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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities and Exchange Act of 1934
Date of Report (Date of earliest event reported) May 30, 1997
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Radiant Systems, Inc.
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(Exact name of registrant as specified in its charter)
Georgia 0-22065 11-2749765
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(State or other jurisdiction (Commission File Number) (IRS Employer
of incorporation) Identification No.)
1000 Alderman Drive, Alpharetta, Georgia 30202
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (770) 772-3000
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Not applicable
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS.
On May 30, 1997, Radiant Systems, Inc., a Georgia corporation (the
"Company"), consummated the acquisition of RSI Merger Corporation, a Georgia
corporation ("RSI"). Pursuant to the Agreement and Plan of Merger (the "Merger
Agreement"), dated as of May 16, 1997, by and among the Company, RSI, RSI
Acquisition Corporation., a Georgia corporation and wholly-owned subsidiary of
the Company (the "Merger Sub"), and the shareholders of RSI, all individuals
residing in the State of Texas (individually "Shareholder" and collectively the
"Shareholders"), RSI was merged with and into Merger Sub, whereby RSI became a
wholly-owned subsidiary of the Company (the "Subsidiary"). Pursuant to the
Merger Agreement, the Shareholders received an aggregate of 199,074 shares of
Common Stock of the Company. In addition, the Company repaid approximately $1.3
million of RSI indebtedness in connection with the acquisition.
RSI is a provider of computer software applications directed toward the
full service segment of the food service industry.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) Financial Statements of Business Acquired:
At the present time, it is impractical to provide the required
financial statements for RSI as required by this Item 7 of Form 8-K. The Company
will file such required financial statements under cover of Form 8-K/A as soon
as practicable, but not later than August 15, 1997 (60 days after this Report is
required to be filed).
(b) Pro Forma Financial Information:
At the present time, it is impractical to provide the pro forma
financial information relative to the RSI acquisition as required by Article 11
of Regulation S-X and this Item 7 of Form 8-K. The Company will file such pro
forma financial information under cover of Form 8-K/A as soon as practicable,
but not later than August 15, 1997 (60 days after this Report is required to be
filed).
(c) Exhibits:
2.1 - Agreement and Plan of Merger, dated as of May 16, 1997, by
and among Radiant Systems, Inc., RSI Acquisition
Corporation, RSI Merger Corporation, and each of the
Shareholders of RSI Merger Corporation.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this Report to be signed on its behalf by the
undersigned hereunto duly authorized.
RADIANT SYSTEMS, INC.
By: /s/ John H. Heyman
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John H. Heyman
Executive Vice President and
Chief Financial Officer
Dated: June 10, 1997
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EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NO. Description of Exhibit
----------- ----------------------
<S> <C>
2.1 Agreement and Plan of Merger, dated as of May 16, 1997, by and
among Radiant Systems, Inc., RSI Acquisition Corporation, RSI
Merger Corporation, and each of the Shareholders of RSI Merger
Corporation.
</TABLE>
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Exhibit 2.1
AGREEMENT AND PLAN OF MERGER
dated as of May 16, 1997
by and among
RADIANT SYSTEMS, INC.
RSI ACQUISITION CORPORATION
RSI MERGER CORPORATION
and
EACH OF THE SHAREHOLDERS OF RSI MERGER CORPORATION
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EXHIBITS
EXHIBIT A Company and Shareholders' Certificate
EXHIBIT B Secretary's Certificate of the Company
EXHIBIT C Opinion of Counsel to Shareholders and the Company
EXHIBIT D Form of Officer's Certificate of Parent and the Merger Sub
EXHIBIT E Form of Secretary's Certificate of Parent and the Merger Sub
EXHIBIT F Opinion of Counsel to Parent and the Merger Sub
EXHIBIT G Investor Representation Letter
EXHIBIT H Form of Stock Pledge Agreement
** Certain schedules and exhibits are not included with this filing. A copy of
any omitted exhibit or schedule will be furnished supplementally to the
Commission upon request. **
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THIS AGREEMENT AND PLAN OF MERGER dated as of May 16, 1997, is made and
entered into by and among RADIANT SYSTEMS, INC., a Georgia corporation
("Parent"), RSI ACQUISITION CORPORATION, a Georgia corporation and wholly-owned
subsidiary of Parent ("Merger Sub"), RSI MERGER CORPORATION, a Georgia
corporation (the "Company") and each of the shareholders of the Company, all
individuals presently residing in Texas (each individually a "Shareholder" and
collectively the "Shareholders"). Capitalized terms not otherwise defined herein
have the meanings set forth in Section 10.01.
WHEREAS, Shareholders own in the aggregate one hundred (100) shares of
common stock, no par value per share, of the Company, constituting all issued
and outstanding shares of capital stock of the Company (such shares being
referred to herein as "Company Common Stock" or the "Shares"); and
WHEREAS, the Boards of Directors of Parent, Merger Sub and the Company
have each determined that it is advisable and in the best interests of their
respective shareholders for Parent to enter into a business combination with the
Company upon the terms and subject to the conditions set forth herein;
WHEREAS, in furtherance of such combination, the Boards of Directors of
Parent and Merger Sub have each approved the merger of the Company with and into
Merger Sub (the "Merger") in accordance with the applicable provisions of the
Georgia Business Corporation Code (the "GBCC") and the Board of Directors of the
Company has approved the Merger in accordance with the applicable provisions of
the GBCC, and upon the terms and subject to the conditions set forth herein;
WHEREAS, Parent, Merger Sub and the Company intend, by approving
resolutions authorizing this Agreement, to adopt this Agreement as a plan of
reorganization within the meaning of Section 368(a) of the Internal Revenue Code
of 1986, as amended (the "Code"), and the regulations promulgated thereunder;
WHEREAS, pursuant to the Merger, each outstanding share (a "Share") of
the Company's common stock, no par value (the "Company Common Stock"), shall be
converted into the right to receive a proportionate share of the Merger
Consideration (as defined in Section 1.07), upon the terms and subject to the
conditions set forth herein;
WHEREAS, Shareholders believe the Merger is in their respective best
interests and desire to enter into this Agreement;
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements herein contained, and intending to be legally bound
hereby, Parent, Merger Sub, the Company and Shareholders hereby agree as
follows:
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ARTICLE I
THE MERGER
SECTION 1.01 The Merger.
(a) Effective Time. At the Effective Time (as defined in Section 1.02),
and subject to and upon the terms and conditions of this Agreement, and the
GBCC, the Company shall be merged with and into Merger Sub, the separate
corporate existence of the Company shall cease, and Merger Sub shall continue as
the surviving corporation. Merger Sub, as the surviving corporation after the
Merger is hereinafter sometimes referred to as the "Surviving Corporation."
(b) Closing. Unless this Agreement shall have been terminated and the
transactions herein contemplated shall have been abandoned pursuant to Section
11.01 and subject to the satisfaction or waiver of the conditions set forth in
Article VII, the consummation of the Merger (the "Closing" and the date thereof
being the "Closing Date") will take place on May 22, 1997, at the offices of
Smith, Gambrell & Russell, LLP, 3343 Peachtree Road, N.E., Suite 1800, Atlanta,
Georgia, unless another date, time or place is agreed to in writing by the
parties hereto.
SECTION 1.02 Effective Time. As promptly as practicable after the Closing,
the parties hereto shall cause the Merger to be consummated by filing a
certificate of merger as contemplated by the GBCC (the "Certificate of Merger"),
together with any required related certificates, with the Secretary of State of
Georgia, in such form as required by, and executed in accordance with, the
relevant provisions of the GBCC (the time of such filing being the "Effective
Time").
SECTION 1.03 Effect of the Merger. At the Effective Time, the effect of the
Merger shall be as provided in this Agreement, the Certificate of Merger and the
applicable provisions of the GBCC. Without limiting the generality of the
foregoing, and subject thereto, at the Effective Time all the property, rights,
privileges, powers and franchises of the Company and Merger Sub shall vest in
the Surviving Corporation, and all debts, liabilities and duties of the Company
and Merger Sub shall become the debts, liabilities and duties of the Surviving
Corporation.
SECTION 1.04 Articles of Incorporation, By-Laws.
(a) Articles of Incorporation. At the Effective Time the Articles of
Incorporation of the Merger Sub, as in effect immediately prior to the Effective
Time, shall be the Articles of Incorporation of the Surviving Corporation until
thereafter amended in accordance with the GBCC and such Articles of
Incorporation.
(b) By-Laws. The By-Laws of the Merger Sub, as in effect immediately
prior to the Effective Time, shall be the By-Laws of the Surviving Corporation
until thereafter amended in accordance with the GBCC, the Articles of
Incorporation of the Surviving Corporation and such ByLaws.
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SECTION 1.05 Directors and Officers. The Board of Directors of Merger Sub
immediately prior to the Effective Time shall be the initial Board of Directors
of the Surviving Corporation, each member to hold office in accordance with the
Articles of Incorporation and By-Laws of the Surviving Corporation, and the
officers of Merger Sub immediately prior to the Effective Time shall be the
initial officers of the Surviving Corporation, in each case until their
respective successors are duly elected or appointed and qualified.
SECTION 1.06 Effect on Capital Stock. At the Effective Time, by virtue of
the Merger and without any action on the part of the Parent, Merger Sub, the
Company or the holders of any of the following securities:
(a) Conversion of Securities. Each Share issued and outstanding
immediately prior to the Effective Time (excluding any Shares to be canceled
pursuant to Section 1.06(b)) shall be converted automatically into the right to
receive the Merger Consideration described in Section 1.07 below.
(b) Cancellation. Each Share held in the treasury of the Company and
each Share owned by Parent, Merger Sub or any direct or indirect wholly-owned
subsidiary of the Company or Parent immediately prior to the Effective Time
shall, by virtue of the Merger and without any action on the part of the holder
thereof, cease to be outstanding, be canceled and retired without payment of any
consideration therefor and cease to exist.
(c) Capital Stock of Merger Sub. Each share of common stock of Merger
Sub issued and outstanding immediately prior to the Effective Time shall remain
issued and outstanding subsequent to the Effective Time.
SECTION 1.07 Merger Consideration. The aggregate consideration to be paid
by Parent in respect of the Shares issued and outstanding as of the Effective
Time pursuant to the Merger shall be that certain shares of the common stock of
Parent (the "Merger Consideration") in an amount equal to the sum of (i) that
number of shares of the common stock of Parent with an aggregate fair market
value of $1,000,000.00 to be determined as set forth below plus (ii) 125,000
shares of the common stock of Parent (the "Parent Shares"). The Parent Shares
have not been registered under the federal securities laws or any state
securities laws and pending such registration may not be offered or sold except
pursuant to an exemption from, or a transaction not subject to, the registration
requirements of the Securities Act of 1933, as amended (the "Securities Act") or
applicable state securities laws. In the event that there are splits,
subdivisions or combinations of the shares of the common stock of Parent, the
Parent Shares shall receive the same treatment, on a pro rata basis, as all
other shares of the common stock of Parent. For the purposes of this Section
1.07, "fair market value" shall be equal to the arithmetic average of the
closing price of a share of the common stock of Parent as reported in The Wall
Street Journal for the five (5) trading days immediately prior to May 15, 1997
(which as of such date, the parties acknowledge and agree to be $13.50 per
share).
SECTION 1.08 No Fractional Shares. No fractional shares of Parent Shares
shall be issued in connection with the Merger, and no certificates for any such
fractional shares shall be issued. In
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lieu of such fractional shares, any holder of Shares who would otherwise be
entitled to receive a fraction of a share of Parent Shares (after aggregating
all fractional shares of Parent Shares issuable to such shareholder) shall, upon
surrender of such Shareholder's Company Common Stock certificate(s), be paid in
cash at the valuation rate determined pursuant to Section 1.07.
SECTION 1.09 Stock Transfer Books. At the Effective Time, the stock
transfer books of the Company shall be closed, and there shall be no further
registration of transfers of the Shares thereafter on the records of the
Company.
SECTION 1.10 No Further Ownership Rights in Company Common Stock. The
Merger Consideration delivered upon the surrender for exchange of Shares in
accordance with the terms hereof shall be deemed to have been issued in full
satisfaction of all rights pertaining to such Shares, and there shall be no
further registration of transfers on the records of the Company of Shares which
were outstanding immediately prior to the Effective Time. If, after the
Effective Time, certificates are presented to the Surviving Corporation for any
reason, they shall be canceled and exchanged as provided in this Article I.
Until surrendered and exchanged in accordance with this Section, each
certificate of Company Common Stock shall, after the Effective Time, represent
solely the right to receive the Merger Consideration in respect of the Shares of
Company Common Stock evidenced by such certificate and shall have no other
rights. No interest shall accrue or be payable on any Merger Consideration.
SECTION 1.11 Tax Consequences. It is intended by the parties hereto that
the Merger shall constitute a reorganization within the meaning of Section 368
of the Code. The parties hereto hereby adopt this Agreement as a "plan of
reorganization" within the meaning of Sections 1.368- 2(g) and 1.368-3(a) of the
United States Treasury Regulations.
SECTION 1.12 Taking of Necessary Action; Further Action. Each of Parent,
Merger Sub, the Company and the Shareholders will take all such reasonable and
lawful action as may be necessary or appropriate in order to effectuate the
Merger in accordance with this Agreement as promptly as practicable. If, at any
time after the Effective Time, any such further action is necessary or desirable
to carry out the purposes of this Agreement and to vest the Surviving
Corporation with full right, title and possession to all assets, property,
rights, privileges, powers and franchises of the Company and Merger Sub, the
officers and directors of the Company and the Merger Sub immediately prior to
the Effective Time are fully authorized in the name of their respective
corporations or otherwise to take, and will take, all such lawful and necessary
action.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COMPANY AND SHAREHOLDERS
Each Shareholder, severally and not jointly with any other Shareholder,
represents and warrants as to himself and the Company to the Parent and Merger
Sub, and the Company, jointly and severally with each such Shareholder,
represents and warrants to the Parent and Merger Sub, as follows:
SECTION 2.01 Power of Shareholders and the Company. Such Shareholder has
full power and authority to execute and deliver this Agreement and the Operative
Agreements to which he is a party and to perform his obligations hereunder and
thereunder and to consummate the transactions contemplated hereby and thereby,
including without limitation to own, hold, sell and transfer (pursuant to this
Agreement) the Shares. The Company has full corporate power and authority to
execute and deliver the Merger Agreement and the Operative Agreements to which
it is a party, to perform its obligations thereunder and to consummate the
transactions contemplated thereby. The execution and delivery by the Company of
this Agreement and the Operative Documents to which it is a party, and the
performance by the Company of its Obligations hereunder and thereunder, have
been duly and validly authorized by the Board of Directors and the Shareholders,
no other corporate action on the part of the Company or the Shareholders being
necessary.
SECTION 2.02 Execution. This Agreement has been duly and validly executed
and delivered by such Shareholders and the Company and constitutes, and upon the
execution and delivery by such Shareholders and the Company of the Operative
Agreements to which the Company or such Shareholder is a party, such Operative
Agreements, assuming the due authorization, execution and delivery of this
Agreement and the Operative Documents by the Parent and Merger Sub, will
constitute legal, valid and binding obligations of the Company and such
Shareholder enforceable against such party in accordance with their respective
terms.
SECTION 2.03 Organization of the Company. The Company is a corporation duly
organized, validly existing and in good standing under the Laws of the State of
Georgia, and has full corporate power and authority to conduct its business as
and to the extent now conducted and to own, use and lease its Assets and
Properties. The Company is duly qualified, licensed or admitted to do business
and is in good standing in those jurisdictions specified in Section 2.03 of the
Disclosure Schedule, which are the only jurisdictions in which the ownership,
use or leasing of its Assets and Properties, or the conduct or nature of its
business, makes such qualification, licensing or admission necessary, except for
such failures to be so qualified or licensed and in good standing as could not
reasonably be expected to have a materially adverse effect on the Business or
Condition of the Company or its Assets and Properties. The name of each director
and officer of the Company on the date hereof, and the position with the Company
held by each, are listed in Section 2.03 of the Disclosure Schedule.
Shareholders have, prior to the execution of this Agreement, delivered to Parent
true and complete copies of the certificate of incorporation and by-laws or
other comparable corporate charter documents of the Company as in effect on the
date hereof, as well as any and all documents and instruments pursuant to which
the Company acquired its Assets and Properties. The Company has no Subsidiaries.
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SECTION 2.04 Capital Stock. The authorized capital stock of the Company
consists solely of one hundred (100) shares of Company Common Stock, of which
only the Shares have been issued. The Shares are duly authorized, validly
issued, outstanding, fully paid and nonassessable and free of any preemptive
rights. Each Shareholder represents and warrants as to his Shares that he owns
such Shares, beneficially and of record, free and clear of all Liens. There are
no outstanding Options with respect to the Company. Immediately prior to the
Effective Time each Shareholder represents and warrants that with respect to his
Shares he will have good and indefeasible title to such Shares, free and clear
of all Liens and free and clear of all restrictions on transfer, except for
those imposed by the Securities Act and all applicable state securities laws.
SECTION 2.05 No Conflicts. The execution and delivery by such Shareholder
and the Company of this Agreement do not, and the execution and delivery by such
Shareholder and the Company of the Operative Agreements to which it or he is a
party, the performance by such Shareholder and the Company of its or his
respective obligations under this Agreement and such Operative Agreements and
the consummation of the transactions contemplated hereby and thereby will not:
(a) in the case of the Company, conflict with or result in a violation
or breach of any of the terms, conditions or provisions of the certificate or
articles of incorporation or by-laws (or other comparable corporate charter
documents) of the Company;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Section 2.05 of the Disclosure
Schedule, conflict with or result in a violation or breach of any term or
provision of any Law or Order applicable to such Shareholder or the Company or
any of their respective Assets and Properties; or
(c) except as disclosed in Section 2.05 of the Disclosure Schedule, (i)
conflict with or result in a violation or breach of, (ii) constitute (with or
without notice or lapse of time or both) a default under, (iii) require such
Shareholder or the Company to obtain any consent, approval or action of, make
any filing with or give any notice to any Person as a result or under the terms
of, (iv) result in or give to any Person any right of termination, cancellation,
acceleration or modification in or with respect to, (v) result in or give to any
Person any additional rights or entitlement to increased, additional,
accelerated or guaranteed payments under, or (vi) result in the creation or
imposition of any Lien upon the respective Assets and Properties under, any
Contract or License to which such Shareholder or the Company is a party or by
which any of the respective Assets and Properties of such Shareholder or the
Company is bound.
SECTION 2.06 Governmental Approvals and Filings. Except for filings with
the IRS, no consent, approval or action of, filing with or notice to any
Governmental or Regulatory Authority on the part of such Shareholder or the
Company is required in connection with the execution, delivery and performance
of this Agreement or any of the Operative Agreements to which the Company or
such Shareholder is a party or the consummation of the transactions contemplated
hereby or thereby.
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SECTION 2.07 Books and Records. The minute books and other similar records
of the Company as made available to Parent prior to the execution of this
Agreement contain a true and complete record, in all material respects, of all
action taken at all meetings and by all written consents in lieu of meetings of
the stockholders, the boards of directors and committees of the boards of
directors of the Company. The stock transfer ledgers and other similar records
of the Company as made available to Parent prior to the execution of this
Agreement accurately reflect all record transfers prior to the execution of this
Agreement in the capital stock of the Company. The Company has none of its Books
and Records recorded, stored, maintained, operated or otherwise wholly or partly
dependent upon or held by any means (including any electronic, mechanical or
photographic process, whether computerized or not) which (including all means of
access thereto and therefrom) are not under the exclusive ownership and direct
control of the Company.
SECTION 2.08 Absence of Changes. Except for the execution and delivery of
this Agreement and the transactions to take place pursuant hereto on or prior to
the Closing Date, since the date of the formation of the Company there has not
been any material adverse change, or any event or development which,
individually or together with other such events, could reasonably be expected to
result in a material adverse change in the Business or Condition of the Company
or to the Assets or Properties. Without limiting the foregoing, except as
disclosed in Section 2.08 of the Disclosure Schedule, there has not occurred
between the date of the formation of the Company and the date hereof:
(i) any declaration, setting aside or payment of any dividend
or other distribution in respect of the capital stock of the Company, or
any redemption, purchase or other acquisition by the Company of any such
capital stock of or any Option with respect to the Company;
(ii) any authorization, issuance, sale or other disposition by
the Company of any shares of capital stock of or Option with respect to
the Company, or any modification or amendment of any right of any holder
of any outstanding shares of capital stock of or Option with respect to
the Company;
(iii) (A) except as disclosed in Section 2.08 of the Disclosure
Schedule, incurrences by the Company of Indebtedness, or (B) any
voluntary purchase, cancellation, prepayment or complete or partial
discharge in advance of a scheduled payment date with respect to, or
waiver of any right of the Company under, any Indebtedness of or owing to
the Company;
(iv) any physical damage, destruction or other casualty loss
(whether or not covered by insurance) affecting any of the plant, real or
personal property or equipment of the Company;
(v) any change in (x) any pricing, investment, accounting,
financial reporting, inventory, credit, allowance or Tax practice or
policy of the Company, or (y) any method of
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calculating any bad debt, contingency or other reserve of the Company for
accounting, financial reporting or Tax purposes, or any change in the
fiscal year of the Company;
(vi) any write-off or write-down of or any determination to
write off or write down any of the Assets and Properties of the Company;
(vii) any acquisition or disposition of, or incurrence of a Lien
(other than a Permitted Lien) on, any Assets and Properties of the
Company;
(viii) any (x) amendment of the certificate or articles of
incorporation or by-laws (or other comparable corporate charter
documents) of the Company, (y) recapitalization, reorganization,
liquidation or dissolution of the Company or (z) merger or other business
combination involving the Company and any other Person;
(ix) any entering into, amendment, modification, termination
(partial or complete) or granting of a waiver under or giving any consent
with respect to (A) any Contract which is required (or had it been in
effect on the date hereof would have been required) to be disclosed in
the Disclosure Schedule pursuant to Section 2.17(a) or (B) any material
License held by the Company;
(x) capital expenditures or commitments for additions to
property, plant or equipment of the Company constituting capital assets;
(xi) any commencement or termination by the Company of any line
of business;
(xii) any transaction by the Company with any Shareholder, any
Affiliate (other than the Company) or Associate of any Shareholder;
(xiii) any entering into of a Contract to do or engage in any of
the foregoing after the date hereof; or
(xiv) any other transaction involving or development affecting
the Company outside the ordinary course of business consistent with past
practice.
SECTION 2.09 No Undisclosed Liabilities. Except as disclosed in Section
2.09 of the Disclosure Schedule or any other Section of the Disclosure Schedule,
there are no Liabilities against, relating to or affecting the Company or any of
its Assets and Properties.
SECTION 2.10 Taxes. All Tax Returns required to be filed by such
Shareholder or the Company prior to the Closing Date have been accurately
prepared in all respects and timely filed and all Taxes for which the filing
party may be held liable (other than the Taxes referred to in the next
sentence), have been paid or accrued within the prescribed period or any
extension thereof. All
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Taxes required to be withheld by such Shareholder or the Company prior to the
Closing Date, including, but not limited to, Taxes arising as a result of
payments (or amounts allocable) to foreign persons or to employees of any such
party, have been collected and withheld, and have been either paid to the
respective Governmental or Regulatory Authorities, set aside in accounts for
such purpose, or accrued, reserved against, and entered upon the books and
records of the employer.
SECTION 2.11 Legal Proceedings. Except as disclosed in Section 2.11 of the
Disclosure Schedule (with paragraph references corresponding to those set forth
below):
(a) there are no Actions or Proceedings pending or, to the Knowledge of
such Shareholder, threatened against, relating to or affecting such Shareholder
or the Company or any of their respective Assets and Properties which (i) could
reasonably be expected to result in the issuance of an Order restraining,
enjoining or otherwise prohibiting or making illegal the consummation of any of
the transactions contemplated by this Agreement or any of the Operative
Agreements or otherwise result in a material diminution of the benefits
contemplated by this Agreement or any of the Operative Agreements to Parent, or
(ii) if determined adversely to such Shareholder or the Company, could
reasonably be expected to result in (x) any injunction or other equitable relief
against the Company that would interfere in any material respect with its
business or operations or (y) Losses by the Company;
(b) there are no facts or circumstances Known to such Shareholder that
could reasonably be expected to give rise to any Action or Proceeding that would
be required to be disclosed pursuant to clause (a) above; and
(c) there are no Orders outstanding against the Company or such
Shareholder or any of their respective Assets and Properties.
SECTION 2.12 Compliance With Laws and Orders. Except as disclosed in
Section 2.12 of the Disclosure Schedule, the Company is not or has not at any
time been, in violation of or in default under, in any material respect, any Law
or Order applicable to the Company or any of its Assets and Properties.
SECTION 2.13 Benefit Plans; ERISA. The Company (i) is not required to and
does not maintain and has never maintained a Benefit Plan and (ii) does not
contribute to and is or has not been obligated or required to contribute to any
"employee benefit plan" as such term is defined in Section 3(3) of ERISA.
SECTION 2.14 Real Property. The Company does not currently and has never
owned any real property. Section 2.14 of the Disclosure Schedule lists all
leases of real property to which the Company is a party. The Company has
provided to Parent, prior to the date hereof, copies of all such leases.
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SECTION 2.15 Tangible Personal Property; Investment Assets. (a) The Company
at Closing will be in possession of and has good title to, or has valid
leasehold interests in or valid rights under Contract to use, all tangible
personal property used in or reasonably necessary for the conduct of its
business, including all tangible personal property owned by the Company as of
the date of the acquisition by the Company of its Assets and Properties other
than property disposed of since such date in the ordinary course of business
consistent with past practice. All such tangible personal property is free and
clear of all Liens, other than Permitted Liens and Liens disclosed in Section
2.15(a) of the Disclosure Schedule, and is in good working order and condition,
ordinary wear and tear excepted, and its use complies in all respects with all
applicable Laws.
(b) Section 2.15(b) of the Disclosure Schedule describes each
Investment Asset owned by the Company on the date hereof and includes the name
of the record and beneficial owner each such Investment Asset, the location of
the certificates, if any, therefor, the maturity date, if any, and any stock or
bond powers or other authority for transfer granted with respect thereto. Except
as disclosed in Section 2.15(b) of the Disclosure Schedule, all such Investment
Assets are owned by the Company free and clear of all Liens other than Permitted
Liens.
SECTION 2.16 Intellectual Property Rights. At Closing, the Company will
have interests in or will use only the Intellectual Property disclosed in
Section 2.16 of the Disclosure Schedule, each of which the Company will have
either all right, title and interest in or a valid and binding rights under
Contract to use. No other Intellectual Property is used or necessary in the
conduct of the business of the Company. Except as disclosed in Section 2.16 of
the Disclosure Schedule, (i) unless otherwise disclosed in Section 2.16 of the
Disclosure Schedule, the Company will have the exclusive right to use the
Intellectual Property disclosed in Section 2.16 of the Disclosure Schedule, (ii)
all registrations with and applications to Governmental or Regulatory
Authorities in respect of such Intellectual Property are valid and in full force
and effect and are not subject to the payment of any Taxes or maintenance fees
or the taking of any other actions by the Company or the named registrant or
applicant to maintain their validity or effectiveness, (iii) there are no
restrictions on the direct or indirect transfer of any Contract, or any interest
therein, held by the Company in respect of such Intellectual Property, (iv) the
Shareholders have delivered to, or made available to, Parent, prior to the
execution of this Agreement, documentation with respect to any invention,
process, design, computer program or other know-how or trade secret included in
such Intellectual Property, which documentation is accurate in all material
respects and reasonably sufficient in detail and content to identify and explain
such invention, process, design, computer program or other know-how or trade
secret and to facilitate its full and proper use without reliance on the special
knowledge or memory of any Person, (v) the Company has taken reasonable security
measures to protect the secrecy, confidentiality and value of their trade
secrets, (vi) the Company is not or has not received any notice that it is, in
default (or with the giving of notice or lapse of time or both, would be in
default) under any Contract to use such Intellectual Property, and (vii) to the
Knowledge of such Shareholder, no such Intellectual Property is being infringed
by any other Person. Neither such Shareholder nor the Company has received
notice that the Company is infringing any Intellectual Property of any other
Person, no claim is pending or, to the Knowledge of such Shareholder, has
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been made to such effect that has not been resolved and, to the Knowledge of
such Shareholder, the Company is not infringing any Intellectual Property of any
other Person.
SECTION 2.17 Contracts. (a) Section 2.17(a) of the Disclosure Schedule
(with paragraph references corresponding to those set forth below) contains a
true and complete list of each of the following Contracts or other arrangements
(true and complete copies or, if none, reasonably complete and accurate written
descriptions of which, together with all amendments and supplements thereto and
all waivers of any terms thereof, have been delivered to, or made available to,
Parent prior to the execution of this Agreement), to which the Company is a
party or by which any of its Assets and Properties are bound:
(i) (A) all Contracts providing for a commitment of employment
or consultation services for a specified or unspecified term or otherwise
relating to employment or the termination of employment, the name,
position and rate of compensation of each Person party to such a Contract
and the expiration date of each such Contract; and (B) any written or
unwritten representations, commitments, promises, communications or
courses of conduct (excluding any such Contracts referred to in clause
(A)) involving an obligation of the Company to make payments in any year,
other than with respect to salary or incentive compensation payments in
the ordinary course of business, to any employee;
(ii) all Contracts with any Person containing any provision or
covenant prohibiting or limiting the ability of the Company to engage in
any business activity or compete with any Person or prohibiting or
limiting the ability of any Person to compete with the Company;
(iii) all partnership, joint venture, shareholders' or other
similar Contracts with any Person;
(iv) all Contracts relating to Indebtedness of the Company or to
preferred stock issued by the Company;
(v) all Contracts with distributors, dealers, manufacturer's
representatives, sales agencies or franchisees;
(vi) all Contracts relating to (A) the future disposition or
acquisition of any Assets and Properties, other than dispositions or
acquisitions in the ordinary course of business consistent with past
practice, and (B) any merger or other business combination;
(vii) all Contracts between or among the Company, on the one
hand, and any Shareholder, any Affiliate (other than the Company) or
Associate of any Shareholder, on the other hand;
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(viii) all collective bargaining or similar labor Contracts;
(ix) all Contracts that (A) limit or contain restrictions on the
ability of the Company to declare or pay dividends on, to make any other
distribution in respect of or to issue or purchase, redeem or otherwise
acquire its capital stock, to incur Indebtedness, to incur or suffer to
exist any Lien, to purchase or sell any Assets and Properties, to change
the lines of business in which it participates or engages or to engage in
any Business Combination or (B) require the Company to maintain specified
financial ratios or levels of net worth or other indicia of financial
condition;
(x) all Contracts that license or otherwise grant to any person
the right to use the Intellectual Property described in Section 2.16 of
the Disclosure Schedule; and
(xi) all other Contracts (other than leases listed in Section
2.14 of the Disclosure Schedule and Licenses listed in Section 2.18 of
the Disclosure Schedule that involve the payment or potential payment of
money or other monetary equivalents, pursuant to the terms of any such
Contract, by or to the Company.
(b) Each Contract required to be disclosed in Section 2.14, Section
2.17(a) and Section 2.18 of the Disclosure Schedule is in full force and effect
and constitutes a legal, valid and binding agreement, enforceable in accordance
with its terms, of each party thereto; and except as disclosed in Section 2.14,
Section 2.17(b) or Section 2.18 of the Disclosure Schedule neither the Company,
nor, to the Knowledge of such Shareholder, any other party to such Contract is,
or has received notice that it is, in violation or breach of or default under
any such Contract (or with notice or lapse of time or both, would be in
violation or breach of or default under any such Contract) in any material
respect.
(c) Except as disclosed in Section 2.17(c) of the Disclosure Schedule,
the Company is not a party to or bound by, nor are the Assets and Properties of
the Company subject to, any Contract that has been or could reasonably be
expected to be, individually or in the aggregate with any other such Contracts,
materially adverse to the Business or Condition of the Company or its Assets or
Properties.
SECTION 2.18 Licenses. Section 2.18 of the Disclosure Schedule contains a
true and complete list of all Licenses used in and material, individually or in
the aggregate, to the business or operations of the Company(and all pending
applications for any such Licenses), setting forth the grantor, the grantee, the
function and the expiration and renewal date of each. Prior to the execution of
this Agreement, Shareholders have delivered to, or made available to, Parent
true and complete copies of all such Licenses. No other Licenses are required by
Law in order for the Company to operate its business and operations as it is
currently operated. Except as disclosed in Section 2.18 of the Disclosure
Schedule:
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(i) the Company owns or validly holds all Licenses that are
material, individually or in the aggregate, to its business or
operations;
(ii) each License listed in Section 2.18 of the Disclosure
Schedule is valid, binding and in full force and effect; and
(iii) the Company is not, or has not received any notice that it
is, in default (or with the giving of notice or lapse of time or both,
would be in default) under any such License.
SECTION 2.19 Insurance. The Company owns no, and is not required to own
any, insurance policies and there are no insurance policies currently in effect
insuring, in any manner, its Assets and Properties.
SECTION 2.20 Affiliate Transactions. Except as disclosed in Section 2.08,
Section 2.17(a)(vii) or Section 2.20(a) of the Disclosure Schedule, (i) there
are no intercompany Liabilities between the Company, on the one hand, and any
Shareholder, any Affiliate (other than the Company) or Associate of any
Shareholder, on the other, (ii) no Shareholder nor any such Affiliate or
Associate provides or causes to be provided any assets, services or facilities
to the Company, (iii) the Company does not provide or cause to be provided any
assets, services or facilities to any Shareholder or any such Affiliate or
Associate and (iv) the Company beneficially owns no, directly or indirectly,
Investment Assets issued by any Shareholder or any such Affiliate or Associate.
Except as disclosed in Section 2.20(b) of the Disclosure Schedule, each of the
Liabilities and transactions listed in Section 2.20(a) of the Disclosure
Schedule was incurred or engaged in, as the case may be, on an arm's-length
basis. Except as disclosed in Section 2.20(c) of the Disclosure Schedule, all
settlements of intercompany Liabilities between the Company, on the one hand,
and any Shareholder or any such Affiliate or Associate, on the other, have been
made, and all allocations of intercompany expenses have been applied, in the
ordinary course of business consistent with past practice.
SECTION 2.21 Employees; Labor Relations. Section 2.21 of the Disclosure
Schedule contains a list of the name of each officer and employee of the Company
at the date hereof, together with each such person's position or function,
annual base salary or wages and any incentive or bonus arrangement with respect
to such person in effect on such date. Such Shareholder has not received any
information that would lead him to believe that a material number of such
persons will or may cease to be employees, or will refuse offers of employment
from Parent, because of the consummation of the transactions contemplated by
this Agreement.
SECTION 2.22 Bank and Brokerage Accounts; Investment Assets. Section 2.22
of the Disclosure Schedule sets forth (a) a true and complete list of the names
and locations of all banks, trust companies, securities brokers and other
financial institutions at which the Company has an account or safe deposit box
or maintains a banking, custodial, trading or other similar relationship; and
(b) a true and complete list and description of each such account, box and
relationship,
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indicating in each case the account number and the names of the respective
officers, employees, agents or other similar representatives of the Company
having signatory power with respect thereto.
SECTION 2.23 No Powers of Attorney. The Company does not have any powers
of attorney or comparable delegations of authority outstanding.
SECTION 2.24 Disclosure. All material facts relating to the Business or
Condition of the Company have been disclosed to Parent in or in connection with
this Agreement. No representation or warranty contained in this Agreement, and
no statement contained in the Disclosure Schedule or in any certificate, list or
other writing furnished to Parent pursuant to any provision of this Agreement,
contains any untrue statement of a material fact or omits to state a material
fact necessary in order to make the statements herein or therein, in the light
of the circumstances under which they were made, not misleading.
SECTION 2.25 Applicable Laws. Such Shareholder has, and the Shareholders
have caused the Company to, comply with all applicable Laws including, without
limitation, any Laws relating to the transactions contemplated by this
Agreement.
SECTION 2.26 Broker's and Finder's Fees. Such Shareholder has not and the
Company has not incurred, nor will any such Person incur, directly or
indirectly, any liability for brokerage or finder's or agent's commission or any
similar charges in connection with the Agreement, the Merger or any transaction
contemplated hereby.
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ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARENT AND MERGER SUB
Parent and Merger Sub, jointly and severally, hereby represent and
warrant to Shareholders as follows:
SECTION 3.01 Organization, Standing and Power. Parent is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Georgia. Merger Sub is a corporation duly organized, validly existing and in
good standing under the laws of the State of Georgia. Each of Parent and Merger
Sub has the full corporate power and authority to conducts its business as and
to the extent now conducted and to own, use and lease its Assets and Properties.
Each of the Parent and the Merger Sub is duly qualified, licensed or admitted to
do business and is in good standing in each jurisdiction where the ownership,
use or leasing of its Assets and Properties, or the conduct or the nature of its
business makes such qualification, licensing or admission necessary, except for
such failures to be so duly qualified or licensed and in good standing that
could not reasonable be expected to have a materially adverse effect on the
financial condition of Parent or Merger Sub.
SECTION 3.02 Authority. The execution and delivery by Parent and Merger Sub
of this Agreement and the Operative Agreements to which it is a party, and the
performance by Parent and Merger Sub of its obligations hereunder and
thereunder, have been duly and validly authorized by the Board of Directors of
Parent and Merger Sub, respectively, and the sole shareholder of Merger Sub, no
other corporate action on the part of Parent, Merger Sub or their stockholders
being necessary. This Agreement has been duly and validly executed and delivered
by Parent and Merger Sub and, assuming the due authorization, execution and
delivery of this Agreement and the Operative Documents by each Shareholder and
the Company, constitutes, and upon the execution and delivery by Parent and
Merger Sub of the Operative Agreements to which it is a party, such Operative
Agreements will constitute, legal, valid and binding obligations of Parent and
Merger Sub enforceable against Parent and Merger Sub in accordance with their
terms.
SECTION 3.03 Parent Shares. The Parent Shares are duly authorized, validly
issued, outstanding, fully paid and nonassessable. The delivery of the
certificates at the Closing representing the Parent Shares in the manner
provided in Section 1.07 will transfer to each Shareholder beneficial and record
title to the Parent Shares, free and clear of all Liens and free and clear of
all restrictions on transfer except for those imposed by the Securities Act and
all applicable state securities laws.
SECTION 3.04 No Conflicts. The execution and delivery by Parent and Merger
Sub of this Agreement do not, and the execution and delivery by Parent and
Merger Sub of the Operative Agreements to which it is a party, the performance
by Parent and Merger Sub of their obligations
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under this Agreement and such Operative Agreements and the consummation of the
transactions contemplated hereby and thereby will not:
(a) conflict with or result in a violation or breach of any of the
terms, conditions or provi sions of the articles of incorporation or by-laws (or
other comparable corporate charter document) of Parent or Merger Sub,
respectively;
(b) subject to obtaining the consents, approvals and actions, making
the filings and giving the notices disclosed in Schedule 3.05 hereto, conflict
with or result in a violation or breach of any term or provision of any Law or
Order applicable to Parent, Merger Sub or any of their Assets and Properties; or
(c) except as disclosed in Schedule 3.04 hereto, (i) conflict with or
result in a violation or breach of, (ii) constitute (with or without notice or
lapse of time or both) a default under, (iii) require Parent or Merger Sub to
obtain any consent, approval or action of, make any filing with or give any
notice to any Person as a result or under the terms of, or (iv) result in the
creation or imposition of any Lien upon the Parent Shares, Parent or Merger Sub
or any of their respective Assets or Properties under, any Contract or License
to which Parent or Merger Sub is a party or by which any of its Assets and
Properties is bound.
SECTION 3.05 Governmental Approvals and Filings. Except as disclosed in
Schedule 3.05 hereto, no consent, approval or action of, filing with or notice
to any Governmental or Regulatory Authority on the part of Parent or Merger Sub
is required in connection with the execution, delivery and performance of this
Agreement or the Operative Agreements to which it is a party or the consummation
of the transactions contemplated hereby or thereby.
SECTION 3.06 Legal Proceedings. There are no Actions or Proceedings pending
or, to the knowledge of Parent or Merger Sub, threatened against, relating to or
affecting Parent or Merger Sub or any of their respective Assets and Properties
which could reasonably be expected to result in the issuance of an Order
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements. Except as set forth in the Company's SEC Documents (as
defined below), there are no suits, actions or legal, administrative,
arbitration or other proceedings or governmental investigations against Parent
or Merger Sub pending or, to Parent's knowledge, threatened, which if determined
adversely to Parent or Merger Sub, could be expected to result in a material
adverse effect on the financial condition or results of operations of Parent and
Merger Sub considered as a whole.
SECTION 3.07 Capitalization. As of March 24, 1997, the authorized capital
stock of Parent consisted of (i) 30,000,000 shares of no par value Common Stock
of which 11,694,726 shares were issued and outstanding, all of which are validly
issued, fully paid and non-assessable, none of which were held in treasury,
4,000,000 shares were reserved for future issuance under the 1995 Stock
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Option Plan of Parent of which, as of January 15, 1997, 3,121,762 were subject
to unexercised options (in addition, as of January 15, 1997, non-qualified
options to purchase 264,000 shares of Common Stock have been granted by Parent
outside of the 1995 Stock Option Plan), and (ii) 5,000,000 shares of preferred
stock of which no shares are issued and outstanding. The authorized capital
stock of Merger Sub consists of 100 shares of common stock without par value of
which 10 shares are issued and outstanding. Except as described in the SEC
Documents (as defined below), as of the date hereof, there are no options,
warrants or other rights, agreements, arrangements or commitments of any
character relating to the issued or unissued capital stock of Parent or
obligating Parent to issue or sell any shares of capital stock of, or other
equity interests in Parent. All shares of the Common Stock of Parent subject to
issuance as aforesaid, upon issuance on the terms and conditions specified in
the instruments pursuant to which they are issuable, shall be duly authorized,
validly issued, fully paid and nonassessable. Except as described in the SEC
Documents, as of the date hereof, there are no obligations, contingent or
otherwise, of Parent to repurchase, redeem or otherwise acquire any shares of
the Common Stock or Parent or to provide funds to or make any investment (in the
form of a loan, capital contribution or otherwise) in any other entity.
SECTION 3.08 SEC Documents; Parents Financial Statements. Parent has
furnished or made available to the Company and each Shareholder a true and
complete copy of its (i) Form 10-K for the fiscal year ended December 31, 1996,
(ii) Form 10-Q for the fiscal quarter ended March 31, 1997, (iii) Form S-1, as
amended, Registration No. 333-177-23, declared effective as of February 12, 1997
and (iv) Form S-8, Registration No. 333-23237, filed with the SEC on March 13,
1997 (collectively, the "SEC Documents"), which Parent filed under the federal
securities laws with the Securities and Exchange Commission ("SEC"). As of their
respective filing dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act, and none of the SEC Documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they were made, not
misleading, except to the extent corrected by a subsequently filed document with
the SEC. The financial statements of Parent, including the notes thereto,
included in the SEC Documents (the "Parent Financial Statements") comply as to
form in all material respects with applicable accounting requirements and with
the published rules and regulations of the SEC with respect thereto, have been
prepared in accordance with generally accepted accounting principles
consistently applied (except as may be indicated in the notes thereto or, in the
case of unaudited statements, as permitted by Form 10-Q of the SEC) and fairly
present the consolidated financial position of Parent at the dates thereof and
of its operations and cash flows for the periods then ended (subject, in the
case of unaudited statements, to normal, recurring audit adjustments). There has
been no change in Parent's accounting policies except as described in the notes
to the Parent Financial Statements. Parent has no material obligations other
than (i) those set forth in the Parent Financial Statements and (ii) those not
required to be set forth in the Parent Financial Statements under generally
accepted accounting principles.
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SECTION 3.09 Broker's and Finder's Fees. Parent has not incurred, and will
not incur, directly or indirectly, any liability for brokerage or finder's or
agent's commission or any similar charges in connection with the Agreement, the
Merger or any transaction contemplated hereby.
SECTION 3.10 Compliance with Laws. Parent has complied with, is not in
violation of, and has not received any notices of violation with respect to, any
material federal, state or local statute, law or regulation with respect to the
conduct of its business, or the ownership or operation of its business, assets
or properties.
SECTION 3.11 Tax Matters.
(a) On the Closing Date, Parent will be in control of Merger Sub
withing the meaning of Section 368(c)(1) of the Code.
(b) Parent has no plan or intention to cause Merger Sub to issue
additional shares of its stock that would result in Parent losing control of
Merger Sub within the meaning of Section 368(c)(1) of the Code.
(c) Parent has no plan or intention to reacquire any of its stock
issued in the Merger.
(d) Following the Merger, Merger Sub will use a significant portion of
the Company's business assets in a business.
(e) Neither Parent nor Merger Sub is an investment company as defined
in Section 368(a)(2)(f)(iii) and (iv) of the Code.
SECTION 3.13 Disclosure. All material facts relating to the Business or
Condition of Parent and Merger Sub have been disclosed to the Shareholders and
the Company in or in connection with this Agreement. No representation or
warranty contained in this Agreement, and no statement contained in the
Disclosure Schedule or in any certificate, list or other writing furnished to
the Shareholders or the Company pursuant to any provision of this Agreement,
contains any untrue statement of a material fact necessary in order to make the
statements herein or therein, in light of the circumstances under which they
were made, not misleading.
ARTICLE IV
COVENANTS OF SHAREHOLDERS AND COMPANY
Shareholders and the Company covenant and agree with Parent and Merger
Sub that Shareholders and the Company will comply with all covenants and
provisions of this Article IV, except to the extent Parent and Merger Sub may
otherwise consent in writing.
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SECTION 4.01 Regulatory and Other Approvals. Shareholders and the Company
will, and Shareholders will cause the Company to, (a) take all commercially
reasonable steps necessary or desirable, and proceed diligently and in good
faith and use all commercially reasonable efforts, as promptly as practicable to
obtain all consents, approvals or actions of, to make all filings with and to
give all notices to Governmental or Regulatory Authorities or any other Person
required of Shareholders or the Company to consummate the transactions
contemplated hereby and by the Operative Agreements, including without
limitation those described in Sections 2.05 and 2.06 of the Disclosure Schedule,
(b) provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as Parent, Merger Sub or such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) cooperate with Parent and Merger Sub as promptly
as practicable in obtaining all consents, approvals or actions of, making all
filings with and giving all notices to Governmental or Regulatory Authorities or
other Persons required of Parent and Merger Sub to consummate the transactions
contemplated hereby. Shareholders and the Company will provide prompt
notification to Parent and Merger Sub when any such consent, approval, action,
filing or notice referred to in clause (a) above is obtained, taken, made or
given, as applicable, and will advise Parent and Merger Sub of any
communications (and, unless precluded by Law, provide copies of any such
communications that are in writing) with any Governmental or Regulatory
Authority or other Person regarding any of the transactions contemplated by this
Agreement or any of the Operative Agreements.
ARTICLE V
COVENANTS OF PARENT AND MERGER SUB
Parent and Merger Sub covenant and agree with Shareholders and the
Company that, at all times from and after the date hereof until the Closing,
they will comply with all covenants and provisions of this Article V, except to
the extent Shareholders and the Company may otherwise consent in writing.
SECTION 5.01 Regulatory and Other Approvals. Parent and Merger Sub will (a)
take all commercially reasonable steps necessary or desirable, and proceed
diligently and in good faith and use all commercially reasonable efforts, as
promptly as practicable to obtain all consents, approvals or actions of, to make
all filings with and to give all notices to Governmental or Regulatory
Authorities or any other Person required of Parent or Merger Sub to consummate
the transactions contemplated hereby and by the Operative Agreements, including
without limitation those described in Schedules 3.04 and 3.05 hereto, (b)
provide such other information and communications to such Governmental or
Regulatory Authorities or other Persons as Shareholders, the Company or such
Governmental or Regulatory Authorities or other Persons may reasonably request
in connection therewith and (c) cooperate with Shareholders and the Company as
promptly as practicable in obtaining all consents, approvals or actions of,
making all filings with and giving all notices to Governmental or Regulatory
Authorities or other Persons required of Shareholders or the Company to
consummate the transactions contemplated hereby and by the Operative Agreements.
Parent and
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Merger Sub will provide prompt notification to Shareholders and the Company when
any such consent, approval, action, filing or notice referred to in clause (a)
above is obtained, taken, made or given, as applicable, and will advise
Shareholders and the Company of any communications (and, unless precluded by
Law, provide copies of any such communications that are in writing) with any
Governmental or Regulatory Authority or other Person regarding any of the
transactions contemplated by this Agreement or any of the Operative Agreements.
SECTION 5.02 Registration of Parent Shares. (a) Parent agrees that if at
any time within the first two (2) years after the date hereof the Parent shall
propose to file a registration statement with respect to any of its Common Stock
for its own account or for the account of other shareholders on a form that
would also permit the registration of the Parent Shares, it will give notice in
writing to such effect to the registered holders of the Parent Shares issued
hereunder at least thirty (30) days prior to such filing, and, at the written
request of any Shareholder, made within ten (10) days after the receipt of such
notice, will include therein at the Parent's cost and expense (excluding
underwriting discounts, commissions and filing fees attributable to the Parent
Shares included therein) such of the Parent Shares as such Shareholder(s) shall
request (a "Piggyback Registration") and use its best efforts to cause the
Parent Shares to be registered under the Securities Act; provided, however, that
if the offering being registered by the Parent is underwritten and if the
representative of the underwriters certifies in writing that the inclusion
therein of the Parent Shares would materially and adversely affect the sale of
the securities to be sold by the Parent or if the registration is being
underwritten pursuant to the exercise of any demand registration rights of any
shareholder such shareholder's thereunder, then the Parent shall be required to
include in the offering only that number of securities, including the Parent
Shares, which the representative of the underwriters determine in its sole
discretion will not jeopardize the success of the offering.
(b) The Parent's obligations under Section 5.02(a) above with respect to
each holder of Parent Shares are expressly conditioned upon such Shareholder
furnishing to the Parent such information regarding the Shareholder, the Parent
Shares and the intended method of disposition of such securities, as Parent
shall reasonably request and as shall be required in connection with the action
to be taken by Parent. In any offering of Parent Shares hereunder, each
Shareholder will reasonably cooperate with Parent and any underwriter for such
Parent Shares and take all actions as are reasonably necessary or advisable to
permit, expedite and facilitate the disposition of such Parent Shares in the
manner contemplated by the related registration statement ("Registration
Statement"). If any registration statement including any of the Parent Shares is
filed, such holder shall indemnify the Parent (and each of its officers and
directors who has signed such registration statement, each director, each
person, if any, who controls the Parent within the meaning of the Securities
Act, each underwriter for the Parent and each person, if any, who controls such
underwriter within the meaning of the Securities Act) and each other such holder
against any loss, claim, damage or liability arising from any such statement or
omission which was made in reliance upon information furnished in writing to the
Parent by such Shareholder of the Parent Shares expressly for use in connection
with such registration statement.
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(c) If, at any time after giving the written notice required by Section
5.02(a) hereof of its intention to register any of its securities and prior to
the effective date of the registration statement filed in connection with such
registration, Parent shall determine for any reason not to register such
securities, Parent may, at its election, give written notice of such
determination to each Shareholder seeking to register Parent Shares and
thereupon shall be relieved of its obligation to register any such Parent
Shares.
(d) Parent shall not be obligated to effect any registration of Parent
Shares under this Section 5.02 incidental to the registration of any of its
securities in connection with mergers, acquisitions, exchange offers, dividend
reinvestment plans or stock option or other employee benefit plans or incidental
to the registration of any non-equity securities not convertible into equity
securities.
(e) Whenever required under subsection (a) to use its best efforts to
effect the registration of any Parent Shares, Parent shall, as expeditiously as
reasonably possible:
(i) Subject to the other terms and provisions of this
Agreement, use its best efforts to cause such Registration Statement
including such Parent Shares filed pursuant to the Agreement to become
effective as soon as practicable after the filing thereof.
(ii) Cause any Registration Statement to remain current,
including the prompt filing of necessary amendments or supplements and
shall avoid any voluntary act to cause any suspension of the
effectiveness of such Registration Statement during the period of
distribution contemplated thereby.
(iii) In connection with any Registration under this Agreement
and upon notice by Parent to the Shareholders that any event has occurred
as a result of which a supplement or amendment to the prospectus or
Registration Statement is required, each Shareholder shall cease further
distributions of the prospectus and all offers and sales of Parent Shares
until notified by Parent of the availability and filing of such
supplement or the effectiveness of such amendment. Each shareholder shall
distribute Parent Shares only in a manner that is in accordance with the
manner of distribution contemplated by the prospectus with regard to such
Parent Shares and only in compliance with applicable federal and state
securities laws.
(iv) Furnish to the Shareholders such numbers of copies of a
prospectus, including a preliminary prospectus, in conformity with the
requirements of the Securities Act, and such other documents as are
reasonably required by applicable law or reasonably necessary for the
sale of such Parent Shares and that are customarily delivered in
underwritten offerings.
(v) 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
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Registration Statement; provided that Parent 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.
(vi) Use its best efforts to list the Parent Shares covered by
such Registration Statement on each securities exchange and/or
inter-dealer quotation system on which the Common Stock of Parent is
then listed or included.
(f) In connection with any offering involving an underwriting of Common
Stock being issued by Parent, Parent shall not be required to include any of the
Parent Shares in such underwriting unless the Shareholders accept the terms of
the underwriting as agreed upon between Parent 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
a selling shareholder, 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 Parent or
the other Shareholders requiring such registration.
(g) The Shareholders 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 5.02.
(h) In the event any Parent Shares are included in a Registration Statement
under this Agreement:
(A) To the extent permitted by law, Parent will indemnify and hold
harmless the Shareholder, any underwriter (as defined in the Securities
Act), if any, for any Shareholder, and each person, if any, who controls
the Shareholder, or such underwriter, within the meaning of the Securities
Act, against any losses, claims, damages or liabilities (or actions in
respect thereof) which 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 which 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, in light of the circumstances in
which they are made, not misleading or which arise out of any violation by
Parent of any rule or regulation promulgated under the Securities Act
applicable to Parent and relating to action or inaction required of Parent
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 Section 5.02(h)(A)
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
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Parent (which consent shall not be unreasonably withheld or delayed), nor
shall Parent 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 in conformity
with written information furnished expressly for use in connection with
such registration by the Shareholder.
(B) To the extent permitted by law, the Shareholders by participating
in any registration pursuant to this Agreement agree to indemnify and hold
harmless Parent, each of its directors, each of its officers who has signed
the Registration Statement, each person, if any, who controls Parent within
the meaning of the Securities Act, and each agent and any underwriter for
Parent (within the meaning of the Securities Act) against any losses,
claims, damages or liabilities to which Parent or any such director,
officer, controlling person, agent, or underwriter may become subject,
under the Securities 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 any final prospectus of 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 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 such registration, and the Shareholder, will
reimburse any legal or other expenses reasonably incurred by Parent 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 Section 5.02(h)(B) 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 or delayed) and provided
further, that no Shareholder shall have liability under this Section
5.02(h)(B) in excess of the net proceeds actually received by such
Shareholder in the relevant public offering.
(C) Promptly after receipt by an indemnified party under this Section
5.02(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 Section 5.02(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 or its ability to defend such action,
shall relieve such indemnifying party of liability for damages caused by
such failure but the omission
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so to notify the indemnifying party will not relieve him or it of any other
liability that he or it may have to any indemnified party.
(D) The registration rights of a Shareholder under this Section 5.02
may be transferred to any transferee who acquires (other than in a
registered public offering or in a transfer made pursuant to Rule 144 under
the Securities Act) Parent Shares; provided, however, that Parent 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.
(i) If any registration of the Common Stock of Parent shall be made by
means of an underwritten offering (whether or not any Parent Shares are
registered thereby), each Shareholder agrees not to effect any public sale or
distribution, including any sale pursuant to Rule 144 under the Securities Act,
of any Parent Shares, and not to effect any such public sale or distribution of
any other equity security of Parent or of any security convertible into or
exchangeable or exercisable for any equity security of Parent (in each case,
other than as part of such underwritten offering or with the permission of the
managing underwriter) during the longer of (i) the 15 days prior to, and during
the 120-day period beginning on, the effective date of such Registration
Statement (except as part of such registration) or (ii) such period as the
officers, directors, affiliates or control persons of Parent are required by the
underwriter to cease sales or distributions, provided, however, that each
Shareholder has received written notice of such registration at least 15 days
prior to its effective date.
(j) Notwithstanding anything to the contrary contained herein, in the event
a proposed sale of Parent Shares may, in the written opinion of Parent's counsel
(experienced in securities law matters and reasonably acceptable to the
Shareholders), be effected under applicable securities laws without
registration, or without the limitations and restrictions of Rule 144 under the
Securities Act, Parent shall be under no obligation to register such securities.
SECTION 5.03 Other Securities Matters. Parent hereby agrees at the cost
and expense of Parent to:
(a) Make and keep public information available concerning the
Parent, as those terms are understood and defined in Rule 144 under the
Securities Act;
(b) File with the SEC in a timely manner all reports and other
documents required of Parent under the Securities Act and the Exchange
Act; and
(c) So long as Shareholders own any Parent Shares, furnish to
Shareholders forthwith upon request a written statement by Parent as to
its compliance with the reporting requirements of said Rule 144, and of
the Securities Act and the Exchange Act, (i) an opinion of counsel
addressed to the Parent's transfer agent necessary to the effect the
transfer of any and
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all Parent Shares sold by the Shareholders; and (ii) a copy of the most
recent annual or quarterly report of Parent, and such other reports and
documents of Parent, and such other reports and documents so filed as
Shareholders may reasonably request in availing itself of any rule or
regulation of the SEC allowing Shareholders to sell any such Parent Shares
without registration.
(d) Upon the request of any Shareholder following expiration of
any "holding period" under applicable securities laws, Parent shall use
its reasonable efforts to assist such Shareholder in having all
restrictive legends removed from the certificates representing such
Parent Shares.
SECTION 5.04 NASDAQ Listing. Parent agrees to cause the Parent Shares to be
listed for trading on the Nasdaq National Market.
ARTICLE VI
CONDITIONS TO OBLIGATIONS OF PARENT AND MERGER SUB
The obligations of Parent and Merger Sub hereunder to purchase the
Shares are subject to the fulfillment, at or before the Closing, of each of the
following conditions (all or any of which may be waived in whole or in part by
Parent and Merger Sub in their sole discretion):
SECTION 6.01 Representations and Warranties. Each of the representations
and warranties made by Company and Shareholders in this Agreement (other than
those made as of a specified date earlier than the Closing Date) shall be true
and correct in all respects on and as of the Closing Date.
SECTION 6.02 Performance. The Company and Shareholders shall have performed
and complied with each agreement, covenant and obligation required by this
Agreement to be so performed or complied with by the Company and the
Shareholders at or before the Closing.
SECTION 6.03 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law restraining, enjoining or otherwise prohibiting or making
illegal the consummation of any of the transactions contemplated by this
Agreement or any of the Operative Agreements or which could reasonably be
expected to otherwise result in a diminution of the benefits of the transactions
contemplated by this Agreement or any of the Operative Agreements to Parent or
Merger Sub, and there shall not be pending or threatened on the Closing Date any
Action or Proceeding or any other action in, before or by any Governmental or
Regulatory Authority which could reasonably be expected to result in the
issuance of any such Order or the enactment, promulgation or deemed
applicability to Parent, Merger Sub, the Company or the transactions
contemplated by this Agreement or any of the Operative Agreements of any such
Law.
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SECTION 6.04 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit Parent, Merger Sub, the Company and Shareholders to perform
their obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (a) shall have been
duly obtained, made or given, (b) shall be in form and substance reasonably
satisfactory to Parent and Merger Sub, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, and all terminations or expirations of
waiting periods imposed by any Governmental or Regulatory Authority necessary
for the consummation of the transactions contemplated by this Agreement and the
Operative Agreements shall have occurred.
SECTION 6.05 Third Party Consents. The consents (or in lieu thereof
waivers) listed in Section 6.05 of the Disclosure Schedule, including, without
limitation, the consent of Alex. Brown & Sons Incorporated to the issuance by
Parent of the Parent Shares, and all other consents (or in lieu thereof waivers)
to the performance by Parent, Merger Sub, the Company and Shareholders of their
obligations under this Agreement and the Operative Agreements or to the
consummation of the transactions contemplated hereby and thereby as are required
under any Contract to which Parent, Merger Sub, Shareholders or the Company is a
party or by which any of their respective Assets and Properties are bound (a)
shall have been obtained, (b) shall be in form and substance reasonably
satisfactory to Parent and Merger Sub, (c) shall not be subject to the
satisfaction of any condition that has not been satisfied or waived and (d)
shall be in full force and effect, except where the failure to obtain any such
consent (or in lieu thereof waiver) could not reasonably be expected,
individually or in the aggregate with other such failures, to materially
adversely affect Parent, Merger Sub or the Business or Condition of the Company
or otherwise result in a material diminution of the benefits of the transactions
contemplated by this Agreement and the Operative Agreements to Parent.
SECTION 6.06 Company and Shareholders' Certificates. Parent and Merger Sub
shall have received from the Company and Shareholders a certificate dated the
Closing Date, substantially in the form and to the effect of Exhibit A hereto,
and a certificate, dated the Closing Date and executed by the Secretary or any
Assistant Secretary to the Company, substantially in the form and to the effect
of Exhibit B hereto.
SECTION 6.07 Opinion of Counsel. Parent and Merger Sub shall have received
the opinion of Munsch, Hardt, Kopf, Harr & Dinan, P.C.,counsel to Shareholders
and the Company, dated the Closing Date, substantially in the form and to the
effect of Exhibit C hereto, and to such further effect as Parent may reasonably
request, together with a certificate that all fees, costs and expenses of such
firm incurred in connection with the transactions contemplated hereby shall have
been satisfied in full or provision has been made for the payment thereof from
parties other than the Company, Parent or Merger Sub.
SECTION 6.08 Proceedings. All proceedings to be taken on the part of
Shareholders and Company in connection with the transactions contemplated by
this Agreement and all documents
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incident thereto shall be reasonably satisfactory in form and substance to
Parent and Merger Sub, and Parent and Merger Sub shall have received copies of
all such documents and other evidences as Parent and Merger Sub may reasonably
request in order to establish the consummation of such transactions and the
taking of all proceedings in connection therewith.
SECTION 6.09 Employment Agreements. Parent and Merger Sub shall have
received employment agreements executed by each of J. Hamilton Coleman and J.
Charles Davis, II, respectively, which employment agreements will contain
provisions that provide for, among other things, the relocation of each such
party to Atlanta, Georgia and shall otherwise be in form and content
satisfactory to Parent and Merger Sub.
SECTION 6.10 Release Agreements. Parent and Merger Sub shall have received
release agreements, or shall be the beneficiary of release agreements delivered
to the Company, from each party from whom the Company acquired its Assets and
Properties, all in form and content satisfactory to Parent and Merger Sub.
SECTION 6.11 Investor Representation Letters. Each Shareholder shall have
executed and delivered to Parent an Investor Representation Letter (each, an
"Investor Representation Letter"), substantially in the form of Exhibit G
hereto.
SECTION 6.12 Asset Purchase Transactions. The asset purchase transactions
between the Company, on the one hand, and each of MI/R.I.S.E., Ltd., a Colorado
limited partnership, and Central 3Hundred, Ltd., a Texas limited partnership, on
the other hand, shall have been completed and closed and the Company shall have
valid and absolute title free and clear of any and all liens to all assets
conveyed to it therein. The Company shall have provided evidence of (i) the
termination and release of all obligations between (i) ALTOC/POS, Ltd., a Texas
limited partnership, and MI/R.I.S.E., Ltd. and (ii) Central 3Hundred, Ltd. and
ALTOC/POS, Ltd., including, without limitation, the termination and release of
that certain ALTOC/POS, Ltd. Master Distribution Agreement, dated January 1,
1995, between ALTOC/POS, Ltd. and Central 3Hundred, Ltd. and that certain
Exclusive License Agreement, dated January 1, 1995, between MI/R.I.S.E., Ltd.
and ALTOC/POS, Ltd.
SECTION 6.13 Pledge Agreements. Parent and Merger Sub shall have received
from each Shareholder a Pledge Agreement, substantially in the form of Exhibit H
hereto, wherein each such Shareholder pledges the appropriate number of Parent
Shares as security for the indemnity obligations of each such shareholder
arising under Article IX hereof (collectively, the "Pledge Agreements").
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ARTICLE VII
CONDITIONS TO OBLIGATIONS OF SHAREHOLDERS AND THE COMPANY
The obligations of Shareholders and the Company hereunder are subject
to the fulfillment, at or before the Closing, of each of the following
conditions (all or any of which may be waived in whole or in part by the Company
and Shareholders in their sole discretion):
SECTION 7.01 Representations and Warranties. Each of the representations
and warranties made by Parent and Merger Sub in this Agreement shall be true and
correct in all material respects on and as of the Closing Date as though such
representation or warranty was made on and as of the Closing Date.
SECTION 7.02 Performance. Parent and Merger Sub shall have performed and
complied with, in all material respects, each agreement, covenant and obligation
required by this Agreement to be so performed or complied with by Parent and
Merger Sub at or before the Closing.
SECTION 7.03 Officers' Certificates. Parent and Merger Sub shall have
delivered to Shareholders and Company a certificate, dated the Closing Date and
executed by the Chairman of the Board, the President or any Vice President of
Parent and Merger Sub, substantially in the form and to the effect of Exhibit D
hereto, and a certificate, dated the Closing Date and executed by the Secretary
or any Assistant Secretary of Parent and Merger Sub, substantially in the form
and to the effect of Exhibit E hereto.
SECTION 7.04 Orders and Laws. There shall not be in effect on the Closing
Date any Order or Law that became effective after the date of this Agreement
restraining, enjoining or otherwise prohibiting or making illegal the
consummation of any of the transactions contemplated by this Agreement or any of
the Operative Agreements.
SECTION 7.05 Regulatory Consents and Approvals. All consents, approvals and
actions of, filings with and notices to any Governmental or Regulatory Authority
necessary to permit the Company, Shareholders, Parent and Merger Sub to perform
their obligations under this Agreement and the Operative Agreements and to
consummate the transactions contemplated hereby and thereby (a) shall have been
duly obtained, made or given, (b) shall not be subject to the satisfaction of
any condition that has not been satisfied or waived and (c) shall be in full
force and effect, and all terminations or expirations of waiting periods imposed
by any Governmental or Regulatory Authority necessary for the consummation of
the transactions contemplated by this Agreement and the Operative Agreements
shall have occurred.
SECTION 7.06 Third Party Consents. All consents (or in lieu thereof
waivers) to the performance by Shareholders and the Company of their obligations
hereunder and to the consummation of the transactions contemplated hereby as are
required under the Contracts listed
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in Section 7.06 of the Disclosure Schedule (a) shall have been obtained, (b)
shall not be subject to the satisfaction of any condition that has not been
satisfied or waived and (c) shall be in full force and effect.
SECTION 7.07 Opinion of Counsel. Shareholders shall have received the
opinion of Smith, Gambrell & Russell, LLP, counsel to Parent and Merger Sub,
dated the Closing Date, substantially in the form and to the effect of Exhibit F
hereto.
SECTION 7.08 Proceedings. All proceedings to be taken on the part of Parent
and Merger Sub in connection with the transactions contemplated by this
Agreement and all documents incident thereto shall be reasonably satisfactory in
form and substance to the Company and Shareholders, and the Company and
Shareholders shall have received copies of all such documents and other
evidences as the Company and Shareholders may reasonably request in order to
establish the consummation of such transactions and the taking of all
proceedings in connection therewith.
SECTION 7.09 Employment Agreements. Each of J. Hamilton Coleman and J.
Charles Davis, II shall have received an employment agreement executed by
Parent, in form and content satisfactory to each such Person.
ARTICLE VIII
SURVIVAL OF REPRESENTATIONS, WARRANTIES,
COVENANTS AND AGREEMENTS
SECTION 8.01 Survival of Representations, Warranties, Covenants and
Agreements. Notwithstanding any right of Parent and Merger Sub (whether or not
exercised) to investigate the affairs of the Company or any right of any party
(whether or not exercised) to investigate the accuracy of the representations
and warranties of the other party contained in this Agreement, Shareholders,
Parent and Merger Sub have the right to rely fully upon the representations,
warranties, covenants and agreements of the other contained in this Agreement.
The representations, warranties, covenants and agreements of the Company,
Shareholders, Parent and Merger Sub contained in this Agreement will survive for
two (2) years following the Closing Date, except that any representation,
warranty, covenant or agreement that would otherwise terminate in accordance
with this Section 8.01 will continue to survive if a claim for indemnity shall
have been made under Section 9.02 on or prior to such termination date, until
such claim has been satisfied or otherwise resolved.
ARTICLE IX
INDEMNIFICATION
SECTION 9.01 Indemnification.
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(a) Subject to the other Sections of this Article IX, each
Shareholder shall indemnify the Parent Indemnified Parties in respect of, and
hold each of them harmless from and against, any and all Losses suffered,
incurred or sustained by any of them or to which any of them becomes subject,
resulting from, arising out of or relating to (i) any misrepresentation, breach
of warranty or nonfulfillment of or failure to perform any covenant or agreement
on the part of any Shareholder or the Company contained in this Agreement
(determined in all cases as if the terms "material" or "materially" were not
included therein), (ii) any litigation disclosed in Section 2.11 of the
Disclosure Schedule, (iii) any claims made by Southern Hospitality Systems, Inc.
or any other entity arising out of or in any way related to the termination of
the business relationship between Southern Hospitality Systems, Inc. and Central
3Hundred, Ltd. or (iv) any claims made by ERC Parts, Inc. arising out of or in
any way related to the business relationship between ERC Parts, Inc. and Central
3Hundred, Ltd. Notwithstanding anything else to the contrary contained herein
and subject to the limitations set forth in Section 9.03 hereto, the indemnity
obligations of the Shareholders in this Section 9.01 shall at no time exceed
$1,843,750.00. Absent fraud, all Parent Indemnified Parties hereby agree that
the indemnity provided in this Article IX shall be the sole remedy for breaches
or violations by the Shareholders of the terms and conditions of this Agreement.
(b) Subject to the other Sections of this Article IX, Parent
shall indemnify the Shareholder Indemnified Parties in respect of, and hold each
of them harmless from and against, any and all Losses suffered, incurred or
sustained by any of them or to which any of them becomes subject, resulting
from, arising out of or relating to any misrepresentation, breach of warranty or
nonfulfillment of or failure to perform any covenant or agreement on the part of
Parent and Merger Sub contained in this Agreement (determined in all cases as if
the terms "material" or "materially" were not included therein). Notwithstanding
anything else to the contrary contained herein, the indemnity obligations of
Parent in this Section 9.01 shall at no time exceed the fair market value of the
Merger Consideration as of the Closing Date, such value to be determined in
accordance with Section 1.07 hereof. Absent fraud, all Shareholder Indemnified
Parties hereby agree that the indemnity provided in this Article IX shall be the
sole remedy for breaches or violations by the Parent and Merger Sub of the terms
and conditions of this Agreement.
SECTION 9.02 Method of Asserting Claims. All claims for indemnification
by any Indemnified Party under Section 9.02 will be asserted and resolved as
follows:
(a) In the event any claim or demand in respect of which an
Indemnified Party might seek indemnity under Section 9.02 is asserted against or
sought to be collected from such Indemnified Party by a Person other than a
Shareholder, Parent, Merger Sub or any Affiliate of a Shareholder or Parent (a
"Third Party Claim"), the Indemnified Party shall deliver a Claim Notice with
reasonable promptness to the Indemnifying Party. If the Indemnified Party fails
to provide the Claim Notice with reasonable promptness after the Indemnified
Party receives notice of such Third Party Claim, the Indemnifying Party will not
be obligated to indemnify the Indemnified Party with
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respect to such Third Party Claim to the extent that the Indemnifying Party's
ability to defend has been irreparably prejudiced by such failure of the
Indemnified Party. The Indemnifying Party will notify the Indemnified Party as
soon as practicable within the Dispute Period whether the Indemnifying Party
disputes its liability to the Indemnified Party under Section 9.02 and whether
the Indemnifying Party desires, at its sole cost and expense, to defend the
Indemnified Party against such Third Party Claim.
(i) If the Indemnifying Party notifies the
Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Indemnified Party with respect to the Third Party
Claim pursuant to this Section 9.02(a), then the Indemnifying Party will
have the right to defend, with counsel reasonably satisfactory to the
Indemnified Party, at the sole cost and expense of the Indemnifying
Party, such Third Party Claim by all appropriate proceedings, which
proceedings will be vigorously and diligently prosecuted by the
Indemnifying Party to a final conclusion or will be settled at the
discretion of the Indemnifying Party (but only with the consent of the
Indemnified Party in the case of any settlement that provides for any
relief other than the payment of monetary damages or that provides for
the payment of monetary damages as to which the Indemnified Party will
not be indemnified in full. The Indemnifying Party will have full control
of such defense and proceedings, including any compromise or settlement
thereof; provided, however, that the Indemnified Party may, at the sole
cost and expense of the Indemnified Party, at any time prior to the
Indemnifying Party's delivery of the notice referred to in the first
sentence of this Section 9.02(a)(i), file any motion, answer or other
pleadings or take any other action that the Indemnified Party reasonably
believes to be necessary or appropriate to protect its interests; and
provided further, that if requested by the Indemnifying Party, the
Indemnified Party will, at the sole cost and expense of the Indemnifying
Party, provide reasonable cooperation to the Indemnifying Party in
contesting any Third Party Claim that the Indemnifying Party elects to
contest. The Indemnified Party may participate in, but not control, any
defense or settlement of any Third Party Claim controlled by the
Indemnifying Party pursuant to this Section 9.02(a)(i), and except as
provided in the preceding sentence, the Indemnified Party will bear its
own costs and expenses with respect to such participation.
Notwithstanding the foregoing, the Indemnified Party may take over the
control of the defense or settlement of a Third Party Claim at any time
if it irrevocably waives its right to indemnity under Section 9.02 with
respect to such Third Party Claim.
(ii) If the Indemnifying Party fails to notify the
Indemnified Party within the Dispute Period that the Indemnifying Party
desires to defend the Third Party Claim pursuant to Section 9.02(a), or
if the Indemnifying Party gives such notice but fails to prosecute
vigorously and diligently or settle the Third Party Claim, or if the
Indemnifying Party fails to give any notice whatsoever within the Dispute
Period, then the Indemnified Party will have the right to defend, at the
sole cost and expense of the Indemnifying Party, the Third Party Claim by
all appropriate proceedings, which proceedings will be prosecuted by the
Indemnified Party in a reasonable manner and in good faith or will be
settled at the
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discretion of the Indemnified Party (with the consent of the Indemnifying
Party, which consent will not be unreasonably withheld). The In demnified
Party will have full control of such defense and proceedings, including
any compromise or settlement thereof; provided, however, that if
requested by the Indemnified Party, the Indemnifying Party will, at the
sole cost and expense of the Indemnifying Party, provide reasonable
cooperation to the Indemnified Party and its counsel in contesting any
Third Party Claim which the Indemnified Party is contesting.
Notwithstanding the foregoing provisions of this Section 9.02(a)(ii), if
the Indemnifying Party has notified the Indemnified Party within the
Dispute Period that the Indemnifying Party disputes its liability
hereunder to the Indemnified Party with respect to such Third Party Claim
and if such dispute is resolved in favor of the Indemnifying Party in the
manner provided in clause (iii) below, the Indemnifying Party will not be
required to bear the costs and expenses of the Indemnified Party's
defense pursuant to this Section 9.02(a)(ii) or of the Indemnifying
Party's participation therein at the Indemnified Party's request, and the
Indemnified Party will reimburse the Indemnifying Party in full for all
reasonable costs and expenses incurred by the Indemnifying Party in
connection with such litigation. The Indemnifying Party may participate
in, but not control, any defense or settlement controlled by the
Indemnified Party pursuant to this Section 9.02(a)(ii), and the
Indemnifying Party will bear its own costs and expenses with respect to
such participation.
(iii) If the Indemnifying Party notifies
the Indemnified Party that it does not dispute its liability to the
Indemnified Party with respect to the Third Party Claim under Section
9.02 or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes its liability to the Indemnified
Party with respect to such Third Party Claim, the Loss in the amount
specified in the Claim Notice will be conclusively deemed a liability of
the Indemnifying Party under Section 9.02 and the Indemnifying Party
shall pay the amount of such Loss to the Indemnified Party on demand. If
the Indemnifying Party has timely disputed its liability with respect to
such claim, the Indemnifying Party and the Indemnified Party will proceed
in good faith to negotiate a resolution of such dispute, and if not
resolved through negotiations within the Resolution Period, such dispute
shall be resolved by litigation in a court of competent jurisdiction.
(b) In the event any Indemnified Party should have a claim
under Section 9.02 against any Indemnifying Party that does not involve a Third
Party Claim, the Indemnified Party shall deliver an Indemnity Notice with
reasonable promptness to the Indemnifying Party. The failure by any Indemnified
Party to give the Indemnity Notice shall not impair such party's rights
hereunder except to the extent that an Indemnifying Party demonstrates that it
has been irreparably prejudiced thereby. If the Indemnifying Party notifies the
Indemnified Party that it does not dispute the claim described in such Indemnity
Notice or fails to notify the Indemnified Party within the Dispute Period
whether the Indemnifying Party disputes the claim described in such Indemnity
Notice, the Loss in the amount specified in the Indemnity Notice will be
conclusively deemed a liability of the Indemnifying Party under Section 9.02 and
the Indemnifying Party shall pay the amount of such Loss to the Indemnified
Party on demand. If the Indemnifying Party has timely
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disputed its liability with respect to such claim, the Indemnifying Party and
the Indemnified Party will proceed in good faith to negotiate a resolution of
such dispute, and if not resolved through negotiations within the Resolution
Period, such dispute shall be resolved by litigation in a court of competent
jurisdiction.
(c) If the Indemnifying Party notifies the Indemnified Party
that it does not dispute the claim described therein or fails to notify the
Indemnified Party within the Dispute Period whether the Indemnifying Party
disputes the claim described in such Claim Notice or Indemnity Notice, as the
case may be, the Loss specified in the notice will be conclusively deemed to
have been incurred by the Indemnified Party. If the Indemnifying Party has
timely disputed the claim described in such Claim Notice or Indemnity Notice, as
the case may be, the Indemnifying Party and the Indemnified Party will proceed
in good faith to negotiate a resolution of such dispute, and if not resolved
through negotiations within the Resolution Period, such dispute shall be
resolved by litigation in a court of competent jurisdiction.
SECTION 9.03. Remedies of Parent Indemnified Parties. In the event that
the Shareholders, or any one or a combination of the Shareholders, fail to pay a
claim for indemnification made by the Parent Indemnified Parties that is not
subject to dispute pursuant to Section 9.02 hereof, the Secured Party (as that
term is defined in the Pledge Agreements), on behalf of the Parent Indemnified
Parties, shall have the right to exercise all remedies available to it pursuant
to the Pledge Agreements. Absent fraud and except as expressly set forth in this
Section, the Parent Indemnified Parties shall have no other recourse against the
Shareholders in respect of unpaid claims for indemnification hereunder.
Notwithstanding the foregoing, in the event that Parent Shares are released to a
Shareholder on the date which twelve (12) months after the Closing Date in
accordance with Section VIII.A of the Pledge Agreements and subsequent to such
release there exists an unpaid claim for indemnification, Parent Indemnified
Parties will have recourse to the Shareholder receiving such Parent Shares in an
amount equal to the fair market value (as defined in Section 1.07 hereof) of
such released Parent Shares. To the extent such claims are made solely with
respect to the breach of a several representation or warranty of any
Shareholder, the claims shall be satisfied solely from the Parent Shares issued
to the breaching Shareholder or against such breaching Shareholder directly, to
the extent Parent Shares issued to such breaching Shareholder may have been
released in accordance with Section VIII.A of the Pledge Agreements to which
such Shareholder is a party. Notwithstanding the foregoing, in the case of
Messrs. Morgan and Sebes the indemnity obligations (whether arising from the
breach of a several or a joint and several representation and warranty or any
combination thereof) shall in no event exceed the fair market value (such value
to be determined in accordance with Section 1.07 hereof) of the Parent Shares
received by such Shareholders hereunder.
SECTION 9.04 Assignment of Rights. If Parent Indemnified Parties (or
any successor thereof) makes an indemnity claim against the Shareholders based
upon Section 2.16 hereof, and the Parent Indemnified Parties are fully
indemnified by the Shareholders with respect to such indemnity claim (without
regard to any limitation on indemnity contained in Section 9.01 hereof),
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then the Parent Indemnified Parties (or any successor thereof) agree to assign
to the Shareholders, to the extent permitted by applicable law, any and all
rights of indemnification that Parent Indemnified Parties may have against
MI/R.I.S.E., Ltd., a Colorado limited partnership, under that certain Asset
Purchase Agreement by and between MI/R.I.S.E., Ltd. and the Company (the "Asset
Purchase Agreement") and the Shareholders shall succeed to the Parent
Indemnified Parties' (or such successors') rights against MI/R.I.S.E., Ltd. in
respect of the indemnity claim, if any, existing under the Asset Purchase
Agreement; provided, that, prior to any such assignment, the Shareholders shall
agree, in form and substance acceptable to the Parent Indemnified Parties, to
indemnify and hold the Parent Indemnified Parties harmless from and against any
cost, expense or damage arising from such assignment of rights.
ARTICLE X
DEFINITIONS
SECTION 10.01 Definitions. (a) Defined Terms. As used in this
Agreement, the following defined terms have the meanings indicated below:
"Acquisition Proposal" means any proposal for a merger or
other business combination to which the Company is a party or the direct or
indirect acquisition of any equity interest in, or a substantial portion of the
assets of, the Company, other than the transactions contemplated by this
Agreement.
"Actions or Proceedings" means any action, suit, proceeding,
arbitration or Governmental or Regulatory Authority investigation or audit.
"Affiliate" means any Person that directly, or indirectly
through one of more intermediaries, controls or is controlled by or is under
common control with the Person specified. For purposes of this definition,
control of a Person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such Person whether by Contract or
otherwise and, in any event and without limitation of the previous sentence, any
Person owning ten percent (10%) or more of the voting securities of another
Person shall be deemed to control that Person.
"Agreement" means this Agreement and Plan of Merger and the
Exhibits, the Disclosure Schedule and the Schedules hereto and the certificates
delivered in accordance with Sections 6.06 and 7.03, as the same shall be
amended from time to time.
"Assets and Properties" of any Person means all assets and
properties of every kind, nature, character and description (whether real,
personal or mixed, whether tangible or intangible, whether absolute, accrued,
contingent, fixed or otherwise and wherever situated), including the goodwill
related thereto, operated, owned or leased by such Person, including without
limitation
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cash, cash equivalents, Investment Assets, accounts and notes receivable,
chattel paper, documents, instruments, general intangibles, real estate,
equipment, inventory, goods and Intellectual Property.
"Associate" means, with respect to any Person, any corporation
or other business organization of which such Person is an officer or partner or
is the beneficial owner, directly or indirectly, of ten percent (10%) or more of
any class of equity securities, any trust or estate in which such Person has a
substantial beneficial interest or as to which such Person serves as a trustee
or in a similar capacity and any relative or spouse of such Person, or any
relative of such spouse, who has the same home as such Person.
"Benefit Plan" means any Plan established by the Company, or
any predecessor or Affiliate of any of the foregoing, existing at the Closing
Date or prior thereto, to which the Company contributes or has contributed, or
under which any employee, former employee or director of the Company or any
beneficiary thereof is covered, is eligible for coverage or has benefit rights.
"Books and Records" means all files, documents, instruments,
papers, books and records relating to the Business or Condition of the Company,
including without limitation financial statements, Tax Returns and related work
papers and letters from accountants, budgets, pricing guidelines, ledgers,
journals, deeds, title policies, minute books, stock certificates and books,
stock transfer ledgers, Contracts, Licenses, customer lists, computer files and
programs, retrieval programs, operating data and plans and environmental studies
and plans.
"Business Day" means a day other than Saturday, Sunday or any
day on which banks located in the States of Georgia are authorized or obligated
to close.
"Business or Condition" means the business, condition
(financial or otherwise), results of operations, Assets and Properties and
prospects of any Person taken as a whole.
"Claim Notice" means written notification pursuant to Section
9.02(a) of a Third Party Claim as to which indemnity under Section 9.02 is
sought by an Indemnified Party, enclosing a copy of all papers served, if any,
and specifying the nature of and basis for such Third Party Claim and for the
Indemnified Party's claim against the Indemnifying Party under Section 9.02,
together with the amount or, if not then reasonably ascertainable, the estimated
amount, determined in good faith, of such Third Party Claim.
"Closing" means the closing of the transactions contemplated
by Section 1.01(b).
"Closing Date" means the day of the Closing as set forth in
Section 1.01(b).
"Code" means the Internal Revenue Code of 1986, as amended,
and the rules and regulations promulgated thereunder.
"Company" has the meaning ascribed to it in the forepart of
this Agreement.
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"Company Common Stock" means the common stock, no par value
per share, of the Company.
"Contract" means any agreement, lease, license, evidence of
Indebtedness, mortgage, indenture, security agreement or other contract (whether
written or oral).
"Disclosure Schedule" means the record delivered to Parent by
Shareholders herewith and dated as of the date hereof, containing all lists,
descriptions, exceptions and other information and materials as are required to
be included therein by Shareholders pursuant to this Agreement.
"Dispute Period" means the period ending thirty (30) days
following receipt by an Indemnifying Party of either a Claim Notice or an
Indemnity Notice.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the rules and regulations promulgated thereunder.
"GAAP" means generally accepted accounting principles,
consistently applied throughout the specified period and in the immediately
prior comparable period.
"Governmental or Regulatory Authority" means any court,
tribunal, arbitrator, authority, agency, commission, official or other
instrumentality of the United States, any foreign country or any domestic or
foreign state, county, city or other political subdivision.
"Indebtedness" of any Person means all obligations of such
Person (i) for borrowed money, (ii) evidenced by notes, bonds, debentures or
similar instruments, (iii) for the deferred purchase price of goods or services
(other than trade payables or accruals incurred in the ordinary course of
business), (iv) under capital leases and (v) in the nature of guarantees of the
obligations described in clauses (i) through (iv) above of any other Person.
"Indemnified Party" shall mean and refer to either (i) the
Parent Indemnified Parties, or (ii) the Shareholder Indemnified Parties, as the
case may be.
"Indemnifying Party" shall mean and refer to either (i) Parent
and Merger Sale, on the one hand, or (ii) the Shareholders on the other hand.
"Indemnity Notice" means written notification pursuant to
Section 9.02(b) of a claim for indemnity under Article IX by an Indemnified
Party, specifying the nature of and basis for such claim, together with the
amount or, if not then reasonably ascertainable, the estimated amount,
determined in good faith, of such claim.
"Intellectual Property" means all patents and patent rights,
trademarks and trademark rights, trade names and trade name rights, service
marks and service mark rights, service names and service name rights, brand
names, inventions, processes, formulae, copyrights and copyright rights, trade
dress, business and product names, logos, slogans, trade secrets, industrial
models, processes,
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designs, methodologies, computer programs (including all source codes) and
related documentation, technical information, manufacturing, engineering and
technical drawings, know-how and all pending applications for and registrations
of patents, trademarks, service marks and copyrights.
"Investment Assets" means all debentures, notes and other
evidences of Indebtedness, stocks, securities (including rights to purchase and
securities convertible into or exchangeable for other securities), interests in
joint ventures and general and limited partnerships, mortgage loans and other
investment or portfolio assets owned of record or beneficially by the Company
and issued by any Person other than the Company (other than trade receivables
generated in the ordinary course of business of the Company).
"IRS" means the United States Internal Revenue Service.
"Knowledge of such Shareholder" or "Known to such Shareholder"
means the actual knowledge of a particular Shareholder or any employee of the
Company after due inquiry; provided; however, no further knowledge shall be
imputed.
"Laws" means all laws, statutes, rules, regulations,
ordinances and other pronouncements having the effect of law of the United
States, any foreign country or any domestic or foreign state, county, city or
other political subdivision or of any Governmental or Regulatory Authority.
"Liabilities" means all Indebtedness, obligations and other
liabilities of a Person (whether absolute, accrued, contingent, fixed or
otherwise, or whether due or to become due).
"Licenses" means all licenses, permits, certificates of
authority, authorizations, approvals, registrations, franchises and similar
consents granted or issued by any Governmental or Regulatory Authority.
"Liens" means any mortgage, pledge, assessment, security
interest, lease, lien, adverse claim, levy, charge or other encumbrance of any
kind, or any conditional sale Contract, title retention Contract or other
Contract to give any of the foregoing.
"Loss" means any and all damages, fines, fees, penalties,
deficiencies, losses and expenses (including without limitation interest, court
costs, fees of attorneys, accountants and other experts or other expenses of
litigation or other proceedings or of any claim, default or assessment).
"Operative Agreements" means the Agreement, the Pledge
Agreements, the Investor Representation Letters and any and all other support or
other agreements to be entered into in connection with the transaction.
"Option" with respect to any Person means any security, right,
subscription, warrant, option, "phantom" stock right or other Contract that
gives the right to (i) purchase or otherwise receive or be issued any shares of
capital stock of such Person or any security of any kind
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convertible into or exchangeable or exercisable for any shares of capital stock
of such Person or (ii) receive or exercise any benefits or rights similar to any
rights enjoyed by or accruing to the holder of shares of capital stock of such
Person, including any rights to participate in the equity or income of such
Person or to participate in or direct the election of any directors or officers
of such Person or the manner in which any shares of capital stock of such Person
are voted.
"Order" means any writ, judgment, decree, injunction or
similar order of any Governmental or Regulatory Authority (in each such case
whether preliminary or final).
"Parent" has the meaning ascribed to it in the forepart of
this Agreement.
"Parent Indemnified Parties" means Parent and its officers,
directors, employees, agents and Affiliates.
"Parent Shares" has the meaning ascribed to it in Section
1.07.
"Permitted Lien" means (i) any Lien for Taxes not yet due or
delinquent or being contested in good faith by appropriate proceedings for which
adequate reserves have been established in accordance with GAAP, (ii) any
statutory Lien arising in the ordinary course of business by operation of Law
with respect to a Liability that is not yet due or delinquent and (iii) any
minor imperfection of title or similar Lien which individually or in the
aggregate with other such Liens does not materially impair the value of the
property subject to such Lien or the use of such property in the conduct of the
business of the Company.
"Person" means any natural person, corporation, general
partnership, limited partnership, proprietorship, other business organization,
trust, union, association or Governmental or Regulatory Authority.
"Plan" means any bonus, incentive compensation, deferred
compensation, pension, profit sharing, retirement, stock purchase, stock option,
stock ownership, stock appreciation rights, phantom stock, leave of absence,
layoff, vacation, day or dependent care, legal services, cafeteria, life,
health, accident, disability, workmen's compensation or other insurance,
severance, separation or other employee benefit plan, practice, policy or
arrangement of any kind, whether written or oral, including, but not limited to,
any "employee benefit plan" within the meaning of Section 3(3) of ERISA.
"Resolution Period" means the period ending thirty (30) days
following receipt by an Indemnified Party of a written notice from an
Indemnifying Party stating that it disputes all or any portion of a claim set
forth in a Claim Notice or an Indemnity Notice.
"Shareholders" has the meaning ascribed to it in the forepart
of this Agreement.
"Shareholder Indemnified Parties" means the Shareholders.
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"Shares" has the meaning ascribed to it in the forepart of
this Agreement.
"Subsidiary" means any Person in which the Company, directly
or indirectly through Subsidiaries or otherwise, beneficially owns more than
fifty percent (50%) of either the equity interests in, or the voting control of,
such Person.
"Tax Returns" means any return, declaration, report, claim for
refund, or information return or statement relating to Taxes, including any
schedule or attachment thereto, and including any amendment thereof.
"Taxes" means any federal, state, local, or foreign income,
gross receipts, license, payroll, employment, excise, severance, stamp,
occupation, premium, windfall profits, environmental (including taxes under Code
Sec. 59A), customs duties, capital stock, franchise, profits, withholding,
social security (or similar), unemployment, disability, real property, personal
property, sales, use, transfer, registration, value added, alternative or add-on
minimum, estimated, or other tax of any kind whatsoever, including any interest,
penalty, or addition thereto, whether disputed or not.
"Third Party Claim" has the meaning ascribed to it in Section
9.02(a).
(b) Construction of Certain Terms and Phrases. Unless the
context of this Agreement otherwise requires, (i) words of any gender include
each other gender; (ii) words using the singular or plural number also include
the plural or singular number, respectively; (iii) the terms "hereof," "herein,"
"hereby" and derivative or similar words refer to this entire Agreement; (iv)
the terms "Article" or "Section" refer to the specified Article or Section of
this Agreement; and (v) the phrases "ordinary course of business" and "ordinary
course of business consistent with past practice" refer to the business and
practice of the Company. Whenever this Agreement refers to a number of days,
such number shall refer to calendar days unless Business Days are specified. All
accounting terms used herein and not expressly defined herein shall have the
meanings given to them under GAAP.
ARTICLE XI
TERMINATION
SECTION 11.01 Termination. This Agreement may be terminated at
any time prior to the Effective Time:
(a) by written consent of the parties hereto duly authorized
by the Boards of Directors of Parent and the Company; or
(b) by either Parent or the Company if the Merger shall not
have been consummated by June 30, 1997 (provided that the right to terminate
this Agreement under Section 11.01(b) shall not be available to any party whose
failure to fulfill any obligation under this
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Agreement has been the cause of or resulted in the failure of the Merger to
occur on or before such date); or
(c) by either Parent or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the Merger;
(d) by Parent or the Company, respectively, (i) if any
representation or warranty of the Company and Shareholders or Parent and Merger
Sub, respectively, set forth in this Agreement shall be untrue when made, or
(ii) upon a breach of any covenant or agreement on the part of the Company and
the Shareholders or Parent and the Merger Sub, respectively, set forth in this
Agreement, such that in either case of (i) or (ii) above the conditions set
forth in Section 6.01 or 6.02, or Section 7.01 or 7.02, as the case may be,
would not be satisfied (either (i) or (ii) above being a "Terminating Breach"),
provided, that, if such Terminating Breach is curable prior to June 30, 1997, by
the Company and the Shareholders or Parent and the Merger Sub, as the case may
be, through the exercise of its reasonable efforts and for so long as the
Company and the Shareholders or Parent and the Merger Sub, as the case may be,
continues to exercise such reasonable efforts, neither the Company and the
Shareholders nor the Parent and the Merger Sub, respectively, may terminate this
Agreement under this Section 11.01; or
(e) by Parent and the Merger Sub, if any representation or
warranty of the Company and the Shareholders shall have become untrue such that
the condition set forth in Section 6.01 would not be satisfied, or by the
Company and the Shareholders, if any representation or warranty of Parent and
the Merger Sub shall have become untrue such that the condition set forth in
Section 7.01 would not be satisfied, in either case other than by reason of a
Terminating Breach.
SECTION 11.02 Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 11.01, this Agreement shall forthwith become
void and there shall be no liability on the part of any party hereto or any of
its affiliates, directors, officers or Shareholders except the provisions of
Section 12.05 shall survive and nothing herein shall relieve any party from
liability for any breach hereof.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01 Notices. All notices, requests and other communications
hereunder must be in writing and will be deemed to have been duly given only if
delivered personally or by facsimile transmission or mailed (first class postage
prepaid) to the parties at the following addresses or facsimile numbers:
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If to Parent or Merger Sub, to:
Radiant Systems, Inc.
1000 Alderman Drive, Suite A
Alpharetta, Georgia 30202
Facsimile No.: (770) 772-3057
Attn: Mr. John Heyman
with a copy to:
Smith, Gambrell & Russell, LLP
Suite 3100, Promenade II
1230 Peachtree Street, N.E.
Atlanta, Georgia 30309-3592
Attn: John R. Schneider, Esq.
Facsimile No.: (404) 815-3509
If to the Company or Shareholders, to:
Mr. J. Hamilton Coleman
M. J. Charles Davis, II
6500 Greenville Avenue, Suite 490
Dallas, Texas 75206
Facsimile No.: (214) 363-7979
with a copy to:
Munsch, Hardt, Kopf, Harr & Dinan, P.C.
4000 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202-2790
Attn: A. Michael Hainsfurther, Esq.
Facsimile No.: (214) 855-7584
All such notices, requests and other communications will (i) if delivered
personally to the address as provided in this Section, be deemed given upon
delivery, (ii) if delivered by facsimile transmission to the facsimile number as
provided in this Section, be deemed given upon receipt, and (iii) if delivered
by mail in the manner described above to the address as provided in this
Section, be deemed given upon receipt (in each case regardless of whether such
notice, request or other communication is received by any other Person to whom a
copy of such notice, request or other communication is to be delivered pursuant
to this Section). Any party from time to time may change its address, facsimile
number or other information for the purpose of notices to that party by giving
notice specifying such change to the other party hereto.
SECTION 12.02 Entire Agreement. This Agreement and the Operative
Agreements supersede all prior discussions and agreements between the parties
with respect to the subject matter hereof and thereof, and contain the sole and
entire agreement between the parties hereto with respect to the subject matter
hereof and thereof.
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SECTION 12.03 Expenses. Except as otherwise expressly provided in this
Agreement (including without limitation as provided in Section 12.02), whether
or not the transactions contemplated hereby are consummated, each party will pay
its own costs and expenses, and Shareholders shall pay the costs and expenses of
the Company, incurred in connection with the negotiation, execution and closing
of this Agreement and the Operative Agreements and the transactions contemplated
hereby and thereby.
SECTION 12.04 Public Announcements. At all times at or before the
Closing, the Company, Shareholders, Merger Sub and Parent will not issue or make
any reports, statements or releases to the public or generally to the employees,
customers, suppliers or other Persons to whom the Company sell goods or provide
services or with whom the Company otherwise have significant business
relationships with respect to this Agreement or the transactions contemplated
hereby without the consent of the other, which consent shall not be unreasonably
withheld. If either party is unable to obtain the approval of its public report,
statement or release from the other party and such report, statement or release
is, in the opinion of legal counsel to such party, required by Law in order to
discharge such party's disclosure obligations, then such party may make or issue
the legally required report, statement or release and promptly furnish the other
party with a copy thereof. Shareholders and Parent will also obtain the other
party's prior approval of any press release to be issued immediately following
the Closing announcing the consummation of the transactions contemplated by this
Agreement.
SECTION 12.05 Confidentiality. Each party hereto will hold, and will
use its best efforts to cause its Affiliates, and their respective
Representatives to hold, in strict confidence from any Person (other than any
such Affiliate or Representative), unless (i) compelled to disclose by judicial
or administrative process (including without limitation in connection with
obtaining the necessary approvals of this Agreement and the transactions
contemplated hereby of Governmental or Regulatory Authorities) or by other
requirements of Law or (ii) disclosed in an Action or Proceeding brought by a
party hereto in pursuit of its rights or in the exercise of its remedies
hereunder, all documents and information concerning the other party or any of
its Affiliates furnished to it by the other party or such other party's
Representatives in connection with this Agreement or the transactions
contemplated hereby, except to the extent that such documents or information
can be shown to have been (a) previously known by the party receiving such
documents or information, (b) in the public domain (either prior to or after
the furnishing of such documents or information hereunder) through no fault of
such receiving party or (c) later acquired by the receiving party from another
source if the receiving party is not aware that such source is under an
obligation to another party hereto to keep such documents and information
confidential; provided that following the Closing the foregoing restrictions
will not apply to Parent's or Merger Sub's use of documents and information
concerning the Company furnished by the Company and Shareholders hereunder. In
the event the transactions contemplated hereby are not consummated, upon the
request of the other party, each party hereto will, and will cause its
Affiliates and their respective Representatives to, promptly redeliver or cause
to be redelivered all copies of documents and information furnished by the
other party in connection with this Agreement or the transactions contemplated
hereby and destroy or cause to be destroyed all notes, memoranda, summaries,
analyses, compilations and other writings related thereto or based thereon
prepared by the party furnished such documents and information or its
Representatives.
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SECTION 12.06 Further Assurances; Post-Closing Cooperation. (a) At any
time or from time to time after the Closing, Shareholders shall execute and
deliver to Parent and Merger Sub such other documents and instruments, provide
such materials and information and take such other actions as Parent or Merger
Sub may reasonably request to carry out the terms of this Agreement and, to the
full extent permitted by Law, to put Parent in actual possession and operating
control of the Company and its Assets and Properties and Books and Records, and
otherwise to cause Shareholders to fulfill their respective obligations under
this Agreement and the Operative Agreements to which either or both is a party.
(b) Following the Closing, each party will afford the other
party, its counsel and its accountants, during normal business hours, reasonable
access to the books, records and other data relating to the Business or
Condition of the Company in its possession with respect to periods prior to the
Closing and the right to make copies and extracts therefrom, to the extent that
such access may be reasonably required by the requesting party in connection
with (i) the preparation of Tax Returns, (ii) the determination or enforcement
of rights and obligations under this Agreement, (iii) compliance with the
requirements of any Governmental or Regulatory Authority, (iv) the determination
or enforcement of the rights and obligations of any Indemnified Party or (v) in
connection with any actual or threatened Action or Proceeding. Further, each
party agrees for a period extending six (6) years after the Closing Date not to
destroy or otherwise dispose of any such books, records and other data unless
such party shall first offer in writing to surrender such books, records and
other data to the other party and such other party shall not agree in writing to
take possession thereof during the ten (10) day period after such offer is made.
(c) If, in order properly to prepare its Tax Returns, other
documents or reports required to be filed with Governmental or Regulatory
Authorities or its financial statements or to fulfill its obligations hereunder,
it is necessary that a party be furnished with additional information, documents
or records relating to the Business or Condition of the Company not referred to
in paragraph (b) above, and such information, documents or records are in the
possession or control of the other party, such other party shall use its best
efforts to furnish or make available such information, documents or records (or
copies thereof) at the recipient's request, cost and expense. Any information
obtained by Shareholders in accordance with this paragraph shall be held
confidential by Shareholders in accordance with Section 12.05.
(d) Notwithstanding anything to the contrary contained in this
Section, if the parties are in an adversarial relationship in litigation or
arbitration, the furnishing of information, documents or records in accordance
with any provision of this Section shall be subject to applicable rules relating
to discovery.
SECTION 12.07 Waiver. Any term or condition of this Agreement may be
waived at any time by the party that is entitled to the benefit thereof, but no
such waiver shall be effective unless set forth in a written instrument duly
executed by or on behalf of the party waiving such term or condition. No waiver
by any party of any term or condition of this Agreement, in any one or more
instances, shall be deemed to be or construed as a waiver of the same or any
other term or condition of this Agreement on any future occasion. All remedies,
either under this Agreement or by Law or otherwise afforded, will be cumulative
and not alternative.
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SECTION 12.08 Amendment. This Agreement may be amended, supplemented or
modified only by a written instrument duly executed by or on behalf of each
party hereto.
SECTION 12.09 No Third Party Beneficiary. The terms and provisions of
this Agreement are intended solely for the benefit of each party hereto and
their respective successors or permitted assigns, and it is not the intention of
the parties to confer third-party beneficiary rights upon any other Person other
than any Person entitled to indemnity under Article IX.
SECTION 12.10 No Assignment; Binding Effect. Neither this Agreement nor
any right, interest or obligation hereunder may be assigned by any party hereto
without the prior written consent of the other party hereto and any attempt to
do so will be void, except for assignments and transfers by operation of Law.
Subject to the preceding sentence, this Agreement is binding upon, inures to the
benefit of and is enforceable by the parties hereto and their respective
successors and assigns.
SECTION 12.11 Headings. The headings used in this Agreement have been
inserted for convenience of reference only and do not define or limit the
provisions hereof.
SECTION 12.12 Invalid Provisions. If any provision of this Agreement is
held to be illegal, invalid or unenforceable under any present or future Law,
and if the rights or obligations of any party hereto under this Agreement will
not be materially and adversely affected thereby, (a) such provision will be
fully severable, (b) this Agreement will be construed and enforced as if such
illegal, invalid or unenforceable provision had never comprised a part hereof,
(c) the remaining provisions of this Agreement will remain in full force and
effect and will not be affected by the illegal, invalid or unenforceable
provision or by its severance here from and (d) in lieu of such illegal, invalid
or unenforceable provision, there will be added automatically as a part of this
Agreement a legal, valid and enforceable provision as similar in terms to such
illegal, invalid or unenforceable provision as may be possible.
SECTION 12.13 Governing Law. This Agreement shall be governed by and
construed in accordance with the Laws of the State of Georgia applicable to a
Contract executed and performed in such State, without giving effect to the
conflicts of laws principles thereof.
SECTION 12.14 Counterparts. This Agreement may be executed in any
number of counterparts, each of which will be deemed an original, but all of
which together will constitute one and the same instrument.
44
<PAGE> 47
IN WITNESS WHEREOF, this Agreement has been duly executed and delivered
by the duly authorized officer of each party hereto as of the date first above
written.
PARENT:
RADIANT SYSTEMS, INC.
By: /s/ John Heyman
----------------------------------------
Name: John Heyman
Title: Executive Vice President and
Chief Financial Officer
MERGER SUB:
RSI ACQUISITION CORPORATION
By: /s/ John Heyman
----------------------------------------
John Heyman
Executive Vice President
SHAREHOLDERS:
/s/ J. Hamilton Coleman
--------------------------------------(SEAL)
J. HAMILTON COLEMAN
/s/ J. Charles Davis, II
--------------------------------------(SEAL)
J. CHARLES DAVIS, II
/s/ Richard L. Morgan
--------------------------------------(SEAL)
RICHARD L. MORGAN
/s/ Christopher A. Sebes
--------------------------------------(SEAL)
CHRISTOPHER A. SEBES
COMPANY:
RSI MERGER CORPORATION
By: /s/ J. Hamilton Coleman
----------------------------------------
Name: J. Hamilton Coleman
Title: President
