5,000,000 Shares of Common Stock
RAC FINANCIAL GROUP, INC.
UNDERWRITING AGREEMENT
January 23, 1997
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
▇▇▇▇▇▇▇▇▇▇ SECURITIES
PRUDENTIAL SECURITIES INCORPORATED
as Representatives of the
several Underwriters named in
Schedule I attached hereto
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Dear Sirs:
RAC Financial Group, Inc., a Nevada corporation (the "Company"), and the
persons and entities listed on Schedule II hereto (the "Selling
Securityholders") propose, subject to the terms and conditions stated herein,
to sell to the several underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 5,000,000 shares (the "Firm Shares") of the
Company's common stock, par value $0.01 per share (the "Common Stock"), of
which 4,200,000 shares are to be issued and sold by the Company, and an
aggregate of 800,000 shares are to be sold by the Selling Securityholders in
the amounts set forth on Schedule II hereto. Certain of the Selling
Securityholders propose to sell, at the option of the Underwriters and
subject to the terms and conditions stated herein, up to an additional
750,000 shares (the "Additional Shares") of Common Stock for the sole purpose
of covering over-allotments in connection with the sale of the Firm Shares.
The Firm Shares and any Additional Shares purchased by the Underwriters are
referred to
herein as the "Shares". The Shares are more fully described in the Registration
Statement referred to below.
1A. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company represents
and warrants to, and agrees with, the Underwriters that:
(a) The Company has filed with the Securities and Exchange Commission
(the "Commission") a registration statement, and has filed an amendment or
amendments thereto, on Form S-1 (No. 333-18497), for the registration of the
Shares under the Securities Act of 1933, as amended (the "Act"). Such
registration statement, including the prospectus, financial statements and
schedules, exhibits and all other documents filed as a part thereof, as amended
at the time of effectiveness of the registration statement, including any
information deemed to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A, or pursuant to Rule 434, of the Rules and
Regulations of the Commission under the Act (the "Regulations"), is herein
called the "Registration Statement," and the prospectus, in the form first filed
with the Commission pursuant to Rule 424(b) of the Regulations or filed as part
of the Registration Statement at the time of effectiveness if no Rule 424(b)
filing is required, is herein called the "Prospectus." The term "preliminary
prospectus" as used herein means a preliminary prospectus as described in Rule
430 or Rule 430A of the Regulations.
(b) At the time of the effectiveness of the Registration Statement or
the effectiveness of any post-effective amendment to the Registration Statement,
when the Prospectus is first filed with the Commission pursuant to Rule 424(b)
of the Regulations, when any supplement to or amendment of the Prospectus is
filed with the Commission and at the Closing Date and the Additional Closing
Date, if any (as hereinafter respectively defined), the Registration Statement
and the Prospectus and any amendments thereof and supplements thereto complied
or will comply in all material respects with the applicable provisions of the
Act and the Regulations and does not or will not contain an untrue statement of
a material fact and does not or will not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein (i) in the case of the Registration Statement, not misleading and (ii)
in the case of the Prospectus, in light of the circumstances under which they
were made, not misleading. When any preliminary prospectus was first filed with
the Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
of the Regulations) and when any amendment thereof or supplement thereto was
first filed with the Commission, such preliminary prospectus and any amendments
thereof and supplements thereto complied in all material respects with the
applicable provisions of the Act and the Regulations and did not contain an
untrue statement of a material fact and did not omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein in light of the circumstances under which they were made not misleading.
No representation and warranty is made in this subsection (b), however, with
respect to any information contained in or omitted from the Registration
Statement or the Prospectus or any preliminary prospectus or any amendment
thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by
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or on behalf of any Underwriter through you as herein stated expressly for use
in connection with the preparation thereof.
(c) Ernst & Young LLP ("E&Y"), who have certified the consolidated
balance sheets of the Company as of September 30, 1995 and 1996, and the related
consolidated statements of income, stockholders' equity, and cash flows for each
of the three years in the period ended September 30, 1996, included in the
Registration Statement, are independent public accountants as required by the
Act and the Regulations.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as set forth in
the Registration Statement and the Prospectus, there has been no material
adverse change, nor any development involving a prospective material adverse
change, in the business, prospects, properties, operations, condition (financial
or other) or results of operations of the Company and its subsidiaries taken as
a whole (a "Material Adverse Effect"), whether or not arising from transactions
in the ordinary course of business, and since the date of the latest balance
sheet presented in the Registration Statement and the Prospectus, neither the
Company nor any of its subsidiaries has incurred or undertaken any liabilities
or obligations, direct or contingent, which are material to the Company and its
subsidiaries taken as a whole, except for liabilities or obligations which are
reflected in the Registration Statement and the Prospectus.
(e) This Agreement and the transactions contemplated herein have been
duly and validly authorized by the Company. This Agreement has been duly and
validly executed and delivered by the Company and constitutes the legal, valid
and binding obligation of the Company, enforceable against the Company in
accordance with its terms, except, in the case of enforceability, as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws. This Agreement
conforms in all material respects to the description hereof contained in the
Registration Statement and the Prospectus. The Company has all requisite
corporate power and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions contemplated hereby,
including (without limitation) (i) the issuance, sale and delivery of the Shares
to be issued, sold and delivered by the Company hereunder and (ii) the filing of
the Registration Statement.
(f) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or
any of its subsidiaries pursuant to any, agreement, instrument, franchise,
license or permit to which the Company or any of its subsidiaries is a party or
by which any
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of such corporations or their respective properties or assets may be bound, or
(ii) violate or conflict with any provision of the certificate of incorporation
or bylaws of the Company or any of its subsidiaries or any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their respective properties or assets. No consent,
approval, authorization, order, registration, filing, qualification, license or
permit of or with any court or any public, governmental or regulatory agency or
body having jurisdiction over the Company or any of its subsidiaries or any of
their respective properties or assets (collectively, "Licenses") is required for
the execution, delivery and performance of this Agreement or the consummation of
the transactions contemplated hereby, including the issuance, sale and delivery
of the Shares to be issued, sold and delivered by the Company hereunder, except
the registration under the Act of the Shares and such Licenses as may be
required under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters or by the National
Association of Securities Dealers, Inc. (the "NASD").
(g) All of the outstanding shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
nonassessable and were not issued and are not now in violation of or subject to
any preemptive rights. The Shares, when issued, delivered and sold in
accordance with this Agreement, will be duly and validly issued and outstanding,
fully paid and nonassessable, and will not have been issued in violation of or
be subject to any preemptive rights. The Company had, at September 30, 1996, an
authorized and outstanding capitalization as set forth in the Registration
Statement and the Prospectus. The capital stock of the Company, including the
Firm Shares and the Additional Shares, conform in all material respects to the
descriptions thereof contained in the Registration Statement and the Prospectus.
(h) Each of the Company and its subsidiaries (i) has been duly
organized and is validly existing as a corporation is good standing under the
laws of its jurisdiction of incorporation, (ii) is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character or
location of its properties (owned, leased or licensed) or the nature or conduct
of its business makes such qualification necessary, except for those failures to
be so qualified or in good standing that will not have a Material Adverse
Effect, and (iii) has all requisite power and authority, and all necessary
Licenses, to own, lease and operate its properties and conduct its business as
now being conducted and as described in the Registration Statement and the
Prospectus, except in such case where the failure to have such Licenses will not
have a Material Adverse Effect, and no such License contains a materially
burdensome restriction not adequately disclosed in the Registration Statement
and the Prospectus. Neither the Company nor any of its subsidiaries has
received any written notice of proceedings relating to the revocation or
modification of any such License which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have resulted in a
Material Adverse Effect, except as described in or contemplated by the
Prospectus.
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(i) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid
and non-assessable and are owned of record and beneficially, directly or
indirectly, by the Company free and clear of any security interest
(other than (i) the security interest in such capital stock held by BOCP II,
Limited Liability Company ("BOCP II"), Banc One Capital Partners V, Ltd.
("BOCP V") and Farm Bureau Life Insurance Company ("FBLIC") pursuant to the
Security Agreement-Pledge of Common Stock dated as of ▇▇▇▇▇ ▇▇, ▇▇▇▇), ▇▇▇▇,
▇▇▇▇▇, encumbrance, restriction on transfer, shareholders' agreement, voting
trust or other preferential arrangement or defect of title whatsoever.
(j) Except as described in the Prospectus, there is no litigation or
governmental proceeding to which the Company or any of its subsidiaries is a
party or to which any property of the Company or any of its subsidiaries is
subject or which is pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries that (i) would have a Material
Adverse Effect or would result in any development involving a Material Adverse
Effect or (ii) is required to be disclosed in the Registration Statement and the
Prospectus.
(k) Neither the Company nor any of its subsidiaries, nor any of their
respective officers or directors has taken and none of them will take, directly
or indirectly, any action designed to cause or result in, or which constitutes
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares.
(l) The financial statements, including the notes thereto, included
in the Registration Statement and the Prospectus present fairly the financial
position of the Company as of the dates indicated and the results of operations
for the periods specified, all in conformity with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the entire periods
presented, except as otherwise disclosed therein. No financial statement
schedules of the Company, FirstPlus Financial, Inc., a Texas corporation
("FPF"), First Security Mortgage Corp., a South Carolina corporation ("East"),
FirstPlus Financial West, Inc., a Delaware corporation ("West"), or National
Loans, Inc., a Mississippi corporation ("National"), are required to be filed
with the Registration Statement pursuant to Regulation S-X promulgated by the
Commission. The selected financial data for the Company set forth under the
captions "Prospectus Summary--Summary Financial Information" and "Selected
Financial Data" in the Prospectus has been prepared on a basis consistent with
the financial statements of the Company. No other financial statements of the
Company, FPF, East, West, National or any other entity are required by the Act
or the Rules and Regulations to be included in the Registration Statement or the
Prospectus.
(m) Except as described in the Prospectus, no holder of securities of
the Company has any rights to the registration of securities of the Company
because of the filing of the Registration Statement or otherwise in connection
with the sale of the Shares contemplated hereby. Except as described in the
Prospectus, no holder of securities of the
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Company has any rights to the registration, whether now or in the future, of
securities of the Company.
(n) The Company is not, and upon consummation of the transactions
contemplated hereby will not be, subject to registration as an "investment
company" under the Investment Company Act of 1940, as amended.
(o) No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the Company's knowledge, is threatened or imminent
that would have a Material Adverse Effect, except as described in or
contemplated by the Prospectus.
(p) The Company and its subsidiaries own or possess, or can acquire
on reasonable terms, all material trademarks, service marks, trade names,
licenses, copyrights and proprietary or other confidential information,
including, but not limited to, "FIRSTPLUS FINANCIAL," "Buster Plus," "Debt
Buster," and "You don't need equity, you just need a phone," currently employed
by them in connection with their respective businesses, and neither the Company
nor any such subsidiary has received any written notice of infringement of or
conflict with asserted rights of any third party with respect to any of the
foregoing which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect, except as
described in or contemplated by the Prospectus.
(q) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are customary in the businesses in which they are engaged; and
neither the Company nor any such subsidiary has any reason to believe that it
will not be able to renew its existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a Material
Adverse Effect, except as described in or contemplated by the Prospectus.
(r) No subsidiary of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except as described in or contemplated by the
Prospectus.
(s) The Company has filed all foreign, federal, state and local tax
returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a Material
Adverse Effect) and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it, to the extent that any of the
foregoing is due and payable, except for any such assessment, fine or penalty
that is currently being contested in good faith or as described in or
contemplated by the Prospectus.
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(t) Neither the Company nor any of its subsidiaries is in violation
of any federal or state law or regulation relating to their respective lending
activities, including, without limitation, rules and regulations of the Federal
Housing Authority and applicable banking laws, rules and regulations, except for
any such violation of law or regulation which would not have a Material Adverse
Effect or which is described in or contemplated by the Prospectus.
(u) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and its other subsidiaries, neither the
Company nor any such subsidiary owns any shares of stock or any other equity
securities of any corporation or has any equity interest in any firm,
partnership, association or other entity, except as described in or contemplated
by the Prospectus.
(v) No event has occurred that will (i) conflict with or result in a
breach of any of the terms and provisions of, or constitute a default (or an
event which with notice or lapse of time, or both, would constitute a default)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, any agreement, instrument, franchise, License or
permit to which the Company or any of its subsidiaries is a party or by which
any of such corporations or their respective properties or assets may be bound,
except for such conflicts, breaches or defaults which would not have a Material
Adverse Effect, or (ii) violate or conflict with any provision of the
certificate of incorporation or bylaws of the Company or any of its subsidiaries
or any judgment, decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their respective properties or
assets.
(w) Each certificate signed by any officer of the Company and
delivered to the Representative or counsel for the Underwriters shall be deemed
to be a representation and warranty by the Company, and not by such officer in
an individual capacity, to each Underwriter as to the matters covered thereby.
1B. REPRESENTATIONS AND WARRANTIES OF THE SELLING SECURITYHOLDERS. Each
Selling Securityholder, severally and not jointly, represents and warrants to,
and agrees with, the Underwriters that:
(a) Such Selling Securityholder has full power and authority to enter
into this Agreement and the Power of Attorney and Custody Agreement (as
hereinafter defined). All authorizations and consents necessary for the
execution and delivery by such Selling Securityholder of this Agreement and the
Power of Attorney and Custody Agreement and the performance of the transactions
contemplated hereby and thereby have been obtained. Each of this Agreement and
the Power of Attorney and Custody Agreement has been duly authorized, executed
and delivered by or on behalf of such Selling Securityholder and constitutes a
valid and binding agreement of such Selling Securityholder and is enforceable
against such Selling Securityholder in accordance with its terms, except, in the
case of enforceability, as limited by applicable bankruptcy, insolvency,
reorganization, moratorium
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or other laws now or hereafter in effect relating to or affecting creditors'
rights generally or by general principles of equity relating to the availability
of remedies and except as rights to indemnity and contribution may be limited by
federal or state securities laws or the public policy underlying such laws.
(b) Such Selling Securityholder now has, and at the time of delivery
thereof hereunder will have, (i) good and marketable title to the Shares to be
sold by such Selling Securityholder hereunder, free and clear of all security
interests, pledges, liens, encumbrances, equities, charges and claims
whatsoever, and (ii) full legal right and power, and all authorizations and
approvals required by law, except as required under the Act and the state Blue
Sky laws or by the NASD, to sell, transfer and deliver the Shares to be sold by
such Selling Securityholder to the Underwriters hereunder and to make the
representations, warranties and agreements made by such Selling Securityholder
herein. Upon the delivery of and payment for the Shares to be sold by such
Selling Securityholder hereunder, such Selling Securityholder will deliver good
and marketable title thereto, free and clear of all security interests, pledges,
liens, encumbrances, equities, charges and claims whatsoever.
(c) On the Closing Date and the Additional Closing Date, if any, all
stock transfer or other taxes (other than income taxes) which are required to be
paid in connection with the sale and transfer of the Shares to be sold by such
Selling Securityholder to the several Underwriters hereunder will have been
fully paid or provided for by the Company and all laws imposing such taxes will
have been complied with in all material respects.
(d) The execution, delivery and performance of this Agreement or the
Power of Attorney and Custody Agreement and the consummation of the transactions
contemplated hereby and thereby do not and will not (i) conflict with or result
in a breach of any of the terms and provisions of, or constitute a default (or
an event which with notice or lapse of time, or both, would constitute a
default) under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of such Selling Securityholder pursuant
to, any agreement, instrument, franchise, license or permit to which such
Selling Securityholder is a party or by which such Selling Securityholder's
properties or assets may be bound, (ii) with respect to each Selling
Securityholder which is a corporation, violate or conflict with any provision of
the certificate or articles of incorporation or bylaws of such Selling
Securityholder, (iii) with respect to each Selling Securityholder which is a
trust, violate or conflict with any provision of the declaration of trust of
such Selling Securityholder, (iv) with respect to each Selling Securityholder
which is a limited liability company, violate or conflict with any provisions of
the articles of organization or operating agreement or regulations of such
Selling Securityholder, or (v) violate or conflict with any judgment, decree,
order, statute, rule or regulation of any court or any public, governmental or
regulatory agency or body having jurisdiction over such Selling Securityholder
or any of its properties or assets. No License is required for the execution,
delivery and performance of this Agreement or the Power of Attorney and Custody
Agreement or the consummation of the transactions contemplated hereby or
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thereby, including the issuance, sale and delivery of the Shares to be issued,
sold and delivered by such Selling Securityholder hereunder, except the
registration under the Act of the Shares and such consents, approvals,
authorizations, orders, registrations, filings, qualifications, licenses and
permits as may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters.
(e) The sale of the Shares proposed to be sold by such Selling
Securityholder is not prompted by such Selling Securityholder's knowledge of any
material non-public information concerning the Company or any of its
subsidiaries.
(f) At the time of the effectiveness of the Registration Statement
or the effectiveness of any post-effective amendment to the Registration
Statement, when the Prospectus is first filed with the Commission pursuant to
Rule 424(b) of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission and at the Closing Date and the
Additional Closing Date, if any, all information required by Item 507 of
Regulation S-K under the Act with respect to such Selling Securityholder
contained in the Registration Statement and the Prospectus and any amendments
thereof and supplements thereto complied or will comply in all material
respects with Item 507 of Regulation S-K; the Registration Statement and the
Prospectus and any amendments thereof and supplements thereto contains and
will contain all statements with respect to such Selling Securityholder
required to be stated therein in accordance with Item 507 of Regulation S-K
and does not or will not contain an untrue statement of a material fact
regarding such Selling Securityholder and does not or will not omit to state
any material fact regarding such Selling Securityholder required to be stated
therein by Item 507 of Regulation S-K or necessary in order to make the
statements therein (i) in the case of the Registration Statement, not
misleading and (ii) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading. When any related
preliminary prospectus was first filed with the Commission (whether filed as
part of the registration statement for the registration of the Shares or any
amendment thereto or pursuant to Rule 424(a) of the Regulations) and when any
amendment thereof or supplement thereto was first filed with the Commission,
all information required by Item 507 of Regulation S-K with respect to such
Selling Securityholder contained in such preliminary prospectus and any
amendments thereof and supplements thereto complied in all material respects
with Item 507 of Regulation S-K and such preliminary prospectus and any
amendments thereof and supplements thereto did not contain an untrue
statement of a material fact regarding such Selling Securityholder and did
not omit to state any material fact regarding such Selling Securityholder
required to be stated therein by Item 507 of Regulation S-K or necessary in
order to make the statements therein in light of the circumstances under
which they were made not misleading.
(g) Other than as permitted by the Act and the Regulations, such
Selling Securityholder has not distributed and will not distribute any
preliminary prospectus, the Prospectus or any other offering material in
connection with the offering and sale of the Shares. Such Selling
Securityholder has not taken and will not take, directly or indirectly, any
action designed to cause or result in, or which constitutes or which might
reasonably be
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expected to constitute, the stabilization or manipulation of the price of the
shares of Common Stock to facilitate the sale or resale of the Shares.
(h) Such Selling Securityholder has duly executed and delivered in
the form heretofore furnished to the Representatives, a power of attorney and
custody agreement ("Power of Attorney and Custody Agreement") with ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇ as the attorney(s)-in-fact (each, an
"Attorney-in-Fact") and Key Corp Shareholder Services, Inc. as the custodian
(the "Custodian"); the Attorney-in-Fact is authorized to execute and deliver
this Agreement and the certificates referred to in Section 6(f), to authorize
the delivery of the Shares to be sold hereunder by such Selling Securityholder,
to duly endorse (in blank or otherwise) the certificate or certificates
representing such Shares, to accept payment therefor, and otherwise to act on
behalf of such Selling Securityholder in connection with this Agreement.
(i) Certificates in negotiable form, or accompanied by duly executed
instruments of transfer or assignment in blank with signatures guaranteed, for
all Shares to be sold by such Selling Securityholder hereunder have been placed
in custody with the Custodian by or for the benefit of such Selling
Securityholder for the purpose of effecting delivery by such Selling
Securityholder hereunder.
(j) Each certificate signed by such Selling Securityholder and
delivered to the Representative or counsel for the Underwriters shall be deemed
to be a representation and warranty by such Selling Securityholder to each
Underwriter as to the matters covered thereby.
2. PURCHASE, SALE AND DELIVERY OF THE SHARES.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein
set forth, the Company hereby agrees to issue and sell 4,200,000 of the Firm
Shares, and the Selling Securityholders, severally and not jointly, agree to
sell 800,000 of the Firm Shares to the several Underwriters and the
Underwriters, severally and not jointly, agree to purchase from the Company
and the Selling Securityholders, at a purchase price per share of $_____, the
number of Firm Shares set forth opposite the respective names of the
Underwriters in Schedule I hereto plus any additional number of Shares which
such Underwriter may become obligated to purchase pursuant to the provisions
of Section 9 hereof.
(b) Payment of the purchase price for, and delivery of certificates
for, the Shares shall be made at the offices of Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as shall be agreed
upon by you and the Company, at 10:00 a.m. on the third business day (unless
postponed in accordance with the provisions of Section 9 hereof) following the
date of the effectiveness of the Registration Statement (or, if the Company has
elected to rely upon Rule 430A of the Regulations, the third business day after
the determination of the initial public offering price of the Shares or the
fourth business day after the determination of the initial pubic offering price
of the
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Shares if such determination is made after 4:30 p.m. E.S.T.), or such other
time not later than ten business days after such date as shall be agreed upon
by you, the Selling Securityholders and the Company (such time and date of
payment and delivery being herein called the "Closing Date"). Payment shall
be made to the order of the Company, on behalf of itself and each of the
Selling Securityholders by wire transfer of New York Clearing House (next
day) funds payable to the order of the Company against delivery to you
for the respective accounts of the Underwriters of certificates for the
Shares to be purchased by them. Certificates for the Firm Shares shall be
registered in such name or names and in such authorized denominations as you
may request in writing at least two full business days prior to the Closing
Date. The Company and the Selling Securityholders will permit you to examine
and package such certificates for delivery at least one full business day
prior to the Closing Date.
(c) In addition, certain of the Selling Securityholders (as listed
on Schedule II hereto) hereby agrees to sell to the several Underwriters an
aggregate of 750,000 Additional Shares at the same purchase price per share
to be paid by the several Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering over-allotments
in the sale of Firm Shares by the Underwriters. This option may be exercised
at any time, in whole or in part, on or before the thirtieth day following
the date of the Prospectus, by written notice by you to the Company. Such
notice shall set forth the aggregate number of Additional Shares as to which
the option is being exercised and the date and time, as reasonably determined
by you, when the Additional Shares are to be delivered (such date and time
being herein sometimes referred to as the "Additional Closing Date");
PROVIDED, HOWEVER, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after the date
on which the option shall have been exercised nor later than the eighth full
business day after the date on which the option shall have been exercised
(unless such time and date are postponed in accordance with the provisions of
Section 9 hereof). Certificates for the Additional Shares shall be
registered in such name or names and in such authorized denominations as you
may request in writing at least two full business days prior to the
Additional Closing Date. The Company will permit you to examine and package
such certificates for delivery at least one full business day prior to the
Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter shall
be the number which bears the same ratio to the aggregate number of Additional
Shares being purchased as the number of Firm Shares set forth opposite the name
of such Underwriter in Schedule I hereto (or such number increased as set forth
in Section 9 hereof) bears to 6,000,000, subject, however, to such adjustments
to eliminate any fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made by wire transfer of
New York Clearing House (next day) funds, payable to the order of the
Company, on behalf of the Selling Securityholders, at the offices of Bear,
▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or such other
location as may be mutually
-11-
acceptable, upon delivery of the certificates for the Additional Shares to you
for the respective accounts of the several Underwriters.
3. OFFERING; REPRESENTATIONS AND WARRANTIES OF THE REPRESENTATIVES.
(a) Upon your authorization of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale to the public
upon the terms set forth in the Prospectus.
(b) You represent that you are authorized to execute and deliver this
Agreement on behalf of the several Underwriters named in Schedule I hereto and
to exercise all authority and discretion vested in the Underwriters or you by
the provisions of this Agreement.
4. COVENANTS OF THE COMPANY AND THE SELLING SECURITYHOLDERS. The Company
(as to all Sections other than (m), (n) and (o)) and each Selling Securityholder
(as to Sections 4(l), (m), (n) and (o)) covenants and agrees, severally and not
jointly, with the Underwriters that:
(a) If the Registration Statement has not yet been declared
effective, the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible, and if Rule 430A is used or the filing of the Prospectus is otherwise
required under Rule 424(b), the Company will file the Prospectus (properly
completed if Rule 430A has been used) pursuant to Rule 424(b) within the
prescribed time period and will provide evidence satisfactory to you of such
timely filing.
The Company will notify you immediately (and, if requested by you
in writing, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information, (iii) of the mailing or the
delivery to the Commission for filing of any amendment of or supplement to the
Registration Statement or the Prospectus, (iv) of the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of the initiation, or the threatening,
of any proceedings therefor, (v) of the receipt of any comments from the
Commission, and (vi) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b)) that differs from the prospectus
on file at the time of the effectiveness of the Registration Statement before or
after the effective date of the
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Registration Statement to which you shall reasonably object in writing after
being timely furnished in advance a copy thereof.
(b) If at any time when a prospectus relating to the Shares is
required to be delivered under the Act any event shall have occurred as a result
of which the Prospectus as then amended or supplemented includes an untrue
statement of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading, or if it shall be
necessary at any time to amend or supplement the prospectus or Registration
Statement to comply with the Act or the Regulations, the Company will notify you
promptly and prepare and file with the Commission an appropriate amendment or
supplement (in form and substance satisfactory to you) which will correct such
statement or omission and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you five signed copies of
the Registration Statement, including exhibits and all amendments thereto, and
the Company will promptly deliver to each of the Underwriters such number of
copies of any preliminary prospectus, the Prospectus, the Registration
Statement, and all amendments of and supplements to such documents, if any, as
you may reasonably request. The Company will retain a manually signed copy of
the Registration Statement and all amendments thereto for a period of five years
from the date of filing thereof.
(d) The Company will endeavor in good faith, in cooperation with you,
at or prior to the time of effectiveness of the Registration Statement, to
qualify the Shares for offering and sale under the securities laws relating to
the offering or sale of the Shares of such jurisdictions as you may designate
and to maintain such qualification in effect for so long as required for the
distribution thereof, except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute a general
consent to service of process.
(e) The Company will make generally available (within the meaning of
Section 11(a) of the Act) to its security holders and to you as soon as
practicable, but not later than 45 days after the end of its fiscal quarter in
which the first anniversary date of the effective date of the Registration
Statement occurs, an earning statement (in form complying with the provisions of
Rule 158 of the Regulations) covering a period of at least twelve consecutive
months beginning after the effective date of the Registration Statement.
(f) During the period of 90 days from the date of the Prospectus, the
Company will not, without your prior written consent, issue, sell, offer or
agree to sell, grant any option to purchase or otherwise dispose of, directly or
indirectly, any capital stock of the Company or any securities convertible into
or exercisable or exchangeable for capital stock of the Company or any rights to
acquire capital stock of the Company, except for (i) the Shares to be issued and
sold by the Company pursuant hereto, (ii) the issuance of shares of Common Stock
upon exercise of presently outstanding stock options
-13-
or the grant of options pursuant to the Company's stock option plans, (iii)
the issuance of shares of Common Stock in exchange for presently outstanding
shares of non-voting common stock of the Company, and (iv) the issuance of up
to 2,500,000 shares of Common Stock in connection with investments in,
acquisitions of, or mergers combinations with other companies. The Company
will cause each of its executive officers and directors and such of its
shareholders as have been heretofore designated by you and listed on Schedule
III hereto to agree with you that, during the period of 90 days from the date
of the Prospectus, they will not engage in any of the aforementioned
transactions on their own behalf, other than the sale of Shares hereunder and
exercises of presently outstanding stock options. For a period of 90 days
from the date of the Prospectus (until August 14, 1997 in the case of 2.4
million shares currently held by Farm Bureau Life Insurance Company and Farm
Bureau Mutual Insurance Company), the Company will cause a stop transfer
order to be placed with KeyCorp Shareholder Services, Inc., its transfer
agent, and with any successor transfer agent, with respect to all of the
shares of Common Stock and the Company's Non-Voting Common Stock subject to
the agreements referred to in the prior sentence.
(g) During a period of three years from the effective date of the
Registration Statement, the Company will furnish to you copies of (i) all
reports to its shareholders, and (ii) all reports, financial statements and
proxy or information statements filed by the Company with the Commission or any
national securities exchange.
(h) The Company will apply the proceeds from the sale of the Shares
as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will use its best efforts to cause the Shares to be
listed for quotation in the Nasdaq National Market.
(j) The Company will file with the Commission such reports on Form SR
as may be required pursuant to Rule 463 of the Regulations.
(k) The Company, during the period when the Prospectus is required to
be delivered under the Act or the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), will file all documents required to be filed with the
Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time
periods required by the Exchange Act and the rules and regulations thereunder.
(l) Neither the Company nor any Selling Securityholder will at any
time, directly or indirectly, take any action intended, or which might
reasonably be expected, to cause or result in, or which will constitute,
stabilization of the price of the shares of Common Stock to facilitate the sale
or resale of any of the Shares.
-14-
(m) Such Selling Securityholder will not, without your prior written
consent, make any bid for or purchase of any shares of Common Stock during the
90-day period following the date hereof.
(n) As soon as such Selling Securityholder is advised thereof, such
Selling Securityholder will advise you and confirm such advice in writing, (i)
of receipt by such Selling Securityholder, or by any representative of such
Selling Securityholder, of any communication from the Commission relating to the
Registration Statement, the Prospectus or any preliminary prospectus, or any
notice or order of the Commission relating to the Company or such Selling
Securityholder in connection with the transactions contemplated by this
Agreement and (ii) of the happening of any event during the period from and
after the Effective Date that in the judgment of such Selling Securityholder
makes any statement made in the Registration Statement or the Prospectus untrue
or that requires the making of any changes in the Registration Statement or the
Prospectus in order to make the statements therein, in light of the
circumstances in which they were made, not misleading.
(o) Such Selling Securityholder will deliver to the Underwriters
prior to or on the Closing Date a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
5. PAYMENT OF EXPENSES. Whether or not the transactions contemplated in
this Agreement are consummated or this Agreement is terminated, the Company
hereby agrees to pay all costs and expenses incident to the performance of the
obligations of the Company and the Selling Securityholders hereunder, including
those in connection with (i) preparing, printing, duplicating, filing and
distributing the Registration Statement, as originally filed and all amendments
thereof (including all exhibits thereto), any preliminary prospectus, the
Prospectus and any amendments or supplements thereto (including, without
limitation, fees and expenses of the Company's accountants and the Company's and
the Selling Securityholders' counsel), the underwriting documents (including
this Agreement and the Agreement Among Underwriters) and all other documents
related to the public offering of the Shares (including those supplied to the
Underwriters in quantities as hereinabove stated), (ii) the issuance, transfer
and delivery of the Shares to the Underwriters, including any transfer or other
taxes payable thereon, (iii) the qualification of the Shares under state or
foreign securities or Blue Sky laws, including the costs of printing and mailing
a "Blue Sky Survey," and the fees and expenses of counsel for the Underwriters
and such counsel's disbursements in relation thereof (provided, however, that
such counsel's fees, exclusive of expenses and disbursements, shall not exceed
$8,000), (iv) quotation of the Shares on the Nasdaq National Market; (v) filing
fees of the Commission and the NASD; (vi) the cost of printing certificates
representing the Shares; and (vii) the cost and charges of any transfer agent or
registrar.
6. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The obligations of the
several Underwriters to purchase and pay for the Firm Shares and the Additional
Shares, as provided herein, shall be subject to the accuracy of the
representations and warranties of the
-15-
Company and the Selling Securityholders herein contained, as of the date hereof
and as of the Closing Date (for purposes of this Section 6, "Closing Date" shall
refer to the Closing Date for the Firm Shares and any Additional Closing Date,
if different, for the Additional Shares), to the absence from any certificates,
opinions, written statements or letters furnished to you or to Stroock & Stroock
& ▇▇▇▇▇ ("Underwriters' Counsel") pursuant to this Section 6 of any misstatement
or omission, to the performance by the Company and each of the Selling
Securityholders of their respective obligations hereunder, and to the following
additional conditions:
(a) The Registration Statement shall have become effective and
all necessary stock exchange approval by the Nasdaq National Market have been
received not later than 5:30 p.m., New York time, on the date of this Agreement,
or at such later time and date as shall have been consented to in writing by
you; if the Company shall have elected to rely upon Rule 430A of the
Regulations, the Prospectus shall have been filed with the Commission in a
timely fashion in accordance with Section 4(a) hereof, and, at or prior to the
Closing Date no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof shall have been issued and no
proceedings therefor shall have been initiated or threatened by the Commission.
(b)(1) At the Closing Date you shall have received the opinion of
Jenkens & ▇▇▇▇▇▇▇▇▇, a Professional Corporation, counsel for the Company and
▇▇▇▇ ▇▇▇▇▇▇ (a Selling Securityholder listed on Schedule II hereto), as
applicable, dated the Closing Date addressed to the Underwriters and in form and
substance satisfactory to Underwriters' Counsel, to the effect that:
(i) Each of the Company and its subsidiaries: (A) has been
duly incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation; (B) is duly qualified and
in good standing as a foreign corporation in each jurisdiction where the Company
has certified to such counsel that it owns, leases or licenses properties,
maintains employees or conducts business, except for those failures to be so
qualified or in good standing which will not in the aggregate have a material
adverse effect on the Company and its subsidiaries taken as a whole; and (C) has
all requisite corporate power and authority to own, lease and license its
respective properties and conduct its business as described in the Registration
Statement and the Prospectus. All of the issued and outstanding capital stock
of each subsidiary of the Company has been duly and validly issued and is fully
paid and nonassessable and was not issued in violation of any statutory
preemptive rights or, to such counsel's knowledge, contractual preemptive rights
and is owned directly or indirectly by the Company, free and clear of any lien,
encumbrance, security interest [other than the security interest in such capital
stock held by BOCP II, BOCP V and FBLIC pursuant to the Security
Agreement-Pledge of Common Stock dated as of March 31, 1995] or, to such
counsel's knowledge, any claim, restriction on transfer, shareholders'
agreement, voting trust or other defect of title whatsoever.
(ii) The authorized capital stock of the Company is as set
forth in the Registration Statement and the Prospectus. All of the outstanding
shares of Common
-16-
Stock are duly and validly authorized and issued, are fully paid and
nonassessable and were not issued in violation of or subject to any statutory
preemptive rights or, to such counsel's knowledge, contractual preemptive
rights. The Shares to be delivered on the Closing Date have been duly and
validly authorized and, when delivered by the Company and paid for by the
several Underwriters in accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable and will not have been issued in violation
of or subject to any statutory preemptive rights or, to such counsel's
knowledge, contractual preemptive rights. The Common Stock, the Firm Shares and
the Additional Shares conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus under the
caption "Description of Capital Stock."
(iii) The Common Stock has been approved for listing,
and the Shares to be sold under this Agreement to the Underwriters have been
duly authorized for listing, subject to notice of issuance, on the Nasdaq
National Market.
(iv) This Agreement has been duly and validly authorized,
executed and delivered by the Company.
(v) To such counsel's knowledge, there is no legal or
governmental suit or proceeding or investigation before any court or before or
by any public, regulatory or governmental agency or body pending or threatened
against the Company or any of its subsidiaries or their business or properties,
which is of a character required to be disclosed in the Registration Statement
and the Prospectus that has not been properly disclosed therein.
(vi) The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby by the
Company do not and will not (A) conflict with or result in a breach of any of
the terms and provisions of, or constitute a default (or an event which with
notice or lapse of time, or both, would constitute a default) under, or result
in the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to, any
material agreement, instrument, franchise, license or permit certified to such
counsel by an officer of the Company to which the Company or any of its
subsidiaries is a party or by which any of such corporations or their respective
properties or assets may be bound; (B) violate or conflict with any provision of
the certificate of incorporation or bylaws of the Company or any of its
subsidiaries, or any statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their respective properties or assets or,
to the knowledge of such counsel, any judgment, decree or order of any court or
any public, governmental or regulatory agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their respective properties or
assets; or (C) to such counsel's knowledge, require any consent, approval,
authorization, order, registration, filing, qualification, license or permit of
or with any court or any public, governmental or regulatory agency or body
having jurisdiction over the Company or any of its subsidiaries or any of their
respective properties or assets, except (in the case of clause (C) above) for
any such consents, approvals,
-17-
authorizations, orders, registrations, filings, qualifications, licenses and
permits as may be required by the NASD or under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters (as to which such counsel need express no opinion) and such as have
been made or obtained under the Act.
(vii) The Registration Statement and the Prospectus and
any amendments thereof or supplements thereto (other than the exhibits and the
financial statements and schedules and other financial or statistical data
included therein, as to which no opinion need be rendered) comply as to form in
all material respects within the requirements of the Act and the Regulations.
(viii) The Registration Statement has become effective
under the Act, and, to the knowledge of such counsel, no stop order suspending
the effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission and all filings required by Rule 424(b) of the
Regulations have been made within the time periods required thereby.
(ix) Each of this Agreement and the Power of Attorney and
Custody Agreement has been duly executed and delivered by or on behalf of such
Selling Securityholder, and the Power of Attorney and Custody Agreement
constitutes a valid and binding agreement of such Selling Securityholder in
accordance with its terms, except, in the case enforceability, as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws or except as
provisions as to the irrevocability of the Power of Attorney and Custody
Agreement may be limited by applicable laws upon the death or incapacity of a
Selling Securityholder. To such counsel's knowledge, no event has occurred that
would cause the revocation of the Power of Attorney and Custody Agreement.
(x) The execution, delivery and performance of this
Agreement or the Power of Attorney and Custody Agreement and the consummation of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of such Selling
Securityholder pursuant to, any material agreement, instrument, franchise,
license or permit certified to such counsel by such Selling Securityholder or an
officer or representative thereof to which such Selling Securityholder is a
party or by which such Selling Securityholder's properties or assets may be
bound, (ii) with respect to any Selling Securityholder which is a trust, violate
or conflict with any provision of the declaration of trust of such Selling
Securityholder, (iii) with respect to any Selling Securityholder which is
a partnership, violate or conflict with any provision of the agreement of
limited partnership of such Selling Securityholder, or (iv) violate or conflict
with any judgment, decree, order,
-18-
statute, rule or regulation certified to such counsel by such Selling
Securityholder or an officer or representative thereof of any court or any
public, governmental or regulatory agency or body having jurisdiction over such
Selling Securityholder or any of its properties or assets. To such counsel's
knowledge, no consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over such Selling
Securityholder or any of its properties or assets is required for the execution,
delivery and performance of this Agreement or the Power of Attorney and Custody
Agreement or the consummation of the transactions contemplated hereby or
thereby, including the sale and delivery of the Shares to be sold and delivered
by such Selling Securityholder hereunder, except for such as may be required by
the NASD or under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the Underwriters (as to which such
counsel need express no opinion) and such as have been made or obtained under
the Act.
(xi) To such counsel's knowledge, immediately prior to the
Closing Date, such Selling Securityholder has (i) good and valid record title to
the Shares to be sold by such Selling Securityholder, free and clear of all
security interests, pledges, liens, encumbrances, equities, charges and claims
whatsoever, and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver the Shares to be sold
by such Selling Securityholder to the Underwriters on the Closing Date, except
for such as may be required by the NASD or under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by the
Underwriters. Upon the delivery of and payment for the Shares to be sold by
such Selling Securityholder, such Selling Securityholder will deliver good and
marketable title thereto, free and clear of all security interests, pledges,
liens, encumbrances, equities, charges and claims whatsoever to each of the
Underwriters who have purchased such Shares in good faith and without notice of
any such security interests, pledges, liens, encumbrances, equities, charges and
claims.
(xii) To such counsel's knowledge, other than as disclosed in
the Registration Statement and the Prospectus, no holders of securities of the
Company have rights which have not been satisfied or waived to the registration
of shares of capital stock or other securities of the Company because of the
filing of the Registration Statement by the Company, or the offering
contemplated thereby.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and representatives of the Company,
representatives of the independent public accountants for the Company and the
Underwriters at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for and has not verified the
accuracy, completeness or fairness of the statements contained in the
Registration Statement and the Prospectus, and has not made any independent
check or verification thereof, on the basis of the foregoing (relying as to
materiality to a large extent upon facts provided by officers and other
representatives of the Company), no facts have come to the attention of such
counsel that lead such counsel to
-19-
believe that either the Registration Statement at the time it became effective
(including the information deemed to be part of the Registration Statement at
the time of effectiveness pursuant to Rule 430A(b), if applicable), or any
amendment thereof made prior to the Closing Date as of the date of such
amendment, contained an untrue statement of a material fact or omitted to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of its date (or any
amendment thereof or supplement thereto made prior to the Closing Date as of the
date of such amendment or supplement) and as of the Closing Date contained or
contains an untrue statement of a material fact or omitted or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading (it being understood that such counsel need express no belief or
opinion with respect to the exhibits and the financial statements and other
financial and statistical data included therein).
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
(b)(2) At the Closing Date you shall have received the opinion of
▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇▇, P.C., counsel for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇, Fairfax
-20-
Trust, ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇▇ White Trust, ▇▇▇▇▇ Capital Co., LLC and ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ (each, a Selling Securityholder listed on Schedule II hereto), dated
the Closing Date addressed to the Underwriters and in form and substance
satisfactory to Underwriters' Counsel, to the effect that:
(i) Each of this Agreement and the Power of Attorney and
Custody Agreement has been duly executed and delivered by or on behalf of such
Selling Securityholder, and the Power of Attorney and Custody Agreement
constitutes a valid and binding agreement of such Selling Securityholder in
accordance with its terms, except, in the case enforceability, as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws or except as
provisions as to the irrevocability of the Power of Attorney and Custody
Agreement may be limited by applicable laws upon the death or incapacity of a
Selling Securityholder. To such counsel's knowledge, no event has occurred that
would cause the revocation of the Power of Attorney and Custody Agreement.
(ii) The execution, delivery and performance of this
Agreement or the Power of Attorney and Custody Agreement and the consummation of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of such Selling
Securityholder pursuant to, any material agreement, instrument, franchise,
license or permit certified to such counsel by such Selling Securityholder or an
officer or representative thereof to which such Selling Securityholder is a
party or by which such Selling Securityholder's properties or assets may be
bound, (ii) with respect to any Selling Securityholder which is a trust, violate
or conflict with any provision of the declaration of trust of such Selling
Securityholder, (iii) with respect to any Selling Securityholder which is
a partnership, violate or conflict with any provision of the agreement of
limited partnership of such Selling Securityholder, or (iv) violate or conflict
with any judgment, decree, order, statute, rule or regulation certified to such
counsel by such Selling Securityholder or an officer or representative thereof
of any court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or
assets. To such counsel's knowledge, no consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or assets
is required for the execution, delivery and performance of this Agreement or the
Power of Attorney and Custody Agreement or the consummation of the transactions
contemplated hereby or thereby, including the sale and delivery of the Shares to
be sold and delivered by such Selling Securityholder hereunder, except for such
as may be required by the NASD or under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
(as to
-21-
which such counsel need express no opinion) and such as have been made or
obtained under the Act.
(iii) To such counsel's knowledge, immediately prior to
the Closing Date, such Selling Securityholder has (i) good and valid record
title to the Shares to be sold by such Selling Securityholder, free and clear of
all security interests, pledges, liens, encumbrances, equities, charges and
claims whatsoever, and (ii) full legal right and power, and all authorizations
and approvals required by law, to sell, transfer and deliver the Shares to be
sold by such Selling Securityholder to the Underwriters on the Closing Date.
Upon the delivery of and payment for the Shares to be sold by such Selling
Securityholder, such Selling Securityholder will deliver good and marketable
title thereto, free and clear of all security interests, pledges, liens,
encumbrances, equities, charges and claims whatsoever to each of the
Underwriters who have purchased such Shares in good faith and without notice of
any such security interests, pledges, liens, encumbrances, equities, charges and
claims.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
(b)(3) At the Closing Date you shall have received the opinion of
__________, counsel for BOCP II, Limited Liability Company, Banc One Capital
Holdings Corporation and Banc One Capital Partners V, Ltd. (each, a Selling
Securityholder listed on Schedule II hereto), dated the Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) Each of this Agreement and the Power of Attorney and
Custody Agreement has been duly executed and delivered by or on behalf of such
Selling Securityholder, and the Power of Attorney and Custody Agreement
constitutes a valid and binding agreement of such Selling Securityholder in
accordance with its terms, except, in the case enforceability, as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws or except as
provisions as to the irrevocability of the Power of Attorney and Custody
Agreement may be limited by applicable laws upon the
-22-
death or incapacity of a Selling Securityholder. To such counsel's knowledge,
no event has occurred that would cause the revocation of the Power of Attorney
and Custody Agreement.
(ii) The execution, delivery and performance of this
Agreement or the Power of Attorney and Custody Agreement and the consummation of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of such Selling
Securityholder pursuant to, any material agreement, instrument, franchise,
license or permit certified to such counsel by such Selling Securityholder or an
officer or representative thereof to which such Selling Securityholder is a
party or by which such Selling Securityholder's properties or assets may be
bound, (ii) with respect to any Selling Securityholder which is a trust, violate
or conflict with any provision of the declaration of trust of such Selling
Securityholder, (iii) with respect to any Selling Securityholder which is
a partnership, violate or conflict with any provision of the agreement of
limited partnership of such Selling Securityholder, or (iv) violate or conflict
with any judgment, decree, order, statute, rule or regulation certified to such
counsel by such Selling Securityholder or an officer or representative thereof
of any court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or
assets. To such counsel's knowledge, no consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or assets
is required for the execution, delivery and performance of this Agreement or the
Power of Attorney and Custody Agreement or the consummation of the transactions
contemplated hereby or thereby, including the sale and delivery of the Shares to
be sold and delivered by such Selling Securityholder hereunder, except for such
as may be required by the NASD or under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
(as to which such counsel need express no opinion) and such as have been made or
obtained under the Act.
(iii) To such counsel's knowledge, immediately prior to the
Closing Date, such Selling Securityholder has (i) good and valid record title to
the Shares to be sold by such Selling Securityholder, free and clear of all
security interests, pledges, liens, encumbrances, equities, charges and claims
whatsoever, and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver the Shares to be sold
by such Selling Securityholder to the Underwriters on the Closing Date. Upon
the delivery of and payment for the Shares to be sold by such Selling
Securityholder, such Selling Securityholder will deliver good and marketable
title thereto, free and clear of all security interests, pledges, liens,
encumbrances, equities, charges and claims whatsoever to each of the
Underwriters who have purchased such Shares in good faith and without notice of
any such security interests, pledges, liens, encumbrances, equities, charges and
claims.
-23-
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
(b)(4) At the Closing Date you shall have received the opinion of
▇▇▇▇▇ ▇▇▇▇▇▇▇, general counsel for Residential Funding Corporation (a Selling
Securityholder listed on Schedule II hereto), dated the Closing Date
addressed to the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) Each of this Agreement and the Power of Attorney and
Custody Agreement has been duly executed and delivered by or on behalf of such
Selling Securityholder, and the Power of Attorney and Custody Agreement
constitutes a valid and binding agreement of such Selling Securityholder in
accordance with its terms, except, in the case enforceability, as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws or except as
provisions as to the irrevocability of the Power of Attorney and Custody
Agreement may be limited by applicable laws upon the death or incapacity of a
Selling Securityholder. To such counsel's knowledge, no event has occurred that
would cause the revocation of the Power of Attorney and Custody Agreement.
(ii) The execution, delivery and performance of this
Agreement or the Power of Attorney and Custody Agreement and the consummation of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of such Selling
Securityholder pursuant to, any material agreement, instrument, franchise,
license or permit certified to such counsel by such Selling Securityholder or an
officer or representative thereof to which such Selling Securityholder is a
party or by which such Selling Securityholder's properties or assets may be
bound, (ii) with respect to any Selling Securityholder which is a trust, violate
or conflict with any provision of the declaration of trust of such Selling
Securityholder, (iii) with respect to any Selling Securityholder which is
a partnership, violate or conflict with any provision of the agreement of
limited partnership of such Selling Securityholder, or (iv) violate or conflict
with any judgment, decree, order, statute, rule or regulation certified to such
counsel by such Selling Securityholder or an officer or representative thereof
of any court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or
assets. To such counsel's knowledge, no consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or assets
is required for the execution, delivery and performance of this Agreement or the
Power of Attorney and Custody Agreement or the consummation of the transactions
contemplated hereby or thereby, including the sale and delivery of the Shares to
be sold and delivered by such Selling Securityholder hereunder, except for such
as may be required by the NASD or under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
(as to which such counsel need express no opinion) and such as have been made or
obtained under the Act.
(iii) To such counsel's knowledge, immediately prior to the
Closing Date, such Selling Securityholder has (i) good and valid record title to
the Shares to be sold by such Selling Securityholder, free and clear of all
security interests, pledges, liens, encumbrances, equities, charges and claims
whatsoever, and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver the Shares to be sold
by such Selling Securityholder to the Underwriters on the Closing Date. Upon
the delivery of and payment for the Shares to be sold by such Selling
Securityholder, such Selling Securityholder will deliver good and marketable
title thereto, free and clear of all security interests, pledges, liens,
encumbrances, equities, charges and claims whatsoever to each of the
Underwriters who have purchased such Shares in good faith and without notice of
any such security interests, pledges, liens, encumbrances, equities, charges and
claims.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
-24-
(b)(5) At the Closing Date you shall have received the opinion of
______________, counsel for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ (a Selling Securityholder
listed on Schedule II hereto), dated the Closing Date addressed to the
Underwriters and in form and substance satisfactory to Underwriters' Counsel,
to the effect that:
(i) Each of this Agreement and the Power of Attorney and
Custody Agreement has been duly executed and delivered by or on behalf of such
Selling Securityholder, and the Power of Attorney and Custody Agreement
constitutes a valid and binding agreement of such Selling Securityholder in
accordance with its terms, except, in the case enforceability, as limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other laws now
or hereafter in effect relating to or affecting creditors' rights generally or
by general principles of equity relating to the availability of remedies and
except as rights to indemnity and contribution may be limited by federal or
state securities laws or the public policy underlying such laws or except as
provisions as to the irrevocability of the Power of Attorney and Custody
Agreement may be limited by applicable laws upon the death or incapacity of a
Selling Securityholder. To such counsel's knowledge, no event has occurred that
would cause the revocation of the Power of Attorney and Custody Agreement.
(ii) The execution, delivery and performance of this
Agreement or the Power of Attorney and Custody Agreement and the consummation of
the transactions contemplated hereby and thereby do not and will not (i)
conflict with or result in a breach of any of the terms and provisions of, or
constitute a default (or an event which with notice or lapse of time, or both,
would constitute a default) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of such Selling
Securityholder pursuant to, any material agreement, instrument, franchise,
license or permit certified to such counsel by such Selling Securityholder or an
officer or representative thereof to which such Selling Securityholder is a
party or by which such Selling Securityholder's properties or assets may be
bound, (ii) with respect to any Selling Securityholder which is a trust, violate
or conflict with any provision of the declaration of trust of such Selling
Securityholder, (iii) with respect to any Selling Securityholder which is
a partnership, violate or conflict with any provision of the agreement of
limited partnership of such Selling Securityholder, or (iv) violate or conflict
with any judgment, decree, order, statute, rule or regulation certified to such
counsel by such Selling Securityholder or an officer or representative thereof
of any court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or
assets. To such counsel's knowledge, no consent, approval, authorization,
order, registration, filing, qualification, license or permit of or with any
court or any public, governmental or regulatory agency or body having
jurisdiction over such Selling Securityholder or any of its properties or assets
is required for the execution, delivery and performance of this Agreement or the
Power of Attorney and Custody Agreement or the consummation of the transactions
contemplated hereby or thereby, including the sale and delivery of the Shares to
be sold and delivered by such Selling Securityholder hereunder, except for such
as may be required by the NASD or under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
(as to which such counsel need express no opinion) and such as have been made or
obtained under the Act.
(iii) To such counsel's knowledge, immediately prior to the
Closing Date, such Selling Securityholder has (i) good and valid record title to
the Shares to be sold by such Selling Securityholder, free and clear of all
security interests, pledges, liens, encumbrances, equities, charges and claims
whatsoever, and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver the Shares to be sold
by such Selling Securityholder to the Underwriters on the Closing Date. Upon
the delivery of and payment for the Shares to be sold by such Selling
Securityholder, such Selling Securityholder will deliver good and marketable
title thereto, free and clear of all security interests, pledges, liens,
encumbrances, equities, charges and claims whatsoever to each of the
Underwriters who have purchased such Shares in good faith and without notice of
any such security interests, pledges, liens, encumbrances, equities, charges and
claims.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the United
States and jurisdictions in which they are admitted, to the extent such counsel
deems proper and to the extent specified in such opinion, if at all, upon an
opinion or opinions (in form and substance reasonably satisfactory to
Underwriters' Counsel) of other counsel reasonably acceptable to Underwriters'
Counsel, familiar with the applicable laws; (B) as to matters of fact, to the
extent they deem proper, on certificates of responsible officers of the Company
and certificates or other written statements of officers of departments of
various jurisdictions having custody of documents respecting the corporate
existence or good standing of the Company and its subsidiaries, provided that
copies of any such statements or certificates shall be delivered to
Underwriters' Counsel. The opinion of such counsel for the Company shall state
that the opinion of any such other counsel is in form satisfactory to such
counsel and, in their opinion, you and they are justified in relying thereon.
(c) At the Closing Date you shall have received the opinion of ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, General Counsel to the Company, dated the Closing Date addressed to
the
-25-
several Underwriters and in form and substance satisfactory to Underwriters'
Counsel, to the effect that each of the Company and its subsidiaries has
obtained all Licenses as are necessary or required for the ownership, leasing
and operation of its properties and the conduct of its business as now being
conducted.
(d) All proceedings taken in connection with the sale of the Firm
Shares and the Additional Shares as herein contemplated shall be satisfactory in
form and substance to you and to Underwriters' Counsel, and the Underwriters
shall have received from Underwriters' Counsel a favorable opinion, dated as of
the Closing Date with respect to the issuance and sale of the Shares, the
Registration Statement and the Prospectus and such other related matters as you
may reasonably require, and the Company and the Selling Securityholders shall
have furnished to Underwriters' Counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(e) At the Closing Date you shall have received a certificate of the
Chief Executive Officer and the Chief Financial Officer of the Company dated the
Closing Date to the effect that (i) the condition set forth in subsection (a) of
this Section 6 has been satisfied, (ii) as of the date hereof and as of the
Closing Date the representations and warranties of the Company set forth in
Section 1A hereof are accurate, (iii) as of the Closing Date the obligations of
the Company to be performed hereunder on or prior thereto have been duly
performed and (iv) subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, the Company and its
subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a material adverse change, in the
business, prospects, properties, operations, condition (financial or other), or
results of operations of the Company and its subsidiaries, taken as a whole,
except in each case as described in or contemplated by the Prospectus.
(f) At the Closing Date you shall have received a certificate of each
Selling Securityholder dated the Closing Date to the effect that (i) as of the
date hereof and as of the Closing Date the representations and warranties of
such Selling Securityholder set forth in Section 1B hereof are accurate and (ii)
as of the Closing Date the obligations of such Selling Securityholder to be
performed hereunder on or prior thereto have been duly performed.
(g) At the time this Agreement is executed, you shall have received a
letter from E&Y, independent auditors for the Company dated as of the date of
this Agreement (the "Original Letter"), addressed to the Underwriters and in
form and substance satisfactory to you, to the effect that: (i) they are
independent certified auditors with respect to the Company within the meaning of
the Act and the Regulations and stating that the answer to Item 10 of the
Registration Statement is correct insofar as it relates to them; (ii) stating
that, in their opinion, the consolidated financial statements of the Company
included in the Registration Statement and the Prospectus and covered by their
opinion
-26-
therein comply as to form in all material respects with the applicable
accounting requirements of the Act and the applicable published rules and
regulations of the Commission thereunder; (iii) on the basis of procedures, not
constituting an examination in accordance with generally accepted auditing
standards, set forth in detail in the Original Letter, including the procedures
specified by the American Institute of Certified Public Accounts as described in
SAS 71, INTERIM FINANCIAL INFORMATION, a reading of the minutes of meetings and
consents of the shareholders and boards of directors of the Company and the
committees of such board subsequent to September 30, 1996, inquiries of officers
and other employees of the Company who have responsibility for financial and
accounting matters of the Company with respect to transactions and events
subsequent to September 30, 1996 and other procedures and inquiries as may be
specified in the Original Letter to a date not more than five days prior to the
date of the Original Letter, nothing has come to their attention that would
cause them to believe that: (A) the unaudited consolidated income statement data
and balance sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements from
which such data and items were derived, and any such unaudited data and items
are not fairly presented in conformity with GAAP applied on a basis
substantially consistent with that of the audited consolidated financial
statements included in the Registration Statement and the Prospectus; (B) the
unaudited consolidated financial statements which were not included in the
Prospectus but from which were derived any unaudited income statement data and
balance sheet items included in the Prospectus and referred to in Clause (A)
were not determined on a basis substantially consistent with the basis for the
audited financial statements included in the Prospectus; (C) as of (I) December
31, 1996 and (II) a specified date not more than five days prior to the date of
the Original Letter, there have been any changes in the capital stock, warehouse
financing facilities, term line, notes payable, subordinated notes payable to
affiliates or other debt or indebtedness of the Company or decreases in total
assets, excess servicing receivable or stockholders' equity of the Company, in
each case as compared with the amounts shown in the most recent balance sheet
presented in the Registration Statement and the Prospectus, except for changes
or decreases which the Registration Statement and the Prospectus disclose have
occurred or may occur or which are set forth in the Original Letter; and (D) for
the periods from (I) the date of the latest financial statements included in the
Prospectus to December 31, 1996 and (II) January 1, 1997 to the specified date
referred to in Clause (C)(II), there were any decreases, as compared with the
corresponding period in the prior fiscal year, in gain on sale of loans, net,
total revenues, or total or per share net income, except for decreases which the
Registration Statement and the Prospectus disclose have occurred or may occur or
which are set forth in the Original Letter; and (iv) stating that they have
compared specific dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the Company and its
subsidiaries set forth in the Registration Statement and the Prospectus, which
have been specified by you prior to the date of this Agreement, to the extent
that such amounts, numbers, percentages, and information may be derived from the
general accounting, financial or other records of the Company and its
subsidiaries or from schedules furnished by the Company, and excluding any
questions requiring an interpretation by legal counsel, with the results
obtained from the application of specified readings, inquiries, and other
appropriate procedures specified by
-27-
you set forth in such letter, and found them to be in agreement. At the Closing
Date and, as to the Additional Shares, the Option Closing Date, E&Y shall have
furnished to you a letter, dated the date of its delivery, which shall confirm,
on the basis of a review in accordance with the procedures set forth in the
Original Letter, that nothing has come to their attention during the period from
the date of the Original Letter referred to in the prior sentence to a date
(specified in the letter) not more than five days prior to the Closing Date or
the Option Closing Date, as the case may be, which would require any change in
the Original Letter if it were required to be dated and delivered at the Closing
Date or the Option Closing Date, as the case may be.
(h) Prior to the Closing Date the Company and each Selling
Securityholder shall have furnished to you such further information,
certificates and documents as you may reasonably request.
(i) You shall have received from each person who is a director or
executive officer of the Company and such shareholders as have been heretofore
designated by you and listed on Schedule III hereto an agreement to the effect
that such person will not, directly or indirectly, without your prior written
consent, sell, offer or agree to sell, grant any option to purchase or otherwise
dispose (or announce any offer, sale, grant of an option to purchase or other
disposition) of any shares of capital stock of the Company (or any securities
convertible into, exercisable for or exchangeable or exercisable for shares of
capital stock of the Company) for a period of 90 days after the date of the
Prospectus, except for the Shares to be sold pursuant hereto and except for the
exercise of outstanding options. You shall have received copies of the
Company's instructions to KeyCorp Shareholder Services, Inc., its transfer
agent, to institute a stop transfer order with respect to all of the shares of
Common Stock and the Company's Non-Voting Common Stock subject to the agreements
referred to in the prior sentence and with respect to 2.4 million shares
currently held by Farm Bureau Life Insurance Company and Farm Bureau Mutual
Insurance Company.
(j) At the Closing Date, the Shares shall have been approved for
quotation on the Nasdaq National Market.
If any of the conditions specified in this Section 6 shall not have
been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
canceled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
canceled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company in writing, or by
telephone, telex or telegraph, confirmed in writing.
-28-
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, 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;
PROVIDED, HOWEVER, that the Company will not be liable in any such case to the
extent but only to the extent that any such loss, liability, claim, damage or
expense arises out of or is based upon any such untrue statement or alleged
untrue statement or omission or alleged omission made therein in reliance upon
and in conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein; PROVIDED,
FURTHER that such indemnity with respect to any preliminary prospectus shall not
inure to the benefit of any Underwriter (or any person controlling such
Underwriter) from whom the person asserting any such loss, claim, damage,
liability or action purchased Shares which are the subject thereof to the extent
that any such loss, liability, claim, damage or expense (i) results from the
fact that such Underwriter failed to send or give a copy of the Prospectus (as
amended or supplemented) to such person at or prior to the confirmation of the
sale of such Shares to such person in any case where such delivery is required
by the Act and (ii) arises out of or is based upon an untrue statement or
omission of a material fact contained in such Preliminary Prospectus that was
corrected in the Prospectus (or any amendment or supplement thereto), unless
such failure to deliver the Prospectus (as amended or supplemented) was the
result of noncompliance by the Company with Section 4(c). This indemnity
agreement will be in addition to any liability which the Company may otherwise
have including under this Agreement.
(b) Each Selling Securityholder, severally and not jointly, agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all losses, liabilities, claims,
damages and expenses whatsoever as incurred (including but not limited to
attorneys' fees and any and all expenses whatsoever incurred in investigating,
preparing or defending against any litigation, commenced or threatened, or any
claim whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages
-29-
or expenses (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Shares, as originally filed
or any amendment thereof, or any related preliminary prospectus or the
Prospectus, or in any supplement thereto or amendment thereof, 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; PROVIDED, HOWEVER, that no Selling Securityholder will be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through you
expressly for use therein; PROVIDED, FURTHER that such indemnity with respect to
any preliminary prospectus shall not inure to the benefit of any Underwriter (or
any person controlling such Underwriter) from whom the person asserting any such
loss, claim, damage, liability or action purchased Shares which are the subject
thereof to the extent that any such loss, liability, claim, damage or expense
(i) results from the fact that such Underwriter failed to send or give a copy of
the Prospectus (as amended or supplemented) to such person at or prior to the
confirmation of the sale of such Shares to such person in any case where such
delivery is required by the Act and (ii) arises out of or is based upon an
untrue statement or omission of a material fact contained in such Preliminary
Prospectus that was corrected in the Prospectus (or any amendment or supplement
thereto), unless such failure to deliver the Prospectus (as amended or
supplemented) was the result of noncompliance by the Company with Section 4(c);
PROVIDED, FURTHER, that each Selling Securityholder will be liable in any such
case only to the extent that any such loss, claim, damage or liability arises
out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged untrue statement or omission made in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any supplement thereto or amendment thereof in reliance upon and in
conformity with written information furnished to the Company by such Selling
Securityholder expressly for use in the Registration Statement, any preliminary
prospectus or the Prospectus. This indemnity agreement will be in addition to
any liability which each Selling Securityholder may otherwise have including
under this Agreement. The liability of each Selling Securityholder under this
Section 7(b) shall be limited to an amount equal to the initial public offering
price of the Shares sold by such Selling Securityholder to the Underwriters.
The Company and each Selling Securityholder may agree, as among themselves and
without limiting the rights of the Underwriters under this Agreement, as to the
respective amounts of such liability for which they each shall be responsible.
The Company and each Underwriter acknowledge that the statements set forth under
the captions "Principal and Selling Stockholders" and "Certain Relationships and
Related Party Transactions" in the Prospectus constitute the only information
furnished in writing by or on behalf of any Selling Securityholder expressly for
use in the registration statement relating to the Shares as originally filed or
in any amendment thereof, any related preliminary prospectus or the Prospectus
or in any amendment thereof or supplement thereto, as the case may be.
-30-
(c) Each Underwriter severally, and not jointly, agrees to indemnify
and hold harmless the Company, each of the directors of the Company, each of the
officers of the Company who shall have signed the Registration Statement, each
other person, if any, who controls the Company within the meaning of Section 15
of the Act or Section 20(a) of the Exchange Act, and each Selling Securityholder
against any losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), jointly or severally, to
which they or any of them may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, liabilities, claims, damages or expenses (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Shares, as originally filed or any
amendment thereof, or any related preliminary prospectus or the Prospectus, or
in any amendment thereof or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any Underwriter through you
expressly for use therein; PROVIDED, HOWEVER, that in no case shall any
Underwriter be liable or responsible for any amount in excess of the
underwriting discount applicable to the Shares purchased by such Underwriter
hereunder. This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. The Company and
each Selling Securityholder acknowledge that the statements set forth in the
last paragraph of the front cover page, the third and fourth paragraphs on the
inside front cover page, and the third paragraph under the caption
"Underwriting" in the Prospectus constitute the only information furnished in
writing by or on behalf of any Underwriters expressly for use in the
registration statement relating to the Shares as originally filed or in any
amendment thereof, any related preliminary prospectus or the Prospectus or in
any amendment thereof or supplement thereto, as the case may be.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the commencement thereof (but the
failure so to notify an indemnifying party shall not relieve it from any
liability which it may have under this Section 7). In case any such action is
brought against any indemnified party, and it notifies an indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
therein, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party. Notwithstanding the foregoing, the indemnified party or
parties shall have the right to employ its or their own counsel in any
-31-
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties shall
not have employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, or (iii) such
indemnified party or parties shall have reasonably concluded that there may be
defenses available to it or them which are different from or additional to those
available to one or all of the indemnifying parties (in which case the
indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties), in any of which events
such fees and expenses shall be borne by the indemnifying parties. Anything in
this subsection to the contrary notwithstanding, an indemnifying party shall not
be liable for any settlement of any claim or action effected without its written
consent; PROVIDED, HOWEVER, that such consent was not unreasonably withheld.
8. CONTRIBUTION. In order to provide for contribution in circumstances
in which the indemnification provided for in Section 7 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company, the Selling
Securityholders and the Underwriters shall contribute to the aggregate losses,
claims, damages, liabilities and expenses of the nature contemplated by such
indemnification provision (including any investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting in the case of
losses, claims, damages, liabilities and expenses suffered by the Company any
contribution received by the Company from persons, other than the Underwriters,
who may also be liable for contribution, including persons who control the
Company within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act, officers of the Company who signed the Registration Statement and
directors of the Company) as incurred to which the Company, any of the Selling
Securityholders and one or more of the Underwriters may be subject, in such
proportions as is appropriate to reflect the relative benefits received by the
Company, the Selling Securityholders and the Underwriters from the offering of
the Shares or, if such allocation is not permitted by applicable law or
indemnification is not available as a result of the indemnifying party not
having received notice as provided in Section 7 hereof, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company, the Selling Securityholders and the
Underwriters in connection with the statements or omissions which resulted in
such losses, claims, damages, liabilities or expenses, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, the Selling Securityholders and the Underwriters shall be deemed to be
in the same proportion as (x) the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Securityholders and (y) the underwriting
discounts and commissions received by the Underwriters, respectively, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault of the Company, the Selling Securityholders and of the
Underwriters shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company,
-32-
the Selling Securityholders or the Underwriters and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The Company, the Selling Securityholders and the
Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 8 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other method
of allocation which does not take account of the equitable considerations
referred to above. Notwithstanding the provisions of this Section 8, (i) in no
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discount applicable to the Shares purchased by such Underwriter
hereunder, and (ii) no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. Notwithstanding
the provisions of this Section 8, no Underwriter shall be required to contribute
any amount in excess of 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 that such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. For purposes of this Section 8, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act shall have the same rights to contribution as such
Underwriter, each person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, and each
person, if any, who controls a Selling Securityholder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as the Selling Securityholders, subject in each case to
clauses (i) and (ii) of this Section 8. Any party entitled to contribution
will, promptly after receipt of notice of commencement of any action, suit or
proceeding against such party in respect of which a claim for contribution may
be made against another party or parties, notify each party or parties from whom
contribution may be sought, but the omission to so notify such party or parties
shall not relieve the party or parties from whom contribution may be sought from
any obligation it or they may have under this Section 8 or otherwise. No party
shall be liable for contribution with respect to any action or claim settled
without its consent; PROVIDED HOWEVER, that such consent was not unreasonably
withheld.
9. DEFAULT BY AN UNDERWRITER.
(a) If any Underwriter or Underwriters shall default in its or their
obligation to purchase Firm Shares or Additional Shares hereunder, and if the
Firm Shares or Additional Shares with respect to which such default relates do
not (after giving effect to arrangements, if any, made by you pursuant to
subsection (b) below) exceed in the aggregate 10% of the number of Firm Shares
or Additional Shares, as the case may be, which all Underwriters have agreed to
purchase hereunder, then such Firm Shares or Additional Shares to which the
default relates shall be purchased by the non-defaulting Underwriters in
proportion to the respective proportions which the numbers of Firm Shares set
forth
-33-
opposite their respective names in Schedule 1 hereto bear to the aggregate
number of Firm Shares set forth opposite the names of the non-defaulting
Underwriters.
(b) In the event that such default relates to more than 10% of the
Firm Shares or Additional Shares, as the case may be, you may in your discretion
arrange for yourself or for another party or parties (including any
non-defaulting Underwriter or Underwriters who so agree) to purchase such Firm
Shares or Additional Shares, as the case may be, to which such default relates
on the terms contained herein. In the event that within 5 calendar days after
such a default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates as provided
in this Section 9, this Agreement or, in the case of a default with respect to
the Additional Shares, the obligations of the Underwriters to purchase and of
the Company to sell the Additional Shares shall thereupon terminate, without
liability on the part of the Company with respect thereto (except in each case
as provided in Section 5, 7(a) and 8 hereof) or the Underwriters, but nothing in
this Agreement shall relieve a defaulting Underwriter or Underwriters of its or
their liability, if any, to the other Underwriters and the Company for damages
occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional Shares to which
the default relates are to be purchased by the non-defaulting Underwriters, or
are to be purchased by another party or parties as aforesaid, you or the Company
shall have the right to postpone the Closing Date or Additional Closing Date, as
the case may be, for a period not exceeding five business days, in order to
effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and arrangements, and the
Company agrees to file promptly any amendment or supplement to the Registration
Statement or the Prospectus which, in the opinion of Underwriters' Counsel, may
thereby be made necessary or advisable. The term "Underwriter" as used in this
Agreement shall include any party substituted under this Section 9 with the like
effect as if it had originally been a party to this Agreement with respect to
such Firm Shares and Additional Shares.
10. SURVIVAL OF REPRESENTATIONS AND AGREEMENTS. All representations and
warranties, covenants and agreements of the Underwriters, the Company and the
Selling Securityholders contained in this Agreement, including the agreements
contained in Section 5, the indemnity agreements contained in Section 7 and the
contribution agreements contained in Section 8, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any controlling person thereof or by or on behalf of the
Company, any of its officers and directors or any controlling person thereof,
and shall survive delivery of and payment for the Shares to and by the
Underwriters. The representations contained in Section 1 and the agreements
contained in Sections 5, 7, 8 and 11(d) hereof shall survive the termination of
this Agreement, including termination pursuant to Section 9 or 11 hereof.
-34-
11. EFFECTIVE DATE OF AGREEMENT; TERMINATION.
(a) This Agreement shall become effective upon the later of when (i)
you and the Company shall have received notification of the effectiveness of the
Registration Statement or (ii) the execution of this Agreement. If either the
initial public offering price or the purchase price per Share has not been
agreed upon prior to 5:00 p.m., New York time, on the fifth business day after
the Registration Statement shall have become effective, this Agreement shall
thereupon terminate without liability to the Company or the Underwriters except
as herein expressly provided. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you or by you
notifying the Company. Notwithstanding the foregoing, the provisions of this
Section 11 and Sections 1, 5, 7 and 8 hereof shall at all times be in full force
and effect.
(b) You shall have the right to terminate this Agreement at any time
prior to the Closing Date or the obligations of the Underwriters to purchase the
Additional Shares at any time prior to the Additional Closing Date, as the case
may be, if (A) any domestic or international event or act or occurrence has
materially disrupted, or in your opinion will in the immediate future materially
disrupt, the market for the Company's securities or securities in general; or
(B) if trading on the New York or American Stock Exchanges or the Nasdaq
National Market shall have been suspended, or minimum or maximum prices for
trading shall have been fixed, or maximum ranges for prices for securities shall
have been required, on the New York or American Stock Exchanges or the Nasdaq
National Market or by order of the Commission or any other governmental
authority having jurisdiction; or (C) if a banking moratorium has been declared
by a state or federal authority or if any new restriction materially adversely
affecting the distribution of the Shares shall have become effective; or (D) (i)
if the United States becomes engaged in hostilities or there is an escalation of
hostilities involving the United States or there is a declaration of a national
emergency or war by the United States or (ii) if there shall have been such
change in political, financial or economic conditions if the effect of any such
event in (i) or (ii) as in your judgment makes it impracticable or inadvisable
to proceed with the offering, sale and delivery of the Firm Shares or the
Additional Shares, as the case may be, on the terms contemplated by the
Prospectus; or (E) if any downgrading in the rating of the Company's debt
securities by any "nationally recognized statistical rating organization" (as
defined for purposes of Rule 436(g) under the Act) shall have occurred; or
(F) if trading in the Common Stock shall have been suspended by the Commission
or the Nasdaq National Market.
(c) Any notice of termination pursuant to this Section 11 shall be by
telephone, telex, or telegraph, confirmed in writing by letter.
(d) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than pursuant to (i) notification by you as
provided in Section 9 or 11(a) hereof), or if the sale of the Shares provided
for herein is not consummated because any condition to the obligations of the
underwriters set forth herein is not satisfied or because of any refusal,
inability or failure on the part of the Company or a Selling Securityholder to
-35-
perform any agreement herein or comply with any provision hereof, the Company
will, subject to demand by you, reimburse the Underwriters for all out-of-pocket
expenses (including the fees and expenses of their counsel), incurred by the
Underwriters in connection herewith.
12. NOTICE. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing and, if sent to any
Underwriter, shall be mailed, delivered, or telexed or telegraphed and confirmed
in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; if sent to the Company,
shall be mailed, delivered, or telegraphed and confirmed in writing to the
Company, RAC Financial Group, Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, Attention: General Counsel.
13. PARTIES. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the Underwriters, the Company and the Selling
Securityholders and the controlling persons, directors, officers, employees and
agents referred to in Sections 7 and 8, and their respective successors and
assigns, and no other person shall have or be construed to have any legal or
equitable right, remedy or claim under or in respect of or by virtue of this
Agreement or any provision herein contained. The term "successors and assigns"
shall not include a purchaser, in its capacity as such, of Shares from any of
the Underwriters.
14. GOVERNING LAW. (a) THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, BUT WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW.
(b) THE COMPANY HEREBY IRREVOCABLY SUBMITS TO THE NON-EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE FEDERAL COURTS OF
THE UNITED STATES OF AMERICA SITTING IN THE CITY OF NEW YORK IN ANY ACTION
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT AND IRREVOCABLY AGREES
THAT ALL CLAIMS IN RESPECT OF SUCH ACTION OR PROCEEDING MAY BE HEARD IN ANY SUCH
NEW YORK STATE OR FEDERAL COURT. THE COMPANY IRREVOCABLY WAIVES, TO THE FULLEST
EXTENT IT MAY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
SUCH ACTION OR PROCEEDING AND APPOINTS CT CORPORATION TRUST SYSTEM WITH AN
OFFICE AT ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ AS ITS AUTHORIZED AGENT UPON
WHOM PROCESS MAY BE SERVED IN ANY ACTION ARISING OUT OF OR BASED UPON THIS
AGREEMENT WHICH MAY BE INSTITUTED IN ANY SUCH COURT. THE COMPANY REPRESENTS AND
WARRANTS THAT SUCH AGENT HAS AGREED TO ACT AS ITS AGENT FOR SERVICE OF PROCESS
AND AGREES TO TAKE ANY AND ALL ACTIONS INCLUDING THE FILING OF ANY AND ALL
DOCUMENTS OR INSTRUMENTS (INCLUDING THE APPOINTMENT OF ANY SUCCESSOR AGENT, AS
NECESSARY) THAT MAY BE NECESSARY TO CONTINUE SUCH APPOINTMENT IN EFFECT.
-36-
NOTHING HEREIN SHALL BE CONSTRUED TO PREVENT OR IMPAIR THE RIGHT OF ANY INITIAL
PURCHASER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR TO BRING ANY
ACTION, SUIT OR PROCEEDING IN ANY OTHER JURISDICTION.
If the foregoing correctly sets forth the understanding between you and the
Company, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among us.
Very truly yours,
RAC FINANCIAL GROUP, INC.
By:
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Chief Financial Officer
THE SELLING SECURITYHOLDERS
By:
----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Attorney-in-Fact for each of
the Selling Securityholders
listed on Schedule II hereto.
Accepted as of the date first above written
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, INC.
▇▇▇▇▇▇▇▇▇▇ SECURITIES
PRUDENTIAL SECURITIES INCORPORATED
BY: BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By:
----------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Managing Director
On its own behalf and on behalf of the other
Underwriters named in Schedule I hereto.
-37-
No. of Firm No. of Firm
Shares to Shares to
No. of Firm be be
Shares to Purchased Purchased No. of Firm No. of Firm No. of Firm
be from BOCP II, from Shares to be Shares to be Shares to be
Purchased Limited Residential Purchased Purchased Purchased
from the Liability Funding from ▇▇▇▇▇▇▇ from ▇▇▇▇▇▇ from Fairfax
Company Company Corporation ▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Trust Total
----------- ----------- ------------ ------------ ----------- ------------ ------
Bear, ▇▇▇▇▇▇▇ & Co. Inc. . . . . . .
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. . . . .
▇▇▇▇▇▇▇▇▇▇ Securities . . . . . . . .
Prudential Securities Incorporated .
I-1
No. of Firm
No. of Firm No. of Firm Shares to
Shares to Shares to be No. of Firm No. of Firm No. of Firm
be be Purchased Shares to be Shares to be Shares to be
Purchased Purchased from ▇▇▇▇▇ Purchased Purchased Purchased
from ▇▇▇▇▇▇ from ▇▇▇▇▇▇ Capital from ▇▇▇▇▇▇▇ from ▇▇▇▇ from ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇ White Trust Co., LLC ▇. ▇▇▇▇▇ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ Total
----------- ------------ ---------- ------------- ------------- ------------- -----
Bear, ▇▇▇▇▇▇▇ & Co. Inc. . . . . . .
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇, Inc. . . . .
▇▇▇▇▇▇▇▇▇▇ Securities . . . . . . . .
Prudential Securities Incorporated .
I-2
SCHEDULE II
SELLING SECURITYHOLDERS
Number of Number of
Firm Shares Additional Shares
Name to be Sold to be Sold
---- ---------- ----------
Banc One Capital
Holdings Corporation 80,000 625,000
BOCP II, Limited Liability 296,000 0
Company
Banc One Capital
Partners V, Ltd. 24,000 0
Residential Funding 125,000 125,000
Corporation
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ 25,000 0
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 40,000 0
Fairfax Trust 32,758 0
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 25,000 0
▇▇▇▇▇▇ White Trust 5,655 0
▇▇▇▇▇ Capital Co., LLC 82,242 0
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ 39,345 0
▇▇▇▇ ▇▇▇▇▇▇ 20,000 0
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ 5,000 0
II-1
SCHEDULE III
LOCK-UP AGREEMENTS
▇▇▇▇▇▇▇▇ Partnership
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇
G. B. ▇▇▇▇▇ Residuary Trust
Banc One Capital Holdings Corporation
BOCP II, Limited Liability Company
Banc One Capital Partners V. Ltd.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Residential Funding Corporation
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fairfax Trust
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ White Trust
▇▇▇▇▇ Capital Co., LLC
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇ Children's Trust
III-1