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EXHIBIT 1.1
CRAGAR INDUSTRIES, INC.
A DELAWARE CORPORATION
UP TO 1,000,000 SHARES OF COMMON STOCK
AND
UP TO 1,000,000 WARRANTS TO PURCHASE COMMON STOCK
PARTICIPATING DEALER AGREEMENT
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Dear Sirs:
Cragar Industries, Inc., a Delaware corporation (the "COMPANY") is
offering for sale (the "OFFERING") up to 1,000,000 shares of Common Stock, $0.01
par value ("COMMON STOCK"), and up to 1,000,000 Warrants to Purchase Common
Stock (the "WARRANTS"). The Common Stock and the Warrants offered (hereinafter
collectively referred to as the "UNITS") may only be purchased pursuant to the
Offering together, as one share of Common Stock and one Warrant, at a price of
$6.00 per Unit. The Units will be offered on a "best-efforts, all or none" basis
with respect to the first 666,667 Units (the "MINIMUM OFFERING"), and on a "best
efforts" basis as to the remaining 333,333 Units. Collected or collectible
subscriptions for the Minimum Offering must be received prior to the expiration
of one hundred twenty (120) days from the commencement of the Offering unless
extended by the Company one or more times for up to a total additional one
hundred twenty (120) days (the "MINIMUM OFFERING PERIOD"). The Offering of the
Units is further described in the Company's Registration Statement (File No.
__________) filed on Form SB-2 (the "REGISTRATION STATEMENT") with the United
States Securities and Exchange Commission (the "COMMISSION"). The Registration
Statement was declared effective by the Commission on _______ _____, 19___. You,
as a licensed broker-dealer capable of participating in the Offering of the
Units ("PARTICIPATING DEALER"), are invited to assist the Company in the
Offering of the Units by using your best efforts to solicit offers for the
purchase of the Units, and in this regard, you have agreed to act in such
capacity on the terms and conditions set forth in this Participating Dealer
Agreement (the "AGREEMENT").
NOW, THEREFORE, in consideration of the respective covenants,
agreements, representations, and warranties contained herein, the parties hereto
agree as follows:
Section 1. Representations and Warranties of the Company. In order to
induce you to enter into this Agreement, and to further the Offering of the
Units, the Company hereby represents and warrants to you and agrees with you as
follows:
(a) The Company has filed the Registration Statement relating
to the Common Stock offered pursuant to the Offering (the "OFFERED COMMON
STOCK"), the Warrants, the shares of the Company's Common Stock issuable upon
exercise of the Warrants (the "WARRANT SHARES"), the
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Participating Dealer Warrants (as defined in Section 3(g)(ii) below), and the
shares of the Company's Common Stock issuable upon the exercise of the
Participating Dealer Warrants (the "PARTICIPATING DEALER WARRANT SHARES"), with
the Commission pursuant to the Securities Act of 1933, as amended (the
"SECURITIES ACT")[, and such Registration Statement was declared effective on
_____________, 1996]. The term "REGISTRATION STATEMENT," when used hereinafter
will mean the Registration Statement described above, including the Prospectus
(defined below), the exhibits, and all amendments and supplements thereto,
including any amendments and supplements after the effective date of the
Registration Statement. The term "PROSPECTUS" means the prospectus filed as a
part of the Registration Statement, including all pre-effective and
post-effective amendments and supplements thereto.
(b) The Registration Statement and all other documents
previously filed or filed after the date hereof during the pendency of the
Offering with the Commission pursuant to the Securities Act conform and will
conform with the requirements of the Securities Act in all material respects.
Neither the Registration Statement, the Prospectus, nor any other material filed
or to be filed with the Commission during the pendency of the Offering contains
nor will contain any untrue statement of material fact nor are there or will
there be any omissions of material facts required to be stated therein or that
are necessary to make the statements therein not misleading, except that this
warranty does not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by and with
respect to you, or any dealer through you, expressly for use in the Registration
Statement or Prospectus or any amendment or supplement thereto.
(c) The Company has been legally incorporated and is now and
always during the period of the Offering will be, a validly existing corporation
under the laws of the state of Delaware, lawfully qualified to conduct the
business for which it was organized and which it proposes to conduct.
(d) The outstanding capital stock of the Company has been duly
and validly authorized, issued, and is fully paid and nonassessable and conforms
to all statements made in the Registration Statement and Prospectus with respect
thereto. The Offered Common Stock, the Warrant Shares, and the Participating
Dealer Warrant Shares have been duly and validly authorized and, when issued and
delivered against payment as provided in this Agreement, will be validly issued,
fully paid, and nonassessable. The Offered Common Stock, the Warrant Shares, and
the Participating Dealer Warrant Shares, upon issuance, will not be subject to
the preemptive rights of any shareholders of the Company. The Units will conform
to all statements in the Registration Statement and Prospectus.
(e) The Company has an authorized capitalization of 5,000,000
shares of Common Stock, and 200,000 shares of Preferred Stock, $0.01 par
value.
(f) The audited financial statements, together with related
schedules and notes, included in the Registration Statement and Prospectus
present fairly the financial condition of the
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Company and are reported upon by independent public accountants according to
generally accepted accounting principles and as required by the rules and
regulations of the Commission.
(g) The Company will have the legal right and authority to
enter into this Agreement upon its execution, to effect the proposed sale of the
Units, and to effect all other transactions contemplated by this Agreement.
(h) The Company is eligible to use Form SB-2 for the Offering
of the Units.
(i) 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,
except to the extent that the failure to possess any such certificates or
permits is not likely to have a material adverse effect on the financial
condition or operations of the Company and its subsidiaries, taken as a whole.
The Company has not received any notice of any proceeding relating to the
revocation or modification of any necessary certificates or permits.
(j) Material documents and other information relating to the
Company's affairs have been and will continue to be made available upon
reasonable request to you and to your counsel and copies of any such documents
will be furnished upon reasonable request to you and to your counsel.
(k) The Company has retained ChaseMellon Shareholder Services,
L.L.C. as its transfer agent. The Company will retain an independent transfer
agent, for so long as the Company is subject to the reporting requirements under
Section 12(g) or Section 15(d) of the Securities Exchange Act of 1934, as
amended (the "EXCHANGE ACT") and is required to retain an independent transfer
agent under the Exchange Act. The Company will make arrangements to have
available at the office of the transfer agent sufficient quantities of the
Company's Common Stock and Warrant certificates as may be needed for the quick
and efficient transfer of the Units.
(l) The Company will use the proceeds from the sale of Units
as set forth in the Registration Statement and Prospectus.
(m) This Agreement has been duly and validly authorized,
executed, and delivered by the Company and constitutes a valid, binding
agreement of the Company enforceable against the Company in accordance with its
terms, except as such enforcement may be limited by general principles of
equity, or by bankruptcy, insolvency, reorganization, arrangement, moratorium,
or other similar laws, and except as public policy may limit any rights of
indemnity granted herein. The execution and delivery of this Agreement and the
consummation of the transactions herein contemplated and compliance with the
terms of this Agreement will not conflict with or result in a breach of any of
the material terms, conditions, or provisions of, or constitute a material
default under, the Certificate of Incorporation or Bylaws of the Company, as
amended, or any material note, indenture, mortgage, deed of trust, or other
agreement or instrument to which the Company is a party or by which it or any of
its property is bound, or any existing law, order, rule, regulation, writ,
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injunction, or decree of any government, governmental instrumentality, agency or
body, arbitration tribunal or court, domestic or foreign, having jurisdiction
over the Company or its property. The consent, approval, authorization, or order
of any court or governmental instrumentality, agency, or body is not required
for the consummation of the transactions herein contemplated except such as may
be required under the Securities Act, under the Blue Sky or securities laws of
any state or jurisdiction, or the rules of the NASD (as defined in Section 2(c)
hereof).
Section 2. Representations and Warranties of the Participating Dealer.
You hereby represent and warrant to the Company and agree with the Company as
follows:
(a) This Agreement has been duly and validly authorized,
executed and delivered by you and constitutes a valid and binding agreement by
you enforceable against you in accordance with its terms, except as such
enforcement may be limited by general principles of equity, or by bankruptcy,
insolvency, reorganization, arrangement, moratorium, or other similar laws, and
except as public policy may limit any rights of indemnity granted herein.
(b) [You are a corporation duly organized, validly existing
and in good standing under the laws of the state of your incorporation with all
requisite power and authority to enter into and carry out your obligations under
this Agreement.] Neither the execution and delivery of this Agreement nor the
performance and consummation of the transactions contemplated in this Agreement
will result in any breach of any of the material terms or conditions of, or
constitute a material default under, your articles or certificate of
incorporation or bylaws or any material indenture, agreement or other instrument
to which you are a party or violate any order directed to you of any court or
any federal or state regulatory body or administrative agency having
jurisdiction over you or your affiliates.
(c) You represent that you are a member in good standing of
the National Association of Securities Dealers, Inc. ("NASD") and are registered
as a broker-dealer with the Commission. Your attention is called to the
following: (a) Article III, Section 1 of the Rules of Fair Practice of the NASD
and the interpretations of said Section promulgated by the Board of Governors of
the NASD; (b) Section 10(b) of the Exchange Act and Rule 10b-9 of the general
rules and regulations promulgated under the Exchange Act; (c) Section 15 of the
Exchange Act and Rule 15c2- 4 of the general rules and regulations promulgated
under the Exchange Act; and (d) Securities Act Release No. 4968 requiring the
distribution of a Preliminary Prospectus to all persons reasonably expected to
be purchasers of Units from you at least 48 hours prior to the time you expect
to mail confirmations of purchase. You, if a member of the NASD, by signing this
Agreement, acknowledge that you are familiar with the cited law, rules and
releases, and agree that you will not directly and/or indirectly violate any
provisions of applicable law in connection with your participation in the
distribution of the Units.
(d) You will not, until advised by us in writing or by wire
that the entire Offering has been distributed and closed, bid for or purchase
Units in the open market or otherwise make a market in the Units or otherwise
attempt to induce others to purchase Units in the open market.
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(e) You represent that you have been provided a copy of the
Escrow Agreement dated _____________, 1996 between the Company and ____________
______________ (the "ESCROW AGREEMENT"). You agree that you will conduct the
Minimum Offering and all sales of Units during the Escrow Period (as such term
is defined in the Escrow Agreement) subject to and in full compliance with the
terms and conditions of the Escrow Agreement.
(f) Neither you nor your directors or officers (or any other
person serving in a similar capacity) or any person engaged on your behalf to
sell the Units:
(1) Has filed a registration statement, or is named
as an underwriter in connection with a registration or offering statement, which
is the subject of any pending proceeding or examination under Section 8 of or
Rule 258 or 261 or any similar rules under the Securities Act, or under any
state securities laws or is the subject of a currently effective refusal order
or stop order entered pursuant to the above or pursuant to the law of any state
within five years prior to the commencement of the Offering;
(2) Has been convicted of a misdemeanor or felony
within the last ten years in connection with the offer, purchase or sale of any
security or commodity, involving the making of a false filing with the
Commission, or arising out of the conduct of the business of any underwriter,
broker, dealer, municipal securities dealer, or investment adviser, or involving
theft, fraud, breach of fiduciary duty, deceit, or intentional wrongdoing, or
which is a crime involving moral turpitude, or, within the last five years, of a
misdemeanor or felony which is a criminal violation of statutes designed to
protect consumers against unlawful practices involving insurance, securities,
commodities or commodity futures, real estate, franchises, business
opportunities, consumer goods, or other goods and services;
(3) Is currently subject to any administrative order
or judgment entered within five years prior to the commencement of the offering,
arising out of the conduct of the business of an underwriter, broker, dealer,
municipal securities dealer, or investment adviser, or involving theft, fraud,
or fraudulent conduct, or breach of fiduciary duty, or deceit, or intentional
wrongdoing, including but not limited to making untrue statements of material
facts or omitting to state material facts, and the order or judgment was entered
within five years prior to the commencement of the offering;
(4) Is currently subject to any administrative order
or judgment which prohibits the use of any exemption from registration in
connection with the purchase or sale of securities, or to a Commission censure
or other order based on a finding of false filing;
(5) Is subject to any administrative order or order,
judgment, or decree of any court of competent jurisdiction temporarily or
preliminarily restraining or enjoining, or is subject to any order, judgment, or
decree of any court of competent jurisdiction entered within five years prior to
the commencement of the offering permanently restraining or enjoining, such
person from engaging in or continuing any conduct or practice in connection with
the purchase or sale of any
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security or commodity or involving the making of any false filing with the
Commission or any state or arising out of the conduct of the business of an
underwriter, broker, dealer, municipal securities dealer, or investment adviser,
or which restrains or enjoins such person from activities subject to federal or
state statutes designed to protect consumers against unlawful or deceptive
practices involving insurance, commodities or commodity futures, real estate,
franchises, business opportunities, consumer goods, or other goods and services;
(6) Is suspended or expelled from membership in, or
suspended or barred from association with a member of, an exchange registered as
a national securities exchange, an association registered as a national
securities association, or a Canadian securities exchange or association;
(7) Is subject to a United States Postal Service
false representation order entered within five years prior to the commencement
of the Offering or is subject to a restraining order or preliminary injunction
with respect to conduct alleged to violate 39 U.S.C. Section 3005; or
(8) Is otherwise subject to any disqualification
under Commission Rule 262.
(g) To your knowledge, no action or proceeding is pending
against you or any of the other persons referred to in Section 2(f) hereof
concerning your or such person's activities as a broker or dealer or an
associated person of a broker or dealer that would affect the Company's Offering
of the Units.
(h) You will offer the Units only in those states in which the
Offering of the Units has been qualified for sale or an exemption for the
Offering and sale of the Units is available under applicable state statutes and
regulations and which have been approved by the Company, and in the quantities
that are identified in the Blue Sky Memorandum prepared by the Company's counsel
and provided to you.
(i) You, in connection with the offer and sale of Units, and
in the performance of your duties and obligations under this Agreement, agree to
comply and will cause your employees, agents, and representatives to comply with
all applicable federal laws, including but not limited to the Securities Act and
Exchange Act and any applicable rules and regulations issued under the
Securities Act and/or the Exchange Act, the laws of the states or other
jurisdictions in which the Units are offered and sold, and the Rules and
Regulations of the NASD.
(j) You will not make any offer or sale of Units unless the
offer or sale is made in compliance with the Securities Act, the Rules of Fair
Practice of the NASD, and the applicable securities or Blue Sky laws of
jurisdictions in which offers or sales are made, and the rules and regulations
thereunder. You agree that you will not offer or sell Units to any subscriber
unless you have reasonable grounds to believe that the investment in the Units
is suitable for the subscriber.
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(k) You have not dealt with or engaged and will not deal with
or engage any finder in connection with the Offering of the Units.
(l) You, in connection with the offering of the Units, have
obtained and may in the future obtain information regarding the Company and its
business that is not generally available to the public, and you have not and
will not disclose any such information to any person except as may be required
to comply with obligations of disclosure pursuant to federal or state securities
laws and, even as to such disclosures, will make them only after notice to the
Company and only to those persons, prospective subscribers and regulatory
authorities, who have a need to know the information, and will exercise
reasonable efforts to inform the persons to whom such information is disclosed
that it should be held in confidence to the maximum extent possible, except as
otherwise agreed to by the Company.
(m) Neither you nor any of your officers, directors,
employees, agents, representatives, or affiliates are subject to any
disqualifications precluding reliance by the Company upon any exemption from
registration under the securities laws of any jurisdiction in which it intend to
offer or sell the Units in reliance upon such exemption.
(n) You will, reasonably promptly after the closing of the
Offering of the Units, supply the Company with all information required from you
for the completion of Form SR and such additional information as the Company may
reasonably request to be supplied to the securities commission of such states in
which the Units have been qualified for sale.
All of the representations and warranties made by you hereunder shall
survive the performance or termination of this Agreement.
Section 3. Retention of Participating Dealer. In reliance upon the
representations and warranties set forth herein, and subject to the terms and
conditions of this Agreement:
(a) You hereby agree to solicit, as an independent contractor
and not as our agent, persons who will acquire the Units. Neither you nor any
other person is or has been authorized to give any information or to make any
representations other than those contained in the Prospectus in connection with
the sale of the Units, and you hereby agree not to give any such information or
make any such representations.
(b) The Company shall have full authority to take such action
as it may deem advisable in respect of all matters pertaining to the Offering or
arising thereunder. The Company shall be under no liability to you, except such
as may be incurred under the Securities Act and the rules and regulations
thereunder, except for lack of good faith and except for obligations expressly
assumed by the Company in this Agreement, and no obligation on the Company's
part shall be implied or inferred therefrom.
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(c) You will be informed by the Company as to the states in
which the Company has been advised by counsel that the Units have been qualified
for sale or are exempt under the respective securities or blue sky laws of such
states, but the Company has not assumed and will not assume any obligation or
responsibility as to the right of you or any other Participating Dealer to sell
Units in any states.
(d) Pursuant to the Escrow Agreement, an escrow account shall
be established for the Offering at ________________________, Corporate Trust
Services (the "Escrow Agent"). Pursuant to the Escrow Agreement, you shall
deliver all checks, drafts, money orders, and other forms of subscription
payment received from subscribers to the Units solicited by you to the Escrow
Agent by twelve o'clock noon of the next business day after the date of receipt,
and all checks, money orders and other subscription payments should be made
payable to "________________________, Corporate Trust Services, as Escrow Agent
for Cragar Industries, Inc."
(e) The Units will be sold by the Company on a "best effort,
all or none" basis with respect to the first 666,667 Units constituting the
Minimum Offering and on a "best efforts" basis as to the remaining 333,333
Units. The Minimum Offering must be sold, if any are to be sold, within a period
of 120 days (or a period of 240 days, if extended by the Company) from the
commencement of the Offering (the "Offering Period"). The Company reserves the
right, in its sole discretion to allocate among or reject, in whole or in part,
any subscriptions to purchase Units.
(f) In the event that the Minimum Offering is not sold within
the Offering Period or the Offering is terminated by the Company pursuant to
Section 6 of the Escrow Agreement or at any other time, all funds not
theretofore utilized to purchase Units will be promptly refunded to the
subscribers, in full, without interest or deductions therefrom.
(g) Subject to the sale of the Minimum Offering within the
Minimum Offering Period, the Company agrees to:
(i) pay to you a cash commission equal to five
percent (5%) of the offering purchase price of
all Units sold by you. In the event that a sale
of a Unit for which you have solicited a
purchaser shall not occur, no payment with
respect to such Unit shall be paid to you.
During the Escrow Period, payment of
commissions due to you will be made prior to or
concurrently with the disbursement of funds to
the Company pursuant to the terms and
conditions of the Escrow Agreement and a sale
will be deemed to have occurred only upon such
disbursement; and
(ii) subject to your entering into a Participating
Dealer Warrant Agreement in substantially the
form attached hereto as Exhibit A (the
"Participating Dealer Warrant Agreement") with
the Company, sell to you, at a price of $0.01
each, and issue and deliver to you or your
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designees, that number of warrants
("Participating Dealer Warrants") equal to 15
per centum of the number of Units sold by you
in the Offering, each such Participating Dealer
Warrant to be in substantially the form
attached as Exhibit B to the Participating
Dealer Warrant Agreement, and to be issued
pursuant thereto and subject to the terms and
conditions stated therein, and shall represent
the right to purchase one share of Common Stock
at a price of $7.20 per share during the period
and on the terms and conditions specified
therein.
(h) The Company will provide to you as many copies of the
Registration Statement and amendments thereto, any Preliminary Prospectuses, and
definitive Prospectuses as reasonably requested by you. If at any time any event
occurs as a result of which, in the opinion of the Company, the Prospectus would
include an untrue statement of a material fact or would omit to state any
material fact necessary to make any statement therein, in view of the
circumstances under which it was made, not misleading, the Company will notify
you thereof and will prepare an amended or supplemented Prospectus which will
correct such statement or omission. The Company will deliver to you as many
copies of such amended or supplemented Prospectus as you may reasonably request.
Section 4. Company Indemnification. The Company agrees to indemnify,
defend and hold you and any person who controls (within the meaning of Section
15 of the Securities Act) you harmless against any losses, claims, damages, or
liabilities, joint or several, to which you may become subject:
(a) under applicable law, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the
Registration Statement, Prospectus, or any amendment or
supplement thereto or in any sales literature, or arise out of
or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; or
(b) due to the misrepresentation by the Company or its agents
(other than you or any other Participating Dealer) of material
facts in connection with the sale of the Units, unless the
misrepresentation of such material facts was the direct result
of misleading information provided to the Company or its
agents by you; or
(c) as a result of any representation or warranty of the
Company herein having been false or misleading in any material
respect when made or of any breach by the Company of its
agreements contained in this Agreement.
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The Company will reimburse you for reasonable legal or other
expenses reasonably incurred in connection with investigating or defending any
such loss, claim, damage, or liability (or actions in respect thereof);
provided, however, that the Company shall 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, Prospectus or any amendment or
supplement thereto or in any sales literature, in reliance upon and in
conformity with written information furnished to the Company by you specifically
for use in the preparation thereof.
Section 5. Participating Dealer Indemnification. You agree to indemnify
and hold harmless the Company and any person who controls (within the meaning of
Section 15 of the Securities Act) the Company against any losses, claims,
damages, or liabilities, joint or several, to which they may become subject:
(a) under applicable law, insofar as such losses, claims,
damages, or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in the
Registration Statement, Prospectus, or any amendment or
supplement thereto or in any sales literature, in reliance
upon and in conformity with written information furnished to
the Company by you specifically for use in the preparation
thereof or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein
not misleading; or
(b) due to the misrepresentation by you or your agents of
material facts in connection with the sale of the Units,
unless the misrepresentation of such material facts was the
direct result of misleading information provided by the
Company or its agents to you; or
(c) as a result of any representation or warranty made by you
herein having been false or misleading in any material respect
when made or of any breach by you of the terms and conditions
of this Agreement.
Section 6. Notices and Other Conditions of Indemnification. Promptly
after receipt by an indemnified party of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under Sections 4 or 5 hereof, notify the
indemnifying party in writing of the commencement thereof; but the omission to
so notify the indemnifying party shall not relieve it from any liability which
it may have to any indemnified party otherwise than under such Section. In case
any such action shall be brought against such indemnified party, and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate in, and, to the extent that it shall
wish, jointly with any other indemnifying party similarly notified, to assume
the defense thereof, with counsel satisfactory to such indemnifying and
indemnified parties. Any indemnified party shall have the right to employ
separate counsel in any such action and to participate in the defense thereof,
but the
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fees and expenses of such counsel shall be at the expense of such indemnified
party unless (a) the employment thereof has been specifically authorized by the
indemnifying party in writing, or (b) the indemnifying party has failed to
assume the defense and employ counsel or (c) the named parties to any such
action (including any impleaded parties) include both such indemnified party and
the indemnifying party, and such indemnified party shall have been advised in
writing by such counsel that representation of such indemnified party and the
indemnifying party by the same counsel would be inappropriate under applicable
standards of professional conduct due to actual or potential differing interests
between them, in which case the indemnifying party shall not have the right to
assume the defense of such action on behalf of such indemnified party; provided,
however, that the indemnifying party shall, in connection with any one such
action or, separate or substantially similar or related actions in the same
jurisdictions arising out or the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys at any time for all such indemnified parties.
Section 7. Termination. This Agreement may be terminated by the Company
at any time upon five (5) days' written notice to you. Your participation in the
offer and sale of the Units will be governed by the conditions herein set forth
until this Agreement is terminated. If this Agreement is not terminated sooner
as provided in this section, then this Agreement will terminate when the
Offering is completed.
Section 8. Addresses. Except as otherwise expressly provided in this
Agreement, whenever notice is required by the provisions of this Agreement to be
given, such notice shall be in writing addressed to the parties at the following
addresses:
If to the Company:
Cragar Industries, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
President and Chief Executive Officer
If to the Participating Dealer:
Section 9. Binding Effect. This Agreement shall inure to the benefit of
and be binding upon you and the Company and the Company's respective successors
and assigns. Nothing expressed in this Agreement is intended to give any person
other than the persons mentioned in the preceding sentence any legal or
equitable right, or any remedy on warranties included in this Agreement.
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Section 10. Miscellaneous Provisions.
(a) Independent Contractor. Nothing contained herein shall
constitute the relationship between you and the Company as an association,
partnership, unincorporated business venture or other separate entity.
(b) Governing Law. This Agreement shall be construed according
to the laws of the State of Arizona (without giving effect to its principles of
conflicts of law).
(c) Survival of Representations and Warranties. The
representations and warranties made in this Agreement shall survive the
termination of this Agreement and shall continue in full force and effect
regardless of any investigation made by the party relying upon any such
representation or warranty.
(d) Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute me and the same instrument.
(e) Entire Agreement. This Agreement constitutes the entire
agreement between the parties and supersedes any prior understandings or
agreements concerning the subject matter hereof.
(f) Amendments; Waivers. This Agreement may not be amended
except by an instrument in writing signed on behalf of each of the parties
hereto. No waiver of this Agreement shall be binding unless executed in writing
by the party to be bound thereby. No waiver of any of the provisions of this
Agreement shall be deemed or shall constitute a waiver of any other provision
hereof (whether or not similar), nor shall such waiver constitute a continuing
waiver unless otherwise expressly provided.
(g) Severability. In the event that any one or more of the
provisions contained in this Agreement or in any other instrument referred to
herein, shall, for any reason, be held to be invalid, illegal or unenforceable
in any respect, then to the maximum extent permitted by law, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Agreement or any other such instrument.
(h) Headings. All headings in this Agreement are included
herein for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
Please confirm your agreement to solicit persons to acquire Units on
the foregoing terms and conditions by signing and returning the form enclosed
herewith.
Very truly yours,
Cragar Industries, Inc.
By_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, President
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Cragar Industries, Inc.
▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
The undersigned confirms its agreement to act as a
Participating Dealer as referred to in the foregoing Participating Dealer
Agreement, subject to the terms and conditions of such Agreement. The
undersigned confirms all of the representations, warranties, and agreements on
the part of a Participating Dealer in such Agreement.
-------------------------------
(Print Name of Firm)
By______________________________
(Signature)
--------------------------------
(Print Name and Title of
Authorized Representative)
--------------------------------
(N.A.S.D. Firm Number)
Dated: ___________, 199__ ________________________________
Address
--------------------------------
Telephone(___) _________________
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Exhibit A
---------
PARTICIPATING DEALER WARRANT AGREEMENT
AGREEMENT, dated as of the _______ day of
____________________, 199__, by and between CRAGAR INDUSTRIES, INC., a Delaware
corporation (the "Company"), and
_________________________________________________ (the
"Participating Dealer").
WITNESSETH
WHEREAS, the Company has determined to offer for sale (the
"Offering") up to 1,000,000 units ("Units"), consisting of one (1) share of the
Company's Common Stock, $0.01 par value ("Common Stock"), and one (1) warrant to
purchase Common Stock;
WHEREAS, the Units will be offered on a "best-efforts, all or
none" basis as to the first 666,667 Units (the "Minimum Offering"), and on a
"best efforts" basis as to the remaining 333,333 Units, and collected or
collectible subscriptions for the Minimum Offering must be received prior to the
expiration of one hundred twenty (120) days from the commencement of the
Offering unless extended one or more times by the Company for up to a total
additional one hundred twenty (120) days (the "Minimum Offering Period");
WHEREAS, the offer and sale of the Units will be made by the
Company, provided that the Company may engage independent broker-dealers to sell
the Units and each such broker-dealer will enter into a separate participating
dealer agreement with the Company in connection with the Offering;
WHEREAS, the Company and the Participating Dealer have entered
into that certain Participating Dealer Agreement dated _________________________
(the "Participating Dealer Agreement"); and
WHEREAS, pursuant to the Participating Dealer Agreement,
subject to the sale of the Minimum Offering within the Minimum Offering Period,
the Participating Dealer may purchase, at a purchase price of $0.01 each, up to
that number of warrants (the "Participating Dealer Warrants") equal to 15 per
centum of the number of Units sold by the Participating Dealer, such
Participating Dealer Warrants to be in substantially the form attached hereto as
Exhibit A, and each Participating Dealer Warrant representing the right to
purchase one (1) share of Common Stock at a price of $7.20 per share on the
terms and subject to the conditions contained herein.
NOW, THEREFORE, in consideration of the premises and the
mutual agreements hereinafter set forth and for the purpose of defining the
terms and provisions of the Participating Dealer Warrants and the Warrant
Certificates and the respective rights and obligations thereunder of the Company
and the holders of Warrant Certificates, the parties hereto agree as follows:
15
SECTION 1. DEFINITIONS. As used herein, the following terms shall have
the following meanings, unless the context shall otherwise require:
(a) "Corporate Office" shall mean the office of the Company
located at ▇▇▇▇ ▇. ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or such other
location as shall be notified to the Registered Holders by the Company
from time to time.
(b) "Exercise Date" shall mean, as to any Participating Dealer
Warrant, the date on which the Company shall have received at the
Corporate Office both (a) the Warrant Certificate representing such
Participating Dealer Warrant, with the exercise form thereon duly
executed by the Registered Holder thereof or his attorney duly
authorized in writing, and (b) payment in cash, or by official bank or
certified check made payable to the Company, of an amount in lawful
money of the United States of America equal to the applicable Stock
Purchase Price.
(c) "Market Value" shall mean, on any date specified herein,
the price obtained by taking the average, on each such trading day, of
(A) the high and low sale price of a share of Common Stock or if no
such sale takes place on any such trading day, the average of the
closing bid and asked prices thereof on any such trading day, in each
case as officially reported on all national securities exchanges on
which the Common Stock is then listed or admitted to trading, or (B) if
the Common Stock is not then listed or admitted to trading on any
national securities exchange, the closing price of the Common Stock on
such date or if no closing price is available on any such trading date,
the average of the closing bid and asked prices thereof on any such
trading date in the over-the-counter market as reported to NASDAQ, or,
if the Common Stock is not then quoted in such system, the average of
the highest and lowest bid and asked prices reported by the market
makers and dealers for the Common Stock listed as such by the National
Quotation Bureau, Incorporated or any similar successor organization.
(d) "Registered Holder" shall have the meaning given in
Section 2(f) hereof.
(e) "Stock Purchase Price" shall mean the purchase price to be
paid upon exercise of the Participating Dealer Warrants in accordance
with the terms hereof, which price shall be $7.20 per share of Common
Stock, subject to modification and adjustment from time to time
pursuant to the provisions of Section 8 hereof.
(f) "Transfer Agent" shall mean the entity designated as the
Company's transfer agent from time to time. On the date hereof, the
Transfer Agent is ChaseMellon Shareholder Services, L.L.C.
(g) "Warrant Expiration Date" shall mean 5:00 P.M.
(_____ time) on ___________,___________ .
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(h) "Warrant Purchase Price" shall mean the purchase price to
be paid for the Participating Dealer Warrants, which price shall be $0.01 per
Participating Dealer Warrant.
(i) "Warrant Register" shall have the meaning given in
Section 2(e) hereof.
SECTION 2. PURCHASE OF WARRANTS AND ISSUANCE OF WARRANT CERTIFICATES;
REGISTRATION.
(a) From time to time from the date hereof to the Warrant
Expiration Date, the Company will issue and deliver that number of
Participating Dealer Warrants as the Participating Dealer shall be
entitled to purchase at such time pursuant to the Participating Dealer
Agreement to the Participating Dealer upon delivery by the
Participating Dealer to the Company of (i) a properly completed and
executed Form of Election to Purchase Participating Dealer Warrants in
the form attached hereto as Exhibit A (an "Election to Purchase") and
(ii) the Warrant Purchase Price for the number of Participating Dealer
Warrants which the Participating Dealer is entitled to purchase and
elects so to purchase; provided, however, that the Warrant Certificates
representing Participating Dealer Warrants will not be issued until
clearance of the funds received for purchase thereof.
(b) A Participating Dealer Warrant shall initially entitle the
Registered Holder of the Warrant Certificate representing such
Participating Dealer Warrant to purchase one share of Common Stock upon
the exercise thereof and payment of the Stock Purchase Price (subject
to modification as herein provided), in accordance with the terms
hereof.
(c) From time to time up to the Warrant Expiration Date, the
Company shall cause the Transfer Agent to deliver stock certificates in
required whole number denominations representing up to an aggregate of
150,000 shares of Common Stock, subject to adjustment as described
herein, upon the exercise of the Participating Dealer Warrants in
accordance with this Agreement.
(d) From time to time up to the Warrant Expiration Date, the
Company shall deliver Warrant Certificates in required whole number
denominations to the persons entitled thereto in connection with any
transfer or exchange permitted under this Agreement; provided that no
Warrant Certificates shall be issued except (i) those issued upon the
exercise of fewer than all the Participating Dealer Warrants
represented by a Warrant Certificate, to evidence any unexercised
Participating Dealer Warrants held by the exercising Registered Holder;
(ii) those issued upon any transfer or exchange pursuant to Section 6;
(iii) those issued in replacement of lost, stolen, destroyed, or
mutilated Warrant Certificates pursuant to Section 7; and (iv) at the
option of the Company, in such form as may be approved by its Board of
Directors, to reflect any adjustment or change in the Stock Purchase
Price or the number of shares of Common Stock purchasable upon exercise
of the Participating Dealer Warrants made pursuant to Section 8.
(e) The Company shall maintain books (the "Warrant Register")
for the registration of original issuance and the registration of
transfer of the Warrants. Upon the
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initial issuance of the Warrants, the Company shall issue and register
the Participating Dealer Warrants in the name of the Participating
Dealer.
(f) Prior to due presentment for registration of transfer of
any Warrant Certificate, the Company may deem and treat the person in
whose name such Warrant Certificate shall be registered upon the
Warrant Register (the "Registered Holder"), as the absolute owner of
such Warrant Certificate and of each Participating Dealer Warrant
represented thereby (notwithstanding any contrary notation of ownership
or other writing on the Warrant Certificate), for the purpose of any
exercise thereof, and for all other purposes, and the Company shall not
be affected by any notice to the contrary.
SECTION 3. FORM AND EXECUTION OF WARRANT CERTIFICATE.
(a) Warrant Certificates shall be substantially in the form
annexed hereto as Exhibit B (provisions of which Exhibit are hereby
incorporated herein) and may have such letters, numbers, or other marks
of identification or designation and such legends, summaries or
endorsements printed, lithographed, or engraved thereon as the Company
may deem appropriate and as are not inconsistent with the provisions of
this Agreement, or as may be required to comply with any law or with
any rule or regulation made pursuant thereto or with any rule or
regulation of any stock exchange or other market (including the NASDAQ)
on which the Common Stock may be listed, or to conform to usage. The
Warrant Certificates shall be dated the date of issuance thereof
(whether upon initial issuance, transfer, or exchange or in lieu of
mutilated, lost, stolen, or destroyed Warrant Certificates) and issued
in registered form. Participating Dealer Warrants shall be numbered
serially with the letter W on the Participating Dealer Warrants of all
denominations.
(b) Warrant Certificates shall be executed on behalf of the
Company by its President and by its Secretary by manual signatures or
by facsimile signatures printed thereon. In case any officer of the
Company who shall have signed any of the Warrant Certificates shall
cease to be such officer of the Company before the date of issuance of
the Warrant Certificates and before issue and delivery thereof, such
Warrant Certificates may nevertheless be issued and delivered by the
Company to the Registered Holder without further action by the Company,
except as otherwise provided by Section 4 hereof.
SECTION 4. EXERCISE. Each Participating Dealer Warrant may be exercised
by the Registered Holder thereof at the Corporate Office at any time up to and
including the Warrant Expiration Date, upon the payment of the Stock Purchase
Price (subject to adjustment as herein provided) and upon the other terms and
subject to the conditions set forth herein and in the applicable Warrant
Certificate. A Participating Dealer Warrant shall be deemed to have been
exercised immediately prior to the close of business on the Exercise Date and
the person entitled to receive the securities deliverable upon such exercise
shall be treated for all purposes as the holder
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of such securities upon exercise thereof as of the close of business on the
Exercise Date. Promptly following, and in any event within five business days
after the date of exercise, the Company shall issue and deliver to the person or
persons entitled to receive the same a certificate or certificates for the
securities deliverable upon such exercise (plus a Warrant Certificate for any
remaining unexercised Participating Dealer Warrants of the Registered Holder),
subject to clearance of checks received in payment of the Stock Purchase Price.
A Warrant may only be exercised in whole number denominations.
SECTION 5. RESERVATION OF SHARES; LISTING: PAYMENT OF TAXES; ETC.
(a) The Company covenants that it will at all times reserve
and keep available out of its authorized Common Stock, solely for the
purpose of issue upon exercise of the Participating Dealer Warrants,
such number of shares of Common Stock as shall then be issuable upon
the exercise of all outstanding Participating Dealer Warrants. The
Company covenants that all shares of Common Stock which shall be
issuable upon exercise of the Participating Dealer Warrants shall, at
the time of delivery, be duly and validly issued, fully paid,
nonassessable and free from all taxes, liens, and charges with respect
to the issue thereof (other than those which the Company shall promptly
pay or discharge), and that upon issuance such shares shall be listed
on each national securities exchange, if any, or on the NASDAQ, on
which the other outstanding shares of Common Stock of the Company are
then listed.
(b) The Company has filed with the Securities and Exchange
Commission a Registration Statement No. (the "Registration
Statement") on Form SB-2 for the registration, under the Securities Act
of 1933, as amended (the "Securities Act"), of, among other securities,
the Participating Dealer Warrants and the Common Stock issuable upon
exercise of the Participating Dealer Warrants. The Company agrees that,
if necessary, it shall file with the Securities and Exchange Commission
a post-effective amendment to the Registration Statement, or a new
registration statement, for the registration, under the Securities Act
of the Common Stock issuable upon exercise of the Participating Dealer
Warrants. In either case, the Company will use its best efforts to
cause the same to become effective and to maintain the effectiveness of
such registration statement until the expiration of the Participating
Dealer Warrants in accordance with the provisions of this Agreement.
(c) The Company shall pay all documentary, stamp, or similar
taxes and other governmental charges that may be imposed with respect
to the issuance of the Participating Dealer Warrants, or the issuance
or delivery of any shares of Common Stock upon exercise of the
Participating Dealer Warrants; provided, however, that if the shares
of Common Stock are to be delivered in a name other than the name of
the Registered Holder of the Warrant Certificate representing any
Participating Dealer Warrant being exercised, then no delivery shall
be made unless the person requesting the same has paid to the Company
the amount of transfer taxes or charges incident thereto, if any. The
Company shall not be required to pay any tax
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which may be payable in respect of any transfer involved in the
issuance and delivery of any Warrant Certificate in a name other than
that of the then Registered Holder of the Warrant being exercised.
(d) The Company will requisition the Transfer Agent from time
to time for certificates representing shares of Common Stock required
upon exercise of the Participating Dealer Warrants.
SECTION 6. EXCHANGE AND REGISTRATION OF TRANSFER.
(a) Warrant Certificates may be exchanged for other Warrant
Certificates representing an equal aggregate number of Participating
Dealer Warrants of the same class or may be transferred in whole or in
part; provided that no Participating Dealer Warrant may be sold,
transferred, hypothecated, or assigned prior to ______________, ____,
the date that is twelve (12) months following the disbursement of funds
to the Company from the Minimum Offering. The Company will advise the
Participating Dealer of such date. Warrant Certificates to be exchanged
shall be surrendered to the Company at the Corporate Office, and upon
satisfaction of the terms and provisions hereof, the Company shall
execute and deliver in exchange therefor the Warrant Certificates which
the Registered Holder making the exchange shall be entitled to receive.
(b) Upon due presentment for registration of transfer of any
Warrant Certificate at such office, the Company shall execute and
deliver to the transferee or transferees a new Warrant Certificate or
Certificates representing an equal aggregate number of Participating
Dealer Warrants.
(c) With respect to all Warrant Certificates presented for
registration of transfer, the Form of Assignment attached thereto shall
be duly endorsed, or be accompanied by a written instrument or
instruments of transfer, in form satisfactory to the Company, duly
executed by the Registered Holder or his attorney-in-fact duly
authorized in writing.
(d) The Company may require payment by the Registered Holder
of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any exchange or registration of
transfer of Warrant Certificates.
(e) All Warrant Certificates surrendered for exercise or for
exchange in case of mutilated Warrant Certificates shall be promptly
canceled by the Company and may be disposed of or destroyed in the
discretion of the Company. The Company will record all such exercises
or exchanges on the Warrant Register.
(f) Prior to due presentment for registration of transfer
thereof, the Company may deem and treat the Registered Holder of any
Warrant Certificate as the absolute owner thereof and of each
Participating Dealer Warrant represented thereby (notwithstanding any
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contrary notations of ownership or other writing thereon) for all
purposes and shall not be affected by any notice to the contrary.
SECTION 7. LOSS OR MUTILATION. Upon receipt by the Company of evidence
satisfactory to it of the ownership of and loss, theft, destruction, or
mutilation of any Warrant Certificate and (in case of loss, theft, or
destruction) of indemnity satisfactory to it, and (in case of mutilation) upon
surrender and cancellation thereof, the Company shall (in the absence of notice
that the Warrant Certificate has been acquired by a bona fide purchaser) execute
and deliver to the Registered Holder in lieu thereof a new Warrant Certificate
of like tenor representing an equal aggregate number of the Participating Dealer
Warrants. Applicants for substitute Warrant Certificates shall comply with such
other reasonable regulations and pay such other reasonable charges as the
Company may prescribe.
SECTION 8. ADJUSTMENT OF EXERCISE PRICE AND NUMBER OF SHARES OF COMMON
STOCK. The Stock Purchase Price and the number of shares purchasable upon the
exercise of the Participating Dealer Warrants shall be subject to adjustment
from time to time upon the occurrence of certain events described in this
Section 8.
8.1 SUBDIVISION OR COMBINATION OF COMMON STOCK. In case the
Company shall at any time (a) subdivide its outstanding shares of Common Stock
into a greater number of shares, (b) combine its outstanding Common Stock into a
smaller number of shares, or (c) issue any securities in reclassification of its
outstanding Common Stock (except as provided in Section 8.5 hereof), then and in
each such event, the Stock Purchase Price in effect immediately prior to such
action by the Company shall be adjusted by multiplying it by a fraction, the
numerator of which shall be the number of shares of Common Stock outstanding
immediately prior to such subdivision, combination, or reclassification and the
denominator of which shall be the number of shares of Common Stock outstanding
immediately after such subdivision, combination, or reclassification, and the
number of shares of Common Stock issuable upon exercise of the Participating
Dealer Warrants shall be increased or decreased proportionately.
8.2 STOCK DIVIDEND. In case the Company shall at any time
declare a dividend upon its Common Stock payable solely in shares of Common
Stock, the Stock Purchase Price in effect immediately prior to such dividend
shall be proportionately reduced and the number of shares of Common Stock
issuable upon exercise of the Participating Dealer Warrants shall be
proportionately increased.
8.3 NOTICE OF ADJUSTMENT. Upon any adjustment of the Stock
Purchase Price or any increase or decrease in the number of shares purchasable
upon the exercise of the Participating Dealer Warrants, the Company shall give
written notice thereof, by first class mail, postage prepaid, addressed to each
Registered Holder of the Participating Dealer Warrants at the address of such
holder as shown on the Warrant Register. The notice shall be signed by the
Company's principal financial or accounting officer and shall state the Stock
Purchase Price resulting from such adjustment and the increase or decrease, if
any, in the number of shares purchasable at
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such price upon the exercise of the Participating Dealer Warrants, setting forth
in reasonable detail the method of calculation and the facts upon which such
calculation is based. Such calculation shall be conclusive in the absence of
manifest error.
8.4 OTHER NOTICES. If at any time:
(a) the Company shall declare any cash dividend upon
its Common Stock;
(b) the Company shall declare any dividend upon its
Common Stock payable in stock (other than a dividend payable solely in
shares of Common Stock) or make any special dividend or other
distribution to the holders of its Common Stock;
(c) there shall be any consolidation or merger of the
Company with another corporation, or a sale of all or substantially all
of the Company's assets to another corporation; or
(d) there shall be a voluntary or involuntary
dissolution, liquidation or winding-up of the Company; then, in any one
or more of said cases, the Company shall give, by certified or
registered mail, postage prepaid, addressed to the Registered Holder of
each Participating Dealer Warrant at the address of such Registered
Holder as shown on the Warrant Register, at least 30 days' prior
written notice of the date on which the books of the Company shall
close or a record shall be taken for such dividend or for determining
rights to vote in respect of any such consolidation, merger, sale,
dissolution, liquidation, or winding up or, if no such vote is
required, of the date of such consolidation, merger, sale, dissolution,
liquidation, or winding-up. Any such notice shall also specify, in the
case of any such dividend or distribution, the date on which the
holders of Common Stock shall be entitled thereto and, in the case of
any such consolidation, merger, sale, dissolution, liquidation, or
winding-up, the date on which the holders of Common Stock shall be
entitled to exchange their Common Stock for securities or other
property deliverable upon such consolidation, merger, sale,
dissolution, liquidation, or winding-up, as the case may be. In the
event that the Registered Holder of a Warrant does not exercise the
Participating Dealer Warrant prior to the occurrence of an event
described above, except as provided in Section 8.5 below, the
Registered Holder shall not be entitled to receive the benefits
accruing to existing holders of the Common Stock in such event, and,
upon the occurrence of an event described in subsection (d) the
Participating Dealer Warrant shall terminate.
8.5 CHANGES IN COMMON STOCK. In case at any time the Company
shall be party to any transaction (including, without limitation, a merger,
consolidation, sale of all or substantially all of the Company's assets or
recapitalization of the Common Stock) in which the previously outstanding Common
Stock shall be changed into or exchanged for different securities of the Company
or common stock or other securities of another corporation or interests in a
non-corporate entity or other property (including cash) or any combination of
any of the foregoing (each such transaction being herein called a "Transaction"
and the effective date of the Transaction being
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herein called the "Consummation Date"), the Company shall make, as a condition
of the consummation of the Transaction, lawful and adequate provisions so that
each Registered Holder, upon the exercise of its Participating Dealer Warrants
at any time on or after the Consummation Date, shall be entitled to receive, and
the Participating Dealer Warrants shall thereafter represent the right to
receive, in lieu of the Common Stock issuable upon such exercise prior to the
Consummation Date, the highest amount of securities or other property to which
such holder would actually have been entitled as a stockholder upon the
consummation of the Transaction if such Register Holder had exercised its
Participating Dealer Warrants immediately prior thereto (subject to adjustments
from and after the Consummation Date as nearly equivalent as possible to the
adjustments provided for in this paragraph 8). The provisions of this Section
8.5 shall similarly apply to successive Transactions.
SECTION 9. FRACTIONAL WARRANTS AND FRACTIONAL SHARES. No fractional
shares shall be issued upon the exercise of the Participating Dealer Warrants.
The Company shall, in lieu of issuing any fractional shares, pay the holder
entitled to such fraction a sum equal to such fraction multiplied by the Market
Value. No fractional Warrants shall be issued.
SECTION 10. WARRANT HOLDERS NOT DEEMED STOCKHOLDERS. No holder of a
Participating Dealer Warrant shall, as such, be entitled to vote or to consent
or to receive notice as a stockholder in respect of meetings of stockholders for
the election of directors of the Company or any other matters or any rights
whatsoever as a stockholder of the Company. Except for any required adjustment
to the Stock Purchase Price pursuant to Section 8 hereof, no dividends or
interest shall be payable or accrued in respect of a Participating Dealer
Warrant or the interest represented thereby or the shares purchasable thereunder
until, and only to the extent that, the Participating Dealer Warrant shall have
been exercised. No provisions hereof, in the absence of affirmative action by
the holder to purchase shares of Common Stock, and no mere enumeration herein of
the rights or privileges of the Registered Holder of the Participating Dealer
Warrant, shall give rise to any liability of such Registered Holder for the
Stock Purchase Price or as a stockholder of the Company whether such liability
is asserted by the Company or by its creditors.
SECTION 11. RIGHTS OF ACTION. All rights of action with respect to this
Agreement are vested in the respective Registered Holders of the Participating
Dealer Warrants, and any Registered Holder of a Participating Dealer Warrant,
without consent of the holder of any other Participating Dealer Warrant, may, in
his own behalf and for his own benefit, enforce against the Company his right to
exercise his Participating Dealer Warrants for the purchase of Common Stock in
the manner provided in the Warrant Certificate and this Agreement.
SECTION 12. AGREEMENT OF WARRANT HOLDERS. Every holder of a
Participating Dealer Warrant, by his acceptance thereof, consents and agrees
with the Company and every other holder of a Participating Dealer Warrant that:
(a) The Participating Dealer Warrants are transferable only on
the Warrant Register by the Registered Holder thereof in person or by
his attorney duly authorized in
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writing and only if the Warrant Certificates representing such
Participating Dealer Warrants are surrendered at the Corporate Office
of the Company, duly endorsed or accompanied by a proper instrument of
transfer satisfactory to the Company in its sole discretion, together
with payment of any applicable transfer taxes; and
(b) The Company may deem and treat the person in whose name
the Warrant Certificate is registered as the holder and as the
absolute, true and lawful owner of the Participating Dealer Warrants
represented thereby for all purposes, and the Company shall not be
affected by any notice or knowledge to the contrary, except as
otherwise expressly provided in Section 7 hereof.
SECTION 13. CANCELLATION. If the Company shall purchase or acquire any
Participating Dealer Warrants, the Warrant Certificate(s) evidencing the same
shall thereupon be canceled by it and retired. The Company shall also cancel the
Warrant Certificate(s) following exercise of any or all of the Participating
Dealer Warrants represented thereby or delivered to it for transfer, split-up,
combination, or exchange.
SECTION 14. MODIFICATION OF AGREEMENT. The Company and the
Participating Dealer for so long as it is a Registered Holder of any
Participating Dealer Warrants may by supplemental agreement make any changes or
corrections in this Agreement: (i) that they shall deem appropriate to cure any
ambiguity or to correct any defective or inconsistent provision or manifest
mistake or error herein contained; or (ii) that they may deem necessary or
desirable and which shall not adversely affect the interests of the holders of
Warrant Certificates; provided, however, that, except as provided in subclause
(i) or (ii) above, this Agreement shall not otherwise be modified, supplemented,
or altered in any respect except with the consent in writing of the Registered
Holders of Warrant Certificates representing not less than 50% of the
Participating Dealer Warrants then outstanding; and provided, further, that no
change in the number or nature of the securities purchasable upon the exercise
of any Participating Dealer Warrant, of the Stock Purchase Price therefor, or
the acceleration of the Warrant Expiration Date shall be made without the
consent in writing of the Registered Holder of the Warrant Certificate
representing such Participating Dealer Warrant, other than such changes as are
specifically prescribed by this Agreement as originally executed or are made in
compliance with applicable law.
SECTION 15. NOTICES. All notices, requests, consents, and other
communications hereunder shall be in writing and shall be deemed to have been
made when delivered or mailed first class registered or certified mail, postage
prepaid as follows: if to the Registered Holder of a Warrant Certificate, at the
address of such Registered Holder as shown in the Warrant Register maintained by
the Company; and if to the Company, at the Corporate Office.
SECTION 16. GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Arizona, without reference
to principles of conflict of laws.
SECTION 17. BINDING EFFECT. This Agreement shall be binding upon and
inure to the benefit of the Company and the Participating Dealer and their
respective successors and assigns,
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and the holders from time to time of Warrant Certificates. Nothing in this
Agreement is intended or shall be construed to convey upon any other person any
right, remedy, or claim, in equity or at law, or to impose upon any other person
any duty, liability, or obligation.
SECTION 18. TERMINATION. This Agreement shall terminate at the close of
business on the fifth business day following the Warrant Expiration Date.
SECTION 19. COUNTERPARTS. This Agreement may be executed in several
counterparts, which taken together shall constitute a single document.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the date first above written.
CRAGAR INDUSTRIES, INC.
By:______________________
_________________________
By:______________________