1
Exhibit 1.1
CHAMPIONSHIP AUTO RACING TEAMS, INC.
(A DELAWARE CORPORATION)
1,816,500 SHARES
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
---------------------
UNDERWRITING AGREEMENT
May __, 1999
XXXXXXXXX & COMPANY, INC.
X.X. XXXXXXXX & CO., L.L.C.
A.G. XXXXXXX & SONS, INC.
As Representatives of
the Several Underwriters
c/o Jefferies & Company, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
Championship Auto Racing Teams, Inc., a Delaware corporation (the
"Company"), and certain selling Stockholders named in Schedule II hereto (the
"Selling Stockholders") hereby confirm their agreement with you, as
representatives (the "Representatives") of the underwriters named in Schedule I
hereto (the "Underwriters"), with respect to the sale by the Selling
Stockholders, acting severally and not jointly, of an aggregate of 1,816,500
shares (the "Stockholder Shares") of the Company's common stock, par value $.01
per share (the "Common Stock"), and the purchase of the Stockholder Shares by
the Underwriters, acting severally and not jointly. The Company has agreed to
issue and sell up to 272,475 shares (the "Option Shares") of Common Stock to
cover over-allotments, if any. The Stockholder Shares and the Option Shares are
hereinafter collectively referred to as the "Shares."
You have advised us that you desire to purchase the Shares and that
you propose to make a public offering of the Shares as soon as you deem
advisable after the Registration Statement referred to below becomes effective
upon the terms set forth in the Prospectus referred to below.
The terms that follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that the
Registration Statement and any post-effective amendment or amendments thereto
became or become effective and each date after the date hereof on which a
document incorporated by reference in the Registration Statement if filed.
"Preliminary Prospectus" shall mean any preliminary prospectus referred to in
Section 1(a)(i) below and any preliminary prospectus included in the
Registration
2
Statement at the Effective Date that omits Rule 430A Information (as defined
below). "Registration Statement" shall mean the registration statement referred
to in Section 1(a)(i) below, including incorporated documents, exhibits and
financial statements, as amended at the Representation Date (as defined below)
(or, if not effective at the Representation Date, in the form in which it shall
become effective) and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Date (as defined in Section 2 hereof),
shall also mean such registration statement as so amended. Such term shall
include Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A (as defined below). If the Company files an
additional registration statement to register additional shares of Common Stock
pursuant to Rule 462(b) (defined below) (the "Additional Registration
Statement"), all references in this Underwriting Agreement to "Registration
Statement" shall mean the Additional Registration Statement, as amended at the
Effective Date, including the contents of the initial registration statement
incorporated by reference therein and including all information (if any) deemed
to be a part of the Additional Registration Statement as of its effective time
pursuant to Rule 430A(b). The prospectus constituting a part of the
Registration Statement (including the Rule 430A Information), as from time to
time amended or supplemented, is hereinafter referred to as the "Prospectus",
except that if any revised prospectus shall be provided to the Underwriters by
the Company that differs from the prospectus on file at the Securities and
Exchange Commission (the "Commission") at the Effective Date (whether or not
such revised prospectus is required to be filed by the Company pursuant to Rule
424 of the Act Regulations), the term "Prospectus" shall refer to each such
revised prospectus from and after the time it is first provided to the
Underwriters for such use. "Rule 158", "Rule 415", "Rule 424", "Rule 430A",
"Rule 462" and "Regulation S-K" refer to such rules or regulation under the
Securities Act of 1933, as amended (the "Act"; and the rules and regulations
under the Act, the "Act Regulations"). "Rule 430A Information" means
information with respect to the Shares and the offering thereof permitted to be
omitted from the Registration Statement when it becomes effective pursuant to
Rule 430A. "Exchange Act" refers to the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated
thereunder. Any reference herein to the Registration Statement, a Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
which were filed under the Exchange Act on or before the Effective Date of the
Registration Statement or the issue date of such Preliminary Prospectus or the
Prospectus, as the case may be; and any reference herein to the terms "amend",
"amendment" or "supplement" with respect to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the filing of any document under the Exchange Act after the Effective
Date of the Registration Statement, or the issue date of any Preliminary
Prospectus or the Prospectus, as the case may be, deemed to be incorporated
therein by reference.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to the Underwriters as of the
date hereof (such date being referred to as the "Representation Date") and as
of the Closing Date, as follows:
(i) the Company meets the requirements for use of Form S-3
under the Act and has filed with the Commission a registration
statement on such Form S-3 (Registration No. 333-76091), including a
related preliminary prospectus, and one or more amendments thereto,
including the related preliminary prospectus, each of which
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-2-
3
has previously been furnished to the Underwriters, for the
registration under the Act of the offering and sale of the Shares.
Such registration statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, have been declared
effective by the Commission in such form. No other document with
respect to such registration statement has heretofore been filed with
the Commission and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that
purpose has been initiated or threatened by the Commission. The
Company will file with the Commission (A) prior to effectiveness of
such registration statement, a further amendment to such registration
statement (including the form of final prospectus), (B) after
effectiveness of such registration statement, if applicable, an
Additional Registration Statement pursuant to Rule 462(b) or (C) after
effectiveness of such registration statement or such Additional
Registration Statement, a final prospectus in accordance with Rules
430A and 424(b)(1) or (4) or Rule 434 of the Act Regulations. The
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information in
the case of clause (B)) required by the Act and the Act Regulations to
be included in the Prospectus with respect to the Shares and the
offering thereof. As filed, such amendment and form of final
Prospectus, or such final Prospectus, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Shares and the offering thereof and, except to the
extent the Underwriters shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to the
Underwriters prior to the date hereof;
(ii) no order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the Act
Regulations, and did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Selling Stockholders or the Underwriters through Jefferies & Company,
Inc. expressly for use therein;
(iii) on the Effective Date, the Representation Date and the
Closing Date, the Registration Statement did and will, and when the
Prospectus is first filed (if required) in accordance with Rule 424(b)
the Prospectus will, comply in all material respects with the
applicable requirements of the Act and the Act Regulations and the
Exchange Act; on the Effective Date, the Representation Date and the
Closing Date, the Registration Statement did not and will not contain
any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and, on the Effective Date, the
Representation Date and the Closing Date, and on the date of any
filing pursuant to Rule 424(b), the Prospectus did not and will not
contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-3-
4
in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Selling Stockholders or
the Underwriters through Jefferies & Company, Inc. expressly for use
therein. The Company agrees that the only information provided in
writing by or on behalf of the Underwriters to the Company, expressly
for use in the Registration Statement or the Prospectus, is that
information contained in the first table and the second, fourth, fifth
and sixth paragraphs following the second table in the section of the
Prospectus entitled "Underwriting";
(iv) the documents incorporated by reference in the
Registration Statement or the Prospectus pursuant to Item 12 of Form
S-3 under the Act, at the time they became effective or at the time
they were filed with the Commission, or to the extent such documents
were subsequently amended prior to the date hereof, at the time so
amended, complied and will comply in all material respects with the
requirements of the Exchange Act and, when read together and with the
other information in the Prospectus, do not and will not on the date
hereof and at the Closing Date contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were or are made, not misleading.
(v) the Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware,
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus, and is duly registered and
qualified to conduct its business and is in good standing in each
jurisdiction where the nature or location of its properties (owned or
leased) or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify
would not have a Material Adverse Effect. As used herein, the term
"Material Adverse Effect" shall mean an adverse effect on the
financial condition, business, properties, net worth or results of
operations of the Company or its Subsidiaries (as hereinafter defined)
that would be, singly or in the aggregate, material to the Company and
the Subsidiaries, taken as a whole, whether or not occurring in the
ordinary course of business (a "Material Adverse Effect");
(vi) the only significant subsidiaries (as defined in the Act
Regulations) of the Company are the subsidiaries listed on Schedule
III hereto (the "Corporate Subsidiaries"). Each of the Corporate
Subsidiaries is a corporation, duly organized and validly existing in
good standing under the laws of its jurisdiction of incorporation with
full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and in the Prospectus, and is duly registered
and qualified to conduct its business and is in good standing in each
jurisdiction where the nature or location of its properties (owned or
leased) or the conduct of its business requires such registration or
qualification, except where the failure so to register or qualify
would not have a Material Adverse Effect. CART Licensed Products,
L.P., a Georgia limited partnership ("CLP"), is a limited partnership
duly organized, validly existing and in good standing under the laws
of the State of Georgia, has the partnership power and authority to
own, lease and operate its properties and to conduct its business as
described in the Registration Statement and in the Prospectus and has
been duly registered and qualified as a foreign partnership to conduct
its business and is in good standing in each other jurisdiction where
the
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-4-
5
nature or location of its properties (owned or leased) or the conduct
of its business requires such registration or qualification, except
where the failure so to register or qualify would not have a Material
Adverse Effect. The Corporate Subsidiaries and CLP are referred to
herein collectively as the "Subsidiaries" and individually as a
"Subsidiary";
(vii) each of the Company and the Subsidiaries has all
necessary authorizations, approvals, orders, licenses, rights-of-way,
operating rights, easements, certificates and permits of and from, and
has made all declarations and filings with, all regulatory or
governmental officials and bodies, all self-regulatory organizations
and all courts and other tribunals ("Permits"), to own or lease its
respective properties and to conduct its respective businesses
described in the Prospectus and the Registration Statement, except
where failure to have obtained or made the same would not have a
Material Adverse Effect, and neither the Company nor any of the
Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Permits; each of the Company
and the Subsidiaries has fulfilled and performed all its current
material obligations with respect to such Permits and no event has
occurred that allows, or after notice or lapse of time, or both, would
allow, revocation or termination thereof or result in any other
material impairment of the rights of the holder of any such Permit;
and each of the Company and the Subsidiaries is in compliance with all
applicable laws, rules, regulations, orders and consents, the
violation of which would have a Material Adverse Effect. The property
and business of each of the Company and the Subsidiaries conform in
all material respects to the descriptions thereof contained in the
Prospectus and the Registration Statement;
(viii) the Company has the authorized capitalization set
forth in the Prospectus under the heading "Description of Capital
Stock"; all of the Company's authorized and outstanding capital stock
has been duly authorized, validly issued and is fully paid and
nonassessable and was not issued in violation of any preemptive or
similar rights; and the capitalization of the Company conforms to the
descriptions thereof and the statements made with respect thereto in
the Registration Statement and the Prospectus as of the date set forth
therein. There are no outstanding securities convertible into or
exchangeable for, and no outstanding options, warrants or other rights
to purchase, any shares of the capital stock of the Company, nor any
agreements or commitments to issue any of the same, except as
described in the Registration Statement and the Prospectus, and there
are no preemptive or other rights to subscribe for or to purchase, and
no restrictions upon the voting or transfer of, any capital stock of
the Company pursuant to the Company's Certificate of Incorporation or
Bylaws, or any agreement or other instrument to which the Company is a
party, except as described in the Registration Statement and the
Prospectus;
(ix) all the outstanding shares of capital stock of each of
the Corporate Subsidiaries have been duly authorized and are validly
issued, fully paid and nonassessable and were not issued in violation
of or subject to any preemptive or similar rights. Except as otherwise
set forth in the Registration Statement and the Prospectus, there are
no outstanding securities convertible into or exchangeable for, and no
outstanding options, warrants or other rights to purchase, any shares
of the capital stock of any of the Corporate Subsidiaries, nor any
agreements or commitments to issue any of the same, and except as
otherwise set forth in the Registration
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-5-
6
Statement and the Prospectus, all outstanding shares of capital stock
of the Corporate Subsidiaries and the partnership interest in CLP are
owned by the Company, directly or indirectly through another
Subsidiary, free and clear of any security interests, liens,
encumbrances, equities or other claims;
(x) each of the Company and the Subsidiaries has good and
marketable title to all real property and good and merchantable title
to all personal property owned by it, including those properties
described in the Registration Statement and Prospectus, in each case
free and clear of all liens, charges, encumbrances and restrictions,
other than (a) those described in the Registration Statement and
Prospectus or those that do not materially adversely affect the value
of such properties and assets, and (b) those that do not interfere in
any material respect with use made or proposed to be made of such
properties and assets by the Company. Each of the Company and the
Subsidiaries has valid, subsisting and enforceable leases for the
properties described in the Registration Statement and the Prospectus
as leased by it with such exceptions as are described in the
Registration Statement and the Prospectus or are not material;
(xi) the Company has all requisite power and authority to
enter into this Agreement and to carry out the provisions and
conditions hereof, and to issue and deliver the Option Shares to the
Underwriters as provided herein. This Agreement has been duly
authorized, executed and delivered by the Company;
(xii) the Option Shares to be issued and sold by the Company
have been duly and validly authorized for issuance by the Company, and
the Company has full corporate power and authority to issue, sell and
deliver the Option Shares; and, when such Option Shares are issued and
delivered against payment therefor as provided by this Agreement, the
Option Shares will have been validly issued, fully paid and
nonassessable and the issuance of such Option Shares will not be
subject to any preemptive or similar rights. All corporate action
required to be taken by the Company for the authorization, issuance
and sale of the Option Shares has been duly and validly taken;
(xiii) Deloitte & Touche LLP, who have certified certain
financial statements of the Company and the Subsidiaries, are
independent accountants with respect to the Company and the
Subsidiaries as required by the Act and Act Regulations;
(xiv) the consolidated financial statements and related notes
and schedules included in the Registration Statement, the Preliminary
Prospectus and the Prospectus present fairly the financial position of
the Company and the Subsidiaries, on the basis stated in the
Registration Statement, as of the respective dates thereof and the
consolidated statements of operations and consolidated balance sheets
of the Company and the Subsidiaries, for the respective periods
covered thereby; and such financial statements and the related
schedules and notes have been prepared in conformity with U.S.
generally accepted accounting principles ("U.S. GAAP") applied on a
consistent basis throughout the entire period involved, except as
otherwise disclosed in the Registration Statement, the Preliminary
Prospectus and the Prospectus. The selected consolidated financial
data included in the Registration Statement, the Preliminary
Prospectus and the Prospectus presents fairly the information shown
therein and has
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-6-
7
been compiled on a basis consistent with that of the audited financial
statements of the Company included therein. No other financial
statements or schedules of the Company and the Subsidiaries are
required by the Exchange Act, the Act or the Act Regulations to be
included in the Registration Statement, the Preliminary Prospectus or
the Prospectus;
(xv) the Shares conform in all material respects to the
descriptions thereof in the Registration Statement and Prospectus;
(xvi) neither the Company nor any of the Subsidiaries is in
violation of its charter or bylaws or other organizational documents.
Neither the Company nor any of the Subsidiaries is, nor with the
passage of time or the giving of notice or both would be, in violation
of any material law, ordinance, administrative or governmental rule or
regulation applicable to the Company or any of the Subsidiaries, or of
any judgment, order or decree of any court or governmental agency or
body or of any arbitrator having jurisdiction over the Company or any
of the Subsidiaries, or in default in the performance or observance of
any obligation, agreement, covenant or condition contained in any
mortgage, loan agreement, note, bond, debenture, credit agreement or
any other evidence of indebtedness or in any agreement, contract,
indenture, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them may be bound, or
to which any of the property or assets of the Company or any of the
Subsidiaries is subject;
(xvii) there is no action, suit or proceeding pending before
or by any court, arbitrator or governmental agency or body or, to the
Company's knowledge, threatened against the Company or the
Subsidiaries or to which any of their respective property is subject
(A) that is required to be described in the Registration Statement or
the Prospectus but is not described as required or (B) that, if
adversely determined, could reasonably be expected to have a Material
Adverse Effect. There is no agreement, contract, indenture, lease or
other document or instrument that is required to be described in the
Registration Statement or Prospectus or to be filed as an exhibit to
the Registration Statement that is not described or filed as required;
(xviii) except for the Selling Stockholders, no person has
any right to the registration of any security of the Company by reason
of the filing of the Registration Statement with the Commission or the
consummation of the transactions contemplated hereby, which right has
not been waived or lapsed;
(xix) other than as set forth in the Registration Statement
and the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of the Subsidiaries is a party or
of which any property of the Company or any of the Subsidiaries is the
subject; and, to the best of the Company's knowledge, no such
proceedings are threatened by any court or governmental agency or body
or any stock exchange authorities ("Governmental Agency") or
threatened by others;
(xx) the Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company"
or an entity "controlled" by an "investment company", as such terms
are defined in the Investment Company Act of 1940, as amended (the
"Investment Company Act");
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-7-
8
(xxi) except as disclosed in the Registration Statement and
the Prospectus, the Company and each of the Subsidiaries owns or
possesses, has applied for or can acquire on reasonable terms, the
patents, patent rights, licenses, inventions, copyrights, knowhow
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks and trade names (collectively, "Patent and
Proprietary Rights") presently employed by it in connection with the
business now operated by it, except where the failure to apply for or
acquire any such Patent and Proprietary Rights would not, singly or in
the aggregate, result in a Material Adverse Effect, and neither the
Company nor any of the Subsidiaries has received any notice or is
otherwise aware of any infringement of asserted rights of others with
respect to any Patent and Proprietary Rights, or of any facts which
would render any Patent and Proprietary Rights invalid or inadequate
to protect the interests of the Company therein, and which
infringement (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate,
could have a Material Adverse Effect;
(xxii) as of the date of the Prospectus, neither the Company
nor any of the Subsidiaries currently is planning any probable
acquisitions for which disclosure of pro forma financial information
would be required by the Act;
(xxiii) except as disclosed in the Registration Statement and
the Prospectus (or any amendment or supplement thereto), since the
respective dates as of which information is given therein (or any
amendment or supplement thereto), (A) neither the Company nor any of
the Subsidiaries (1) has issued any securities other than in
connection with the exercise of any outstanding options, (2) incurred
any material liability or obligations, direct or contingent, for
borrowed money, (3) entered into any transaction, not in the ordinary
course of business, that is material to the Company and the
Subsidiaries, taken as a whole, (4) entered into any transaction with
an affiliate of the Company (as the term "affiliate" is defined in
Rule 405 of the Act Regulations) that would otherwise be required to
be disclosed in the Prospectus or the Registration Statement, or (5)
declared or paid any dividend on its capital stock, or made any other
distribution to its equity holders and (B) there has not been any
change in the capital stock or any increase in long-term debt of the
Company and the Subsidiaries or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, current consolidated
financial position, stockholders' equity or results of operations of
the Company and the Subsidiaries, taken as a whole. Neither the
Company nor any of the Subsidiaries has sustained since the date of
the latest audited financial statements included in the Prospectus any
loss or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
organized labor dispute or court or governmental action, order or
decree, except as otherwise set forth or contemplated in the
Registration Statement and the Prospectus;
(xxiv) each of the Company and the Subsidiaries, directly or
indirectly, maintains insurance covering its properties, operations,
personnel and businesses, and in the Company's reasonable judgment,
such insurance provides coverage against such losses and risks as is
adequate in accordance with customary industry practice to protect the
Company and its businesses. Neither the Company nor any of the
Subsidiaries has received notice from any insurer or agent of such
insurer that
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-8-
9
substantial capital improvements or other expenditures will have to be
made in order to continue such insurance, and all such insurance is
outstanding and duly in force;
(xxv) the Company has not distributed and, prior to the later
to occur of (A) the Closing Date and (B) completion of the
distribution of the Shares, will not distribute without your prior
consent any offering material in connection with the offering and sale
of the Shares other than the Registration Statement, the Prospectus or
other materials, if any, permitted by the Act;
(xxvi) prior to the Option Shares Closing Date, the Option
Shares will be duly authorized for listing on the New York Stock
Exchange upon official notice of issuance;
(xxvii) neither the Company nor any Subsidiaries is involved
in any labor dispute or, to the knowledge of the Company, is any
dispute threatened;
(xxviii) neither the Company nor any Subsidiary nor, to the
best of its knowledge, any employee or agent of the Company or any
Subsidiary, has used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense relating
to political activity, or made any unlawful payment of funds of the
Company or any Subsidiary or received or retained any funds in
violation of any law, rule or regulation;
(xxix) each of the Company and the Subsidiaries has filed (or
have obtained extensions thereto) all federal, state and local or
foreign tax returns that are required to be filed, which returns are
complete and correct in all material respects, and have paid all taxes
shown on such returns and all assessments with respect thereto to the
extent that the same have become due, except those taxes that are
being contested or protested in good faith by the Company or its
Subsidiaries;
(xxx) except for the shares of capital stock of the Corporate
Subsidiaries and the partnership interest in CLP, neither the Company
nor any of the Subsidiaries owns any shares of stock or any other
securities of any corporation or has any equity interest in any firm,
partnership, association or other entity other than as reflected in
the consolidated financial statements included in the Registration
Statement and the Prospectus;
(xxxi) neither the execution or delivery of this Agreement,
the offer, issuance, sale or delivery of the Shares nor the
consummation by the Company of the terms of this Agreement (A)
requires the consent, approval, authorization or order of any court or
governmental agency or body except such as have been obtained under
the Act or as may be required under state securities or "blue sky"
laws or similar laws in applicable foreign jurisdictions in connection
with the purchase and distribution of the Shares by the Underwriters
or such as may be required by the National Association of Securities
Dealers, Inc. (the "NASD"), (B) will conflict with, result in a breach
of, or constitute a default under the terms of any indenture,
agreement, lease or other instrument to which the Company or any of
the Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or will result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-9-
10
Company or any of the Subsidiaries pursuant to the terms of any
agreement or instrument to which any of them is a party or by which
any of them may be bound or to which any of the property or assets of
any of them is subject, (C) will violate any law, order, statute,
regulation, consent or memorandum of understanding applicable to the
Company or any of the Subsidiaries of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over the Company or any of the Subsidiaries, or (D) will
conflict with or violate the charter or bylaws or other organizational
documents of the Company or any of the Subsidiaries;
(xxxii) the Company has not taken, directly or indirectly,
any action designed to cause or result in or that has constituted or
that 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;
(xxxiii) the statements set forth in the Registration
Statement or the Prospectus under the caption "Description of Capital
Stock," insofar as they purport to constitute a summary of the terms
of the Common Stock, and under the captions "Management's Discussion
and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources," "Management," and "Certain
Relationships and Related Transactions," insofar as they purport to
describe the provisions of the laws, agreements, contracts,
indentures, leases or other documents or instruments referred to
therein, are accurate and fair summaries of the material and relevant
provisions thereof;
(xxxiv) each of the Company and the Subsidiaries (A) are in
compliance with any and all applicable federal, state, local and
foreign laws and regulations relating to the protection of human
health and safety, the environment or hazardous or toxic substances or
wastes, pollutants or contaminants ("Environmental Laws"), (B) have
received all permits, licenses or other approvals required of them
under applicable Environmental Laws to conduct their business and (C)
are in compliance with all terms and conditions of any such permit,
license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals would not have a Material Adverse
Effect; and
(xxxv) there are no costs or liabilities, to the Company's
knowledge after due inquiry, associated with the effect of
Environmental Laws on the business, operations and properties of the
Company and its Subsidiaries that would have a Material Adverse
Effect.
(b) Each of the Selling Stockholders severally represents and warrants
to, and agrees with, the Underwriters as of the Representation Date and as of
the Closing Date, as follows:
(i) the sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms or provisions of, or
constitute a default under,
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-10-
11
any statute, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder is bound or to which any of
the property or assets of such Selling Stockholder is subject, nor
will such action result in any violation of the provisions of the
charter or bylaws of such Selling Stockholder if such Selling
Stockholder is a corporation, the partnership agreement of such
Selling Stockholder if such Selling Stockholder is a partnership; or
any applicable statute or any order, rule or regulation of any court
or governmental agency or body having jurisdiction over such Selling
Stockholder or the property of such Selling Stockholder;
(ii) the Selling Stockholder now has, and on the Closing Date
will have, valid title to the Shares to be sold by the Selling
Stockholder pursuant to this Agreement, free and clear of any security
interests, liens, encumbrances, equities or other claims, including,
without limitation, any restrictions or transfer (except for
restrictions imposed by applicable federal or state securities laws)
other than as specified on the certificate(s) representing such
Shares, and, upon delivery of and payment for such Shares hereunder,
the several Underwriters will acquire valid title to such Shares free
and clear of any adverse claims, assuming that the Underwriters have
acquired such Shares for value, in good faith and without notice of
any adverse claim;
(iii) this Agreement has been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder;
(iv) the Selling Stockholder has not taken, directly or
indirectly, any action designed to or that might reasonably be
expected to cause or result in stabilization or manipulation of the
price of the Common Stock to facilitate the sale or resale of the
Shares, except for the lock-up arrangements described herein and in
the Prospectus;
(v) each Preliminary Prospectus that has been distributed by
the Underwriters or the Company to prospective investors and the
Prospectus, insofar as they include or reflect information with
respect to such Selling Stockholder, has conformed in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder and has not included any untrue statement
of a material fact or omitted to state a material fact necessary to
make the statements therein not misleading in light of the
circumstances under which they were made; and neither the Registration
Statement nor the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), nor any amendment
or supplement thereto, insofar as they include or reflect information
with respect to such Selling Stockholder, will include any untrue
statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading;
(vi) such Selling Stockholder is not aware that any of the
representations or warranties the Company set forth in Section 2(a)
above is untrue or inaccurate in any material respect;
(vii) all stock transfer or other taxes (other than income
taxes), if any, that are required to be paid in connection with the
sale and transfer of the Stockholder Shares proposed to be sold by
such Selling Stockholder to the several Underwriters
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-11-
12
pursuant to this Agreement will be fully paid or provided for by such
Selling Stockholder;
(viii) no consent, approval, authorization or order of, or
any filing with, any court or governmental agency or body is required
for the consummation by such Selling Stockholder of the transactions
on its part contemplated in this Agreement, the Power of Attorney or
the Custody Agreement, except as may be required under the Act or
state securities or "blue sky" laws or similar laws in applicable
foreign jurisdictions in connection with the purchase and distribution
of the Shares by the Underwriters or such as may be required by the
NASD;
(ix) other than as permitted by the Act and Act Regulations,
such Selling Stockholder 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 Stockholder
Shares proposed to be sold by the Selling Stockholder;
(x) during the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Common Stock or any such substantially
similar securities (other than pursuant to employee stock incentive
plans existing on, or upon the conversion or exchange of convertible
or exchangeable securities outstanding as of, the date of this
Agreement, or in connection with the acquisition of any business or
property so long as the recipient of any Common Stock shall agree not
to resell such Common Stock during the 180 day period), without the
prior written consent of the Xxxxxxxxx & Company, Inc.;
(xi) in order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or
at the First Time of Delivery (as hereinafter defined) 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);
(xii) certificates in negotiable form representing all of the
Shares to be sold by such Selling Stockholder hereunder have been
placed in custody under a Custody Agreement, in the form heretofore
furnished to you (the "Custody Agreement"), duly executed and
delivered by such Selling Stockholder to Norwest Bank Minnesota, N.A.,
as custodian (the "Custodian"), and such Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore
furnished to you (the "Power of Attorney"), appointing Xxxxx X.
Xxxxxxxxxxx and Xxxxxx Xxxxx as such Selling Stockholder's
attorneys-in-fact (individually, an "Attorney-in-Fact", and
collectively, the "Attorneys-in-Fact") with authority to execute and
deliver this Agreement on behalf of such Selling Stockholder, to
determine the purchase price to be paid by the Underwriters to the
Selling Stockholders as provided in Section 2 hereof, to authorize the
delivery of the Shares to be sold by such Selling Stockholder
hereunder and
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-12-
13
otherwise to act on behalf of such Selling Stockholder in connection
with the transactions contemplated by this Agreement and the Custody
Agreement; and
(xiii) the Shares represented by the certificates held in
custody for such Selling Stockholder under the Custody Agreement are
subject to the interests of the Underwriters hereunder; the
arrangements made by such Selling Stockholder for such custody, and
the appointment by such Selling Stockholder of the Attorneys-in-Fact
by the Power of Attorney, are to that extent irrevocable; the
obligations of the Selling Stockholders hereunder shall not be
terminated by operation of law, whether by the death or incapacity of
any individual Selling Stockholder or, in the case of an estate or
trust, by the death or incapacity of any executor or trustee or the
termination of such estate or trust, or in the case of a partnership
or corporation, by the dissolution of such partnership or corporation,
or by the occurrence of any other event; if any individual Selling
Stockholder or any such executor or trustee should die or become
incapacitated, or if any such estate or trust should be terminated, or
if any such partnership or corporation should be dissolved, or if any
other such event should occur, before the delivery of the Shares
hereunder, certificates representing the Shares shall be delivered by
or on behalf of the Selling Stockholders in accordance with the terms
and conditions of this Agreement and of the Custody Agreements; and
actions taken by the Attorneys-in-Fact pursuant to the Powers of
Attorney shall be as valid as if such death, incapacity, termination,
dissolution or other event had not occurred, regardless of whether or
not the Custodian, the Attorneys-in-Fact, or any of them, shall have
received notice of such death, incapacity, termination, dissolution or
other event.
Any certificate signed by any officer of the Company or a Selling
Stockholder delivered to the Underwriters or to counsel for the Underwriters
pursuant to the terms of this Agreement shall be deemed a representation and
warranty by the Company or such Selling Stockholder, as the case may be, to
each Underwriter as to the matters covered thereby.
SECTION 2. SALE AND DELIVERY TO THE UNDERWRITERS; CLOSING.
(a) Subject to the terms and conditions set forth herein, and subject
to adjustments as you may determine to avoid fractional shares:
(i) the Selling Stockholders agree, severally and not
jointly, to sell to each Underwriter, severally and not jointly, and,
on the basis of the representations and warranties herein contained
and subject to the terms and conditions herein set forth, each
Underwriter, severally and not jointly, agrees to purchase from the
Selling Stockholders at a purchase price of $ per share (the "Initial
Price"), the aggregate number of Stockholder Shares that bears the
same proportion to the aggregate number of Stockholder Shares to be
sold by the Selling Stockholder as the number of Stockholder Shares
set forth opposite the name of such Underwriter in Schedule I hereto
(or such number of Stockholder Shares increased as provided in Section
9 hereof) bears to the aggregate number of Stockholder Shares to be
sold by the Selling Stockholders, and the Selling Stockholders will
have no obligation to sell to the Underwriters any of the Stockholders
Shares to be sold by the Selling Stockholders hereunder unless the
Underwriters purchase all of such Stockholder Shares hereunder.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-13-
14
(b) The Company grants to the Underwriters an option to purchase all
or any part of the Option Shares at the Initial Price. Option Shares shall be
purchased from the Company, severally and not jointly, for the accounts of the
Underwriters in proportion to the number of Stockholder Shares set forth in
Schedule I hereto opposite the name of such Underwriter. Such option may be
exercised only to cover over-allotments in the sale of the Stockholder Shares
by the Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the
Stockholder Shares Closing Date (as hereinafter defined), and only once
thereafter within 30 days after the date of the Prospectus, in each case upon
written or telegraphic notice, or oral or telephonic notice confirmed by
written or facsimile notice, by the Underwriters to the Company no later than
12:00 noon, New York City time, on the business day before the Stockholder
Shares Closing Date or at least two business days before the Option Shares
Closing Date (as hereinafter defined), as the case may be, setting forth the
number of Option Shares to be purchased and the time and date (if other than
the Stockholder Shares Closing Date) of such purchase.
(c) Payment of the purchase prices for, and delivery of, the
Stockholders Shares to be purchased by the Underwriters shall be made at the
offices of Xxxxxxxxx & Company, Inc., 00 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or
at such other place as shall be agreed upon by the Underwriters and the
Company, at 10:00 A.M., New York City time, on the third or fourth business day
following the date the Registration Statement becomes effective (or, if the
Company elected to rely upon Rule 430A, the fourth business day after the date
of execution of this Agreement), or such other time not later than ten business
days after such date as shall be agreed upon by the Underwriters and the
Company ( such time and date of payment and delivery being herein called the
"Stockholder Shares Closing Date"). Payment shall be made to the Company and
the Selling Stockholders, as the case may be, by wire transfer in same day
funds payable to the order of the Company or the Selling Stockholders, as
applicable, against delivery to the Underwriters of the Stockholder Shares.
(d) Payment of the purchase price for, and delivery of, the Option
Shares to be purchased by the Underwriters shall be made at the office as set
forth above or at such other place as shall be agreed upon by the Underwriters
and the Company at the time and on the date (which may be the same as, but in
no event shall be earlier than, the Stockholder Shares Closing Date) specified
in the notice referred to in Section 2(b) (such time and date of delivery and
payment being herein called the "Option Shares Closing Date"). The Stockholder
Shares Closing Date and the Option Shares Closing Date are called,
individually, the "Closing Date" and together, the "Closing Dates." Payment
shall be made to the Company by wire transfer in same day funds payable to the
order of the Company against delivery to the Underwriters of the Option Shares.
(e) Certificates representing the Shares shall be issued in such
denominations and registered in such names as the Underwriters may request in
writing at least two business days before the Stockholder Shares Closing Date
or, in the case of Option Shares, on the day of notice of exercise of the
option as described in Section 2(b). The certificates representing the Shares
will be made available for examination and packaging by the Underwriters not
later than 1:00 P.M., New York City time, on the last business day prior to the
Stockholder Shares Closing Date (or the Option Shares Closing Date in the case
of the Option Shares) at such place as is designated by the Underwriters.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-14-
15
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with each of the
Underwriters as follows:
(a) the Company will use its best efforts to cause the Registration
Statement, if not effective at the Representation Date, and any amendment
thereof, to become effective, as promptly as possible after the filing thereof.
The Company will not file any amendment to the Registration Statement or any
amendment or supplement to the Prospectus to which the Underwriters shall
reasonably object in writing after a reasonable opportunity to review such
amendment or supplement. Subject to the foregoing sentences in this clause (a),
if the Registration Statement has become or becomes effective pursuant to Rule
430A, or filing of the Prospectus or supplement to the Prospectus is otherwise
required under Rule 424(b), the Company will cause the Prospectus, properly
completed, or such supplement thereto to be filed with the Commission pursuant
to the applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Underwriters of such timely
filing. The Company will promptly advise the Underwriters (i) when the
Registration Statement, if not effective at the Representation Date, and any
amendment thereto, shall have become effective, (ii) when the Prospectus, and
any supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b), (iii) when any amendment to the Registration Statement
shall have been filed or become effective, (iv) of any request by the
Commission for any amendment of the Registration Statement or supplement to any
Prospectus or for any additional information, (v) of the receipt by the Company
of any notification of, or if the Company otherwise has knowledge of, the
issuance by the Commission of any stop order suspending the effectiveness of
the Registration Statement or the institution or threatening of any proceeding
for that purpose 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 such
purpose. The Company will use its best efforts to prevent the issuance of any
such stop order and, if issued, to obtain as soon as possible the lifting
thereof;
(b) if, at any time when a prospectus relating to the Shares is
required to be delivered under the Act or the Act Regulations, any event occurs
as a result of which the Prospectus as then amended or supplemented would
contain any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein,
in the light of the circumstances under which they were made, not misleading,
or if it shall be necessary to amend the Registration Statement or amend or
supplement the Prospectus to comply with the Act or the Act Regulations, the
Company promptly will prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 3, an amendment or supplement
that will correct such statement or omission or effect such compliance;
(c) the Company consents to the use of the Prospectus in accordance
with the provisions of the Act and with the securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the Act to be delivered in connection with the sales by any
Underwriter or dealer. The Company will comply with all requirements imposed
upon it by the Act, as now and hereafter amended, so far as necessary to permit
the continuance of sales of or dealing in the Shares in accordance with the
provisions hereof and the Prospectus;
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-15-
16
(d) the Company will furnish to the Representatives, without charge,
four signed copies of the Registration Statement (including exhibits thereto
and all documents incorporated by referenced therein) and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by the Act, or the
Act Regulations, as many copies of the Prospectus and all amendments and
supplements thereto as the Underwriters may reasonably request;
(e) during the period of five years hereafter, the Company will
furnish to you, as soon as practicable after the end of each fiscal year, a
copy of its annual report to Stockholders for such year; and the Company will
furnish to you (i) as soon as available, a copy of each report or definitive
proxy statement of the Company filed with the Commission under the Exchange Act
or mailed to the Stockholders, and (ii) from time to time, such other publicly
available information concerning the Company as you may reasonably request;
(f) the Company will not, and will cause each of its directors (other
than Xxxxx X. Xxxxxxxx and Xxx Xxxxxxxx, Jr.) and Xxxxx X. Xxxxxxxxxxx and
Xxxxxx Xxxxx to enter into agreements with the Underwriters in the form set
forth in Annex A hereto to the effect that they will not, during the period
beginning from the date hereof and continuing to and including the date 180
days after the date of the Prospectus, offer, sell, contract to sell or
otherwise dispose of, except as provided hereunder, any securities of the
Company that are substantially similar to the Shares, including but not limited
to any securities that are convertible into or exchangeable for, or that
represent the right to receive, Common Stock or any such substantially similar
securities (other than pursuant to employee stock incentive plans existing on,
or upon the conversion or exchange of convertible or exchangeable securities
outstanding as of, the date of this Agreement, or in connection with the
acquisition of any business or property so long as the recipient of any Common
Stock shall agree not to resell such Common Stock during the 180 day period),
without the prior written consent of Xxxxxxxxx & Company, Inc.; provided that
the agreement entered into by Xxxxx X. Xxxxxxxxxxx and Xxxxxx X. Xxxxx shall
not apply to sales by them of not more than 30,000 and 60,000 shares of Common
Stock, respectively, at any time after the date 30 days after the date of the
Prospectus;
(g) the Company will comply with all the provisions of any
undertakings contained in the Registration Statement;
(h) the Company will apply the net proceeds from the offering and sale
of the Shares to be sold by the Company in accordance with the description set
forth in the "Use of Proceeds" section of the Prospectus;
(i) the Company will cooperate with the Underwriters and their counsel
in connection with endeavoring to obtain and maintain the qualification or
registration, or exemption from qualification, of the Shares for offer and sale
under the applicable securities laws of such states and other jurisdictions of
the United States as the Underwriters may designate; provided, that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action that would subject it to
taxation or general service of process in any jurisdiction where it is not now
so subject;
(j) the Company will not take, and will cause each of the Subsidiaries
to not take, directly or indirectly, any action which is designed to or which
constitutes or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the Company or
facilitate the sale or resale or the Shares; and
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-16-
17
(k) the Company will cause the Shares to be duly listed on the New
York Stock Exchange.
SECTION 4. COVENANTS OF THE SELLING STOCKHOLDERS. Each Selling Stockholder
severally and not jointly covenants with each of the Underwriters as follows:
(a) such Selling Stockholder shall cooperate to the extent reasonably
necessary to cause the Registration Statement, if not effective at the
Representation Date, and any amendment thereof, to become effective, as
promptly as possible after the filing thereof;
(b) without prejudice to any rights such Selling Stockholder may have
against the Company, the Selling Stockholder shall pay all federal and other
taxes, if any, on the transfer or sale of the Shares being sold by the Selling
Stockholder to the Underwriters;
(c) such Selling Stockholder shall do or perform all things required
to be done or performed by the Selling Stockholder prior to the Stockholder
Shares Closing Date to satisfy all conditions precedent to delivery of and the
payment for the Shares to be sold by the Selling Stockholder pursuant to this
Agreement;
(d) such Selling Stockholder will not at any time, directly or
indirectly, take any action which is designed to or which constitutes or which
might reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company or facilitate the sale
or resale or the Shares; and
(e) such Selling Stockholder will advise the Representatives promptly,
and if requested by the Representatives will confirm such advice in writing, of
any change in the information relating to the Selling Stockholder contained in
the Registration Statement under the caption "Selling Stockholders."
SECTION 5. PAYMENT OF EXPENSES. The Company will pay, or reimburse if paid by
the Underwriters, all actual and reasonable costs and expenses incident to the
performance of the obligations of the Company and the Selling Stockholders
under this Agreement, including (i) the fees, disbursements and expenses of
counsel and accountants for the Company and the Selling Stockholders and all
other expense in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus, the Prospectus, and any
amendments or supplements thereto, and the mailing and delivery of copies
thereof to the Underwriters and dealers, (ii) the cost of reproducing the
Agreement Among Underwriters, this Agreement, the Selling Agreement, any Dealer
Agreements, the Underwriters' Questionnaire and the Blue Sky Memorandum (in
both preliminary and final form); (iii) all expenses in connection with
qualification of the Shares for offering and sale under state securities laws
as provided in Section 3(i) hereof, including filing and registration fees and
the fees, disbursements and expenses of counsel for the Underwriters in
connection with such qualification and in connection with Blue Sky surveys
(such fees of counsel not to exceed $5,000); (iv) the filing fees incident to
securing any required review by the NASD; (v) the cost of preparing stock
certificates; (vi) all fees of the Company's transfer agent and registrar;
(vii) any fees for including the Shares on the New York Stock Exchange; and
(vii) all other costs and expenses incident to the performances of its
obligations hereunder that are not otherwise specifically provided for in this
Section.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-17-
18
If this Agreement is terminated by the Underwriters because of any
failure or refusal on the part of the Company or the Selling Stockholders to
comply with the terms or fulfill any of the conditions of this Agreement, the
Company shall reimburse the Underwriters for all of their reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriters. The Company shall not in any event be liable to
any of the Underwriters for consequential damages including loss of anticipated
profits from the transactions covered by this Agreement.
SECTION 6. Conditions of the Underwriters' Obligation. The obligation of the
Underwriters to purchase the Shares hereunder is subject to the continued
accuracy of the representations and warranties of the Company and the Selling
Stockholders herein contained, to the accuracy of the statements of the Company
and the Selling Stockholders made in any certificates pursuant to the provision
hereof, to the performance by the Company and the Selling Stockholders of their
obligations hereunder and to the following further conditions:
(a) the Registration Statement shall have become effective, and you
shall have received notice thereof, not later than 3:00 p.m., Washington D.C.
time, on the date hereof, or such later time and date as shall be approved by
the Representatives and the Company and shall remain effective at the Closing
Date. No stop order suspending the effectiveness of the Registration Statement
shall have been issued under the Act or proceedings therefor initiated or
threatened by the Commission. No order suspending the effectiveness of the
Registration Statement or the qualification or registration of the Shares under
the securities or blue sky laws of any jurisdiction shall be in effect or
proceedings therefor initiated or threatened by the Commission or the
authorities of any such jurisdiction. If the Company has elected to rely upon
Rule 430A, the price of the Shares and any price-related or other information
previously omitted from the effective Registration Statement pursuant to Rule
430A shall have been transmitted to the Commission for filing pursuant to Rule
424(b) within the prescribed time period, and, prior to the Closing Date, the
Company shall have provided evidence satisfactory to the Underwriters of such
timely filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirement of Rule 430A;
(b) subsequent to the execution and delivery of this Agreement, there
shall not have occurred: (i) any change, or any development involving a
prospective change, in or affecting particularly the business, properties,
condition (financial or other) or results of operations of the Company and the
Subsidiaries, taken as a whole, which, in the reasonable judgment of the
Underwriters, materially impairs the investment quality of the Shares and
constitutes a Material Adverse Effect; (ii) any material loss or interference
with the business or properties of the Company or the Subsidiaries from fire,
explosion, flood or other casualty, whether or not covered by insurance, or
from any labor dispute or any court or legislative or other governmental
action, order or decree, that is not set forth in the Registration Statement
and the Prospectus, if in the reasonable judgment of the Underwriters any such
development makes it impracticable or inadvisable to proceed with completion of
the sale of and payment for the Shares;
(c) on or after the date hereof there shall not have occurred any of
the following: (i) any suspension or limitation of trading in securities
generally on the New York Stock Exchange or The Nasdaq National Market, or any
setting of minimum prices for trading on such
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-18-
19
exchange or system, or any suspension of trading of any securities of the
Company on any exchange or system or in the over-the-counter market; (ii) any
banking moratorium declared by federal or New York authorities; or (iii) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by Congress or any other substantial national
or international calamity or emergency if, in the reasonable judgment of the
Underwriters, the effect of any such outbreak, escalation, declaration,
calamity or emergency makes it impractical or inadvisable to proceed with
completion of the sale of and payment for the Shares;
(d) since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there shall have been no litigation
or other proceeding instituted against the Company or any of the Subsidiaries
or any of their respective officers or directors in their capacities as such,
before or by any federal, state or local court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, or
arbitrator, in which litigation or proceeding an unfavorable ruling, decision
or finding would have a Material Adverse Effect;
(e) the Option Shares to be sold by the Company at such Time of
Delivery shall have been duly approved for inclusion on the New York Stock
Exchange, subject to official notice of issuance;
(f) each of the representations and warranties of the Selling
Stockholders contained herein shall be true and correct at the Closing Date, as
if made at the Closing Date, and all covenants and agreements contained herein
to be performed on the part of the Selling Stockholders, and all conditions
contained herein to be fulfilled or complied with by the Selling Stockholders
at or prior to the Closing Date, shall have been duly performed, fulfilled or
complied with, and the Representatives shall have received a certificate to
such effect and as to such other matters as the Underwriters may reasonably
request, dated the Closing Date and signed by or on behalf of the Selling
Stockholders;
(g) the Underwriters shall have received opinions from Kegler, Brown,
Hill & Xxxxxx Co., L.P.A., counsel for the Company and the Selling
Stockholders, satisfactory in form and substance to counsel for the
Underwriters, dated as of each Closing Date, to the effect set forth in Annex B
and Annex C;
(h) the Underwriters shall have received a favorable opinion, dated as
of each Closing Date, of Xxxxxx & Xxxxxx L.L.P., counsel for the Underwriters,
with respect to such matters as may be reasonably requested by the
Underwriters, and the Company shall have provided such counsel with such papers
and information as they may reasonably request to enable them to provide such
opinion;
(i) the conditions contained in subsections (a), (b), (d) and (e) of
this Section 6 shall have been satisfied on and as of each Closing Date and the
Company shall have furnished to the Underwriters a certificate of the Company,
signed by the President and the principal financial or accounting officer of
the Company, dated such Closing Date (A) to the effect that (i) the signers or
such certificate have carefully examined the Registration Statement, the
Prospectus, any supplement or amendment to the Prospectus, and this Agreement,
(ii) that the representations and warranties of the Company in this Agreement
are true and correct on and as of the Closing Date with the same effect as if
made on the Closing Date and (iii) the
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-19-
20
Company has complied with all the agreements and satisfied all the conditions
under this Agreement on its part to be performed or satisfied at or prior to
the Closing Date and (B) as to the matters set forth in subsections (a), (b),
(d) and (e) of this Section and such other matters as the Underwriter may
reasonably request;
(j) at the Representation Date and at each Closing Date, Deloitte &
Touche LLP shall have furnished to the Underwriters and the Company and the
Selling Stockholders a letter or letters, dated respectively as of the date of
this Agreement and each Closing Date, in form and substance satisfactory to the
Underwriters, to the effect set forth in Annex D hereto;
(k) at the Representation Date, the Company shall have furnished to
the Underwriters a letter substantially in the form of Annex A hereto from each
director of the Company (other than Xxxxx X. Xxxxxxxx and Xxx Xxxxxxxx, Jr.),
Xxxxx X. Xxxxxxxxxxx, Xxxxxx Xxxxx and from each of the Selling Stockholders,
addressed to the Underwriters, in which each such person agrees not to offer,
sell, contract to sell or otherwise dispose of, except as provided hereunder,
any securities of the Company that are substantially similar to the Shares,
including but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Common Stock or any
such substantially similar securities (other than pursuant to employee stock
incentive plans existing on, or upon the conversion or exchange of convertible
or exchangeable securities outstanding as of, the date of this Agreement, or in
connection with the acquisition of any business or property so long as the
recipient of any Common Stock shall agree not to resell such Common Stock
during the 180 day period), without the prior written consent of Xxxxxxxxx &
Company, Inc.; provided that the agreement entered into by Xxxxx X. Xxxxxxxxxxx
and Xxxxxx X. Xxxxx shall not apply to sales by them of not more than 30,000
and 60,000 shares of Common Stock, respectively, at any time after the date 30
days after the date of the Prospectus; and
(l) at the Closing Date, counsel for the Underwriters shall have been
furnished with such information, certificates and documents as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Shares as contemplated herein and related proceedings, or to
evidence the accuracy of any of the representations or warranties, or the
fulfillment of any of the conditions, herein contained, or otherwise in
connection with the offering contemplated hereby; and all opinions and
certificates mentioned above or elsewhere in this Agreement shall be reasonably
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.
If any condition specified in this Section 6 shall have not been fulfilled in
all material respects when and as required to be fulfilled, this Agreement may
be terminated by the Underwriters by notice to the Company and such termination
shall be without liability of any party to any other party except as provided
in Section 5.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify, defend 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 of the Exchange Act from and
against any loss expense, damage, liability or claim (including the reasonable
cost of investigating such claim) that, jointly or severally, any such
Underwriter or any person controlling such Underwriter may incur under the Act,
the Exchange Act or otherwise, as such expenses are incurred, insofar as such
loss,
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-20-
21
expense, damage, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof) or any omission or alleged omission to state
a material fact required to be stated in such Registration Statement or
necessary to make the statements made therein not misleading or any untrue
statement or alleged untrue statement of a material fact contained in a
Prospectus (the term Prospectus for the purpose of this Section 7 being deemed
to include any Preliminary Prospectus, the Prospectus, the Prospectus as
amended or supplemented and any document filed under the Exchange Act and
incorporated by reference into the Prospectus) or any omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that this indemnity
agreement shall not apply to any loss, liability, claim, damage or expense to
the extent arising out of any untrue statement or omission or alleged untrue
statement or omission made in reliance upon and in conformity with the
information provided in writing to the Company by or on behalf of the Selling
Stockholders or any Underwriter through the Representatives expressly for use
in the Registration Statement (or any amendment thereto), including the Rule
430A Information and the Rule 434 Information, if applicable, or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto). The foregoing indemnity with respect to any untrue statement or
alleged untrue statement contained in or omission or alleged omission from a
preliminary prospectus shall not inure to the benefit of the Underwriter (or
any person controlling such Underwriter) from whom the person asserting any
loss, liability, claim, damage or expense purchased any of the Shares which are
the subject thereof if the Company shall sustain the burden of proving that
such person was not sent or given a copy of the Prospectus (or such Prospectus
as amended or supplemented) at or prior to the written confirmation of the sale
of such Shares to such person and the untrue statement contained in or omission
from such preliminary prospectus was corrected in such Prospectus (or such
Prospectus as amended or supplemented) and the Company had previously furnished
copies thereof to such Underwriter. The Company agrees that the only such
information provided in writing by or on behalf of any Underwriter to the
Company, expressly for use in the Registration Statement or the Prospectus, is
that information contained in the first table and the second, fourth, fifth and
sixth paragraphs following the second table in the section of the Prospectus
entitled "Underwriting". The foregoing indemnity agreement shall be in addition
to any liability that the Company may otherwise have.
(b) Each Selling Stockholder agrees severally and not jointly to
indemnify, defend and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Act from
and against any loss, expense, liability or claim (including the reasonable
cost of investigating such claim) that, jointly or severally, any such
Underwriter or any person controlling such Underwriter may incur under the Act,
the Exchange Act or otherwise, as such expenses are incurred, insofar as such
loss, expense, liability or claim arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact supplied by the
Selling Stockholders for use in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof) or
any omission or alleged omission to state a material fact required to be stated
in such Registration Statement or necessary to make the statements made therein
not misleading or any untrue statement or alleged untrue statement of a
material fact contained in a Prospectus (the term Prospectus for the purpose of
this Section 7 being deemed to include any Preliminary Prospectus, the
Prospectus, the Prospectus as amended or supplemented and any
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-21-
22
document filed under the Exchange Act and incorporated by reference into the
Prospectus) or any omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading;
provided, however, that the liability of the Selling Stockholders pursuant
hereto shall not exceed an amount equal to the net proceeds received by the
Selling Stockholders for the sale of the Shares hereunder to the Underwriters.
(c) Each Underwriter agrees to indemnify, defend and hold harmless
each Selling Stockholder, the Company, its directors, its officers who sign the
Registration Statement and each person, if any, who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act from and
against any loss, expense, damage, liability or claim (including the reasonable
cost of investigating such claim) that the Selling Stockholders, the Company,
its directors, its officers who sign the Registration Statement or any person
controlling the Company may incur under the Act, the Exchange Act or otherwise
to the same extent as the provisions of Section 7(a) above, but only insofar as
such loss, expense, damage, liability or claim arises out of or is based upon
any untrue statement or omission or alleged untrue statement or omission made
in reliance or in conformity with information relating to such Underwriter
furnished in writing to the Company by or on behalf of such Underwriter,
expressly for use in the Registration Statement or the Prospectus. The Selling
Stockholders and the Company agree that the only information provided in
writing by or on behalf of the Underwriters to the Company, expressly for use
in the Registration Statement or the Prospectus, is that information contained
in the first table and the second, fourth, fifth and sixth paragraphs following
the second table in the section of the Prospectus entitled "Underwriting".
(d) If any action is brought against an indemnified party under this
Section 7, the indemnified party or parties shall promptly notify the
indemnifying party in writing of the institution of such action (provided that
the failure to give such notice shall not relieve the indemnifying party of any
liability that it may have pursuant to this Agreement, unless and to the extent
the indemnifying party did not otherwise learn of such action and such failure
has resulted in the forfeiture of substantive rights or defenses by the
indemnifying party) and the indemnifying party shall assume the defense of such
action, including the employment of counsel and payment of reasonable expenses.
The indemnified party or parties shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall
be at the expense of the indemnified party or parties unless (i) the employment
of such counsel shall have been authorized in writing by the indemnifying party
in connection with the defense of such action, (ii) the indemnifying party
shall not have employed counsel reasonably satisfactory to the indemnified
party to take charge of the defense of such action within a reasonable time
after notice of the institution of such action or (iii) the named parties to
any such proceeding (including any impleaded parties) include both an
indemnified party and an indemnifying party and representation of both parties
by the same counsel would be inappropriate due to actual or potential differing
interests between the named parties (in which case the indemnifying party 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 party and paid as incurred; provided that
the indemnifying party shall only be responsible for the fees and expenses of
one counsel for all the indemnified party or parties hereunder, in additional
to any local counsel. Anything in this paragraph to the contrary
notwithstanding, the indemnifying party shall not be liable for any settlement
of any
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-22-
23
such claim or action effected without its written consent, which consent shall
not be unreasonably withheld.
(e) If the indemnification provided for in this Section 7 is
unavailable to an indemnified party under subsection (a), (b) or (c) of this
Section 7 in respect of any losses, damages, expenses, liabilities or claims
referred to therein, then each applicable indemnifying party shall contribute
to the amount paid or payable by such indemnified party as a result of such
losses, damages, expenses, liabilities or claims (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Selling Stockholders on the one hand and the Underwriters on the other hand
from the offering of the Shares or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company and the Selling Stockholders
on the one hand and the Underwriters on the other hand in connection with the
statements or omissions that resulted in such losses, damages, expenses,
liabilities or claims, as well as any other relevant equitable considerations.
The relative benefits received by the Company and the Selling Stockholders on
the one hand and the Underwriters on the other hand shall be deemed to be in
the same proportion as the total proceeds from the offering (net of
underwriting discounts and commissions but before deducting expenses) received
by the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault of
the Company and the Selling Stockholders on the one hand and of the
Underwriters on the other hand shall be determined by reference to, among other
things, whether the untrue statement or alleged untrue statement of a material
fact or omission or alleged omission relates to information supplied by the
Company, the Selling Stockholders or by the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The amount paid or payable by a party as a
result of the losses, damages, expenses, liabilities and claims referred to
above shall be deemed to include any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any claim
or action.
(f) The Company, the Selling Stockholders and the Underwriters agree
that it would not be just and equitable if contribution pursuant to this
Section 7 were determined by pro rata allocation or by any other method of
allocation that does not take account of the equitable considerations referred
to in Section 7(e) above. Notwithstanding the provisions of this Section 7, (i)
no Underwriter shall be required to contribute any amount in excess of the
underwriting discount received by it by reason of such untrue statement or
alleged untrue statement or omission or alleged omission, (ii) no Selling
Stockholder shall be required to contribute any amount in excess of the gross
proceeds received by such Selling Stockholder from the sale of the Shares
pursuant to this Agreement, and (iii) 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.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY. The
respective indemnity and contribution agreements contained in Section 7, and
the covenants, representations and warranties of the Company and the Selling
Stockholders contained in this Agreement or contained in certificates of
officers of the Company and the Selling Stockholders submitted pursuant hereto,
shall remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter or
any person who controls any Underwriter, or by or on behalf of the Company or
the Selling Stockholders
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-23-
24
or any controlling person of the Company or the Selling Stockholders, as the
case may be, and will survive delivery of and payment for the Shares.
SECTION 9. DEFAULT OF UNDERWRITERS. If any Underwriter or Underwriters default
in their obligations to purchase Shares hereunder on either the Stockholder
Shares Closing Date or the Option Shares Closing Date and the aggregate number
of Shares that such defaulting Underwriter or Underwriters agreed but failed to
purchase does not exceed 10% of the total number of Shares that the
Underwriters are obligated to purchase on such Closing Date, the
Representatives may make arrangements satisfactory to the Company and the
Selling Stockholders for the purchase of such Shares by other persons,
including any of the Underwriters, but if no such arrangements are made by such
Closing Date the non-defaulting Underwriters shall be obligated severally, in
proportion to their respective commitments hereunder, to purchase the Shares
that such defaulting Underwriters agreed but failed to purchase on such Closing
Date. If any Underwriter or Underwriters so default and the aggregate number of
Shares with respect to which such default or defaults occur exceeds 10% of the
total number of Shares that the Underwriters are obligated to purchase on such
Closing Date and arrangements satisfactory to the Representatives and the
Company and the Selling Stockholders for the purchase of such Shares by other
persons are not made within 36 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter, the
Company or the Selling Stockholders, except as provided in this Section 9
(provided that if such default occurs with respect to the Option Shares after
the Stockholder Shares Closing Date, this Agreement will not terminate as to
the Stockholder Shares). As used in this Agreement, the term "Underwriter"
includes any person substituted for an Underwriter under this Section. Nothing
herein will relieve a defaulting Underwriter from liability for its default.
SECTION 10. NOTICES. All notices and other communications hereunder will be in
writing and shall be deemed to have been duly given if mailed or transmitted by
standard form of telecommunication. Notices to the Underwriters shall be
directed to the Underwriters in care of:
Xxxxxxxxx & Company, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxx Xxxxx, Esq.
with a copy to: T. Xxxx Xxxxx
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000-0000
or, if sent to the Company, directed to:
Championship Auto Racing Teams, Inc.
000 Xxxx Xxx Xxxxxx Xxxx, Xxxxx 000
Xxxx, Xxxxxxxx 00000
Attention: Xxxxxx X. Xxxxx
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-24-
25
with a copy to: Xxxx X. Xxxxxx
Kegler, Brown, Hill & Xxxxxx Co., L.P.A.
00 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
or, if sent to the Selling Stockholders, directed to:
Xxxx X. Xxxxxx
Kegler, Brown, Hill & Xxxxxx Co., L.P.A.
00 Xxxx Xxxxx Xxxxxx, 00xx Xxxxx
Xxxxxxxx, Xxxx 00000
SECTION 11. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Company and the Selling Stockholders and
their respective successors and legal representatives. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to provide any
person, firm or corporation, other than the Underwriters, the Company and the
Selling Stockholders and their respective successors and legal representatives
and the controlling persons, officers and directors referred to in Sections 7
and 8 and their respective heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein or therein contained. This Agreement and all conditions and
provisions hereof are intended to be for the sole and exclusive benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors and legal representatives, and such controlling persons, officers
and directors referred to in Sections 7 and 8 and their respective heirs and
legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Shares from any Underwriter shall be deemed to be
a successor by reason merely of such purchase.
SECTION 12. GOVERNING LAW AND TIME. This Agreement shall be governed and
construed in accordance with the laws of the State of New York applicable to
agreements made and to be performed in such State. Specified times of day refer
to New York time, unless otherwise specified.
SECTION 13. COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
-25-
26
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to the Company a counterpart hereof, whereupon this
instrument, along with all counterparts, will become a binding agreement among
the Company, the Selling Stockholders and the Underwriters in accordance with
its terms.
Very truly yours,
CHAMPIONSHIP AUTO RACING TEAMS, INC.
By:
Name:
SELLING STOCKHOLDERS
By:
Name:
Title:
As Attorney-in-Fact acting on behalf of
each of the Selling Stockholders named in
Schedule II to this Agreement
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
JEFFERIES & COMPANY, INC.
X.X. XXXXXXXX & CO., L.L.C.
A.G. XXXXXXX & SONS, INC.
As Representatives of
the Several Underwriters
JEFFERIES & COMPANY, INC.
By:
Name:
Title:
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
SIGNATURE PAGE
27
SCHEDULE I
NUMBER OF OPTION
TOTAL NUMBER OF STOCKHOLDER SHARES TO BE PURCHASED
UNDERWRITER SHARES TO BE PURCHASED IF MAXIMUM OPTION EXERCISED
------------------------------------------------------- ---------------------------- -----------------------------
Jefferies & Company, Inc.........................
X.X. Xxxxxxxx & Co., L.L.C.......................
X.X. Xxxxxxx & Sons, Inc.........................
--------------- --------------
Total................................... 1,816,500 272,475
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
SCHEDULE I
28
SCHEDULE II
TOTAL NUMBER OF
---------------
NAME STOCKHOLDER SHARES TO BE SOLD
---- -----------------------------
Xxxxxx Xxxxxx, Inc............................... 700,000
Xxxxxxx Racing, Inc.............................. 400,000
Team Green, Inc.................................. 256,500
Xxxxxxx Xxxxxx Racing, Inc....................... 150,000
All American Racers, Inc......................... 100,000
Xxxx Xxxxx Racing, Inc........................... 80,000
Team Rahal, Inc.................................. 80,000
---------
Xxxxx Xxxxx Motorsports, Inc..................... 50,000
=========
Total................................... 1,816,500
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
SCHEDULE II
29
SCHEDULE III
JURISDICTION OF
---------------
NAME INCORPORATION/ORGANIZATION
---- --------------------------
CART, Inc........................................... Michigan
CART Properties, Inc................................ Michigan
CART Licensed Products, Inc......................... Michigan
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
SCHEDULE III
30
ANNEX A
LOCK-UP AGREEMENT
May __, 1999
JEFFERIES & COMPANY, INC.
X.X. XXXXXXXX & CO., L.L.C.
A.G. XXXXXXX & SONS, INC.
c/o Jefferies & Company, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Dear Sirs:
The undersigned understands that Jefferies & Company, Inc., X.X. Xxxxxxxx
& Co., L.L.C. and X.X. Xxxxxxx & Sons, Inc., as Representatives of the several
underwriters (the "Underwriters"), have entered into an Underwriting Agreement
with Championship Auto Racing Teams, Inc. (the "Company"), providing for the
public offering (the "Public Offering") of the Company's common stock, par
value $0.01 per share (the "Common Stock"), pursuant to the Company's
Registration Statement on Form S-3 (Reg. No. 333-76091) (the "Registration
Statement").
To induce the Underwriters that may participate in the Public Offering to
continue their efforts in connection with the Public Offering, the undersigned,
during the period commencing on the date of the Underwriting Agreement and
ending 180 days after the date of the final prospectus relating to the Public
Offering:
(i) agrees not to (x) offer, pledge, sell, contract to sell, sell any
option or contract to purchase, purchase any option or contract to sell,
grant any option, right or warrant to purchase, or otherwise transfer or
dispose of, directly or indirectly, any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock (including, without limitation, shares of Common Stock or securities
convertible into or exercisable or exchangeable for Common Stock which may
be deemed to be beneficially owned by the undersigned in accordance with
the rules and regulations of the Securities and Exchange Commission by
virtue of the undersigned's power to dispose, or direct the disposition
of, such shares or securities) or (y) enter into any swap or other
arrangement that transfers all or a portion of the economic consequences
associated with the ownership of any Common Stock (regardless of whether
any of the transactions described in clause (x) or (y) is to be settled by
the delivery of Common Stock, or such other securities, in cash or
otherwise), without the prior written consent of Jefferies & Company,
Inc., provided that the foregoing restrictions shall not apply to
intra-family transfers and transfers for estate planning purposes;
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX A - 1
31
Jefferies & Company, Inc.
X.X. Xxxxxxxx & Co., L.L.C.
A.G. Xxxxxxx & Sons, Inc.
May ___, 1999
Page 2
(ii) agrees not to make any demand for, or exercise any right with
respect to, the registration of any shares of Common Stock or any
securities convertible into or exercisable or exchangeable for Common
Stock, without the prior written consent of Jefferies & Company, Inc.;
(iii) authorizes the Company to cause the transfer agent to decline to
transfer and/or to note stop transfer restrictions on the transfer books
and records of the Company with respect to any shares of Common Stock and
any securities convertible into or exercisable or exchangeable for Common
Stock for which the undersigned is the record holder and, in the case of
any such shares or securities for which the undersigned is the beneficial
but not the record holder by virtue of the undersigned's power to dispose,
or direct the disposition of, such shares or securities, agrees to use
reasonable efforts to cause the record holder to cause the transfer agent
to decline to transfer and/or to note stop transfer restrictions on such
books and records with respect to such shares or securities.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into the agreements set forth herein, and
that, upon request, the undersigned will execute any additional documents
necessary or desirable in connection with the enforcement hereof. All authority
herein conferred or agreed to be conferred shall survive the death or
incapacity of the undersigned and any obligations of the undersigned shall be
binding upon the heirs, personal representatives, successors, and assigns of
the undersigned.
Very truly yours,
____________________________
_______________________________
(Name - Please Type)
_________________________
_________________________
_________________________
(Address)
________________________
(Social Security No.)
Number of shares of Common Stock owned: ________________
Certificate Numbers: ________________
________________
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX A - 2
Number of shares of Common Stock issuable upon exercise of stock options:
_________
32
ANNEX B
Form of Opinion of Counsel to the Company
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(2) The Company has corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Prospectus and to
enter into and perform its obligations under the Underwriting Agreement.
(3) The Company is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect.
(5) The authorized, issued and outstanding capital stock of the Company is as
set forth in the Prospectus in the column entitled "Actual" under the caption
"Capitalization"; the shares of issued and outstanding capital stock have been
duly authorized and validly issued and are fully paid and non-assessable; and
none of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or to our knowledge other similar rights of any
securityholder of the Company.
(6) All offers and sales of the Company's capital stock prior to the date hereof
were made in compliance with or were the subject of an available exemption from
the registration provisions of the Act and any applicable state securities
laws, or any actions, in respect of any such offers or sales are effectively
barred by effective waivers or statutes of limitations.
(7) The Shares to be purchased by the Underwriters from the Company have been
duly authorized for issuance and sale to the Underwriters pursuant to the
Underwriting Agreement and, when issued and delivered by the Company pursuant
to the Underwriting Agreement against payment of the consideration set forth in
the Underwriting Agreement, will be validly issued and fully paid and
non-assessable and no holder of the Shares is or will be subject to personal
liability by reason of being such a holder.
(8) The issuance of the Shares is not subject to the preemptive or to our
knowledge other similar rights of any securityholder of the Company.
Each of the Corporate Subsidiaries has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign corporation to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; CLP is a limited
partnership
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX B - 1
33
duly organized, validly existing and in good standing under the laws of the
State of Georgia, has the partnership power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus and is duly qualified as a foreign partnership to transact business
and is in good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Effect; all of the issued and
outstanding capital stock of each of the Corporate Subsidiaries has been duly
authorized and validly issued, is fully paid and non-assessable and, to the
best of our knowledge, all outstanding shares of capital stock of the Corporate
Subsidiaries and the partnership interest in CLP are owned by the Company,
directly or indirectly through another Subsidiary, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; none
of the outstanding shares of capital stock of any of the Subsidiaries was
issued in violation of the preemptive or to our knowledge similar rights of any
securityholder of such Subsidiary.
(9) The Underwriting Agreement has been duly authorized, executed and delivered
by the Company.
(10) The Registration Statement, including any Additional Registration
Statement, has been declared effective under the Act; any required filing of
the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and, to the best of our knowledge no
stop order suspending the effectiveness of the Registration Statement or any
Additional Registration Statement has been issued under the Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
(11) The Registration Statement, including any Additional Registration
Statement, the Rule 430A Information and the Rule 434 Information, as
applicable, the Prospectus and each amendment or supplement to the Registration
Statement and the Prospectus as of their respective effective or issue dates
(other than the financial statements and supporting schedules and other
financial and statistical data included therein or omitted therefrom, as to
which we need express no opinion) complied as to form in all material respects
with the requirements of the Act and the Act Regulations.
(12) The form of certificate used to evidence the Common Stock complies in all
material respects with all applicable statutory requirements, with any
applicable requirements of the charter and by-laws of the Company and the
requirements of the New York Stock Exchange.
(13) To our knowledge, there is not pending or threatened any action, suit,
proceeding, inquiry or investigation, to which the Company or any Subsidiary is
a party, or to which the property of the Company or any subsidiary is subject,
before or brought by any court or governmental agency or body, domestic or
foreign, which might reasonably be expected to materially and adversely affect
the properties or assets thereof or the consummation of the transactions
contemplated by the Underwriting Agreement or the performance by the Company of
its obligations thereunder.
(14) The information in the Prospectus under "Description of Capital Stock --
Common Stock", "Description of Capital Stock -- Preferred Stock", "Business --
Franchise System and Race Teams", "Management--Limited Liability and
Indemnification of Directors" and in the Registration Statement under Item 14
and 15, to the extent that it constitutes matters of law, summaries of legal
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX B - 2
34
matters, the Company's charter and bylaws or legal proceedings, or legal
conclusions, has been reviewed by us and is correct in all material respects.
(15) We have reviewed all agreements, contracts, indentures, leases or other
documents or instruments described in the Registration Statement and the
Prospectus under the captions "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources," "Management," "Certain Relations and Related Transactions" and
"Shares Eligible for Future Sale" and such agreements, contracts, indentures,
leases or other documents or instruments are fairly summarized or described
therein in all material respects, and filed as exhibits to the Registration
Statement as required.
(16) To our knowledge, there are no statutes or regulations that are required
to be described in the Prospectus that are not described as required.
(17) To our knowledge, there are no franchises, contracts, indentures,
mortgages, loan agreements, notes, leases or other instruments required to be
described or referred to in the Registration Statement or to be filed as
exhibits thereto other than those described or referred to therein or filed or
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(18) To our knowledge, neither the Company nor any Subsidiary is in violation
of its charter or by-laws and no default by the Company or any Subsidiary
exists in the due performance or observance of any material obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, loan agreement, note lease or other agreement or instrument that is
described or referred to in the Registration Statement or the Prospectus or
filed or incorporated by reference as an exhibit to the Registration Statement.
(19) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any court or governmental authority
or agency, domestic or foreign (other than under the Act and the Act
Regulations, which have been obtained, or as may be required under the
securities or blue sky laws of the various states, as to which we need express
no opinion) is necessary or required in connection with the due authorization,
execute and delivery of the Underwriting Agreement or for the offering,
issuance, sale or delivery of the Shares.
(20) The execution, delivery and performance of the Underwriting Agreement and
the consummation of the transactions contemplated in the Underwriting Agreement
and the Registration Statement (including the issuance and sale of Shares, and
the use of the proceeds from the sale of the Shares as described in the
Prospectus under the caption "Use of Proceeds") and compliance by the Company
with its obligations under the Underwriting Agreement do not and will not,
whether with or without the giving of notice or lapse of time or both,
constitute a breach of, or 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 Subsidiary pursuant to any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or any other agreement or
instrument, that is described or referred to in the Registration Statement or
filed or incorporated by reference as an Exhibit to the Registration Statement,
to which the Company or any subsidiary is a party or by which it or any of them
may be bound, or to which any of the property or assets of the Company or any
subsidiary is subject (except
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX B - 3
35
for such breaches or defaults or liens, charges or encumbrances that would not
have a Material Adverse Effect), nor will such action result in any violation
of the provisions of the charter or by-laws of the Company or any Subsidiary,
or any applicable law, statute, rule, regulation, judgement, order, writ or
decree, know to us, of any government, government instrumentality or court,
domestic or foreign, having a jurisdiction over the Company or any Subsidiary
or any of their respective properties, assets or operations.
(21) The Company is not an "investment company" or an entity "controlled" by an
"investment company," as such terms are defined in the 1940 Act.
(22) To our knowledge, no holders of securities of the Company have rights to
the registration thereof under the Registration Statement or, if any such
holders have such rights, such holders have waived such rights.
(23) The Rights under the Company's Shareholders Rights Plan to which holders
of the Shares will be entitled have been duly authorized and validly issued.
We have generally reviewed and discussed with your representatives and
with certain officers of, and independent public accountants for, the Company,
the information furnished, whether or not subject to our check and
verification. On the basis of such consideration, review and discussion,
nothing has come to our attention that has caused us to believe that the
Registration Statement or any amendment thereto, including the Rule 430A
Information and Rule 434 Information (if applicable), (except for financial
statements and schedules and other financial and statistical data included or
incorporated by reference therein or omitted therefrom, as to which we need
make no statement), at the time such Registration Statement or any such
amendment became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading or that the Prospectus or any
amendment or supplement thereto (except for financial statements and schedules
and other financial and statistical data included or incorporated by reference
therein or omitted therefrom, as to which we need make no statement), at the
time the Prospectus was issued, at the time any such amended or supplemented
prospectus was issued or at the Closing Time, included or includes an untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
upon representations and warranties contained herein, and certificates of
officers of the Company, among other things, and may state that they express no
opinion as to the laws of any jurisdiction other than Ohio and federal law and
the General Corporation Law of the State of Delaware.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX B - 4
36
ANNEX C
Form of Opinion of Counsel to the Selling Stockholders
(24) A Power of Attorney and a Custody Agreement have been duly executed and
delivered by each of the Selling Stockholders and constitute valid and binding
agreements of each such Selling Stockholder in accordance with their terms.
(25) The Underwriting Agreement has been duly executed and delivered by or on
behalf of each Selling Stockholder; the sale of the Shares to be sold by each
Selling Stockholder hereunder and the compliance by each Selling Stockholder
with all of the provisions of the Underwriting Agreement, the Power of Attorney
and the Custody Agreement and the consummation of the transactions therein
contemplated will not result in a breach or violation of any terms or
provisions of, or constitute a default under, any statute, indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument known to such
counsel to which each such Selling Stockholder is a party or by which each such
Selling Stockholder is bound or to which any of the property or assets of such
Selling Stockholder is subject, nor will such action result in any violation of
the provisions of the charter or by-laws of such Selling Stockholder if such
Selling Stockholder is a corporation, the Partnership Agreement of such Selling
Stockholder if such Selling Stockholder is a partnership or any order, rule or
regulation known to such counsel of any court or governmental agency or body
having jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder.
(26) No authorization, approval, consent or order of any court or governmental
agency is required to be obtained by any such Selling Stockholder for the sale
of the Shares by such Selling Stockholder to the Underwriters or for the
consummation by the Selling Stockholders of the transactions contemplated by
the Underwriting Agreement (other than the registration under the Act of such
shares, which has been obtained, or as may be required under the securities or
blue sky laws of the various states, as to which we need not express an
opinion).
(27) Immediately prior to such Time of Delivery, each Selling Stockholder had
good and valid title to the Shares to be sold at such Time of Delivery by such
Selling Stockholder under the Underwriting Agreement, to our knowledge after
due inquiry, free and clear of all liens, encumbrances, equities or claims, and
had full corporate or partnership right, power and authority to sell, assign,
transfer and deliver the Shares to be sold by such Selling Stockholder
thereunder.
(28) When delivered by the Selling Stockholder pursuant to the Underwriting
Agreement against payment of the consideration set forth therein, good and
valid title to such Shares, free and clear of all liens, encumbrances, equities
or claims, has been transferred to each of the several Underwriters who have
purchased such Shares in good faith and without notice of any such lien,
encumbrance, equity or claim or any other adverse claim within the meaning of
the Uniform Commercial Code.
In rendering the opinion in paragraph (iv), such counsel may rely upon
a certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold
by such Selling Stockholder and with respect to each item of this opinion may
rely on opinions of counsel for the Selling Stockholders, provided that such
counsel
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX C - 1
37
shall state that they believe that both you and they are justified in relying
upon such certificate and opinions.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX C - 2
38
ANNEX D
Form of Comfort Letter
Pursuant to Section 6(j) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any supplementary
financial information and schedules (and, if applicable, financial forecasts
and/or pro forma financial information) examined by them and included in the
Prospectus or the Registration Statement comply as to form in all material
respects with the applicable accounting requirements of the Act and the related
published rules and regulations thereunder; and, if applicable, they have made
a review in accordance with standards established by the American Institute of
Certified Public Accountants of the unaudited consolidated interim financial
statements, selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited financial
statements of the Company for the periods specified in such letter, as
indicated in their reports thereon, copies of which have been separately
furnished to the representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with standards established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of operations, consolidated balance sheets
and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the Act and
the related published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated statements of operations and financial position of the Company for
the five most recent fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX D - 1
39
to believe that this information does not conform in all material respects with
the disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Prospectus, inquiries of officials
of the Company and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of operations, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited 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 were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited operations statement data and balance sheet items included
in the Prospectus and referred to in Clause (B) were not determined on
a basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma combined financial statements
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the published rules and regulations thereunder or the pro forma
adjustments have not been properly applied to the historical amounts
in the compilation of those statements;
(E) as of a specified date not more than five days prior to
the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or
any decreases in
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX D - 2
40
consolidated net current assets or stockholders' equity or other items
specified by the Representatives, or any increases in any items
specified by the Representatives, in each case as compared with
amounts shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which the
Prospectus discloses have occurred or may occur or which are described
in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and (vi)
above, they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives, which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by
the Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
CHAMPIONSHIP AUTO RACING TEAMS, INC.
UNDERWRITING AGREEMENT
ANNEX D - 3