1,000,000 Shares
HOLMES PROTECTION GROUP, INC.
Common Stock
UNDERWRITING AGREEMENT
September __, 1996
BREAN MURRAY & CO., INC.
As Representative of the several
Underwriters
570 Lexington Avenue
New York, New York 10022
Ladies and Gentlemen:
HOLMES PROTECTION GROUP, INC., a Delaware corporation (the "Company"),
proposes to sell an aggregate of 1,000,000 shares (the "Firm Shares") of the
Common Stock, par value $.01 per share (the "Common Stock"), of the Company, to
you and the other underwriters named in Schedule I hereto (collectively, the
"Underwriters"), for whom you are acting as representative (the
"Representative"). The Company also has agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 150,000
shares of Common Stock (the "Option Shares") on the terms and for the purposes
set forth in Section l(b) hereto. The Firm Shares and the Option Shares are
hereinafter collectively referred to as the "Shares."
As the Representative, you have advised the Company (a) that you are
authorized to enter into this Agreement on behalf of the several Underwriters,
and (b) that the several Underwriters are willing, acting severally and not
jointly, to purchase the numbers of Firm Shares set forth opposite their
respective names in Schedule I, plus their pro rata portion of the Option Shares
if you elect to exercise the over-allotment option in whole or in part for the
accounts of the several Underwriters.
The Company hereby confirms as follows its agreement with the
Representative and the several other Underwriters.
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1. Agreement to Sell and Purchase
(a) On the basis of the representations, warranties and
agreements of the Company herein contained and subject to all the terms and
conditions of this Agreement, the Company agrees to sell to each Underwriter and
each Underwriter, severally and not jointly, agrees to purchase from the Company
at a purchase price of $_________ per share, the number of Firm Shares set forth
opposite the name of such Underwriter on Schedule I hereto, plus such additional
number of Shares which such Underwriter may become obligated to purchase
pursuant to Sections 1(b) or 10 hereof.
(b) Subject to all the terms and conditions of this Agreement,
the Company grants the Option to the several Underwriters to purchase, severally
and not jointly, the Option Shares at the same price per share as the
Underwriters shall pay for the Firm Shares. The Option may be exercised only to
cover over-allotments in the sale of the Firm Shares by the Underwriters and may
be exercised in whole or in part at any time and from time to time on or before
the 30th day after the date of this Agreement (or on the next business day if
the 30th day is not a business day), upon notice (the "Option Shares Notice") in
writing or by telephone (confirmed in writing) by the Representative to the
Company no later than 5:00 p.m., New York City time, at least two and no more
than five business days before the date specified for closing in the Option
Shares Notice (the "Option Closing Date") setting forth the aggregate number of
Option Shares to be purchased on the Option Closing Date. On the Option Closing
Date, the Company will sell to the Underwriters the number of Option Shares set
forth in the Option Shares Notice, and each Underwriter will purchase such
percentage of the Option Shares as is equal to the percentage of Firm Shares
that such Underwriter is purchasing, as adjusted by the Representative in such
manner as it deems advisable to avoid fractional shares.
2. Delivery and Payment. Delivery of the Firm Shares shall be made to
the Representative for the accounts of the Underwriters at the office of Brean
Murray & Co., Inc., 570 Lexington Avenue, New York, New York 10022, and in
exchange therefor payment of the purchase price shall be made to the Company by
wire transfer of immediately available funds to the Company's account at
____________________ (the "Closing"). Such delivery and payment shall be made at
10:00 a.m., New York time, on the third full business day following the date of
this Agreement, or at such other time on such other date as may be agreed upon
by the Company and the Representative (such date is hereinafter referred to as
the "Closing Date"). (As used herein, "business day" means a day on which the
New York Stock Exchange is open for trading and on which banks in New York are
open for business and not permitted by law or executive order to be closed.)
Time shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of each
Underwriter hereunder.
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
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Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representative shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
3. Representations and Warranties of the Company. The Company
represents, warrants and covenants to each Underwriter that:
(a) A registration statement on Form S-1 (Registration No.
333-9025) relating to the Shares, including a preliminary prospectus relating to
the Shares and such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company under
the provisions of the Securities Act of 1933, as amended (the "Act"), and the
rules and regulations (collectively referred to as the "Rules and Regulations")
of the Securities and Exchange Commission (the "Commission") promulgated
thereunder and has been filed with the Commission. The Commission has not issued
any order preventing or suspending the use of the Prospectus (as defined below)
or any Preliminary Prospectus (as defined below) or instituted or, to the
knowledge of the Company, threatened any proceeding for that purpose. The term
"Preliminary Prospectus" as used herein means a preliminary prospectus relating
to the Shares omitting therefrom such information as permitted in reliance upon
Rule 430A included at any time as part of the foregoing registration statement
or any amendment thereto before it became effective under the Act and any
prospectus filed with the Commission by the Company pursuant to Rule 424(a) of
the Rules and Regulations. Copies of such registration statement and amendments
and of each related Preliminary Prospectus have been delivered to the
Representative. If such registration statement has not become effective, a
further amendment to such registration statement, including a form of final
Preliminary Prospectus, necessary to permit such registration statement to
become effective will be filed promptly by the Company with the Commission. If
such registration statement has become effective, a final prospectus relating to
the Shares containing information permitted to be omitted at the time of
effectiveness by Rule 430A of the Rules and Regulations will be filed by the
Company with the Commission in accordance with Rule 424(b) of the Rules and
Regulations promptly after execution and delivery of this Agreement. The term
"Registration Statement" means the registration statement at the time such
registration statement becomes or became effective (the "Effective Date"),
together with any registration statement filed by the Company pursuant to Rule
462(b) under the Act, including all financial statements and schedules and all
exhibits, documents incorporated therein by reference and all information
contained in any final prospectus filed with the Commission pursuant to Rule
424(b) of the Rules and Regulations or in a term sheet described in Rule 434 of
the Rules and Regulations in accordance with Section 5 hereof and deemed to be
included therein as of the Effective Date by Rule 430A of the Rules and
Regulations. The term "Prospectus" means the prospectus relating to the Shares
as first filed with the Commission pursuant to Rule 424(b) of the Rules and
Regulations or, if no such filing is required, the form of final prospectus
relating to the Shares included in the Registration Statement at the Effective
Date. References herein to any document or other information incorporated by
reference in the Registration Statement shall include documents or other
information incorporated by reference in the Prospectus (or if the Prospectus is
not in existence, in the most recent Preliminary Prospectus). References herein
to any Preliminary Prospectus or the Prospectus shall be deemed to include all
documents and information incorporated by reference therein.
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(b) On the date that any Preliminary Prospectus was filed with
the Commission, the date the Prospectus is first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement, each Preliminary Prospectus and the
Prospectus (as amended or as supplemented if the Company shall have filed with
the Commission any amendment or supplement thereto), including the financial
statements included in the Prospectus, did or will comply with all applicable
provisions of the Act and the Rules and Regulations and did or will contain all
statements required to be stated therein in accordance with the Act and the
Rules and Regulations. On the Effective Date and when any post-effective
amendment to the Registration Statement becomes effective, no part of the
Registration Statement or any such amendment did or will contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading. At the Effective Date, the date the Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission and at the Closing
Date and, if later, the Option Closing Date, the Prospectus did not or will not
contain any untrue statement of a material fact or omit to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The foregoing representations and
warranties in this Section 3(b) do not apply to any statements or omissions made
in reliance on and in conformity with information relating to any Underwriter as
set forth in Section 16 hereof furnished by such Underwriter in writing to the
Company by the Representative specifically for inclusion in the Registration
Statement or Prospectus or any amendment or supplement thereto. There are no
contracts or other documents required to be filed as exhibits to the
Registration Statement by the Act or the Regulations that have not been so
filed. The documents which are incorporated by reference in any Preliminary
Prospectus or the Prospectus or from which information is so incorporated by
reference, when they became effective or were filed with the Commission, as the
case may be, complied in all material respects with the requirements of the Act
and the Rules and Regulations or the Exchange Act and the rules and regulations
thereunder, as applicable, and did not, when such documents were so filed,
contain any untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were made, not
misleading, and any documents so filed and incorporated by reference subsequent
to the effective date of the Registration Statement shall, when they are filed
with the Commission, conform in all material respects with the requirements of
the Act and the Rules and Regulations and the Exchange Act and the rules and
regulations thereunder, as applicable.
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(c) The Company has the following subsidiaries: Holmes
Protection of New York, Inc., a New York corporation, Holmes Protection of Long
Island, Inc., a New York corporation, Holmes Protection of New Jersey, Inc., a
New Jersey corporation, Holmes Protection, Inc., a New York corporation, Holmes
Protection of Philadelphia, Inc., a Pennsylvania corporation, Dictograph
Franchise Corporation, a New Jersey corporation, Holmes Holding Company, Inc., a
Delaware corporation, and Holmes Central Services, Inc., a New Jersey
corporation (collectively, the "Subsidiaries"). The Company does not own and, at
the Closing Date and the Option Closing Date, if any, will not own, an interest
in any corporation (except for the Subsidiaries), joint venture, trust,
partnership or other business entity. The Company has been and, at the Closing
Date and Option Closing Date, if any, will be, duly incorporated and validly
existing as a corporation under the laws of the State of Delaware and is, and at
the Closing Date and the Option Closing Date, if any, will be, in good standing
in the State of Delaware. The Company has all corporate power and authority
necessary to own its properties and conduct its business as currently being
carried on and as described in the Registration Statement and Prospectus. The
Company is, and at the Closing Date and the Option Closing Date, if any, will
be, duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its properties (owned, leased
or licensed) or the nature or conduct of its business or use of its property and
assets makes such qualification necessary and in which the failure to so qualify
would have a material adverse effect on the business, financial condition or
properties of the Company.
(d) The outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable (except as disclosed in the Registration Statement) and are not
subject to any preemptive or similar rights, and the holders thereof, are not
subject to personal liability by reason of being such holders. The Firm Shares
to be sold hereunder to the Underwriters, and the Option Shares to be sold
hereunder to the Underwriters in the event the Option is exercised, will be duly
authorized and validly issued, fully paid and nonassessable, and the holders
thereof will not be subject to personal liability by reason of being such
holders. The Company has, and, upon completion of the sale of the Shares, will
have, an authorized, issued and outstanding capitalization as set forth in the
Registration Statement and the Prospectus under the caption "Description of
Capital Stock" (or, if the Prospectus is not in existence, in the most recent
Preliminary Prospectus). The description of the securities of the Company in the
Registration Statement and the Prospectus under the caption "Description of
Capital Stock" (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) is, and at the Closing Date and, if later, the Option
Closing Date, will be, complete and accurate in all respects. Neither the filing
of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights for or relating to the
registration of any shares of Common Stock or other securities of the Company,
except such rights as have been disclosed in the Registration Statement or as
have been satisfied, waived or terminated.
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(e) The financial statements and the related notes of the
Company included in the Registration Statement and in the Prospectus (or, if the
Prospectus is not in existence, in the most recent Preliminary Prospectus)
comply in all material respects with the requirements of the Act and the Rules
and Regulations, present fairly the financial condition, results of operations
and cash flows of the Company at the dates and for the periods covered thereby
and have been prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the entire periods
involved (except as otherwise stated therein). Arthur Andersen LLP (the
"Accountants"), who have reported on those of such financial statements and
related notes which are audited, are independent accountants with respect to the
Company as required by the Act and the related rules and regulations.
(f) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization, (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain accountability for assets,
(iii) access to material assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(g) Except as set forth in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus and prior
to the Closing Date and, if later, the Option Closing Date, (i) there has not
been, and will not have been, any material adverse change in the business,
properties, key personnel, condition (financial or otherwise), net worth or
results of operations of the Company (ii) the Company has not, and will not
have, incurred any material liabilities or obligations, direct or contingent,
or, entered into any material transactions not in the ordinary course of
business other than pursuant to this Agreement, (iii) the Company has not, and
will not have, paid or declared any dividends or other distributions of any kind
on any class of its capital stock, and (iv) there has not been, and will not
have been, any change in the capital stock, or a material change in the
short-term or long-term debt, or any issuance of options, warrants, convertible
securities or other rights to purchase capital stock of the Company, other than
changes in capital stock and issuances of rights, options and shares pursuant to
the Company's Amended and Restated Senior Executives' Option Plan, 1992
Directors' Option Plan and 1996 Stock Incentive Plan.
(h) The Company has good and marketable title to all
properties and assets described in the Registration Statement and Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), as owned by it, free and clear of all liens, security interests,
restrictions, pledges, encumbrances, charges, equities, claims, easements,
leases and tenancies (collectively, "Encumbrances") other than those described
in the Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and those that will not
materially affect the value of such properties and assets and will not interfere
with the use made and proposed to be made of such properties and assets. The
Company has valid, subsisting and enforceable leases for the properties and
assets described in the Registration Statement and Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) as
leased by it, free and clear of all Encumbrances, other than those described in
the Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), and those that will not
materially affect the value of such properties and assets and will not interfere
with the use made and proposed to be made of such properties and assets.
6
(i) The Company owns or possesses all material patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service mark registrations, copyrights, licenses, inventions, trade secrets and
rights necessary for the conduct of the business of the Company as currently
carried on and as described in the Registration Statement, and Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
and except as stated in the Registration Statement or Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), to the
Company's knowledge, no name which the Company uses and no other aspect of the
business of the Company may in the future involve or give rise to any
infringement of or license or similar fees for, any patents, patent
applications, trademarks, service marks, tradenames, trademark registrations,
service mark registrations, copyrights, licenses, inventions, trade secrets or
other similar rights of others material to the business or prospects of the
Company, and the Company has not received any notice alleging any infringement
or fee.
(j) Except as set forth in the Registration Statement and
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), there are no actions, suits, arbitrations, claims,
governmental or other proceedings (formal or informal), or investigations
pending or, to the knowledge of the Company, threatened against or affecting the
Company, or any of the properties or assets owned or leased by the Company,
before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign
(collectively, a "Governmental Body"), which might result in any material
adverse change in the business, properties, prospects, condition (financial or
otherwise), net worth or results of operations of the Company. The Company is
not in violation of, or in default with respect to, any law, rule or regulation,
or any order, judgment or decree, except as described in the Prospectus (or if
the Prospectus is not in existence, in the most recent Preliminary Prospectus)
or such as in the aggregate do not now have and can reasonably be expected in
the future not to have a material adverse effect upon the operations, business,
properties or assets of the Company; nor is the Company presently required to
take any action in order to avoid any such violation or default.
(k) The Company has, and at the Closing Date and, if later,
the Option Closing Date will have, all material governmental licenses, permits,
consents, orders, approvals, franchises, certificates and other authorizations
(collectively, "Licenses") necessary to carry on its business and owns or leases
its properties as contemplated in the Registration Statement and Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus),
and all such Licenses are, and at the Closing Date and, if later, the Option
Closing Date will be, in full force and effect. The Company has, and at the
Closing Date and, if later, the Option Closing Date will have, complied in all
material respects with all laws, regulations and orders applicable to it or its
business, assets and properties. The Company is not, nor at the Closing Date
and, if later, the Option Closing Date will it be, in violation of its Restated
Articles of Incorporation or Bylaws or in default (nor has any event occurred
which, with notice or lapse of time or both, would constitute a default) in the
due performance and observation of any term, covenant or condition of any
indenture, mortgage, deed of trust, voting trust agreement, loan agreement,
bond, debenture, note agreement or other evidence of indebtedness, lease,
contract or other agreement or instrument (collectively, a "contract or other
agreement") to which it is a party or by which its properties are bound or
affected, the violation of which would individually or in the aggregate have a
material adverse effect on the business, properties, condition (financial or
otherwise), net worth or results of operations of the Company. There are no
governmental proceedings or actions pending or, to the Company's knowledge,
threatened for the purpose of suspending, modifying or revoking any License held
by the Company.
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(l) No consent, approval, authorization or order of, or any
filing or declaration with, any Governmental Body is required for the execution,
delivery or performance of this Agreement or for the consummation of the
transactions contemplated by this Agreement or in connection with the sale of
the Shares by the Company, except such as have been obtained and such as may be
required under the Act, the Rules and Regulations, any state securities or Blue
Sky laws or the bylaws and rules of the National Association of Securities
Dealers, Inc. (the "NASD") in connection with the purchase and distribution by
the Underwriters of the Shares to be sold hereby.
(m) The Company has full power (corporate and other) and
authority to enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it. This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid and
binding agreement of the Company, and is enforceable against the Company in
accordance with the terms hereof, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter affecting creditors' rights generally or by general principles of
equity relating to the availability of remedies and except as rights to
indemnity and contribution may be limited by federal or state securities laws or
the public policy underlying such laws. Except as disclosed in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), the execution, delivery and the performance
of this Agreement and the consummation of the transactions contemplated hereby
will not result in the creation or imposition of any Encumbrance upon any of the
properties or assets of the Company pursuant to the terms or provisions of, or
result in a breach or violation of or conflict with any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, (i) the Restated Articles of Incorporation or Bylaws of the
Company, in each case as amended, or (ii) any contract or other agreement to
which the Company is a party or by which it or any of the respective assets or
properties are bound or affected, the violation of which would individually or
in the aggregate have a material adverse effect on the business, properties,
condition (financial or otherwise), net worth or results of operations of the
Company or (iii) any judgment, ruling, decree, order, law, statute, rule or
regulation of any Governmental Body applicable to the Company or its business or
properties, the violation of which would individually or in the aggregate have a
material adverse effect on the business, properties, condition (financial or
otherwise), net worth or results of operations of the Company.
8
(n) No statement, representation, warranty or covenant made by
the Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representative was or will be, when made,
inaccurate, untrue or incorrect. Each certificate signed by an officer of the
Company and delivered to the Representative or counsel for the Underwriters
shall be deemed to be a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
(o) Neither the Company nor the Subsidiaries nor, to the
Company's knowledge, any of its directors or officers has taken, nor will he,
she or it take, directly or indirectly, any action designed, or which might
reasonably be expected in the future, to cause or result in, under the Act or
otherwise, or which has constituted, stabilization or manipulation of the price
of any security of the Company to facilitate the sale or resale of the Shares or
otherwise.
(p) The Company is not involved in any labor dispute with its
employees nor is any such dispute threatened or imminent.
(q) Neither the Company nor, to the Company's best knowledge,
any employee or agent of the Company has made any payment of funds of the
Company or received or retained any funds of the Company in violation of any
law, rule or regulation or of a character required to be disclosed in the
Registration Statement and Prospectus (or, if the Prospectus is not in
existence, in the most recent Preliminary Prospectus).
(r) The business, operations and facilities of the Company
have been and are being conducted in compliance in all material respects with
all applicable laws, ordinances, rules, regulations, licenses, permits,
approvals, plans, authorizations or requirements relating to occupational safety
and health, or pollution, or protection of health or the environment (including,
without limitation, those relating to emissions, discharges, releases or
threatened releases of pollutants, contaminants or hazardous or toxic
substances, materials or wastes into ambient air, surface water, groundwater or
land, or relating to the manufacture, processing, distribution, use, treatment,
storage, disposal, transport or handling of chemical substances, pollutants,
contaminants or hazardous or toxic substances, materials or wastes, whether
solid, gaseous or liquid in nature) of any governmental department, commission,
board, bureau, agency or instrumentality of the United States or any state or
political subdivision thereof, and all applicable judicial or administrative
agency or regulatory decrees, awards, judgments and orders relating thereto; and
the Company has not received any notice from any governmental instrumentality or
any third party alleging any violation thereof or material liability thereunder
(including, without limitation, liability for costs of investigating or
remediating sites containing hazardous substances and/or damages to natural
resources). The intended use and occupancy of each of the facilities owned or
operated by the Company complies in all material respects with all applicable
codes and zoning laws and regulations, and there is no pending or, to the
Company's knowledge, threatened condemnation, zoning change, environmental or
other proceeding or action that will in any material respect adversely affect
the size of, use of, improvements on, construction on or access to such
facilities.
9
(s) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested extensions
thereof and is not in default in any taxes which were payable pursuant to said
returns, other than any which the Company is contesting in good faith.
(t) Neither the Company nor, to the knowledge of the Company,
any of its directors or officers in such capacity is subject to any order or
directive of, or party to any agreement with, any regulatory agency having
jurisdiction with respect to its business or operations except as disclosed in
the Prospectus (or if the Prospectus is not in existence, in the most recent
Preliminary Prospectus).
(u) The Company, each officer and director of the Company and
certain of the principal stockholders of the Company have delivered to the
Representative an agreement to the effect that he, she or it will not, for a
period of 90 days after the date hereof, without the prior written consent of
the Representative, directly or indirectly, offer, sell or otherwise dispose (or
announce any offer, sale, grant of any option to purchase or other disposition)
of any shares of Common Stock or securities convertible into, or exercisable or
exchangeable for, shares of Common Stock.
(v) The Company has not distributed and will not distribute
any prospectus or other offering material in connection with the offering and
sale of the Shares other than any Preliminary Prospectus or the Prospectus or
other materials permitted by the Act or the Rules and Regulations to be
distributed by the Company.
(w) The Common Stock of the Company is quoted on the NASD
Automated Quotation National Market System ("NASDAQ").
4. Representations and Warranties of the Underwriters. Upon your
authorization of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale to the public upon the terms set forth
in the Prospectus. The Representative represents and warrants to the Company
that, assuming compliance by the Company with all relevant provisions of the Act
in connection with the Registration Statement, the Representative will conduct
all offers and sales of the Shares in compliance with the relevant provisions of
the Act and the Rules and Regulations, all applicable state securities laws and
regulations and the bylaws and rules of the NASD.
10
5. Agreements of the Company. The Company covenants and agrees with
each of the several Underwriters as follows:
(a) The Company will not, either prior to the Effective Date
or thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representative within a reasonable period of time prior to the filing thereof
and the Representative shall not have objected thereto in good faith within a
reasonable amount of time from receipt from the Company of such proposed
amendment or supplement to the Registration Statement.
(b) If the Registration Statement is not yet effective, the
Company will use its best efforts to cause the Registration Statement to become
effective not later than the time indicated in Section 7(a) hereof. The Company
will notify the Representative promptly, and will confirm such advice in
writing, (i) when the Registration Statement has become effective (if later than
the date hereof) and when any post-effective amendment thereto becomes
effective, (ii) of any request by the Commission for amendments or supplements
to the Registration Statement or the Prospectus or for additional information,
(iii) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose or the threat thereof, (iv) of the happening of any event
during the period mentioned in the third sentence of Section 5(f) that in the
judgment of the Company makes any statement made in the Registration Statement
or the Prospectus untrue or that requires the making of any changes in the
Registration Statement or the Prospectus in order to make the statements
therein, in light of the circumstances in which they are made, not misleading
and (v) of receipt by the Company or any representative or attorney of the
Company during the period mentioned in the third sentence of Section 5(f) of any
other communication from the Commission relating to the Company, the
Registration Statement, any Preliminary Prospectus or the Prospectus. If at any
time the Commission shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. The Company will
prepare the Prospectus in a form approved by the Representative and will file
such Prospectus pursuant to Rule 424(b) of the Rules and Regulations not later
than the Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) of the Rules and Regulations. If the Company
has omitted any information from the Registration Statement pursuant to Rule
430A of the Rules and Regulations, the Company will use its best efforts to
comply with the provisions of and make all requisite filings with the Commission
pursuant to Rule 430A of the Rules and Regulations and to notify the
Representative promptly of all such filings.
(c) If, at any time when a Prospectus relating to the Shares
is required to be delivered under the Act, any event has occurred as a result of
which the Prospectus, as then amended or supplemented, would 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 were made, not misleading, or the Registration Statement, as then amended
or supplemented, would include any untrue statement of a material fact or omit
to state a material fact necessary to make the statements therein not
misleading, or if for any other reason it is necessary at any such time to amend
or supplement the Prospectus or the Registration Statement to comply with the
Act or the Rules and Regulations, the Company will promptly notify the
Representative thereof and, subject to Section 5(b) hereof, will prepare and
file with the Commission, at the Company's expense, an amendment to the
Registration Statement or an amendment or supplement to the Prospectus that
corrects such statement or omission or effects such compliance.
11
(d) The Company will furnish to the Representative, without
charge, two signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Representative, without charge,
for transmittal to each of the other Underwriters, copies of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(e) The Company will comply with all the provisions of all
undertakings contained in the Registration Statement.
(f) On the Effective Date, and thereafter from time to time
for such period as the Prospectus is required by the Act to be delivered, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representative
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or in the Registration Statement in order to make any statement
therein not misleading, or if it is necessary to supplement or amend the
Prospectus or the Registration Statement to comply with law, the Company will
forthwith prepare and duly file with the Commission an appropriate supplement or
amendment thereto and will deliver to each of the Underwriters, without charge,
such number of copies thereof as the Representative may reasonably request.
(g) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representative and its counsel
in connection with the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions as the
Representative may request; 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 take any action which would subject it to general service of
process in any jurisdiction where it is not now so subject or subject itself to
taxation as doing business in any jurisdiction.
12
(h) During the period of five years commencing on the
Effective Date, the Company will furnish to the Representative and each other
Underwriter who may so request in writing copies of such financial statements
and other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock and will
furnish to the Representative and each other Underwriter who may so request in
writing a copy of each annual or other report it shall be required to file with
the Commission.
(i) The Company will make generally available to holders of
its securities, as soon as may be practicable, but in no event later than the
last day of the fifteenth full calendar month following the calendar quarter in
which the Effective Date falls, a consolidated earnings statement (which need
not be audited but shall be in reasonable detail) for a period of 12 months
commencing after the Effective Date, and satisfying the provisions of Section
11(a) of the Act (including Rule 158 of the Rules and Regulations).
(j) The Company will not for a period of 90 days after the
date hereof, without the prior written consent of Representative, directly or
indirectly, offer, sell or otherwise dispose (or announce any offer, sale, grant
of any option to purchase or other disposition) of any shares of Common Stock or
any securities convertible into, or exercisable or exchangeable for, shares of
Common Stock, except pursuant to Section 1 hereof and except that the Company
may grant options, and issue shares pursuant to the options granted, under the
Company's stock option and employee stock purchase plans.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the shares of
Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company shall apply the net proceeds of the sale of
the Shares as set forth in the Prospectus.
(m) The Company shall not invest, or otherwise use, the
proceeds received by the Company from the sale of the Shares to the Underwriters
in such a manner as would require the Company or any of its subsidiaries to
register as an investment company under the Investment Company Act of 1940, as
amended.
(n) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company or if required
for NASDAQ designation, a registrar for its Common Shares.
13
6. Expenses. Whether or not the transactions contemplated by
this Agreement are consummated or this Agreement is terminated, the Company will
pay, or reimburse if paid by the Representative, all costs and expenses incident
to the performance of its obligations under this Agreement and the transactions
contemplated by this Agreement, including, but not limited to, costs and
expenses of or relating to (i) the preparation, printing and filing of the
Registration Statement and exhibits thereto, each Preliminary Prospectus, the
Prospectus, any amendment or supplement to the Registration Statement or the
Prospectus, (ii) the preparation and delivery of certificates representing the
Shares, (iii) the printing of this Agreement, the Agreement among Underwriters,
any Dealer Agreements and any Underwriters' Questionnaire, (iv) furnishing
(including costs of shipping and mailing) such copies of the Registration
Statement, the Prospectus and any Preliminary Prospectus, and all amendments and
supplements thereto, as may be requested for use in connection with the offering
and sale of the Shares by the Underwriters or by dealers to whom Shares may be
sold, (v) the quotation of the Shares on The Nasdaq Stock Market, (vi) any
filings required to be made by the Underwriters with the NASD, (vii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions designated pursuant to Section
5(g), including the reasonable fees, disbursements and other charges of counsel
to the Underwriters in connection therewith, and the preparation and printing of
preliminary, supplemental and Blue Sky memoranda, (viii) counsel and accountants
to the Company and (ix) the transfer agent for the Shares. Whether or not the
transactions contemplated by this Agreement are consummated or if this Agreement
shall be terminated by the Company pursuant to any provisions hereof, the
Company will reimburse the Representative for all of its accountable
out-of-pocket fees and expenses including, among other things, its travel and
travel related expenses and its counsel fees and expenses, incurred by it in
connection herewith, up to an aggregate amount of $150,000.
7. Conditions to the Obligations of the Underwriters. The obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representative not later than 4:00 p.m., New
York time, on the date of this Agreement or at such later date and time as shall
be consented to in writing by the Representative and all filings required prior
to such effectiveness by Rule 424 of the Rules and Regulations and Rule 430A of
the Rules and Regulations shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the authorities of any such
jurisdiction, (iii) any request for additional information on the part of the
staff of the Commission or any such authorities shall have been complied with to
the satisfaction of the staff of the Commission or such authorities and (iv)
after the date hereof no amendment or supplement to the Registration Statement
or the Prospectus shall have been filed unless a copy thereof was first
submitted to the Representative and the Representative did not object thereto in
good faith, and the Representative shall have received certificates, dated the
Closing Date and the Option Closing Date, if any, and signed by the Chief
Executive Officer of the Company and the Chief Financial Officer of the Company
(who may, as to proceedings threatened, rely upon the best of their information
and belief), to the effect of the foregoing clauses (i), (ii) and (iii).
14
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
been a material adverse change in the general affairs, business, business
prospects, properties, management, condition (financial or otherwise) or results
of operations of the Company, whether or not arising from transactions in the
ordinary course of business, and (ii) the Company shall not have sustained any
material loss or interference with its business, assets or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and the
Prospectus, if in the judgment of the Representative any such development makes
it impracticable or inadvisable to consummate the sale and delivery of the
Shares by the Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or, to the
knowledge of the Company, any of its officers, directors or shareholders in
their capacities as such, or any of its assets or properties, before or by any
Governmental Body in which litigation or proceeding an unfavorable ruling,
decision or finding would materially and adversely affect the business,
properties, business prospects, condition (financial or otherwise), net worth or
results of operations of the Company.
(e) Each of the representations and warranties of the Company
contained herein shall be true and correct at the Closing Date and, with respect
to the Option Shares, if any, at the Option Closing Date, as if made on such
date, and all covenants and agreements herein contained to be performed on the
part of the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to the Closing Date and, with respect
to the Option Shares, if any, at or prior to the Option Closing Date, shall have
been fully performed, fulfilled or complied with.
(f) The Representative shall have received an opinion, dated
the Closing Date and the Option Closing Date, from Squadron, Ellenoff, Plesent &
Sheinfeld, LLP, New York, New York, counsel for the Company, to the following
effect:
(i) The Company has been duly incorporated and is
validly existing as a corporation under the laws of the State of Delaware. The
Company is duly qualified and in good standing as a foreign corporation in each
jurisdiction in which the character or location of its properties (owned, leased
or licensed) or the nature or conduct of its business or use of its property and
assets makes such qualification necessary and in which the failure to so qualify
would have a material adverse effect on the business, financial condition or
properties of the Company;
15
(ii) The capital stock of the Company conforms as to
legal matters to the description thereof contained in the Prospectus under the
caption "Description of Capital Stock." The Company has an authorized
capitalization as set forth in the Prospectus; all of the issued and outstanding
shares of Common Stock have been duly authorized and validly issued by the
Company, are fully paid and nonassessable and are free of any preemptive or
similar rights pursuant to the Company's Articles of Incorporation, Bylaws or
any agreement or other instrument known to such counsel to which the Company is
a party or by which it is bound, and the holders thereof are not subject to
personal liability by reason of being such holders; the Shares, when sold by the
Company and paid for in accordance with the terms hereof, will be validly
issued, fully paid and nonassessable and will conform in all material respects
to the description thereof contained under the caption "Description of Capital
Stock" in the Prospectus and will not be subject to any preemptive, subscription
or similar rights pursuant to the Company's Articles of Incorporation, Bylaws or
any agreement or other instrument known to such counsel to which the Company is
a party or by which it is bound; to such counsel's knowledge, neither the filing
of the Registration Statement nor the offering or sale of the Shares as
contemplated hereby gives rise to any rights for or relating to the registration
of any Shares of Common Stock or other securities of the Company, except as
disclosed in the Registration Statement, or such rights as have been satisfied,
waived or terminated;
(iii) To such counsel's knowledge, except as
described in the Registration Statement and Prospectus, there are no options,
warrants, agreements, contracts or other rights in existence to purchase or
acquire from the Company any shares of capital stock of the Company;
(iv) The Registration Statement is effective under
the Act; any required filing of the Prospectus pursuant to Rule 424(b) of the
Rules and Regulations has been made in the manner and within the time period
required by Rule 424(b) of the Rules and Regulations; and, to such counsel's
knowledge, no stop order suspending the effectiveness of the Registration
Statement has been issued, and to such counsel's knowledge no proceedings for
that purpose have been instituted or are pending or, to the best knowledge of
such counsel, are threatened or contemplated under the Act;
(v) The Registration Statement originally filed with
respect to the Shares and each amendment thereto and the Prospectus and, if any,
each amendment and supplement thereto (except the financial statements,
schedules and other financial data contained therein, as to which such counsel
need not express any opinion), complied as to form in all material respects with
the requirements of the Act and the related rules and regulations thereunder;
(vi) Insofar as statements in the Prospectus purport
to summarize the status of litigation in which we are counsel to the Company or
the provisions of laws, rules, regulations, orders, judgments, decrees,
contracts, agreements, instruments, leases, or licenses, such statements have
been prepared or reviewed by such counsel and accurately reflect the status of
such litigation and provisions purported to be summarized and are correct in all
material respects;
16
(vii) To such counsel's knowledge, there are no
contracts or documents which are required by the Act to be described in the
Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement which are not described therein or filed as required by
the Act and the Rules and Regulations;
(viii) To the knowledge of such counsel, there is not
pending or threatened against the Company any action, suit, arbitration, claim,
governmental or other proceeding (informal or formal) or investigation before or
by any Governmental Body of a character required to be disclosed in the
Registration Statement or the Prospectus which is not so disclosed therein. To
the knowledge of such counsel, the Company is not in violation of, or in default
with respect to, any law, rule or regulation of the State of Delaware or the
United States of America, or any order, judgment or decree, except as described
in the Registration Statement or Prospectus or such as in the aggregate do not
now have and can reasonably be expected in the future not to have a material
adverse effect upon the operations, business, properties or assets of the
Company;
(ix) The Company has the corporate power and
authority to enter into this Agreement and to consummate the transactions
provided for herein; this Agreement has been duly authorized, executed and
delivered by the Company; this Agreement, assuming due authorization, execution
and delivery by each other party hereto, is a valid and binding agreement of the
Company, enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors rights generally or by
general principles of equity relating to the availability of remedies and except
as rights to indemnity and contribution may be limited by federal or state
securities laws or the public policy underlying such laws;
(x) None of the Company's execution or delivery of
this Agreement, its performance hereof or its consummation of the transactions
contemplated herein conflicts or will conflict with or results or will result in
any breach or violation of any of the terms or provisions of, or constitute a
default under, or result in the creation or imposition of any Encumbrance upon,
any property or assets of the Company pursuant to (A) the terms of the Articles
of Incorporation or Bylaws of the Company, in each case as amended; (B) the
terms of any material contract or other material agreement known to such counsel
without independent investigation to which the Company is a party or by which it
is or may be bound or to which any of its properties is or may be subject; (C)
any statute, rule or regulation of the State of Delaware or the United States of
America; or (D) the terms of any judgment, decree or order known to such counsel
of any arbitrator or Governmental Body having jurisdiction over the Company; and
no consent, approval, authorization or order of, or filing with, any
Governmental Body has been or is required for the execution, delivery and
performance of this Agreement or for the consummation of the transactions
contemplated hereby, except such as have been obtained under the Act or may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution by the Underwriters of the Shares; and
17
(xi) To such counsel's knowledge, the Company is not
in any breach or violation of any of the terms or provisions of, or in default
under (nor has an event occurred which with notice or lapse of time or both
would constitute a default or acceleration under), (A) the terms of its Articles
of Incorporation or Bylaws, in each case as amended; or (B) the terms of any
material contract or other material agreement known to such counsel to which the
Company is a party or by which the Company is bound or to which any of its
properties or assets is subject.
(xii) The Underwriters have acquired good, valid and
marketable title to the Shares free and clear of all liens, encumbrances,
equities, claims and security interests.
In addition, such counsel shall state that, in the course of
the preparation of the Registration Statement and the Prospectus, such counsel
has examined the documents referred to in the Registration Statement and
Prospectus and participated in conferences with officers and representatives of
the Company and with the Accountants, at which conferences such counsel made
inquiries of such officers, representatives and accountants and discussed the
contents of the Registration Statement and the Prospectus and, solely on the
basis of the foregoing and such other actions as such counsel deemed
appropriate, no facts have come to such counsel's attention that causes such
counsel to believe that the Registration Statement as of the date it was
declared effective and as of the date of such opinion contained or contains any
untrue statement of a material fact or omitted or omits to state a material fact
required to be stated therein or necessary to make the statement therein not
misleading or that the Prospectus as of the date thereof and as of the date of
such opinion, contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading (it being understood that such
counsel need not make any statement with respect to the financial statements,
schedules and other financial data included in the Registration Statement or the
Prospectus).
In rendering any such opinion, such counsel may (i) state that
such counsel expresses no opinion as to the laws of any jurisdiction other than
the corporate laws of the State of Delaware, the laws of the State of New York
and federal law and (ii) may rely, as to matters of fact, to the extent such
counsel deems proper, on certificates of responsible officers of the Company and
public officials and, as to matters involving the application of laws of any
other jurisdiction than the States of Delaware and New York and the United
States (to the extent reasonably satisfactory in form and scope to counsel for
the Underwriters) on the opinion of local counsel. The foregoing opinion shall
also state that the Underwriters are justified in relying upon such opinion of
local counsel, and copies of such opinion shall be delivered to the
Representative and its counsel.
References to the Registration Statement and the Prospectus in
this paragraph (f) shall include any amendment or supplement thereto at the date
of such opinion.
18
(g) The Representative shall have received an opinion, dated
the Closing Date and the Option Closing Date, from Piper & Marbury L.L.P.,
counsel to the Underwriters, which opinion shall be satisfactory in all respects
to the Representative.
(h) Concurrently with the execution and delivery of this
Agreement, or, if the Company elects to rely on Rule 430A of the Rules and
Regulations, on the date of the Prospectus, the Accountants shall have furnished
to the Representative a letter, dated the date of its delivery (the "Original
Letter"), addressed to the Representative and in form and substance satisfactory
to the Representative, to the effect that:
(i) they are independent certified public accountants
with respect to the Company within the meaning of the Act, the Exchange Act and
the applicable rules and regulations thereunder;
(ii) in their opinion, the audited financial
statements and schedules audited by them and included in the Registration
Statement and the Prospectus comply as to form in all material respects with the
applicable accounting requirements of the Act and the related published rules
and regulations thereunder;
(iii) on the basis of reading of the latest available
interim unaudited financial statements of the Company, carrying out certain
specified procedures (which do not constitute an audit made in accordance with
generally accepted auditing standards) that would not necessarily reveal matters
of significance with respect to the comments set forth in this paragraph (iii),
a reading of the minute books of the shareholders, the board of directors and
any committees thereof of the Company and inquiries of certain officials of the
Company who have responsibility for financial and accounting matters, nothing
came to their attention that caused them to believe that at a specific date not
more than five business days prior to the date of such letter, there were any
changes in the shares of capital stock or indebtedness of the Company or any
decreases in total assets, current assets or shareholders' equity of the
Company, in each case compared with amounts shown on the June 30, 1996
consolidated balance sheet included in the Registration Statement and the
Prospectus, or for the period from July 1, 1996 to such specified date there
were any decreases, as compared with the corresponding period of the preceding
fiscal year, in net revenues, net income before income taxes or total or per
share amounts or net income of the Company, except in all instances for changes,
decreases or increases set forth in such letter or as set forth in or
contemplated in the Prospectus; and
(iv) they have carried out certain specified
procedures, not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the general
accounting records of the Company and are included in the Registration Statement
and the Prospectus, and have compared such amounts, percentages and financial
information with such records of the Company and with information derived from
such records and have found them to be in agreement, excluding any questions of
legal interpretation.
19
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representative deems such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representative, make
it impractical or inadvisable to proceed with the purchase and delivery of the
Shares as contemplated by the Registration Statement, as amended as of the date
hereof.
At the Closing Date and, as to the Option Shares, if any, the
Option Closing Date, the Accountants shall have furnished to the Representative
a letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the Original Letter, that
nothing has come to their attention during the period from the date of the
Original Letter referred to in the prior sentence to a date (specified in such
letter) not more than five days prior to the Closing Date or the Option Closing
Date, as the case may be, which would require any change in the Original Letter
if it were required to be dated and delivered at the Closing Date or the Option
Closing Date, as the case may be.
(i) At the Closing Date and, as to the Option Shares, if any,
the Option Closing Date, there shall be furnished to the Representative an
accurate certificate, dated the date of its delivery, signed by each of the
Chief Executive Officer and the Chief Financial Officer of the Company, in form
and substance satisfactory to the Representative, to the effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of the date of
such certificate, (x) the Registration Statement does not contain any untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
misleading and (y) the Prospectus does not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, and (B) since the Effective Date, no
event has occurred as a result of which it is necessary to amend or supplement
the Prospectus in order to make the statements therein not untrue or misleading
in any material respect;
(ii) Each of the representations and warranties of
the Company contained in this Agreement were, when originally made, and are, at
the time such certificate is delivered, true and correct in all respects; each
of the covenants required herein to be performed by the Company on or prior to
the date of such certificate has been duly, timely and fully performed and each
condition herein required to be complied with by the Company on or prior to the
delivery of such certificate has been duly, timely and fully complied with.
(iii) No stop order suspending the effectiveness of
the Registration Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration Statement
or any amendment thereto or the Prospectus has been issued, and no proceedings
for that purpose have been instituted or threatened or, to the best of the
Company's knowledge, are contemplated by the Commission.
20
(j) The Shares shall be qualified for sale in such
states as the Representative may reasonably request and each such qualification
shall be in effect and not subject to any stop order or other proceeding on the
Closing Date and the Option Closing Date, if any.
(k) The Representative shall have received at or
prior to the Closing Date from Piper & Marbury L.L.P. a memorandum or summary,
in form and substance satisfactory to the Representative, with respect to the
qualification for offering and sale by the Underwriters of the Shares under the
State securities or Blue Sky laws of such jurisdictions as the Representative
may reasonably have designated to the Company.
(l) The Firm Shares, and Option Shares, if any, have
been approved for listing upon official notice of issuance on the NASDAQ.
(m) The Company shall have furnished to the
Representative such certificates, letters and other documents, in addition to
those specifically mentioned herein, as the Representative may have reasonably
requested as to the accuracy and completeness at the Closing Date, if any, and
the Option Closing Date, if any, of any statement in the Registration Statement
or the Prospectus, as to the accuracy at the Closing Date and the Option Closing
Date of the representations and warranties of the Company, as to the performance
by the Company of their obligations hereunder or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Underwriters.
All such opinions, certificates, letters and other documents
will be in compliance with the provisions hereof only if they are satisfactory
in form and substance to you. The Company will furnish you with such conformed
copies of such opinions, certificates, letters and other documents as you shall
reasonably request.
21
8. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter, the directors, officers, employees and agents of each Underwriter
and each person, if any, who controls each Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages or liabilities, joint or several (and actions in
respect thereof), to which they, or any of them, may become subject under the
Act 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 (i) any untrue statement or
alleged untrue statement made by the Company in Section 3 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any material fact
contained in (A) any Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus or (B) any application or other document, or any amendment or
supplement thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in order to
qualify the Shares under the securities or Blue Sky laws thereof or filed with
the Commission or any securities association or securities exchange (each, an
"Application"), or (iii) the omission or alleged omission to state in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement to the Registration Statement or the Prospectus or any
Application a material fact required to be stated therein or necessary to make
the statements therein not misleading, and will reimburse, as incurred, each
Underwriter and each such other person for any legal or other expenses
reasonably incurred by such Underwriter or such other person in connection with
investigating, defending or appearing as a third-party witness in connection
with 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 is based solely upon an untrue statement or
omission or alleged untrue statement or omission in any of such documents made
in reliance upon and in conformity with information relating to any Underwriter
furnished by such Underwriter in writing to the Company by the Representative on
behalf of any Underwriter expressly for inclusion therein as set forth in
Section 16 hereof; provided, further, that such indemnity with respect to any
Preliminary Prospectus shall not inure to the benefit of any Underwriter (or any
such other person) from whom the person asserting any such loss, claim, damage,
liability or action purchased Shares which are the subject thereof to the extent
that any such loss, claim, damage or liability (i) results from the fact that
such Underwriter failed to send or give a copy of the Prospectus (as amended or
supplemented) to such person at or prior to the confirmation of the sale of such
Shares to such person in any case where such delivery is required by the Act and
(ii) arises out of or is based upon an untrue statement or omission of a
material fact contained in such Preliminary Prospectus that was corrected in the
Prospectus (or any amendment or supplement thereto), unless such failure to
deliver the Prospectus (as amended or supplemented) was the result of
noncompliance by the Company with Section 5(f). This indemnity agreement will be
in addition to any liability that the Company might otherwise have. The Company
will not, without the prior written consent of each Underwriter, settle or
compromise or consent to the entry of any judgment in any pending of threatened
claim, action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not such Underwriter or any person who controls
such Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act is a party to each claim, action, suit or proceeding), unless
such settlement, compromise or consent includes an unconditional release of each
Underwriter and each such other person from all liability arising out of such
claim, action, suit or proceeding.
22
(b) Each Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signed the Registration Statement
against any losses, claims, damages or liabilities (or actions in respect
thereof) to which the Company and any such director, officer or controlling
person may become subject under the Act 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 (i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus or any Application, or (ii) the omission or the alleged omission to
state in the Registration Statement, any Preliminary Prospectus or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus, or any Application, a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representative specifically for use therein as set forth in Section
16 hereof; and, subject to the limitation set forth immediately preceding this
clause, will reimburse, as incurred, any legal or other expenses reasonably
incurred by the Company and any such director, officer or controlling person in
connection with investigating, defending or appearing as a third party witness
in connection with any such loss, claim, damage, liability or any action in
respect thereof. The Company acknowledges that, for all purposes under this
Agreement, the statements set forth under the heading "Underwriting" and the
information set forth in the last paragraph on the front cover page and the last
two paragraphs on the inside front cover of any Preliminary Prospectus and the
Prospectus (insofar as such information relates to the Underwriters) constitute
the only information relating to any Underwriter furnished in writing to the
Company by the Representative on behalf of the Underwriters expressly for
inclusion in the Registration Statement, any Preliminary Prospectus or the
Prospectus. This indemnity agreement will be in addition to any liability that
each Underwriter might otherwise have. No Underwriter will, without the prior
written consent of the Company settle or compromise or consent to the entry of
any judgment in any pending or threatened claim, action, suit or proceeding in
respect of which indemnification may be sought hereunder (whether or not the
Company or any person who controls the Company within the meaning of Section 15
of the Act or Section 20 of the Exchange Act is a party to each claim, action,
suit or proceeding), unless such settlement, compromise or consent includes an
unconditional release of the Company from all liability arising out of such
claim, action, suit or proceeding.
23
(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 an indemnifying party
or parties under this Section 8, notify such indemnifying party or parties of
the commencement thereof; but the omission so to notify the indemnifying party
or parties will not relieve it or them from any liability which it or they may
have to any indemnified party under the foregoing provisions of this Section 8
or otherwise unless, and only to the extent that, such omission results in the
forfeiture of substantive rights or defenses by the indemnifying party. If any
such action is brought against an indemnified party and it notifies an
indemnifying party or parties of its commencement, the indemnifying party or
parties against which a claim is made will be entitled to participate therein
and, to the extent that it or they may wish, to assume the defense thereof with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party and
the indemnifying party or parties and the indemnified party shall have
reasonably concluded that there may be one or more legal defenses available to
it and/or other indemnified parties which are different from or additional to
those available to the indemnifying party or parties, the indemnifying party or
parties shall not have the right to direct the defense of such action on behalf
of such indemnified party or parties and such indemnified party or parties shall
have the right to select separate counsel to defend such action on behalf of
such indemnified party or parties. After notice from the indemnifying party or
parties to such indemnified party of its or their election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party or parties will not be liable to such
indemnified party under this Section 8 for any legal or other expenses other
than reasonable costs of investigation subsequently incurred by such indemnified
party in connection with the defense thereof, unless (i) the indemnified party
shall have employed separate counsel in accordance with the proviso to the next
preceding sentence (it being understood, however, that in connection with such
action the indemnifying party or parties shall not be liable for the expenses of
more than one separate counsel (in addition to local counsel) in any one action
or separate but substantially similar actions in the same jurisdiction arising
out of the same general allegations or circumstances, designated by the
Representative in the case of paragraph (a) of this Section 8, representing the
indemnified parties under such paragraph (a) who are parties to such action or
actions), or (ii) the indemnifying party has authorized in writing the
employment of counsel for the indemnified party at the expense of the
indemnifying party or parties. After such notice from the indemnifying party or
parties to such indemnified party, the indemnifying party or parties will not be
liable for the costs and expenses of any settlement of such action effected by
such indemnified party without the consent of the indemnifying party or parties,
unless such indemnified party waived its rights under this Section 8 in which
case the indemnified party may effect such a settlement without such consent.
24
(d) If the indemnification provided for in the foregoing
paragraphs of this Section 8 is unavailable or insufficient to hold harmless an
indemnified party under paragraph (a) or above in respect of any losses, claims,
damages or liabilities (or actions in respect thereof) referred to therein, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties, on the one
hand, and the indemnified party, on the other, from the offering of the Shares
or (ii) if, but only if, the allocation provided by the foregoing clause (i) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above but also the
relative fault of the indemnifying party or parties on the one hand, and the
indemnified party, on the other, in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the Company, on the
one hand, and the Underwriters, on the other, shall be deemed to be in the same
proportion as the total proceeds from the offering of the Shares (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. Relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Representative on behalf
of the Underwriters, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company and the Underwriters agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the losses, claims, damages, liabilities (or
actions in respect thereof) referred to above in this Section 8(d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this Section 8(d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim. Notwithstanding the provisions of this Section
8(d), the Company shall not be required to contribute any amount in excess of
the amount by which the total proceeds received by it from the sale of the
Shares under this Agreement, before deducting expenses, exceeds the aggregate
amount of any damages that the Company has otherwise been required to pay in
respect of the same or any substantially similar claim. No person found guilty
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
will be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 8(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 8(d), each
person, if any, who controls an Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act will have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20 of the Exchange Act, will have the same rights to contribution as the
Company, subject in each case to the provisions of this Section 8(d). Any party
entitled to contribution will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a claim
for contribution may be made under this Section 8(d), notify any such party or
parties from whom contribution may be sought, but the omission so to notify will
not relieve the party or parties from whom contribution may be sought from any
other obligation(s) it or they may have hereunder or otherwise than under this
Section 8(d) or to the extent that such party or parties were not adversely
affected by such omission. The contribution agreement set forth above shall be
in addition to any liabilities which any indemnifying party may otherwise have.
No party will be liable for contribution with respect to any action or claim
settled without its written consent (which consent will not be unreasonably
withheld).
25
9. Termination. The obligations of the several Underwriters under this
Agreement may be terminated at any time prior to the Closing Date (or, with
respect to the Option Shares, if any, on or prior to the Option Closing Date),
by notice to the Company from the Representative, without liability on the part
of any Underwriter to the Company, if, prior to delivery and payment for the
Firm Shares (or the Option Shares, if any, as the case may be), (i) the Company
shall have failed, refused or been unable, at or prior to such Closing Date, to
perform all obligations on its part to be performed hereunder, (ii) trading in
the Common Stock or securities generally shall have been suspended by the
Commission or by The Nasdaq Stock Market, (iii) minimum or maximum prices shall
have been established for the Common Stock or securities generally on either The
Nasdaq Stock Market or the New York Stock Exchange, or additional material
governmental restrictions, not in force on the date of this Agreement, shall
have been imposed upon trading in securities generally by any of such market or
exchange or by order of the Commission or any court or other governmental
authority, (iv) a general banking moratorium shall have been declared by the
United States or New York State authorities, or (v) any material adverse change
in the financial or securities markets in the United States or any outbreak or
material escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have occurred, the
effect of any of which is such as to make it, in the sole judgment of the
Representative, impracticable or inadvisable to market the Shares on the terms
and in the manner contemplated by the Prospectus. Any termination pursuant to
Section 9 shall be without liability of any party to any other party except as
provided in Sections 6 and 8.
10. Default of Underwriters. If one or more Underwriters default in
their obligations to purchase Firm Shares or Option Shares hereunder and the
aggregate number of such Shares that such defaulting Underwriter or Underwriters
agreed but failed to purchase is ten percent (10%) or less of the aggregate
number of Firm Shares or Option Shares, as the case may be, to be purchased by
all of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representative for the purchase of such Shares
by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representative), but if no such arrangements are
made by the Closing Date or the related Option Closing Date, as the case may be,
the other Underwriters shall be obligated severally in proportion to their
respective commitments hereunder to purchase the Firm Shares or Option Shares
that such defaulting Underwriter or Underwriters agreed but failed to purchase.
If one or more Underwriters so default with respect to an aggregate number of
Shares that is more than ten percent of the aggregate number of Firm Shares or
Option Shares, as the case may be, to be purchased by all of the Underwriters at
such time hereunder, and if arrangements satisfactory to the Representative are
not made within 36 hours after such default for the purchase by other persons
(who may include one or more of the non-defaulting Underwriters, including the
Representative) of the Shares with respect to which such default occurs, this
Agreement will terminate without liability on the part of any non-defaulting
Underwriter or the Company other than as provided in Section 11 hereof. In the
event of any default by one or more Underwriters as described in this Section
10, the Representative shall have the right to postpone the Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 2
hereof for not more than seven (7) business days in order that any necessary
changes may be made in the arrangements or documents for the purchase and
delivery of the Firm Shares or Option Shares, as the case may be. As used in
this Agreement, the term "Underwriter" includes any person substituted for an
Underwriter under this Section 10. Nothing herein shall relieve any defaulting
Underwriter from liability for its default.
26
11. Survival. The respective representations, warranties, agreements,
covenants, indemnities and other statements of the Company, its officers and the
several Underwriters set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement shall remain in full force and
effect, regardless of (i) any investigation made by or on behalf of the Company,
any of its officers or directors, any Underwriter or any controlling person
referred to in Section 8 hereof and (ii) delivery of and payment for the Shares.
The respective agreements, covenants, indemnities and other statements set forth
in Sections 5 and 8 hereof shall remain in full force and effect, regardless of
any termination or cancellation of this Agreement.
12. Notices. Notice given pursuant to any of the provisions of this
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 440 Ninth
Avenue, New York, New York 10001-1695, Attention: Mr. George V. Flagg,
Telephone: (212) 629-1213 and Facsimile: (212) 563-0129, with a copy to
Squadron, Ellenoff, Plesent & Sheinfeld, LLP, 551 Fifth Avenue, New York, New
York 10176, Attention: Jeffrey W. Rubin, Esquire, Telephone: (212) 476-8224 and
Facsimile: (212) 697-6686 or (b) if to the Underwriters, to the Representative
at the offices of Brean Murray & Co., Inc., 570 Lexington Avenue, New York, New
York 10022 Attention: Mr. A. Brean Murray, Telephone: (212) 476-0700 and
Facsimile: (212) 476-0798, with a copy to Piper & Marbury L.L.P., 1251 Avenue of
the Americas, New York, New York 10020-1104, Attention: Michael Hirschberg,
Esq., Telephone: (212) 835-6270 and Facsimile: (212) 835-6001. Any such notice
shall be effective only upon receipt. Any notice under Section 8 or 9 may be
made by telephone or facsimile but if so made shall be subsequently confirmed in
writing.
13. Successors. This Agreement shall inure to the benefit of and shall
be binding upon the several Underwriters, the Company and their respective
successors and legal representatives, and nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any other person any legal
or equitable right, remedy or claim under or in respect of this Agreement, or
any provisions herein contained, this Agreement and all conditions and
provisions hereof being intended to be and being for the sole and exclusive
benefit of such persons and for the benefit of no other person except that (i)
the indemnities of the Company contained in Section 8 of this Agreement shall
also be for the benefit of any person or persons who control any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
and (ii) the indemnities of the Underwriters contained in Section 8 of this
Agreement shall also be for the benefit of the directors of the Company, the
officers of the Company who have signed the Registration Statement and any
person or persons who control the Company within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act. No purchaser of Shares from any
Underwriter shall be deemed a successor because of such purchase. This Agreement
shall not be assignable by any party hereto without the prior written consent of
the other parties.
27
14. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT,
AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT GIVING
EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
15. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
16. Information Provided by Underwriters. The Company and the
Underwriters acknowledge and agree that the only information furnished or to be
furnished by any Underwriter to the Company for inclusion in any Prospectus or
the Registration Statement consists of the information set forth in the last
paragraph on the front cover page and the last two paragraphs on the inside
front cover of the Prospectus (insofar as such information relates to the
Underwriters) and under the caption "Underwriting" in the Prospectus.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
HOLMES PROTECTION GROUP, INC.
By:
-----------------------------------------
Name: George V. Flagg
Title: President and Chief Executive Officer
Confirmed as of the date first above mentioned:
BREAN MURRAY & CO., INC.
By:
--------------------------------
Name: A. Brean Murray
Title: Chairman
Acting on its behalf and as the Representative of the other several Underwriters
named in Schedule I hereof.
28
SCHEDULE I
UNDERWRITERS
Aggregate
Number of
Shares to
be
Purchased
----------
Brean Murray & Co., Inc. ......................................
----------
Total ............................................. 1,000,000
==========