EXHIBIT 99.2
FIRST MONTAUK FINANCIAL CORP.
INSTRUCTIONS FOR USE OF
SUBSCRIPTION RIGHTS CERTIFICATES
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CONSULT THE SUBSCRIPTION AGENT, OR YOUR BANK OR BROKER,
IF YOU HAVE ANY QUESTIONS AFTER READING THESE INSTRUCTIONS
The following instructions relate to the rights offering (the "Rights
Offering") by First Montauk Financial Corp. (the "Company"), to the holders of
its Common Stock, no par value (the "Common Stock"), as described in the
Company's Prospectus dated __________ , 1997 (the "Prospectus"). Holders of
record (the "Record Date Holders") of Common Stock at the close of business on
___________ , 1997 (the "Record Date") are receiving one non-transferable
subscription right (a "Right") for each share of Common Stock held on the Record
Date. Every three Rights entitle the holder thereof (the "Rights Holder") to
subscribe for and purchase from the Company one unit (the "Unit") at the
subscription price (the "Subscription Price") of $.45 (the "Basic Subscription
Privilege"). 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 as described in the Prospectus. An
aggregate of up to 3,072,779 Units will be distributed in connection with the
Offering. Subject to the proration and possible reduction described below, each
Right also entitles any Rights Holder to subscribe for additional Units which
may be available after satisfaction of all subscriptions pursuant to the Basic
Subscription Privilege (the "Oversubscription Privilege"). Units will be
available for purchase pursuant to the Oversubscription Privilege only to the
extent that any Units are not subscribed for through the Basic Subscription
Privilege. If the Units not subscribed for through the Basic Subscription
Privilege (the "Excess Units") are not sufficient to satisfy all subscriptions
pursuant to the Oversubscription Privilege, the Excess Units will be allocated
pro rata (subject to the elimination of fractional shares) among those Rights
Holders exercising the Oversubscription Privilege in proportion to the number of
Units a Rights Holder has subscribed for pursuant to the Basic Subscription
Privilege. However, if such pro rata allocation results in any Rights Holder
being allocated a greater number of Excess Units than such Rights Holder
subscribed for pursuant to the exercise of 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. The Subscription
Price is payable in cash. See "Rights Offering Procedures" in the Prospectus.
The Rights will expire at 5:00 p.m. Eastern time on _________________ ,
1997, unless extended by the Company to a time not later than 5:00 p.m., Eastern
time, on , 1997 (in either case, the "Expiration Time").
The number of Rights to which you are entitled pursuant to the Basic
Subscription
Privilege is printed on the face of your Subscription Rights Certificate. You
should indicate your wishes with regard to the exercise of your Rights by
completing the appropriate form or forms on the reverse side of your
Subscription Rights Certificate and returning the Subscription Rights
Certificate to the Subscription Agent in the envelope provided.
YOUR SUBSCRIPTION RIGHTS CERTIFICATE OR NOTICE OF GUARANTEED DELIVERY MUST
BE RECEIVED BY NORTH AMERICAN TRANSFER COMPANY, (THE "SUBSCRIPTION AGENT") AND
PAYMENT OF THE SUBSCRIPTION PRICE, INCLUDING FINAL CLEARANCE OF ANY UNCERTIFIED
CHECKS, MUST BE RECEIVED BY THE SUBSCRIPTION AGENT, AT OR BEFORE 5:00 P.M.
EASTERN TIME, ON ______________, 1997. YOU MAY NOT REVOKE ANY EXERCISE OF A
RIGHT.
1. SUBSCRIPTION PRIVILEGES.
TO EXERCISE RIGHTS. To exercise your Rights, complete your Subscription
Rights Certificate and send to the Subscription Agent your properly completed
and executed Subscription Rights Certificate together with payment in full of
the Subscription Price for each Unit subscribed for pursuant to the Basic
Subscription Privilege and the Oversubscription Privilege. Payment of the
Subscription price must be made for the full number of Units being subscribed
for (a) by check drawn upon a U.S. bank, or postal, telegraphic or express money
order, in each case, payable to North American Transfer Company, as Subscription
Agent for such purpose of accepting subscriptions at _____________________ 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 U.S. bank, or of any
postal, telegraphic or express money order or (iii) receipt of collected funds
in the Subscription Agent's account designated above. IF PAYING BY UNCERTIFIED
CHECK, PLEASE NOTE THAT THE FUNDS PAID THEREBY MAY TAKE FIVE BUSINESS DAYS OR
MORE TO CLEAR. ACCORDINGLY, RIGHTS HOLDERS WHO WISH TO PAY THE SUBSCRIPTION
PRICE BY MEANS OF UNCERTIFIED CHECK ARE URGED TO MAKE PAYMENT SUFFICIENTLY IN
ADVANCE OF THE EXPIRATION TIME TO ENSURE THAT SUCH PAYMENT IS RECEIVED AND
CLEARS BEFORE THE EXPIRATION TIME AND ARE URGED TO CONSIDER, IN THE ALTERNATIVE,
PAYMENT BY MEANS OF CERTIFIED OR, CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER
OF FUNDS.
If you have not indicated the number of Rights being exercised, or if you
have not forwarded full payment of the aggregate Subscription Price for the
number of Rights that you have indicated are being exercised, then you will be
deemed to have exercised the Basic Subscription Privilege for the maximum number
of Rights which may be exercised for the aggregate payment delivered by you and,
to the extent that the aggregate payment delivered by you exceeds the product of
the Subscription Price multiplied by the number of Rights evidenced by the
Subscription Rights Certificates delivered by you (such excess being the
"Subscription Excess"), you 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
dividing the Subscription Excess by the Subscription Price and any amount
remaining after such division shall be returned to you without interest or
deduction.
TO EXERCISE RIGHTS THROUGH A NOMINEE. If you wish to have your bank, broker
or other nominee exercise some or all of your Rights, you must complete the
instructions accompanying the letter from nominee holders, providing clear
direction as to how many Rights are to be exercised. Banks, brokers and other
nominees who exercise the Oversubscription Privilege on behalf of the beneficial
owners of Rights will be required to certify to the Subscription Agent and the
Company, by delivery to the Subscription Agent of a Nominee Holder
Oversubscription Certification in the form available from the Subscription
Agent, the aggregate number of Rights as to which the Oversubscription Privilege
are being exercised and the number of Units thereby subscribed for by each
beneficial owner of Rights on whose behalf such nominee holder is acting.
TO EXERCISE RIGHTS IF SUBSCRIPTIONS RIGHTS CERTIFICATE MIGHT NOT PROPERLY
REACH THE SUBSCRIPTION AGENT PRIOR TO THE EXPIRATION TIME. You may cause a
written guarantee substantially in the form of Exhibit A to these Instructions
(the "Notice of Guaranteed Delivery") from a member firm of a registered
national securities exchange or a member of the National Association of
Securities Dealers, Inc. or from a commercial bank or trust company having an
office or correspondent in the United States (each, an "Eligible Institution"),
to be received by the Subscription Agent at or prior to the Expiration Time;
payment in full of the applicable Subscription Price may be made separately as
long as said payment is also received by the Subscription Agent at or before the
Expiration Time. Such Notice of Guaranteed Delivery must state your name, the
number of Rights represented by your Subscription Rights Certificate and the
number of Units being subscribed for pursuant to the Basic Subscription
Privilege and being subscribed for, if any, pursuant to the Oversubscription
Privilege, and the Eligible Institution must guarantee the delivery to the
Subscription Agent of your properly completed and executed Subscription Rights
Certificates evidencing those Rights within three trading days following the
date of the Notice of Guaranteed Delivery. If this procedure is followed, your
Subscription Rights Certificates must be received by the Subscription Agent
within three trading days following the date of the Notice of Guaranteed
Delivery relating thereto. Additional copies of the Notice of Guaranteed
Delivery may be obtained upon request from the Subscription Agent.
LIMITATION ON SUBSCRIPTION PRIVILEGES. The Company will not be required to
issue Units pursuant to the Rights Offering to any Rights Holder that in the
Company's judgment is required to obtain prior clearance or approval from any
regulatory authority to own or control such shares unless prior to the
Expiration Time, evidence of such clearance or approval has been provided to the
Company. If the Company elects not to issue shares in such case, such shares
will become available to satisfy subscriptions pursuant to the Oversubscription
Privilege.
2. THE SUBSCRIPTION AGENT.
The address and telephone and telecopier numbers of the Subscription Agent
are as follows:
General Information:
(516) 379-8501
By Mail or By Hand or Overnight Courier:
North American Transfer Company
47 West Merrick Road
Freeport, New York 11521
Facsimile Transmission, Copy Number:(516) 379-8525
3. ISSUANCE AND DELIVERY OF STOCK CERTIFICATES, ETC.
The following issuances, deliveries, and payments will be made to you at
the address shown on the face of your Subscription Rights Certificate unless you
provide special payment, issuance or delivery instructions to the contrary by
completing the applicable part of Section 2 of your Subscription Rights
Certificate. See "Rights Offering Procedures - Exercise of Rights" in the
Prospectus.
BASIC SUBSCRIPTION PRIVILEGE. As soon as practicable after the
corresponding Rights have been validly exercised and payment has been received,
the Subscription Agent will issue and mail in accordance with your instructions
three certificates representing Warrants purchased pursuant to the Basic
Subscription Privilege. See "Rights Offering Procedures - Exercise of Rights" on
the Prospectus.
OVERSUBSCRIPTION PRIVILEGE. If you validly exercise the Oversubscription
Privilege, as soon as practicable after the Expiration Time and after all
prorations and reductions contemplated by the terms of the Rights Offering have
been effected, the Subscription Agent will issue and mail to you, if you validly
exercise the Oversubscription Privilege, three certificates representing
Warrants purchased pursuant to the Oversubscription Privilege. See "Rights
Offering Procedures - Exercise of Rights" in the Prospectus.
REFUNDING OF EXCESS PAYMENTS. If you exercise the Oversubscription
Privilege, as soon as practicable after the Expiration Time and after all
prorations and reductions contemplated by the terms of the Rights Offering have
been effected, the Subscription Agent will return by mail, without interest or
deduction to you, any excess funds received in payment of the Subscription Price
for Units that were subscribed by you but not allocated to you pursuant to the
Oversubscription Privilege.
4. SIGNATURES.
EXECUTION BY RIGHTS HOLDER. The signature on the Subscription Rights
Certificate must correspond with the name of the Rights Holder exactly as it
appears on the face of the Subscriptions Rights Certificate without any
alteration or change whatsoever. Persons who sign the Subscription Rights
Certificate in a representative or other fiduciary capacity must indicate their
capacity when signing and, unless waived by the Company in its sole and absolute
discretion, must present to the Subscription Agent satisfactory evidence of
their authority to so act.
EXECUTION BY PERSON OTHER THAN RIGHTS HOLDER. If the Subscription Rights
Certificate is executed by a person other than the Rights Holder named on the
face of the Subscription Rights Certificate, proper evidence of authority of the
person executing the Subscription Rights Certificate must accompany the same
unless, for good cause, the Company dispenses with proof of authority.
SIGNATURE GUARANTEES. As the Rights are non-transferable, unless your
Subscription Rights Certificate (i) provides that the Units to be issued
pursuant to the exercise of the Rights represented thereby are to be issued to
you and sent to your registered address or (ii) is submitted for the account of
an Eligible Institution (as defined in paragraph 1), your signature on each
Subscription Rights Certificate must be guaranteed by a bank, broker, dealer,
credit union, national securities exchange, registered securities association,
clearing agency or savings association (an "Eligible Guarantor Institution").
5. METHOD OF DELIVERY.
The method of delivery of Subscription Rights Certificates and payment of
the Subscription Price to the Subscription Agent will be at your election and
risk, but, if sent by mail, you are urged to send such materials by registered
or certified mail, properly insured, with return receipt requested, and are
urged to allow a sufficient number of days to ensure delivery to the
Subscription Agent and, if you are paying by uncertified check, the clearance of
payment of the Subscription Price prior to the Expiration Time. BECAUSE
UNCERTIFIED CHECKS MAY TAKE FIVE BUSINESS DAYS OR MORE TO CLEAR, YOU ARE
STRONGLY URGED TO CONSIDER, IN THE ALTERNATIVE, PAYMENT BY MEANS OF CERTIFIED OR
CASHIER'S CHECK, MONEY ORDER OR WIRE TRANSFER OF FUNDS.
6. SPECIAL PROVISIONS RELATING TO THE DELIVERY OF RIGHTS THROUGH THE
DEPOSITORY TRUST COMPANY.
In the case of Rights that are held of record through The Depository Trust
Company ("DTC"), exercises of the Basic Subscription Privilege (but not the
Oversubscription Privilege) may be effected by instructing DTC to transfer
Rights (such Rights being "DTC Rights") from the DTC account in which the Rights
are held to the DTC account of the Subscription Agent, together with payment of
the Subscription Price for each Unit subscribed for pursuant to the Basic
Subscription Privilege. THE OVERSUBSCRIPTION PRIVILEGE IN RESPECT OF DTC RIGHTS
MAY NOT BE EXERCISED THROUGH DTC. The holder of DTC Rights may exercise the
Oversubscription Privilege in respect thereof by properly executing and
delivering to the Subscription Agent, at or prior to the Expiration Time, a DTC
Participant Oversubscription Exercise Form, in the form available from the
Subscription Agent, together with payment of the appropriate Subscription Price
for the number of Excess Shares for which the Oversubscription Privilege is
exercised.
If a Notice of Guaranteed Delivery relates to Rights for to which exercise
of the Basic Subscription Privilege will be made through DTC and such Notice of
Guaranteed Delivery also relates to the exercise of the Oversubscription
Privilege, a DTC Participant Oversubscription
Exercise Form must also be received by the Subscription Agent for such exercise
of the Oversubscription Privilege at or prior to the Expiration Time.
7. FORM W-9.
If you have not previously provided the Subscription Agent with a Form W-9,
you should provide the Subscription Agent with a correct Taxpayer Identification
Number on a Form W-9 which may be obtained upon request from the Subscription
Agent. Failure to provide the information on the Form W-9 may subject you to
penalties and to withholding for dividends that may be paid by the Company on
shares of Common Stock purchased upon the exercise of Warrants.
8. TRANSFER TAXES.
All commissions, fees and other expenses (including brokerage commissions
and transfer taxes) incurred in connection with the exercise of Rights will be
for the account of the Company.
9. IRREGULARITIES.
All questions concerning the timeliness, validity, form and eligibility of
any exercise of Rights will be determined by the Company, whose determinations
will be final and binding. The Company, in its sole discretion, may waive any
defect or irregularity, or permit a defect or irregularity to be corrected
within such time as it may determine, or reject the purported exercise of any
Right. Subscription Rights Certificates 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. The
Company reserves the right to reject any exercise if such exercise is not in
accordance with the terms of the Rights Offering or not in proper form or if the
acceptance thereof or the issuance of shares of Common Stock pursuant thereto
could be deemed unlawful.
EXHIBIT A TO INSTRUCTIONS
NOTICE OF GUARANTEED DELIVERY
FOR
SUBSCRIPTION RIGHTS CERTIFICATES
ISSUED BY
FIRST MONTAUK FINANCIAL CORP.
This form, or one substantially equivalent hereto, must be used to exercise
Rights pursuant to the Rights Offering described in the Prospectus dated
_____________________ (the "Prospectus") of First Montauk Financial Corp. (the
"Company"), if a holder of Rights cannot deliver the Subscription Rights
Certificates evidencing Rights (the "Subscription Rights Certificate(s)'), to
the Subscription Agent listed below (the "Subscription Agent") at or before 5:00
p.m. Eastern time on __________________ , 1997, unless extended by the Company
to a time not later than 5:00 p.m., Eastern time, on ________________, 1997, (in
either case, the "Expiration Time"). This form must be delivered by hand or sent
by facsimile transmission, overnight courier or mail to the Subscription Agent,
and must be received by the Subscription Agent at or prior to the Expiration
Time. Properly completed and executed Subscription Rights Certificates relating
to this Notice of Guaranteed Delivery must be received by the Subscription Agent
within three trading days following the date of this Notice of Guaranteed
Delivery. See "Rights Offering Procedures - Exercise of Rights" in the
Prospectus. Payment of the Subscription Price of $.45 per Unit (as defined in
the Prospectus) subscribed for pursuant to the Basic Subscription Privilege (as
defined in the Prospectus) and the Oversubscription Privilege (as defined in the
Prospectus) must be received by the Subscription Agent in the manner specified
in the Instructions for Use of Subscription Rights Certificates (the
"Instructions") at or before the Expiration Time even if the Subscription Rights
Certificate evidencing such Rights is being delivered pursuant to the procedure
for guaranteed delivery thereof.
THE SUBSCRIPTION AGENT IS:
NORTH AMERICAN TRANSFER COMPANY
BY MAIL OR GENERAL INFORMATION:
BY HAND OR (516) 379-8501
OVERNIGHT COURIER:
NORTH AMERICAN TRANSFER COMPANY FACSIMILE TRANSMISSION:
47 WEST MERRICK ROAD (516) 379-8525
FREEPORT, NEW YORK 11521
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE OR
TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE OTHER THAN THAT SET FORTH ABOVE
DOES NOT CONSTITUTE A VALID DELIVERY.
Ladies and Gentlemen:
The undersigned hereby represents that he or she is the holder of
Subscription Rights Certificates(s) representing ___________ Rights and that
such Subscription Rights Certificate(s) cannot be delivered to the Subscription
Agent at or before 5:00 p.m., Eastern time on___________________, 1997 unless
extended by the Company to a time not later than 5:00 p.m. Eastern time, on
______________, 1997 (in either case, the "Expiration Time"). Upon the terms and
subject to the conditions set forth in the Prospectus, receipt of which is
hereby acknowledged, the undersigned hereby elects to exercise (i) the Basic
Subscription Privilege to subscribe for one Unit for every three Rights for
_____________ Units represented by such Subscription Rights Certificate and (ii)
the Oversubscription Privilege, to the extent that Excess Units (as defined in
the Prospectus) are available therefor, for an aggregate of up to _____________
Excess Units. The undersigned understands that payment of the Subscription Price
of $.45 for each Unit subscribed for pursuant to the Basic Subscription
Privilege and the Oversubscription Privilege must be received by the
Subscription Agent at or before the Expiration Time, and represents that such
payment, in the aggregate amount of $ , either (check appropriate box(es)):
|_| is being delivered to the Subscription Agent; or |_| has been
delivered separately to the Subscription Agent; and is being or was
delivered in the manner set forth below (check appropriate box and
complete information relating thereto):
|_| Wire transfer of funds directed to _______ Bank, ABA No. ________,
Account No. ________.
Name of transferor institution __________________________________
Date of transfer ________________________________________________
Confirmation number (if available) ______________________________
|_| Uncertified check payable to North American Transfer Company
(Payment by uncertified check will not be deemed to have been
received by the Subscription Agent until such check has cleared.
Rights Holders paying by such means are urged to make payment
sufficiently in advance of the Expiration Time to ensure that such
payment clears by such date.)
Name of maker ___________________________________________________
Date of check ___________________________________________________
Bank on which check is drawn ____________________________________
|_| Certified check payable to North American Transfer Company
Name of maker ___________________________________________________
Date of check ___________________________________________________
Bank on which check is drawn ____________________________________
|_| Cashier's check payable to North American Transfer Company
Name of maker ___________________________________________________
Date of draft ___________________________________________________
|_| Money order payable to North American Transfer Company
Issuer of money order ___________________________________________
Date of money order _____________________________________________
Signature(s) _________________________ Address ______________________________
______________________________________ ______________________________________
Name(s)_______________________________ ______________________________________
Please Type or Print (Include Zip Code)
______________________________________ ______________________________________
______________________________________ Area Code and Tel. No.(s)_____________
(If signature is by a trustee(s), executor(s), administrator(s),
guardian(s), attorney(s)-in-fact, agent(s), officer(s), of a
corporation or another acting in a fiduciary or
representative capacity, such capacity must be clearly
indicated above.)
Subscription Rights Certificate
No(s). (if available)________________________
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GUARANTEE OF DELIVERY
(Not to be used for Subscription Rights Certificate Signature Guarantee)
The undersigned, a member firm or a registered national securities
exchange or number of the National Association of Securities Dealers, Inc. or a
commercial bank or trust company having an office or correspondent in the United
States, guarantees that the undersigned will deliver to the Subscription Agent
the Subscription Rights Certificate(s) representing the Rights being exercised
hereby, with any required signature guarantees and any other required documents,
all within five trading days after the date hereof.
___________________________________ Dated: _____________________________________
(Name of Firm)
___________________________________ Address: ___________________________________
(Authorized Signature)
___________________________________ ____________________________________________
(Name) (Include Zip Code)
__________________________________ _____________________________________________
(Title) (Area Code and Telephone Number)
The institution which completes this form must communicate the guarantee
to the Subscription Agent and must deliver the Subscription Rights
Certificate(s) to the Subscription Agent within the time period shown herein.
Failure to do so could result in a financial loss to such institution.
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