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Exhibit 1.2
CRAGAR INDUSTRIES, INC.
850,000 SHARES OF COMMON STOCK
AND
850,000 COMMON STOCK PURCHASE WARRANTS
UNDERWRITING AGREEMENT
December __, 1996
Xxxxxxxxx & Co.
As Representative of the
Several Underwriters
referred to herein
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
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:
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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."
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(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,
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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
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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
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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
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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
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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
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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 X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, P.A., Xxx
Xxxx Xxxxxxxxx Xx., Xxxxxxx, Xxxxxxx 00000-0000 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
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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 X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx &
Xxxxxxxx, 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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(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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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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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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(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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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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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 Xxxxx & Xxxxxx,
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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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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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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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
X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, P.A. to rely upon such
opinion in rendering its opinion under Section 6(c).
(c) The Underwriters shall have received from X'Xxxxxx,
Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, 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,
X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, 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 X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx &
Xxxxxxxx, P.A., a Blue Sky memorandum, in form and substance satisfactory to the
Representative, with respect to the
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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
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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
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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 X'Xxxxxx,
Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, 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
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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.
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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,
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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,
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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 Xxxxxxxxx &
Co., 0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxx, Xxxxxxx 00000; Telephone
(000) 000-0000, Fax: (000) 000-0000; Attention: Xx. Xxxxx Xxxxxxx, with a copy
to X'Xxxxxx, Cavanagh, Anderson, Xxxxxxxxxxxxx & Xxxxxxxx, P.A., Xxx Xxxx
Xxxxxxxxx Xx., Xxxxx 0000, Xxxxxxx, Xxxxxxx 00000-0000; Telephone (602)
000-0000; Fax: (000) 000-0000; Attention: Xxxxxx X. Xxxx, Esq.; if to the
Company, to CRAGAR Industries, Inc., 0000 Xxxxx 00xx Xxxxxx, Xxxxxxx, Xxxxxxx
00000; Telephone: (000) 000-0000, Fax: (000) 000-0000; Attention: Xx. Xxxxxxx X.
Xxxxxxxxx, President , with a copy to Xxxxx & Xxxxxx L.L.P., Xxx Xxxxxxx Xxxxxx,
Xxxxxxx, Xxxxxxx 00000-0000; telephone (000) 000-0000; fax: (000) 000-0000;
attention: Xxxxxx X. Xxxxxxx, 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
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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.
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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.
XXXXXXXXX & CO.
As Representative of the several
Underwriters listed on Schedule I
By:
----------------------------
Name:
Title:
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SCHEDULE I
Schedule of Underwriters
Underwriter Number of Firm
----------- Securities to be Purchased
--------------------------
Shares Warrants
------ --------
Xxxxxxxxx & Co.
RAS Securities Corp.
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SCHEDULE II
A.
PERIOD OF AGREEMENT
NAME NOT TO SELL
---- -----------
Xxxxxxx X. Xxxxxxxxx 12 months
Xxxxxx Xxxxxxx 12 months
Xxxx Xxxxxxxx 12 months
Xxxxxx XxXxxxxx 12 months
Xx Xxxxx 12 months
Xxxxxx Xxxxxxx 12 months
Xxxxx Xxxxxx 12 months
MDA Financial 12 months
Xxxxx Xxxxxxxx 12 months
Xxxxxxx Xxxxxxxxx 12 months
CN Partners 12 months
B.
PERIOD OF AGREEMENT
NAME NOT TO SELL
---- -----------
Hymie Askt 3 months
Xxxxx Xxxxxx 3 months
Xxxxxxx Xxxxx 3 months
Xxxxxxx Xxxxx 3 months
Xxxxxxx Xxxxxxxx 3 months
Xxxxxx Xxxxxx 3 months
Xxxxxx Xxxxxxx, Trust 3 months
Xxxxxxx Xxxxxxxx 3 months
Xxxxxx Xxxxxxx 3 months
F.S. Green 3 months
Vinod & Xxxxx Xxxxx 3 months
Xxxxxx Xxxxxx 3 months
Xxxxxx Xxxxxxx 3 months
Xxxxxx Xxxxxx 3 months
Xxxxx Xxxxxx 3 months
Xxxxx Xxxxxx 3 months
Xxxxxx Xxxx 3 months
Xxxxxx Xxxxx 3 months
Xxxxxx Xxxxx, Trustee for Xxxxxx Xxxxx 3 months
Xxxxxx Xxxxx, Trustee for Natalie, James, and Xxxxxx Xxxxx 3 months
Xxxxxxx Xxxxxxx 3 months
Xxxxxx Xxxxx 3 months
Xxxxxx Xxxxxxxxxx 3 months
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SCHEDULE III
Xxxxxxxxx & Co.
0000 Xxxx Xxxxxxxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxxxx 00000
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
