1
Exhibit 1
INTERNATIONAL TOTAL SERVICES, INC.
2,825,000 Common Shares*
UNDERWRITING AGREEMENT
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_______________, 1997
XxXxxxxx & Company Securities, Inc.
Xxxxxx Xxxxxx & Company, Inc.
As Representatives of the Several Underwriters
c/x XxXxxxxx & Company Securities, Inc.
XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Dear Sirs:
1. INTRODUCTORY. International Total Services, Inc., an Ohio
corporation (the "Company"), proposes to issue and sell 2,597,727 of its common
shares, without par value (the "Common Shares"), which are authorized but
unissued, and Xxxxxx X. Xxxxxxx (the "Selling Shareholder") proposes to sell
227,273 outstanding Common Shares, to the public through the underwriters named
in Schedule A annexed hereto (the "Underwriters") for whom you are acting as the
Representatives. The 2,825,000 Common Shares to be purchased from the Company
and Selling Shareholder are hereinafter referred to as the "Firm Stock." The
Company also proposes to sell to the Underwriters, at their option, an aggregate
of not more than 423,750 additional Common Shares solely to cover
over-allotments, which are hereinafter referred to as the "Option Stock." The
Firm Stock and the Option Stock are hereinafter collectively referred to as the
"Stock" and are more fully described in the Registration Statement and the
Prospectus (as hereinafter defined). The Company and the Selling Shareholder
hereby confirm its and his several agreements, as set forth herein, with you,
acting as the Representatives of the Underwriters.
2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each of the Underwriters that:
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* Plus an option to purchase up to 423,750 additional shares to cover
over-allotments.
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(a) The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than those listed
in Exhibit 21 to the Registration Statement (as hereinafter defined). The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of Ohio with power and authority to own and lease its
properties and conduct its business as described in the Prospectus (as
hereinafter defined). Each of the Company's subsidiaries has been duly
incorporated and is validly existing as a corporation in good standing under the
laws of its respective jurisdiction of incorporation, with corporate power and
authority to own and lease its properties and conduct its respective business.
The Company and each of its subsidiaries is duly qualified to do business as a
foreign corporation and is in good standing in all jurisdictions (i) in which
the conduct of business, as presently being conducted, requires such
qualification and (ii) in which the Company or such subsidiary owns or leases
real property (except for those jurisdictions in which the failure to so qualify
will not in the aggregate have a material adverse effect on the Company and such
subsidiaries, taken as a whole). Except as disclosed in the Registration
Statement and except for the shares of stock of each subsidiary owned by the
Company, neither the Company nor any subsidiary owns, directly or indirectly,
any equity securities or securities convertible into or exchangeable for equity
securities of any other corporation, partnership, joint venture, Massachusetts
or other business trust or any other business enterprise.
(b) This Agreement has been duly and validly
authorized, executed and delivered on behalf of the Company.
(c) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission"), in conformity with the
requirements of the Securities Act of 1933, as amended (the "Act"), and the
Rules and Regulations of the Commission thereunder (as hereinafter defined), a
registration statement on Form S-1 (Registration No. 333-29463) including a
preliminary prospectus relating to the Company's Stock. The registration
statement as amended at the time when it becomes effective (the "Effective
Date"), and including information (if any) contained in a prospectus
subsequently filed with the Commission pursuant to Rule 424(b) under the Act,
and deemed to be part of the registration statement at the time of effectiveness
pursuant to Rule 430A under the Act is hereinafter referred to as the
"Registration Statement"; the prospectus in the form first used to confirm sales
of Stock, whether or not filed with the Commission pursuant to Rule 424(b) under
the Act is hereinafter referred to as the "Prospectus." If an abbreviated
registration statement is prepared and filed with the Commission in accordance
with Rule 462(b) under the Act (an "Abbreviated Registration Statement"), the
term "Registration Statement" as used in this Agreement includes the Abbreviated
Registration Statement.
(d) As of the Effective Date, and at all times
subsequent thereto up to and including the respective Closing Dates (as
hereinafter defined) of the offering, the Registration Statement and the
Prospectus, and any amendments thereof or supplements thereto, will contain all
statements of material facts which are required to be stated therein in
accordance with the Act and the applicable rules, regulations and interpretive
releases of the Commission thereunder (the "Rules and Regulations"), and will in
all material respects conform to the requirements of the Act and the Rules and
Regulations; and neither the Registration Statement nor the Prospectus, nor any
amendment thereof or supplement thereto, will include any untrue
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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;
provided, however, that the Company makes no representations, warranties or
agreements as to information contained in the Registration Statement or the
Prospectus or any such amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company through you as the
Representatives specifically for use in the preparation thereof.
(e) The Company's duly authorized, issued and
outstanding capital stock is as set forth under "Capitalization" in the
Prospectus, the outstanding Common Shares are duly authorized and validly
issued, fully paid and nonassessable, are free of any preemptive rights, rights
of first refusal or similar rights, were issued and sold in compliance in all
material respects with the applicable Federal and state securities laws and
conform in all material respects to the description thereof in the Prospectus;
except as described in the Prospectus, there are no outstanding options,
warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue any shares of capital stock of the
Company or any security convertible or exchangeable or exercisable for capital
stock of the Company. There are no holders of securities of the Company who, by
reason of the filing of the Registration Statement have the right (and have
not waived such right) to request the Company to include in the Registration
Statement securities owned by them, other than such rights as have been
satisfied by the inclusion of securities in the Registration Statement.
(f) The Common Shares of the Company conform in
substance to all statements in relation thereto contained in the Registration
Statement and the Prospectus; the Stock to be sold by the Company hereunder has
been duly authorized and, when issued and delivered pursuant to this Agreement,
will be validly issued, fully paid and nonassessable and will conform to the
description thereof contained in the Prospectus; and the Stock to be sold by the
Selling Shareholder has been duly authorized and validly issued and is fully
paid and nonassessable. All corporate action required to be taken for the
issuance of the Stock by the Company has been validly taken. No preemptive
rights of security holders of the Company exist with respect to the issuance and
sale of the Stock by the Company pursuant hereto.
(g) All the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and are owned by the Company free and clear of all
liens, encumbrances, equities, security interests, or claims; and there are no
outstanding options, warrants or other rights calling for the issuance of, and
there are no commitments, plans or arrangements to issue, any shares of capital
stock of any subsidiary or any security convertible or exchangeable or
exercisable for capital stock of any subsidiary.
(h) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus up to and
including the respective Closing Dates (as hereinafter defined), except as set
forth or contemplated in the Prospectus, (i) neither the Company nor any of its
subsidiaries has incurred any material liabilities or obligations, direct or
contingent, nor have any of them entered into any material transaction, (ii)
there has not been
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and will not have been any change on a pro forma basis or otherwise in the
capital stock or funded debt of the Company and its subsidiaries which is
material or any material adverse change in the business or the financial
position or results of operations of the Company and its subsidiaries and (iii)
no loss or damage (whether or not insured) to the property of the Company and
its subsidiaries has been sustained which materially and adversely affects the
operations of the Company and its subsidiaries taken as a whole.
(i) The consummation of the transactions herein
contemplated and the fulfillment of the terms hereof will not conflict with or
result in a breach of any of the terms and provisions of, or constitute a
default under, the Articles of Incorporation or the Code of Regulations of the
Company, or the organizational documents of any of its subsidiaries, or any
indenture, mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound, or any order, rule or regulation applicable to the
Company or any of its subsidiaries of any court or of any federal or state
regulatory body or administrative agency or other governmental body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties.
(j) The financial statements of the Company and Intex
Aviation Services, Inc. ("Intex") included in the Registration Statement and the
Prospectus fairly present the financial position and results of operations of
the Company and Intex at the respective dates and for the respective periods to
which they apply, and such financial statements have been prepared in conformity
with generally accepted accounting principles consistently applied throughout
the periods involved. The pro forma financial statements of the Company included
in the Prospectus fairly present the pro forma financial position and results of
operations of the Company at the dates and for the periods to which they apply,
and have been prepared to give effect to certain assumptions and proposed
transactions made on reasonable bases which are fully and accurately described
in the Prospectus, and the pro forma adjustments have been properly applied on
the bases described therein.
(k) Xxxxx Xxxxxxxx LLP, who have examined and
expressed their opinion on the financial statements of the Company and Intex
referenced in their opinions set forth in the Prospectus, are independent
accountants within the meaning of the Act and the Rules and Regulations.
(l) The Company and its subsidiaries hold all
necessary material authorizations, approvals, orders, licenses, certificates and
permits of and from all governmental regulatory officials and bodies
(collectively the "licenses") required for the conduct of its business as
described in the Prospectus, and all such licenses are valid and in full force
and effect, and the Company and its subsidiaries are operating in compliance in
all material respects with the terms and provisions of such licenses and with
all material laws, regulations, orders and decrees applicable to the Company and
its subsidiaries, and their respective businesses and assets.
(m) Neither the Company nor any of its subsidiaries
is in violation of any applicable Federal, state or local laws, statutes, rules,
regulations or ordinances relating to
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public health, safety or the environment, including, without limitation,
relating to releases, discharges, emissions or disposal to air, water, land or
groundwater, to the withdrawal or use of groundwater, to the use, handling or
disposal of polychlorinated biphenyls (PCBs), asbestos or urea formaldehyde, to
the treatment, storage, disposal or management of hazardous substances
(including, without limitation, petroleum, crude oil or any fraction thereof, or
other hydrocarbons), pollutants or contaminants, to exposure to toxic, hazardous
or other controlled, prohibited or regulated substances, which violation would
have a material adverse effect on the business, condition (financial or other)
or results of operations of the Company and its subsidiaries, taken as a whole,
or which might materially and adversely affect the consummation of the
transactions contemplated by this Agreement. In addition, and irrespective of
such compliance, to the Company's knowledge, neither the Company nor any of its
subsidiaries is subject to any liabilities for environmental remediation or
clean-up, including any liability or class of liability of the lessee under the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, or the Resource Conservation and Recovery Act of 1976, as amended,
which liability would have a material adverse effect on the business, condition
(financial or other) or results of operations of the Company and its
subsidiaries, or which might materially and adversely affect the consummation of
the transactions contemplated by this Agreement.
(n) There are no legal or governmental actions, suits
or proceedings pending or, to the knowledge of the Company, threatened to which
the Company or any of its subsidiaries, or any of their executive officers or
directors is a party or of which the business or property (including, without
limitation, any of the licenses referred to in (l) above) of the Company or any
of its subsidiaries or any of the Company's or any of its subsidiaries'
employees is the subject which could have a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its subsidiaries, except as set forth in the Prospectus.
(o) Neither the Company nor any of its subsidiaries
is in violation of its Articles of Incorporation or its Code of Regulations or
other organizational documents, and no material default exists by the Company or
any of its subsidiaries in the due performance and observance of any term,
covenant or condition of any agreement material to the Company and its
subsidiaries to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound.
(p) The Company and its subsidiaries have good title
to, or valid and enforceable leasehold estates in, all properties and assets
used for their businesses (including the property described in the Prospectus as
being owned or leased by the Company), in each case free and clear of all liens,
encumbrances and defects other than those set forth or referred to in the
Registration Statement or Prospectus or those which do not materially affect the
value of such property or leasehold and do not materially interfere with the use
made or proposed to be made of such property or leasehold by the Company and its
subsidiaries; and all of the leases and subleases under which the Company and
its subsidiaries hold such properties are in full force and effect.
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(q) Other than as set forth in the Prospectus, the
Company and its subsidiaries own or possess, or can acquire on reasonable terms,
the patents, patent rights, licenses, inventions, copyrights, know-how
(including trade secrets, applications and other unpatented or unpatentable
proprietary or confidential information, systems or procedures), trademarks,
service marks, and trade names (collectively, "Proprietary Rights") used in or
necessary for the conduct of their businesses as now conducted and as proposed
to be conducted as described in the Prospectus; the Company and its subsidiaries
have the right to use all Proprietary Rights used in or necessary for the
conduct of their businesses without infringing the rights of any person or
violating the terms of any licensing or other agreement to which the Company or
any of its subsidiaries is a party, and to the knowledge of the Company no
person is infringing upon any Proprietary Right which the Company or any of its
subsidiaries has the sole and exclusive right to use; no charges, claims or
litigation have been asserted or to the knowledge of the Company threatened
against the Company or any of its subsidiaries contesting the right of the
Company or any of its subsidiaries to use, or the validity of, any Proprietary
Right or challenging or questioning the validity or effectiveness of any
license or agreement pertaining thereto or asserting the misuse thereof, and,
to the Company's knowledge, no valid basis exists for the assertion of any such
charge, claim or litigation; all licenses and other agreements to which the
Company or any of its subsidiaries is a party relating to Proprietary Rights
are in full force and effect and constitute valid, binding and enforceable
obligations of the Company or such subsidiary, and, to the Company's knowledge,
the other respective parties thereto, and, to the Company's knowledge, there
have not been and there currently are not any defaults thereunder which would
have a material adverse effect on the Company and its subsidiaries, and no
event has occurred which (whether by notice or lapse of time or both) would
constitute such a default under any license or other agreement affecting
Proprietary Rights used in or necessary for the conduct of the businesses of
the Company and its subsidiaries by any party; and except as set forth in the
Prospectus, the validity, continuation and effectiveness of all such licenses
and other agreements and the current terms thereof will not be affected by the
transactions contemplated by this Agreement.
(r) No approval, authorization, consent or other
order of any public board or body (other than in connection with or in
compliance with the provisions of the Act and the securities or Blue Sky laws of
various jurisdictions) is legally required for the sale of the Stock by the
Company.
(s) The Common Shares have been registered under
Section 12(g) of the Securities Exchange Act of 1934, as amended, and have been
authorized for trading over-the-counter on the National Association of
Securities Dealers Automated Quotation National Market ("NASDAQ/NM") subject to
notice of issuance or sale, as the case may be.
(t) The outstanding debt, the properties and the
business of the Company and its subsidiaries conform in all material respects to
the description thereof contained in the Registration Statement and the
Prospectus.
(u) The Company and its subsidiaries have filed on a
timely basis all necessary federal, state, local and foreign income and
franchise tax returns required to be filed
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through the date hereof and have paid all taxes shown as due thereon; and no tax
deficiency has been asserted against the Company or any of its subsidiaries that
has not been satisfied, nor does the Company know of any tax deficiency which is
likely to be asserted against the Company or any of its subsidiaries which if
determined adversely to the Company or such subsidiary could materially
adversely affect the business, prospects, properties, assets, results of
operations or condition (financial or otherwise) of the Company and its
subsidiaries. All tax liabilities are adequately provided for on the books of
the Company.
(v) The Company and each of its subsidiaries maintain
insurance of the types and in the amounts generally deemed adequate for their
businesses, including, but not limited to, insurance covering (i) personal
injury claims and (ii) real and personal property owned or leased by the Company
and its subsidiaries against theft, damage, destruction, acts of vandalism and
all other risks customarily insured against, all of which insurance is in full
force and effect.
(w) To the best of the Company's knowledge, no labor
problem exists with its employees or is threatened or imminent that could
materially adversely affect the Company and its subsidiaries, taken as a whole,
and the Company is not aware of any existing, threatened or imminent labor
disturbance by the employees of any of its principal suppliers, contractors or
customers that could be expected to materially adversely affect the business,
prospects, properties, assets, results of operation or condition (financial or
other) of the Company and its subsidiaries, taken as a whole.
(x) The Company has obtained the agreement of each of
its executive officers, directors and shareholders that, for a period of 180
days from the date of the final prospectus, such persons will not, without the
prior written consent of XxXxxxxx & Company Securities, Inc., directly or
indirectly sell, offer to sell, grant any option for the sale of, or otherwise
dispose of any shares of the Company's Common Stock (including, without
limitation, shares of Common Stock which may be deemed to be beneficially owned
by such persons in accordance with the 1934 Act Regulations) or any securities
convertible into Common Stock.
(y) Neither the Company nor any of its officers,
directors or affiliates (as defined in the Act and the Rules and Regulations),
has taken or will take, directly or indirectly, any action designed to stabilize
or manipulate, or which has constituted, or might in the future reasonably be
expected to cause or result in, stabilization or manipulation of, the price of
the Stock of the Company in order to facilitate the sale or resale of the Stock
or otherwise.
(z) The Company's system of internal accounting
controls is sufficient to meet the broad objectives of internal accounting
control insofar as those objectives pertain to the prevention or detection of
errors or irregularities in amounts that would be material in relation to the
Company's financial statements; and, to the best of the Company's knowledge,
neither the Company nor any employee or agent of the Company or any of its
subsidiaries has made any payment of funds of the Company or any of its
subsidiaries or received or retained any funds and no funds of the Company or
any of its subsidiaries have been set aside to be used for any payment in
violation of any law, rule or regulation.
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(aa) Neither the Company nor any of its subsidiaries
is or intends to conduct its business in a manner in which it would become, an
"investment company" as defined in Section 3(a) of the Investment Company Act of
1940, as amended.
(bb) All contracts and documents which are required
to be filed as exhibits to the Registration Statement have been so filed.
3. REPRESENTATIONS AND WARRANTIES OF THE SELLING SHAREHOLDER.
The Selling Shareholder represents and warrants to each of the Underwriters
that:
(a) The Selling Shareholder now has and on the
Closing Date (as hereinafter defined) will have good and valid title to all the
shares of the Stock to be sold by the Selling Shareholder hereunder, free and
clear of all liens, encumbrances, equities, security interests and claims
whatsoever, with full legal right, power and authority to enter into this
Agreement and that upon the delivery of and payment for such shares of the Stock
hereunder, the several Underwriters will receive good and valid title to the
shares of the Stock to be sold by the Selling Shareholder, free and clear of all
liens, encumbrances, equities, security interests and claims whatsoever,
assuming that the several Underwriters purchase the stock in good faith without
notice of any adverse claims.
(b) The Selling Shareholder has not taken and will
not take, directly or indirectly, any action designed to stabilize or
manipulate, or which has constituted or which might in the future reasonably be
expected to cause or result in stabilization or manipulation of, the price of
the Stock of the Company in order to facilitate the sale or resale of the Stock
or otherwise.
(c) The Selling Shareholder is disposing of such
shares of the Stock for his own account. The Selling Shareholder is not selling
such shares of the Stock, directly or indirectly, for the benefit of the Company
or the Underwriters, and, no part of the proceeds of such sale to be received by
the Selling Shareholder will inure, either directly or indirectly, to the
benefit of the Company. Notwithstanding the foregoing, the Selling Shareholder
will repay all of his outstanding indebtedness to the Company upon the
consummation of the offering.
(d) This Agreement has been duly authorized, executed
and delivered by or on behalf of the Selling Shareholder and this Agreement is a
valid and binding obligation of the Selling Shareholder enforceable in
accordance with its terms.
(e) The Selling Shareholder has reviewed the
Registration Statement and the Prospectus, and neither the Registration
Statement nor the Prospectus nor any amendment or supplement thereto, will
include 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. All information furnished in writing to the Company or the
Underwriters by the Selling Shareholder specifically for use in the preparation
of the Registration Statement and the Prospectus and other documents to be filed
with the National Association of Securities Dealers,
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Inc. or state securities or Blue Sky authorities is true and correct and does
not contain an untrue statement of a material fact nor does it omit to state any
material fact required to be stated therein or necessary to make such
information not misleading.
(f) The execution and performance of this Agreement
and the consummation of the transactions herein and therein contemplated and the
fulfillment of the terms hereof and thereof will not conflict with, result in a
breach of, or constitute a default under any will, trust (constructive or
other), agreement, indenture, mortgage, note, deed, rule, regulation, order,
injunction, judgment, decree or other instrument to which the Selling
Shareholder is a party or by which he is bound.
(g) All consents, approvals, authorizations and
orders necessary for the execution and delivery by the Selling Shareholder of
this Agreement and for the sale and delivery of the Stock to be sold by the
Selling Shareholder hereunder, have been obtained, except such as may be
necessary to qualify the Stock for public offering by you under state securities
or "blue sky" laws.
(h) The Selling Shareholder is not aware that any of
the representations and warranties of the Company, set forth in Section 2
hereof, is untrue or inaccurate in any material respect.
4. SALE, PURCHASE AND DELIVERY OF STOCK. (a) On the basis of
the representations and warranties herein contained, but subject to the terms
and conditions herein set forth, the Company and the Selling Shareholder,
severally and no jointly, hereby agree to sell to each Underwriter, and each
Underwriter, severally and not jointly, agrees to purchase from the Company and
the Selling Shareholder the respective number of shares of the Firm Stock set
forth opposite the Underwriter's name in Schedule A hereto, at a price of
$______ per share. It is agreed (i) that the number of shares of Firm Stock to
be sold by the Company to each Underwriter and purchased by such Underwriter
from the Company shall be the percentage of 2,597,727 shares (Firm Shares sold
by the Company) of the Stock that the total number of shares of the Firm Stock
to be purchased by such Underwriter from the Company and the Selling Shareholder
is of 2,825,000 (total number of Firm Shares) and (ii) that the number of shares
of Firm Stock to be sold by the Selling Shareholder to each Underwriter and
purchased by such Underwriter from the Selling Shareholder shall be the
percentage of 227,273 shares (Firm Shares sold by the Selling Shareholder) of
the Stock that the total number of shares of Firm Stock to be purchased by such
Underwriter from the Company and the Selling Shareholder is of 2,825,000 shares
(total number of Firm Shares), in each instance adjusted by the Representatives
to avoid fractions and to reflect any adjustment required by Section 13 hereof.
(b) The Company and the Selling Shareholder will deliver the
Firm Stock to you for the respective accounts of the several Underwriters at the
office of XxXxxxxx & Company Securities, Inc., XxXxxxxx Investment Center, 000
Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, at 10:00 A.M., Cleveland time, or to
your designee at a specified place at the same time, against payment of the
purchase price at the place of such Closing, by certified or official bank
checks in next day funds drawn in the case of shares of the Firm Stock sold by
the Company to
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the order of the Company and in the case of shares of the Firm Stock sold by the
Selling Shareholder to the order of the Selling Shareholder on the third full
business day after the effective date of the Registration Statement (or, if the
Firm Stock is priced after 4:30 p.m., Cleveland time on the effective date of
the Registration Statement, the fourth full business day after the effective
date of the Registration Statement), or at such other time not later than seven
full business days after such initial public offering as you shall determine,
such time and place being herein referred to as the "Closing Date." The
certificates for the Firm Stock so to be delivered will be in such denominations
and registered in such names as you may specify to the Company and the Selling
Shareholder at or before 3:00 P.M., Cleveland time, on the second full business
day prior to the Closing Date. Such certificates will be made available for
checking and packaging at least 24 hours prior to the Closing Date.
(c) On the basis of the representations and warranties herein
contained, but subject to the terms and conditions herein set forth, the Company
hereby grants an option to the several Underwriters to purchase, severally and
not jointly, up to 423,750 additional shares in the aggregate of the Option
Stock at the purchase price set forth in Section 4(a) hereof, for use solely in
covering any over-allotments made by the Underwriters in the sale and
distribution of the Firm Stock. The option granted hereunder may be exercised at
any time (but not more than once) within 30 days after the date the Registration
Statement becomes effective, upon written or telegraphic notice by the
Representatives to the Company setting forth the aggregate number of shares of
the Option Stock as to which the Underwriters are exercising the option and the
time and place at which certificates will be delivered, such time (which, unless
otherwise determined by you and the Company, shall not be earlier than three nor
later than seven full business days after the exercise of said option) being
herein called the "Second Closing Date." The number of shares of the Option
Stock to be sold by the Company to each Underwriter and purchased by such
Underwriter from the Company shall be the same percentage of the total number of
shares of the Option Stock to be purchased by the several Underwriters on the
Second Closing Date as such Underwriter purchased of the total number of shares
of the Firm Stock, as adjusted by the Representatives to avoid fractions and to
reflect any adjustment required by Section 13 hereof. The Company will deliver
certificates for the shares of the Option Stock being purchased by the several
Underwriters to you on the Second Closing Date at the place and time of such
Closing, or to your designee at a specified place at the same time, against
payment of the purchase price at the place of such Closing, by certified or
official bank checks in next day funds drawn to the order of the Company. The
certificates for the Option Stock so to be delivered will be in such
denominations and registered in such names as you may specify to the Company at
or before 3:00 P.M., Cleveland time, on the second full business day prior to
the Second Closing Date. Such certificates will be made available for checking
and packaging at least 24 hours prior to the Second Closing Date. The option
granted hereby may be cancelled by you as the Representatives of the several
Underwriters, as to the shares of the Option Stock for which the option is
unexercised, at any time prior to the expiration of the 30-day period, upon
notice to the Company.
5. OFFERING BY UNDERWRITERS. Subject to the terms and
conditions hereof, the several Underwriters agree that (i) they will offer the
Stock to the public as set forth in the Prospectus as soon after the
Registration Statement becomes effective as may be practicable, but
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in no event later than 5:00 p.m., Cleveland time, on the 15th business day
subsequent to the date that the Registration Statement becomes effective, and
(ii) they will offer and sell the Stock to the public only in those
jurisdictions, and in such amounts, where due qualification and/or registration
has been effected or an exemption from such qualification and/or registration is
available under the applicable securities or Blue Sky laws of such jurisdiction;
it being understood, however, that such agreement only covers the initial sale
of the Stock by the Underwriters and not any subsequent sale of such Stock in
any trading market which may develop after the public offering.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will make every reasonable effort to
cause the Registration Statement to become effective and will advise you when it
is effective under the Act. The Company will not file any amendment to the
Registration Statement, or supplement to the Prospectus, of which you have not
been previously advised and furnished with a copy, or to which you have
reasonably objected in writing.
(b) The Company will advise you promptly of any
request of the Commission for amendment of the Registration Statement or
Prospectus or for additional information and of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
of the institution of any proceedings for that purpose of which it has
knowledge, and the Company will make every reasonable effort to prevent the
issuance of any such stop order and to obtain as soon as possible the lifting
thereof, if issued.
(c) The Company will comply, to the best of its
ability, with the Act so as to permit the continuance of sales of and dealings
in the Stock under the Act for such period as may be required by the Act;
whenever it is necessary to amend or supplement the Prospectus to make the
statements therein not misleading, furnish, without charge to you as the
Representatives, either amendments to the Prospectus or supplemental
information, so that the statements in the Prospectus as so amended or
supplemented will not be misleading; and file a post-effective amendment to the
Registration Statement whenever such an amendment may be required and furnish,
without charge to you, a reasonable number of copies of any such amendment and
related Prospectus.
(d) Not later than the 45th day following the end of
the fiscal quarter first occurring after the first anniversary of the Effective
Date, the Company will make generally available to its security holders and
deliver to you an earnings statement (which need not be audited) covering a
period of at least 12 months beginning not earlier than the Effective Date which
shall satisfy the provisions of Section 11(a) of the Act and/or Rule 158
promulgated under the Act.
(e) The Company will furnish to you copies of the
Registration Statement (two of which will be signed and will include all
exhibits thereto), each preliminary
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prospectus, the Prospectus, all amendments of and supplements to such documents,
and all correspondence between the Commission and the Company or its counsel or
accountants relating thereto, in each case as soon as available and in such
quantities as you may reasonably request.
(f) For a period of three years from the date of the
Prospectus, the Company will deliver to you (i) within 90 days after the end of
each fiscal year, consolidated balance sheets, statements of income, statements
of cash flow and statements of changes in stockholders' equity of the Company
and its consolidated subsidiaries, if any, as at the end of and for such year
and the last preceding year, all in reasonable detail and certified by
independent accountants, (ii) within 45 days after the end of each of the first
three quarterly periods in each fiscal year, unaudited consolidated balance
sheets and statements of income, statements of cash flow and statements of
changes in stockholders' equity of the Company and its consolidated
subsidiaries, if any, as at the end of and for such period, all in reasonable
detail, (iii) as soon as available, all such proxy statements, financial
statements and reports as the Company shall send or make available to its
stockholders or the stockholders of any subsidiary any of whose stock is owned
by any person other than the Company or any subsidiary, and (iv) copies of all
annual or periodic reports as the Company or any subsidiary shall file with the
Commission as required by the Act, the Exchange Act and any rules or regulations
thereunder, which are available for public inspection at the Commission, or any
material reports filed in connection with the Company's listing on any stock
exchange.
(g) The Company will apply the net proceeds from the
sale of the Stock sold by it in the manner set forth in the Prospectus and will
timely file with the Commission such reports on Form SR as may be required
pursuant to Rule 463 under the Act.
(h) If, at the time that the Registration Statement
becomes effective, any information shall have been omitted therefrom in reliance
upon Rule 430A promulgated under the Act, then promptly following the execution
of this Agreement, the Company will prepare, and file or transmit for filing
with the Commission in accordance with Rule 430A and Rule 424(b) promulgated
under the Act, copies of an amended Prospectus or, if required by such Rule
430A, a post-effective amendment (including an amended Prospectus), containing
all information so omitted.
(i) The Company will file with the NASD all documents
and notices required of companies that have issued securities that are traded in
the over-the-counter market and quotations for which are reported by the
NASDAQ/NM.
(j) The Company will cooperate with you and your
counsel to qualify the Stock for sale under the securities or Blue Sky laws of
such jurisdictions within the United States as you designate, including
furnishing such information and executing such instruments as may be required,
and will continue such qualifications in effect for a period of at least three
months from the date hereof; provided, however, the Company shall not be
required to register or qualify as a foreign corporation or as a dealer in
securities nor, except as to matters and transactions relating to the offer and
sale of the Stock, consent to a service of process in any jurisdiction.
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(k) For a period of 180 days from the time of the
initial public offering of the Stock by the Underwriters, the Company will not
publicly sell, except with your prior written consent, any Common Shares or
securities convertible into Common Shares for cash, except pursuant to the
exercise of any outstanding stock options of the Company that are described in
the Prospectus.
(l) After the Closing Dates, the Company and the
Subsidiaries will be in compliance with the financial record-keeping
requirements and internal accounting control requirements of Section 13(b)(2) of
the Exchange Act.
7. COVENANTS OF THE SELLING SHAREHOLDER. The Selling
Shareholder covenants and agrees with each Underwriter that the Selling
Shareholder will not sell or transfer, without your prior written consent, any
Common Shares of the Company now held by the Selling Shareholder, alone or with
any other person, for a period of 180 days from the time of the initial offering
of the Stock by the Underwriters, except for any transfer by gift upon the
condition that the donee shall agree in writing, with a copy to be delivered to
you, to be bound by the foregoing restriction in the same manner as it applies
to the donor. However, the giving of your written consent with respect to any
such sale or transfer by the Selling Shareholder shall not constitute a waiver
of this covenant with respect to any other request by the Selling Shareholder,
it being understood that you may, in your absolute discretion, consent to
certain proposed sales and transfers and refuse to consent to others during such
180-day period. Any request from the Selling Shareholder to permit a sale or
transfer of Common Shares of the Company shall be in writing and addressed to
you and shall set forth in reasonable detail the reasons for the proposed sale
or transfer. In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Internal Revenue Code of 1986, as
amended, with respect to the transactions herein contemplated, the Selling
Shareholder agrees to deliver to you prior to or on the Closing Date 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).
8. PAYMENT OF EXPENSES. The Company will pay or cause to be
paid (and the Selling Shareholder shall reimburse the Company in such amounts
and in such proportions as may be agreed upon between the Company and the
Selling Shareholder, subject, however, to any limitations imposed by applicable
state securities or Blue Sky laws) all costs and expenses incident to the
performance of the obligations of the Company and the Selling Shareholder
hereunder, including, but not limited to, the reasonable fees and disbursements
of its counsel; the reasonable fees, costs and expenses of preparing, printing
and delivering the certificates for the Stock; the reasonable fees, costs and
expenses of the transfer agent and registrar for the Common Shares; the
reasonable fees and disbursements of its accountants; the filing fees and
reasonable expenses incurred in connection with the qualification, registration
or exemption of the Stock under state securities or Blue Sky laws and the fees
and disbursements of counsel for the Underwriters in connection with such
qualification, registration or exemption and the preparation and printing of the
preliminary and final Blue Sky Surveys; the filing fees and reasonable expenses
paid and incurred by the Underwriters, including fees and disbursements of
counsel for
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Underwriters, in connection with the review of the terms of the underwriting
arrangements by the NASD; the costs and expenses in connection with the
preparation, printing and filing of the Registration Statement (including
exhibits thereto) and the Prospectus and the furnishing to the Underwriters of
such copies of each preliminary and final Prospectus as the Underwriters may
reasonably require; and the costs and expenses in connection with the printing
of this Agreement, the Agreement Among Underwriters, the Selected Dealers
Agreement and other documents distributed to the Underwriters.
9. CONDITIONS OF THE OBLIGATION OF THE UNDERWRITERS. The
obligations of the several Underwriters to purchase and pay for the Firm Stock
on the Closing Date and the Option Stock on the Second Closing Date shall be
subject to the condition that the representations and warranties made by the
Company and the Selling Shareholder herein are true and correct as of the date
hereof and as of the respective Closing Dates, to the condition that the written
statements of Company officers and the Selling Shareholder made pursuant to the
provisions hereof are true and correct, and to the performance by the Company
and the Selling Shareholder of their respective obligations hereunder and to the
following additional conditions:
(a) The Registration Statement shall have become
effective not later than 5:00 P.M., Cleveland time, on the date of this
Agreement, or at such later time as shall have been consented to by you, and
prior to each Closing Date no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or shall be pending, or to the knowledge of
the Company or you, shall be contemplated by the Commission.
(b) You shall not have advised the Company and the
Selling Shareholder that the Registration Statement or Prospectus or any
amendment thereof or supplement thereto contains an untrue statement of fact
which, in the reasonable opinion of Xxxxxx, Halter & Xxxxxxxx LLP, counsel for
the Underwriters, is material, or omits to state a fact which, in the opinion of
such counsel, is material and is required to be stated therein or is necessary
to make the statements therein not misleading.
(c) You shall have received as of each Closing Date
(or prior thereto as indicated) the following:
(i) An opinion of Xxxxx & Xxxxxxxxx LLP,
dated the respective Closing Dates, to the effect that:
(aa) The Company has been duly
organized and is validly existing as a corporation in good standing under the
laws of Ohio with corporate power and authority to own its properties and
conduct its business as described in the Prospectus. Each of the Company's
subsidiaries has been duly incorporated and is validly existing as a corporation
in good standing under the laws of its respective jurisdiction of incorporation,
with power and authority to own and lease its properties and conduct its
respective business.
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(bb) The authorized capital stock of
the Company is as set forth under "Capitalization" in the Prospectus; all
issued and outstanding Common Shares of the Company (including the Stock to be
sold by the Selling Shareholder hereunder) have been duly authorized and
validly issued and are fully paid and nonassessable, and, to the best of the
knowledge of such counsel, are free of preemptive rights of stockholders,
rights of first refusal or similar rights. To the best of the knowledge of such
counsel, except as described in the Prospectus, there are no outstanding
options, warrants or other rights calling for the issuance of and there are no
commitments, plans or arrangements to issue any shares of capital stock of the
Company or any security convertible or exchangeable or exercisable for capital
stock of the Company, and there are no holders of securities of the Company
who, by reason of the filing of the Registration Statement, have the right (and
have not waived such right) to request the Company to include in the
Registration Statement securities owned by them, other than such rights as have
been satisfied by the inclusion of securities in the Registration Statement.
(cc) The Common Shares of the
Company to be issued and sold by the Company hereunder have been duly
authorized, and, when issued, delivered and paid for pursuant to this Agreement,
will be validly issued, fully paid and nonassessable. No preemptive rights of
security holders of the Company exist with respect to the issuance and sale of
the stock by the Company pursuant to this Agreement. The Common Shares of the
Company conform to the description thereof contained in the Prospectus and the
certificates for the Common Shares of the Company (including the Stock) are in
due and legal form under Ohio law.
(dd) The Company has the corporate
power and authority to enter into and perform this Agreement, and to issue and
deliver the Stock as provided herein. The execution, delivery and performance of
this Agreement by the Company and the Selling Shareholder have been duly
authorized by all necessary action of the Company and the Selling Shareholder.
This Agreement constitutes the legal, valid and binding obligation of the
Company and the Selling Shareholder, enforceable in accordance with its terms,
except as rights to indemnity may be limited by public policy and applicable
federal or state securities laws and except as enforcement thereof may be
limited by bankruptcy, insolvency or other laws of general application affecting
the enforcement of creditors' rights or by general principles of equity.
(ee) The Registration Statement has
become effective under the Act and, to the best of the knowledge of such
counsel, no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
instituted or are pending or contemplated under the Act. The Registration
Statement and the Prospectus, and each amendment thereof or supplement thereto
(except for the financial statements and schedules and financial and statistical
information included therein as to which such counsel need express no opinion)
comply as to form in all material respects with the requirements of the Act and
the Rules and Regulations (except for the financial statements and schedules and
financial and statistical information included therein as to which such counsel
need express no opinion); the descriptions in the Registration Statement and the
Prospectus of the Common Shares, statutes, regulations, leases, employee benefit
plans, contracts and other documents are materially accurate and fairly present
the information required to be shown; and such counsel does not know of any
legal or governmental proceedings which are required by the Act and the Rules
and Regulations to be described in the Prospectus and which are not described
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as so required, or of any leases, contracts or other documents of a character
which are required by the Act and the Rules and Regulations to be described in
the Registration Statement or the Prospectus or to be filed as exhibits to the
Registration Statement and which are not described and/or filed as so required.
(ff) The consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not result in a breach of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust or other agreement or
instrument to which the Company or any of its subsidiaries is a party and of
which such counsel has knowledge after reasonable investigation, or any will,
trust (constructive or other), agreement, judgment, decree, or other instrument
to which the Selling Shareholder is a party or by which the Selling Shareholder
is bound and of which such counsel has knowledge, or the Articles of
Incorporation or By-laws of the Company, or the organizational documents of any
of its subsidiaries, or, to the knowledge of such counsel, any order, rule or
regulation applicable to the Company or any of its subsidiaries or the Selling
Shareholder of any court or of any federal or state regulatory body or
administrative agency or other governmental body having jurisdiction over the
Company or any of its subsidiaries or the Selling Shareholder or the properties
of any of them, except for such breaches or defaults as will not have a material
adverse effect on the consummation of the transactions herein contemplated and
the fulfillment of the terms hereof by the Company or the Selling Shareholder.
(gg) All approvals, consents and
orders of all governmental bodies required in connection with the valid
authorization, issuance and sale of the Stock as contemplated by this Agreement
have been obtained, except such as may be required under the securities or Blue
Sky laws of any jurisdiction as to which such counsel need express no opinion.
(hh) To such counsel's knowledge,
neither the Company nor any of its subsidiaries is in violation of its Articles
of Incorporation or its Code of Regulations or other organizational documents,
and, to the best of the knowledge of such counsel, no default exists by the
Company or any of its subsidiaries in the due performance and observance of any
term, covenant or condition of any indenture, mortgage, deed of trust, loan
agreement or other agreement filed as an exhibit to the Registration Statement
and by which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound.
(ii) Based solely on such counsel's
examination of the share records of the Company, the Selling Shareholder is, as
of the Closing Date, the owner of the shares of the Stock sold by the Selling
Shareholder pursuant to this Agreement and full legal right and power and all
authorization and approval (if any), required by law to sell, transfer and
deliver such shares in accordance with this Agreement, and delivery of such
shares against payment therefor as provided in this Agreement will vest good
title to such shares in the purchasers thereof, free and clear of any liens,
claims, equities or encumbrances, assuming that such purchasers purchase the
same in good faith without notice of any adverse claims.
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(jj) The Company is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended.
(kk) No facts have come to the
attention of such counsel which would lead such counsel to believe that either
the Registration Statement at the time it became effective and at the Closing
Date or the Second Closing Date, as the case may be, contained an untrue
statement of a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein not misleading or
that the Prospectus as of the date thereof and as of the Closing Date or the
Second Closing Date, as the case may be, contained an untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading (it being understood
that such counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial and statistical
information data included therein).
In rendering such opinion, such
counsel may rely (A) as to matters involving the application of laws other than
the laws of the United States and jurisdictions in which they are admitted, to
the extent specified in such opinion, if at all, upon an opinion or opinions of
other counsel, familiar with the applicable laws; (B) as to matters of fact on
certificates of officers of the Company and of the Selling Shareholder and
certificates or other written statements of officers of departments of various
jurisdictions having custody of documents respecting the corporate existence or
good standing of the Company and its subsidiaries. The opinion of such counsel
for the Company and the Selling Shareholder shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and, in their
opinion, you and they are justified in relying thereon.
(ii) An opinion of Xxxxx X. Xxxxxx, Esq.,
General Counsel of the Company, dated the respective Closing Dates, to the
effect that:
(aa) To the best of his knowledge,
the Company and its subsidiaries hold and are in compliance with all necessary
material authorizations, approvals, orders, licenses, certificates and permits
of and from all governmental regulatory officials and bodies (collectively, the
"licenses") required for the conduct of its business as described in the
Prospectus, except where the failure to so hold or comply with any license would
not have, individually or in the aggregate, a material adverse effect on the
business, condition (financial or other) or results of operations of the Company
and its subsidiaries, taken as a whole.
(bb) To the best of his knowledge,
the Company and its subsidiaries are not in violation of any Federal or Ohio
laws and regulations that are of general application to corporations in the
conduct of their business, except where the failure so to comply or conform
would not have a material adverse effect on the business, condition (financial
or other) or results of operations of the Company and its subsidiaries, taken as
a whole.
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(cc) Except as set forth in the
Prospectus, such counsel does not know of any past, pending or threatened
action, suit, proceeding, inquiry or investigation before any court or before or
by any public, regulatory or governmental body or board against or involving the
business or property of the Company or any of its subsidiaries which, if
successful, could reasonably be expected to have a material adverse effect on
the business, condition (financial or other) or results of operations of the
Company and its subsidiaries, taken as a whole.
(dd) The Company and each of its
subsidiaries are duly qualified to do business as a foreign corporation and are
in good standing in all jurisdictions (i) in which the conduct of business, as
presently being conducted requires such qualification (except for those
jurisdictions in which the failure to so qualify will not in the aggregate have
a material adverse effect on the Company and its subsidiaries) and (ii) in which
the Company or such subsidiary owns or leases real property.
(ee) All the issued shares of
capital stock of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned by the
Company free and clear of all liens, encumbrances, equities, security interests,
or claim; and there are no outstanding options, warrants or other rights
calling for the issuance of, and there are no commitments, plans or arrangements
to issue, any shares of capital stock of any subsidiary or any security
convertible or exchangeable or exercisable for capital stock of any subsidiary;
except as disclosed in the Registration Statement and except for the shares of
stock of each subsidiary owned by the Company, neither the Company nor any
subsidiary owns, directly or indirectly, any shares of capital stock of any
corporation or has any equity interest in any firm, partnership, joint venture,
association or other entity.
In rendering such opinion, such
counsel may rely (A) as to matters involving the application of laws other than
the laws of the United States and jurisdictions in which he is admitted, to the
extent specified in such opinion, if at all, upon an opinion or opinions of
other counsel, familiar with the applicable laws; (B) as to matters of fact on
certificates of officers of the Company. The opinion of Xx. Xxxxxx shall state
that the opinion of any such other counsel is in form satisfactory to him and,
in his opinion, you and they are justified in relying thereon.
(iii) Such opinion or opinions of Xxxxxx,
Halter & Xxxxxxxx LLP, counsel for the Underwriters, dated the respective
Closing Dates, with respect to the sufficiency of all corporate proceedings and
other legal matters relating to this Agreement, the validity of the Stock, the
Registration Statement, the Prospectus, and other related matters as you
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may reasonably request, and the Company and the Selling Shareholder shall have
furnished to such counsel such documents as they may request for the purpose of
enabling them to pass upon such matters. In connection with such opinions, such
counsel may rely on representations or certificates of officers of the Company
and of the Selling Shareholder; and in rendering an opinion with respect to the
Selling Shareholder, such counsel may rely on the opinion of Xxxxx & Xxxxxxxxx
LLP.
(iv) A certificate of the Company executed
by the principal executive officer and the principal financial and accounting
officer of the Company, dated each respective Closing Date, to the effect that:
(aa) The representations and
warranties of the Company in Section 2 of this Agreement are true and correct as
of each respective Closing Date, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to each respective Closing Date.
(bb) No stop order suspending the
effectiveness of the Registration Statement has been issued and, to the
knowledge of the respective signers of the certificate, no proceedings for that
purpose have been instituted or are pending or, are contemplated under the Act.
(cc) The signers of the certificate
have carefully examined the Registration Statement and the Prospectus; no facts
have come to their attention which would lead them to believe that either the
Registration Statement at the time it became effective (or any amendment thereof
or supplement thereto made prior to the Closing Date or the Second Closing Date,
as the case may be, as of the date of such amendment or supplement) contained an
untrue statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the statements therein not
misleading or that the Prospectus as of the date thereof (or any amendment
thereof or supplement thereto made prior to the Closing Date or the Second
Closing Date, as the case may be, as of the date of such amendment or
supplement) contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading; since the latest respective dates as of which information is
given in the Registration Statement, there has been no material adverse change
in the financial position, business or results of operations of the Company and
its subsidiaries, except as set forth in or contemplated by the Prospectus; and
since the Effective Date of the Registration Statement there has occurred no
event required to be set forth in an amended or supplemented Prospectus which
has not been set forth.
(v) A certificate of the Selling
Shareholder, dated the Closing Date, to the effect that the representations and
warranties of the Selling Shareholder in Section 3 of this Agreement are true
and correct as of the Closing Date, and the Selling Shareholder has complied
with all the agreements and satisfied all the conditions on his part to be
performed or satisfied at or prior to the Closing Date.
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(vi) Letters from Xxxxx Xxxxxxxx LLP dated
respectively the date of this Agreement and each respective Closing Date,
addressed to you and in form and substance previously approved by you, with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and the Prospectus.
(d) At or prior to the Closing Date (as indicated in
the Closing Memorandum prepared by counsel for the Underwriters), the Company
and the Selling Shareholder shall have furnished to you such further
certificates and documents provided for in such Closing Memorandum.
(e) Prior to each Closing Date no stop orders
suspending the qualification of the Stock under the securities or Blue Sky laws
of the states in which the Stock is to be offered and sold shall have been
issued and no proceedings for that purpose shall have been instituted or shall
be pending, or to the knowledge of the Company or you, shall be contemplated by
the applicable state securities administrators.
If any condition of the Underwriters' obligations hereunder to
be satisfied prior to any Closing Date is not so satisfied, this Agreement may
be terminated by you prior to such Closing Date, by notice in writing or by
telegram confirmed in writing to the Company and the Selling Shareholder.
All such opinions, certificates, letters and documents
furnished to you pursuant to this Section 9 will be in compliance with the
provisions hereof only if they are in all material respects satisfactory to you
and to Xxxxxx, Halter & Xxxxxxxx LLP, counsel for the Underwriters, as to which
both you and such counsel shall act reasonably. The Company will furnish you
with such executed and conformed copies of such opinions, certificates, letters
and documents as you may request.
You, on behalf of the Underwriters, may waive in writing the
compliance by the Company or the Selling Shareholder of any one or more of the
foregoing conditions or extend the time for their performance.
10. REPRESENTATIONS OF THE UNDERWRITERS. Each of the
Underwriters severally represents and warrants to the Company and the Selling
Shareholder that the information furnished to the Company in writing by such
Underwriters or by you expressly for use in the preparation of the Registration
Statement or the Prospectus does not, and any amendments thereof or supplements
thereto thus furnished will not, 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. Through you each Underwriter has
only furnished to the Company expressly for such use, the statements made in the
last paragraph of the cover page of the Prospectus and the statements relating
to the terms of the offering by the several Underwriters set forth under the
caption "Underwriting" in the Prospectus.
11. TERMINATION OF AGREEMENT. This Agreement shall become
effective at the time the Stock is released by you for sale. At any time before
the happening of such
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occurrence, the Company or the Selling Shareholder may, by notice to you,
terminate this Agreement; and at any time prior to such time, you, as the
Representatives of the several Underwriters, may, by notice to the Company and
the Selling Shareholder, terminate this Agreement.
This Agreement may also be terminated by you, as the
Representatives of the several Underwriters, by notice to the Company and the
Selling Shareholder, on or after the Effective Date of the Registration
Statement and prior to each respective Closing Date, if at any time during such
period any of the following has occurred: (i) except as disclosed in or
contemplated by the Registration Statement, since the respective dates as of
which information is given in the Registration Statement and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company and its subsidiaries taken as a whole or the earnings, business affairs,
management or business prospects of the Company and its subsidiaries taken as a
whole, whether or not arising in the ordinary course of business; (ii) any
outbreak of hostilities or escalation in existing hostilities anywhere in the
world or other national or international calamity or crisis or change in
economic or political conditions, if the effect of such outbreak, escalation,
calamity, crisis or change on the financial markets in the United States would,
in your reasonable judgment, make it impracticable to offer for sale or to
enforce contracts made by the Underwriters for the resale of the Stock agreed to
be purchased hereunder; (iii) any general suspension of trading in securities on
the New York Stock Exchange or the American Stock Exchange or the NASDAQ/NM or
any general limitation on prices for such trading or any general restrictions on
the distribution of securities, all to such a degree as would in your reasonable
judgment materially adversely affect the market for the Stock; or (iv) a banking
moratorium shall have been declared by either Federal, Ohio or New York State
authorities.
This Agreement may also be terminated as provided in Sections
9 and 13 hereof.
If this Agreement shall be terminated by you because of any
failure on the part of the Company or the Selling Shareholder to comply with any
of the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company or the Selling Shareholder shall be unable to perform its
or his obligations under this Agreement, the Company shall pay, in addition to
the costs and expenses referred to in Section 8, all reasonable out-of-pocket
expenses incurred by the Underwriters in contemplation of the performance by
them of their obligations hereunder, including but not limited to the reasonable
fees and disbursements of counsel for the Underwriters, the Underwriters'
reasonable printing and traveling expenses and postage, telegraph and telephone
charges relating directly to the offering contemplated by the Prospectus, and
also including reasonable advertising expenses of the Representatives incurred
after the Effective Date of the Registration Statement and so relating, it being
understood that such out-of-pocket expenses shall not include any compensation,
salaries or wages of the officers, partners or employees of any of the
Underwriters, subject to such right of contribution, if any, as the Company may
have against the Selling Shareholder in the event of the failure of the Selling
Shareholder to comply with any of the terms or to fulfill any of the conditions
of this Agreement. Only such out-of-pocket expenses as shall be accounted for by
the Underwriters shall be paid to the Underwriters by the Company.
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The Company and the Selling Shareholder shall not in any event
be liable to the several Underwriters for damages on account of loss of
anticipated profits arising out of the transactions contemplated by this
Agreement.
12. INDEMNIFICATION. (a) The Company will indemnify and hold
harmless each Underwriter, and each person, if any, who controls each
Underwriter within the meaning of the Act, against any losses, claims, damages
or liabilities, joint or several, to which such Underwriter or such controlling
person may become subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based in whole or in part on any inaccuracy in the representations and
warranties of the Company contained herein or any failure of the Company to
perform its obligations hereunder, or arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any related preliminary prospectus (if used prior to the
Effective Date), the Prospectus or any amendment thereof or supplement thereto,
or arise out of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and, subject to the provisions of Section
12(d), will reimburse each Underwriter and each such controlling person for any
legal or other expenses reasonably incurred by such Underwriter or such
controlling person in connection with investigating or defending any such loss,
claim, damage, liability or action; provided, however, that the indemnity
agreement contained in this Section 12(a) with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter or to the benefit
of any person controlling such Underwriter in respect of any loss, claim,
damage, liability or action asserted by a person who purchases shares of the
Stock from such Underwriter, if such Underwriter failed to send or give a copy
of the Prospectus (as the same may then be amended or supplemented) to such
person with or prior to written confirmation of the sale to such person; and
provided, further, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission or alleged omission made in the
Registration Statement, any preliminary prospectus, the Prospectus or any
amendment thereof or supplement thereto in reliance upon or in conformity with
written information furnished to the Company by an Underwriter specifically for
use in the preparation thereof, as referred to in the last sentence of Section
10 hereof. This indemnity agreement will be in addition to any liability which
the Company may otherwise have.
(b) The Selling Shareholder will indemnify and hold harmless
each Underwriter, and each person, if any, who controls each Underwriter within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several, to which such Underwriter or such controlling person may
become subject, under the Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
in whole or in part on any inaccuracy in the representations and warranties of
the Selling Shareholder contained herein or any failure of the Selling
Shareholder to perform its obligations hereunder, or arise out of or are based
upon any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any related preliminary prospectus (if
used prior to the Effective Date), the Prospectus or any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a
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material fact required to be stated therein or necessary to make the statements
therein not misleading, and, subject to the provisions of Section 12(d), will
reimburse each Underwriter and each such controlling person for any legal or
other expenses reasonably incurred by such Underwriter or such controlling
person in connection with investigating or defending any such loss, claim,
damage, liability or action; provided, however, that the indemnity agreement
contained in this Section 12(b) with respect to any preliminary prospectus shall
not inure to the benefit of any Underwriter or to the benefit of any person
controlling such Underwriter in respect of any loss, claim, damage, liability or
action asserted by a person who purchases shares of the Stock from such
Underwriter, if such Underwriter failed to send or give a copy of the Prospectus
(as the same may then be amended or supplemented) to such person with or prior
to written confirmation of the sale to such person; and provided further, that
the Selling Shareholder will not be liable in any such case to the extent that
any such loss, claim, damage or liability arises out of or is based upon any
untrue statement or omission or alleged omission made in the Registration
Statement, any preliminary prospectus, the Prospectus or any amendment thereto
for supplement thereto in reliance upon or in conformity with written
information furnished to the Company by an Underwriter specifically for use in
the preparation thereof, as referred to in the last sentence of Section 10
hereof. This indemnity agreement will be in addition to any liability which the
Selling Shareholder may otherwise have.
The liability of the Selling Shareholder in respect of the
indemnity agreement set forth in this Section 12 shall be limited to an amount
equal to the proceeds received by the Selling Shareholder for the shares of
Stock sold to the Underwriters pursuant to this Agreement.
(c) Each Underwriter will indemnify and hold harmless the
Company, each person, if any, who controls the Company within the meaning of the
Act, each of its directors, each of its officers who have signed the
Registration Statement, and the Selling Shareholder against any losses, claims,
damages or liabilities to which the Company, or any such director, officer or
Selling Shareholder may become subject, under the Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement, any preliminary
prospectus, the Prospectus, or any amendment thereof or supplement thereto, or
arise out of or are based upon the omission or the alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission was made in the Registration Statement, any preliminary
prospectus, the Prospectus or any amendment thereof or supplement thereto in
reliance upon or in conformity with written information furnished to the Company
by such Underwriter through you, as the Representatives of the Underwriters,
specifically for use in the preparation thereof, as referred to in the last
sentence of Section 10 of this Agreement; and will reimburse the Company and
each such director, officer or Selling Shareholder for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action. This indemnity
agreement will be in addition to any liability which the Underwriters may
otherwise have.
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(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against an indemnifying party
under this Section, notify each party against whom indemnification is to be
sought in writing of the commencement thereof; but the omission so to notify an
indemnifying party will not relieve it from any liability which they may have to
any indemnified party otherwise than under this Section. In case any such action
is brought against any indemnified party, and it notifies the Indemnifying party
of the commencement thereof, the Indemnifying party will be entitled to
participate in, and to the extent that it may wish, to assume the defense
thereof, with counsel approved by such indemnified party (which approval shall
not be unreasonably withheld), and after notice from the Indemnifying party to
such indemnified party of its election so to assume the defense thereof, the
Indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof except as provided
below and except for the reasonable costs of investigation subsequently incurred
by such indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any such action,
but the fees and expenses of such counsel shall be at the expense of such
indemnified party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the named
parties to any such action include both the indemnifying party and the
indemnified party, and the indemnified party shall have reasonably concluded
that there is an actual or potential conflict of interest between the
indemnifying parties and the indemnified party in the conduct of the defense of
such action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or (iii)
the indemnifying parties shall not have employed counsel to assume the defense
of such action within a reasonable time after notice of the commencement
thereof, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying parties. In no event shall the indemnifying party or
parties be liable for the fees and expenses of more than one counsel for all
indemnified parties in connection with any one or separate but similar or
related actions in the same jurisdiction arising out of the same allegations or
circumstances. Anything in this Section to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent.
(e) In order to provide for contribution in circumstances in
which the indemnification provided for in this Section is for any reason held to
be unavailable from the Company, the Selling Shareholder or the Underwriters or
is insufficient to hold harmless a party indemnified hereunder, the Company, the
Selling Shareholder and the Underwriters shall contribute to the aggregate
losses, claims, damages, liabilities and expenses of the nature contemplated by
such indemnification provisions (including any investigation, legal and other
expenses incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claims asserted, but after deducting in the
case of losses, claims, damages, liabilities and expenses suffered by the
Company and the Selling Shareholder any contribution received by the Company or
the Selling Shareholder from persons, other than the Underwriters, who may also
be liable for contribution, including persons who control the Company within the
meaning of the Act, officers of the Company who signed the Registration
Statement and directors of the Company) to which the Company, the Selling
Shareholder and one or more of
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the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company, the Selling Shareholder
and the Underwriters from the offering of the Stock or, if such allocation is
not permitted by applicable law or indemnification is not available as a result
of the indemnifying party not having received notice as provided in this
Section, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company, the
Selling Shareholder and the Underwriters in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Shareholder and the Underwriters
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company, (y) the total proceeds from the offering (net
of underwriting discounts and commissions but before deducting expenses)
received by the Selling Shareholder and (z) the underwriting discounts and
commissions received by the Underwriters, respectively, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Company, the Selling Shareholder and of the Underwriters shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omissions or alleged omission to state a
material fact relates to information supplied by the Company, the Selling
Shareholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholder and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section
12(e) were determined by pro rata allocation even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to above.
The Company and the Selling Shareholder shall be severally, and not jointly,
liable for the amounts to be contributed by each of them pursuant to the
provisions of this Section 12(e). Notwithstanding the provisions of this Section
12(e), (i) in no case shall any Underwriter (except as may be provided in the
Agreement Among Underwriters) be liable or responsible for any amount in excess
of the underwriting discounts and commissions applicable to the Stock purchased
by such Underwriter hereunder and (ii) no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person, if any, who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 12(e), each person,
if any, who controls an Underwriter within the meaning of Section 15 of the Act
shall have the same rights to contribution as such Underwriter, and each person,
if any, who controls the Company within the meaning of Section 15 of the Act,
each officer of the Company who shall have signed the Registration Statement and
each director of the Company shall have the same rights to contribution as the
Company, subject in each case to clauses (i) and (ii) of this Section 12(e). Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties
under this Section 12(e), notify such party or parties from whom contribution
may be sought, but the omission to so notify such party or parties shall not
relieve the party or parties from whom contribution may be sought from any
obligation it or they may have under this Section 12(e) or otherwise. No party
shall be liable for contribution for any settlement of any action or claim
effected without its written consent.
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13. DEFAULT OF THE UNDERWRITERS. If any Underwriter or
Underwriters default in their obligations to purchase the Stock hereunder and
arrangements satisfactory to you, the Company and the Selling Shareholder,
evidenced by a writing or writings signed by you, the Company and the Selling
Shareholder, for the purchase of such Stock by other persons are not made within
36 hours after such default, this Agreement will terminate without liability on
the party of any non-defaulting Underwriter, the Company and the Selling
Shareholder (except that the Company shall be liable for the expenses to be paid
by it pursuant to the provisions of Section 8), provided, however, that if the
number of shares of the Stock which all such defaulting Underwriters have agreed
but failed to purchase shall not exceed 10% of the number of shares of the Firm
Stock or the Option Stock, as the case may be, agreed to be purchased pursuant
to this Agreement (other than the shares agreed to be taken up hereunder which
the defaulting Underwriters failed to purchase) by all non-defaulting
Underwriters, the non-defaulting Underwriters shall be obligated proportionately
to take up and pay for the shares of the Firm Stock or the Option Stock which
such defaulting Underwriters failed to purchase.
If any such default occurs, either you or the Company or the
Selling Shareholder shall have the right to postpone the Closing Date for not
more than seven business days in order that the necessary changes in the
Registration Statement, Prospectus and any other documents, as well as any other
arrangement, may be effected. As used in this Agreement, the term "Underwriters"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from its liability to the other
several Underwriters, the Company and the Selling Shareholder for its default
hereunder.
14. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations and warranties of the
Company, the Selling Shareholder and the several Underwriters, set forth in or
made pursuant to this Agreement, will remain in full force and effect,
regardless of any investigation made by or on behalf of any Underwriter, the
Company or any of its officers or directors or any controlling person or the
Selling Shareholder, and will survive delivery of and payment for the Stock and,
in the case of the agreements contained in Sections 8, 11 and 12 hereof, will
survive any termination of this Agreement.
15. NOTICES. All communications hereunder will be in writing
and, if sent to the Underwriters, will be mailed, delivered or telegraphed and
confirmed to you at XxXxxxxx & Company Securities, Inc., XxXxxxxx Investment
Center, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: Xxxxxx X. Xxxxxx,
with a copy to Xxxxxx, Halter & Xxxxxxxx LLP, 1400 XxXxxxxx Investment Center,
000 Xxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: Xxxxxx X. XxXxx, Esq., or
if sent to the Company, will be mailed, delivered or telegraphed and confirmed
to the Company at 0000 Xxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxx 00000, Attention: Xxxxx
X. Xxxxxx, General Counsel, with a copy to Xxxxx & Xxxxxxxxx LLP, 3200 National
City Center, 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000, Attention: Xxxxxx
Xxxxx, Esq., or if sent to the Selling Shareholder, will be mailed, delivered or
telegraphed and confirmed to the Selling Shareholder at Xxxxxx X. Xxxxxxx, 0000
Xxxxxxxx Xxxx, Xxxxxxxxxxxx, Xxxx 00000.
16. SUCCESSORS, GOVERNING LAW. This Agreement will inure
solely to the benefit of and be binding upon the parties hereto and the officers
and directors and controlling
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persons referred to in Section 12 hereof and their respective successors,
assigns, heirs, executors and administrators, and no other persons will have any
right or obligation hereunder. This Agreement will be governed by and construed
in accordance with the laws of the State of Ohio, without giving effect to the
principles of conflicts of laws thereof.
17. EXECUTION IN COUNTERPARTS. This Agreement may be executed
by any one or more of the parties hereto in any number of counterparts, each of
which shall be deemed to be an original, but all such counterparts shall
together constitute one and the same instrument.
18. AUTHORITY OF THE REPRESENTATIVES. You represent and
warrant that you have been authorized by the several Underwriters to enter into
this Agreement on their behalf and to act for them in the manner hereinbefore
provided.
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If the foregoing is in accordance with your understanding of
our agreement, kindly sign and return to us the enclosed copies hereof,
whereupon it will become a binding agreement by and among the Company, the
Selling Shareholder and the several Underwriters in accordance with its terms.
Very truly yours,
INTERNATIONAL TOTAL SERVICES, INC.
By:
--------------------------------
Its:
-------------------------------
XXXXXX X. XXXXXXX,
The Selling Shareholder
-----------------------------------
The foregoing Agreement is hereby confirmed
and accepted by us in Cleveland, Ohio,
acting on our own behalf and as the
Representatives of the several Underwriters
named on Schedule A annexed hereto, as of
the date first above written.
XxXXXXXX & COMPANY SECURITIES, INC.
XXXXXX XXXXXX & COMPANY, INC.
As Representatives of the Several Underwriters
By: XxXXXXXX & COMPANY SECURITIES, INC.
By:
-----------------------------------
Managing Director
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SCHEDULE A
UNDERWRITERS
Number of Shares to
Underwriter be Purchased
----------- -------------------
XxXxxxxx & Company Securities, Inc......................
Xxxxxx Xxxxxx & Company, Inc............................
Total ................................
A-1
