RACING CHAMPIONS CORPORATION
4,500,000 SHARES OF COMMON STOCK*
UNDERWRITING AGREEMENT
MARCH ___, 2002
XXXXXX X. XXXXX & CO. INCORPORATED
X.X. XXXXXXX, INC.
XXXXXX XXXXXX XXXXXXXX & CO., INC.
As Representatives of the Several Underwriters
Identified in Schedule I Annexed Hereto
c/o Xxxxxx X. Xxxxx & Co. Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
SECTION 1. INTRODUCTORY. Racing Champions Corporation, a Delaware
corporation (the "Company"), and the several Stockholders of the Company
identified in Schedule II annexed hereto (the "Selling Stockholders") propose to
sell 4,500,000 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, certain of the Selling Stockholders have agreed to grant to the
Underwriters an option to purchase up to 675,000 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. The Company
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:
(a) Each of the Company and the subsidiaries of the Company
that are listed on Exhibit 21 of the Company's Annual Report on Form
10-K for the year ended December 31, 2001 incorporated by reference
into 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,
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* Plus an option to acquire up to 675,000 additional shares of Common
Stock from certain of the Selling Stockholders to cover
over-allotments.
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; the Company and each of 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 of 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 in all material respects 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.
(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
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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"),
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, except as rights to indemnity or contribution hereunder may be
limited by applicable law or the public policy underlying such 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.
(e) A registration statement on Form S-3 (Reg. No.
333-_______) 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"). The conditions for use of
Form S-3, set forth in the General Instructions thereto, have been
satisfied. 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-3 (Reg. No. __________), 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." Reference made herein to
each Preliminary Prospectus or the
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Prospectus, as amended or supplemented, shall include all documents and
information incorporated by reference therein and shall be deemed to
refer to and include any documents filed after the date of such
Preliminary Prospectus or Prospectus, as the case may be, and so
incorporated by reference, under the Exchange Act. 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 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, including any document filed under the Exchange Act
and deemed to be incorporated by reference into the Registration
Statement, 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, 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, in light of the circumstances under which they were made, 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 complied or will comply as to form in
all material 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, in light of the circumstances under which they were
made, 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) The documents that are incorporated by reference in each
Preliminary Prospectus, the Prospectus or the Registration Statement or
from which information is so incorporated by reference, when they
became effective or were filed with the Commission, as the case may be,
complied with the requirements of the Act or the Exchange Act, as
applicable, and any document so filed and incorporated by reference
subsequent to the effective date of the Registration Statement shall,
when it is filed with the Commission, comply with the requirements of
the Act and the Exchange Act, as applicable, and when read together
with the other information included in such Preliminary Prospectus, the
Prospectus or the Registration Statement, as the case may be, do not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading.
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(h) Xxxxxx Xxxxxxxx LLP, which has expressed its opinion with
respect to the consolidated financial statements and schedules of the
Company and the Subsidiaries, as filed with the Commission and included
or incorporated by reference as a part of each Preliminary Prospectus,
the Prospectus or the Registration Statement are independent
accountants as required by the Act.
(i) The consolidated financial statements and the related
notes thereto included or incorporated by reference in each Preliminary
Prospectus, the Prospectus and the Registration Statement present
fairly the financial position, results of operations and cash flows of
the Company as of the dates or for the 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 consolidated financial statements of the Company
contained therein. 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 relating
to the Company in each Preliminary Prospectus, the Prospectus and the
Registration Statement are accurately presented and prepared on a basis
consistent with the consolidated financial statements and books and
records of the Company. The consolidated financial statements and
schedules and the related notes thereto included or incorporated by
reference 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.
(j) 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.
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(k) There are no legal or governmental proceedings or
investigations pending or, to the knowledge of the Company, 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
environment 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.
(l) 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 (assuming
such agreements are enforceable against the third party to such
agreements), except rights to indemnity or contribution hereunder may
be limited by applicable law or the public policy underlying such 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.
(m) 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 Company's consolidated financial statements included
or incorporated by reference 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 such 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.
(n) 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 Act,
the Exchange Act or otherwise, of the price of any security of the
Company to facilitate the sale or resale of the Common Stock.
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(o) 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.
(p) 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.
(q) The Company or a Subsidiary owns or possesses adequate
rights to use all patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service xxxx
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 asserted rights of others, in respect thereof,
which would, individually or collectively, have a Material Adverse
Effect.
(r) 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.
(s) No labor dispute with the employees of the Company or any
Subsidiary exists or, to the knowledge of the Company, is imminent,
which would, individually or collectively, have a Material Adverse
Effect, and, except as described in the Registration Statement, neither
the Company nor any Subsidiary is a party to any collective bargaining
agreement and, to the knowledge of the Company, 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.
(t) 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.
(u) 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
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Company or such Subsidiary have been paid or reflected as a liability
on the consolidated financial statements of the Company 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, would result in a proposed deficiency for any other
period not so audited and would, individually or collectively, have a
Material Adverse Effect; 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.
(v) 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 compliance
with all applicable regulations, including ERISA and the Code except
where such noncompliance would not, individually or collectively, have
a Material Adverse Effect. 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 except where such excess would not, individually or collectively,
have a Material Adverse Effect. 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
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.
(w) 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.
(x) 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
Xxxxx Capital Partners and BCP II Affiliates Fund Limited Partnership,
as such term is used in the NASD Rules of Fair Practice, except as
provided in this Agreement.
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(y) The Common Stock has been registered pursuant to Section
12(g) of the Exchange Act. The Shares to be issued by the Company
pursuant to this Agreement have been approved for listing upon notice
of issuance by The Nasdaq Stock Market ("Nasdaq").
(z) 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.
(aa) The Company has obtained for the benefit of the
Underwriters a lock-up agreement, enforceable by Xxxxxx X. Xxxxx & Co.
Incorporated ("Baird"), of each of the officers and directors of the
Company set forth under "Management" in the Prospectus who owns of
record the number of shares of Common Stock set forth therein, and from
each Selling Stockholder a lock-up agreement enforceable by Baird for a
period of 90 days and on such other terms as are satisfactory to the
Representatives.
(bb) 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 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.
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 [____________], 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 Shares of such Selling
Stockholder for the purpose of selling such 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 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 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
9
Agreement and to sell, assign, transfer and deliver such 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 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 assuming the Underwriters purchase such Shares without any
notice of any adverse claim.
(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 Act, 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.
(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, 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 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 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
10
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 Shares hereunder, the certificates for Shares then
on deposit with the Custodian shall, to the extent such 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 Shares sold by such Selling Stockholder against delivery thereof
and otherwise to act on behalf of such Selling Stockholder.
(g) To the extent, but only to the extent, that any statements
or omissions made in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto are
made in reliance upon and in conformity with written information
furnished to the Company by such Selling Stockholder expressly for use
therein, (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, 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, in light of the circumstances under which they were
made, or necessary to make the statements therein not misleading.
(h) The information contained in such Selling Stockholder's
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.
(i) To the knowledge of the Selling Stockholders, the
representations and warranties of the Company set forth in Section 2
hereof are 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 inside front cover page of the Prospectus
concerning the terms of the offering by the
11
Underwriters, and the table of Underwriters, the first three sentences of the
fourth paragraph, and the eighth paragraph 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 1,500,000 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 basis of the representations, warranties and
agreements herein contained, and subject to the terms and conditions
herein set forth, each Selling Stockholder agrees, severally and not
jointly, to sell to the Underwriters that number of full Firm Shares
set forth opposite the name of such Selling Stockholder in Schedule II
annexed hereto (a total of 3,000,000 shares from all of the Selling
Stockholders), and each of the Underwriters agrees, severally and not
jointly, to purchase from each Selling Stockholder the number of Firm
Shares as hereinafter set forth at the same purchase price per share as
stated in the preceding paragraph. The obligation of each Underwriter
to each Selling Stockholder shall be to purchase from that Selling
Stockholder 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 such
Selling Stockholder 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.
(c) On the First Closing Date (as hereinafter defined), the
Company and the Custodian on behalf of the Selling Stockholders will
deliver to the Representatives, at the offices of Xxxxxx X. Xxxxx & Co.
Incorporated, 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000, 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 them 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
with respect to the Firm Shares being sold by the Company and to the
order of the Custodian with respect to the Firm Shares being sold by
the Selling Stockholders. 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.
12
(d) In addition, on the basis of the representations,
warranties and agreements herein contained, and subject to the terms
and conditions herein set forth each Selling Stockholder hereby agrees
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 the number of Optional Shares set
forth next to such Selling Stockholder's name from such Selling
Stockholder, 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
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 Selling
Stockholders, then each of 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.
(e) 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:
(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
13
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)), or file any document under the Exchange
Act before the termination of the public offering of the Shares by the
Underwriters if such document would be deemed to be incorporated by
reference in the Registration Statement, 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 or to file under the Exchange Act any document which would be
deemed to be incorporated by reference in the Registration Statement to
comply with the Act or the Exchange 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
or file such document 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.
(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
14
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, including any
document filed under the Exchange Act and deemed to be incorporated by
reference in the Registration Statement, 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) 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.
(i) 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.
(j) 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 Stock Incentive Plan or the Company's Employee Stock Purchase
Plan, a copy of each of which is filed as an exhibit to the Company's
most recent Annual Report on Form 10-K for the year ended December 31,
2001 incorporated by reference into the Registration Statement, the
Company shall not, for a period of 90 days after the date of the
Prospectus, without the prior written consent of Xxxxx, 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.
(k) The Company will maintain a transfer agent and, if
required by law or the rules of Nasdaq 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.
(l) 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
15
purchase and sale of the Shares, and the provisions of sections 9 and
12 hereof shall at all times be effective and apply.
(m) 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) 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 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 Nasdaq; 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 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.
16
(b) All registration fees and expenses, including legal fees
and disbursements of counsel for the Underwriters incurred in
connection with 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 have made or may make for the allocation or
sharing of such expenses and costs.
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
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.
17
(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, Xxxxxx & 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 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 28,000,000 shares of Common Stock, par value $0.01
per share, 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, 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, to such counsel's
knowledge, 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 (other than
Racing Champions Limited, Racing Champions Worldwide Limited
and Racing Champions International Limited) 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 (other than Racing
Champions Limited, Racing Champions Worldwide Limited and
Racing Champions International Limited) 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
(other than Racing Champions Limited, Racing Champions
Worldwide Limited and Racing Champions International Limited)
have been duly authorized and
18
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 (other than Racing Champions
Limited, Racing Champions Worldwide Limited and Racing
Champions International Limited), 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, to such counsel's knowledge, 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 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, including any document
incorporated by reference in the Registration Statement,
(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; the conditions for use of
Form S-3, set forth in the General Instructions thereto, have
been satisfied; 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 required to be
filed under the Exchange Act if upon such filing they would be
incorporated, in whole or in part, by reference therein, or to
be filed as an exhibit to or incorporated by reference in the
Registration Statement by the Act, which is not described,
filed or incorporated by reference, 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
19
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, 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 or incorporated by
reference as an exhibit to the Registration Statement; or (C)
violate any statute, 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 is a National Market security on
Nasdaq and is registered under the Exchange Act;
(xi) The Shares to be issued and sold by the Company
pursuant to this Agreement have been approved for listing upon
official notice of issuance by Nasdaq;
(xii) Neither the Company nor any Subsidiary is an
"investment company", as such term is 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 or incorporation by reference
in the Registration Statement and the Prospectus of statutes,
law, regulations, legal and governmental proceedings, and
contracts and other legal documents described therein or
incorporated by reference present fairly, 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.
20
In addition, such counsel shall state that, although such
counsel has not independently determined the accuracy and completeness
of or otherwise verified, and is not passing upon and assumes no
responsibility for, the accuracy or completeness of, the statements
contained in the Registration Statement or the Prospectus, such counsel
has generally reviewed and discussed the contents of the Registration
Statement and Prospectus with certain officers of the Company,
representatives of the Company's independent public accountants and the
Representatives. In the course of such review and discussions and in
connection with such counsel's services as counsel to the Company,
nothing has come to such counsel's attention which causes such counsel
to believe that the Registration Statement, including any document
incorporated by reference in the Registration Statement, as of the time
it became effective under the Act, contained an untrue statement of a
material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein not
misleading or the Prospectus, as of its date and the date hereof,
contained any untrue statement of a material fact or omitted to state
any material fact necessary in order to make the statements therein, in
light of the circumstances under which they were made, not misleading
(except that the foregoing statement does not apply to the financial
statements and other financial and statistical information contained
therein as to which such counsel may express no belief).
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 First 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) 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, 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
21
(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 Hong
Kong counsel to Racing Champions Limited dated the First Closing Date
or the Second Closing Date, as the case may be, substantially to the
effect that Racing Champions Limited has been duly incorporated 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; Racing Champions Limited 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 Racing Champions Limited 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 Racing Champions Limited, and to such counsel's knowledge, no shares
of capital stock of Racing Champions Limited have been issued in
violation of such rights.
(g) The Representatives shall have received an opinion of U.K.
counsel to Racing Champions Worldwide Limited and Racing Champions
International Limited dated the First Closing Date or the Second
Closing Date, as the case may be, substantially to the effect that
Racing Champions Worldwide Limited and Racing Champions International
Limited have been duly incorporated 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; Racing Champions Worldwide Limited and Racing Champions
International Limited are each 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
Racing Champions Worldwide Limited and Racing Champions International
Limited 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 Racing Champions Worldwide Limited or Racing
Champions International Limited, and to such counsel's knowledge, no
shares of capital stock of Racing Champions
22
Worldwide Limited or Racing Champions International Limited, to such
counsel's knowledge, have been issued in violation of such rights.
(h) The Representatives shall have received an opinion of
XxXxxxxxx, Will & Xxxxx, 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.
(i) The Representatives shall have received on each Closing
Date, a certificate of Xxxxxx X. Xxxxxxxxx, Chief Operating Officer and
Executive Vice President of the Company, and Xxxx X. Xxxxxx, Chief
Financial Officer and Secretary of the Company, to the effect that:
(i) The representations and warranties of the Company
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, including
any documents filed under the Exchange Act and deemed to be
incorporated by reference in the Registration Statement, 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 there has been no document
required to be filed under the Exchange Act that upon such
filing would be deemed to be incorporated by reference in the
Registration Statement that has not been so filed; 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 material 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
23
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 (i) 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.
(j) 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, including any documents filed under
the Exchange Act and deemed to be incorporated by reference in the
Registration Statement, 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, including any documents filed under the
Exchange Act and deemed to be incorporated by reference in the
Registration Statement, 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.
(k) 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 Xxxxxxxx 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 (k) 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.
(l) At the time this Agreement is executed, there shall be
delivered to the Representatives a letter addressed to the
Representatives, as the representatives of the Underwriters, from Ernst
& Young, the independent accountants of the Company's subsidiary,
Racing Champions Worldwide Limited, a United Kingdom corporation, which
shall be in form and substance satisfactory to the Representatives.
(m) The underwriting terms and arrangements for the offering
shall have been cleared by the NASD.
24
(n) 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 XxXxxxxxx, Will & Xxxxx, 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 (m) 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 and the Selling Stockholders will use their
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.
SECTION 12. INDEMNIFICATION.
(a) The Company and each of the Selling Stockholders,
severally and not jointly, 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, if
such settlement is effected with the written consent of the Company and
the Selling Stockholders, which consent shall not be unreasonably
withheld), insofar as such Claims arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto or arise out of
or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading. The Company and each of the Selling
Stockholders, severally and not jointly, subject to subsection (g) 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 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 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
25
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 and each of the Selling Stockholders as
provided above are in addition to and in no way limit any liabilities
the Company 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, the Selling
Stockholders, and any controlling person within the meaning of the Act
or the Exchange Act, from and against any claims to which the Company
or any such 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, if such settlement is effected with the written consent
of such Underwriter and Xxxxx, which consent shall not be unreasonably
withheld), 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 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 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 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) 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 except to the extent that the
indemnifying party was materially prejudiced thereby. 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,
26
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.
(d) 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 (c) 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 Xxxxx, 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.
(e) Subject to subsection (g) of this section 12, if the
indemnification provided for in this section 12 is unavailable to an
indemnified party under subsection (a) or (b) 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 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 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
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 each of the Selling Stockholders, are
responsible for the remaining portion. The relative fault of the
Company, each Selling Stockholder and the Underwriters shall
27
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 Selling 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, subject to the limitations set forth
in subsections (c) and (d) 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.
(f) The Company, 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.
The Selling Stockholders' obligations to contribute pursuant to this
section 12 are several and not joint.
(g) Notwithstanding any provision of this section 12 to the
contrary, (x) the liability of each of the Selling Stockholders to the
Underwriters 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
(less the amount of any damages such Selling Stockholder or Principal
Stockholder has otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission) and (y)
the Underwriters shall not seek any indemnification under this
Agreement against the Selling Stockholders until Underwriters have, in
their reasonable judgment, exhausted their remedies hereunder against
the Company.
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
28
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 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 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 Nasdaq 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 or any Selling Stockholder, or on
the part of the Company 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 (l) of
section 7 hereof and except as to indemnification to the extent provided in
section 12 hereof.
29
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 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, 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.
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 Xxxxxx X. Xxxxx & Co.
Incorporated at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxx, Managing Director, with a copy to Xxxxxx X. Murphy,
McDermott, Will & Xxxxx, 000 Xxxx Xxxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000, and if
sent to the Company, will be mailed, delivered, telecopied (with receipt
confirmed) or telegraphed and confirmed to the Company at 000 Xxxxxxxxx Xxxx,
Xxxx Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxx with a copy to Xxxxx
Xxxxxx, Reinhart, Boerner, Van Deuren, Xxxxxx & Xxxxxxxxxx, S.C., 0000 Xxxxx
Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000; 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 [______________________].
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
Selling Stockholders and the several Underwriters, including the
Representatives, all in accordance with its terms.
****
30
Very truly yours,
RACING CHAMPIONS CORPORATION
By:
---------------------------------------
Xxxxxx X. Xxxx, Chief Executive Officer
THE SELLING STOCKHOLDERS:
------------------------------------------
Xxxxxx X. Xxxx
------------------------------------------
Xxxx X. Xxxxx
------------------------------------------
Xxxxx X.X. Xxxxx
XXXXXX XXXXX & PARTNERS, L.P.
By:
---------------------------------------
Attorney-in-Fact
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
XXXXXX X. XXXXX & CO. INCORPORATED
X.X. XXXXXXX, INC.
XXXXXX XXXXXX XXXXXXXX & CO., INC.
By: XXXXXX X. XXXXX & CO. INCORPORATED
Acting as Representative of the several
Underwriters (including itself) identified
in Schedule I annexed hereto.
By:
--------------------------------------
Authorized Representative
31
RACING CHAMPIONS CORPORATION
SCHEDULE I
Number of Firm
Name of Underwriter Shares to be
------------------- Purchased
---------
XXXXXX X. XXXXX & CO. INCORPORATED
X.X. XXXXXXX, INC.
XXXXXX XXXXXX XXXXXXXX & CO., INC.
---------
Total 4,500,000
RACING CHAMPIONS CORPORATION
SCHEDULE II
Number of Number of Op-
Firm Shares tional Shares
------------- -------------
The Company ............................................ 1,500,000 0
The Selling Stockholders:
Xxxxxx Xxxxx & Partners, L.P. ...................... 2,381,249 0
Xxxxxx X. Xxxx ..................................... 206,251 225,000
Xxxx X. Xxxxx ...................................... 206,250 225,000
Xxxxx X.X. Xxxxx ................................... 206,250 225,000
------------- -------------
Total 4,500,000 675,000
32
