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PLACEMENT AGENT AGREEMENT
AEGIS CAPITAL CORP.
70 EAST SUNRISE HIGHWAY, SUITE 415
VALLEY STREAM, NEW YORK 11581-1264
December 8, 1999
Vianet Technologies, Inc.
83 Mercer Street, 3rd Floor
New York, New York 10012
Dear Sirs:
This letter will confirm our understanding that Vianet
Technologies, Inc. (the "Company") has appointed Aegis Capital Corp. (the
"Placement Agent") in connection with the proposed private placement (the
"Offering") of a minimum of $1,000,000 and a maximum of $3,000,000 of units of
the Company (the "Units"). Each Unit shall consisting of (i) 66,666 shares of
the Company's common stock ("Common Stock"); (ii) 66,666 Class A Common Stock
purchase warrants (the "Class A Warrants"), each Warrant entitling the holder
thereof to purchase one share of Common Stock at an exercise price that is equal
to $2.00; (iii) 66,666 Class B Common Stock purchase warrants (the "Class B
Warrants"), each Warrant entitling the holder thereof to purchase one share of
Common Stock at an exercise price that is equal to $2.50; and (iv) 66,666 Class
C Common Stock purchase warrants (the "Class C Warrants"), each Warrant
entitling the holder thereof to purchase one share of Common Stock at an
exercise price that is equal to $3.00. The Class A Warrants, the Class B
Warrants and the Class C Warrants shall hereinafter collectively be referred to
as the "Warrants." The Price of the Common Stock and number of Common Stock
shares and Warrants contained in the Units was determined by taking the lower of
$1.50 per share of Common Stock or a 30% discount from the closing price of the
Common Stock on December 7, 1999. Common Stock and Warrants shall also be
referred to hereinafter as the "Securities." Purchases may be made by the
Placement Agent and its officers, directors, employees and affiliates, or by
officers, directors, employees and affiliates of the Company, which, if made,
will be applied towards the Minimum Offering.
In connection with the placement of the Units, the Placement
Agent shall be entitled to receive (i) a commission of 10% of the gross proceeds
derived from the sale of Units (except that only 5% commission shall be payable
on a sale of Units placed by Vianet or any of its officers, directors or
employees); (ii) an accountable expense allowance (not to exceed $100,000) to
pay all costs and expenses reasonably incurred by the Placement Agent in
connection with the Offering, including all legal fees and disbursements; and
(iii) a warrant (the "Placement Agent's Warrant") to purchase a number of Units
that is equal to 10% of the number of Units sold to investors pursuant to the
Offering. The Common Stock underlying the Warrants shall have anti-dilution
protection, as provided for in the Warrants, until the Warrants are exercised or
expire and shall have demand registration rights to the same extent as the Units
purchased by investors
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Upon the first closing of the Offering, the Company and the
Placement Agent will execute a non-exclusive corporate finance agreement
pursuant to which the Placement Agent will perform consulting services to the
Company for a two year period for a fee of $30,000 per year. The entire fee due
to the Placement Agent pursuant to the agreement shall be pre-paid at such first
closing.
Notwithstanding the foregoing, for services of the Placement
Agent's counsel in connection with "blue-skying" the Offering, the Company shall
pay the Placement Agent's counsel $1,000 in fees per state for each state in
which registration is requested by the Placement Agent and undertaken by such
counsel, plus actual state filing fees for such states and such counsel's other
reasonable out-of-pocket expenses. Upon the commencement of blue sky filings,
the Company shall pay $2,500 to such counsel for such professional services
(plus the filing fees to be paid to the various states), with the balance due
for professional services, plus counsel's other reasonable out-of-pocket
disbursements, payable on the date of the closing of the Offering. The Offering
will not be "blue-skyed" in more than five states without the written consent of
the Company.
At any time during the two year period following the first
anniversary of the final closing of the Offering (the "Final Closing") (with
respect to demand registration rights) and during the four year period following
the first anniversary of the Final Closing (with respect to piggyback
registration rights), the investors in the Offering and the Placement Agent will
be entitled to exercise demand and piggyback registration rights pursuant to the
terms of a registration rights agreement to be executed simultaneously herewith.
At such time that the Common Stock issued at a particular
closing of the Offering initially becomes publicly saleable (either pursuant to
an exemption from registration under the Securities Act of 1933 and Rule 144
enacted thereunder or the effectiveness of a registration statement covering
such shares), if the preceding 30 trading day average of the closing prices of
the Company's Common Stock (as reported by the OTC Bulletin Board, the Nasdaq
Stock Market or a securities exchange, depending upon where such Common Stock is
then traded or listed) (the "Later Market Value") is less than $2.14 (the "Base
Market Value"), then the purchasers of the particular Units, including the
particular Units issuable to the Placement Agent upon exercise of the Placement
Agent's Warrant, will each receive additional shares of Common Stock (the
"Additional Shares"), and additional Warrants (the "Additional Warrants"),
without additional consideration, as if the Offering had been based upon the
Later Market Value (rounded up to the next whole cent) (but in no event more
than an additional 100% of the original Common Shares and Warrants issued). The
right to receive the Additional Shares and Additional Warrants shall not be
deemed attached to the purchased Common Shares and Warrants, and shall not be
considered transferred to any person who acquires such originally purchased
Common Shares and Warrants.
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In the event the Later Market Value is less than the Base
Market Value, then the exercise prices of the Class A Warrants, Class B Warrants
and Class C Warrants shall be adjusted to equal 100%, 125% and 150%,
respectively, of 1.166 multiplied by the Later Market Value (except that none of
the respective exercise prices may be reduced by more than one-third). Any such
readjustment in the exercise prices of the Warrants shall only apply to the
unexercised portion of the Warrants.
The Company has prepared a Confidential Private Offering
Memorandum relating to the Offering of the Units (the "Offering Memorandum").
The Offering Memorandum, together with any exhibits, amendments or supplements
thereto, documents incorporated therein by reference and other documents
provided by the Company in writing to the Placement Agent expressly for delivery
to a Purchaser, are hereinafter referred to as the "Offering Materials." As used
herein, the terms "amend" and "supplement" shall refer to and include the
incorporation by reference of any document in the Offering Materials after the
date hereof. The Units will be offered by the Placement Agent in accordance with
the provisions of the section of the Offering Memorandum entitled "Plan of
Offering."
The Company represents and warrants to the Placement Agent
that:
(a) It is not a reporting company pursuant to Section 12 and
15 of the Securities and Exchange Act of 1934 and the Copmany has been advised
that if it does not becom a reporting company on or before March 23, 2000 it
will be delisted from the Electronic Bulletin Board and will trade on the "pink
sheets."
(b) The representations and warranties of the Company's
officers contained in the certificates to be delivered to the Placement Agent
pursuant to Paragraph III below will be true and correct as of the Initial
Closing as hereinafter defined (the "Closing Date") and all subsequent closing
dates of the Offering.
(c) The Offering Materials, as amended or supplemented, taken
as a whole will not, as of each date the Offering Materials are delivered to a
potential investor and as of each Closing Date, contain any untrue statement of
a material fact or omit to state a material fact necessary in order to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
II
The Company agrees with the Placement Agent that:
(a) The Company will take all necessary steps to ensure that
the offering and sale of the Securities are exempt from the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act").
(b) The Company will immediately undertake to complete and
file a Registration Statement with the Securities and Exchange Commission and
will use the highest degree of diligence to have such registration statement
declared effective by the Securities and Exchange Commission on or before March
23, 2000.
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(c) The Company will supply to the Placement Agent, without
charge, copies of the Offering Materials in such quantities as the Placement
Agent may from time to time reasonably request, and the Placement Agent will
utilize the Offering Materials in connection with sales of the Securities, and
will deliver a copy thereof to each potential purchaser of Units (each, a
"Purchaser" and collectively, the "Purchasers") prior to accepting an offer to
purchase Securities.
(d) The Company shall extend to all prospective Purchasers the
opportunity, prior to the Closing Date, to ask questions of, and receive answers
from, the Company concerning the Securities and the terms and conditions of the
offering thereof and to obtain any information that such prospective Purchasers
may consider necessary in making an informed investment decision or to verify
the accuracy of the information set forth in the Offering Materials (subject to
certain restrictions as to confidentiality), to the extent the Company possesses
the same or can acquire it without unreasonable effort or expense.
(e) Before amending or supplementing any of the Offering
Materials, the Company will furnish the Placement Agent with a copy of each such
proposed amendment or supplement, and the Company shall not make any such
amendment or supplement if the Placement Agent reasonably objects and such
amendment or supplement is not required to be made in order that the Company may
make the representations set forth in Section I(b) above.
(f) If any event occurs or condition exists as a result of
which the Offering Materials would include an untrue statement of a material
fact, or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances when the Offering Materials are
delivered to a Purchaser not misleading, or if, in the opinion of the Placement
Agent or in the opinion of the Company, it is necessary at any time to amend or
supplement the Offering Materials to comply with applicable law, the Company
will immediately notify the Placement Agent and shall prepare an amendment or
supplement to the Offering Materials, satisfactory in all respects to the
Placement Agent, that will correct such statement or omission or effect such
compliance and will supply such amended or supplemented Offering Materials to
the Placement Agent for delivery to prospective Purchasers.
(g) The Company will not, and will not permit any agent
authorized on its behalf to, offer, sell, contract to sell or otherwise dispose
of any Securities or any other securities or rights to acquire securities of the
Company (i) prior to the termination of the placement of the Securities
contemplated by this Agreement (other than the Securities to be sold hereunder),
or (ii) the result of which would bring the issuance and sale of the Units
pursuant to this Agreement within the registration requirements of Section 5 of
the Securities Act, or any Blue Sky law of any state.
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III
The obligations of the Placement Agent hereunder are subject
to the accuracy of the representations and warranties of the Company contained
herein in all material respects, to the performance and observance by the
Company of all covenants and agreements contained herein in all material
respects and to the satisfaction of the following additional conditions.
(a) On the Closing Date, the Company shall deliver to the
Placement Agent:
(1) An opinion from counsel to the Company to the
Placement Agent to the effect set forth in Exhibit A hereto.
(2) A certificate of all of the Company's executive
officers to the effect set forth in Exhibit B hereto.
(3) A certificate of the Company's President or Secretary
to the effect set forth in Exhibit C hereto.
(4) A certificate of the Company's Treasurer or Chief
Financial Officer to the effect set forth in Exhibit D hereto.
(5) A certificate of the Company's Chief Executive Officer
to the effect set forth in Exhibit E hereto.
(6) A representation of the Company's officers and/or
directors to the effect set forth in Exhibit G hereto.
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IV
The Placement Agent represents and warrants to, and agrees
with, the Company as follows:
(a) The Placement Agent understands that the Securities have
not been registered under the Securities Act or any Blue Sky law of any state
and agrees that they may not be offered or sold except pursuant to an exemption
from, or in a transaction not subject to, the registration requirements of the
Securities Act and such Blue sky laws, unless otherwise registered. The
Placement Agent agrees with the Company that it will not solicit offers for, or
offer or sell, the Securities by any form of general solicitation or general
advertising within the meaning of Section 4(2) of the Securities Act, and
Regulation D thereunder.
(b) The Placement Agent will only solicit offers for the
purchase of, and will only accept subscriptions for, the Securities from persons
it believes are "accredited investors," within the meaning of Regulation D
promulgated under the Securities Act.
(c) The Placement Agent is (i) a registered broker-dealer
under the Securities Exchange Act of 1934, (ii) a member in good standing of the
National Association of Securities Dealers, Inc. and (iii) registered as a
broker-dealer in each jurisdiction in which it is required to be in order to
offer and sell the Securities in such state.
(d) The Placement Agent agrees to use its best efforts to
solicit and receive offers to purchase the Units.
The Company and the Placement Agent agree to the
indemnification and contribution arrangements set forth in Exhibit F hereto. The
respective representations, warranties and indemnities set forth herein and in
Exhibit F will remain in full force and effect regardless of any investigation
made by or on behalf of the Placement Agent or the Company or any of the
officers, directors, employees, agents or controlling persons referred to in
Exhibit F hereto, and will survive delivery of and payment for the Securities.
The Company agrees that the Placement Agent will not be liable
to the Company on account of the failure of any person to whom the Placement
Agent has sold any Units to pay for such Units or to deliver any document (other
than the Subscription Agreement) in respect of such sale.
All notices, requests or other communications to any party
hereunder shall be in writing (including facsimile transmission or similar
writing) and shall be given to such party at the address set forth above, or the
facsimile number set forth on the signature page hereof, or such other address
or facsimile number as such party may hereafter specify in writing.
This Agreement (including the Exhibits hereto) shall be
governed by and construed in accordance with the internal laws of the State of
New York. This Agreement may be signed in counterparts with the same effect as
if the signatures hereto were on the same instrument. This Agreement may not be
modified or amended except by a written instrument signed by each of the parties
hereto.
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If the foregoing is in accordance with your understanding of
our agreement, please sign, date and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance and dating shall represent a binding
agreement between the Placement Agent and the Company.
Very truly yours,
AEGIS CAPITAL CORP.
By:_________________________________
Robert J. Eide, Chief Executive
Officer
Facsimile Number: (516) 872-1468
Accepted as of December 7, 1999
VIANET TECHNOLOGIES, INC.
By: _________________________________
Peter Leighton, Chief Executive
Officer
Facsimile Number: (212) 966-1735
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EXHIBIT A
SICHENZIA, ROSS & FRIEDMAN LLP
135 West 50th Street, 20th Floor
New York, New York 10020
-------------------------------
Tel: (212) 664-1200
Fax: (212) 664-7329
E-Mail: [email protected]
December 7, 1999
Aegis Capital Corp.
70 East Sunrise Hwy.
Valley Stream, NY 11581
Re: Vianet Technologies, Inc.
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Gentlemen:
We have acted as counsel to Vianet Technologies, Inc. in
connection with the proposed private placement (the "Offering") of a minimum of
$1,000,000 and a maximum of $3,000,000 of units of the Company (the "Units"), at
a price of $100,000 per Unit, each Unit consisting of (i) 66,666 shares of the
Company's common stock ("Common Stock"); (ii) 66,666 Class A Common Stock
purchase warrants (the "Class A Warrants"), each Warrant entitling the holder
thereof to purchase one share of Common Stock at an exercise price that is equal
to $2.00; (iii)66,666 Class B Common Stock purchase warrants (the "Class B
Warrants"), each Warrant entitling the holder thereof to purchase one share of
Common Stock at an exercise price that is equal to $2.50; and (iv) 66,666 Class
C Common Stock purchase warrants (the "Class C Warrants"), each Warrant
entitling the holder thereof to purchase one share of Common Stock at an
exercise price that is equal to $3.00. The Class A Warrants, the Class B
Warrants and the Class C Warrants shall hereinafter collectively be referred to
as the "Warrants." The Units, together with the Common Stock and Warrants shall
also be referred to hereinafter as the "Securities."
The Units are being offered pursuant to a Placement Agent Agreement,
dated December 7, 1999 (the "Agreement"), between Aegis Capital Corp., as
placement agent (the "Placement Agent"), and the Company. Unless otherwise
defined herein, the definitions of the terms used in this opinion shall be the
same as those in the Agreement.
A-1
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We have examined copies of the Company's Confidential Private
Offering Memorandum dated October 5, 1999 with exhibits annexed (the "Offering
Materials"). As such counsel, we have made such examination of law, have
examined originals or copies certified or otherwise authenticated to our
satisfaction, of all such records, agreements and other instruments,
certificates and orders of public officials, certificates of officers, directors
and representatives of the Company, and other documents that we have deemed
necessary to render the opinions hereinafter set forth. In addition, as such
counsel, we have participated in conferences with officers, directors and other
representatives of the Company, and representatives of the independent
accountants of the Company at which the contents of the Offering Materials and
related matters were discussed, and received such certificates, statements,
information and assurances as to matters of fact as we have deemed necessary in
order to render the opinions hereinafter set forth; however, we are not, except
as hereinafter set forth, passing upon and do not assume responsibility for the
accuracy, completeness or fairness of the statements contained in the Offering
Materials.
In such examination, we have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals, the
conformity to the original thereof of all documents submitted to us as certified
or photostatic copies, and the authenticity of the originals of such latter
documents. As to any facts material to such opinion, we have relied, to the
extent that relevant facts were not independently established by us, to the
extent we deemed reliance proper, on certificates of public officials and
certificates, oaths and declarations of officers, directors and other
representatives of the Company, upon which we have no reason to believe that we
and you are not entitled to so rely.
The conclusions contained herein are based upon matters which
have come to our attention in the course of our legal representation of the
Company.
No opinion is being rendered herein as to the availability of
equitable remedies, including but not limited to, specific performance and
injunctive relief. In addition, the opinions expressed herein as to the
enforceability of any documents are subject in all respects to the effect of:
(a) bankruptcy, reorganization, insolvency, fraudulent conveyance, moratorium or
other similar laws or equitable principals affecting creditors' rights or
remedies; and (b) the effect of applicable laws and court decisions which may
hereafter limit or render unenforceable certain of your rights and remedies.
Based upon and subject to the foregoing, we hereby advise you
that in our opinion:
(i) the Company has been duly incorporated and is validly
existing as a corporation 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 the State of New York,
such state, being, to our knowledge, the only jurisdiction where the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified does not have a
material adverse effect on the Company;
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(ii) the Company has the corporate power to own or lease its
properties and conduct its business as described in the Offering Materials, and
the Company had the corporate power to enter into the Agreement and to carry out
all the terms and provisions thereof to be carried out by it;
(iii) the authorized capitalization of the Company as of the
date of the Memorandum is as set forth in the Offering Materials; to our
knowledge, the outstanding shares of Common Stock of the Company have not been
issued in violation of the preemptive rights of any shareholder and, to our
knowledge, the shareholders of the Company do not have any preemptive rights or
other rights to subscribe for or to purchase, nor, to our knowledge, are there
any restrictions upon the voting or transfer of any of the stock, except as
disclosed in the Memorandum; the Securities conform to the respective
descriptions thereof contained in the Memorandum; the Company's Common Stock has
been, and the Units, and the securities underlying the Units, and the Common
Stock underlying the Warrants, to be issued pursuant to the Memorandum, upon
issuance in accordance with the terms of the Memorandum, have been duly
authorized and, when issued and delivered and paid for, will be duly and validly
issued, fully paid, non-assessable, free of statutory preemptive rights and no
personal liability will attach to the ownership thereof; the Board of Directors
of the Company has adopted a resolution pursuant to which it reserved for
issuance a sufficient number of the shares of Common Stock upon sale of the
Securities as contemplated by the Agreement; and, to our knowledge, said sale
does not give rise to any registration rights, or other rights, for or relating
to the registration of any securities of the Company, except as set forth in the
Memorandum;
(iv) from October 5, 1999 until the date hereof, to our
knowledge, there has been no material change in the capitalization or
outstanding shares of any class of capital stock of the Company, including,
without limitation, the issuance of employee options or warrants to purchase any
of the Company's capital stock;
(v) the execution and delivery of the Agreement and the
consummation of the transactions contemplated thereby have been duly authorized
by all necessary corporate action of the Company and the Agreement has been duly
executed and delivered by the Company;
(vi) to our knowledge, no legal or governmental proceedings
are pending to which the Company is a party or to which the property of the
Company is subject that are required to be described in the Memorandum and are
not described therein, and, to our knowledge, no such proceedings have been
threatened against the Company or with respect to any of its properties; and, to
our knowledge, no material contract or other document is required to be
described in the Memorandum that is not described therein;
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(vii) the issuance, offering and sale of the Units by the
Company pursuant to the Memorandum, the compliance by the Company with the
provisions of the Agreement and the consummation of the other transactions
therein contemplated do not (x) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except such
as have been obtained and such as may be required under state securities or blue
sky laws, or (y) to our knowledge, conflict with or result in a material breach
or violation of any of the terms and provisions of, or constitute a default
under any material indenture, mortgage, deed of trust, lease or other agreement
or instrument, to which the Company is a party or by which the Company or any of
its properties are bound, or the charter documents or by-laws of the Company, or
any statute or any judgment, decree, order, rule or regulation of any court or
other governmental authority or any arbitrator applicable to the Company;
(viii) to our knowledge, the Company has not received any
notification regarding its material violation of any federal or state law or
regulation relating to (a) occupational safety and business, (b) the storage,
handling or transportation of hazardous or toxic materials, or (c) the
revocation of any material permit, license or other approval required of it
under applicable federal and state consumer product, occupational safety and
health and environmental laws and regulations to conduct its business;
(ix) we have participated in the preparation of the Memorandum
and, although we have not been engaged to conduct any independent investigation
and do not assume any responsibility for the accuracy or completeness of the
information contained therein, nothing has come to our attention to cause us to
believe that the Memorandum (except as to financial statements and other
financial information set forth in the Memorandum or attached thereto as an
exhibit, as to which no opinion is expressed) contains any untrue statement of a
material fact or omits 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;
(x) the Offering Materials comply as to form in all material
respects with the requirements of Regulation D promulgated by the Securities and
Exchange Commission under the Securities Act of 1933, as amended (the "Act")
with respect to a private offering of securities to "accredited investors;" and
(xi) no registration of the Securities under the Act is
required for the offer, sale or issuance of the Securities in the manner
contemplated by the Agreement and the Offering Materials.
This opinion is limited to the addressee and is made as of the
date first above written.
Very truly yours,
Sichenzia, Ross & Friedman LLP
A-4
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EXHIBIT B
CERTIFICATE PURSUANT TO
PLACEMENT AGENCY AGREEMENT
The undersigned duly elected, appointed and qualified officers
and directors of Vianet Technologies, Inc., a Delaware corporation (the
"Company"), pursuant to the Placement Agent Agreement, dated December 7, 1999
(the "Agreement"), between the Company and Aegis Capital Corp. (the "Placement
Agent") (unless specified herein, each capitalized term used herein shall have
the same meaning as that given in the Agreement), do hereby certify, represent
and warrant to the Placement Agent on behalf of the Company that:
(a) The Company meets all of the requirements for the use of
Regulation D promulgated by the Securities and Exchange Commission
("Commission") under the Securities Act of 1933, as amended (the "Act") or such
other exemption as may be available under the Act. A Confidential Private
Offering Memorandum, including exhibits (the "Memorandum"), with respect to a
private placement offering of a minimum of $1,000,000 and a maximum of
$3,000,000 of units of the Company (the "Units"), at a price of $100,000 per
Unit, each Unit consisting of (i) 66,666 shares of the Company's common stock
("Common Stock"); (ii) 66,666 Class A Common Stock purchase warrants (the "Class
A Warrants"), each Warrant entitling the holder thereof to purchase one share of
Common Stock at an exercise price that is equal to $2.00; (iii)66,666 Class B
Common Stock purchase warrants (the "Class B Warrants"), each Warrant entitling
the holder thereof to purchase one share of Common Stock at an exercise price
that is equal to $2.50; and (iv) 66,666 Class C Common Stock purchase warrants
(the "Class C Warrants"), each Warrant entitling the holder thereof to purchase
one share of Common Stock at an exercise price that is equal to $3.00. The Class
A Warrants, the Class B Warrants and the Class C Warrants shall hereinafter
collectively be referred to as the "Warrants." The Units, together with the
Common Stock and Warrants shall also be referred to hereinafter as the
"Securities."
(b) We have carefully examined the Offering Materials and they
do 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.
(c) All the issued shares of capital stock of the Company have
been duly authorized and issued and no such shares nor any other securities of
the Company are subject to any preemptive rights. No holder of the Company's
securities has the right to require (whether now or in the future) the Company
to register such holder's securities under the Act.
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(d) From October 5, 1999 up and until the time of the Closing,
there has been no material change in the capitalization or outstanding shares of
any class of capital stock of the Company, including, without limitation, the
issuance of employee options or warrants to purchase any of the Company's
capital stock.
(e) Except as disclosed in the Offering Materials, no material
legal or governmental proceedings are pending to which the Company is a party or
to which the property of the Company is subject.
(f) The issuance, offering and sale of the Securities pursuant
to the Agreement, the compliance by the Company with the other provisions of the
Agreement and the Securities and the consummation of the other transactions
therein contemplated do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority, except such
as have been obtained, or such as may be required under state securities or blue
sky laws, or (ii) conflict with or result in a breach of violation of any of the
material terms and provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, lease or other agreement or instrument to
which the Company is a party or by which the Company or any of its properties
are bound, or the charter documents or by-laws of the Company, or any statute or
any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Company.
(g) Subsequent to the respective dates as of which information
is given in the Offering Materials, except as disclosed in or contemplated by
the Offering Materials or the Agreement, (i) the Company has not incurred any
material liability or obligation, direct or contingent, nor entered into any
material transaction not in the ordinary course of business; (ii) there has been
no material adverse change in the condition, financial or otherwise, of the
Company, or in the earnings, business affairs or business prospects of the
Company, whether or not arising in the ordinary course of business; (iii) the
Company has not purchased any of its outstanding capital stock, nor declared,
paid or otherwise made any dividend or distribution of any kind on its capital
stock; and (iv) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company.
(h) The Company has good and marketable title to all items of
real property, if any, and marketable title to all personal property, owned by
it, in each case free and clear of any security interests, liens, encumbrances,
equities, claims and other defects, except such as do not materially and
adversely affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company. Any real property
and buildings held or to be held under lease by the Company are held or will be
held, as the case may be, under valid, subsisting and enforceable leases for the
period described in such lease, with such exceptions as are not material and do
not materially interfere with the use made or proposed to be made of such
property and buildings by the Company.
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(i) No labor dispute with the employees of the Company exists
or, to the best of the Company's knowledge, is threatened or imminent that could
result in a material adverse change in the condition (financial or otherwise),
business prospects, net worth or results of operations of the Company.
(j) The Company is insured by insurers of recognized financial
responsibility against such losses and risks and in such amounts as are prudent
and customary in the business in which it is engaged; the Company has not been
refused any insurance coverage sought or applied for; and the Company has no
reason to believe that it will not be able to renew its existing insurance
coverage from similar insurers as may be necessary to continue its business at a
cost that would not materially and adversely affect the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company.
(k) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested extensions
thereof (except in any case in which the failure so to file would not have a
material adverse effect on the Company), and has paid in all material respects
all taxes required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and payable,
except for any such assessment, fine or penalty that is currently being
contested in good faith.
(l) The Company is not in violation of any federal or state
law or regulation relating to (i) occupational safety and health, or (ii) the
storage, handling or transportation of hazardous or toxic materials, and the
Company has received all permits, licenses or other approvals required of it
under applicable federal and state consumer product, occupational safety and
health and environmental laws and regulations to conduct its business, and the
Company is in compliance with all terms and conditions of any such permit,
license or approval, except any such violation of law or regulation, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals which would not,
singly or in the aggregate, result in a material adverse change in the condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company.
(m) The Company possesses in all material respects all
certificates, authorizations and permits issued by the appropriate federal,
state or foreign regulatory authorities necessary to conduct its business, and
the Company has not received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or permit
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 condition
(financial or otherwise), business prospects, net worth or results of operations
of the Company.
(n) Other than shares of subsidiaries and as disclosed in the
Offering Materials, the Company does not own any shares of stock or any other
equity securities of any corporation or have any equity interest in any firm,
partnership, association or other entity.
B-3
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(o) The Company maintains 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.
(p) 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 material term, covenant or condition of any
material indenture, mortgage, deed or trust, lease or other agreement or
instrument to which the Company is a party or by which the Company or any of its
properties is bound or may be affected in any material adverse respect with
regard to property, business or operations of the Company.
(q) The Company has not maintained or contributed to any
deferred compensation, profit sharing, savings, retirement, pension or other
benefit plan or arrangements with or for the benefit of any person resulting
from a relationship with the Company.
(r) The Company has been duly incorporated and is validly
existing as a corporation 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 business
requires such qualification, except where the failure to be so qualified does
not have a material adverse effect on the Company. Attached hereto as Schedule
(c) is a list of all jurisdictions in which the Company is qualified to do
business.
(s) The Company has full corporate power and authority to own
or lease its properties and conduct its business as described in the Offering
Materials, and the Company has full corporate power and authority to enter into
the Agreement and to carry out all the terms and provisions thereof to be
carried out by it.
(t) The financial statements and schedules of the Company
(including the related notes) included in the Offering Materials fairly present
the financial position of the Company and the results of operations and cash
flows as of the dates and periods therein specified. Such financial statements
and schedules (including the related notes) have been prepared in accordance
with generally accepted accounting principles consistently applied throughout
the periods involved (except as may be otherwise noted therein).
B-4
<PAGE>
(u) To the best of our knowledge, the Company's independent
auditors who have certified certain financial statements of the Company and
delivered their reports with respect to the indicated audited financial
statements and schedules included in the Offering Materials, are independent
certified public accountants as required by the Act and the Securities Exchange
Act of 1934 (the "Exchange Act") and the applicable rules and regulations under
each such act.
(v) The execution and delivery of the Agreement between the
Placement Agent and the Company and the consummation of the transactions
contemplated thereby have been duly authorized by the Company and the Agreement
has been duly executed and delivered by the Company.
(w) No legal or governmental proceedings are pending to which
the Company is a party or to which the property of the Company is subject that
are required to be described in the Offering Materials and are not described
therein and, to the best of the Company's knowledge, no such proceedings have
been threatened against the Company or with respect to any of its properties;
and no material contract or other document is required to be described in the
Offering Materials that is not described therein.
(x) The Company owns or possesses all licenses, copyrights,
trademarks, service marks, trade names and proprietary or other confidential
information currently employed by it in connection with its business or
necessary in order to conduct its business as presently conducted, and the
Company has not received, or has no reason to believe that it may receive, any
notice of infringement of or conflict with asserted rights of any third party or
otherwise 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 condition (financial or otherwise),
business prospects, net worth or results of operations of the Company, except as
described in the Offering Materials.
(y) The Company has not taken, directly or indirectly, any
action designed to cause or to result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of the
price of any securities of the Company.
VIANET TECHNOLOGIES, INC.
Date: December 7, 1999 By: ________________________________________
Jeremy Posner, Chairman of the Board
Date: December 7, 1999 By: ________________________________________
Peter Leighton, Chief Executive Officer
Date: December 7, 1999 By: ________________________________________
Bruce Arnstein, Chief Operating Officer
Date: December 7, 1999 By: ________________________________________
Robert H. Bailey, Director
Date: December 7, 1999 By: ________________________________________
Darrell J. Elliot, Director
Date: December 7, 1999 By: ________________________________________
F. Paul Whitlock, Director
B-5
<PAGE>
EXHIBIT C
VIANET TECHNOLOGIES, INC.
PRESIDENT'S CERTIFICATE
I, Peter Leighton, President of Vianet Technologies, Inc., a
Nevada corporation (the "Company"), HEREBY CERTIFY on behalf of the Company as
follows:
1. Attached hereto as Exhibit A is a true and complete copy, certified
as of recent date, of the Certificate of Incorporation, with
amendments, if any, of the Company as in effect on the date hereof.
2. No proceeding for the dissolution, merger, consolidation or
liquidation of the Company or for the sale of all or substantially all
of its assets is pending or, to the best of my knowledge, threatened,
and no such proceeding is contemplated by the Company.
3. Attached hereto as Exhibit B is a true and complete copy of the
By-laws of the Company as in effect on the date hereof.
4. Attached hereto as Exhibit C is a true and complete copy of certain
resolutions duly adopted by the Board of Directors of the Company by
unanimous written consent, dated December 7, 1999; such resolutions are
now in full force and effect and have not been modified, amended or
revoked in any respect; and such resolutions are the only resolutions
adopted by the Company's Board of Directors or any committee in
connection with the proposed private placement of the Company's Units,
pursuant to the Placement Agent Agreement, dated December 7, 1999 (the
"Agreement"), between the Company and Aegis Capital Corp. (the
"Placement Agent").
5. The Agreement under which the Units are to be issued, as executed
and delivered on behalf of the Company, is substantially in the form
thereof approved pursuant to the aforementioned resolutions.
7. Attached as Exhibit D is a true, correct and complete specimen of
the certificate for the Common Stock.
8. Attached as Exhibit F are true, correct and complete specimens of
the certificates for the Warrants.
9. Each person who, as a director or officer of the Company or
attorney-in-fact of such director or officer, signed the Agreement and
any other document delivered prior hereto or on the date hereof in
connection with the financing described in the Agreement was, at the
respective times of such signing and delivery, duly elected or
appointed, qualified and acting as such director or officer or duly
appointed and acting as such attorney-in-fact, and the signatures of
such persons appearing on such documents are their genuine signatures,
and set forth below is a list of certain officers of the Company, each
of whom is a duly qualified and acting officer of the Company, duly
elected or appointed to the office set forth opposite his name, and the
specimen signature set forth opposite the name of each of said persons
is the genuine signature, or a true facsimile thereof, of such person:
C-1
<PAGE>
Name Position Signature
---- -------- ---------
Jeremy Posner Chairman of the Board ___________________
Peter Leighton President, Chief Executive
Officer, Director ___________________
Bruce Arnstein Chief Operating Officer ___________________
Robert Nimon Chief Technology Officer ___________________
Vincent Santivasci Chief Financial Officer ___________________
Elizabeth Desiere Secretary ___________________
Robert H. Bailey Director ___________________
Darrell J. Elliot Director ___________________
F. Paul Whitlock irector __________________
IN WITNESS WHEREOF, I have hereunto set my hand and affixed
the seal of the Company this sixth day of December 1999.
VIANET TECHNOLOGIES, INC.
By:______________________
Name: Peter Leighton
Title: President
I, Elizabeth Desiere, the Secretary of Vianet Technologies,
Inc., a Nevada corporation (the "Company"), hereby certify that Peter Leighton
has been duly elected or appointed, is duly qualified as, and is the President
of the Company, and that the above signature is his genuine signature.
IN WITNESS WHEREOF, I have hereunto set my hand this sixth day
of December, 1999.
_________________________
Name: Elizabeth Desiere
Title: Secretary
C-2
<PAGE>
EXHIBIT D
VIANET TECHNOLOGIES, INC.
CHIEF FINANCIAL OFFICER'S CERTIFICATE
The undersigned, Vincent Santivasci, Chief Financial Officer
of Vianet Technologies, Inc., a Nevada corporation (the "Company"), pursuant to
Section III(a)(5) of the Placement Agent Agreement, dated December 7, 1999 (the
"Agreement"), between the Company and Aegis Capital Corp. providing for the
issue and sale by the Company of a minimum of $1,000,000 and a maximum of
$3,000,000 of units of the Company (the "Units"), at a price of $100,000 per
Unit, each Unit consisting of (i) 66,666 shares of the Company's common stock
("Common Stock"); (ii) 66,666 Class A Common Stock purchase warrants (the "Class
A Warrants"), each Warrant entitling the holder thereof to purchase one share of
Common Stock at an exercise price that is equal to $2.00; (iii)66,666 Class B
Common Stock purchase warrants (the "Class B Warrants"), each Warrant entitling
the holder thereof to purchase one share of Common Stock at an exercise price
that is equal to $2.50; and (iv) 66,666 Class C Common Stock purchase warrants
(the "Class C Warrants"), each Warrant entitling the holder thereof to purchase
one share of Common Stock at an exercise price that is equal to $3.00, does
hereby certify on behalf of the Company that, since the date of the most recent
financial statements included in the Offering Materials (as such term is defined
in the Agreement), except as disclosed in the Offering Materials, there has not
been any material adverse change or, to the best of the undersigned's knowledge,
any development involving a prospective material adverse change in the condition
(financial or otherwise), earnings, business or properties of the Company,
whether or not arising from transactions in the ordinary course of business from
that set forth in the Offering Materials.
IN WITNESS WHEREOF, the undersigned has executed this certificate as of
the sixth day of December, 1999.
VIANET TECHNOLOGIES, INC.
By:___________________________
Name: Vincent Santivasci
Title: Chief Financial Officer
D-1
<PAGE>
EXHIBIT E
CHIEF EXECUTIVE OFFICER'S CERTIFICATE
The undersigned, Peter Leighton, Chief Executive Officer of Vianet
Technologies, Inc., a Nevada corporation (the "Company"), pursuant to the
Placement Agent Agreement dated December 7, 1999 (the "Agreement"), between the
Company and Aegis Capital Corp. providing for the private placement (the
"Offering") of a minimum of $1,000,000 and a maximum of $3,000,000 of units of
the Company (the "Units"), at a price of $100,000 per Unit, each Unit consisting
of (i) 66,666 shares of the Company's common stock ("Common Stock"); (ii) 66,666
Class A Common Stock purchase warrants (the "Class A Warrants"), each Warrant
entitling the holder thereof to purchase one share of Common Stock at an
exercise price that is equal to $2.00; (iii)66,666 Class B Common Stock purchase
warrants (the "Class B Warrants"), each Warrant entitling the holder thereof to
purchase one share of Common Stock at an exercise price that is equal to $2.50;
and (iv) 66,666 Class C Common Stock purchase warrants (the "Class C Warrants"),
each Warrant entitling the holder thereof to purchase one share of Common Stock
at an exercise price that is equal to $3.00, does hereby certify on behalf of
the Company that:
1. The representations and warranties of the Company in the Agreement
and in the certificates provided pursuant to the Agreement are true
and correct in all material respects on and as of the date hereof
as if made on the date hereof;
2. The Company has performed in all material respects all of its
obligations pursuant to the Agreement to be performed at or prior
to the date hereof;
3. The Offering Materials (as such term is defined in the Agreement),
taken as a whole, do not as of the date hereof contain any untrue
statement of a material fact or omit to state a material fact
necessary in order to make the statements made therein, in the
light of the circumstances under which they were made, not
misleading; and
4. Since the date of the most recent financial statements included in
the Offering Materials, except as disclosed in the Offering
Materials, there has been no material adverse change or, to the
best of the undersigned's knowledge, any development involving a
prospective material adverse change, in the condition (financial or
otherwise), earnings, business or properties of the Company,
whether or not arising from transactions in the ordinary course of
business, from that set forth in the Offering Materials.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the seal of
the Company this sixth day of December, 1999.
VIANET TECHNOLOGIES, INC.
By:_____________________________
Name: Peter Leighton
Title: Chief Executive Officer
E-1
<PAGE>
EXHIBIT F
This Exhibit F is attached to and incorporated by reference
into the Placement Agent Agreement, dated December 7, 1999 (the "Placement
Agreement"), between Vianet Technologies, Inc. (the "Company") and Aegis Capital
Corp. (the "Placement Agent"). Capitalized terms used herein and not otherwise
defined herein shall have the meanings assigned to such terms in the Placement
Agreement.
The Company agrees to indemnify and hold harmless the
Placement Agent and its affiliates, and the respective directors, officers,
agents and employees of the Placement Agent and its affiliates and each other
entity or person, if any, controlling the Placement Agent or any of its
affiliates within the meaning of either Section 15 of the Securities Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the Placement
Agent and each such entity or person being collectively referred to as an
"Indemnified Party"), from and against any losses, claims, damages or
liabilities (or actions in respect thereof) caused by any alleged untrue
statement of a material fact contained in the Offering Materials, as amended or
supplemented (including but not limited to any documents deemed to be
incorporated therein by reference), or caused by any alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; 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 such alleged untrue statement made in, or
alleged omission from, the Offering Materials in reliance upon and in conformity
with written information furnished to the Company by or on behalf of the
Placement Agent. The Company will reimburse any Indemnified Party for all
reasonable expenses (including, without limitation, reasonable fees and
disbursements of counsel) incurred by such Indemnified Party in connection with
investigating, preparing or defending any such action or claim, whether or not
in connection with pending or threatened litigation in connection with this
transaction to which the Indemnified Party is a party, in each case, as such
expenses are incurred or paid.
The Placement Agent agrees to indemnify and hold harmless the
Company and its affiliates, and the respective directors, officers, agents and
employees of the Company within the meaning of either Section 15 of the
Securities Act or Section 20 of the Securities Exchange Act of 1934, as amended,
(the Company and each such entity or person being collectively referred to as an
"Indemnified Company Party") from and against any losses, claims, damages or
liabilities (or actions in respect thereof) arising out of the selling
activities of the Placement Agent and with respect to written information
furnished by the Placement Agent to the Company for inclusion in the Offering
Materials to the same extent and under the same conditions as provided for by
the Company to the Placement Agent.
F-1
<PAGE>
In case any proceeding (including any governmental
investigation) shall be instituted involving any Indemnified Party, such
Indemnified Party shall promptly notify the Company in writing, and the Company
shall have the right to retain counsel reasonably satisfactory to the
Indemnified Party to represent the Indemnified Party and any others the Company
may designate in such proceeding and shall pay the fees and disbursements of
such counsel related to such proceeding. In any such proceeding, any Indemnified
Party shall have the right to retain its own counsel, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party unless (i) the
Company and the Indemnified Party shall have mutually agreed to the retention of
such counsel, and to the payment of such fees and expenses by the Company or
(ii) the named parties to any such proceeding (including any impeded parties)
include both the Company and an Indemnified Party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the Company shall not in
respect of the legal expenses of any Indemnified Party in connection with any
proceeding or related proceedings in the same jurisdiction, be liable for the
reasonable fees and expenses of more than one separate firm (in addition to any
local counsel) for all such Indemnified Parties, and that all such fees and
expenses shall be reimbursed as they are incurred. In the case of any such
separate firm for the Indemnified Parties, such firm shall be designated in
writing by the Placement Agent. The Company shall not be liable for any
settlement of any proceeding effected without its written consent, but if
settled with such consent or if there be a final judgment for the plaintiff, the
Company agrees to indemnify each Indemnified Party from and against any loss or
liability by reason of such settlement or judgment. The Company shall not,
without the prior written consent of each Indemnified Party, effect any
settlement of any pending or threatened proceeding in respect of which any
Indemnified Party is a party and indemnity could have been sought hereunder by
such Indemnified Party, unless such settlement includes an unconditional release
of such Indemnified Party from all liability on claims that are the subject
matter of such proceeding.
If the indemnification provided for herein is unavailable to
an Indemnified Party or the Company in respect to any losses, claims, damages or
liabilities referred to therein, then the Company or the Placement Agent as the
case may be, in lieu of indemnifying such Indemnified Party or Indemnified
Company Party thereunder, shall contribute to the amount paid or payable by such
Indemnified Party or Indemnified Company Party as a result of such losses,
claims, damages or liabilities (i) in such proportion as is appropriate to
reflect the relative benefits received by the Company, on the one hand, and the
Placement Agent, on the other hand, from the placement of the securities or (ii)
if the allocation provided by clause (i) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and
of the Placement Agent in connection with the actions, statements or omissions
that resulted in such losses, claims, damages of liabilities, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Placement Agent from the Offering of the Securities shall be
deemed to be in the same respective proportions as the total net proceeds from
the Offering (after deducting the placement fee but before deducting expenses)
received by the Company bear to the total placement fee and other consideration
received by the Placement Agent. The relative fault of the Company, on one hand,
and the Placement Agent, on the other hand, (i) in the case of alleged untrue
statement of a material fact or any alleged omission to state a material fact,
shall be determined by reference to, among other things, whether such statement
or omission relates to information supplied by the Company or by the Placement
Agent and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission, and (ii) in the
case of any other action or omission, shall be determined by reference to, among
other things, whether such action or omission was taken or omitted to be taken
by the Company or by the Placement Agent and the parties' relative intent,
knowledge, access to information and opportunity to prevent such action or
omission.
F-2
<PAGE>
The Company and the Placement Agent agree that it would not be
just and equitable if contribution pursuant to this Exhibit F were determined by
pro rata allocation or by any other method of allocation that does not take
account of the equitable considerations referred to in the immediately preceding
paragraph. The amount paid or payable by an Indemnified Party or the Indemnified
Company Party as a result of the losses, claims, damages and liabilities
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such Indemnified Party in connection with investigating
or defending any such action or claim. Notwithstanding any of the provisions of
this Exhibit F, in no event shall the Placement Agent's aggregate contribution
to the amount paid or payable exceed the aggregate amount of fees and other
consideration actually received by it under the Agreement.
AEGIS CAPITAL CORP.
By:_____________________________________
Robert Eide, Chief Executive Officer
VIANET TECHNOLOGIES, INC.
By:_____________________________________
Jeremy Posner, Chairman of the Board
F-3
<PAGE>
EXHIBIT G
FORM OF OFFICERS AND/OR DIRECTORS REPRESENTATION LETTER
December 7, 1999
Vianet Technologies, Inc.
83 Mercer Street, 3rd Floor
New York, New York 10012
and
Aegis Capital Corp.
70 East Sunrise Highway, Suite 415
Valley Stream, New York 11581-1264
Re: Vianet Technologies, Inc. (the "Company")
-----------------------------------------
Gentlemen:
This is to confirm that I have received a copy of the
Company's Subscription Agreement, Registration Rights Agreement, Class A
Warrant, Class B Warrant and Class C Warrant (the "Offering Materials"), and, to
the best of my knowledge, all of the information contained therein is accurate
and complete in all material respects, and there are no omissions of any
material facts.
I affirm that I am an officer and/or director of the Company,
and consent to the use of my name as such in the Offering Materials.
During the past ten years, I have not been (other than as
described in an exhibit hereto):
(1) The subject of a petition under the Federal bankruptcy
laws or any state insolvency law filed by or against me, or a receiver, fiscal
agent or similar officer appointed by a court for the business or property of
myself, or any partnership in which I was a general partner, at or within two
years before the time of such filing, or any corporation or business association
of which I was an executive officer at or within two years before the time of
such filing;
(2) Convicted in a criminal proceeding or a subject of a
pending criminal proceeding (excluding traffic violations and other minor
offenses);
G-1
<PAGE>
(3) The subject of any order, judgment, or decree, not
subsequently reversed, suspended or vacated, of any court of competent
jurisdiction, permanently or temporarily enjoining me from, or otherwise
limiting my involvement in, any type of business, securities or banking
activities including, but not limited to, any of the following activities:
(i) acting as a futures commission merchant, introducing
broker, commodity trading advisor, commodity pool operator, floor broker,
leverage transaction merchant, any other person regulated by the Commodity
Futures Trading Commission, or an associated person of any of the foregoing, or
as an investment adviser, underwriter, broker or dealer in securities, or as an
affiliated person, director or employee of any investment company, bank, savings
and loan association or insurance company, or engaging in or continuing any
conduct or practice in connection with such activity;
(ii) engaging in any type of business practice; or
(iii) engaging in any activity in connection with the
purchase or sale of any security or commodity or in connection with any
violation of federal or state securities law or federal commodities laws;
(4) The subject of any order, judgment or decree, not
subsequently reversed, suspended or vacated of any federal or state authority
barring, suspending or otherwise limiting for more than 60 days my right to
engage in any activity described in paragraph (3)(i) of this letter, or be
associated with persons engaged in such activity;
(5) Found by a court of competent jurisdiction in a civil
action or by the Securities and Exchange Commission, not subsequently reversed,
suspended or vacated, to have violated any federal or state securities law;
(6) Found by a court of competent jurisdiction in a civil
action or by the Commodity Futures Trading Commission, not subsequently
reversed, suspended or vacated, to have violated any federal commodities law; or
G-2
<PAGE>
(7) The subject of a United States Postal Service false
representation order entered under Section 3005 of Title 39, United States Code,
nor am I subject to a restraining order or preliminary injunction entered under
Section 3007 of Title 39, United States Code, with respect to conduct alleged to
have violated Section 3005 of Title 39, United States Code.
Very truly yours,
_______________________________
Name: Peter Leighton
Title: Chief Executive Officer
_______________________________
Print Name and Address:
_______________________________
_______________________________
_______________________________
Date: December 7, 1999
G-3
