<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934 (Amendment No. )
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by
Rule 14a-6(e)(2))
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to 240.14a-11(c) or 240.14a-12
HOLMES PROTECTION GROUP, INC.
(Name of Registrant as Specified in Its Charter)
-----------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
1) Title of each class of securities to which transaction applies:
----------------------------------------------------------------------
2) Aggregate number of securities to which transaction applies:
----------------------------------------------------------------------
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
----------------------------------------------------------------------
4) Proposed maximum aggregate value of transaction:
----------------------------------------------------------------------
5) Total fee paid:
----------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
___________________________________________________________________________
2) Form, Schedule or Registration Statement No.:
___________________________________________________________________________
3) Filing Party:
___________________________________________________________________________
4) Date Filed:
___________________________________________________________________________
<PAGE>
[GRAPHIC OMITTED]
HOLMES PROTECTION GROUP, INC.
440 Ninth Avenue
New York, New York 10001-1695
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To the Stockholders of Holmes Protection Group, Inc.:
The Annual Meeting of Stockholders of Holmes Protection Group, Inc. (the
"Company") will be held at the Marriott Marquis Hotel, 1535 Broadway, New York,
New York 10036, at 10:00 a.m., local time, on Thursday, May 22, 1997, for the
following purposes:
1. To elect three directors to the Board of Directors for three-year terms.
2. To ratify the appointment of Arthur Andersen LLP as the independent
accountants for the Company for the year ending December 31, 1997.
3. To transact such other business as may properly come before the meeting.
All stockholders are invited to attend the meeting. Stockholders of record
at the close of business on April 18, 1997, the record date fixed by the Board
of Directors, are entitled to notice of, and to vote at, the meeting. A complete
list of stockholders entitled to notice of, and vote at, the meeting will be
open to examination by the stockholders beginning ten days prior to the meeting
for any purpose germane to the meeting during normal business hours at the
office of the Secretary of the Company at 440 Ninth Avenue, New York, New York
10001-1695.
Whether or not you intend to be present at the meeting, please sign and
date the enclosed proxy and return it in the enclosed envelope.
By Order of the Board of Directors
/s/ Dennis M. Stern
-------------------------------
Secretary
New York, New York
April 30, 1997
<PAGE>
HOLMES PROTECTION GROUP, INC.
440 Ninth Avenue
New York, New York 10001-1695
(212) 760-0630
---------------------
PROXY STATEMENT
---------------------
The accompanying proxy is solicited by the Board of Directors (the "Board
of Directors") of Holmes Protection Group, Inc. (the "Company") for use at the
Annual Meeting of Stockholders (the "Annual Meeting") to be held at the Marriott
Marquis Hotel, 1535 Broadway, New York, New York 10036, at 10:00 a.m., local
time, on Thursday, May 22, 1997, and any adjournment thereof.
VOTING SECURITIES; PROXIES
The Company will bear the cost of solicitation of proxies. In addition to
the solicitation of proxies by mail, certain officers and employees of the
Company, without additional remuneration, may also solicit proxies personally by
telefax and by telephone. In addition to mailing copies of this material to
stockholders, the Company may request persons who hold stock in their names or
custody, or in the names of nominees for others, to forward such material to
those persons for whom they hold stock of the Company and to request their
authority for execution of the proxies. The Company may reimburse such persons
for their expenses in connection with such request.
One-third of the outstanding shares of common stock, par value $.01 per
share (the "Common Stock"), present, in person or represented by proxy, shall
constitute a quorum at the Annual Meeting. The approval of a plurality of the
outstanding shares of Common Stock present in person or represented by proxy at
the Annual Meeting, is required for election of the nominees as directors as set
forth in Proposal 1. In all other matters, the affirmative vote of the majority
of the outstanding shares of Common Stock present, in person or represented by
proxy at the Annual Meeting, is required for adoption of such matters, unless
the vote of a greater number is required by the Company's Charter, the Company's
Amended and Restated By-Laws (the "By-Laws") or the General Corporation Law of
the State of Delaware.
The form of proxy solicited by the Board of Directors affords stockholders
the ability to specify a choice among approval of, disapproval of, or abstention
(except in the case of election of directors) with respect to each matter to be
acted upon at the Annual Meeting. Shares of Common Stock represented by the
proxy will be voted, except as to matters with respect to which authority to
vote is specifically withheld. Where the solicited stockholder indicates a
choice on the form of proxy with respect to any matter to be acted upon, the
shares will be voted as specified. Abstentions and broker non-votes will have no
effect on the outcome of the election of directors or the ratification of the
appointment of the independent accountants. With respect to all other matters to
be voted on by stockholders at the Annual Meeting, abstentions will have the
same effect as "no" votes, and broker non-votes will have no effect on the
outcome of the vote.
All shares of Common Stock represented by properly executed proxies which
are returned and not revoked will be voted in accordance with the instructions,
if any, given therein. If no instructions are provided in a proxy, the shares of
Common Stock represented by such proxy will be voted (i) FOR the election of the
Board of Directors' nominees for directors as set forth in Proposal 1, (ii) FOR
the ratification of Arthur Andersen LLP as the independent accountants for the
Company for the year ending December 31, 1997 as set forth in Proposal 2, and
(iii) in accordance with the proxy-holder's best judgment as to any other
matters raised at the Annual Meeting.
A stockholder who has given a proxy may revoke it at any time prior to its
exercise by giving written notice of such revocation to the office of the
Secretary of the Company, executing and delivering to the Company a later-dated
proxy reflecting contrary instructions or appearing at the Annual Meeting and
taking appropriate steps to vote in person.
1
<PAGE>
At the close of business on April 18, 1997, 5,872,537 shares of Common
Stock were outstanding and eligible for voting at the Annual Meeting. Each
stockholder of record is entitled to one vote for each share of Common Stock
held on all matters that come before the Annual Meeting. Only stockholders of
record at the close of business on April 18, 1997 are entitled to notice of, and
to vote at, the Annual Meeting.
This proxy material is being mailed to stockholders commencing on or about
April 30, 1997.
PROPOSAL 1
ELECTION OF DIRECTORS
In accordance with the Charter and the By-Laws, the Company's Board of
Directors is divided into three classes of directors, designated as Class A,
Class B and Class C, serving staggered three-year terms. The By-Laws provide
that each director serves from the date of his election until the annual meeting
of stockholders held in the third year following the year of his election and
until his successor is elected and qualified. The total number of directors, and
the number of directors in any class, may be increased or decreased by a
resolution adopted by a vote of three-quarters of the entire Board of Directors.
The number of directors is fixed at nine; however, only eight directors are
currently serving on the Board of Directors and one vacant seat exists. The
Company has no immediate plans to fill such vacant seat on the Board of
Directors.
For re-election to the Board of Directors as Class C directors for full
three-year terms expiring in 2000, the Board of Directors has nominated the
following individuals, each a current Class C director:
MARK S. HAUSER
WILLIAM P. LYONS
DAVID JAN MITCHELL
The persons named in the accompanying proxy intend to vote for the election
as director of the three nominees listed above. Each nominee has consented to
serve if elected. The Board of Directors has no reason to believe that any of
the nominees will not serve if elected, but if any of them should become
unavailable to serve as a director, and if the Board of Directors designates a
substitute nominee or nominees, the persons named as proxies will vote for the
substitute nominee or nominees designated by the Board of Directors.
The following table sets forth certain information with respect to each
person who is currently a director or executive officer of the Company, and is
based on the records of the Company and information furnished to it by such
persons. Reference is made to "Security Ownership of Certain Beneficial Owners
and Management" for information pertaining to stock ownership by each director
and executive officer of the Company.
2
<PAGE>
Directors and Officers of the Company
The current directors and executive officers of the Company, their
positions held with the Company, their ages, and for directors, their class and
the year their term as director expires, are as follows:
<TABLE>
<CAPTION>
Class/Expiration
of Term as
Name Age Positions Director
---- ------ --------- ------------------
<S> <C> <C> <C>
George V. Flagg .................. 55 President, Chief Executive Officer and Director Class B/1999
James L. Boehme .................. 48 Executive Vice President -- Sales and
Marketing
Dennis M. Stern .................. 55 Senior Vice President, General Counsel and
Secretary
Glenn C. Riker .................. 52 Senior Vice President -- Human Resources
and Assistant Secretary
Lawrence R. Irving ............... 40 Vice President -- Finance
Pierre Besuchet(2)(3) ............ 63 Director Class A/1998
Daniel T. Carroll(1)(2) ......... 71 Director Class A/1998
Lawrence R. Glenn(1)(3)(4) ...... 58 Director Class B/1999
Mark S. Hauser(1)(3)(5) ......... 39 Director, Vice Chairman of the Board Class C/1997
William P. Lyons(5) ............... 55 Director, Chairman of the Board Class C/1997
David Jan Mitchell(2)(3)(5) ...... 35 Director Class C/1997
Edward L. Palmer(1)(2)(4) ......... 79 Director Class B/1999
</TABLE>
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(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Retirement Benefits Committee.
(4) In 1992, the Company effected a financial restructuring pursuant to the
Exchange Agreement, dated as of December 18, 1991, as amended (the "Exchange
Agreement"), between the Company and seven U.S. insurance companies and
other institutions (together, the "Institutions"), including John Hancock
Mutual Life Insurance Company and The Mutual Life Insurance Company of New
York, whereby, in exchange for satisfaction of $72.6 million of loans to the
Company from the Institutions, the Institutions received cash, shares of
Common Stock and warrants to purchase shares of Common Stock. In connection
therewith, the Institutions also received the right to nominate three
directors of the Company ("Institution-Nominees"), subject to adjustment
based on their percentage ownership of total Common Stock. As of the date
hereof, the Institutions have the right to nominate two directors. Messrs.
Glenn and Palmer are Institution-Nominees. Based solely on the Company's
records, the Company believes that the Institutions hold an aggregate of
1,498,105 shares of Common Stock. See "Nomination of Certain Directors."
(5) In 1994, pursuant to the Investment Agreement, dated as of June 29, 1994,
(the "Investment Agreement") between the Company and HP Partners L.P., a
Delaware limited partnership ("HP Partners" or the "Investor"), the Investor
purchased shares of Common Stock and warrants to purchase shares of Common
Stock in exchange for an aggregate consideration of $10 million. In
connection therewith, the Investor received the right to nominate four
directors ("Investor-Nominees"), subject to adjustment based on the number
of Institution- Nominees and the Investor's percentage ownership of total
Common Stock. As of the date hereof, the Investors have the right to
nominate three directors. Messrs. Hauser, Lyons and Mitchell are
Investor-Nominees. Based on the Company's records and filings with the
Securities and Exchange Commission, the Company believes that the Investor
holds 2,201,600 shares of Common Stock. See "Nomination of Certain
Directors" and "Security Ownership of Certain Beneficial Owners and
Management."
3
<PAGE>
The following is a brief summary of the background of each director and
executive officer of the Company:
George V. Flagg. Mr. Flagg joined the Company on January 8, 1996 as
President and Chief Executive Officer. Prior thereto, from September 1985 to
December 1995, Mr. Flagg served in various executive capacities at The National
Guardian Corporation, a security alarm services company ("National Guardian"),
and most recently as President (from May 1986 to December 1995) and Chief
Executive Officer (from May 1991 to December 1995). Mr. Flagg became a director
of the Company in May 1996.
James L. Boehme. Mr. Boehme was appointed Executive Vice President - Sales
and Marketing of the Company on January 8, 1996. Prior thereto, from March 1988
to December 1995, Mr. Boehme served in various executive capacities at National
Guardian, and most recently as Senior Vice President, Sales and Marketing (from
June 1994 to December 1995) and Vice President, Sales and Marketing (from
January 1990 to June 1994).
Dennis M. Stern. Mr. Stern joined the Company in December 1996 as Senior
Vice President, General Counsel and Secretary. Prior thereto, from December 1995
to December 1996, Mr. Stern was engaged in the private practice of law and
associated with the law firm of Buchanan Ingersall. From March 1983 to December
1995, Mr. Stern served in various executive capacities with National Guardian,
serving as Executive Vice President, General Counsel and Secretary from August
1984 to December 1995.
Glenn C. Riker. Mr. Riker has been with the Company since December 1989,
starting as Director of Human Resources and currently serving as Senior Vice
President of Human Resources and Assistant Secretary. Prior to joining the
Company, Mr. Riker was Vice President of Human Resources at Atlas Copco North
America, Inc., a manufacturer of industrial equipment.
Lawrence R. Irving. Mr. Irving joined the Company in May 1996 as Vice
President - Finance. From July 1995 to April 1996, Mr. Irving served as
Controller, and then as Vice President-Finance and Treasurer, respectively, of
Centennial Security Holdings, Inc., a security alarm services company. Prior
thereto, from April 1987 to June 1995, Mr. Irving served as Assistant
Controller, and then as Assistant Vice President/Assistant Controller,
respectively, of National Guardian.
Pierre Besuchet. Mr. Besuchet has been a director since 1991. Mr. Besuchet
has been the President of Gerant des Fortunes, a Swiss investment management
company since 1983. He is also a non-executive director of Faisal Finance
(Switzerland) S.A., a Swiss investment firm.
Daniel T. Carroll. Mr. Carroll has been a director since June 1996. Since
1982, Mr. Carroll has been the Chairman of The Carroll Group, a management
consulting company. He is also a director of A.M. Castle & Co., American
Woodmark Corporation, Aon Incorporated, Comshare, Inc., Diebold Incorporated,
Oshkosh Truck Corporation, Recombinant Biocatalyst Inc., Wolverine World Wide,
Inc. and Woodhead Industries Inc.
Lawrence R. Glenn. Mr. Glenn has been a director since February 1996. Since
1995, Mr. Glenn has been Chairman of J.W. Goddard and Company, a privately owned
investment company dealing in real estate, corporate finance and financial
advisory services. Mr. Glenn is the retired former Chairman of the Credit Policy
Committee of Citicorp and Citibank, N.A. He is also a director of First Bank of
Americas and Gerber Childrenswear Holdings, Inc.
Mark S. Hauser. Mr. Hauser has been a director since 1994. He was elected
Vice Chairman of the Board of Directors in May 1995. He is the founder and,
since 1991, has been a Managing Director of Tamarix Capital Corporation, a New
York-based private investment banking firm. Prior thereto, Mr. Hauser was a
Managing Director at Hauser, Richards & Co., and Ocean Capital Corporation,
private international investment banking firms. He is also a director of ICC
Technologies, Inc. and EA Industries, Inc.
William P. Lyons. Mr. Lyons has been a director since 1994. He was elected
Chairman of the Board of Directors in May 1995. He has been President and Chief
Executive Officer of William P. Lyons and Co., Inc., a private investment firm,
since 1975. From 1992 to 1995, Mr. Lyons served as Chairman of JVL Corp., a
pharmaceutical manufacturer, and from 1988 to 1991, he served as Chairman and
Chief Executive Officer of Duro-Test Corporation, a manufacturer of specialty
lighting products. Mr. Lyons was an adjunct Professor of Management and Law at
Yale University from 1973 to 1989. Mr. Lyons is also a director of Lydall, Inc.,
Video Lottery Technologies, Inc. and Keystone Consolidated Industries, Inc.
4
<PAGE>
David Jan Mitchell. Mr. Mitchell has been a director since 1994. Since
January 1991, Mr. Mitchell has been President of Mitchell & Company, Ltd., a New
York-based private merchant banking company he founded. Since March 1992, Mr.
Mitchell has been a partner of Pertherton Capital Corporation, a privately held
real estate investment company. From April 1988 to December 1990, Mr. Mitchell
served as a managing principal and a director of Rodman & Renshaw, Inc., a
publicly traded investment banking and brokerage firm. Mr. Mitchell also serves
as a director of Kellstrom Industries, Inc. and Bogen Communications
International.
Edward L. Palmer. Mr. Palmer has been a director since 1992. He is the
retired Chairman of the Executive Committee of Citicorp and Citibank, N.A. Mr.
Palmer's current directorships include Devon Group, Inc., Sun-Resorts Ltd.
N.V., FondElec Group, and Energy Services International Corporation. Mr. Palmer
has also served on the board of directors of several U.S. and international
corporations.
Nomination of Certain Directors
As described in the Company's Annual Report on Form 10-K for the year ended
December 31, 1996, the Company is party to the following agreements which
entitle certain stockholders to nominate members of the Board of Directors: (i)
the Exchange Agreement and (ii) the Investment Agreement. Based on their
aggregate percentage share ownership, the Institutions currently have a right to
nominate two directors. Messrs. Palmer and Glenn were initially nominated by the
Institutions and appointed to the Board of Directors on November 30, 1992 and
February 8, 1996, respectively, in accordance with the terms of the Exchange
Agreement. The Investor currently has a right to nominate three directors.
Messrs. Hauser, Lyons and Mitchell were nominated by the Investor and elected to
the Board of Directors on July 29, 1994 in accordance with the terms of the
Investment Agreement. The Investor previously had the right to nominate four
directors. However, as a result of the Company's public offering of Common Stock
in September 1996, the number of directors the Investor was entitled to nominate
to the Board of Directors was reduced from four to three. In connection
therewith, William Spier (a former director who was elected to the Board of
Directors as a nominee of the Investor) resigned from the Board of Directors on
September 30, 1996. Messrs. Hauser, Mitchell and Spier are stockholders and
directors of the general partner of HP Partners and Messrs. Mitchell and Spier
are also limited partners of HP Partners. See Footnotes (4) and (5) to the table
included in "Directors and Officers of the Company," "Security Ownership of
Certain Beneficial Owners and Management" and "Certain Transactions."
Additionally, under the terms of the Holmes Protection Group, Inc. 1996
Stock Incentive Plan (the "1996 Plan"), each director, other than a director
first elected within twelve months of this Annual Meeting will be granted an
option to purchase 1,000 shares of Common Stock immediately following each
Annual Meeting of Stockholders, commencing with this Annual Meeting.
Committees of the Board of Directors; Board of Directors Meetings
The Board of Directors has established an audit, a compensation and a
retirement benefits committee to assist it in the discharge of its
responsibilities. The principal responsibilities of each committee and the
members of each committee are described in the succeeding paragraphs. The
Company's Board of Directors held eight meetings during the fiscal year ended
December 31, 1996. The Board of Directors does not have a nominating committee.
This function is performed by the Board of Directors. All directors attended at
least 75% of the meetings held by the Board of Directors and by the committees
on which they served during 1996.
The Audit Committee currently consists of Messrs. Carroll, Glenn, Hauser
and Palmer (Chairman). The Audit Committee held three meetings during 1996. The
Audit Committee reviews the scope and results of the audit and other services
performed by the Company's independent accountants.
The Compensation Committee currently consists of Messrs. Besuchet, Carroll
(Chairman), Mitchell and Palmer. The Compensation Committee held one meeting
during 1996. This Committee establishes objectives for the Company's senior
executive officers and sets the compensation of directors, executive officers
and other employees of the Company. It is also charged with the administration
of the Company's employee benefit plans, including stock options plans.
The Retirement Benefits Committee currently consists of Messrs. Besuchet,
Glenn, Hauser (Chairman) and Mitchell. The Retirement Benefits Committee held
one meeting during 1996. The Retirement Benefits Committee provides oversight
for the Company's pension and retirement benefit plans.
5
<PAGE>
Compensation of Directors
Each non-employee director receives an annual director's fee of $15,000
(except for the Chairman who receives an annual fee of $25,000) and a fee of
either $500 per day for attending, in person, meetings of the Board of Directors
or committees of the Board of Directors, or $250 per day for participating in
such meetings by telephone; and are reimbursed for their reasonable expenses
incurred in connection with attendance at or participation in such meetings. In
addition, under the 1996 Plan, each non-employee director who was a director of
the Company on December 4, 1995 was granted an option to purchase 25,000 shares
of Common Stock. Messrs. Glenn and Carroll were each granted an option to
purchase 25,000 shares of Common Stock on February 8, 1996 and June 27, 1996,
respectively, at the time of their respective appointments to the Board of
Directors. Such grants were approved by the stockholders of the Company in
connection with stockholder approval of the 1996 Plan at the 1996 Annual Meeting
of Stockholders in December 1996. Additionally, under the terms of the 1996
Plan, each director, other than a director first elected within twelve months
prior to this Annual Meeting, will be granted an option to purchase 1,000 shares
of Common Stock immediately following each Annual Stockholders Meeting,
commencing with this Annual Meeting.
Directors who are employees of the Company receive no additional
compensation for their services as directors. However, such directors are
reimbursed for their reasonable expenses incurred in connection with attendance
at or participation in meetings of the Board of Directors or committees of the
Board of Directors.
The Board of Directors recommends a vote FOR the approval of the nominees
for election as directors.
6
<PAGE>
PROPOSAL 2
RATIFICATION OF INDEPENDENT ACCOUNTANTS
The Board of Directors of the Company has appointed Arthur Andersen LLP as
independent accountants for the fiscal year ending December 31, 1997, and to
render other professional services as required.
The appointment of Arthur Andersen LLP is being submitted to stockholders
for ratification.
Representatives of Arthur Andersen LLP will be present at the Annual
Meeting, where they will have the opportunity to make a statement if they desire
to do so, and are expected to be available to respond to appropriate questions.
The Board of Directors recommends a vote FOR the ratification of Arthur
Andersen LLP as independent accountants of the Company, which is designated as
Proposal 2 on the enclosed proxy card.
7
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL
OWNERS AND MANAGEMENT
The following table sets forth information with respect to the beneficial
ownership, as of April 18, 1997, of the Common Stock by (i) any person known by
the Company to beneficially own more than 5% of the outstanding Common Stock;
(ii) each director of the Company; (iii) the Company's Chief Executive Officer
and each of the four most highly compensated executive officers (collectively,
the "Named Officers") whose total salaries and bonuses exceed $100,000 for
services rendered to the Company during the last fiscal year; and (iv) all
directors and executive officers of the Company as a group, including the Named
Officers. All share and warrant amounts and related exercise prices have been
adjusted to give effect to the one-for-fourteen reverse stock split of the
Common Stock completed on March 27, 1995. On April 18, 1997, there were
5,872,537 shares of Common Stock issued and outstanding.
<TABLE>
<CAPTION>
Number of Shares Common
Name of Beneficial Owner Stock Beneficially Owned(1) Percentage Ownership(1)
------------------------ ------------------------------ -------------------------
<S> <C> <C>
HP Partners L.P.(2) .................................... 2,201,600 32.5%
c/o HP Management, Inc.
444 Madison Avenue, 38th Floor
New York, New York 10022
John Hancock Mutual Life Insurance Company(2) ......... 639,500 10.8%
John Hancock Place
P.O. Box 111
Boston, MA 02117
The Mutual Life Insurance Company of New York(2) ...... 399,845 6.8%
1740 Broadway
New York, New York 10019
TJS Partners, L.P.(2) ................................. 399,000 6.8%
52 Vanderbilt Avenue, 5th Floor
New York, New York 10017
Stephen Feinberg(2) .................................... 389,000 6.6%
950 Third Avenue, 20th Floor
New York, New York 10022
Pierre Besuchet(3)(6)(7) .............................. 44,048 *
James L. Boehme(6)(7) ................................. 78,000 1.3%
Daniel T. Carroll(6)(7) .............................. 27,000 *
George V. Flagg(6)(7) ................................. 110,000 1.8%
Lawrence R. Glenn(6)(7)(8) ........................... 25,000 *
Mark S. Hauser(4)(6)(7) .............................. 2,241,600 34.0%
Lawrence R. Irving (6)(7) .............................. 10,000 *
William P. Lyons(4)(6)(7) .............................. 2,305,600 34.7%
David Jan Mitchell(4)(6)(7) ........................... 2,259,600 34.2%
Edward L. Palmer(6)(7)(8) .............................. 26,464 *
Glenn C. Riker(5) .................................... 6,427 *
All directors and officers as a group
(12 persons)(3)(4)(5)(6) .............................. 2,735,539 38.9%
</TABLE>
- ------------
* Represents less than 1% of outstanding Common Stock.
(1) Each director and executive officer has sole voting and investment power
with respect to the shares beneficially owned, except as otherwise noted in
the footnotes to this table. For purposes of this table, a person or group
of persons is deemed to have "beneficial ownership" of any shares of Common
Stock which such person has the right to acquire on or within 60 days of
April 18, 1997. For purposes of computing the percentage of outstanding
Common Stock held by each person or group of persons named above, any shares
which such person has or has the right to acquire on or within 60 days after
April 18, 1997 are deemed to be outstanding, but are not deemed to be
outstanding for the purpose of computing the percentage ownership of any
other person.
8
<PAGE>
(2) With respect to warrants held by the Institutions, including John Hancock
Mutual Life Insurance Company and The Mutual Life Insurance Company, such
warrants have been adjusted (subject to notification of the Institutions) in
accordance with the anti-dilution provisions contained therein to increase
the number of shares purchasable and to reduce the exercise thereof.
Includes shares issuable upon the exercise of warrants having a current
exercise price of $10.17 per share, as follows: John Hancock Mutual Life
Insurance Company and affiliates - 71,799; and The Mutual Life Insurance
Company of New York and affiliates - 44,893. With respect to HP Partners,
includes 685,714 shares of Common Stock issuable upon the exercise of
warrants having a current exercise price of $4.58 per share. The information
in the foregoing table and in this note is based on the Company's records
and on either a Schedule 13D or a Schedule 13G filed with the Securities and
Exchange Commission by each of the following stockholders and dated as
indicated: HP Partners, dated January 20, 1995; John Hancock Mutual Life
Insurance Company, dated January 16, 1996; The Mutual Life Insurance Company
of New York, dated March 2, 1995; TJS Partners, L.P., dated June 17, 1996;
and Stephen Feinberg, dated October 11, 1996. The Schedule 13D filed by TJS
Partners, L.P. states that TJS Management, L.P., TJS Corporation, and Thomas
J. Salvatore may be deemed to own beneficially the shares owned beneficially
by TJS Partners, L.P.
(3) Excludes vested options to purchase 17,884 shares of Common Stock granted to
Mr. Besuchet under the Company's 1992 Directors' Option Plan (the "Directors
Plan"). Grants of stock options are no longer permitted under the Directors
Plan. Such options have a current exercise price of $13.97 per share,
however, they become exercisable only if the price per share of the Common
Stock on the Nasdaq National Market is not less than $24.45 for 30
consecutive trading days. Such condition had not been met as of April 18,
1997.
(4) Includes 1,515,886 shares of Common Stock and warrants to purchase 685,714
shares of Common Stock owned by HP Partners. Messrs. Hauser, Mitchell and
Spier (a former director of the Company who resigned on September 30, 1996)
are stockholders and directors of the general partner of HP Partners and
Messrs. Mitchell and Spier are also limited partners of HP Partners. Messrs.
Hauser, Mitchell and Spier are also the sole stockholders of the special
limited partner of HP Partners which is entitled to various rights relating
to 285,714 of the partnership's warrants. Pursuant to HP Partners'
partnership agreement, Mr. Lyons has an arrangement to participate in any
economic benefit which Mr. Spier obtains as a result of Mr. Spier's
shareholding interest in such general partner. See "Certain Transactions."
(5) Includes vested options granted under the Company's Amended and Restated
Senior Executives' Option Plan (the "Executive Plan") to Mr. Riker to
purchase 4,427 shares of Common Stock, at an exercise price of $7.28 per
share. These options become exercisable only if the price per share of the
Common Stock on the Nasdaq National Market is not less than $13.30 for 30
consecutive trading days. Such condition had been met as of April 18, 1997.
Also includes vested options granted under the 1996 Plan to Mr. Riker to
purchase 2,000 shares of Common Stock. Excludes options granted to Mr. Riker
under the 1994 Plan and the 1996 Plan which have not yet vested to purchase
4,427 and 8,000 shares of Common Stock, respectively.
(6) Includes vested options granted under the 1996 Plan to each of Messrs.
Besuchet, Carroll, Glenn, Hauser, Lyons, Mitchell, Palmer, Flagg, Boehme,
Irving and Stern to purchase 25,000, 25,000, 25,000, 40,000, 85,000, 55,000,
25,000, 104,000, 78,000, 10,000 and 5,000 shares of Common Stock,
respectively. Excludes options granted under the 1996 Plan which have not
yet vested to each of Messrs. Flagg, Boehme, Irving and Stern to purchase
156,000, 117,000, 15,000 and 20,000 shares of Common Stock, respectively.
(7) The address of such stockholder is: c/o Holmes Protection Group, Inc., 440
Ninth Avenue, New York, New York 10001-1695.
9
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table
The following table sets forth a summary of annual and long-term
compensation earned by or paid to the Named Officers for services rendered to
the Company during each of the last three fiscal years:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
-------------------------------------- ----------------------
Securities
Other Annual Underlying Options/ All Other
Salary Bonus Compensation SARs Compensation
Name and Principal Position Year ($) ($) ($) (#) ($)(1)
- ------------------------------ ------- --------- -------- --------------- ---------------------- --------------
<S> <C> <C> <C> <C> <C> <C>
George V. Flagg ............ 1994 $ -- -- $ -- -- $ --
President and 1995 -- -- -- -- --
Chief Executive Officer 1996 196,154 -- 12,750 260,000(2) 4,763
James L. Boehme ............ 1994 $ -- -- -- -- --
Executive Vice President - 1995 -- -- -- -- --
Sales and Marketing 1996 147,115 -- 12,750 195,000(2) 4,748
Glenn C. Riker ............... 1994 88,150 12,782 13,000 8,854(3) 3,209
Senior Vice President- 1995 91,260 20,716 13,000 -- 3,476
Human Resources 1996 93,445 9,125 13,000 10,000(4) 3,691
Lawrence R. Irving ......... 1994 -- -- -- -- --
Vice President - Finance 1995 -- -- -- -- --
1996 68,654 20,000 31,800 25,000(5) --
</TABLE>
- ------------
(1) Represents matching contributions by the Company under the Company's 401(k)
Plan. 20% of accrued matching contributions become vested on each of the
second through sixth anniversaries of employment and are fully vested
thereafter.
(2) Represents a grant of stock options made in January 1996 under the 1996
Plan, subject to approval, which was granted, of the 1996 Plan by
stockholders of the Company at the 1996 Annual Meeting of Stockholders in
December 1996.
(3) 1994 option grants replaced a like number of options previously granted
under the Executive Plan to Mr. Riker in 1992.
(4) Represents a grant of stock options made in December 1995 under the 1996
Plan, subject to approval, which was granted, of the 1996 Plan by
stockholders of the Company at the 1996 Annual Meeting of Stockholders in
December 1996.
(5) Represents a grant of stock options made in May 1996 under the 1996 Plan,
subject to approval, which was granted, of the 1996 Plan by stockholders of
the Company at the 1996 Annual Meeting of Stockholders in December 1996.
All information under "Executive Compensation" herein relating to stock
options (except for those granted under the 1996 Plan) and related exercise and
hurdle prices have been adjusted to give effect to the one-for-fourteen reverse
stock split of the Common Stock effected on March 27, 1995.
The following table contains information concerning the grant of stock
options made to the Named Officers during the fiscal year ended December 31,
1996 under the Executive Plan or the 1996 Plan:
10
<PAGE>
OPTION/SAR GRANTS IN LAST FISCAL YEAR
<TABLE>
<CAPTION>
Individual Grants
----------------------------------------------------------
Number of Percent of
Securities Total Option/SARs Market
Underlying Granted to Exercise or Base Price on
Optionals/SARs Employees in Price Grant Date
Name Granted (#) Fiscal Year ($/sh)(1) ($/sh)
- ---- ----------------- -------------------- ------------------- -------------
<S> <C> <C> <C> <C>
George V. Flagg ......... 260,000 25.9% $6.00-$10.00(3) $6.00
James L. Boehme ......... 195,000 19.5% $6.00-$10.00(3) $6.00
Glenn C. Riker ......... 10,000 1.0% $12.00 $12.00
Lawrence R. Irving ...... 25,000 2.5% $8.50 $8.50
<CAPTION>
Potential
Realizable Value
at Assumed
Annual
Rates of
Stock Price
Appreciation For
Option Term(2)
Expiration -------------------------
Name Date 5% 10%
- ---- ------------- ----------- ------------
<S> <C> <C> <C>
George V. Flagg ......... 1/7/2006 $962,893 $2,312,485
James L. Boehme ......... 1/7/2006 $722,170 $1,734,364
Glenn C. Riker ......... 11/4/2006 $75,467 $191,249
Lawrence R. Irving ...... 5/5/2006 133,640 $338,670
</TABLE>
- ------------
(1) Once vested, all options which have been granted under the Executive Plan
become exercisable only if the price per share of the Common Stock on
the Nasdaq National Market is not less than $13.30 for 30 consecutive
trading days. Such condition had been met as of April 18, 1997. The 1996
Plan was approved by the Company's stockholders at the 1996 Annual Meeting
of Stockholders in December 1996.
(2) Amounts indicated under the "Potential Realizable Value" columns above have
been calculated by multiplying the market price on the date of grant by the
annual appreciation rate shown (compounded for the term of the options),
subtracting the exercise price per share and multiplying the gain per share
by the number of shares covered by the options.
(3) Upon shareholder approval of the 1996 Plan at the 1996 Annual Meeting of
Stockholders, one-fifth of the total number of options granted vested
immediately at an exercise price of $6.00 per share. With respect to the
remaining options, one-fifth of the total number of options granted will
vest on each January 2nd of the years 1997 through 2000 at an exercise price
at each of said dates which is $1.00 greater than the prior year's exercise
price (i.e., $7.00 on January 2, 1997, $8.00 on January 2, 1998, $9.00 on
January 2, 1999 and $10.00 on January 2, 2000).
Except as disclosed above, no other grants of stock options were made in
the fiscal year ended December 31, 1996 to any of the Named Officers. No stock
options were exercised by any of the Named Officers during the fiscal year ended
December 31, 1996.
<PAGE>
AGGREGATED OPTION/SAR EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION/SAR VALUES
<TABLE>
<CAPTION>
Value of
Unexercised
Number of Securities In-the-Money
Underlying Unexercised Options/SARs
Options/SARs at Fiscal
at Fiscal Year-End (#) Year-End ($)
Name Exercisable/Unexercisable Exercisable/Unexercisable
- ---- ---------------------------- ---------------------------
<S> <C> <C>
George V. Flagg ......... 52,000/208,000(2) $442,000/$1,248,000
James L. Boehme ......... 39,000/156,000(2) $331,500/$936,000
Glenn C. Riker ......... 6,427/12,427(1)(2) $5,000/$20,000
Lawrence R. Irving ...... 5,000/20,000(2) $30,000/$120,000
</TABLE>
- ------------
(1) Options were granted pursuant to the Executive Plan.
(2) Options were granted pursuant to the 1996 Plan.
11
<PAGE>
EMPLOYMENT AGREEMENTS
Mr. Flagg is employed by the Company pursuant to an employment agreement
dated January 8, 1996, which expires on December 31, 1997, but continues
year-to-year thereafter unless terminated in accordance with its terms. Mr.
Flagg's employment agreement provides for an annual base salary of no less than
$200,000. Mr. Boehme is employed by the Company pursuant to an employment
agreement dated January 8, 1996, which expires on December 31, 1997, but
continues year-to-year thereafter unless terminated in accordance with its
terms. Mr. Boehme's employment agreement provides for an annual base salary of
no less than $150,000. Mr. Irving is employed by the Company pursuant to an
employment agreement dated May 13, 1996, which expires on May 31, 1998, but
continues year-to-year thereafter unless terminated in accordance with its
terms. Mr. Irving's employment agreement provides for an annual base salary of
no less than $105,000. Mr. Stern is employed by the Company pursuant to an
employment agreement dated as of December 2, 1996, which expires on December 1,
1998, but continues year-to-year thereafter unless terminated in accordance with
its terms. Mr. Stern's employment agreement provides for an annual base salary
of no less than $140, 000. The salaries provided under all of these employment
agreements may be increased at the discretion of the Board of Directors or the
Compensation Committee thereof. Under the terms of Messrs. Flagg's, Boehme's,
Irving's and Stern's respective employment agreements, options were granted to
purchase shares of Common Stock under the 1996 Plan (260,000 shares in the case
of Mr. Flagg, 195,000 shares in the case of Mr. Boehme and 25,000 shares each in
the case of Messrs. Irving and Stern). Messrs. Flagg, Boehme, Irving and Stern
are also provided with certain other benefits and perquisites pursuant to their
respective employment agreements. Upon termination of employment with the
Company, Messrs. Flagg, Boehme, Irving and Stern are each subject to a
non-compete period of six months.
In accordance with Messrs. Flagg's, Boehme's, Irving's and Stern's
respective employment agreements, upon a termination of employment by the
Company for reasons other than (i) "Cause," (ii) "Disability" (each as defined
in such employment agreements), or (iii) death, or adjudicated incompetency, the
Company will be obligated to pay to each of Messrs. Flagg, Boehme, Irving and
Stern the greater of 12 months' base salary or base salary for the balance of
the remaining term of the respective employment agreement, and to maintain
certain benefits. Upon termination of employment by the Company within 12 months
of a "Change-of-Control Event" (as defined below), Messrs. Flagg, Boehme, Irving
and Stern shall each be entitled to receive their respective base salaries and
certain other benefits for an additional period of 12 months. As defined in
Messrs. Flagg's, Boehme's, Irving's and Stern's respective employment
agreements, a "Change-of-Control Event" means the consummation of (i) a proxy
contest for control of the Board of Directors resulting in the person or entity
or group of affiliated persons or entities (collectively, a "Control Group")
initiating such proxy contest electing a majority of the members of the Board of
Directors; (ii) the purchase by a Control Group of the Common Stock or other
securities of the Company which, when aggregated with any other securities of
the Company then held by such Control Group, gives such Control Group
"beneficial ownership" (as defined in Rule 13d-3 promulgated under the Exchange
Act) of securities representing more than 50% of the combined voting power of
the Company; or (iii) any such transaction that the Board of Directors shall
have favorably recommended to stockholders of the Company at any time prior to
its consummation, and such recommendation shall not have been withdrawn.
Mr. Riker was employed by the Company pursuant to an employment agreement
dated October 12, 1994, which expired on December 31, 1996, and which provided
for an annual base salary of $91,260. The Company and Mr. Riker have agreed to
enter into a new employment agreement on terms substantially similar to those
set forth in the employment agreements of Messrs. Flagg, Boehme, Irving and
Stern. It is anticipated that Mr. Riker's employment agreement will provide for
an annual base salary of no less than $100,000.
Upon the occurrence of a "Change-of-Control Event," the Company's maximum
aggregate salary payment obligation would be $1,435,000. Such amount is
calculated by combining the 1997 base salaries of each of Messrs. Flagg, Boehme,
Irving, Stern and Mr. Riker (assuming a new employment agreement is entered
into) for a period of 24 months.
12
<PAGE>
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the Company's fiscal year ended December 31, 1996, the Compensation
Committee of the Board of directors consisted of Messrs. Besuchet, Carroll,
Lyons (Chairman), Palmer and Spier (a former director who resigned on September
30, 1996). On December 5, 1996, immediately following the 1996 Annual Meeting of
Stockholders of the Company at which Messrs. Flagg, Glenn and Palmer were
re-elected as directors, the Compensation Committee was reconstituted and
currently consists of Messrs. Busuchet, Carroll (Chairman), Mitchell and Palmer.
None of these individuals has ever served as an officer or an employee of the
Company (other than by reason of the officer status conferred upon the Chairman
of the Board of Directors pursuant to the By-Laws). In addition, no executive
officer of the Company has ever served as (i) a member of the compensation
committee or equivalent of another entity, one of whose executive officers
served on the Compensation Committee, (ii) a director of another entity, one of
whose executive officers served on the Compensation Committee, or (iii) a member
of the compensation committee or equivalent of another entity, one of whose
executive officers served as a director of the Company.
COMPENSATION COMMITTEE REPORT TO STOCKHOLDERS
The Compensation Committee establishes compensation policies and practices
for the Company, outlines objectives for the Company's executive officers and
sets the compensation of the executive officers, certain highly compensated
employees and the Board of Directors. Additionally, the Compensation Committee
is charged with the administration of the Company's employee benefit plans,
including stock option plans.
General Policies Regarding Compensation of Executive Officers
The Company's executive compensation policies are designed to attract and
retain superior management and professional talent, to motivate those
individuals to maximize shareholder value, and to reward those individuals with
increases in base salary, bonuses when performance objectives are achieved, and
appropriate stock options. Together these components link each executive's
compensation directly to individual and Company performance. The initial base
salary and terms of bonuses for certain executive officers are contained in the
employment agreements described under the caption "Employment Agreements."
Salary. Individual base salaries reflect the level of responsibility, the
experience and training required, and the executive's ability to contribute to
the Company's success. Salaries are reviewed at least annually and are increased
on the recommendation of the Chief Executive Officer to the Compensation
Committee, which is empowered to take final action. The base salaries specified
in each executive's employment agreement may from time to time be adjusted,
subject to the minimum salary levels specified therein.
Bonuses. In 1996, the Company established the 1996 Incentive Compensation Plan
(the "Incentive Plan") which is designed to reward executive officers and
certain other employees for exceptional performance. The actual awards under the
Incentive Plan are recommended by a senior management committee, including the
Chief Executive Officer, and approved by the Compensation Committee. The bonus
opportunity for eligible participants is based on their level of responsibility,
their performance and the performance by the Company. Bonus awards for eligible
participants range from 15% to 50% of their base salaries. In fiscal year ended
December 31, 1996, actual awards granted to the Named Officers under the
Incentive Plan ranged from 0% to 19% of base salary.
In addition to bonus payments under the Incentive Plan, the Chief Executive
Officer may from time to time recommend, subject to the Compensation Committee's
approval, additional discretionary bonus payments to certain executive officers
based on exceptional individual performance and unique contributions to the
Company.
Stock Options. The Compensation Committee believes that continued use of stock
options is an effective mechanism for long-term incentive compensation of
executive officers and certain other employees. Such compensation, the
Compensation Committee believes, effectively links the actions of these officers
and employees to the interests of stockholders and is critical to the Company's
remaining competitive in its compensation practices. Accordingly, the Company
adopted the 1996 Plan described herein. As a result of stockholder approval of
the 1996 Plan in December 1996, no further grants will be made under the
Executive Plan.
Compensation Limitations. In 1993, the Internal Revenue Code was amended to
limit the deductibility of compensation paid to certain executives in excess of
$1 million. Compensation not subject to the limitation includes certain
compensation payable solely because an executive attains performance goals. The
Company's compen-
13
<PAGE>
sation deduction for a particular executive's total compensation, including
compensation realized from the exercise of stock options, will be limited to $1
million. The Compensation Committee believes that the compensation paid by the
Company in the fiscal year ended December 31, 1996 will not result in any
material loss of tax deductions for the Company.
Compensation of the Chief Executive Officer
Mr. Flagg's annual base salary of $200,000 for the fiscal year ended
December 31, 1996 was determined by the terms of his employment agreement, dated
January 8, 1996. The Compensation Committee believes that the compensation
earned by Mr. Flagg in 1996 pursuant to his employment agreement was appropriate
in light of Mr. Flagg's substantial contribution to improving the efficiency of
the Company's operations and his efforts toward positioning the Company's
business for future growth. Among other things, Mr. Flagg's contribution and
efforts were instrumental in effecting an over 10% reduction in selling, general
and administration expenses of the Company in 1996 as compared to 1995, securing
a new, two-year, $25 million credit facility for the Company, initiating and
implementing a strategic acquisition strategy, enhancing and expanding the
Company's national accounts program and promoting and executing the Company's
public offering of Common Stock in September 1996.
Members of the Compensation Committee
Pierre Besuchet
Daniel T. Carroll (Chairman)
David J. Mitchell
Edward L. Palmer
14
<PAGE>
PERFORMANCE GRAPH(1)
The Company's Common Stock traded on the London Stock Exchange from 1984
through March 24, 1995. From March 27, 1995 through September 20, 1996, the
Common Stock traded on the Nasdaq SmallCap Market. Since September 23, 1996, the
Common Stock has traded on the Nasdaq National Market.
The graph below compares the cumulative total shareholder return on the
Common Stock since March 27, 1995 (the date the Common Stock began trading on
Nasdaq SmallCap Market) through December 31, 1997, with the cumulative
stockholder return of (a) the total return on the CRSP Total Return Index for
The Nasdaq Stock Market (U.S. Companies) and (b) a "Peer Group Index." Total
return values were calculated based on the assumption of $100 invested and on
cumulative total return values assuming reinvestment of dividends. The Peer
Group is based on a selection of companies operating in the security alarm
monitoring industry and is comprised of Protection One, Inc., ADT Limited,
Borg-Warner Security, and Response USA, Inc. The Peer Group Index weighs the
constituent companies' stock performance on the basis of market capitalization
measured on March 27, 1995. The stock price performance shown on the graph below
is not necessarily indicative of future price performance.
COMPARISON OF CUMULATIVE TOTAL RETURN
AMONG HOLMES PROTECTION GROUP, INC., CRSP TOTAL RETURN INDEX FOR
THE NASDAQ STOCK MARKET (U.S. COMPANIES) AND A PEER GROUP INDEX
(in dollars)
Produced by the Center for Research in Security Prices
Produced on 04/14/97 including data to 12/31/96
$250|--------------------------------------------------------------*---|
$240|------------------------------------------------------------------|
$230|------------------------------------------------------------------|
$220|------------------------------------------------------------------|
$210|------------------------------------------------------------------|
$200|------------------------------------------------------------------|
$190|------------------------------------------------------------------|
$180|--------------------------------------------------------------#---|
$170|------------------------------------------------------------------|
$160|--------------------------------------------------------------&---|
$150|------------------------------------------------------------------|
$140|------------------------------------------------------------------|
$130|------------------------------------------------------------------|
$120|-----------------------------------------------#-&----------------|
$110|------------------------------------------------------------------|
$100|---------------------------#-------#------------------------------|
$90|----------------#----------&--------&-----------------------------|
$80|-----#-----------&------------------------------------------------|
$70|----&--------------------------------------------*----------------|
$60|----|----------|---------|-----------|-----------|-----------|----|
12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------
LEGEND
<S> <C> <C> <C> <C> <C> <C> <C>
Symbol CRSP Total Returns Index for: 12/31/91 12/31/92 12/31/93 12/30/94 12/29/95 12/31/96
- ------ ------------------------------ -------- -------- ------- ------- -------- --------
*= Homes Protection Group, Inc. 72.3 246.8
&= Nasdaq Stock Market (US Companies) 69.8 81.2 93.2 91.1 128.8 158.4
#= Self Determined Peer Group 78.4 88.7 95.4 94.5 132.3 185.6
Companies in the Self-Determined Peer Group
A D T LTD BORG WARNER SECURITY CORP
PROTECTION ONE INC RESPONSE USA INC
Notes:
A. The lines represent monthly index levels derived from compounded daily returns that include all dividends.
B. The indexes are reweighted daily, using the market capitalization on the previous trading day.
C. If the monthly interval, based on the fiscal year-end, it is not a trading day, the preceding trading day is used.
D. The index level for all series was set to $100.0 on 03/27/95.
- ------------------------------------------------------------------------------------------------------------------------------
</TABLE>
- ------------
(1) The materials contained in this report and under the caption "Performance
Graph are not "soliciting material," are not deemed filed with the Securities
and Exchange Commission and are not to be incorporated by reference in any
filing of the Company under the Securities Act of 1933, as amended, or the
Securities Exchange Act of 1934, as amended, whether made before or after the
date of this Proxy Statement and irrespective of any general incorporation
provision contained therein.
15
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1994, Mr. William Spier, a former director of the Company who resigned
on September 30, 1996, entered into an agreement with PremiTech Corporation
("PremiTech"), which is a limited partner of HP Partners, to acquire PremiTech's
limited partnership interest for approximately $2,000,000, at the option of
PremiTech, in the event that PremiTech did not enter into an agreement for the
provision of information technology services to the Company. Such information
technology agreement was subsequently executed on April 4, 1995, thereby
terminating PremiTech's option to sell its interest in HP Partners to Mr. Spier.
Pursuant to HP Partners' partnership agreement, Mr. Lyons has an
arrangement to participate in any economic benefit which Mr. Spier obtains as a
result of Mr. Spier's shareholding interest in such general partner.
On December 5, 1995, each of Messrs. Hauser, Lyons, Mitchell and Spier were
granted options under the 1996 Plan, subject to stockholder approval of the 1996
Plan, to purchase 15,000, 60,000, 30,000 and 15,000 shares of Common Stock,
respectively, at an exercise price of $5.56 per share. Such grants were made in
recognition of the extraordinary services that each of these individuals
provided to the Company in connection with the management transition and
reorganization that occurred during 1995. The 1996 Plan was approved by
stockholders in December 1996 at the Company's 1996 Annual Meeting of
Stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors and executive officers, and
persons who beneficially own more than ten percent of a registered class of the
Company's equity securities, to file with the Securities and Exchange Commission
and the National Association of Securities Dealers, Inc. initial reports of
ownership and reports of changes in ownership of Common Stock and the other
equity securities of the Company. Officers, directors, and persons who
beneficially own more than ten percent of a registered class of the Company's
equity securities are required by the regulations of the Securities and Exchange
Commission to furnish the Company with copies of all Section 16(a) forms they
file. To the Company's knowledge, based solely on review of the copies of such
reports furnished to the Company and written representations that no other
reports were required, during the fiscal year ended December 31, 1996, all
Section 16(a) filing requirements applicable to its officers, directors, and
greater than ten percent beneficial owners were complied with.
ANNUAL REPORT
The Annual Report of the Company for the fiscal year ended December 31,
1996 is being mailed to stockholders with this proxy statement.
DEADLINE FOR STOCKHOLDER PROPOSALS FOR 1997
Stockholder proposals intended to be considered for inclusion in the proxy
statement for presentation at the Company's 1998 Annual Meeting of Stockholders
must be received at the Company's offices at 440 Ninth Avenue, New York, New
York 10001-1695, Attention: Secretary, no later than 120 days prior to April 30,
1998, for inclusion in the Company's proxy statement and form of proxy relating
to such meeting. All proposals must comply with applicable Securities and
Exchange Commission rules and regulations.
OTHER MATTERS
The Board of Directors is not aware of any other matter other than those
set forth in this proxy statement that will be presented for action at the
meeting. If other matters properly come before the meeting, the persons named as
proxies intend to vote the shares they represent in accordance with their best
judgment in the interest of the Company.
THE COMPANY UNDERTAKES TO PROVIDE ITS STOCKHOLDERS WITHOUT CHARGE A COPY OF THE
COMPANY'S ANNUAL REPORT ON FORM 10-K, INCLUDING THE FINANCIAL STATEMENTS AND
SCHEDULES FILED THEREWITH. WRITTEN REQUESTS FOR SUCH REPORT SHOULD BE ADDRESSED
TO THE OFFICE OF THE SECRETARY, HOLMES PROTECTION GROUP, INC., 440 NINTH AVENUE,
NEW YORK, NEW YORK 10001-1695.
16
<PAGE>
Holmes Protection Group, Inc.
Annual Meeting of Stockholders - May 22, 1997
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
The undersigned stockholder of Holmes Protection Group, Inc. (the "Company")
hereby constitutes and appoints Dennis M. Stern and Lawrence R. Irving, and each
of them, his true and lawful attorneys and proxies, with full power of
substitution in and for each of them, to vote all shares of the Company which
the undersigned is entitled to vote at the Annual Meeting of Stockholders to be
held at the Marriott Marquis Hotel, 1535 Broadway, New York, New York 10036, on
Thursday, May 22, 1997, at 10:00 a.m., local time, or at any postponement or
adjournment thereof, on any and all of the proposals contained in the Notice of
the Annual Meeting of Stockholders, with all the powers the undersigned would
possess if present personally at said meeting, or at any postponement or
adjournment thereof.
THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED IN THE MANNER DIRECTED HEREIN BY
THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE VOTED
FOR THE NOMINEES LISTED ON THE REVERSE SIDE AND FOR THE APPROVAL OF PROPOSAL 2.
(Continued and to be signed and dated on the other side)
- ------------------------------------------------------------------------------
Please mark [X]
your votes
as this
example
The Directors recommend a vote FOR the Nominees listed in Proposal 1 and FOR
Proposal 2.
1. ELECTION OF DIRECTORS.
Mark S. Hauser, William P. Lyons,
David Jan Mitchell
FOR all nominees listed WITHHOLD AUTHORITY to
(except as marked to the vote for all nominees listed
contrary, See Instructions Below)
[ ] [ ]
INSTRUCTION: To withhold authority to vote for any individual nominee,
line through the name of the nominee above.
2. Proposal to ratify the appointment
of Arthur Andersen LLP as
independent accountants.
FOR AGAINST ABSTAIN
[ ] [ ] [ ]
The above named proxies are granted the authority, in
their discretion, to act upon such other matters as
may properly come before the meeting or any
postponement or adjournment thereof.
Dated_________________________________________ , 1997
Signature(s)_________________________________________
Signatures___________________________________________
Please sign exactly as your name appears and return this proxy immediately in
the enclosed self-addressed envelope.
