EXHIBIT 10.11
ACQUISITION AGREEMENT AND PLAN OF MERGER
BY AND AMONG
RADIANT SYSTEMS, INC.
3 BS ENTERPRISES, INC.
5 RS ENTERPRISES, INC.
THE XXXXXXX X. XXXXXXX CHARITABLE REMAINDER UNITRUST
THE H. XXXXXX XXXX CHARITABLE REMAINDER UNITRUST
AND
H. XXXXXX XXXX
AND
XXXXXXX X. XXXXXXX
DECEMBER 31, 1996
AGREEMENT AND PLAN OF MERGER
TABLE OF CONTENTS
SECTION 1. THE MERGERS.................................................... 2
1.1. The Mergers.............................................. 2
1.2. Effective Time of the Mergers............................ 3
1.3. Closing.................................................. 3
1.4. Effect of the Merger..................................... 3
1.5. Articles of Incorporation; Bylaws........................ 3
1.6. Directors and Officers................................... 4
1.7. Shareholders' Meetings of 3Bs and 5Rs.................... 4
SECTION 2. THE ASSET SALES................................................ 4
2.1. The Asset Sales.......................................... 4
2.2. Effective Time of the Asset Sales........................ 5
SECTION 3. CONSIDERATION.................................................. 5
3.1. Total Consideration...................................... 5
3.2. Consideration for Profits Interest Sale.................. 6
3.3. Consideration for Trust Asset Sales...................... 6
3.4. Merger Consideration..................................... 7
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND.............. 8
THE SHAREHOLDERS
4.1. Corporate or Entity Representations as to Sellers........ 8
4.2. Shareholders............................................. 10
4.3. Billmart Entity Representations and Warranties........... 10
4.4. PrysmTech Entity Representations and Warranties.......... 11
4.5. Distribution of Schedule 4.5 Assets and Certain
Other Assets............................................. 12
4.7. Statements of Assets and Liabilities and
Financial Statements..................................... 13
4.8. Tax Matters.............................................. 14
4.9. Absence of Certain Changes............................... 14
4.10. Absence of Undisclosed Liabilities....................... 14
4.11. Litigation and Claims.................................... 15
4.12. Title to and Condition of Properties..................... 15
4.13. Nature of the Businesses; Contracts...................... 15
4.14. Employment Matters....................................... 16
4.15. Trade Rights............................................. 16
4.16. Bank Accounts............................................ 17
4.17. Conveyance of Profits Interest........................... 17
4.18. Securities Law Matters................................... 17
4.19. No Brokers or Finders.................................... 18
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4.20. Disclosure............................................... 18
SECTION 5. REPRESENTATIONS AND WARRANTIES OF RADIANT...................... 18
5.1. Corporate................................................ 18
5.2. Authority................................................ 19
5.3. No Brokers or Finders.................................... 19
5.4. Disclosure............................................... 19
SECTION 6. COVENANTS...................................................... 19
6.1. Tax Treatment: Securities Law Matters.................... 19
6.2. Notification............................................. 20
6.3. Best Efforts............................................. 20
6.4. Exclusive Dealing........................................ 20
6.5. Further Assurances....................................... 20
6.6. Operation in Ordinary Course............................. 20
6.7. Employment Agreements of Budwitz and Rice................ 21
6.8. Grant of Options to Budwitz and Rice..................... 21
SECTION 7. POST-CLOSING COVENANTS......................................... 21
7.1. Termination of Public Offering Rights
in PrysmTech Operating Agreement......................... 21
7.2. Shareholders' Put Right Relating to Radiant IPO.......... 22
7.3. Shareholders' Post-IPO Registration Rights
with Respect to Radiant Common Stock..................... 23
7.4. Restrictions on Transfer................................. 27
7.5. Tax Matters.............................................. 30
7.6. Dissolution of Billmart and PrysmTech.................... 32
7.7. Transition Loans to Rice and Budwitz..................... 32
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RADIANT................. 32
8.1. Representations and Warranties True as of the
Closing Date............................................. 32
8.2. Compliance With Agreement................................ 32
8.3. Absence of Suit.......................................... 33
8.4. Consents and Approvals................................... 33
8.5. Exemption................................................ 33
SECTION 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS
AND THE SHAREHOLDERS........................................... 33
9.1. Representations and Warranties True on
the Closing Date......................................... 33
9.2. Compliance With Agreement................................ 33
9.3. Absence of Suit.......................................... 33
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SECTION 10. SECTION SURVIVAL OF REPRESENTATIONS AND WARRANTIES/
INDEMNITY...................................................... 34
10.1. Survival of Representations and Warranties............... 34
10.2. Indemnification by Shareholders.......................... 34
10.3. Indemnification by Radiant............................... 34
10.4. Set-Off.................................................. 35
10.5. Conditions of Indemnification............................ 35
10.6. Payment.................................................. 35
10.7. No Waiver................................................ 36
10.8. Adjustment of Liability.................................. 36
10.9. Non-Exclusive Remedy..................................... 36
SECTION 11. CLOSING........................................................ 36
11.1. Documents to be Delivered by the Sellers
and the Shareholders..................................... 36
11.2. Documents to be Delivered by Radiant..................... 38
SECTION 12. TERMINATION.................................................... 39
12.1. Termination.............................................. 39
SECTION 13. MISCELLANEOUS.................................................. 40
13.1. Expenses................................................. 40
13.2. Entire Agreement......................................... 40
13.3. Waivers and Consents..................................... 40
13.4. Notices.................................................. 40
13.5. Gender................................................... 41
13.6. Governing Law............................................ 41
13.7. Arbitration.............................................. 41
13.8. Parties in Interest...................................... 42
13.9. Severability............................................. 42
13.10 Counterparts............................................. 42
13.11 Confidentiality.......................................... 42
EXHIBITS:
Exhibit 1 - Names, Addresses and Shareholdings of Shareholders of
3Bs and 5Rs
Exhibit "A" - Form of Term Note
Exhibit "B" - Form of Security and Agency Agreement
Exhibit "C" - Form of Transition Loan Note
Exhibit "D" - Form of Budwitz Employment Agreement
Exhibit "E" - Form of Rice Employment Agreement
Exhibit "F" - Form of ISO Agreement
Exhibit "G" - Form of NQO Agreement
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Exhibit "H" - Form of Assignment and Transfer of Limited Liability
Company Membership Interest
Exhibit "I" - Form of Assignment and Transfer of Profits Interest
Exhibit "J" - Form of Certificate of Shareholder
Exhibit "K" - Form of Secretary's Certificate
Exhibit "L" - Form of Officer's Certificate
Exhibit "M" - Form of Certificate of Trustee
Exhibit "N" - Form of Manager's Certificate of Billmart
Exhibit "O" - Form of Manager's Certificate of PrysmTech
Exhibit "P" - Form of Opinion of Sellers' and Shareholders' Counsel
Exhibit "Q" - Form of Sirrom Intercreditor Agreement
Exhibit "R" - Form of Certificate of Merger
Exhibit "S" - Form of Secretary's Certificate of Radiant
Exhibit "T" - Form of Officer's Certificate of Radiant
Exhibit "U" - Form of Opinion of Counsel of Radiant
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SCHEDULES
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Schedule 4.1.(f) - Capitalization of 3Bs and 5Rs
Schedule 4.3(e) - Billmart Members, Managers and Officers
Schedule 4.4(e) - PrysmTech Managers and Officers
Schedule 4.4(f) - Capitalization of PrysmTech
Schedule 4.5(a) - Schedule 4.5 Assets and Holders Thereof
Schedule 4.6 - Exceptions to No Violations or Conflicts
Schedule 4.7 - Financial Statements
Schedule 4.9 - Absence of Certain Changes
Schedule 4.10 - Off Balance Sheet and Undisclosed Liabilities
Schedule 4.12 - Lien
Schedule 4.13 - Billmart License Agreement; Contracts
Schedule 4.15 - Trade Rights
Schedule 4.16 - Bank Accounts
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ACQUISITION AGREEMENT AND PLAN OF MERGER
THIS ACQUISITION AGREEMENT AND PLAN OF MERGER (this "Agreement"), dated as
of December 31, 1996, by and among RADIANT SYSTEMS, INC., a Georgia corporation
("Radiant"), 3BS ENTERPRISES, INC., a Georgia corporation ("3Bs"), 5RS
ENTERPRISES, INC., a Georgia corporation ("5Rs"), THE XXXXXXX X. XXXXXXX
CHARITABLE REMAINDER UNITRUST, a Georgia trust having as its trustee Xxxxxxx X.
Xxxxxxx (the "Budwitz Trust"), THE H. XXXXXX XXXX CHARITABLE REMAINDER
UNITRUST, a Georgia trust having as its trustee H. Xxxxxx Xxxx (the "Rice
Trust"), H. XXXXXX XXXX, an individual resident of Georgia ("Rice") and XXXXXXX
X. XXXXXXX, an individual resident of Georgia ("Budwitz").
RECITALS
WHEREAS, Budwitz is the sole shareholder of 3Bs and is the settlor and a
trustee of the Budwitz Trust, and Rice is the sole shareholder of 5Rs and is the
settlor and a trustee of the Rice Trust (Budwitz and Rice collectively referred
to as the "Shareholders"); and
WHEREAS, 3Bs, 5Rs, the Budwitz Trust and the Rice Trust collectively are
the only owners of the entire outstanding membership interest in Billmart, LLC,
a Georgia limited liability company ("Billmart") (3Bs, 5Rs, the Budwitz Trust
and the Rice Trust hereinafter sometimes collectively referred to as the
"Sellers"); and
WHEREAS, Billmart has offered to grant to Sony Theatre Management
Corporation, a Delaware corporation ("Sony"), a two percent (2%) profits
interest in Billmart (the "Profits Interest"), which (if accepted and issued)
will be the only outstanding interest in capital or profits of Billmart other
than the membership interests held by the Sellers; and
WHEREAS, Billmart and Radiant collectively are the owners of the entire
outstanding membership interest in PrysmTech, LLC, a Georgia limited liability
company ("PrysmTech"); and
WHEREAS, substantially the entire business of Billmart consists of
Billmart's ownership of its respective interest in PrysmTech and ownership of
certain software which is exclusively licensed to PrysmTech (collectively, the
"Billmart Business"); and
WHEREAS, PrysmTech is engaged in the business of developing and marketing
automated point-of-sale ticketing, back office and headquarters office systems
for the entertainment industry, which include proprietary and other software
incorporated with computer hardware (the "PrysmTech Business"); and
WHEREAS, Radiant desires to acquire from the Sellers and Sony, on the terms
and conditions set forth herein, the entire ownership interest in Billmart
(including both the membership interests therein and the Profits Interest) as
well as certain other assets related to the PrysmTech Business which are held by
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the Sellers as of the date hereof, and thereby to acquire the Billmart Business
and the PrysmTech Business, and the Sellers desire to convey to Radiant, on the
terms and conditions set forth herein, such entire ownership interest in
Billmart and to procure conveyance to Radiant of the Profits Interest; and
WHEREAS, the respective Boards of Directors of 3Bs and Radiant have
approved the merger of 3Bs with and into Radiant (the "3Bs Merger"), the
Respective Boards of Directors of 5Rs and Radiant have approved the merger of
5Rs with and into Radiant (the "5Rs Merger") (the 3Bs Merger and the 5Rs Merger
collectively referred to herein as the "Mergers") and the Board of Directors of
Radiant and the respective trustees of the Rice Trust and the Budwitz Trust have
approved the sale by each such respective trust of its respective membership
interest in Billmart to Radiant (the "Trust Asset Sales", and collectively with
the sale to Radiant by Sony of the Profits Interest, the "Asset Sales"), all
pursuant to this Agreement and their respective articles of incorporation and
bylaws or their respective trust agreements, as applicable, and the applicable
corporation or trust laws or their respective jurisdictions of organization; and
WHEREAS, the respective Boards of Directors of Radiant, 3Bs and 5Rs, as
well as the Rice Trust, the Budwitz Trust and the Shareholders (individually)
believe that the proposed Mergers and Asset Sales, and the exchange of
promissory notes and shares of Radiant's no par value, nonvoting Class A common
stock ("Class A Stock") for all the shares of 3Bs common stock (the "3Bs
Shares") and 5Rs common stock (the "5Rs Shares") and for the Billmart membership
interests owned by the trusts and for the Profits Interest, pursuant to and
subject to the terms of this Agreement, are desirable and in the best interests
of the respective entities and Shareholders; and
WHEREAS, each of Radiant, 3Bs, 5Rs, the Budwitz Trust, the Rice Trust and
the Shareholders desire to make certain representations and warranties and
agreements in connection with the Mergers and Asset sales and the other
transactions contemplated herein and to prescribe various conditions to such
transactions;
NOW, THEREFORE, in consideration of the foregoing premises and the
representations, warranties and agreements contained herein, the parties hereto,
intending to be legally bound, hereby agree as follows:
SECTION 1. THE MERGERS
1.1. The Mergers. Subject to the terms and conditions of this Agreement
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and at the Effective Time (as hereinafter defined):
(a) 3Bs Merger. 3Bs shall merge with and into Radiant in accordance
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with the Georgia Business Corporation Code (the "GBCC"), as a result of which
the separate corporate existence of 3Bs will cease and Radiant shall be the
surviving corporation under the laws of the State of Georgia;
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(b) 5Rs Merger. 5Rs shall merge with and into Radiant in accordance
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with the GBCC, as a result of which the separate corporate existence of 5Rs will
cease and Radiant shall be the surviving corporation under the laws of the State
of Georgia. (References to the "Surviving Corporation" herein are to Radiant as
the corporation surviving the 3Bs Merger and the 5Rs Merger, as the context
requires.)
1.2. Effective Time of the Mergers.
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Promptly after the Closing (as hereinafter defined) and subject to the
provisions of this Agreement:
(i) a certificate of merger shall be duly prepared and executed by
Radiant and 3Bs and thereafter delivered to the Secretary of State of the State
of Georgia for filing as provided in the GBCC (the "3Bs Certificate of Merger").
The 3Bs Merger shall become effective upon the filing of the 3Bs Certificate of
Merger with the Secretary of State of the State of Georgia or at such time
within two business days thereafter as is provided in the 3Bs Certificate of
Merger (the "3Bs Effective Time"); and
(ii) a certificate of merger shall be duly prepared and executed by
Radiant and 5Rs and thereafter delivered to the Secretary of State of the State
of Georgia for filing as provided in the GBCC (the "5Rs Certificate of Merger").
The 5Rs Certificate of Merger shall be filed such that the 5Rs Merger shall
become effective at the 3Bs Effective Time.
1.3. Closing. The Closing of the Mergers ("Closing") will take place
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at 11 o'clock a.m. on December 31, 1996 at the offices of Xxxxx, Xxxxxxxx &
Xxxxxxx, LLP, counsel to Radiant, Suite 1800, 0000 Xxxxxxxxx Xxxx, XX,
Xxxxxxx, Xxxxxxx 00000, unless another date or place is agreed to in
writing by the parties hereto (the "Closing Date"). Notwithstanding the
foregoing, if the Closing does not take place on the date referred to in
the preceding sentence because any condition to the obligations of Radiant,
on the one hand, or any of the Sellers and/or the Shareholders, on the
other hand, to close under this Agreement is not met on that date, then
subject to the provisions of Section 10 herein, the other parties may
postpone the Closing from time to time to any designated subsequent
business day not more than five business days after the original or
postponed date on which such Closing was to occur by delivering notice of
such postponement not later than the day prior to the day the Closing was
to occur.
1.4. Effect of the Merger. At or immediately after the Effective Time,
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the Mergers shall have the effects set forth in the GBCC. Without limiting the
generality of the foregoing, and subject thereto, at the Effective Time, all
properties, rights, privileges, powers and franchises of 3Bs and 5Rs shall vest
in the Surviving Corporation, and all debts, liabilities and duties of 3Bs and
5Rs shall become the debts, liabilities and duties of the Surviving Corporation.
1.5. Articles of Incorporation; Bylaws. At the Effective Time, (i) the
---------------------------------
Articles of Incorporation of the Surviving Corporation, as in effect immediately
prior to the Effective Time, shall be the Articles of Incorporation of the
Surviving Corporation, and (ii) the Bylaws of the Surviving Corporation, as in
3
effect immediately prior to the Effective Time, shall be the Bylaws of the
Surviving Corporation, in each case until duly amended in accordance with
applicable law.
1.6. Directors and Officers. At the Effective Time, the directors of the
----------------------
Surviving Corporation immediately prior to the Effective Time shall become the
directors of the Surviving Corporation, and the officers of the Surviving
Corporation immediately prior to the Effective Time shall become the officers of
the Surviving Corporation, each such director and officer to hold office from
the Effective Time until their respective successors are duly elected or
appointed and qualified in the manner provided in the articles of incorporation
and bylaws of the Surviving Corporation and applicable law.
1.7. Shareholders' Meetings of 3Bs and 5Rs. 3Bs and 5Rs each will take
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all action necessary, in accordance with the GBCC and other applicable law and
its respective articles or certificate of incorporation and bylaws, to either
take action by the unanimous written consent of their respective Shareholders
or to convene a special meeting of their respective Shareholders ( a "Meeting")
as promptly as practicable for the purpose of considering and taking action upon
the 3Bs Merger or the 5Rs Merger, as the case may be, and this Agreement. The
Board of Directors of each of 3Bs and 5Rs will recommend that their respective
Shareholders vote in favor of and approve the 3Bs Merger or the 5Rs Merger, as
the case may be, and this Agreement and will take all action necessary to obtain
the unanimous written consent of their respective Shareholders to the foregoing
or to obtain such approval at the applicable Meeting.
SECTION 2. THE ASSET SALES
2.1. The Asset Sales. Subject to the terms and conditions of this
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Agreement, on the Closing Date:
(i) The Rice Trust shall sell to Radiant all of the outstanding
membership interest in Billmart owned by the Rice Trust (the "Rice Trust
Units"), which sale shall be effected by delivery to Radiant at the Closing of a
document of assignment and transfer of limited liability company membership
interest with respect to the Rice Trust Units, in form and substance
satisfactory to Radiant, duly executed by a trustee or other validly authorized
agent of the Rice Trust; and
(ii) The Budwitz Trust shall sell to Radiant all of the outstanding
membership interest in Billmart owned by the Budwitz Trust (the "Budwitz Trust
Units"), which sale shall be effected by delivery to Radiant at the Closing of a
document of assignment and transfer of limited liability company membership
interest with respect to the Budwitz Trust Units, in form and substance
satisfactory to Radiant, duly executed by a trustee or other validly authorized
agent of the Budwitz Trust; and
(iii) Simultaneously with the effectuation of the Trust Asset Sales,
the Sellers and the Shareholders shall cause to be delivered to Radiant either:
(A) a document of assignment and transfer of profits interest, with respect to
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the Profits Interest, or a release of Billmart, its members and Radiant (as
successor thereto) of any claims which Sony may have in respect of the Profits
Interest (the "Profits Interest Release") in either case in form and substance
satisfactory to Radiant and duly executed by a duly authorized executive officer
or other validly authorized agent of Sony; or (B) a written undertaking
addressed to Radiant and executed by each of the Shareholders, in form and
substance reasonably satisfactory to Radiant (the "Profits Interest
Undertaking"), agreeing to the withholding by Radiant of the Profits Interest
Consideration (as defined in Section 3.2 hereof) until Radiant has received
either of the agreements described in clause (A) of this Section 2.1(iii), and
undertaking to use their best efforts to obtain delivery to Radiant of either of
the two agreements described in clause (A) hereof, duly executed by Sony.
2.2. Effective Time of the Asset Sales. All of the Asset Sales shall take
---------------------------------
place at the Closing (as defined in Paragraph 1.3, above), and shall be deemed
to be effective on the Closing Date (as defined in Paragraph 1.3, above).
SECTION 3. CONSIDERATION
3.1. Total Consideration. The aggregate total consideration which will be
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paid by Radiant for the Mergers and the Asset Sales ("Total Consideration")
shall be:
(i) $3,000,000 payable in the form of promissory notes
(collectively, the "Term Notes"), each of which shall be in the form attached
hereto as Exhibit "A" and which shall:
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(x) bear interest at the rate of eight and one-half percent
(8.5%) per annum, cumulative but not compounded, with interest
accruing and payable monthly, and with principal and any accrued
but unpaid interest payable in full on the second anniversary of
the date of issuance thereof, provided that the maturity of each
Term Note shall accelerate in full on the effective date of a
Qualified Public Offering (as defined in Section 7.2(a)(i)
hereof); and
(y) collectively, be secured by the pledge of the assets
constituting the PrysmTech Business, as operated as a division
or a subsidiary of Radiant, subject to and under the terms and
conditions of a Security and Agency Agreement in the form
attached hereto as Exhibit "B"; and
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(ii) 300,000 shares of the Class A Stock (the "Merger Shares").
Solely for the purpose of this Agreement (and not for any other purpose), in
calculating the value of the Total Consideration, or any portion thereof, the
Term Notes shall be deemed to have a value equal to the principal face amount
thereof, and the Merger Shares shall be deemed to have a value of $7.00 per
share (which amount does not give effect to any applicable discount attributable
to absence of marketability or control status in the hands of any holder).
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3.2. Consideration for Profits Interest Sale.
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(a) In the event of delivery to Radiant at the Closing of either of
the agreements described in clause (A) of Section 2.1(iii) hereof, duly executed
by Sony, Sony shall receive at the Closing, as consideration for its sale to
Radiant of (or its release of claims, as described in Section 2.1, in respect
of) the Profits Interest, one or more Term Notes having an aggregate principal
face amount equal to two percent (2%) of the value of the Total Consideration
(the "Profits Interest Consideration"), together with an agreement (the "Sony
Option"), in form and substance reasonably satisfactory to Radiant, executed in
favor of Sony by each of the Shareholders, providing for the grant to Sony by
each Shareholder of an option to purchase, at an exercise price of $7.00 per
share, up to 3,000 shares of the Merger Shares issued to such Shareholder
pursuant to this Agreement, provided that such option (i) may be: exercisable
only upon the consummation of a Qualified Public Offering (as defined in Section
7.2(a)(i) hereof); (ii) shall expire on the earlier to occur of (A) March 31,
1999, or (B) the exercise by the Shareholders of the Shareholders' Put Right
pursuant to Section 7.2 hereof; and (iii) may be exercised by requiring payment
to Sony from each Shareholder, in exchange for endorsement to both the
Shareholders of any Term Note or Term Notes then held by Sony, of a cash amount
determined by multiplying the Put Valuation Price (as defined in Section 7.2
hereof) by 3,000.
(b) In the event of delivery to Radiant at the Closing of the Profits
Interest Undertaking (as described in clause (B) of Section 2.1(iii) hereof):
(i) Radiant shall deliver to an escrow agent mutually agreed upon among Radiant
and Shareholders (the "Escrow Agent") the Term Note or Term Notes representing
the Profits Interest Consideration, duly executed in favor of Sony by Radiant,
and each of the Shareholders shall deliver to the Escrow Agent the agreements,
duly executed by such Shareholder, representing his respective Sony Option (as
defined in clause 3.2(a) above); and (ii) each of the Shareholders, Radiant and
the Escrow Agent shall enter into an escrow agreement, dated the Closing Date
(the "Escrow Agreement"), in form and substance reasonably satisfactory to each
of Radiant and the Shareholders, providing among other things that the Escrow
Agent shall hold the Term Notes described in clause (ii) of this subsection
3.2(b) and the Sony Options pending, and shall deliver such instruments and
agreements to Sony upon, Sony's delivery to the Escrow Agent of either of the
agreements described in clause (A) of Section 2.1(iii) hereof, and further
providing for, in the absence of earlier delivery thereof to Sony pursuant to
the terms of the Escrow Agreement, the Escrow Agent's redelivery of such Term
Note(s) to Radiant and of such Sony Options to the respective signatory
Shareholder thereto, on the second anniversary of the date of Closing.
3.3. Consideration for Trust Asset Sales. As used herein, "Adjusted
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Total Consideration" shall mean the value of the Total Consideration reduced by
the value of the Profits Interest Consideration (as determined pursuant to
Section 2.2, above). Each of the Trusts will be entitled to receive the
following respective amounts of consideration for its respective Asset Sale:
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(i) as consideration for its sale to Radiant of the Rice Trust
Units, the Rice Trust shall receive a principal amount of the Term Notes
equal to $510,000 (the "Rice Trust Consideration"); and
(ii) as consideration for its sale to Radiant of the Budwitz Trust
Units, the Budwitz Trust shall receive a principal amount of the Term Notes
equal to $1,250,000 (the "Budwitz Trust Consideration").
3.4. Merger Consideration.
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(a) Merger Consideration. At the Effective Time, by virtue of the
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3Bs Merger and the 5Rs Merger, and without any action on the part of the 3Bs
Shareholders, or the 5Rs Shareholders, the 3Bs Shares and 5Rs Shares which are
issued and outstanding immediately prior to the Effective Time shall be
converted into and represent the right to receive in the aggregate (i) Term
Notes having an aggregate principal face amount equal to the remainder of
subtracting from $3,000,000 the aggregate Value of the Profits Interest
Consideration, the Rice Trust Consideration and the Budwitz Trust Consideration;
and (ii) subject to the proviso set forth in the following sentence, the Merger
Shares (the consideration in clauses (i) and (ii) hereof hereinafter referred to
as the "Merger Consideration"). Upon surrender to the Surviving Corporation of
the certificate or certificates representing the 3Bs Shares and the 5Rs Shares,
as the case may be, accompanied by such other documents as the Surviving
Corporation may reasonably request, the Surviving Corporation shall promptly
deliver to the Shareholders the portion of the Merger Consideration to which
such Shareholder is entitled with respect to the certificate or certificates
delivered, and such certificates shall forthwith be retired and canceled.
(b) Allocation of Merger Consideration. The Merger Consideration,
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both that payable by delivery of Term Notes and that payable by delivery of the
Merger Shares, shall be as follows: (i) the Term Notes comprising the Merger
Consideration shall be allocated (by principal amount) $199,000 to 3Bs and
$939,000 to 5Rs; and (ii) the Merger Shares shall be allocated 50% to 3Bs and
50% to 5Rs. Subject to the provisions of the last subsection hereof, each
holder of issued and outstanding 3Bs Shares, and/or 5Rs Shares, as the case may
be, shall be entitled to receive his pro rata share of the Merger Consideration
allocable to the 3Bs Shares and/or 5Rs Shares, as the case may be, determined by
dividing the number of such 3Bs Shares or 5Rs Shares, as the case may be,
represented by the certificate or certificates appropriately surrendered for
cancellation by such Shareholder by the total number of the issued and
outstanding shares of 3Bs Shares or 5Rs Shares, as the case may be, issued and
outstanding.
(c) Right to Receive Merger Consideration. Until surrendered and
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exchanged in accordance with this Section 3.4, each such certificate
representing 3Bs Shares, or 5Rs Shares, as the case may be, shall after the
Effective Time represent solely the right (as set forth in this Section 3.4) to
receive the Merger Consideration in respect of the shares evidenced by such
certificate, and shall have no other rights. Except as set forth in the terms
of the Term Notes, no interest shall accrue or be payable on any Merger
Consideration.
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(d) No Fractional Shares. Anything in this Agreement to the
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contrary notwithstanding, (i) neither certificates nor scrip for fractional
shares of Radiant stock will be issued in the Mergers, and no dividend or
distributions of Radiant shall be payable on or with respect to any fractional
share, but in lieu thereof each Shareholder who otherwise would have been
entitled to a fraction of a share of Radiant Class A Stock pursuant to this
Agreement, will be paid in cash equivalent an amount equal to the product of
$7.00 multiplied by such fraction of a share (carried out to two decimal
places).
SECTION 4. REPRESENTATIONS AND WARRANTIES OF THE SELLERS AND THE SHAREHOLDERS
As an inducement to Radiant to enter into this Agreement and to consummate
the transactions contemplated hereby, and with the knowledge that they will rely
thereon, each of 3Bs, 5Rs, the Budwitz Trust, the Rice Trust and Budwitz and
Rice, severally (but not jointly), make the following representations and
warranties to Radiant, each of which is true and correct on the date hereof, and
shall survive the Closing of the transactions provided for herein for a period
of one year following the Closing Date. Representations and warranties with
respect to PrysmTech and the PrysmTech Business contained in Sections 4.4 and
4.6 through 4.17 are (i) to the extent made by any of 5Rs, the Rice Trust or
Rice, limited solely to the Actual Knowledge (as hereinafter defined) of Rice,
and (ii) to the extent made by any of 3Bs, the Budwitz Trust or Budwitz, limited
solely to the Actual Knowledge of Budwitz. As used in this Agreement, the term
"Actual Knowledge" shall mean, with respect to any person, actual knowledge of
such person obtained through direct communication (whether written or oral) and
without independent investigation.
4.1. Corporate or Entity Representations as to Sellers.
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(a) Organization. Each of 3Bs and 5Rs is a corporation duly
------------
organized, validly existing and in good standing under the laws of the state of
Georgia. No other entity has been merged or consolidated with or into 3Bs or
5Rs. Each of the Budwitz Trust and the Rice Trust is a trust duly and validly
organized and existing under the laws of the state of Georgia.
(b) Corporate Power or Entity. Each of 3Bs, 5Rs, the Budwitz Trust
-------------------------
and the Rice Trust has all requisite corporate or trust power and authority (i)
to enter into this Agreement and the Ancillary Documents (as hereinafter
defined) to be executed and delivered by 3Bs, 5Rs the Budwitz Trust and/or the
Rice Trust, as the case may be, and to carry out the transactions contemplated
hereby and thereby and (ii) to own and its properties and to carry on its
business as and where such is now being conducted.
(c) Qualification. None of 3Bs, 5Rs, the Budwitz Trust or the Rice
-------------
Trust owns any properties or conducts any business such as to require it to
qualify in any jurisdiction as a foreign corporation or Trust.
8
(d) Subsidiaries. Except for its respective ownership interest in
------------
Billmart, none of 3Bs, 5Rs, the Budwitz Trust or the Rice Trust owns, directly
or indirectly, any capital stock, or other equity securities of any corporation
or has any direct or indirect equity or other ownership interest in any other
entity or business.
(e) Corporate Documents, etc. The copies of the respective articles
------------------------
of incorporation and by-laws of 3Bs and 5Rs, and of the respective trust
agreements of the Budwitz Trust and the Rice Trust, including any amendments
thereto, which have been delivered to Radiant are true, correct and complete
copies of such instruments as presently in effect. The corporate minute book
and stock records of each of 3Bs and 5Rs which have been furnished to Radiant
for inspection are true, correct and complete and accurately reflect all
material corporate action taken by such corporations, as the case may be. The
sole director and officer of 3Bs is Budwitz, and the sole director and sole
officer of 5Rs is Rice.
(f) Capitalization. The authorized and outstanding capital stock of
--------------
each of 3Bs and 5Rs consists solely of the 3Bs Shares and the 5Rs Shares,
respectively, as more fully set forth in Schedule 4.1.(f). No shares of such
----------------
capital stock are issued or outstanding except for shares identified in Schedule
--------
4.1.(f). The shares of capital stock of 3Bs and 5Rs are owned of record and
-------
beneficially by the Shareholders in the respective numbers set forth in Exhibit
-------
1. All such shares of capital stock are validly issued, fully paid and
-
nonassessable. Except as set forth on Schedule 4.1.(f), there are no (A)
----------------
securities convertible into or exchangeable for any of the capital stock or
other securities of 3Bs or 5Rs, (B) options, warrants or other rights to
purchase or subscribe to capital stock or other securities of 3Bs or 5Rs or
securities which are convertible into or exchangeable for capital stock or other
securities of 3Bs or 5Rs, or (C) contracts, commitments, agreements,
understandings or arrangements of any kind relating to the issuance, sale or
transfer of any capital stock or other equity securities of 3Bs or 5Rs, any such
convertible or exchangeable securities or any such options, warrants or other
rights.
(g) Authorization: Validity. The execution and delivery of this
-----------------------
Agreement and the other agreements, instruments and documents contemplated
hereby (such other agreements, instruments and documents sometimes referred to
herein as the "Ancillary Documents") to be executed by 3Bs and/or 5Rs and full
performance thereunder, have been duly authorized by the Board of Directors of
each of 3Bs and/or 5Rs, as the case may be, and no other or further corporate
act on the part of such corporations is necessary therefor except as
contemplated by Section 1.7. The execution and delivery of this Agreement and
of such Ancillary Documents to which they are respectively parties, and the
full performance of their respective obligations thereunder, have been duly
authorized by the respective trustees of each of the Budwitz Trust and the Rice
Trust, as the case may be, and no other action on the part of either such trust
is necessary therefor. This Agreement has been duly and validly executed and
delivered by each of the Sellers and is, and when executed and delivered the
Ancillary Documents to be executed and delivered by the Sellers pursuant hereto
will be, the legal, valid and binding obligation of such corporations,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
9
4.2. Shareholders.
------------
(a) Power. Each Shareholder has full power, legal right and
-----
authority to enter into, execute and deliver this Agreement and the Ancillary
Documents to be executed by such Shareholder and to carry out the transactions
contemplated hereby and thereby.
(b) Validity. This Agreement has been duly and validly executed and
--------
delivered by each Shareholder and is, and when executed and delivered each
Ancillary Document to be executed by a Shareholder will be, the legal, valid and
binding obligation of such Shareholder enforceable in accordance with its terms,
except as such may be limited by bankruptcy, insolvency, reorganization or other
laws affecting creditors' rights generally, and by general equitable principles.
(c) Title. Each Shareholder has good and marketable title to the
-----
3Bs Shares and/or 5Rs Shares, shown on Exhibit 1 as owned by such Shareholder,
---------
and at the Closing each Shareholder will have good and marketable title to such
shares of 3Bs Common Stock and/or 5Rs Common Stock, in each case free and clear
of all liens, security interests, pledges, assessments, levies, restrictions,
options, encumbrances, voting trusts or agreements, proxies, marital or
community property interests or other claims or other charges of any nature
whatsoever.
4.3. Billmart Entity Representations and Warranties.
----------------------------------------------
(a) Organization. Billmart is a limited liability company, validly
------------
existing and in good standing under the laws of the state of Georgia, which was
duly organized on October 18, 1994, under the name "PrysmTech, L.L.C." The name
of Billmart was changed to "Billmart, L.L.C." by Articles of Amendment filed
with the Secretary of State of Georgia effective November 28, 1995. Except for
Billmart's acquisition of the assets of Prysm Technology, Inc. in October, 1994,
no other entity has been merged or consolidated with or into Billmart.
(b) Power and Authority. Billmart has all requisite entity power
-------------------
and authority to own and operate its properties and to carry on the Billmart
Business as and where such is now being conducted.
(c) Qualification. Billmart is duly licensed or qualified to do
-------------
business and is in good standing in each jurisdiction wherein the character of
the properties owned or leased by it, or the nature of the Billmart Business,
makes such licensing or qualification necessary, except where the lack of such
licensing or qualifications would not have a material adverse effect on the
financial condition of Billmart and PrysmTech taken as a whole.
(d) Subsidiaries. Except for its ownership of a membership interest
------------
in PrysmTech, Billmart does not own, directly or indirectly, any capital stock,
or other equity securities of any corporation or have any direct or indirect
equity or other ownership interest in any entity or business.
10
(e) Organic Documents, etc. The copies of the articles of
----------------------
organization and operating agreement of Billmart, including any amendments
thereto, which have been delivered to Radiant are true, correct and complete
copies of such instruments as presently in effect. The members, managers and
officers of Billmart are listed in Schedule 4.3 (e).
----------------
(f) Capitalization. The authorized membership interest in Billmart
--------------
consists entirely of 10,000 units of membership interest, and the issued and
outstanding membership interest in Billmart consists entirely of 1,500 of such
units of membership interest (the "Billmart Units") which are owned by the
Sellers as set forth in Schedule 4.3.(f). No membership interest in Billmart
----------------
is issued or outstanding except for the Billmart Units. All such Billmart Units
are validly issued, fully paid and nonassessable. Except for the Billmart Units
and the Profits Interest, there are no (A) securities convertible into or
exchangeable for any of the membership interest, or rights to participate in the
capital or profits of, or other securities of Billmart, (B) options, warrants or
other rights to purchase or subscribe to membership interests, or rights to
participate in capital or profits in, Billmart or other securities of Billmart
or securities which are convertible into or exchangeable for membership interest
in, or rights to participate in the capital or profits of, or other securities
of Billmart or (C) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance, sale or transfer of any
membership interest in, or rights to participate in the capital or profits of,
or other securities of Billmart.
4.4. PrysmTech Entity Representations and Warranties.
-----------------------------------------------
(a) Organization. PrysmTech is a limited liability company duly
------------
organized, validly existing and in good standing under the laws of the state of
Georgia. No other entity has been merged or consolidated with or into
PrysmTech.
(b) Power and Authority. PrysmTech has all requisite entity power
-------------------
and authority to own and operate its properties and to carry on its business as
and where such is now being conducted.
(c) Qualification. PrysmTech is duly licensed or qualified to do
-------------
business and is in good standing in each jurisdiction wherein the character of
the properties owned or leased by it, or the nature of its business, makes such
licensing or qualification necessary, except where the lack of such licensing or
qualification would not have a material adverse effect on the financial
condition of PrysmTech.
(d) Subsidiaries. PrysmTech does not own, directly or indirectly,
------------
any capital stock, or other equity securities of any corporation or have any
direct or indirect equity or other ownership interest in any entity or business.
(e) Organic Documents, etc. The copies of the articles of
----------------------
organization and operating agreement of PrysmTech, including any amendments
thereto, which have been delivered to Radiant are true, correct and complete
11
copies of such instruments as presently in effect. The managers and officers of
PrysmTech are listed in Schedule 4.4(e).
---------------
(f) Capitalization. The authorized membership interest in PrysmTech
--------------
consists entirely of 1,000 Units and the issued and outstanding membership
interest in PrysmTech consists entirely of 200 Units (the "PrysmTech Units"), of
which 100 Units are owned by Radiant and 100 Units are owned by Billmart. No
membership interest in PrysmTech is issued or outstanding except for the
PrysmTech Units. All such PrysmTech Units are validly issued, fully paid and
nonassessable. Except for the PrysmTech Units, there are no (A) securities
convertible into or exchangeable for any membership interest in, or rights to
participate in the capital or profits of PrysmTech, (B) options, warrants or
other rights to purchase or subscribe to membership interest in, or rights to
participate in the capital or profits of, or other securities of PrysmTech or
securities which are convertible into or exchangeable for membership interest
in, or rights to participate in the capital or profits of or other securities of
PrysmTech or (C) contracts, commitments, agreements, understandings or
arrangements of any kind relating to the issuance, sale or transfer of any
membership interest in, or rights to participate in the capital or profits of or
other equity securities of PrysmTech.
4.5. Distribution of Schedule 4.5 Assets and Certain Other Assets.
------------------------------------------------------------
(a) Immediately prior to the execution of this Agreement by the
parties hereto: (i) PrysmTech caused to be distributed to each of its members an
undivided fifty percent interest (each a "Primary Distribution Interest") in the
assets of PrysmTech listed on Schedule 4.5(a) (the "Schedule 4.5 Assets"), (ii)
---------------
Billmart caused to be distributed to each of its then-members (xxxxx 0Xx, 0Xx,
Xxxxxxx and Rice) a pro-rata portion (each a "Secondary Distribution Interest")
of Billmart's Primary Distribution Interest in the Schedule 4.5 Assets, (iii)
Budwitz contributed to the capital of 3Bs his respective Secondary Distribution
Interest in the Schedule 4.5 Assets, and (iv) Rice contributed to the capital of
5Rs his respective Secondary Distribution Interest in the Schedule 4.5 Assets.
The distributions described in this subsection 4.5(a) are collectively referred
to as the "Schedule 4.5 Asset Distribution." Schedule 4.5(a) also sets forth
the identity of each owner of the Schedule 4.5(a) Assets as of the date hereof,
and a description of those Schedule 4.5 Assets owned by each such owner as of
the date hereof.
(b) Subsequent to the completion of the Schedule 4.5 Asset
Distributions, Rice contributed the Rice Trust Units to the Rice Trust, and
Budwitz contributed the Budwitz Trust Units to the Budwitz Trust.
(c) At the date of this Agreement, except for the Primary
Distribution Interest therein distributed by PrysmTech to Radiant, all right,
title and interest in and to the Schedule 4.5 Assets is held by 3Bs and 5Rs,
free and clear of liens, claims or encumbrances permitted or imposed by Billmart
or any of the Sellers.
(d) Prior to the date of this Agreement but subsequent to the
effective date of the Recent Financial Statements (as defined in Section 4.7
hereof), PrysmTech effected a cash distribution to its members in the aggregate
12
amount of $315,000 (the "PrysmTech Tax Payment Distribution"), with the intent
that each member utilize the proceeds thereof to fund payment of such member's
respective income tax liability arising from its allocable share of 1996 profits
from operations of PrysmTech. Simultaneously, Billmart distributed to its then-
members (xxxxx 0Xx, 0Xx, Xxxxxxx and Rice) its proportionate share of the
PrysmTech Tax Distribution, with the same intent, and each of 3Bs and 5Rs
simultaneously distributed its share of that distribution to its respective sole
shareholder. The distributions described in this subsection 4.5(d) are referred
to in this Agreement as the "1996 Tax Payment Distributions."
4.6 No Violation. Except as set forth on Schedule 4.6, neither the
------------ ------------
execution and delivery of this Agreement or any of the Ancillary Documents, nor
the consummation of the transactions contemplated hereby and thereby, does or
will violate, conflict with, result in a breach of any material provision of,
constitute a default under, result in the termination of or permit any third
party to terminate the charter or bylaws of 3Bs or 5Rs, or the trust agreements
of either the Budwitz Trust or the Rice Trust, or the organizational documents
of Billmart or any material agreement or instrument to which the Sellers,
Billmart or PrysmTech is a party or by which the Sellers, Billmart or PrysmTech
or any of their respective assets is subject or bound, or result in the creation
or imposition of any mortgages, liens (statutory or otherwise), security
interests, claims, pledges, licenses, equities, options, conditional sales
contracts, assessments, levies, easements, covenants, reservations,
restrictions, rights-of-way, exceptions, limitations, mineral rights, charges or
encumbrances of any nature whatsoever on or security interest in (collectively,
"Liens") the use of any of the properties or assets of the Sellers, Billmart
and/or PrysmTech.
4.7. Statements of Assets and Liabilities and Financial Statements.
-------------------------------------------------------------
Included as Schedule 4.7 are true and complete copies of the following: (i) a
------------
statement on behalf of 3Bs and a statement on behalf of 5Rs, each executed by
the chief executive officer of such corporation, specifying all the assets and
all the liabilities of such corporation, in each case as of December 15, 1996
(the "Corporate Sellers' Asset and Liability Statements"); and (ii) a statement
on behalf of Billmart, executed by the chief executive officer of Billmart,
specifying all the assets and all the liabilities of Billmart as of December 31,
1996 (the "Billmart Asset and Liability Statement"); and (iii) the unaudited
balance sheet of PrysmTech as of October 31, 1996, and the related statements of
income and cash flows of PrysmTech for the 10-month period then ended (the
"PrysmTech Financials") (the Corporate Sellers' Asset and Liability Statements,
the Billmart Asset and Liability Statements and the PrysmTech Financials
collectively referred to as the "Financial Representations"). The Corporate
Sellers' Asset and Liability Statements and the Billmart Asset and Liability
Statement, respectively, are true, complete and accurate in all material
respects, and fairly present the assets and liabilities of 3Bs, 5Rs and
Billmart, respectively, as of the dates indicated. The PrysmTech Financials are
true, complete and accurate in all material respects, have been prepared on a
consistent basis, have been prepared in accordance with the books and records of
PrysmTech, and fairly present the assets, liabilities and financial position,
the results of operations and cash flows of PrysmTech, as of the date and for
the periods indicated.
13
4.8. Tax Matters.
-----------
(a) Provision For Taxes. Each of 3Bs, 5Rs, Billmart and PrysmTech
-------------------
has filed all federal, state, and local tax returns required to be filed and
each has made timely payment of all taxes which are due and payable, including
any and all employment taxes of every nature, kind and character except where
the failure to file or timely pay would not have a material adverse effect on
the business, operations or financial condition of such entity, and none of such
parties has received notice of any tax Liens on any of its properties.
(b) Tax Audits. Neither the federal or state income tax returns of
----------
either Billmart or PrysmTech have been audited by the Internal Revenue Service
or any state taxing authorities for any periods, and neither such entity has
received from the Internal Revenue Service, or from the tax authorities of any
state, county, local or other jurisdiction, any notice of any material
underpayment of taxes or other deficiency which has not been paid.
4.9. Absence of Certain Changes. Except as and to the extent set forth
--------------------------
in Schedule 4.8, since the respective dates of the applicable Financial
------------
Representations there has been no:
(a) Adverse Change. Material adverse change in (i) the financial
--------------
condition or assets, except to the extent that the Schedule 4.5 Asset
Distribution or the 1996 Tax Payment Distributions, or distributions by
PrysmTech in December of 1996 of employee bonuses not exceeding $250,000 (of
which $231,000 is reflected as accrued liabilities on the PrysmTech Financials),
may be deemed material adverse changes, or (ii) the liabilities, business,
prospects or operations of 3Bs, 5Rs, Billmart and PrysmTech taken as a whole;
(b) Damage. Loss, damage or destruction, whether covered by
------
insurance or not, affecting the business or properties (owned or leased) of 3Bs,
5Rs, Billmart or PrysmTech which has a material adverse impact on such business
or properties taken as a whole;
(c) Commitments. Material commitment or transaction by 3Bs, 5Rs,
-----------
Billmart or PrysmTech (including, without limitation, any borrowing or capital
expenditure) other than in the ordinary course of business consistent with past
practice;
(d) Indebtedness. Indebtedness for borrowed money incurred, assumed
------------
or guaranteed by 3Bs, 5Rs, or Billmart in a material amount; or
(e) Liens. Lien made on any of the properties or assets of 3Bs,
-----
5Rs, or Billmart, of which such party has received notice, which has a material
adverse impact on the properties or business of such entity, taken as a whole;
4.10. Absence of Undisclosed Liabilities. Except as and to the extent
----------------------------------
specifically disclosed in the Financial Representations, or in Schedule 4.10,
-------------
or as otherwise specifically disclosed in this Agreement, neither 3Bs, 5Rs,
Billmart or PrysmTech has any liabilities, commitments or obligations (secured
14
or unsecured, and whether accrued, absolute, contingent, direct, indirect or
otherwise), other than commercial liabilities and obligations incurred since the
date of the Financial Representations in the ordinary course of business and
consistent with past practice and none of which has or will have a material
adverse effect on the business, financial condition or results of operations of
3Bs, 5Rs, Billmart or PrysmTech.
4.11. Litigation and Claims. There are (a) no legal, administrative,
---------------------
arbitration, or other proceedings pending against 3Bs, 5Rs, Billmart or
PrysmTech and none of 3Bs, 5Rs, Billmart or PrysmTech or the Shareholders know
of any basis therefor, and (b) no (i) governmental investigations or (ii)
proposed or threatened claims of any such entity not fully covered by insurance.
4.12. Title to and Condition of Properties.
------------------------------------
Each of 3Bs, 5Rs, Billmart or PrysmTech has good and marketable title to
all of its respective assets, businesses and properties, including, without
limitation, all such properties (tangible and intangible) reflected in the
Financial Representations, except for inventory disposed of in the ordinary
course of business since the date of such Financial Representations, free and
clear of all Liens except those described in Schedule 4.12 (a) or specifically
-----------------
disclosed elsewhere in this Agreement. None of the assets, businesses or
properties of 3Bs, 5Rs, Billmart or PrysmTech are subject to any restrictions
with respect to the transferability thereof and title thereto will not be
affected in any way by the transactions contemplated hereby.
4.13. Nature of the Businesses; Contracts. Attached as Schedule 4.13
----------------------------------- -------------
hereto is a true, complete and correct copy of that certain Exclusive License
Agreement, dated as of November 27, 1995, between Billmart and PrysmTech (the
"Billmart License"). As of the date of this Agreement, the Billmart Business
consists entirely of (i) Billmart's ownership of 100 Units of membership
interest in PrysmTech, and (ii) Billmart's ownership of, and exclusive licensing
to PrysmTech of, the Billmart Software (as defined in the Billmart License).
The sole business of each of 3Bs and 5Rs is, and has been since inception of
such respective corporation, the ownership of the Billmart Units held by such
respective corporation as of the date hereof and the ownership of its respective
undivided percentage interest in the Schedule 4.5 Assets described in Section
4.5 hereof. As used herein, the term Contract includes any written or oral
agreement, commitment, understanding or arrangement, including purchase or sales
of goods or services, commitments and letters of credit or their equivalent.
Except as set forth in Schedule 4.13, neither 3Bs, 5Rs, Billmart or PrysmTech is
-------------
party to any Contract:
(a) with any Person containing any provision or covenant prohibiting
or materially limiting the ability of 3Bs, 5Rs, or Billmart, respectively, to
engage in its business as described in this Section 4.13;
(b) other than this Agreement, relating to the future disposition or
acquisition of any assets individually or in the aggregate material to the
condition of the respective businesses of 3Bs, 5Rs, Billmart or PrysmTech;
(c) of warranty, guaranty, surety and/or other similar undertakings;
15
(d) constituting powers of attorney that are currently effective and
outstanding;
(e) pursuant to which 3Bs, 5Rs or Billmart is required to provide
goods or services; and
(f) with respect to each of the Billmart Business or the respective
businesses of 3Bs or 5Rs that (A) involve the payment or potential payment,
pursuant to the terms of any such Contract, by or to such respective entity of
more than $5,000 annually or (B) cannot be terminated within ninety (90) days
after giving notice of termination without resulting in any material cost or
penalty to such respective entity, including promissory notes, loan, credit or
other financing agreements or arrangements or evidence of indebtedness.
Each of 3Bs, 5Rs and Billmart has performed in all respects all contractual
obligations required to be performed by it to date under each Contract to which
it is a party and is not in default under any Contract to which it is a party or
by which it is bound and no other party to any such Contract is in material
default in the performance of its obligations thereunder or has taken any action
which constitutes, or with notice or lapse of time would constitute, a breach or
anticipatory breach thereof.
4.14. Employment Matters. There are not now, and have not since
------------------
November 28, 1995 been, any employees of 3Bs, 5Rs or Billmart.
4.15. Trade Rights.
------------
(a) The Billmart Software (as defined in Section 4.13) constitutes
the only Trade Rights (as defined below) owned, controlled, used or held (under
license or otherwise) by Billmart which are material to the Billmart Business or
the PrysmTech Business, or to the financial condition of Billmart.
(b) To the Actual Knowledge of the Sellers and the Shareholders:
(i) to conduct the Billmart Business and the PrysmTech Business, as such are
currently being conducted or proposed to be conducted, Billmart does not require
any Trade Rights that it does not already have; (ii) Billmart is not infringing
and has not infringed any Trade Rights of another in the operation of the
Billmart Business or the PrysmTech Business, nor is any other person infringing
the Trade Rights of Billmart or PrysmTech; (iii) except as set forth on Schedule
--------
4.14, Billmart has not granted any license or made any assignment of, or entered
----
into any settlement, consent, covenant not to xxx or similar agreement with
respect to, any of its Trade Rights, nor does Billmart or PrysmTech pay any
royalties or other consideration to any Person for the right to use any Trade
Rights of others; (iv) there are no inquiries, investigations or claims or
litigation challenging or threatening to challenge the right, title and interest
of Billmart with respect to any Trade Rights of Billmart; and (v) all Trade
Rights of Billmart are valid and enforceable.
16
(c) As used herein, the term "Trade Rights" shall mean and include:
(i) all United States, state and foreign trademark rights, business identifiers,
trade dress, service marks, trade names and brand names, including all claims
for infringement, and all registrations thereof and applications therefor and
all goodwill associated with the foregoing accruing from the dates of first use
thereof; (ii) all United States and foreign copyrights, copyright registrations
and copyright applications, including all claims for infringement, and all other
rights associated with the foregoing and the underlying works of authorship;
(iii) all United States and foreign patents and patent applications, including
all claims for infringement and all international proprietary rights associated
therewith; (iv) all contracts or agreements granting any right, title, license
or privilege under the intellectual property rights of any third party; and (v)
all inventions, mask works and mask work registrations, know-how, discoveries,
improvements, designs, trade secrets, shop and royalty rights, employee and
third party covenants and agreements respecting confidentiality, intellectual
property and non-competition (including without limitation agreements executed
by potential purchasers of the Billmart Business or the PrysmTech Business or
any part thereof), and all other types of intellectual property.
4.16. Bank Accounts. Schedule 4.16 sets forth the names and locations of
------------- -------------
all banks, trust companies, savings and loan associations and other financial
institutions at which 3Bs, 5Rs or Billmart maintains a safe deposit box, lock
box or checking, savings, custodial or other account of any nature, the type and
number of each such account and the signatories therefore, a description of any
compensating balance arrangements, and the names of all persons authorized to
draw thereon, make withdrawals therefrom or have access thereto.
4.17. Conveyance of Profits Interest. To the Actual Knowledge of the
------------------------------
Shareholders, Sony holds the Profits Interest (to the extent accepted by Sony
and issued and outstanding) free of liens, claims and encumbrances, and has all
requisite corporate and other right, power and authority to convey to radiant
all Sony's right, title and interest in and to the Profits Interest.
4.18. Securities Law Matters. Each Shareholder acquiring Radiant Common
----------------------
Stock pursuant to this Agreement is acquiring such stock for investment for such
Shareholder's own account, not on behalf of others and not with a view to resell
or otherwise distribute such Radiant Common Stock. Each Shareholder
acknowledges that the Radiant Common Stock has not been registered under the
Securities Act of 1933, as amended (the "Securities Act"), or under any state
securities laws and, therefore, cannot be resold unless registered under the
Securities Act and applicable state securities laws or unless an exemption from
registration is available and, as a result, such Shareholder must bear the risk
of an investment in Radiant Common Stock for an indefinite period of time. The
financial condition of each such Shareholder is currently adequate to bear the
substantial economic risk of an investment in Radiant Common Stock. Each such
Shareholder has sufficient knowledge and experience in investment and business
matters to understand the economic risk of such an investment and the risk
involved in a commercial enterprise such as Radiant. Each Shareholder is a bona
fide resident of the State of Georgia, and all communications and information,
written or oral, concerning the Radiant Common Stock and this Agreement have
been directed to such Shareholders and have been received in such State. Each
17
Shareholder has received, and had the opportunity to review, the Registration
Statement (as defined in Section 5.4, below), including Radiant's most recent
financial statements for its last fiscal year and its unaudited financial
statements for the interim period ended September 30, 1996. Each Shareholder
acknowledges that the Merger Shares are not included within the Registration
Statement, and are therefore subject to the restrictions on transferability set
forth above in this Section 4.18. Each Shareholder further acknowledges that,
in addition to his receipt of the information contained in the Registration
Statement, he has been given the opportunity to ask questions of, and receive
answers from, officers of Radiant concerning Radiant and the Radiant Common
Stock and to obtain any additional information which such Shareholder reasonably
requested. Each Shareholder is an "accredited investor" within the meaning of
Regulation D under the Securities Act.
4.19. No Brokers or Finders. Neither the Sellers nor Billmart, nor any of
---------------------
their respective directors, officers, employees, shareholders or agents, have
retained, employed or used any broker or finder in connection with the
transaction provided for herein or in connection with the negotiation thereof.
4.20. Disclosure. No representation or warranty by the Sellers or the
----------
Shareholders in this Agreement, nor any statement, certificate, schedule or
exhibit hereto furnished or to be furnished by or on behalf of such respective
person or entity, pursuant to this Agreement, nor any document or certificate
delivered to Radiant pursuant to this Agreement or in connection with
transactions contemplated hereby, contains or shall contain any untrue statement
of material fact or omits or shall omit a material fact necessary to make the
statements contained therein not misleading. There is no fact known to the
Sellers or any of the Shareholders which materially and adversely affects the
Billmart Business and the PrysmTech Business, and their respective financial
conditions, taken as a whole, or the prospects or financial condition of 3Bs,
5Rs or Billmart or their respective properties or assets, which has not been set
forth in this Agreement or in the schedules or certificates in writing furnished
in connection with the transactions contemplated by this Agreement.
SECTION 5. REPRESENTATIONS AND WARRANTIES OF RADIANT
As an inducement to the Sellers and the Shareholders to enter into this
Agreement and to consummate the transactions contemplated hereby, and with the
knowledge that the Sellers and Shareholders will rely thereon, Radiant as of the
date hereof represents and warrants to the Sellers and the Shareholders, the
following as of the date hereof, which shall be unaffected by any investigation
heretofore or hereafter made by the Sellers or the Shareholders, and shall
survive the Closing of the transactions provided for herein.
5.1. Corporate.
---------
(a) Organization. Radiant is a corporation duly organized, validly
------------
existing and in good standing under the laws of the State of Georgia.
18
(b) Corporate Power. Radiant has all requisite corporate power to
---------------
enter into this Agreement and the Ancillary Documents to be executed and
delivered by Radiant and to carry out the transactions contemplated hereby and
thereby.
5.2. Authority. The execution and delivery of this Agreement and the
---------
Ancillary Documents to be executed and delivered by Radiant pursuant hereto and
the consummation of the transactions contemplated hereby and thereby have been
duly authorized by the Board of Directors of Radiant. No other corporate act or
proceeding on the part of Radiant or its shareholders is necessary to authorize
this Agreement or the Ancillary Documents to be executed and delivered by
Radiant pursuant hereto or the consummation of the transactions contemplated
hereby and thereby. This Agreement constitutes, and when executed and
delivered, the Ancillary Documents to be executed and delivered by Radiant
pursuant hereto will constitute, valid and binding agreements of Radiant,
enforceable in accordance with their respective terms, except as such may be
limited by bankruptcy, insolvency, reorganization or other laws affecting
creditors' rights generally, and by general equitable principles.
5.3. No Brokers or Finders. Neither Radiant nor any of its directors,
---------------------
officers, employees or agents has retained, employed or used any broker or
finder in connection with the transaction provided for herein or in connection
with the negotiation thereof.
5.4. Disclosure.
----------
(a) Radiant has delivered to each of the Sellers and to each of the
Shareholders a copy of the Registration Statement on Form S-1(Registration File
No. 333-17723), filed by Radiant with the Securities and Exchange Commission
under the Securities Act of 1933, as amended, on December 12, 1996 with respect
to certain shares of Radiant common stock (the "Registration Statement"), and
hereby undertakes to provide to any Seller or Shareholder, upon request, a
complete copy of the exhibits thereto. The information contained in the
Registration Statement is, in all material respects, true, complete and correct
as of the date of such Registration Statement, and there has been no material
change in such information, since the date of such information, which would,
considered in the aggregate, have a material adverse outcome on the financial
condition, business or operations of Radiant.
(b) No representation or warranty by Radiant in this Agreement, nor
any statement, certificate, schedule or exhibit hereto furnished or to be
furnished by or on behalf of Radiant pursuant to this Agreement, nor any
document or certificate delivered by Radiant to the Sellers or the Shareholders
pursuant to this Agreement or in connection with transactions contemplated
hereby, contains or shall contain any untrue statement of material fact or omits
or shall omit a material fact necessary to make the statements contained therein
not misleading.
SECTION 6. COVENANTS
6.1. Tax Treatment: Securities Law Matters.
-------------------------------------
19
(a) Qualification as Reorganization. The Sellers and the
-------------------------------
Shareholders shall use their respective best efforts to cause each of the
Mergers to qualify as reorganizations under Section 368(a)(2)(D) of the Code.
Prior to the Closing, neither the Sellers nor the Shareholders will take any
action that could in any manner adversely affect such qualification.
(b) Prohibition of Sales. Each Shareholder agrees not to sell or
--------------------
otherwise distribute Radiant Class A Stock (or any shares of the no par value
voting common stock of Radiant ("Radiant Common Stock") into which such shares
of Class A Stock may be converted) received in the Mergers over which he has
direct or indirect control without registration under the Securities Act and
applicable state securities laws unless either (i) in the opinion of counsel
reasonably acceptable to Radiant, such sale is exempt from the registration
requirements of federal and applicable state securities laws, or (ii) such sale
has the prior written consent of Radiant, which will not be unreasonably
withheld.
6.2. Notification. From the date hereof until the Closing, each of the
------------
Sellers and the Shareholders on the one hand, and Radiant, on the other, shall
promptly notify the other of (i) any event, condition or circumstance occurring
from the date hereof through the Closing Date which would constitute a violation
or breach of this Agreement and (ii) any lawsuits, claims, proceedings or
investigations which after the date hereof are threatened or commenced against
such party or any officer, director, employee, consultant, agent or shareholder
thereof with respect to the affairs of 3Bs, 5Rs, Billmart or PrysmTech or
Radiant.
6.3. Best Efforts. Each party hereto covenants to utilize its best
------------
efforts to obtain, prior to the Closing Date, all consents, approvals and
waivers of third parties required as a condition precedent to the obligations to
close hereunder or that may otherwise be necessary or desirable to permit the
consummation of the transactions contemplated in this Agreement and to satisfy
all the conditions necessary to Closing.
6.4. Exclusive Dealing. So long as this Agreement remains in effect,
-----------------
neither the Sellers nor the Shareholders shall directly or indirectly take any
action to encourage, initiate or engage in discussions or negotiations with, or
provide any information to, any corporation, partnership, person, or other
entity or group, other than Radiant, concerning the purchase and sale of any
assets of any of the Sellers, Billmart or PrysmTech, the purchase and sale of
any equity or profit interest in any of the Sellers, Billmart or PrysmTech, or
any transaction similar to the foregoing involving any of the Sellers, Billmart
or PrysmTech and/or the Shareholders.
6.5. Further Assurances. Each Shareholder and each Seller covenants and
------------------
agrees that from and after the Closing he or it, as the case may be, will
execute, deliver and acknowledge (or cause to be executed, delivered and
acknowledged), from time to time at the request of Radiant and without further
consideration, all such further instruments and take all such further action as
may be reasonably necessary or appropriate to transfer more effectively to
confirm or carry out the provisions and intent of this Agreement. In
particular, and without limitation of the foregoing, each such Shareholder or
20
Seller shall cooperate with Radiant in executing, delivering, filing or causing
to be filed, such documents, instruments or agreements as are necessary or
advisable, in the opinion of Radiant or its counsel, in order to effect the
dissolution of Billmart and PrysmTech, and to effect the transfer to Radiant, in
accordance with the transactions contemplated by this Agreement, of the title
of, or rights of such entities in, the assets, rights and privileges of such
entities.
6.6. Operation in Ordinary Course. From the date hereof to the Closing
----------------------------
Date, each of the Sellers, Billmart and PrysmTech shall, and each Shareholder
shall cause the Sellers, Billmart and PrysmTech to, (i) conduct their respective
businesses only in the ordinary course and in substantially the same manner as
conducted at the date hereof, (ii) use their respective best efforts to preserve
their respective business organizations intact and to retain the services of
their respective present officers, key employees, purchasing and sales personnel
and representatives, (iii) use their respective best efforts to preserve their
respective favorable relationships with their respective employees, customers,
suppliers and others having business relations with them, (iv) use their
respective best efforts to comply with all laws, ordinances and regulations
applicable to it in the conduct of their respective businesses, (v) not amend
their respective articles of incorporation or bylaws, or enter into, amend in
any material respect or terminate any contract, agreement or lease, (vi) not
declare, set aside or pay any dividend or make any distribution in respect of
the capital stock or membership interest in the Sellers, Billmart and PrysmTech
or redeem, purchase or acquire any capital stock or membership in or related
security of the Sellers, Billmart and PrysmTech, and (vii) conduct their
respective businesses in such a manner so that the representations and
warranties contained in Section 4 hereof shall continue to be true and correct
on and as of the Closing Date as if made on and as of the Closing Date.
6.7. Employment Agreements of Budwitz and Rice. Simultaneously with the
-----------------------------------------
Closing of the Mergers, Radiant shall enter into (a) an employment agreement
with Budwitz substantially in the form of Exhibit "D" hereto (the "Budwitz
-----------
Employment Agreement"), and (b) an employment agreement with Rice substantially
in the form of Exhibit "E" hereto (the "Rice Employment Agreement").
-----------
6.8. Grant of Options to Budwitz and Rice. Simultaneously with the entry
------------------------------------
by the parties thereto into the Budwitz Employment Agreement and the Rice
Employment Agreement, Radiant shall grant to each of Budwitz and Rice: (a)
options granted pursuant to Radiant's 1995 Incentive Stock Option Plan covering
57,140 shares of Radiant Common Stock, exercisable at a purchase price of $7.00
per share (the "ISO's"), each of which options shall be evidenced by an
Incentive Option Agreement substantially in the form of Exhibit "F" hereto (the
-----------
"ISO Agreement"); and (b) non-qualified stock options covering 80,360 shares of
Radiant Common Stock, exercisable at a purchase price of $7.00 per share (the
"NQO's"), each of which options shall be evidenced by a Nonqualified Stock
Option Agreement substantially in the form of Exhibit "G" hereto (the "NQO
-----------
Agreement").
SECTION 7. POST-CLOSING COVENANTS
21
7.1. Termination of Public Offering Rights in PrysmTech Operating
------------------------------------------------------------
Agreement. The Sellers and the Shareholders (on behalf of
---------
themselves and on behalf of Billmart) and Radiant hereby agree, in addition to
and without limitation of any other consequences of the transactions
contemplated hereby, that immediately upon consummation of the Closing of the
transactions contemplated hereby, and without further action on the part of any
party, all the rights of any party set forth in Section 7.13 ("Billmart's Rights
Occasioned by Public Offering by Softsense of its Stock") of the Operating
Agreement, dated November 27, 1995, of PrysmTech, shall be terminated and
without further force or effect.
7.2. Shareholders' Put Right Relating to Radiant IPO.
-----------------------------------------------
(a) As used in this Section 7.2: (i) the term "Qualified Public
Offering" shall mean a firm-commitment underwritten public offering of Radiant
Common Stock yielding gross offering proceeds to Radiant of not less than
$15,000,000; (ii) "Eligible Shares" shall mean, with respect to holdings of
Radiant stock by any Shareholder, any of the Merger Shares, any shares of
Radiant Common Stock into which such Merger Shares shall be converted and any
shares of Radiant Common Stock issued to either Budwitz or Rice pursuant to the
exercise of any of the Employee Options; (iii) "Employee Options" shall mean
collectively the ISO's and the NQO's issued to such Shareholder pursuant to
Section 6.9 hereof; (iv) the "Put Period" shall mean the period beginning
January 1, 1999 and ending March 31, 1999; (v) "Put Valuation Price" shall mean
a price per share calculated in accordance with subsection (d) hereof; (vi)
"Acquired Business" shall mean the business of PrysmTech as operated as a
division or subsidiary of Radiant as at the time of valuation made pursuant to
subsection (e) hereof; and (vi) "Fair Market Value" shall mean the value of the
Acquired Business as determined in accordance with subsection (e)(i) hereof.
(b) If Radiant has not effected a Qualified Public Offering on or
before December 31, 1998, the Shareholders shall be entitled, by written notice
(the "Put Notice") executed by both Shareholders and delivered to Radiant prior
to the expiration of the Put Period, to require that Radiant purchase all (but
not less than all) the Eligible Shares, at a price per share equal to the Put
Valuation Price. If Radiant has not received a properly executed and delivered
Put Notice prior to the expiration of the Put Period, the Shareholders shall be
deemed to have waived their rights under this Section 7.2, and all such rights
shall automatically terminate. Not later than five business days following
Radiant's receipt of a properly executed and delivered Put Notice, Radiant shall
initiate the process of appraisal for determination of Fair Market Value of the
Acquired Business, in accordance with subsection (e) hereof. Not later than
five business days following the earlier of the agreement of Radiant and the
Shareholders as to Fair Market Value or Radiant's receipt of the report of
appraisers setting forth the Fair Market Value as determined in accordance with
subsection (e) hereof, Radiant shall give written notice to each Shareholder of
the place and time (which shall be no fewer than ten nor more than thirty days
following the date of Radiant's giving of such notice) of closing (the "Put
Closing") for Radiant's purchase of the Eligible Shares in accordance with this
Section 7.2. At the Put Closing, Radiant shall deliver to the Shareholders (or
such other parties as the Shareholders shall designate in writing to radiant not
less than two business days prior to the Put closing) payment of the aggregate
purchase price for the Eligible Shares, in the form provided in subsection (c)
22
hereof, and the Shareholders shall cause to be delivered to Radiant
certificates evidencing all the Eligible Shares, duly endorsed for transfer to
Radiant by the record owners thereof.
(c) The purchase price for its purchase of the Eligible Shares
pursuant to this Section 7.2 shall be payable in cash or certified or bankers
check, or by wire transfer.
(d) The Put Valuation Price shall be determined by dividing: (a) the
remainder of subtracting from (x) the Fair Market Value of the Acquired
Business, (y) the aggregate sum of all principal actually paid by Radiant under
the Term Notes (as defined in Section 3.1 hereof) to and through the date of
such determination, provided that there shall also be subtracted the amount of
unpaid principal under any outstanding Term Note which is not surrendered and
marked as "Satisfied" prior to the payment of the Put Valuation Price; by (b)
the total number of Eligible Shares.
(e) (i) The "Fair Market Value" of the Acquired Business for purposes
of this Section 7.2 means the appraised value of the Acquired Business, as
operated as a going concern as a division or a subsidiary of Radiant, as of the
date of Radiant's receipt of a Put Notice, as determined (i) by mutual
agreement among Radiant and the Shareholders within five business days following
the date of Radiant's receipt of the Put Notice, or in the absence of such
agreement (ii) by an independent appraiser mutually agreeable to Radiant and the
Shareholders. If Radiant and the Shareholders are not able to agree on an
independent appraiser, then the Shareholders, as a group, and Radiant shall each
promptly select an appraiser. Each of the appraisers so selected, within ninety
(90) days of their appointment, shall determine the fair market value of the
Acquired Business, by such method as they shall independently determine as
appropriate to the industry including such Acquired Business. If the lower of
the two appraisals is equal to or in excess of the product of eighty five
hundredths (0.85) times the higher appraisal, then the two appraisals shall be
averaged, and the averaged amount shall be the fair market value of the Acquired
Business for purposes of this Section 7.2. If the lower of the two appraised
values is less than the foregoing product, then the two selected appraisers
shall, within twenty (20) days, jointly select a third appraiser, who shall then
have forty-five (45) days within which to arrive at a fair market value, at
which time the value determined by the third appraiser shall be averaged with
the closer of the two previously determined values to determine the Fair Market
Value.
(ii) The costs of obtaining the appraisals for this Section 7.2(e)
shall be paid by Radiant.
7.3. Shareholders' Post-IPO Registration Rights with Respect to Radiant
------------------------------------------------------------------
Common Stock.
------------
(a) As used in this Section 7.3: (i) the term "Registrable
Securities" shall mean any of the Merger Shares, any shares of Radiant Common
Stock into which such Merger Shares may be converted and any shares issued to
either Budwitz or Rice pursuant to the exercise of any of the Employee Options
(as defined in Section 7.2(a), above); (ii) the term "Act" shall mean the
23
federal Securities Act of 1933, as amended; and (iii) the term "Initial Public
Offering" shall mean the first public offering by Radiant of its common stock
pursuant to an effective registration statement under the Act.
(b) If at any time following its IPO, Radiant proposes to register
any of its Common Stock under the Act in connection with the public offering of
such securities for its own account or for the accounts of other shareholders,
solely for cash, on a form that would also permit the registration of the
Registrable Securities, Radiant shall, on each such occasion, promptly give each
Shareholder written notice of such determination. Upon the written request of
the Shareholder made within thirty (30) days after the effective date of such
notice (as determined in accordance with Article 8 hereof), Radiant shall,
subject to subsection (f) below, use its best efforts to cause to be registered
under the Act all of the Registrable Securities that the Shareholder has
requested be registered.
(c) Whenever required under subsection (a) to use its best efforts
to effect the registration of any Registrable Securities, Radiant shall, as
expeditiously as reasonably possible:
(i) Prepare and file with the Securities and Exchange
Commission ("SEC") a registration statement including such
Registrable Securities and use its best efforts to cause such
registration statement to become and remain effective.
(ii) Prepare and file with the SEC such amendments and
supplements to such registration statement and the prospectus used in
connection with such registration statement as may be necessary to
comply with the provisions of the Act with respect to the disposition
of all securities covered by such registration statement.
(iii) Furnish to the Shareholder such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with
the requirements of the Act, and such other documents as the
Shareholder may reasonably request in order to facilitate the
disposition of Registrable Securities covered by such registration
statement.
(iv) Use its best efforts to register and qualify the
securities covered by such registration statement under such other
securities or Blue Sky laws of such jurisdictions as shall be
reasonably appropriate for the distribution of the securities covered
by the registration statement, provided that Radiant shall not be
required in connection therewith or as a condition thereto to qualify
to do business or to file a general consent to service of process in
any such states or jurisdictions, and further provided that (anything
in this Agreement to the contrary notwithstanding with respect to the
bearing of expenses) if any jurisdiction in which the securities
shall be qualified shall require that expenses incurred in connection
with the qualification of the securities in that jurisdiction be
borne by selling shareholders, then such expenses shall be payable by
selling shareholders (including the Shareholder) pro rata, to the
extent required by that jurisdiction.
24
(v) Provide a transfer agent for the Common Stock no later
than the effective date of the first registration of any Registrable
Securities.
(d) It shall be a condition precedent to the obligations of Radiant
to take any action pursuant to this Section 7.3 that the Shareholder shall
furnish to Radiant such information regarding the Shareholder, the Registrable
Securities, and the intended method of disposition of such securities as Radiant
shall reasonably request and as shall be required in connection with the action
to be taken by Radiant.
(e) All expenses (excluding underwriters' discounts and commissions)
incurred in connection with a registration pursuant to subsection (a) including,
without limitation, any additional registration and qualification fees and any
additional fees and disbursements of counsel to Radiant that result from the
inclusion of securities held by the Shareholder in such registration and the
reasonable fees and disbursements of counsel for the Shareholder, shall be borne
by Radiant; provided, however, that if the registration is of exclusively a
secondary offering, the respective sellers of the securities covered thereby
shall bear their proportionate share of the expenses incurred in connection with
any registration (provided all sellers registering shares thereunder bear their
proportionate share of expenses), except expenses which Radiant would have
incurred whether or not the securities held by such sellers were included in
such registration (including, without limitation, the expenses of preparing
normal audited or unaudited financial statements).
(f) (i) In connection with any offering involving an underwriting of
shares being issued by Radiant, Radiant shall not be required to include
any of the Registrable Securities in such underwriting unless the
Shareholder accepts the terms of the underwriting as agreed upon between
Radiant and the underwriters selected by it, and enters into an
underwriting agreement, custody agreement, power of attorney and other
agreements customarily incident to the offering of shares by selling
Shareholders, each containing such representations, warranties, covenants
and indemnities as are reasonable and customary under the circumstances,
and then only in such quantity as will not, in the reasonable opinion of
the underwriters, jeopardize the success of the offering by Radiant.
(ii) If the total amount of securities that all proposed selling
securityholders request to be included in an underwritten offering exceeds
the amount of securities that the underwriters reasonably believe
compatible with the success of the offering, Radiant shall only be required
to include in the offering so many of the securities of such proposed
selling securityholders, including the Shareholder, as the underwriters
reasonably believe will not jeopardize the success of the offering (the
securities so included to be apportioned pro rata among such selling
securityholders according to the total amount of securities owned by such
proposed selling securityholders, including the Registrable Securities
owned by the Shareholder, or in such other proportions as shall mutually be
agreed to by such proposed selling securityholders), provided that no such
reduction shall be made with respect to any securities offered by Radiant
for its own account.
25
(iii) If requested by the underwriters of any public offering of
securities by Radiant, the Shareholder shall agree not to sell publicly any
of such Registrable Securities or other securities of Radiant (other than
shares registered in such offering) without the consent of such
underwriters for a period of not more than one hundred eighty (180) days
following the date on which such offering commences.
(g) The Shareholder shall have no right to take any action to
restrain, enjoin, or otherwise delay any registration as the result of any
controversy that might arise with respect to the interpretation or
implementation of this Section 7.3
(h) In the event any Registrable Securities are included in a
registration statement under this Agreement:
(i) To the extent permitted by law, Radiant will indemnify and hold
harmless the Shareholder, any underwriter (as defined in the Act) for it,
and each person, if any, who controls the Shareholder, or such underwriter
within the meaning of the Act, against any losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based on
any untrue or alleged untrue statement of any material fact contained in
such registration statement, including, without limitation, any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements 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 or
arise out of any violation by Radiant of any rule or regulation promulgated
under the Act applicable to Radiant and relating to action or inaction
required of Radiant in connection with any such registration; and will
reimburse the Shareholder, such underwriter, or controlling person for any
legal or other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability, or
action, provided, however, that the indemnity agreement contained in this
subsection (h)(i) shall not apply to amounts paid in settlement of any such
loss, claim, damage, liability or action if such settlement is effected
without the consent of Radiant (which consent shall not be unreasonably
withheld or delayed) nor shall Radiant be liable in any such case for any
such loss, claim, damage, liability or action to the extent that it arises
out of or is based upon an untrue statement or alleged untrue statement or
omission or alleged omission made in connection with such registration
statement, preliminary prospectus, final prospectus, or amendments or
supplements thereto, in reliance upon and in conformity with written
information furnished expressly for use in connection with such
registration by the Shareholder or such underwriter or controlling person.
(ii) To the extent permitted by law, the Shareholder will
indemnify and hold harmless Radiant, each of its directors, each of its
officers who has signed the registration statement, each person, if any,
who controls Radiant within the meaning of the Act, and each agent and any
underwriter for Radiant (within the meaning of the Act) against any losses,
26
claims, damages or liabilities to which Radiant or any such director,
officer, controlling person, agent, or underwriter may become subject,
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereto) arise out of or are based upon
any untrue statement or alleged untrue statement of any material fact
contained in such registration statement, including any preliminary
prospectus or final prospectus contained therein or any amendments or
supplements 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 such
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 such
registration statement, preliminary prospectus or final prospectus, or
amendments or supplements thereto, in reliance upon and in conformity with
written information furnished by the Shareholder expressly for use in
connection with such registration; and the Shareholder will reimburse any
legal or other expenses reasonably incurred by Radiant or any such
director, officer, controlling person, agent, or underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action; provided, however, that the indemnity agreement contained in this
subsection (h)(ii) shall not apply to amounts paid in settlement of any
such loss, claim, damage, liability or action if such settlement is
effected without the consent of the Shareholder (which consent shall not be
unreasonably withheld) and provided further that the Shareholder shall have
liability under this subsection (h)(ii)in excess of the net proceeds
actually received by the Shareholder in the relevant public offering.
(iii) Promptly after receipt by an indemnified party under this
subsection (h) of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made against
any indemnifying party under this subsection (h) notify the indemnifying
party in writing of the commencement thereof and the indemnifying party
shall have the right to participate in, and, to the extent the indemnifying
party so desires, jointly with any other indemnifying party similarly
noticed, to assume the defense thereof with counsel mutually satisfactory
to the parties. The failure to notify an indemnifying party promptly of the
commencement of any such action, if prejudicial to his ability to defend
such action, shall relieve such indemnifying party of any liability to the
indemnified party under this subsection (h) but the omission so to notify
the indemnifying party will not relieve him of any liability that he may
have to any indemnified party otherwise than under this subsection (h).
(i) The registration rights of a Shareholder under this Section 7.3
may be transferred to any transferee who acquires (otherwise than in a
registered public offering or in a transfer made pursuant to Rule 144 under the
Act) shares of Registrable Securities, provided, however, that Radiant is given
written notice by the Shareholder at the time of such transfer stating the name
and address of the transferee and identifying the securities with respect to
which the rights under this Agreement are being assigned.
7.4. Restrictions on Transfer.
------------------------
27
(a) Neither Shareholder, nor any Permitted Transferee, shall
transfer any of the Registrable Securities (as defined in Section 7.3 hereof) to
any person or entity whatsoever, except in a Permitted Transfer (in accordance
with subsection (c) hereof) or in a transfer complying with the terms set forth
in subsection (d) hereof, provided that the prohibition of this Section 7.4 (a)
shall be inapplicable to any transfer which is effected following the closing of
a Qualified Public Offering (as defined in Section 7.2 (a) hereof).
(b) Any purported transfer of Registrable Securities by any
Shareholder without full compliance with this Section 7.4 shall be void and of
no effect, and the purported transferee shall be entitled to no rights as a
Shareholder of Radiant as a result thereof. In addition to any other legal or
equitable remedy which may be available, Radiant shall be entitled to injunctive
relief against any such noncomplying transfer by the Shareholder.
(c) (i) Subject to the satisfaction of the condition set forth in
subsection (c)(ii), below, the prohibition of subsection (a) shall not
apply to any of the following transfers of Registrable Securities (each a
"Permitted Transfer"):
(A) if the Shareholder is an individual, transfers by gift by the
Shareholder, or by will or intestacy upon the death of the
Shareholder, to the spouse, lineal descendants, parents or siblings
of the Shareholder or to a trust for the benefit of such spouse,
lineal descendants parents or siblings which is created by the
Shareholder's will or of which the Shareholder during his lifetime
served as trustee, provided that the trust instrument governing any
such latter type of trust shall provide that the Shareholder, as
trustee, shall retain sole and exclusive control over the voting and
disposition of such Securities until the termination of this
Agreement;
(B) transfers of Securities between the Shareholder and the
Shareholder's guardian or conservator;
(C) transfers of Securities to Radiant by the Shareholder upon
the death, disability, retirement or termination of employment by
Radiant of the Shareholder, in each case if made pursuant to a
written stock repurchase agreement approved by the Board of Directors
of Radiant, or any other transfer by the Shareholder to Radiant if
made with the express approval of a majority of the total number of
members of the Board of Directors of Radiant;
(D) any other transfer made by the Shareholder with the express
written consent of at least a majority of the members of the Board of
Directors of Radiant.
(ii) Any Security transferred in any transaction described in
subsection (c)(i) shall remain subject to the transfer restriction of
subsection (a) hereof. As a condition to such a transfer, each Permitted
Transferee shall execute and deliver to Radiant an agreement with Radiant
in respect of the transferred Registrable Securities, containing all the
28
same terms and conditions of this Agreement, reflecting such transferee's
ownership of the Registrable Securities so transferred, which execution and
delivery shall evidence the agreement of such Permitted Transferee that the
Registrable Securities intended to be transferred shall continue to be
subject to the same terms and restrictions on transfer as contained in this
Section 7.4, and that as to such Registrable Securities such Permitted
Transferee shall be bound by such terms and conditions.
(d) (i) If the Shareholder (for purposes of this subsection (d)
referred to as the "Offering Shareholder") desires to make a transfer of
any Registrable Securities, unless such transfer is made in a Permitted
Transfer, the Offering Shareholder shall offer such Securities to Radiant
and to each other holder of shares of Radiant Common Stock (the "Offeree
Shareholders"), in accordance with the terms set forth in this subsection
(d), by giving them notice of the Shareholder's intention to dispose of the
Registrable Securities. Such notice shall name the type of transfer, the
proposed transferee, the number of shares to be transferred (the "Offered
Securities"), the price per share (or other comparable price information),
and the terms of payment, and shall be accompanied by a copy of the
binding, bona fide written offer of the proposed transferee to acquire such
securities upon the terms specified in the notice. Following receipt of
such notice by the Offeree Shareholders and Radiant, the Offeree
Shareholders and Radiant shall have an option, that may be exercised in the
manner provided by subsection (d)(ii) hereof, to purchase all, but not less
than all, of the Offered Securities in the discretion of each purchaser, at
the price and on terms specified in the notice.
(ii) Radiant shall have first option to purchase all of the Offered
Securities (or any lesser part thereof, provided one or more Offeree
Shareholders elect to purchase all Offered Securities that Radiant does not
purchase). Radiant may exercise its option by giving written notice, which
must state the number of shares of the Offered Securities which Radiant
elects to purchase, and the price and terms of purchase, to the Shareholder
and each Offeree Shareholder, within ten (10) days after its receipt of the
Offering Shareholder's notice. The Offering Shareholder shall not
participate in the determination reached by Radiant with respect to such
issue. If Radiant elects to purchase none or less than all of the Offered
Securities, the Offeree Shareholders shall have an option to purchase all,
but not less than all, of the Offered Securities that Radiant elects not to
purchase, exercisable by giving notice to the Offering Shareholder and each
other Offeree Shareholder and to Radiant within thirty (30) days after such
Offeree Shareholder's receipt of notice from the Offering Shareholder.
Each Offeree Shareholder shall have the right to purchase a proportion of
the Offered Securities (to the extent not purchased by Radiant) equal to
the ratio that the number of shares of radiant Common Stock owned by such
Offeree Shareholder bears to the total number of shares of radiant common
Stock owned by all of the Offeree Shareholders who elect to exercise their
purchase option (or in such other proportion as is unanimously agreed to
among the Offeree Shareholders who elect to exercise their purchase
option). Radiant or Offeree Shareholders or both may purchase all of the
Offered Securities but may not together purchase less than all of the
29
Offered Securities. If Radiant elects to purchase a greater percentage of
the Offered Securities than any other offeree, it shall state in its notice
of exercise the date for the closing of the purchase, which shall not be
less than forty-five (45) nor more than sixty (60) days after its receipt
of notice from the Offering Shareholder. If any Offeree Shareholder
exercises his or its option to purchase a greater percentage of the Offered
Securities than any other offeree, including Radiant, such Offeree
Shareholder shall state in his or its notice of exercise, with a copy to
the Secretary of Radiant the purchase price of the Securities and the terms
of purchase and a date for the closing of the purchase by all accepting
offerees. Such date for closing shall not be less than forty-five (45) nor
more than sixty (60) days after the date of such accepting Shareholder's
receipt of notice from the Offering Shareholder. The Secretary of Radiant
shall promptly mail a copy of such notice of exercise to all accepting
offerees to advise them of the time of closing.
(iii) If the right of first refusal provided above is not exercised
as to all of the Offered Securities, if the exercise by the Offeree
Shareholders and Radiant is not made within the time specified in
subsection (d)(ii), or if the purchase by the Offeree Shareholders or
Radiant is not consummated within the time specified in subsection (d)(ii),
above, through no fault of the Offering Shareholder, the Offering
Shareholder may transfer the Offered Securities to the proposed purchaser,
at the price and on the terms and conditions set forth in the notice of
intention sent by the Offering Shareholder. As a condition to such
transfer, the Offering Shareholder shall obtain the written acknowledgement
of the transferee (addressed to Radiant) that the transferee will be bound
by, and the Securities transferred will be subject to, the terms of this
Section 7.4, as if such transferee were a Shareholder. If the transfer of
Securities by the Offering Shareholder to the proposed purchaser named in
the notice of intention is not made within thirty (30) days after the date
the Offering Shareholder became free to transfer, the right to transfer in
accordance with the notice shall expire. In such event this Section 7.4
shall remain in full force and effect as to the offered Securities.
(e) At the closing the purchasers shall deliver the required
consideration, and (if applicable) the written undertaking specified in
subsection (c) hereof, and the selling Shareholder shall deliver the Offered
Securities, duly endorsed for transfer and with any and all required revenue
stamps attached.
(f) The Shareholder shall bear Shareholder's own costs and expenses
incurred in connection with any transfer or proposed transfer of Securities
covered by subsection (c) or (d) hereof, and shall, in addition, reimburse
Radiant for any expenses reasonably incurred by Radiant in the exercise of its
rights or fulfillment of its obligations pursuant to subsection (c), in
connection with such transfer. Radiant shall pay its own expenses, however, in
connection with the exercise of its rights or fulfillments of its obligations
pursuant to subsection (d) hereof.
30
7.5. Tax Matters.
-----------
(a) Each Shareholder acknowledges that he and Radiant have entered
into this Agreement with the understanding and expectation that until the
earlier to occur ("Election Termination Date") of (x) the election by holders of
not less than fifty one percent (51%) of the issued and outstanding Radiant
Common Stock to terminate such "S corporation" status, or (y) the effective date
of a Qualified Public Offering (as defined in Section 7.2(a)(i) hereof), Radiant
will be taxed as an "S corporation" under (i) the tax laws of the United States;
(ii) the tax laws of the State of Georgia; and (iii) unless otherwise agreed to
by all of the shareholders, under the tax laws of each state where such status
(or similar status) is available and in which at any time Radiant does business
or any shareholder is resident. Each Shareholder covenants and agrees that he
will use his best efforts not do any act or fail to do any act, the commission
or omission of which would cause the termination of the S corporation election
of Radiant, unless such action or failure to act has the consent of each other
shareholder. Each Shareholder further covenants and agrees that,
notwithstanding any other provision of this Agreement, prior to the Election
Termination Date, Radiant shall have no obligation to recognize or effect on the
transfer records of Radiant any transfer of any security by Shareholder which
would, in the opinion of counsel to Radiant, cause or have the effect of
termination of the S-corporation election of Radiant. Each Shareholder (and
such Shareholder's spouse) shall take all necessary and appropriate steps and
execute all necessary and appropriate consents and other documents required to
make each election to be taxed as an S corporation effective under the laws of
the United States and the respective states in which Radiant files an election
to be an S corporation.
(b) In the event of an inadvertent termination of Radiant's
S corporation election, prior to the Election Termination Date then each
Shareholder and Radiant agree to take appropriate action under Section 1362(f)
of the Internal Revenue Code of 1986, as amended (the "Code") and the
regulations thereunder to request a determination of inadvertent termination
from the Commissioner of Internal Revenue allowing Radiant to be treated as or
continuing to be an S corporation, and if a waiver of the terminating event is
not granted, to request consent for an early reelection of S corporation status
under Section 1362(g) of the Code and the regulations thereunder.
(c) In the event either Shareholder terminates his entire interest
in the stock of Radiant prior to the Election Termination Date, such Shareholder
agrees to file an election under Code Section 1377(a)(2) to close the tax year
of Radiant as of the date of such termination for Federal income tax accounting
purposes.
(d) If, prior to the Election Termination Date, Radiant's S election
is terminated during any taxable year of Radiant, each Shareholder agrees to
make such elections and sign such consent forms as may be required, and Radiant
will allocate all tax items between the short tax year ending on the date
immediately prior to the terminating event and the short tax year beginning with
the date of the terminating event in accordance with Code Section 1362(e)(3).
31
(e) Each Shareholder (and such Shareholder's spouse) hereby
irrevocably constitutes and appoints the President of Radiant, or any successor,
with power of substitution, his or her true and lawful attorney-in-fact and
agent, to execute, acknowledge, verify, swear to, deliver, record and file, in
his (or his spouse's) name, place and stead, all consents, instruments,
documents and certificates that may from time to time be required by the laws of
the United States, the State of Georgia, or any other relevant state, to
effectuate, implement and continue the valid existence of Radiant as an
S corporation (or similar status). This power of attorney is a special power and
shall not be terminated upon the incapacity, disability or incompetence of such
Shareholder (or spouse) and shall not be revoked and shall survive the
assignment or transfer by such Shareholder (or spouse) of all or part of his or
her Stock. The existence of this power shall not preclude execution of any such
instrument by such Shareholder (or spouse) individually on any such matter.
(f) Each Shareholder and Radiant acknowledges that, with respect to
any tax year in the period from the date hereof until the Election Termination
Date, Radiant will use its best efforts to make pro rata distributions of money
with respect to the Radiant Class A Stock and Radiant Common Stock in an amount
sufficient to pay the federal and state income taxes on the income that passes
through to the Shareholders from Radiant under Section 1366 of the Code for each
taxable year, net of any tax benefits produced by losses, deductions and credits
that pass through under Section 1366 of the Code. Radiant will use its best
efforts to make such distributions no later than ninety (90) days after the end
of each taxable year. For purposes of this subsection, a distribution shall be
treated as made with respect to a particular tax year of Radiant if (a) it is
made during the taxable year and not designated by Radiant as made with respect
to another taxable year, or (b) it is specifically designated by Radiant as made
with respect to that particular taxable year. The foregoing distribution
requirement set forth in this subsection is subject, however, to (i) the duty of
Radiant to maintain sufficient funds for working capital and business needs so
as not to impair the ability of Radiant to continue its business operations, and
(ii) any applicable restrictions contained in loan documents with Radiant's
creditors.
7.6. Dissolution of Billmart and PrysmTech. Promptly following the
-------------------------------------
Closing, Radiant shall take such action, in its capacity as sole member of each
of Billmart and of PrysmTech, to cause to be filed with the Secretary of State
of Georgia appropriate certificates or other documents to effect the dissolution
of each of Billmart and PrysmTech.
7.7. Transition Loans to Rice and Budwitz. Not later than the earlier to
------------------------------------
occur of the closing date of a Qualified Public Offering (as defined in Section
7.2(a) hereof) or April 15, 1997, Radiant will loan to each of Rice and Budwitz
the principal sum of $165,000 (each a "Transition Loan"). Each Transition Loan,
which shall be represented by a promissory note in the form attached hereto as
Exhibit "C" (a "Transition Loan Note"), will bear interest at seven percent (7%)
-----------
per annum, cumulative but not compounding, with principal and interest payable
in full on the fifth (5th) anniversary of the making of the loan (the
"Transition Loan Maturity Date"), provided that in the event that the obligor
under such Transition Loan makes any sale prior to the Transition Loan Maturity
Date of any of the Merger Shares (as defined in Section 3.1(ii) hereof) received
by such obligor pursuant to this Agreement (for purposes of this Section 7.7,
32
the "Prepayment Shares"), such obligor shall be obligated to apply any net
proceeds of such sale in reduction of the obligor's obligations to Radiant under
such Transition Loan Note.
SECTION 8. CONDITIONS PRECEDENT TO OBLIGATIONS OF RADIANT
Each and every obligation of Radiant to be performed on the Closing Date
shall be subject to the satisfaction or the waiver in writing by Radiant, prior
to or at the Closing, of each of the following conditions:
8.1. Representations and Warranties True as of the Closing Date. Each of
----------------------------------------------------------
the representations and warranties made by the Sellers and the Shareholders in
this Agreement, in the statements contained in the Schedule or in any
instrument, list, certificate or writing delivered by the Sellers and/or the
Shareholders pursuant to this Agreement, shall be true and correct when made and
shall be true and correct in all material respects at and as of the Closing Date
as though such representations and warranties were made or given on and as of
the Closing Date, except for any changes permitted by the terms of this
Agreement or consented to in writing by Radiant.
8.2. Compliance With Agreement. The Sellers and the Shareholders shall
-------------------------
have in all material respects performed and complied with all of their
respective agreements and obligations under this Agreement which are to be
performed or complied with by them prior to or on the Closing Date, including
the delivery of the closing documents specified in Section 11.1.
8.3. Absence of Suit. No action, suit or proceeding before any court or
---------------
any governmental authority shall have been commenced or threatened, and no
investigation by any governmental or regulating authority shall have been
commenced, against Radiant, the Sellers or any of the shareholders, officers or
directors of any of them, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions.
8.4. Consents and Approvals. All approvals, consents and waivers that are
----------------------
required to effect the transactions contemplated hereby shall have been
received, and executed counterparts thereof shall have been delivered to
Radiant, including, without limitation, all approvals and consents, whether
governmental or private, necessary for Radiant's continuation of the PrysmTech
Business as a division or wholly-owned subsidiary of Radiant. The Sellers and
the Shareholders shall cooperate with Radiant in obtaining, and take all actions
necessary to obtain, any such consents or approvals.
8.5. Exemption. Radiant shall have received evidence reasonably
---------
satisfactory to it that the issuance of the Merger Shares in the Mergers is
exempt from registration under the Securities Act.
33
SECTION 9. CONDITIONS PRECEDENT TO OBLIGATIONS OF THE SELLERS AND THE
SHAREHOLDERS
Each and every obligation of the Sellers and the Shareholders to be
performed on the Closing Date shall be subject to the satisfaction or the waiver
in writing by the Sellers and the Shareholders, prior to or at the Closing, of
the following conditions:
9.1. Representations and Warranties True on the Closing Date. Each of the
-------------------------------------------------------
representations and warranties made by Radiant in this Agreement shall be true
and correct when made and shall be true and correct in all material respects at
and as of the Closing Date as though such representations and warranties were
made or given on and as of the Closing Date.
9.2. Compliance With Agreement. Radiant shall have in all material
-------------------------
respects performed and complied with all of Radiant's agreements and obligations
under this Agreement which are to be performed or complied with by Radiant prior
to or on the Closing Date, including the delivery of the closing documents
specified in Section 11.2.
9.3. Absence of Suit. No action, suit or proceeding before any court or
---------------
any governmental authority shall have been commenced or threatened, and no
investigation by any governmental or regulatory authority shall have been
commenced, against Radiant, the Sellers or any of the shareholders, officers or
directors of any of them, seeking to restrain, prevent or change the
transactions contemplated hereby, or questioning the validity or legality of any
such transactions, or seeking damages in connection with, or imposing any
condition on, any such transactions.
SECTION 10. SECTION SURVIVAL OF REPRESENTATIONS AND WARRANTIES/INDEMNITY
10.1. Survival of Representations and Warranties. All of the
------------------------------------------
representations and warranties of the Sellers and the Shareholders, on the one
hand, and Radiant on the other hand, contained in this Agreement shall survive
the Closing for a period of one year following the Closing Date. No party
hereto shall be entitled to indemnification, payment of any damages, expenses or
other remedy based on such representations, warranties, covenants, and insofar
as, and to the extent that, such party had Actual Knowledge prior to the Closing
Date, of the inaccuracy of, or of noncompliance with, any such representation,
warranty, covenant or obligation. The waiver by the party seeking
indemnification of any condition based on the accuracy of any representation or
warranty, or on the performance of or compliance with any covenant or
obligation, will not affect the right to indemnification, payment of damages,
expenses or other remedy based on such representations, warranties, covenants
and obligations.
10.2. Indemnification by Shareholders. Each of the Shareholders shall,
-------------------------------
severally (but not jointly), defend, indemnify and hold harmless Radiant and its
successors and permitted assigns (and its directors, officers, employees, agents
and affiliates) from and against any and all direct or indirect requests,
demands, claims, payments, defenses, obligations, recoveries, deficiencies,
fines, penalties, interest, assessments, actions, liens, causes of action,
34
suits, proceedings, judgments, losses, damages, liabilities, costs and expenses
of any kind or nature (including without limitation (i) interest, penalties and
reasonable attorneys' fees and expenses, (ii) attorneys' fees and expenses
necessary to enforce their rights to indemnification hereunder, and (iii)
consultants' fees and other costs of defending or investigating any claim
hereunder, whether or not resulting in any liability), and interest on any
amount payable as a result of the foregoing, whether accrued, absolute,
contingent, known, unknown, or otherwise as of the Closing Date or thereafter
(collectively "Claims") asserted against, imposed upon or incurred by Radiant or
its successors or permitted assigns or any of its directors, officers,
employees, agents or affiliates based upon, awarded or asserted against in
respect of or otherwise in respect of: (a) the inaccuracy or breach of any
representation or warranty of such Shareholder or, in the case of Budwitz, 3Bs
or the Budwitz Trust, and in the case of Rice, 5Rs or the Rice Trust, contained
in or made pursuant to this Agreement or any of the closing certificates or
documents of assignment delivered at the Closing described in Sections 11.1(i)
hereof (the "Closing Documents") (but not including any other Ancillary
Agreements), or (b) the breach of any covenant or agreement of such Shareholder
or, in the case of Budwitz, 3Bs or the Budwitz Trust, and in the case of Rice,
5Rs or the Rice Trust, contained in this Agreement or any of the Closing
Documents.
10.3. Indemnification by Radiant. Subject to the terms and conditions of
--------------------------
this Section 10, Radiant, hereby agree to indemnify, defend and hold harmless
each Shareholder from and against all Claims asserted against, resulting to,
imposed upon or incurred by any such Shareholder, directly or indirectly, by
reason of, arising out of, or resulting from (a) the inaccuracy or breach of any
representation or warranty of Radiant contained in or made pursuant to this
Agreement or any Ancillary Document (regardless of whether such breach is deemed
"material" for purposes hereof), or (b) the breach of any covenant or agreement
of Radiant contained in this Agreement or any of the Ancillary Documents.
10.4. Set-Off. Radiant shall have the right to set-off and apply against
-------
all amounts due and owing to the Shareholders pursuant to (i) this Agreement, or
(ii) any of the Term Notes issued to the Shareholders pursuant hereto, all sums
in respect of which the Shareholder is finally determined (by final and non-
appealable judgment, or settlement or compromise or other mutual agreement) to
be liable to Radiant, including without limitation as a result of a breach of
any representation or warranty contained in Section 4 hereof or pursuant to the
indemnification agreement contained herein. Such right of set-off shall be in
addition to, and not in lieu of, or an election against, any and all other
remedies available to Radiant at law or in equity. The exercise of such right
of set-off by Radiant in good faith will not constitute an event of default
under any Note issued to the Shareholders pursuant hereto or any instrument
securing such Notes.
10.5. Conditions of Indemnification. The obligations and liabilities of
-----------------------------
the parties hereunder with respect to Claims resulting from the assertion of
liability by third parties shall be subject to the following terms and
conditions:
(a) The party hereby seeking indemnification (the "Indemnitee")
will give the other party hereto (the "Indemnitor") notice of any such claims
promptly after the Indemnitee receives notice thereof, and the Indemnitor will
35
accept the defense thereof by counsel of its own choosing reasonably acceptable
to the Indemnitee; provided, however, the failure to give such notice shall not
relieve the Indemnitor of its obligations hereunder except and to the extent he
or it is prejudiced thereby.
(b) In the event that the Indemnitor, within a reasonable time
after notice of any such claim, fails to defend against such claim, the
Indemnitee (upon further notice to the Indemnitor) will have the right to
undertake the defense, compromise or settlement of such claim on behalf of and
for the account and risk of the Indemnitor, subject to the right of the
Indemnitor to assume the defense of such claim at any time prior to the
settlement, compromise or final determination thereof;
(c) Anything in this Section 10.5 to the contrary notwithstanding,
(i) if the Indemnitee shall so elect, the Indemnitee shall have the right, at
its sole cost and expense, to defend, compromise or settle such claim or to
participate in the defense of any such claim being defended by the Indemnitor,
(ii) the Indemnitor shall not, without the Indemnitee's written consent, settle
or compromise any such claim or consent to entry of any judgment which does not
include an unconditional term thereof giving the Indemnitee a release from all
liability in respect of such claim by the claimant or the plaintiff, and (iii)
the Indemnitor agrees to act in good faith with due regard to the Indemnitee's
on-going business interests to the extent compatible with an efficient and cost
effective resolution of the dispute.
10.6. Payment. The Indemnitor shall promptly pay the Indemnitee any
-------
amount due under this Section 10. Upon judgment, determination, settlement or
compromise of any third party Claim, the Indemnitor shall pay promptly on behalf
of the Indemnitee, and/or to the Indemnitee in reimbursement of any amount
theretofore finally determined (by final judgment, settlement, compromise or
other mutual agreement) to be required to be paid by it, the amount so
determined by judgment, determination, settlement or compromise and all other
Claims of the Indemnitee with respect thereto, unless in the case of a judgment
an appeal is made from the judgment. If the Indemnitor desires to appeal from an
adverse judgment, then the Indemnitor shall post and pay the cost of the
security or bond to stay execution of the judgment pending appeal. Upon the
payment in full by the Indemnitor of such amounts, the Indemnitor shall succeed
to the rights of such Indemnitee, to the extent not waived in settlement,
against the third party who made such third party claim.
10.7. No Waiver. The closing of the transactions contemplated by this
---------
Agreement shall not constitute a waiver by any party of its rights to
Indemnification hereunder, under the party seeking Indemnification had knowledge
before the execution and delivery of this Agreement or the Closing Date, of the
breach, violation or failure of condition constituting the basis of any claim.
10.8. Adjustment of Liability. In the event an Indemnitor is required to
-----------------------
make any payment under this Section 10 in respect of any Claim, such Indemnitor
shall pay the Indemnitee an amount (the "Adjusted Amount") which is equal to the
sum of (i) the amount of such Claim, minus (ii) the amount of any insurance
-----
proceeds the Indemnitee actually receives with respect thereto, minus (iii) any
-----
36
third party payments actually received by the Indemnitee with respect to such
damages, liability, obligation, loss, claim or other amount after demand or
notice to such third party from the Indemnitor (with the consent of the
Indemnitee which will not be unreasonably withheld).
10.9. Non-Exclusive Remedy. The rights and remedies of the parties hereto
--------------------
pursuant to this Section 10 are in addition to and not in lieu of other rights
and remedies available at law or in equity.
SECTION 11. CLOSING
11.1. Documents to be Delivered by the Sellers and the Shareholders. At
-------------------------------------------------------------
the Closing, the Sellers and/or the Shareholders, as the case may be, shall
deliver to Radiant the following documents, in each case duly executed or
otherwise in proper form:
(a) Stock Certificate(s). Stock certificates representing the 3Bs
--------------------
Shares and 5Rs Shares, together with stock powers executed in blank, and such
other documents, instruments and agreements with respect thereto as may be
reasonably requested by Radiant.
(b) Assignment of Billmart Units. Forms of Assignment and
----------------------------
Transfer of Limited Liability Company Membership Units, each in substantially
the form of Exhibit "H" hereto, executed by each of the Budwitz Trust and the
-----------
Rice Trust, respectively, with respect to the Rice Trust Units and the Budwitz
Trust Units respectively.
(c) Assignment of Profits Interest or Profits Interest Release.
----------------------------------------------------------
Either: (i) an Assignment and Transfer of Profits Interest, in substantially the
form of Exhibit "I" hereto, or the Profits Interest Release (as defined in
-----------
Section 2.1(iii) hereof) in form and substance reasonably acceptable to Radiant,
in either case executed by Sony with respect to the Profits Interest; or
alternatively (ii) the Profits Interest Undertaking (as defined in Section
2.1(iii)(B) hereof), executed by each of the Shareholders, accompanied by the
Escrow Agreement (as defined in Section 3.2(b) hereof) executed by each of the
Shareholders and the Escrow Agent.
(d) Sony Option. The Sony Option (as defined in Section 3.2
-----------
hereof), in form and substance reasonably acceptable to Radiant, executed in
favor of Sony by each of Rice and Budwitz.
(e) Shareholder's Certificates. A certificate of each Shareholder,
--------------------------
dated as of the Closing Date, substantially in the form of Exhibit "J" hereto.
-----------
(f) Secretary's Certificates. A certificate of the Secretary of
------------------------
each of 3Bs and 5Rs, dated as of the Closing Date, substantially in the form of
Exhibit "K" hereto.
-----------
(g) Officer's Certificates. A certificate of an executive
----------------------
officer of each of 3Bs and 5Rs, dated as of the Closing Date, substantially in
the form of Exhibit "L" hereto.
-----------
37
(h) Trustee's Certificate. A certificate of each of the Trustees
---------------------
of the Budwitz Trust and the Rice Trust, respectively, dated as of the Closing
Date, substantially in the form of Exhibit "M" hereto.
-----------
(i) Billmart Manager's Certificate. A certificate of a Manager of
------------------------------
Billmart, dated as of the Closing Date, substantially in the form of Exhibit "N"
-----------
hereto.
(j) PrysmTech Manager's Certificate. A certificate of a Manager of
-------------------------------
PrysmTech, dated as of the Closing Date, substantially in the form of Exhibit
-------
"O" hereto.
---
(k) Opinion of Counsel. A written opinion of Xxxxxx, Xxxxxxx &
------------------
Xxxxxx, LLP, counsel to the Sellers and the Shareholders, dated as of the
Closing Date, addressed to Radiant, substantially in the form of Exhibit "P"
-----------
hereto.
(l) Budwitz Employment Agreement. The Budwitz Employment
----------------------------
Agreement, executed by Budwitz.
(m) Rice Employment Agreement. The Rice Employment Agreement,
-------------------------
executed by Rice.
(n) Option Agreements. The ISO Agreement and the NQO Agreement in
-----------------
favor of Budwitz, and the ISO Agreement and the NQO Agreement in favor of Rice,
each executed by Budwitz and Rice, respectively.
(o) Security and Agency Agreement. A Security and Agency
-----------------------------
Agreement in the form of Exhibit "B" hereof, executed in favor of Radiant by
-----------
each Shareholder and each of the Budwitz Trust and Rice Trust, or will as by the
Agent named therein.
(p) Sirrom Capital Intercreditor Agreement. An intercreditor
--------------------------------------
agreement, substantially in the form of Exhibit "Q" hereto (the "Sirrom
-----------
Intercreditor Agreement"), among Radiant, Sirrom Capital Corporation ("Sirrom")
and an Agent for the holders of the Term Notes, executed on behalf of such
Agent.
(q) Articles of Merger. The certificates of merger contemplated by
------------------
Section 1.2 duly executed on behalf of 3Bs and 5Rs.
(r) Redemption of PrysmTech Profits Interests. Evidence
-----------------------------------------
satisfactory to Radiant and its counsel of the complete redemption by PrysmTech,
prior to the effectuation of the Schedule 4.5 Assets Distribution, of all
profits interests in PrysmTech held by each of Xxxxx Xxxxx ("Xxxxx") and Xxxxx
XxXxxxxxx ("McAfferty"), and the release by each of Xxxxx and McAfferty of all
claims which he may have against PrysmTech or its members in respect of such
profits interests.
38
(s) Releases of PrysmTech by Unvested Employees. A release
-------------------------------------------
executed in favor of PrysmTech and its members by each of Xxxx Xxxxxxxxx, Xxxxx
Xxxxxx, Xxxx Xxxxxxx, Xxxx Xxxxxx and Xxxx XxXxxxx (each an "Unvested Employee")
may have to, or in respect of, any participation (whether past, present or
future) in profits, equity or cash flow of PrysmTech.
(t) Other Documents. All other documents, instruments or writings
---------------
required to be delivered to Radiant at or prior to the Closing pursuant to this
Agreement and such other certificates of authority, documents, instruments or
writings as Radiant may reasonably request.
11.2. Documents to be Delivered by Radiant. At the Closing, Radiant
------------------------------------
shall deliver to the Sellers and/or the Shareholders, as appropriate, the
following documents, in each case duly executed or otherwise in proper form:
(a) Non-Stock Consideration. The non-stock portion of the Total
-----------------------
Consideration, in the form of the Term Notes executed by Radiant and payable in
accordance with Section 3.1(i) hereof, and in the event of delivery of the
documents described in Section 11.1(c)(ii) hereof, an executed counterpart of
the Escrow Agreement.
(b) Security and Agency Agreement. The Security and Agency
-----------------------------
Agreement described in Section 11.1(p), executed by Radiant.
(c) Stock Certificates. Stock certificates evidencing the Merger
------------------
Shares, executed by appropriate officers of Radiant and registered in the names
of the Shareholders.
(d) Secretary's Certificates. A certificate of the Secretary of
------------------------
Radiant, dated as of the Closing Date, substantially in the form of Exhibit "S"
-----------
hereto.
(e) Officer's Certificates. A certificate of an executive officer
----------------------
of each of Radiant, dated as of the Closing Date, substantially in the form of
Exhibit "T" hereto.
-----------
(f) Opinion of Counsel. A written opinion of Xxxxx, Xxxxxxxx &
------------------
Xxxxxxx, counsel to Radiant, dated as of the Closing Date, addressed to the
Shareholders, and substantially in the form of Exhibit "U" hereto.
-----------
(g) Articles of Merger. The articles of merger and/or
------------------
certificates of merger contemplated by Section 1.2 duly executed on behalf of
Radiant.
(h) Employment Agreements. Counterparts of the Budwitz Employment
---------------------
Agreement and the Rice Employment Agreement, executed on behalf of Radiant.
(i) Option Agreements. The Option Agreements described in Section
-----------------
11.1(n), each executed by Radiant.
39
(j) Sirrom Capital Intercreditor Agreement. The Sirrom Capital
--------------------------------------
Intercreditor Agreement, described in Section 11.1(p), executed on behalf of
Sirrom and Radiant.
(k) Other Documents. All other documents, instruments or writings
---------------
required to be delivered to the Sellers and/or the Shareholders at or prior to
the Closing pursuant to this Agreement and such other certificates of authority
and documents as the Sellers or the Shareholders may reasonably request.
SECTION 12. TERMINATION
12.1. Termination. This Agreement may be terminated at any time prior to
-----------
the Closing:
(a) By mutual agreement of Radiant, and the Sellers, and the
Shareholders;
(b) By the Shareholders, if they discover that any representation
or warranty made by Radiant herein is false in any material respect or if
Radiant shall have breached any of its material agreements and covenants
contained herein in any material respect;
(c) By Radiant, if Radiant shall discover that any representation
or warranty made by the Sellers and/or the Shareholders herein is false in any
material respect or if the Sellers and/or the Shareholders shall have breached
any of its material agreements and covenants contained herein in any material
respect;
(d) By Radiant, provided that Radiant is not in default hereunder,
if the Closing shall not have occurred on or before December 31, 1996.
(e) By Radiant if at any time Radiant shall determine that the
conditions herein cannot be satisfied.
SECTION 13. MISCELLANEOUS
13.1. Expenses. Except as otherwise specifically provided herein Radiant,
--------
on the one hand, and the Shareholders, on the other hand, shall pay their own
respective expenses (and with respect to the Shareholders those of the Sellers),
in connection with the negotiation, preparation and execution of this Agreement
and the consummation of the transactions contemplated hereby, except that
Radiant shall, at the Closing, pay the reasonable fees and expenses of counsel
to the Sellers and the Shareholders incurred directly in connection with and
directly relating to the transactions contemplated hereby. This Section 13.1
shall expressly survive the termination of this Agreement.
13.2. Entire Agreement. This Agreement, including all schedules and
----------------
exhibits hereto, constitutes the entire agreement of the parties with respect to
the subject matter hereof, and may not be modified, amended or terminated except
by a written instrument specifically referring to this Agreement signed by the
party against whom enforcement is sought.
40
13.3. Waivers and Consents. All waivers and consents given hereunder
--------------------
shall be in writing. No waiver by any party hereto of any breach or anticipated
breach of any provision hereof by any other party shall be deemed a waiver of
any other contemporaneous, preceding or succeeding breach or anticipated breach,
whether or not similar, on the part of the same or any other party.
13.4. Notices. All notices and other communications hereunder shall be in
-------
writing and shall be deemed to have been given only if (i) personally delivered
or (ii) three (3) business days after mailing, postage prepaid, by certified
mail or (iii) when delivered (and receipted for) by an overnight delivery
service, addressed in each case as follows:
(a) If to Radiant to:
Radiant Systems, Inc.
Suite A, 0000 Xxxxxxxx Xxxxx
Xxxxxxxxxx, Xxxxxxx 00000
Attn: Xxxx X. Xxxxxx, Executive Vice President
with a copy in like manner to
Xxxxx, Xxxxxxxx & Xxxxxxx
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000-0000
Attn: Xxxxxxx X. Xxxxxxxxxx
(b) If to any of the Sellers or the Shareholders to:
H. Xxxxxx Xxxx
000 Xxx Xxxxxxxxxx Xxxx
Xxxxxx, Xxxxxxx 00000
with a copy in like manner to:
Xxxxxx, Xxxxxxx & Xxxxxx, LLP
1600 Atlanta Financial Center, East Tower
0000 Xxxxxxxxx Xxxx, XX
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxx, Esquire
Radiant, on the one hand, and the Sellers or the Shareholders, on the other, may
change the address(es) for the giving of notices and communications to them or
to it, as the case may be, by written notice to the other parties in conformity
with the foregoing.
41
13.5. Gender. All pronouns and any variations thereof refer to the
------
masculine, feminine or neuter, singular or plural, as the identity of the person
or persons may require.
13.6. Governing Law. The interpretation and construction of this
-------------
Agreement, and all matters relating hereto, shall be governed by the internal
laws of the State of Georgia, except with respect to the filing of the articles
and/or certificates of merger in which case the governing law shall be the
jurisdiction in which the applicable party hereto is incorporated.
13.7. Arbitration.
-----------
(a) Any dispute, controversy or claim arising out of or relating to
this Agreement or any contract or agreement entered into pursuant hereto or the
performance by the parties of its or their terms shall be settled by binding
arbitration held in Atlanta, Georgia in accordance with the Commercial
Arbitration Rules of the American Arbitration Association then in effect, except
as specifically otherwise provided in this Section 13.7. The interpretation and
enforceability of this Section 13.7 shall be governed exclusively by the Federal
Arbitration Act, 9 U.S.C. (S)(S) 1-16.
(b) If the matter in controversy (exclusive of attorney fees and
expenses) shall appear, as at the time of the demand for arbitration, to exceed
$100,000, then the panel to be appointed shall consist of three neutral
arbitrators; otherwise, one neutral arbitrator.
(c) The arbitrator(s) shall allow such discovery as the
arbitrator(s) determine appropriate under the circumstances and shall resolve
the dispute as expeditiously as practicable, and if reasonably practicable,
within 120 days after the selection of the arbitrator(s). The arbitrator(s)
shall give the parties written notice of the decision, with the reasons therefor
set out, and shall have 30 days thereafter to reconsider and modify such
decision if any party so requests within 10 days after the decision. Thereafter,
the decision of the arbitrator(s) shall be final, binding, and nonappealable
with respect to all persons, including (without limitation) persons who have
failed or refused to participate in the arbitration process.
(d) The arbitrator(s) shall have authority to award relief under
legal or equitable principles, including interim or preliminary relief, and to
allocate responsibility for the costs of the arbitration and to award recovery
of attorneys fees and expenses in such manner as is determined to be appropriate
by the arbitrator(s).
(e) Judgment upon the award rendered by the arbitrator(s) may be
entered in any court having in personam and subject matter jurisdiction.
(f) All proceedings under this Section 13.7, and all evidence
given or discovered pursuant hereto, shall be maintained in confidence by all
parties.
(g) The fact that the dispute resolution procedures specified in
this Section 13.7 shall have been or may be invoked shall not excuse any party
from performing its obligations under this Agreement and during the pendency of
42
any such procedure all parties shall continue to perform their respective
obligations in good faith, subject to any rights to terminate this Agreement
that may be available to any party and to the right of set-off provided herein.
(h) All applicable statutes of limitation shall be tolled while the
procedures specified in this Section 13.7 are pending. The parties will take
such action, if any, required to effectuate such tolling.
13.8. Parties in Interest. This Agreement may not be transferred,
-------------------
assigned, pledged or hypothecated by any party hereto, other than with the
written consent of the other parties hereto and any attempted transfer,
assignment, pledge or hypothecation without such consent shall be null and void
and of no effect. Subject to the foregoing restrictions, this Agreement shall be
binding upon and shall inure to the benefit of the parties hereto and their
respective heirs, executors, administrators, successors and permitted assigns.
13.9. Severability. In case any provision in this Agreement shall be held
------------
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof will not in any way be affected or impaired
thereby.
13.10. Counterparts. This Agreement may be executed in two or more
------------
counterparts, all of which taken together shall constitute one instrument.
13.11. Confidentiality. From the date hereof to the Closing Date, the
---------------
parties hereto shall maintain in confidence and not divulge or disclose, and,
shall cause their respective directors, officers, employee, agents, and
advisors, if any, to maintain in confidence and not divulge or disclose the
existence of, and any written, oral or other information obtained in confidence
from any other party in connection with, this Agreement, any Ancillary Document
or the transactions contemplated hereby unless (a) such information is already
known to such party or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of such party, (b) the
use of such information is necessary or appropriate in making any filing or
obtaining any consent or approval required for the consummation of the
transactions contemplated hereunder, or (c) the furnishing or use of such
information is required by legal proceedings.
IN WITNESS WHEREOF, the parties have executed this Agreement under seal
as of the date first above written.
RADIANT SYSTEMS, INC.
By: /s/ Xxxx X. Xxxxxx
------------------------------------
Title: Executive Vice President and
Chief Excutive Officer
---------------------------------
43
3Bs ENTERPRISES, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Title: President
---------------------------------
5Rs ENTERPRISES, INC.
By: /s/ H. Xxxxxx Xxxx
------------------------------------
Title: President
---------------------------------
THE XXXXXXX X. XXXXXXX CHARITABLE
REMAINDER UNITRUST
By: /s/ Xxxxxxx X. Xxxxxxx
------------------------------------
Title: Trustee
---------------------------------
THE H. XXXXXX XXXX CHARITABLE
REMAINDER UNITRUST
By: /s/ H. Xxxxxx Xxxx
------------------------------------
Title: Trustee
---------------------------------
/s/ Xxxxxxx X. Xxxxxxx (L.S.)
----------------------------------
XXXXXXX X. XXXXXXX, Individually
/s/ H. Xxxxxx Xxxx (L.S.)
----------------------------------
H. XXXXXX XXXX, Individually
44
