EXHIBIT 99.7
SUBSCRIPTION AGENT AGREEMENT
This SUBSCRIPTION AGENT AGREEMENT (the "Agreement") is made and entered
into as of ______ , 1997, by and between FIRST MONTAUK FINANCIAL CORP., a New
Jersey corporation (the "Company"), and NORTH AMERICAN TRANSFER COMPANY, a New
York corporation (the "Subscription Agent"), with reference to the following:
A. The Company has filed with the Securities and Exchange Commission (the
"Commission"), under the Securities Act of 1933, as amended, and the rules and
regulations of the commission thereunder (collectively, the "1933 Act"), a
Registration Statement on Form S-3, No. 333-30135 (in the form in which it first
becomes effective under the 1933 Act, and as it may thereafter be amended, the
"Registration Statement"), relating to the proposed distribution and offering
(the "Rights Offering") by the Company of non-transferable subscription rights
(the Rights") to holders of record ("Record Date Holders") of shares of common
stock, no par value, of the Company (the "Common Stock") as of the close of
business on ____________, 1997 (the "Record Date"), at a rate of one right for
each share of Common Stock held on the Record Date.
B. Holders of Rights ("Rights Holders") will be entitled to subscribe for
one unit (a "Unit") for every three Rights (the "Basic Subscription Privilege")
at a per Unit price of $0.45 (the "Subscription Price"),which price is set forth
in the prospectus which forms a part of the Registration Statement (in the form
in which the Registration Statement first becomes effective, and as thereafter
amended or supplemented, the "Prospectus") by post-effective amendment to the
Registration Statement. Each Unit consists of one Class A Redeemable Common
Stock Purchase Warrant, one Class B Redeemable Common Stock Purchase Warrant and
one Class C Redeemable Common Stock Purchase Warrant.
C. Subject to allocation and possible reduction as set forth herein,
Rights Holders will also be entitled (the "Oversubscription Privilege") to
subscribe at the Subscription Price to purchase additional Units, if any,
remaining after satisfaction of all subscriptions pursuant to the Basic
Subscription Privilege (the "Excess Shares").
D. The Company wishes the Subscription Agent to act on its behalf in
connection with the Offering as set forth herein, and the Subscription Agent is
willing so to act.
NOW THEREFORE, the parties hereby agree as follows:
SECTION 1. APPOINTMENT OF SUBSCRIPTION AGENT. The Company hereby appoints
the Subscription Agent to act as agent in accordance with the instructions set
forth in this Agreement, and the Subscription Agent hereby accepts such
appointment and agrees to take such actions as may be necessary to effectuate
the terms of this Agreement.
SECTION 2. DISTRIBUTION OF RIGHTS. The Company has authorized the
distribution of the Rights and, following the effectiveness of the Registration
Statement and the Record Date, will issue such Rights to Record Date Holders as
contemplated by the Registration Statement and the Prospectus. The Company will
promptly notify the Subscription Agent upon the effectiveness of the
Registration Statement. The Subscription Agent in its capacity as transfer agent
and registrar for the Common Stock (the "Transfer Agent"), will provide such
assistance as the Company may require in order to effect the distribution of the
Rights to Record Date Holders, including assistance in determining the number of
rights to be distributed to each such Record Date Holder. The Subscription Agent
will distribute the Prospectus, the subscription rights Certificates evidencing
the Rights (the "Subscription rights Certificates"), the Instructions As to Use
of Subscription rights Certificates (the "Instructions") and all other ancillary
documents relating to the Offering to Record Date Holders. The subscription
rights Certificates and the Instructions will be substantially in the forms
attached hereto as Exhibits A and B, respectively.
SECTION 3. OVERSUBSCRIPTION PRIVILEGE. If there are insufficient Excess
Shares to satisfy all exercised Oversubscription Privileges, Excess Shares will
be allocated among Rights Holders. Excess Shares will be allocated pro rata
among those Rights Holders exercising the Oversubscription Privilege in
proportion to the number of Units subscribed for pursuant to each such Rights
Holders exercising the Oversubscription Privilege. To the extent that such pro
rata allocation results in any Rights Holder being allocated a lesser number of
Excess Shares than such Rights Holder subscribed for pursuant to the
Oversubscription Privilege, then the excess funds paid by that Rights Holder as
the Subscription Price for shares not issued will be returned without interest
or deduction.
SECTION 4. SIGNATURE AND REGISTRATION.
(a) The Subscription Rights Certificates will be executed on behalf
of the Company by its President, Chairman of the Board or Chief Executive
Officer and by its Secretary or an Assistant Secretary by facsimile signature.
Any Subscription Rights Certificate may be signed on behalf of the Company by
any person who, at the actual date of execution of such facsimile signature, is
a proper officer of the Company to sign such Subscription Rights Certificate,
even if at the date of the execution of this Agreement or the date of actual
issuance of such certificate such person is not such an officer.
(b) The Subscription Agent will keep or cause to be kept, at its
principal offices in the State of New York, books for registration of the Rights
issued hereunder. Such books will show the names and addresses of the respective
Rights Holders and the number of
2
Rights evidenced by each outstanding Subscription Rights Certificate.
SECTION 5. DIVISION, COMBINATION AND EXCHANGE OF SUBSCRIPTION RIGHTS
CERTIFICATES; MUTILATED, DESTROYED, LOST OR STOLEN
SUBSCRIPTION RIGHTS CERTIFICATES.
(a) Subject to the provisions of Section 9 hereof, any Subscription
Rights Certificate, or any two or more Subscription Rights Certificates may be
divided, combined or exchanged for any number of Subscription Rights
Certificates or for a single Subscription Rights Certificate of different
denominations; provided however, that the aggregate number of Rights evidenced
by the Subscription Rights Certificates so issued does not exceed the aggregate
number of Rights evidenced by the Subscription Rights Certificate or
Certificates surrendered in exchange therefor. No Subscription Rights
Certificates evidencing fractional Rights will be issued upon division,
combination or exchange of other Subscription Rights Certificates, and any
instructions to divide, combine or exchange Subscription Rights Certificates
that would result in the issuance of Subscription Rights Certificates evidencing
fractional Rights are to be rejected.
(b) Any Rights Holder desiring to divide, combine or exchange any
Subscription Rights Certificate or Certificates must make such requests in
writing to the Subscription Agent and surrender the Subscription Rights
Certificate or Certificates to be divided, combined or exchanged to the
Subscription Agent. Thereupon the Subscription Agent will deliver to the person
entitled thereto a Subscription Rights Certificate or Certificates, as the case
may be, as so requested. In all cases of requests by an attorney-in-fact, the
original power of attorney duly approved, or a copy thereof, duly certified,
must be deposited and remain with the Subscription Agent. In case of requests by
executors, administrators, guardians or other legal representatives, duly
authenticated evidence of their authority satisfactory to the Subscription Agent
must be produced and may be required to be deposited and to remain with the
Subscription Agent in its discretion. The Company may require payment of a sum
sufficient to cover any tax or governmental charge that may be imposed in
connection with any division, combination or exchange of Subscription Rights
Certificates.
(c) Upon receipt by the Company and the Subscription Agent of
evidence reasonably satisfactory to them of the loss, theft, destruction or
mutilation of a Subscription Rights Certificate, and in case of loss, theft or
destruction, of indemnity and/or security satisfactory to them, in their sole
discretion, and reimbursement to the Company and the Subscription Agent of all
reasonable expenses incidental thereto, and upon surrender and cancellation of
the Subscription Rights Certificate, if mutilated, the Subscription Agent will
make and deliver a new Subscription Rights Certificate of like tenor to the
registered Rights Holder in lieu of the Subscription Rights Certificate so lost,
stolen, destroyed or mutilated. If required by the Company or the Subscription
Agent, an indemnity bond must be sufficient in the judgment of each party to
protect the Company, the Subscription Agent of any agent thereof from any loss
which any of them may suffer if a lost, stolen, destroyed or mutilated
Subscription Rights Certificate is replaced.
3
SECTION 6. SUBSEQUENT ISSUE OF SUBSCRIPTION RIGHTS CERTIFICATES.
Subsequent to the original issuance of the Subscription Rights Certificates, no
Subscription Rights Certificates will be issued except as provided herein.
SECTION 7. EXERCISE OF RIGHTS; EXERCISE PRICE; EXPIRATION DATE.
(a) A Rights Holder may exercise Rights held by such Rights Holder
by properly completing, signing and delivering the Subscription Rights
Certificate representing such Rights, with any required signature guarantees,
together with payment in full of the Subscription Price for the aggregate number
of Units subscribed for pursuant to such Rights Holder's exercise of the Basic
Subscription Privilege and the Oversubscription Privilege, before any proration
or reduction with respect to the Oversubscription Privilege. A Rights Holder may
also exercise Basic Subscription Privileges by complying with the procedures
described in Section 7(f), below, with respect to DTC Exercised Rights (as
hereinafter defined). Except as provided in Sections 7(d) and 7(f), below, and
subject to Section 12(b), below, Subscription Rights Certificates and payment of
the Subscription Price must be received by the Subscription Agent before 5:00
p.m. New York City time, on __________, 1997, or such later time and date to
which the Rights may be extended by the Company at its option (the "Expiration
Time"), and a Right will not be deemed exercised until the Subscription Agent
receives both payment of the Subscription Price and a duly executed Subscription
Rights Certificate (or until the Guaranteed Delivery Procedures set forth in
Section 7(d), below, have been complied with). A Rights Holder's
Oversubscription Privilege must be exercised concurrently with such Rights
Holder's Basic Subscription Privilege, except for DTC Exercised Rights, as
described in Section 7(f), below. Once a Rights Holder has exercised a Right,
such exercise may not be revoked. The Rights will expire at the Expiration Time.
The Company may notify the Subscription Agent either orally or in writing of any
extension of the Expiration Time. If the Company gives an oral notice of an
extension, it will confirm such extension in writing.
(b) Unless a Subscription Rights Certificate (i) provides that the
Units to be issued pursuant to the exercise of Rights represented thereby are to
be registered in the name of and delivered to the registered holder of such
Subscription Rights Certificate, or (ii) is submitted for the account of a
member firm of a registered national securities exchange or a member of the
National Association of Securities Dealers, Inc. (the "NASD"), or a commercial
bank or trust company having an office or correspondent in the United States
(each, an "Eligible Institution"), signatures on such Subscription Rights
Certificate must be guaranteed by an Eligible Guarantor Institution, as defined
in Rule 17Ad-15(a)(2) of the 1933 Act.
(c) The Subscription Price will be payable in United States dollars
(i) by personal check, certified check or cashier's check drawn upon a United
States bank, or postal, telegraphic or express money order, payable to the order
of the Subscription Agent, or (ii) by wire transfer of funds to the Bank, ABA
No. ______________, Account No. _____________. The Subscription Price will be
deemed to have been received by the Subscription Agent only upon (i) clearance
of any uncertified check, (ii) receipt by the Subscription Agent of any
certified check or cashier's check drawn upon a United States bank, or of any
postal, telegraphic
4
or express money order, or (iii) receipt of collected funds in the Subscription
Agent's account designated above, in payment of the Subscription Price.
(d) If a Rights Holder wishes to exercise Rights, but time will not
permit such Rights Holder to cause the Subscription Rights Certificate or
Certificates evidencing such Rights to reach the Subscription Agent at or prior
to the Expiration Time, such Rights may nevertheless be exercised if all of the
following conditions (the "Guaranteed Delivery Procedures") are met:
(i) Such Rights Holder has caused payment in full of the
Subscription Price for the aggregate number of Units subscribed for
pursuant to such Rights Holder's exercise of the Basic Subscription
Privilege and the Oversubscription Privilege, before any proration or
reduction with respect to the Oversubscription Privilege, to be received
as set forth in Section 7(c), above, by the Subscription Agent at or
before the Expiration Time:
(ii) The Subscription Agent receives, at or prior to the
Expiration Time, a guarantee notice (the "Notice of Guaranteed Delivery"),
substantially in the form distributed with the Subscription Rights
Certificates, from an Eligible Institution, stating the name of the
exercising Rights Holder, the number or Rights represented by the
Subscription Rights Certificate or Certificates held by such exercising
Rights Holder, the number of Units being subscribed for pursuant to Basic
Subscription privilege and the number of Units, if any, being subscribed
for pursuant to the Oversubscription Privilege, and guaranteeing the
delivery to the Subscription Agent of the Subscription Rights Certificate
or Certificates evidencing such Rights within three trading days following
the date of the Notice of Guaranteed Delivery; and
(iii) The properly completed Subscription Rights Certificate
or Certificates evidencing the Rights being exercised, with any required
signatures guarantee, are received by the Subscription Agent within three
trading days following the date of the Notice of Guaranteed Delivery
relating thereto. The Notice of Guaranteed Delivery may be delivered to
the Subscription Agent in the same manner as Subscription Rights
Certificates, or may be transmitted to the Subscription Agent by facsimile
transmission (telecopy No. (516) 379-8525).
(e) If a Subscription Rights Certificate does not indicate the
number of Units subscribed for or if the Subscription Price payment forwarded to
the Subscription Agent is insufficient to purchase the number of Units
subscribed for, the Rights Holder will be deemed to have exercised the Basic
Subscription Privilege with respect to the maximum number of whole Units that
may be subscribed for based on the Subscription Price delivered to the
Subscription Agent and, to the extent that the payment delivered by such Rights
Holder exceeds the product of the Subscription Price multiplied by the number of
Rights evidenced by the Subscription Rights Certificates delivered by the Rights
Holder (such excess being the "Subscription Excess"), the Rights Holder will be
deemed to have exercised the Oversubscription Privilege to purchase, to the
extent available, that number of whole Excess Shares equal to the quotient
obtained by
5
dividing the Subscription Excess by the Subscription Price. If a Rights Holder
(other than a Qualified Financial Institution) exercises an Oversubscription
Privilege without exercising its Basic Subscription Privilege in full, such
Rights Holder will be deemed to have exercised such Basic Subscription Privilege
to the fullest possible extent, and the Oversubscription Privilege will be
deemed exercised only to the extent of payments received from such Rights Holder
in excess of the aggregate Subscription Price applicable to such deemed Basic
Subscription Privilege exercise.
(f) The exercise of the Basis Subscription Privilege (but not the
Oversubscription Privilege) may be effected through the facilities of the
Depository Trust Company, (Rights so exercised are referred to as "DTC Exercised
Rights"). A holder of DTC Exercised Rights may exercise the Oversubscription
Privilege in respect thereof by properly executing and delivering to the
Subscription Agent, at or before the Expiration Time, a DTC Participant
Oversubscription Exercise Form (substantially in the form attached hereto as
Exhibit C), together with payment of the appropriate Subscription Price for the
number of Units for which the Oversubscription Privilege is to be exercised,
before any proration or reduction.
(g) The Subscription Agent will pay to credit to the account of, or
otherwise transfer to the Company all funds received by the Subscription Agent
in payment of the Subscription Price for Units subscribed for pursuant to the
Basic Subscription Privilege as soon as practicable following receipt thereof
and of all related documents.
(h) Funds received by the Subscription Agent in payment of the
Subscription Price for Excess Shares subscribed for pursuant to the
Oversubscription Privilege will be held in a segregated account pending issuance
of such Excess Shares. The Subscription Agent will pay to, credit to the account
of, or otherwise, transfer to the Company all funds received in payment of the
Subscription Price pursuant to the Oversubscription Privilege, as soon as
practicable following the Expiration Time and allocation of Excess Shares for
purchase pursuant to the Oversubscription Privilege.
SECTION 8. DELIVERY OF STOCK CERTIFICATES; REFUNDS.
The Subscription Agent will, on each business day commencing
_________________, 1997, and ending on the second business day immediately
following the Expiration Time, furnish the Transfer Agent with such information
as the Transfer Agent may reasonably require, and in such form as the Transfer
Agent may reasonably request, to allow the Transfer Agent to issue certificates
representing all Units to be issued pursuant to Basic Subscription Privileges
exercised on the previous business day and will, as soon as practicable
following the Expiration Time and allocation of Excess Shares for purchase
pursuant to the Oversubscription Privilege and as requested by the Transfer
Agent, furnish the Transfer Agent, to allow the Transfer Agent with such
information as the Transfer Agent may reasonably require, and in such form as
the Transfer Agent may reasonably request, to allow the Transfer Agent to issue
certificates evidencing any Excess Shares purchased pursuant to Oversubscription
Privileges. Unless the Subscription Rights Certificate provides otherwise,
certificates for Units purchased pursuant to
6
the exercise of Rights will be registered in the name of the Rights Holder
exercising such Rights. Any refund, without interest, of the Subscription Price
for Excess Shares subscribed for but not sold due to proration or otherwise will
be mailed or delivered by the Subscription Agent to the Rights Holder to whom
such refund is due as soon as practicable after the Expiration Time.
SECTION 9. FRACTIONAL RIGHTS AND SHARES. No fractional Rights or cash in
lieu thereof will be issued or paid. All questions as to the validity and
eligibility of any rounding of fractional Rights (including, without limitation,
in connection with the surrender by Qualified Financial Institution of a
Subscription Rights Certificate, as set forth in Section 5(a) hereof) will be
determined by the Company in its sole discretion and its determination will be
final and binding.
SECTION 10. NON-TRANSFERABILITY OF RIGHTS. No Rights Holder may transfer
any Rights.
SECTION 11. FOREIGN AND CERTAIN OTHER STOCKHOLDERS. Subscription Rights
Certificates will not be mailed to Rights Holders whose registered addresses are
outside the United States (collectively, "Foreign Record Date Holders").
Subscription Rights Certificates evidencing Rights otherwise distributable to
Foreign Record Date Holders will be delivered to the Subscription Agent, which
will hold such Subscription Rights Certificates for the account of such Foreign
Record Date Holders and upon notice from such Foreign Record Date Holders and
the written consent of the Company will allow the exercise of the Rights by such
Foreign Record Date Holders. To so exercise their Rights, Foreign Record Date
Holders must notify the Subscription Agent not later than 11:00 a.m., New York
City time, ________________, 1997.
SECTION 12. AMENDMENT AND WAIVERS; TERMINATION.
(a) The Company reserves the right to extend the Expiration Time,
and to amend the terms and conditions of the Offering, whether the amended terms
are more or less favorable to Rights Holders.
(b) All questions as to the validity, form, eligibility (including
time of receipt and record ownership) and acceptance of any exercise of Rights
will be determined by the Company, in its sole discretion, and Company reserves
the right to reject any exercise that is not in accordance with the terms of the
Rights Offering or is not in proper form, or if the acceptance thereof or the
issuance of Units pursuant thereto could be deemed unlawful. The Company also
reserves the right to waive any deficiency or irregularity (including, without
limitation, any deficiency with respect to time of receipt of a Subscription
Rights Certificate or the Subscription Price for all Units subscribed for
pursuant thereto) or to permit a defect or irregularity to be corrected within
such time as it may determine. Subscriptions will not be deemed to have been
received or accepted until all irregularities have been waived or cured within
such time as the Company determines in its sole discretion. Neither the Company
nor the Subscription Agent will be under any duty to give notification of any
defect or irregularity in connection with the submission of Subscription Rights
Certificates or incur any liability for failure to give such notification.
7
(c) The Subscription Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the board, President an Chief Executive Officer. any Vice
President (including any Senior or Executive Vice President), the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary of the Company, or
any other person designated by any of them and to apply to such officers for
advice or instructions in connection with its duties and it will not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with the instructions of any such officer.
SECTION 12. AMENDMENTS AND WAIVERS; TERMINATION.
(a) The Company reserves the right to extend the Expiration Time,
and to amend the terms and conditions of the Offering, whether the amended terms
are more or less favorable to Rights Holders.
(b) All questions as to the validity, form, eligibility (including
time of receipt and record ownership) and acceptance of any exercise of Rights
will be determined by the Company, in its sole discretion, and company reserves
the right to reject any exercise that is not in accordance with the terms of the
Rights Offering or is not in proper form, or if the acceptance thereof or the
issuance of Units pursuant thereto could be deemed unlawful. The Company also
reserves the right to waive any deficiency or irregularity (including, without
limitation, any deficiency with respect to time of receipt of a Subscription
Rights Certificate or the Subscription Price for all Units subscribed for
pursuant thereto) or to permit a defect or irregularity to be corrected within
such time as it may determine. Subscriptions will not be deemed to have been
received or accepted until all irregularities have been waived or cured within
such time as the Company determines in its sole discretion. Neither the Company
nor the Subscription Agent will be under any duty to give notification of any
defect or irregularity in connection with the submission of Subscription Rights
Certificates or incur any liability for failure to give such notification.
(c) The Subscription Agent is hereby authorized and directed to
accept instructions with respect to the performance of its duties hereunder from
the Chairman of the Board, President and Chief Executive Officer, any Vice
President (including any Senior or Executive Vice President), the Treasurer, any
Assistant Treasurer, the Secretary of any Assistant Secretary of the Company, or
any other person designated by any of them and to apply to such officers for
advice or instructions in connection with its duties and it will not be liable
for any action taken or suffered to be taken by it in good faith in accordance
with the instructions of any such officer.
SECTION 13. REPORTS. The Subscription Agent will notify the Company and
its designated representatives by telephone each business day during the period
commencing on __________, 1997 and ending at the Expiration Time (and in the
case of deliveries pursuant to the Guaranteed Delivery Procedure, the period
ending three trading days after the Expiration Time), which notice will
thereafter be confirmed in writing of (i) the number of rights exercised
8
each day, (ii) the number of Units subscribed for pursuant to the Basic
Subscription Privilege each day and the number of Units for which payment has
been received, (iii) the number of Units subscribed for pursuant to the
Oversubscription Privilege each day and the number of such Units for which
payment has been received, (iv) the number of Rights exercised pursuant to the
Guaranteed Delivery Procedure each day, (v) the number of Rights for which
defective Subscription Rights Certificates have been received each day, (vi) the
number of Units subscribed for in respect of which Rights Holders have
designated a broker-dealer as a soliciting Dealer (a "Soliciting Dealer") and
(vii) cumulative totals with respect to the information set forth in each of the
clauses (i) through (vi) above. At or before 5:00 p.m., New York City time, on
the first trading day following the Expiration Time the Subscription Agent will
certify in writing to the Company the cumulative totals through the Expiration
Time with respect to the information set forth in clauses (i) through (vi)
above. The Subscription Agent will provide the Company and its designated
representatives which the information compiled pursuant to this Section 13 and
any Subscription Rights Certificates or other documents or date from which such
information derived, as any of them may request. The Subscription Agent hereby
represents, warrants and agrees that the information contained in each
notification referred to in this Section 13 will be accurate in all material
respects.
SECTION 14. PAYMENT OF TAXES. The Company will pay when due all
documentary, stamp and other taxes, if any, that may be payable with respect to
the issuance or delivery of any Rights or the issuance of any Units upon the
exercise of Rights.
SECTION 15. CANCELLATION AND DESTRUCTION OF SUBSCRIPTION RIGHTS
CERTIFICATES. All Subscription Rights Certificates surrendered for the purpose
of exercise, exchange or substitution will be canceled by the Subscription
Agent, and no Subscription Rights Certificates will be issued in lieu thereof,
except as expressly permitted by this Agreement. The Subscription Agent will
either deliver all canceled Subscription Rights Certificates to the Company or,
at the written request of the Company, destroy such canceled Subscription Rights
Certificates, and in such case will deliver a certificate of destruction thereof
to the Company.
SECTION 16. NO SOLICITING DEALER FEES The Company will not pay any fees to
any dealer in connection with this Rights Offering.
SECTION 17. FEES OF THE SUBSCRIPTION AGENT: INDEMNIFICATION.
(a) The Company agrees to pay to the Subscription Agent compensation
in accordance with the fee schedule attached hereto as Exhibit A for all
services rendered by it hereunder and, from time to time its reasonable expenses
and other disbursements incurred in the administration and execution of this
Agreement and the exercise and performance of its duties hereunder.
(b) The Company hereby covenants and agrees to indemnify and to hold
the Subscription Agent harmless against any losses, claims, damages,
liabilities, costs and expenses (including reasonable fees and disbursements of
legal counsel) which the Subscription Agent may
9
incur or become subject to arising from or out of any claims or liability
resulting from actions taken as Subscription Agent pursuant to this Agreement;
provided, however, that such covenant and agreement does not extend to, and the
Subscription Agent will not be indemnified or held harmless with respect to such
losses, claims, damages, liabilities, costs and expenses incurred or suffered by
the Subscription Agent as a result, or arising out, of the Subscription Agent's
negligence, misconduct, bad faith or breach of this Agreement. In connection
therewith, (i) in no case will the Company be liable with respect to any claim
against the Subscription Agent unless the Subscription Agent notifies the
Company in writing of the assertion of a claim against it or of any action
commenced against it promptly after the Subscription Agent has notice of any
such assertion of a claim or has been served with the summons or other first
legal process giving information as to the nature and basis of the claim; (ii)
the Company will be entitled to participate at its own expense in the defense of
any suit brought to enforce any such claim and if the Company so elects, it will
assume the defense of any such suits, in which event the Company will not
thereafter be liable for the fees and expenses of any additional counsel that
the Subscription Agent may retain so long as the Company retains counsel
satisfactory to the Subscription Agent, in the exercise of the Subscription
Agent's reasonable judgment, to defend such suit; and (iii) the Subscription
Agent agrees not to settle any litigation in connection with any claim or
liability with respect to which it may seek indemnification from the Company
without the prior written consent of the Company.
(c) The Subscription Agent will be protected and will incur no
liability for or with respect to any action taken, suffered or omitted by it
without negligence and in good faith in connection with its administration of
this Agreement in reliance upon any Subscription Rights Certificate, instrument
of assignment or transfer, power of attorney, endorsement, affidavit letter,
notice, direction, consent, certificate, statement or other paper or document
reasonably believed by it to be genuine and to be signed, executed and, where
necessary, verified or acknowledged by the proper person or persons.
SECTION 18. CONCERNING THE SUBSCRIPTION AGENT. The Subscription Agent
undertakes the duties and obligations imposed by this Agreement upon the
following terms and conditions:
(a) The Subscription Agent will have no responsibility with respect
to the validity of this Agreement or the execution and delivery hereof (except
the due execution and delivery hereof by the Subscription Agent), or with
respect to the validity or execution of any Subscription Rights Certificate.
(b) Nothing herein precludes the Subscription Agent from acting in
any other capacity for the Company.
(c) From the date hereof to the Expiration Time, the Subscription
Agent agrees not to and not permit any affiliate to, sell or purchase any Common
Stock, or establish any short or long position with respect thereto, for its own
account or the account of any affiliate of the Subscription Agent.
10
SECTION 19. CERTAIN TAX MATTERS.
(a) The Subscription Agent will comply with the information
reporting and backup withholding requirements of the Internal Revenue Code of
1986, as amended (the "Code"), including without limitation, where appropriate,
on a timely basis filing with the Internal Revenue Service and furnishing to
Rights Holder duly completed Forms 1099B. The Subscription Agent will also
collect and duly preserve Forms W-8 and W-9 and other forms or information
necessary to comply with the backup withholding requirement of the Code.
(b) The Subscription Agent will withhold from payments made to
Rights Holders amounts sufficient to comply with the backup withholding
requirements of the Code.
SECTION 20. NOTICES TO THE COMPANY, RIGHTS HOLDERS AND SUBSCRIPTION AGENT.
All notices and other communication provided for or permitted hereunder are to
be made by hand delivery prepaid first-class mail, telex or telecopier:
(a) If to the Company, to:
First Montauk Financial Corp.
Parkway 109 Office Center
328 Newman Springs Road
Red Bank, New Jersey 07701
Attention: Robert I. Rabinowitz, Esq.
Telephone: (908) 842-4700
Telecopy: (908) 842-9047
(b) If to the Subscription Agent, to:
North American Transfer Company
147 West Merrick Road
Freeport, New York 11520
Attention: Ms. Mildred Rostolder
Telephone: (516) 379-8501
Telecopy: (516) 379-8525
(c) if to a Rights Holder, to the address shown on the registry
books of the Company.
All such notices and communications will be deemed to have been duly given
when delivered by hand, if personally delivered; two business days after being
deposited in the mail, postage prepaid, if mailed as aforesaid; when answered
back, it telexed; and when receipt is acknowledged, if telecopied.
11
SECTION 21. SUPPLEMENTS AND AMENDMENTS. The Company and the Subscription
Agent may from time to time supplement or amend this Agreement without the
approval of any Rights Holders.
SECTION 22. SUCCESSORS. All the covenants and provisions of the Agreement
by or for the benefit of the Company or the Subscription Agent will bind and
inure to the benefit of their respective successors and assigns hereunder.
SECTION 23. GOVERNING LAW. This Agreement will be deemed to be a contract
made under the laws of the State of New York and for all purposes is to be
construed in accordance with the internal laws of said State.
SECTION 24. BENEFITS OF THIS AGREEMENT. Nothing in this Agreement is to be
construed to give any person or corporation other than the Company, the
Subscription Agent and the Rights Holders any legal or equitable right, remedy
or claim under this Agreement; but this Agreement is for the sole and exclusive
benefit of the Company, the Subscription Agent an the Rights Holders.
SECTION 25. COUNTERPARTS. This Agreement may be executed in any number of
counterparts and each of such counterparts will for all purposes be deemed to be
an original but all such counterparts will together constitute one and the same
instrument.
SECTION 26. DESCRIPTIVE HEADINGS. Descriptive headings of the several
Sections of this Agreement are inserted for convenience only and do not control
or affect the meaning or construction of any of the provision hereof.
IN WITNESS WHEREOF each of the parties hereto has caused this Agreement to
be duly executed as of the date first above written.
FIRST MONTAUK FINANCIAL CORP.
By:_____________________________
Name:
Title:
NORTH AMERICAN TRANSFER COMPANY
By:_____________________________
Name:
Title:
12
Exhibit A
The company will pay a fee of $5,000 to the Subscription Agent, such fee to be
payable within 30 days following the Expiration Time.