<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON DECEMBER 18, 1996
REGISTRATION NO. 333-13415
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
AMENDMENT NO. 4
TO
FORM SB-2
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
CRAGAR INDUSTRIES, INC.
(NAME OF SMALL BUSINESS ISSUER IN ITS CHARTER)
<TABLE>
<S> <C> <C>
DELAWARE 3714 86-0721001
(STATE OF (PRIMARY STANDARD INDUSTRIAL CLASSIFICATION (I.R.S. EMPLOYER
INCORPORATION) CODE NUMBER) IDENTIFICATION NO.)
</TABLE>
------------------------
4636 N. 43RD AVENUE
PHOENIX, ARIZONA 85031
(602) 247-1300
FAX: (602) 846-0684
(ADDRESS AND TELEPHONE NUMBER OF PRINCIPAL EXECUTIVE OFFICES AND PRINCIPAL PLACE
OF BUSINESS)
------------------------
MICHAEL L. HARTZMARK
4636 N. 43RD AVENUE
PHOENIX, ARIZONA 85031
(602) 247-1300
(NAME, ADDRESS AND TELEPHONE NUMBER OF AGENT FOR SERVICE)
------------------------
COPIES TO:
<TABLE>
<S> <C>
MATTHEW P. FEENEY, ESQ. ROBERT S. KANT, ESQ.
STEVEN D. PIDGEON, ESQ. RICHARD B. STAGG, ESQ.
SNELL & WILMER L.L.P. O'CONNOR, CAVANAGH, ANDERSON,
ONE ARIZONA CENTER KILLINGSWORTH & BESHEARS, P.A.
PHOENIX, ARIZONA 85004-0001 ONE EAST CAMELBACK
(602) 382-6000 PHOENIX, ARIZONA 85012
FAX: (602) 382-6070 (602) 263-2400
FAX: (602) 263-2900
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 2
EXPLANATORY NOTE
Cragar Industries, Inc. has prepared this Amendment No. 4 for the
purpose of filing with the Securities and Exchange Commission certain exhibits
to the Registration Statement. Amendment No. 4 does not modify any provision of
the Prospectus included in the Registration Statement; accordingly, the related
Prospectus has not been included herein.
<PAGE> 3
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 24. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Company's Bylaws provide that the corporation shall to the fullest
extent authorized by the Delaware General Corporation Law, as the same exists or
may hereafter be amended (but, in the case of any such amendment, only to the
extent that such amendment permits the corporation to provide broader
indemnification rights than such law permitted the corporation to provide prior
to such amendment), indemnify and hold harmless any person who was or is a
party, or is threatened to be made a party to or is otherwise involved in any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative by reason of the fact that such person
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, including
service with respect to an employee benefit plan (hereinafter an "Indemnitee")
against expenses, liabilities and losses (including attorneys' fees, judgments,
fines, excise taxes or penalties paid in connection with the Employee Retirement
Income Security Act of 1974, as amended, and amounts paid in settlement)
reasonably incurred or suffered by such Indemnitee in connection therewith;
provided, however, that except as provided in this Section with respect to
proceedings to enforce rights to indemnification, the corporation shall
indemnify any such Indemnitee in connection with a proceeding (or part thereof)
initiated by such Indemnitee only if such proceeding or part thereof was
authorized by the board of directors of this corporation.
The right to indemnification conferred in the Company's Bylaws includes the
right to be paid by the corporation the expenses (including attorneys' fees)
incurred in defending any such proceeding in advance of its final disposition;
provided, however, that, if the Delaware General Corporation Law requires, an
advancement of expenses incurred by an Indemnitee in his capacity as a director
or officer (and not in any other capacity in which service was or is rendered by
such Indemnitee, including, without limitation, service to an employee benefit
plan) shall be made only upon delivery to the corporation of an undertaking, by
or on behalf of such Indemnitee, to repay all amounts so advanced if it shall
ultimately be determined by final judicial decision from which there is not
further right to appeal that such Indemnitee is not entitled to be indemnified
for such expenses under this section or otherwise. The rights to indemnification
and to the advancement of expenses conferred in this Section shall be contract
rights and such rights shall continue as to an Indemnitee who has ceased to be a
director, officer, employee or agent and shall inure to the benefit of the
Indemnitee's heirs, executors and administrators.
If a claim under the two preceding paragraphs of this Section is not paid
in full by the corporation within 60 days after a written claim has been
received by the corporation, except in the case of a claim for an advancement of
expenses, in which case the applicable period shall be 20 days, the Indemnitee
may at any time thereafter bring suit against the corporation to recover the
unpaid amount of the claim. If successful in whole or in part in any such suit,
or in a suit brought by the corporation to recover an advancement of expenses
pursuant to the terms of an undertaking, the Indemnitee shall be entitled to be
paid also the expense of prosecuting or defending such suit. In (i) any suit
brought by the Indemnitee to enforce a right to indemnification hereunder (but
not in a suit brought by the Indemnitee to enforce a right to an advancement of
expenses) and (ii) in any suit brought by the corporation to recover an
advancement of expenses pursuant to the terms of an undertaking, the corporation
shall be entitled to recover such expenses upon a final adjudication that the
Indemnitee has not met any applicable standard for indemnification set forth in
the Delaware General Corporation Law. Neither the failure of the corporation
(including its board of directors, independent legal counsel, or its
stockholders) to have made a determination prior to the commencement of such
suit that indemnification of the Indemnitee is proper in the circumstances
because the Indemnitee has met the applicable standard of conduct set forth in
the Delaware General Corporation Law, nor an actual determination by the
corporation (including its board of directors, independent legal counsel, or its
stockholders) that the Indemnitee has not met such applicable standard of
conduct shall create a presumption that the Indemnitee has not met the
applicable standard of conduct or, in the case of such a suit brought by the
Indemnitee, be a defense to such suit. In any suit brought by the Indemnitee to
enforce a right
II-1
<PAGE> 4
to indemnification or to an advancement of expenses hereunder, or brought by the
corporation to recover an advancement of expenses pursuant to the terms of an
undertaking, the burden of proving that the Indemnitee is not entitled to be
indemnified, or to such advancement of expenses under this Section or otherwise
shall be on the corporation.
The Delaware General Corporation Law provides that indemnification is
permissible only when the director, officer, employee, or agent acted in good
faith and in a manner reasonable believed to be in or not opposed to the best
interests of the Company, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe the conduct was unlawful. The
Delaware General Corporation Law also precludes indemnification in respect of
any claim, issue, or matter as to which an officer, director, employee, or agent
shall have been adjudged to be liable to the Company unless and only to the
extent that the Court of Chancery or the court in which such action or suit was
brought shall determine that, despite such adjudication of liability but in view
of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
ITEM 25. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
<TABLE>
<S> <C>
Securities and Exchange Commission Registration Fee..................... $ 4,261
Nasdaq and Boston Stock Exchange Filing Fees............................ 7,291
NASD Fee................................................................ 1,929
Printing Expenses....................................................... 75,000
Legal Fees and Expenses................................................. 150,000
Accounting Fees and Expenses............................................ 95,000
Blue Sky Filing Fees and Expenses....................................... 25,000
Warrant Agent, Transfer Agent and Registrar Fees........................ 3,000
Representative's Non-accountable Expense Allowance...................... 155,550
Miscellaneous........................................................... 49,469
--------
Total................................................................. $566,500*
========
</TABLE>
- ---------------
* Estimated
ITEM 26. RECENT SALES OF UNREGISTERED SECURITIES
Since September 30, 1993, the Company has sold the following unregistered
securities:
1. On September 30, 1993, the Company privately sold for cash
$1,500,000 principal amount of 6% convertible subordinated secured
promissory notes (the "1993 Junior Notes") to certain accredited and
sophisticated investors. The 1993 Junior Notes will be automatically
converted upon the closing of this offering into approximately 291,666
shares of Common Stock. The purchasers of the 1993 Junior Notes were David
Atkins; CN Partners, L.P.; Phyllis Cohen; Anthony Dalessio; Irving Davies;
Sidney Dworkin; Edward R. Falkner; Julius Kramer; MDA Financial, Inc.;
Kenneth Reichle; Gerald Richter; James Schoke; Elayne Schoke; and Donald
Shapiro.
2. On December 15, 1994, the Company issued to Mr. Sidney Dworkin
29,167 shares of Common Stock, 3,937.5 Class A Warrants, and a promissory
note in the principal amount of $108,333 (the "$108,333 Note") in exchange
for $150,000 cash. Each Class A Warrant entitles the holder to purchase one
share of Common Stock at $1.43, exercisable at any time before December 31,
1999. The $108,333 Note had an interest rate of 15% per annum, payable
annually in five installments commencing January 1, 1995. On January 31,
1995, Mr. Dworkin contributed the $108,333 Note to the capital of the
Company.
3. On December 15, 1994, the Company issued to Mr. Sidney Dworkin
24,500 Class B Warrants and a promissory note in the principal amount of
$350,000 (the "$350,000 Note") in exchange for
II-2
<PAGE> 5
$350,000 cash. Each Class B Warrant entitles the holder to purchase one
share of Common Stock at $0.36, exercisable at any time on or before
December 31, 1999. The $350,000 Note bears interest at a rate of 8% per
annum, payable monthly through January 1, 1997. The $350,000 Note is
automatically convertible upon the closing of this offering into 68,056
shares of the Company's Common Stock.
4. On September 30, 1995, the Company agreed to issue shares of its
Common Stock to the holders of the 1993 Junior Notes, and the holders of
the 1993 Junior Notes agreed to accept such Common Stock, in lieu of paying
interest that had accrued on the 1993 Junior Notes. Pursuant to that
agreement, each holder of the 1993 Junior Notes received 15,070 shares of
the Company's Common Stock for every $100,000 of interest payable. In
aggregate, 26,409 shares of Common Stock were issued for $175,245. The
holders of the 1993 Junior Notes were the same accredited and sophisticated
investors as set forth above in paragraph 1.
5. On June 10, 1996, pursuant to the Company's Non-Employee Directors'
Stock Option Plan, the Company granted options to current and former
members of the Board of Directors to purchase 9,800 shares of the Company's
Common Stock. All options were granted with an exercise price of $5.14 per
share. The options were issued to Mark Schwartz, Sidney Dworkin, Donald
McIntyre, Phyllis Froimson, and Victor Scaravilli. Also, effective June 10,
1996, the Company's Board of Directors granted James Schoke, a former
director of the Company, an option to purchase 2,100 shares of the
Company's Common Stock at an exercise price of $5.14 per share.
6. On July 1, 1996, the Company sold securities totaling $1,500,000 to
certain accredited and sophisticated investors. In consideration thereof,
each investor received from the Company (i) the Company's promissory note
in the principal amount of the investor's individual investment (the
"Bridge Note"), and (ii) Class C Warrants, in the amount of 8,400 warrants
for each $100,000 the investor individually invested. Each Class C Warrant
entitles the holder to purchase one share of the Company's Common Stock at
$3.25, exercisable at any time before June 30, 2001. These Bridge Notes and
Class C Warrants were sold to the following investors: Hymie Akst; Michael
Bushey; Central Fill Pharmacy; Inc.; Irving Davies; Melvin Gershman, IRA;
Edward R. Falkner; Marvin Kogod; Marc Loveman, IRA; Beno Michel; Kenneth M.
Reichle, Jr.; Robert M. Rosin; Royal Bank of Scotland; RFD Associates,
Ltd.; Harry Schwartz; Mark Schwartz; Paul T. Sciarrino; Wesley Wood.
7. On November 9, 1996, pursuant to the Company's Employee Stock
Option Plan, the Company granted options to current employees to purchase
53,500 shares of the Company's Common Stock. All options were granted with
an exercise price of $5.60 per share. The options were issued to Michael L.
Hartzmark, David Bratset, Tony Barrett, Ed Chavez, Tony Cortes, Bob
Deyoung, Michael Miller, and Kent Rogers. In addition, the Company's Board
of Directors granted James Schoke, a former director of the Company, an
option to purchase 2,100 shares of the Company's Common Stock at an
exercise price of $5.60 per share.
Each transaction described above was deemed exempt from registration under
the Securities Act pursuant to Section 4(2) of the Act as transactions not
involving any public offering.
ITEM 27. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ ----------------------------------------------------------------------------
<S> <C>
1.1 Deleted
1.2 Form of Underwriting Agreement between Registrant and Dickinson & Co.
3.1 Second Amended and Restated Certificate of Incorporation of the Registrant
filed with State of Delaware on October 1, 1996*
3.2 Amended and Restated Bylaws of the Registrant*
4.1 Second Amended and Restated Certificate of Incorporation of the Registrant
(filed as Exhibit 3.1)*
</TABLE>
II-3
<PAGE> 6
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ ----------------------------------------------------------------------------
<S> <C>
4.2 Form of Certificate representing Common Stock*
4.3 Form of Warrant Agreement
4.4 Form of Warrant Certificate (attached as Exhibit A to Form of Warrant
Agreement filed as Exhibit 4.3)
4.5 Deleted
4.6 Deleted
4.7 Form of 1993 Convertible Subordinated Secured Note of the Registrant, dated
September 30, 1993*
4.7 (a) Form of First Note Amendment to 1993 Convertible Subordinated Secured Note
of the Registrant, dated September 30, 1995*
4.7 (b) Form of Second Note Amendment to 1993 Convertible Subordinated Secured Note
of the Registrant*
4.8 $350,000 Promissory Note of the Registrant, dated December 15, 1994, issued
to Sidney Dworkin*
4.8 (a) Agreement between Registrant and Sidney Dworkin, dated October 12, 1995,
amending the terms and conditions of the $350,000 Promissory Note*
4.8 (b) First Note Amendment to the $350,000 Promissory Note of the Registrant
issued to Sidney Dworkin*
4.9 Form of 1996 Unsecured Promissory Bridge Note of the Registrant*
4.10 Credit and Security Agreement, dated as of April 14, 1995, executed by and
between Registrant and Norwest Business Credit, Inc.*
4.10(a) Amendment to Credit and Security Agreement, dated as of September 19, 1995,
executed by and between Registrant and Norwest Business Credit, Inc.*
4.10(b) First Amendment to Credit Agreement, dated as of , 1996,
executed by and between Registrant and Norwest Business Credit, Inc.*
4.10(c) Waiver and Amendment to Credit and Security Agreement, dated November 20,
1996, executed by and between Registrant and Norwest Business Credit, Inc.*
4.11 Form of Class A Stock Purchase Warrant Certificate*
4.12 Form of Class B Stock Purchase Warrant Certificate*
4.13 Form of Class C Stock Purchase Warrant Certificate*
4.14 Form of Stock Option/Restricted Stock Grant for grants made pursuant to
either or both the CRAGAR Industries, Inc. 1996 Non-Employee Directors'
Stock Option Plan filed as Exhibit 10.1 and the CRAGAR Industries, Inc. 1996
Stock Option and Restricted Stock Plan filed as Exhibit 10.2*
4.15 Form of Representative's Warrant Agreement, dated , 1996, by and between the
Registrant and Dickinson & Co.
5.1 Opinion of Snell & Wilmer L.L.P. regarding the legality of the Securities
and Representative's Warrants being registered
10.1 CRAGAR Industries, Inc. 1996 Non-Employee Directors' Stock Option Plan*
10.1 (a) First Amendment to the CRAGAR Industries, Inc. 1996 Non-Employee Directors'
Stock Option Plan, dated October 1, 1996*
10.2 CRAGAR Industries, Inc. 1996 Stock Option and Restricted Stock Plan*
10.2 (a) First Amendment to the CRAGAR Industries, Inc. 1996 Stock Option and
Restricted Stock Plan, dated October 1, 1996*
</TABLE>
II-4
<PAGE> 7
<TABLE>
<CAPTION>
EXHIBIT
NUMBER DESCRIPTION
------ ----------------------------------------------------------------------------
<S> <C>
10.3 Commercial Lease, dated February 5, 1993, executed by and between Registrant
and Principal Mutual Life Insurance Company*
10.4 Employment Agreement, dated January 1, 1996, executed by and between
Registrant and Tony Barrett*
10.5 Purchase Program, dated January 24, 1996, executed by and between Registrant
and Super Shops*
10.6 Form of 1992 Promissory Note of Registrant, dated December 31, 1992, issued
in connection with Registrant's original capitalization*
10.6 (a) Form of First Note Amendment of 1992 Promissory Note of Registrant, dated
September 30, 1994*
10.6 (b) Form of Agreement to Forgive Interest, dated December 14, 1994, executed by
and between Registrant and certain holders of 1992 Promissory Notes of
Registrant*
10.6 (c) Form of Letter, dated February 16, 1995, issued by Registrant to (i) holders
of the 1992 Promissory Notes of Registrant, and (ii) holder of the $350,000
Note of Registrant, whereby holders of the Notes agreed to contribute to
capital the 1992 Notes and the $350,000 Note*
10.7 $108,333 Promissory Note of Registrant, dated December 15, 1994, issued to
Sidney Dworkin*
10.7 (a) Form of Letter, dated February 16, 1995, issued by Registrant to (i) holders
of the 1992 Promissory Notes of Registrant, and (ii) holder of the $350,000
Note of Registrant, whereby holders of the Notes agreed to contribute to
capital the 1992 Promissory Notes and the $350,000 Note (attached as Exhibit
10.6(c))*
10.8 Cognovit Promissory Note dated September 30, 1993, executed by Registrant
and payable to Performance Industries, Inc.*
10.8 (a) Cross Receipt executed by and between Lee Hartzmark and Registrant in
connection with Assignment of Cognovit Promissory Note*
10.9 Wheel & Component Purchase Agreement dated April 3, 1996, executed by and
between Registrant and Titan Wheel International, Inc.*
10.10 Redistribution Agreement dated November 7, 1996, executed by and between
Registrant and RELCO Corp.*
11.1 Computation of Earnings Per Share*
21 List of Subsidiaries of the Registrant*
23.1 Consent of Snell & Wilmer, L.L.P (included in Exhibit 5.1)*
23.2 Consent of KPMG Peat Marwick LLP, independent certified public accountants*
24 Power of Attorney (included on signature page of Registration Statement)*
24.1 Power of Attorney signed by Ed Faber*
27 Financial Data Schedule*
99.1 Deleted
99.2 Deleted
99.3 Form of Lock-Up Agreement, executed by and between the Registrant and
certain of the Registrant's security-holders (included in Exhibit 1.2).*
</TABLE>
- ---------------
* Previously filed
** To be filed
II-5
<PAGE> 8
ITEM 28. UNDERTAKINGS
The undersigned Registrant hereby undertakes to provide the Underwriter at
the closing specified in the Underwriting Agreement certificates in such
denominations and registered in such names as required by the Underwriters to
permit prompt delivery to each purchaser.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the Registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.
The undersigned Registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities
Act, the information omitted from the form of prospectus filed as part of
this Registration Statement in reliance upon Rule 430A and contained in the
form of prospectus field by the Registrant pursuant to Rule 424(b)(1), or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
Registration Statement as of the time it was declared effective.
(2) For purposes of determining any liability under the Securities
Act, each post effective amendment that contains a form of prospectus shall
be deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall be
deemed to be the initial bona fide offering thereof.
The undersigned Registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this Registration Statement to: (i)
including any prospectus required by Section 10(a)(3) of the Securities Act
of 1933; (ii) reflect in the prospectus any facts or events arising after
the effective date of this Registration Statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in this
Registration Statement; (iii) include any material information with respect
to the plan of distribution not previously disclosed in this Registration
Statement or any material change to such information in the registration
statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective amendment
any of the securities being registered which remain unsold at the
termination of the offering.
II-6
<PAGE> 9
SIGNATURES
In accordance with the requirements of the Securities Act of 1933, the
Registrant has duly caused this Amendment No. 4 to the Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized, in the
City of Phoenix, State of Arizona, on the 18th day of December, 1996.
CRAGAR INDUSTRIES, INC.
By: /s/
---------------------------------
Michael L. Hartzmark
President and Chief Executive
Officer
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Amendment No. 4 to the Registration Statement on Form SB-2 has been signed
by the following persons in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- ------------------------------------------ ------------------------------ ------------------
<S> <C> <C>
/s/ President, Chief Executive December 18, 1996
- ------------------------------------------ Officer, and Director
Michael L. Hartzmark (Principal Executive Officer)
/s/ Vice President of Operations December 18, 1996
- ------------------------------------------ (Principal Financial and
Anthony W. Barrett Accounting Officer)
* Director December 18, 1996
- ------------------------------------------
Sidney Dworkin
* Director December 18, 1996
- ------------------------------------------
Donald McIntyre
* Director December 18, 1996
- ------------------------------------------
Mark Schwartz
* Director December 18, 1996
- ------------------------------------------
Ed Faber
*By: /s/
-------------------------------------
Michael L. Hartzmark
Attorney-in-Fact
</TABLE>
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<PAGE> 10
EXHIBITS INDEX
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ---------------------------------------------------------------------- ------------
<S> <C> <C>
1.1 Deleted...............................................................
1.2 Form of Underwriting Agreement, dated , 1996, by and
between Registrant and Dickinson & Co. ...............................
3.1 Second Amended and Restated Certificate of Incorporation of the
Registrant filed with State of Delaware on October 1, 1996*...........
3.2 Amended and Restated Bylaws of the Registrant*........................
4.1 Second Amended and Restated Certificate of Incorporation of the
Registrant (filed as Exhibit 3.1)*....................................
4.2 Form of Certificate representing Common Stock*........................
4.3 Form of Warrant Agreement.............................................
4.4 Form of Warrant Certificate (attached as Exhibit A to Form of Warrant
Agreement filed as Exhibit 4.3).......................................
4.5 Deleted...............................................................
4.6 Deleted...............................................................
4.7 Form of 1993 Convertible Subordinated Secured Note of the Registrant,
dated September 30, 1993*.............................................
4.7 (a) Form of First Note Amendment to 1993 Convertible Subordinated Secured
Note of the Registrant, dated September 30, 1995*.....................
4.7 (b) Form of Second Note Amendment to 1993 Convertible Subordinated Secured
Note of the Registrant*...............................................
4.8 $350,000 Promissory Note of the Registrant, dated December 15, 1994,
issued to Sidney Dworkin*.............................................
4.8 (a) Agreement between Registrant and Sidney Dworkin, dated October 12,
1995, amending the terms and conditions of the $350,000 Promissory
Note*.................................................................
4.8 (b) First Note Amendment to the $350,000 Promissory Note of the Registrant
issued to Sidney Dworkin*.............................................
4.9 Form of 1996 Unsecured Promissory Bridge Note of the Registrant*......
4.10 Credit and Security Agreement, dated as of April 14, 1995, executed by
and between Registrant and Norwest Business Credit, Inc.*.............
4.10(a) Amendment to Credit and Security Agreement, dated as of September 19,
1995, executed by and between Registrant and Norwest Business Credit,
Inc.*.................................................................
4.10(b) First Amendment to Credit Agreement, dated as of , 1996,
executed by and between Registrant and Norwest Business Credit,
Inc.* ................................................................
4.10(c) Waiver and Amendment to Credit and Security Agreement, dated November
20, 1996, executed by and between Registrant and Norwest Business
Credit, Inc.* ........................................................
4.11 Form of Class A Stock Purchase Warrant Certificate*...................
4.12 Form of Class B Stock Purchase Warrant Certificate*...................
4.13 Form of Class C Stock Purchase Warrant Certificate*...................
4.14 Form of Stock Option / Restricted Stock Grant for grants made pursuant
to either or both the CRAGAR Industries, Inc. 1996 Non-Employee
Directors' Stock Option Plan filed as Exhibit 10.1 and the CRAGAR
Industries, Inc. 1996 Stock Option and Restricted Stock Plan filed as
Exhibit 10.2*.........................................................
</TABLE>
<PAGE> 11
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ---------------------------------------------------------------------- ------------
<S> <C> <C>
4.15 Form of Representative's Warrant Agreement, dated , 1996, by
and between the Registrant and Dickinson & Co.........................
5.1 Opinion of Snell & Wilmer L.L.P. regarding the legality of the
Securities and Representative's Warrants being registered.............
10.1 CRAGAR Industries, Inc. 1996 Non-Employee Directors' Stock Option
Plan*.................................................................
10.1 (a) First Amendment to the CRAGAR Industries, Inc. 1996 Non-Employee
Directors' Stock Option Plan, dated October 1, 1996*..................
10.2 CRAGAR Industries, Inc. 1996 Stock Option and Restricted Stock
Plan*.................................................................
10.2 (a) First Amendment to the CRAGAR Industries, Inc. 1996 Stock Option and
Restricted Stock Plan, dated October 1, 1996*.........................
10.3 Commercial Lease, dated February 5, 1993, executed by and between
Registrant and Principal Mutual Life Insurance Company*...............
10.4 Employment Agreement, dated January 1, 1996, executed by and between
Registrant and Tony Barrett*..........................................
10.5 Purchase Program, dated January 24, 1996, executed by and between
Registrant and Super Shops*...........................................
10.6 Form of 1992 Promissory Note of Registrant, dated December 31, 1992,
issued in connection with Registrant's original capitalization*.......
10.6 (a) Form of First Note Amendment of 1992 Promissory Note of Registrant,
dated September 30, 1994*.............................................
10.6 (b) Form of Agreement to Forgive Interest, dated December 14, 1994,
executed by and between Registrant and certain holders of 1992
Promissory Notes of Registrant*.......................................
10.6 (c) Form of Letter, dated February 16, 1995, issued by Registrant to (i)
holders of the 1992 Promissory Notes of Registrant, and (ii) holder of
the $350,000 Note of Registrant, whereby holders of the Notes agreed
to contribute to capital the 1992 Promissory Notes and the $350,000
Note*.................................................................
10.7 $108,333 Promissory Note of Registrant, dated December 15, 1994,
issued to Sidney Dworkin*.............................................
10.7 (a) Form of Letter, dated February 16, 1995, issued by Registrant to (i)
holders of the 1992 Promissory Notes of Registrant, and (ii) holder of
the $350,000 Note of Registrant, whereby holders of the Notes agreed
to contribute to capital the 1992 Promissory Notes and the $350,000
Note (attached as Exhibit 10.6(c))*...................................
10.8 Cognovit Promissory Note dated September 30, 1993, executed by
Registrant and payable to Performance Industries, Inc.*...............
10.8 (a) Cross Receipt executed by and between Lee Hartzmark and Registrant in
connection with Assignment of Cognovit Promissory Note*...............
10.9 Wheel & Component Purchase Agreement dated April 3, 1996, executed by
and between Registrant and Titan Wheel International, Inc.* ..........
10.10 Redistribution Agreement dated November 7, 1996, executed by and
between Registrant and RELCO Corp.* ..................................
11.1 Computation of Earnings Per Share*....................................
21 List of Subsidiaries of the Registrant*...............................
23.1 Consent of Snell & Wilmer, L.L.P (included in Exhibit 5.1)*...........
23.2 Consent of KPMG Peat Marwick LLP, independent certified public
accountants*..........................................................
</TABLE>
<PAGE> 12
<TABLE>
<CAPTION>
SEQUENTIALLY
EXHIBIT NUMBERED
NUMBER DESCRIPTION PAGES
- ------ ---------------------------------------------------------------------- ------------
<S> <C> <C>
24 Power of Attorney (included on signature page of Registration
Statement)*...........................................................
24.1 Power of Attorney signed by Ed Faber*.................................
27 Financial Data Schedule*..............................................
99.1 Deleted...............................................................
99.2 Deleted...............................................................
99.3 Form of Lock-Up Agreement, executed by and between the Registrant and
certain of the Registrant's security-holders (included in Exhibit
1.2).*
</TABLE>
- ---------------
* Previously filed
** To be filed
<PAGE> 1
Exhibit 1.2
CRAGAR INDUSTRIES, INC.
850,000 SHARES OF COMMON STOCK
AND
850,000 COMMON STOCK PURCHASE WARRANTS
UNDERWRITING AGREEMENT
December __, 1996
Dickinson & Co.
As Representative of the
Several Underwriters
referred to herein
2425 East Camelback Road, Suite 725
Phoenix, Arizona 85016
Ladies and Gentlemen:
CRAGAR Industries, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to the several underwriters (the "Underwriters")
named in Schedule I hereto for whom you are acting as representative (the
"Representative") an aggregate of 850,000 shares (the "Firm Shares") of Common
Stock, $.01 par value per share (the "Common Stock"), and 850,000 redeemable
common stock purchase warrants (the "Firm Warrants") exercisable for one share
of Common Stock each (the Firm Shares and the Firm Warrants together, the "Firm
Securities"). The respective amounts of the Firm Securities to be so purchased
by the several Underwriters are set forth opposite their names in Schedule I
hereto. The Company also proposes to sell, at the Underwriters' option, an
aggregate of up to 127,500 additional shares (the "Option Shares") of Common
Stock and up to 127,500 additional Warrants (the "Option Warrants") (the Option
Shares and the Option Warrants together, the "Option Securities") as discussed
more fully in Section 2 below. The Company further agrees to issue, upon the
Closing Date as hereafter defined in Section 2, certain warrants (the
"Representative's Warrants") to the Representative or its designees as more
fully discussed in Section 4(p) below. The Firm Warrants and Option Warrants are
herein collectively referred to as "Warrants." The Firm Securities, the Option
Securities (to the extent the aforementioned option is exercised) and the shares
into which the Warrants are exercisable are herein collectively called the
"Securities."
In consideration of the mutual agreements contained herein and of the
interests of the parties in the transactions contemplated hereby, the parties
hereto agree as follows:
<PAGE> 2
1. Representations and Warranties of the Company.
The Company represents, warrants, and agrees as follows:
(a) A registration statement on Form SB-2 (File No.
333-13415) with respect to the Securities, including a form of
prospectus subject to completion, has been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder and has been filed with the Commission under
the Act and has been declared effective by the Commission under the Act,
and no post-effective amendment to such registration statement has been
filed as of the date of this Agreement. Copies of such registration
statement, including any pre-effective amendments thereto, the
prospectuses subject to completion (meeting the requirements of Rule
430A of the Rules and Regulations) contained therein and the exhibits,
financial statements and schedules, as finally amended and revised, have
heretofore been delivered by the Company to the Representative. The term
"Registration Statement" means the registration statement as amended at
the time it becomes or became effective, including financial statements
and all exhibits and any information deemed to be included by Rule 430A.
The Company also may file a related abbreviated registration statement
with the Commission pursuant to Rule 462(b) under the Act for the
purpose of registering certain additional Securities, which registration
statement shall be effective upon filing with the Commission. Any
registration statement filed pursuant to Rule 462(b) of the Rules and
Regulations is referred to herein as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement"
includes the Rule 462(b) Registration Statement. The Registration
Statement shall be deemed to include all information omitted therefrom
in reliance upon Rule 430A and contained in the Prospectus or term sheet
referred to below. The term "Prospectus" as used in this Agreement means
(i) the prospectus in the form included in the Registration Statement,
or (ii) if the prospectus included in the Registration Statement omits
information in reliance upon Rule 430A under the Act and such
information is included in a prospectus filed with the Commission
pursuant to Rule 424(b) under the Act or as part of a post-effective
amendment to the Registration Statement after the Registration Statement
becomes effective, the prospectus as so filed, or (iii) if the
prospectus included in the Registration Statement omits information in
reliance upon Rule 430A under the Act and such information is included
in a term sheet (as described in Rule 434(b) under the Act) filed with
the Commission pursuant to Rule 424(b) under the Act, the prospectus
included in the Registration Statement and such term sheet, taken
together, or (iv) any other prospectus filed with the Commission
pursuant to Rule 424(b) under the Act or as part of a post-effective
amendment to the Registration Statement after the Registration Statement
becomes effective. The prospectus subject to completion in the form
included in the Registration Statement at the time of the initial filing
of such Registration Statement with the Commission and as such
prospectus is amended from time to time until the date upon which the
Registration Statement is declared effective by the Commission is
referred to in this Agreement as the "Preliminary Prospectus."
2
<PAGE> 3
(b) The Company is a corporation duly formed, validly
existing, and in good standing under the laws of the State of Delaware,
with full corporate power and corporate authority to own or lease its
properties and conduct its business as described in the Registration
Statement; the Company is qualified to transact business in all
jurisdictions in which the conduct of its business requires such
qualification, except where the failure to qualify would not have a
material adverse effect upon the business or property of the Company.
(c) The Company has authorized and outstanding capital
stock as set forth under the heading "Capitalization" in the Prospectus;
the outstanding shares of Common Stock of the Company have been duly
authorized and validly issued, are fully paid and nonassessable, and
have been issued in compliance with all federal and state securities
laws; all of the Securities to be issued and sold by the Company
pursuant to this Agreement have been duly authorized and, when issued
and paid for as contemplated herein, will be validly issued, fully paid,
and nonassessable; and no preemptive rights of stockholders exist with
respect to any of the Securities nor the issue and sale thereof; no
stockholder of the Company has any right pursuant to any agreement to
require the Company to register, in the Registration Statement, the sale
of any shares owned by such stockholder under the Act; all necessary and
proper corporate proceedings have been taken to validly authorize the
issuance and sale of the Securities and no further approval or authority
of the stockholders or the Board of Directors of the Company is required
for the issuance and sale of the Securities to be sold by the Company as
contemplated herein. The Company has received, subject to notice of
issuance, approval to have the Securities listed on the Nasdaq SmallCap
Market and the Boston Stock Exchange, and the Company does not know of
any reason or set of facts which is likely to adversely affect such
approval.
(d) The Securities conform in all material respects to the
description thereof in the Registration Statement. Except as
specifically disclosed in the Registration Statement and the financial
statements of the Company and the related notes thereto, the Company
does not have outstanding any options or warrants to purchase, or any
preemptive rights or other rights to subscribe for or to purchase, any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, shares of its capital stock or any such
options, rights, convertible securities, or obligations. The
descriptions of the Company's stock option and other stock-based plans,
and of the options or other rights granted and exercised thereunder, set
forth in the Prospectus are accurate summaries and fairly present the
information required to be shown with respect to such plans and rights
in all material respects. The Company and its affiliates are not
currently offering any securities other than the Securities, nor has the
Company offered or sold any of the Company's securities within the past
three years, except as described in the Registration Statement.
(e) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus
relating to the proposed offering of the Firm Securities nor instituted
or, to the best knowledge of the Company, threatened instituting
proceedings for that purpose. The Registration Statement contains,
3
<PAGE> 4
and the Prospectus and any amendments or supplements thereto contains or
will contain, all statements of material fact that are required to be
stated therein by, and in all material respects conform or will conform,
as the case may be, to the requirements of, the Act and the Rules and
Regulations. Neither the Registration Statement nor any amendment
thereto, and neither the Prospectus nor any supplement thereto, contains
or will contain, as the case may be, any untrue statement of a material
fact or omits or will omit to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that the Company makes no representations or warranties as to
information contained in or omitted from the Registration Statement or
the Prospectus, or any such amendment or supplement, in reliance upon,
and in conformity with, written information furnished to the Company by
or on behalf of the Representative specifically for use in the
preparation thereof.
(f) The financial statements of the Company, together with
related notes and schedules included in the Registration Statement,
present fairly in all material respects the financial position and the
results of operations of the Company, at the indicated dates and for the
indicated periods. Such financial statements, schedules and related
notes have been prepared in accordance with generally accepted
accounting principles, consistently applied throughout the periods
involved, except as disclosed therein, and all adjustments necessary for
a fair presentation of results for such periods have been made. The
summary and selected financial and statistical data and schedules
included in the Registration Statement present fairly the information
shown therein and have been compiled on a basis consistent with the
financial statements presented therein. No other financial statements or
schedules are required to be included in the Registration Statement.
(g) There is no action, suit, or proceeding pending or, to
the best knowledge of the Company, after due inquiry, threatened against
the Company before any court or regulatory, governmental, or
administrative agency or body, or arbitral forum, that might reasonably
be expected to result in a material adverse change in the business or
financial condition of the Company, except as set forth in the
Registration Statement. Except as set forth in the Registration
Statement, the Company is not subject to the provisions of any
injunction, judgment, decree, or order of any court, regulatory body,
administrative agency, or other governmental body or arbitral forum,
that might reasonably be expected to result in a material adverse change
in the business, assets, or condition of the Company.
(h) The Company has good and marketable title to all of
the properties and assets reflected in either the financial statements
or as described in the Registration Statement and such properties and
assets are not subject to liens, mortgages, security interests, pledges,
or encumbrances of any kind, except those reflected in or encumbering
debt described in such financial statements or as described in the
Registration Statement, and except for equipment leases entered into by
the Company in the ordinary course of its business and such encumbrances
that, individually or in the aggregate, would not have a material
adverse effect on the business or financial condition of the Company.
The
4
<PAGE> 5
Company occupies its leased properties under valid and binding leases
conforming in all material respects to the description thereof set forth
in the Registration Statement.
(i) The Company has filed (or has received extensions with
regard to) all federal, state, local, and foreign income tax returns
that have been required to be filed and has paid all taxes indicated by
said returns and has paid all tax assessments received by it, except
those as to which a bonafide dispute exists, which in any case are not
material individually or in the aggregate. There is no income, sales,
use, transfer, or other tax deficiency or assessment that has been or
might reasonably be expected to be asserted or threatened against the
Company that might reasonably be expected to result in a material
adverse change in the business or financial condition of the Company.
The Company has paid all sales, use, transfer, and other taxes
applicable to it and its business and operations, except those as to
which a bonafide dispute exists, which in any case are not material
individually or in the aggregate.
(j) Since the respective dates as of which information is
given in the Registration Statement, as it may be amended or
supplemented, and prior to the Closing Date and Option Closing Date, and
except in each case as described in or as contemplated by the
Registration Statement and Prospectus, (i) there has not been any
material adverse change in or affecting the condition, financial or
otherwise, of the Company or the earnings, business affairs, management,
or business prospects of the Company; (ii) there has not been any
transaction entered into by the Company, other than transactions in the
ordinary course of business or transactions specifically described in
the Registration Statement as it may be amended or supplemented; (iii)
the Company has not sustained any material loss or interference with its
businesses or properties from fire, flood, windstorm, accident, or other
calamity; (iv) the Company has not paid or declared any dividends or
other distribution with respect to its capital stock and, except as
disclosed in the Prospectus, the Company is not in default in the
payment of principal of or interest on any outstanding debt obligations
that might reasonably be expected to result in a material adverse change
in the business or financial condition of the Company; and (v) there has
not been any change in the capital stock (other than the sale of the
Securities or the exercise of outstanding stock options or warrants as
described in the Registration Statement) or material increase in
indebtedness of the Company. The Company does not have any material
contingent obligation which is not disclosed in the Registration
Statement (or contained in the financial statements or related notes
thereto), as such may be amended or supplemented.
(k) The Company is not in violation or default under any
provision of its Certificate of Incorporation or Bylaws and, except as
disclosed in Prospectus, is not in material violation or default under
any of its agreements, leases, licenses, contracts, franchises,
mortgages, permits, deeds of trust, indentures, or other instruments or
obligations to which the Company is a party or by which it or any of its
properties is bound or may be materially affected (collectively,
"Contracts").
(l) The execution and performance of this Agreement and
the consummation of the transactions herein contemplated do not and will
not conflict with
5
<PAGE> 6
or result in a breach of, or violation of, any of the terms or
provisions of, or constitute, either by itself or upon notice or the
passage of time or both, a default under, any Contract to which the
Company is a party or by which the Company or any of its property may be
bound or affected, except where such breach, violation, or default would
not have a material adverse effect on the business or financial
condition of the Company, or violate any of the provisions of the
Certificate of Incorporation or Bylaws of the Company or violate any
order, judgment, statute, rule, or regulation applicable to the Company
of any court or of any regulatory, administrative, or governmental body
or agency or arbitral forum having jurisdiction over the Company or any
of its property.
(m) The Company has the legal right, corporate power and
corporate authority to enter into this Agreement and perform the
transactions contemplated hereby. This Agreement has been duly
authorized, executed, and delivered by the Company and, assuming due
authorization, execution and acceptance by the Representative on behalf
of the several Underwriters, constitutes a legally binding agreement
enforceable against the Company in accordance with its terms, except as
the enforceability may be subject to or limited by bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other similar
laws affecting the rights of creditors generally and subject to the
effect of general principles of equity (including, without limitation,
matters of public policy and equitable principles).
(n) Each approval, registration, qualification, license,
permit, consent, order, authorization, designation, declaration, or
filing by or with any regulatory, administrative, or other governmental
body or agency necessary in connection with the execution and delivery
by the Company of this Agreement and the consummation of the
transactions herein contemplated (except such additional actions as may
be required to qualify the Securities for public offering under state
securities or Blue Sky laws) has been obtained or made and each is in
full force and effect.
(o) The Company owns or possesses adequate and sufficient
rights by license agreement or otherwise to use and enjoy the full
rights in and to all patents, patent rights, trade secrets, license or
royalty arrangements, trademarks and trademark rights, service marks,
trade names, copyrights, know how or proprietary techniques or rights
thereto of others, and governmental, regulatory, or administrative
authorizations, orders, permits, certificates, and consents necessary
for the conduct of the business of the Company other than those that
would not individually or in the aggregate have a material adverse
effect on the Company. The Company is not aware of any pending or
threatened action, suit, proceeding, or claim by others, either
domestically or internationally, that the Company is violating any (i)
patents, patent rights, copyrights, trademarks, or trademark rights,
inventions, service marks, trade names, licenses or royalty
arrangements, trade secrets, know how or proprietary techniques or
rights thereto of others, or (ii) governmental, regulatory or
administrative authorizations, orders, permits, certificates, and
consents relating thereto. The Company is not aware of any rights of
third parties to, or any infringement by a third party of, any of the
Company's patents, patent rights, trademarks or trademark rights,
copyrights, licenses or royalty arrangements, trade secrets, know how or
proprietary techniques, as well as processes
6
<PAGE> 7
and substances, that could reasonably be expected to materially
adversely affect the use thereof by the Company or that would have a
material adverse effect on the Company. The Company is not aware of any
pending or threatened action, suit, proceeding, or claim by others
challenging the validity or scope of any of the Company's patents,
patent rights, trademarks, or trademark rights, copyrights, licenses or
royalty arrangements, trade secrets, know how, or proprietary
techniques.
(p) There are no Contracts or other documents
required to be described in the Registration Statement or to be filed
as exhibits to the Registration Statement by the Act or by the Rules
and Regulations that have not been described or filed as required.
(q) The Company is conducting its business in
compliance with all applicable laws, rules, and regulations of the
jurisdictions in which it is conducting business, including, without
limitation, all applicable local, state, federal, and foreign
environmental laws and regulations, except where the failure to so
comply would not have a material adverse effect on the business or
financial condition of the Company. The Company possesses adequate
certificates or permits issued by the appropriate federal, state, and
local regulatory authorities necessary to conduct its business and to
retain possession of its properties. The Company has not received any
notice of any proceeding relating to the revocation or modification of
any such federal, state, and local regulatory certificates or permits.
(r) All transactions among the Company and the
officers, directors, and affiliates of the Company have been accurately
disclosed, in all material respects, in the Prospectus, to the extent
required to be disclosed in the Prospectus in accordance with the Act
and the Rules and Regulations. As used in this Agreement, the term
"affiliate" shall mean a person or entity controlling, controlled by,
or under common control with, any specified person or entity, or the
ability to direct, directly or indirectly, the management or policies
of the controlled person or entity, whether through the ownership of
voting securities, by contract, positions of employment, family
relationships, service as an officer, director, or partner of the
person or entity, or otherwise.
(s) The Company has not, to the best of its
knowledge, directly or indirectly, (i) made any unlawful contribution
to any candidate for public office, or failed to disclose fully any
contribution in violation of law, or (ii) made any payment to any
federal, state, local, or foreign governmental officer or official, or
other person charged with similar public or quasi-public duties, other
than payments required or permitted by the laws of the United States or
any other such jurisdiction.
(t) The Company maintains insurance of the types and
in the amounts that it deems adequate for its business including, but
not limited to, general liability insurance and insurance covering all
real and personal property owned or leased by the Company against all
risks customarily insured against by similar businesses, all of which
insurance is in full force and effect. The Company has no reason to
believe that the Company will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its
7
<PAGE> 8
business at a cost that would not have a material adverse affect on the
Company, except as described in or contemplated by the Prospectus.
(u) KPMG Peat Marwick, L.L.P., which has audited and
certified the financial statements filed with the Commission as part of
the Registration Statement, are independent public accountants as
required by the Act and the Rules and Regulations.
(v) The Company has taken all appropriate steps
reasonably necessary or appropriate to assure that no offering, sale,
or other disposition of any Common Stock of the Company will be made,
directly or indirectly, by any of its directors or executive officers
or other persons listed in Schedule IIA for a period of 12 months after
the date of the Prospectus, or by the persons specified in Schedule IIB
for the periods specified therein, in each case, except as otherwise
provided herein or with the prior written consent of the
Representative. For a period of 12 months from the date of the
Prospectus, the Company, at its expense, shall provide the
Representative with copies of the Company's daily transfer sheets,
which shall be mailed to the Representative no less frequently than
weekly.
(w) The Company is classified as a "C" corporation
with the Internal Revenue Service.
(x) The Company's Board of Directors consists of
those persons listed in the Prospectus. Except as disclosed in the
Prospectus, none of such persons engages in business with the Company
to the extent required to be disclosed in the Prospectus.
(y) Except as provided for herein, no broker's or
finder's fees or commissions are due and payable by the Company, and
none will be paid by it.
(z) Neither the Company, nor to its knowledge, after
due and diligent inquiry, any person other than the Representative, has
made any representation, promise, or warranty, whether verbal or in
writing, to anyone, whether an existing stockholder or not, that any of
the Securities will be reserved for or directed to them during the
proposed public offering.
(aa) No labor disturbance by the employees of the
Company exists or is, to the Company's best knowledge, eminent that is
reasonably likely to have a material adverse affect on the Company. No
collective bargaining agreement exists with any of the Company's
employees and no such agreement is eminent.
(bb) The Representative's Warrants will conform to
the description thereof in the Registration Statement and in the
Prospectus and, when sold to and paid for by the Representative or its
designees in accordance with the Representative's Warrant Agreement,
will have been duly authorized and validly issued and will constitute
valid and binding obligations of the Company, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization or other similar laws relating to enforcement of
creditors' rights generally, and general equitable principles
8
<PAGE> 9
relating to the availability of remedies, and the holders thereof will
be entitled to the benefits of the Representative's Warrant Agreement,
except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or other similar laws relating to
enforcement of creditors' rights generally, and general equitable
principles relating to the availability of remedies. The Underlying
Shares (as defined in the Representative's Warrant Agreement) have been
duly authorized and reserved for issuance upon exercise of the
Representative's Warrants by all necessary corporate action on the part
of the Company and, when issued upon such exercise in accordance with
the terms of the Representative's Warrant Agreement at the price
therein provided, will be validly issued, fully paid, non-assessable
and free of preemptive rights, and will conform to the description
thereof in the Prospectus.
(cc) Except as set forth in the Registration
Statement and the Prospectus, (i) the Company is in compliance with all
rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the
environment ("Environmental Laws") that are applicable to its business,
(ii) the Company has not received any notice from any governmental
authority or third party of an asserted claim under any Environmental
Law, which claim is required to be disclosed in the Registration
Statement and the Prospectus, (iii) to the extent now known to the
Company, the Company will not be required to make future material
capital expenditures to comply with Environment Laws, and (iv) no
property that is owned, leased or occupied by the Company has been
designated as a contaminated site under applicable federal, state, or
local law.
2. Purchase, Sale and Delivery of the Firm Securities. On the basis of
the representations, warranties, and covenants herein contained, and subject to
the conditions herein set forth, the Company agrees to sell to the Underwriters
and each Underwriter agrees, severally and not jointly, to purchase, at the
gross price per Share and per Warrant indicated in the Prospectus (the "Initial
Price") less the Underwriters' discount of ten percent (10%) of the Initial
Price, the Firm Shares and the number of Firm Securities set forth opposite the
name of each Underwriter in Schedule I hereof, subject to adjustments in
accordance with Section 9 hereof.
Payment for the Firm Securities to be sold hereunder is to be made by
certified or bank cashier's check(s) drawn to the order of the Company for the
Firm Securities, against delivery of certificates therefor to the Representative
for the several accounts of the Underwriters. Such payment is to be made at the
offices of O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A., One
East Camelback Rd., Phoenix, Arizona 85012-1656 at 10:00 A.M., Phoenix time, on
the third business day after the date of this Agreement, or at such other time
and date not later than four business days thereafter as the Representative and
the Company shall agree upon, such time and date being herein referred to as the
"Closing Date." (As used herein, "business day" means a day on which the Boston
Stock Exchange, Inc. is open for trading and on which banks in Arizona are open
for business and not permitted by law or executive order to be closed.) The
certificates for the Firm Securities shall be in definitive form and will be
delivered in such denominations and in such registrations as the Representative
requests in writing not later than the second business day prior to the Closing
Date, unless upon the request of the Representative, delivery is to be made
through the facilities of the Depository Trust
9
<PAGE> 10
Company. The Certificates for the Firm Securities will be made available for
inspection by the Representative at least one business day prior to the Closing
Date at the offices of the Representative or American Stock Transfer & Trust
Company located in New York City or New Jersey, as the Representative elects.
Delivery of the certificates for the Firm Securities shall be made against
payment therefor at either of such offices, as the Representative elects.
In addition, on the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
grants an option to the several Underwriters to purchase the Option Securities
at the Initial Price, less the Underwriters' discount, subject to adjustment as
provided in Section 9. The maximum number of Option Securities to be sold by the
Company is 127,500 shares of Common Stock and 127,500 Warrants. The option
granted hereby may be exercised in whole or in part, but only once, and at any
time upon written notice given within 45 days after the Closing Date, by the
Representative on behalf of the several Underwriters, to the Company setting
forth the number of Option Securities as to which the several Underwriters are
exercising the option, the names and denominations in which the Option
Securities are to be registered, and the time and date at which such
certificates are to be delivered. The certificates for Option Securities are to
be delivered to a location designated by the Representative on a date designated
by the Representative (which may be the same as the Closing Date but shall in no
event be earlier than the Closing Date nor earlier than three nor later than ten
business days after the giving of the notice referred to above) (such time and
date being herein referred to as the "Option Closing Date"). Except as otherwise
agreed by the Representative on behalf of the several Underwriters in writing,
the number of Option Securities to be purchased by each Underwriter shall be in
the same proportion to the total number of Option Securities being purchased as
the number of Firm Securities being purchased by such Underwriter bears to the
total number of the Firm Securities, adjusted by the Representative in such
manner as to avoid fractional shares. The option with respect to the Option
Securities granted hereunder may be exercised solely to cover over-allotments in
the sale of the Firm Securities by the Underwriters or to permit purchases by
the Underwriters to the extent permitted by law. The Representative may cancel
such option at any time, in whole or in part, prior to its expiration, by giving
written notice of such cancellation to the Company. To the extent, if any, that
the option is exercised, payment for the Option Securities shall be made on the
Option Closing Date by certified or bank cashier's check(s) drawn to the order
of the Company for the Option Securities, against delivery of certificates
therefor at the offices of O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, P.A. noted above.
3. Offering by the Underwriters. It is understood that the several
Underwriters are to make a public offering of the Firm Securities as soon as
practicable after the Registration Statement becomes effective. The Firm
Securities are to be initially offered to the public at the Initial Price set
forth in the Prospectus. The Representative may from time to time thereafter
change the public offering price and other selling terms. To the extent, if at
all, that any Option Securities are purchased pursuant to Section 2 hereof, the
Representative will offer them to the public on the foregoing terms.
It is further understood that the Representative will act on behalf of
the Underwriters in the offering and sale of the Securities, in accordance with
a Master Agreement Among
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Underwriters entered into by the Representative and the several other
Underwriters on or prior to the date hereof.
4. Covenants of the Company. The Company covenants and agrees with the
several Underwriters that:
(a) The Company will (i) prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a prospectus or term
sheet (as described in Rule 434(b) of the Rules and Regulations) containing
information previously omitted at the time of effectiveness of the Registration
Statement in reliance on Rule 430A of the Rules and Regulations and (ii) not
file any amendment to the Registration Statement or supplement to the Prospectus
of which the Representative shall not previously have been advised and furnished
with a copy or to which the Representative shall have reasonably objected in
writing or which is not in compliance with the Rules and Regulations.
(b) The Company will advise the Representative promptly and
will confirm such advice in writing (i) when the Registration Statement has
become effective, (ii) of any request of the Commission for amendment of the
Registration Statement or for supplement to the Prospectus or for any additional
information, or (iii) of the issuance by the Commission or any state securities
commission of any stop order suspending the effectiveness of the Registration
Statement or the use of the Prospectus or of the institution of any proceedings
for that purpose, and the Company will use its best efforts to prevent the
issuance of any such stop order preventing or suspending the use of the
Prospectus and to obtain as soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representative in
endeavoring to qualify the Securities for sale under the securities laws of such
jurisdictions as the Representative may have reasonably requested in writing and
will make such applications, file such documents, furnish such information, and
take such other actions as may be reasonably required by federal or state
securities laws or regulations whether before, during, or after the offering.
The Company will, from time to time, prepare and file such statements, reports,
and other documents, as are or may be required to continue such qualifications
in effect for so long a period as the Representative may reasonably request for
distribution of the Securities; provided, however, that the Company shall not be
required to register or qualify as a foreign corporation or to take any action
that would subject it to service of process in suits, other than relating to the
sale of the Securities, in any jurisdiction where it is not now so subject.
(d) The Company will register the Common Stock and the
Warrants with the Commission under the provisions of Section 12(g) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and will
maintain such registration in effect for a period of five years from the
effective date of the Registration Statement, or for such shorter period as
shall be required by law. The Company will qualify the Securities for trading on
the National Association of Securities Dealers Automated Quotation System
("NASDAQ") and for listing on the Boston Stock Exchange (the "BSE") and will use
its reasonable best efforts to maintain such qualification and listing for as
long as the Common Stock is qualified for inclusion in NASDAQ and on the BSE.
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<PAGE> 12
(e) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary Prospectus
as the Representative may reasonably request. The Company will deliver to, or
upon the order of, the Representative during the period when delivery of a
Prospectus is required under the Act, as many copies of the Prospectus in final
form, or as thereafter amended or supplemented, as the Representative may
reasonably request. The Company will deliver to the Representative at or before
the Closing Date, two signed copies of the Registration Statement and all
amendments thereto, including all exhibits filed therewith, and will deliver to
the Representative such number of copies of the Registration Statement, without
exhibits, but including any information incorporated by reference, and of all
amendments thereto, as the Representative may request.
(f) If during the period of time in which a Prospectus is
required to be delivered under the Act, by an underwriter or dealer, any event
shall occur as a result of which, in the judgment of the Company or in the
opinion of counsel for the Representative, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein not
misleading, or if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Registration Statement, including the
Prospectus as so amended or supplemented, will not be misleading, or so that the
Registration Statement, including the Prospectus, will comply with the Act.
(g) The Company will make generally available to its
stockholders, as soon as it is practicable to do so, but in any event not later
than 15 months after the effective date of the Registration Statement, an
earnings statement in reasonable detail, covering a period of at least 12
consecutive months beginning after the effective date of the Registration
Statement, which earnings statement shall satisfy the requirements of Section 11
(a) of the Act and Rule 158 of the Rules and Regulations and will advise the
Representative in writing when such statement has been so made available and
will furnish the Representative with a true and correct copy thereof.
(h) The Company will, for a period of five years from the
effective date of the Registration Statement, deliver to the Representative
copies of annual reports and copies of all other documents, reports, and
information furnished by the Company to its stockholders or filed with any
securities exchange pursuant to the requirements of such exchange or with the
Commission pursuant to the Act or the Exchange Act. The Company will deliver to
the Representative similar reports with respect to significant subsidiaries, as
that term is defined in the Rules and Regulations, which are not consolidated in
the Company's financial statements.
(i) The Company will apply the net proceeds of the sale of the
Securities sold by it materially in accordance with the statements under the
caption "Use of Proceeds" in the Prospectus subject to the qualifications
described therein.
(j) The Company has required each of its directors and
executive officers, and certain of its security holders listed on Schedule II,
to enter into agreements not to sell any shares of the Company's Common Stock
for a period of time ending on the date specified on Schedule II with respect to
such director, executive officer, or security-holder (being a period ending 12
months or 90 days, as so specified, from the date of the Prospectus), without
the prior
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<PAGE> 13
written consent of the Representative. The Company has furnished the
Representative with an executed copy of each such agreement substantially in the
form attached as Schedule III which has been executed by each person or entity
specified in Schedule II.
(k) The Company has made original documents (or true copies
thereof) and other information relating to the Company's affairs available to
the Underwriters and to their counsel. Included within the documents made
available have been at least the Certificate of Incorporation and all amendments
thereto, the Bylaws and all amendments thereto, minutes of all of the meetings
of the incorporators, directors, and stockholders, all financial statements, and
copies of all Contracts filed as exhibits to the Registration Statement (a
"Material Contract") to which the Company is a party or in which the Company has
an interest.
(l) The Company will furnish to its stockholders, as soon as
practicable, annual reports (including financial statements audited by
independent public accounts) and unaudited quarterly reports of earnings, and
during the period of five years after the date hereof will deliver to the
Representative:
(i) concurrently with furnishing such annual reports
to its stockholders, a balance sheet of the Company as at the end of
the preceding fiscal year, together with statements of operations,
stockholders' equity, and cash flows of the Company for such fiscal
year, accompanied by a copy of the report thereon of independent public
accounts;
(ii) concurrently with furnishing such quarterly
reports to its stockholders, statements of income for the Company for
each quarter in the form furnished to the Company's stockholders;
(iii) as soon as they are available, copies of all
information (financial or other) mailed to stockholders;
(iv) as soon as they are available, copies of all
publicly available reports and financial statements furnished to or
filed with the Commission, the NASD, or the BSE;
(v) every press release and every material news item
or article of interest distributed to the financial community in
respect of the Company or its affairs, which was released or prepared
by the Company; and
(vi) any additional information of a public nature
concerning the Company or its business which the Representative may
reasonably request.
The foregoing financial statements will be on a consolidated
basis to the extent that the accounts of the Company and its subsidiaries are
consolidated, and will be accompanied by similar financial statements for any
subsidiary which is not so consolidated.
(m) The Company has appointed American Stock Transfer & Trust
Company as the Company's transfer agent. Unless the Representative otherwise
consents in writing, the
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<PAGE> 14
Company will continue to retain such transfer agent, or a transfer agent
reasonably satisfactory to the Representative, for a period of five years
following the effective date of the Registration Statement. The Company will
make arrangements to have available at the office of the transfer agent
sufficient quantities of certificates representing Shares of Common Stock
issuable upon the exercise of the Warrants as may be needed for the quick and
efficient transfer of such Securities. During such five year period, at the
request of the Representative, the Company shall cause such transfer agent to
provide the Representative on a monthly basis with copies of the Company's stock
transfer sheets and, when reasonably requested by the Representative, a current
list of the Company's security holders, including a list of the beneficial
owners of securities held by a depository trust company, and other nominees.
(n) For a period of five years from the effective date of the
Registration Statement, the Company, at its expense, shall continue to retain
KPMG Peat Marwick, L.L.P., or another accounting firm reasonably acceptable to
the Representative, as its regularly engaged independent certified public
accountants and shall cause such accountants to review (but not audit) the
Company's financial statements for each of the first three fiscal quarters prior
to the announcement of quarterly financial information, the filing of the
Company's 10-Q quarterly report, and the filing of quarterly financial
information to stockholders.
(o) Except with the Representative's approval, the Company
agrees that the Company will not do any of the following for 25 days after the
Closing Date or the Option Closing Date, whichever occurs later:
(i) Undertake or authorize any change in its capital
structure or authorize, issue or permit any public or private
offering of additional securities, other than in connection
with existing stock-based benefit plans.
(ii) Authorize, create, issue, or sell any funded
obligations, notes, or other evidences of indebtedness, except
in the ordinary course of business;
(iii) Consolidate or merge with or into any other
corporation or effect a material corporate reorganization of
the Company; or
(iv) Create any mortgage or any lien upon any of its
properties or assets, except in the ordinary course of its
business.
(p) At closing, the Company shall deliver to the
Representative warrants (the "Representative's Warrants") to purchase, for $.001
per warrant, in the aggregate 85,000 Shares of Common Stock and 85,000 Warrants
in the form attached hereto as Appendix "A." The Representative's Warrants will
be exercisable for a four-year term, commencing one year after the effective
date of the Registration Statement, at an exercise price equal to 125% of the
Initial Price of the Firm Securities. The Representative's Warrants shall not be
redeemable by the Company, and shall be exercisable at any time commencing one
year after the effective date of the Registration Statement and continuing for
four years thereafter.
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<PAGE> 15
(q) For a period commencing on the date hereof and ending 12
months after the effective date of the Registration Statement, the Company will
deliver to the Representative copies of such news releases or other publicity
about the Company promptly after distribution thereof.
(r) For a period of five years from the effective date of the
Registration Statement, the Company will appoint a non-voting advisor,
designated by the Representative, to its Board of Directors; such designee shall
attend meetings of the Board and receive no more or less compensation than is
paid to other non-management directors of the Company and shall be entitled to
receive reimbursement for all reasonable costs incurred in attending such
meetings, including, but not limited to, food, lodging, and transportation. To
the extent permitted by law, the Company will indemnify the Representative and
its designee for the actions of such designee as a director of the Company. In
the event the Company maintains a liability insurance policy affording coverage
for the acts of its officers and directors, it will agree, if reasonably
feasible, to include both the Representative and its designee as an insured
under such policy. If the Representative does not exercise its option to
designate an advisor to the Company's Board of Directors, the Representative
shall nonetheless have the right to send a representative (who need not be the
same individual from meeting to meeting) to observe each meeting of the Board of
Directors. The Company agrees to give the Representative notice of each such
meeting and to provide the Representative with an agenda and minutes of the
meeting no later than it gives such notice and provides such items to the
directors.
(s) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 promulgated under the Act by the earlier of (i) the close of the next
business day following the filing of the Rule 462(b) Registration Statement and
(ii) the time confirmations are sent or given, as specified by Rule 462(b)(2).
5. Costs and Expenses. The Company will pay or cause to be paid all
costs, expenses and fees in connection with the offering or incident to the
performance of the obligations of the Company under this Agreement, including,
without limiting the generality of the foregoing, the following: (a) all
expenses (including any transfer taxes) incurred in connection with the delivery
to the several Underwriters of the Securities sold hereunder, (b) all fees and
expenses (including, without limitation, fees and expenses of the Company's
accountants and counsel, but excluding fees and expenses of counsel for the
Underwriters other than fees in connection with blue sky matters in connection
with the preparation, printing, filing, delivery, and shipping of the
Registration Statement (including the financial statements therein and all
amendments and exhibits thereto)), Preliminary Prospectuses and the Prospectus
as amended or supplemented, (c) the cost of printing, filing, and delivering
this Agreement and other underwriting documents including Underwriters'
Questionnaires, Underwriters' Powers of Attorney, Blue Sky Memoranda, Agreements
Among Underwriters, Selected Dealers Agreements, Invitation Telecopy, and any
letters transmitting the offering materials to the Underwriters or selling group
members (including costs of mailing and shipment), (d) all filing fees and fees
and disbursements of counsel to the Underwriters incurred in connection with the
qualification of the Securities and their components for offer and sale under
the applicable state or foreign securities laws, (e) filing and listing fees of
the Commission, National Association
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<PAGE> 16
of Securities Dealers, Inc., ("NASD"), NASDAQ and any other similar entity in
connection with the offering, (f) the cost of printing certificates representing
the Securities and issuable upon the exercise of the Warrants, (g) the costs and
charges of any transfer agent or registrar, (h) the costs of advertising,
including but not limited to the Wall Street Journal and the Arizona Republic,
as well as any other advertising undertaken at the Company's request, (i) the
cost of the Company's executive employees for marketing and public relations
associated with "road shows" and other presentations to NASD approved
broker/dealers, (j) the fees for financial coverage in Standard and Poor's
Corporate Record Service, (k) the costs of preparing, printing and distributing
bound volumes for the Representative and its counsel, and (l) all other costs
and expenses incident to the performance of the Company's obligations under this
Agreement which are not otherwise provided for in this Section . The Company
shall use a printer acceptable to the Representative. Any transfer taxes imposed
on the sale of the Securities to the several Underwriters will be paid by the
Company. The Company shall pay to the Representative a non-accountable expense
allowance of up to three percent (3%) of the gross proceeds of the Securities,
payable at the Closing(s), of which Twenty-Five Thousand Dollars ($25,000) has
been advanced to the Representative on or before the date hereof, which shall be
credited to the allowance noted above. This expense allowance is in addition to
the Underwriters' discount. The Underwriters shall be responsible for the fees
and disbursements of their counsel, except as noted otherwise in this Section 5.
The Company shall not be required to pay for any of the Underwriters' other
expenses, except that if this Agreement shall not be consummated because the
conditions in Section 7 hereof are not satisfied, or because this Agreement is
terminated by the Representative pursuant to Section 6 hereof, or by reason of
any failure, refusal, or inability on the part of the Company to perform any
undertaking or satisfy any condition of this Agreement or to comply with any of
the terms hereof on its part to be performed, unless such failure to satisfy
said condition or to comply with said terms is due solely to the default of the
Underwriters, then the Company shall reimburse the several Underwriters for
out-of-pocket expenses, including fees and disbursements of counsel, up to
$50,000, incurred in connection with investigating, marketing, and proposing to
market the Securities or in contemplation of performing their obligations
hereunder, and in any event the Underwriters may retain amounts theretofore paid
to them as set forth above.
6. Conditions of Obligations of the Underwriters. The several
obligations of the Underwriters to purchase the Firm Securities on the Closing
Date and the Option Securities, if any, on the Option Closing Date are subject
to the accuracy, in all material respects, as of the Closing Date or the Option
Closing Date, as the case may be, of the representations and warranties of the
Company contained herein, and to the performance by the Company of its covenants
and obligations hereunder and to the following additional conditions:
(a) If the Registration Statement or any amendment thereto
filed prior to the Closing Date has not been declared effective as of the time
of execution hereof, the Registration Statement or such amendment shall have
been declared effective not later than 5:00 p.m. New York City time, on the date
of this Agreement or such later date and time as may be consented to in writing
by the Representative. If required, the Prospectus that constitutes a part of
the Registration Statement and any amendment of supplement thereto shall have
been filed with the Commission in the manner and within the time period required
by Rules 424 and 430A under the Act. No stop order suspending the effectiveness
of the Registration Statement, as amended
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<PAGE> 17
from time to time, shall have been issued and no proceedings for that purpose
shall have been taken or, to the best knowledge of the Company, after due
inquiry, shall be contemplated by the Commission or any state securities
commission.
(b) The Representative shall have received on the Closing Date
or the Option Closing Date, as the case may be, the opinion of Snell & Wilmer,
counsel for the Company, dated the Closing Date or the Option Closing Date, as
the case may be, addressed to the Underwriters to the effect that:
(i) The Company is a corporation duly organized,
validly existing, and in good standing as a corporation under
the laws of the State of Delaware, with corporate power and
corporate authority to own or lease its properties and conduct
its business as described in the Registration Statement; the
Company is duly qualified as a foreign corporation to transact
business in all jurisdictions in which, to counsel's
knowledge, the conduct of its business requires such
qualification, except where the failure to qualify would not
have a material adverse effect upon the business or financial
condition of the Company.
(ii) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization"
in the Prospectus; and the outstanding shares of Common Stock
of the Company have been duly authorized and validly issued,
and are fully paid and nonassessable.
(iii) All of the Securities to be issued and sold by
the Company pursuant to this Agreement have been duly
authorized by all necessary corporate action and, when issued
and delivered to the Underwriters against payment therefor, as
contemplated herein, will be validly issued, fully paid, and
nonassessable. Further, to such counsel's knowledge, no
preemptive rights of stockholders exist with respect to any of
the Securities or the issue and sale thereof; no stockholder
of the Company has any right pursuant to any agreement to
require the Company to register the sale of any shares owned
by such stockholder under the Act in the public offering
contemplated herein; and no further approval or authority of
the stockholders or the Board of Directors of the Company is
required for the issuance and sale of the Securities to be
sold by the Company as contemplated herein.
(iv) The certificates evidencing the Securities to be
delivered hereunder comply in all material respects with the
requirements of Delaware law and the Securities conform in all
material respects to the description thereof contained in the
Prospectus.
(v) Except as specifically disclosed in or
contemplated by the Registration Statement and the financial
statements of the Company, and the related notes thereto, to
counsel's knowledge, the Company does not have outstanding any
options to purchase, or any preemptive rights or other rights
to subscribe for or to purchase, any securities or obligations
convertible into, or any contracts or
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<PAGE> 18
commitments to issue or sell, shares of its capital stock or
any such options, rights, convertible securities, or
obligations. The descriptions of the Company's stock option
and other stock-based plans, and any other options or warrants
heretofore granted by the Company, set forth in the Prospectus
are accurate summaries and fairly present the information
required under the Act and Rules and Regulations to be shown
with respect to such plans and rights in all material respects
(provided that counsel need express no opinion with respect to
numerical information pertaining to such plans or grants).
(vi) The Registration Statement has become effective
under the Act and no stop order proceedings with respect
thereto have been instituted or are pending or threatened
under the Act and nothing has come to such counsel's attention
to lead them to believe that such proceedings are
contemplated; any required filing of the Prospectus and any
supplement thereto or term sheet (as described in Rule 434(b)
of the Rules and Regulations) relating thereto pursuant to
Rule 424(b) of the Rules and Regulations has been made in
accordance with Rule 424(b).
(vii) The Registration Statement, all Preliminary
Prospectuses, the Prospectus and each amendment or supplement
thereto comply as to form in all material respects with the
requirements of the Act and the Rules and Regulations (except
that such counsel need express no opinion as to the financial
statements, schedules, and other financial and statistical
information included therein).
(viii) Such counsel does not know of any Contracts or
other documents required to be filed as exhibits to the
Registration Statement or described in the Registration
Statement or the Prospectus that are required under the Act
and Rules and Regulations to be filed or described, which are
not so filed or described as required.
(ix) Except as otherwise described in the
Registration Statement and Prospectus, to such counsel's
knowledge, there is no action or suit pending before any court
of the United States of a character required to be disclosed
in the Prospectus pursuant to the Act and the Rules and
Regulations; and to such counsel's knowledge, there is no
action, suit, or proceeding threatened by a written
communication to the Company against the Company before any
U.S. court or regulatory, governmental, or administrative
agency or body or arbitral forum of a character required to be
disclosed in the Prospectus pursuant to the Act and the Rules
and Regulations; and to such counsel's knowledge, the Company
is not a party or subject to the provisions of any injunction,
judgment, decree, or order of any court, regulatory body,
administrative agency, or other governmental body or agency or
arbitral forum that is required to be disclosed under the Act
or the Rules and Regulations.
(x) The execution and performance of this Agreement
and the consummation of the transactions herein contemplated
do not and will not conflict with or result in the breach of,
or violation of, any of the terms or provisions of,
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<PAGE> 19
or constitute, either by itself or upon notice or the passage
of time or both, a default under, any Material Contract to
which the Company is a party or by which the Company or any of
its property may be bound or affected, except where such
breach, violation, or default would not have a material
adverse effect on the business or financial condition of the
Company, or violate any of the provisions of the Certificate
of Incorporation or Bylaws of the Company or violate any
statute, judgment, decree, order, rule, or regulation known to
such counsel of any court or of any governmental, regulatory,
or administrative body or agency or arbitral forum having
jurisdiction over the Company or any its property.
(xi) To such counsel's knowledge, the Company is not
in violation or default under any provision of any of its
Certificate of Incorporation or Bylaws; and, to such counsel's
knowledge, the Company is not in violation of or default under
any Material Contracts to which the Company is a party or by
which it or any of its properties is bound or may be affected,
except, in each case, where such violation or default would
not have a material adverse effect on the business or
financial condition of the Company.
(xii) The Company has the corporate power and
corporate authority to enter into this Agreement and perform
the transactions contemplated hereby. This Agreement has been
duly authorized, executed, and delivered by the Company, and,
assuming due authorization, execution, and acceptance by the
Representative on behalf of the Underwriters, this Agreement
constitutes a valid and binding agreement of the Company,
enforceable in accordance with its terms, except as such
enforceability may be limited by or affected by judicial
decisions and laws governing, limiting, or affecting equitable
remedies or relief generally (including, without limitation,
matters of public policy and equitable principles), whether
considered in a proceeding at law or in equity, or by
bankruptcy, insolvency, liquidation, reorganization,
arrangement, moratorium, or other laws or judicial decisions
relating to or affecting rights of creditors generally, and
except to the extent that rights to indemnity hereunder may be
limited by federal or state securities laws or the public
policy underlying such laws.
(xiii) To such counsel's knowledge, all approvals,
consents, orders, authorizations, designations, registrations,
permits, qualifications, licenses, declarations, or filings by
or with any regulatory, administrative, or governmental body
necessary in connection with the execution and delivery by the
Company of this Agreement and the consummation of the
transactions herein contemplated have been obtained or made
and all are in full force and effect, except those that may be
required under State Securities or Blue Sky Laws, as to which
counsel need express no opinion.
(xiv) No transfer taxes are required to be paid under
any applicable state law in connection with the sale and
delivery of the Securities to the Underwriters hereunder.
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<PAGE> 20
Except with respect to subparagraph (b)(i) above, the opinion may be
limited to the laws of the State of Arizona, the corporate law of the State of
Delaware, and federal law. In rendering the opinion in (b)(xi) above, such
counsel may rely upon certificates of public officials and officers of the
Company. As to factual matters generally, such counsel may rely on certificates
obtained from directors and officers of the Company, its stockholders, and from
public officials. In addition to the matters set forth above, such opinion also
shall include a statement to the effect that nothing has come to the attention
of such counsel which leads them to believe that the Registration Statement, or
any amendment thereto, at the time the Registration Statement or 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, in light of the circumstances under which they were made,
not misleading, or the Prospectus or any amendment or supplement thereto, at the
time it was filed pursuant to Rule 424(b) or at the Closing Date or the Option
Closing Date, as the case may be, 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, in light of the circumstances under
which they were made, not misleading (except that such counsel need express no
view as to financial statements, schedules, and other financial information and
statistical data and information included therein). Such counsel shall permit
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A. to rely upon such
opinion in rendering its opinion under Section 6(c).
(c) The Underwriters shall have received from O'Connor,
Cavanagh, Anderson, Killingsworth & Beshears, P.A., counsel for the
Underwriters, an opinion dated the Closing Date and the Option Closing Date, if
any, substantially to the effect that (i) the Registration Statement has become
effective under the Act and to the best of the knowledge of such counsel, no
stop order proceedings with respect thereto have been instituted or are pending
or threatened under the Act; and (ii) the Registration Statement, all
Preliminary Prospectuses, the Prospectus, and each amendment or supplement
thereto comply as to form in all material respects with the requirements of the
Act and the applicable Rules and Regulations thereunder (except that such
counsel need express no opinion as to the financial statements, schedules, and
other financial or statistical information included therein). In addition to the
matters set forth above, such opinion shall also include a statement to the
effect that nothing has come to the attention of such counsel which leads them
to believe that the Registration Statement, the Prospectus, or any amendment
thereto contains any untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or the Prospectus or any amendment or supplement
thereto, at the time it was filed pursuant to Rule 424(b) or at the Closing Date
or the Option Closing Date, as the case may be, 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, in light of the
circumstances under which they were made, not misleading (except that such
counsel need express no view as to financial statements, schedules, and other
financial information included therein). With respect to such statement,
O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A. may state that
their belief is based upon the procedures set forth therein, but is without
independent check and verification.
(d) The Representative and the Company shall have received at
or prior to the Closing Date from O'Connor, Cavanagh, Anderson, Killingsworth &
Beshears, P.A., a Blue Sky memorandum, in form and substance satisfactory to the
Representative, with respect to the
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<PAGE> 21
qualification for offering and sale by the Underwriters of the Securities under
the state securities or Blue Sky laws of such jurisdictions as the
Representative may have designated to the Company in writing.
(e) The Representative shall have received on the date hereof
and on the Closing Date and the Option Closing Date, as the case may be, a
signed letter from KPMG Peat Marwick, L.L.P., auditors for the Company, dated
the date hereof, the Closing Date and the Option Closing Date, as the case may
be, which shall confirm, on the basis of a review in accordance with the
procedures set forth in the letter signed by such firm and dated and delivered
to the Representative on the date noted above the following matters:
(i) They are independent certified public accountants
with respect to the Company within the meaning of the Act and
the applicable Rules and Regulations.
(ii) The financial statements and schedules included
in the Registration Statement and Prospectus covered by their
reports therein set forth comply as to form in all material
respects with the applicable accounting requirements of the
Act and the applicable Rules and Regulations.
(iii) On the basis of procedures (but not an
examination in accordance with generally accepted auditing
standards) consisting of a reading of the minutes of meetings
and consents of the stockholders and Board of Directors of the
Company and the committees of such Board subsequent to
September 30, 1996, as set forth in the minute books of the
Company, inquiries of officers and other employees of the
Company who have responsibilities for financial and accounting
matters with respect to transactions and events subsequent to
September 30, 1996, and such other specified procedures and
inquiries to a date not more than three days prior to the date
of such letter, nothing has come to their attention which in
their judgment would indicate that (A) with respect to the
period subsequent to September 30, 1996, there were, as of the
date of the most recent available monthly consolidated
financial statements of the Company and, as of a specified
date not more than three days prior to the date of such
letter, any changes in the capital stock or long-term
indebtedness of the Company or payment or declaration of any
dividend or other distribution, or decrease in net current
assets, total assets or net stockholder's equity, in each case
as compared with the amounts shown in the most recent audited
consolidated financial statements included in the Registration
Statement and the Prospectus, except for changes or decreases
which the Registration Statement and the Prospectus disclose
have occurred or may occur or which are set forth in such
letter or (B) during the period from September 30, 1996, to
the date of the most recent available monthly unaudited
consolidated financial statements of the Company and to a
specified date not more than three days prior to the date of
such letter, there was any decrease, as compared with the
three-month period ended September 30, 1996, in total revenues
or total or per share net income, except for decreases that
the
21
<PAGE> 22
Registration Statement and the Prospectus disclose have
occurred or may occur or that are set forth in such letter.
(iv) Stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the
Company set forth in the Registration Statement and the
Prospectus, which have been specified by the Representative,
to the extent that such amounts, numbers, and percentages and
information may be derived from the general accounting and
financial records of the Company and its subsidiaries or from
schedules furnished by the Company, with the results obtained
from the application of specified reasonings, inquiries and
other appropriate procedures specified by the Representative
(which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set
forth in such letter heretofore delivered, and found them to
be in agreement.
(v) Such other matters as may be reasonably requested
by the Underwriters. All such letters shall be in form and
substance satisfactory to the Representative and its counsel.
(f) The Representative shall have received on the Closing Date
and the Option Closing Date, if any, a certificate or certificates on behalf of
the Company by the Chief Executive Officer and the Chief Financial Officer of
the Company to the effect that, as of the Closing Date or the Option Closing
Date, as the case may be, each of them represents on behalf of the Company as
follows:
(i) The Registration Statement has become effective
under the Act and no stop order suspending the effectiveness
of the Registration Statement has been issued, and no
proceedings for such purpose have been taken or are, to their
knowledge, contemplated or threatened by the Commission or any
state securities commissions.
(ii) They do not know of any investigation,
litigation, or proceeding instituted or threatened against the
Company of a character required to be disclosed in the
Registration Statement which is not so disclosed as required
by the Act or the Rules and Regulations; and they do not know
of any Contract or other document required to be filed as an
exhibit to the Registration Statement which is not so filed.
(iii) They have carefully examined the Registration
Statement and the Prospectus and, in their opinion, as of the
effective date of the Registration Statement, the statements
contained in the Registration Statement were and are correct,
in all material respects, and such Registration Statement and
Prospectus do not omit to state a material fact required to be
stated therein or necessary in order to make the statements
therein, in light of the circumstances under which they were
made, not misleading and, in their opinion, since the
effective date of the Registration Statement, no event has
occurred which should be set forth in a
22
<PAGE> 23
supplement to or an amendment of the Prospectus which has not
been so set forth in such supplement or amendment.
(iv) The representations and warranties of the
Company contained in Section 1 hereof are true and correct in
all material respects as of the Closing Date or the Option
Closing Date, as the case may be, as if such representations
and warranties were made as of such date; and all covenants,
agreements, and conditions to be performed or satisfied by the
Company under this Agreement on or prior to the Closing Date
or the Option Closing Date, as the case may be, have been
performed or satisfied.
(g) The Company shall have furnished to the Representative
such further certificates and documents confirming the representations,
warranties and covenants contained herein and related matters as the
Representative may reasonably have requested.
The opinions and certificates described in this Agreement shall be
deemed to be in compliance with the provisions hereof only if they are in all
respects reasonably satisfactory to the Representative and to O'Connor,
Cavanagh, Anderson, Killingsworth & Beshears, P.A., counsel for the Underwriters
and any other counsel for the Underwriters.
If any of the conditions herein provided for in this Section 6 shall
not have been fulfilled when and as required by this Agreement to be fulfilled,
the obligations of the Underwriters hereunder may be terminated by the
Representative by notifying the Company of such termination in writing or by
telegram at or prior to the Closing Date or the Option Closing Date, as the case
may be. In such event, the Company and the Underwriters shall not be under any
obligation to each other (except to the extent provided in Sections 5 and 8
hereof).
7. Conditions of the Obligations of the Company. The obligations of the
Company to sell and deliver the Securities required to be delivered as and when
specified in this Agreement are subject to the conditions that at the Closing
Date or the Option Closing Date, as the case may be, no stop order suspending
the effectiveness of the Registration Statement shall have been issued and in
effect or proceedings therefor initiated or threatened.
8. Indemnification.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and its respective affiliates, directors, officers, partners,
employees, agents, counsel, and representatives, (collectively, "Underwriter
Parties") against any losses, claims, damages, or liabilities to which such
Underwriter Parties or any one or more of them may become subject under the Act
or otherwise, insofar as such losses, claims, damages, or liabilities (or
actions or proceedings in respect thereof) arise out of or are based upon (i)
any failure by the Company or any of its affiliates, directors, officers,
employees, agents, counsel, and representatives (collectively, the "Company
Parties") to perform any obligation hereunder or any other agreement among any
of the Company Parties and any of the Underwriter Parties or to comply with
applicable law in fulfilling such obligations, (ii) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, any Preliminary
23
<PAGE> 24
Prospectus, the Prospectus or any amendment or supplement thereto, or (iii) the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in
light of the circumstances under which they were made, and will reimburse each
Underwriter Party for any legal or other expenses incurred by such Underwriter
Party in connection with investigating or defending any such loss, claim,
damage, liability, action or proceeding; provided, however, that (X) the Company
will not be liable in any such case to the extent that any such loss, claim,
damage, or liability arises out of or is based upon an untrue statement, or
alleged untrue statement, or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Underwriters specifically
for use in the preparation thereof (which the parties hereto agree is limited
solely to that information contained in the last paragraph on the cover page and
the paragraph relating to stabilization on page 2 of the Prospectus or
Preliminary Prospectus and in the section thereof entitled "Underwriting"), and
(Y) such indemnity with respect to any Preliminary Prospectus shall not inure to
the benefit of any Underwriter Party from whom the person asserting any such
loss, claim, damage, or liability purchased the Securities which are the subject
thereof if such person did not receive a copy of the Prospectus (or the
Prospectus as amended or supplemented) at or prior to the confirmation of the
sale or such Securities to such person in any case where such delivery is
required by the Act and the untrue statement or omission of a material fact
contained in such Preliminary Prospectus was corrected in the Prospectus (or the
Prospectus as amended or supplemented.) This indemnity agreement will be in
addition to any liability that the Company may otherwise have.
(b) Each Underwriter will severally indemnify and hold
harmless the Company Parties against any losses, claims, damages, or liabilities
to which the Company Parties or any one or more of them may become subject,
under the Act or otherwise, insofar as such losses, claims, damages, or
liabilities (or actions or proceedings in respect thereof) arise out of or are
based upon (i) any failure by such Underwriter Party to perform any obligations
hereunder or any other agreement among any of the Underwriter Parties and any of
the Company Parties, (ii) any untrue statement or alleged untrue statement of
any material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus, or any amendment or supplement thereto, or (iii) the
omission or the alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and will reimburse any
legal or other expense reasonably incurred by the Company Parties in connection
with investigating or defending any such loss, claim, damage, liability, action,
or proceeding; provided, however, that each Underwriter will be liable in each
case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission has been made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through such Underwriter specifically
for use in the preparation thereof (which the parties hereto agree is limited
solely to that information contained in the last paragraph on the cover page and
the paragraph relating to stabilization on page 2 of the Prospectus or
Preliminary Prospectus and in the section thereof entitled "Underwriting"). This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
24
<PAGE> 25
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which such
notice would have related and was prejudiced by the failure to give such notice,
but the failure to give such notice shall not relieve the indemnifying party or
parties from any liability which it or they may have to the indemnified party
for contribution or otherwise than on account of the provisions of Section 8(a)
or (b). In case any such proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate therein and, to the
extent that it shall wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel reasonably satisfactory to
such indemnified party and shall pay as incurred the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any indemnified
party shall have the right to retain its own counsel at its own expense.
Notwithstanding the foregoing, the indemnifying party shall pay as incurred the
fees and expenses of the counsel retained by the indemnified party in the event
(i) the indemnifying party and the indemnified party shall have mutually agreed
to the retention of such counsel or (ii) the named parties to any such
proceeding (including any impleaded parties) include both the indemnifying party
and the indemnified party and representation of both parties by the same counsel
would be inappropriate due to actual or potential differing interests between
them. It is understood that the indemnifying party shall not, in connection with
any proceeding or related proceedings in the same jurisdiction, be liable for
the reasonable fees and expenses of more than one separate firm for all such
indemnified parties. Such firm shall be designated in writing by the
Representative in the case of parties indemnified pursuant to Sections 8(a) and
by the Company in the case of parties indemnified pursuant to Section 8(b) and
shall be subject to the reasonable consent of the other party. The indemnifying
party shall not be liable for any settlement of any proceeding effected without
its written consent but if settled with such consent or if there be a final
judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party from and against any loss or liability by reason of such
settlement or judgment.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages, or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages, or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company on the
one hand and the Underwriters on the other from the offering of the Securities.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give the
notice required under Section 8(c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company on the one hand and the Underwriters on the
other in connection with the statements or omissions which resulted in such
losses,
25
<PAGE> 26
claims, damages, or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company on the one hand and the Underwriters on the other shall
be deemed to be in the same proportion as the total net proceeds from the
offering (before deducting expenses) received by the Company bear to the total
underwriting fees and commissions received by the Underwriters, including the
non-accountable expense allowance payable to the Underwriters, in each case as
set forth in the table on the cover page of the Prospectus. The relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were determined by pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to above in this Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, or liabilities (or actions or proceedings in respect thereof)
referred to above in this Section 8(d) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection 8 (d), (i) no Underwriter shall be required to
contribute any amount in excess of the underwriting discounts and commissions
applicable to the Securities purchased by that Underwriter, and (ii) no person
guilty of fraudulent misrepresentations (within the meaning of Section 11 (f) of
the Act) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. The Underwriters' obligations in this Section
8(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration Statement,
any Preliminary Prospectus, the Prospectus, or any supplement or amendment
thereto, each party against whom contribution may be sought under this Section 8
hereby consents to the jurisdiction of any court having jurisdiction over any
other contributing party, agrees that process issuing from such court may be
served upon him or it by any other contributing party and consents to the
service of such process and agrees that any other contributing party may join
him or it as an additional defendant in any such proceeding in which such other
contributing party is a party.
9. Default by Underwriters. If on the Closing Date or the Option
Closing Date, as the case may be, any Underwriter shall fail to purchase and pay
for the portion of the Securities which such Underwriter has agreed to purchase
and pay for on such date (otherwise than by reason of any default on the part of
the Company or the failure to occur of a condition precedent to the Closing),
the Representative on behalf of the Underwriters, shall use its best efforts to
procure as soon as possible but not later than five business days thereafter one
or more of the other Underwriters, or any others, to purchase from the Company
such amounts as may be agreed upon and upon the terms set forth herein, the Firm
Securities or Option Securities, as the case may be, which the defaulting
Underwriter or Underwriters failed to purchase. If during such period the
Representative shall not have procured such other Underwriters, or any others,
26
<PAGE> 27
to purchase the Firm Securities or Option Securities, as the case may be, agreed
to be purchased by the defaulting Underwriter or Underwriters then (a) if the
aggregate number of shares with respect to which such default shall occur does
not exceed 10% of the Firm Securities or Option Securities, as the case may be,
covered hereby, the other Underwriters shall be obligated to purchase,
severally, in proportion to the respective numbers of Firm Securities or Option
Securities, as the case may be, the Securities which such defaulting Underwriter
or Underwriters failed to purchase, or (b) if the aggregate number of shares of
Firm Securities or Option Securities, as the case may be, with respect to which
such default shall occur exceeds 10% of the Firm Securities or Option
Securities, as the case may be, covered hereby, the Company or the
Representative on behalf of the Underwriters will have the right, by written
notice given within the next 24-hour period to the parties to this Agreement, to
terminate this Agreement without liability on the part of the non-defaulting
Underwriters of the Company, except to the extent provided in Section 8 and
Section 5 hereof. In the event of a default by any Underwriter or Underwriters,
as set forth in this Section 9, the Closing Date or Option Closing Date, as the
case may be, may be postponed for such period, not exceeding seven days, as the
Representative may determine in order that the required changes in the
Registration Statement or in the Prospectus or in any other documents or
arrangements may be effected. The term "Underwriter" includes any person
substituted for a defaulting Underwriter. Any action taken under this Section 9
shall not relieve any defaulting Underwriter from liability in respect of any
default of such Underwriter under this Agreement.
10. Notices. All communications hereunder must be in writing and,
except as otherwise provided herein, will be mailed, delivered, telecopied, or
telegraphed and confirmed as follows: if to the Underwriters, to Dickinson &
Co., 2425 East Camelback Road, Suite 725, Phoenix, Arizona 85016; Telephone
(602) 957-1951, Fax: (602) 957-3052; Attention: Mr. Glenn Cushman, with a copy
to O'Connor, Cavanagh, Anderson, Killingsworth & Beshears, P.A., One East
Camelback Rd., Suite 1100, Phoenix, Arizona 85012-1656; Telephone (602)
263-2606; Fax: (602) 263-2900; Attention: Robert S. Kant, Esq.; if to the
Company, to CRAGAR Industries, Inc., 4636 North 43rd Avenue, Phoenix, Arizona
85031; Telephone: (602) 247-1300, Fax: (602) 846-9034; Attention: Dr. Michael L.
Hartzmark, President , with a copy to Snell & Wilmer L.L.P., One Arizona Center,
Phoenix, Arizona 85004-0001; telephone (602) 382-6000; fax: (602) 382-6070;
attention: Steven D. Pidgeon, Esq.
11. Termination. This Agreement may be terminated by the Representative
by notice to the Company as follows:
(a) at any time prior to the earlier of (i) the time the
Securities are released by the Representative for sale by notice to the
Underwriters, or (ii) 11:30 A.M., Phoenix time, on the first business day
following the date of this Agreement.
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which information
is given in the Registration Statement and the Prospectus, any material adverse
change or any development involving a prospective material adverse change in or
affecting the business or financial condition of the Company, or the earnings,
business affairs, or management of the Company, (ii) any outbreak of hostilities
or other national or international calamity or crisis or change in economic or
political conditions
27
<PAGE> 28
if the effect of such outbreak, calamity, crisis, or change on the financial
markets or economic conditions would, in the reasonable judgment of the
Representative, have a material adverse effect on the securities markets in the
United States, (iii) suspension of trading in securities on the New York Stock
Exchange, Inc., the American Stock Exchange, or the BSE, or limitation on prices
(other than limitations on hours or numbers of days of trading or limitations on
pricing required by existing law or regulations) for securities on any such
exchange, (iv) the enactment, publication, decree, or other promulgation of any
federal or state statute, regulation, rule or order of any court or other
governmental authority which in the reasonable opinion of the Representative
materially and adversely affects or will materially or adversely affect the
business or operations of the Company or (v) declaration of a banking moratorium
by either federal or New York authorities.
(c) as provided in Sections 6 and 9 of this Agreement.
This Agreement also may be terminated by the Representative, by notice
to the Company, as to any obligation of the Underwriters to purchase the Option
Securities, upon the occurrence at any time at or prior to the Option Closing
Date of any of the events described in subparagraph (b) above or as provided in
Sections 6 and 9 of this Agreement.
12. Successors. This Agreement has been and is made solely for the
benefit of the Underwriters and the Company and their respective successors,
executors, administrators, heirs, and assigns, and the Underwriter Parties and
Company Parties referred to herein, and no other person will have any right or
obligation hereunder. The term "successors" shall not include any purchaser of
the Securities merely because of such purchase.
13. Miscellaneous. The reimbursement, indemnification, and contribution
agreements contained in this Agreement and the representations and warranties in
this Agreement shall remain in full force and effect regardless of (a) any
termination of this Agreement, (b) any investigation made by or on behalf of any
Underwriter Party, or by or on behalf of any Company Party, and (c) delivery of
and payment for the Securities under this Agreement.
This Agreement and any notices delivered hereunder 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. This Agreement and
any and all notices may be delivered by telecopy and shall be effective upon
receipt, with the original of such document to be deposited promptly in the U.S.
Mail.
The statements set forth in the last paragraph on the cover page, the
paragraph on page 2 with respect to stabilization and under the caption
"Underwriting" in the Prospectus constitute the only written information
furnished by or on behalf of any Underwriter for inclusion in the Prospectus or
the Registration Statement.
This Agreement and all disputes and controversies relating hereto or in
connection with the transactions contemplated hereby shall be governed by, and
construed in accordance with, the laws of the State of New York.
28
<PAGE> 29
This Agreement constitutes the entire agreement of the parties with
respect to the matters set forth herein, and, without limitation of the
foregoing, supersedes that Letter of Intent dated October 14, 1996 between the
Company and the Representative.
If the foregoing agreement is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement between the Company and the several
Underwriters in accordance with its terms as of the date first above written.
Very truly yours,
CRAGAR INDUSTRIES, INC.
By:
--------------------------
Name:
Title:
The foregoing Underwriting Agreement is hereby
confirmed and accepted as of
December ____, 1996.
DICKINSON & CO.
As Representative of the several
Underwriters listed on Schedule I
By:
----------------------------
Name:
Title:
29
<PAGE> 30
SCHEDULE I
Schedule of Underwriters
Underwriter Number of Firm
- ----------- Securities to be Purchased
--------------------------
Shares Warrants
------ --------
Dickinson & Co.
RAS Securities Corp.
30
<PAGE> 31
SCHEDULE II
A.
PERIOD OF AGREEMENT
NAME NOT TO SELL
- ---- -----------
Michael L. Hartzmark 12 months
Sidney Dworkin 12 months
Mark Schwartz 12 months
Donald McIntyre 12 months
Ed Faber 12 months
Elliot Dworkin 12 months
Debra Jacobs 12 months
MDA Financial 12 months
Harry Schwartz 12 months
Dolores Hartzmark 12 months
CN Partners 12 months
B.
PERIOD OF AGREEMENT
NAME NOT TO SELL
- ---- -----------
Hymie Askt 3 months
David Atkins 3 months
Leonard Berke 3 months
Phyllis Cohen 3 months
Anthony Dalessio 3 months
Irving Davies 3 months
Edward Falkner, Trust 3 months
Phyllis Froimson 3 months
Morton Goulder 3 months
F.S. Green 3 months
Vinod & Manju Joshi 3 months
Julius Kramer 3 months
Gerald Richter 3 months
Elayne Schoke 3 months
James Schoke 3 months
Roger Siegel 3 months
Wesley Wood 3 months
Robert Rosin 3 months
Robert Rosin, Trustee for Mollie Moers 3 months
Robert Rosin, Trustee for Natalie, James, and Thomas Rosin 3 months
Kenneth Reichle 3 months
Marvin Kogod 3 months
Victor Scaravilli 3 months
1
<PAGE> 32
SCHEDULE III
Dickinson & Co.
2425 East Camelback Road, Suite 725
Phoenix, Arizona 85016
Gentlemen:
The undersigned is the holder of shares of capital stock or has the
right to acquire shares of capital stock (collectively "Securities") of CRAGAR
Industries, Inc. (the "Company"). I acknowledge and understand that you are
acting as the Underwriter in the proposed public offering of 850,000 Shares of
Common Stock of the Company and 850,000 Common Stock Purchase Warrants of the
Company, together with up to an additional 127,500 Shares of Common Stock and an
additional 127,500 Common Stock Purchase Warrants (collectively, the
"Securities") as set forth in a Prospectus which the undersigned has reviewed.
In connection with your agreeing to so act, and for your benefit, the
undersigned hereby undertakes and agrees with you that during the period of 12
months from the date of the Prospectus relating to the offering of the
Securities, the undersigned will not offer for sale, sell or otherwise dispose
of, directly or indirectly, any securities of the Company, in any manner
whatsoever, whether pursuant to Rule 144 under the Securities Act of 1933 or
otherwise, without your prior written consent. The undersigned further
understands that the Company will take such steps as may be reasonably necessary
to enforce the foregoing provisions and restrict the sale or transfer of such
securities as provided herein including, but not limited to, notification to the
Company's transfer agent regarding any such restrictions; and the undersigned
hereby agrees to and authorizes any actions and acknowledges that the Company
and you are relying upon this Agreement in taking any such actions.
If the foregoing conforms to your understanding of our agreement,
please so indicate by signing a copy of this Agreement, whereupon it shall
become a binding agreement between and among us.
Very truly yours,
-------------------------------
Signature
-------------------------------
Printed Name
-------------------------------
Number of Shares
<PAGE> 1
Exhibit 4.3
CRAGAR INDUSTRIES, INC.
WARRANT AGREEMENT
THIS AGREEMENT (the "Agreement"), dated as of ________________, 1996, is
between CRAGAR INDUSTRIES, INC., a Delaware corporation (the "Company"), and
AMERICAN STOCK TRANSFER & TRUST COMPANY, as warrant agent (the "Warrant Agent").
WHEREAS, in connection with (i) an offering to the public of up to
977,500 shares of the Company's Common Stock, $.01 par value (the "Common
Stock"), and 977,500 Redeemable Common Stock Purchase Warrants (the "Redeemable
Warrants"), and (ii) the issuance to Dickinson & Co. (the "Representative") or
its designees of warrants (the "Representative's Warrants") to purchase up to
(x) 85,000 additional shares of Common Stock and (y) 85,000 Common Stock
Purchase Warrants (the "Underlying Warrants"), each such Underlying Warrant
entitling the holder thereof to purchase one share of Common Stock (the
Redeemable Warrants and the Underlying Warrants, the "Warrants"), the Company
will issue up to 1,062,500 Warrants evidencing the right to purchase an
aggregate of 1,062,500 shares of Common Stock as constituted on the date hereof
as contemplated by the Prospectus of the Company dated ______________, 1996 (the
"Definitive Prospectus"); and
WHEREAS, the Company desires the Warrant Agent to act on behalf of the
Company, and the Warrant Agent is willing so to act, in connection with the
issuance, registration, transfer, exchange, exercise, and redemption of the
Warrants;
NOW, THEREFORE, in consideration of the promises and the mutual
agreements herein set forth, the parties agree as follows:
Section 1. APPOINTMENT OF WARRANT AGENT. The Company hereby appoints the
Warrant Agent to act as agent of the Company for the Warrants, and the Warrant
Agent hereby accepts such appointment and agrees to perform the same in
accordance with the terms and conditions set forth in this Agreement.
Section 2. WARRANTS AND FORM OF WARRANT CERTIFICATES.
(a) Each Redeemable Warrant shall entitle the registered holder
of the certificate representing such Warrant to purchase upon the exercise
thereof one share of Common Stock, subject to the adjustments provided for in
Section 9 hereof, at any time until 5:00 p.m., New York City time, on
____________, 2001 (five years after the date of the Definitive Prospectus),
unless earlier redeemed pursuant to Section 11 hereof.
(b) Each Representative's Warrant entitles the registered holder
of the certificate representing such Warrant to purchase upon the exercise
thereof one share of Common Stock, subject to adjustments provided in Section 8
of the Representative's Warrant Agreement referred to below, and one Underlying
Warrant at any time after 9:00 a.m., New York City time, on
<PAGE> 2
________________, 1997 (one year from the date of the Definitive Prospectus)
until 5:00 p.m., New York City time, on ________________, 2001 (five years after
such date), in accordance with a Representative's Warrant Agreement, dated the
date hereof (the "Representative's Warrant Agreement").
(c) Each Underlying Warrant entitles the registered holder of the
certificate representing such Warrant to purchase upon the exercise thereof one
share of Common Stock, subject to adjustments provided in Section 9 hereof, at
any time after 9:00 a.m., New York City time, on ________________, 1997 (one
year from the date of the Definitive Prospectus) until 5:00 p.m., New York City
time, on _______________, 2001 (five years from such date).
(d) The Warrant certificates shall be in registered form only.
The text of the Warrant certificate and the form of election to exercise a
warrant on the reverse side thereof shall be substantially in the form of
Exhibit A attached hereto. Each Warrant certificate shall be dated by the
Warrant Agent as of the date of issuance thereof (whether upon initial issuance
or upon transfer or exchange), and shall be executed on behalf of the Company by
the manual or facsimile signature of its President or a Vice President, under
its corporate seal, affixed or in facsimile, and attested to by the manual or
facsimile signature of its Secretary or an Assistant Secretary. In case any
officer of the Company who shall have signed any Warrant certificate shall cease
to be such officer of the Company prior to the issuance thereof, such Warrant
certificate may nevertheless be issued and delivered with the same force and
effect as though the person who signed the same had not ceased to be such
officer of the Company. Any such Warrant certificate may be signed on behalf of
the Company by persons who, at the actual date of execution of such Warrant
certificate, are the proper officers of the Company, although at the nominal
date of such Warrant certificate any such person shall not have been such
officer of the Company.
Section 3. EXERCISE OF WARRANTS, DURATION AND WARRANT PRICE. Subject to
the provisions of this Agreement, each registered holder of one or more Warrant
certificates shall have the right, which may be exercised as provided in such
Warrant certificates, to purchase from the Company (and the Company shall issue
and sell to such registered holder) the number of shares of Common Stock to
which the Warrants represented by such certificates are at the time entitled
hereunder.
Each Warrant not exercised by its expiration date shall become void, and
all rights thereunder and all rights in respect thereof under this Agreement
shall cease on such date.
A Warrant may be exercised by the surrender of the certificate
representing such Warrant to the Company, at the office of the Warrant Agent, or
at the office of a successor to the Warrant Agent, with the subscription form
set forth on the reverse thereof duly executed and properly endorsed with the
signatures properly guaranteed, and upon payment in full to the Warrant Agent
for the account of the Company of the Warrant Price (as hereinafter defined) for
the number of shares of Common Stock as to which the Warrant is exercised. Such
Warrant Price shall be paid in full in cash, or by certified check or bank draft
payable in United States currency to the order of the Warrant Agent.
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The price per share of Common Stock at which the Warrants may be
exercised (the "Warrant Price") shall be $6.60 (adjusted in accordance with
Section 9 hereof, taking into account prior adjustments).
Subject to the further provisions of this Section 3 and of Section 6
hereof, upon surrender of Warrant certificates and payment of the Warrant Price,
the Company shall issue and cause to be delivered, with all reasonable dispatch
to or upon the written order of the registered holder of such Warrants and in
such name or names as such registered holder may designate, subject to
applicable securities laws, a certificate or certificates for the number of
securities so purchased upon the exercise of such Warrants, together with cash,
as provided in Section 10 of this Agreement, in respect of any fraction of a
share or security otherwise issuable upon such surrender. All shares of Common
Stock issued upon the exercise of a Warrant shall be validly issued, fully paid
and nonassessable and shall be listed on any and all national securities
exchanges or approved for quotation on the level of National Association of
Securities Dealers Automatic Quotation System ("Nasdaq") upon which any other
shares of the Common Stock or securities otherwise issuable are then listed or
traded.
Certificates representing such securities shall be deemed to have been
issued and any person so designated to be named therein shall be deemed to have
become a holder of record of such securities as of the date of the surrender of
such Warrants and payment of the Warrant Price; provided, however, that if, at
the date of surrender of such Warrants and payment of such Warrant Price, the
transfer books for the Common Stock or other securities purchasable upon the
exercise of such Warrants shall be closed, the certificates for the securities
in respect of which such Warrants are then exercised shall be issuable as of the
date on which such books shall next be opened and until such date the Company
shall be under no duty to deliver any certificate for such securities. The
rights of purchase represented by each Warrant certificate shall be exercisable,
at the election of the registered holder thereof, either as an entirety or from
time to time for part of the number of securities specified therein and, in the
event that any Warrant certificate is exercised in respect of less than all of
the securities specified therein at any time prior to the expiration date of the
Warrant certificate, a new Warrant certificate or certificates will be issued to
such registered holder for the remaining number of securities specified in the
Warrant certificate so surrendered.
Section 4. COUNTERSIGNATURE AND REGISTRATION. The Warrant Agent shall
maintain books (the "Warrant Register") for the registration and the
registration of transfer of the Warrants. Upon the initial issuance of the
Warrants, the Warrant Agent shall issue and register the Warrants in the names
of the respective holders thereof in such denominations and otherwise in
accordance with instructions delivered to the Warrant Agent by the Company. The
Warrant certificates shall be countersigned manually or by facsimile by the
Warrant Agent (or by any successor to the Warrant Agent then acting as such
under this Agreement) and shall not be valid for any purpose unless so
countersigned. Warrant certificates may be so countersigned, however, by the
Warrant Agent and delivered by the Warrant Agent, notwithstanding that the
persons whose manual or facsimile signatures appear thereon as proper officers
of the Company shall have ceased to be such officers at the time of such
countersignature or delivery.
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Prior to due presentment for registration of transfer of any Warrant
certificate, the Company and the Warrant Agent may deem and treat the person in
whose name such Warrant certificate shall be registered upon the Warrant
Register (the "registered holder") as the absolute owner of such Warrant
certificate and of each Warrant represented thereby (notwithstanding any
notation of ownership or other writing on the Warrant certificate made by anyone
other than the Company or the Warrant Agent), for the purpose of any exercise
thereof, of any distribution or notice to the holder thereof, and for all other
purposes, and neither the Company nor the Warrant Agent shall be affected by any
notice to the contrary.
Section 5. TRANSFER AND EXCHANGE OF WARRANTS. The Warrant Agent shall
register the transfer, from time to time, of any outstanding Warrant upon the
Warrant Register, upon surrender of the certificate evidencing such warrant for
transfer, properly endorsed with signatures properly guaranteed and accompanied
by appropriate instructions for transfer. Upon any such transfer, a new Warrant
certificate representing an equal aggregate number of Warrants shall be issued
to the transferee and the surrendered Warrant certificate shall be canceled by
the Warrant Agent. The Warrant certificates so canceled shall be delivered by
the Warrant Agent to the Company from time to time upon request. Notwithstanding
the foregoing, no transfer or exchange may be made except in compliance with
applicable securities laws.
Warrant certificates may be surrendered to the Warrant Agent, together
with a written request for exchange, and thereupon the Warrant Agent shall issue
in exchange therefor one or more new Warrant certificates as requested by the
registered holder of the Warrant certificate or certificates so surrendered,
representing an equal aggregate number of Warrants.
The Warrant Agent shall not be required to effect any registration of
transfer or exchange which will result in the issuance of a Warrant certificate
for a fraction of a Warrant.
No service charge shall be made for any exchange or registration of
transfer of Warrant certificates.
The Warrant Agent is hereby authorized to countersign and to deliver, in
accordance with the terms of this Agreement, the new Warrant certificates
required to be issued pursuant to the provisions hereof, and the Company,
whenever required by the Warrant Agent, will supply the Warrant Agent with
certificates duly executed on behalf of the Company for such purpose.
Section 6. PAYMENT OF TAXES. The Company will pay any documentary stamp
taxes attributable to the initial issuance of the shares of Common Stock
issuable upon the exercise of Warrants; provided, however, the Company shall not
be required to pay any tax or taxes which may be payable in respect of any
transfer involved in the issuance or delivery of any certificates for shares of
Common Stock in a name other than registered holder of Warrants in respect of
which such shares are issued, and in such case neither the Company nor the
Warrant Agent shall be required to issue or deliver any certificate for shares
of Common Stock or any Warrant certificate until the person requesting the same
has paid to the Company the amount of such tax or has established to the
Company's satisfaction that such tax has been paid.
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Section 7. MUTILATED OR MISSING WARRANTS. In case any of the Warrant
certificates shall be mutilated, lost, stolen or destroyed, the Company may in
its discretion issue, and the Warrant Agent shall countersign and deliver in
exchange and substitution for and upon cancellation of the mutilated Warrant
certificate, or in lieu of and substitution for the Warrant certificate lost,
stolen or destroyed, a new Warrant certificate representing an equal aggregate
number of Warrants, but only upon receipt of evidence satisfactory to the
Company and the Warrant Agent of such loss, theft or destruction of such Warrant
certificate and reasonable indemnity, if requested, also satisfactory to them.
Applicants for such substitute Warrant certificates shall also comply with such
other reasonable conditions and pay such reasonable charges as the Company or
the Warrant Agent may prescribe.
Section 8. RESERVATION OF COMMON STOCK. There have been reserved, and
the Company shall at all times keep reserved, out of the authorized and unissued
shares of Common Stock, a number of shares sufficient to provide for the
exercise of the rights of purchase represented by the Redeemable Warrants, the
Representative's Warrants and the Underlying Warrants then outstanding or
issuable upon exercise, and the transfer agent for the Common Stock and every
subsequent transfer agent for any shares of the Company's capital stock issuable
upon the exercise of any of the rights of purchase aforesaid are hereby
irrevocably authorized and directed at all times to reserve such number of
authorized and unissued shares as shall be requisite for such purpose.
Prior to the issuance of any shares of Common Stock upon exercise of the
Warrants, the Company shall secure the listing of such shares on any and all
national securities exchanges or approved for quotation on the level of Nasdaq
upon which any of the other shares of the Common Stock are then listed or
quoted. So long as any unexpired Redeemable Warrants remain outstanding, the
Company will file such post-effective amendments to the Registration Statement
or supplements to the Prospectus filed pursuant to the Securities Act of 1933,
as amended (the "Act"), with respect to the Warrants (or such other registration
statements or post-effective amendments or supplements) as may be necessary to
permit trading in the Warrants and to permit the Company to deliver to each
person exercising a Warrant a Prospectus meeting the requirements of Section
10(a)(3) of the Act, and otherwise complying therewith; and the Company will,
from time to time, furnish the Warrant Agent with such Prospectuses in
sufficient quantity to permit the Warrant Agent to deliver such a Prospectus to
each holder of a Warrant upon the exercise thereof. The Company will keep a copy
of this Agreement on file with the transfer agent for the Common Stock and with
every subsequent transfer agent for any shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants.
The Warrant Agent is hereby irrevocably authorized to requisition from
time to time from such transfer agent stock certificates required to honor
outstanding Warrants. The Company will supply such transfer agent with duly
executed certificates for such purpose and will itself provide or otherwise make
available any cash as provided in Section 10 of this Agreement. All Warrant
certificates surrendered in the exercise of the rights thereby evidenced shall
be canceled by the Warrant Agent and shall thereafter be delivered to the
Company, and such canceled Warrant certificates shall constitute sufficient
evidence of the number of shares of Common Stock which have been issued upon the
exercise of such Warrants. Promptly after the expiration date of the Warrants,
the Warrant Agent shall certify to the Company the aggregate number of such
Warrants which
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expired unexercised, and after the expiration date of the Warrants, no shares of
Common Stock shall be subject to reservation in respect of such Warrants.
Section 9. ADJUSTMENT OF WARRANT PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The number and kind of securities purchasable upon the exercise of the
Warrants and the Warrant Price shall be subject to adjustment from time to time
upon the happening of certain events, as follows:
9.1 ADJUSTMENTS. The number of shares of Common Stock purchasable
upon the exercise of each Warrant and the Warrant Price shall be subject to
adjustment as follows:
(a) If the Company (i) pays a dividend in Common Stock or
makes a distribution in Common Stock, (ii) subdivides its outstanding Common
Stock into a greater number of shares, (iii) combines its outstanding Common
Stock into a smaller number of shares, or (iv) issues, by reclassification of
its Common Stock, other securities of the Company, then the number of shares of
Common Stock purchasable upon exercise of a Warrant immediately prior thereto
will be adjusted so that the holder of a Warrant will be entitled to receive the
kind and number of shares of Common Stock or other securities of the Company
that such holder would have owned or would have been entitled to receive
immediately after the happening of any of the events described above, had the
Warrant been exercised immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this
subsection 9.1(a) will become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
(b) In case the Company shall distribute to all or
substantially all holders of its Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or rights,
options, warrants, or convertible securities containing the right to subscribe
for or purchase Common Stock, then the Company shall reserve, and the
Warrantholder shall be entitled to receive upon the exercise of such Warrant,
for each Share issuable upon exercise of such Warrant, the amount of
indebtedness or assets or the number of rights, options, warrants, or
convertible securities that such Warrantholder would have received had the
Warrantholder been the holder of such Share on the record date established by
the Company for the determination of holders of Common Stock entitled to receive
such distribution, or, if no such record date shall have been established, then
on the date of such distribution. Notwithstanding the above, in the event that
any of the provisions of this subsection 9.1(b) do not comply with the Conduct
Rules of the National Association of Securities Dealers, as such rules exist on
the date of this Agreement (the "Conduct Rules"), then such provisions shall be
deemed to be null and void, but only to the extent that such provisions do not
comply with the Conduct Rules, in which case the Warrantholder will be entitled
to receive the maximum amount of indebtedness or assets of the Company and/or
that number of rights, options, warrants, or convertible securities that the
Warrantholder may receive without violating the Conduct Rules.
(c) No adjustment in the number of shares purchasable
pursuant to the Warrants shall be required unless such adjustment would require
an increase or decrease of at least one percent in the number of shares then
purchasable upon the exercise of the Warrants or, if the
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Warrants are not then exercisable, the number of shares purchasable upon the
exercise of the Warrants on the first date thereafter that the Warrants become
exercisable; provided, however, that any adjustments which by reason of this
subsection 9.1(c) are not required to be made immediately shall be carried
forward and taken into account in any subsequent adjustment.
(d) Whenever the number of shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Warrant Price for
shares payable upon exercise of the Warrant shall be adjusted by multiplying
such Warrant Price immediately prior to such adjustment by a fraction, of which
the numerator shall be the number of shares purchasable upon the exercise of the
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of shares so purchasable immediately thereafter.
(e) Whenever the number of shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the Company shall cause
to be promptly mailed to the Warrantholder by first class mail, postage prepaid,
notice of such adjustment and a certificate of the chief financial officer of
the Company setting forth the number of shares purchasable upon the exercise of
the Warrants after such adjustment, a brief statement of the facts requiring
such adjustment and the computation by which such adjustment was made.
(f) For the purpose of this subsection 9.1, the term
"Common Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to this Section 9, the Warrantholder shall become
entitled to purchase any securities of the Company other than Shares and
Underlying Warrants, thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in this Section 9.
(g) The adjustments set forth in this Section 9.1 shall be
applied with respect to each Underlying Warrant retroactively to the date of
original issuance of the Representative's Warrant to which it relates, as if
such Underlying Warrant had been issued and outstanding on and from such
original issuance date, and notwithstanding the fact that at the time any event
occurs giving rise to adjustment under this Section 9.1, such Underlying Warrant
has not yet been issued pursuant to the Representative's Warrant to which such
Underlying Warrant relates.
9.2 NO ADJUSTMENT FOR DIVIDENDS. Except as provided in subsection
9.1, no adjustment in respect of any dividends or distributions out of earnings
shall be made during the term of the Warrants or upon the exercise of the
Warrants.
9.3 NO ADJUSTMENT IN CERTAIN CASES. No adjustments shall be made
pursuant to Section 9 hereof in connection with the issuance of Shares,
Underlying Warrants or Underlying Warrant Stock sold as part of the public sale
and issuance of shares of Common Stock and Common
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Stock Warrants pursuant to the Underwriting Agreement or the issuance of Shares,
Underlying Warrants or Underlying Warrant Stock upon exercise of the Warrants.
9.4 PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Warrantholder
an agreement that the Warrantholder shall have the right thereafter upon payment
of the Warrant Price in effect immediately prior to such action to purchase,
upon exercise of the Warrants, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had the Warrants (and each underlying security) been exercised immediately prior
to such action. In the event of a merger described in Section 368(a)(2)(E) of
the Internal Revenue Code of 1954, as amended, in which the Company is the
surviving corporation, the right to purchase Shares and Underlying Warrants
under the Warrants shall terminate on the date of such merger and thereupon the
Warrants shall become null and void, but only if the controlling corporation
shall agree to substitute for the Warrants its warrant which entitles the holder
thereof to purchase upon its exercise the kind and amount of shares and other
securities and property which it would have owned or been entitled to receive
had the Warrants been exercised immediately prior to such merger. Any such
agreements referred to in this subsection 9.4 shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
provided for in Section 9 hereof. The provisions of this subsection 9.4 shall
similarly apply to successive consolidations, mergers, sales, or conveyances.
9.5 PAR VALUE OF SHARES OF COMMON STOCK. Before taking any action
that would cause an adjustment reducing the Warrant Price below the then par
value of the Common Stock issuable upon exercise of the Warrants, the Company
will take any corporate action which may, in the opinion of its counsel, be
necessary in order that the Company may validly and legally issue fully paid and
nonassessable Common Stock at such adjusted Warrant Price.
9.6 INDEPENDENT PUBLIC ACCOUNTANTS. The Company may retain a firm
of independent public accountants of recognized regional or national standing
(which may be any such firm regularly employed by the Company) to make any
computation required under this Section 9, and a certificate signed by such firm
shall be conclusive evidence of the correctness of any computation made under
this Section 9.
9.7 STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the Warrant Price or the number of securities issuable upon
exercise of Warrants, Warrant certificates theretofore or thereafter issued may
continue to express the same price and number of securities as are stated in the
similar Warrant certificates initially issuable pursuant to this Agreement.
However, the Company may, at any time in its sole discretion (which shall be
conclusive), make any change in the form of Warrant certificate that it may deem
appropriate and that does not affect the substance thereof; and any Warrant
certificate thereafter issued, whether upon registration of, transfer of, or in
exchange or substitution for, an outstanding Warrant certificate, may be in the
form so changed.
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9.8 NO RIGHTS AS STOCKHOLDER; NOTICES TO HOLDERS OF WARRANTS. If,
at any time prior to the expiration of a Warrant and prior to its exercise, any
one or more of the following events shall occur:
(a) any action that would require an adjustment pursuant
to subsection 9.1 or 9.4 hereof; or
(b) a dissolution, liquidation or winding up of the
Company (other than in connection with a consolidation, merger or sale of its
property, assets and business as an entirety or substantially as an entirety)
shall be proposed; then the Company must give notice in writing of such event to
the registered holders of the Warrants, as provided in Section 18 hereof, at
least 20 days to the extent practicable, prior to the date fixed as a record
date or the date of closing the transfer books for the determination of the
stockholders entitled to any relevant dividend, distribution, subscription
rights or other rights or for the determination of stockholders entitled to vote
on such proposed dissolution, liquidation or winding up. Such notice must
specify such record date or the date of closing the transfer books, as the case
may be. Failure to mail or receive such notice or any defect therein will not
affect the validity of any action taken with respect thereto.
Section 10. FRACTIONAL INTERESTS. The Company is not required to issue
fractional shares of Common Stock on the exercise of a Warrant. If any fraction
of a share of Common Stock would, except for the provisions of this Section 10,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company will in lieu thereof pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement, the
term "Current Market Price" means (i) if the Common Stock is traded in the
over-the-counter market and is not listed for quotation on the Nasdaq National
Market or the Nasdaq SmallCap Market nor on any national securities exchange,
the average of the per share closing bid prices of the Common Stock on the 30
consecutive trading days immediately preceding the date in question, as reported
by Nasdaq or an equivalent generally accepted reporting service, or (ii) if the
Common Stock is listed for quotation on the Nasdaq National Market or the Nasdaq
SmallCap Market or on a national securities exchange, the average for the 30
consecutive trading days immediately preceding the date in question of the daily
per share closing prices of the Common Stock as quoted by the Nasdaq National
Market or the Nasdaq SmallCap Market or on the principal stock exchange on which
it is listed, as the case may be, whichever is the higher. For purposes of
clause (i) above, if trading in the Common Stock is not reported by Nasdaq, the
bid price referred to in said clause shall be the lowest bid price as reported
on the OTC Bulletin Board or in the "pink sheets" published by National
Quotation Bureau, Incorporated. The closing price referred to in clause (ii)
above shall be the last reported sale price or, in case no such reported sale
takes place on such day, the average of the reported closing bid and asked
prices, in either case as quoted by the Nasdaq National Market or the Nasdaq
SmallCap Market or on the national securities exchange on which the Common Stock
is then listed.
Section 11. REDEMPTION.
(a) The then outstanding Warrants may be redeemed, at the option
of the Company, at $.10 per share of Common Stock purchasable upon exercise of
such Warrants, at any time after the average Daily Market Price per share of the
Common Stock for a period of at least
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20 consecutive trading days ending not more than three days prior to the date of
the notice given pursuant to Section 11(b) hereof has equaled or exceeded $9.00,
and prior to expiration of the Warrants. The Daily Market Price of the Common
Stock will be determined by the Company in the manner set forth in Section 11(e)
as of the end of each trading day (or, if no trading in the Common Stock
occurred on such day, as of the end of the immediately preceding trading day in
which trading occurred) and verified to the Warrant Agent before the Company may
give notice of redemption. All outstanding Warrants must be redeemed if any are
redeemed, and any right to exercise an outstanding Warrant shall terminate at
5:00 p.m. (New York City time) on the date fixed for redemption. A trading day
means a day in which trading of securities occurred on the Boston Stock
Exchange.
(b) The Company may exercise its right to redeem the Warrants
only by giving the notice set forth in the following sentence. If the Company
exercises its right to redeem, it shall give notice to the Warrant Agent and the
registered holders of the outstanding Warrants by mailing or causing the Warrant
Agent to mail to such registered holders a notice of redemption, first class,
postage prepaid, at their addresses as they shall appear on the records of the
Warrant Agent. Any notice mailed in the manner provided herein will be
conclusively presumed to have been duly given whether or not the registered
holder actually receives such notice.
(c) The notice of redemption must specify the redemption price,
the date fixed for redemption (which must be at least 30 days after such notice
is mailed), the place where the Warrant certificates must be delivered and the
redemption price paid, and that the right to exercise the Warrant will terminate
at 5:00 P.M. (New York City time) on the date fixed for redemption.
(d) Appropriate adjustment shall be made to the redemption price
and to the minimum Daily Market Price prerequisite to redemption set forth in
Section 11(a) hereof, in each case on the same basis as provided in Section 9
hereof with respect to adjustment of the Warrant Price.
(e) For purposes of this Agreement, the term "Daily Market Price"
means (i) if the Common Stock is traded in the over-the-counter market and not
quoted on the Nasdaq National Market or the Nasdaq SmallCap Market nor on any
national securities exchange, the closing bid price of the Common Stock on the
trading day in question, as reported by Nasdaq or an equivalent generally
accepted reporting service, or (ii) if the Common Stock is quoted on the Nasdaq
National Market or the Nasdaq SmallCap Market or on a national securities
exchange, the daily per share closing price of the Common Stock as quoted on the
Nasdaq National Market or the Nasdaq SmallCap Market or on the principal stock
exchange on which it is listed on the trading day in question, as the case may
be, whichever is the higher. For purposes of clause (i) above, if trading in the
Common Stock is not reported by Nasdaq, the bid price referred to in said clause
shall be the lowest bid price as quoted on the OTC Bulletin Board or reported in
the "pink sheets" published by National Quotation Bureau, Incorporated. The
closing price referred to in clause (ii) above shall be the last reported sale
price or, in case no such reported sale takes place on such day, the average of
the reported closing bid and asked prices, in either case on the Nasdaq National
Market or the Nasdaq SmallCap Market or on the national securities exchange on
which the Common Stock is then listed.
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(f) On the redemption date, each Warrant will be automatically
converted into the right to receive the redemption price and the Warrant Agent
will no longer honor any purported exercise of a Warrant. On or before the
redemption date, the Company will deposit with the Warrant Agent sufficient
funds for the purpose of redeeming all of the other outstanding unexercised
Warrants. All such funds shall be maintained by the Warrant Agent in an
interest-bearing, segregated account. Funds remaining in such account on the
date three years from the redemption date will be returned to the Company. Any
Warrants thereafter submitted to the Warrant Agent for redemption will be
forwarded for redemption by the Warrant Agent to the Company and the Warrant
Agent will have no further responsibility with respect thereto.
Section 12. RIGHTS AS WARRANTHOLDERS. Nothing contained in this
Agreement or in any of the Warrants shall be construed as conferring upon the
holders thereof, as such, any of the rights of stockholders of the Company,
including, without limitation, the right to receive dividends or other
distributions, to exercise any preemptive rights, to vote or to consent or to
receive notice as stockholders in respect of the meetings of stockholders or the
election of directors of the Company or any other matter. Anything herein to the
contrary notwithstanding, the Company shall cause copies of all financial
statements and reports, proxy statements and other documents as it shall send
generally to its stockholders to be sent by the same class mail as sent to its
stockholders, postage prepaid, on the date of the mailing to such stockholders,
to each registered holder of Warrants at his or her address appearing on the
Warrant Register as of the record date for the determination of the stockholders
entitled to such documents.
Section 13. DISPOSITION OF PROCEEDS ON EXERCISE OF WARRANTS. The Warrant
Agent must account promptly to the Company with respect to Warrants exercised,
and must promptly pay to the Company all monies received by it upon the exercise
of such Warrants, and agrees to keep copies of this Agreement available for
inspection by holders of Warrants during normal business hours.
Section 14. MERGER OR CONSOLIDATION OR CHANGE OF NAME OF WARRANT AGENT.
Any corporation into which the Warrant Agent may be merged or with which it may
be consolidated, or any corporation resulting from any merger or consolidation
to which the Warrant Agent shall be a party, or any corporation succeeding to
the corporate trust business of the Warrant Agent, shall be the successor to the
Warrant Agent hereunder without the execution or filing of any paper or any
further act on the part of any of the parties hereto, provided that such
corporation would be eligible for appointment as a successor Warrant Agent under
the provisions of Section 16 of this Agreement. In case at the time such
successor to the Warrant Agent shall succeed to the agency created by this
Agreement and any of the Warrant certificates shall have been countersigned but
not delivered, any such successor to the Warrant Agent may adopt the
countersignature of the original Warrant Agent and deliver such Warrant
certificates so countersigned; and in case at that time any of the Warrant
certificates shall not have been countersigned, any successor to the Warrant
Agent may countersign such Warrant certificates either in the name of the
predecessor Warrant Agent or in the name of the successor Warrant Agent, and in
all such cases the Warrants represented by such Warrant certificates shall have
the full force provided in the Warrant certificates and in this Agreement. Any
such successor Warrant Agent shall promptly give notice of its succession as
Warrant Agent to the Company and to the registered holder of each Warrant
certificate.
11
<PAGE> 12
If at any time the name of the Warrant Agent is changed and at such time
any of the Warrant certificates have been countersigned but not delivered, the
Warrant Agent may adopt the countersignature under its prior name and deliver
Warrant certificates so countersigned; and if at that time any of the Warrant
certificates have not been countersigned, the Warrant Agent may countersign such
Warrant certificates either in its prior name or in its changed name; and in all
such cases the Warrants represented by such Warrant certificates will have the
full force provided in the Warrant certificates and in this Agreement.
Section 15. DUTIES OF WARRANT AGENT. The Warrant Agent hereby undertakes
the duties and obligations imposed by this Agreement upon the following terms
and conditions, all of which bind the Company and the holders of Warrants by
their acceptance thereof:
(a) The statements of fact and recitals contained herein and in
the Warrants shall be taken as statements of the Company, and the Warrant Agent
assumes no responsibility for the correctness of any of the same except such as
describe the Warrant Agent or action taken or to be taken by it. The Warrant
Agent assumes no responsibility with respect to the distribution of the Warrants
except as herein expressly provided.
(b) The Warrant Agent will not be responsible for any failure of
the Company to comply with any of the covenants contained in this Agreement or
in the Warrants to be complied with by the Company.
(c) The Warrant Agent may consult at any time with counsel
satisfactory to it (who may be counsel for the Company) and the Warrant Agent
shall incur no liability or responsibility to the Company or to any holder of
any Warrant in respect of any action taken, suffered or omitted by it hereunder
in good faith and in accordance with the opinion or the advice of such counsel.
(d) The Warrant Agent will incur no liability or responsibility
to the Company or to any holder of any Warrant for any action taken in reliance
on any notice, resolution, waiver, consent, order, certificate or other paper,
document or instrument believed by it to be genuine and to have been signed,
sent or presented by the proper party or parties.
(e) The Company agrees to pay to the Warrant Agent reasonable
compensation for all services rendered by the Warrant Agent in the execution of
this Agreement, to reimburse the Warrant Agent for all expenses, taxes (other
than income taxes) and governmental charges and other charges incurred by the
Warrant Agent in the execution of this Agreement and to indemnify the Warrant
Agent and save it harmless against any and all liabilities, including judgments,
costs and reasonable counsel fees, for anything done or omitted by the Warrant
Agent in the execution of this Agreement, except as a result of the Warrant
Agent's negligence, willful misconduct or bad faith.
(f) The Warrant Agent will be under no obligation to institute
any action, suit or legal proceeding or to take any other action on behalf of
the Company or any registered holder, but this provision will not affect the
power of the Warrant Agent to take such action as the Warrant Agent may consider
proper. All rights of action under this Agreement or under any of the Warrants
12
<PAGE> 13
may be enforced by the Warrant Agent without the possession of any of the
Warrants or the production thereof at any trial or other proceeding relative
thereto, and any such action, suit or proceeding instituted by the Warrant Agent
must be brought in its name as Warrant Agent, and any recovery of judgment must
be for the ratable benefit of all the registered holders of the Warrants, as
their respective rights or interests may appear.
(g) The Warrant Agent and any stockholder, director, officer or
employee of the Warrant Agent may buy, sell or deal in any of the Warrants or
other securities of the Company or become pecuniarily interested in any
transaction in which the Company may be interested, or contract with or lend
money to the Company or otherwise act as fully and freely as though it were not
Warrant Agent under this Agreement. Nothing herein precludes the Warrant Agent
from acting in any other capacity for the Company or for any other legal entity.
(h) The Warrant Agent will act hereunder solely as agent and not
in a ministerial capacity, and its duties will be determined solely by the
provisions hereof. The Warrant Agent shall not be liable for anything which it
may do or refrain from doing in connection with this Agreement, except for its
own negligence, willful misconduct or bad faith.
(i) Any request, direction, election, order or demand of the
Company will be sufficient if evidenced by an instrument signed in the name of
the Company by its President, a Vice President or chief financial officer
(unless other evidence in respect thereof is herein specifically prescribed);
and any resolution of the Board of Directors may be evidenced to the Warrant
Agent by a copy thereof certified by the Secretary or an Assistant Secretary of
the Company.
Section 16. CHANGE OF WARRANT AGENT. The Warrant Agent may resign and be
discharged from its duties under this Agreement by giving the Company at least
30 days prior notice in writing, and by mailing notice in writing to the
registered holders at their addresses appearing on the Warrant Register, of such
resignation, specifying a date when such resignation shall take effect. The
Warrant Agent may be removed by like notice to the Warrant Agent from the
Company and by like mailing of notice to the registered holders of the Warrants.
If the Warrant Agent resigns or is removed or otherwise becomes incapable of
acting, the Company shall appoint a successor to the Warrant Agent. If the
Company fails to make such appointment within 30 days after such removal or
after it has been notified in writing of such resignation or incapacity by the
resigning or incapacitated Warrant Agent or by the registered holder of a
Warrant (who shall, with such notice, submit his Warrant certificate for
inspection by the Company), then the registered holder of any Warrant may apply
to any court of competent jurisdiction for the appointment of a successor to the
Warrant Agent. Any successor Warrant Agent, whether appointed by the Company or
by such a court, must be registered and otherwise authorized to serve as a
transfer agent pursuant to the Securities Exchange Act of 1934, as amended. If
at any time the Warrant Agent ceases to be eligible in accordance with the
provisions of this Section 16, it will resign immediately in the manner and with
the effect specified in this Section 16. After acceptance in writing of the
appointment, the successor Warrant Agent will be vested with the same powers,
rights, duties and responsibilities as if it had been originally named as
Warrant Agent without further act or deed; but the former Warrant Agent will
deliver and transfer to the successor Warrant Agent any property at the time
held by it hereunder, and execute and deliver any further assurance, conveyance,
act or deed necessary for this
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<PAGE> 14
purpose. Upon request of any successor Warrant Agent, the Company will make,
execute, acknowledge and deliver any and all instruments in writing for more
fully and effectually vesting in and confirming to such successor Warrant Agent
all such powers, rights, duties and responsibilities. Failure to file or mail
any notice provided in this Section 16, however, or any defect therein, will not
affect the legality or validity of the resignation or removal of the Warrant
Agent or the appointment of the successor Warrant Agent, as the case may be.
Section 17. IDENTITY OF TRANSFER AGENT. Following the appointment of any
transfer agent for the Common Stock or of any subsequent transfer agent for
shares of the Common Stock or other shares of the Company's capital stock
issuable upon the exercise of the rights of purchase represented by the
Warrants, the Company will file with the Warrant Agent a statement setting forth
the name and address of such transfer agent.
Section 18. NOTICES. All notices, requests and other communications
pursuant to this Agreement must be in writing and will be sufficiently given or
made when delivered or mailed by first class mail, postage prepaid, addressed as
follows:
(a) if to the Company, to (until another address is filed in
writing by the Company with the Warrant Agent):
Cragar Industries, Inc.
4636 N. 43rd Avenue
Phoenix, Arizona 85031
(602) 247-1300
Attention: President
(b) if to the Warrant Agent, to (until another address is filed
in writing by the Warrant Agent with the Company):
American Stock Transfer & Trust Company
40 Wall Street
New York, New York 10005
(212) 936-5100
Attention: ________________
(c) if to the registered holder of a Warrant, to the address of
such holder as shown in the Warrant Register.
Section 19. SUPPLEMENTS AND AMENDMENTS. The Company and the Warrant
Agent may from time to time supplement or amend this Agreement without the
approval of any holders of Warrants in order to cure any ambiguity or to correct
or supplement any provision contained herein which may be defective or
inconsistent with any other provision herein, or to make any other provisions in
regard to matters or questions arising hereunder which the Company and the
Warrant Agent may deem necessary or desirable and which shall not be
inconsistent with the provisions of
14
<PAGE> 15
the Warrants, or which shall not adversely affect the interests of the holders
of Warrants (including reducing the Warrant Price or extending the redemption or
expiration date).
Section 20. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company or the Warrant Agent or the
registered holders of the Warrants will bind and inure to the benefit of their
respective successors and assigns hereunder.
Section 21. GOVERNING LAW. This Agreement will be deemed to be a
contract made under the laws of the State of Arizona and for all purposes will
be construed in accordance with the laws of said State.
Section 22. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement will
be construed to give to any person or corporation other than the Company, the
Warrant Agent and the registered holders of the Warrants any legal or equitable
right, remedy or claim under this Agreement. This Agreement is for the sole and
exclusive benefit of the Company, the Warrant Agent and the registered holders
of the Warrants.
Section 23. COUNTERPARTS. This Agreement may be executed in counterparts
and each of such counterparts will for all purposes be deemed to be an original,
and all such counterparts will together constitute but one and the same
instrument.
Section 24. DESCRIPTIVE HEADINGS. The descriptive headings of the
several Sections of this Agreement are inserted for convenience only and do not
control or affect the meaning or construction of any of the provisions hereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, as of the day and year first above written.
CRAGAR INDUSTRIES, INC.
By:________________________________________________
Name:______________________________________________
Its:_______________________________________________
15
<PAGE> 16
AMERICAN STOCK TRANSFER &
TRUST COMPANY
By:________________________________________________
Name:______________________________________________
Its:_______________________________________________
16
<PAGE> 17
Warrant No. ____
EXHIBIT A
WARRANT TO PURCHASE ___________ SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.,
NEW YORK CITY TIME, ON DECEMBER ____, 2001
CRAGAR INDUSTRIES, INC.
This certifies that, for value received _________________, the
registered holder hereof or assigns (the "Holder"), is entitled to purchase from
CRAGAR INDUSTRIES, INC., a Delaware corporation (the "Company"), at any time
before 5:00 p.m., New York City time, on December ____, 2001, at the purchase
price per share of $6.60 (the "Warrant Price"), the number of shares of Common
Stock, par value $0.01 per share, of the Company set forth above (the "Shares")
. The number of shares of Common Stock purchasable upon exercise of the Warrant
evidenced hereby and the Warrant Price is subject to adjustment from time to
time as set forth in the Warrant Agreement referred to below.
This Warrant may be redeemed, at the option of the Company, at $.10 per
share of Common Stock purchasable upon exercise hereof, at any time after the
average Daily Market Price (as defined in Section 11 of the Warrant Agreement)
per share of the Common Stock for a period of at least 20 consecutive trading
days ending not more than three days prior to the date of the notice given
pursuant to Section 11(b) thereof has equaled or exceeded $9.00, and prior to
expiration of this Warrant. The Holder's right to exercise this Warrant
terminates at 5:00 p.m. (New York City time) on the date fixed for redemption in
the notice of redemption delivered by the Company in accordance with the Warrant
Agreement.
The Warrants evidenced hereby may be exercised in whole or in part by
presentation of this Warrant certificate with the Purchase Form attached hereto
duly executed and guaranteed and simultaneous payment of the Warrant Price
(subject to adjustment) at the principal office in New York, New York, of
American Stock Transfer & Trust Company (the "Warrant Agent"). Payment of such
price may be made at the option of the Holder in cash or by certified check or
bank draft, all as provided in the Warrant Agreement.
The Warrants evidenced hereby are part of a duly authorized issue of
Warrants and are issued under and in accordance with the Warrant Agreement dated
as of December ____, 1996, between the Company and the Warrant Agent (the
"Warrant Agreement") and are subject to the terms and provisions contained in
such Warrant Agreement, to all of which the Holder of this Warrant certificate
by acceptance hereof consents. A copy of the Warrant Agreement may be obtained
for inspection by the Holder hereof upon written request to the Warrant Agent.
<PAGE> 18
Upon any partial exercise of the Warrants evidenced hereby, there will
be issued to the Holder a new Warrant certificate in respect of the Shares
evidenced hereby that have not been exercised. This Warrant certificate may be
exchanged at the office of the Warrant Agent by surrender of this Warrant
certificate properly endorsed either separately or in combination with one or
more other Warrants for one or more new Warrants to purchase the same aggregate
number of Shares as evidenced by the Warrant or Warrants exchanged. No
fractional Shares will be issued upon the exercise of rights to purchase
hereunder, but the Company will pay the cash value of any fraction upon the
exercise of one or more Warrants. The Warrants evidenced hereby are not
transferable except in the manner and subject to the limitations set forth in
the Warrant Agreement.
The number of shares of Common Stock issuable upon exercise of this
Warrant are subject to adjustment as provided in Section 9 of the Warrant
Agreement.
The Holder hereof may be treated by the Company, the Warrant Agent and
all other persons dealing with this Warrant certificate as the absolute owner
hereof for all purposes and as the person entitled to exercise the rights
represented hereby, any notice to the contrary notwithstanding, and until any
transfer is entered on such books, the Company may treat the Holder hereof as
the owner for all purposes.
Dated:_____________ CRAGAR INDUSTRIES, INC.
By:______________________________________________
President
ATTEST:
___________________________
Secretary
2
<PAGE> 19
CRAGAR INDUSTRIES, INC.
PURCHASE FORM
Mailing Address:
CRAGAR INDUSTRIES, INC.
4636 N. 43rd Avenue
Phoenix, Arizona 85031
The undersigned hereby irrevocably elects to exercise the right of
purchase represented by the within Warrant certificate for, and to purchase
thereunder, ______________ Shares of Common Stock provided for therein, and
requests that certificates for such Shares be issued in the name of:
________________________________________________________________________________
________________________________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
and, if said number of Shares shall not be all the Shares purchasable hereunder,
that a new Warrant certificate for the balance of the Shares purchasable under
the within Warrant certificate be registered in the name of the undersigned
Holder or his or her Assignee as below indicated and delivered to the address
stated below.
Dated:______________________________________
Name of Holder or Assignee:
________________________________________________________________________________
(Please Print)
Address:________________________________________________________________________
________________________________________________________________________________
Signature:
___________________________
NOTE: The above signature must correspond with the name as it appears upon the
face of the within Warrant certificate in every particular, without alteration
or enlargement or any change whatever, unless these Warrants have been assigned.
Signature Guaranteed:
___________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE> 20
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
________________________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
________________________________________________________________________________
the within Warrants, hereby irrevocably constituting and appointing ____________
________ Attorney to transfer said Warrants on the books of the Company, with
full power of substitution in the premises.
Dated:_______________________
____________________________________________
Signature of Registered Holder
Note: The signature on this assignment must correspond
with the name as it appears upon the face of the
within Warrant certificate in every particular,
without alteration or enlargement or any change
whatever.
Signature Guaranteed:
___________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
<PAGE> 1
Exhibit 4.15
12/16/96
REPRESENTATIVE'S WARRANT AGREEMENT
THIS REPRESENTATIVE'S WARRANT AGREEMENT (the "Agreement"), dated as of
__________, 1996, is made and entered into by and between CRAGAR INDUSTRIES,
INC., a Delaware corporation (the "Company"), and DICKINSON & CO. (together with
its successors and assigns, the "Warrantholder").
The Company agrees to issue and sell, and the Warrantholder agrees to
purchase, for the price of $85.00, warrants, as hereinafter described (the
"Warrants"), to purchase (i) up to 85,000 (subject to adjustment pursuant to
Section 8 hereof) shares (the "Shares") of the Company's Common Stock, $.01 par
value (the "Common Stock") and (ii) up to 85,000 Common Stock Purchase Warrants
(the "Common Stock Warrants"), each such Common Stock Warrant being exercisable
to purchase one share of Common Stock, in connection with a public offering (the
"Offering") by the Company of up to 850,000 shares of Common Stock and up to
850,000 Common Stock Purchase Warrants pursuant to an underwriting agreement
(the "Underwriting Agreement"), dated as of _____________, 1996, among the
Company and the Warrantholder, as Representative of the several underwriters, as
contemplated by the prospectus of the Company dated ________, 1996 (the "Final
Prospectus"). (The Common Stock Warrants underlying the Warrants are hereinafter
referred to as the "Underlying Warrants." The shares of Common Stock purchasable
upon exercise of the Warrants and the Underlying Warrants are hereinafter
referred to as the "Underlying Warrant Stock.") The purchase and sale of the
Warrants shall occur upon completion of the Offering, and be subject to the
conditions to the Representative's obligations to purchase Shares of Common
Stock and Common Stock Warrants thereunder. The Underlying Warrants shall be
subject to all of the terms and conditions of the warrant agreement, dated as of
________________, 1996, between the Company and American Stock Transfer & Trust
Company, as Warrant Agent (the "Warrant Agreement").
In consideration of the foregoing and for the purpose of defining the
terms and provisions of the Warrants and the respective rights and obligations
thereunder, the Company and the Warrantholder, for value received, hereby agree
as follows:
Section 1. TRANSFERABILITY AND FORM OF WARRANTS.
1.1. REGISTRATION. The Warrants shall be numbered and shall be
registered on the books of the Company when issued.
1.2. TRANSFER. The Warrants may not be sold, transferred,
assigned, pledged or hypothecated by the Warrantholder or any other person,
except in accordance with and subject to applicable securities laws, (i) to any
member of the National Association of Security Dealers, Inc. participating in
the offering as underwriter or as a member of the Selling Group
<PAGE> 2
to which the Final Prospectus relates and bona fide officers and partners
thereof, or (ii) by operation of law or by reason of the reorganization of the
Company or (iii) after _________, 1996 [date 12 months from date of registration
statement of which the Final Prospectus is a part] to any person that agrees to
exercise the Warrants so acquired immediately upon acquisition thereof. All
Warrant certificates shall bear an appropriate legend describing the foregoing
restriction and stating the time period for which the restriction is operative.
The Warrants shall be transferable only on the books of the Company
maintained at its principal office in Phoenix, Arizona or wherever its principal
office may then be located, upon delivery thereof duly endorsed by the
Warrantholder or by its duly authorized attorney or representative, accompanied
by proper evidence of succession, assignment, or authority to transfer. Upon any
registration of transfer, the Company shall execute and deliver new Warrants to
the person entitled thereto.
1.3 FORM OF WARRANTS. The text of the Warrants and of the form of
election to purchase Shares and Underlying Warrants shall be substantially as
set forth in Exhibit A attached hereto. The number of shares of Common Stock
issuable upon exercise of the Warrants is subject to adjustment upon the
occurrence of certain events, all as hereinafter provided. The Warrants shall be
executed on behalf of the Company by its Chairman of the Board, Chief Executive
Officer, President, or by a Vice President, and attested to by its Secretary or
an Assistant Secretary.
A Warrant bearing the signature of an individual who was at the
time of execution thereof the proper officer of the Company shall bind the
Company, notwithstanding that such individual shall have ceased to hold such
office prior to the delivery of such Warrant or did not hold such office on the
date of this Agreement.
The Warrants shall be dated as of the date of signature thereof
by the Company either upon initial issuance or upon division, exchange,
substitution, or transfer.
Section 2. EXCHANGE OF WARRANT CERTIFICATE. Any Warrant certificate may
be exchanged for another certificate or certificates entitling the Warrantholder
to purchase a like aggregate number of Shares and Underlying Warrants as the
certificate or certificates surrendered then entitled such Warrantholder to
purchase. Any Warrantholder desiring to exchange a Warrant certificate shall
make such request in writing delivered to the Company, and shall surrender,
properly endorsed, with signatures guaranteed, the certificate evidencing the
Warrant to be so exchanged. Thereupon, the Company shall execute and deliver to
the person entitled thereto a new Warrant certificate as so requested.
Section 3. TERM OF WARRANTS; EXERCISE OF WARRANTS. Subject to the terms
of this Agreement, the Warrantholder shall have the right, at any time during
the period commencing at 9:00 A.M. Arizona Time, on the date one year from the
date of the Final Prospectus, and ending at 5:00 P.M., Arizona Time, on the date
immediately preceding the date five years from
2
<PAGE> 3
the date of the Final Prospectus (the "Termination Date"), to purchase from the
Company up to the number of fully paid and nonassessable shares and Underlying
Warrants to which the Warrantholder may at the time be entitled to purchase
pursuant to this Agreement, upon surrender to the Company, at its principal
office, of the certificate evidencing the Warrants to be exercised, together
with the purchase form on the reverse thereof duly filled in and signed, with
signatures guaranteed, and upon payment to the Company of the Warrant Price (as
defined in and determined in accordance with the provisions of Sections 7 and 8
hereof), for the number of shares and Underlying Warrants in respect of which
such Warrants are then exercised, but in no event for less than 100 shares and
100 Underlying Warrants (unless less than an aggregate of 100 shares and 100
Underlying Warrants are then purchasable under all outstanding Warrants held by
a Warrantholder). Each Warrant may be exercised only for an equal number of
shares and Underlying Warrants. Payment of the aggregate Warrant Price shall be
made in cash or by check. No Underlying Warrant may be exercised by the
Warrantholder after 5:00 p.m., Arizona Time, on the date immediately preceding
the Termination Date. The exercise price of the Underlying Warrants shall be
$6.60, subject to adjustment as is provided in Section 9 of the of the Warrant
Agreement.
Upon surrender of the Warrants and payment of the Warrant Price, the
Company shall issue and cause to be delivered with all reasonable dispatch to or
upon the written order of the Warrantholder and in such name or names as the
Warrantholder may designate a certificate or certificates for the number of full
shares and Underlying Warrants so purchased upon the exercise of the Warrant,
together with cash, as provided in Section 9 hereof, in respect of any
fractional Shares otherwise issuable upon surrender; provided, however, that the
right of the Warrantholder to designate a person other than the Warrantholder as
the recipient of Shares or Underlying Warrants receivable upon the exercise of
the Warrants shall be subject to the Securities Act of 1933, as amended, and the
rules and regulations promulgated by the Securities and Exchange Commission
thereunder. Such certificate or certificates shall be deemed to have been issued
and any person so designated to be named therein shall be deemed to have become
a holder of record of such securities as of the date of surrender of the
Warrants and payment of the Warrant Price, notwithstanding that the certificate
or certificates representing such securities shall not actually have been
delivered or that the stock and Underlying Warrant transfer books of the Company
shall then be closed. The Warrants shall be exercisable, at the election of the
Warrantholder, either in full or from time to time in part and, in the event
that a certificate evidencing the Warrants is exercised in respect of less than
all of the Shares and Underlying Warrants specified therein at any time prior to
the Termination Date, a new certificate evidencing the remaining portion of the
Warrants will be issued by the Company.
Section 4. PAYMENT OF TAXES. The Company will pay all documentary stamp
taxes, if any, attributable to the initial issuance of the Warrants, Shares, and
Underlying Warrants, the securities and shares of Common Stock issuable upon
exercise thereof; provided, however, the Company shall not be required to pay
any tax which may be payable in respect of any secondary transfer of the
Warrants, the shares, and Underlying Warrants.
3
<PAGE> 4
Section 5. MUTILATED OR MISSING WARRANTS. In case the certificate or
certificates evidencing the Warrants shall be mutilated, lost, stolen, or
destroyed, the Company shall, at the request of the Warrantholder, issue and
deliver in exchange and substitution for and upon cancellation of the mutilated
certificate or certificates, or in lieu of and substitution for the certificate
or certificates lost, stolen, or destroyed, a new Warrant certificate or
certificates of like tenor and representing an equivalent right or interest, but
only upon receipt of evidence satisfactory to the Company of such loss, theft,
or destruction of such Warrant and a bond of indemnity, if requested, also
satisfactory in form and amount at the applicant's cost. Applicants for such
substitute Warrant certificate shall also comply with such other reasonable
regulations and pay such other reasonable charges as the Company may prescribe.
Section 6. RESERVATION OF SHARES. There has been reserved, and the
Company shall at all times keep reserved so long as the Warrants remain
outstanding, out of its authorized Common Stock, such number of shares of Common
Stock as shall be subject to purchase under the Warrants (including such number
of shares of Underlying Warrant Stock subject to purchase upon exercise of the
Underlying Warrants). Every transfer agent for the Common Stock and other
securities of the Company issuable upon the exercise of the Warrants will be
irrevocably authorized and directed at all times to reserve such number of
authorized shares and other securities as shall be requisite for such purpose.
The Company will keep a copy of this Agreement and the Warrant Agreement on file
with every transfer agent for the Common Stock and other securities of the
Company issuable upon the exercise of the Warrants. The Company will supply
every such transfer agent with duly executed stock and other certificates, as
appropriate, for such purpose and will provide or otherwise make available any
cash which may be payable as provided in Section 9 hereof.
Section 7. WARRANT PRICE. The price (the "Warrant Price") at which
Shares and Underlying Warrants shall be purchasable upon the exercise of the
Warrants shall be $7.50 per Share and $0.125 per Underlying Warrant, subject to
adjustment as provided in Section 8.
Section 8. ADJUSTMENT OF NUMBER OF SHARES. The number and kind of
securities purchasable upon the exercise of the Warrants and the Warrant Price
shall be subject to adjustment from time to time upon the happening of certain
events, as follows:
8.1. ADJUSTMENTS. The number of shares purchasable upon the
exercise of the Warrants shall be subject to adjustment as follows:
(a) In case the Company shall (i) pay a dividend in Common
Stock or make a distribution in Common Stock, (ii) subdivide its outstanding
Common Stock, (iii) combine its outstanding Common Stock into a smaller number
of shares of Common Stock, or (iv) issue by reclassification of its Common Stock
other securities of the Company, the number of shares purchasable upon exercise
of the Warrants immediately prior thereto shall be adjusted so that the
Warrantholder shall be entitled to receive the kind and number of shares or
other securities of the Company which it would have owned or would have been
entitled to receive
4
<PAGE> 5
immediately after the happening of any of the events described above, had the
Warrants been exercised immediately prior to the happening of such event or any
record date with respect thereto. Any adjustment made pursuant to this
subsection 8.1(a) shall become effective immediately after the effective date of
such event retroactive to the record date, if any, for such event.
(b) In case the Company shall distribute to all or
substantially all holders of its Common Stock evidences of its indebtedness or
assets (excluding cash dividends or distributions out of earnings) or rights,
options, warrants, or convertible securities containing the right to subscribe
for or purchase Common Stock, then the Company shall reserve, and the
Warrantholder shall be entitled to receive upon the exercise of such Warrant,
for each Share issuable upon exercise of such Warrant, the amount of
indebtedness or assets or the number of rights, options, warrants, or
convertible securities that such Warrantholder would have received had the
Warrantholder been the holder of such Share on the record date established by
the Company for the determination of holders of Common Stock entitled to receive
such distribution, or, if no such record date shall have been established, then
on the date of such distribution. Notwithstanding the above, in the event that
any of the provisions of this subsection 8.1(b) do not comply with the Conduct
Rules of the National Association of Securities Dealers, as such rules exist on
the date of this Agreement (the "Conduct Rules"), then such provisions shall be
deemed to be null and void, but only to the extent that such provisions do not
comply with the Conduct Rules, in which case the Warrantholder will be entitled
to receive the maximum amount of indebtedness or assets of the Company and/or
that number of rights, options, warrants, or convertible securities that the
Warrantholder may receive without violating the Conduct Rules.
(c) No adjustment in the number of shares purchasable
pursuant to the Warrants shall be required unless such adjustment would require
an increase or decrease of at least one percent in the number of shares then
purchasable upon the exercise of the Warrants or, if the Warrants are not then
exercisable, the number of shares purchasable upon the exercise of the Warrants
on the first date thereafter that the Warrants become exercisable; provided,
however, that any adjustments which by reason of this subsection 8.1(c) are not
required to be made immediately shall be carried forward and taken into account
in any subsequent adjustment.
(d) Whenever the number of shares purchasable upon the
exercise of the Warrant is adjusted, as herein provided, the Warrant Price for
shares payable upon exercise of the Warrant shall be adjusted by multiplying
such Warrant Price immediately prior to such adjustment by a fraction, of which
the numerator shall be the number of shares purchasable upon the exercise of the
Warrant immediately prior to such adjustment, and of which the denominator shall
be the number of shares so purchasable immediately thereafter.
(e) Whenever the number of shares purchasable upon the
exercise of the Warrants is adjusted as herein provided, the Company shall cause
to be promptly mailed to the Warrantholder by first class mail, postage prepaid,
notice of such adjustment and a certificate of the chief financial officer of
the Company setting forth the number of shares purchasable upon
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<PAGE> 6
the exercise of the Warrants after such adjustment, a brief statement of the
facts requiring such adjustment and the computation by which such adjustment was
made.
(f) For the purpose of this subsection 8.1, the term
"Common Stock" shall mean (i) the class of stock designated as the Common Stock
of the Company at the date of this Agreement, or (ii) any other class of stock
resulting from successive changes or reclassifications of such Common Stock
consisting solely of changes in par value, or from par value to no par value, or
from no par value to par value. In the event that at any time, as a result of an
adjustment made pursuant to this Section 8, the Warrantholder shall become
entitled to purchase any securities of the Company other than Shares and
Underlying Warrants, thereafter the number of such other securities so
purchasable upon exercise of the Warrants shall be subject to adjustment from
time to time in a manner and on terms as nearly equivalent as practicable to the
provisions with respect to the shares contained in this Section 8.
8.2. NO ADJUSTMENT FOR DIVIDENDS. Except as provided in
subsection 8.1, no adjustment in respect of any dividends or distributions out
of earnings shall be made during the term of the Warrants or upon the exercise
of the Warrants.
8.3. NO ADJUSTMENT IN CERTAIN CASES. No adjustments shall be made
pursuant to Section 8 hereof in connection with the issuance of Shares,
Underlying Warrants or Underlying Warrant Stock sold as part of the public sale
and issuance of shares of Common Stock and Common Stock Warrants pursuant to the
Underwriting Agreement or the issuance of Shares, Underlying Warrants or
Underlying Warrant Stock upon exercise of the Warrants.
8.4. PRESERVATION OF PURCHASE RIGHTS UPON RECLASSIFICATION,
CONSOLIDATION, ETC. In case of any consolidation of the Company with or merger
of the Company into another corporation or in case of any sale or conveyance to
another corporation of the property, assets or business of the Company as an
entirety or substantially as an entirety, the Company or such successor or
purchasing corporation, as the case may be, shall execute with the Warrantholder
an agreement that the Warrantholder shall have the right thereafter upon payment
of the Warrant Price in effect immediately prior to such action to purchase,
upon exercise of the Warrants, the kind and amount of shares and other
securities and property which it would have owned or have been entitled to
receive after the happening of such consolidation, merger, sale or conveyance
had the Warrants (and each underlying security) been exercised immediately prior
to such action. In the event of a merger described in Section 368(a)(2)(E) of
the Internal Revenue Code of 1954, as amended, in which the Company is the
surviving corporation, the right to purchase Shares and Underlying Warrants
under the Warrants shall terminate on the date of such merger and thereupon the
Warrants shall become null and void, but only if the controlling corporation
shall agree to substitute for the Warrants its warrant which entitles the holder
thereof to purchase upon its exercise the kind and amount of shares and other
securities and property which it would have owned or been entitled to receive
had the Warrants been exercised immediately prior to such merger. Any such
agreements referred to in this subsection 8.4 shall provide for adjustments,
which shall be as nearly equivalent as may be practicable to the adjustments
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<PAGE> 7
provided for in Section 8 hereof. The provisions of this subsection 8.4 shall
similarly apply to successive consolidations, mergers, sales, or conveyances.
8.5. PAR VALUE OF SHARES OF COMMON STOCK. Before taking any
action that would cause an adjustment effectively reducing the portion of the
Warrant Price allocable to each Share below the then par value per share of the
Common Stock issuable upon exercise of the Warrants, the Company will take any
corporate action which may, in the opinion of its counsel, be necessary in order
that the Company may validly and legally issue fully paid and nonassessable
Common Stock upon exercise of the Warrants.
8.6. INDEPENDENT PUBLIC ACCOUNTANTS. The Company may retain a
firm of independent public accountants of recognized national standing (which
may be any such firm regularly employed by the Company) to make any computation
required under this Section 8, and a certificate signed by such firm shall be
conclusive evidence of the correctness of any computation made under this
Section 8.
8.7. STATEMENT ON WARRANT CERTIFICATES. Irrespective of any
adjustments in the number of securities issuable upon exercise of Warrants,
Warrant certificates theretofore or thereafter issued may continue to express
the same number of securities as are stated in the similar Warrant certificates
initially issuable pursuant to this Agreement. However, the Company may, at any
time in its sole discretion (which shall be conclusive), make any change in the
form of Warrant certificate that it may deem appropriate and that does not
affect the substance thereof; and any Warrant certificate thereafter issued,
whether upon registration of transfer of, or in exchange or substitution for, an
outstanding Warrant certificate, may be in the form so changed.
Section 9. FRACTIONAL INTERESTS. The Company is not required to issue
fractional shares of Common Stock on the exercise of a Warrant. If any fraction
of a share of Common Stock would, except for the provisions of this Section 10,
be issuable on the exercise of a Warrant (or specified portion thereof), the
Company will in lieu thereof pay an amount in cash equal to the then Current
Market Price multiplied by such fraction. For purposes of this Agreement, the
term "Current Market Price" means (i) if the Common Stock is traded in the
over-the-counter market and is not listed for quotation on the Nasdaq National
Market or the Nasdaq SmallCap Market nor on any national securities exchange,
the average of the per share closing bid prices of the Common Stock on the 30
consecutive trading days immediately preceding the date in question, as reported
by Nasdaq or an equivalent generally accepted reporting service, or (ii) if the
Common Stock is listed for quotation on the Nasdaq National Market or the Nasdaq
SmallCap Market or on a national securities exchange, the average for the 30
consecutive trading days immediately preceding the date in question of the daily
per share closing prices of the Common Stock as quoted by the Nasdaq National
Market or the Nasdaq SmallCap Market or on the principal stock exchange on which
it is listed, as the case may be, whichever is the higher. For purposes of
clause (i) above, if trading in the Common Stock is not reported by Nasdaq, the
bid price referred to in said clause shall be the lowest bid price as reported
on the
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<PAGE> 8
OTC Bulletin Board or in the "pink sheets" published by National Quotation
Bureau, Incorporated. The closing price referred to in clause (ii) above shall
be the last reported sale price or, in case no such reported sale takes place on
such day, the average of the reported closing bid and asked prices, in either
case as quoted by the Nasdaq National Market or the Nasdaq SmallCap Market or on
the national securities exchange on which the Common Stock is then listed.
Section 10. NO RIGHTS AS STOCKHOLDER; NOTICES TO WARRANTHOLDER. Nothing
contained in this Agreement or in the Warrants shall be construed as conferring
upon the Warrantholder or its transferees any rights as a stockholder of the
Company, including the right to vote, receive dividends, consent or receive
notices as a stockholder in respect of any meeting of stockholders for the
election of directors of the Company or any other matter. If, however, at any
time prior to the expiration of the Warrants and prior to their exercise, any
one or more of the following events shall occur:
(a) any action which would require an adjustment pursuant to
Section 8.1 (except subsections 8.1(e) and 8.1(h)) or 8.4; or
(b) a dissolution, liquidation, or winding up of the Company
(other than in connection with a consolidation, merger, or sale of its
property, assets and business as an entirety or substantially as an
entirety) shall be proposed;
then the Company shall give notice in writing of such event to the
Warrantholder, as provided in Section 14 hereof, at least 20 days, unless such
period is impracticable, prior to the date fixed as a record date or the date of
closing the transfer books for the determination of the stockholders entitled to
any relevant dividend, distribution, subscription rights, or other rights or for
the determination of stockholders entitled to vote on such proposed dissolution,
liquidation, or winding up. Such notice shall specify such record date or the
date of closing the transfer books, as the case may be. Failure to mail or
receive such notice or any defect therein shall not affect the validity of any
action taken with respect thereto. If the Company has not disclosed publically
the event set forth in such notice, and this fact is clearly indicated on such
notice, the Warrantholder shall maintain such information in confidence until so
disclosed.
Section 11. RESTRICTIONS ON TRANSFER; REGISTRATION RIGHTS.
(a) The Warrantholder agrees that prior to making any disposition
of the Warrants, the Shares, the Underlying Warrants, or the Underlying Warrant
Stock other than to persons or entities identified in clauses (i) through (iii),
inclusive, of Section 1.2, the Warrantholder shall give written notice to the
Company describing briefly the manner in which any such proposed disposition is
to be made; and no such disposition shall be made if the Company has notified
the Warrantholder that in the opinion of counsel reasonably satisfactory to the
Warrantholder a registration statement or other notification or post-effective
amendment thereto (hereinafter collectively a "Registration Statement") under
the Act is required with
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<PAGE> 9
respect to such disposition and no such Registration Statement has been filed by
the Company with, and declared effective, if necessary, by, the Securities and
Exchange Commission (the "Commission").
(b) The Company shall be obligated to the owners of the Warrants,
the Shares, the Underlying Warrants and the Underlying Warrant Stock to file a
Registration Statement as follows:
(i) Whenever during the four-year period beginning on the
date one year from the date of the Final Prospectus and ending on the date
immediately preceding the date five years from the date of the Final Prospectus,
the Company proposes to file with the Commission a Registration Statement (other
than as to securities issued pursuant to an employee benefit plan or as to a
transaction subject to Rule 145 promulgated under the Act), it shall, at least
30 days prior to each such filing, give written notice of such proposed filing
to the Warrantholder and each holder of Shares, Underlying Warrants, and the
Underlying Warrant Stock, at their respective addresses as they appear on the
records of the Company, and shall offer to include and shall include in such
filing any proposed disposition of the Shares, the Underlying Warrants, and the
Underlying Warrant Stock upon receipt by the Company, not less than 10 days
prior to the proposed filing date, of a request therefor setting forth the facts
with respect to such proposed disposition and all other information with respect
to such person reasonably necessary to be included in such Registration
Statement. In the event that the managing underwriter for said offering advises
the Company in writing that the inclusion of such securities in the offering
would be detrimental to the offering, such securities shall nevertheless be
included in the Registration Statement, provided that the Warrantholder and each
holder of Shares, Underlying Warrants, and the Underlying Warrant Stock desiring
to have such securities included in the Registration Statement agrees in
writing, for a period of 60 days following such offering, not to sell or
otherwise dispose of such securities pursuant to such Registration Statement,
which Registration Statement the Company shall keep effective for a period of at
least nine months following the expiration of such 60-day period.
(ii) In addition to any Registration Statement pursuant to
Section 11(b)(i) above, during the four-year period beginning on the date one
year from the date of the Final Prospectus and ending on the date immediately
preceding the date five years from the date of the Final Prospectus the Company
will, as promptly as practicable (but in any event within 60 days), after
written request by Dickinson & Co., or by a person or persons holding (or having
the right to acquire by virtue of holding the Warrants or Unit Warrants) at
least 50% of the Shares which have been (or may be) issued upon exercise of the
Warrants and Underlying Warrants, prepare and file at its own expense a
Registration Statement with the Commission and appropriate Blue Sky authorities
sufficient to permit the public offering of the Shares of Common Stock, the
Underlying Warrants, and the Underlying Warrant Stock, and will use its best
efforts at its own expense through its officers, directors, auditors and
counsel, in all matters necessary or advisable, to cause such Registration
Statement to become effective as promptly as
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practicable; provided, however, that the Company shall only be obligated to file
one such Registration Statement under this Section 11(b)(ii).
(c) All fees, disbursements and out-of-pocket expenses (other
than Warrantholders' brokerage fees and commissions and legal fees of counsel to
the Warrantholder, if any) in connection with the filing of any Registration
Statement under Section 11(b) and in complying with applicable securities and
Blue Sky laws shall be borne by the Company. The Company at its expense will
supply any Warrantholder and any holder of Shares, Underlying Warrants, or
Underlying Warrant Stock with copies of such Registration Statement and the
prospectus included therein and other related documents in such quantities as
may be reasonably requested by the Warrantholder or holder of Shares, Underlying
Warrants, or Underlying Warrant Stock.
(d) If the Warrantholder shall be entitled to registration of any
Shares, Underlying Warrants, or Underlying Warrant Stock as provided in this
Section 11 and so requests, in lieu of such registration, the Company shall have
the right, for a period of 30 days following such request, to purchase or cause
to be purchased all of the securities to which such request for registration
pertains, at the Current Market Price (as defined in Section 9) less the
exercise price, if any, of the Warrants or Underlying Warrants, as the case may
be.
(e) The Company shall not be required by this Section 11 to file
such Registration Statement if, in the opinion of counsel for the Warrantholders
and holders of Shares, Underlying Warrants, and the Underlying Warrant Stock and
the Company (or, should they not agree, in the opinion of another counsel
experienced in securities law matters acceptable to counsel for such holders and
the Company), the proposed public offering or other transfer as to which such
Registration Statement is requested is exempt from applicable federal and state
securities laws and would result in all purchasers or transferees obtaining
securities which are not "restricted securities," as defined in Rule 144 under
the Act.
(f) The provisions of this Section 11 and Section 12 hereof shall
apply to the extent as provided herein if the Company chooses to file an
Offering Statement under Regulation A promulgated under the Act.
(g) The Company agrees that until all Shares, Underlying
Warrants, and the Underlying Warrant Stock have been sold under a Registration
Statement or pursuant to Rule 144 under the Act, it will keep current in filing
all materials required to be filed with the Commission in order to permit the
holders of such securities to sell the same under Rule 144.
Section 12. INDEMNIFICATION.
(a) In the event of the filing of any Registration Statement with
respect to the Warrants, the Shares, the Underlying Warrants, or the Underlying
Warrant Stock pursuant to Section 11 hereof, the Company agrees to indemnify and
hold harmless the Warrantholder or
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any holder of such Shares, the Underlying Warrants, or the Underlying Warrant
Stock and each person, if any, who controls the Warrantholder or any holder of
such Shares, the Underlying Warrants, or the Underlying Warrant Stock, within
the meaning of the Act, against any losses, claims, damages or liabilities,
joint or several (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all attorneys'
fees), to which the Warrantholder or any holder of such Shares, the Underlying
Warrants, or the Underlying Warrant Stock or such controlling person may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
any such Registration Statement, or any related preliminary prospectus, final
prospectus, or amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not misleading;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in such Registration Statement, preliminary prospectus, final
prospectus or amendment or supplement thereto in reliance upon, and in
conformity with, written information furnished to the Company by such
Warrantholder or the holder of such Shares, Underlying Warrants, or the
Underlying Warrant Stock specifically for use in the preparation thereof. This
indemnity will be in addition to any liability which the Company may otherwise
have.
(b) The Warrantholder and the holders of the Shares, Underlying
Warrants, or the Underlying Warrant Stock agree that they will indemnify and
hold harmless the Company, each other person referred to in subparts (1), (2)
and (3) of Section 11(a) of the Act in respect of the Registration Statement and
each person, if any, who controls the Company within the meaning of the Act,
against any losses, claims, damages or liabilities (which shall, for all
purposes of this Agreement, include but not be limited to, all costs of defense
and investigation and all attorneys' fees) to which the Company or any such
director, officer or controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in such Registration Statement,
or any related preliminary prospectus, final prospectus or amendment or
supplement thereto, or arise out of or are based upon the omission or the
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, but in each case
only to the extent that such untrue statement or alleged untrue statement or
omission or alleged omission was made in such Registration Statement,
preliminary prospectus, final prospectus or amendment or supplement thereto in
reliance upon, and in conformity with, written information furnished to the
Company by the Warrantholder or such holder of Shares, Underlying Warrants, or
the Underlying Warrant Stock specifically for use in the preparation thereof.
This indemnity agreement will be in addition to any liability which the
Warrantholder or such holder of shares of Common Stock or Underlying Warrants
may otherwise have.
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(c) Promptly after receipt by an indemnified party under this
Section 12 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 12, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
the indemnifying party from any liability which it may have to any indemnified
party otherwise than as to the particular item as to which indemnification is
then being sought solely pursuant to this Section 12. In case any such action is
brought against any indemnified party, and it notifies the indemnifying party of
the commencement thereof, the indemnifying party will be entitled to participate
in, and, to the extent that it may wish, jointly with any other indemnifying
party similarly notified, reasonably assume the defense thereof, subject to the
provisions herein stated, and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense hereof, the
indemnifying party will not be liable to such indemnified party under this
Section 12 for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation, unless the indemnifying party shall not pursue the
action to its final conclusion. The indemnified party shall have the right to
employ separate counsel in any such action and to participate in the defense
thereof, but the fees and expenses of such counsel shall not be at the expense
of the indemnifying party if the indemnifying party has assumed the defense of
the action with counsel reasonably satisfactory to the indemnified party;
provided that if the indemnified party is a Warrantholder or a holder of Shares,
Underlying Warrants, or Underlying Warrant Stock or a person who controls a
Warrantholder or a holder of Shares, Underlying Warrants, or Underlying Warrant
Stock within the meaning of the Act, the fees and expenses of such counsel shall
be at the expense of the indemnifying party if (i) the employment of such
counsel has been specifically authorized in writing by the indemnifying party or
(ii) the named parties to any such action, including any impleaded parties,
include both a Warrantholder or a holder of Shares, Underlying Warrants, or
Underlying Warrant Stock or such controlling person and the indemnifying party
and a Warrantholder or a holder of Shares, Underlying Warrants, or Underlying
Warrant Stock or such controlling person shall have been advised by such counsel
that there may be one or more legal defenses available to a Warrantholder or a
holder of Shares, Underlying Warrants, or Underlying Warrant Stock or
controlling person which are not available to or in conflict with any legal
defenses which may be available to the indemnifying party (in which case the
indemnifying party shall not have the right to assume the defense of such action
on behalf of a Warrantholder or a holder of Shares, Underlying Warrants, or
Underlying Warrant Stock or such controlling person, it being understood,
however, that the indemnifying party shall not, in connection with any one such
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of more than one separate firm of
attorneys for the Warrantholder, the holders of the Shares, Underlying Warrants,
and Underlying Warrant Stock and controlling persons, which firm shall be
designated in writing by a majority in interest of such holders and controlling
persons based upon the value of the securities included in the Registration
Statement). No settlement of any action against an indemnified party shall be
made without the consent of the indemnified and the
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indemnifying parties, which shall not be unreasonably withheld in light of all
factors of importance to such parties.
Section 13. CONTRIBUTION. In order to provide for just and equitable
contribution under the Act in any case in which (i) a Warrantholder or any
holder of the Shares, Underlying Warrants, or Underlying Warrant Stock or
controlling person makes a claim for indemnification pursuant to Section 12
hereof but it is judicially determined (by the entry of a final judgment or
decree by a court of competent jurisdiction and the expiration of time to appeal
or the denial of the last right of appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that the express provisions of
Section 12 hereof provide for indemnification in such case or (ii) contribution
under the Act may be required on the part of any Warrantholder or any holder of
the Shares, Underlying Warrants, or Underlying Warrant Stock or controlling
person, then the Company and any Warrantholder or any such holder of the Shares,
Underlying Warrants, or Underlying Warrant Stock or controlling person shall
contribute to the aggregate losses, claims, damages or liabilities to which they
may be subject (which shall, for all purposes of this Agreement, include, but
not be limited to, all costs of defense and investigation and all attorneys'
fees), in either such case (after contribution from others) on the basis of
relative fault as well as any other relevant equitable considerations. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by the
Company on the one hand or a Warrantholder or holder of Shares, Underlying
Warrants, or Underlying Warrant Stock or controlling person on the other and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and such holders of
such securities and such controlling persons agree that it would not be just and
equitable if contribution pursuant to this Section 13 were determined by pro
rata allocation or by any other method which does not take account of the
equitable considerations referred to in this Section 13. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof referred to above in this Section 13
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any such
action or claim. 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 14. NOTICES. Any notice pursuant to this Agreement by the
Company or by a Warrantholder, a holder of Shares, Underlying Warrants, or
Underlying Warrant Stock must be in writing and shall be deemed to have been
duly given if delivered (including by overnight delivery service) or mailed by
certified mail, return receipt requested:
(a) If to a Warrantholder, a holder of Shares, Underlying
Warrants or Underlying Warrant Stock:
Dickinson & Co.
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2425 East Camelback Road, Suite 725
Phoenix, Arizona 85016
Attention: Glenn Cushman
(b) If to the Company:
CRAGAR Industries
4636 N. 43rd Avenue
Phoenix, Arizona 85031
Attention: Michael L. Hartzmark, President
Each party may from time to time change the address to which notices to
it are to be delivered or mailed hereunder by notice in accordance herewith to
the other party.
Section 15. SUCCESSORS. All the covenants and provisions of this
Agreement by or for the benefit of the Company, the Warrantholder, or the
holders of shares of Common Stock, Underlying Warrants, or Underlying Warrant
Stock shall bind and inure to the benefit of their respective successors and
assigns hereunder.
Section 16. MERGER OR CONSOLIDATION OF THE COMPANY. The Company will not
merge or consolidate with or into any other corporation or sell all or
substantially all of its property to another corporation, unless the provisions
of Section 8.4 are complied with.
Section 17. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All statements
contained in any schedule, exhibit, certificate, or other instrument delivered
by or on behalf of the parties hereto, or in connection with the transactions
contemplated by this Agreement, shall be deemed to be representations and
warranties hereunder. Notwithstanding any investigations made by or on behalf of
the parties to this Agreement, all representations, warranties, and agreements
made by the parties to this Agreement or pursuant hereto shall survive.
Section 18. APPLICABLE LAW. This Agreement shall be deemed to be a
contract made under the laws of the State of Arizona and for all purposes shall
be construed in accordance with the laws of said State.
Section 19. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement shall
be construed to give to any person or corporation other than the Company, the
Warrantholder and the holders of Shares, Underlying Warrants, or Underlying
Warrant Stock any legal or equitable right, remedy or claim under this
Agreement. This Agreement shall be for the sole and exclusive benefit of the
Company, the Warrantholder and the holders of Shares, Underlying Warrants and
Underlying Warrant Stock.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed, all as of the day and year first above written.
CRAGAR INDUSTRIES, INC.
(CORPORATE SEAL)
By________________________________
Name:
Title:
ATTEST:
___________________________
Secretary
DICKINSON & CO.
By________________________________
Name:
Title:
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<PAGE> 16
NEITHER THIS WARRANT, NOR THE SECURITIES ISSUABLE UPON EXERCISE HEREOF, HAVE
BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY APPLICABLE STATE SECURITIES LAW. SUCH SECURITIES MAY NOT BE SOLD
OR OTHERWISE TRANSFERRED UNLESS (I) A REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND SUCH APPLICABLE STATE SECURITIES LAWS SHALL HAVE BECOME
EFFECTIVE WITH REGARD THERETO OR (II) IN THE OPINION OF COUNSEL REASONABLY
ACCEPTABLE TO THE COMPANY, REGISTRATION UNDER THE SECURITIES ACT AND SUCH
APPLICABLE STATE SECURITIES LAWS IS NOT REQUIRED IN CONNECTION WITH A PROPOSED
SALE OR TRANSFER.
Warrant Certificate, No. _____
REPRESENTATIVE'S WARRANT
TO PURCHASE ______ SHARES OF COMMON STOCK AND ____ UNDERLYING WARRANTS TO
PURCHASE AN AGGREGATE OF ____ SHARES OF COMMON STOCK
VOID AFTER 5:00 P.M.,
ARIZONA TIME, ON [date immediately preceding date
five years from the date of the Final Prospectus]
CRAGAR INDUSTRIES, INC.
INCORPORATED UNDER THE LAWS
OF THE STATE OF DELAWARE
This certifies that, for value received, _______________________
___________________, the registered holder hereof or assigns (the
"Warrantholder"), is entitled to purchase from CRAGAR INDUSTRIES, INC., a
Delaware corporation (the "Company"), at any time during the period commencing
at 9:00 a.m., Arizona Time, on [date one year from the date of the Final
Prospectus] and before 5:00 p.m., Arizona Time, on [date immediately preceding
date five years from date of the Final Prospectus], at the purchase price (the
"Warrant Price") of $7.50 per Share and $0.125 per Underlying Warrant, the
number of Shares of Common Stock of the Company and the number of Underlying
Warrants of the Company set forth above. The number of shares of Common Stock of
the Company purchasable upon exercise of each Warrant evidenced hereby shall be
subject to adjustment from time to time as set forth in the Representative's
Warrant Agreement referred to below.
1
<PAGE> 17
The Warrants evidenced hereby may be exercised in whole or in
part by presentation of this Warrant certificate with the Purchase Form attached
hereto duly executed (with a signature guarantee as provided thereon) and
simultaneous payment of the Warrant Price at the principal office of the
Company. Payment of such price shall be made at the option of the Warrantholder
in cash or by check.
The Warrants evidenced hereby represent a portion of an aggregate
of up to 85,000 Warrants issued under and in accordance with a Representative's
Warrant Agreement, dated as of _________________, 1996, between the Company and
Dickinson & Co. (the "Representative's Warrant Agreement") and are subject to
the terms and provisions contained in the Representative's Warrant Agreement, to
all of which the Warrantholder by acceptance hereof consents. Capitalized terms
used herein and not otherwise defined will have the meanings given in the
Representative's Warrant Agreement.
Upon any partial exercise of the Warrants evidenced hereby, there
shall be signed and issued to the Warrantholder a new Warrant certificate in
respect of the number of shares of Common Stock and number of Underlying
Warrants as to which the Warrants evidenced hereby shall not have been
exercised. These Warrants may be exchanged at the office of the Company by
surrender of this Warrant certificate properly endorsed for one or more new
Warrants of the same aggregate number of Shares of Common Stock and number of
Underlying Warrants as are evidenced by the Warrant or Warrants exchanged. No
fractional shares of Common Stock will be issued upon the exercise of rights to
purchase hereunder, but the Company shall pay the cash value of any fraction
upon the exercise of one or more Warrants. These Warrants are transferable at
the office of the Company in the manner set forth in the Representative's
Warrant Agreement.
This Warrant may not be sold, transferred, assigned, pledged or
hypothecated by the Warrantholder or any other person, except in accordance with
and subject to applicable securities laws, (i) to any member of the National
Association of Security Dealers, Inc. participating in the offering to which the
Final Prospectus relates and bona fide officers and partners thereof, (ii) by
operation of law or by reason of the reorganization of the Company or (iii)
after _________, 1996 [date 12 months from date of registration statement of
which the Final Prospectus is a part] to any person that agrees to exercise the
Warrant so acquired immediately upon acquisition thereof.
2
<PAGE> 18
This Warrant certificate does not entitle any Warrantholder to
any of the rights of a stockholder of the Company.
CRAGAR INDUSTRIES, INC.
By__________________________________
[Seal]
ATTEST:
_____________________________________
Secretary
Dated: _________________
3
<PAGE> 19
CRAGAR INDUSTRIES, INC.
PURCHASE FORM
CRAGAR Industries
4636 North 43rd Avenue
Phoenix, Arizona 85018
The undersigned hereby irrevocably elects to exercise the right
of purchase represented by the within Warrant certificate for, and to purchase
thereunder, ____________ Shares of Common Stock and an equal number of
Underlying Warrants provided for therein, and requests that certificates for the
shares of Common Stock and the Underlying Warrants be issued in the name of:
________________________________________________________________________________
(Please Print or Type Name, Address and Social Security Number)
________________________________________________________________________________
and, if said number of Shares and Underlying Warrants shall not be all the
Shares and Underlying Warrants purchasable hereunder, that a new Warrant
certificate for the balance of the Shares and Underlying Warrants purchasable
under the within Warrant certificate be registered in the name of the
undersigned Warrantholder or his or her allowable Assignee as below indicated
and delivered to the address stated below.
Dated: ______________
Name of Warrantholder
or Assignee:____________________________________________________________________
(Please Print)
Address:________________________________________________________________________
Signature:______________________________________________________________________
Note: The above signature must correspond with the name as written upon
the face of this Warrant certificate in every particular, without
alteration or enlargement or any change whatever, unless these
Warrants have been assigned.
Signature Guaranteed:
__________________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
4
<PAGE> 20
ASSIGNMENT
(To be signed only upon assignment of Warrants)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and
transfers unto
________________________________________________________________________________
(Name and Address of Assignee Must Be Printed or Typewritten)
________________________________________________________________________________
the within Warrants, hereby irrevocably constituting and appointing ____________
______ Attorney to transfer said Warrants on the books of the Company, with full
power of substitution in the premises.
Dated:___________________ _____________________________________________________
Signature of Registered Holder
Note: The signature on this assignment must correspond with the name as
it appears upon the face of the within Warrant certificate in
every particular, without alteration or enlargement or any change
whatever.
Signature Guaranteed:
_______________________________
(Signature must be guaranteed by a bank or trust company having an office or
correspondent in the United States or by a member firm of a registered
securities exchange or the National Association of Securities Dealers, Inc.)
5
<PAGE> 1
Exhibit 5.1
November 21, 1996
Cragar Industries, Inc
4636 North 43rd Avenue
Phoenix, Arizona 85031
Re: Registration Statement on Form SB-2
Ladies and Gentlemen:
We have acted as counsel to Cragar Industries, Inc., a Delaware
corporation (the "Company") in connection with the preparation of a Registration
Statement on Form SB-2 (the "Registration Statement"), relating to the offer and
sale by the Company of (a) 850,000 shares of Common Stock (and the offering of
an additional 127,500 shares if the over-allotment option is exercised in full);
(b) 850,000 Common Stock Purchase Warrants to purchase shares of Common Stock
(and the offering of an additional 127,500 Common Stock Purchase Warrants if the
over-allotment option is exercised in full); (c) 850,000 shares of Common Stock
underlying the Common Stock Purchase Warrants (and the offering of an additional
127,500 shares of Common Stock if the over-allotment option is exercised in
full); (d) Representative's Warrants to purchase 85,000 shares of Common Stock
and 85,000 Underlying Warrants; (e) 85,000 shares of Common Stock underlying the
Representative's Warrants; and (f) 85,000 shares of Common Stock underlying the
Underlying Warrants (collectively, the "Securities"). In this regard, we have
reviewed the Registration Statement and the exhibits thereto. In addition, we
have reviewed the originals, or copies certified or otherwise identified to our
satisfaction, of all such corporate records of the Company and such other
instruments and other certificates of public officials, officers, and
representatives of the Company and other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis for the opinions
expressed below. In rendering the opinions expressed below, we have assumed that
the signatures on all documents that we have reviewed are genuine and that the
Common Stock, the Common Stock Purchase Warrants, the Representative's Warrants,
and the Underlying Warrants will conform in all material respects to the
description thereof set forth in the Registration Statement.
Based upon the foregoing, we advise you that, in our opinion, when the
following events have occurred:
<PAGE> 2
November 21, 1996
Page 2
(a) The Registration Statement has become effective under the
Securities Act;
(b) The due authorization, registration, and delivery of the
certificate or certificates evidencing the Common Stock has occurred;
(c) The due authorization, execution and delivery of the
Underwriting Agreement, the Representative's Warrants and the Warrant
Agreement;
(d) The compliance with all applicable contracts, agreements, and
instruments in respect of the issuance of the Securities; and
(e) The Securities are issued and sold and consideration has been
received therefore in the manner specified in the Registration Statement and the
exhibits thereto; then
1. The Common Stock to be issued by you will be legally
issued, fully paid and non-assessable.
2. The Common Stock Purchase Warrants, the Representative's
Warrants, and the Underlying Warrants to be issued by you will be legally issued
and will constitute the valid and binding obligation of the Company enforceable
in accordance with its terms, except as enforceability thereof may be limited by
(i) applicable bankruptcy, insolvency, reorganization, moratorium, or other
similar laws relating to or affecting the rights of creditors generally, and
(ii) the application of general principles of equity (whether such
enforceability is considered in a proceeding in equity or at law). The shares of
Common Stock issuable upon exercise of the Common Stock Purchase Warrants, the
Representative's Warrants, and the Underlying Warrants and receipt by the
Company of the consideration for such shares in accordance with the terms
thereof will be legally issued, fully paid and non-assessable.
The foregoing opinions are limited to the federal law of the United
States of America and the General Corporation Law of the State of Delaware. We
express no opinion as to the application of the various state securities laws to
the offer, sale, issuance, or delivery of the Common Stock.
We hereby consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the use of our name under the caption "Legal
Matters" in the Registration Statement and in the Prospectus included therein.
Very truly yours,
SNELL & WILMER L.L.P.
