EXHIBIT 1
1,545,000 SHARES
DETECTION SYSTEMS, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
St. Petersburg, Florida
September , 1997
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
As Representatives of the Several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Dear Sirs:
Detection Systems, Inc., a New York corporation (the "Company"), proposes
to issue and sell and certain persons named in SCHEDULE II hereto (the "Selling
Shareholders") propose to sell to the underwriters named in SCHEDULE I hereto
(the "Underwriters"), an aggregate of 1,545,000 shares of common stock, par
value $0.05 per share (the "Common Stock"), of the Company, of which 1,325,000
shares are to be issued and sold by the Company and an aggregate of 220,000
shares are to be sold by the Selling Shareholders in the respective amounts set
forth in SCHEDULE II hereto, subject to the terms and conditions stated herein.
The aggregate of 1,545,000 shares to be purchased from the Company and the
Selling Shareholders are hereinafter referred to as the "Firm Shares." In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to 231,750 additional shares of Common Stock (the "Additional
Shares"), solely to cover over-allotments by the Underwriters, if any. The
Firm Shares and, to the extent such option is exercised, the Additional Shares
are hereinafter collectively referred to as the "Shares." Xxxxxxx Xxxxx &
Associates, Inc. and Xxxxxxx & Company, Inc. are acting as the representatives
of the several Underwriters and in such capacity are hereinafter referred to as
the "Representatives."
The Company and the Selling Shareholders wish to confirm as follows their
agreement with you and the other several Underwriters, on whose behalf you are
acting, in connection with the several purchases of the Shares from the Company
and the Selling Shareholders.
SECTION 1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively, the "Act"), a registration statement on Form S-2 (Registration
No. 333-31951), including a prospectus subject to completion, relating to the
Shares. Such registration statement (including all financial schedules and
exhibits and the schedules and reports incorporated in
such registration statement by reference), as amended at the time when it
becomes effective and as thereafter amended by post-effective amendment, is
referred to in this Agreement as the "Registration
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
Statement." The term "Prospectus" as used in this Agreement means (i)
the prospectus (including the schedules and reports incorporated in such
prospectus by reference) in the form included in the Registration Statement
on the date upon which the Registration Statement is declared effective by
the Commission, or (ii) if the prospectus (including the schedules and
reports incorporated in such prospectus by reference) included in the
Registration Statement on the date upon which the Registration Statement
is declared effective by the Commission omits information in reliance
upon Rule 430A under the Act and such information is included in a
prospectus filed with the Commission pursuant to Rule 424(b)
under the Act or as part of a post-effective amendment to the Registration
Statement after the Registration Statement becomes effective, the prospectus as
so filed, or (iii) if the prospectus (including the schedules and reports
incorporated in such prospectus by reference) included in the Registration
Statement on the date upon which the Registration Statement is declared
effective by the Commission omits information in reliance upon Rule 430A under
the Act and such information is included in a term sheet (as described in Rule
434(b) under the Act) filed with the Commission pursuant to Rule 424(b) under
the Act, the prospectus included in the Registration Statement and such term
sheet, taken together. The prospectus (including the schedules and reports
incorporated in such prospectus by reference) subject to completion in the form
included in the Registration Statement at the time of the initial filing of
such Registration Statement with the Commission and as such prospectus is
amended from time to time until the date upon which the Registration Statement
is declared effective by the Commission is referred to in this Agreement as the
"Prepricing Prospectus." If the Company files a registration statement to
register the offer and sale of a portion of the Shares and relies upon Rule
462(b) for such registration statement to become effective upon filing with the
Commission (the "Rule 462 Registration Statement"), then any reference herein
to the "Registration Statement" shall be deemed to refer to both the
registration statement referred to above (Registration No. 333-31951) and the
Rule 462 Registration Statement, in each case as amended from time to time.
The schedules and reports incorporated by reference into the Prospectus or any
Prepricing Prospectus pursuant to Item 12 of Form S-2 are hereinafter referred
to as the "Incorporated Reports."
SECTION 2. AGREEMENTS TO SELL AND PURCHASE. Upon the basis of the
representations, warranties and agreements of the Company and the Selling
Shareholders herein contained and subject to all the terms and conditions set
forth herein, the Company hereby agrees to issue and sell 1,325,000 Firm Shares
to the Underwriters, and the Selling Shareholders, severally and not jointly,
hereby agree to sell an aggregate of 220,000 Firm Shares (each to sell the
number of Firm Shares set forth opposite the name of such Selling Shareholder
in SCHEDULE II hereto) to the Underwriters, and each Underwriter agrees,
severally and not jointly, to purchase from the Company and the Selling
Shareholders at a purchase price of $_______ per Share (the "purchase price per
Share"), the number of Firm Shares set forth opposite the name of such
Underwriter in SCHEDULE I hereto (or such number of Firm Shares as adjusted
pursuant to Section 12 hereof).
Upon the basis of the representations, warranties and agreements of the
Company and the Selling Shareholders herein contained and subject to all the
terms and conditions set forth herein, the Company also agrees to issue and
sell up to 231,750 Additional Shares to the Underwriters, and the Underwriters
shall have the one-time right for 30 days from the date upon which the
Registration Statement is declared effective by the Commission to purchase from
the Company up to 231,750 Additional Shares at the purchase price per Share
for the Firm Shares. The Additional Shares may be purchased solely for the
purpose of covering over-allotments made in connection with the offering
and distribution of the Firm Shares. If any Additional Shares are to be
purchased, each Underwriter agrees, severally and not jointly, to purchase
the number of Additional Shares (subject to such adjustments as you may
determine to avoid fractional shares) which bears the same proportion to
the number of Additional Shares to be sold as the number of Firm Shares set
forth opposite the name of such Underwriter in SCHEDULE I hereto (or such
number of Firm Shares as adjusted pursuant to Section 12 hereof) bears to the
total number of Firm Shares.
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SECTION 3. TERMS OF PUBLIC OFFERING. The Company and the Selling
Shareholders have been advised by you that the Underwriters propose to make a
public offering of their respective portions of the Shares as soon after the
Registration Statement and this Agreement have become effective as in your
judgment is advisable and initially to offer the Shares upon the terms set
forth in the Prospectus.
SECTION 4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of the Firm Shares and payment therefor shall be made at the
offices of Xxxxxxx Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx.
Xxxxxxxxxx, Xxxxxxx, at 10:00 a.m., St. Petersburg, Florida time, on the third
business day after the date of this Agreement, or at such time on such other
day, not later than seven full business days after such third business day, as
shall be agreed upon in writing by the Company and the Representatives (the
"Closing Date"). The place of closing for the Firm Shares and the Closing Date
may be varied by agreement between you and the Company.
Delivery to the Underwriters of and payment for any Additional Shares to
be purchased by the Underwriters shall be made at the offices of Xxxxxxx Xxxxx
& Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx, at 10:00
a.m., St. Petersburg, Florida time, on such date or dates (the "Additional
Closing Date") (which may be the same as the Closing Date but shall in no event
be earlier than the Closing Date nor earlier than three nor later than ten
business days after the giving of the notice hereinafter referred to), as shall
be specified in a written notice from you on behalf of the Underwriters to the
Company, of the Underwriters' determination to purchase a number, specified in
such notice, of Additional Shares. Such notice may be given to the Company by
you at any time within 30 days after the date upon which the Registration
Statement is declared effective by the Commission. The place of closing for
the Additional Shares and the Additional Closing Date may be varied by
agreement between you and the Company.
Certificates for the Firm Shares and for any Additional Shares to be
purchased hereunder shall be registered in such names and in such denominations
as you shall request prior to 1:00 p.m., St. Petersburg, Florida time, on the
second business day preceding the Closing Date or the Additional Closing Date,
as the case may be. Such certificates shall be made available to you in St.
Petersburg, Florida for inspection and packaging not later than 9:30 a.m., St.
Petersburg, Florida time, on the business day immediately preceding the Closing
Date or the Additional Closing Date, as the case may be. The certificates
evidencing the Firm Shares and any Additional Shares to be purchased hereunder
shall be delivered to you on the Closing Date or the Additional Closing Date,
as the case may be, against payment of the purchase price therefor by certified
or official bank check or checks payable in New York Clearing House (next day)
funds.
SECTION 5. AGREEMENTS OF THE COMPANY. The Company agrees with the
several Underwriters as follows:
(a) The Company will endeavor to cause the Registration Statement to
become effective and will advise you promptly and, if requested by you, will
confirm such advice in writing (i) when the Registration Statement has become
effective and when any post-effective amendment thereto becomes effective, (ii)
if Rule 430A under the Act is employed, when the Prospectus or term sheet (as
described in Rule 434(b) under the Act) has been timely filed pursuant to Rule
424(b) under the Act, (iii) of any request by the Commission for amendments or
supplements to the Registration Statement, any Prepricing Prospectus or the
Prospectus or for additional information, (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of the suspension of qualification of the Shares for offering or
sale in any jurisdiction or the initiation (or threatened initiation) of any
proceeding for such purposes, and (v) within the period of time referred to in
Section 5(e) below, of any change in the Company's condition (financial or
other), business, business prospects, properties, net worth
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XXXXXXX XXXXX & ASSOCIATES, INC.
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or results of operations, or of any event that comes to the attention of the
Company that makes any statement made in the Registration Statement or the
Prospectus (as then amended or supplemented) untrue in any material respect or
that requires the making of any additions thereto or changes therein in order
to make the statements therein not misleading in any material respect, or of
the necessity to amend or supplement the Prospectus (as then amended or
supplemented) to comply with the Act or any other law. If at any time the
Commission shall issue any stop 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 time.
(b) The Company will furnish to you, without charge, three signed
copies of the Registration Statement as originally filed with the Commission
and of each amendment thereto, including financial statements and all exhibits
thereto, and will also furnish to you, without charge, such number of conformed
copies of the Registration Statement as originally filed and of each amendment
thereto as you may reasonably request.
(c) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which you
shall not previously have been advised (with a reasonable opportunity to review
such amendment or supplement) or to which you have reasonably objected after
being so advised.
(d) Prior to the execution and delivery of this Agreement, the Company
has delivered or will deliver to you, without charge, in such quantities as you
have requested or may hereafter reasonably request, copies of each form of the
Prepricing Prospectus. The Company consents to the use, in accordance with the
provisions of the Act and with the securities or Blue Sky laws of the
jurisdictions in which the Shares are offered by the several Underwriters and
by dealers, prior to the date of the Prospectus, of each Prepricing Prospectus
so furnished by the Company.
(e) As soon after the execution and delivery of this Agreement as is
practicable and thereafter from time to time for such period as in the
reasonable opinion of counsel for the Underwriters a prospectus is required by
the Act to be delivered in connection with sales by any Underwriter or a
dealer, the Company will deliver to each Underwriter and each dealer, without
charge, as many copies of the Prospectus (and of any amendment or supplement
thereto) as the Representatives may reasonably request. The Company consents
to the use of the Prospectus (and of any amendment or supplement thereto) in
accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions in which the Shares are offered by the several
Underwriters and by all dealers to whom Shares may be sold, both in
connection with the offering and sale of the Shares and for such period
of time thereafter as the Prospectus is required by the Act to be
delivered in connection with sales by any Underwriter or dealer.
If during such period of time any event shall occur
that in the judgment of the Company or in the opinion of counsel for the
Underwriters is required to be set forth in the Prospectus (as then amended or
supplemented) or should be set forth therein in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary to supplement or amend the Prospectus to
comply with the Act or any other law, the Company will forthwith prepare and
file with the Commission an appropriate supplement or amendment thereto, and
will furnish to each Underwriter and to each dealer who has previously been
provided Prospectuses, without charge, a reasonable number of copies thereof.
(f) The Company will cooperate with you and counsel for the
Underwriters in connection with the registration or qualification of the Shares
for offering and sale by the several Underwriters and by dealers under the
securities or Blue Sky laws of such jurisdictions as you may reasonably
designate and will file such consents to service of process or other documents
as may be reasonably necessary in order to effect such registration or
qualification; 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 service of process in suits,
other than
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XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
those arising out of the offering or sale of the Shares, in any
jurisdiction where it is not now so subject. In the event that the
qualification of the Shares in any jurisdiction is suspended, the Company shall
so advise you promptly in writing.
(g) The Company will make generally available to its security holders a
consolidated earnings statement, which need not be audited, covering a twelve-
month period commencing after the effective date of the Registration Statement
and ending not later than 15 months thereafter, as soon as practicable after
the end of such period, which consolidated earnings statement shall satisfy the
provisions of Section 11(a) of the Act.
(h) During the period of five years hereafter, the Company will furnish
to you as soon as practicable after the end of each fiscal year, a copy of its
annual report to shareholders for such year; and the Company will furnish to
you (i) as soon as available, a copy of each report or definitive proxy
statement of the Company filed with the Commission under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), or mailed to
shareholders, and (ii) from time to time such other information concerning the
Company as you may reasonably request. In addition, for a period of two years
hereafter, the Company will xxxxxxx Xxxxxxx Xxxxx & Associates, Inc. with
copies of any management letters received by the Company from the Company's
independent certified public accountants, including any such management letters
relating to the Company's fiscal year ending March 31, 1999.
(i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (other than as a result of a
failure by the Representatives or any Underwriter to fulfill their or its
obligations hereunder) or if this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part of the Company to
comply with the terms or fulfill any of the conditions of this Agreement, the
Company agrees to reimburse the Representatives for all out-of-pocket expenses
(including fees and expenses of counsel for the Underwriters but excluding
wages and salaries paid by the Representatives) reasonably incurred by you in
connection herewith to a maximum aggregate reimbursement of Seventy-Five
Thousand Dollars (U.S. $75,000.00).
(j) The Company will apply the net proceeds from the sale of the Shares
to be sold by it hereunder substantially in accordance with the description set
forth in the Prospectus.
(k) If Rule 430A under the Act is employed, the Company will timely
file the Prospectus or term sheet (as described in Rule 434(b) under the Act)
pursuant to Rule 424(b) under the Act.
(l) The Company will not offer, sell, contract to sell or otherwise
dispose of any Common Stock or rights to purchase Common Stock, or any
securities convertible into or exchangeable for Common Stock, except to the
Underwriters pursuant to this Agreement, for a period of 120 days after
commencement of the public offering of the Shares by the Underwriters without
the prior written consent of Xxxxxxx Xxxxx & Associates, Inc.; PROVIDED,
HOWEVER, that the Company may issue Common Stock upon the exercise of warrants
or stock options outstanding at the time of effectiveness of the Registration
Statement or pursuant to the Company's Deferred Compensation Plan or Deferred
Stock Compensation Plan and the Company may grant options under the Company's
1997 Stock Option Plan.
(m) The Company will not, directly or indirectly, take any action which
would constitute or any action designed, or which might reasonably be expected
to cause or result in or constitute, under the Act or otherwise, stabilization
or manipulation of the price of any security of the Company to facilitate the
sale or resale of the Shares.
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XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
(n) If at any time during the 25-day period after the first date that
any of the Shares are released by you for sale to the public, any rumor,
publication, or event relating to or affecting the Company shall occur as a
result of which in your opinion the market price of the Common Stock (including
the Shares) has been or is likely to be materially affected (regardless of
whether such rumor, publication, or event necessitates a supplement to or
amendment of the Prospectus), the Company will, after written notice from you
advising the Company to the effect set forth above, forthwith consult with you
concerning the advisability and substance of, and, if appropriate, disseminate
a press release or other public statement responding to or commenting on such
rumor, publication, or event.
(o) The Company will maintain a transfer agent and, if necessary under
the jurisdiction of its incorporation or the rules of the Nasdaq National
Market or any national securities exchange on which the Common Stock is listed,
a registrar (which, if permitted by applicable laws and rules, may be the same
entity as the transfer agent) for its Common Stock.
SECTION 6. AGREEMENTS OF THE SELLING SHAREHOLDERS. Each of the Selling
Shareholders, severally and not jointly, agrees with the several Underwriters
as follows:
(a) Such Selling Shareholder will not offer, sell, contract to sell or
otherwise dispose of any Common Stock or rights to purchase Common Stock, or
any securities convertible into or exchangeable for Common Stock, except to the
Underwriters pursuant to this Agreement, for a period of 120 days after
commencement of the public offering of the Shares by the Underwriters without
the prior written consent of Xxxxxxx Xxxxx & Associates, Inc.
(b) Such Selling Shareholder will not, directly or indirectly, take any
action which would constitute or any action designed, or which might reasonably
be expected to cause or result in or constitute, under the Act or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
SECTION 7. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter on the date hereof, and shall be
deemed to represent and warrant to each Underwriter on the Closing Date and the
Additional Closing Date, that:
(a) Each Prepricing Prospectus included as part of the Registration
Statement as originally filed or as part of any amendment or supplement
thereto, or filed pursuant to Rule 424(a) under the Act, complied when so filed
in all material respects with the provisions of the Act, except that this
representation and warranty does not apply to statements in or omissions from
such Prepricing Prospectus (or any amendment or supplement thereto) made in
reliance upon and in conformity with information relating to any Underwriter
furnished to the Company in writing by or on behalf of any Underwriter through
you expressly for use therein or in reliance upon and in conformity with
information relating to any Selling Shareholder furnished to the Company in
writing by or on behalf of any Selling Shareholder expressly for use therein.
(b) The Commission has not issued any order preventing or suspending
the use of any Prepricing Prospectus, and the Prepricing Prospectus included as
part of the Registration Statement declared effective by the Commission
complies as to form in all material respects with the requirements of the Act.
The Registration Statement, in the form in which it becomes effective and also
in such form as it may be when any post-effective amendment thereto shall
become effective, and the Prospectus, and any supplement or amendment thereto
when filed
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XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
with the Commission under Rule 424(b) under the Act, will comply in
all material respects with the provisions of the Act and will not at any such
times contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except that this representation and warranty does not
apply to statements in or omissions from the Registration Statement or the
Prospectus (or any amendment or supplement thereto) made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by or on behalf of any Underwriter through you expressly for
use therein or in reliance upon and in conformity with information relating to
any Selling Shareholder furnished to the Company in writing by or on behalf of
any Selling Shareholder expressly for use therein. The Company has satisfied
all conditions to the use of Form S-2 with respect to the offering of the
Shares for sale to the public.
(c) The capitalization of the Company is as set forth in the Prospectus
as of the date set forth therein. All the outstanding shares of Common Stock
of the Company have been duly authorized and validly issued, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares to
be issued and sold to the Underwriters by the Company hereunder have been duly
authorized and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms hereof, will be validly issued, fully
paid and nonassessable and free of any preemptive or similar rights; the
capital stock of the Company conforms to the description thereof in the
Registration Statement and the Prospectus (or any amendment or supplement
thereto); and the delivery of certificates for the Shares pursuant to the terms
of this Agreement and payment for the Shares will pass valid marketable title
to the Shares, free and clear of any voting trust arrangements, liens,
encumbrances, equities, claims or defects in title to the several Underwriters
purchasing the Shares in good faith and without notice of any lien, claim or
encumbrance.
(d) The Company is a corporation duly organized and validly existing in
good standing under the laws of the State of New York with full corporate power
and authority to own, lease and operate its properties and to conduct its
business as presently conducted and as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto), and is
duly registered and qualified to conduct its business and is in good standing
in each jurisdiction or place where the nature of its properties or the conduct
of its business requires such registration or qualification, except where the
failure to so register or qualify does not have a material adverse effect on
the condition (financial or other), business, properties, net worth or results
of operations of the Company and the Subsidiaries (as hereinafter defined),
taken as a whole.
(e) Each of Radionics, Inc., a California corporation; Emergency
Communication Inc., a New York corporation (in which the Company holds a 99.33%
equity interest); Detection Systems Foreign Sales Corp., a Barbados
corporation; TriSense Ltd., a New York corporation; Detection Systems
International, Inc., a New York corporation; Detection Systems Australia Pty.
Ltd., an Australian corporation; Detection Systems (HK) Ltd., a corporation
organized under the laws of Hong Kong; DS First Systems (Beijing) Limited, a
corporation (in which the Company owns a 30% equity interest) organized under
the laws of the People's Republic of China; Digital Audio Limited, a
corporation organized under the laws of England and Wales; SystemCredit Trading
Limited, a corporation organized (in which Digital Audio Limited owns a 100%
interest) under the laws of England and Wales; Seriee, S.A., a corporation
(in which the Company owns a 99.5% interest) organized under the laws of
France; and Radio-Active Systems N.V., a corporation (in which the Company owns
a 98.7% equity interest) organized under the laws of Belgium (collectively, the
"Subsidiaries"), is a corporation duly organized, validly existing and in good
standing in its jurisdiction of incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its business
as presently conducted and as described in the Registration Statement and the
Prospectus (and any amendment or supplement thereto), and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
to so register or qualify does not have a material adverse effect
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on the condition (financial or other), business, properties, net worth or
results of operations of the Company and the Subsidiaries, taken as a whole.
Except as otherwise noted in the first sentence of this Section 7(e),
all of the outstanding shares of capital stock of each of the Subsidiaries
has been duly authorized and validly issued, are fully paid and nonassessable,
and are owned by the Company directly or indirectly through one of the other
Subsidiaries, free and clear of any lien, adverse claim, security interest,
equity or other encumbrance. Except for the Subsidiaries, the Company does
not own a material interest in or control, directly or indirectly,
any other corporation, partnership, joint venture, association, trust or
other business organization or entity.
(f) There are no legal or governmental proceedings pending or, to the
knowledge of the Company, threatened, against the Company or any of the
Subsidiaries, or to which the Company or any of the Subsidiaries, or to which
any of their respective property, is subject, that are required to be described
in the Registration Statement or the Prospectus (or any amendment or supplement
thereto) but are not described as required. Except as described in the
Prospectus, there is no action, suit, inquiry, proceeding, or investigation by
or before any court or governmental or other regulatory or administrative
agency or commission pending or, to the best knowledge of the Company,
threatened against or involving the Company or any Subsidiary relating to any
product alleged to have been manufactured or sold by the Company or any
Subsidiary and alleged to have been unreasonably hazardous, defective, or
improperly designed or manufactured, nor, to the knowledge of the Company, is
there any basis for any such action, suit, inquiry, proceeding, or
investigation. There are no agreements, contracts, indentures, leases or other
instruments that are required to be described in the Registration Statement or
the Prospectus (or any amendment or supplement thereto) or to be filed as an
exhibit to the Registration Statement that are not described or filed as
required or incorporated by reference as permitted by the
Act. All such agreements, contracts, indentures, leases or other instruments
to which the Company or any Subsidiary is a party have been duly authorized,
executed and delivered by the Company or such Subsidiary, constitute valid and
binding agreements of the Company or such Subsidiary and are enforceable
against the Company or such Subsidiary in accordance with the terms thereof,
except as enforceability thereof may be limited by the application of
bankruptcy, reorganization, insolvency and other laws affecting the rights of
creditors generally.
(g) Neither the Company nor any of the Subsidiaries is in violation of
its certificate or articles of incorporation or bylaws, or other organizational
documents, nor is the Company or any of the Subsidiaries in violation of any
law, ordinance, administrative or governmental rule or regulation applicable to
the Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or any of the
Subsidiaries, except where such violation has not had and will not have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined), taken as a whole.
(h) The execution and delivery of this Agreement, and the performance
by the Company of its obligations under this Agreement have been duly and
validly authorized by the Company, and this Agreement has been duly executed
and delivered by the Company and constitutes the valid and legally binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except as enforceability thereof may be limited by (i) the
application of bankruptcy, reorganization, insolvency and other laws affecting
creditors' rights generally, (ii) equitable principles being applied at the
discretion of a court before which any proceeding may be brought and (iii)
federal or state securities laws or principles of public policy relating to the
enforcement of rights to indemnification or contribution.
(i) None of the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement by the Company nor the consummation
by the Company of the transactions contemplated hereby (i) is or may be void or
voidable by any person or entity, (ii) requires any consent, approval,
authorization or other order of or registration or filing with, any court,
regulatory body, administrative agency or other governmental body,
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agency or official (except such as may be required for the registration of
the Shares under the Act and compliance with the securities or Blue Sky
laws of various jurisdictions, all of which will be, or have been,
effected in accordance with this Agreement) or conflicts or will conflict
with or constitutes or will constitute a breach of, or a default under,
the certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries,
or (iii) conflicts or will conflict with or
constitutes a breach of, or a default under, any agreement, indenture, lease or
other instrument to which the Company or any of the Subsidiaries is a party or
by which any of them or any of their respective properties may be bound, or
violates any statute, law, regulation or filing or judgment, injunction, order
or decree applicable to the Company or any of the Subsidiaries or any of their
respective properties, or results in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to which any
of them is a party or by which any of them may be bound or to which any of the
property or assets of any of them is subject.
(j) Except as described in the Prospectus, each bond, debenture, note,
other evidence of indebtedness, indenture, lease, contract, agreement or
arrangement to which the Company or any of its Subsidiaries is a party or by
which any of them is bound, or to which any of the property or assets of the
Company or any of its Subsidiaries is subject, which is material to the
condition (financial or other), business, business prospects, properties, net
worth or results of operations of the Company and its
Subsidiaries, taken as a whole, has been duly and validly authorized, executed
and delivered by the Company or such Subsidiary, as applicable, and neither the
Company nor any of its Subsidiaries is in breach or default in any material
respect of any obligation, agreement, covenant or condition contained in any
such bond, debenture, note, other evidence of indebtedness, indenture, lease,
contract, agreement or arrangement; none of such bonds, debentures, notes,
other evidences of indebtedness, indentures, leases, contracts, agreements or
arrangements has been assigned by the Company or any of its Subsidiaries, and
the Company knows of no present condition or fact which would prevent
compliance by the Company or any of its Subsidiaries of any other party thereto
with the terms of any such bond, debenture, note, other evidence of
indebtedness, indenture, lease, contract, agreement or arrangement in all
material respects; neither the Company nor any of its Subsidiaries has any
present intention to exercise any rights that it may have to cancel any such
bond, debenture, note, other evidence of indebtedness, indenture, lease,
contract, agreement or arrangement or otherwise to terminate its rights and
obligations thereunder, and none of them has any knowledge that any other party
to any such bond, debenture, note, other evidence of indebtedness, indenture,
lease, contract, agreement or arrangement has any intention not to render full
performance in all materials respects as contemplated by the terms thereof.
(k) Except as described in the Prospectus, the Company does not have
outstanding and at the Closing Date (and the Additional Closing Date, if
applicable) will not have outstanding any options to purchase, or any warrants
to subscribe for, or any securities or obligations convertible into, or any
contracts or commitments to issue or sell, any shares of Common Stock or any
such warrants or convertible securities or obligations. No holder of
securities of the Company has rights to the registration of any securities of
the Company because of the filing of the Registration Statement which have not
been complied with or effectively waived. The Company has complied with all of
its duties and obligations pursuant to any agreement, instrument, or other
document pursuant to which any holder of securities of the Company has rights
to the registration of any securities of the Company because of the filing of
the Registration Statement.
(l) Price Waterhouse LLP, the certified public accountants that have
certified the financial statements filed as part of the Registration Statement
and the Prospectus (or any amendment or supplement thereto) are independent
public accountants as required by the Act.
(m) The financial statements, together with related schedules and
notes, forming part of, or incorporated by reference into, the Registration
Statement and the Prospectus (and any amendment or supplement thereto), present
9
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
fairly the historical consolidated financial position, results of operations
and changes in financial position of the Company and the Subsidiaries on the
basis stated in the Registration Statement at the respective dates or for the
respective periods to which they apply; such statements and related schedules
and notes have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved, except as
disclosed therein. The other financial and statistical information and data
relating to the Company set forth in the Registration Statement and Prospectus
(and any amendment or supplement thereto) is accurately presented and prepared
on a basis consistent with such financial statements and the books and records
of the Company.
(n) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement thereto), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement thereto), neither
the Company nor any of the Subsidiaries has incurred any liability or
obligation, direct or contingent, or
entered into any transactions, not in the ordinary course of business, that is
material to the Company and the Subsidiaries, taken as a whole, and there has
not been any material change in the capital stock, or material increase in the
short-term debt or long-term debt, of the Company and the Subsidiaries, taken
as a whole, or any material adverse change, or any development involving or
which may reasonably be expected to involve a material adverse change, in the
condition (financial or other), business, net worth or results of operations of
the Company and the Subsidiaries, taken as a whole.
(o) The Company or each of the Subsidiaries, as the case may be, has
good and marketable title to all property (real and personal) described in the
Prospectus as being owned by them, free and clear of all liens, claims,
security interests or other encumbrances except such as are described in the
Registration Statement and the Prospectus or in a document filed as an exhibit
to the Registration Statement or such as are not materially burdensome and do
not interfere in any material respect with the use of the property or the
conduct of the business of the Company and the Subsidiaries, taken as a whole,
and the property (real and personal) held under lease by each of the Company or
the Subsidiaries, as the case may be, is held by them under valid, subsisting
and enforceable leases with only such exceptions as in the aggregate are not
materially burdensome and do not interfere in any material respect with the
conduct of the business of the Company and the Subsidiaries, taken as a whole.
(p) The Company has not distributed and will not distribute prior to
the Closing Date any offering material in connection with the offering and sale
of the Shares other than the Prepricing Prospectus and the Registration
Statement, the Prospectus or other materials permitted by the Act.
(q) The Company has not taken, directly or indirectly, any action which
constituted or any action designed, or which might reasonably be expected to
cause or result in or constitute, under the Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(r) The Company is not an "investment company," an "affiliated person"
of, or "promoter" or "principal underwriter" for an investment company within
the meaning of the Investment Company Act of 1940, as amended.
(s) The Incorporated Reports, when they were filed (or if an amendment
with respect to any such Incorporated Reports was filed, such Incorporated
Reports as amended when such amendment was filed) with the Commission, were
timely filed (or filed within the time limits prescribed by Rule 12b-25 under
the Exchange Act) and conformed in all material respects to the requirements of
the Exchange Act; none of such Incorporated Reports, when filed (or if an
amendment with respect to any such Incorporated Reports was filed, such
Incorporated Reports as amended when such amendment was filed), contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading.
10
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
(t) The Company and each of the Subsidiaries have all permits,
licenses, franchises, approvals, consents and authorizations of governmental or
regulatory authorities or private persons or entities (hereinafter "permit" or
"permits") as are necessary to own their properties and to conduct their
business in the manner described in the Prospectus, subject to such
qualifications as may be set forth in the Prospectus, except where the failure
to have obtained any such permit has not had and will not have a material
adverse effect upon the condition (financial or other) or the business of the
Company and the Subsidiaries, taken as a whole; the Company and each of the
Subsidiaries have fulfilled and performed all of their material obligations
with respect to each such permit and no event has occurred
which allows, or after notice or lapse of time would allow, revocation or
termination of any such permit or result in any other material impairment of
the rights of the holder of any such permit, subject in each case to such
qualification as may be set forth in the Prospectus, except where such
revocation, termination or impairment has not had and will not have a material
adverse effect upon the condition (financial or other) or the business of the
Company and the Subsidiaries, taken as a whole; and, except as described in the
Prospectus, such permits contain no restrictions that are materially burdensome
to the Company or any of the Subsidiaries.
(u) The Company and each of the Subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company nor any of the Subsidiaries has any reason to
believe that it will not be able to renew its existing insurance coverage as
and when such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a comparable cost,
except as disclosed in the Registration Statement and the Prospectus.
(v) The Company and the Subsidiaries have complied and will comply in
all material respects with wage and hour determinations issued by the U.S.
Department of Labor under the Service Contract Act of 1965 and the Fair Labor
Standards Act in paying its employees' salaries, fringe benefits, and other
compensation for the performance of work or other duties in connection with
contracts with the U.S. government, and have complied and will comply in all
material respects with the requirements of the Americans with Disabilities Act
of 1990, the Family and Medical Leave Act of 1993, the Employee Retirement
Income Security Act, the Civil Rights Act of 1964 (Title VII), as amended, the
Age Discrimination in Employment Act and state labor laws, except where the
failure to comply with any such requirements has not, and will not, have a
material adverse effect (financial or other) upon the condition of the Company
and the Subsidiaries, taken as a whole. The Company and the Subsidiaries have
complied and will comply in all material respects with the terms of all
certifications and representations made to the U.S. government in connection
with the submission of any bid or proposal or any contract. The Company and
the Subsidiaries have complied and will comply in all material respects with
their obligations under their agreements and contracts with the U.S. government
and agencies thereof. To the Company's knowledge, the Company and the
Subsidiaries have complied in all material respects with all foreign
requirements that are substantially similar in nature to the foregoing
domestic requirements and are applicable to the Company's and the Subsidiaries'
non-U.S. operations, except where the failure to comply with any such
requirements has not, and will not, have a material adverse effect (financial
or other) upon the condition of the Company and the Subsidiaries, taken as a
whole.
(w) The Company and the Subsidiaries maintain a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or specific
authorizations; 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.
11
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
(x) Neither the Company nor any Subsidiary has, directly or indirectly,
at any time during the past five years (i) made any unlawful contribution to
any candidate for political office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any federal,
state or foreign governmental official, or other person charged with similar
public or quasi-public duties, other
than payments required or permitted by the laws of the United States or any
jurisdiction thereof or applicable foreign jurisdictions, except where the
making of any such contribution or payment has not had and will not have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined), taken as a whole.
(y) The Company and the Subsidiaries have obtained all required
permits, licenses, and other authorizations, if any, which are required under
federal, state, regional, county, local and foreign statutes, codes, ordinances
and other laws relating to pollution or protection of the environment,
including laws relating to emissions, discharges, releases, spilling,
injecting, leaching, or disposing into the environment or threatened releases
of pollutants, contaminants, chemicals, or industrial, hazardous, or toxic
materials or wastes into the environment (including, without limitation,
ambient air, surface water, ground water, land surface, or subsurface strata)
or otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, discharge into the environment, transport, or
handling of pollutants, contaminants, chemicals, or industrial, hazardous, or
toxic materials or wastes, or any regulation, rule, code, plan, order, decree,
judgment, injunction, notice, or demand letter issued, entered, promulgated, or
approved thereunder ("Environmental Laws"), except where the failure to obtain
any such permit, license or authorization has not had and will not have a
material adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined), taken as a whole. The Company and the
Subsidiaries are in material compliance with all terms and conditions of all
required permits, licenses, and authorizations, and are also in material
compliance with all other limitations, restrictions, conditions, standards,
prohibitions, requirements, obligations, schedules, and timetables contained in
the Environmental Laws. There is no pending or, to the knowledge of the
Company, threatened civil or criminal litigation, notice of violation, warning
letter, or administrative proceeding relating in any way to the Environmental
Laws (including, without limitation, notices, demand letters, or claims under
the Resource Conservation and Recovery Act of 1976, as amended ("RCRA"), the
Comprehensive Environmental Response, Compensation and Liability Act of 1980,
as amended ("CERCLA"), as amended by the Superfund Amendments Reauthorization
Act of 1987 ("XXXX"), the Toxic Substances Control Act of 1976, the Emergency
Planning and Community Right-to-Know Act of 1986, the Clean Water Act of 1977,
and the Clear Air Act of 1966, all as amended, and similar foreign, state, or
local laws) involving the Company or any of the Subsidiaries. To the knowledge
of the Company, there have not been and there are not any past, present, or
foreseeable future events, conditions, circumstances, activities, practices,
incidents, actions, or plans which may interfere with or prevent continued
compliance, or which may give rise to any common law or legal liability, or
otherwise form the basis of any present or future claim, action, demand, suit,
proceeding, hearing, study, or investigation, based on or related to the
manufacture, processing, distribution, use, treatment, storage, disposal,
arrangement for disposal, transport, arrangement for transport, or handling, or
the emission, discharge, release, or threatened release into the environment,
of any pollutant, contaminant, chemical, or industrial, hazardous, or toxic
material or waste, including, without limitation, any liability arising, or any
claim, action, demand, suit, proceeding, hearing, study, or investigation which
may be brought under RCRA, CERCLA, XXXX, or similar foreign, state, regional,
county, or local laws.
(z) From time to time the Company evaluates the effect of Environmental
Laws on the business, operations, and properties of the Company and the
Subsidiaries and the associated costs and liabilities (including without
limitation, any capital or operating expenditures required for clean-up,
closure of properties or compliance with any Environmental Laws or any permit,
license, or approval, any related constraints on operating activities and any
potential liabilities to third parties). On the basis of such evaluations,
the Company believes that such associated
12
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
costs and liabilities would not, singly or in the aggregate, reasonably
be expected to have a material adverse effect on the business or condition
(financial or otherwise) of the Company and the Subsidiaries, taken as a
whole.
(aa) Except as otherwise disclosed in the Prospectus, the Company and
the Subsidiaries own or possess adequate rights to use all patents, trademarks,
trademark registrations, service marks, service xxxx registrations, trade
names, mask works, copyrights, licenses, inventions, trade secrets and rights
necessary for the conduct of their respective businesses, as now conducted or
hereinafter proposed to be conducted as described in the Prospectus. To the
knowledge of the Company, neither the Company nor any Subsidiary is infringing
in any material respect on any patent, trademark, service xxxx, mask work,
trade name, copyright, license, invention, trade secret or other intellectual
property or franchise rights of any person or entity. Except as described in
the Prospectus, no claim has been made against the Company alleging the
infringement by the Company of any patent, trademark, service xxxx, trade name,
mask work, copyright, license, invention, trade secret or other intellectual
property or franchise right of any person or entity. The Company has duly and
properly filed or cause to be filed with the United States Patent and Trademark
Office (the "PTO") all its United States patent applications described or
referred to in the Prospectus. The Company has clear title to its patents and
patent applications referred to in the Prospectus.
(ab) All offers and sales of the Company's and its Subsidiaries' capital
stock and debt or other securities prior to the date hereof were made in
compliance with the Act and all other applicable state and federal laws or
regulations, or any actions under the Act or any state or federal laws or
regulations in respect of any such offers or sales are effectively barred by
effective waivers or statutes of limitation.
(ac) The Common Stock has been and continues to be designated for
inclusion in the Nasdaq National Market under the symbol DETC, and the Company
is in compliance with the maintenance and designation criteria applicable to
Nasdaq National Market issuers.
(ad) All federal, state and local tax returns required to be filed by or
on behalf of the Company and each Subsidiary with respect to all periods ended
prior to the date of this Agreement have been filed (or are the subject of
valid extension) with the appropriate federal, state and local authorities and
all such tax returns, as filed, are accurate in all material respects. All
federal, state and local taxes (including estimated tax payments) required to
be shown on all such tax returns or claimed to be due from or with respect to
the business of the Company and each Subsidiary have been paid or reflected as
a liability on the financial statements of the Company and the Subsidiaries for
appropriate periods, except for those taxes which are being contested by the
Company in good faith and for which appropriate reserves are reflected in the
Company's financial statements. All deficiencies asserted as a result of any
federal, state or local tax audits have been paid or finally settled and no
issue has been raised in any such audit which, by application of the same or
similar principals, reasonably could be expected to result in a proposed
deficiency for any other period not so audited. No state of facts exist or has
existed which would constitute grounds for the assessment of any tax liability
with respect to the periods which have not been audited by appropriate federal,
state or local authorities. There are no outstanding agreements or waivers
extending the statutory period of limitation applicable to any federal, state
or local tax return for any period.
(ae) Except as described in the Prospectus, there are no outstanding
loans, advances, or guarantees of indebtedness by the Company or any Subsidiary
to or for the benefit of any of its officers, directors, or controlling
persons, or any of the members of the families of any of them. Except as
disclosed in the Prospectus, there are no business relationships or related
party transactions required to be disclosed therein by Regulation S-K of the
Commission.
13
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
SECTION 8. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDERS.
Each Selling Shareholder, severally and not jointly, represents and warrants to
each Underwriter on the date hereof, and shall be deemed to represent and
warrant to each Underwriter on the Closing Date and the Additional Closing
Date, that:
(a) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Shareholder of this Agreement, the
Power of Attorney (the "Power of Attorney") hereinafter referred to, the
Custody Agreement (the "Custody Agreement") hereinafter referred to, and for
the sale and delivery of the Shares to be sold by such Selling Shareholder
hereunder, have been obtained; and such Selling Shareholder has full right,
power and authority to enter into this Agreement, the Power of Attorney and the
Custody Agreement and to sell, assign, transfer and deliver the Shares to be
sold by such Selling Shareholder hereunder.
(b) The Power of Attorney and the Custody Agreement have been duly
authorized, executed and delivered by such Selling Shareholder, and this
Agreement has been duly authorized, executed and delivered by or on behalf of
such Selling Shareholder and the Power of Attorney, the Custody Agreement and
this Agreement constitute valid and binding agreements of such Selling
Shareholder enforceable in accordance with their respective terms, except as
enforceability thereof may be limited by (i) the application of bankruptcy,
reorganization, insolvency and other laws affecting creditors' rights
generally, (ii) equitable principles being applied at the discretion of a court
before which any proceeding may be brought and (iii) federal or state
securities laws or principles of public policy relating to the enforcement of
rights to indemnification or contribution; the performance of this Agreement,
the Power of Attorney and the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not result in a breach or
violation of any of the terms or provisions of, or constitute a default under,
any statute, indenture, mortgage, deed of trust, voting trust agreement, note
agreement, lease or other agreement or instrument to which such Selling
Shareholder is a party or by which such Selling Shareholder or its properties
are bound, or under any order, rule or regulation or any court or governmental
agency or body applicable to such Selling Shareholder or the business or
property of such Selling Shareholder.
(c) The execution, delivery, and performance of this Agreement by such
Selling Shareholder, compliance by such Selling Shareholder with all the
provisions hereof and the consummation of the transactions contemplated hereby
will not require any consent, approval, authorization or other order of any
court, regulatory body, administrative agency, or other government body (except
such as may be required under the Act or state securities or Blue Sky laws),
and will not conflict with or constitute a breach of any of the terms or
provisions of, or a default under, any organizational documents of such Selling
Shareholder, if not an individual, or any agreement, indenture, or other
instrument to which such Selling Shareholder is a party or by which such
Selling Shareholder or any property of such Shareholder is bound, or violate
any law, administrative regulation or ruling or court decree applicable to such
Selling Shareholder or property of such Selling Shareholder.
(d) Immediately prior to the Closing Date (and the Additional Closing
Date, if appropriate) such Selling Shareholder will have good and valid title
to the Shares to be sold by such Selling Shareholder hereunder, free and clear
of all liens, encumbrances, equities or claims, and, upon delivery
of such Shares and payment therefor pursuant hereto, good and valid title to
such Shares free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters.
(e) Such Selling Shareholder will not offer, sell, contract to sell or
otherwise dispose of any Common Stock or rights to purchase Common Stock or any
securities convertible into or exchangeable for Common Stock, except to the
Underwriters pursuant to this Agreement, for a period of 120 days after
commencement of the public offering of the Shares by the Underwriters without
the prior written consent of Xxxxxxx Xxxxx & Associates, Inc.
14
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
(f) Such Selling Shareholder has not, directly or indirectly, (i) taken
any action which constituted, or any action designed, or which might reasonably
be expected to cause or result in or constitute, under the Act or otherwise,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares or (ii) since the filing of the
Registration Statement, bid for, purchased (other than pursuant to the exercise
of options) or paid any compensation for soliciting purchases of, the Shares.
(g) The sale of such Selling Shareholder's Shares pursuant to this
Agreement is not prompted by any material information concerning the Company
that is not set forth in the Prospectus.
(h) To the extent that any statements in or omission from the
Registration Statement and the Prospectus (and any amendment or supplement
thereto) are made in reliance upon and in conformity with written information
furnished to the Company by such Selling Shareholder expressly for use therein,
the Registration Statement and the Prospectus (and any amendment or supplement
thereto) will, when they become effective or are filed with the Commission, as
the case may be, conform in all material respects to the requirements of the
Act and not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading.
(i) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, each Selling Shareholder agrees to deliver to you prior to or at
the Closing a properly completed and executed United States Treasury Department
Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
(j) The Firm Shares represented by the certificates held in custody for
such Selling Shareholder under the Custody Agreement are subject to the
interests of the Underwriters hereunder, and the arrangements made by such
Selling Shareholder for such custody, and the appointment by such Selling
Shareholder of the Attorneys-in-Fact by the Power of Attorney, are to that
extent irrevocable. Each of the Selling Shareholders specifically agrees that
the obligations of the Selling Shareholders hereunder shall not be terminated
by operation of law, whether by the death or incapacity of any individual
Selling Shareholder or, in the case of an estate or trust, by the death or
incapacity of any executor or trustee or the termination of such estate or
trust, or in the case of a corporation, the liquidation or dissolution of the
corporation, or by the occurrence of any other event. If any individual
Selling Shareholder or any such executor or trustee should die or become
incapacitated, or if any such estate or trust should be terminated, or if any
such corporation should liquidate or dissolve, or if any other such event
should occur, before the delivery of the Shares hereunder, certificates
representing the Shares shall be delivered by or on behalf of the Selling
Shareholders in accordance with the terms and conditions of this Agreement and
the Custody Agreements, and actions taken by the Attorneys-in-Fact
pursuant to Powers of Attorney shall be as valid as if such death, incapacity,
liquidation, dissolution or other event had not occurred, regardless of whether
or not the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, liquidation, dissolution or other
event.
(k) Certificates in negotiable form representing all of the Firm Shares
to be sold by such Selling Shareholder hereunder (execpt those of Xxxx X.
Xxxxxxxxx) have been placed in custody
under a Custody Agreement, in the form heretofore furnished to you, duly
executed and delivered by such Selling Shareholder to Xxxx X. Xxxxxxxxx,
as custodian (the "Custodian"), and that such Selling Shareholder
has duly executed and delivered a Power of Attorney, in the form heretofore
furnished to you, appointing Xxxx X. Xxxxxxxxx and Xxxxx X. Xxxx and each of
them, as such Selling Shareholder's attorneys-in-fact (the "Attorneys-in-Fact")
with authority to execute and deliver this Agreement on behalf of such Selling
Shareholder as provided in this Section 8, to authorize the delivery of the
Firm Shares to be sold by such Selling Shareholder hereunder and otherwise to
act on behalf of such Selling Shareholder in connection with the transactions
contemplated by this Agreement and the Custody Agreement.
15
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
SECTION 9. EXPENSES. The Company hereby agrees with the several
Underwriters that the Company will pay or cause to be paid the costs and
expenses associated with the following: (i) the preparation, printing or
reproduction, and filing with the Commission of the Registration Statement
(including financial statements and exhibits thereto), each Prepricing
Prospectus, the Prospectus, and each amendment or supplement to any of them;
(ii) the printing (or reproduction) and delivery (including postage, air
freight charges and charges for counting and packaging) of such copies of the
Registration Statement, each Prepricing Prospectus, the Prospectus, and all
amendments or supplements to any of them as may be reasonably requested for use
in connection with the offering and sale of the Shares; (iii) the preparation,
printing, authentication, issuance and delivery of certificates for the Shares,
including any stamp taxes in connection with the offering of the Shares; (iv)
the printing (or reproduction) and delivery of this Agreement and all other
agreements or documents printed (or reproduced) and delivered in connection
with the offering of the Shares; (v) the registration of the Common Stock under
the Exchange Act, if applicable, and the listing of the Shares on the Nasdaq
National Market; (vi) the registration or qualification of the Shares for offer
and sale under the securities or Blue Sky laws of the several states as
provided in Section 5(f) hereof (including the reasonable fees and expenses of
counsel for the Underwriters relating to such registration and qualification);
(vii) the filing fees and the reasonable fees and expenses of counsel for the
Underwriters in connection with any filings required to be made with the
National Association of Securities Dealers, Inc. or NASD Regulation, Inc. in
connection with the offering; (viii) the transportation and other expenses
incurred by or on behalf of representatives of the Company in connection with
the presentations to prospective purchasers of the Shares; (ix) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company; (x) the preparation,
printing and distribution of bound volumes for the Representatives and their
counsel; and (xi) the performance by the Company of its other obligations under
this Agreement. Notwithstanding the foregoing, in the event that the proposed
offering is terminated for the reasons set forth in Section 5(i) hereof, the
Company agrees to reimburse the Underwriters as PROVIDED in Section 5(i). The
provisions of this Section 9 shall not affect any agreement that the Company
and the Selling Shareholders may have for the sharing of such costs and
expenses.
SECTION 10. INDEMNIFICATION AND CONTRIBUTION.
The Company agrees to indemnify and hold harmless you and each other
Underwriter and each person, if any, who controls any 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, liabilities and expenses,
including reasonable costs of investigation, arising out of or based upon any
breach of any representation, warranty, agreement or covenant of the Company
contained herein or arising out of or based upon any untrue statement or
alleged untrue statement of a material fact contained in any Prepricing
Prospectus or in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or arising out of or based upon any omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, or arising
out of or based upon any untrue statement or alleged untrue statement of any
material fact contained in any audio or visual materials used in connection
with the marketing of the Shares, including, without limitation, slides,
videos, films and tape recordings, except insofar as such losses, claims,
damages, liabilities or expenses arise out of or are based upon an untrue
statement or omission or alleged untrue statement or omission which has been
made therein or omitted therefrom in reliance upon and in conformity with the
information relating to an Underwriter furnished in writing to the Company by
or on behalf of any Underwriter through you expressly for use in connection
therewith; PROVIDED, HOWEVER, that the indemnification contained in this
paragraph with respect to any Prepricing Prospectus shall not inure to the
benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Underwriter
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to any person if a copy of the Prospectus shall not have been delivered or sent
to such person within the time required by the Act and the regulations
thereunder, and the untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in such Prepricing Prospectus was
corrected in the Prospectus, PROVIDED that the Company has delivered the
Prospectus to the several Underwriters in requisite quantity on a timely basis
to permit such delivery or sending.
Each Selling Shareholder, severally and not jointly, agrees to indemnify
and hold harmless you and each other Underwriter and each person, if any, who
controls any 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,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any breach of any representation, warranty, agreement or
covenant of such Selling Shareholder contained herein or arising out of or
based upon any untrue statement or alleged untrue statement of a material fact
contained in any Prepricing Prospectus or in the Registration Statement or the
Prospectus or in any amendment or supplement thereto, or arising out of or
based upon any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon an untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
an Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through you expressly for use in connection therewith; PROVIDED,
HOWEVER, that each Selling Shareholder shall only be liable under this
paragraph with respect to (A) information pertaining to such Selling
Shareholder furnished by or on behalf of such Selling Shareholder expressly for
use in any Preliminary Prospectus or the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto or (B) facts that
would constitute a breach of any representation or warranty of such Selling
Shareholder set forth in Section 8 hereof.
If any action or claim shall be brought against any Underwriter or any
person controlling any Underwriter in respect of which indemnity may be sought
against the Company or any of the Selling Shareholders, such Underwriter or
such controlling person shall promptly notify in writing the party(s) against
whom indemnification is being sought (the "indemnifying party" or "indemnifying
parties"), and such indemnifying party(s) shall assume the defense thereof,
including the employment of counsel reasonably acceptable to such Underwriter
or such controlling person and payment of all fees and expenses. Such
Underwriter or any such controlling person shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of such
Underwriter or such controlling person unless (i) the indemnifying party(s) has
(have) agreed in writing to pay such fees and expenses, (ii) the indemnifying
party(s) has (have) failed to assume the defense and employ counsel reasonably
acceptable to the Underwriter or such controlling person, or (iii) the named
parties to any such action (including any impleaded parties) include both such
Underwriter or such controlling person and the indemnifying party(s), and such
Underwriter or such controlling person shall have been advised by its counsel
that representation of such indemnified party and any indemnifying party(s) by
the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel
has been proposed) due to actual or potential differing interests between them
(in which case the indemnifying party(s) shall not have the right to assume the
defense of such action on behalf of such Underwriter or such controlling
person). The indemnifying party(s) shall not be liable for any settlement of
any such action effected without its (their) written consent, but if settled
with such written consent, or if there be a final judgment for the plaintiff in
any such action, the indemnifying party(s) agrees to indemnify and hold
harmless any Underwriter and any such controlling person from and against any
loss, claim, damage, liability or expense by reason of such settlement or
judgment, but in the case of a judgment only to the extent stated in the
immediately preceding paragraph.
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Each Underwriter agrees, severally and not jointly, to indemnify and hold
harmless the Company, its directors, its officers who sign the Registration
Statement, the Selling Shareholders and any person who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company and the Selling
Shareholders to each Underwriter, but only with respect to information relating
to such Underwriter furnished in writing by or on behalf of such Underwriter
through you expressly for use in the Registration Statement, the Prospectus or
any Prepricing Prospectus, or any amendment or supplement thereto. If any
action or claim shall be brought or asserted against the Company, any of its
directors, any such officers, or any such controlling person or the Selling
Shareholders or any controlling person of a Selling Shareholder based on the
Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be
sought against any Underwriter pursuant to this paragraph, such Underwriter
shall have the rights and duties given to the Company and the Selling
Shareholders by the preceding paragraphs (except that if the Company and the
Selling Shareholders shall have assumed the defense thereof such Underwriter
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Underwriter's expense), and the Company, its directors, any
such officers, and any such controlling persons and the Selling Shareholders or
any controlling person of a Selling Shareholder shall have the rights and
duties given to the Underwriters by the immediately preceding paragraph.
In any event, the Company and the Selling Shareholders will not, without
the prior written consent of the Representatives, settle or compromise or
consent to the entry of any judgment in any proceeding or threatened claim,
action, suit or proceeding in respect of which indemnification may be
sought hereunder (whether or not the Representatives or any person who controls
the Representatives within the meaning of Section 15 of the Act or Section 20
of the Exchange Act is a party to such claim, action, suit or proceeding)
unless such settlement, compromise or consent includes an unconditional release
of all Underwriters and such controlling persons from all liability arising out
of such claim, action, suit or proceeding.
If the indemnification provided for in this Section 10 is unavailable to
an indemnified party in respect of any losses, claims, damages, liabilities or
expenses referred to therein, then an indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, claims, damages,
liabilities or expenses (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Shareholders on the
one hand and the Underwriters on the other hand from the offering of the Shares
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault
of the Company and the Selling Shareholders on the one hand and the
Underwriters on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Company and the Selling Shareholders on the one hand and the Underwriters
on the other shall be deemed to be in the same proportion as the total net
proceeds from the offering (before deducting expenses) received by the Company
and the Selling Shareholders 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 (or any term sheet used in reliance
on Rule 434(b) under the Act); provided that, in the event that the
Underwriters shall have purchased any Additional Shares hereunder, any
determination of the relative benefits received by the Company and the Selling
Shareholders or the Underwriters from the offering of the Shares shall include
the net proceeds (before deducting expenses) received by the Company and the
Selling Shareholders, and the underwriting discounts and commissions received
by the Underwriters, from the sale of such Additional Shares, in each case
computed on the basis of the respective amounts set forth in the notes to the
table on the cover page of the Prospectus. The relative fault of the Company
and the Selling Shareholders on the one hand and the Underwriters on the other
hand shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission
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XXXXXXX & COMPANY, INC.
or alleged omission to state a material fact relates to information supplied by
the Company and the Selling Shareholders on the one hand or by the Underwriters
on the other hand and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Shareholders, and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this Section 10 was
determined by a pro rata allocation (even if the Underwriters were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in the immediately
preceding paragraph. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities and expenses referred to in
the immediately preceding paragraph shall be deemed to include, subject to the
limitations set forth above, 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 10, no
Underwriter shall be required to contribute any amount in excess of the amount
by which the total price of the Shares underwritten by it and distributed to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to
this Section 10 are several in proportion to the respective numbers of Firm
Shares set forth opposite their names in SCHEDULE I hereto (or such numbers of
Firm Shares increased as set forth in Section 12 hereof) and not joint.
Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 10 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 10 and the
representations and warranties of the Company and the Selling Shareholders set
forth in this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter or
any person controlling any Underwriter, the Company, its directors or officers
or any person controlling the Company or any Selling Shareholder or any person
controlling any Shareholder, (ii) acceptance of any Shares and payment therefor
hereunder, and (iii) any termination of this Agreement. A successor to any
Underwriter or any person controlling any Underwriter, or to the Company, its
directors or officers, or any person controlling the Company or any Selling
Shareholder or any person controlling any Shareholder, shall be entitled to the
benefits of the indemnity, contribution and reimbursement agreements contained
in this Section 9.
SECTION 11. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) The Registration Statement shall have become effective not later
than 9:30 a.m., New York City time, on the date hereof, or at such later date
and time as shall be consented to in writing by you, and all filings required
by Rules 424(b) and 430A under the Act shall have been timely made.
(b) Subsequent to the effective date of the Registration Statement
there shall not have occurred any change, or any development involving, or
which might reasonably be expected to involve, a prospective material adverse
change, in the condition (financial or other), business, properties, net worth
or results of operations of the Company and the Subsidiaries, taken as a whole,
not contemplated by the Prospectus (or any supplement thereto), that in your
reasonable opinion, as Representatives of the several Underwriters, would
materially and adversely affect the market for the Shares.
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(c) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of Nixon, Hargrave, Devans & Xxxxx LLP,
counsel for the Company, dated the Closing Date (and the Additional Closing
Date, if any), in form and substance reasonably satisfactory to you and your
counsel, to the effect that:
(i) The Company is a corporation duly incorporated and validly
existing in good standing under the laws of the State of New York with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Registration
Statement and the Prospectus (and any amendment or supplement thereto),
and is duly registered and qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such registration
or qualification, except where the failure to so register or qualify
does not have a material adverse effect on the condition (financial
or other), business, properties, net worth or results of operation of
the Company and the Subsidiaries, taken as a whole.
(ii) Each of the Subsidiaries is a corporation duly organized and
validly existing in good standing under the laws of the jurisdiction of
its organization, with full corporate power and authority to own, lease
and operate its properties and to conduct its business as described
in the Registration Statement and the Prospectus (and any amendment
or supplement thereto); and is duly registered and qualified to conduct
its business and is in good standing in each jurisdiction or place
where the nature of its properties or the conduct of its business
requires such registration or qualification, except where the
failure to so register or qualify does not have a material adverse
effect on the condition (financial or other), business, properties,
net worth or results of operation of the Company and the Subsidiaries,
taken as a whole; and all of the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued,
and are fully paid and nonassessable, and, except as otherwise noted in
Section 7(e) of this Agreement, are owned by the Company directly,
or indirectly through one of the other Subsidiaries, free and clear
of any perfected security interest, or to the knowledge of such counsel,
any other voting trust arrangements, liens, encumbrances, equities,
claims or defects in title.
(iii) The authorized capital stock of the Company conforms in all
material respects as to legal matters to the description thereof
contained in the Prospectus under the caption "Description of Capital
Stock."
(iv) All shares of capital stock of the Company issued on or after
April 1, 1990, and outstanding prior to the issuance of the Shares to be
issued and sold by the Company hereunder, have been duly authorized
and validly issued, are fully paid and nonassessable (except as
permitted by Section 505 of the New York Business Corporation Law) and
are free of any preemptive or, to the best knowledge of such counsel
after reasonable inquiry, similar rights that entitle or will entitle
any person to acquire any Shares upon the issuance thereof by the
Company, or any actions based upon any of the foregoing are effectively
barred by effective waivers or statutes of limitation.
(v) All offers and sales of the Company's and its Subsidiaries'
capital stock prior to the date hereof were made in compliance with the
registration provisions of the Act and the registration provisions of
all other applicable State of New York and federal laws or regulations
or any actions under the Act or any State of New York or federal laws
or regulations in respect of any such offers or sales are effectively
barred by effective waivers or statutes of limitation.
(vi) The Shares to be issued and sold to the Underwriters by the
Company hereunder have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance
with the terms hereof, will be validly issued, fully paid and
nonassessable and free of any preemptive or,
20
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XXXXXXX & COMPANY, INC.
to the best knowledge of such counsel after reasonable inquiry, similar
rights that entitle or will entitle any person to acquire any Shares
upon the issuance thereof by the Company.
(vii) The form of certificates for the Shares conforms to the
requirements of the applicable corporate laws of the State of New York.
(viii) The Registration Statement has become effective under the
Act and, to the best knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement has been issued and no
proceedings for that purpose are pending before or, to the knowledge of
such counsel, contemplated by the Commission.
(ix) The Company has all requisite corporate power and authority
to enter into this Agreement and to issue, sell and deliver the Shares
to be sold by it to the Underwriters as provided herein, and this
Agreement has been duly authorized, executed and delivered by the
Company and is a valid, legal and binding agreement of the Company
enforceable against the Company in accordance with its terms, except
as enforceability thereof may be limited by (i) the application of
bankruptcy, reorganization, insolvency and other laws affecting
creditors' rights generally, (ii) equitable principles being applied
at the discretion of a court before which any proceeding may be brought
and (iii) federal or state securities laws or principles of public
policy relating to the enforcement of rights to indemnification or
contribution.
(x) To the knowledge of such counsel, neither the Company nor any
of the Subsidiaries is in violation of its certificate or articles of
incorporation or bylaws, or other organizational documents, and such
counsel has no knowledge that the Company or any Subsidiary is in
default in the performance of any material obligation, agreement or
condition contained in any bond, indenture, note or other evidence of
indebtedness or in any other agreement material to the Company and the
Subsidiaries, taken as a whole, except as has been disclosed in the
Prospectus.
(xi) Neither the offer, sale or delivery of the Shares, the
execution, delivery or performance of this Agreement, compliance by the
Company with all provisions hereof nor consummation by the Company of
the transactions contemplated hereby conflicts or will conflict with
or constitutes or will constitute a breach of, or a default under,
the certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries or
any agreement, indenture, lease or other instrument to which the
Company or any of the Subsidiaries is a party or by which any of
them or any of their respective properties is bound that is made an
exhibit to the Registration Statement, or, to the knowledge of such
counsel, will result in (A) the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or
any of the Subsidiaries or (B) a violation of any existing law,
regulation, ruling (assuming compliance with all applicable state
securities and Blue Sky laws), judgment, injunction, order or decree
known to such counsel to be applicable to the Company, the Subsidiaries
or any of their respective properties.
(xii) No consent, approval, authorization or other order of, or
registration or filing with, any court, regulatory body, administrative
agency or other governmental body, agency or official is required on
the part of the Company (except such as have been obtained under the
Act or such as may be required under state securities or Blue Sky laws
governing the purchase and distribution of the Shares) for the valid
issuance and sale of the Shares to the Underwriters under this
Agreement.
(xiii) The Registration Statement and the Prospectus (including
the Incorporated Reports) and any supplements or amendments thereto
(except for the financial statements and the notes thereto and the
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XXXXXXX & COMPANY, INC.
schedules and other financial and statistical data included or
incorporated by reference therein, as to which such counsel need not
express any opinion) comply as to form in all material respects with
the requirements of the Act.
(xiv) To the best knowledge of such counsel, (A) other than as
described or contemplated in the Registration Statement (including the
Incorporated Reports) or the Prospectus (or any amendment or supplement
thereto), there are no legal or governmental proceedings pending or
threatened against the Company or any of the Subsidiaries, or to which
the Company or any of the Subsidiaries, or any of their property, is
subject, that are required to be described in the Registration Statement
(including the Incorporated Reports) or Prospectus (or any amendment or
supplement thereto) that are not described as required therein, and
(B) there are no agreements, contracts, indentures, leases or other
instruments, that are required to be described in the Registration
Statement (including the Incorporated Reports) or the Prospectus
or to be filed as an exhibit to the Registration Statement (including
the Incorporated Reports) that are not described or filed as required,
as the case may be.
(xv) Such counsel has no knowledge that the Company or any of the
Subsidiaries is in material violation of any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries, except where such violation does not and will
not have a material adverse effect on the condition (financial or
other), business, properties, net worth or results of operation of the
Company and the Subsidiaries, taken as a whole.
(xvi) Such counsel has no knowledge that: (A) the Company or any
of the Subsidiaries does not have any permit, license, franchise,
approval, consent or authorization of governmental or regulatory
authorities ("permit") that is necessary to own their properties and to
conduct their business in the manner described in the Prospectus,
subject to such qualifications as may be set forth in the Prospectus;
(B) the Company or any of the Subsidiaries has failed to fulfill and
perform any of their material obligations with respect to such permits;
(C) any event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or result in any
other material impairment of the rights of the holder of any such
permit, subject in each case to such qualification as may be set forth
in the Prospectus; and (D) except as described in the Prospectus, that
any permit contains restrictions that are materially burdensome to the
Company or any of the Subsidiaries.
(xvii) The property described in the Prospectus as held under
lease by either of the Company or its Subsidiaries is held under valid,
subsisting and enforceable leases, with only such exceptions as in the
aggregate are not material and do not interfere in any material respect
with the conduct of the business of the Company and the Subsidiaries,
taken as a whole.
(xviii) Such counsel has reviewed all agreements, contracts,
indentures, leases or other documents or instruments referred to in the
Registration Statement and the Prospectus (other than routine contracts
entered into by the Company or any Subsidiary for the purchase of
materials or the sale of products, entered into in the normal course
of business) and such agreements, contracts, indentures, leases or
other documents or instruments are fairly summarized or disclosed
therein, and filed as exhibits thereto as required, and such counsel
does not know, after reasonable inquiry, of any agreements, contracts,
indentures, leases or other documents or instruments required to be so
summarized or disclosed or filed which have not been so summarized or
disclosed or filed.
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(xix) Such counsel has no reason to believe that the descriptions
in the Prospectus of statutes, regulations or legal or governmental
proceedings are other than accurate or fail to present fairly the
information required to be shown.
(xx) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended.
(xxi) Except as otherwise disclosed in the Prospectus, the Company
or the Subsidiaries are the registered owners of all trademarks described
in the Prospectus as being registered trademarks of the Company or the
Subsidiaries, and such counsel has no knowledge of any claim to the
contrary or any challenge by any other person to the rights of the
Company and the Subsidiaries with respect to such trademarks. Except
as otherwise described in the Prospectus, such counsel has no
knowledge that any claim has been made against the Company alleging
the infringement by the Company of any patent, trademark, service xxxx,
trade name, mask work, copyright, license, invention, trade secret or
other intellectual property or franchise right of any person or entity.
In rendering such opinion, counsel may rely upon an opinion or opinions,
each dated the Closing Date (and the Additional Closing Date, if applicable),
of other counsel as to the laws of a jurisdiction other than the State of New
York, provided that (1) each such local counsel is acceptable to you, (2) such
reliance is expressly authorized by each opinion so relied upon and a copy of
each such opinion is delivered to you and is in form and substance satisfactory
to you, and (3) counsel shall state in their opinion that they believe that
they and you are justified in relying thereon. In rendering such opinion,
counsel may rely, to the extent they deem such reliance proper, as to matters
of fact upon certificates of officers of the Company and of government
officials. Copies of all such certificates shall be furnished to you and your
counsel on the Closing Date (and the Additional Closing Date, if applicable).
In rendering such opinion, in each case where such opinion is qualified
by "the best knowledge of such counsel after reasonable inquiry" or words of
similar import, such counsel may rely as to matters of fact upon certificates
of executive and other officers and employees of the Company or its
Subsidiaries as you and such counsel shall deem are appropriate and such other
procedures as you and such counsel shall mutually agree; PROVIDED, HOWEVER, in
each such case, such counsel shall state that it has no knowledge contrary to
the information contained in such certificates or developed by such procedures
and knows of no reason why you should not reasonably rely upon the information
contained in such certificates or developed by such procedures. In addition,
in rendering such opinion such counsel may state that where an opinion is
qualified by "the best knowledge of such counsel after reasonable inquiry" or
words of similar import, such opinion is based solely upon the conscious
awareness of facts or other information by the attorneys at such counsel's firm
who have had active involvement in the transactions contemplated by this
Agreement.
In addition to the opinion set forth above, such counsel shall state that
during the course of the preparation of the Registration Statement (including
the Incorporated Reports) and the Prospectus and the amendments thereto,
nothing has come to the attention of such counsel which has caused it to
believe that the Registration Statement and the Prospectus or any amendment
thereto (except for the financial statements and other financial and
statistical information contained therein or omitted therefrom as to which no
opinion need be expressed), at the date thereof, contained an untrue statement
of a material fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not misleading or that
the Registration Statement and the Prospectus, as of the date of the opinion
(except as aforesaid), contains an untrue statement of a material fact or
omits to state
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XXXXXXX & COMPANY, INC.
a material fact necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading.
Notwithstanding the foregoing provisions of this Section 11(c), (A) with
respect to Subsidiaries organized under the laws of jurisdictions outside the
United States of America, the opinion of counsel required by paragraph (ii)
above need only be given with respect to Detection Systems Australia Pty. Ltd.,
an Australian corporation, and Detection Systems (HK) Ltd., a corporation
organized under the laws of Hong Kong ("DS Hong Kong"), (B) with respect to
property located outside the United States of America and described in the
Prospectus as held under lease by either the Company or its Subsidiaries, the
opinion of counsel required by paragraph (xvii) above need only be given with
respect to the lease entered into by DS Hong Kong for the manufacturing
facility in Zhuhai, China, (C) the opinions of counsel described in the
foregoing clauses (A) and (B) of this paragraph may be given by one or more
counsel other than Nixon, Hargrave, Devans & Xxxxx LLP, provided that (x) each
such other counsel is reasonably acceptable to you and (y) such opinions are in
form and substance reasonably acceptable to you and your counsel, and (D)
Nixon, Hargrave, Devans & Xxxxx LLP may expressly exclude from its opinion of
counsel the opinion required by paragraph (xvii) above to the extent that such
opinion relates to the property described in the Prospectus as held under lease
by Radionics, Inc.
(d) You shall have received on the Closing Date the opinion from the
respective counsel for the Selling Shareholders, dated the Closing Date in form
and substance satisfactory to you, to the effect that:
(i) A Power of Attorney and a Custody Agreement have been duly
authorized, executed and delivered by or on behalf of the Selling
Shareholder and constitute valid and binding agreements of the Selling
Shareholder enforceable in accordance with their respective terms, except
as enforceability thereof may be limited by (i) the application of
bankruptcy, reorganization, insolvency and other laws affecting creditors'
rights generally, (ii) equitable principles being applied at the
discretion of a court before which any proceeding may be brought and (iii)
federal or state securities laws or principles of public policy relating
to the enforcement of rights to indemnification or contribution.
(ii) This Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Shareholder and constitutes a
valid and binding agreement of the Selling Shareholder enforceable in
accordance with its terms, except as enforceability thereof may be
limited by (i) the application of bankruptcy, reorganization, insolvency
and other laws affecting creditors' rights generally, (ii) equitable
principles being applied at the discretion of a court before which any
proceeding may be brought and (iii) federal or state securities laws or
principles of public policy relating to the enforcement of rights to
indemnification or contribution; and the performance of this Agreement,
the Power of Attorney and the Custody Agreement and the consummation of
the transactions herein and therein contemplated will not result in a
breach or violation of any of the terms or provisions of, or constitute
a default under, any statute, indenture, mortgage, deed of trust, voting
trust agreement, note agreement, lease or other agreement or instrument
of which such counsel is aware and to which the Selling Shareholder is a
party or by which the Selling Shareholder or its properties are bound,
or any order, rule or regulation, known to such counsel of any court or
governmental agency or body applicable to the Selling Shareholder or the
business or property of the Selling Shareholder.
(iii) No consent, approval, authorization or order has been or is
required for the consummation of the transaction contemplated by this
Agreement, the Power of Attorney or the Custody Agreement in connection
with the Shares to be sold by the Selling Shareholder hereunder, except
(name any such consent, approval, authorization or order) which has (have)
been duly obtained and is (are) in full force and effect,
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XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
such as have been obtained under the Act and such as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of such Shares by the Underwriters.
(iv) Immediately prior to the Closing Date the Selling
Shareholder has good and valid title to the Shares to be sold by such
Selling Shareholder under this Agreement, free and clear of all liens,
encumbrances, equities or claims, and full right, power and authority
to sell, assign, transfer and deliver the Shares to be sold by the
Selling Shareholder hereunder.
(v) Good and valid title to such Shares, free and clear of all
liens, encumbrances, equities or claims has been transferred to each of
the several Underwriters that have purchased such shares in good faith
and without notice of any adverse claim.
In rendering such opinion, such counsel may rely upon a certificate of
the Selling Shareholder as to matters of fact with respect to (i) any consent,
approval, authorization or order required for the consummation of the
transactions contemplated by this Agreement, the Power of Attorney or the
Custody Agreement, (ii) ownership of and liens, encumbrances, equities or
claims on the Shares sold by the Selling Shareholder, and (iii) any agreements,
mortgages, deeds of trust, voting trusts, notes, leases or other instruments
provided that such counsel shall state that they have no knowledge contrary to
the information contained in such certificate.
(e) You shall have received on the Closing Date (and the Additional
Closing Date, if any) an opinion of Fowler, White, Gillen, Boggs, Xxxxxxxxx and
Banker, P.A., counsel for the Underwriters, dated the Closing Date (and the
Additional Closing Date, if any), with respect to the issuance and sale of the
Firm Shares, the Registration Statement and other related matters as you may
reasonably request and the Company and its counsel shall have furnished to your
counsel such documents as they may reasonably request for the purpose of
enabling them to pass upon such matters.
(f) You shall have received letters addressed to you and dated the date
hereof and the Closing Date (and the Additional Closing Date, if any) from
Price Waterhouse LLP, independent certified public accountants, substantially
in the forms heretofore approved by you.
(g) (i) No stop order suspending the effectiveness of the Registration
Statement shall have been issued and no proceedings for that purpose shall have
been taken or, to the knowledge of the Company, shall be contemplated by the
Commission at or prior to the Closing Date; (ii) there shall not have been any
material change in the capital stock of the Company nor any material increase
in the short-term or long-term debt of the Company (other than in the ordinary
course of business) from that set forth or contemplated in the Registration
Statement or the Prospectus (or any amendment or supplement thereto); (iii)
there shall not have been since the respective dates as of which information is
given in the Registration Statement and the Prospectus (or any amendment or
supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectus (or any amendment or supplement thereto), any material
adverse change (present or potential future) in the condition (financial or
other), business properties, net worth or results of operations of the Company
and the Subsidiaries, taken as a whole; (iv) the Company and the Subsidiaries
shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business) that are material to the Company and the Subsidiaries, taken as a
whole, other than those reflected in the Registration Statement or the
Prospectus (or any amendment or supplement thereto); and (v) all of the
representations and warranties of the Company contained in this Agreement shall
be true and correct in all material respects on and as of the date hereof and
on and as of the Closing Date as if made on and as of the Closing Date, and you
shall have received a certificate, dated the Closing Date and signed by the
chief executive officer and the chief financial officer of the Company (or such
other officers as are acceptable to you) to the effect set forth in this
Section 10(g) and in Section 10(h) hereof.
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XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
(h) The Company shall not have failed in any material respect at or
prior to the Closing Date to have performed or complied with any of its
agreements herein contained and required to be performed or complied with by it
hereunder at or prior to the Closing Date.
(i) The Company shall have furnished or caused to have been furnished
to you such further certificates and documents as you shall have reasonably
requested.
(j) At or prior to the Closing Date, you shall have received the
written commitment of each of the Company's directors and executive officers
and each of the Selling Shareholders not to offer, sell or otherwise dispose of
any shares of Common Stock or any securities convertible into or exercisable or
exchangeable for, or any rights to purchase or acquire, Common Stock, other
than in accordance with this Agreement for a period of 120 days after
commencement of the public offering of the Shares by the Underwriters without
the prior written consent of Xxxxxxx Xxxxx & Associates, Inc.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are reasonably satisfactory
in form and substance to you and your counsel.
The several obligations of the Underwriters to purchase Additional Shares
hereunder are subject to the satisfaction on and as of the Additional Closing
Date of the conditions set forth in this Section 10, except that, if the
Additional Closing Date is other than the Closing Date, the certificates,
opinions and letters referred to in paragraphs (c) through (i) shall be dated
in the Additional Closing Date and the opinions called for by paragraphs (c)
and (d) shall be revised to reflect the sale of Additional Shares.
SECTION 12. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective upon the later of (a) the execution and delivery hereof by the
parties hereto, or (b) release of notification of the effectiveness of the
Registration Statement by the Commission.
If any one or more of the Underwriters shall fail or refuse to purchase
Firm Shares which it or they have agreed to purchase hereunder, and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of the Firm Shares, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number
of Firm Shares set forth opposite its name in Schedule I hereto bears to the
aggregate number of Firm Shares set forth opposite the names of all
non-defaulting Underwriters or in such other proportion as you may specify in
the Agreement Among Underwriters, to purchase the Firm Shares which such
defaulting Underwriter or Underwriters agreed, but failed or refused to
purchase. If any Underwriter or Underwriters shall fail or refuse to purchase
Firm Shares and the aggregate number of Firm Shares with respect to which such
default occurs is more than one-tenth of the aggregate number of Firm Shares
and arrangements satisfactory to you, the
Company, and the Selling Shareholders for the purchase of such Firm Shares are
not made within 36 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter or the Company
and the Selling Shareholders. In any such case which does not result in
termination of this Agreement, either you or the Company shall have the right
to postpone the Closing Date, but in no event for longer than seven (7) days,
in order that the required changes, if any, in the Registration Statement and
the Prospectus or any other documents or arrangements may be effected. Any
action taken under this paragraph shall not relieve any defaulting Underwriter
from liability in respect of any such default of any such Underwriter under
this Agreement.
26
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
SECTION 13. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in your absolute discretion, without liability on the part of any
Underwriter to the Company or any Selling Shareholder by notice to the Company,
if prior to the Closing Date or the Additional Closing Date (if different from
the Closing Date and then only as to the Additional Shares), as the case may
be, (i) trading in securities generally on the New York Stock Exchange,
American Stock Exchange or the Nasdaq Stock Market shall have been suspended or
materially limited, (ii) trading of any securities of the Company, including
the Shares, on the New York Stock Exchange, American Stock Exchange or the
Nasdaq Stock Market shall have been suspended or materially limited, whether as
the result of a stop order by the Commission or otherwise, (iii) a general
moratorium on commercial banking activities in New York or Florida shall have
been declared by either federal or state authorities, (iv) there shall have
occurred any outbreak or escalation of hostilities or other international or
domestic calamity, crisis or change in political, financial or economic
conditions or other material event the effect of which on the financial markets
of the United States is such as to make it, in your judgment, impracticable or
inadvisable to market the Shares or to enforce contracts for the sale of the
Shares, or (v) the Company or any of the Subsidiaries shall have, in the sole
judgment of the Representatives, sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident, or other calamity, whether or not covered by insurance, or from any
labor disputes or any legal or governmental proceeding, or there shall have
been any material adverse change (including, without limitation, a material
change in management or control of the Company) in the condition (financial or
otherwise), business prospects, net worth, or results of operations of the
Company and the Subsidiaries, except in each case as described in, or
contemplated by, the Prospectus (excluding any amendment or supplement
thereto). Notice of such cancellation shall be promptly given to the Company
and its counsel by telegraph or telephone and shall be subsequently confirmed
by letter.
SECTION 14. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements
set forth under the caption "Underwriting" in any Prepricing Prospectus and in
the Prospectus, constitute all the information furnished by or on behalf of the
Underwriters through you or on your behalf as such information is referred to
in Section 6(a) and 6(b) hereof.
SECTION 15. MISCELLANEOUS. Except as otherwise provided in Sections 5,
12 and 13 hereof, notice given pursuant to any of the provisions of this
Agreement shall be in writing and shall be delivered (i) if to the Company, at
the office of the Company at 000 Xxxxxxxx Xxxxxxx, Xxxxxxxx, Xxx Xxxx 00000,
Attention: Xxxx X. Xxxxxxxxx, Chairman and Chief Executive Officer (with copy
to Xxxxxx X. Xxxxx, Esq., Nixon, Hargrave, Devans & Xxxxx LLP, 0000 Xxxxxxx
Xxxxxx, Xxxxxxxxx, Xxx Xxxx 00000; or (ii) if to you, as the Underwriters, (A)
Xxxxxxx Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx
00000, Attention: Xxxxxx X. Xxxxxxx, Senior Vice President; and (B) Xxxxxxx &
Company, Inc., 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx X.
Xxxxxxxxx, Managing Director (with copy to R. Xxxx Xxxxxx, Esq., Fowler, White,
Gillen, Boggs, Xxxxxxxxx and Banker, P.A., 000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx
0000, Xxxxx, Xxxxxxx 33602).
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company, its directors and officers, the Selling Shareholders
and the other controlling persons referred to in Section 10 hereof, and their
respective successors and assigns, to the extent provided herein, and no other
person shall acquire or have any right under or by virtue of this Agreement.
Neither of the terms "successor" and "successors and assigns" as used in this
Agreement shall include a purchaser from any Underwriter of any of the Shares
in his status as such purchaser.
27
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
SECTION 16. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York
without reference to choice of law principles thereunder. This Agreement may
be signed in various counterparts which together shall constitute one and the
same instrument. This Agreement shall be effective when, but only when, at
least one counterpart hereof shall have been executed on behalf of each party
hereto.
28
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
If the foregoing correctly sets forth our understanding, please indicate
your acceptance thereof in the space provided below for that purpose, whereupon
this letter and your acceptance shall constitute a binding agreement between
us.
Very truly yours,
DETECTION SYSTEMS, INC.
By:____________________________
Name:__________________________
Title:_________________________
SELLING SHAREHOLDERS
By:_____________________________
As attorney-in-fact on behalf of each
of the Selling Shareholders named in
Schedule II to this Agreement.
CONFIRMED as of the date first above mentioned,
on behalf of itself and the other several
Underwriters named in Schedule I hereto.
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXXXX & COMPANY, INC.
By: XXXXXXX XXXXX & ASSOCIATES, INC.
By:__________________________________
Authorized Representative
29
SCHEDULE I
NUMBER
OF FIRM
NAME SHARES
----- -------
Xxxxxxx Xxxxx & Associates, Inc...............................
Xxxxxxx & Company, Inc........................................
TOTAL ........................................................... 1,545,000
=========
SCHEDULE II
Firm Additional Total
Shares Shares Shares
------ ---------- -------
Company.................. 1,325,000 231,750 1,556,750
-------
Selling Shareholders
--------------------
Xxxxx X. Xxxxxxx ........ 130,000 0 130,000
Xxxx X. Xxxxxxxxx ....... 72,000 0 72,000
Xxxxxxxx X. Xxxxx ....... 10,000 0 10,000
Xxxxx X. Xxxx ........... 8,000 0 8,000
