Exhibit 1.1
GIGA INFORMATION GROUP, INC.
3,000,000 Shares1
Common Stock
UNDERWRITING AGREEMENT
_______ ___, 1998
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
PRUDENTIAL SECURITIES INCORPORATED as Representatives
of the Several Underwriters
c/o Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
Potomac Tower
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Giga Information Group, Inc., a Delaware corporation (the
"Company"), hereby confirms its agreement with the several underwriters named
in Schedule I hereto (the "Underwriters"), for whom you have been duly
authorized to act as representatives (in such capacity, the
"Representatives"), as set forth below. If you are the only Underwriters, all
references herein to the Representatives shall be deemed to be to the
Underwriters.
1. Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the several Underwriters
an aggregate of __________ shares (the "Firm Securities") of the Company's
common stock, par value $.01 per share (the "Common Stock"). The Company also
proposes to grant to the several Underwriters an option to purchase up to
_________ additional shares of Common Stock (the "Option Securities" and
collectively with the Firm Securities, the "Securities") if requested by the
Representatives as provided in Section 3 of this Agreement. The Common Stock
is more fully described in the Registration Statement and the Prospectus
hereinafter mentioned.
2. Representations, Warranties and Agreements of the Company.
The Company hereby represents and warrants to, and agrees
with, each of the several Underwriters that:
(a) A registration statement on Form S-1 (File No. 333-52899)
with respect to the Securities, including a prospectus subject to completion,
has been prepared by the Company in conformity with the requirements of the
Securities Act of 1933, as amended (the "Act"), and the applicable rules and
regulations thereunder) and has been filed with the Securities and Exchange
Commission (the "Commission"), and one or more amendments to such registration
statement have been so filed, if applicable. Copies of such registration
statement and of each amendment thereto, if any, including the related
preliminary prospectus (meeting the requirements of
--------
1 Plus an option to purchase from the Company up to 450,000 additional
shares to cover over-allotments, if any.
Rule 430A under the Act) heretofore filed by the Company with the Commission
have been delivered to you. After the execution of this Agreement, the Company
will file with the Commission either (i) if such registration statement, as it
may have been amended, has been declared by the Commission to be effective
under the Act, either (A) if the Company relies on Rule 434 under the Act, a
Term Sheet (as hereinafter defined) relating to the Securities, that shall
identify the Preliminary Prospectus (as hereinafter defined) that it
supplements containing such information as is required or permitted by Rules
434, 430A and 424(b) under the Act, or (B) if the Company does not rely on
Rule 434 under the Act, a prospectus in the form most recently included in an
amendment to such registration statement (or, if no such amendment shall have
been filed, in such registration statement), with such changes or insertions
as are required by Rule 430A under the Act or permitted by Rule 424(b) under
the Act, and in the case of either clause (i)(A) or (i)(B) of this sentence,
as have been provided to and approved by the Representatives prior to the
execution of this Agreement, or (ii) if such registration statement, as it may
have been amended, has not been declared by the Commission to be effective
under the Act, an amendment to such registration statement, including a form
of prospectus, a copy of which amendment has been furnished to and approved by
the Representatives prior to the execution of this Agreement. The Company may
also file a related abbreviated registration statement with the Commission
pursuant to Rule 462(b) under the Act for the purpose of registering certain
additional Securities, which registration statement shall be effective upon
filing with the Commission. If the Company has elected to rely on Rule 462(b)
under the Act, the Company (i) has filed a Rule 462(b) Registration Statement
in compliance with the Act and the rules and regulations of the Commission
promulgated thereunder, which Rule 462(b) Registration Statement is effective
upon filing pursuant to Rule 462(b) under the Act, and has received
confirmation of its receipt and (ii) has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111 promulgated
under the Act or the Commission has received payment of such filing fee. As
used in this Agreement, the term "Original Registration Statement" means the
registration statement initially filed relating to the Securities, as amended
at the time when it was or is declared effective, including all financial
statement schedules and exhibits thereto and including any information omitted
therefrom pursuant to Rule 430A under the Act and included in the Prospectus
(as hereinafter defined); the term "Rule 462(b) Registration Statement" means
any abbreviated registration statement filed with the Commission pursuant to
Rule 462(b) under the Act (including the Registration Statement and any
Preliminary Prospectus or Prospectus incorporated therein at the time such
Registration Statement becomes effective); the term "Registration Statement"
includes both the Original Registration Statement and any Rule 462(b)
Registration Statement; the term "Preliminary Prospectus" means each
prospectus subject to completion filed with such registration statement or any
amendment thereto (including the prospectus subject to completion, if any,
included in the Registration Statement or any amendment thereto at the time it
was or is declared effective); the term "Prospectus" means (A) if the Company
relies on Rule 434 under the Act, the Term Sheet relating to the Securities
that is first filed pursuant to Rule 424(b)(7) under the Act, together with
the Preliminary Prospectus identified therein that such Term Sheet
supplements, (B) if the Company does not rely on Rule 434 under the Act, the
prospectus first filed with the Commission pursuant to Rule 424(b) under the
Act, or (C) if the Company does not rely on Rule 434 under the Act and if no
prospectus is required to be filed pursuant to Rule 424(b) under the Act, the
prospectus included in the Registration Statement; and the term "Term Sheet"
means any term sheet that satisfies the requirements of Rule 434 under the
Act. Any reference herein to the "date" of a Prospectus that includes a Term
Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus or instituted proceedings for
such purpose. When any Preliminary Prospectus was filed with the Commission,
it (A) contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements of, the Act
and the rules and regulations of the Commission promulgated thereunder, and
(B) did not include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading. When the
Registration Statement or any amendment thereto was or is declared effective,
it (A) contained all statements required to be stated therein in accordance
with, and complied in all material respects with the requirements of, the Act
and the rules and regulations of the Commission promulgated thereunder, and
(B) did not contain any untrue statement of a material fact or omit to state
any material fact required to be stated therein or necessary to make the
statements therein not misleading. When the Prospectus or any Term Sheet that
is a part thereof or any amendment or supplement to the Prospectus is filed
with the Commission pursuant to Rule 424(b) (or, if the Prospectus or any part
thereof or such amendment or supplement is not required to be so
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filed, when the Registration Statement or the amendment thereto containing
such amendment or supplement to the Prospectus was or is declared effective)
and on the Firm Closing Date and any Option Closing Date (both as hereinafter
defined), the Prospectus or any Term Sheet, if applicable, as amended or
supplemented at any such time, (A) contained all statements required to be
stated therein in accordance with, and complied in all material respects with
the requirements of, the Act and the rules and regulations of the Commission
promulgated thereunder and (B) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading. The foregoing provisions of this paragraph (b) do
not apply to statements contained in, or omissions from, any Preliminary
Prospectus, the Registration Statement or any amendment thereto or the
Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by or on behalf
of the Underwriters specifically for use therein.
(c) Each of the Company and its subsidiaries has been duly
incorporated and is validly existing and in good standing under the laws of
the jurisdiction of its incorporation and is duly qualified to transact
business as a foreign corporation and is in good standing under the laws of
all other jurisdictions where the ownership or leasing of its properties or
the conduct of its businesses requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on the
business, properties, business prospects, financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
(d) Each of the Company and its subsidiaries has full power
(corporate and other) and authority to own, lease and operate its properties
and conduct its businesses as described in the Registration Statement and
Prospectus.
(e) All issued and outstanding shares of capital stock of each
of the Company's subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and have not been issued in violation of or
subject to any preemptive right, co-sale right, registration right, right of
first refusal or other similar right and are owned by the Company free and
clear of any pledge, security interests, liens, encumbrances, claims or
equitable interests. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
subsidiaries listed on Schedule A hereto.
(f) The authorized and outstanding capital stock of the
Company is as set forth in the Prospectus under the caption "Capitalization"
and conforms to the description thereof and the statements relating thereto
contained in the Registration Statement and the Prospectus (and such
statements correctly state the substance of the instruments defining the
capitalization of the Company to the extent required by the Act and the rules
and regulations promulgated thereunder). All of the issued and outstanding
shares of capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable, have been issued in compliance
with all federal and state securities laws, and have not been issued in
violation of any preemptive rights or other rights to subscribe for or
purchase securities. The Securities have been duly authorized for issuance and
sale to the Underwriters pursuant to this Agreement, and at the Firm Closing
Date or the related Option Closing Date (as the case may be), when issued and
delivered by the Company against payment therefor in accordance herewith, will
be duly and validly issued, fully paid and nonassessable, and will be sold
free and clear of any pledge, lien, security interest, encumbrance, claim or
equitable interest; and no preemptive right, co-sale right, registration
right, right of first refusal or other similar right of stockholders exists
with respect to any of the Firm Securities or Option Securities to be
purchased from the Company hereunder or, except with respect to the co-sale
rights set forth in the Prospectus, any of the Common Stock issued and
outstanding on the date hereof other than those that have been expressly
waived prior to the date hereof and those that will automatically expire upon
and will not apply to the consummation of the transactions contemplated on the
Closing Date. No further approval or authorization of any stockholder, the
Board of Directors of the Company or others is required for the issuance and
sale or transfer of the Securities except as may be required under the Act or
state securities or Blue Sky laws.
(g) Except as disclosed in the Prospectus, there are no
outstanding (i) securities or obligations of the Company or its subsidiaries
convertible into or exchangeable for any capital stock or ownership interests
of the Company or its subsidiaries, (ii) warrants, rights or options to
subscribe for or purchase from the Company or its subsidiaries any such
capital stock or ownership interest or any such convertible or exchangeable
securities or
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obligations, or (iii) obligations of the Company or its subsidiaries to issue
any shares of capital stock or any ownership interests, any such convertible
or exchangeable securities or obligations, or any such warrants, rights or
options. The description of the Company's stock option plans, and the options
or other rights granted and exercised thereunder, set forth in the Prospectus
accurately and fairly presents the information required to be shown with
respect to such plans, arrangements, options and rights.
(h) The audited consolidated financial statements of the
Company and its subsidiaries, together with the related schedules and notes,
and the unaudited consolidated financial information, included in the
Registration Statement and the Prospectus present fairly the financial
position, results of operations and changes in financial condition of the
Company and its subsidiaries as of the dates and periods therein specified.
Such audited consolidated financial statements of the Company, together with
the related schedules and notes, and the unaudited consolidated financial
information have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods involved
(except as may be otherwise noted therein). The selected and summary financial
and statistical data included in the Registration Statement present fairly the
information included therein and have been compiled on a basis consistent with
the audited consolidated financial statements and unaudited consolidated
financial information presented therein. No other financial statements or
schedules are required to be included in the Registration Statement.
(i) PricewaterhouseCoopers LLP are independent accountants
within the meaning of the Act and the applicable rules and regulations
thereunder.
(j) The Company has full legal right, power (corporate and
other) and authority to enter into this Agreement and to perform the
transactions contemplated hereby. This Agreement has been duly authorized,
executed and delivered by the Company and is a valid and binding agreement of
the Company, enforceable against it in accordance with its terms, except as
rights to indemnification and contribution hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or other similar
laws relating to or affecting creditors' rights generally, or by general
equitable principles.
(k) No legal or governmental action, suit, claim or other
proceeding is pending or, to the best of the Company's knowledge, threatened,
to which the Company, any of its subsidiaries, or any of their respective
officers or directors is a party or to which the property, assets or rights of
the Company or any of its subsidiaries is subject that (i) might have a
material adverse effect on the business, properties, business prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, or (ii) might prevent consummation of the
transactions contemplated hereby, or (iii) is required to be described in the
Registration Statement or the Prospectus and is not so described; and no
agreement, contract, lease or other document of the Company or any of its
subsidiaries is required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement that is
not described therein or filed as required and any such description of such
agreements, contracts, leases or other documents of the Company or any of its
subsidiaries conforms in all material respects to the terms of such
agreements, contracts, leases or other documents.
(l) Neither the Company nor any of its subsidiaries is (i) in
violation of its respective charter or bylaws, or (ii) in default in the
performance or observance of any obligation, agreement, covenant or condition
contained in any bond, debenture, note, security agreement or other evidence
of indebtedness, which default would have a material adverse effect on the
business, properties, business prospects, financial condition or results of
operations of the Company or any of its subsidiaries, taken as a whole, or
(iii) in default in the performance or observance of any lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or other
agreement or instrument to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of its
properties are bound, which default would have a material adverse effect on
the business, properties, business prospects, financial condition or results
of operations of the Company or any of its subsidiaries, taken as a whole, or
(iv) in violation of any law, order, rule, regulation, writ, injunction,
judgment or decree of any court, government or governmental agency or body,
domestic or foreign, having jurisdiction over the Company or any of its
subsidiaries or over their respective properties.
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(m) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance and
performance by the Company or any of its subsidiaries with the other
provisions of this Agreement and the consummation of the other transactions
herein contemplated do not and will not (i) require the consent, approval,
authorization, registration or qualification of or with any governmental
authority, domestic or foreign, except such as have been obtained, or such as
may be required under the Act, the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or under state securities or blue sky laws, all of which
requirements have been satisfied, or (ii) result in a breach or violation of
any of the terms and provisions of, or constitute a default under the charter
or bylaws of the Company or any of its subsidiaries, or (iii) result in a
breach or violation of any of the terms and provisions of, or constitute a
default under any obligation, agreement, covenant or condition contained in
any bond, debenture, note, security agreement or other evidence of
indebtedness which default would have a material adverse effect on the
business, properties, business prospects, financial condition or results of
operations of the Company or any of its subsidiaries, taken as a whole, or
(iv) result in a breach or violation of any of the terms and provisions of, or
constitute a default under any lease, contract, indenture, mortgage, deed of
trust, loan agreement, joint venture or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the Company or
any of its subsidiaries or any of its properties are bound, which default
would have a material adverse effect on the business, properties, business
prospects, financial condition or results of operations of the Company or any
of its subsidiaries, taken as a whole, or (v) result in a breach or violation
of any of the terms and provisions of, or constitute a default under any law,
order, rule, regulation, writ, injunction, judgment or decree of any court,
government or governmental agency or body to which the Company or any of its
subsidiaries are subject.
(n) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except as
specifically set forth therein, there has not been (i) any material adverse
change in the business, properties, business prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole,
(ii) any transaction that is material to the Company and its subsidiaries,
taken as a whole, except transactions entered into in the ordinary course of
business, (iii) any obligation, direct or contingent, that is material to the
Company and its subsidiaries, taken as a whole, incurred by the Company or any
of its subsidiaries, except obligations incurred in the ordinary course of
business, (iv) any change in the capital stock or outstanding indebtedness of
the Company that is material to the Company or any of its subsidiaries, (v)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company or any of its subsidiaries, or (vi) any loss or damage
(whether or not insured) to the property of the Company which has been
sustained or will have been sustained which has a material adverse effect on
the business, properties, business prospects, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole.
(o) The Company has not taken and will not take, directly or
indirectly, (i) any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities, or (ii) since the filing of
the Registration Statement (A) other than amounts to be paid to the
Underwriters pursuant to the terms hereof, sold, bid for, purchased, or paid
anyone any compensation for soliciting purchases of, the Securities or (B)
paid or agreed to pay to any person any compensation for soliciting another to
purchase any other securities of the Company.
(p) Neither the Company nor any of its subsidiaries have at
any time since the Company's inception (i) made any unlawful contribution to
any candidate for foreign office or failed to disclose fully any contribution
in violation of law, (ii) made any payment to any federal or state
governmental officer or official, or other person charged with similar public
or quasi-public duties, other than payments required or permitted by the laws
of the United States or any jurisdiction thereof, or (iii) made any payment of
funds of the Company or received or retained any funds in violation of any
law, rule or regulation or of a character required to be disclosed in the
Prospectus.
(q) (i) The Company and its subsidiaries possess all
certificates, authorizations, licenses, consents, orders, franchises and
permits issued by the appropriate federal, state or foreign regulatory
authorities necessary to own, lease and operate their respective properties
and to conduct their respective businesses described in the Prospectus, all of
which are valid and in full force and effect, except where the failure would
not have a
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material adverse effect on the business, properties, business prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole, and (ii) neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the revocation
or modification of any such certificate, authorization, license, consent,
order, franchise or permit, except as described in the Prospectus. Except as
described in the Prospectus, none of the Company's or its subsidiaries'
certificates, authorizations, licenses, consents, orders, franchises or
permits contain any restrictions that would result in any material adverse
effect on the business, properties, business prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a whole.
(r) The Company is familiar with the Investment Company Act of
1940, as amended (the "Investment Company Act"), and the rules and regulations
thereunder, and has in the past conducted its affairs, and will in the future
conduct its affairs, in such a manner to ensure that the Company was not and
will not become an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act and such
rules and regulations.
(s) The Company and its subsidiaries have timely filed all
foreign, federal, state, local and franchise tax returns that are required to
be filed and have paid all taxes and assessments required to be paid by them
and there is no tax deficiency that has been or, to the best of the Company's
knowledge, might be asserted against the Company or any of its subsidiaries
that might have a material adverse effect on the business, properties,
business prospects, financial condition or results of operations of the
Company or any of its subsidiaries, taken as a whole; and all material tax
liabilities are adequately provided for on the books of the Company and its
subsidiaries.
(t) Except for the shares of its subsidiaries owned by the
Company, neither the Company nor any of its subsidiaries owns any shares of
stock or any other equity securities of any corporation and has no equity
interest in any firm, partnership, association or other entity, except as
disclosed on Schedule B.
(u) The Company and its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that:
(i) transactions are executed in accordance with management's general or
specific authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(v) Except as described in the Registration Statement and the
Prospectus, (i) the agreements to which the Company or any of its subsidiaries
is a party described in the Registration Statement and Prospectus are valid
agreements, enforceable by the Company and its subsidiaries (as applicable),
except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles and
the other contracting party or parties thereto are not in breach or default
under any of such agreements, and (ii) no default exists, and no event has
occurred which, with notice or lapse of time or both, would constitute a
default, in the due performance and observance of any term, covenant or
condition of any indenture, mortgage, deed of trust, lease, contract, loan
agreement, joint venture or other agreement or instrument to which the Company
or any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties is bound or may be
affected, in any respect which would result in any material adverse effect on
the business, properties, business prospects, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole.
(w) The Company has not distributed and will not distribute,
prior to the later of (i) the Firm Closing Date, or any date on which the
Option Securities are to be purchased, as the case may be, and (ii) the
completion of the distribution of the Securities, any offering material in
connection with the offering and sale of the Securities other than any
Preliminary Prospectus, the Prospectus, the Registration Statement or Term
Sheet or any amendment or supplement thereto, or other materials, if any,
permitted by the Act.
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(x) Except as set forth in the Registration Statement and
Prospectus, (i) each of the Company and its subsidiaries has good and
marketable title to all properties and assets described in the Registration
Statement and Prospectus as owned by it, free and clear of any pledge, lien,
security interest, encumbrance, claim or equitable interest, (ii) each of the
Company and its subsidiaries has valid and enforceable leases for all
properties described in the Registration Statement and Prospectus as leased by
it, except as the enforcement thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting creditors' rights generally or by general equitable principles.
Except as set forth in the Registration Statement and Prospectus, the Company
and its subsidiaries owns or leases all such properties as are necessary to
their operations as now conducted or as proposed to be conducted.
(y) No labor dispute or disturbance with the employees of the
Company or its subsidiaries exists or, to the Company's knowledge, is
threatened or imminent except as described in the Prospectus; and the Company
has no actual knowledge of any existing or imminent labor disturbance by the
employees of any of its principal suppliers or distributors that might be
expected to result in any material adverse change in the business, properties,
business prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole. No collective bargaining
agreement exists with any of the Company's or its subsidiaries' employees and
no such agreement is imminent.
(z) Except as described in the Prospectus, (i) each of the
Company and its subsidiaries owns or possesses adequate rights to use all
patents, patent rights, licenses, inventions, trade secrets, copyrights,
know-how (including unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade names
(the "IP Rights") which are necessary to conduct their business as described
in the Registration Statement and Prospectus and has no knowledge of any
infringement or misappropriation of the IP Rights of the Company or its
subsidiaries by any third party; (ii) the loss or expiration of any of the IP
Rights, or an unfavorable decision, ruling or finding granting superior rights
to a third party would not have a material adverse effect on the business,
properties, business prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole; and (iii) neither the
Company nor its subsidiaries has received any notice of infringement of or
conflict with rights of any third party with respect to any of the foregoing
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would result in a material adverse change in the business,
properties, business prospects, financial condition or results of operations
of the Company and its subsidiaries, taken as a whole.
(aa) The Company and its subsidiaries maintain insurance with
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
the Company and its subsidiaries are engaged, including, but not limited to,
insurance covering real and personal property owned or leased by the Company
against theft, damage, destruction, errors and omissions, business
interruption, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect; neither the
Company nor any of its subsidiaries has been refused any insurance coverage
sought or applied for; and neither the Company nor any of its subsidiaries has
any reason to believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its business at a cost that
would result in any material adverse change in the business, properties,
business prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, except as described in the
Prospectus.
(ab) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
(ac) The Securities to be issued and sold by the Company have
been approved for quotation on the Nasdaq National Market, subject to official
notice of issuance.
(ad) Except as set forth in the Registration Statement and
Prospectus, (i) the Company and its subsidiaries are in compliance with all
rules, laws and regulations relating to the use, treatment, storage and
disposal of toxic substances and protection of health or the environment
("Environmental Laws") which are applicable to
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their respective businesses, (ii) the Company and its subsidiaries have
received no notice from any governmental authority or third party of an
asserted claim under Environmental Laws, which claim is required to be
disclosed in the Registration Statement and the Prospectus, (iii) the Company
and its subsidiaries will not be required to make future material capital
expenditures to comply with Environmental Laws and (iv) no property which is
owned, leased or occupied by the Company or any of its subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive Response,
Compensation, and Liability Act of 1980, as amended (42 U.S.C. ss. 9601, et
seq.), or otherwise designated as a contaminated site under applicable state
or local law.
(ae) The Company has complied with all provisions of Section
517.075, Florida Statutes, relating to doing business with the Government of
Cuba or with any person or affiliate located in Cuba.
(af) There are no outstanding loans, advances (except normal
advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company or any of the members of the families of
any of them, except as disclosed in the Registration Statement and the
Prospectus.
(ag) Each officer, director, and director nominee and certain
beneficial owners of Common Stock of the Company have entered into agreements
(collectively, the "Lock-up Agreements") to the effect that such person will
not, during the period ending 180 days after the consummation of the sale of
the Firm Securities, directly or indirectly, without the prior written consent
of Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. (i) offer, pledge, sell, offer to
sell, contract to sell, grant any option to purchase or otherwise sell,
dispose of, make any short sale of, loan or grant any rights with respect to
(or announce any offer, pledge, sale, offer of sale, contract of sale, grant
of an option to purchase or other sale, disposition of, short sale of, loan or
grant of any rights with respect to) any shares of Common Stock, any options
or warrants to purchase any shares of Common Stock or any securities
convertible into, or exercisable or exchangeable for, shares of Common Stock
or (ii) enter into any swap or any other agreement or any transactions that
transfers, in whole or part, directly or indirectly, the economic consequence
of ownership of the Common Stock, whether any such swap or transaction
described in clause (i) or (ii) above is to be settled by delivery of Common
Stock or such other securities, in cash or otherwise; except that certain
transfers and certain repurchases may be made. Furthermore, each such person
has also agreed and consented to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of the Securities held by
such person except in compliance with this restriction. The Company has
provided to counsel for the Underwriters a complete and accurate list of all
securityholders of the Company and the number and type of securities held by
each securityholder. The Company has provided to counsel for the Underwriters
true, accurate and complete copies of all of the Lock-up Agreements. The
Company hereby represents and warrants that it will not release any of its
officers, directors, director nominees or other stockholders from any such
Lock-up Agreements currently existing or hereafter effected without the prior
written consent of Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
(ah) The Preliminary Prospectus was, and the Prospectus
delivered to the Underwriters for use in connection with this offering will
be, identical to the versions of the Preliminary Prospectus and Prospectus
created to be transmitted to the Commission for filing via the Electronic Data
Gathering Analysis and Retrieval System ("▇▇▇▇▇"), except to the extent
permitted or required by Regulation S-T.
(ai) The Company has not incurred any liability for any
finder's fees or similar payments in connection with the transactions herein
contemplated, except as described in the Prospectus.
3. Purchase, Sale and Delivery of the Securities.
(a) On the basis of the representations, warranties,
agreements and covenants herein contained and subject to the terms and
conditions herein set forth, the Company agrees to sell to each of the
Underwriters, and each of the Underwriters, severally and not jointly, agrees
to purchase from the Company, at a purchase price of $_____ per share, the
number of Firm Securities set forth opposite the name of such Underwriter in
Schedule I hereto.
8
One or more certificates in definitive form for the Firm
Securities that the several Underwriters have agreed to purchase hereunder,
and in such denomination or denominations and registered in such name or names
as the Representatives request upon notice to the Company at least 48 hours
prior to the Firm Closing Date, shall be delivered by or on behalf of the
Company to the Representatives for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters of the
aggregate purchase price therefor by wire transfer in same day funds to the
account of the Company. Such delivery of and payment for the Firm Securities
shall be made at the offices of Weil, Gotshal & ▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ at 10:00 a.m., New York City time on _____ __, 1998,
or at such other place, time or date as the Representatives and the Company
may agree upon or as the Representatives may determine pursuant to Section 9
hereof, such time and date of delivery against payment being herein referred
to as the "Firm Closing Date;" provided, however, that if the Company has not
made available to the Representatives copies of the Prospectus within the time
provided in Section 5(e) hereof, the Representatives may, in their sole
discretion, postpone the Firm Closing Date until no later than two (2) full
business days following delivery of copies of the Prospectus to the
Representatives. The Company will make such certificate or certificates for
the Firm Securities available for checking and packaging by the
Representatives at the offices in New York, New York of the Company's transfer
agent or registrar at least 24 hours prior to the Firm Closing Date. If the
Representatives so elect, delivery of the Firm Securities may be made by
credit through full fast transfer to the accounts at The Depository Trust
Company designated by the Representatives.
(b) Solely, for the purpose of covering any over-allotments in
connection with the distribution and sale of the Firm Securities as
contemplated by the Prospectus, the Company hereby grants to the several
Underwriters an option to purchase, severally and not jointly, the Option
Securities. The purchase price to be paid for any Option Securities shall be
the same price per share as the price per share for the Firm Securities set
forth above in paragraph (a) of this Section 3. The option granted hereby may
be exercised as to all or any part of the Option Securities from time to time
within thirty days after the date of the Prospectus (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the Nasdaq National Market is open for trading). The
Underwriters shall not be under any obligation to purchase any of the Option
Securities prior to the exercise of such option. The Representatives may from
time to time exercise the option granted hereby by giving notice in writing or
by telephone (confirmed in writing) to the Company setting forth the aggregate
number of Option Securities as to which the several Underwriters are then
exercising the option and the date and time for delivery of and payment for
such Option Securities. Any such date of delivery shall be determined by the
Representatives but shall not be earlier than two (2) business days or later
than five (5) business days after such exercise of the option and, in any
event, shall not be earlier than the Firm Closing Date. The time and date set
forth in such notice, or such other time on such other date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities. Upon exercise of the option as
provided herein, the Company shall become obligated to sell to each of the
several Underwriters, and, subject to the terms and conditions herein set
forth, each of the Underwriters (severally and not jointly) shall become
obligated to purchase from the Company, the same percentage of the total
number of the Option Securities as to which the several Underwriters are then
exercising the option as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representatives in
such manner as they deem advisable to avoid fractional shares. If the option
is exercised as to all or any portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor, shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section
3, except that reference therein to the Firm Securities and the Firm Closing
Date shall be deemed, for purposes of this paragraph 3(b), to refer to such
Option Securities and Option Closing Date, respectively.
(c) It is understood that you, individually and not as the
Representatives, may (but shall not be obligated to) make payment on behalf of
any Underwriter or Underwriters for any of the Securities to be purchased by
such Underwriter or Underwriters. No such payment shall relieve such
Underwriter or Underwriters from any of its or their obligations hereunder.
(d) The Company hereby acknowledges that the wire transfer by
or on behalf of the Underwriters of the purchase price for any Securities does
not constitute closing of a purchase and sale of the Securities. Only
execution and delivery of a receipt for the Securities by the Underwriters
indicates completion of
9
the closing of a purchase of the Securities from the Company. Furthermore, in
the event that the Underwriters wire funds to the Company prior to the
completion of the closing of a purchase of Securities, the Company hereby
acknowledges that until the Underwriters execute and deliver a receipt for the
Securities, by facsimile or otherwise, the Company will not be entitled to the
wired funds and shall return the wired funds to the Underwriters as soon as
practicable (by wire transfer of same-day funds) upon demand. In the event
that the closing of a purchase of Securities is not completed and the wire
funds are not returned by the Company to the Underwriters on the same day the
wired funds were received by the Company, the Company agrees to pay to the
Underwriters in respect of each day the wire funds are not returned by it, in
same-day funds, interest on the amount of such wire funds in an amount
representing the Underwriters' cost of financing as reasonably determined by
the Representatives.
4. Offering by the Underwriters. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus. The Underwriters may from time to time change the public offering
price after the closing of the initial public offering and increase or
decrease the concessions and discounts to dealers as they may determine.
5. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement and any amendment thereof, if not effective at the time
and date that this Agreement is executed and delivered by the parties hereto,
to become effective as promptly as possible. The Company will file the
Prospectus or any Term Sheet and any amendment or supplement thereto with the
Commission in the manner and within the time period required by Rules 424(b)
and 434 under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the rules and
regulations of the Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with the
provisions hereof and of the Prospectus, as then amended or supplemented, and
(ii) will not file with the Commission the Prospectus, Term Sheet or the
amendment referred to in the second sentence of Section 2(a) hereof, any
amendment or supplement to such Prospectus, Term Sheet or any amendment to the
Registration Statement or any Rule 462(b) Registration Statement of which the
Representatives shall not previously have been advised and furnished with a
copy for a reasonable period of time prior to the proposed filing and as to
which filing the Representatives shall not have given their consent. The
Company will prepare and file with the Commission, in accordance with the
rules and regulations of the Commission, promptly upon request by the
Representatives or counsel for the Underwriters, any amendments to the
Registration Statement or amendments or supplements to the Prospectus that may
be reasonably necessary or advisable in connection with the distribution of
the Securities by the several Underwriters, and will use its best efforts to
cause any such amendment to the Registration Statement to be declared
effective by the Commission as promptly as possible. The Company will advise
the Representatives, promptly after receiving notice thereof, of the time when
the Registration Statement or any amendment thereto has been filed or declared
effective or the Prospectus or any amendment or supplement thereto has been
filed and will provide to the Representatives copies of each such filing.
(b) The Company will advise the Representatives, promptly
after receiving notice or obtaining knowledge thereof, of (i) the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose, or (iv) any request made
by the Commission for amending the Original Registration Statement or any Rule
462(b) Registration Statement, for amending or supplementing the Prospectus or
for additional information. The Company will use its reasonable best efforts
to prevent the issuance of any such stop order and, if any such stop order is
issued, to obtain the withdrawal thereof as promptly as possible.
(c) The Company will cooperate with you and your counsel to
qualify or register the Securities for offering and sale under the securities
or blue sky laws of such jurisdictions as the Representatives may designate
and will continue such qualifications in effect for as long as may be
necessary to complete the distribution
10
of the Securities; provided, however, that in connection therewith the Company
shall not be required to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction where it is not now
so qualified or required to file such consent. In each jurisdiction in which
the Securities shall have been qualified as provided above, the Company will
prepare and file such statements and reports in each year as are or may be
required by the laws of such jurisdiction.
(d) If, at any time prior to the later of (i) the final date
when a prospectus relating to the Securities is required to be delivered under
the Act, or (ii) the Option Closing Date, any event occurs as a result of
which the Prospectus, as then amended or supplemented, would include any
untrue statement of a material fact or omit to state a material fact necessary
in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it is
necessary at any time to amend or supplement the Prospectus to comply with the
Act or the rules or regulations of the Commission thereunder, the Company will
promptly notify the Representatives thereof and, subject to Section 5(a)
hereof, will prepare and file with the Commission, at the Company's expense,
an amendment to the Registration Statement or an amendment or supplement to
the Prospectus that corrects such statement or omission or effects such
compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a signed copy of the
Original Registration Statement filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) and any Rule
462(b) Registration Statement, (ii) to each other Underwriter, a conformed
copy of such registration statement and any Rule 462(b) Registration Statement
and each amendment thereto (in each case without exhibits thereto) and (iii)
so long as a prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the Prospectus
or any amendment or supplement thereto as the Representatives may reasonably
request; without limiting the application of clause (iii) of this sentence,
the Company, not later than (A) 6:00 p.m., New York City time, on the date of
determination of the initial public offering price, if such determination
occurred at or prior to 10:00 a.m., New York City time, on such date or (B)
12:00 noon, New York City time, on the business day following the date of
determination of the initial public offering price, if such determination
occurred after 10:00 a.m., New York City time, on such date, will deliver to
the Underwriters, without charge, as many copies of the Prospectus and any
amendment or supplement thereto as the Representatives may reasonably request
for purposes of confirming orders that are expected to settle on the Firm
Closing Date.
(f) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay or give direction to pay the applicable
fees in accordance with Rule 111 promulgated under the Act by the earlier of
(i) 10:00 p.m., New York City time, on the date of this Agreement and (ii) the
time confirmations are sent or given, as specified by Rule 462(b)(2).
(g) The Company will make timely generally available to its
securityholders and to the Representatives a consolidated earnings statement
of the Company and its subsidiaries that satisfies the provisions of Section
11(a) of the Act and Rule 158 thereunder.
(h) During a period of three (3) years after the date hereof,
the Company, within the periods prescribed by applicable law, will furnish to
its stockholders annual reports (including consolidated financial statements
audited by independent certified public accountants) and will furnish to its
stockholders unaudited quarterly reports of operations for each of the first
three quarters of the fiscal year as required of companies with a class of
securities registered under the Exchange Act, and will furnish to you (i)
concurrently with making such reports available to its stockholders,
statements of operations of the Company for each of the first three quarters
in the form made available to the Company's stockholders; (ii) concurrently
with the furnishing thereof to its stockholders, a balance sheet of the
Company as of the end of such fiscal year, together with statements of
operations, of stockholders' equity and of cash flow of the Company for such
fiscal year, accompanied by a copy of the certificate or report thereon of
nationally recognized independent certified public accountants; (iii)
concurrently with the furnishing of such reports to its stockholders, copies
of all reports (financial or other) mailed to stockholders; (iv) as soon as
they are available, copies of all reports and financial statements furnished
to or filed by the Company with the Commission, any securities exchange, the
Nasdaq National Market or the National
11
Association of Securities Dealers, Inc. ("NASD") (except for documents for
which confidential treatment is requested); (v) every material press release
in respect of the Company or its affairs which was generally released to
stockholders or prepared for general release by the Company; and (vi) any
additional publicly available information concerning the Company or its
businesses which you may reasonably request. During such three (3) year
period, the foregoing financial statements shall be accompanied by similar
financial statements for any significant subsidiary that is not consolidated.
(i) The Company will apply the net proceeds from the sale of
the Securities as set forth under "Use of Proceeds" in the Prospectus.
(j) The Company will not, during the period ending 180 days
after consummation of the sale of the Firm Securities, directly or indirectly,
without the prior written consent of Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
(i) offer, pledge, sell, offer to sell, contract to sell, grant any option to
purchase or otherwise sell, dispose of, make any short sale of, loan, or grant
any rights with respect to (or announce any offer, pledge, sale, offer of
sale, contract of sale, grant of an option to purchase or other sale,
disposition of, short sale of, loan or grant any rights with respect to) any
shares of Common Stock, any options or warrants to purchase any shares of
Common Stock or any securities convertible into, or exercisable or
exchangeable for, shares of Common Stock or (ii) enter into any swap or any
other agreement or any transactions that transfers, in whole or part, directly
or indirectly, the economic consequence of ownership of the Common Stock,
whether any such swap or transaction described in clause (i) or (ii) above is
to be settled by delivery of Common Stock or such other securities, in cash or
otherwise, except pursuant to this Agreement and except for issuances pursuant
to the exercise of warrants or employee stock options outstanding on the date
hereof, or pursuant to the terms of convertible securities of the Company
outstanding on the date hereof or upon the issuance of options or Common Stock
under the Company's presently authorized 1995 Stock Option/Stock Issuance
Plan, 1996 Stock Option Plan and 1997 Director Option Plan (the "Equity
Plans"), or pursuant to an acquisition or a merger.
(k) The Company will not, directly or indirectly, (i) take
any action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale
of the Securities in contravention of Regulation M promulgated under the
Exchange Act, or (ii) (A) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities or (B) pay or agree
to pay to any person any compensation for soliciting another to purchase any
other securities of the Company.
(l) The Company will cause the Securities to be duly
included for quotation on the Nasdaq National Market prior to the Firm Closing
Date. The Company will use its reasonable best efforts to ensure that the
Securities remain included for quotation on the Nasdaq National Market
following the Firm Closing Date.
(m) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for its Common Stock.
(n) The Company is familiar with the Investment Company Act,
and the rules and regulations thereunder, and for at least one year after the
date hereof will conduct its affairs in such a manner to ensure that the
Company will not be an "investment company" or a company "controlled" by an
"investment company" within the meaning of the Investment Company Act and such
rules and regulations. If after one year from the date hereof the Company
cannot, using its best efforts, conduct its affairs in such a manner so as to
ensure that the Company will not be an "investment company" or a company
"controlled" by an "investment company" within the meaning of the Investment
Company Act and such rules and regulations, the Company will take all steps
necessary to register as an "investment company" under such act or otherwise
comply with such act.
(o) The Company will pay on the Firm Closing Date the
outstanding principal amount and any unpaid accrued interest due and payable
to each of Friedman, Billings, ▇▇▇▇▇▇ Group, Inc. and Friedman, Billings,
▇▇▇▇▇▇ Investment Management, Inc. (or their respective affiliates and
assigns) pursuant to the Convertible
12
Promissory Notes dated April 7, 1998 in the principal amount of $2,000,000 and
$8,000,000, respectively (the "Convertible Promissory Notes").
6. Independent Underwriter. (a) The Company hereby confirms its
engagement, without compensation, of the services of Prudential Securities
Incorporated as, and Prudential Securities Incorporated hereby confirms its
agreement with the Company to render services as, a "qualified independent
underwriter" (in such capacity, the "Independent Underwriter") within the
meaning of Rule 2720 of the Conduct Rules ("Rule 2720") of the NASD with
respect to the offering and sale of the Securities.
(b) The Independent Underwriter hereby represents and warrants
to, and agrees with, the Company, Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., and
the other Underwriters that with respect to the offering and sale of
Securities as described in the Prospectus:
(i) the Independent Underwriter is a "qualified
independent underwriter" within the meaning of Rule 2720;
(ii) the Independent Underwriter has participated in the
preparation of the Registration Statement and the Prospectus and has
exercised the usual standards of "due diligence" with respect thereto;
(iii) the Independent Underwriter has undertaken the
legal responsibilities and liabilities of an underwriter under the Act,
including those contained in Section 11 thereof, subject to the
limitations on such liabilities set forth herein (including without
limitation, the nature of Prudential Securities Incorporated's
underwriting commitment as several and not joint). It is specifically
understood, however, that Prudential Securities Incorporated will bear
such legal responsibilities only to the extent, if any, that a court of
competent jurisdiction rules in a judgment which has become final, and
not subject to further appeal, that Prudential Securities Incorporated,
as Independent Underwriter, bears the legal responsibilities and
liabilities of an "underwriter";
(iv) based upon, among other factors, the information set
forth in the Preliminary Prospectus and its reviews of such other
documents and the taking of such other actions as the Independent
Underwriter, in its sole discretion, has deemed necessary or appropriate
for the purposes of delivering its recommendation hereunder, the
Independent Underwriter recommends, as of the date of the execution and
delivery of this Agreement, that the public offering price for the
Securities not exceed the amount of $_____ per share, which price should
in no way be considered or relied upon except as set froth therein and in
the letter referred to in clause (v) below; and
(v) the Independent Underwriter will furnish to the other
Underwriters on the date hereof a letter, dated the date hereof,
substantially to the effect set forth in Schedule C hereto.
(c) The Company, the Independent Underwriter and the other
Underwriters agree to comply in all material respects with all of the
requirements of Rule 2720 applicable to them in connection with the offering
and sale of the Securities. The Company agrees to cooperate with Underwriters
to enable the Underwriters to comply with Rule 2720 and the Independent
Underwriter to perform the services contemplated by this Agreement.
(d) The Independent Underwriter hereby consents to the
references to it as set forth under the caption "Underwriting" in the
Prospectus.
7. Expenses. The Company will pay and bear all costs and expenses
incident to the performance of its obligations under this Agreement, whether
or not the transactions contemplated herein are consummated or this Agreement
is terminated pursuant to Section 12 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the Registration Statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus and the
Prospectus and any amendment or supplement thereto, this
13
Agreement, any blue sky memoranda and the quantity of prospectuses or offering
circulars as determined by the Representatives, (ii) all arrangements relating
to the delivery to the Underwriters of copies of the foregoing documents,
(iii) the fees and disbursements of its counsel, the accountants and any other
experts or advisors retained by the Company, (iv) the fees and disbursements
of the Underwriters' counsel, which amount shall not exceed $100,000 in the
aggregate, provided that such fees and disbursements shall not exceed $50,000
if the transactions contemplated herein are not consummated because the
Underwriters cannot complete such transactions, (v) the preparation, issuance
and delivery to the Underwriters of any certificates evidencing the
Securities, including transfer agent's and registrar's fees, (vi) NASD filing
fees and the cost of qualifying the Securities under state securities and blue
sky laws, including filing fees and reasonable fees and disbursements of
counsel for the Underwriters relating thereto, (vii) the filing fees of the
Commission relating to the Securities, (viii) the filing and other fees of
securing quotation of the Securities on the Nasdaq National Market, (ix) any
meetings with prospective investors in the Securities (other than as shall
have been specifically approved by the Representatives to be paid for by the
Underwriters), (x) advertising relating to the offering of the Securities
(other than as shall have been specifically approved by the Representatives to
be paid for by the Underwriters), (xi) certain costs and expenses incurred by
the Underwriters and the Company in connection with the road show, and (xii)
all other expenses directly incurred by the Company in connection with the
performance of its obligations hereunder. If the sale of the Securities
provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 8 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 12 hereof
or because of any failure, refusal or inability on the part of the Company to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon
demand for all reasonable out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection with the
proposed purchase and sale of the Securities. The Company shall not in any
event be liable to any of the Underwriters for the loss of anticipated profits
from the transactions covered by this Agreement.
8. Conditions of the Underwriters' Obligations. The obligations of
the several Underwriters to purchase and pay for the Firm Securities shall be
subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company contained herein as of the date
hereof and as of the Firm Closing Date, as if made on and as of the Firm
Closing Date, to the accuracy of the statements of the Company's officers made
pursuant to the provisions hereof, to the performance by the Company of its
covenants and agreements hereunder and to the following additional conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared effective
as of the time of execution hereof, the Registration Statement or such
amendment, and if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement, shall have been declared effective not later
than the earlier of: (i) 10:00 a.m., New York City time, on the date on which
the amendment to the Registration Statement originally filed with respect to
the Securities or to the Registration Statement, as the case may be,
containing information regarding the initial public offering price of the
Securities has been filed with the Commission, and (ii) the time confirmations
are sent or given as specified by Rule 462(b) or, with respect to the Original
Registration Statement, such later time and date as shall have been consented
to by the Representatives; if required, the Prospectus or any Term Sheet that
constitutes a part thereof and any amendment or supplement thereto shall have
been filed with the Commission in the manner and within the time period
required by Rules 434 and 424(b) under the Act; no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto shall
have been issued, and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Company, shall be
contemplated by the Commission; and the Company shall have complied to the
reasonable satisfaction of Underwriters' counsel with any request of the
Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise).
(b) Subsequent to the execution and delivery of this Agreement
and prior to the Firm Closing Date, or any later date on which Option
Securities are to be purchased, as the case may be, there shall not have been
any change in the condition (financial or otherwise), earnings, operations,
business or business prospects of the Company from that set forth in the
Registration Statement or Prospectus, which, in your reasonable judgment, is
material and adverse and that makes it, in your reasonable judgment,
impracticable or inadvisable to proceed with the public offering of the
Securities as contemplated by the Prospectus.
14
(c) The Representatives shall have received an opinion, dated
the Firm Closing Date, of Weil, Gotshal & ▇▇▇▇▇▇ LLP, counsel for the Company,
to the effect that:
(i) the Company has been duly incorporated and is validly
existing and in good standing under the laws of its jurisdiction of
incorporation and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of [list
jurisdictions];
(ii) the Company has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its
businesses as described in the Registration Statement and the Prospectus;
(iii) the authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectus under the caption
"Capitalization" and conforms to the description thereof and the
statements relating thereto contained in the Registration Statement and
the Prospectus (and such statements correctly state the substance in all
material respects of the instruments defining the capitalization of the
Company to the extent required by the Act and the rules and regulations
promulgated thereunder). All of the issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued
and are fully paid and nonassessable, and, to such counsel's knowledge,
have been issued in compliance with all federal and state securities
laws, and have not been issued in violation of or subject to any
preemptive rights. The Securities have been duly authorized for issuance
and sale to the Underwriters pursuant to this Agreement, and at the Firm
Closing Date or related Option Closing Date (as the case may be), when
issued and delivered by the Company after payment therefor in accordance
herewith, will be duly and validly issued, fully paid and nonassessable;
and no preemptive right pursuant to law or contained in the Company's
Certificate of Incorporation, nor, to such counsel's knowledge, any
co-sale right, registration right, right of first refusal, or other
similar right of stockholders exists with respect to any of the Common
Stock issued hereunder or the sale thereof other than those that have
been expressly waived prior to the date hereof and those that will
automatically expire upon the consummations of the transactions
contemplated by this Agreement. No further approval or authorization of
any stockholder, the Board of Directors of the Company or others is
required for the issuance of the Company Firm Securities or the Option
Securities except as may be required under the Act or state securities or
Blue Sky laws;
(iv) to such counsel's knowledge, except as set forth in
the Registration Statement and Prospectus, no holders of Common Stock or
other securities of the Company have registration rights with respect to
securities of the Company and, except as set forth in the Registration
Statement and Prospectus, all holders of securities of the Company having
rights known to such counsel to registration of such shares of Common
Stock or other securities, because of the filing of the Registration
Statement by the Company have, with respect to the offering contemplated
thereby, waived such right or such rights have expired by reason of lapse
of time following notification of the Company's intent to file the
Registration Statement;
(v) the statements set forth under the heading
"Description of Capital Stock" in the Prospectus, insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein, provide a fair summary of such
provisions in all material respects; the statements set forth under the
headings "Management -- 1997 Director Option Plan" and "- Stock Plans,"
"Shares Eligible for Future Sale" and "Certain Transactions" in the
Prospectus, insofar as such statements constitute a summary of the legal
matters, documents or proceedings referred to therein, provide a fair
summary of such legal matters, documents and proceedings in all material
respects; the description in the Registration Statement and the
Prospectus of the certificate of incorporation and bylaws of the Company
is accurate and fairly presents the information required to be presented
by the Act and the applicable rules and regulations thereunder in all
material respects and the description in the Registration Statement and
the Prospectus of statutes fairly presents the information required to be
presented by the Act and the applicable rules and regulations thereunder
in all material respects;
15
(vi) except as disclosed in the Prospectus, to such
counsel's knowledge, there are no outstanding (i) securities or
obligations of the Company convertible into or exchangeable for any
capital stock or ownership interests of the Company, (ii) warrants,
rights or options to subscribe for or purchase from the Company any such
capital stock or ownership interest or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the
Company to issue any shares of capital stock or any ownership interests,
any such convertible or exchangeable securities or obligations, or any
such warrants, rights or options. The description of the Company's stock
option plans, and the options or other rights granted and exercised
thereunder, set forth in the Prospectus accurately and fairly presents
the information required to be shown with respect to such plans,
arrangements, options and rights in all material respects.
(vii) the Company has all requisite corporate power and
authority to execute and deliver this Agreement and to perform its
obligations hereunder; the execution and delivery of this Agreement have
been duly authorized by all necessary corporate action on the part of the
Company and this Agreement has been duly executed and delivered by the
Company and, assuming due authorization, execution and delivery by you,
is a valid and binding agreement of the Company, enforceable against the
Company in accordance with its terms, except as rights to indemnification
and contribution hereunder may be limited by applicable law, and except
as the enforcement hereof may be limited by applicable bankruptcy,
insolvency, fraudulent convenyance, reorganization, moratorium or other
similar laws relating to or affecting creditors' rights and remedies
generally, or by general principles of equity including principles of
commercial reasonableness, good faith and fair dealing (regardless of
whether enforement is sought in a proceeding at law or in equity);
(viii) to the best of such counsel's knowledge, there are
no legal or governmental actions, suits, claims or other proceedings
pending or, threatened against or affecting the Company, Giga Information
Group Investment Corporation, Giga Information Group Ltd., Giga
Information Group GmbH, BIS Italy, SRL and Giga Information Group
S.A.R.L., each a "Subsidiary" of the Company and, collectively, the
"Subsidiaries" or any of their properties, which are required,
individually or in the aggregate, to be disclosed in the Registration
Statement or the Prospectus, other than those disclosed therein;
(ix) to the best of such counsel's knowledge, there are
no contracts, indentures, mortgages, agreements, notes, leases or other
instruments required to be described or referred to in the Registration
Statement or the Prospectus or to be filed as exhibits to the
Registration Statement other than those described or referred to therein
or filed as exhibits thereto, and any description of or reference to any
such instrument in the Registration Statement or the Prospectus conforms
in all material respects to the terms of such instrument;
(x) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, the
compliance and performance by the Company with the other provisions of
this Agreement and the consummation of the other transactions herein
contemplated do not and will not (A) require the consent, approval,
authorization, registration or qualification of or with any New York,
Delaware corporate or federal governmental authority, except such as have
been obtained, or such as may be required under the Act or the Exchange
Act, all of which requirements have been satisfied, and except such as
may be required under state securities or Blue Sky laws, as to which such
counsel expresses no opinion, or (B) result in a breach or violation of
any of the terms and provisions of, or constitute a default under the
certificate of incorporation or bylaws of the Company, or (C) result in a
breach or violation of any of the terms and provisions of, or constitute
a default under any material document, agreement, or other instrument to
which the Company or any of its Subsidiaries is a party or by which they
are bound, which breach or default would have a material adverse effect
on the business, properties, business prospects, financial condition or
results of operations of the Company and its Subsidiaries, taken as a
whole, or (D) result in a breach or violation of any of the terms and
provisions of, or cause a default under any New York, Delaware corporate
or federal law or regulation (other than federal and state securities or
Blue Sky laws, as to which such counsel expresses no opinion), or (E)
result in a breach or violation of any of the terms and provisions of, or
constitute a default under any order, rule,
16
writ, injunction, judgment or decree of any court or governmental
authority binding on the Company of which such counsel is aware;
(xi) the Registration Statement is effective under the
Act; any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, pursuant to Rules 424(b) and 434 has been
made in the manner and within the time period required by Rules 424(b)
and 434; and to such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement or any amendment thereto has
been issued, and no proceedings for that purpose have been instituted or
to the best of such counsel's knowledge, threatened by the Commission;
(xii) the Registration Statement originally filed with
respect to the Securities and each amendment thereto, any Rule 462(b)
Registration Statement and the Prospectus (in each case, other than the
financial statements and the notes thereto and the other financial and
statistical information contained therein, as to which such counsel need
express no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules and regulations of the
Commission thereunder;
(xiii) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different," as such term is used in Rule
434, from the prospectus included in the Registration Statement at the
time of its effectiveness or an effective post-effective amendment
thereto (including such information that is permitted to be omitted
pursuant to Rule 430A);
(xiv) the Securities have been approved for quotation on
the Nasdaq National Market, upon issuance as contemplated hereby;
(xv) the Company is not, and the transactions
contemplated by this Agreement will not cause the Company to become, an
investment company subject to registration under the Investment Company
Act of 1940, as amended; and
(xvi) the specimen stock certificate of the Company filed
as an exhibit to the Registration Statement is in due and proper form to
evidence shares of Common Stock, has been duly authorized and approved by
the Board of Directors of the Company and complies with all legal
requirements applicable under the corporate laws of the State of
Delaware.
In addition, such counsel shall state that such counsel has
participated in conferences with directors, officers and other representatives
of the Company, the Representatives, Underwriters' Counsel and the
representatives of the independent certified public accountants of the
Company, at which such conferences the contents of the Registration Statement
and Prospectus and related matters were discussed, and although, except as
enumerated above, such counsel has not independently verified and are not
passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus except to the extent specified in the foregoing opinion, no facts
have come to the attention of such counsel which leads them to believe that
the Registration Statement, on the effective date thereof, contained an untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements contained therein not
misleading, or the Prospectus, on the date thereof or on the date of this
opinion, contained or contains an untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading (it being understood
that such counsel expresses no view with respect to the financial statements
and related notes, the financial statement schedules, and the other financial,
statistical and accounting data included in the Registration Statement or
Prospectus).
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deem(s) proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (c) shall include any amendment or supplement thereto at the
date of such opinion.
17
(d) The Representatives shall have received an opinion, dated
the Firm Closing Date, of Lanklaters & Paines, local counsel for Giga
Information Group Ltd. ("U.K. Subsidiary"), to the effect that:
(i) the U.K. Subsidiary has been duly incorporated and is
validly existing and in good standing under the laws of its jurisdiction
of incorporation; and is duly qualified to transact business as a foreign
corporation and is in good standing under the laws of all other
jurisdictions where the ownership or leasing of its properties or the
conduct of its businesses requires such qualification, except where the
failure to be so qualified would not have a material adverse effect on
the business, properties, business prospects, financial condition or
results of operations of such Subsidiary; and
(ii) the U.K. Subsidiary has the full corporate power and
authority to own, lease and operate its properties and to conduct its
businesses as described in the Registration Statement and the Prospectus.
(iii) the issued and outstanding shares of the U.K.
Subsidiary have been duly authorized and validly issued, are fully paid
and nonassessable, and, to such counsel's knowledge, have not been issued
in violation of or subject to any preemptive right, co-sale right,
registration right, right of first refusal or other similar right; and
are owned by the Company free and clear of any pledge, security
interests, liens, encumbrances, claims or equitable interests.
(iv) Except as disclosed in the Prospectus, to such
counsel's knowledge, there are no outstanding (i) securities or
obligations of the U.K. Subsidiary convertible into or exchangeable for
any capital stock or ownership interests of the U.K. Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from the U.K.
Subsidiary any such capital stock or ownership interest or any such
convertible or exchangeable securities or obligations, or (iii)
obligations of the U.K. Subsidiary to issue any shares of capital stock
or any ownership interests, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options. The
description of the U.K. Subsidiary's stock option plans, and the options
or other rights granted and exercised thereunder, set forth in the
Prospectus accurately and fairly presents the information required to be
shown with respect to such plans, arrangements, options and rights in all
material respects.
(e) The Representatives shall have received from
PricewaterhouseCoopers LLP a letter or letters, addressed to the Underwriters,
dated, respectively, the date hereof and the Firm Closing Date, in form and
substance satisfactory to the Representatives, to the effect that:
(i) they are independent certified public accountants
with respect to the Company and its consolidated subsidiaries within the
meaning of the Act and the applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements, together with the related schedules and notes, examined by
them and included in the Registration Statement and the Prospectus comply
in form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations;
(iii) on the basis of carrying out certain specified
procedures (which do not constitute an examination made in accordance
with generally accepted auditing standards) that would not necessarily
reveal matters of significance with respect to the comments set forth in
this paragraph (iii), a reading of the minute books of the stockholders,
the Board of Directors and any committees thereof of the Company and its
consolidated subsidiaries, and inquiries of certain officials of the
Company and its consolidated subsidiaries who have responsibility for
financial and accounting matters, nothing came to their attention that
caused them to believe that at a specific date not more than five
business days prior to the date of such letter, there were any changes in
the capital stock or long-term debt of the Company and its consolidated
subsidiaries or any decreases in net current assets or stockholders'
equity of the Company and its consolidated subsidiaries, in each case
compared with amounts shown on the March 31, 1998 balance sheet
18
included in the Registration Statement and the Prospectus, or for the
period from April 1, 1998 to such specified date there are any decreases,
as compared to total revenues, net income or pro forma net income per
share, respectively, of the Company and its consolidated subsidiaries,
except in all instances for changes, decreases or increases set forth in
such letter;
(iv) they have performed the procedures set out in
Statement on Auditing Standards No. 71 ("SAS 71") for a review of interim
financial statements for the quarters ended March 31, 1997 and March 31,
1998 (the "Quarterly Financial Statements") and in the course of such
review, nothing came to their attention that leads them to believe that
any material modifications need to be made to any of the Quarterly
Financial Statements in order for them to be in compliance with generally
accepted accounting principles consistently applied across the periods
presented; and
(v) they carried out certain specified procedures, not
constituting an audit, with respect to certain amounts, percentages and
financial information that are derived from the general accounting
records of the Company and its consolidated subsidiaries and are included
in the Registration Statement and the Prospectus, including, without
limitation, the amounts and financial information in "Selected Financial
Data," and have compared such amounts, percentages and financial
information with such records of the Company and its consolidated
subsidiaries and with information derived from such records and have
found them to be in agreement, excluding any questions of legal
interpretation.
In addition, such letter or letters will address other matters agreed upon by
PricewaterhouseCoopers LLP and you.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by
a written explanation of the Company as to the significance thereof, unless
the Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives,
make it impractical or inadvisable to proceed with the purchase and delivery
of the Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
References to the Registration Statement and the Prospectus in
this paragraph (e) with respect to either letter referred to above shall
include any amendment or supplement thereto at the date of such letter.
(f) The Representatives shall have received a certificate,
dated the Firm Closing Date, of the principal executive officer and the
principal financial or accounting officer, respectively, of the Company to the
effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Firm
Closing Date and the Company has performed all covenants and agreements
and satisfied all conditions on its part to be performed or satisfied at
or prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement or any amendment thereto has been issued, and no
proceedings for that purpose have been instituted or threatened or, to
the best of the Company's knowledge, are contemplated by the Commission;
(iii) when the Registration Statement or any amendment
thereto was declared effective, and at all times subsequent thereto up to
the delivery of such certificate, the Registration Statement and the
Prospectus, and any amendments or supplements thereto, contained all
statements required to be stated therein in accordance with, and complied
in all material respects with the requirements of, the Act and the rules
and regulations of the Commission promulgated thereunder, the
Registration Statement, and any amendment or supplement thereto, did not
and does not include any untrue statement of a material fact or omit to
state any material fact necessary to make the statements therein not
misleading, the Prospectus, and any amendment or supplement thereto, did
not and does not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
19
therein, in the light of the circumstances under which they were made,
not misleading, and since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an
amended or supplemented Prospectus which has not been so set forth; and
(iv) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
there has not been (A) any material adverse change in the business,
properties, business prospects, financial condition or results of
operations of the Company and its Subsidiaries, taken as a whole, (B) any
transaction that is material to the Company and its subsidiaries, taken
as a whole, except transactions entered into in the ordinary course of
business, (C) any obligation, direct or contingent, that is material to
the Company and its subsidiaries, taken as a whole, incurred by the
Company or its subsidiaries, except obligations incurred in the ordinary
course of business, (D) any change in the capital stock or outstanding
indebtedness of the Company that is material to the Company and its
subsidiaries, taken as a whole, (E) any dividend or distribution of any
kind declared, paid or made on the capital stock of the Company or its
subsidiaries, or (F) any loss or damage (whether or not insured) to the
property of the Company or its subsidiaries which has been sustained or
will have been sustained which has a material adverse effect on the
business, properties, business prospects, financial condition or results
of operations of the Company and its subsidiaries, taken as a whole.
(g) On or prior to date of this Agreement, the Company shall
have obtained and delivered to you the Lock-up Agreements.
(h) The Representatives and counsel for the Underwriters shall
have received such further certificates, documents or other information as
they may have reasonably requested from the Company.
(i) Prior to the commencement of the offering of the
Securities, the Securities shall have been approved for quotation on the
Nasdaq National Market, subject to official notice of issuance.
(j) The Representatives shall have received an opinion, dated
the Firm Closing Date, of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the
Underwriters, with respect to the issuance and sale of the Firm Securities,
the Registration Statement and Prospectus, and such other related matters as
the Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they may reasonably request for
the purpose of enabling them to pass upon such matters.
(k) On or prior to the Firm Closing Date, the Company shall
have obtained a director and officer insurance policy with a minimum coverage
amount reasonably acceptable to the Representatives and provide evidence
thereof reasonably acceptable to counsel for the Underwriters.
(l) On or prior to the Firm Closing Date, the Company shall
have paid the outstanding principal amounts and any unpaid accrued interest
due and payable under the Convertible Promissory Notes to the holders thereof.
All opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory in all material respects to the Representatives
and counsel for the Underwriters. The Company shall furnish to the
Representatives such conformed copies of such opinions, certificates, letters
and documents in such quantities as the Representatives and counsel for the
Underwriters shall reasonably request.
The respective obligations of the several Underwriters to
purchase and pay for any Option Securities shall be subject, in their
discretion, to each of the foregoing conditions to purchase the Firm
Securities, except that all references to the Firm Securities and the Firm
Closing Date shall be deemed to refer to such Option Securities and the
related Option Closing Date, respectively.
20
9. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Act and
the Exchange Act, or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 or Section 5 of this Agreement;
(ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto and including any Rule 462(b)
Registration Statement, or (B) any application or other document, or any
amendment or supplement thereto, executed by the Company or based upon
written information furnished by or on behalf of the Company filed in any
jurisdiction in order to qualify the Securities under the securities or
blue sky laws thereof or filed with the Commission or any securities
association or securities exchange (each an "Application");
(iii) the omission or alleged omission to state in (a)
the Registration Statement or any amendment thereto, a material fact
required to be stated therein or necessary to make the statements therein
not misleading, or (b) any Preliminary Prospectus or the Prospectus or
any amendment or supplement thereto, or any Application a material fact
required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; or
(iv) any untrue statement or alleged untrue statement of
any material fact or omission or alleged omission of a material fact
contained in any audio or visual materials used by the Company in
connection with the marketing of the Securities, including without
limitation, slides, videos, films, tape recordings,
and will reimburse, as incurred, each Underwriter and each such controlling
person for any legal or other expenses reasonably incurred by such Underwriter
or such controlling person in connection with investigating, defending against
or any other proceeding in connection with any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any untrue statement or alleged untrue
statement or omission or alleged omission made in such Registration Statement
or any amendment thereto, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto or any Application in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein; and
provided, further, the Company will not be liable to any Underwriter or any
person controlling such Underwriter with respect to any such untrue statement
or omission made in any Preliminary Prospectus that is corrected in the
Prospectus (or any amendment or supplement thereto) if the person asserting
any such loss, claim, damage or liability purchased Securities from such
Underwriter but was not sent or given a copy of the Prospectus (as amended or
supplemented) at or prior to the written confirmation of the sale of such
Securities to such person in any case where such delivery of the Prospectus
(as amended or supplemented) is required by the Act, unless such failure to
deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with this Agreement. This indemnity agreement
will be in addition to any liability which the Company may otherwise have. The
Company will not, without the prior written consent of the Underwriter or
Underwriters purchasing, in the aggregate, more than 50% of the Securities,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter
or any person who controls any such Underwriter within the meaning of Section
15 of the Act or Section 20 of the Exchange Act is a party to such claim,
action, suit or proceeding), unless such settlement, compromise or consent
includes an unconditional release of all of the Underwriters and such
controlling persons from all liability arising out of such claim, action, suit
or proceeding.
21
(b) The Company also agrees to indemnify and hold harmless
Prudential Securities Incorporated and each person, if any, who controls
Prudential Securities Incorporated within the meaning of either Section 15 of
the Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages or liabilities incurred as a result of Prudential
Securities Incorporated's participation as a "qualified independent
underwriter" within the meaning of Rule 2720 in connection with the offering
of the Securities, except for any losses, claims, damages or liabilities
resulting from Prudential Securities Incorporated's, or such controlling
person's, willful misconduct or gross negligence.
(c) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities to
which the Company or any such director, officer of the Company or controlling
person of the Company may become subject under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any material fact contained in the Registration Statement or any
amendment thereto, or any Application, (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or any Application or
necessary to make the statements therein not misleading, or (iii) the omission
or the alleged omission to state therein a material fact required to be stated
in any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representative specifically for use therein; and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company or any such director, officer or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or any
action in respect thereof.
(d) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof, but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under this Section 9. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party; provided, however, that if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be one or more legal defenses available to it and/or other
indemnified parties which are different from or additional to those available
to the indemnifying party, the indemnifying party shall not have the right to
direct the defense of such action on behalf of such indemnified party or
parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the next preceding sentence (it being
understood, however, that in connection with such action the indemnifying
party shall not be liable for the expenses of more than one separate counsel
(in addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Representatives in the case of
paragraph (a) of this Section 9, representing the indemnified parties under
such paragraph (a) who are parties to such action or actions or (ii) the
indemnifying party does not promptly retain counsel reasonably satisfactory to
the indemnified party or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party. The indemnifying party will not be liable for the costs
and expenses of any
22
settlement of such action effected by such indemnified party without the
consent of the indemnifying party, provided that such consent shall not be
unreasonably withheld.
(e) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable or
insufficient, for any reason, to hold harmless an indemnified party in respect
of any losses, claims, damages or liabilities (or actions in respect thereof),
each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to
reflect (i) the relative benefits received by the indemnifying party or
parties on the one hand and the indemnified party on the other from the
offering of the Securities or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, not only such relative benefits
but also the relative fault of the indemnifying party or parties on the one
hand and the indemnified party on the other in connection with the statements
or omissions or alleged statements or omissions that resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received by the
Company on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters. The relative fault of
the parties shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Underwriters, the parties' relative intents, knowledge,
access to information and opportunity to correct or prevent such statement or
omission, and any other equitable considerations appropriate in the
circumstances. The Company and the Underwriters agree that it would not be
equitable if the amount of such contribution were determined by pro rata or
per capita allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to above in this paragraph (d).
Notwithstanding any other provision of this paragraph (d), no Underwriter
shall be obligated to make contributions hereunder that in the aggregate
exceed the total public offering price of the Securities purchased by such
Underwriter under this Agreement, less the aggregate amount of any damages
that such Underwriter has otherwise been required to pay in respect of the
same or any substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the
provisions of the Representatives's Master Agreement Among Underwriters. For
the purposes of this paragraph 9(e), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company.
(f) The parties of this Agreement hereby acknowledge that they
are sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions hereof including, without limitation,
the provisions of this Section 9, and are fully informed regarding said
provisions. They further acknowledge that the provisions of this Section 9
fairly allocate the risks in light of the ability of the parties to
investigate the Company and its business in order to assure the adequate
disclosure is made in the Registration Statement and Prospectus as required by
the Act and the Exchange Act.
10. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Securities or Option Securities
hereunder and the aggregate number of such Securities that such defaulting
Underwriter or Underwriters agreed but failed to purchase is ten percent or
less of the aggregate number of Firm Securities or Option Securities to be
purchased by all of the Underwriters at such time hereunder, then the other
Underwriters may make arrangements satisfactory to the Representatives for the
purchase of such Securities by other persons (who may include one or more of
the non-defaulting Underwriters, including the Representatives), but if no
such arrangements are made by the Firm Closing Date or the related Option
Closing Date, as the case may be, the other Underwriters shall be obligated
severally in proportion to their respective commitments hereunder to purchase
the Firm Securities or Option Securities that such defaulting Underwriter or
Underwriters agreed but failed
23
to purchase. If one or more Underwriters so default with respect to an
aggregate number of Securities that is more than ten percent of the aggregate
number of Firm Securities or Option Securities, as the case may be, to be
purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representatives are not made within
twenty-four (24) hours after such default for the purchase by other persons
(who may include one or more of the non-defaulting Underwriters, including the
Representatives) of the Securities with respect to which such default occurs,
this Agreement will terminate without liability on the part of any
non-defaulting Underwriter or the Company other than as provided in Section 11
hereof. In the event of any default by one or more Underwriters as described
in this Section 10, the Representatives shall have the right to postpone the
Firm Closing Date or the Option Closing Date, as the case may be, established
as provided in Section 3 hereof for not more than seven business days in order
that any necessary changes may be made in the arrangements or documents for
the purchase and delivery of the Firm Securities or Option Securities, as the
case may be. As used in this Agreement, the term "Underwriter" includes any
person substituted for an Underwriter under this Section 9. Nothing herein
shall relieve any defaulting Underwriter from liability for its default.
11. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, and the several Underwriters set forth in this Agreement or made by
or on behalf of them, respectively, pursuant to this Agreement shall remain in
full force and effect, regardless of (i) any investigation made by or on
behalf of the Company, any of its officers or directors, any Underwriter or
any controlling person referred to in Section 9 hereof and (ii) delivery of
and payment for the Securities. The respective agreements, covenants,
indemnities and other statements set forth in Sections 7 and 9 hereof shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement.
12. Termination.
(a) This Agreement may be terminated with respect to the Firm
Securities or any Option Securities in the sole discretion of the
Representatives by notice to the Company given prior to the Firm Closing Date
or the related Option Closing Date, respectively, in the event that the
Company shall have failed, refused or been unable to perform all obligations
and satisfy all conditions on its part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Firm Closing Date or, with
respect to the Company, such Option Closing Date, respectively:
(i) the Company or any of its subsidiaries shall have, in
the reasonable judgment of the Representatives, sustained any material
loss or interference with their respective businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse
change, or any development involving a prospective material adverse
change (including without limitation a material change in management or
control of the Company or the death or disability of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
which would not allow him to carry out his duties as President and Chief
Executive Officer of the Company), in the business, properties, business
prospects, financial condition or results of operations of the Company
and its subsidiaries, taken as a whole, except in each case as described
in or contemplated by the Prospectus (exclusive of any amendment or
supplement thereto);
(ii) trading in the Common Stock shall have been
suspended by the Commission or the Nasdaq National Market or trading in
securities generally on the New York Stock Exchange or the Nasdaq
National Market shall have been suspended or materially limited, or
limitations on prices for trading (other than limitations on hours or
numbers of days of trading) have been fixed, or maximum ranges for prices
for securities have been required, by such exchange or the NASD or the
Nasdaq National Market or by order of the Commission or any other
governmental authority.
(iii) a banking moratorium shall have been declared by
New York or United States authorities;
(iv) the enactment, publication, decree or other
promulgation of any federal or state statute, regulation, rule or order
of, or commencement of any proceeding or investigation by, any court,
24
legislative body, agency or other government authority which in the
Underwriters' reasonable opinion materially and adversely affects or will
materially or adversely affect the business or operations of the Company;
or
(v) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
reasonable judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended as
of the date hereof.
(b) Termination of this Agreement pursuant to this Section 12
shall be without liability of any party to any other party except as provided
in Sections 9 and 11 hereof.
(c) If you elect to prevent this Agreement from becoming
effective or to terminate this Agreement as provided in this Section 12, you
shall promptly notify the Company by telephone, telecopy or telegram, in each
case confirmed by letter. If the Company shall elect to prevent this Agreement
from becoming effective, the Company shall promptly notify you by telephone,
telecopy or telegram, in each case, confirmed by letter.
13. Information Supplied by Underwriters. The statements set forth
in (i) the last paragraph on the front cover page, (ii) under the heading
"Underwriting and Plan of Distribution" in any Preliminary Prospectus or the
Prospectus and (iii) on page 2 in any Preliminary Prospectus or the Prospectus
pertaining to stabilization (to the extent such statements relate to the
Underwriters) constitute the only information furnished by or on behalf of the
Underwriters to the Company for the purposes of Sections 2(b) and 9 hereof.
The Underwriters confirm that such statements (to such extent) are correct.
14. Notices. All notices or communications hereunder shall be in
writing and, if sent to any of the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission and confirmed in writing to Friedman,
Billings, ▇▇▇▇▇▇ & Co., Inc., Potomac Tower, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇, with a copy to
▇▇▇▇▇▇▇, Phleger & ▇▇▇▇▇▇▇▇ LLP, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.; and if sent to the Company, shall
be delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to the Company at ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: Chief Executive Officer with a copy to Weil, Gotshal & ▇▇▇▇▇▇ LLP,
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, P.C.
15. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company and their
respective successors and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained, this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of such persons and for the benefit of no other person
except that (i) the indemnities of the Company contained in Section 8 of this
Agreement shall also be for the benefit of any person or persons who control
any Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act and (ii) the indemnities of the Underwriters contained in
Section 8 of this Agreement shall also be for the benefit of the directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from any Underwriter shall be deemed a successor because of such
purchase.
16. Applicable Law. The validity and interpretation of this
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the laws of the State of New York, without
giving effect to any provisions relating to conflicts of laws.
25
17. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the Commonwealth of
Virginia, and by execution and delivery of this Agreement, the Company accepts
for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
waives any defense of forum non conveniens and irrevocably agree to be bound
by any judgment rendered thereby in connection with this Agreement. The
Company designates and appoints ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and such other persons as
may hereafter be selected by the Company irrevocably agreeing in writing to so
serve, as its agent to receive on its behalf service of all process in any
such proceedings in any such court, such service being hereby acknowledged by
the Company to be effective and binding service in every respect. A copy of
any such process so served shall be mailed by registered mail to the Company
at its address provided in Section 13 hereof; provided, however, that, unless
otherwise provided by applicable law, any failure to mail such copy shall not
affect the validity of service of such process. If any agent appointed by the
Company refuses to accept service, the Company hereby agrees that service of
process sufficient for personal jurisdiction in any action against the Company
in the Commonwealth of Virginia may be made by registered or certified mail,
return receipt requested, to the Company as applicable, at its address
provided in Section 14 hereof, and the Company hereby acknowledges that such
service shall be effective and binding in every respect. Nothing herein shall
affect the right to serve process in any other manner permitted by law or
shall limit the right of any Underwriter to bring proceedings against the
Company in the courts of any other jurisdiction.
18. Entire Agreement. This Agreement constitutes the entire
Agreement between the parties and supersedes and cancels any and all prior or
contemporaneous arrangements, understanding agreements, written or oral,
between them relating to the subject matter hereof.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
26
If the foregoing correctly sets forth our understanding please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and
each of the several Underwriters.
Very truly yours,
GIGA INFORMATION GROUP, INC.
By
-------------------------------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
President and Chief Executive Officer
The foregoing Agreement is hereby confirmed
nd accepted as of the date first above written.
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By:
By:
------------------------------------
Name:
Title:
For itself and as the Representatives.
27
Schedule I
UNDERWRITERS
Number of Firm Securities
Underwriting to be Purchased
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.............. [ ]
Prudential Securities Incorporated................. [ ]
28
Schedule A
Giga Information Group Investment Corporation
Giga Information Group Ltd.
Giga Information Group GmbH
BIS Italy SRL
Giga Information Group S.A.R.L.
29
Schedule B
30
Schedule C
Form of Pricing Opinion
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
Potomac Tower
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Giga Information Group, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Pricing Opinion
---------------
Ladies and Gentlemen:
Giga Information Group, Inc., a Delaware corporation (the "Corporation"), has
filed with the Securities and Exchange Commission a registration statement on
Form S-1 (Reg. No. 333-52899) relating to the offering of 3,000,000 shares of
common stock (plus up to 450,000 shares of common stock subject to the
underwriters' over-allotment option), par value $.001 per share (the "Common
Stock").
Prudential Securities Incorporated is acting as one of the several
underwriters of the offering to the public of the Common Stock (the
"Offering"). Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. ("FBR"), directly and
through affiliates, in the aggregate beneficially owns more than 10% of the
outstanding subordinated debt of the Corporation, pursuant to the Loan and
Warrant Purchase Agreement between the Corporation and certain affiliates of
FBR dated April 7, 1998. The debt shall automatically convert into shares of
the Corporation's Series D Preferred Stock and a warrant to purchase shares of
Series D Preferred Stock on February 1, 1999 (which based on the current
capitalization of the Corporation shall be greater than 10% of the
Corporation's Preferred Stock) unless repaid prior thereto on the occurrence
of an initial public offering of the Corporation's Common Stock.
Under the Conduct Rules of the National Association of Securities Dealers,
Inc. ("NASD"), due to the ownership interest in the Corporation of FBR, the
Corporation may be deemed to be an affiliate of FBR. Accordingly, the public
offering price can be no higher than that recommended by a "qualified
independent underwriter" meeting certain standards.
We have been retained as a Qualified Independent Underwriter to recommend to
you the maximum offering price for the Common Stock as required by the NASD
Conduct Rules.
We have participated in the preparation of the Registration Statement and the
Prospectus (as such terms are defined in the Agreement) and have exercised the
usual standards of "due diligence" with respect thereto. Assuming that the
Offering is commenced on __________ ___, 1998, we recommend that the offering
price of the Common Stock be no higher than $_____, which price should in no
event be considered or relied upon as an indication of the actual value of the
Common Stock.
Our recommendations are based on economic, market, financial and other
conditions as they exist at the date hereof and on other conditions and
circumstances relating to the Corporation as described in the Registration
Statement. Changes in the conditions and circumstances relating to the
Corporation from those described in the Registration Statement and events
occurring after the date hereof, including changes in the markets in which the
Corporation operates, could materially affect the conclusions stated in this
letter. We shall not be obligated or required to
31
reaffirm or revise these recommendations or otherwise to comment on any events
occurring after the date hereof or on any change to the conditions or
circumstances relating to the Corporation from those so described.
Very truly yours,
PRUDENTIAL SECURITIES INCORPORATED
By:
-----------------------------
Name:
Title:
32
