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EXHIBIT 1.1
3,000,000 SHARES
XXXXXXXXXX.XXX, INC.
COMMON STOCK
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UNDERWRITING AGREEMENT
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FIRST UNION CAPITAL MARKETS CORP.
X.X. XXXXXXXX & CO.
WACHOVIA SECURITIES, INC.
DLJDIRECT INC.
As Representatives of the Several
Underwriters Named in Schedule I hereto
x/x Xxxxx Xxxxx Xxxxxxx Xxxxxxx Xxxx.
Xxxxxxxxxx Xxxxx
000 Xxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000 , 1999
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Dear Sirs:
XxxxXxxxxx.XXX, Inc., a Georgia corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
underwriters named in Schedule I hereto (the "Underwriters"), for whom you are
acting as the representatives (the "Representatives"), an aggregate of 3,000,000
shares of Common Stock, $0.01 par value per share ("Common Stock"), of the
Company (the "Firm Shares") and, at the election of the Underwriters, the
shareholders of the Company named on Schedule II hereto (each a "Selling
Shareholder" and collectively, the "Selling Shareholders") propose to sell up to
an aggregate of 450,000 shares of Common Stock (the "Optional Shares") as
provided in Section 2 of this Agreement solely to cover over-allotments, if any.
The Firm Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof are collectively called the "Shares."
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1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to the Underwriters that:
(i) The Company has filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1
(File No. 333-80915) under the Securities Act of 1933, as amended (the
"Act"), and as a part thereof a preliminary prospectus, in respect of
the Shares, and has filed one or more amendments thereto. Such
registration statement, as amended, has been declared effective by the
Commission, and no stop order suspending the effectiveness of such
registration statement has been issued, and no proceeding for that
purpose has been instituted or, to the knowledge of the Company,
threatened by the Commission. Copies of such registration statement and
any amendments, including any post-effective amendments, and all forms
of the related prospectuses contained therein and any supplements
thereto, have been delivered to you. Such registration statement,
together with any registration statement filed by the Company pursuant
to Rule 462(b) of the Act, including the prospectus, Part II, all
financial schedules and exhibits thereto, and all information deemed to
be a part of such registration statement pursuant to Rule 430A under
the Act at the time when it became effective, is herein referred to as
the "Registration Statement." The form of final prospectus that
discloses all the information that was omitted from the prospectus
contained in the Registration Statement on the effective date pursuant
to Rule 430A of the rules and regulations of the Commission under the
Act and in the form filed pursuant to Rule 424(b) under the Act is
herein referred to as the "Prospectus." The prospectus included in the
Registration Statement, and each prospectus included in any amendment
thereto, prior to the effective date of the Registration Statement, is
referred to herein as a "Preliminary Prospectus."
(ii) No order preventing or suspending the use of any
Preliminary Prospectus and each Preliminary Prospectus has been issued
or, to the Company's knowledge, is threatened by the Commission, at the
time of filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder, and did not contain any untrue statement of a material fact
or omit to state 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 this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Underwriters
expressly for use therein.
(iii) The Registration Statement conforms, and the Prospectus
and any amendments or supplements thereto will conform, in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder and do not and will not, as of the
applicable effective date as to the Registration Statement and any
amendment thereto and as of the applicable filing date as to the
Prospectus and any amendment or supplement thereto, contain any untrue
statement of
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a material fact or omit to state 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, in the case of the
Prospectus and any amendments or supplements thereto) not misleading;
provided, however, that this representation and warranty shall not
apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by the
Underwriters expressly for use therein. The Company acknowledges that
the only information relating to the Underwriters furnished in writing
to the Company by the Representatives specifically for inclusion in the
Registration Statement, any Preliminary Prospectus and the Prospectus
is the information in the last sentence in the last paragraph on the
cover page and the first, second, third, seventh, eighth and ninth
paragraphs under the heading "Underwriting."
(iv) Since the date of the latest audited financial statements
included in the Prospectus, neither the Company nor any of its
subsidiaries included on Exhibit 21.1 to the Registration Statement
(the "Subsidiaries") has sustained any material loss or interference
with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court
or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates as of
which information is given in the Registration Statement and the
Prospectus, there has not been any change in the outstanding capital
stock or long-term debt of the Company or any of the Subsidiaries, or
any issuance of options, warrants or rights to purchase capital stock
of the Company (except options granted to new employees under the
Company's 1998 Long-Term Incentive Plan, as amended, as described in
the Prospectus), or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
management, business, financial condition, shareholders' equity or
results of operations of the Company and the Subsidiaries, taken as a
whole ("Material Adverse Effect"), otherwise than as set forth or
contemplated in the Prospectus. Other than the Subsidiaries, there are
no corporations, joint ventures, partnerships or other entities in
which the Company or any Subsidiaries has an ownership interest in
excess of 5%.
(v) The Company and each of its Subsidiaries have good and
marketable title in fee simple to all real property, and good and
marketable title to all personal property, owned by them which is
material to the business of the Company, in each case free and clear of
all liens, encumbrances and defects except (1) such as are described in
the Prospectus, (2) such as do not materially affect the value of such
property and do not interfere with the use made and proposed to be made
of such property by the Company and the Subsidiaries or (3) the lien
held by ITC Service Company, Inc. ("ITC") to secure the Company's $3.0
million revolving credit facility with ITC, which will be repaid in
full with a portion of the proceeds of this offering as described in
the Prospectus (and all ITC liens in or to the Company's and its
Subsidiaries' properties will be released upon such repayment). All
real property and buildings held under lease by the Company or any of
the Subsidiaries are held by it under valid, subsisting and enforceable
leases (except as may be limited by bankruptcy and other creditor
rights laws and general principals of equity, including the
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availability of the equitable remedy of specific performance) with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property and buildings by the Company
or such Subsidiaries.
(vi) The Company and HNET, Inc. have been duly incorporated
and are validly existing and in good standing under the laws of the
State of Georgia, with corporate power and authority to own or lease
their respective properties and conduct their respective businesses as
described in the Prospectus. HeadHunters, L.L.C. has been duly
organized and is validly existing and in good standing under the laws
of the State of Delaware, with the power and authority to own or lease
its properties and conduct its business as described in the Prospectus.
Each of the Company and its Subsidiaries has been duly qualified to
transact business and is in good standing under the laws of each other
jurisdiction in which, given the nature of its business, the ownership
of property or other reason, it is required to be so qualified, except
where the failure to so qualify would not result in a Material Adverse
Effect.
(vii) The Company has authorized and issued capital stock as
set forth in the Prospectus under the headings "Capitalization" and
"Description of Capital Stock;" all of the issued shares of capital
stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and conform to the description of the
capital stock of the Company contained in the Prospectus; there are no
preemptive or other similar rights to subscribe for or to purchase any
securities of the Company; except as described in the Prospectus, the
Company has issued no warrants, options or other rights to purchase any
securities of the Company; and except as disclosed in the Prospectus,
neither the filing of the Registration Statement, nor the offering or
sale of the Shares as contemplated by this Agreement, gives rise to any
rights for or relating to the registration of any securities of the
Company with respect to such filing, offering or sale. All offers and
sales of securities of the Company and its Subsidiaries have been at
all relevant times duly registered under or exempt from the
registration requirements of the Act and were duly registered or exempt
from the registration requirements of all applicable state securities
or Blue Sky laws.
(viii) All of the issued and outstanding shares of capital
stock of HNET, Inc. have been duly authorized and validly issued and
are fully paid and nonassessable; all membership, limited liability
company interests or other ownership interests in each other Subsidiary
have been duly authorized and issued in compliance with the applicable
operating agreement and organizational documents for such Subsidiary
and valid contributions to capital were made by the persons holding
such interests in exchange therefor; and except as otherwise set forth
in the Prospectus, all outstanding shares of capital stock of, or
membership or other ownership interests in, each of the Subsidiaries
are owned directly, or indirectly through a wholly-owned subsidiary, by
the Company free and clear of any security interests, claims, liens or
encumbrances.
(ix) The Firm Shares have been duly authorized and, when
issued and delivered against payment therefor as provided herein, will
be validly issued and fully
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paid and nonassessable and will conform to the description of the
Shares contained in the Prospectus.
(x) The Company has full legal right, power and authority to
enter into this Agreement and to issue, sell and deliver the Firm
Shares to the Underwriters as provided herein, and this Agreement has
been duly authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the Company enforceable
against the Company in accordance with its terms, except as may be
limited by bankruptcy and other creditor rights laws and general
principals of equity, including the availability of the equitable
remedy of specific performance. The issue and sale of the Firm Shares
by the Company and the performance of this Agreement and the
consummation by the Company of the other transactions herein
contemplated will not conflict with or result in a breach or violation
of any terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of the Subsidiaries is a
party or is otherwise bound or to which any of the property or assets
of the Company or any of its Subsidiaries is subject, nor will such
action result in any violation of the provisions of the articles of
incorporation or bylaws of the Company (each as amended to date the
"Articles" and "Bylaws," respectively), or the articles of
incorporation, bylaws or other organizational documents of any of the
Subsidiaries, or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries or any of its or their properties or
assets; and no consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or body
is required for the issue and sale of the Firm Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except such as may be required under the Act and under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters and the clearance of
such offering with the National Association of Securities Dealers, Inc.
(the "NASD"). To the knowledge of the Company and each Subsidiary, as
of the date of this Agreement, no other party under any contract or
other instrument to which it is a party is in material default
thereunder.
(xi) There are no legal or governmental proceedings pending to
which the Company or any of its Subsidiaries is a party or of which any
property or assets of the Company or any of its Subsidiaries is the
subject, other than as set forth or contemplated in the Prospectus,
which, if determined adversely to the Company or any of the
Subsidiaries, would individually or in the aggregate, have a Material
Adverse Effect and, to the Company's knowledge, no such proceedings are
threatened or contemplated by governmental authorities or by others.
(xii) Xxxxxx Xxxxxxxx LLP, who have certified certain
financial statements of the Company and the Subsidiaries, are
independent public accountants as required by the Act and the rules and
regulations of the Commission thereunder.
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(xiii) All "employee benefit plans" (as defined in Section
3(3) of the Employee Retirement Income Security Act of 1974, as amended
("ERISA")) established, maintained or contributed to by the Company or
any of the Subsidiaries comply in all material respects with the
requirements of ERISA and no "employee pension benefit plan" (as
defined in Section 3(2) of ERISA) has incurred or assumed an
"accumulated funding deficiency" within the meaning of Section 302 of
ERISA or has incurred or assumed any material liability (other than for
the payment of premiums) to the Pension Benefit Guaranty Corporation.
(xiv) The consolidated financial statements of the Company and
the Subsidiaries, together with the related notes, as set forth in the
Registration Statement present fairly the consolidated financial
position and the results of operations of the Company and the
Subsidiaries at the indicated dates and for the indicated periods; such
financial statements have been prepared in accordance with generally
accepted accounting principles, consistently applied throughout the
periods presented, except as noted in the notes thereon, and all
adjustments necessary for a fair presentation of results for such
periods have been made. The selected financial information included in
the Prospectus under the headings "Summary Financial Data," "Use of
Proceeds," "Capitalization," "Selected Financial Data," and
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" presents fairly the information shown therein
and has been compiled on a basis consistent with the financial
statements presented therein.
(xv) Neither the Company nor any of the Subsidiaries is in
violation of any international, federal, state or local law,
regulation, or treaty relating to the storage, handling,
transportation, treatment or disposal of "hazardous substances" (as
defined in 42 U.S.C. Section 9601) or "hazardous materials" (as defined
by any international, federal, state or local law or regulation) or
other waste products, which violation is reasonably likely to result in
a Material Adverse Effect, and the Company and each of the Subsidiaries
have received all material permits, licenses or other approvals as may
be required of them under applicable international, federal, state or
local environmental laws and regulations to conduct their business as
described in the Prospectus; and the Company and each of the
Subsidiaries are in compliance in all material respects with the terms
and conditions of any such permit, license or approval; neither the
Company nor any of the Subsidiaries has received any notices or claims
that it is a responsible party or a potentially responsible party in
connection with any claim or notice asserted pursuant to 42 U.S.C.
Section 9601 et seq. or any state superfund law; and the disposal by
the Company or any Subsidiary of any of the Company's and each
Subsidiary's hazardous substances, hazardous materials and other waste
products, if any, has been lawful.
(xvi) No relationship, direct or indirect, exists between or
among the Company or any of the Subsidiaries, on the one hand, and the
directors, officers, shareholders, customers or suppliers of the
Company or any of the Subsidiaries on the other hand, which is required
by the Act or by the rules and regulations under the Act
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to be described in the Registration Statement and the Prospectus and
which is not described therein.
(xvii) The Company and each of the Subsidiaries have filed all
federal, state, local and foreign income, franchise and excise tax
returns which have been required to be filed (or have received an
extension with respect thereto), and have paid or made adequate
reserves for, all taxes indicated by said returns and all assessments
received by them to the extent that such taxes have become due and are
not being contested in good faith; to the knowledge of the Company
there is no tax deficiency that has been or might be asserted against
the Company that would have a Material Adverse Effect.
(xviii) Neither the Company nor any of the Subsidiaries has
taken, directly or indirectly, any action that is designed to or that
has constituted or that might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
(xix) The Shares have been approved for listing, subject to
notice of issuance, on the Nasdaq Stock Market's National Market (the
"Nasdaq National Market").
(xx) The Company and each of the Subsidiaries operate their
respective businesses in compliance, in all material respects, with all
applicable statutes, ordinances, decrees, orders, rules and regulations
of all applicable governmental bodies, including federal, state and
local governing bodies in the United States and all foreign governments
in areas outside of the United States. The Company and each of the
Subsidiaries holds and are operating in compliance, in all material
respects, with all franchises, grants, permits, easements, consents,
certificates and orders businesses as presently being conducted.
(xxi) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (a)
transactions are executed in accordance with management's general or
specific authorization; (b) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; and (c) assets are properly accounted for and safeguarded
against errors or loss from unauthorized use. Neither the Company nor
any director, officer, agent, employee or other person acting, with the
Company's knowledge, on behalf of the Company has, directly or
indirectly, used any funds of the Company for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity, made any unlawful payment to foreign or domestic government
officials or employees or to foreign or domestic political parties or
campaigns from funds of the Company, violated any provision of the
Foreign Corrupt Practices Act of 1977, as amended, or made any bribe,
rebate, payoff, influence payment, kickback or other payment, or
received or retained any funds, in violation of any law, rule or
regulation.
(xxii) The Company has filed with or submitted to the
applicable regulatory authorities each material statement, report,
information or form required by any
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applicable law, regulation or order; all such filings or submissions
were in material compliance with applicable laws when filed and, to the
knowledge of the Company, no deficiencies have been asserted by any
regulatory commission, agency or authority with respect to such filings
or submissions. The Company maintains in full force and effect all
licenses and permits necessary for the conduct of its business and has
not received any notification that any revocation or limitation thereof
is threatened or pending. To the knowledge of the Company, there is not
pending any change under any law, regulation, license or permit which
could have a Material Adverse Effect, other than as set forth in the
Prospectus. The Company has not received any notice of violation of or,
to the knowledge of the Company, been threatened with a charge of
violating and, to the knowledge of the Company, is not under
investigation with respect to a possible violation of any provision of
any law, regulation or order.
(xxiii) There is no document or contract required by the Act
or by the rules and regulations of the Commission thereunder to be
described in the Registration Statement or the Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required. All documents or contracts filed as
exhibits to the Registration Statement to which the Company or any
Subsidiary is a party have been duly authorized, validly executed and
delivered by the Company or such Subsidiary, constitute valid and
binding agreements of the Company or such Subsidiary and (assuming the
enforceability against all other parties thereto) are enforceable in
accordance with their terms, except where enforceability may be limited
by bankruptcy and other creditors rights laws and general principles of
equity, including the availability of the equitable remedy of specific
performance, and where the lack of authorization, execution, delivery
or enforceability of any such contract would not have a Material
Adverse Effect or prevent or materially hinder the consummation of this
Agreement.
(xxiv) No labor dispute exists with the Company's employees
or, to the Company's knowledge, is imminent which could have a Material
Adverse Effect. The Company has no knowledge of any existing or
imminent labor disturbance by its employees which could be expected to
have a Material Adverse Effect.
(xxv) The Company is not, will not become as a result of the
transactions contemplated hereby, and does not intend to conduct its
business in a manner that would cause it to become, an "investment
company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended (the
"1940 Act").
(xxvi) The Company has not violated any applicable laws
relating to immigration and has employed only individuals authorized to
work in the United States and, to its knowledge, has never been the
subject of any inspection or investigation relating to its compliance
with or violation of the Immigration Reform and Control Act of 1986 and
all Regulations promulgated thereunder.
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(xxvii) Other than as described in the Registration Statement,
the Company's and the Subsidiaries' internal computer systems (the
"Systems") and the computer software that the Company has developed
(the "Software") are "Millennium Compliant"; for the purposes of this
Agreement "Millennium Compliant" means: (a) the functions,
calculations, and other computing processes of the Software and Systems
(collectively, "Processes") perform as designed regardless of the date
in time on which the Processes are actually performed and regardless of
the date input to the Software and Systems, whether or not the dates
include leap years; (b) the Software and Systems can accept, store,
sort, extract, sequence, and otherwise manipulate date inputs and date
values, and return and display date values, as designed and in a
materially accurate manner, regardless of the dates used or format of
the date input; (c) the Software and Systems will function without
interruptions caused by the date in time on which the Processes are
actually performed or by the date input to the Software and Systems;
(d) the Software and Systems accept and respond to four digit year date
input in a manner that recognizes the correct century and displays,
prints and provides electronic output of date information that properly
reflects the correct century. Except as set forth in the Registration
Statement or as would not have a Material Adverse Effect, to the
Company's knowledge after making the inquiries described in the
Prospectus, the third party information and operating systems and
software (not including the Software and Systems) used by the Company
in the conduct of its business are Millennium Compliant.
(xxviii) The Company has not received any communication
(written or oral) relating to the termination or modification or
threatened termination or modification of any of the agreements
specifically named or referred to in the Prospectus, nor has it
received any communication (written or oral) relating to any
determination not to renew or extend any agreement specifically named
or referred to in the Prospectus at the end of the current term of any
such agreement, except where any such termination, modification,
non-renewal or non-extension would not have a Material Adverse Effect.
(xxix) Any 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.
(xxx) The filing of the Registration Statement has been duly
authorized by the Board of Directors of the Company.
(xxxi) 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.
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(xxxii) The Company and the Subsidiaries own or possess, or
can acquire on reasonable terms, adequate rights to use all patents,
patent rights, inventions, trade secrets, know-how, trademarks, service
marks, trade names and copyrights (collectively, "Intellectual
Property") which are necessary to conduct their business as described
in the Registration Statement and Prospectus; neither the Company nor
the Subsidiaries have received any notice of, and have no knowledge of,
any infringement of or conflict with asserted rights of the Company or
the Subsidiaries by others with respect to any Intellectual Property,
and the Company and the Subsidiaries have not received any notice of,
and have no knowledge of, any infringement of or conflict with asserted
rights of others with respect to any Intellectual Property owned or
used by the Company or the Subsidiaries, which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or
finding, could have a Material Adverse Effect.
(xxxiii) The Company and the Subsidiaries maintain insurance
with insurers of recognized financial responsibility against such
losses and risks and in such amounts as management believes it
appropriate to the business of the Company and all such policies are in
full force and effect. The Company has no 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 not have a Material Adverse Effect.
(xxxiv) The Company has not distributed and will not
distribute prior to the later of (i) the First Delivery Date or the
Second Delivery Date, as the case may be, or (ii) completion of the
distribution of the Shares, any offering material in connection with
the offering and sale of the Shares other than any Preliminary
Prospectus, the Prospectus, the Registration Statement and other
materials, if any, permitted by the Act.
(b) Each of the Selling Shareholders represents, warrants and covenants
to each Underwriter that:
(i) Such Selling Shareholder at the Closing Date will have
good and valid title to the Optional Shares set forth in Schedule II to
be sold by such Selling Shareholder, free and clear of any liens,
encumbrances, equities and claims (other than as imposed by the Act or
this Agreement), and full right, power and authority to effect the sale
and delivery of such Shares; and upon the delivery of and payment for
the Optional Shares to be sold by such Selling Shareholder pursuant to
this Agreement, good and valid title thereto, free and clear of any
liens, encumbrances, equities and claims, will be transferred to the
Underwriters.
(ii) Such Selling Shareholder has duly executed and delivered
the Custody Agreement and Power of Attorney (the "Custody Agreement")
in the form previously delivered to the Underwriters, appointing Xxxxxx
X. Xxxxxxxxxx, Xx. and Xxxx X. Xxxxxx, and each of them, as such
Selling Shareholder's attorney-in-fact (the "Attorney-in-Fact") and
American Stock Transfer & Trust Company, as custodian (the
"Custodian").
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The Attorney-in-Fact is authorized to execute, deliver and perform this
Agreement on behalf of such Selling Shareholder, to deliver the
Optional Shares to be sold by such Selling Shareholder hereunder, to
accept payment therefor and otherwise to act on behalf of such Selling
Shareholder in connection with this Agreement. Certificates, in
suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank, representing the
Optional Shares to be sold by such Selling Shareholder hereunder have
been deposited with the Custodian pursuant to the Custody Agreement for
the purpose of delivery pursuant to this Agreement. Such Selling
Shareholder agrees that the shares of Common Stock represented by the
certificates on deposit with the Custodian are subject to the interests
of the Company, the Underwriters and the other Selling Shareholders
hereunder, that the arrangements made for such custody and the
appointment of the Attorney-in-Fact are to that extent irrevocable, and
that the obligations of such Selling Shareholder hereunder shall not be
terminated except as provided in this Agreement and the Custody
Agreement. If such Selling Shareholder, as the case may be, should die,
become disabled or be declared incompetent, dissolve, cease to exist,
terminate or become insolvent, or if any other event should occur
before the delivery of the Optional Shares of such Selling Shareholder
hereunder, the certificates for such Optional Shares deposited with the
Custodian shall be delivered by the Custodian in accordance with the
terms and conditions of this Agreement and the Custody Agreement as if
such death, disability, incompetence, dissolution, cessation of
existence, termination, insolvency or other event had not occurred,
regardless of whether or not the Custodian or the Attorney-in-Fact
shall have received notice thereof.
(iii) Such Selling Shareholder, acting through such Selling
Shareholder's duly authorized Attorney-in-Fact, has duly executed and
delivered this Agreement; this Agreement constitutes a legal, valid and
binding obligation of such Selling Shareholder; all authorizations and
consents necessary for the execution and delivery of this Agreement and
the Custody Agreement on behalf of such Selling Shareholder and for the
sale and delivery of the Optional Shares to be sold by such Selling
Shareholder hereunder have been given, except as may be required by the
Act or state securities laws or the NASD; and such Selling Shareholder
has the legal capacity and full right, power and authority to execute
this Agreement and the Custody Agreement.
(iv) The performance of this Agreement and the Custody
Agreement and the consummation of the transactions contemplated hereby
and thereby by such Selling Shareholder will not result in a material
breach or violation of, or material conflict with, any of the terms or
provisions of, or constitute a material default by such Selling
Shareholder under, any indenture, mortgage, deed of trust (constructive
or other), loan agreement, lease, franchise, license or other agreement
or instrument to which such Selling Shareholder or any of his or its
properties is bound, any statute, or any judgment, decree, order, rule
or regulation or any court or governmental agency or body applicable to
such Selling Shareholder or any of his or its properties.
(v) Such Selling Shareholder has not distributed and will not
distribute any prospectus or other offering material in connection with
the offer and sale of the Shares
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other than any preliminary prospectus prepared and filed by the Company
with the Commission or the Prospectus or other material permitted by
the Act.
(vi) Such Selling Shareholder is not prompted to sell the
Optional Shares to be sold by such Selling Shareholder by any material,
non-public information concerning the Company that is not fully and
fairly disclosed in the preliminary prospectus or the Prospectus.
(vii) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Shareholder expressly for use therein, such Registration
Statement, Preliminary Prospectus and Prospectus and any amendments or
supplements thereto did not and will 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.
(viii) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory body,
administrative or other governmental body is necessary in connection
with the execution and delivery of this Agreement by such Selling
Shareholder, and the consummation by it of the transactions herein
contemplated (other than as required by the Act, state securities laws
and the NASD).
(ix) Any certificates signed by or on behalf of such Selling
Shareholder as such and delivered to the Representatives or to counsel
for the Representatives shall be deemed a representation and warranty
by such Selling Shareholder to each Underwriter as to the matters
covered thereby.
(x) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Shareholder agrees to deliver to you prior
to or at the Closing Date a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu
thereof).
(xi) Such Selling Shareholder has not taken and will not take,
directly or indirectly, any action intended to constitute or which has
constituted, or which might reasonably be expected to cause or result
in, stabilization or manipulation of the price of the Common Stock.
(xii) Such Selling Shareholder is not a member of the NASD
that is participating in the distribution of the Shares or a "person
associated with a member," as that term is defined in the NASD's Review
of Corporate Financing Interpretation.
13
(c) Xxxxxx X. Xxxx represents, warrants and covenants to each
Underwriter that, to his knowledge, the representations and warranties of the
Company contained in Section 1(a) of this Agreement are true and correct in all
material respects. Mr. Bare has reviewed and is familiar with the Registration
Statement as originally filed with the Commission and the Preliminary Prospectus
contained therein, and to his knowledge, the Preliminary Prospectus does not
include an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading.
2. PURCHASE AND SALE.
Subject to the terms and conditions herein set forth, (a) the Company
agrees to sell the Firm Shares to the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company at a purchase
price of $_______ per share, the number of Firm Shares to be purchased by such
Underwriter as set forth opposite the name of such Underwriter in Schedule I
hereto and (b) in the event and to the extent that the Underwriters shall
exercise the election to purchase the Optional Shares as provided below, the
Selling Shareholders agree to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from each Selling
Shareholder (or the Company, if applicable under the next paragraph and Article
10), at the purchase price set forth in clause (a) of this Section 2, that
portion of the number of Optional Shares as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractional securities)
determined by multiplying such number of Optional Shares by a fraction, the
numerator of which is the maximum number of Optional Shares that such Selling
Shareholder is entitled to sell as set forth opposite the name of such Selling
Shareholder in Schedule II hereto, and the denominator of which is the maximum
number of the Optional Shares that all of the Selling Shareholders are entitled
to sell, and then multiplying that resulting number by a fraction, the numerator
of which is the maximum number of Optional Shares that such Underwriter is
entitled to purchase as set forth opposite the name of such Underwriter in
Schedule I hereto, and the denominator of which is the maximum number of the
Optional Shares that all of the Underwriters are entitled to purchase.
The Selling Shareholders and, in the event either of the Selling
Shareholders defaults in his or its obligations to sell Optional Shares, the
Company, hereby grant to the Underwriters the right to purchase at their
election all or any part of the Optional Shares, at the purchase price per share
set forth in the paragraph above, for the sole purpose of covering
over-allotments in the sale of the Firm Shares. Any Optional Shares purchased by
the Underwriters shall be purchased from the Selling Shareholders; provided,
however, that if either of the Selling Shareholders defaults for any reason in
his or its obligation to sell the Optional Shares, the Company shall, if
requested by the Underwriters, issue and sell the Optional Shares to the
Underwriters in accordance with Article 10 of this Agreement. Any such election
to purchase Optional Shares may be exercised no more than once by written notice
from you to the Company and the Selling Shareholders, given within a period of
30 days after the date of this Agreement, setting forth the aggregate amount of
Optional Shares to be purchased and the date on which such Optional Shares are
to be delivered, as determined by you, but in no event
14
(i) earlier than the First Delivery Date (as defined in Section 4 hereof) or
(ii) unless you otherwise agree in writing, earlier than two or later than 10
business days after the date of such notice.
3. OFFERING BY THE UNDERWRITERS.
Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus and this Agreement.
4. DELIVERY AND PAYMENT.
Certificates in definitive form for the Shares to be purchased by each
Underwriter hereunder, and in such denominations and registered in such names as
First Union Capital Markets Corp. may request upon at least two business days
prior notice to the Company or the Selling Shareholders, as applicable, shall be
delivered by or on behalf of the Company or the Selling Shareholders, as
applicable, to you for the account of each Underwriter, against payment by such
Underwriter or on its behalf of the purchase price therefor all at the offices
of First Union Capital Markets Corp., Riverfront Plaza, 000 X. Xxxx Xxxxxx,
Xxxxxxxx, Xxxxxxxx 00000. Payment of the purchase price for the Shares shall be
made by wire transfer of immediately available funds. The time and date of such
delivery and payment shall be, with respect to the Firm Shares, 10:00 a.m.,
Richmond, Virginia time, on ___________, 1999 or at such other time and date as
you and the Company may agree upon in writing, and, with respect to the Optional
Shares, 10:00 a.m., Richmond, Virginia time, on the date specified by you in the
written notice given by you (consistent with Section 2 hereof) of the
Underwriters' election to purchase such Optional Shares, or at such other time
and date as you and the Company may agree upon in writing. Such time and date
for delivery of the Firm Shares is herein called the "First Delivery Date," such
time and date for delivery of the Optional Shares, if not the First Delivery
Date, is herein called the "Second Delivery Date," and each such time and date
for delivery is herein called a "Delivery Date." Such certificates will be made
available for checking and packaging at least 24 hours prior to each Delivery
Date at the offices of First Union Capital Markets Corp., Riverfront Plaza, 000
X. Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000 or such other location designated by
the Underwriters to the Company and the Selling Shareholders, as applicable.
5. AGREEMENTS OF THE COMPANY.
The Company agrees with the Underwriters:
(a) To prepare the Prospectus in a form reasonably approved by you and
to file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A under the Act; to make no amendment or supplement
to the Registration Statement or Prospectus prior to any Delivery Date which is
reasonably disapproved by you promptly after reasonable notice thereof; to
advise you, promptly after it receives notice thereof, of the time when any
amendment to the
15
Registration Statement has been filed or becomes effective, or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish you with
copies thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the Commission
subsequent to the date of the Prospectus and for so long as the delivery of a
Prospectus is required in connection with the offering or sale of the Shares; to
advise you, promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, of any request
by the Commission for the amending or supplementing of the Registration
Statement or Prospectus or for additional information and, in the event of the
issuance of any stop order or of any order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus or suspending any such
qualification, to use promptly all commercially reasonable efforts to obtain its
withdrawal.
(b) Promptly from time to time to take such actions as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares; provided that, in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction.
(c) To furnish the Underwriters with copies of the Registration
Statement and the Prospectus in such quantities as you may from time to time
reasonably request during such period following the date hereof that a
prospectus is required to be delivered in connection with offers or sales of
Shares, and, if the delivery of a prospectus is required during this period and
if at such time any event shall have occurred as a result of which the
Prospectus, as then amended or supplemented, would include an 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 when such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus to comply with the Act, to notify you and upon your request to file
such document and to prepare and furnish without charge to you and to any dealer
in securities as many copies as you may from time to time reasonably request of
an amended Prospectus or a supplement to the Prospectus, which will correct such
statement or omission or effect such compliance.
(d) To make generally available to its shareholders and to deliver to
you, an earnings statement of the Company, conforming with the requirements of
Section 11(a) of the Act and Rule 158 under the Act, covering a period of at
least 12 months beginning after the effective date of the Registration
Statement;
(e) For a period of 180 days from the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of any securities of the
Company (other than the Shares or
16
pursuant to employee stock option or incentive plans or pursuant to options,
warrants or rights outstanding on the date of this Agreement or pursuant to bona
fide gifts to persons who agree in writing with the donor to be bound by this
restriction), without the prior written consent of First Union Capital Markets
Corp.
(f) During a period of three years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to shareholders, and deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission, the Nasdaq Stock Market or
any national securities exchange on which any class of securities of the Company
is listed; and (ii) such additional information concerning the business and
financial condition of the Company as you may from time to time reasonably
request.
(g) To apply the net proceeds from the sale of the Firm Shares for the
purposes set forth in the Prospectus and report the use of such proceeds in
accordance with Rule 463 under the Act.
(h) The Company will comply with all of the provisions of any
undertakings contained in the Registration Statement. The Company will, from
time to time, after the effective date of the Registration Statement file with
the Commission such reports as are required by the Act, the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and the rules and regulations of
the Commission thereunder, and shall also file with state securities commissions
in states where the Shares have been sold by you (as you shall have advised us
in writing) any such reports as are required to be filed by the securities acts
and the regulations of those states.
(i) If at any time during the 25 day period after the Registration
Statement is declared effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which, in your opinion, the
market price for the Common Stock has been or is likely to be materially
affected (regardless of whether such rumor, publication or event necessitates a
supplement to or amendment of the Prospectus), the Company will, after written
notice from you advising it to do so, prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
(j) Neither the Company nor any of its officers, directors or
affiliates will take, directly or indirectly, any action designed to cause or
result in, or which might constitute or be expected to constitute, stabilization
or manipulation of the price of the Common Stock.
(k) The Company will cause the Shares to be listed on the Nasdaq Stock
Market's National Market (or such other trading market as shall be approved by
you) at each Delivery Date and will use all commercially reasonable efforts to
cause the Shares to be so listed for at least three years from the date hereof.
17
(l) The Company will not invest or otherwise use the proceeds received
by the Company from its sale of the Shares in such a manner as would require the
Company to register as an investment company under the 1940 Act.
(m) The Company will maintain a transfer agent and, if necessary under
the laws of the State of Georgia, a registrar for the Common Stock.
(n) Prior to the First Delivery Date (and, if applicable, the Second
Delivery Date), the Company will furnish to you, as soon as they have been
prepared, copies of any unaudited interim consolidated financial statements of
the Company and its Subsidiaries for any periods subsequent to the periods
covered by the financial statements appearing in the Registration Statement and
the Prospectus.
(o) The Company has filed a registration statement on Form 8-A with the
Commission providing for the registration of the Shares under the Exchange Act,
and such registration shall remain effective prior to and after the First
Delivery Date and Second Delivery Date for as long as the Company is a reporting
company under the Exchange Act.
6. PAYMENT OF EXPENSES.
The Company covenants and agrees with the several Underwriters that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
registration of the Shares under the Act; (ii) the expenses in connection with
the preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and supplements thereto
and the mailing and delivering of copies thereof to the Underwriters and
dealers; (iii) the cost of printing or reproducing any Agreement Among
Underwriters, Selected Dealers Agreement, this Agreement, Blue Sky Memoranda and
any other documents in connection with the offering, purchase, sale and delivery
of the Shares; (iv) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection therewith; (v) filing fees paid or incurred by the
Underwriters and related reasonable fees and expenses of counsel to the
Underwriters in connection with filings with the NASD; (vi) the cost of
preparing stock certificates; (vii) the costs or expenses of any transfer agent
or registrar; (viii) the costs and expenses of the Company relating to investor
presentations on any "road show" undertaken in connection with the marketing of
the Shares, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any third
party consultants engaged in connection with the road show presentations with
the prior written approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such third party
consultants, and the cost of any aircraft chartered in connection with the road
show; provided, however, expenses will be paid by the Underwriters, for any
Underwriter who is transported on aircraft chartered by the Company for a "road
show" presentation, in an amount equal to the average commercial airfare rate
for the flight, as reasonably determined by the Underwriters; (ix) the expenses
of listing the Shares on the Nasdaq National Market and (ix) all other costs and
expenses incident to the
18
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. To the extent, if at all, that either or both of
the Selling Shareholders engage special legal counsel to represent them in
connection with the transactions contemplated by this Agreement, the fees and
expenses of such counsel shall be borne by the Selling Shareholders. It is
understood, however, that except as provided in this Section, Section 8 and
Section 12 hereof, the Underwriters will pay all of their own costs and
expenses, including the fees of their counsel, stock transfer taxes on resale of
any of the Shares by them, and any advertising expenses connected with any
offers they may make.
7. CONDITIONS TO OBLIGATIONS OF UNDERWRITERS.
The obligations of the Underwriters hereunder, as to the Shares to be
delivered at each Delivery Date, shall be subject, in their discretion, to the
condition that all representations and warranties and other statements of the
Company and the Selling Shareholders herein are, at and as of such Delivery
Date, true and correct, and the condition that the Company and the Selling
Shareholders shall have performed all of their respective obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 4:00 p.m., Washington, D.C.
time, on the date of this Agreement, or such later time and date as shall have
been consented to by the Representatives, and all filings required by Rule 424,
Rule 430A, Rule 434 or Rule 462(b), if applicable, of the rules and regulations
of the Commission shall have been made; no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceeding for that purpose shall have been initiated or, to the knowledge of
the Company, threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to your
reasonable satisfaction; and no Underwriter shall have advised the Company that
the Registration Statement or any amendment thereto contains an untrue statement
of fact which, in your judgment, is material or omits to state a fact which, in
your judgment, is material and is required to be stated therein or necessary to
make the statements therein not misleading, or that any Preliminary Prospectus,
the Prospectus or any supplement thereto contains an untrue statement of fact
which, in your judgment, is material, or omits to state a fact which, in your
judgment, is material and is 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;
(b) Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., counsel for the
Underwriters, shall have furnished to you such opinion or opinions, dated such
Delivery Date, with respect to the incorporation of the Company, the validity of
the Shares being issued at such Delivery Date, the Registration Statement, the
Prospectus, and other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Xxxxxx & Bird LLP, counsel for the Company, shall have furnished to
you their written opinion, dated each such Delivery Date, in form and substance
reasonably satisfactory
19
to you, to the effect set forth in Exhibit A attached hereto, and Xxxx &
Xxxxxxxxx P.C., counsel to Selling Shareholders, shall have furnished to you
their written opinion, dated such Delivery Date, in form and substance
reasonably satisfactory to you, to the effect set forth in Exhibit B attached
hereto;
(d) On the date of this Agreement and the effective date of the most
recently filed post-effective amendment to the Registration Statement and also
at each Delivery Date, Xxxxxx Xxxxxxxx LLP shall have furnished to you a letter
or letters, dated the respective date of delivery thereof, in form and substance
reasonably satisfactory to you, containing statements and information of the
type ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain other financial information
relating to the Company and its Subsidiaries contained in the Registration
Statement and the Prospectus;
(e) (i) Neither the Company nor any of the Subsidiaries shall have
sustained, since the date of the latest audited financial statements included in
the Prospectus, any loss or interference with their business taken as a whole
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Prospectus, and (ii)
since the respective dates as of which information is given in the Prospectus
there shall not have been any change in the outstanding capital stock or
long-term debt of the Company or any of the Subsidiaries or any change, or any
development involving a prospective change, in or affecting the general affairs,
management, financial position, shareholders' equity or results of operations of
the Company and the Subsidiaries taken as a whole otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such case described
in clause (i) or (ii) is, in your reasonable judgment, so material and adverse
as to make it impracticable or inadvisable to proceed with the public offering
or the delivery of the Shares being delivered at such Delivery Date on the terms
and in the manner contemplated by the Prospectus;
(f) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension in the trading of the Company's securities; (ii)
a suspension or material limitation in trading in securities generally on the
New York Stock Exchange or the National Association of Securities Dealers, Inc.
Automated Quotation System; (iii) a general moratorium on commercial banking
activities in New York, Virginia or Georgia declared by either federal or New
York, Virginia or Georgia authorities; (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United States
of a national emergency or war, if any such event specified in this clause (iv)
would have such a materially adverse effect, in your reasonable judgment, as to
make it impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Delivery Date on the terms and in
the manner contemplated in the Prospectus; or (v) such a material adverse change
in general economic, political, financial or international conditions affecting
financial markets in the United States having a material adverse impact on
trading prices of securities in general, as, in your reasonable judgment, makes
it inadvisable to proceed with the payment for and delivery of the Shares;
20
(g) The Company shall have furnished to you copies of agreements
between the Company and the directors, executive officers and certain
shareholders of the Company specified by you, including but not limited to the
Selling Shareholders, in form and content reasonably satisfactory to you,
pursuant to which such persons agree that for a period beginning on the date of
effectiveness of the Registration Statement and ending 180 days thereafter, they
will not, except pursuant to this Agreement, directly or indirectly (i) make,
agree to or cause any offer, sale (including short sale), loan, pledge, or other
disposition of, or grant any options, rights or warrants to purchase with
respect to, or otherwise transfer or reduce any risk of ownership of, directly
or indirectly, any shares of Common Stock or any securities convertible into or
exchangeable or exercisable for Common Stock or other capital stock of the
Company or (ii) enter into any swap or other arrangement that transfers all or a
portion of the economic consequences associated with the ownership of the Common
Stock (regardless of whether any of the transactions described in clause (i) or
(ii) is to be settled by the delivery of Common Stock, or such other securities,
in cash or otherwise), or (iii) make any demand for, or exercise any right with
respect to, the registration of Common Stock or any securities convertible into
or exchangeable or exercisable for Common Stock, without the prior written
consent of First Union Capital Markets Corp., which consent shall not be
unreasonably withheld, conditioned or delayed; provided, however, that nothing
contained therein shall prohibit (x) the exercise of stock options or other
purchases of Common Stock under stock option plans or other incentive
compensation arrangements for employees or directors previously approved by the
Company's Board of Directors or (y) the gift, pledge, assignment or transfer, in
lifetime or by will or intestacy, to a person, entity or trust of any such
securities without the prior consent of First Union Capital Markets Corp. if the
donee, pledgee, assignee, beneficiary, heir, trustee or other transferee agrees,
in writing delivered to First Union Capital Markets Corp. within five days after
such gift, pledge or assignment, to be bound by the terms of such agreement; and
(h) The Company and the Selling Shareholders shall have furnished or
caused to be furnished to you at such Delivery Date certificates of officers of
the Company and certificates of the Selling Shareholders, as applicable,
reasonably satisfactory to you as to the accuracy of the representations and
warranties of the Company and the Selling Shareholders herein at and as of such
Delivery Date, as to the performance by the Company and the Selling Shareholders
of all of their respective obligations hereunder to be performed at or prior to
such Delivery Date, as to the matters set forth in subsections (a) and (g) of
this Section and as to such other matters as you may reasonably request.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities, joint or several, to which
such Underwriter 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 an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be
21
stated therein or necessary to make the statements therein not
misleading, and will promptly reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection with
investigating, preparing to defend or defending, or appearing as a third-party
witness in connection with, any such action or claim; provided, however, that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by the Underwriters through you expressly
for use therein; provided, further, that the foregoing indemnity agreement with
respect to any preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims, damages or
liabilities purchased Shares, or any person controlling such Underwriter, if a
copy of the Prospectus (as then amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) was not sent or given by
or on behalf of such Underwriter to such person, if required by law so to have
been delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or supplemented)
would have cured the defect giving rise to such losses, claims, damages or
liabilities. For all purposes of this Agreement, the Company acknowledges that
the information in the last sentence of the last paragraph on the cover page and
the first, second, third, seventh, eighth and ninth paragraphs under the heading
"Underwriting" in any Preliminary Prospectus and the Prospectus constitute the
only information relating to any Underwriter furnished in writing to the Company
by you expressly for inclusion in the Registration Statement, any Preliminary
Prospectus or the Prospectus.
(b) The Selling Shareholders agree, severally and not jointly, to
indemnify and hold harmless each Underwriter (including, without limitation, in
its capacity as an Underwriter or as a "qualified independent underwriter"
within the meaning of Rule 2700 of the NASD), and each person, if any, who
controls any Underwriter within the meaning of either Section 15 of the Act or
Section 20 of the Exchange Act, or any blue sky application or filing, and the
Company, its directors, its officers who sign the Registration Statement and
each person, if any who controls the Company within the meaning of either such
Section, provided, however, that the indemnification obligation of each Selling
Shareholder shall be limited to the net proceeds received by such Selling
Shareholder with respect to the Optional Shares sold by such Selling
Shareholder, from and against any and all losses, claims, damages and
liabilities (or actions in respect thereof) that arise out of or are based upon
any untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendment or supplement thereto) or any
Preliminary Prospectus, or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, but only with reference to information
relating to such Selling Shareholder furnished in writing by or on behalf of
such Selling Shareholder expressly for use in the Registration Statement or the
Prospectus or in any Preliminary Prospectus; provided, however, that the
foregoing indemnity agreement shall be effective only if Optional Shares are
sold pursuant to this Agreement; further provided, that no foregoing indemnity
agreement with
22
respect to any Preliminary Prospectus or the Prospectus shall not
inure to the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages or liabilities purchased Shares, or any person
controlling such Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or supplements
thereto) was not sent or given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered, at or prior to the written
confirmation of the sale of the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the defect giving rise to such
loss, claim, damage or liability; and further provided, that no Selling
Shareholder will be liable to the extent that such loss, claim, liability,
expense or damage arises from the sale of the Optional Shares in the public
offering to any person by an Underwriter and is based on an untrue statement or
omission or alleged untrue statement or omission made in reliance on and in
conformity with information relating to an Underwriter furnished in writing to
the Company by an Underwriter expressly for inclusion in the Registration
Statement, any Preliminary Prospectus or the Prospectus. For all purposes under
this Agreement, the Selling Shareholders acknowledge that the information in the
last sentence of the last paragraph on the cover page and the first, second,
third, seventh, eighth and ninth paragraphs under the heading "Underwriting" in
any Preliminary Prospectus and the Prospectus constitute the only information
relating to any Underwriter furnished in writing to the Company by you expressly
for inclusion in the Registration Statement, any preliminary prospectus or the
Prospectus.
(c) Each Underwriter will indemnify and hold harmless the Company and
the Selling Shareholders against any losses, claims, damages or liabilities to
which the Company or Selling Shareholders 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 an untrue statement or alleged
untrue statement of a material fact contained in the Preliminary Prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, 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 any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the Company by such
Underwriter through you expressly for use therein; and will reimburse the
Company and the Selling Shareholders for any legal or other expenses reasonably
incurred by the Company and the Selling Shareholders in connection with
investigating, preparing to defend or defending, or appearing as third-party
witness in connection with, any such action or claim.
(d) Promptly after receipt of notice of the commencement of any action
by an indemnified party under subsection (a), (b) or (c) above, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be
23
brought against any indemnified party and it shall notify the indemnifying party
of the commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such 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 been advised by counsel
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to defend such action on behalf of such indemnified
party or parties. It is understood that the indemnifying party shall, in
connection with any such action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys together with appropriate local counsel at any time
for all indemnified parties, unless such firm of attorneys shall have reasonably
concluded that one or more indemnified parties has actual differing interests
with any other indemnified party. Upon receipt of notice from the indemnifying
party to such indemnified party of its election so to appoint counsel to defend
such action and approval by the indemnified party of such counsel, the
indemnifying party will not be liable for any settlement entered into without
its written consent and will not be liable to such indemnified party under this
Section 8 for any legal or other expenses 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, (ii) the indemnifying party shall not
have employed counsel reasonably satisfactory to the indemnified party to
represent the indemnified party within a reasonable time after notice of
commencement of the action, or (iii) the indemnifying party has authorized the
employment of counsel for the indemnified party at the expense of the
indemnifying party; and except that, if clause (i) or (iii) is applicable, such
liability shall be only in respect of the counsel referred to in such clause (i)
or (iii). Notwithstanding the immediately preceding sentence and the first
sentence of this paragraph, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel, the indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to therein,
then each indemnifying party shall contribute to the amount paid or payable by
such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion as
is appropriate to reflect the relative benefits received by the Company, the
Selling Shareholders and the Underwriters from the offering of the Shares. The
relative benefits received by the Selling Shareholders shall be deemed to be in
proportion to the net proceeds to be received by them in the offering. If,
24
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (d) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company, the Selling Shareholders and the Underwriters
in connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions or proceedings in respect thereof),
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Selling Shareholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (after deducting the total underwriting
discount, but before deducting expenses) received by the Company and the Selling
Shareholders bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault 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, a Selling Shareholder or the Underwriters
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Selling Shareholders and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this subsection (e) were determined by
pro rata allocation (even if the Underwriters were treated as one entity for
such purpose) or by any other method of allocation which does not take into
account the equitable considerations referred to above in this subsection (e).
The amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions or proceedings in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. 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 under this subsection (e) are several in proportion to
their respective underwriting obligations and not joint.
(f) The obligations of the Company and the Selling Shareholders under
this Section 8 shall be in addition to any liability which the Company and the
Selling Shareholders may otherwise have and shall extend, upon the same terms
and conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the Underwriters may otherwise have
and shall extend, upon the same terms and conditions, to each officer and
director of the Company and to each person, if any, who controls the Company
within the meaning of the Act and to the Selling Shareholders.
25
9. DEFAULT OF UNDERWRITERS.
(a) If any Underwriter shall default in its obligation to purchase the
Shares that it has agreed to purchase hereunder at a Delivery Date, you may in
your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within 36 hours after such default
by any Underwriter you do not arrange for the purchase of such Shares, then the
Company or the Selling Shareholders shall be entitled to a further period of 36
hours within which to procure another party or other parties satisfactory to you
to purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company or the Selling Shareholders that you
have so arranged for the purchase of such Shares, or the Company or the Selling
Shareholders notifies you that it has so arranged for the purchase of such
Shares, you or the Company or the Selling Shareholders shall have the right to
postpone such Delivery Date for a period of not more than seven days, in order
to effect whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration Statement or
the Prospectus which in your opinion, exercised in consultation with Xxxxxx
Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., may thereby be made necessary. The term
"Underwriter" as used in this Agreement shall include any person substituted
under this Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company or the
Selling Shareholders as provided in subsection (a) above, the aggregate number
of such Shares that remains unpurchased does not exceed one-eleventh of the
aggregate number of all the Shares to be purchased at such Delivery Date, then
the Company or a Selling Shareholder, as applicable, shall have the right to
require each non-defaulting Underwriter to purchase the number of Shares that
such Underwriter agreed to purchase hereunder at such Delivery Date and, in
addition, to require each non-defaulting Underwriter to purchase its pro rata
share (based on the number of Shares that such Underwriter agreed to purchase
hereunder at such Delivery Date) of the share of such defaulting Underwriter or
Underwriters for which such arrangements have not been made; but nothing herein
shall relieve a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by you and the Company or the
Selling Shareholders, as applicable, as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased exceeds one-eleventh
of the aggregate number of all the Shares to be purchased at such Delivery Date,
or if the Company or a Selling Shareholder shall not exercise the right
described in subsection (b) above to require non-defaulting Underwriters to
purchase Shares of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Delivery Date, the obligation of the
Underwriters to purchase and the Selling Shareholders to sell the Optional
Shares) shall thereupon terminate, without liability on the part of any
non-defaulting Underwriters or the Company and the Selling Shareholders, except
for the expenses to be borne by the Company and the Underwriters as provided in
Section 6
26
hereof and the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
10. DEFAULT BY A SELLING SHAREHOLDER.
If a Selling Shareholder shall fail to sell and deliver the number of
Optional Shares that such Selling Shareholder is obligated to sell, the
Underwriters may, at their option, by notice to the Company, either (a) require
the Company to sell and deliver such number of shares of Common Stock as to
which such Selling Shareholder has defaulted, (b) elect to purchase the Firm
Shares that the Company has agreed to sell pursuant to this Agreement or (c)
terminate this Agreement if the Company shall have refused to sell and deliver
to the Underwriters the shares of Common Stock referred to in clause (a) of this
Section 10.
In the event of a default under this Section 10 that does not result in
the termination of this Agreement, either the Underwriters or the Company shall
have the right to postpone the Closing Date for a period not exceeding seven
days in order to effect any required changes in the Registration Statement or
Prospectus or in any other documents or arrangements. No action taken pursuant
to this Section 10 shall relieve the Company or the Selling Shareholder so
defaulting from liability, if any, in respect of such default.
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE.
The respective indemnities, agreements, representations, warranties and
other statements of the Company and the several Underwriters, as 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 any termination
or cancellation of this Agreement or any investigation (or any statement as to
the results thereof) made by or on behalf of the Underwriters or any controlling
person of any Underwriter, or the Company, or any officer or director or
controlling person of the Company, and shall survive delivery of and payment for
the Shares.
12. TERMINATION AND PAYMENT OF EXPENSES.
If this Agreement shall be terminated pursuant to Section 9 hereof, the
Company and the Selling Shareholders shall not then be under any liability to
any Underwriter, except as provided in Section 6 and Section 8 hereof; but if
for any other reason any Shares are not delivered by or on behalf of the Company
as provided herein, the Company will reimburse the Underwriters through you for
all out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred by the Underwriters in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Underwriter except as provided in Section 6
and Section 8 hereof.
27
13. NOTICES.
In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you.
All statements, requests, notices and agreements hereunder shall be in
writing and if to the Underwriters shall be sufficient in all respects if
delivered or sent by reliable courier, first-class mail, telex or facsimile
transmission to First Union Capital Markets Corp., at Riverfront Plaza, 000 Xxxx
Xxxx Xxxxxx, Xxxxxxxx, Xxxxxxxx 00000, Attention: Corporate Finance Department,
facsimile (000) 000-0000, with a copy (which shall not constitute notice) to
Xxxxxx Xxxxxxx Xxxxx & Xxxxxxxxxxx, L.L.P., Attention: Xxxxx X. Xxxxxxx, Esq.,
counsel for the Underwriters; if to the Company shall be sufficient in all
respects if delivered or sent by reliable courier, first-class mail, telex, or
facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: Xxxxxx X. Xxxxxxxxxx, Xx., facsimile (770)
300-9298, with a copy (which shall not constitute notice) to Xxxxxx & Bird LLP,
Attention: Xxxx X. Xxxxxx, Esq., counsel to the Company; and if to the Selling
Shareholders shall be sufficient in all respects if delivered or sent by
reliable courier, first-class mail, telex or facsimile transmission to Xxxxxx X.
Xxxx, at ______________________, and to the Bare Family Trust, at
________________________, with at copy (which shall not constitute notice) to
Xxxx & Xxxxxxxxx, P.C., at Perimeter Ridge, Xxxxxxxx 00, Xxxxx 000, 000 Xxxxxxx
Xxxxx, Xxxxxxx, Xxxxxxx 00000, Attention: P. Xxxxxx Xxxxxxx, Esq., facsimile
(000) 000-0000, counsel to the Selling Shareholders; provided, however, that any
notice to any Underwriter pursuant to Section 8 hereof shall be delivered or
sent by reliable courier, first-class mail, telex or facsimile transmission to
such Underwriter at its address set forth in the Underwriters' Questionnaire,
which address will be supplied to the Company or the Selling Shareholders by you
upon request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
14. SUCCESSORS.
This Agreement shall be binding upon, and inure solely to the benefit
of, the Underwriters, the Company and the Selling Shareholders and, to the
extent provided in Sections 8 and 11 hereof, the officers and directors of the
Company and each person who controls the Company or any Underwriter, and their
respective heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
15. TIME OF THE ESSENCE.
Time shall be of the essence in this Agreement.
28
16. BUSINESS DAY.
As used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
17. APPLICABLE LAW.
This Agreement shall be construed in accordance with the laws of the
State of Georgia.
18. CAPTIONS.
The captions included in this Agreement are included solely for
convenience of reference and shall not be deemed to be a part of this Agreement.
19. COUNTERPARTS.
This Agreement may be executed by any one or more of the parties in any
number of counterparts, each of which shall be deemed to be an original, but all
such counterparts shall together constitute one and the same instrument.
20. PRONOUNS.
All pronouns used herein shall be deemed to refer to the masculine,
feminine or neuter gender as the context requires.
29
If the foregoing is in accordance with your understanding, please sign
and return to us four counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding agreement
among each of the Underwriters and the Company. It is understood that your
acceptance of this Agreement on behalf of each of the Underwriters is pursuant
to the authority set forth in a form of Agreement Among Underwriters, the form
of which will be submitted to the Company for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
XXXXXXXXXX.XXX, INC.
By:
-----------------------------------
Name:
Title:
By:
-----------------------------------
Xxxxxx X. Xxxx,
Selling Shareholder
BARE FAMILY TRUST, Selling Shareholder
By:
-----------------------------------
Xxxx XxXxxxxxxx, Trustee
Accepted as of the date hereof
at Richmond, Virginia:
FIRST UNION CAPITAL MARKETS CORP.
X.X. XXXXXXXX & CO.
WACHOVIA SECURITIES, INC.
DLJDIRECT INC.
As Representatives of the several Underwriters
By: FIRST UNION CAPITAL MARKETS CORP.
By:
---------------------------------------
Name:
Title:
30
SCHEDULE I
OPTIONAL
SECURITIES
TO BE PURCHASED
FIRM SHARES IF MAXIMUM
UNDERWRITER TO BE PURCHASED OPTION EXERCISED
----------- --------------- ----------------
First Union Capital Markets Corp.....................................
X. X. Xxxxxxxx & Co. ................................................
Wachovia Securities, Inc.............................................
DLJdirect Inc........................................................
B-1
31
SCHEDULE II
SELLING SHAREHOLDERS
NAME OF SELLING SHAREHOLDER NUMBER OF OPTIONAL SHARES
--------------------------- -------------------------
Xxxxxx X. Xxxx....................................................... 225,000
Bare Family Trust.................................................... 225,000
--------
Total....................................................... 450,000
B-2