-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Vi1m//ytxFmoBx9keGzkOCPnpM7ov5yDngRv8UgSAHdGDAm1oeTj6ENlp3Mr693+ DVh+KCfI50KkJhtoZTmRHQ== 0000950110-00-001374.txt : 20001220 0000950110-00-001374.hdr.sgml : 20001220 ACCESSION NUMBER: 0000950110-00-001374 CONFORMED SUBMISSION TYPE: S-3 PUBLIC DOCUMENT COUNT: 4 FILED AS OF DATE: 20001219 FILER: COMPANY DATA: COMPANY CONFORMED NAME: DRS TECHNOLOGIES INC CENTRAL INDEX KEY: 0000028630 STANDARD INDUSTRIAL CLASSIFICATION: SEARCH, DETECTION, NAVIGATION, GUIDANCE, AERONAUTICAL SYS [3812] IRS NUMBER: 132632319 STATE OF INCORPORATION: DE FISCAL YEAR END: 0331 FILING VALUES: FORM TYPE: S-3 SEC ACT: SEC FILE NUMBER: 333-52170 FILM NUMBER: 791851 BUSINESS ADDRESS: STREET 1: 3RD FLOOR STREET 2: 5 SYLVAN WAY CITY: PARSIPPANY STATE: NJ ZIP: 07054 BUSINESS PHONE: 9738981500 MAIL ADDRESS: STREET 1: 16 THORNTON RD CITY: OAKLAND STATE: NJ ZIP: 07436 FORMER COMPANY: FORMER CONFORMED NAME: DIAGNOSTIC RETRIEVAL SYSTEMS INC DATE OF NAME CHANGE: 19920703 S-3 1 0001.txt FORM S-3 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 19,2000 Registration No. 333- ================================================================================ SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------- DRS TECHNOLOGIES, INC. (Exact name of registrant as specified in its charter) DELAWARE 13-2632319 (State or other jurisdiction of (I.R.S. Employee incorporation or organization) Identification Number) 5 SYLVAN WAY PARSIPPANY, NEW JERSEY 07054 (973) 898-1500 (Address, including zip code, and telephone number, including area code, of registrant's principal executive offices) Nina Laserson Dunn, Esq. Executive Vice President, General Counsel and Secretary DRS Technologies, Inc. 5 SYLVAN WAY PARSIPPANY, NEW JERSEY 07054 (973) 898-1500 (Name, address, including zip code, and telephone number, including area code, of agent for service) ------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as practicable after the effective date of this Registration Statement. If the only securities being registered on this Form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933 (as defined below), other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ________________ If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] ________________ If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ]
CALCULATION OF REGISTRATION FEE PROPOSED PROPOSED MAXIMUM TITLE OF EACH CLASS OF MAXIMUM AGGREGATE SECURITIES TO BE AMOUNT TO BE OFFERING PRICE OFFERING AMOUNT OF REGISTERED REGISTERED PER SHARE(1) PRICE(1) REGISTRATION FEE - ------------------------------------------------------------------------------------------------------------------------ Common Stock, 1,154,238 shares $8.85 $10,215,006.30 $2,696.76 $.01 par value - ------------------- (1) Estimated solely for the purpose of calculating the Registration Fee.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. PROSPECTUS DATED DECEMBER 20, 2000 SUBJECT TO COMPLETION, DATED DECEMBER 20, 2000 DRS TECHNOLOGIES, INC. 1,154,238 SHARES OF COMMON STOCK (PAR VALUE $.01 PER SHARE) On December 19, 2000, we called for redemption on January 18, 2001, which we refer to in this prospectus as the Redemption Date, all of our 9% Senior Subordinated Convertible Debentures (the "9% Debentures") due October 1, 2003 at a redemption price of $1,025 for each $1,000 principal amount of 9% Debentures, plus accrued but unpaid interest of $27.25 per $1,000 principal amount of 9% Debentures from October 1, 2000 to the Redemption Date. We refer to the total amount payable for each $1,000 principal amount of 9% Debentures in this prospectus as the Redemption Price. The 9% Debentures are convertible into shares of our Common Stock at a conversion price of $8.85 per share, or approximately 112.994 shares for each $1,000 principal amount of 9% Debentures. With respect to any 9% Debentures delivered for conversion after the date of the notice of redemption sent by the Company to the holders of the 9% Debentures (the "Notice of Redemption"), the Company shall pay interest to such holders so converting for the period from October 1, 2000 to, but not including, the date of such conversion. Cash will be paid for fractional shares of Common Stock. Including the redemption premium and accrued interest, the Redemption Price per share is $9.31. The conversion right expires at 5:30 p.m., Eastern Standard Time, on January 17, 2001, which is the last business day preceding the Redemption Date. A holder of 9% Debentures is not entitled to any rights of a holder of Common Stock until such holder of 9% Debentures has converted such 9% Debentures into Common Stock. On and after the Redemption Date, registered holders of the 9% Debentures shall be entitled only to the Redemption Price and interest shall cease to accrue. We have entered into a standby purchase agreement with First Union Securities, Inc. In this prospectus, we refer to First Union Securities, Inc. in its role as standby purchaser pursuant to the standby purchase agreement as the Purchaser. Under the terms of the standby purchase agreement, the Purchaser has agreed, subject to certain conditions, to purchase from us, at the Company's option, such number of shares of our Common Stock equal to the amount that would have been issuable upon conversion of the 9% Debentures that were not surrendered for conversion prior to the Redemption Date. The Purchaser may also purchase the 9% Debentures for its own account in the open market or otherwise in amounts and at prices that the Purchaser deems advisable. The actual number of shares to be purchased by the Purchaser will be the number of shares that otherwise would have been issuable upon conversion of 9% Debentures that are not surrendered for conversion by 5:30 p.m., Eastern Standard Time, on January 17, 2001 plus any shares of Common Stock issued upon conversion of any 9% Debentures purchased by Purchaser for its own account. You should read the remainder of this prospectus for more information. Our Common Stock is quoted on the American Stock Exchange ("AMEX") and traded under the symbol "DRS". The closing price of our Common Stock on December 15, 2000 was $13 13/16 per share. A holder of 9% Debentures who converted such 9% Debentures on that date would have received Common Stock having a market value, based on such price on that date, of approximately $1,560.73 for each $1,000 principal amount of 9% Debentures converted (including cash, if any, received in lieu of fractional shares). If such 9% Debentures were surrendered for redemption on the Redemption Date, such holder would receive $1,025 in cash for each $1,000 principal amount of 9% Debentures. As long as the market price of the Common Stock remains above $9.07 per share, the holders of 9% Debentures who elect to convert will receive, upon conversion, Common Stock (including cash, if any, received in lieu of fractional shares) having a greater market value than the amount of cash receivable upon redemption. It should be noted, however, that the price of the Common Stock received upon conversion will fluctuate in the market. No assurances can be given as to the price of the Common Stock at any future time, and the holders should expect to incur various expenses of sale if such Common Stock is sold. Our principal executive offices are located at 5 Sylvan Way, Parsippany, New Jersey 07054 and our telephone number is (973) 898-1500. SEE "RISK FACTORS" BEGINNING ON PAGE 3 FOR A DISCUSSION OF CERTAIN MATERIAL FACTORS THAT YOU SHOULD CONSIDER IN CONNECTION WITH AN INVESTMENT IN OUR COMMON STOCK. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR DETERMINED IF THIS PROSPECTUS IS TRUTHFUL OR COMPLETE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. --------------------------------- The date of this prospectus is December 20, 2000 FIRST UNION SECURITIES, INC. The information in this prospectus is not complete and may be changed. We may not sell these securities until the Registration Statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Prior to and after the Redemption Date, the Purchaser may offer to the public shares of Common Stock, including shares acquired through conversion of 9% Debentures purchased by the Purchaser pursuant to the standby arrangements at prices set by it from time to time and to dealers at such prices less a selling concession to be determined by the Purchaser. Sales of Common Stock by the Purchaser may be made on the American Stock Exchange, in block trades, in the over the counter market, in privately negotiated transactions or otherwise, from time to time. In effecting such sales, the Purchaser may realize profits or incur losses independent of the compensation described under "Standby Arrangements". The Purchaser reserves the right to reject any order in whole or in part and to withdraw, cancel or modify the offer without notice. IN CONNECTION WITH THIS OFFERING, THE PURCHASER MAY ENGAGE IN TRANSACTIONS THAT STABILIZE, MAINTAIN OR OTHERWISE AFFECT THE PRICE OF THE COMMON STOCK. SEE "STANDBY ARRANGEMENTS" FOR ADDITIONAL INFORMATION. TABLE OF CONTENTS About this Prospectus............................................... 2 Risk Factors........................................................ 3 The Company......................................................... 6 Use of Proceeds..................................................... 8 Standby Arrangements ............................................... 8 Description of the Securities....................................... 10 Market Prices of Capital Stock...................................... 11 Legal Matters....................................................... 12 Experts............................................................. 12 Where You Find More Information..................................... 12 Some of the information contained in this prospectus or documents incorporated by reference may contain forward-looking statements, within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act"), and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements in this report are made pursuant to the safe harbor provisions of the Private Securities Reform Act of 1994. Persons reading this prospectus or documents incorporated by reference are cautioned that risks and uncertainties are inherent to forward-looking statements. Accordingly, the Company's actual results could differ materially from those suggested by such forward-looking statements. Risks include, without limitation, the effect of the Company's acquisition strategy on future operating results; the uncertainty of acceptance of new products and successful bidding for new products; the effect of technological changes or obsolescence relating to the Company's products and services; the effects of government regulation or shifts in government policy, as they may relate to the Company's products and services; competition; and other matters referred to in this prospectus. Our forward-looking statements are based on information available to us today, and we will not update these statements. Our actual results may differ significantly from the results discussed. --------------------------------- ABOUT THIS PROSPECTUS This prospectus is part of a Registration Statement that we filed with the Securities and Exchange Commission (the "SEC") using a "shelf" registration process. Under this shelf process, we may from time to time sell any number of shares of Common Stock of the Company to the Purchaser as set forth in this prospectus in one or more offerings up to a total of 1,154,238 shares. The Registration Statement that contains this prospectus, including the exhibits to the Registration Statement and the information incorporated by reference, contains additional information about the securities offered under this prospectus. That Registration Statement can be read at the SEC website or at the SEC offices mentioned below under the heading "Where You Can Find More Information." You should rely only on the information contained in this prospectus. We have not, and the Purchaser has not, authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not, and the Purchaser is not, making an offer to sell these securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate only as of the date on the front cover of this prospectus. Our business, financial condition, results of operations and prospects may have changed since that date. In this prospectus, "Company," "DRS," "we," "us" and "our" refer to DRS Technologies, Inc. and its subsidiaries. The term "you" refers to a prospective investor. 2 RISK FACTORS You should carefully consider the following factors and other information contained in our current and future reports, including information incorporated by reference in this prospectus, before you invest in the shares of Common Stock being offered in this prospectus. DRS FACES ACQUISITION AND INTEGRATION RISKS Since March 31, 1993, we have consummated 18 acquisitions and may continue to acquire businesses that present a strategic fit with our operations. The growth of the Company may place significant demands on our management and our operational, financial and marketing resources. In connection with acquisitions and opening of new locations, we have expanded and may continue to expand the number of our employees, the scope of our operating and financial systems and the geographic area of our operations. We believe this growth will increase the complexity of our operations and the level of responsibility exercised by both existing and new management personnel. We cannot assure you that our current operating and financial systems and controls will continue to be adequate as we grow or that any steps taken to improve such systems and controls will be sufficient. Our failure to successfully integrate and manage our growth may have a material adverse effect on our business, financial condition, results of operations or prospects. In addition, there may be liabilities that we fail or are unable to discover in the course of performing due diligence investigations on each company or business we acquired or seek to acquire in the future. Such liabilities could include those arising from employee benefits contribution obligations of a prior owner or non-compliance with applicable federal, state or local environmental requirements by prior owners for which we, as a successor owner, may be responsible. In addition, there may be additional costs relating to acquisitions including, but not limited to, possible purchase price adjustments. We try to minimize these risks by conducting such due diligence, including employee benefit and environmental reviews, as we deem appropriate under the circumstances. However, we cannot assure you that we have identified, or in the case of future acquisitions, will identify, all existing or potential risks. We also generally require each seller of acquired businesses or properties to indemnify us against undisclosed liabilities. In some cases this indemnification obligation may be supported by deferring payment of a portion of the purchase price or other appropriate security. However, we cannot assure you that the indemnification, even if obtained, will be enforceable, collectible or sufficient in amount, scope or duration to fully offset the possible liabilities associated with the business or property acquired. Any such liabilities, individually or in the aggregate, could have a material adverse effect on our business, financial condition, results of operations or prospects. DRS REVENUES DEPEND ON CONTINUED LEVEL OF GOVERNMENT BUSINESS We derive a significant portion of all of our revenues from contracts or subcontracts with domestic and foreign government agencies. A reduction in the 3 purchase of our products by these agencies (and principally by the U.S. Navy) would have a material adverse effect on our business. In the fiscal years ended March 31, 2000, 1999 and 1998, approximately 80%, 81% and 78% of our revenues were derived directly or indirectly from defense-industry contracts with the U.S. government. In addition, in each of the fiscal years ended March 31, 2000, 1999 and 1998 less than 10% of our revenues were derived directly or indirectly from sales to foreign governments. Therefore, the development of our business in the future will depend upon the continued willingness of the U.S. government to commit substantial resources to defense programs and, in particular, upon continued purchase of our products, and other products which incorporate our products, by the U.S. government. The risk that governmental purchases of our products may decline stems from the nature of our business with the U.S. government, in which the U.S. government may: o terminate contracts at its convenience; o terminate, reduce or modify contracts or subcontracts if its requirements or budgetary constraints change; o cancel multi-year contracts and related orders if funds become unavailable; o shift its spending priorities; and o adjust contract costs and fees on the basis of audits done by its agencies. Upon the termination of a contract with the U.S. government, a defense contractor is entitled to reimbursement for allowable costs and an allowance for the proportionate share of fees or earnings for the work completed if the contract was not terminated due to the contractor's default. Foreign defense contracts generally also contain comparable provisions relating to termination at the convenience of the foreign government. In addition, as a defense business, we are subject to the following risks in connection with government contracts: o the frequent need to bid on programs prior to completing the necessary design, which may result in unforeseen technological difficulties and/or cost overruns; o the difficulty in forecasting long-term costs and schedules and the potential obsolescence of products related to long-term fixed price contracts; and o when we act as a subcontractor, the failure or inability of the primary contractor to perform its prime contract, which may result in our inability to obtain payment of our fees and contract costs. DRS' SUBSTANTIAL INDEBTEDNESS MAY ADVERSELY AFFECT DRS DRS has indebtedness that is substantial in relation to its stockholders' equity. As of the fiscal years ended March 31, 2000, 1999 and 1998, DRS' debt to equity ratios were 1.55, 1.59 and 1.56 respectively. The debt to equity ratio at September 30, 2000 was 1.23. DRS' high degree of leverage could: o impair DRS' future ability to obtain additional financing for working capital, capital expenditures, acquisitions, general corporate purposes or other purposes; o hinder DRS' ability to adjust rapidly to changing market conditions; and o make DRS more vulnerable if a downturn in general economic conditions or DRS' business occurs. In addition, a substantial portion of DRS' cash flow from operations must be dedicated to the payment of principal and interest on its indebtedness. During the fiscal year ended March 31, 2000, DRS used approximately $21.9 million, or 296% of cash flow from operations, for principal and interest payments on its debt obligations. For the six-months ended September 30, 2000, DRS used approximately $12.5 million, or 93% of cash flow from operations, for principal and interest payments on its debt obligations. This use of DRS' cash flow reduces the funds available for other purposes, which may adversely affect the continued success of DRS' business. Significant operating and financial restrictions are also imposed on DRS by the Mellon credit agreement (i.e., a $160 million secured credit facility with Mellon Bank, N.A.). The restrictions affect, and often significantly limit or prohibit, DRS' ability to incur additional indebtedness and pay dividends. The Mellon credit agreement also contains covenants limiting, for example: o borrowings by DRS and its subsidiaries; o liens on assets of DRS and its subsidiaries; o fundamental changes, such as a merger or sale of substantially all of DRS' assets; and o guaranties by DRS. REDUCTION IN U.S. GOVERNMENT'S SPENDING FOR DEFENSE PRODUCTS MAY ADVERSELY AFFECT DRS' EARNINGS The U.S. government may reduce its expenditures for defense products in the coming years, and, if so, this reduction may have an effect on DRS' programs. In the event expenditures for products of the type manufactured by DRS are reduced and not offset by greater foreign sales or other new programs or products, there will be a reduction in the volume of contracts or subcontracts awarded to DRS. Unless this reduction is offset, it would adversely affect DRS' earnings. DRS REVENUES DEPEND ON OBTAINING RENEWAL OR FOLLOW-ON CONTRACTS Renewal and follow-on contracts are important because our contracts are for fixed terms. These terms vary from shorter than one year to over five years, particularly for contracts with options. 4 The average term of our contracts with the U.S. government is between one and three years. Our possible failure to obtain a renewal or follow-on contract with respect to any significant contract or a number of lesser contracts would result in a loss of revenues. If revenues from the award of new contracts failed to offset the loss of contracts, it could have a material adverse effect on our results of operations and financial position. The loss of revenues from our possible failure to obtain renewal or follow-on contracts may be significant because our U.S. government contracts account for a substantial portion of our revenues. For example, in the fiscal years ended 2000 and 1999, the AN/UYQ-70 advanced display system program accounted for approximately 21% and 28%, respectively, of our total revenues. In addition, we sometimes enter into U.S. government contracts with a fully funded backlog, which means that the U.S. government has appropriated funds sufficient to cover all of the sales orders represented by such contracts at the time of award. The price per unit of our product, however, may not be determined at the time of award. If the price per unit is ultimately determined to be significantly less than we anticipated, our net revenues would be adversely affected. DRS FACES A COMPETITIVE INDUSTRY AND DEPENDS ON STRATEGIC ALLIANCES The military electronics industry in which we participate is highly competitive and characterized by rapid technological change. Our potential inability to improve existing product lines and develop new products and technologies could adversely affect our business. In addition, our competitors could introduce new products with greater capabilities which could adversely affect our business. There are many competitors in the markets in which DRS sells its products. Many of these competitors are substantially larger than DRS, devote substantially greater resources to research and development and generally have greater resources. Consequently, these competitors may be better positioned to take advantage of economies of scale and develop new technologies. Some of these competitors are also our suppliers. In the military sector, we compete with many large and mid-tier defense contractors on the basis of product performance, cost, overall value, delivery and reputation. As the size of the overall defense industry has decreased in recent years, the industry has experienced substantial consolidation, increasing the market share of certain prime contractors. Accordingly, it is important for us to maintain our good relationships with such major contractors. 5 DRS MAY EXPERIENCE PRODUCTION DELAYS IF SUPPLIERS FAIL TO DELIVER MATERIALS TO DRS Our manufacturing process for certain of our products consists primarily of the assembly of purchased components and testing of the product at various stages in the assembly process. Although we can obtain materials and purchase components generally from a number of different suppliers, several suppliers are our sole source of certain components. If a supplier should cease to deliver such components, we would probably find other sources; however, this could result in added cost and manufacturing delays. We have not experienced significant production delays attributable to supply shortages, but we occasionally experience procurement problems with respect to certain components, such as semiconductors and connectors. In addition, with respect to our electro-optical products, certain materials, such as germanium, zinc sulfide and cobalt, may not always be readily available. SHARES ELIGIBLE FOR FUTURE SALE The sale, or availability for sale, of substantial amounts of Common Stock in the public market could adversely affect the prevailing market price of the Common Stock and could impair the Company's ability to raise additional capital through the sale of its securities. As of November 26, 2000, there was an aggregate of 10,717,952 shares of Common Stock outstanding (net of 440,939 shares of Common Stock in treasury). Of such shares, approximately 1,673,556 shares of Common Stock are "restricted" under the Securities Act and are resalable pursuant to the limitations of Rule 144 under the Securities Act. LIMITED PUBLIC MARKET FOR COMMON STOCK The Common Stock of the Company is currently listed on the AMEX. The market for Common Stock has historically been characterized by limited trading volume and a limited number of holders. There can be no assurance that a more active trading market for the Common Stock will develop. THE COMPANY DRS Technologies, Inc. is a leading supplier of defense electronic systems and has served the defense industry for over thirty years. We provide advanced technology products and services to government and commercial customers worldwide. Our company develops and manufactures a broad range of mission critical products--from rugged computers and peripherals to systems and components in the areas of communications, combat systems, data storage, digital imaging, electro-optics, flight safety and space. Our defense electronics systems and subsystems are sold to all branches of the U.S. military, selected U.S. government intelligence agencies, major aerospace/defense contractors and international military forces. 6 The Company has grown substantially in recent years, as a result of internal business development and strategic acquisitions. Acquisitions have significantly expanded the Company's business base and have increased and further diversified the Company's backlog. In the past two years, revenues and earnings from continuing operations before extraordinary items, interest and related expenses, income taxes, depreciation and amortization (EBITDA) have grown at compound average annual rates of approximately 42% and 39% respectively. In fiscal 2000, the Company's total revenues increased by approximately 47%. Funded backlog also has increased substantially. At September 30, 2000, the Company's funded backlog was approximately $426.2 million, an increase of 10% from March 31, 2000. As of September 30, 2000, approximately 39% and 32% of the Company's backlog was related to products and services for the U.S. Army and U.S. Navy, as compared with 45% and 28% at March 31, 2000, respectively. To achieve this level of growth and business development, DRS has executed a consistent long-term business strategy. The Company's goal is to secure its emerging position as a mid-tier defense technology supplier by maintaining its reputation for technical excellence, focusing on the development of profitable long-term contracts and acquiring businesses that complement or extend existing product lines. Our principal executive offices are located at 5 Sylvan Way, Parsippany, NJ 07054 and our telephone number is (973) 898-1500. For further information about the business and operations of the Company, reference is made to the Company's reports incorporated by reference. See "Where You Can Fund More Information" below. 7 USE OF PROCEEDS The net proceeds, if any, from the sale of Common Stock to the Purchaser pursuant to the standby arrangements described below will be used to effect a redemption of any of the Company's 9% Debentures not tendered for conversion in accordance with the Company's Notice of Redemption. The amount of the proceeds to be received by the Company from the Purchaser pursuant to the standby arrangements is not determinable at this time because the number of shares of Common Stock, if any, that will be sold to the Purchaser cannot be determined at this time. The Company will not receive any cash proceeds from the issuance of Common Stock upon conversion of the 9% Debentures. STANDBY ARRANGEMENTS Under the terms and subject to the conditions in the Standby Agreement dated December 20, 2000 between the Company and the Purchaser, (the "Standby Agreement"), the Purchaser has agreed to purchase from the Company, at the Company's option, for settlement on January 18, 2001 such number of shares of Common Stock as would have been issuable upon conversion of the 9% Debentures that were not surrendered for conversion prior to 5:30 p.m., Eastern Standard Time, on January 17, 2001, the business day preceding the date set forth as the redemption date in the Company's Notice of Redemption (the "Redemption Date") for a purchase price of $8.85 per share of Common Stock. The Purchaser may also purchase the 9% Debentures for its own account in the open market or otherwise in amounts and at prices that the Purchaser deems advisable. The Purchaser has agreed to convert into Common Stock all of the 9% Debentures owned by it prior to 5:30 p.m. Eastern Standard Time on January 17, 2001, the business day preceding the Redemption Date. Prior to and after the Redemption Date, the Purchaser may offer to the public shares of Common Stock, including shares acquired through conversion of the 9% Debentures purchased by the Purchaser as described above at prices set by it from time to time and to dealers at such prices less a selling concession to be determined by the Purchaser. Sales of Common Stock by the Purchaser may be made on the American Stock Exchange, in block trades, in the over the counter market, in privately negotiated transactions or otherwise, from time to time. In effecting such sales, the Purchaser may realize profits or incur losses independent of the compensation described below. The Purchaser reserves the right to reject any order in whole or in part and to withdraw, cancel or modify the offer without notice. 8 In connection with any offer to the public of shares of Common Stock, the Purchaser may engage in transactions that stabilize the price of the Common Stock. These transactions may include purchases for the purpose of fixing or maintaining the price of the Common Stock. The Purchaser may also create a short position in the Common Stock, which means that the Purchaser may sell a larger number of shares of the Common Stock than it acquires pursuant to the Standby Agreement. If the Purchaser creates a short position, the Purchaser may purchase shares of Common Stock in the open market to reduce the short position. If the Purchaser purchases shares of Common Stock to stabilize the price or to reduce its short position, the price of Common Stock could be higher than it might have been if the Purchaser had not made such purchases. The Purchaser makes no representation or prediction about any effect that the purchases may have on the price of the Common Stock. The Purchaser may suspend any of these activities at any time. Pursuant to the terms of the Standby Agreement and in consideration of its obligations thereunder, the Company has agreed to pay the Purchaser an amount equal to the sum of (i) $200,000 plus (ii) the amount, if any, by which the product of (x) 7% and (y) the aggregate sales price of all shares of Common Stock issued to the Purchaser upon conversion of the 9% Debentures (the "Conversion Securities") and shares of Common Stock to be Purchased by the Purchaser pursuant to Section 2(b) of the Standby Agreement (the "Purchased Securities") sold by the Purchaser at or below $11.00 per share, exceeds $200,000. For purposes of the foregoing, (i) Conversion Securities and Purchased Securities sold at prices below $11.00 per share shall be deemed to have been sold at $11.00 and the proceeds of such sales shall be determined based on such assumption, and (ii) any Conversion Securities or Purchased Securities not sold prior to the fifteenth day following the Redemption Date shall be deemed to have been sold by the Purchaser for an amount equal to the higher of (i) the last reported sale price of the Common Stock on such day and (ii) $11.00. The Company has agreed to indemnify the Purchaser against certain liabilities, including liabilities under the Securities Act, or to contribute to payments the Purchaser may be required to make in respect thereof. The Company has agreed that it will not, prior to the Redemption Date (and, if the aggregate number of Purchased Securities and Conversion Securities purchased by the Purchaser exceeds 500,000 shares, for an additional period of 30 days following the Redemption Date), without the prior written consent of the Purchaser, offer, sell or contract to sell, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company), directly or indirectly, by means of a public offering requiring registration with the SEC or announce the public offering of, any other shares of Common Stock or any securities convertible into, or exchangeable for, shares of Common Stock. Notwithstanding the foregoing, this restriction shall not apply to any sale or disposition of securities pursuant to the registration of such securities on Form S-4 or Form S-8 under the Securities Act or any successor forms or any sale or disposition of such securities in connection with any merger or consolidation involving the Company or a subsidiary of the Company or the acquisition by the Company or a subsidiary of the Company of the capital equity or substantially all of the assets of any other person or entity. 9 DESCRIPTION OF THE CAPITAL STOCK DRS' authorized capital stock consists of 20,000,000 shares of DRS Common Stock, par value $.01 per share, and 2,000,000 shares of undesignated preferred stock, $10.00 par value per share. As of November 26, 2000, 10,717,952 shares of DRS Common Stock were issued and outstanding, 440,939 shares were issued and held in treasury and 2,251,759 shares were reserved for issuance upon exercise of outstanding stock options. There were no shares of DRS' preferred stock designated or issued. All of our outstanding shares of Common Stock are fully paid and non-assessable. DRS has not paid any cash dividends since 1976. The Company intends to retain future earnings for use in its business and does not expect to declare cash dividends on Common Stock in the foreseeable future. The Company's bank borrowings restrict the Company's ability to pay dividends or make other distributions on the Common Stock. Any future declaration of dividends will be subject to the discretion of the Board of Directors of the Company. The timing, amount and form of any future dividends will depend, among other things, on the Company's results of operations, financial condition, cash requirements, plans of expansion and other factors deemed relevant by the Board of Directors of the Company. The holders of DRS Common Stock have one vote per share with respect to matters submitted to a vote of the DRS stockholders. Under DRS Bylaws, any action that may be taken at a meeting of DRS stockholders may be taken without a meeting, without prior notice and without a vote, if a written consent setting forth the action to be taken is signed by the holders of not less than the minimum number of votes that could be necessary to take such action at a meeting of the stockholders at which all shares entitled to vote thereon were present and voted. The DRS Bylaws also provide that prompt notice of the taking of corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing. 10 MARKET PRICES OF CAPITAL STOCK The Company's Common Stock trades on the AMEX (symbol: DRS). The following table sets forth for each period indicated the high and low closing sales prices of the Company's Common Stock, as reported by the American Stock Exchange Monthly Market Statistics: COMMON STOCK* HIGH LOW Year ended March 31, 1999 First Quarter............................... 15 3/8 11 5/8 Second Quarter.............................. 12 1/16 9 1/16 Third Quarter............................... 11 7 Fourth Quarter.............................. 11 7 5/8 Year ended March 31, 2000 First Quarter............................... 10 5/16 7 Second Quarter.............................. 10 5/8 8 15/16 Third Quarter............................... 10 7 Fourth Quarter.............................. 10 3/8 8 1/4 Year ending March 31, 2001 First Quarter............................... 12 1/8 9 7/8 Second Quarter.............................. 16 1/4 10 1/4 Third Quarter (through November 26, 2000)... 16 1/2 12 5/8 - ----------------- * As of November 26, 2000, the Common Stock was held by 4,100 stockholders (of which 765 were registered holders and 3,335 were beneficial holders). See "Risk Factors--Limited Public Market for Common Stock." 11 LEGAL MATTERS The legality of the Common Stock offered hereby will be passed upon for the Company by Arnold & Porter, New York, New York. Certain legal matters regarding the Common Stock will be passed upon for the Purchaser by Cleary, Gottlieb, Steen & Hamilton, New York, New York. EXPERTS The consolidated financial statements and consolidated financial statement schedule of DRS Technologies, Inc. and subsidiaries as of March 31, 2000 and 1999, and for each of the years in the three-year period ended March 31, 2000, have been incorporated by reference herein and in the Registration Statement in reliance upon the reports, incorporated herein by reference, of KPMG LLP, independent auditors, and upon the authority of said firm as experts in accounting and auditing. WHERE YOU CAN FIND MORE INFORMATION We file annual, quarterly and special reports, proxy statements and other information with the SEC. Our filings with the SEC are available to the public over the Internet at the SEC website at http://www.sec.gov. You may also read and copy any document we file at the SEC's public reference room at 450 Fifth Street, N.W., Washington, D.C. 20549. These documents are also available at the public reference rooms at the SEC's regional offices in New York, New York and Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information on the public reference rooms. Our SEC filings are also available at the offices of the American Stock Exchange, 86 Trinity Place, New York, New York 10006, on which our Common Stock is listed. We are "incorporating by reference" in the prospectus the information we file with the SEC, which means that we can disclose important information to you by referring you to those documents. The information incorporated by reference is an important part of this prospectus, and information that we file later with the SEC will automatically update and supersede this information. We are incorporating by reference the documents listed below and any future filings we make with the SEC under Section 13(a), 13(c), 14, or 15(d) of the Securities Exchange Act of 1934 prior to the termination of this offering. o Annual Report on Form 10-K for the fiscal year ended March 31, 2000. o Quarterly Reports on Forms 10-Q for the quarters ended September 30, 2000 and June 30, 2000. o The Proxy Statement, dated June 28, 2000, for the Annual Meeting of Stockholders. You may request a copy of these filings at no cost, by writing or telephoning us at the following address: 12 DRS Technologies, Inc. Corporate Headquarters 5 Sylvan Way Parsippany, NJ 07054 Tel. No.: (973) 898-1500 Attn: Patricia Williamson This prospectus is part of a Registration Statement we filed with the SEC. You should rely only on the information or representations provided in this prospectus. We have authorized no one to provide information other than that provided in this prospectus. We are not making any offer of these securities in any state where the offer is not permitted. The information contained in this prospectus is current as of December 20, 2000. 13 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION Securities and Exchange Commission filing fee.......................$ 2,696.76 Legal fees and expenses............................................. 40,000* Accounting fees and expenses........................................ 5,000* Cost of printing and preparing Registration Statement, Prospectus and other documents................................. 5,000* Miscellaneous....................................................... 5,000* Total......................................................$57,696.76* - ----------------- * Estimated. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS. Set forth below is a description of certain provisions of the Company's Restated Certificate of Incorporation, as amended (the "Restated Certificate of Incorporation"), the Bylaws (the "Bylaws") of the Company and the General Corporation Law of the State of Delaware, as such provisions relate to the indemnification of the directors and officers of the Company. This description is intended only as a summary and is qualified in its entirety by reference to the Restated Certificate of Incorporation, the Bylaws, and the General Corporation Law of the State of Delaware. The Company's Restated Certificate of Incorporation provides that the Company shall, to the full extent permitted by Sections 102 and 145 of the General Corporation Law of the State of Delaware, as amended from time to time, indemnify all persons whom it may indemnify pursuant thereto and eliminates the personal liability of its directors to the full extent permitted by Section 102(b)(7) of the General Corporation Law of the State of Delaware, as amended from time to time. Section 145 of the General Corporation Law of the State of Delaware permits a corporation to indemnify its directors and officers against expenses (including attorney's fees), judgments, fines and amounts paid in settlements actually and reasonably incurred by them in connection with any action, suit or proceeding brought by third parties, if such directors or officers acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation and, with respect to any criminal action or proceeding, if they had no reasonable cause to believe their conduct was unlawful. In a derivative action, i.e., one by or in the right of the corporation, indemnification may be made only for expenses actually and reasonably incurred by directors and officers in connection with the defense or settlement of an action or suit, and only with respect to a matter as to which they shall have acted in good faith and in a manner they reasonably believed to be in or not opposed to the best interests of the corporation, except that no indemnification shall be made if such person shall have been adjudged liable for I negligence or misconduct in the performance of his respective duties to the corporation, although the court in which the action or suit was brought may determine upon application that the defendant officers or directors are reasonably entitled to indemnity for such expenses despite such adjudication of liability. Section 102(b)(7) of the General Corporation Law of the State of Delaware provides that a corporation may eliminate or limit the personal liability of a director to the corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, provided that such provision shall not eliminate or limit the liability of a director (i) for any breach of the director's duty of loyalty to the corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of the State of Delaware, or (iv) for any transaction from which the director derived an improper personal benefit. No such provision shall eliminate or limit the ability of a director for any act or omission occurring prior to the date when such provision becomes effective. ITEM 16. EXHIBITS. Exhibit No. Description - ----------- ----------- 1.1 Standby Agreement 5.1 Validity Opinion 23 Consent of KPMG LLP ITEM 17. UNDERTAKINGS. (a) The undersigned registrant hereby undertakes: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement; (i) To include any prospectus required by Section 10(a)(3) of the Securities Act of 1933; (ii) To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represents a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high and of the estimated maximum offering range may be reflected in the form of prospectus filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20 percent change in the maximum aggregate offering II price set forth in the "Calculation of Registration Fee" table in the effective registration statement. (iii) To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement; (2) That, for the purpose of determining any liability under the Securities Act of 1933, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from the registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. (b) The undersigned registrant hereby undertakes that, for purposes of determining any liability under the Securities Act of 1933, each filing of the registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (and, where applicable, each filing of an employee benefit plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is incorporated by reference in the registration statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (c) Insofar as indemnification for liabilities arising under the Securities Act of 1933 may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the Securities and Exchange Commission, such indemnification is against public policy as expressed in the Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Act and will be governed by the final adjudication of such issue. III SIGNATURES Pursuant to the requirements of the Securities Act of 1933, the Registrant certifies that it has reasonable grounds to believe that it meets all the requirements for filing on Form S-3 and has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in Parsippany, in the state of New Jersey, on December 19, 2000. DRS TECHNOLOGIES, INC. By: /s/ MARK S. NEWMAN --------------------------------- Name: Mark S. Newman Title: Chairman of the Board, President, Chief Executive Officer and Director Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed below by the following persons in the capacities and on the dates indicated. Each person, in so signing also makes, constitutes and appoints Mark S. Newman and Nina Laserson Dunn, and each of them acting alone, his true and lawful attorney-in-fact, with full power of substitution, to execute and cause to be filed with the Securities and Exchange Commission pursuant to the requirements of the Securities Act of 1933, as amended, any and all amendments and post-effective amendments to this Registration Statement, with exhibits thereto and other documents in connection therewith, and hereby ratifies and confirms all that said attorney in fact or his substitute or substitutes may do or cause to be done by virtue hereof.
NAME CAPACITY DATE - ------------------------------------------------------------------------------------------------------------- /s/ MARK S. NEWMAN - ---------------------- Mark S. Newman Chairman of the Board, President, December 19, 2000 Chief Executive Officer and Director /s/ RICHARD A. SCHNEIDER - -------------------------- Richard A. Schneider Executive Vice President, Chief December 19, 2000 Financial Officer and Treasurer
IV
NAME CAPACITY DATE - ------------------------------------------------------------------------------------------------------------- /s/ IRA ALBOM - --------------------------------- Ira Albom Director December 19, 2000 /s/ DONALD C. FRASER - --------------------------------- Donald C. Fraser Director December 19, 2000 /s/ WILLIAM F. HEITMANN - --------------------------------- William F. Heitmann Director December 19, 2000 /s/ STEVEN S. HONIGMAN - --------------------------------- Steven S. Honigman Director December 19, 2000 /s/ C. SHELTON JAMES - --------------------------------- C. Shelton James Director December 19, 2000 /s/ MARK N. KAPLAN - --------------------------------- Mark N. Kaplan Director December 19, 2000 /s/ STUART F. PLATT - --------------------------------- Stuart F. Platt, RADM, USN (Ret.) Director December 19, 2000 /s/ ERIC J. ROSEN - --------------------------------- Eric J. Rosen Director December 19, 2000
V
NAME CAPACITY DATE - ------------------------------------------------------------------------------------------------------------- /s/ GENERAL DENNIS J. REIMER - ------------------------------------ General Dennis J. Reimer, USA (Ret.) Director December 19, 2000
EX-1 2 0002.txt STANDBY AGREEMENT Exhibit 1.1 DRS Technologies, Inc. 9% Senior Subordinated Convertible Debentures Due October 1, 2003 Standby Agreement Old Greenwich, CT December __, 2000 First Union Securities, Inc. 53 Forest Avenue Old Greenwich, CT 06870 Ladies and Gentlemen: DRS Technologies, Inc., a Delaware corporation (the "Company"), intends to call for redemption on January 18, 2001 (the "Redemption Date") all of its 9% Senior Subordinated Convertible Debentures due October 1, 2003 (the "Debentures"), at a total redemption price of _______ per $1,000 principal amount of Debentures (which amount includes accrued but unpaid interest to the Redemption Date and the required redemption premium (the "Redemption Price"). The Debentures are convertible into shares of the Common Stock, $0.01 par value, of the Company ("Common Stock"), at any time prior to the close of business at the place where the Conversion Agent (as defined in the Indenture dated as of September 22, 1995 between the Company and the Trust Company of New Jersey, as trustee (the "Indenture")), is located, on the business day preceding the Redemption Date. The close of business at the location where the Conversion Agent is located is 5:30 p.m., Eastern Standard Time. Certain capitalized terms used in this Agreement are defined in Section 17 hereof. In order to ensure that the Company will have available sufficient funds to redeem any Debentures not converted prior to or on the Redemption Date, the Company wishes to make arrangements pursuant to which you (the "Purchaser") will, following the Redemption Date, purchase shares of Common Stock that would have been issuable upon the conversion of the Debentures that have not been surrendered for conversion prior to the close of business at the place where the Conversion Agent is located, on the business day preceding the Redemption Date. Any reference herein to the Registration Statement, a Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or before the Effective Date of the Registration Statement or the issue date of such Preliminary Prospectus or the Prospectus, as the case may be; and any reference herein to the terms "amend," "amendment" or "supplement" with respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the filing of any document under the Exchange Act after the Effective Date of the Registration Statement, or the issue date of any Preliminary Prospectus or the Prospectus, as the case may be, deemed to be incorporated therein by reference. Certain terms used herein are defined in Section 17 hereof. 1. Representations and Warranties. The Company represents and warrants to, and agrees with, the Purchaser as set forth below in this Section 1. (a) The Company meets the requirements for use of Form S-3 under the Act and has prepared and filed with the Commission a registration statement (file number 333- ) on Form S-3, including a related preliminary prospectus, for the registration under the Act of the issuance by the Company of the shares of Common Stock issuable upon conversion by the Purchaser of Debentures and the sale by the Purchaser of any shares of Common Stock that may be acquired by the Purchaser hereunder. The Company may have filed one or more amendments thereto, including a related preliminary prospectus, each of which has previously been furnished to you. The Company will next file with the Commission one of the following: either (1) prior to the Effective Date of such registration statement, a further amendment to such registration statement, including the form of final prospectus, (2) after the Effective Date of such registration statement, a final prospectus in accordance with Rule 424(b) or (3) a final prospectus in accordance with Rules 415 and 424(b). In the case of clause (2), the Company has included in such registration statement, as amended at the Effective Date, all information required by the Act and the rules thereunder to be included in such registration statement and the Prospectus; provided, however, that the Company makes no representations or warranties as to the information contained in or omitted from the Registration Statement or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished herein or in writing to the Company by the Purchaser specifically for inclusion in the Registration Statement or the Prospectus (or any supplement thereto). As filed, such amendment and form of final prospectus, or such final prospectus, shall contain all such required material information, and, except to the extent the Representative shall agree in writing to a modification, shall be in all substantive respects in the form furnished to you prior to the Execution Time or, to the extent not completed at the Execution Time, shall contain only such specific additional information and other changes (beyond those contained in the latest Preliminary Prospectus) as the Company has advised you, prior to the Execution Time, will be included or made therein. If the Registration Statement contains the undertaking specified by Regulation S-K Item 512(a), the Registration Statement, at the Execution Time, meets the requirements set forth in Rule 415(a)(1)(x). (b) On the Effective Date, the Registration Statement did or will, and when the Prospectus is first filed (if required) in accordance with Rule 424(b) and, on the Redemption Date and on the Closing Date (as defined herein), the Prospectus (and any supplements thereto) will, comply in all material respects with the applicable requirements of the Act and the Exchange Act and the respective rules thereunder; on the Effective Date and at the Execution Time, the Registration Statement did not or will not contain any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary in order to make the statements therein not misleading; and, on the Effective Date, the Prospectus, if not filed pursuant to Rule 424(b), did not or will not, and on the date of any filing pursuant to Rule 424(b), on the Redemption Date and on the Closing Date, the Prospectus (together with any supplement thereto) will not, include any untrue statement of a material fact or omit to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they 2 were made, not misleading; provided, however, that the Company makes no representations or warranties as to the information contained in or omitted from the Registration Statement or the Prospectus (or any supplement thereto) in reliance upon and in conformity with information furnished herein or in writing to the Company by the Purchaser specifically for inclusion in the Registration Statement or the Prospectus (or any supplement thereto). (c) The Debentures are convertible into Common Stock at a conversion price of $8.85 per share of Common Stock. At the Execution Time, there was outstanding $10,215,006.30 aggregate principal amount of Debentures. The redemption of all the outstanding Debentures has been duly authorized by the Company. By the close of business on the business day following the date of execution hereof, all of the Debentures will have been duly called for redemption in accordance with the terms of the Indenture; and the right to convert the Debentures into shares of Common Stock will, as a result of such call, expire as of the close of business at the place where the Conversion Agent is located, on the business day preceding the Redemption Date. Copies of the forms of notice of redemption and the related letters of transmittal (collectively, the "Notices of Redemption") with respect to each series of Debentures have been heretofore delivered to you by the Company. The Debentures have been duly and validly authorized and issued and constitute valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable in accordance with their terms except as enforcement thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights and by general equitable principles. (d) The Company has neither taken nor will take, directly or indirectly, any action designed to cause or result in, or that has constituted or that might be reasonably expected to cause or result in, stabilization or manipulation of the price of any security of the Company to facilitate the conversion of the Debentures (provided that the Company does not make any representation as to any actions that may be taken by the Purchaser); and the Company has not distributed and will not distribute any prospectus or other offering material in connection with the issue and sale of the Securities (as hereinafter defined) other than the Registration Statement, any Preliminary Prospectus filed with the Commission or the Prospectus or any other material permitted by the Act. (e) The Company has neither paid or given, nor will pay or give, directly or indirectly, any commission or other remuneration for soliciting the conversion of Debentures into Common Stock and cash. (f) The Registration Statement has become effective; no stop order suspending the effectiveness of the Registration Statement is in effect; and no proceedings for such purpose are pending before or, to the knowledge of the Company, threatened by the Commission. (g) Since the respective dates as of which information is given in the Registration Statement and the Prospectus, except as otherwise stated therein, (A) there has been no material adverse change in the condition (financial or otherwise), earnings or 3 business affairs of the Company and its subsidiaries considered as one enterprise, whether or not arising from transactions in the ordinary course of business (a "Material Adverse Effect"), and (B) there have been no transactions entered into by the Company or any of its subsidiaries, other than those in the ordinary course of business, which are material with respect to the Company and its subsidiaries considered as one enterprise. (h) This Agreement has been duly authorized, executed and delivered by the Company. (i) The authorized capital stock of the Company conforms in all material respects as to legal matters to the description thereof contained in the Prospectus. (j) The call of the Debentures for redemption, the conversion or redemption thereof, the issue and sale of the Securities (as hereinafter defined), the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated herein and compliance by the Company with its obligations hereunder do not and will not, whether with or without the giving of notice or passage of time or both, conflict with or constitute a breach of, or default or Repayment Event (as defined below) under, or result in the creation or imposition of any lien, charge or encumbrance upon any property or assets of the Company or pursuant to any obligation, agreement, covenant or condition contained in any contract, indenture, mortgage, deed of trust, loan or credit agreement, note, lease or other agreement or instrument to which the Company is a party or by which it may be bound, or to which any of the property or assets of the Company is subject (except for such conflicts, breaches or defaults or liens, charges or encumbrances that would not result in a Material Adverse Effect), nor will any such action result in any violation of the provisions of the charter or by-laws of the Company, or any applicable law, statute, rule, regulation, judgment, order, writ or decree of any government, government instrumentality or court, domestic or foreign, known to the Company having jurisdiction over the Company or any of its assets, properties or operations which would result in a Material Adverse Effect. As used herein, a "Repayment Event" means any event or condition which gives the holder of any note, debenture or other evidence of indebtedness (or any person acting on such holder's behalf) the right to require the repurchase, redemption or repayment of all or a portion of such indebtedness by the Company or any subsidiary. (k) No filing with, or authorization, approval, consent, license, order, registration, qualification or decree of, any court or governmental authority or agency by or on behalf of the Company is necessary or required for the performance by the Company of its obligations hereunder, in connection with the issue and sale of the Securities hereunder or the consummation by the Company of the transactions contemplated by this Agreement, except such as have been already obtained, and except for such that would not reasonably be expected to have a Material Adverse Effect or as may be required under the Act or the applicable rules and regulations of the Commission thereunder or state securities laws. (l) The Company is not and, after giving effect to the issue and sale of the Securities hereunder and the application of the proceeds thereof as described in the Prospectus, will 4 not be, an "investment company" as defined in the Investment Company Act of 1940, as amended. 2. Purchase and Conversion of Debentures. Subject to the terms and conditions and in reliance upon the representations and warranties herein set forth: (a) The Purchaser agrees to surrender for conversion into Common Stock prior to 5:30 p.m., Eastern Standard Time, on the business day preceding the Redemption Date, all Debentures purchased by the Purchaser pursuant to Section 4 hereof or otherwise acquired by such Purchaser. The shares of Common Stock issued to the Purchasers upon the conversion of Debentures purchased by the Purchaser pursuant to Section 4 hereof are referred to as the "Conversion Securities." (b) If any Debentures have not been surrendered for conversion prior to 5:30,, p.m. Eastern Standard Time, on the business day preceding the Redemption Date, at the option of the Company, exercisable by giving notice in writing to the Purchaser not later than 8:00 p.m., Eastern Standard Time, on the business day preceding the Redemption Date, the Company may sell to the Purchaser, and the Purchaser shall purchase from the Company, at a purchase price of $___ per share of Common Stock that would have been issuable upon conversion of Debentures not surrendered for conversion, such number of shares of Common Stock as shall be specified in such notice (but, in each case, not in excess of such number of shares of Common Stock as would have been issuable upon the conversion of all Debentures not surrendered for conversion). The shares of Common Stock to be purchased pursuant to this Section 2(b) are referred to as the "Purchased Securities" and, together with the Conversion Securities, the "Securities." Delivery of and payment for the Purchased Securities shall be made at 10:00 A.M., Eastern Standard Time, on January 18, 2001, which date and time may be postponed by agreement between the Purchaser and the Company (such date and time of delivery and payment for the Purchased Securities being herein called the "Closing Date"). Delivery of the Purchased Securities shall be made to the Purchaser against payment by the Purchaser of the purchase price thereof to the Company or, upon the order of the Company by wire transfer payable in same-day funds, to an account specified by the Company. Delivery of the Purchased Securities shall be made through the facilities of The Depository Trust Company unless the Purchaser shall otherwise instruct. The closing of the purchase and sale of the Purchased Securities shall be made at the office of Cleary Gottlieb Steen & Hamilton. 3. Compensation. As compensation for the commitment of the Purchaser hereunder, the Company will pay to the Purchaser an amount equal to the sum of (i) $200,000 plus (ii) the amount, if any, by which the product of (x) 7% and (y) the aggregate sales price of all Conversion Securities and Purchased Securities sold by the Purchaser at or below $11.00 per share, exceeds $200,000. For purposes of the foregoing, (i) Conversion Securities and Purchased Securities sold at prices below $11.00 per share shall be deemed to have been sold at $11.00 and the proceeds of such sales shall be determined based on such assumption, and (ii) any Conversion Securities or Purchased Securities not sold prior to the fifteenth day following the Redemption Date shall be deemed to have been sold by the Purchaser for an amount equal to the higher of (i) 5 the last reported sale price of the Common Stock on such day and (ii) $11.00. Nothing contained herein shall limit the right of the Purchaser, in its discretion, to determine the price or prices at which, or the time or times when, any Securities shall be sold, whether or not prior to the Redemption Date and whether or not for long or short account. Such compensation shall be paid to the Purchaser as by wire transfer payable in same-day funds to an account specified by the Purchaser, paid as follows: (A) $200,000 on the date of this Agreement and (B) any remaining compensation as soon as practicable but no later than (i) two Business Days following notification by the Purchaser that all Conversion Shares and Purchased Shares have been sold or (ii) the seventeenth day following the Redemption Date. 4. Additional Purchases. The Purchaser may purchase Debentures, in the open market or otherwise, in such amounts and at such prices as the Purchaser may deem advisable. All Debentures so purchased will be converted by the Purchaser into Common Stock in accordance with Section 2(a) hereof. The Common Stock acquired by the Purchaser upon conversion of any Debentures acquired pursuant to this Section 4 may be sold at any time or from time to time by the Purchaser. It is understood that, for the purpose of stabilizing the price of the Common Stock or otherwise, the Purchaser may (but will not be obligated to) make purchases and sales of Common Stock, in the open market or otherwise, for long or short account, on such terms as the Purchaser may deem advisable and the Purchaser may overallot in arranging sales. 5. Agreements. The Company agrees with the Purchaser that: (a) The Company will use its best efforts to cause the Registration Statement, if not effective at the Execution Time, and any amendment thereof, to become effective. Prior to the termination of the offering of the Securities, the Company will not file any amendment of the Registration Statement or supplement to the Prospectus unless the Company has furnished the Purchaser a copy for the Purchaser's review prior to filing and will not file any such proposed amendment or supplement to which the Purchaser reasonably objects in writing; provided, however, that the preceding clause shall not apply to the filing of any document required to be filed by the Company under the Exchange Act that upon filing is deemed to be incorporated by reference in the Registration Statement, except that the Company shall, to the extent practicable, furnish the Purchaser a copy of any such document a reasonable time prior to filing. Subject to the foregoing sentence, if filing of the Prospectus is required under Rule 424(b), the Company will cause the Prospectus, properly completed, and any supplement thereto to be filed with the Commission pursuant to the applicable paragraph of Rule 424(b) within the time period prescribed and will provide evidence satisfactory to the Purchaser of such timely filing. The Company will promptly advise the Purchaser (1) when the Registration Statement (and any amendment thereto), if not effective at the Execution Time, shall have become effective, (2) when the Prospectus, and any supplement thereto, shall have been filed (if required) with the Commission pursuant to Rule 424(b), (3) when, prior to termination of the offering of the Securities, any amendment to the Registration Statement shall have been filed or become effective, (4) of any request by the Commission or its staff for any amendment of the Registration Statement or for any supplement to the Prospectus or for any additional information, (5) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or the institution or threatening of any proceeding for that purpose 6 and (6) of the receipt by the Company of any notification with respect to the suspension of the qualification of the Securities for sale in any jurisdiction or the institution or threatening of any proceeding for such purpose. The Company will use its best efforts to prevent the issuance of any such stop order or the suspension of any such qualification and, if issued, to obtain as soon as possible the withdrawal thereof. (b) If, at any time when a Prospectus relating to the Securities is required to be delivered under the Act, any event occurs as a result of which the Prospectus as then supplemented would include any untrue statement of a material fact or omit to state any material fact necessary to make the statements therein in the light of the circumstances under which they were made not misleading, or if it shall be necessary to amend the Registration Statement or supplement the Prospectus to comply with the Act or the Exchange Act or the respective rules thereunder, the Company promptly will (1) notify the Purchaser of such event, (2) prepare and file with the Commission, subject to the second sentence of paragraph (a) of this Section 5, an amendment or supplement which will correct such statement or omission or effect such compliance and (3) supply any supplemented Prospectus to you in such quantities as you may reasonably request. (c) As soon as practicable, the Company will make generally available to its security holders and to the Purchaser an earnings statement or statements of the Company and its subsidiaries which will satisfy the provisions of Section 11(a) of the Act and Rule 158 under the Act. (d) The Company will furnish to the Purchaser and counsel for the Purchaser, without charge, five signed copies of the Registration Statement (including exhibits thereto) and, so long as delivery of a prospectus by the Purchaser or a dealer may be required by the Act, as many copies of each Preliminary Prospectus and the Prospectus and any supplement thereto as the Purchaser may reasonably request. The Company will pay the expenses of printing or other production of all documents relating to the transactions contemplated hereby. The Company will pay all transfer taxes as may be imposed on the Purchaser in connection with their purchase of Debentures pursuant hereto. (e) The Company will use its best efforts to qualify the Securities for sale under the laws of such jurisdictions as the Purchaser may designate and will maintain such qualifications in effect so long as required for the distribution of the Securities; provided that in no event shall the Company be obligated to qualify to do business in any jurisdiction where it is not now so qualified or to execute a general consent to service of process in any state or to otherwise subject itself to taxation (other than stock transfer taxes) in connection with any such qualification. (f) The Company will mail or cause to be mailed not later than the Business Day following the date of execution hereof the Notices of Redemption by first class mail to the registered holders of the Debentures as of the close of business on the date of execution hereof, which mailing will conform to the requirements of the Indenture. The Company will not withdraw or revoke the Notices of Redemption or attempt to do so. 7 (g) The Company will advise the Purchaser daily of the amount of Debentures surrendered in the previous day for redemption or for conversion. (h) The Company will not take any action the effect of which would be in require an adjustment in the conversion price of the Debentures. (i) The Company will not, prior to the Redemption Date (and, if the aggregate number of the Securities exceeds 500,000 shares, for an additional period of 30 days following the Redemption Date), without the prior written consent of the Purchaser, offer, sell or contract to sell, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company) directly or indirectly, by means of a public offering requiring registration with the Securities and Exchange Commission or announce the public offering of, any other shares of Common Stock (other than the Securities) or any securities convertible into, or exchangeable for, shares of Common Stock. Notwithstanding the foregoing, this restriction shall not apply to any sale or disposition of securities pursuant to the registration of such securities on Form S-4 or Form S-8 under the Act or any successor forms or any sale or disposition of securities in connection with any merger or consolidation involving the Company or a subsidiary of the Company or the acquisition by the Company or a subsidiary of the Company of the capital equity or substantially all of the assets of any other person or entity). The provisions of this paragraph (i) shall not prevent the conversion or exchange pursuant to their terms of any securities of the Company outstanding at the Execution Time into or for other shares of Common Stock or any securities convertible into, or exchangeable for, shares of Common Stock. 6. Conditions to the Obligations of the Purchasers. The obligations of the Purchaser to convert Debentures and to purchase any Purchased Securities shall be subject to the accuracy of the representations and warranties on the part of the Company contained herein as of the Execution Time, each Effective Date occurring after the Execution Time, the Redemption Date and, as to the purchase of the Purchased Securities, the Closing Date, to the accuracy of the statements of the Company made in any certificates pursuant to the provisions hereof, to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) If the Registration Statement has not become effective prior to the Execution Time, unless the Purchaser agrees in writing to a later time, the Registration Statement shall have become effective not later than 9:30 A.M., New York City time, on the Business Day following the date of execution hereof; if filing of the Prospectus, or any supplement thereto, is required pursuant to Rule 424(b), the Prospectus, and any such supplement, shall have been filed in the manner and within the time period required by Rule 424(b); and no stop order suspending the effectiveness of the Registration Statement shall have been issued and no proceedings for that purpose shall have been instituted or threatened. 8 (b) On the date of this Agreement and on the Closing Date, the Company shall have furnished to the Purchaser the opinion of Nina Laserson Dunn, Executive Vice President, General Counsel and Secretary of the Company, dated the date of this Agreement and the Closing Date, respectively, to the effect that: (i) the Company has been duly organized and is validly existing and in good standing under the laws of the State of Delaware; the Company has corporate power and authority to conduct its business as described in the Prospectus; the Company is duly qualified to do business and is, if applicable, in good standing in each jurisdiction in which it owns or leases a material amount of real property [also include significant subsidiaries]; (ii) the outstanding shares of Common Stock have been duly and validly authorized and issued and are fully paid and nonassessable; the outstanding Debentures have been duly and validly authorized and issued and constitute valid and binding obligations of the Company entitled to the benefits of the Indenture, enforceable in accordance with their terms except as enforcement thereof may be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and other laws affecting the enforcement of creditors' rights and by general equitable principles; assuming the mailing of the Notices of Redemption in accordance with Section 1(c) hereof and any further assumptions agreed upon by the parties, all the Debentures will have been duly called for redemption by the close of business on the Business Day following the date of execution hereof and the right to convert the Debentures into shares of Common Stock will expire at 5:30 p.m., Eastern Standard Time, on the business day preceding the Redemption Date; the shares of Common Stock issuable upon conversion of the Debentures have been duly and validly authorized and, when issued and delivered upon conversion of any Debentures pursuant to this Agreement, will be fully paid and nonassessable; the Purchased Securities have been duly and validly authorized and, when issued and delivered to and paid for by the Purchasers pursuant to this Agreement, will be fully paid and nonassessable; the Converted Securities (and, for the opinion to be delivered on the Closing Date only, the Purchased Securities) are duly listed, and admitted and authorized for trading, subject to official notice of issuance, on the American Stock Exchange; the certificates for the Securities are in valid and sufficient form; the holders of outstanding shares of capital stock of the Company are not entitled to preemptive or other rights to subscribe for the Securities or the shares of Common Stock issuable upon conversion of the Debentures; and, except as set forth in the Prospectus and documents included by reference therein, the Registration Statement and documents included by reference therein and any registration statements filed with the SEC on Form S-8, no options, warrants or other rights to purchase, agreements or other obligations to issue, or rights to convert any obligations into 9 or exchange any securities for, shares of capital stock of or ownership interests in the Company are outstanding; (iii) the descriptions in the Registration Statement and the Prospectus of statutes, legal and governmental proceedings, contracts and other documents (including in each case the documents incorporated by reference therein) fairly present the information required to be shown; and such counsel does not know of any statutes or legal or governmental proceedings required to be described in the Prospectus that are not described as required, or of any contracts or documents of a character required to be described in the Registration Statement or Prospectus (or required to be filed under the Exchange Act if upon such filing they would be incorporated, in whole or in part, by reference therein) or to be filed as exhibits to the Registration Statement that are not described and filed as required; (iv) such counsel has no reason to believe that on the Effective Date or at the Execution Time the Registration Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as of its date and on the Closing Date includes any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (in each case, other than the financial statements and other financial information contained therein, as to which such counsel need express no opinion); (v) the statements in the Prospectus under the caption "Description of Capital Stock," insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly present the information called for with respect to such legal matters, documents and proceedings and fairly summarize the matters referred to therein; (vi) this Agreement has been duly authorized, executed and delivered by the Company; (vii) the call of the Debentures for redemption, the conversion or redemption thereof, the issue and sale of the Securities, the execution, delivery and performance by the Company of this Agreement and the consummation by the Company of the transactions contemplated herein and compliance by the Company with its obligations hereunder will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, any statute, any agreement or instrument known to such counsel to which the Company is a party or by which it is bound or to which any of the property of the Company or any Significant Subsidiary is subject, the Company's Articles of Incorporation, as amended to date, or by-laws, or any order, rule or regulation known to such counsel of any court or governmental agency or body having jurisdiction over the Company 10 any of its respective properties of the Laws of the State of New York, the Delaware General Corporation Law or the Federal Laws of the United States; and no consent, approval, authorization or order of, or filing with, any court or governmental agency or body is required for the consummation of the transactions contemplated by this Agreement, except such as have been obtained under the Act and such as may be required under state securities laws in connection with the purchase and distribution of the Shares by the Purchaser; provided that no opinion is called for with respect to any such consent, approval, authorization or order required to be obtained under the Act and the applicable rules and regulations of the Commission thereunder that have been obtained or as may be required under state securities laws or Blue Sky Laws of the various states; and (viii) no holders of securities of the Company have rights to the registration of such securities under the Registration Statement. In rendering such opinion, such counsel may rely (A) as to matters involving the application of laws of any jurisdiction other than the State of Delaware or the Federal laws of the United States, to the extent they deem proper and specified in such opinion, upon the opinion of other counsel of good standing whom they believe to be reliable and who are satisfactory to counsel for the Purchaser and (B) as to matters of fact, to the extent they deem proper, on certificates of responsible officers of the Company and public officials. References to the Prospectus in this paragraph (b) include any supplements thereto at the Closing Date. The opinion of such counsel shall be rendered to the Purchaser at the request of the Company and shall so state therein. (c) On the date of this Agreement and on the Closing Date, the Company shall have furnished to the Purchaser the opinion of Arnold & Porter, counsel for the Company, dated the date of this Agreement and the Closing Date, respectively, to the effect that: (i) the authorized capital stock of the Company is as set forth in the Prospectus; and the Shares conform to the description of the Common Stock contained in the Prospectus; (ii) such counsel has been advised by the staff of the Commission that the Registration Statement has become effective under the Act on the date and at the time specified in such opinion; the Prospectus was filed pursuant to the subparagraph of Rule 424(b) under the Act specified in such opinion on the date specified therein in the manner and within the time period required by Rule 424(b); and no stop order suspending the effectiveness of the Registration Statement under the Act has been issued and, to such counsel's knowledge, no proceeding has been instituted or threatened; 11 (iii) the Registration Statement and the Prospectus, and any further amendments or supplements thereto (other than the financial statements and other financial data therein, as to which such counsel need express no opinion), comply as to form in all material respects with the requirements of the Act and the rules and regulations of the Commission thereunder; and the documents from which information is incorporated by reference in the Prospectus, when they became effective or were filed with the Commission, as the case may be, complied as to form in all material respects with the requirements of the Act and of the Exchange Act, as applicable, and the rules and regulations of the Commission thereunder (other than the financial statements and other financial data therein, as to which such counsel need express no opinion); (iv) such counsel has no reason to believe that on the Effective Date or at the Execution Time (or, for the opinion to be delivered on the Closing Date, at the latest Effective Date) the Registration Statement contained or contains any untrue statement of a material fact or omitted or omits to state any material fact required to be stated therein or necessary to make the statements therein not misleading or that the Prospectus as of its date (or, for the opinion to be delivered on the Closing Date, as of the Closing Date) includes any untrue statement of a material fact or omitted or omits to state a material fact necessary to make the statements therein, in the light of the circumstances under which they were made, not misleading (in each case, other than the financial statements and other financial information contained therein, as to which such counsel need express no opinion). In rendering such opinion, such counsel may (A) state that their opinion is limited to matters governed by the laws of the State of New York or the Federal laws of the United States and (B) rely, as to matters of fact, to the extent they deem proper, on the representations made by the Company herein or on certificates of public officials. References to the Prospectus in this paragraph (d) include any supplements thereto at the Closing Date. The opinion of such counsel shall be rendered to the Purchaser at the request of the Company and shall so state therein. (d) On the date of this Agreement and on the Closing Date, the Purchaser shall have received from Cleary, Gottlieb, Steen & Hamilton, counsel for the Purchasers, such opinion or opinions, dated the date of this Agreement and the Closing Date, respectively, and addressed to the Purchaser, with respect to the issuance and sale of the Securities, the Registration Statement, the Prospectus (together with any supplements thereto) and other related matters as the Purchaser may reasonably require, and the Company shall have furnished to such counsel such documents as they request for the purpose of enabling them to pass upon such matters. The opinion or opinions of such counsel shall be rendered to the Purchasers at the request of the Company and shall so state therein. (e) On the date of this Agreement, on each Effective Date occurring after the Execution Time and on the Closing Date, the Company shall have furnished to the Purchaser a certificate of the Company, signed by the Chairman of the Board, the Chief 12 Executive Officer, the Executive Vice President or the Senior Vice President and the principal financial or accounting officer of the Company, dated the date of delivery, to the effect that the signers of such certificate have carefully examined the Registration Statement, the Prospectus, any supplements to the Prospectus and this Agreement and to the effect that, to the best of their knowledge based upon reasonable investigation: (i) the representations and warranties of the Company in this Agreement are true and correct in all material respects on and as of the date of such certificate as if made on the date of such certificate and the Company has complied with all the agreements and satisfied all the conditions on its part to be performed or satisfied at or prior to the date of such certificate; (ii) no stop order suspending the effectiveness of the Registration Statement has been issued and no proceedings for that purpose have been instituted or, to the Company's knowledge, threatened; and (iii) since the date of the most recent financial statements included in the Prospectus (exclusive of any supplement thereto), there has been no material adverse change or development involving a prospective material adverse change in the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, considered as one enterprise, whether or not arising from transactions in the ordinary course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto). (f) At the Execution Time, on each Effective Date occurring after the Execution Time on which financial information is included or incorporated in the Registration Statement or the Prospectus and on the Closing Date, KPMG LLP shall have furnished to the Purchaser a letter, dated respectively as of the Execution Time, each such Effective Date and as of the Closing Date, in form and substance satisfactory to the Purchaser, confirming that they are independent accountants within the meaning of the Act and the Exchange Act and the respective applicable published rules and regulations thereunder and containing statements and information of the type ordinarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in or incorporated by reference in the Registration Statement and Prospectus. (g) References to the Prospectus in this paragraph (g) include any supplement thereto as of the date of this Agreement. Subsequent to the Execution Time or, if earlier, the dates as of which information is given in the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto), there shall not have been (i) any change or decrease in certain line items of the Company's financial statements specified in the letter or letters referred to in paragraph (g) of this Section 6 or (ii) any change, or any development involving a prospective change, in or affecting the condition (financial or otherwise), earnings, business or properties of the Company and its subsidiaries, taken as a whole, whether or not arising from transactions in the ordinary 13 course of business, except as set forth in or contemplated in the Prospectus (exclusive of any supplement thereto) the effect of which, in any case referred to in clause (i) or (ii) above, is, in the sole judgment of the Purchaser, so material and adverse as to make it impractical or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Registration Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of any supplement thereto). (h) Subsequent to the Execution Time, there shall not have been any decrease in the rating of any of the Company's debt securities by any "nationally recognized statistical rating organization" (as defined for purposes of Rule 436(g) under the Act) or any notice given of any intended or potential decrease in any such rating or of a possible change in any such rating that does not indicate the direction of the possible change. (i) The Securities shall have been approved for listing on the American Stock Exchange, subject to official notice of issuance, and satisfactory evidence of such action shall have been provided to the Purchaser. (j) At the Execution Time, the Company shall have furnished to the Purchaser a letter substantially in the form of Exhibit A hereto addressed to the Purchaser. (k) The Company shall have furnished to the Purchaser such further information, certificates and documents as the Purchaser may reasonably request. If any of the conditions specified in this Section 6 shall not have been fulfilled in all material respects when and as provided in this Agreement, or if any of the opinions and certificates mentioned above or elsewhere in this Agreement shall not be in all material respects reasonably satisfactory in form and substance to the Purchaser and counsel for the Purchaser, this Agreement and all obligations of the Purchaser hereunder may be canceled at, or at any time prior to, the Closing Date by the Purchaser. Notice of such cancellation shall be given to the Company in writing or by telephone or facsimile confirmed in writing. The documents required to be delivered by this Section 6 shall be delivered at the office of Cleary, Gottlieb, Steen & Hamilton, counsel for the Purchaser, at 1 Liberty Plaza, New York, New York 10006, on the due date for delivery thereof. 7. Reimbursement of Purchasers' Expenses. (a) The Company will reimburse the Purchaser for its expenses relating to the transaction contemplated herein in an amount not to exceed $25,000. (b) If the sale of the Securities provided for herein is not consummated because any condition to the obligations of the Purchaser set forth in Section 6 hereof is not satisfied other than by reason of a breach by the Purchaser, because of any termination pursuant to Section 10 hereof or because of any refusal, inability or failure on the part of the Company to perform any agreement herein or comply with any provision hereof other than by reason of a default by the Purchaser, the Company will reimburse the Purchaser on demand for all out-of-pocket expenses (including reasonable fees and disbursements 14 of counsel) that shall have been incurred by the Purchaser in connection with the proposed purchase and sale of the Securities. 8. Indemnification and Contribution. (a) The Company agrees to indemnify and hold harmless the Purchaser, the directors, officers, employees and agents of the Purchaser and each person who controls the Purchaser within the meaning of either the Act or the Exchange Act against any and all losses, claims, damages or liabilities, joint or several, to which they or any of them may become subject under the Act, the or other Federal or state statutory law or regulation, at common law 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 a material fact contained in the registration statement for the registration of the Securities as originally filed or in any amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in any amendment thereof or supplement thereto, or arise out of or are based upon the omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action; 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 any such untrue statement or alleged untrue statement or omission or alleged omission made therein in reliance upon and in conformity with written information furnished to the Company by the Purchaser specifically for inclusion therein; provided, further, that with respect to any untrue statement or omission of material fact made in any Preliminary Prospectus, the indemnity agreement contained in this Section 8(a) shall not inure to the benefit of the Purchaser from whom the person asserting any such loss, claim, damage or liability purchased the securities concerned, to the extent that any such loss, claim, damage or liability of the Purchaser occurs under the circumstance where it shall have been determined by a court of competent jurisdiction by final and nonappealable judgment that (w) the Company had previously furnished copies of the Prospectus to the Purchasers, (x) delivery of the Prospectus was required by the Act to be made to such person, (y) the untrue statement or omission of a material fact contained in the Preliminary Prospectus was corrected in the Prospectus and (z) there was not sent or given to such person, at or prior to the written confirmation of the sale of such securities to such person, a copy of the Prospectus. This indemnity agreement will be in addition to any liability which the Company may otherwise have. (b) The Purchaser agrees to indemnify and hold harmless the Company, each of its directors, each of its officers who signs the Registration Statement and each person who controls the Company within the meaning of either the Act or the Exchange Act, to the same extent as the foregoing indemnity from the Company to the Purchaser, but only to the extent that any such loss, claim, damage or liability arises out of or is based upon any such untrue statement or omission, or alleged untrue statement or omission or alleged omission made in the documents referred to in the foregoing indemnity in reliance upon and in conformity with written information relating to the Purchaser furnished to the Company by the Purchaser specifically for inclusion in the documents referred to in the foregoing indemnity, and agrees to reimburse each such indemnified party, as incurred, for any legal or other expenses reasonably incurred by them in connection with investigating or defending any such loss, claim, damage, liability or action. This indemnity agreement will be in addition to any liability which the Purchaser may otherwise 15 have. The Company acknowledges that (i) the statements set forth in the first paragraph of page 2 regarding delivery of the Securities, (ii) the legend in block capital letters on page 2 related to stabilization and (iii) the sentences related to concessions and the fifth paragraph related to stabilization under the heading "Standby Arrangements" in any Preliminary Prospectus and the Prospectus constitute the only information furnished in writing by the Purchaser for inclusion in any Preliminary Prospectus or the Prospectus. (c) Promptly after receipt by an indemnified party under this Section 8 of notice of the commencement of any action, such indemnified party will, if a claim in respect thereof is to be made against the indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; but the failure so to notify the indemnifying party (i) will not relieve it from liability under paragraph (a) or (b) above unless and to the extent it did not otherwise learn of such action and such failure results in the forfeiture by the indemnifying party of substantial rights and defenses and (ii) will not, in any event, relieve the indemnifying party from any obligations to any indemnified party other than the indemnification obligation provided in paragraph (a) or (b) above. The indemnifying party shall be entitled to appoint counsel of the indemnifying party's choice at the indemnifying party's expense to represent the indemnified party in any action for which indemnification is sought (in which case the indemnifying party shall not thereafter be responsible for the fees and expenses of any separate counsel retained by the indemnified party or parties except as set forth below); provided, however, that such counsel shall be reasonably satisfactory to the indemnified party. Notwithstanding the indemnifying party's election to appoint counsel to represent the indemnified party in an action, the indemnified party shall have the right to employ separate counsel (including local counsel), and the indemnifying party shall bear the reasonable fees, costs and expenses of such separate counsel if (i) the use of counsel chosen by the indemnifying party to represent the indemnified party would present such counsel with a conflict of interest, (ii) the actual or potential defendants in, or targets of, any such action include both the indemnified party and the indemnifying party and the indemnified party shall have reasonably concluded that there may be legal defenses available to it and/or other indemnified parties which are different from or additional to those available to the indemnifying party, (iii) the indemnifying party shall not have employed counsel satisfactory to the indemnified party to represent the indemnified party within a reasonable time after notice of the institution of such action or (iv) the indemnifying party shall authorize the indemnified party to employ separate counsel at the expense of the indemnifying party. It is understood, however, that the Company shall, in connection with any one such action or separate but substantially similar or related actions in the same jurisdiction arising out of the same general allegations or circumstances, be liable for the reasonable fees and expenses of only one separate firm of local counsel at any time for all such Purchasers and controlling persons, which firm shall be designated in writing by First Union Securities, Inc. An indemnifying party will not, without the prior written consent of the indemnified parties, settle or compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent includes an unconditional release of each indemnified party from all liability arising out of such claim, action, suit or proceeding and does not include a statement as to or an admission of fault, culpability or a failure to act by or on behalf of any indemnified party. An indemnifying party shall not be liable under this Section 8 to any indemnified party regarding any settlement or 16 compromise or consent to the entry of any judgment with respect to any pending or threatened claim, action, suit or proceeding in respect of which indemnification or contribution may be sought hereunder (whether or not the indemnified parties are actual or potential parties to such claim or action) unless such settlement, compromise or consent is consented to by such indemnifying party, which consent shall not be unreasonably withheld. (d) In the event that the indemnity provided in paragraph (a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless an indemnified party for any reason, the Company and the Purchasers severally agree to contribute to the aggregate losses, claims, damages and liabilities (including legal or other expenses reasonably incurred in connection with investigating or defending same) (collectively "Losses") to which the Company and the Purchaser may be subject in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and by the Purchaser on the other from the offering of the Securities; provided, however, that in no case shall the Purchaser (except as may be provided in any agreement among purchasers relating to the offering of the Securities) be responsible for any amount in excess of the fees payable by the Company to the Purchaser pursuant to Section 3 hereof. If the allocation provided by the immediately preceding sentence is unavailable for any reason, the Company and the Purchaser severally shall contribute in such proportion as is appropriate to reflect not only such relative benefits but also the relative fault of the Company on the one hand and of the Purchaser on the other in connection with the statements or omissions which resulted in such Losses as well as any other relevant equitable considerations. Benefits received by the Company shall be deemed to be equal to the sum of (i) the aggregate Redemption Price for the Debentures converted by the Purchaser pursuant to Section 2(a) hereof and (ii) the amount paid by the Purchaser to the Company pursuant to Section 2(b) hereof (less the total fees payable by the Company to the Purchaser pursuant to Section 3 hereof), and benefits received by the Purchasers shall be deemed to be equal to the total fees payable by the Company to the Purchasers pursuant to Section 3 hereof. Relative fault shall be determined by reference to, among other things, whether any untrue or any alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information provided by the Company on the one hand or the Purchaser on the other, the intent of the parties and their relative knowledge, access to information and opportunity to correct or prevent such untrue statement or omission. The Company and the Purchaser agree that it would not be just and equitable if contribution were determined by pro rata allocation or any other method of allocation which does not take account of the equitable considerations referred to above. Promptly after receipt by a party entitled to contribution under this Section 8 of notice of the commencement of any action, such party will, if a claim for contribution in respect thereof is to be made against another party or parties under this paragraph (d), notify such party or parties in writing of the commencement thereof; but the failure so to notify such party or parties (i) will not relieve such party or parties from liability under this paragraph (d) unless and to the extent it or they did not otherwise learn of such action and such failure results in the forfeiture by such party or parties of substantial rights and defenses and (ii) will not, in any event, relieve such party or parties from any obligations to any party entitled to contribution other than the contribution obligation provided in this paragraph (d). Notwithstanding the provisions of this paragraph (d), no person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. For purposes of this Section 8, each person who controls the Purchaser within the meaning of either the Act or the Exchange Act and each director, officer, employee and agent 17 of the Purchaser shall have the same rights to contribution as the Purchaser, and each person who controls the Company within the meaning of either the Act or the Exchange Act, each officer of the Company who shall have signed the Registration Statement and each director of the Company shall have the same rights to contribution as the Company, subject in each case to the applicable terms and conditions of this paragraph (d). 9. Termination. This Agreement shall be subject to termination in the absolute discretion of the Purchaser, by notice given to the Company at any time prior to the Closing Date, if at any time prior to such time (i) trading in the Company's Common Stock shall have been suspended by the Commission or the American Stock Exchange, trading in the Debentures shall have been suspended by the Commission or trading in securities generally on the American Stock Exchange shall have been suspended or limited or minimum prices shall have been established on such Exchange, (ii) a banking moratorium shall have been declared either by Federal or New York State authorities or (iii) there shall have occurred any outbreak or escalation of hostilities, declaration by the United States of a national emergency or war or other calamity or crisis the effect of which on financial markets is such as to make it, in the sole judgment of the Purchaser, impracticable or inadvisable to proceed with the offering or delivery of the Securities as contemplated by the Prospectus (exclusive of any supplement thereto). 10. Representations and Indemnities to Survive. The respective agreements, representations, warranties, indemnities and other statements of the Company or its officers and of the Purchaser set forth in or made pursuant to this Agreement will remain in full force and effect, regardless of any investigation made by or on behalf of the Purchaser or the Company or any of the officers, directors or controlling persons referred to in Section 8 hereof, and will survive the conversion of any Debentures and the delivery of and payment for any Securities. The provisions of Sections 7 and 8 hereof shall survive the termination or cancellation of this Agreement. 11. Notices. All communications hereunder will be in writing and effective only on receipt, and, if sent to the Purchaser, will be mailed, delivered or telefaxed to the First Union Securities General Counsel, fax no.:_______ and confirmed to the General Counsel, First Union Securities, at 53 Forest Avenue, Old Greenwich, CT 06870, Attention: General Counsel; or, if sent to the Company, will be mailed, delivered or telefaxed to General Counsel, DRS Technologies, Inc., 5 Sylvan Way, Parsippany, NJ 07054, telefax number: _______ , Attention: General Counsel. 12. Successors. This Agreement will inure to the benefit of and be binding upon the parties hereto and their respective successors and the officers and directors and controlling persons referred to in Section 8 hereof, and no other person will have any right or obligation hereunder. 13. Applicable Law. This Agreement will be governed by and construed in accordance with the laws of the State of New York. 14. Counterparts. This Agreement may be signed in one or more counterparts, each of which shall constitute an original and all of which together shall constitute one and the same agreement. 18 15. Headings. The section headings used herein are for convenience only and shall not affect the construction hereof. 16. Definitions. The terms which follow, when used in this Agreement, shall have the meanings indicated. "Act" shall mean the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder. "Business Day" shall mean any day other than a Saturday, a Sunday or a legal holiday or a day on which banking institutions or trust companies are authorized or obligated by law to close in New York City. "Commission" shall mean the Securities and Exchange Commission. "Effective Date" shall mean each date and time that the Registration Statement and any post-effective amendment or amendments thereto became or become effective and each date after the date hereof on which a document incorporated by reference in the Regulation Statement is filed. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission promulgated thereunder. "Execution Time" shall mean the date and time that this Agreement is executed and delivered by the parties hereto. "Preliminary Prospectus" shall mean any preliminary prospectus referred to in paragraph 1(a) above. "Prospectus" shall mean the prospectus relating to the Securities that is first filed pursuant to Rule 424(b) after the Execution Time or, if no filing pursuant to Rule 424(b) is required, shall mean the form of final prospectus relating to the Securities included in the Registration Statement at the Effective Date. "Registration Statement" shall mean the registration statement referred to in paragraph 1(a) above, including exhibits and financial statements, as amended at the Execution Time (or, if not effective at the Execution Time, in the form in which it shall become effective) and, in the event any post-effective amendment thereto becomes effective prior to the Closing Date, shall also mean such registration statement as so amended. "Rule 415" and "Rule 424" refer to such rules under the Act. 19 If the foregoing is in accordance with your understanding of our agreement, please sign and return to us the enclosed duplicate hereof, whereupon this letter and your acceptance shall represent a binding agreement among the Company and the Purchaser. Very truly yours, DRS Technologies, Inc. By:_________________________________ Name: Title: The foregoing Agreement is hereby confirmed and accepted as of the date first above written. First Union Securities, Inc. By: ____________________________________ Name: Title: 20 EXHIBIT A DRS Technologies, Inc. Standby Underwriting of Common Stock December __, 2000 First Union Securities, Inc. 53 Forest Avenue Old Greenwich, CT 06870 Ladies and Gentlemen: This letter is being delivered to you in connection with the proposed Standby Agreement (the "Standby Agreement") between DRS Technologies, Inc., a Delaware corporation (the "Company"), and you as purchaser (the "Purchaser"), relating to a call for redemption by the Company of all of its outstanding 9% Senior Subordinated Convertible Debentures due October 1, 2003. Such Debentures are convertible into shares of the Common Stock, $.01 par value, of the Company ("Common Stock"), at any time prior to 5:30 p.m., Eastern Standard Time, on the day preceding the Redemption Date (as defined in the Standby Agreement). In order to induce you to enter into the Standby Agreement, the undersigned hereby agrees that, without the prior written consent of First Union Securities, Inc., the undersigned will not, prior to the Redemption Date (and, if the aggregate number of the Securities exceeds 500,000 shares, for an additional period of 30 days following the Redemption Date), offer, sell or contract to sell, or otherwise dispose of (or enter into any transaction which is designed to, or might reasonably be expected to, result in the disposition (whether by actual disposition or effective economic disposition due to cash settlement or otherwise) by the Company) directly or indirectly, by means of a public offering requiring registration with the Securities and Exchange Commission or announce the public offering of, any other shares of Common Stock (other than the Securities) or any securities convertible into, or exchangeable for, shares of Common Stock (other than any such sale or disposition of such securities pursuant to the registration of such securities on Form S-4 or Form S-8 under the Act or any successor forms or any such sale or disposition of such securities in connection with any merger or consolidation involving the Company or a subsidiary of the Company or the acquisition by the Company or a subsidiary of 21 the Company of the capital equity or substantially all of the assets of any other person or entity). The provisions of this paragraph shall not prevent the conversion or exchange pursuant to their terms of any securities of the Company outstanding as of the date and time that the Standby Agreement is executed into or for other shares of Common Stock or any securities convertible, or exchangeable for, shares of Common Stock. If for any reason the Standby Agreement shall be terminated prior to the Closing Date (as defined in the Standby Agreement), the agreement set forth above shall likewise be terminated. Yours very truly, ------------------------- [Name] 22 EX-5.1 3 0003.txt VALIDITY OPINION December 19, 2000 DRS Technologies, Inc. 5 Sylvan Way Parsippany, New Jersey 07054 Re: Standby Agreement by and between DRS Technologies, Inc. and First Union Securities, Inc. -------------------------------------------------------- Ladies and Gentlemen: I am the General Counsel of DRS Technologies, Inc., a Delaware corporation ("DRS"), and have acted as counsel to DRS in connection with the standby purchase arrangement relating to the redemption of DRS's 9% Senior Subordinated Convertible Debentures due October 1, 2003 (the "9% Debentures"). In rendering the opinions set forth below, I have examined originals or copies of: (i) the Standby Agreement; (ii) the Indenture relating to the 9% Debentures dated September 22, 1995 (the "Indenture"); (iii) a Certificate of Good Standing with respect to DRS issued by the Secretary of State of the State of Delaware dated as of December 14, 2000; (iv) the Amended and Restated Certificate of Incorporation and Amended and Restated By-laws of DRS in effect as of the date hereof; (v) certain resolutions adopted by DRS's Board of Directors by unanimous written consent dated as of December 1, 2000 with respect to the Standby Agreement; (vi) the Registration Statement on Form S-3 of DRS, including all documents incorporated by reference therein, filed with the Securities and Exchange Commission (the "SEC") on December 19, 2000; and (vii) such other documents and records as I considered necessary or appropriate for purposes of this opinion. Based solely upon the foregoing and subject to the qualifications and assumptions set forth herein, I am of the opinion that: 1. DRS is a corporation duly incorporated and validly existing under the laws of the State of Delaware. 2. The shares of Common Stock to be issued upon conversion of the 9% Debentures and the shares of Common Stock to be sold to the Purchaser pursuant to the Standby Agreement, in each case as contemplated by the Registration Statement, will be, when so issued, validly issued, fully paid and non-assessable. DRS Technologies, Inc. December 18, 2000 Page 2 I hereby consent to the filing of this opinion with the SEC as an exhibit to the Registration Statement. In giving this consent I do not thereby admit that I am within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or the Rules and Regulations of the SEC. Very truly yours, /s/ NINA LASERSON DUNN ----------------------- Nina Laserson Dunn Executive Vice President, General Counsel & Secretary EX-23 4 0004.txt CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS Exhibit 23 ACCOUNTANTS' CONSENT The Board of Directors DRS Technologies Inc.: We consent to the use of our reports incorporated herein by reference and to the reference to our firm under the heading "Experts" in the prospectus. /s/ KPMG LLP Short Hills, New Jersey December 6, 2000 -----END PRIVACY-ENHANCED MESSAGE-----