEREOF, the parties have entered into this Agreement as
of the date first set forth above.
DSSI CORPORATION,
a Pennsylvania corporation
By: ________________________
Name: ________________________
Title: ________________________
PURCHASER:
-----------------------------
Michael J. Blumenfeld
