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EXHIBIT 1
RACING CHAMPIONS CORPORATION
5,000,000 SHARES OF COMMON STOCK*
UNDERWRITING AGREEMENT
_______________, 1997
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY L.L.C.
J.C. BRADFORD & CO.
As Representatives of the Several Underwriters
Identified in Schedule II Annexed Hereto
c/o ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Racing Champions Corporation, a Delaware
corporation (together with its predecessor companies, the "Company"), proposes
to sell 5,000,000 shares (the "Firm Shares") of common stock, $0.01 par value
per share (the "Common Stock"), to the several underwriters identified in
Schedule I annexed hereto (the "Underwriters"), who are acting severally and
not jointly. In addition, the Company and the several stockholders of the
Company identified in Schedule II annexed hereto (the "Selling Stockholders")
have agreed to grant to the Underwriters an option to purchase up to 750,000
additional shares of Common Stock as set forth on Schedule II annexed hereto
(the "Optional Shares") as further provided in section 6 hereof. The Firm
Shares and, to the extent such option is exercised, the Optional Shares are
hereinafter collectively referred to as the "Shares."
You, as representatives of the Underwriters (the "Representatives"), have
advised the Company and the Selling Stockholders that the Underwriters propose
to make a public offering of their respective portions of the Shares as soon
hereafter as in your judgment is advisable and that the public offering price
of the Shares initially will be $_____ per share.
The Company and the Selling Stockholders hereby confirm their respective
agreements with the Underwriters and each other as follows:
SECTION 2. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE PRINCIPAL
STOCKHOLDERS. Each of the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇.▇. ▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P., ▇▇▇▇▇ Capital Partners II Limited
Partnership, Nassau Capital Partners L.P., BCP II Affiliates Fund Limited
Partnership, and NAS Partners I L.L.C. (individually, a "Principal
Stockholder", and collectively, the "Principal Stockholders"), jointly and
severally, represents and warrants to, and agrees with, the several
Underwriters, and shall be deemed to represent and warrant to the several
Underwriters on each Closing Date (as hereinafter defined), that:
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* Plus an option to acquire up to 750,000 additional shares of Common Stock
from the Company and the Selling Shareholders to cover over-allotments.
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(a) Each of the Company and the subsidiaries of the Company that are
listed on Exhibit 21 of the Registration Statement (as hereinafter defined)
(individually, a "Subsidiary" and collectively, the "Subsidiaries") has
been duly incorporated and is validly existing as a corporation and in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and described in the
Prospectus (as hereinafter defined) and the Registration Statement; each of
the Company and the Subsidiaries is duly registered and qualified to do
business as a foreign corporation under the laws of, and is in good
standing as such in, each jurisdiction in which such registration or
qualification is required, except where the failure to so register or
qualify would not have a material adverse effect on the condition
(financial or other), business, property, net worth or results of
operations the Company and the Subsidiaries, taken as a whole ("Material
Adverse Effect"); and no proceeding has been instituted in any such
jurisdiction revoking, limiting or curtailing, or seeking to revoke, limit
or curtail, such power and authority or qualification. Complete and
correct copies of the certificate of incorporation and by-laws, as amended
or restated ("Certificate of Incorporation" and "By-laws," respectively),
of the Company and each of the Subsidiaries as in effect on the date hereof
have been delivered to the Representatives, and no changes thereto will be
made on or subsequent to the date hereof and prior to each Closing Date.
(b) The shares of Common Stock issued and outstanding immediately
prior to the issuance and sale of the Shares to be sold by the Company
hereunder as set forth in the Prospectus have been duly authorized and
validly issued, are fully paid and nonassessable and conform to the
description thereof contained in the Prospectus and the Registration
Statement. There are no preemptive, preferential or, except as described
in the Prospectus, other rights to subscribe for or purchase any shares of
Common Stock (including the Shares), and no shares of Common Stock have
been issued in violation of such rights. The Shares to be issued and sold
by the Company to the Underwriters have been duly authorized and, when
issued, delivered and paid for 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 Registration Statement. The
delivery of certificates for the Shares to be issued and sold by the
Company hereunder and payment therefor pursuant to the terms of this
Agreement will pass valid title to such Shares to the Underwriters, free
and clear of any lien, claim, encumbrance or defect in title. Except as
described in the Prospectus, there are no outstanding options, warrants or
other rights of any description, contractual or otherwise, entitling any
person to be issued any class of security by the Company or any Subsidiary,
and there are no holders of Common Stock or other securities of the Company
or any Subsidiary, or of securities that are convertible or exchangeable
into Common Stock or other securities of the Company or any Subsidiary,
that have rights to the registration of such Common Stock or securities
under the Securities Act of 1933, as amended, and the regulations
thereunder (together, the "Act") or the securities laws or regulations of
any of the states (the "Blue Sky Laws").
(c) Except for the Subsidiaries, and as otherwise set forth in the
Prospectus, the Company has no subsidiaries and does not own any equity
interest in or control, directly or indirectly, any other corporation,
limited liability company, partnership, joint venture, association, trust
or other business organization. The Company owns directly all of the
issued and outstanding capital stock of each Subsidiary, free and clear of
any and all liens, claims, encumbrances or security interests, and all such
capital stock has been duly authorized and validly issued and is fully paid
and nonassessable. There are no outstanding options, warrants or other
rights of any description, contractual or otherwise, entitling any person
to subscribe for or purchase any shares of capital stock of any Subsidiary.
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(d) The Company has full corporate power and authority to enter into
and perform this Agreement, and the execution and delivery by the Company
of this Agreement and the performance by the Company of its obligations
hereunder and the consummation of the transactions described herein, have
been duly authorized with respect to the Company by all necessary corporate
action and will not: (i) violate any provisions of the Certificate of
Incorporation or By-laws of the Company or any Subsidiary; (ii) violate any
provisions of, or result in the breach, modification or termination of, or
constitute a default under, any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or any Subsidiary is
a party or by which the Company or any Subsidiary, or any property owned or
leased by the Company or any Subsidiary, may be bound or affected; (iii)
violate any statute, ordinance, rule or regulation applicable to the
Company or any Subsidiary, or order or decree of any court, regulatory or
governmental body, arbitrator, administrative agency or instrumentality of
the United States or other country or jurisdiction having jurisdiction over
the Company or any Subsidiary; or (iv) result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any Subsidiary, except where such violation, breach,
modification, termination, default, creation, or imposition would not,
individually or collectively, have a Material Adverse Effect. No consent,
approval, authorization or other order of any court, regulatory or
governmental body, arbitrator, administrative agency or instrumentality of
the United States or other country or jurisdiction is required for the
execution and delivery of this Agreement by the Company, the performance of
its obligations hereunder or the consummation of the transactions
contemplated hereby, except for compliance with the Act, the Securities
Exchange Act of 1934, as amended, and the regulations thereunder (together,
the "Exchange Act"), the Blue Sky Laws applicable to the public offering of
the Shares by the several Underwriters and the clearance of such offering
and the underwriting arrangements evidenced hereby with the National
Association of Securities Dealers, Inc. (the "NASD"). This Agreement has
been duly executed and delivered by and on behalf of the Company and is a
valid and binding agreement of the Company enforceable against the Company
in accordance with its terms.
(e) A registration statement on Form S-1 (Reg. No. 333-22493) with
respect to the Shares, including a preliminary form of prospectus, has
been carefully prepared by the Company in conformity with the requirements
of the Act and has been filed with the Securities and Exchange Commission
(the "Commission"). If the Company elects to rely on Rule 462(b) of the
rules and regulations of the Commission (the "Rules and Regulations") to
register a portion of the Shares, a registration statement relating to the
Shares (the "Rule 462 registration statement") has been or will be prepared
by the Company under the provisions of the Act and the Rules and
Regulations and has been or will be filed with the Commission. The
registration statement on Form S-1 (Reg. No. 333-22493), as finally amended
and revised at the time such registration statement was or is declared
effective by the Commission (including the information contained in the
form of final prospectus, if any, filed with the Commission pursuant to
Rule 424(b) and Rule 430A under the Act and deemed to be part of the
registration statement if the registration statement has been declared
effective pursuant to Rule 430A(b)) and as thereafter amended by
post-effective amendment, if any, together with the Rule 462 registration
statement, is herein referred to as the "Registration Statement." The
related final prospectus in the form first filed with the Commission
pursuant to Rule 424(b) or, if no such filing is required, as included in
the Registration Statement, or any supplement thereto, is herein referred
to as the "Prospectus." The prospectus subject to completion in the form
included in the Registration Statement at the time of the initial filing of
the Registration Statement with the Commission, and each such prospectus as
amended from time to time until the date of the Prospectus, is referred to
herein as the "Preliminary Prospectus." The Company has prepared and filed
such amendments to the Registration Statement since its initial filing with
the Commission, if any, as may have been required to the date hereof, and
will file such additional amendments thereto
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as may hereafter be required. There have been delivered to the
Representatives three signed copies of the Registration Statement
(including the Rule 462 registration statement), and each amendment
thereto, if any, together with three copies of each exhibit filed
therewith, and such number of conformed copies for each of the Underwriters
of the Registration Statement (including the Rule 462 registration
statement) and each amendment thereto, if any (but without exhibits), and
of each Preliminary Prospectus and of the Prospectus as the Representatives
have requested.
(f) Neither the Commission nor any state securities commission has
issued any order preventing or suspending the use of any Preliminary
Prospectus, nor, to the knowledge of the Company or the Principal
Stockholders, have any proceedings for that purpose been initiated or
threatened, and each Preliminary Prospectus filed with the Commission as
part of the Registration Statement as originally filed or as part of any
amendment or supplement thereto complied in all material respects when so
filed with the requirements of the Act and, as of its date, did not include
any 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, other than with respect to information contained in the
Registration Statement furnished by the Representatives to the Company
pursuant to section 5 hereof. As of the effective date of the Registration
Statement, and at all times subsequent thereto up to each Closing Date, the
Registration Statement and the Prospectus contained or will contain all
statements that are required to be stated therein in accordance with the
Act and conformed or will conform in all respects to the requirements of
the Act, and neither the Registration Statement nor the Prospectus included
or will include any untrue statement of a material fact or omitted or will
omit to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, other than with respect to
information contained in the Registration Statement furnished by the
Representatives to the Company pursuant to section 5 hereof. Neither the
Company, nor any person that controls, is controlled by (including the
Subsidiaries) or is under common control with the Company, has distributed
or will distribute prior to each Closing Date any offering material in
connection with the offering and sale of the Shares other than a
Preliminary Prospectus, the Prospectus, the Registration Statement or other
materials permitted by the Act and provided to the Representatives.
(g) Each of (i) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, which has expressed its opinion
with respect to (x) the consolidated financial statements and schedules of
the Company and the Subsidiaries, and (y) the combined financial statements
of Racing Champions, Inc. and ▇▇▇▇-▇▇▇▇▇, Ltd. (the "RCI Group"), and (ii)
Ernst & Young, which has expressed its opinion with respect to the combined
financial statements and schedules of Racing Champions Limited, Hosten
Investment Limited, ▇▇▇▇▇▇▇ Services, Inc., and Bergen Services Inc. (the
"RCL Group") (collectively, the financial statements referred to in clauses
(i) and (ii), the "Financial Statements"), in each case as filed with the
Commission and included as a part of each Preliminary Prospectus, the
Prospectus or the Registration Statement are independent accountants as
required by the Act.
(h) The Financial Statements and the related notes thereto included in
each Preliminary Prospectus, the Prospectus and the Registration
Statement present fairly the financial position, results of operations and
cash flows of each of the Company, RCI Group, and RCL Group as of their
respective dates or for the respective periods covered thereby, all in
conformity with generally accepted accounting principles consistently
applied throughout the periods involved. The financial statement
schedules, if any, included in the Registration Statement present fairly
the information required to be stated therein on a basis consistent with
the Financial Statements. The Company had an outstanding capitalization as
set forth in the Registration Statement and under "Capitalization" in the
Prospectus as of the date indicated therein, and there has been no material
change thereto since such date except as disclosed in the Prospectus. The
financial and statistical information and data
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relating to each of the Company, RCI Group and RCL Group in each
Preliminary Prospectus, the Prospectus and the Registration Statement are
accurately presented and prepared on a basis consistent with the Financial
Statements and books and records of the Company, RCI Group, and RCL Group,
respectively. The Financial Statements and schedules and the related notes
thereto included in each Preliminary Prospectus, the Prospectus or the
Registration Statement are the only financial statements and schedules
required under the Act to be set forth therein.
(i) Neither the Company nor any Subsidiary is, nor with the giving of
notice or passage of time or both, would be, in violation or in breach of:
(i) its respective Certificate of incorporation or By-laws; (ii) any
statute, ordinance, order, rule or regulation applicable to the Company or
such Subsidiary; (iii) any order or decree of any court, regulatory body,
arbitrator, administrative agency or other instrumentality of the United
States or other country or jurisdiction having jurisdiction over the
Company or such Subsidiary; or (iv) any provision of any agreement, lease,
franchise, license, indenture, permit, mortgage, deed of trust, evidence of
indebtedness or other instrument to which the Company or such Subsidiary is
a party or by which any property owned or leased by the Company or such
Subsidiary is bound or affected, except where such violation or breach
would not, individually or collectively, have a Material Adverse Effect.
Neither the Company nor any Subsidiary has received notice of any violation
of any applicable statute, ordinance, order, rule or regulation applicable
to the Company or any Subsidiary. The Company and each Subsidiary have
obtained and hold, and are in compliance with, all permits, certificates,
licenses, approvals, registrations, franchises, consents and authorizations
of governmental or regulatory authorities required under all laws, rules
and regulations in connection with their businesses (hereinafter "permit"
or "permits"), and all of such permits are in full force and effect; and
the Company and each Subsidiary have fulfilled and performed all of their
respective obligations with respect to each such permit and no event has
occurred which would result in, or after notice or lapse of time would
result in, revocation or termination of any such permit or result in any
other impairment of the rights of the holder of such permit, except where
such revocation, termination, or impairment would not, individually or
collectively, have a Material Adverse Effect. Neither the Company nor any
Subsidiary is or has been (by virtue of any action, omission to act,
contract to which it is a party or other occurrence) in violation of any
applicable foreign, federal, state, municipal or local statutes, laws,
ordinances, rules, regulations or orders (including those relating to
environmental protection, occupational safety and health and equal
employment practices) heretofore or currently in effect.
(j) There are no legal or governmental proceedings or investigations
pending or, to the knowledge of the Company or the Principal
Stockholders, threatened to which the Company or any Subsidiary is or may
be a party or to which any property owned or leased by the Company or any
Subsidiary is or may be subject, including, without limitation, any such
proceedings that are related to environmental or employment discrimination
matters, which are required to be described in the Registration Statement
or the Prospectus which are not so described, or which question the
validity of this Agreement or any action taken or to be taken pursuant
hereto. Except as described in the Registration Statement or the
Prospectus, neither the Company nor any Subsidiary: (i) is in violation of
any statute, ordinance, rule or regulation, or any decision, order or
decree of any court, regulatory body, arbitrator, administrative agency or
other instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company or such Subsidiary relating to the
use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environmental or human exposure to
hazardous or toxic substances (collectively, "environmental laws"); (ii)
owns or operates any real property contaminated with any substance that is
subject to any environmental laws; (iii) is liable for any off-site
disposal or contamination pursuant to any environmental laws; or (iv) is
subject to any claim relating to any environmental laws, which violation,
contamination, liability or claim could have a Material Adverse Effect.
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(k) There is no transaction, relationship, obligation, agreement or
other document required to be described in the Registration Statement
or the Prospectus or to be filed or deemed to be filed as an exhibit to the
Registration Statement by the Act, which has not been described or filed as
required. All such contracts or agreements to which the Company or any
Subsidiary is a party have been duly authorized, executed and delivered by
the Company or such Subsidiary, constitute valid and binding agreements of
the Company or such Subsidiary, and are enforceable by and against the
Company or such Subsidiary, in accordance with the respective terms
thereof.
(l) Neither the Company nor any Subsidiary owns any real property.
The Company or a Subsidiary has good and valid title to all property and
assets reflected as owned by the Company or such Subsidiary in the
Financial Statements included in the Registration Statement (or elsewhere
in the Registration Statement or the Prospectus), free and clear of all
liens, claims, mortgages, security interests or other encumbrance of any
kind or nature whatsoever, except those, if any, reflected in the Financial
Statements (or elsewhere in the Registration Statement or the Prospectus)
and those that would not, individually or collectively, have a Material
Adverse Effect. All property (real and personal) held or used by the
Company or a Subsidiary under leases, licenses, franchises or other
agreements is held by the Company or such Subsidiary under valid,
subsisting, binding and enforceable leases, franchises, licenses or other
agreements.
(m) Neither the Company nor any person that controls, is controlled by
(including the Subsidiaries) or is under common control with the Company
has taken or will take, directly or indirectly, any action designed to
cause or result in, or which constituted, or which could cause or result
in, stabilization or manipulation, under the Exchange Act or otherwise, of
the price of any security of the Company to facilitate the sale or resale
of the Common Stock.
(n) Except as described in the Registration Statement or the
Prospectus, since the respective dates as of which information is given in
the Registration Statement or the Prospectus and prior to each Closing
Date: (i) neither the Company nor any Subsidiary has or will have incurred
any liability or obligation, direct or contingent, or entered into any
transaction, that is material to the Company, except as in the ordinary
course of business; (ii) the Company has not and will not have paid or
declared any dividend or other distribution with respect to its capital
stock and neither the Company nor any Subsidiary is or will be delinquent
in the payment of principal or interest on any outstanding debt obligation;
and (iii) there has not been and will not have been any change in the
capital stock, any material change in the indebtedness of the Company or
any Subsidiary, or any change or development involving or which could
reasonably be expected to involve, a Material Adverse Effect, whether or
not arising from transactions in the ordinary course of business.
(o) Neither the Company nor any person that controls, is controlled by
(including the Subsidiaries) or is under common control with the Company
has, directly or indirectly: (i) made any unlawful contribution to any
candidate for political office, or failed to disclose fully any
contribution in violation of law; or (ii) made any payment to any federal,
state or foreign governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States or any jurisdiction thereof or
applicable foreign jurisdictions.
(p) The Company or a Subsidiary owns or possesses adequate rights to
use all patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations, copyrights and
licenses presently used in or necessary for the conduct of its business or
ownership of its properties as presently conducted, and neither the Company
nor any Subsidiary has violated or infringed upon the rights of others, or
received any notice of conflict with the
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asserted rights of others, in respect thereof, which would, individually or
collectively, have a Material Adverse Effect.
(q) The Company or a Subsidiary has in place and effective such
policies of insurance, with limits of liability in such amounts, as are
normal and prudent in the ordinary course of the business of the Company
and its Subsidiaries.
(r) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company and the Principal
Stockholders, is imminent, which would, individually or collectively, have
a Material Adverse Effect, and neither the Company nor any Subsidiary is a
party to any collective bargaining agreement and, to the knowledge of the
Company and the Principal Stockholders, no union organizational attempts
have occurred or are pending. There has been no change in the relationship
of the Company or any Subsidiary with any of its principal suppliers,
manufacturers, contractors or customers resulting in or that could result
in a Material Adverse Effect.
(s) Neither the Company nor any Subsidiary is an "investment company",
an "affiliated person" of, or "promoter" or "principal underwriter" for,
an "investment company", as such terms are defined in the Investment
Company Act of 1940, as amended.
(t) All federal, state and local tax returns required to be filed by
or on behalf of the Company or any Subsidiary have been filed (or are
the subject of valid extension) with the appropriate federal, state and
local authorities, and all such tax returns, as filed, are accurate in all
material respects; all federal, state and local taxes (including estimated
tax payments) required to be shown on all such tax returns or claimed to be
due from or with respect to the business of the Company or such Subsidiary
have been paid or reflected as a liability on the Financial Statements for
appropriate periods; all deficiencies asserted as a result of any federal,
state or local tax audits have been paid or finally settled, and no issue
has been raised in any such audit which, by application of the same or
similar principles, reasonably could be expected to result in a proposed
deficiency for any other period not so audited; no state of facts exist or
has existed which would constitute grounds for the assessment of any tax
liability with respect to the periods which have not been audited by
appropriate federal, state or local authorities; there are no outstanding
agreements or waivers extending the statutory period of limitation
applicable to any federal, state or local tax return of any period; and
neither the Company nor any Subsidiary has ever been a member of an
affiliated group of corporations filing consolidated federal income tax
returns, other than a group of which the Company is and has been the common
parent.
(u) Neither the Company nor any Subsidiary is a participating employer
or plan sponsor with respect to any employee pension benefit plan as
defined in Section 3(2) of the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), or any employee welfare benefit plan as defined
in Section 3(l) of ERISA, including, without limitation, any multiemployer
welfare or pension plan (collectively, the "Plans"). With respect to the
Plans, the Company is in substantial compliance with all applicable
regulations, including ERISA and the Code. With respect to each defined
benefit retirement plan, such plan does not have benefit liabilities (as
defined in Section 4001(a)(16) of ERISA) exceeding the assets of the plan.
The Company or the administrator of each of the Plans, as the case may be,
has timely filed the reports required to be filed by ERISA and the Code in
connection with the maintenance of the Plans, and no facts, including,
without limitation, any "reportable event" as defined by ERISA and the
regulations thereunder, exist in connection with the Plans which, under
applicable law, would be reasonably likely to constitute grounds for the
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termination of any of the Plans by the Pension Benefit Guaranty
Corporation or for the appointment by the appropriate United States
District Court of a trustee to administer any of the Plans.
(v) The Company and each Subsidiary maintain a system of internal
accounting controls sufficient to provide reasonable assurances that: (i)
transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of consolidated financial statements in conformity with
generally accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorizations; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(w) Except for ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ Capital Partners II Limited
Partnership ("▇▇▇▇▇ Capital Partners") and BCP II Affiliates Fund Limited
Partnership ("BCP"), none of the Company, any Subsidiary, any officer or
director of the Company or any Subsidiary, or any person who owns, of
record or beneficially, any class of securities issued by the Company is:
(i) an officer, director or partner of any brokerage firm, broker or dealer
that is a member of the NASD ("NASD Member"); or (ii) directly or
indirectly, a "person associated with" an NASD member or an "affiliate", of
an NASD member, as such terms are used in the NASD Rules of Fair Practice.
In addition, neither the Company nor any Subsidiary has issued or
transferred any Common Stock, warrants, options or other securities, or any
other items of value, to any of the Underwriters or any "related person" of
any Underwriter (other than ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇ Capital Partners and
BCP), as such term is used in the NASD Rules of Fair Practice, except as
provided in this Agreement.
(x) The Company has prepared and filed with the Commission a
registration statement for the Common Stock pursuant to Section
12(g) of the Exchange Act. Such registration statement either has been
declared effective by the Commission under the Exchange Act or will be
declared effective by the Commission prior to or concurrently with the
commencement of the public offering of the Shares. The Common Stock has
been approved for designation upon notice of issuance as a Nasdaq National
Market security on The Nasdaq Stock Market ("Nasdaq") concurrently with the
effectiveness of the Registration Statement.
(y) All offers and sales of the securities of the Company and each
Subsidiary prior to the date hereof were made in compliance with the Act
and all other applicable state and federal laws or regulations.
(z) The Company has obtained for the benefit of the Underwriters the
agreement, enforceable by ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated ("Baird"), of
each of the officers and directors of the Company not a party hereto set
forth under "Management" in the Prospectus, who owns of record the number
of shares of Common Stock set forth therein, that for a period of 180 days
after the date of the Prospectus, such persons will not, without the prior
written consent of Baird, directly or indirectly, offer, sell, transfer, or
pledge, contract to sell, transfer or pledge, or cause or in any way permit
to be sold, transferred, pledged, or otherwise disposed of, any: (i) shares
of Common Stock; (ii) rights to purchase shares of Common Stock (including,
without limitation, shares of Common Stock that may be deemed to be
beneficially owned by any such stockholder in accordance with the
applicable regulations of the Commission and shares of Common Stock that
may be issued upon the exercise of a stock option, warrant or other
convertible security); or (iii) securities that are convertible or
exchangeable into shares of Common Stock.
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(aa) A copy of the Power of Attorney and Custody Agreement executed by
each Selling Stockholder and a copy of each Selling Stockholder's
Selling Stockholder's Questionnaire has been furnished to counsel for the
Underwriters prior to the date hereof, along with such other information as
such counsel may reasonably request in connection with their review
thereof.
A certificate signed by any officer of the Company and delivered to the
Representatives or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company and the Principal Stockholders to
the Underwriters as to the matters covered thereby. A certificate delivered by
the Company to its counsel for purposes of enabling such counsel to render the
opinion referred to in subsection (d) to section 10 hereof will also be
furnished to the Representatives and counsel for the Underwriters and shall be
deemed to be additional representations and warranties to the Underwriters by
the Company as to the matters covered thereby.
SECTION 3. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS. In
addition to the representations and warranties contained in section 2 hereof,
each Selling Stockholder, severally and not jointly, represents and warrants to
and agrees with the several Underwriters and the Company, and shall be deemed
to represent and warrant to the several Underwriters and the Company on each
Closing Date, that:
(a) Such Selling Stockholder has duly executed a power of attorney and
custody agreement ("Power of Attorney and Custody Agreement") naming
______________ and ________________, or either of them, as such Selling
Stockholder's attorneys-in-fact ("Attorneys-in-Fact") for the purpose of
entering into and carrying out this Agreement and naming
_____________________ as custodian ("Custodian") of the Optional Shares of
such Selling Stockholder for the purpose of selling such Optional Shares to
the Underwriters on each Closing Date and receiving payment therefor.
(b) All consents, approvals, authorizations and orders necessary for
the execution and delivery by such Selling Stockholder of this Agreement
and the Power of Attorney and Custody Agreement and for the sale and
delivery of the Optional Shares to be sold by such Selling Stockholder
hereunder, as set forth on Schedule II annexed hereto, have been obtained.
Such Selling Stockholder has, and at the time of delivery thereof hereunder
such Selling Stockholder will have, good and valid title to the Optional
Shares proposed to be sold by such Selling Stockholder hereunder, free and
clear of all voting trust arrangements, liens, encumbrances, security
interests, equities and claims, other than any created by the Power of
Attorney and Custody Agreement or this Agreement for the benefit of the
Underwriters, except for agreements to which such Selling Stockholder is a
party to be terminated at the Closing. Such Selling Stockholder has full
right, power and authority to enter into this Agreement and the Power of
Attorney and Custody Agreement and to sell, assign, transfer and deliver
such Optional Shares hereunder, free and clear of all voting trust
arrangements, liens, encumbrances, security interests, equities, claims and
community property rights, other than any created by the Power of Attorney
and Custody Agreement or this Agreement for the benefit of the
Underwriters, except for agreements to which such Selling Stockholder is a
party to be terminated at the Closing. Upon delivery of and payment for
such Optional Shares hereunder, the Underwriters will acquire good and
valid title thereto, free and clear of all voting trust arrangements,
liens, encumbrances, security interests, equities, and claims.
(c) Such Selling Stockholder has not distributed and will not
distribute any Preliminary Prospectus, the Prospectus or any other
material in connection with the offering and sale of the Shares. Such
Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to or which would reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the
sale or resale of the Common Stock.
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(d) The execution, delivery and performance by such Selling
Stockholder of this Agreement and the Power of Attorney and Custody
Agreement will not, if applicable, result in the violation of any
provisions of the certificate of incorporation, by-laws, partnership
agreement, limited liability operating agreement or other governing
documents of such Selling Stockholder, or constitute a breach, or be in
contravention, of any provision of any material agreement, franchise,
license, indenture, mortgage, deed of trust or other instrument to which
such Selling Stockholder is a party or by which such Selling Stockholder or
such Selling Stockholder's property may be bound or affected, or any
statute, rule or regulation applicable to such Selling Stockholder, or
violate any order or decree of any court, regulatory body, administrative
agency or other governmental body having jurisdiction over such Selling
Stockholder or any of such Selling Stockholder's property. No consent,
approval, authorization or other order of any court, regulatory body,
administrative agency or other governmental body is required for the
execution and delivery of, and performance under, this Agreement by such
Selling Stockholder or the consummation by such Selling Stockholder of the
transactions contemplated by this Agreement, except for compliance with the
Act, the Exchange Act, the Blue Sky Laws applicable to the public offering
of the Shares by the Underwriters and the clearance of such offering with
the NASD. Such Selling Stockholder hereby represents and warrants that
each Attorney-in-Fact has been duly appointed as attorney-in-fact by such
Selling Stockholder for the purpose of entering into and carrying out this
Agreement, and the Power of Attorney and Custody Agreement has been duly
executed and delivered by or on behalf of such Selling Stockholder to the
Representatives.
(e) This Agreement and the Power of Attorney and Custody Agreement are
each valid and binding agreements of such Selling Stockholder
enforceable in accordance with their respective terms.
(f) Such Selling Stockholder has deposited in custody, under the Power
of Attorney and Custody Agreement, certificates in negotiable form for the
Optional Shares to be sold hereunder by such Selling Stockholder as set
forth opposite such Selling Stockholder's name on Schedule II annexed
hereto for the purpose of further delivery pursuant to this Agreement.
Such Selling Stockholder agrees that the Optional Shares of such Selling
Stockholder on deposit with the Custodian are subject to the interests of
the Company, the Underwriters and the other Selling Stockholders, that the
arrangements made for such custody, and the appointment of the
Attorneys-in-Fact pursuant to the Power of Attorney and Custody Agreement,
are to that extent irrevocable, and that the obligations of such Selling
Stockholder hereunder and under the Power of Attorney and Custody Agreement
shall not be terminated, except as provided in this Agreement and the Power
of Attorney and Custody Agreement, by any act of such Selling Stockholder,
by operation of law, or, by the dissolution, winding up or other event
affecting the legal life of such entity, or by the occurrence of any other
event. If any event should occur before the delivery of the Optional
Shares hereunder, the certificates for Optional Shares then on deposit with
the Custodian shall, to the extent such Optional Shares are purchased by
the Underwriters, be delivered by the Custodian in accordance with the
terms and conditions of this Agreement and the Power of Attorney and
Custody Agreement as if such event had not occurred, regardless of whether
or not the Custodian shall have received notice thereof. Such Selling
Stockholder represents that each Attorney-in-Fact has been authorized by
such Selling Stockholder to execute and deliver this Agreement and the
Custodian has been authorized to receive and acknowledge receipt of the
proceeds of sale of the Optional Shares sold by such Selling Stockholder
against delivery thereof and otherwise to act on behalf of such Selling
Stockholder.
(g) Insofar as it relates to such Selling Stockholder, (i) each
Preliminary Prospectus, as of its date, has conformed in all material
respects with the requirements of the Act and, as of its date,
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has not included any untrue statement of a material fact or omitted to
state a material fact necessary to, make the statements therein in
light of the circumstances under which they were made not misleading; and
(ii) on the effective date of the Registration Statement and on each
Closing Date, (x) the Registration Statement and the Prospectus, did or
will comply as to form in all material respects to the requirements of the
Act, and (y) neither the Registration Statement nor the Prospectus did or
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.
(h) The information contained in such Selling Stockholder's Selling
Stockholders' Questionnaire completed in connection with the Company's
public offering and delivered to the Representatives was, as of the date of
such questionnaire, and is, as of the date of this Agreement, true and
correct.
A certificate signed by or on behalf of any Selling Stockholder as such
and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a representation and warranty by such Selling
Stockholder to the Underwriters as to the matters covered thereby. A
certificate delivered by or on behalf of any Selling Stockholder to counsel for
the Selling Stockholders for purposes of enabling such counsel to render the
opinion referred in subsection (e) to section 10 hereof will also be furnished
to the Representatives and counsel for the Underwriters and shall be deemed to
be additional representations and warranties to the Underwriters by such
Selling Stockholder as to the matters covered thereby.
SECTION 4. REPRESENTATION OF UNDERWRITERS. The Representatives will
act as the representatives for the several Underwriters in connection with
the public offering of the Shares, and any action under or in respect of this
Agreement taken by the Representatives will be binding upon all of the
Underwriters.
SECTION 5. INFORMATION FURNISHED BY THE UNDERWRITERS. The information
set forth in the last paragraph on the outside front cover page of the
Prospectus concerning the terms of the offering by the Underwriters, the
paragraph on the inside front cover page of the Prospectus relating to
stabilization practices, and the concession and reallowance amounts appearing
under the caption "Underwriting" in the Prospectus constitute all of the
information furnished to the Company by and on behalf of the Underwriters for
use in connection with the preparation of the Registration Statement and the
Prospectus, as such information is referred to in this Agreement.
SECTION 6. PURCHASE, SALE AND DELIVERY OF SHARES.
(a) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions
herein set forth, the Company agrees to sell to the Underwriters identified
in Schedule I annexed hereto 5,000,000 Firm Shares, and each of the
Underwriters agrees, severally and not jointly, to purchase from the
Company the number of Firm Shares as hereinafter set forth at the price per
share of $_____. The obligation of each Underwriter to the Company shall
be to purchase from the Company that number of full Firm Shares which (as
nearly as practicable in full shares as determined by the Representatives)
bears the same proportion to the number of Firm Shares to be sold by the
Company as the number of shares set forth opposite the name of such
Underwriter in Schedule I annexed hereto bears to the total number of Firm
Shares to be purchased by all of the Underwriters under this Agreement.
(b) On the First Closing Date (as hereinafter defined), the Company
will deliver to the Representatives, at the offices of ▇▇▇▇▇▇ ▇.
▇▇▇▇▇ & Co. Incorporated, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇, or through the facilities of The Depository Trust Company, for the
accounts of the several Underwriters, certificates representing the Firm
Shares to be sold by it
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against payment in Milwaukee, Wisconsin of the purchase price therefor by
certified or official bank check or checks in federal (same day) funds
payable to the order of the Company. As referred to in this Agreement, the
"First Closing Date" shall be on the third full business day after the date
of the Prospectus, at 9:00 a.m., Milwaukee, Wisconsin time, or at such
other date or time not later than ten full business days after the date of
the Prospectus as the Representatives and the Company may agree. The
certificates for the Firm Shares to be so delivered will be in
denominations and registered in such names as the Representatives request
by notice to the Company, prior to the First Closing Date, and such
certificates will be made available for checking and packaging at 9:00
a.m., Milwaukee, Wisconsin time on the first full business day preceding
the First Closing Date at a location to be designated by the
Representatives.
(c) In addition, on the basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions herein
set forth, the Company and the Selling Stockholders hereby agree to sell to
the Underwriters, and the Underwriters, severally and not jointly, shall
have the right at any time within 30 days after the date of the Prospectus
to purchase up to 357,142 Optional Shares from the Company and up to
392,858 Optional Shares from the Selling Stockholders, as set forth on
Schedule II annexed hereto, at the purchase price per share to be paid for
the Firm Shares, for use solely in covering any over-allotments made by the
Underwriters in the sale and distribution of the Firm Shares. The option
granted hereunder may be exercised once upon notice by the Representatives
to the Company and the Attorneys-in-Fact within 30 days after the date of
the Prospectus setting forth the aggregate number of Optional Shares to be
purchased by the Underwriters and sold by the Company and the Selling
Stockholders, the names and denominations in which the certificates for
such shares are to be registered and the date and place at which such
certificates will be delivered. Such date of delivery (the "Second Closing
Date") shall be determined by the Representatives, provided that the Second
Closing Date, which may be the same as the First Closing Date, shall not be
earlier than the First Closing Date and, if after the First Closing Date,
shall not be earlier than three nor later than 10 full business days after
delivery of such notice to exercise. If the Underwriters elect pursuant to
such notice to purchase less than all of the Optional Shares from the
Company and the Selling Stockholders, then each of the Company and the
Selling Stockholders shall sell to the Underwriters a number of Optional
Shares equal to its pro rata share in accordance with Schedule II annexed
hereto. Certificates for the Optional Shares will be made available for
checking and packaging at 9:00 a.m., Milwaukee, Wisconsin time, on the
first full business day preceding the Second Closing Date at a location to
be designated by the Representatives. The manner of payment for and
delivery of (including the denominations of and the names in which
certificates are to be registered) the Optional Shares shall be the same as
for the Firm Shares, except payment to the Selling Stockholders shall be as
directed by the Attorneys-in-Fact.
(d) The Representatives have advised the Company and the
Attorneys-in-Fact that each Underwriter has authorized the
Representatives to accept delivery of the Shares and to make payment
therefor. It is understood that the Representatives, individually and not
as representatives of the Underwriters, may (but shall not be obligated to)
make payment for any Shares to be purchased by any Underwriter whose
funds shall not have been received by the Representatives by the First
Closing Date or the Second Closing Date, as the case may be, for the
account of such Underwriter, but any such payment shall not relieve such
Underwriter from any obligation under this Agreement. As referred to in
this Agreement, "Closing Date" shall mean either the First Closing Date or
the Second Closing Date.
SECTION 7. COVENANTS OF THE COMPANY. The Company covenants and agrees
with the several Underwriters that:
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(a) If the effective time of the Registration Statement is not prior
to the execution and delivery of this Agreement, the Company will use
its best efforts to cause the Registration Statement to become effective at
the earliest possible time and, upon notification from the Commission that
the Registration Statement has become effective, will so advise the
Representatives and counsel to the Underwriters promptly. If the effective
time of the Registration Statement is prior to the execution and delivery
of this Agreement and any information shall have been omitted therefrom in
reliance upon Rule 430A, the Company, at the earliest possible time, will
furnish the Representatives with a copy of the Prospectus to be filed by
the Company with the Commission to comply with Rule 424(b) and Rule 430A
under the Act and, if the Representatives do not object to the contents
thereof, will comply with such Rules. Upon compliance with such Rules, the
Company will so advise the Representatives promptly. The Company will
advise the Representatives and counsel to the Underwriters and the
Attorneys-in-Fact promptly after it receives notice of the issuance by the
Commission or any state securities commission of any stop order suspending
the effectiveness of the Registration Statement or of the institution of
any proceedings for that purpose, or of any notification of the suspension
of qualification of the Shares for sale in any jurisdiction or the
initiation or threatening of any proceedings for that purpose, and will
also advise the Representatives and counsel to the Underwriters and the
Attorneys-in-Fact promptly after it receives notice of any request of the
Commission for amendment or supplement of the Registration Statement
(including the Rule 462 registration statement), of any Preliminary
Prospectus or of the Prospectus, or for additional information, and the
Company will not file any amendment or supplement to the Registration
Statement (including the Rule 462 registration statement)(either before or
after it becomes effective), to any Preliminary Prospectus or to the
Prospectus (including a prospectus filed pursuant to Rule 424(b)) if the
Representatives have not been furnished with a copy prior to such filing
(with a reasonable opportunity to review such amendment or supplement) or
if the Representatives reasonably object to such filing.
(b) If, at any time when a prospectus relating to the Shares is
required by law to be delivered in connection with sales by an Underwriter
or dealer, any event occurs as a result of which the Prospectus would
include an untrue statement of a material fact, or would omit to state any
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, or if it is necessary at any time to supplement the
Prospectus to comply with the Act, the Company promptly will advise the
Representatives and counsel to the Underwriters and the Attorneys-in-Fact
thereof and will promptly prepare and file with the Commission, at its
expense, an amendment to the Registration Statement which will correct such
statement or omission or an amendment which will effect such compliance;
and, if any Underwriter is required to deliver a prospectus nine months or
more after the effective date of the Registration Statement, the Company,
upon request of the Representatives, will prepare promptly such prospectus
or prospectuses as may be necessary to permit compliance with the
requirements of Section 10(a)(3) of the Act. The Company consents to the
use, in accordance with the provisions of the Act and with the Blue Sky
Laws of the jurisdictions in which the Shares are offered by the several
Underwriters and by dealers, of each Preliminary Prospectus.
(c) Neither the Company nor any Subsidiary will, prior to the Second
Closing Date, if any, or 30 days after the date of this Agreement,
whichever occurs first, incur any liability or obligation, direct or
contingent, or enter into any material transaction, other than in the
ordinary course of business, or enter into any transaction with an
"affiliate," as defined in Rule 405 under the Act, which is required to be
described in the Prospectus pursuant to Item 404 of Regulation S-K under
the Act, except, in each case, as described in the Prospectus.
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(d) Neither the Company nor any Subsidiary will, prior to the Second
Closing Date, if any, or 30 days after the date of this Agreement,
whichever occurs first, acquire any of the Common Stock nor will the
Company declare or pay any dividend or make any other distribution upon its
Common Stock payable to stockholders of record on a date prior to such
earlier date, except as described in the Prospectus.
(e) The Company will make generally available to its security holders
and the Representatives an earnings statement as soon as practicable, but
in no event later than 60 days after the end of its fiscal quarter in which
the first anniversary of the effective date of the Registration Statement
occurs, covering a period of 12 consecutive calendar months beginning after
the effective date of the Registration Statement, which will satisfy the
provisions of the last paragraph of Section 11(a) of the Act and Rule 158
promulgated thereunder.
(f) During such period as a prospectus is required by law to be
delivered in connection with sales by an Underwriter or dealer, the
Company will furnish to the Representatives, at the expense of the Company,
subject to subsection (b) of this section 7, copies of the Registration
Statement, the Prospectus, any Preliminary Prospectus and all amendments
and supplements to any such documents in each case as soon as available and
in such quantities as the Representatives may reasonably request for the
purposes contemplated by the Act.
(g) The Company will apply the net proceeds from the sale of the
Shares to be sold by it hereunder for the purposes set forth in the
Prospectus.
(h) The Company will cooperate with the Representatives and counsel to
the Underwriters in qualifying or registering the Shares for sale under the
Blue Sky Laws of such jurisdictions as the Representatives designate, and
will continue such qualifications or registrations in effect so long as
reasonably requested by the Representatives to effect the distribution of
the Shares. The Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any such
jurisdiction where it is not presently qualified. In each jurisdiction
where any of the Shares shall have been qualified as provided above, the
Company will file such reports and statements as may be required to
continue such qualification for a period of not less than one year from the
date of the Prospectus. The Company shall promptly prepare and file with
the Commission, from time to time, such reports as may be required to be
filed by the Act and the Exchange Act, and the Company shall comply in all
respects with the undertakings given by the Company in connection with the
qualification or registration of the Shares for offering and sale under the
Blue Sky Laws.
(i) During the period of three years from the date of the Prospectus,
the Company will furnish to each of the Representatives and to each of the
other Underwriters who may so request, as soon as available, each report,
statement or other document of the Company or its Board of Directors mailed
to its stockholders or filed with the Commission.
(j) The Company shall deliver the requisite notice of issuance to
Nasdaq and shall take all necessary or appropriate action within its power
to maintain the authorization for trading of the Common Stock as a Nasdaq
National Market security, for a period of at least 36 months after the date
of the Prospectus.
(k) Except for the issuance and sale by the Company of Common Stock
upon exercise of presently existing outstanding stock options, the
sale of the Shares to be sold by the Company pursuant to this Agreement,
and the grant of employee stock options pursuant to the Company's 1997
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Stock Incentive Plan or the Company's Employee Stock Purchase Plan, a
copy of each of which is filed as an exhibit to the Registration Statement,
the Company shall not, for a period of 180 days after the date of the
Prospectus, without the prior written consent of Baird, directly or
indirectly, offer, sell or otherwise dispose of, contract to sell or
otherwise dispose of, or cause or in any way permit to be sold or otherwise
disposed of, any: (i) shares of Common Stock; (ii) rights to purchase
shares of Common Stock; or (iii) securities that are convertible or
exchangeable into shares of Common Stock.
(l) The Company will maintain a transfer agent and, if required by law
or the rules of The Nasdaq Stock Market or any national securities
exchange on which the Common Stock is listed, a registrar (which, if
permitted by applicable laws and rules, may be the same entity as the
transfer agent) for its Common Stock. The Company shall, as soon as
practicable after the date hereof, use its reasonable best efforts to
obtain listing in Standard and Poor's Stock Guide, or such other recognized
securities manuals for which it may qualify for listing, and the Company
shall use its best efforts to maintain such listings for at least five
years after the First Closing Date.
(m) If the sale to the Underwriters of the Shares is not consummated
for any reason other than termination of this Agreement pursuant to section
13 hereof, without limiting any other rights the Underwriters may have, the
Company agrees to reimburse the Underwriters upon demand for all
out-of-pocket expenses (including reasonable fees and expenses of counsel
for the Underwriters), that shall have been incurred by the Underwriters in
connection with the proposed purchase and sale of the Shares, and the
provisions of sections 9 and 12 hereof shall at all times be effective and
apply.
(n) The Company will use reasonable efforts to comply or cause to be
complied with the conditions to the obligations of the Underwriters in
section 10 hereof.
SECTION 8. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder, severally and not jointly, covenants and agrees with the several
Underwriters and the Company as follows:
(a) If the effective time of the Registration Statement is not prior
to the execution and delivery of this Agreement, such Selling
Stockholder will cooperate to the extent necessary to cause the
Registration Statement to become effective at the earliest possible time;
and such Selling Stockholder will do and perform all things to be done and
performed by such Selling Stockholder prior to each Closing Date, pursuant
to this Agreement or the Power of Attorney and Custody Agreement.
(b) Such Selling Stockholder agrees to deliver to the Custodian on or
prior to the First Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable substitute
form or statement specified by Treasury Department regulations in lieu
thereof).
(c) Such Selling Stockholder will pay all federal and other taxes, if
any, on the transfer or sale of the Shares being sold by such
Selling Stockholder to the Underwriters.
(d) For a period of 180 days after the date of the Prospectus, such
Selling Stockholder will not, without the prior written consent of
▇▇▇▇▇, directly or indirectly, offer, sell, transfer, or pledge, contract
to sell, transfer or pledge or cause or in any way permit to be sold,
transferred, pledged or otherwise disposed of any: (i) shares of Common
Stock; (ii) rights to purchase shares of Common Stock (including, without
limitation, shares of Common Stock that may be deemed to be beneficially
owned by such Selling Stockholder in accordance with the rules and
regulations of the Commission
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and shares of Common Stock that may be issued upon exercise of a stock
option, warrant or other convertible security); or (iii) securities
that are convertible or exchangeable into shares of Common Stock.
(e) Such Selling Stockholder will furnish any documents, instruments
or other information which the Representatives may reasonably
request in connection with the sale and transfer of the Shares to the
Underwriters.
SECTION 9. PAYMENT OF EXPENSES. Whether or not the transactions
contemplated hereunder are consummated or this Agreement becomes effective, or
if this Agreement is terminated for any reason, the Company will pay the costs,
fees and expenses incurred in connection with the public offering of the
Shares. Such costs, fees and expenses to be paid by the Company and the
Selling Stockholders include, without limitation:
(a) All costs, fees and expenses (excluding the expenses incurred by
the Underwriters and the legal fees and disbursements of counsel for the
Underwriters, but including such fees and disbursements described in
subsection (b) of this section 9) incurred in connection with the
performance of the Company's and the Selling Stockholders' obligations
hereunder, including without limiting the generality of the foregoing: the
registration fees related to the filing of the Registration Statement with
the Commission; the fees and expenses related to the quotation of the
Shares on the Nasdaq Stock Market; the fees and expenses of the Company's
and the Selling Stockholders' counsel, accountants, transfer agent and
registrar; the costs and expenses incurred in connection with the
preparation, printing, shipping and delivery of the Registration Statement,
each Preliminary Prospectus and the Prospectus (including all exhibits and
financial statements) and all agreements and supplements provided for
herein, this Agreement and any Blue Sky memoranda and the Power of Attorney
and Custody Agreement, including, without limitation, shipping expenses via
overnight delivery and/or courier service to comply with applicable
prospectus delivery requirements; and the costs and expenses associated
with the production of materials related to, and travel expenses incurred
by the management of the Company in connection with, the various meetings
to be held between the Company's management and prospective investors.
(b) All registration fees and expenses, including legal fees and
disbursements of counsel for the Underwriters incurred in connection with
qualifying or registering all or any part of the Shares for offer and sale
under the Blue Sky Laws and the clearing of the public offering and the
underwriting arrangements evidenced hereby with the NASD.
(c) All fees and expenses related to printing of the certificates for
the Shares, and all transfer taxes, if any, with respect to the sale and
delivery of the Shares. Notwithstanding the foregoing, each Selling
Stockholder shall be solely responsible for any transfer or sales tax
imposed upon the transfer and sale of such Selling Stockholder's Shares to
the Underwriters. All costs and expenses incident to the performance of
any Selling Stockholder's obligations hereunder which are not otherwise
specifically provided for in this section 9 will be borne and paid solely
by each such Selling Stockholder. In the event any Selling Stockholder
shall fail to pay such Selling Stockholder's pro rata share of the costs,
fees and expenses described in this section 9 within five days after demand
by the Representatives therefor, the Company shall be obligated to pay such
costs, fees and expenses on demand. The provisions of this subsection (c)
shall not affect any agreement which the Company and the Selling
Stockholders may make for the allocation or sharing of such expenses and
costs.
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SECTION 10. CONDITIONS TO THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of the several Underwriters under this Agreement shall be subject
to the accuracy of the representations and warranties on the part of the
Company, the Principal Stockholders and the Selling Stockholders herein set
forth as of the date hereof and as of each Closing Date, to the accuracy of the
statements of the Company's officers, the Selling Stockholders and the
Attorneys-in-Fact on behalf of the Selling Stockholders made pursuant to the
provisions hereof, to the performance by the Company and the Selling
Stockholders of their respective obligations hereunder, and to the following
additional conditions, unless waived in writing by the Representatives:
(a) The Registration Statement shall have been declared effective by
the Commission not later than 5:30 p.m., Washington, D.C. time,
prior to the date of this Agreement, or such later time as shall have been
consented to by the Representatives; all filings required by Rules 424(b)
and 430A under the Act shall have been timely made; no stop order
suspending the effectiveness of the Registration Statement shall have been
issued by the Commission or any state securities commission nor, to the
knowledge of the Company or the Principal Stockholders, shall any
proceedings for that purpose have been initiated or threatened; and any
request of the Commission or any state securities commission for inclusion
of additional information in the Registration Statement, or otherwise,
shall have been complied with to the reasonable satisfaction of the
Representatives.
(b) Since the dates as of which information is given in the
Registration Statement:
(i) there shall not have occurred any change or development
involving, or which could be expected to involve, a Material Adverse
Effect, whether or not arising from transactions in the ordinary
course of business; and
(ii) the Company shall not have sustained any loss or
interference from any labor dispute, strike, fire, flood, windstorm,
accident or other calamity (whether or not insured) or from any court or
governmental action, order or decree,
the effect of which on the Company, in any such case described in clause
(i) or (ii) above, is in the opinion of the Representatives so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares on the terms and in the
manner contemplated in the Registration Statement and the Prospectus.
(c) The Representatives shall not have advised the Company that the
Registration Statement or the Prospectus contains an untrue statement of
fact that, in the reasonable opinion of the Representatives or counsel for
the Underwriters, is material, or omits to state a fact that, in the
opinion of the Representatives or such counsel, is material and is required
to be stated therein or necessary to make the statements therein not
misleading.
(d) The Representatives shall have received an opinion of Reinhart,
Boerner, Van Deuren, ▇▇▇▇▇▇ & Rieselbach, S.C., counsel for the Company
addressed to the Representatives, as the representatives of the
Underwriters, and dated the First Closing Date or the Second Closing Date,
as the case may be, substantially to the effect that, subject to the
qualifications and assumptions set forth therein:
(i) The Company has been duly incorporated and is validly
existing as a corporation and in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority
to own, lease and operate its properties and conduct its business as
presently conducted and as described in the Prospectus and the
Registration Statement; the
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Company is duly qualified to do business as a foreign corporation under the
laws of, and is in good standing as such in, each jurisdiction in which
such qualification is required, except where the failure to so qualify
would not have a Material Adverse Effect;
(ii) The authorized capital stock of the Company consists of
20,000,000 shares of Common Stock, par value $0.01 per share, 100,000
shares of Series A Preferred Stock, par value $0.01 per share, 20,000
shares of Series B Preferred Stock par value $0.01 per share, and 1,000,000
shares of Nonvoting Common Stock, and all such stock conforms in all
material respects as to legal matters to the descriptions thereof in the
Prospectus and the Registration Statement;
(iii) The issued and outstanding shares of capital stock of the
Company immediately prior to the issuance and sale of the Shares to be
sold by the Company hereunder have been duly authorized and validly issued,
are fully paid and nonassessable, and there are no preemptive, preferential
or, except as described in the Prospectus and to such counsel's knowledge,
other rights to subscribe for or purchase any shares of capital stock of
the Company, and to, such counsel's knowledge, no shares of capital stock
of the Company have been issued in violation of such rights;
(iv) Except for the Subsidiaries, the Company has no subsidiaries, and
the Company does not own any equity interest in or control, directly or
indirectly, any other corporation, limited liability company, partnership,
joint venture, association, trust or other business organization except as
described in the Prospectus and the Registration Statement; each Subsidiary
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, with full
corporate power and authority to own, lease and operate its properties and
to conduct its business as presently conducted and as described in the
Prospectus and the Registration Statement; each Subsidiary is duly
qualified to do business as a foreign corporation under the laws of, and is
in good standing as such in, each jurisdiction in which such qualification
is required, except where the failure to so qualify would not have a
Material Adverse Effect; the issued and outstanding shares of the capital
stock of each Subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and there are no preemptive, preferential or,
to such counsel's knowledge, other rights to subscribe for or purchase any
shares of capital stock of any Subsidiary, and to such counsel's knowledge,
no shares of capital stock of any Subsidiary have been issued in violation
of such rights; the Company owns directly and, to such counsel's knowledge,
beneficially all of the issued and outstanding capital stock of each
Subsidiary, free and clear of any and all liens, claims, encumbrances and
security interests;
(v) The certificates for the Shares to be delivered hereunder are in
due and proper form and conform in all material respects to the
requirements of applicable law; and when duly countersigned by the
Company's transfer agent, and delivered to the Representatives or upon the
order of the Representatives against payment of the agreed consideration
therefor in accordance with the provisions of this Agreement, the Shares to
be sold by the Company represented thereby will be duly authorized and
validly issued, fully paid and nonassessable, and free of any preemptive,
preferential or other rights to subscribe for or purchase shares of Common
Stock;
(vi) The Registration Statement has become effective under the Act, and
to such counsel's knowledge, no stop order suspending the effectiveness of
the Registration
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Statement has been issued and no proceedings for that purpose have been
initiated or are threatened under the Act or any Blue Sky Laws; the
Registration Statement and the Prospectus and any amendment or supplement
thereto (except for the financial statements and other statistical or
financial data 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; no facts have come to the attention of such counsel which lead
it to believe that either the Registration Statement or the Prospectus or
any amendment or supplement thereto contains any untrue statement of a
material fact or omitted or will omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading or that the Prospectus, as of the First Closing Date or the
Second Closing Date, as the case may be, contained any untrue statement of
a material fact or omitted or will omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made (except
for the financial statements and other financial data included therein as
to which such counsel need express no opinion); to such counsel's
knowledge, there are no legal or governmental proceedings pending or
threatened, including, without limitation, any such proceedings that are
related to environmental or employment discrimination matters, required to
be described in the Registration Statement or the Prospectus which are not
so described or which question the validity of this Agreement or any action
taken or to be taken pursuant thereto, nor to such counsel's knowledge is
there any transaction, relationship, agreement, contract or other document
of a character required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration Statement
by the Act, which is not described as required;
(vii) The Company has full corporate power and authority to enter into
and perform this Agreement; the performance of the Company's obligations
hereunder and the consummation of the transactions described herein have
been duly authorized by the Company by all necessary corporate action and
this Agreement has been duly executed and delivered by and on behalf of the
Company, and is a legal, valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except that
rights to indemnity or contribution may be limited by applicable law and
except as enforceability of this Agreement may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors'
rights generally, and by equitable principles limiting the right to
specific performance or other equitable relief; no consent, approval,
authorization or other order or decree of any court, regulatory or
governmental body, arbitrator, administrative agency or other
instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company is required for the execution and
delivery of this Agreement by the Company or the consummation by the
Company of the transactions contemplated by this Agreement (except for
compliance with the Act, the Exchange Act, applicable Blue Sky Laws and the
clearance of the underwriting arrangements by the NASD);
(viii) The execution, delivery and performance of this Agreement by
the Company will not: (A) violate any provisions of the Certificate of
Incorporation or By-laws of the Company or any Subsidiary; (B) violate any
provisions of, or result in the breach, modification or termination of, or
constitute a default under, any agreement, lease, franchise, license,
indenture, permit, mortgage, deed of trust, other evidence of indebtedness
or other instrument to which the Company or any Subsidiary is a party or by
which the Company or such Subsidiary, or any of their respective owned or
leased property is bound, and which is filed as an exhibit to the
Registration Statement; or (C) violate any statute,
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ordinance, order, rule, writ, judgment, decree, or regulation known to
such counsel to which the Company is subject of any court, regulatory or
governmental body, arbitrator, administrative agency or other
instrumentality of the United States or other country or jurisdiction
having jurisdiction over the Company or any Subsidiary (assuming compliance
with all applicable federal and state securities laws);
(ix) To such counsel's knowledge, except as described in the
Prospectus, there are no holders of Common Stock or other securities of the
Company, or securities that are convertible or exchangeable into Common
Stock or other securities of the Company, that have rights to the
registration of such securities under the Act or any Blue Sky Laws;
(x) The Common Stock has been designated for inclusion as a National
Market security on The Nasdaq Stock Market and is registered under the
Exchange Act;
(xi) Neither the Company nor any Subsidiary is in violation of its
respective Certificate of Incorporation or By-laws or, to such counsel's
knowledge, in default in any material respect in the performance of any
agreement, lease, franchise, license, permit, mortgage, deed of trust,
evidence of indebtedness or other instrument, or any other document that is
filed as an exhibit to or incorporated by reference in the Registration
Statement, to which the Company or any Subsidiary is subject or bound;
(xii) Neither the Company nor any Subsidiary is an "investment
company", an "affiliated person" of, or "promoter" or "principal
underwriter" for, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended, and, upon its receipt of any
proceeds from the sale of the Shares, the Company will not become or be
deemed to be an "investment company" thereunder;
(xiii) The description in the Registration Statement and the
Prospectus of statutes, law, regulations, legal and governmental
proceedings, and contracts and other legal documents described therein
fairly and correctly present, in all material respects, the information
required to be included therein by the Act; and
(xiv) All offers and sales by the Company of its capital stock before
the date hereof were at all relevant times duly registered under or exempt
from the registration requirements of the Act, and were duly registered
under or the subject of an available exemption from the registration
requirements of any applicable Blue Sky Laws.
In rendering such opinion, counsel for the Company may rely, to the extent
counsel deems such reliance proper, as to matters of fact upon certificates of
officers of the Company and of governmental officials, and copies of all such
certificates shall be furnished to the Representatives and for the Underwriters
on or before each Closing Date.
(e) The Representatives shall have received an opinion from ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇, counsel for the Selling Stockholders, dated the Second Closing Date
substantially to the effect that, subject to the qualifications and assumptions
set forth therein:
(i) Each of this Agreement and the Power of Attorney and Custody
Agreement has been duly authorized, executed and delivered by or on behalf
of each Selling Stockholder and the Power of Attorney and Custody Agreement
constitutes the valid and binding agreement of such Selling Stockholder,
enforceable in accordance with its respective terms,
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except that rights to indemnity or contribution thereunder may be
limited by applicable law and except as enforceability of such agreement
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws generally affecting the rights of creditors and by equitable
principles limiting the right to specific performance or other equitable
relief;
(ii) The execution and delivery of this Agreement and the Power of
Attorney and Custody Agreement and the consummation of the transactions
herein and therein contemplated will not, if applicable, result in the
violation of any provisions of the certificate of incorporation, by-laws,
partnership agreement, limited liability company agreement or other
governing documents of such Selling Stockholder, or constitute a breach, or
be in contravention, of any provision of any agreement, franchise, license,
indenture, mortgage, deed of trust or other instrument known to us to which
such Selling Stockholder is a party or by which such Selling Stockholder or
such Selling Stockholder's property may be bound or affected, or to the
best of such counsel's knowledge any statute, rule or regulation applicable
to such Selling Stockholder, or violate any order or decree of any court,
regulatory or governmental body, administrative body or instrumentality of
the United States or other jurisdiction having jurisdiction over such
Selling Stockholder or any of such Selling Stockholder's property, which
violation would reasonably be expected to have a material adverse effect on
the condition (financial or otherwise), business, properties, net worth or
results of operations of such Selling Stockholder; and
(iii) Such Selling Stockholder has full legal right, power and
authority, to enter into and perform this Agreement and the Power of
Attorney and Custody Agreement and to sell, assign, transfer and deliver
title to the Shares to be sold by such Selling Stockholder as provided
herein; and upon delivery to the Underwriters or upon the order of the
Representatives against payment of the agreed consideration therefor in
accordance with the provisions of this Agreement, the Underwriters will
acquire good and marketable title to the Shares to be sold hereunder by
such Selling Stockholder, free and clear of all voting trust arrangements,
liens, encumbrances, security interests, equities, and claims (assuming
that the Underwriters purchase such Shares in good faith and without notice
of any adverse claim within the meaning of the Uniform Commercial Code in
effect in the State of Illinois).
In rendering such opinion, counsel for the Selling Stockholders may
rely, to the extent counsel deems such reliance proper, as to matters of fact
upon certificates of the Selling Stockholders, and copies of all such
certificates shall be furnished to the Representatives and counsel for the
Underwriters on or before each Closing Date.
(f) The Representatives shall have received an opinion of ▇▇▇▇▇▇▇▇▇,
Will & ▇▇▇▇▇, counsel for the Underwriters, dated the First Closing Date or the
Second Closing Date, as the case may be, with respect to the issuance and sale
of the Shares by the Company, the Registration Statement and other related
matters as the Representatives may require, and the Company shall have
furnished to such counsel such documents and shall have exhibited to them such
papers and records as they reasonably request for the purpose of enabling them
to pass upon such matters.
(g) The Representatives shall have received on each Closing Date, a
certificate of ▇▇▇▇▇▇ ▇. ▇▇▇▇, President of the Company, ▇▇▇▇ ▇. ▇▇▇▇▇,
Executive Vice President of the Company, ▇▇▇▇▇ ▇.▇. ▇▇▇▇▇, President of RCL,
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Vice President-Finance and Operations and Secretary of
the Company, to the effect that:
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(i) The representations and warranties of the Company and the
Principal Stockholders set forth in section 2 hereof are true and correct
as of the date of this Agreement and as of the date of such certificate,
and the Company has complied with all the agreements and satisfied all the
conditions to be performed or satisfied by it at or prior to the date of
such certificate;
(ii) The Commission has not issued an order preventing or suspending
the use of the Prospectus or any Preliminary Prospectus or any amendment or
supplement thereto; no stop order suspending the effectiveness of the
Registration Statement has been issued; and to the knowledge of the
respective signatories, no proceedings for that purpose have been initiated
or are pending or contemplated under the Act or under the Blue Sky Laws of
any jurisdiction;
(iii) Each of the respective signatories has carefully examined the
Registration Statement and the Prospectus, and any amendment or supplement
thereto, and such documents contain all statements required to be stated
therein, and do not 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, and, to the knowledge of the
respective signatories, since the date on which the Registration Statement
was initially filed, no event has occurred that was required to be set
forth in an amended or supplemented prospectus or in an amendment to the
Registration Statement that has not been so set forth; and
(iv) Since the date on which the Registration Statement was initially
filed with the Commission, there shall not have occurred any change or
development involving, or which could be expected to involve, a Material
Adverse Effect, whether or not arising from transactions in the ordinary
course of business, except as disclosed in the Prospectus and the
Registration Statement as heretofore amended or (but only if the
Representatives expressly consent thereto in writing) as disclosed in an
amendment or supplement thereto filed with the Commission and delivered to
the Representatives after the execution of this Agreement; since such date
and except as so disclosed or in the ordinary course of business, the
Company has not incurred any liability or obligation, direct or indirect,
or entered into any transaction which is material to the Company; since
such date and except as so disclosed, there has not been any change in the
outstanding capital stock of the Company, or any change that is material to
the Company in the short-term debt or long-term debt of the Company; since
such date and except as so disclosed, the Company has not acquired any of
the Common Stock or other capital stock of the Company nor has the Company
declared or paid any dividend, or made any other distribution, upon its
outstanding Common Stock payable to stockholders of record on a date prior
to such Closing Date; since such date and except as so disclosed, the
Company has not incurred any material contingent obligations, and no
material litigation is pending or threatened against the Company; and,
since such date and except as so disclosed, the Company has not sustained
any material loss or interference from any strike, fire, flood, windstorm,
accident or other calamity (whether or not insured) or from any court or
governmental action, order or decree.
The delivery of the certificate provided for in this subsection (g)
shall be and constitute a representation and warranty of the Company as to the
facts required in the immediately foregoing clauses (i), (ii), (iii) and (iv)
to be set forth in said certificate.
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(h) The Representatives shall have received a certificate from each
Selling Stockholder (which may be signed by such Selling Stockholder's
Attorneys-in-Fact, or either of them), dated the Second Closing Date, to
the effect that: (i) the representations and warranties of such Selling
Stockholder in section 3 hereof are true and correct as of the date of this
Agreement and as of the date of such certificate, as if again made on and
as of such Closing Date, and such Selling Stockholder has complied with all
of the agreements and satisfied all of the conditions to be performed or
satisfied by such Selling Stockholder at or prior to such Closing Date; and
(ii) such Selling Stockholder has no reason to believe that the
Registration Statement or any amendment thereto at the time it was
declared effective by the Commission contained any 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 amended or supplemented, contains any untrue statement
of a material fact or omits to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
(i) At the time this Agreement is executed and also on each Closing
Date, there shall be delivered to the Representatives a letter
addressed to the Representatives, as the representatives of the
Underwriters, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the Company's independent
accountants, the first letter to be dated the date of this Agreement, the
second letter to be dated the First Closing Date, and the third letter (if
applicable) to be dated the Second Closing Date, which shall be in form and
substance satisfactory to the Representatives and shall contain information
as of a date within five days of the date of such letter. There shall not
have been any change or decrease set forth in any of the letters referred
to in this subsection (i) which makes it impracticable or inadvisable in
the judgment of the Representatives to proceed with the public offering or
purchase of the Shares as contemplated hereby.
(j) The Shares shall have been qualified or registered for sale under
the Blue Sky Laws of such jurisdictions as shall have been specified by the
Representatives, the underwriting terms and arrangements for the offering
shall have been cleared by the NASD, and the Common Stock shall have been
designated for inclusion as a Nasdaq National Market security on the Nasdaq
Stock Market and shall have been registered under the Exchange Act.
(k) Such further certificates and documents as the Representatives may
reasonably request (including certificates of officers of the Company).
All such opinions, certificates, letters and documents shall be in
compliance with the provisions hereof only if they are satisfactory to the
Representatives and to ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, counsel for the Underwriters.
The Company and the Selling Stockholders shall furnish the Representatives with
such manually signed or conformed copies of such opinions, certificates,
letters and documents as the Representatives may reasonably request.
If any condition to the Underwriters' obligations hereunder to be satisfied
prior to or at either Closing Date is not so satisfied, this Agreement at the
election of the Representatives will terminate upon notification to the Company
and the Attorneys-in-Fact for the Selling Stockholders without liability on the
part of any Underwriter, including the Representatives, the Company or the
Selling Stockholders except for the provisions of subsection (n) of section 7
hereof, the expenses to be paid by the Company and the Selling Stockholders
pursuant to section 9 hereof and except to the extent provided in section 12
hereof.
SECTION 11. MAINTAIN EFFECTIVENESS OF REGISTRATION STATEMENT. The Company
will use its best efforts to prevent the issuance of any stop order suspending
the effectiveness of the Registration Statement, and, if such stop order is
issued, to obtain as soon as possible the lifting thereof.
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SECTION 12. INDEMNIFICATION.
(a) The Company, each of the Principal Stockholders, and each of the
Selling Stockholders, jointly and severally, subject to subsection (g) of
this section 12, agree to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of the
Act or the Exchange Act, from and against any losses, claims, damages,
expenses, liabilities or actions in respect thereof ("Claims"), joint or
several, to which such Underwriter or each such controlling person may
become subject under the Act, the Exchange Act, Blue Sky Laws or other
federal or state statutory laws or regulations, at common law or otherwise
(including payments made in settlement of any litigation), insofar as such
Claims arise out of or are based upon any breach of any representation,
warranty or covenant made by the Company and the Principal Stockholders in
this Agreement, or any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or in
any application filed under any Blue Sky Law or other document executed by
the Company for that purpose or based upon written information furnished by
the Company and filed in any state or other jurisdiction to qualify any or
all of the Shares under the securities laws thereof (any such document,
application or information being hereinafter called a "Blue Sky
Application") 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. The Company, each
of the Principal Stockholders and each of the Selling Stockholders, jointly
and severally, subject to subsection (h) of this section 12, agree to
reimburse each Underwriter and each such controlling person for any legal
fees or other expenses incurred by such Underwriter or any such controlling
person in connection with investigating or defending any such Claim;
provided, however, that the Company, the Principal Stockholders and the
Selling Stockholders will not be liable in any such case to the extent
that: (i) any such Claim arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made
in the Registration Statement, any Preliminary Prospectus, the Prospectus
or supplement thereto or in any Blue Sky Application in reliance upon and
in conformity with the written information furnished to the Company
pursuant to section 5 hereof; or (ii) such statement or omission was
contained or made in any Preliminary Prospectus and corrected in the
Prospectus and (1) any such Claim suffered or incurred by any Underwriter
(or any person who controls any Underwriter) resulted from an action, claim
or suit by any person who purchased Shares which are the subject thereof
from such Underwriter in the offering, and (2) such Underwriter failed to
deliver or provide a copy of the Prospectus to such person at or prior to
the confirmation of the sale of such Shares in any case where such delivery
is required by the Act, unless such failure was due to failure by the
Company to provide copies of the Prospectus to the Underwriters as required
by this Agreement. The indemnification obligations of the Company, each of
the Principal Stockholders and each of the Selling Stockholders as provided
above are in addition to and in no way limit any liabilities the Company,
each of the Principal Stockholders and each of the Selling Stockholders may
otherwise have.
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company, each of its directors and each of its
officers who signs the Registration Statement, and each person, or any such
director, officer, controlling person or Selling Stockholder may become
subject under the Act, the Exchange Act, Blue Sky Laws or other federal or
state statutory laws or regulations, at common law or otherwise (including
payments made in settlement of any litigation, if such settlement is
effected with the written consent of such Underwriter and Baird), insofar
as such Claim arises out of or is based upon any untrue or alleged untrue
statement of any material fact contained in the Registration Statement, any
Preliminary Prospectus, the Prospectus, or any amendment or supplement
thereto, or arises out of or is based upon the omission or alleged omission
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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 or supplement thereto, in reliance solely upon and in conformity
with the written information furnished by the Representatives to the
Company pursuant to section 5 hereof. Each Underwriter will severally
reimburse any legal fees or other expenses incurred by the Company, or any
such director, officer, controlling person, Principal Stockholder or
Selling Stockholder in connection with investigating or defending any such
Claim, and from any and all Claims solely resulting from failure of an
Underwriter to deliver a Prospectus, if the person asserting such Claim
purchased Shares from such Underwriter and a copy of the Prospectus (as
then amended if the Company shall have furnished any amendments thereto)
was not sent or given by or on behalf of such Underwriter to such person,
if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the
Prospectus (as so amended) would have cured the defect giving rise to such
Claim. The indemnification obligations of each Underwriter as provided
above are in addition to any liabilities any such Underwriter may otherwise
have. Notwithstanding the provisions of this section 12, no Underwriter
shall be required to indemnify or reimburse the Company, or any officer,
director, controlling person, Principal Stockholder or Selling Stockholder
in an aggregate amount in excess of the total price at which the Shares
purchased by any such Underwriter hereunder were offered to the public,
less the amount of any damages such Underwriter has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission.
(c) Each Selling Stockholder, severally and not jointly, agrees to
indemnify and hold harmless the Company, each of its directors and each of
its officers who signs the Registration Statement, and each person, if any,
controlling the Company within the meaning of the Act or the Exchange Act
to the same extent as the foregoing indemnity from the Company to each
Underwriter set forth in subsection (a) of this section 12. In case any
Claim shall be brought or asserted against the Company, its directors, such
officers or any such controlling person, in respect of which indemnity may
be sought against any Selling Stockholder, such Selling Stockholder shall
have the rights and duties given to the Company, and the Company, such
directors or officers and any such controlling person shall have the rights
and duties given to the Underwriters by subsection (a) of this section 12.
(d) Promptly after receipt by an indemnified party under this section
12 of notice of the commencement of any action in respect of a Claim,
such indemnified party will, if a Claim in respect thereof is to be made
against an indemnifying party under this section 12, notify the
indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve an indemnifying party
from any liability it may have to any indemnified party under this section
12 or otherwise. In case any such action is brought against any
indemnified party, and such indemnified party notifies an indemnifying
party of the commencement thereof, the indemnifying party will be entitled
to participate in and, to the extent that it may wish, jointly with all
other indemnifying parties, similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, if the defendants in any such action include both the
indemnified party and any indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available
to the indemnified party and/or other indemnified parties which are
different from or additional to those available to any indemnifying party,
the indemnified party or parties shall have the right to select separate
counsel to assume such legal defenses and to otherwise participate in the
defense of such action on behalf of such indemnified party or parties.
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(e) Upon receipt of notice from the indemnifying party to such
indemnified party of the indemnifying party's election to assume the
defense of such action and upon approval by the indemnified party of counsel
selected by the indemnifying party, the indemnifying party will not be liable
to such indemnified party under this section 12 for any legal fees or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof, unless:
(i) the indemnified party shall have employed separate counsel
in connection with the assumption of legal defenses in accordance
with the proviso to the last sentence of subsection (d) of this
section 12 (it being understood, however, that the indemnifying party
shall not be liable for the legal fees and expenses of more than one
separate counsel, approved by Baird, if one or more of the
Underwriters or their controlling persons are the indemnified
parties);
(ii) the indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after the indemnified
party's notice to the indemnifying party of commencement of the
action; or
(iii) the indemnifying party has authorized the employment of
counsel at the expense of the indemnifying party.
(f) If the indemnification provided for in this section 12 is
unavailable to an indemnified party under subsection (a), (b) or (c) of
this section 12 in respect of any Claim referred to therein, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall,
subject to the limitations hereinafter set forth, contribute to the amount paid
or payable by such indemnified party as a result of such Claim:
(i) in such proportion as is appropriate to reflect the
relative benefits received by the Company, each Principal
Stockholder, each Selling Stockholder and the Underwriters from the
offering of the Shares; or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i)
above, but also the relative fault of the Company, each Principal
Stockholder, each Selling Stockholder and the Underwriters in
connection with the statements or omissions which resulted in such
Claim, as well as any other relevant equitable considerations.
The relative benefits received by each of the Company, each Principal
Stockholder, each Selling Stockholder and the Underwriters shall be deemed to
be in such proportion so that the Underwriters are responsible for that portion
represented by the percentage that the amount of the underwriting discounts and
commissions per share appearing on the cover page of the Prospectus bears to
the public offering price per share appearing thereon, and the Company
(including its officers and directors and controlling persons), and the
Principal Stockholders, and each of the Selling Stockholders, are responsible
for the remaining portion. The relative fault of the Company, each Principal
Stockholder, each Selling Stockholder and the Underwriters shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, such Principal
Stockholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the Claims
referred to above shall be deemed to include,
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subject to the limitations set forth in subsections (d) and (e) of this
section 12, any legal or other fees or expenses reasonably incurred by such
party in connection with investigating or defending any action or claim.
(g) The Company, the Principal Stockholders, the Selling Stockholders
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this section 12 were determined by pro rata or per
capita allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method or allocation which does not take into
account the equitable considerations referred to in subsection (e) of this
section 12. Notwithstanding the other provisions of this section 12, no
Underwriter shall be required to contribute any amount that is greater than
the amount by which the total price at which the Shares underwritten by it
and distributed to the public were offered to the public exceeds the amount
of any damages which such Underwriter has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this section 12 are
several in proportion to their respective underwriting commitments and not
joint.
(h) Notwithstanding any provision of this section 12 to the contrary,
the liability of each of the Selling Stockholders and the Principal
Stockholders arising under this section 12 shall not exceed the aggregate
of the purchase price received by such Selling Stockholder from the
Underwriters for the Shares sold by such Selling Stockholder and the amount
received by such Principal Stockholders in respect of redemption or
retirement of securities held by such Principal Stockholder as set forth in
"Use of Proceeds" in the Prospectus.
SECTION 13. DEFAULT OF UNDERWRITERS. It shall be a condition to the
obligations of the Company and the Selling Stockholders to sell and deliver the
Shares hereunder, and to the obligations of each Underwriter to purchase the
Shares in the manner as described herein, that, except as hereinafter provided
in this section 13, each of the Underwriters shall purchase and pay for all the
Shares agreed to be purchased by such Underwriter hereunder upon tender to the
Representatives of all such Shares in accordance with the terms hereof. If any
Underwriter or Underwriters default in their obligations to purchase Shares
hereunder on either the First Closing Date or the Second Closing Date and the
aggregate number of Shares which such defaulting Underwriter or Underwriters
agreed but failed to purchase does not exceed ten percent (10%) of the total
number of Shares which the Underwriters are obligated to purchase on such
Closing Date, the Representatives may make arrangements for the purchase of
such Shares by other persons, including any of the Underwriters, but if no such
arrangements are made by such Closing Date the nondefaulting Underwriters shall
be obligated severally, in proportion to their respective commitments
hereunder, to purchase the Shares which such defaulting Underwriters agreed but
failed to purchase on such Closing Date. If any Underwriter or Underwriters so
default and the aggregate number of Shares with respect to which such default
or defaults occur is greater than ten percent (10%) of the total number of
Shares which the Underwriters are obligated to purchase on such Closing Date,
and arrangements satisfactory to the Representatives for the purchase of such
Shares by other persons are not made within 36 hours after such default, this
Agreement will terminate without liability on the part of any nondefaulting
Underwriter, the Company, any Principal Stockholder or any Selling Stockholder
except for the expenses to be paid by the Company and the Selling Stockholders
pursuant to section 9 hereof and except to the extent provided in section 12
hereof.
In the event that Shares to which a default relates are to be purchased by
the nondefaulting Underwriters or by another party or parties, the
Representatives shall have the right to postpone the First Closing Date or the
Second Closing Date, as the case may be, for not more than seven business days
in order
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that the necessary changes in the Registration Statement, Prospectus and any
other documents, as well as any other arrangements, may be effected. As used
in this Agreement, the term "Underwriter" includes any person substituted for
an Underwriter under this section 13. Nothing herein will relieve a defaulting
Underwriter from liability for its default.
SECTION 14. EFFECTIVE DATE. This Agreement shall become effective
upon the execution and delivery of this Agreement by the parties hereto. Such
execution and delivery shall include an executed copy of this Agreement sent by
telecopier, facsimile transmission or other means of transmitting written
documents.
SECTION 15. TERMINATION. Without limiting the right to terminate this
Agreement pursuant to any other provision hereof, this Agreement may be
terminated by the Representatives prior to or on the First Closing Date and the
over-allotment option from the Company and the Selling Stockholders referred to
in section 6 hereof, if exercised, may be cancelled by the Representatives at
any time prior to or on the Second Closing Date, if in the judgment of the
Representatives, payment for and delivery of the Shares is rendered
impracticable or inadvisable because:
(a) additional governmental restrictions, not in force and effect on
the date hereof, shall have been imposed upon trading in securities
generally or minimum or maximum prices shall have been generally
established on the New York Stock Exchange or the American Stock Exchange,
or trading in securities generally shall have been suspended or materially
limited on either such exchange or on The Nasdaq Stock Market or a general
banking moratorium shall have been established by either federal or state
authorities in New York, or Wisconsin;
(b) any event shall have occurred or shall exist which makes untrue or
incorrect in any material respect any statement or information contained in
the Registration Statement or which is not reflected in the Registration
Statement but should be reflected therein to make the statements or
information contained therein not misleading in any material respect; or
(c) an outbreak or escalation of hostilities or other national or
international calamity or any substantial change in political, financial or
economic conditions shall have occurred or shall have accelerated to such
extent, in the judgment of the Representatives, as to have a material
adverse effect on the financial markets of the United States, or to make it
impracticable or inadvisable to proceed with completion of the sale of and
payment for the Shares as provided in this Agreement.
Any termination pursuant to this section 15 shall be without liability
on the part of any Underwriter to the Company, any Principal Stockholder or any
Selling Stockholder, or on the part of the Company, any Principal Stockholder
or any Selling Stockholder to any Underwriter, except for expenses to be paid
by the Company and the Selling Stockholders pursuant to section 9 hereof or
reimbursed by the Company pursuant to subsection (n) of section 7 hereof and
except as to indemnification to the extent provided in section 12 hereof.
SECTION 16. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY. The
respective indemnities, agreements, representations, warranties, covenants and
other statements of the Company, of its officers or directors, of the Principal
Stockholders, of the Selling Stockholders, and of 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, Principal Stockholder, Selling Stockholder or the Company or any
of its or their partners, officers, directors or any controlling person, as the
case may be, and will survive delivery of and payment for the Shares sold
hereunder.
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SECTION 17. NOTICES. All communications hereunder will be in writing and,
if sent to the Representatives, will be mailed, delivered, telecopied (with
receipt confirmed) or telegraphed and confirmed to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co.
Incorporated at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Managing Director, with a copy to ▇▇▇▇▇▇▇ ▇. ▇.
▇▇▇▇▇▇, Esq., ▇▇▇▇▇▇▇▇▇, Will & ▇▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, and if sent to the Company, will be mailed, delivered,
telecopied (with receipt confirmed) or telegraphed and confirmed to the Company
at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇
with a copy to ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Reinhart, Boerner, Van Deuren, ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇▇▇, S.C., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇; and, if
sent to the Selling Stockholders, will be mailed, delivered, telecopied (with
receipt confirmed) or telegraphed and confirmed to the Attorneys-in-Fact, or
either of them, in care of the Company, with copies to ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. Perl.
SECTION 18. SUCCESSORS. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors, personal
representatives and assigns, and to the benefit of the officers and directors
and controlling persons referred to in section 12 hereof and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of the Shares as such from any of the Underwriters merely
by reason of such purchase.
SECTION 19. PARTIAL UNENFORCEABILITY. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph, clause or provision hereof.
SECTION 20. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed
by and construed in accordance with the internal laws of the State of Wisconsin
without reference to conflict of law principles thereunder. This Agreement may
be signed in various counterparts which together shall constitute one and the
same instrument, and shall be effective when at least one counterpart hereof
shall have been executed by or on behalf of each party hereto.
If the foregoing is in accordance with your understanding of our agreement,
kindly sign and return to us the enclosed duplicates hereof, whereupon it will
become a binding agreement among the Company, each of the Principal
Stockholders, each of the Selling Stockholders and the several Underwriters,
including the Representatives, all in accordance with its terms.
* * * *
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Very truly yours,
RACING CHAMPIONS CORPORATION
By:
-----------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇, President
THE PRINCIPAL STOCKHOLDERS (WHO ARE NOT
SELLING STOCKHOLDERS):
---------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇
---------------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------------------
▇▇▇▇▇ ▇.▇. ▇▇▇▇▇
THE SELLING STOCKHOLDERS:
▇▇▇▇▇▇ ▇▇▇▇▇ & PARTNERS, L.P.
By:
----------------------------------
Attorney-in-Fact
▇▇▇▇▇ CAPITAL PARTNERS II LIMITED
PARTNERSHIP
By:
----------------------------------
Attorney-in-Fact
NASSAU CAPITAL PARTNERS L.P.
By:
----------------------------------
Attorney-in-Fact
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BCP II AFFILIATES FUND LIMITED PARTNERSHIP
By:
----------------------------------
Attorney-in-Fact
NAS PARTNERS I L.L.C.
By:
----------------------------------
Attorney-in-Fact
The foregoing Underwriting
Agreement is hereby confirmed
and accepted as of the date
first above written.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
▇▇▇▇▇▇▇ ▇▇▇▇▇ & COMPANY L.L.C.
J.C. BRADFORD & CO.
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & CO. INCORPORATED
Acting as Representative of the several
Underwriters (including itself) identified
in Schedule I annexed hereto.
By:
-------------------------------------------
Authorized Representative
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RACING CHAMPIONS CORPORATION
SCHEDULE I
----------
Number of Firm Shares
Name of Underwriter to be Purchased
------------------- ---------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ & Co. Incorporated . . . . . . . .
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Company L.L.C. . . . . . . . . . .
▇.▇. ▇▇▇▇▇▇▇▇ & Co. . . . . . . . . . . . . . . . _________________
Total 5,000,000
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RACING CHAMPIONS CORPORATION
SCHEDULE II
Number of Number of Op-
Firm Shares tional Shares
----------- --------------
The Company . . . . . . . . . . . . . . . . . . . . . . . 5,000,000 357,142
The Selling Stockholders:
▇▇▇▇▇▇ ▇▇▇▇▇ & Partners, L.P. . . . . . . . . . . . . 0 273,253
▇▇▇▇▇ Capital Partners II Limited Partnership . . . 0 57,635
Nassau Capital Partners L.P. . . . . . . . . . . . . 0 44,498
BCP II Affiliates Fund Limited Partnership . . . . . 0 17,118
NAS Partners I L.L.C. . . . . . . . . . . . . . . . . 0 354
--------- -------
Total 5,000,000 750,000
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