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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For Quarterly Period Ended Commission File Number:
March 31, 2000 0-22065
RADIANT SYSTEMS, INC.
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(Exact name of registrant as specified in its charter)
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<S> <C>
Georgia 11-2749765
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(State or other jurisdiction of incorporation (I.R.S. Employer Identification No.)
or organization)
3925 Brookside Parkway, Alpharetta, Georgia 30022
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(Address of principal executive offices) (Zip Code)
Issuer's telephone number, including area code: (770) 576-6000
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(Former name, former address and former fiscal year, if changed since last report)
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Check whether the issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or
for such shorter period that the registrant was required to file such reports),
and (2) has been subject to such filing requirements for the past 90 days.
Yes X No______________
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The number of the registrant's shares outstanding as of May 10, 2000 was
27,364,073.
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
FORM 10-Q
TABLE OF CONTENTS
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PART I: FINANCIAL INFORMATION PAGE NO.
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Item 1: Financial Statements
Condensed Consolidated Balance Sheets as of March 31, 2000 and 3
December 31, 1999
Condensed Consolidated Statements of Operations for the Three 4
Months Ended March 31, 2000 and 1999
Condensed Consolidated Statements of Cash Flows for the Three 5
Months Ended March 31, 2000 and 1999
Notes to Condensed Consolidated Financial Statements 6-8
Item 2: Management's Discussion and Analysis of Financial Condition and 9-13
Results of Operations
Item 3: Quantitative and Qualitative Disclosures About Market Risks 13
PART II: OTHER INFORMATION
Item 6: Exhibits and Reports on Form 8-K 14
Signature 14
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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share data)
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<CAPTION>
March 31, December 31,
2000 1999
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(unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents $ 57,595 $ 53,435
Accounts receivable, net 20,239 17,929
Inventories 12,977 13,141
Other short-term assets 3,696 3,256
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Total current assets 94,507 87,761
Property and equipment, net 10,904 7,857
Software development costs, net 5,921 5,394
Other long-term assets 6,529 10,987
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$ 117,861 $ 111,999
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LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued liabilities $ 10,702 $ 14,466
Client deposits and unearned revenue 5,753 7,243
Current portion of long-term debt 1 105
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Total current liabilities 16,456 21,814
Long-term debt, less current portion -- 4,250
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Total liabilities 16,456 26,064
Shareholders' equity
Common stock, no par value; 30,000,000 shares authorized;
17,532,832 and 16,983,925 shares issued and outstanding 0 0
Additional paid-in capital 112,210 100,872
Accumulated deficit (10,805) (14,937)
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Total shareholders' equity 101,405 85,935
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$ 117,861 $ 111,999
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The accompanying notes are an integral part of these condensed consolidated
financial statements
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share data)
Unaudited
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<CAPTION>
For the three months ended
March 31,
2000 1999
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Revenues:
System sales $ 21,130 $ 17,235
Client support, maintenance and other services 11,286 7,039
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Total revenues 32,416 24,274
Cost of revenues:
System sales 9,989 8,484
Client support, maintenance and other services 8,712 5,886
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Total cost of revenues 18,701 14,370
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Gross profit 13,715 9,904
Operating Expenses:
Product development 2,191 2,575
Sales and marketing 2,901 2,927
Depreciation and amortization 1,605 1,379
General and administrative 3,379 3,159
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Income (loss) from operations 3,639 (136)
Interest income, net 707 343
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Income before income tax and extraordinary item 4,346 207
Income tax provision 1,734 83
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Income before extraordinary item 2,612 124
Extraordinary item:
Gain on early extinguishment of debt, net of taxes 1,520 -
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Net income $ 4,132 $ 124
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Basic income per share:
Income before extraordinary item $ 0.15 $ 0.01
Extraordinary income on early extinguishment of debt 0.08 -
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Total basic income per share $ 0.23 $ 0.01
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Diluted income per share:
Income before extraordinary item $ 0.13 $ 0.01
Extraordinary income on early extinguishment of debt 0.08 -
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Total diluted income per share $ 0.21 $ 0.01
============ ============
Weighted average shares outstanding:
Basic 17,625 16,078
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Diluted 19,807 17,491
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</TABLE>
The accompanying notes are an integral part of these condensed consolidated
financial statements
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RADIANT SYSTEMS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
Unaudited
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For the three months ended
March 31,
2000 1999
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CASH FLOWS FROM OPERATING ACTIVITIES:
Net income $ 4,132 $ 124
Adjustments to reconcile net income to net cash (used in)
provided by operating activities:
Gain on early extinguishment of debt (1,518) --
Amortization of deferred compensation 13 25
Depreciation and amortization 2,075 1,557
Imputed interest on shareholder note 57 57
Changes in assets and liabilities:
Accounts receivable (2,310) (758)
Inventories 164 994
Other assets 1,083 382
Accounts payable and accrued liabilities (3,736) 2,231
Client deposits and deferred revenue (1,491) 1,793
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Net cash (used in) provided by operating activities (1,531) 6,405
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases of property and equipment (4,333) (728)
Capitalized software development costs (997) (854)
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Net cash used in investing activities (5,330) (1,582)
CASH FLOWS FROM FINANCING ACTIVITIES:
Exercise of employee stock options 1,325 1,340
Repurchase of common stock -- (514)
Issuance of common stock 10,000 --
Principal payments under capital lease obligations -- (12)
Principal payments under long-term debt (304) (4)
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Net cash provided by financing activities 11,021 810
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Increase in cash and cash equivalents 4,160 5,633
Cash and cash equivalents at beginning of year 53,435 25,536
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Cash and cash equivalents at end of period $ 57,595 $ 31,169
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SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest $ -- $ 3
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Income taxes $ 30 $ --
============ =============
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The accompanying notes are an integral part of these condensed consolidated
financial statements.
5
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NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been
prepared in accordance with generally accepted accounting principles applicable
to interim financial statements. Accordingly, they do not include all of the
information and notes required by generally accepted accounting principles for
complete financial statements. In the opinion of Radiant Systems, Inc. (the
"Company") management, these condensed consolidated financial statements contain
all adjustments (which comprise only normal and recurring accruals) necessary
for fair presentation of the consolidated financial condition and results of
operations for these periods. The interim results for the three months ended
March 31, 2000 are not necessarily indicative of the results to be expected for
the full year. These statements should be read in conjunction with the Company's
consolidated financial statements as filed in its Annual Report on Form 10-K for
the year ended December 31, 1999.
2. Net Income Per Share
Basic net income per common share is computed by dividing net income by the
weighted-average number of shares outstanding. Diluted net income per share
includes the dilutive effect of stock options.
A reconciliation of the weighted average number of common shares outstanding
assuming dilution is as follows (in thousands):
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For the three months ended
March 31,
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2000 1999
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Average common shares outstanding 17,625 16,078
Dilutive effect of outstanding stock options 2,182 1,413
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Average common shares outstanding assuming dilution 19,807 17,491
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For the quarter ended March 31, 2000 and 1999, options with an antidilutive
impact of approximately 20,000 and 83,000 shares of common stock were excluded
from the above reconciliation.
3. Segment Reporting Data
Prior to January 1, 2000 the Company operated through two primary reportable
segments (i) Global Solutions and (ii) Regional Solutions. Effective January 1,
2000, the Company restructured its business units and as a result, currently
operates under one segment, providing enterprise technology solutions to
businesses that serve the consumer. To date, the Company's product
applications have been focused on the convenience store, food service,
entertainment and convenient automotive service center markets, as these markets
require many of the same product features and functionality. Revenues from
these markets for the first quarter ended March 31, 2000 and 1999 are as follows
(in thousands):
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<CAPTION>
2000 1999
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Convenience store $ 16,079 $ 12,077
Entertainment and cinema 7,900 5,457
Food service 7,860 6,250
Automotive service centers 577 490
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Total revenues $ 32,416 $ 24,274
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The Company distributes it's technology both within the United States and
internationally, however, to date, international sales have not been material.
4. Significant Events
On March 1, 2000, the Company and Microsoft Corporation jointly announced,
subject to execution of a definitive agreement, that both companies have joined
forces to develop and market an integrated Web-enabled management system and
supply chain solution to enable retailers to conduct business to business e-
commerce over the Internet. In addition, Microsoft agreed to make an equity
investment in the Company and committed to support the Company's solution
through joint marketing programs, funding for product development, consulting
services, developer support, and distribution via the Microsft(R) bCentral(TM)
small-business portal. Further, Microsoft and the Company have created an open
structure that allows for other strategic and equity participants.
On March 3, 2000, the Company finalized an agreement with America Online, Inc.
("AOL") and MovieFone, Inc., a subsidiary of AOL ("MF"), to form a strategic
relationship in the retail point of sale business. This relationship, among
other aspects, entails a ten-year marketing and development agreement whereby
the Company will develop and manufacture point of sale systems and services for
sale to the entertainment industry pursuant to MF's specifications, which will
make such point of sale systems interoperable with MF's remote entertainment and
event ticketing services. The relationship also contemplates future
collaborative efforts between the companies. As part of this relationship, AOL
purchased $10.0 million of the Company's common stock at a price of $15 per
share. In addition, AOL has agreed to invest $25.0 million in a to be formed
subsidiary of the Company to engage in consumer interactive businesses other
than in the entertainment industry (e.g., interactive fuel and dispenser
business and interactive restaurant self-ordering business). In return for its
investment, AOL will receive a 15% equity interest in the form of preferred
stock of this subsidiary. To the extent AOL does not invest $25.0 million in the
to be formed subsidiary, AOL has agreed to invest the balance in another to be
formed subsidiary of the Company or purchase common stock of the Company at the
then current market price.
On March 30, 2000 the Company and the former sole shareholder of RapidFire
reached an agreement whereby the Company paid to the former shareholder $200,000
and forgave a $1.5 million note receivable, and in return, was relieved in full
of its indebtedness to the shareholder. This indebtedness consisted of a
noninterest-bearing note with a lump-sum payment of $6.0 million due October 31,
2005 ($4.3 million at December 31, 1999) and was issued October 31, 1997 as part
of the Company's acquisition of RapidFire. As a result of this early
extinguishment of debt, the Company recorded an
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extraordinary gain of approximately $1.5 million, net of tax, during the first
quarter ended March 31, 2000.
5. Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standard No. 133, "Accounting for Derivative Instruments
and Hedging Activities" (FAS 133). This statement establishes accounting and
reporting standards for derivative instruments, including certain derivative
instruments embedded in other contracts, and for hedging activities. The
Company will be required to adopt FAS 133 for the quarter ended March 31, 2001.
The Company does not expect the adoption to have a material impact on its
results of operations.
In December 1999, the Securities and Exchange Commission (the "SEC") issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition." SAB No. 101
does not change existing accounting literature on revenue recognition, but
rather explains the SEC staff's general framework for revenue recognition. SAB
No. 101 states that changes in accounting to apply the guidance in SAB No. 101
may be accounted for as a change in accounting principle and must be recorded in
the second quarter of 2000. The Company is currently reviewing its revenue
recognition policy but does not expect the adoption of SAB No. 101 to have a
material impact on the Company results of operations.
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Item 2. Management's Discussion and Analysis of Financial Condition and Results
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of Operations
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Overview
Radiant Systems, Inc. (the "Company" or "Radiant") provides enterprise-wide
technology solutions to businesses that serve the consumer. The Company offers
fully integrated retail automation solutions including point of sale systems,
consumer-activated ordering systems, back office management systems,
headquarters-based management systems and Web-enabled decision support systems.
The Company's products provide integrated, end-to-end solutions that span from
the consumer to the supply chain. The Company's products enable retailers to
interact electronically with consumers, capture data at the point of sale,
manage site operations, analyze data, communicate electronically with their
sites, and interact with vendors through electronic data interchange and Web-
based marketplaces. The Company also develops and markets a variety of
intelligent, Windows CE based devices that are specific to the retail industry.
In addition, the Company offers professional services focusing on technical
implementation, process improvement and change management as well as hardware
maintenance services and 24-hour help desk support.
The Company derives its revenues primarily from the sale of integrated systems,
including software, hardware and related support and consulting services. In
addition, the Company offers implementation and integration services which are
billed on a per diem basis. The Company's revenues from its various technology
solutions are, for the most part, dependent on the number of installed sites a
client has. Accordingly, while the typical sale is the result of a long,
complex process, the Company's clients usually continue installing additional
sites over an extended period of time. Revenues from software and systems sales
are recognized as products are shipped, provided that collection is probable and
no significant post shipment vendor obligations remain. Revenues from client
support, maintenance and other services are generally recognized as the service
is performed.
In 1999, the Company began developing its new generation of management systems
products-- WAVE. This product architecture is designed to combine and expand the
functionality of its Site Management Systems and Headquarter-Based Management
Systems. The Company's architecture and platforms for these products are
entirely web-based, which the Company believes will enable it to increase the
functionality while decreasing the costs of implementing and maintaining
technology solutions for retailers. Additionally, the Company has extended its
WAVE technology to include web-enabled, centrally hosted management software and
integrated purchasing software built around industry-specific marketplaces.
Management believes that these products will strengthen its product offerings by
providing integrated, end-to-end solutions that span from the consumer to the
supply chain.
The Company intends to offer its WAVE software through the application service
provider, or "ASP", delivery model. In the ASP delivery model, the Company
would remotely host applications from an offsite central server that users can
access over dedicated lines, virtual private networks or the Internet.
Additionally, the Company plans to offer the product through installations
directly in client locations as "client-hosted" systems. The Company also
intends to offer Internet solutions that will allow its clients to utilize the
Internet to enhance site management and conduct business-to-business e-commerce.
The Company is continuing to develop its WAVE solution and to establish
strategic relationships to facilitate these product offerings.
In connection with its strategy to develop ASP-delivered products, the Company
announced in April 2000 that it plans to begin converting certain new and
existing products to a subscription-based pricing model. Under this
subscription-pricing model, clients will pay a fixed, monthly fee for use of the
Company's site
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and headquarters solutions and the computer hardware necessary to utilize those
applications and solutions. This represents a change in the Company historical
pricing model in which clients were charged an initial licensing fee for use of
the Company's products and continuing maintenance and support over the license
period. The Company intends to begin offering its products and services on the
subscription-pricing model in the second quarter of 2000. The Company will
initially continue to derive a majority of its revenue from its traditional
sales model of one-time software license revenues, hardware sales and software
maintenance and support fees that will be paid by its existing clients. However,
as a result of the transition to the subscription-pricing model, the Company
expects to see a decline in the one-time revenues from software license fees and
hardware sales, replaced over time by monthly subscription fees. In addition,
the Company expects revenue from maintenance and support from existing clients
to decline and to be replaced by subscription fees as existing clients convert
to the subscription-pricing model. The Company expects the percentage of revenue
that is recurring in nature to increase substantially as a result of the change
to a subscription-pricing model.
This change in the Company's product strategy to develop and offer ASP-delivered
and Internet solutions and the transition to a subscription-pricing model
involve certain risks and assumptions. There can be no assurance that the
Company will successfully implement these changes in its organization, product
strategy or pricing model or that the changes will not have a material adverse
effect on the Company's business, financial condition or results of operations.
Subsequent to March 31, 2000 the Company effected a 3-for-2 stock split. This
split was effective April 1, 2000 and had no effect on the accompanying
financial statements.
Results of Operations
Three months ended March 31, 2000 compared to three months ended March 31, 1999
System Sales. The Company derives the majority of its revenues from sales and
licensing fees for its headquarters, back office management and point of sale
solutions. Systems sales increased 22.6% to $21.1 million for the quarter ended
March 31, 2000 (the "first quarter 2000"), compared to $17.2 million for the
quarter ended March 31, 1999 (the "first quarter 1999"). The increase related to
sales and license fees from new and existing clients.
Client Support, Maintenance and Other Services. The Company also derives
revenues from client support, maintenance and other services, which increased
60.3% to $11.3 million for the first quarter 2000, compared to $7.0 million for
the first quarter 1999. The increase was due to increased support, maintenance
and other services revenues within its existing markets resulting from increased
system sales. Additionally, increased client demand for professional services
such as training, custom software development, project management and
implementation services contributed to this increase.
Cost of Systems Sales. Cost of systems sales consists primarily of hardware and
peripherals for site-based systems and labor. These costs are expensed as
products are shipped. Cost of system sales increased 17.7% to $10.0 million for
the first quarter 2000, compared to $8.5 million for the first quarter 1999. The
increase was attributable to the increase in systems sales. Cost of systems
sales as a percentage of systems revenues decreased to 47.3% from 49.2%. The
decrease was due primarily to increases in software sales as a percentage of
total system revenues and increased efficiencies associated with the manufacture
of site-based systems. Additionally, amortization of capitalized software
development costs increased 61.9% to $470,000 for the first quarter 2000,
compared to $179,000 during the first quarter 1999.
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Cost of Client Support, Maintenance and Other Services. Cost of client support,
maintenance and other services consists primarily of personnel and other costs
associated with the Company's services operations. Cost of client support,
maintenance and other services increased 48.0% to $8.7 million for the first
quarter 2000 from $5.9 million for the first quarter 1999. The increase was due
primarily to the Company's expansion of its professional service offerings and
the related increase in wages associated with this effort. Cost of client
support, maintenance and other services as a percentage of client support,
maintenance and other services revenues decreased to 77.2% from 83.6%, due to
increased efficiencies and staff utilization.
Product Development Expenses. Product development expenses consist primarily of
wages and materials expended on product development efforts. Product
development expenses decreased 14.9% to $2.2 million for the first quarter 2000,
compared to $2.6 million for the first quarter 1999. The decrease was due
primarily to higher capitalization of software costs associated with the
Company's development of its WAVE and Lighthouse generation of products. In the
first quarter 2000, software development costs of $1.0 million, or 31.3% of its
total product development costs were capitalized by the Company as compared to
$853,000, or 24.9% of its total product development costs for the first quarter
1999. Product development expenses as a percentage of total revenues decreased
to 6.8% from 10.6%, as total revenues increased at a faster pace than associated
product development expenses.
Sales and Marketing Expenses. Sales and marketing expenses was virtually
unchanged at $2.9 million during both the first quarter 2000 and the first
quarter 1999. Sales and marketing expenses as a percentage of total revenues
decreased to 8.9% from 12.1% as revenues grew at a faster pace than associated
sales and marketing expenses.
Depreciation and Amortization. Depreciation and amortization expenses increased
16.4% to $1.6 million for the first quarter 2000, compared to $1.4 million for
the first quarter 1999. The increase resulted from an increase in computer
equipment and other assets required to support an increased number of employees.
Depreciation and amortization as a percentage of total revenues decreased to
5.0% from 5.7% during the period, as total revenues increased at a pace higher
than associated personnel costs.
General and Administrative Expenses. General and administrative expenses
increased 7.0% to $3.4 million for the first quarter 2000, compared to $3.2
million for the first quarter 1999. The increase was due primarily to personnel
increases needed to support additional revenues. General and administrative
expenses as a percentage of total revenues decreased to 10.4% from 13.0% as
revenues increased a faster rate than associated personnel and related expenses.
Interest Income, Net. Interest income, net increased 106.1% to $707,000 for the
first quarter 2000, compared to $343,000 for the first quarter 1999. The
Company's interest income is derived from the investment of its cash and cash
equivalents. The increase in net interest income resulted primarily as a
result of an increase in cash and cash equivalents from an average cash balance
of $28.4 million during the first quarter 1999 to an average cash balance of
$55.5 million during the first quarter 2000. See--"Liquidity and Capital
Resources".
Income Tax Provision. The Company recorded a tax provision of 40.0% in both
the first quarter 1999 and the first quarter 2000.
Extraordinary Item. On March 30, 2000, the Company and the former sole
shareholder of RapidFire reached an agreement whereby the Company paid to the
former shareholder $200,000 and forgave a $1.5 million note receivable, and in
return, was relieved in full of its indebtedness to the shareholder. This
indebtedness consisted of a noninterest-bearing note with a lump-sum payment of
$6.0 million due
11
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October 31, 2005 ($4.3 million at December 31, 1999) and was issued October 31,
1997 as part of the Company's acquisition of RapidFire. As a result of this
early extinguishment of debt, the Company recorded an extraordinary gain of
approximately $1.5 million, net of tax, during the first quarter 2000. No such
item was recorded in the first quarter 1999.
Net Income. Net income for the first quarter 2000 was approximately $4.1
million, or $0.21 per diluted share compared to $124,000, or $0.01 per diluted
share in the first quarter 1999. Excluding the extraordinary gain described
above, net income for the first quarter 2000 was approximately $2.6 million, or
$0.15 per diluted share compared to $124,000, or $0.01 per diluted share, in the
first quarter 1999.
Liquidity and Capital Resources
As of March 31, 2000, the Company had $57.6 million in cash and cash equivalents
and working capital of $78.1 million. As more fully described in Note 4 of the
condensed consolidated financial statements, on March 3, 2000 AOL purchased
$10.0 million of the Company's stock at a price of $15 per share and may invest
an additional $25.0 million in a to be formed subsidiary of the Company at a
later date. Additionally, on March 1, 2000, the Company and Microsoft
Corporation jointly announced, subject to execution of a definitive agreement,
that both companies have joined forces to develop and market an integrated Web-
enabled management system and supply chain solution to enable retailers to
conduct business-to-business e-commerce over the Internet. In addition to
agreeing to make an equity investment in the Company, Microsoft committed to
support the Company's technology solution through joint marketing programs,
funding for product development, consulting services, developer support, and
distribution via the Microsoft(R) bCentral(TM) small-business portal.
Cash used in operating activities in the first quarter 2000 was $1.5 million
compared to cash provided by operating activities of $6.4 million during the
first quarter 1999. In the first quarter 2000, cash used in operating activities
was primarily due to increases in accounts receivables as well as decreased
accounts payable and accrued liabilities due to timing of certain vendor
payments. Additionally, client deposits and unearned revenues decreased during
the first quarter 2000 as the Company delivered products and or services
previously paid by clients. In the first quarter 1999, the Company provided cash
from operating activities primarily due to decreased accounts receivables and
inventories along with increased accounts payable and accrued liabilities due to
timing of certain vendor payments. Additionally, client deposits and unearned
revenues increased during the first quarter 1999 as the Company received cash in
advance of delivering products and/or services.
Cash used in investing activities during the first quarter 2000 was $5.3 million
due primarily to the purchases of property and equipment of $4.3 million. This
purchase was comprised primarily from the Company's exercise of an option to
purchase land adjacent to its Alpharetta, Georgia headquarters for approximately
$4.1 million. A portion of this land was then resold to a developer for
approximately $800,000 in order to begin construction on a multi-story office
building scheduled for occupancy by the Company in early 2001. Additionally,
during the first quarter 2000, the Company capitalized software costs of $1.0
million associated primarily with its continued development of its WAVE
products. The uses of cash in investing activities for the first quarter 1999
consisted primarily of the purchases of property and equipment for approximately
$729,000 and capitalized software costs of $853,000.
Cash of $11.0 million was provided by financing activities during the first
quarter 2000 due primarily to cash received from AOL's purchase of $10.0 million
of the Company's stock at a price of $15 per share, as more fully described in
Note 4 of the condensed consolidated financial statements, and from the exercise
of employee stock options of $1.3 million. Cash of $810,000 was provided by
financing activities during the first quarter 1999 due primarily to cash
received from the exercise of employee stock
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options of $1.3 million offset by the Company's purchase of common stock from
shareholders for approximately $514,000.
Forward-Looking Statements
Certain statements contained in this filing are "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act of 1995, such
as statements relating to financial results and plans for future business
development activities, and are thus prospective. These statements appear in a
number of places in this filing and include all statements that are not
statements of historical fact regarding intent, belief or current expectations
of the Company, its directors or its officers with respect to, among other
things: (i) the Company's financing plans; (ii) trends affecting the Company's
financial condition or results of operations; (iii) the Company's growth
strategy and operating strategy (including the development of its products and
services); and (iv) the declaration and payment of dividends. The words "may,"
"would," "could," "will," "expect," "estimate," "anticipate," "believe,"
"intend," "plans," and similar expressions and variations thereof are intended
to identify forward-looking statements. Investors are cautioned that any such
forward-looking statements are not guarantees of future performance and involve
risks and uncertainties, many of which are beyond the Company's ability to
control. Actual results may differ materially from those projected in the
forward-looking statements as a result of various factors. Among the key risks,
assumptions and factors that may affect operating results, performance and
financial condition are the Company's reliance on a small number of customers
for a larger portion of its revenues, fluctuations in its quarterly results,
ability to continue and manage its growth, liquidity and other capital resources
issues, competition and the other factors discussed in detail in the Company's
Form 10-K filed with the Securities and Exchange Commission, including the "Risk
Factors", therein.
Item 3. Quantitative and Qualitative Disclosures About Market Risks
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The Company's financial instruments that are subject to market risks are its
cash and cash equivalents. During the first quarter 2000, the weighted average
interest rate on its cash balances was approximately 5.88%. A 10.0% decrease in
this rate would impact interest income by approximately $71,000.
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PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
- -----------------------------------------
(a) Exhibits.
The following exhibit is filed with this Report:
10.1 Securities Purchase Agreement dated as of March 3, 2000 by
and between Radiant Systems, Inc. and American Online, Inc.
10.2 Marketing and Development Agreement dated as of March 3,
2000 by and among Radiant Systems, Inc., American Online,
Inc. and AOL MovieFone, Inc.**
27.1 Financial Data Schedule
** Confidential treatment has been requested for certain
confidential portions of this exhibit pursuant to Rule 24b-2
under the Securities Exchange Act of 1934, as amended. In
accordance with this rule, these confidential portions have
been omitted from this exhibit and filed separately with the
Securities and Exchange Commission.
(b) Reports on Form 8-K
No reports on Form 8-K were filed during the quarter ended
March 31, 2000
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 thereunto duly authorized.
RADIANT SYSTEMS, INC
Dated: May 14, 2000 By: /s/ John H. Heyman
--------------------- --------------------------------------
John H. Heyman, Executive
Vice President and Chief Financial Officer
(Duly authorized officer and principal
financial officer)
14
<PAGE>
EXHIBIT INDEX
Exhibit Number Description of Exhibit
- -------------- ----------------------
10.1 Securities Purchase Agreement dated as of March 3, 2000
by and between Radiant Systems, Inc. and American
Online, Inc.
10.2 Marketing and Development Agreement dated as of March
3, 2000 by and among Radiant Systems, Inc., American
Online, Inc. and AOL MovieFone, Inc.**
27.1 Financial Data Schedule
** Confidential treatment has been requested for certain confidential portions
of this exhibit pursuant to Rule 24b-2 under the Securities Exchange Act of
1934, as amended. In accordance with this rule, these confidential portions
have been omitted from this exhibit and filed separately with the Securities
and Exchange Commission.
15
<PAGE>
Exhibit 10.1
EXHIBIT 10.1 Execution Copy
SECURITIES PURCHASE AGREEMENT
This Securities Purchase Agreement, dated as of March 3, 2000 (this
"Agreement"), is entered into by and between Radiant Systems, Inc., a Georgia
corporation (the "Company"), and America Online, Inc., a Delaware corporation
(the "Purchaser").
RECITALS
--------
A. The Company and the Purchaser (collectively, the "Parties") have
established a strategic relationship and have executed and delivered a Marketing
and Development Agreement of even date herewith (the "Marketing Agreement").
B. As part of the Parties' strategic relationship and to provide the
Company with additional resources to conduct its business, the Purchaser is
willing to purchase from the Company, and the Company is willing to issue and
sell to the Purchaser, on the terms and subject to the conditions set forth
herein, at the closing specified herein, 666,667 shares (the "Shares") of the
common stock, par value $.001 per share, of the Company (the "Common Stock").
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing, and the representations,
warranties, covenants and conditions set forth below, and other good and
valuable consideration, the receipt and sufficiency of which is hereby
acknowledged, the Parties hereto, intending to be legally bound, hereby agree as
follows:
1. Purchase and Sale of the Shares
-------------------------------
(a) Purchase and Sale. In reliance upon the representations,
-----------------
warranties and covenants of the parties set forth herein, and subject to
satisfaction of the conditions set forth in Section 1(c) hereof and the other
terms set forth herein, the Company agrees to issue, sell and deliver to the
Purchaser, and the Purchaser agrees to purchase from the Company, at the Closing
(as defined below), the Shares for an aggregate purchase price of $10,000,000
(the "Purchase Price").
(b) Delivery of the Shares; Payment of Purchase Price. At the
-------------------------------------------------
Closing, the Company shall deliver to the Purchaser certificates representing
the Shares and take all other actions necessary to reflect the ownership of the
Shares by the Purchaser on the books and records of the Company, and the
Purchaser shall pay the Purchase Price by wire transfer of immediately available
funds to an account designated by the Company on Schedule A hereto.
(c) Conditions. (i) The obligations of the Purchaser under this
----------
Section 1 to be performed at the Closing are subject to satisfaction of the
following conditions:
1
<PAGE>
(A) The representations and warranties of the Company contained
in this Agreement shall be true and correct, in all material respects, at and as
of the Closing, and the Company shall have performed and complied with all the
covenants and agreements and satisfied all the conditions required by this
Agreement to be performed or compiled with or satisfied by the Company at or
prior to the Closing. The Purchaser shall have received a certificate dated as
of the date of the Closing and signed by the President of the Company stating
that, to the best of his knowledge after due inquiry, the conditions specified
in this Section 1(c)(i)(A) and in Section 1(c)(i)(D) hereof have been satisfied.
(B) The Marketing Agreement shall have been executed and
delivered by the Company.
(C) The Company shall have received all consents and approvals
of parties necessary for the Company to consummate the transactions contemplated
hereby and by the Marketing Agreement.
(D) The Purchaser shall have received from the Company such
other documents confirming the accuracy and completeness of the representations
and warranties of the Company set forth herein as the Purchaser may reasonably
request.
(ii) The obligations of the Company under this Section 1 to be
performed at the Closing shall be subject to satisfaction of the following
conditions:
(A) The representations and warranties of the Purchaser
contained in this Agreement shall be true and correct, in all material respects,
at and as of the Closing, and the Purchaser shall have performed and complied
with all the covenants and agreements and satisfied all the conditions required
by this Agreement to be performed or compiled with or satisfied by the Purchaser
at or prior to the Closing.
(B) The Marketing Agreement shall have been executed and
delivered by the Purchaser.
(C) The Purchaser shall have received all consents and approvals
of third parties necessary for the Purchaser to consummate the transactions
contemplated hereby and by the Marketing Agreement.
(D) The Company shall have received from the Purchaser such
other documents confirming the accuracy and completeness of the representations
and warranties of the Purchaser set forth herein as the Company may reasonably
request.
(d) Closing. The closing with respect to the purchase and sale of the
-------
Shares (the "Closing") shall take place at the offices of Arnold & Porter, 555
Twelfth Street, N.W., Washington, D.C. 20004 on the second Business Day
following the execution of this Agreement or on such other date as may be agreed
by the Parties (the "Closing Date"). The parties may participate in the Closing
through facsimile transmission of documents.
2
<PAGE>
(e) Registration Rights. The Purchaser shall have the registration
-------------------
rights specified in Registration Rights Statement attached hereto as Exhibit A.
2. Representations and Warranties of the Company. The Company hereby
---------------------------------------------
represents and warrants to the Purchaser that, except as set forth in the
Company's Disclosure Schedule attached to this Agreement as Exhibit B (the
"Disclosure Schedule"), the statements contained in the following paragraphs of
this Section 2 are all true and correct:
(a) Organization and Good Standing; Articles of Incorporation and
-------------------------------------------------------------
Bylaws; Subsidiaries. Each of the Company and each of its material subsidiaries
- --------------------
is a corporation duly organized, validly existing and in good standing under the
laws of its jurisdiction of incorporation or organization and has all requisite
corporate power and authority to carry on its business as now conducted and
proposed to be conducted. Each of the Company and each of its subsidiaries is
duly qualified to conduct business as a foreign corporation and is in good
standing as a foreign corporation in all jurisdictions where the properties
owned, leased or operated by it are located or where its business is conducted,
except where the failure to so qualify or be in good standing is not reasonably
likely to have a material adverse effect on the business, financial condition,
results of operations, assets, liabilities or prospects of the Company and its
subsidiaries taken as a whole (a "Material Adverse Effect"). The Company has
previously delivered to the Purchaser a true and complete copy of the Articles
of Incorporation and Bylaws of the Company as in effect on the date hereof. The
Company does not own more than a five- percent equity or other ownership
interest in, or otherwise control, any corporation, partnership, limited
partnership, limited liability company or other entity.
(b) Corporate Power. The Company has all requisite legal and
---------------
corporate power to enter into, execute, deliver and perform its obligations
under this Agreement. This Agreement is a valid and binding obligation of the
Company, enforceable in accordance with its terms.
(c) Authorization, Etc.
------------------
(i) Corporate Action. All corporate and legal action on the
----------------
part of the Company, its officers, directors and stockholders necessary for the
execution and delivery of this Agreement, the issuance and sale of the Shares,
and the performance of the Company's other obligations hereunder, has been
taken.
(ii) Valid Issuance. The Shares, upon their issuance pursuant
--------------
to this Agreement, will be validly issued, fully-paid and nonassessable.
(iii) No Preemptive Rights. No person has any right of first
--------------------
refusal or any preemptive or similar right in connection with the issuance of
the Shares or the issuance of any other securities by the Company.
(d) Noncontravention. Neither the execution, delivery and
----------------
performance of and compliance with this Agreement nor the issuance and sale of
the
3
<PAGE>
Shares hereunder will result in or constitute any breach, default or violation
of (i) any agreement, contract, lease, license, equipment lease, instrument or
commitment (oral or written) to which the Company or any of its subsidiaries is
a party or is bound or (ii) any law, rule, regulation, statute or order
applicable to the Company or any of its subsidiaries or their respective
properties, nor result in the creation of any mortgage, pledge, lien,
encumbrance or charge upon any of the properties or assets of the Company or any
of its subsidiaries, any of which breach, default or violation would have a
Material Adverse Effect or (iii) the Company's Articles of Incorporation or By-
laws.
(e) Consents, Etc. No consent, approval, order or authorization of,
--------------
or designation, registration, declaration or filing with, any federal, state,
local or provincial or other governmental authority or other person on the part
of the Company or any of its subsidiaries is required in connection with the
valid execution, delivery or performance of this Agreement (including without
limitation the offer, sale or issuance of the Shares), other than, if required,
filings or qualifications under applicable state securities laws, which filings
or qualifications, if required, will be timely filed or obtained by the Company
or its subsidiaries.
(f) Offering. In reliance, in part, on the representations and
--------
warranties of the Purchaser in Section 3 hereof, neither the offer, sale nor
issuance of the Shares in conformity with the terms of this Agreement will
result in a violation of the requirements of Section 5 of the Securities Act of
1933, as amended, (the "Securities Act"), or the qualification or registration
requirements of any applicable state securities laws.
(g) Capitalization. (i) Section 2(h) of the Disclosure Schedule sets
--------------
forth the authorized, issued and outstanding capitalization of the Company as of
the date hereof, and all of the issued and outstanding shares of capital stock
reflected therein have been duly authorized and validly issued, are fully paid
and nonassessable and have been offered, issued, sold and delivered by the
Company in compliance with all applicable federal and state securities laws and
without violating any right of first refusal or any preemptive or any similar
right of any person.
(ii) Options, Warrants, Reserved Shares. Except as disclosed in
----------------------------------
the Company's most recent definitive proxy statement filed with the SEC, there
are no outstanding options, warrants, rights (including conversion or preemptive
rights) or agreements for the purchase or acquisition from the Company of any
shares of the Company's capital stock or any securities convertible into or
ultimately exchangeable or exercisable for any shares of the Company's capital
stock, nor is the Company obligated in any manner to issue any shares of its
capital stock or any other securities.
(h) Financial Statements and Related Matters. The Company's
----------------------------------------
consolidated balance sheet and consolidated statements of operations, cash flows
and changes in stockholders' equity for the year ended December 31, 1998 and the
Company's consolidated balance sheet and consolidated statements of operations
and cash flows for the nine months ended September 30, 1999 (collectively, the
"Financial Statements"), each as filed by the Company with the Securities and
Exchange Commission (the "SEC") on Form 10-K on March 31, 1999 and on Form 10-Q
on
4
<PAGE>
November 15, 1999, respectively, have been prepared in accordance with generally
accepted accounting principles consistently applied (except as may be noted
therein). Furthermore, the Financial Statements are complete and correct in all
material respects and accurately set out and describe in all material respects
the consolidated financial condition, results of operations, cash flows or
changes in stockholders' equity of the Company and its subsidiaries as of the
date or for the period indicated. There has been no material change in the
Company's accounting policies except as described in the notes to the Financial
Statements. Except as set forth in the Financial Statements, neither the Company
nor any of its subsidiaries has any indebtedness, obligation or liability
(contingent or otherwise) that, either alone or when combined with all similar
obligations or liabilities, would be material to the Company and its
subsidiaries taken as a whole, and there does not exist a set of circumstances
that, to the knowledge of the Company, could reasonably be expected to result in
any such material indebtedness, obligation or liability. Since December 31,
1998, there has been no material adverse change in the consolidated business,
financial condition, results of operations, assets, liabilities or prospects of
the Company or its subsidiaries. The Company has made all filings (the "SEC
Filings") with the SEC required under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), or the Securities Act. None of the SEC Filings, as
of their respective date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(i) Compliance with Laws. Neither the Company nor any of its
--------------------
subsidiaries is (i) subject to the terms or provisions of any material judgment,
decree, order, writ or injunction or (ii) in violation of any terms or
provisions of any laws, rules, or regulations, except where such violations do
not and are not likely to have a Material Adverse Effect.
(j) Proprietary Assets.
------------------
(i) Each of the Company and its subsidiaries (A) owns or has
sufficient rights in and to all Proprietary Assets (as defined below) used in or
necessary for its business as currently conducted and as proposed to be
conducted, free and clear of all material liens and other encumbrances; and (B)
has taken reasonable and customary measures and precautions necessary to protect
and maintain the confidentiality and secrecy of all its Proprietary Assets
(except the Proprietary Assets whose value would be unimpaired by public
disclosure) and otherwise to maintain and protect the value of all its
Proprietary Assets.
(ii) Except where such infringement, misappropriation or
unlawful use has not or could not reasonably be expected to have a Material
Adverse Effect, neither the Company nor any of its subsidiaries is infringing,
misappropriating or making any unlawful use of or has at any time infringed,
misappropriated or made any unlawful use of, any Proprietary Asset owned or used
by any other Person (as defined below); and no claims or notices (in writing or
otherwise) with respect to Proprietary Assets have been communicated to the
Company or any of its subsidiaries: (A) to the effect that the manufacture,
sale, license or use of any Proprietary Assets as now used or currently offered
or proposed for use or sale by the Company or any of its subsidiaries
5
<PAGE>
infringes or potentially infringes, or constitutes a misappropriation or
unlawful use of any patent, trademark, trade name, service mark, copyright,
maskwork, trade secret or other proprietary or intellectual property right of a
third party, or (B) challenging the ownership or validity of any of the rights
of the Company or any of its subsidiaries to or their interest in such
Proprietary Assets. Neither the Company nor any of its subsidiaries has received
any notice to the effect that any patents or registered trademarks, service
marks or copyrights held by the Company or any of its subsidiaries are invalid
or not subsisting. To the Company's knowledge, no other Person is infringing,
misappropriating or making any unlawful use of, and no Proprietary Asset owned
or used by any other Person infringes or conflicts with, any Proprietary Asset
used in or pertaining to the business of the Company or any of its subsidiaries.
(iii) The Proprietary Assets used in or pertaining to the
business of the Company and its subsidiaries as currently conducted and as
proposed to be conducted are sufficient to enable the Company and its
subsidiaries to conduct its business in the manner in which such business has
been and is being conducted free from liabilities or valid claims of
infringement or misappropriation by third parties. Neither the Company nor any
of its subsidiaries has licensed any of its Proprietary Assets to any Person on
an exclusive basis or entered into any covenant not to compete or contract
limiting its ability to sell its products or services in any market or
geographical area or with any Person other than restrictions in a license
agreement that are typical of those granted in the ordinary course of business
in its industry.
(iv) As used herein, "Proprietary Assets" means: (A) any
patent, patent application, trademark (whether registered or unregistered),
trademark application, trade name, fictitious business name, service mark
(whether registered or unregistered), service mark application, copyright
(whether registered or unregistered), copyright application, maskwork, maskwork
application, trade secret, know-how, customer list, franchise, system, computer
software, computer program, source code, databases, invention, design,
blueprint, engineering drawing, proprietary product, technology, or other
proprietary or intellectual property right or intangible asset, in any medium in
whole or in part; and (B) any right to use or exploit any of the foregoing.
(v) As used herein, "Person" means a natural person, a
corporation, a partnership, a trust, a joint venture, any governmental entity or
any other entity or organization.
(k) No Brokers. Neither the Company nor, to the Company's knowledge,
----------
any Company stockholder is obligated for the payment of fees or expenses of any
broker or finder in connection with the origin, negotiation or execution of this
Agreement or in connection with any transaction contemplated hereby.
(l) Y2K. The Company has reviewed its and its subsidiaries'
---
operations and those of any third parties with which the Company or any of its
subsidiaries has a material relationship to evaluate the extent to which the
business or operations of the Company or any of its subsidiaries will be
affected by the Year 2000 Problem; as a result of such review, the Company has
no reason to believe, and does not believe, that the Year
6
<PAGE>
2000 Problem will have a Material Adverse Effect or result in any material loss
or interference with the Company's or its subsidiaries' business or operations.
The "Year 2000 Problem" as used herein means any significant risk that computer
hardware or software used in the receipt, transmission, processing,
manipulation, storage, retrieval, retransmission or other utilization of data or
in the operation of mechanical or electrical systems of any kind will not, (i)
properly execute with all date data, whether from years in the same century or
different centuries, including by yielding correct results in arithmetic
operations, comparisons and sorting of date fields and in leap year
calculations, and (ii) continue to operate without abnormally ceasing to execute
or returning an error message due to date-related processing.
3. Representations and Warranties of the Purchaser. The Purchaser
-----------------------------------------------
represents, and warrants to, and covenants with, the Company as follows:
(a) Investment Intent; Authority. The Purchaser is acquiring the
----------------------------
Shares for investment for the Purchaser's own account, and not as nominee or
agent for investment and not with a view to or for resale in connection with any
distribution or public offering thereof within the meaning of the Securities
Act. The Purchaser has the full right, power, authority and capacity to enter
into and perform this Agreement and this Agreement will constitute a valid and
binding obligation upon the Purchaser.
(b) Shares Not Registered. The Purchaser understands and acknowledges
---------------------
that the issuance and sale of the Shares hereunder has not been registered under
the Securities Act or qualified under any state securities laws in reliance upon
one or more exemptions from registration or qualification under the Securities
Act and such state securities laws, and that the Company's reliance upon such
exemption is predicated upon the Purchaser's representations set forth in this
Agreement. The Purchaser understands and acknowledges that resale of the Shares
may be restricted indefinitely unless they are subsequently registered under the
Securities Act and qualified under state law or an exemption from such
registration and such qualification is available.
(c) Accredited Investor. The Purchaser is an "accredited investor"
-------------------
within the meaning of SEC Rule 501, as presently in effect.
4. Covenants.
---------
(a) Restrictions on Additional Purchases of Company Stock. The
-----------------------------------------------------
Purchaser hereby agrees that until the third anniversary of the date hereof the
Purchaser shall not purchase or otherwise acquire any shares of the capital
stock of the Company other than the Shares, provided that the foregoing
restriction shall not apply with respect to any shares of capital stock of the
Company purchased or acquired by the Purchaser (i) as a stock dividend or
distribution or as part of a stock split, recapitalization or similar
transaction or merger or other business combination transaction involving the
Company, (ii) if as a result of such acquisition the percentage of the
outstanding Common Stock
7
<PAGE>
beneficially owned by the Purchaser (determined in accordance with SEC Rule 13d-
3) does not exceed the maximum percentage of such outstanding Common Stock
beneficially owned by the Purchaser at any time prior to such acquisition, (iii)
after any material breach by the Company of its obligations under the Marketing
Agreement, or (iv) after the occurrence of a Change of Control Event or delivery
of an Insider Sale Notice.
(b) Restrictions on Sales of the Shares. The Purchaser hereby agrees
-----------------------------------
that for a period of 13 months after the date hereof, the Purchaser will not
sell or otherwise dispose of any of the Shares, provided that the foregoing
restriction shall not apply with respect to any sale or disposition (i) to an
affiliate of the Purchaser who agrees to be bound by this Section 4(b), (ii)
effected after any material breach by the Company of its obligations under
Article 2, Article 3 or Section 10.2 of the Marketing Agreement, or (iii)
effected after the occurrence of a Change of Control Event or delivery of an
Insider Sale Notice with respect to such sale or disposition.
(c) Notice of Insider Sale. The Company hereby agrees to provide
----------------------
written notice to the Purchaser at least ten (10) days prior to any Insider Sale
("Insider Sale Notice").
(d) Definitions. (i) As used herein, "Change of Control Event" means
-----------
any of the following:
(A) any person or group of persons acting together, excluding
employee benefit plans of the Company, commences a tender offer to acquire or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of the Company representing twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding securities; provided,
however, the acquisition of more than twenty-five percent (25%) of the combined
voting power of the Company's then outstanding securities by Erez Goren or by
Alon Goren shall not constitute a Change of Control Event;
(B) the Company's Board of Directors approves a merger,
consolidation, share exchange, division or other reorganization or transaction
of the Company (a "Fundamental Transaction") with any other corporation, other
than a Fundamental Transaction which would result in the holders of the
Company's voting securities outstanding immediately before the Fundamental
Transaction continuing after the Fundamental Transaction to own greater than 60%
of the outstanding voting securities of (i) the Company, (ii) the surviving
entity in the Fundamental Transaction, or (iii) in the case of a division, each
entity resulting from the division;
(C) the Board of Directors of the Company approves a plan of
complete liquidation or winding-up of the Company or an agreement for the sale
or disposition (in one transaction or a series of transactions) of all or
substantially all of the assets of the Company or any of its "Significant
Subsidiaries" (as such term is defined in Regulation S-X under the Exchange
Act); or
8
<PAGE>
(D) during any period of twenty-four consecutive months,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (including for this purpose any new director whose
election or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board of Directors of the Company.
(ii) As used herein, "Insider Sale" means any sale or other
disposition of shares of the capital stock of the Company by any officer or
director of the Company that together with any other sales or dispositions by
all other officers or directors of the Company occurring after the Closing
results in such person or persons selling or otherwise disposing of 25% or more
of the total voting securities of the Company issued and outstanding as of the
Closing.
(iii) As used herein, "Principal Market" means the New York
Stock Exchange, the American Stock Exchange, or NASDAQ, whichever is at the time
the principal trading market for the Common Stock (or any similar organization
or agency succeeding such market or exchange's functions or reporting prices).
5. Miscellaneous.
-------------
(a) Waivers and Amendments. Any provision of this Agreement may be
----------------------
amended, waived or modified upon the written consent of the Company and the
Purchaser.
(b) Governing Law. This Agreement and all actions arising out of or
-------------
in connection with this Agreement shall be governed by and construed in
accordance with the laws of the Commonwealth of Virginia, without regard to the
conflict of laws provisions of the Commonwealth of Virginia or of any other
state.
(c) Entire Agreement. This Agreement, together with the Exhibits
----------------
hereto, constitute the full and entire understanding and agreement between the
Parties with regard to the subjects hereof and thereof.
(d) Expenses. Each Party shall be responsible for and pay all costs
--------
and expenses, including attorney's fees and accountants' fees, that it incurs in
connection with the drafting and negotiation of this Agreement and the
consummation of the transactions contemplated hereby, including without
limitation the obtaining of any necessary and required governmental approvals.
(e) Confidentiality. The provisions of Article 9 of the Marketing
---------------
Agreement shall apply to this Agreement as if this Agreement were part of the
Purchase Agreement.
(f) Notices. All notices, requests and other communications hereunder
-------
shall be in writing and shall be deemed to have been duly given at the time of
receipt if
9
<PAGE>
delivered by hand or by facsimile transmission or three days after being mailed,
registered or certified mail, return receipt requested, with postage prepaid to
the applicable parties hereto at the address stated below or if any party shall
have designated a different address or facsimile number by notice to the other
party given as provided above, then to the last address or facsimile number so
designated.
If to the Company:
3925 Brookside Parkway
Alpharetta, GA 30022
Attention: John Heyman, Executive Vice President
Facsimile: 770-360-7325
with a copy to:
Smith, Gambrell & Russell, LLP
1230 Peachtree Street, NE
Suite 3100
Atlanta, GA 30309
Attention: Richard G. Greenstein, Esq.
Facsimile: 404-815-3509
If to the Purchaser:
Dulles, VA 20166
2200 AOL Way
Attention: President, Business Affairs/General Counsel
Facsimile: (703) 265-1202/(703) 265-2208
with a copy to:
Arnold & Porter
555 Twelfth Street, N.W.
Washington, D.C. 20004-1206
Attention: Robert B. Ott, Esq.
Facsimile: (202) 942-5999
(g) Validity. If any provision of this Agreement shall be
--------
judicially determined to be invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions thereof shall not in any
way be affected or impaired thereby.
(h) Counterparts. This Agreement may be executed in any number of
------------
counterparts, and a Party's delivery of a signed counterpart by facsimile
transmission shall constitute that Party's due execution of this Agreement.
10
<PAGE>
(i) Business Day. As used herein, "Business Day" means any day other
------------
than a Saturday, Sunday or other day on which the national or state banks
located in the Commonwealth of Virginia are authorized to be closed.
11
<PAGE>
IN WITNESS WHEREOF, the parties have executed and delivered this Agreement
as of the date and year first written above.
RADIANT SYSTEMS, INC.
By: /s/ John Heyman
-------------------------------
Name: John Heyman
----------------------------
Title: Chief Financial Officer
----------------------------
AMERICA ONLINE, INC.
By: /s/ David M. Colburn
-------------------------------
Name: David M. Colburn
-----------------------------
Title: President, Business Affairs
-----------------------------
12
<PAGE>
EXHIBIT 10.1 Execution Copy
EXHIBIT A
---------
REGISTRATION RIGHTS STATEMENT
This Registration Rights Statement (this "Statement") sets forth the
registration rights granted by Radiant Systems, Inc. (the "Company") to America
Online, Inc. (the "Purchaser") under the Securities Purchase Agreement dated as
of March ____, 2000 by and between the Company and the Purchaser (the "Purchase
Agreement"). Capitalized terms defined in the Purchase Agreement and used
herein without definition have the same meanings herein as in the Purchase
Agreement.
In consideration of the agreements of the Purchaser contained in the
Purchase Agreement, the Company hereby grants to the Purchaser the rights set
forth herein:
1. Definitions. For purposes of this Statement:
-----------
(a) "Affiliate" has the meaning specified in Commission Rule
144(a)(i).
(b) "Change of Control Event" means any of the following:
(i) any person or group of persons acting together, excluding
employee benefit plans of the Company, commences a tender offer to acquire or
becomes the "beneficial owner" (as defined in Rules 13d-3 and 13d-5 under the
Exchange Act or any successor provisions thereto), directly or indirectly, of
securities of the Company representing twenty-five percent (25%) or more of the
combined voting power of the Company's then outstanding securities; provided,
however, the acquisition of more than twenty-five percent (25%) of the combined
voting power of the Company's then outstanding securities by Erez Goren or by
Alon Goren shall not constitute a Change of Control Event;
(ii) the Company's Board of Directors approves a merger,
consolidation, share exchange, division or other reorganization or transaction
of the Company (a "Fundamental Transaction") with any other corporation, other
than a Fundamental Transaction which would result in the voting securities of
the Company outstanding immediately prior thereto continuing to represent
(either by remaining outstanding or by being converted into voting securities of
the surviving entity) at least sixty percent (60%) of the combined voting power
immediately after such Fundamental Transaction of (A) the Company's outstanding
securities, (B) the surviving entity's outstanding securities, or (C) in the
case of a division, the outstanding securities of each entity resulting from the
division;
(iii) the Board of Directors of the Company approves a plan of
complete liquidation or winding-up of the Company or an agreement for the sale
or disposition (in one transaction or a series of transactions) of all or
substantially all of the assets of the Company or any of its "Significant
Subsidiaries" (as such term is defined in Regulation S-X under the Exchange
Act); or
<PAGE>
(iv) during any period of twenty-four consecutive months,
individuals who at the beginning of such period constituted the Board of
Directors of the Company (including for this purpose any new director whose
election or nomination for election by the Company's shareholders was approved
by a vote of at least two-thirds (2/3) of the directors then still in office who
were directors at the beginning of such period) cease for any reason to
constitute at least a majority of the Board of Directors of the Company.
(c) "Commencement Date" means the earlier of (i) thirteen (13) months
from the Closing Date under the Purchase Agreement and (ii) the date on which a
Change of Control Event or Insider Sale occurs.
(d) "Commission" means the Securities and Exchange Commission or any
successor.
(e) "Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute.
(f) "Insider Sale" means any sale or other disposition of shares of
the capital stock of the Company by any officer or director of the Company that
together with any other sales or dispositions by all other officers or directors
of the Company occurring after the Closing results in such person or persons
selling or otherwise disposing of 25% or more of the total voting securities of
the Company issued and outstanding as of the Closing.
(g) "Investors" means (i) the Purchaser, (ii) any Affiliate of the
Purchaser or its successor and (iii) any person or entity to whom the Purchaser
or any person or entity identified in clause (ii) of this Section 1(g) is
permitted to sell, transfer or assign any of its Registrable Securities, other
than in a sale pursuant to Rule 144 under the Securities Act or a registration
effected pursuant to this Agreement.
(h) "Register," "registered," and "registration" refer to a
registration effected by preparing and filing with the Commission a registration
statement or similar document in compliance with the Securities Act, and the
declaration or ordering by the Commission of effectiveness of such registration
statement or document.
(i) "Registration Expenses" means all expenses in connection with the
Company's performance of or compliance with its obligations under this
Statement, including, without limitation, all (i) registration, qualification
and filing fees; (ii) fees, costs and expenses of compliance with securities or
blue sky laws; (iii) printing expenses; (iv) messenger, telephone and delivery
expenses incurred by the Company; (v) fees, expenses and disbursements of
counsel for the Company and of all independent certified public accountants
retained by the Company (including the expenses of any special audit and "cold
comfort" letters required by or incident to such performance); (vi) Securities
Act liability insurance if the Company so desires; (vii) fees, expenses and
disbursements of any other individuals or entities retained by the Company in
connection with the registration of the Registrable Securities; (viii) fees,
costs and expenses incurred in
2
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connection with the listing of the Registrable Securities on each national
securities exchange or automated quotation system on which the Company has made
application for the listing of its Common Stock; and (ix) internal expenses of
the Company (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties and expenses of any
annual audit). Registration Expenses shall not include selling commissions,
discounts or other compensation paid to underwriters or other agents or brokers
to effect the sale of Registrable Securities, or counsel fees and any other
expenses incurred by Investors in connection with any registration that are not
specified in the immediately preceding sentence.
(j) "Registrable Securities" means (i) the Shares issued pursuant to
the Purchase Agreement or (ii) shares of Common Stock or other securities of the
Company issued as a dividend or other distribution on or in exchange for any of
the Shares specified in clause (i).
(k) "Securities Act" means the Securities Act of 1933, as amended, or
any successor statute.
2. Demand Registration. If at any time after the Commencement Date
-------------------
Investors holding more than twenty-five percent (25%) of the Registrable
Securities submit a written request (a "Demand Notice") to the Company that the
Company register Registrable Securities under and in accordance with the
Securities Act (a "Demand Registration"), then the Company shall:
(a) within ten (10) days after receipt of such Demand Notice, give
written notice of the proposed registration to all other Investors; and
(b) as soon as practicable, use diligent efforts to effect such
registration as may be so requested and as would permit or facilitate the sale
and distribution of all or such portion of such Registrable Securities as are
specified in such request, together with all or such portion of the Registrable
Securities of any Investors joining in such request as are specified in written
requests received by the Company within 20 days after the date the Company mails
the written notice referred to in clause (i) above.
Notwithstanding the foregoing, if the Company shall furnish to the Investors a
certificate signed by the chief executive officer or president of the Company
stating that in the good faith judgment of the board of directors of the
Company, it would be materially detrimental to the Company or its stockholders
for a registration statement to be filed on or before the date filing would be
required in connection with any Demand Registration and it is therefore
essential to defer the filing of such registration statement, the Company shall
have the right to defer such filing or delay its effectiveness for a reasonable
period not to exceed ninety (90) days provided that such right shall not be
exercised more than once with respect to a request for registration hereunder.
(c) Underwriting. In connection with any registration under this
------------
Section 2, if so requested by the Investor requesting such registration, the
Company shall enter into an underwriting agreement with one or more underwriters
selected by the
3
<PAGE>
Investor (and reasonably acceptable to the Company) requesting such registration
having terms and conditions customary for such agreements.
(d) Shelf Registration. If at the time the Company registers the
------------------
Registrable Securities under the Securities Act pursuant to this Section 2, the
sale or other disposition of such Registrable Securities by the Investors may be
made pursuant to a registration statement on Form S-3 (or any successor form
that permits the incorporation by reference of future filings by the Company
under the Exchange Act), such registration statement, unless otherwise directed
by the Investor requesting such registration, shall be filed as a "shelf"
registration statement pursuant to Rule 415 under the Securities Act (or any
successor rule). Any such shelf registration shall cover the disposition of all
Registrable Securities in one or more underwritten offerings, block
transactions, broker transactions, at-market transactions and in such other
manner or manners as may be specified by the Investor requesting such
registration. The Company shall use its best efforts to keep such "shelf"
registration continuously effective as long as the delivery of a prospectus is
required under the Securities Act in connection with the disposition of the
Registrable Securities registered thereby and in furtherance of such obligation,
shall supplement or amend such registration statement if, as and when required
by the rules, regulations and instructions applicable to the form used by the
Company for such registration or by the Securities Act or by any other rules and
regulations thereunder applicable to shelf registrations. On one occasion
during each twelve months such shelf registration statement remains effective,
upon their receipt of a certificate signed by the chief executive officer or
president of the Company in accordance with the last paragraph of Section 2(b)
hereof, the Investors will refrain from making any sales of Registrable
Securities under the shelf registration statement for a period of up to 60 days;
provided that this right to cause the Investors to refrain from making sales
shall not be exercised by the Company during the one year period following any
exercise of the Company's right to defer the filing or delay its effectiveness
of a registration statement under the last paragraph of Section 2(b).
(e) Limitation on Number of Registrations. The Company shall not be
-------------------------------------
required to effect more than one registration under this Section 2, provided,
however, that if either the Company determines that an Investor is an Affiliate
of the Company or an Investor provides the Company with an opinion of counsel
reasonably acceptable to the Company to the effect that there is a substantial
possibility that such Investor may be deemed to be an Affiliate of the Company,
then the limitation contained in this Section 2(e) shall no longer apply.
4
<PAGE>
3. Company Registration.
--------------------
(a) Notice of Registration. If at any time or from time to time, the
----------------------
Company shall determine to register any of its Common Stock, whether or not for
its own account, other than a registration relating to employee benefit plans or
a registration effected on Form S-4 (or its successor) ("Company Registration"),
the Company shall:
(i) provide to each Investor written notice thereof at least ten
(10) days prior to the filing of the registration statement by the Company in
connection with such registration; and
(ii) include in such registration, and in any underwriting
involved therein, all those Registrable Securities specified in a written
request by each Investor received by the Company within five (5) days after the
Company mails the written notice referred to above, subject to the provisions of
Section 3(b) below.
(b) Underwriting. The right of any Investor to registration pursuant
------------
to this Section 3 shall be conditioned upon the participation by such Investor
in the underwriting arrangements specified by the Company in connection with
such registration and the inclusion of the Registrable Securities of such
Investor in such underwriting to the extent provided herein. All Investors
proposing to distribute their Registrable Securities through such underwriting
shall (together with the Company) enter into an underwriting agreement in
customary form with the managing underwriter selected for such underwriting by
the Company and take all other actions, and deliver such opinions and
certifications, as may be reasonably requested by such managing underwriter.
Notwithstanding any other provision of this Section 3, if the managing
underwriter determines that marketing factors require a limitation of the number
of shares to be underwritten, the managing underwriter may limit the number of
Registrable Securities to be included in such registration. The Company shall
so advise all Investors distributing Registrable Securities through such
underwriting, and there shall be excluded from such registration and
underwriting, to the extent necessary to satisfy such limitation, shares held by
the Investors. As among the Investors as a group, the number of Registrable
Securities that may be included in the registration and underwriting shall be
allocated in proportion, as nearly as practicable, to the respective amounts of
Registrable Securities required to be included (determined without regard to any
requirement of a request to be included in such registration) in such
registration held by all Investors at the time of filing the registration
statement. To facilitate the allocation of shares in accordance with the above
provisions, the Company may round the number of shares allocated to any Investor
to the nearest one hundred (100) shares.
(c) Right to Terminate Registration. The Company shall have the right
-------------------------------
to terminate or withdraw any registration initiated by it under this Section 3
prior to the effectiveness of such registration whether or not any Investor has
elected to include Registrable Securities in such registration.
Limitation on Number of Registrations. The Company shall not be
-------------------------------------
required to effect more than two (2) registrations pursuant to this Section 3,
provided,
5
<PAGE>
however, that if either the Company determines that an Investor is an Affiliate
of the Company or an Investor provides the Company with an opinion of counsel
reasonably acceptable to the Company to the effect that there is a substantial
possibility that such Investor may be deemed to be an Affiliate of the Company,
then the limitation contained in this Section 3(d) shall no longer apply.
4. Expense of Registration. All Registration Expenses incurred in
-----------------------
connection with the registration and other obligations of the Company pursuant
to Sections 2, 3 and 5 shall be borne by Company.
5. Registration Procedures. If and whenever the Company is required by
-----------------------
the provisions of this Statement to effect the registration of Registrable
Securities, the Company shall:
(a) promptly prepare and file with the Commission a registration
statement with respect to such Registrable Securities, and use its reasonable
diligent efforts to cause such registration statement to become effective as
promptly as practicable and remain effective thereafter as provided herein,
provided that prior to filing a registration statement or prospectus or any
amendments or supplements thereto, including documents incorporated by reference
after the initial filing of any registration statement, the Company will furnish
to each of the Investors whose Registrable Securities are covered by such
registration statement, their counsel and any underwriters copies of all such
documents proposed to be filed sufficiently in advance of filing to provide them
with a reasonable opportunity to review such documents and comment thereon;
(b) prepare and file with the Commission such amendments (including
post-effective amendments) and supplements to such registration statement and
the prospectus used in connection therewith as may be necessary to keep such
registration statement effective and current and to comply with the provisions
of the Securities Act with respect to the sale or other disposition of all
Registrable Securities covered by such registration statement, including such
amendments (including post-effective amendments) and supplements as may be
necessary to reflect the intended method of disposition by the prospective
seller or sellers of such Registrable Securities;
(c) continue the effectiveness of such registration as provided in
Section 2(d) hereof where such registration statement relates to a shelf
registration or in all other cases for a period of 180 days from the effective
date of such registration statement;
(d) subject to receiving reasonable assurances of confidentiality, for
a reasonable period after the filing of such registration statement, and
throughout each period during which the Company is required to keep a
registration effective, make available for inspection by the selling holders of
Registrable Securities being offered, and any underwriters, and their respective
counsel, such financial and other information and books and records of the
Company, and cause the officers, directors, employees, counsel and independent
certified public accountants of the Company to respond to such inquiries as
shall be reasonably necessary, in the judgment of such counsel, to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
6
<PAGE>
(e) promptly notify the selling holders of Registrable Securities and
any underwriters and confirm such advice in writing, (i) when such registration
statement or the prospectus included therein or any prospectus amendment or
supplement or post-effective amendment has been filed, and, with respect to such
registration statement or any post-effective amendment, when the same has become
effective, (ii) of any comments by the Commission, by the National Association
of Securities Dealers Inc. ("NASD"), and by the blue sky or securities
commissioner or regulator of any state with respect thereto or any request by
any such entity for amendments or supplements to such registration statement or
prospectus or for additional information, (iii) of the issuance by the
Commission of any stop order suspending the effectiveness of such registration
statement or the initiation or threatening of any proceedings for that purpose,
(iv) if at any time the representations and warranties of the Company cease to
be true and correct in all material respects, (v) of the receipt by the Company
of any notification with respect to the suspension of the qualification of the
Registrable Securities for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose, or (vi) at any time when a
prospectus is required to be delivered under the Securities Act, that such
registration statement, prospectus, prospectus amendment or supplement or post-
effective amendment, or any document incorporated by reference in any of the
foregoing, contains an untrue statement of a material fact or omits to state any
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they are made, not
misleading;
(f) furnish to each selling holder of Registrable Securities being
offered, and any underwriters, prospectuses or amendments or supplements
thereto, in such quantities as they may reasonably request and as soon as
practicable, that update previous prospectuses or amendments or supplements
thereto;
(g) use reasonable diligent efforts to (i) register or qualify the
Registrable Securities to be included in a registration statement hereunder
under such other securities laws or blue sky laws of such jurisdictions within
the United States of America as any selling holder of such Registrable
Securities or any underwriter of the securities being sold shall reasonably
request, (ii) keep such registrations or qualifications in effect for so long as
the registration statement remains in effect and (iii) take any and all such
actions as may be reasonably necessary or advisable to enable such holder or
underwriter to consummate the disposition in such jurisdictions of such
Registrable Securities owned by such holder; provided however, that the Company
shall not be required for any such purpose to (x) qualify generally to do
business as a foreign corporation in any jurisdiction wherein it would not
otherwise be required to qualify but for the requirements of this Section 5(g),
(y) subject itself to taxation in any such jurisdiction or (z) consent to
general service of process in any such jurisdiction;
(h) cause all such Registrable Securities to be listed or accepted for
quotation on each securities exchange or automated quotation system on which the
Company's Common Stock then trades; and
(i) otherwise use reasonable diligent efforts to comply with all
applicable provisions of the Securities Act, and rules and regulations of the
Commission,
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<PAGE>
and make available to its security holders, as soon as reasonably practicable,
an earnings statement covering a period of at least twelve months which shall
satisfy the provisions of Section 11(a) of the Securities Act and Rule 158
thereunder.
6. Indemnification. In the event any of the Registrable Securities are
---------------
included in a registration statement under this Statement:
(a) the Company will indemnify each Investor who participates in such
registration, each of its officers, directors, partners and agents, and each
person controlling such Investor within the meaning of Section 15 of the
Securities Act, and each underwriter, if any, and each person who controls any
underwriter within the meaning of Section 15 of the Securities Act, against all
expenses, claims, losses, damages or liabilities (or actions in respect
thereof), including any of the foregoing incurred in settlement of any
litigation, commenced or threatened, arising out of or based on any untrue
statement (or alleged untrue statement) of a material fact contained in any
registration statement, prospectus, offering circular or other document, or any
amendment or supplement thereto, incident to any such registration,
qualification or compliance, or based on any 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 were made,
not misleading, or any violation by the Company of any rule or regulation
promulgated under the Securities Act applicable to the Company in connection
with any such registration, qualification or compliance, and the Company will
reimburse each such Investor, each of its officers, directors, partners and
agents and each person controlling such Investor, each such underwriter and each
person who controls any such underwriter, for reasonable legal fees actually
incurred and other expenses incurred by them in connection with investigating,
preparing or defending any such claim, loss, damage, liability or action,
provided that the Company will not be liable in any such case to the extent that
any such claim, loss, damage, liability or expense arises out of or is based on
any untrue statement or omission or alleged untrue statement or omission, made
in reliance upon and in conformity with written information furnished to the
Company by an instrument duly executed by such Investor or underwriter.
(b) Each Investor will, if Registrable Securities held by such
Investor are included in the securities as to which such registration,
qualification or compliance is being effected, indemnify the Company, each of
its officers, directors, partners and agents, each underwriter, if any, of the
Company's securities covered by such a registration statement, each person who
controls the Company or such underwriter within the meaning of Section 15 of the
Securities Act, and each other such Investor, each of its officers, directors,
partners and agents and each person controlling such Investor within the meaning
of Section 15 of the Securities Act, against all expenses, claims, losses,
damages and liabilities (or actions in respect thereof) arising out of or based
on any untrue statement (or alleged untrue statement) of a material fact
contained in any such registration statement, prospectus, offering circular or
other document, or any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the statement
therein not misleading, and will reimburse the Company, such Investors, such
directors, officers, persons, underwriters or control persons for any legal or
any other expenses reasonably incurred in connection with investigating or
8
<PAGE>
defending any such claim, loss, damage, liability or action, in each case to the
extent, but only to the extent, that such untrue statement (or alleged untrue
statement) or omission (or alleged omission) is made in such registration
statement, prospectus, offering circular or other document in reliance upon and
in conformity with written information furnished to the Company by an instrument
duly executed by such Investor.
(c) Each party entitled to indemnification under this Section 6 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought provided
that failure to give such prompt notice shall not relieve the Indemnifying Party
of its obligations hereunder unless it is materially prejudiced thereby, and
shall permit the Indemnifying Party to assume the defense of any such claim or
any litigation resulting therefrom, provided that counsel for the Indemnifying
Party, who shall conduct the defense of such claim or litigation, shall be
approved by the Indemnified Party (whose approval shall not unreasonably be
withheld). Such Indemnified Party shall have the right to employ separate
counsel in any such action and to participate in the defense thereof, but the
fees and expenses of such counsel shall be that of such Indemnified Party unless
(i) the Indemnifying Party has agreed to pay such fees and expenses or (ii) the
Indemnifying Party shall have failed to assume the defense of such action or
proceeding and employ counsel reasonably satisfactory to such Indemnified Party
in any such action or proceeding or (iii) the named parties to any such action
or proceeding (including any impleaded parties) include both such Indemnified
Party and the Indemnifying Party and such Indemnified Party shall have been
advised by counsel that there may be one or more legal defenses available to
such Indemnified Party which are different from or additional to those available
to the Indemnifying Party (in which case, if such Indemnified Party notifies the
Indemnifying Party in writing of an election to employ separate counsel at the
expense of the Indemnifying Party, the Indemnifying Party shall not have the
right to assume the defense of such action or proceeding on behalf of such
Indemnified Party, it being understood, however, that the Indemnifying Party
then shall have the right to employ separate counsel at its own expense and to
participate in the defense thereof, and shall not, in connection with any one
such action or proceeding or separate but substantially similar or related
actions or proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the reasonable fees and expenses of
more than one separate firm of attorneys at any time for all Indemnified
Parties, which firm shall be designated in writing by a majority of the
Indemnified Parties who are eligible to select such counsel). No Indemnifying
Party, in the defense of any such claim or litigation, shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect to such claim or litigation. No Indemnified Party may
consent to entry of any judgment or enter into any settlement without the prior
written consent of the Indemnifying Party.
(d) If the indemnification provided for in this Section 6 is held by a
court of competent jurisdiction to be unavailable to an Indemnified Party with
respect to any loss, liability, claim, damage or expense referred to herein,
then the Indemnifying Party, in lieu of indemnifying the Indemnified Party,
shall contribute to the amount paid
9
<PAGE>
or payable by such Indemnified Party with respect to such loss, liability,
claim, damage or expenses in the proportion that is appropriate to reflect the
relative fault of the Indemnifying Party and the Indemnified Party in connection
with the statements or omissions that resulted in such loss, liability, claim,
damage, or expense, as well as any other relevant equitable considerations. The
relative fault of the Indemnifying Party and the Indemnified Party shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of material fact or the omission to state a material fact
relates to information supplied by the Indemnifying Party or by the Indemnified
Party, and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
7. Rule 144 Reporting. With a view to making available the benefits of
------------------
certain rules and regulations of the Commission which may at any time permit the
sale of the Registrable Securities to the public without registration, for as
long as Registrable Securities are held by any Investor, the Company shall use
reasonably diligent efforts to:
(a) Make and keep public information available, as those terms are
understood and defined in Rule 144 under the Securities Act; or
(b) File with the Commission in a timely manner all reports and other
documents required of the Company under the Securities Act and the Exchange Act
(at any time after it has become subject to such reporting requirements).
8. Termination of Registration Rights. No Investor shall be entitled to
----------------------------------
exercise any right provided for in this Statement after the earlier of ten (10)
years following the Commencement Date and such time as all Registrable
Securities held by such Investor may be sold under Rule 144 (or any successor
rule) under the Securities Act within a single three-month period.
9. Information To Be Provided by the Investors. Each Investor whose
-------------------------------------------
Registrable Securities are included in any registration pursuant to this
Agreement shall furnish the Company such information regarding such Investor and
the distribution proposed by such Investor as may be reasonably requested in
writing by the Company and as shall be required in connection with such
registration or the registration or qualification of such securities under any
applicable state securities law.
10. Miscellaneous.
-------------
(a) Amendments and Waivers. The provisions of this Statement,
--- ----------------------
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to depart from the provisions hereof may
not be given unless the Company has obtained the written consent of holders of a
majority of the Registrable Securities then subject to this Statement.
Notwithstanding the foregoing, a waiver or consent to departure from the
provisions hereof with respect to a matter which relates exclusively to the
rights of Investors whose Registrable Securities are being sold pursuant to a
registration statement and which does not directly or indirectly affect the
10
<PAGE>
rights of other Investors may be given by the holders of a majority of the
Registrable Securities being sold by such holders.
(b) Notices. All communications provided for hereunder shall be sent
-------
by registered or certified mail, reputable overnight delivery service or
facsimile transmission. Communications to the Purchaser shall be sent to the
Purchaser at its address set forth in the Purchase Agreement and communications
sent to any Investor other than the Purchaser shall be sent to such Investor at
its address in the security register or other records of the Company.
Communications to the Company shall be sent to the Company as provided in the
Purchase Agreement.
(c) Descriptive Headings. The descriptive headings of the several
--------------------
Sections of this Statement are inserted for convenience only and do not
constitute a part of this Statement.
(d) Governing Law. This Statement shall be construed and enforced in
-------------
accordance with, and the rights of the parties shall be governed by, the law of
the Commonwealth of Virginia as applied to agreements entered into and wholly
performed in Virginia, without giving effect to the choice of law or conflicts
principles thereof.
(e) Part of Purchase Agreement. This Statement constitutes a part of
--------------------------
the Purchase Agreement and is subject to all provisions thereof.
(f) Severability. Any provision of this Statement that is prohibited
------------
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
11
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED Execution Copy
EXHIBIT 10.2
MARKETING AND DEVELOPMENT AGREEMENT
This MARKETING AND DEVELOPMENT AGREEMENT (the "Agreement"), dated
March 3, 2000 (the "Effective Date"), is entered into by and among America
Online, Inc., a Delaware corporation with its principal place of business at
22000 AOL Way, Dulles, VA 20166 ("AOL"), AOL MovieFone, Inc., a Delaware
corporation with its principal place of business at 335 Madison Avenue, 27th
Floor, New York, NY 10017 ("MF"), and Radiant Systems, Inc., a Georgia
corporation with its principal place of business at 1000 Alderman Drive, Suite
A, Alpharetta, GA 30202 ("RS").
WHEREAS, as part of a strategic relationship among the Parties and to
provide RS with additional resources to conduct its business, AOL and RS have
executed and delivered a Securities Purchase Agreement of even date herewith
(the "Securities Agreement");
WHEREAS, the Parties wish to set forth the terms and conditions of
their strategic relationship involving the marketing of POS Systems and Remote
Ticketing Services to the Entertainment Segment (including providing certain
rights in favor of MF with respect to the Initial Enhanced POS System and the
New API) and joint exploration of integrated POS and Interactive Service end-to-
end solutions;
NOW, THEREFORE, in consideration of the mutual promises and covenants
contained in this Agreement, and intending to be legally bound hereby, the
Parties agree as follows:
ARTICLE 1
DEFINITIONS
In addition to other terms defined elsewhere herein, the following
terms will have the following meanings when used herein (any term defined in the
singular will have the same meaning when used in the plural and vice versa,
unless stated otherwise):
1.1 "Affiliate" of any specified Person means any other Person that
---------
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with the specified Person. For the
purposes of this definition, control means the direct or indirect ownership or
control of fifty percent (50%) or more of the stock or other equity interests of
such Person entitled to vote for the election of members of the Board of
Directors or similar governing body of such Person; provided, however, that such
Person shall cease to be an Affiliate if and when such equity interest becomes
less than fifty percent (50%) for any reason other than as a result of dilution,
and provided, further, that if such equity interest becomes less than fifty
percent (50%) as a result of dilution, such Person shall cease to be an
Affiliate if and when such percentage equity interest is further reduced for any
reason other than as a result of dilution.
1.2 "AOL Brand Service" means the U.S. version of the America
-----------------
Online(R) brand commercial online service.
<PAGE>
1.3 "AOL Indemnitee" has the meaning set forth in Section 11.1.
--------------
1.4 "AOL Equity" has the meaning set forth in Section 5.1.3.
----------
1.5 "API" means an application program interface containing all
---
information necessary to interface with an application program, including how
initiation and termination are performed, what interface protocol is used, what
information is being sent and received, timing requirements and other relevant
attributes of the interface.
1.6 "ATMs" means automatic ticket machines for ticketing of Venues
----
and any other specialized hardware and associated software now or hereafter
manufactured or distributed by or on behalf of RS or its Affiliates for use in
connection with a POS System.
1.7 "Compuserve Brand Service" means the U.S. version of the
------------------------
Compuserve(R) brand commercial online service.
1.8 "Confidential Information" has the meaning set forth in Section
------------------------
9.1.
1.9 "Consumer Interactive POS Systems" means RS POS Systems located
--------------------------------
on retail premises that permit consumers to access the products and services of
Interactive Services, and the associated revenue opportunities (including
customer acquisition commissions, information and coupon dispensing and
advertising), except RS POS Systems that permit consumers to access solely
Internet web pages owned and controlled by the retailer upon whose premises such
RS POS System is located. The Parties acknowledge that excluded from this
definition are, among other things, retail systems that do not permit consumers
to access the products and services of Interactive Services, including RS POS
Systems that use the Internet as a means of connectivity and are neither
accessible to consumers nor used to provide data to consumers (i.e., POS Systems
used by the employees of businesses to account for or facilitate the retail sale
of goods and services).
1.10 "Customer" means a purchaser or lessee of an RS Entertainment
--------
POS System, Enhanced POS System or any component thereof (e.g., an ATM).
1.11 "DCI Brand Service" means the U.S. version of the Digital
-----------------
City(R) brand commercial online service.
1.12 "Deliverables" means reports, designs, computer software (in
------------
source code and object code form), documentation, drawings, inventions,
discoveries, works of authorship, know-how, other technology and other work
products developed, created or delivered by or on behalf of RS or its Affiliates
in connection with the provision of Services.
1.13 "Disclosing Party" has the meaning set forth in Section 9.1.
----------------
1.14 "DSI" means DSI Technology Escrow Services, Inc.
---
1.15 "Enhanced POS System" means the Initial Enhanced POS System and
-------------------
all POS Systems thereafter modified, marketed or distributed by or on behalf of
RS or its Affiliates for the Entertainment Segment.
2
<PAGE>
1.16 "Entertainment Segment" means Venues (excluding (i) restaurants
---------------------
and other establishments that primarily offer food, drink or beverage service to
persons not attending an entertainment event and (ii) gasoline stations and
other convenience stores).
1.17 "Exhibitor" means an entity that owns or operates a Venue where
---------
as an ordinary business activity motion pictures are exhibited or presented for
consumers.
1.18 "Incentive Plan" means Exhibit E attached hereto.
--------------
1.19 "Indemnitee" has the meaning set forth in Section 11.3.
----------
1.20 "Initial Enhanced POS System" has the meaning set forth in
---------------------------
Section 2.1.
1.21 "***" means the provision of an interactive experience to
---
consumers via a software application associated with a *** business, and the
associated revenue opportunities (including customer acquisition commissions,
information and coupon dispensing and advertising).
1.22 "***" means the provision of computer systems consisting of
---
hardware and/or software, or of an interactive experience, that provides
consumers the ability ***, and the associated revenue opportunities (including
customer acquisition commissions, information and coupon dispensing and
advertising).
1.23 "Interactive Service" means any entity that as a material part
-------------------
of its business offers one or more of the following: (i) online or Internet
connectivity services (e.g., an Internet service provider); (ii) a broad
selection of aggregated third party interactive content, including entities that
solely aggregate information related to Venues or sell tickets for Venues (or
navigation thereto); or (iii) communications software capable of serving as the
principal means through which a user creates, sends and receives electronic mail
or real time online messages.
1.24 "IVR Systems" means interactive voice system.
-----------
1.25 "Losses" means losses, liabilities, suits, claims, costs,
------
expenses (including reasonable attorneys' fees actually incurred), penalties,
fines, judgments and/or damages.
1.26 "Marketing Plan" means Exhibit D attached hereto.
--------------
1.27 "Mars" means the software known as "Mars" as distributed by MF
----
as of September 30, 1999.
1.28 "Mars Sequel" means the software known as "Mars Sequel" as
-----------
distributed by MF as of September 30, 1999.
- -------------------------------
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
3
<PAGE>
1.29 "MF Features" has the meaning set forth in Section 3.3.
-----------
1.30 "MF System" means the network, hardware, software, and
---------
networking and telephone equipment, but excluding the POS System, used by MF now
or hereafter to provide Remote Ticketing Services.
1.31 "Module" has the meaning set forth in Section 2.1.
------
1.32 "New API" means the API developed in accordance with Article 2
-------
that serves as an interface between Remote Ticketing Services and the Enhanced
POS System generally, and the MF System and the Enhanced POS System
specifically, including any modifications thereafter agreed by the parties.
1.33 "Other RS POS Systems" means all RS POS Systems other than the
--------------------
RS Entertainment POS System and the Enhanced POS System.
1.34 "Original Specifications" means the initial specifications
-----------------------
agreed to by the parties comprising substantially all of the features and
functionality of *** and *** with respect to the New API and the Initial
Enhanced POS System.
1.35 "Party" means AOL, MF or RS, and "Parties" means AOL, MF
----- -------
and RS.
1.36 "Person" means a natural person, a corporation, a partnership, a
------
trust, a joint venture, any governmental authority, or any other entity or
organization.
1.37 "POS System" means a computer system consisting of hardware
----------
and/or software (including associated APIs) that provides the ability to sell,
or account for the sale of, goods or services in a retail environment, including
an ATM.
1.38 "Receiving Party" has the meaning set forth in Section 9.1.
---------------
1.39 "Remote Ticketing Services" means the provision of information
-------------------------
(including event time listings), electronic ticketing and other commerce
services in the Entertainment Segment other than in person (such in person
services may include (i) kiosks, so long the sale features offered at the kiosk
are no greater than the services offered at the relevant Venue's box office, and
(ii) same day purchase of advance concessions) at the Venue of the event.
1.40 "RS API" means RS' application program interface for the RS
------
Entertainment POS System as it existed on the Term Sheet Effective Date.
1.41 "RS Covenant" has the meaning set forth in Section 4.9.
-----------
1.42 "RS Indemnitee" has the meaning set forth in Section 11.2.
-------------
- ------------------------------
***
Denotes information that has been omitted from this Exhibit pursuant
to a confidential treatment request filed with the Commission.
4
<PAGE>
1.43 "RS Entertainment POS System" means the POS System (including
---------------------------
all versions and configurations thereof) for the Entertainment Segment
developed, manufactured, marketed, distributed, sold or leased by or on behalf
of RS or its Affiliates, as such POS System exists on the Effective Date.
1.44 "RS POS Systems" means all POS Systems (including all versions
--------------
and configurations thereof) developed, manufactured, marketed, distributed, sold
or leased by or on behalf of RS or its Affiliates.
1.45 "Schedule" has the meaning set forth in Section 2.2.
--------
1.46 "Services" means any services to be performed or provided by RS
--------
or its Affiliates pursuant to this Agreement.
1.47 "Statement of Work" has the meaning set forth in Section 3.4.1.
-----------------
1.48 "Term" has the meaning set forth in Section 13.1.
----
1.49 "Term Sheet Effective Date" means August 1, 1999.
-------------------------
1.50 "Venture Sub" has the meaning set forth in Section 5.1.
-----------
1.51 "Venue" means a theater, stadium, performing arts center,
-----
concert venue, arena or any other establishment that as an ordinary and regular
business activity exhibits or presents motion pictures, plays, concerts, dance,
sports or any other live entertainment event.
ARTICLE 2
INITIAL DEVELOPMENT
2.1 Initial Enhanced POS System. RS shall, at its expense, design
---------------------------
and develop a POS System that incorporates into the RS Entertainment POS System
substantially the same functionality as is presently available in *** and ***
("Initial Enhanced POS System") in accordance with the Original Specifications.
Additionally and concurrently, RS shall, at its expense and in collaboration
with MF, design and develop the New API in accordance with the Original
Specifications, which shall enable and optimize all the features of *** and the
features developed for the ***. The New API shall be seamlessly integrated into
the Initial Enhanced POS System. Additionally, RS shall design and develop a
software module (the "Module") that will not provide such seamless integration
but can be used in connection with the RS Entertainment POS System with minimal
effort by its users to enable such users to enjoy the New API as an interface
between the RS Entertainment POS System and MF System.
- ---------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
5
<PAGE>
2.2 Development of Initial Enhanced POS System. RS shall design
------------------------------------------
and develop the Initial Enhanced POS System and New API in accordance with the
Statement of Work set forth in Exhibit A attached hereto. The Initial Enhanced
POS System, New API and Module shall be designed, developed and delivered to MF
in accordance with the schedule set forth in such Statement of Work (the
"Schedule"). The Initial Enhanced POS System and New API as designed and
developed shall comply with the specifications set forth in such Statement of
Work and the performance standards set forth in Exhibit B attached hereto. RS
shall provide MF quarterly reports of RS' performance relative to such
performance standards, in sufficient detail to allow MF reasonably to monitor
such performance. The Initial Enhanced POS System, New API and Module shall be
tested in accordance with Section 3.8 and RS agrees that the Initial Enhanced
POS System, New API, and Module shall have completed successfully all such
testing and be commercially available no later than the date set forth in the
Schedule for delivery to MF of the completed and successfully tested Initial
Enhanced POS System, New API and Module. RS agrees that all future versions of
the Enhanced POS System shall include (i) the features designed and developed as
a part of the Initial Enhanced POS System, and (ii) the New API. Additionally,
RS agrees to notify MF prior to modifying the New API, and agrees not to modify
the New API in a manner that impairs or degrades any functionality then
available in the New API.
2.3 RS Responsibility for Development. Notwithstanding AOL's and/or
---------------------------------
MF's participation in developing the Statement of Work and specifications
described in this Article 2 and the New API, RS shall be solely responsible for
the Services necessary to design and develop the Initial Enhanced POS System and
Module in accordance with the Original Specifications, schedules and other
requirements of this Agreement and the Statement of Work.
ARTICLE 3
ONGOING DEVELOPMENT, MAINTENANCE AND SUPPORT
3.1 Support and Maintenance. RS shall make available and provide
-----------------------
training, support and maintenance for the RS Entertainment POS System and Module
or Enhanced POS System to each Customer pursuant to a written agreement between
the Customer and RS. RS agrees to make such training, support and maintenance
available at commercially reasonable prices and to provide at least the minimum
levels of training, support and maintenance set forth in Exhibit C attached
hereto.
3.2 Ongoing Development of Enhanced POS System. RS shall throughout
------------------------------------------
the Term add to the Enhanced POS System features useful to or desired by
Customers as necessary to acquire Customers in accordance with the Marketing
Plan, as agreed from time to time among the Parties pursuant to Section 4.4(a)
of this Agreement. Additionally, RS shall cause the Enhanced POS System to
conform to the performance standards set forth in Exhibit B. Without limiting
the foregoing, the Parties agree that throughout the Term RS shall use
commercially reasonable efforts to ensure that the then-current version of the
Enhanced POS System contains features that are competitive with the ***. If
the Parties are not able to agree on the features of
- ---------------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
6
<PAGE>
the Enhanced POS System pursuant to Section 4.4(a) of this Agreement and MF
reasonably believes that (i) the Enhanced POS System is no longer competitive
with *** and (ii) RS has not made adequate plans to correct such lack of
competitiveness, and MF so notifies RS in writing, RS shall enhance the existing
features of, or develop new features for, the Enhanced POS System so as to make
the Enhanced POS System competitive within the earliest commercially reasonable
period of time, which period of time shall in no event shall exceed *** from the
day MF so notifies RS in writing. If the Enhanced POS System is not competitive
as required by this Section 3.2 within the *** time period set forth in the
preceding sentence, or if RS fails to provide to MF and AOL the prices for the
Enhanced POS System set forth in Exhibit D, then MF and AOL thereafter shall be
excused from all of their obligations set forth in Article 4 (except Section
4.4(b)).
3.3 MF Requested Development. MF may, from time to time,
------------------------
request that RS design and develop additional or enhanced features for the
Enhanced POS System, including modifications or enhancements to the New API (the
"MF Features") that are in addition to the features that RS is obligated to
provide pursuant to Sections 2.1, 2.2, 3.1 and 3.2. If so, RS and MF shall
prepare and agree upon a Statement of Work pursuant to Section 3.4.1 for the
development of such features. MF shall pay to RS for the Services performed to
design and develop the MF Features the lower of (i) cost plus *** percent (***%)
or (ii) ***, in accordance with Article 6.
3.4 Services.
--------
3.4.1 Statements of Work. When required by this Agreement, RS
------------------
and MF shall prepare, negotiate and agree upon a "Statement of Work." At a
minimum a Statement of Work shall include: (i) a description of and detailed
specifications for all Deliverables that are to be designed and developed under
the Statement of Work; (ii) a detailed schedule setting forth the time period
within which RS shall design, develop and deliver such Deliverables to MF,
including development milestones against which RS' performance and timeliness
may be measured; (iii) if appropriate, any acceptance criteria that will be used
to judge the conformance of such Deliverables to their specifications; (iv) if
appropriate, a not-to-exceed budget within which RS shall design, develop and
deliver such Deliverables; and (v) the rates, as governed by Section 6.1.1, MF
may be billed for the Services required to design and develop such Deliverables.
3.4.2 Provision of Services. Upon the execution of a Statement
---------------------
of Work (and upon execution of this Agreement in the case of the Statement of
Work attached hereto as Exhibit A), RS shall provide the Services specified in
the Statement of Work, in accordance with directions provided by MF, through
employees having a skill level appropriate for providing such Services. RS shall
use its best efforts to provide Services in as efficient a manner as reasonably
possible. RS represents and warrants that any independent contractor who
provides Services has executed an agreement providing protection for MF's and
AOL's Confidential
- ----------------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
7
<PAGE>
Information substantially similar to the protection afforded by Article 9 and
has agreed in writing to assign all right, title and interest it may possess in
and to any Deliverables to MF or RS, as appropriate.
3.5 Changes. MF may from time to time request changes to a Statement of
-------
Work, including the specifications, schedules, Deliverables and acceptance
criteria therein. Upon such a request, RS shall evaluate the impact of the
proposed change on the Statement of Work and, no later than ten business days
after receipt of such proposed change, shall prepare and deliver a written
estimate of the effect such proposed change has upon the Statement of Work. RS
shall use reasonable efforts to accommodate proposed changes within the existing
schedule and shall not unreasonably refuse to perform proposed changes. If MF
accepts the written estimate prepared by RS then the Statement of Work shall be
amended accordingly and all Services thereafter shall be in accordance with the
Statement of Work as so amended.
3.6 Delivery.
--------
3.6.1 Deliverables. RS shall deliver to MF all Deliverables to be
------------
delivered pursuant to each Statement of Work, including the Initial Enhanced POS
System (together with the New API) and the MF Features, on or before the
delivery date set forth in the applicable Statement of Work for such
Deliverables. All such Deliverables shall be delivered in the format agreed by
MF and RS. For all computer software RS shall provide the applicable executable
code and, unless otherwise requested by AOL and MF, provide such internally
prepared documentation concerning such software as is reasonably necessary to
enable AOL and MF personnel to operate such software.
3.6.2 Enhanced POS System. RS shall deliver to MF all versions of
-------------------
the Enhanced POS System and any new releases and updates or of the foregoing, at
least *** business days prior to any release or delivery to Customers or any
other third party. MF may test such Enhanced POS System, and RS promptly shall
correct any errors and nonconformities brought to its attention by MF.
3.6.3 New API. RS shall deliver to MF the New API and any
-------
modifications to the New API, which shall be compatible with the New API and
embody the New API, in a format agreed by MF and RS at least *** business days
prior to any release or delivery of any software or hardware that utilizes such
changes or revisions to any third party. MF may test such New API and any such
revisions or changes, and RS shall promptly correct any errors and
nonconformities brought to its attention by MF.
3.6.4 Module. RS shall deliver to MF the Module in a format agreed
------
by MF and RS on or before the date set forth in the Schedule for such delivery.
MF may test the Module, and RS shall promptly correct any errors and
nonconformities brought to its attention by MF.
- -----------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
8
<PAGE>
3.7 Acceptance Testing. All Deliverables delivered by RS to MF shall be
------------------
subject to acceptance or rejection by MF based on the requirements of this
Agreement and the applicable Statement of Work, including any acceptance
criteria set forth therein. Unless otherwise specified in a Statement of Work,
MF shall have 30 days after receipt of Deliverables to test and accept such
Deliverables or to reject such Deliverables as nonconforming by written notice
identifying the reason(s) for nonconformance. If MF rejects Deliverables as
nonconforming, RS shall at its expense correct such nonconformity and redeliver
such Deliverables to MF and MF shall again have the number of days set forth
above or in the Statement of Work to test and accept or reject the redelivered
Deliverables. This Section 3.7 shall not limit RS's ability to distribute
Deliverables after the ten day period set forth in Section 3.6.
3.8 Training, Support and Maintenance of Mars and Mars Sequel. MF may
---------------------------------------------------------
from time to time elect to have RS provide some or all installation, training,
support and maintenance for the Mars POS System and Mars Sequel POS System. RS
shall perform the installation, training, support and maintenance pursuant to
contracts between MF and Customer (and shall receive ***% of the payments
received by MF under such contracts for installation, training, support and
maintenance as complete and total satisfaction for such performance), unless MF
elects to have RS enter into contracts directly with some or all relevant
Customers. In either event, RS shall perform such installation, training,
support and maintenance in compliance with any relevant obligations set forth in
such contracts. RS only shall be obligated to perform installation, training,
support and maintenance under contracts for a term greater than one (1) year
that provide for payments by Customer that are at least equal to RS' standard
non-discounted maintenance fees for comparable services with respect to a
comparable RS POS System or Enhanced POS System and for which AOL or MF have
provided RS at least ninety (90) days notice before RS's services are to
commence.
3.9 RS Responsibility for Development. Notwithstanding AOL's and/or MF's
---------------------------------
participation in developing any Statements of Work and specifications pursuant
to this Article 3, RS shall be solely responsible for the Services necessary to
design and develop the Enhanced POS System and MF Features in accordance with
all applicable specifications, schedules and other requirements of this
Agreement and the Statement of Work; provided that the foregoing shall not limit
AOL's obligation to pay for Services performed pursuant to Section 3.3.
ARTICLE 4
STRATEGIC RELATIONSHIP
4.1 Marketing Plan. Beginning promptly after the Effective Date, the
--------------
Parties shall comply with their respective obligations under the Marketing Plan
set forth in Exhibit D. The Parties shall review the Marketing Plan at the
meetings scheduled pursuant to Section 4.4 and may from time to time agree in
writing to amend or replace the Marketing Agreement.
- ----------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
9
<PAGE>
4.2 Business Plan. During the Term the Parties shall develop and agree
-------------
upon a business plan, including funding requirements, for the provision of ***
and ***. Such business plan also shall be incorporated into the Marketing Plan.
4.3 Incentive Plan. MF shall provide to its employees and agents engaged
--------------
in the sale of its goods and services at least the incentives set forth in the
Incentive Plan in Exhibit E. The Parties shall review the Incentive Plan at the
meetings scheduled pursuant to Section 4.4 and may from time to time agree in
writing to amend or replace the Incentive Plan. On the first anniversary of the
Effective Date, and each year thereafter during the Term RS agrees to pay to MF
the amount necessary to reimburse MF for MF's costs under such Incentive Plan,
provided that RS shall not be obligated to pay to MF in any year more than the
amount owed to RS pursuant to Section 4.11 during the same year.
4.4 Strategic Meetings.
------------------
(a) During the first *** years of the Term, appropriate executives
of each of the Parties shall meet at least *** per *** to
discuss, among other things, the Marketing Plan and Incentive
Plan for the Enhanced POS System. The location for such meetings
shall alternate between RS' headquarters and AOL's headquarters.
Thereafter, such Parties shall meet at the times and in the
places agreed by such Parties.
(b) During the first *** years of the Term, appropriate executives
of each of AOL and RS shall meet at least *** per *** to
discuss, among other things, strategic opportunities in e-
commerce end-to-end solutions that employ point of sale
technologies. The location for such meetings shall alternate
between RS' headquarters and AOL's headquarters. Thereafter,
such Parties shall meet at the times and in the places agreed by
such Parties.
4.5 Distribution of Enhanced POS System or Module to Existing Customers.
-------------------------------------------------------------------
RS shall, in accordance with the schedule set forth in the Marketing Plan,
upgrade the RS Entertainment POS Systems of its existing Customers by:
(a) In the case where the Customer is contractually required to, or
RS has discretion to, upgrade or install new versions of the
Initial Enhanced POS System, installing the Initial Enhanced POS
System as soon as commercially practicable after the Initial
Enhanced POS System is commercially available;
(b) In the case where the Customer is not contractually required to,
and RS does not have discretion to, upgrade or install new
versions of the existing
- ------------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
10
<PAGE>
RS Entertainment POS System, using commercially reasonable
efforts to persuade such Customers to upgrade, including by
offering the Initial Enhanced POS System at no cost to the
extent this does not conflict with RS' marketing strategy and is
consistent with each such Customer's basic maintenance program;
and
(c) In the case where a Customer refuses to acquire an upgrade or
install a new version pursuant to subsection (b) above, using
commercially reasonable efforts to persuade each such Customer
to incorporate the Module into its existing RS Entertainment POS
System, including by offering to perform any reasonable services
necessary to incorporate the Module at no cost to such Customer.
Notwithstanding the foregoing, RS shall deploy (at its expense and with no fee
to Customers) the Module as soon as possible to the extent commercially
practicable to all Customers with an RS Entertainment POS System.
4.6 Marketing and Distribution of the Enhanced POS System. After *** RS
-----------------------------------------------------
shall not sell, distribute, market or promote to Customers in the Entertainment
Segment any POS System capable of use with a *** other than the Enhanced POS
System.
4.7 AOL Marketing Materials. MF shall include in all of its relevant
-----------------------
marketing, advertising, press releases, and other promotional materials
prominent statements that the Enhanced POS System is the preferred POS System
for operation of MF's Remote Ticketing System, provided that RS acknowledges and
agrees that MF may, in its sole discretion, continue to sell, distribute, market
and promote Mars and Mars Sequel in substantially the manner MF engaged in such
activities prior to the Effective Date, to the extent those activities are
consistent with the status of the Enhanced POS System as the preferred POS
System for operation of MF's Remote Ticketing System. Additionally, MF shall
instruct its employees engaged in marketing MF's Remote Ticketing System to
refer to the Enhanced POS System as MF's preferred POS System when interacting
with potential Customers, including during sales discussions. In addition to the
foregoing, MF, AOL and RS shall agree upon a press release concerning the
Initial Enhanced POS System, which shall state that the Enhanced POS System is
MF's preferred POS System and shall reference the seamless integration between
the Initial Enhanced POS System and MF's Remote Ticketing Services.
4.8 RS Marketing Materials. RS shall include in all its relevant
----------------------
marketing, advertising, press releases, and all other promotional materials
prominent statements that promote the seamless integration of the Enhanced POS
System and MF's Remote Ticketing System. RS and its Affiliates shall not
include in any of their marketing, advertising, press releases, or other
promotional materials statements referring to any Remote Ticketing Services
other than MF's Remote Ticketing Service without prior written consent from MF.
- ------------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
11
<PAGE>
4.9 RS Covenant. Throughout the Term RS and its Affiliates shall not
-----------
sell, distribute, market, promote, support, provide or facilitate, directly,
indirectly or through any ***, *** (other than ***) or assist any third party
in selling, distributing, marketing, promoting, supporting, providing or
facilitating *** (other than ***) by any platform, device or access (including,
but not limited to, telephone, Internet, mobile and wireless communications)
(the "RS Covenant"); provided, however, that RS shall be excused from such
obligation to the extent it would require RS to breach its commitments under the
contracts and customer arrangements for IVR Systems existing prior to July 26,
1999 and set forth in Exhibit F attached hereto. RS represents and warrants
that the existing contractual commitments and customer arrangements with the
Customers set forth in Exhibit F are the only contractual commitments and
customer arrangements inconsistent with the RS Covenant, and further represents
and warrants that the existing IVR System contracts and customer arrangements
with such Customers are either single-theatre only or multi-theatre for the same
Customer in only one market, provided such representation and warranty shall not
be deemed to have been breached to the extent that only immaterial contractual
commitments and customer arrangements inconsistent with the RS Covenant are
omitted from Exhibit F. To the extent not contractually prohibited, RS shall
allow MF to deliver, at MF's option and in place of RS, the relevant services in
connection with such IVR Systems to Exhibitors, provided that MF agrees to
deliver substantially the same service in conformity with the relevant
contractual requirements (with RS reimbursing MF for its direct costs (i.e.,
hardware costs), not to exceed ***% of the amount RS would have charged for the
same services); provided, further that, in the event RS is so contractually
prohibited, it will use commercially reasonable best efforts to persuade such
Exhibitor to allow MF to provide such services in place of RS as provided above.
MF acknowledges that although RS shall sell, market and promote MF's IVR Systems
as its preferred IVR System, RS may provide RS' IVR System in circumstances when
a customer refuses to accept and use MF's IVR System despite RS' commercially
reasonable best efforts to sell, market and promote MF's IVR System to such
customer. To the extent that RS' distribution and licensing of the RS API to
Exhibitors (consistent with its practices existing as of the Term Sheet
Effective Date) in and of itself may violate the RS Covenant, MF agrees not to
enforce the RS Covenant with respect to such manner of distribution and
licensing, but RS shall otherwise comply with the terms of the RS Covenant.
Nothing herein shall prohibit or preclude any RS POS System from being connected
or connectable through the RS API with any third-party *** so long as *** and
*** does not promote the availability of such connection; provided that RS may
promote generally that the Enhanced POS System possesses an open architecture;
and provided further that RS may acknowledge that the RS API is an open API, if
RS also states that *** is the preferred *** for operation of the Enhanced POS
System because of enhanced functionality available only through ***. It is
agreed that RS may include as part of the Enhanced POS System (in addition to
the New API), the RS API which RS may modify from time to time solely for the
purpose of allowing Exhibitor information to be transmitted through such RS API;
provided, however that such modifications ***. Nothing in this Section 4.9
shall be interpreted to prevent RS from charging third party IVR System
providers for any support calls received by RS from RS
- -------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
12
<PAGE>
Exhibitors as a result of problems that may arise with such IVR Systems
(provided that any arrangement with respect to such support will not extend
beyond help desk response support to Exhibitors and will not otherwise assist
the third party IVR System provider as prohibited by this Section 4.9).
4.10 Sale of Enhanced POS Systems. In the event RS plans or intends to
----------------------------
sell or otherwise transfer any right, title or interest (except a grant of a
nonexclusive use license to a Customer) in or to, or otherwise plans or intends
to restrict any exclusive right RS may have in or to, any or all of the Enhanced
POS System, RS shall grant MF the right of first offer with respect to acquiring
such right, title or interest. MF shall exercise such right, if at all, within
thirty (30) days of receipt of notice from RS of RS' intent to sell or otherwise
or restrict any exclusive right in or to such right, title or interest.
4.11 *** Payment. On the first anniversary of the Effective Date and on
-----------
each subsequent anniversary thereafter during the Term, MF shall pay RS a fee of
$*** for each *** for which MF exclusively provides *** pursuant to a contract
between the relevant *** and ***; provided that the foregoing payments shall
only apply to contracts entered into or renewed after August 1, 1999.
4.12 RS Delivery of ***. Unless an Exhibitor objects or RS is otherwise
------------------
prohibited from doing so, RS shall use commercially reasonable best efforts to
deliver to MF the showtime and ***. RS hereby authorizes MF to use any such ***.
4.13 No Disparagement. Each of RS, MF and AOL agree not to disparage,
----------------
deprecate or otherwise criticize the POS Systems and IVR Systems of the others.
4.14 RS Right to Bid on Certain Hardware. MF shall use commercially
-----------------------------------
reasonable efforts to provide RS a reasonable opportunity to make offers, in RS'
discretion, to provide MF computer hardware for POS Systems developed,
manufactured, marketed, distributed, sold or leased by MF. MF shall consider in
good faith any such offer made by RS, but MF may entertain similar offers from
third parties, and MF shall have no obligation to accept any offer made by RS.
ARTICLE 5
RS SUBSIDIARY INVESTMENT
5.1 Venture Sub. It is contemplated that RS will incorporate a subsidiary that
-----------
will at a minimum engage in the *** and *** (the "Venture Sub"), and if RS does
so, then, subject to the provisions of Sections 5.1.1, 5.1.2 and 5.1.3 below,
AOL shall be entitled and obligated to invest twenty-five million dollars ($25
million) in Venture Sub. Venture Sub shall be the sole means by which RS
directly or indirectly engages in the Interactive Fuel and Dispenser Business
and Interactive Restaurant Self Ordering Business.
- ---------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
13
<PAGE>
5.1.1 Business Plan.
-------------
(a) Within thirty days after the Effective Date RS shall provide
AOL with a substantially complete business plan for Venture Sub and thereafter
AOL and RS shall work together to agree to a complete business plan for Venture
Sub.
(b) If the Parties fail to agree to a business plan for Venture
Sub within six (6) months after the Effective Date pursuant to the immediately
preceding clause and RS either successfully has completed development of the
Enhanced POS System or, if it has not yet completed such development, the
failure to complete such development was principally the fault of MF and AOL, or
if the Parties agree otherwise, then RS may require AOL at any time thereafter
to invest up to twenty-five million dollars ($25 million) if, and only if, RS
has obtained and provided to AOL a valuation opinion from a nationally
recognized investment bank that Venture Sub has a valuation, prior to the
twenty-five million dollars ($25 million) investment contemplated hereby, of not
less than *** dollars ($***). AOL's contractual commitments with respect to
developing and deploying an interactive service for the POS platforms pursued by
Venture Sub and related commitments to Venture Sub, as more fully described in
Section 5.2 hereof, shall be considered by the nationally recognized investment
bank in determining Venture Sub's valuation.
5.1.2 Accounting Treatment. If AOL determines in its reasonable
--------------------
judgment, in accordance with applicable SEC guidelines and generally accepted
accounting principles, that it may not account for its investment in Venture Sub
under the *** and would be required to account for such investment under the ***
or ***, then AOL and RS will negotiate in good faith to restructure the terms of
AOL's investment in the Venture Sub so that AOL, in its reasonable
determination, may account for its investment in Venture Sub under the ***.
5.1.3 Form of Investment
------------------
(a) AOL's investment (the "AOL Equity") will be in the form of
convertible preferred stock, consisting of a number of shares determined on a
fully diluted basis based on a valuation of Venture Sub agreed upon between AOL
and RS or determined pursuant to Section 5.1.1(b), which will be senior to all
other preferred stock of Venture Sub and will have other rights, preferences and
privileges customarily provided to venture capital investors (including, but not
limited to, weighted average anti-dilution protection) and no less favorable
than those of any other preferred stockholder.
(b) If AOL's purchase of the number of shares determined pursuant
to Section 5.1.3(a) would cause AOL to own more than fifteen percent of the
fully diluted capital stock of Venture Sub (e.g. if the pre-money valuation
described in Section 5.1.3(a) is less than
- ---------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
14
<PAGE>
approximately *** ($***)), then notwithstanding Section 5.1.3(a), AOL shall
not be required to purchase more than fifteen percent of the fully diluted
capital stock of Venture Sub (with the purchase price based on a valuation as
described in Section 5.1.3(a)), and AOL and RS shall agree to reasonable terms
and conditions pursuant to which AOL shall invest the difference between twenty-
five million dollars ($25 million) and such purchase price in capital stock of
RS (at the then current market price) or another subsidiary of RS.
5.1.4 AOL Advice and Representation. AOL will provide advice and
-----------------------------
guidance to Venture Sub requested by Venture Sub or RS, including, if requested,
nominating a member to Venture Sub's board of directors.
5.2 AOL Carriage in *** and ***. With respect to the *** and *** (each a
---------------------------
"Designated Business"), AOL shall provide, and RS shall cause Venture Sub to use
and promote, one of the AOL Brand Service, Compuserve Brand Service, DCI Brand
Service or AOL.com (the choice of among such services to be mutually agreed by
AOL and RS (the "Designated Service")) as the *** (i.e. such ***), provided that
AOL's obligation to provide each Designated Business the Designated Service will
be conditioned upon Venture Sub demonstrating reasonable prospects of such
business achieving a material level of market penetration (including contractual
commitments from third parties that anticipate the deployment of Consumer
Interactive POS Systems in the Designated Business in the reasonably near
future); and provided further that RS and AOL agree on commercially reasonable
terms for the provision of the Designated Service ***. If AOL and RS are not
able to reach agreement on commercially reasonable terms after good-faith,
exclusive negotiations for 90 days, then Venture Sub shall be free to obtain
Interactive Services for such Designated Business from any third party; provided
that in all cases the Interactive Services available from AOL and its Affiliates
shall receive *** equal carriage rights on the Consumer Interactive POS System
for the *** and *** on commercially reasonable terms. If AOL and RS are able to
reach agreement with respect to the Designated Service being the ***, then the
*** products and services of Venture Sub shall be the *** products and services
for which AOL provides the Designated Service.
5.3 AOL Carriage on Other Consumer Interactive POS Systems. If RS or any
------------------------------------------------------
of its Affiliates from time to time desires to engage in aspects of the business
of developing, manufacturing, marketing, distributing, selling or leasing
Consumer Interactive POS Systems other than those addressed in Section 5.2, RS
shall so notify AOL in writing and offer AOL the first right to negotiate to be
the Interactive Service for such other aspects of the business. AOL promptly
shall indicate whether AOL wishes to so negotiate, and if AOL does, AOL and RS
promptly shall commence to negotiate in good faith terms and conditions
therefor. If AOL and RS are not able to reach agreement on commercially
reasonable terms after good-faith, exclusive negotiations for thirty (30) days
from the commencement of such negotiations, then RS or its Affiliate, as the
case may be, shall be free to obtain Interactive Services from any third party.
- -----------------------------------
***
Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
15
<PAGE>
ARTICLE 6
PAYMENT
6.1 Fees.
----
6.1.1 Services. MF shall not be required to pay RS for any
--------
Services performed under a Statement of Work relating to the design or
development of the Initial Enhanced POS System and New API. MF shall pay RS for
each hour that personnel of RS actually spend providing Services under a
Statement of Work designing and developing MF Features. Such payments shall be
at the hourly rates set forth in the applicable Statement of Work, which rates
shall be the lower of (i) the *** of each employee, calculated at an ***, ***
or in the case of independent consultants, each independent consultant's ***, or
(ii) the *** paid to RS by *** in the ***. Additionally, MF shall pay RS the
amounts set forth in Section 3.9 for any Services performed in accordance with
Section 3.9.
6.1.2 Per Screen Payment. MF shall pay RS for all amounts due
------------------
pursuant to Section 4.11.
6.1.3 Incentive Plan Payment. RS shall pay MF for all amounts due
----------------------
pursuant to Section 4.3.
6.2 Payment Procedures. MF shall pay to RS all fees and other amounts due
------------------
and owing pursuant to Section 6.1.1 to RS as described herein on a monthly basis
within 30 days after the receipt of an invoice therefor. MF shall pay to RS all
fees and other amounts due and owing pursuant to Section 6.1.2 within 30 days
after the date such fees are due and owing as set forth in Section 4.11. RS
shall pay to MF all fees and other amounts due and owing pursuant to Section
6.1.3 within 30 days after the date such fees are due and owing as set forth in
Section 4.3 after receipt of an invoice therefor. All payments due hereunder
shall be paid in U.S. Dollars by wire transfer, or by such other method mutually
agreed upon by the RS and MF, in each case at the expense of the payor, for
value no later than the due date thereof (with 24 hours advance notice of each
wire transfer) to such bank account or accounts as the payee shall designate in
writing within a reasonable period of time prior to such due date.
6.3 Late Payment. Without limiting the payee's rights to pursue any other
------------
remedies at law or in equity, if the payor hereunder fails to pay any payment
required under this Agreement on or before the due date therefor, then the payor
shall pay annually compounded interest on such amount at an annual rate equal to
the lower of (a) the highest rate permitted by applicable law and (b) the lowest
prime rate as published by The Wall Street Journal on or nearest to such due
date plus three percent, which interest shall accrue from the date the payment
not timely made became due until the date such payment is paid in full.
_______________
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
16
<PAGE>
6.4 Taxes. Each Party shall pay or reimburse the other for any taxes,
-----
such as sales or use taxes, assessed on the basis of Services performed or
payments made by the payor under this Agreement, except taxes based on the
payee's net income or gross receipts.
6.5 Books and Records. Each of MF and RS shall keep full, true and
-----------------
accurate books of account containing all particulars and reasonable supporting
documentation that may be necessary for the purpose of determining the fees and
other amounts payable by each Party to the other hereunder. All such books of
account and reasonable supporting documentation shall be located at the
principal place of business of MF and RS, as applicable, and shall be open for
inspection for such purpose by MF or RS or any independent certified public
accountant retained by MF or RS, at a time mutually acceptable to such Parties
during normal business hours but no more frequently than twice each calendar
year for three years following the end of the calendar year to which they
pertain.
ARTICLE 7
PROPRIETARY RIGHTS
7.1 RS Entertainment POS System and Enhanced POS Systems. MF acknowledges
----------------------------------------------------
that RS owns all right, title and interest in and to the RS Entertainment POS
System and, except as expressly provided otherwise in this Agreement, the
Enhanced POS System, including all patent, copyright, trademark, trade name,
trade secret and other proprietary rights therein that may be secured in any
place under laws now or hereafter in effect. RS hereby grants to AOL and MF a
nonexclusive, worldwide, royalty-free license to use, reproduce, display,
perform and distribute the Enhanced POS System for internal and marketing
purposes in accordance with the Terms of this Agreement.
7.2 MF Features. RS agrees that MF is the sole and exclusive owner of all
-----------
right, title and interest in and to MF Features, including all patent,
copyright, trade secret and other proprietary rights therein that may be secured
in any place under laws now or hereafter in effect. The parties intend that
each Deliverable that is an MF Feature shall be deemed a "work made for hire"
within the meaning of the copyright laws of the United States and any similar
laws of other jurisdictions. To the extent, if any, that RS, its employees or
independent consultants have rights in such Deliverables notwithstanding the
foregoing, RS hereby irrevocably assigns to MF, and agrees that MF shall be the
sole and exclusive owner of, all right, title and interest in and to such MF
Features, including all patent, copyright, trade secret and other proprietary
rights therein that may be secured in any place under laws now or hereafter in
effect.
7.3 New API. Notwithstanding anything to the contrary in Section 7.1, all
-------
right, title and interest in and to the New API shall be owned by RS, and RS
hereby grants to MF the perpetual, irrevocable, worldwide, royalty-free license
to use, reproduce, display, perform, distribute and create derivative works of
the New API, and sublicense others to do so.
7.4 Mars and Mars Sequel. RS acknowledges that MF owns all right, title
--------------------
and interest in and to Mars and Mars Sequel, including all patent, copyright,
trademark, trade name, trade secret and other proprietary rights therein that
may be secured in any place under laws now or hereafter in effect. To the
extent MF exercises its rights under Section 3.9, MF hereby grants to RS a
nonexclusive, worldwide royalty-free license to use, reproduce, distribute and
create
17
<PAGE>
derivative works of Mars and Mars Sequel solely in order to, and only for as
long as it actually does, support and maintain Mars and Mars Sequel pursuant to
Section 3.9.
7.5 Further Assurances. Upon the request of any Party, the other Parties
------------------
shall sign and deliver any assignments or other necessary documents and
otherwise assist the requesting Party to obtain, maintain, perfect or enforce
any of the requesting Party's rights hereunder.
7.6 Source Code Escrow.
------------------
7.6.1 Deposit. Within sixty (60) of the date each Party executes
-------
this Agreement, each Party shall execute an escrow agreement among the Parties
and DSI on terms and conditions ordinary for such an agreement. RS then shall
deposit a copy of the most currently released production version of the source
code for the Initial Enhanced POS System promptly after it is developed in
escrow in accordance with such escrow agreement. During the term of this
Agreement, RS shall also deposit in such escrow account copies of the source
code for all upgrades and subsequent releases to the Enhanced POS System
provided to Customers, within 30 days of the date on which such upgrades and
future releases are made generally available. If for any reason, such escrow
agreement expires or is terminated before the date seven years after the
expiration or termination of this Agreement, other than upon the occurrence of a
release condition provided in Section 7.6.2, then MF may require RS to place
materials required to be deposited pursuant to this Agreement in escrow pursuant
to another escrow agreement on substantially the same terms as Exhibit G. If for
any reason, any the materials required to be deposited are not in the possession
of an escrow agent pursuant to such an agreement upon the occurrence of a
release condition set forth in Section 7.6.2, RS shall provide such materials to
MF immediately upon MF's written request.
7.6.2 Withdrawal. AOL and MF shall not have access to any of the
----------
materials deposited under the escrow agreement unless and until:
(a) RS becomes the subject of any voluntary or involuntary
proceeding, under state or federal law, in the nature
of bankruptcy, receivership or assignment for the
benefit of creditors which is not dismissed within 90
days after the institution, initiation or filing of
such proceeding;
(b) RS fails to cure any material breach (other than a
breach under Section 3.2, 3.3 or 3.4) of its
obligations under this Agreement within 60 days
following MF's written notice to RS of such breach;
(c) RS fails to provide maintenance or support for the
Enhanced POS System that complies with the minimum
levels of such support or maintenance set forth in
Exhibit C; provided that MF has given RS written notice
of such failure and 30 days to cure such failure; or
(d) RS fails to maintain the Enhanced POS System in
compliance with the performance standards set forth in
Exhibit B; provided that MF has given RS written notice
of such failure and 90 days to cure
18
<PAGE>
such failure, and such 90 day cure period shall not
prejudice other remedies available to AOL under this
Agreement.
7.6.3 Scope of Use. Upon release of the source code under Section
------------
7.6.2 above, RS shall grant to AOL and MF a non-exclusive, perpetual, worldwide
license to use, reproduce, display, perform, distribute and create derivative
works of the source code for the Enhanced POS System (including the source code
for the New API) to the extent necessary for AOL and MF to maintain, support and
correct errors in the Enhanced POS System (including the source code for the New
API) or any upgrades or future releases thereof. AOL and MF shall be permitted
to sublicense the source code to third party contractors in order to carry out
the purposes set forth above, provided that any such third party agrees to be
bound by the confidentiality provisions hereof. AOL and MF shall be obligated
to maintain the confidentiality of the released source code to the same extent
that it is required to maintain confidentiality of RS' other confidential
information under this Agreement, provided such source code shall be treated as
confidential for so long as the source code is protected as a trade secret.
7.6.4 Fees. MF shall bear any fees payable in connection with the
----
escrow agreement.
ARTICLE 8
DISPUTE RESOLUTION
8.1 In the event a dispute or disagreement arises relating to this
Agreement or any Statement of Work entered into pursuant to this Agreement, the
Parties shall attempt to settle amicably by good faith discussions any such
dispute or disagreement between or among them. If the Parties are unable to
resolve the dispute or disagreement by such discussions within five business
days, then each entity involved in the dispute or disagreement shall refer the
dispute or disagreement for resolution to a designated officer. In the case of
AOL the designated officer shall be Donn Davis. In the case of MF the
designated officer shall be Paul Baker. In the case of RS the designated
officer shall be John Heyman The designated officer of any of the Parties may
be changed at any time by written notice to each of the other Parties. The
designated officers of each of the Parties shall meet within five business days
of the date the designated officers received the referral of such dispute or
disagreement. The designated officers shall meet at the location at which the
next meeting would have occurred pursuant to Section 4.4 and shall continue to
meet and engage in a good faith attempt to resolve such dispute or disagreement
for at least three business days. In the event the dispute or disagreement is
not resolved after such meetings, any Party may pursue any other remedies
available under this Agreement in law or equity. Notwithstanding the foregoing,
any Party may seek expedited injunctive relief at any time.
ARTICLE 9
CONFIDENTIALITY
9.1 Confidentiality Obligation. Each of the Parties (the "Receiving
--------------------------
Party") shall keep, and shall cause their Affiliates to keep, strictly
confidential any information disclosed by another Party (the "Disclosing Party")
or otherwise made available to the Receiving Party concerning any Receivable,
Deliverable or any Party's performance of this Agreement or
19
<PAGE>
otherwise concerning the business, operations, marketing (including the
Marketing Plan) or trade secrets or other proprietary information of the
Disclosing Party (whether in written media or otherwise) ("Confidential
Information"), using at least the same degree of care that it uses to protect
its own confidential or proprietary information. "Confidential Information"
shall not include information: (a) that is or becomes generally available to the
public other than as a result of disclosure thereof by the Receiving Party; (b)
that is lawfully received by the Receiving Party on a nonconfidential basis from
a third party that is not itself under any obligation of confidentiality or
nondisclosure to the Disclosing Party or any other Person with respect to such
information; or (c) that by written evidence can be shown by the Receiving Party
to have been independently developed by the Receiving Party.
9.2 Nondisclosure of Confidential Information. The Receiving Party shall
-----------------------------------------
use Confidential Information solely for the purposes of this Agreement and shall
not disclose or disseminate any Confidential Information to any Person at any
time, except for disclosure to those of its Affiliates, and their respective
directors, officers, employees, accountants, attorneys, advisers and agents
whose duties reasonably require them to have access to such Confidential
Information, provided that such directors, officers, employees, accountants,
attorneys, advisers and agents are bound to maintain the confidentiality of such
Confidential Information to the same extent as if they were Parties hereto.
9.3 Nondisclosure of Agreement. In addition to the obligations set forth
--------------------------
in Section 9.1 above, each Party shall not disclose this Agreement or any
provisions of this Agreement and, without the prior consent of the other
Parties, no Party shall make any press release or other public announcement of
or otherwise disclose this Agreement or any of its provisions to any third
party:
(a) Other than to its Affiliates and to its own and its Affiliates'
directors, officers, employees, attorneys and accountants whose
duties reasonably require familiarity with such Agreement,
provided that (i) the Disclosing Party informs such Affiliates,
directors, officers, employees, accountants, attorneys, advisers,
agents and independent contractors of the confidential nature of
such Agreement and instructs such Persons to comply with the
confidentiality and nondisclosure obligations of this Section 9.4
and (ii) the Disclosing Party is responsible for any breach or
violation by such Persons of the confidentiality and
nondisclosure obligations of this Section 9.4;
(b) Other than to third parties providing debt financing to any Party
or any of its Affiliates and to the lead underwriter engaged in
connection with any offering of securities any Party or any of
its Affiliates, provided that such Persons enter into a customary
form of confidentiality agreement with such Party that includes
this Agreement as confidential information subject to the
confidentiality and nondisclosure obligations set forth therein;
and
(c) With respect to this Agreement, except for such disclosure as may
be required by applicable law or regulation or pursuant to the
rules of or a
20
<PAGE>
listing agreement with a national securities exchange or the
NASDAQ National Market, in which case the Disclosing Party shall
provide the other Parties with sufficient advance notice of such
disclosure so that the other Parties have the opportunity, if
they so desire, to restrict such requirement for disclosure, seek
a protective order or take another appropriate remedy; provided
that, in connection with any offering of securities of the
Disclosing Party or any of its Affiliates, the Disclosing Party
shall provide in advance to the other Parties hereto for review
the form and content of any disclosure of this Agreement or any
of its provisions that may be required by applicable law or
regulation which discuss such other Party and shall include such
modifications to such disclosure as may be reasonably requested
by such other Party (except that the Disclosing Party may file
this Agreement as an exhibit to its registration statement or
required periodic reports if it would constitute a "material
agreement" under applicable law or regulation and the Disclosing
Party shall use commercially reasonable efforts to obtain
confidential treatment of the portions of this Agreement that
meet the SEC qualifications for confidential treatment if so
requested by such other Party).
9.4 Exception. The foregoing confidentiality and nondisclosure
---------
obligations shall not apply to Confidential Information that is required to be
publicly disclosed by law or by regulation; provided, however, that, in such
event, the Receiving Party provides the Disclosing Party with prompt advance
notice, to the extent practicable, of such disclosure so that the Disclosing
Party has the opportunity if it so desires to restrict such requirement for
disclosure, seek a protective order or take another appropriate remedy. In any
event, the Receiving Party shall use commercially reasonable efforts to secure
confidential treatment of any Confidential Information of the Disclosing Party
that it is required to disclose.
9.5 Survival. The confidentiality and nondisclosure obligations of this
--------
Article 9 shall survive the termination or expiration of this Agreement and
remain in effect for a period of two years following the termination or
expiration of this Agreement except that with respect to any item protected
thereunder which constitutes a trade secret under applicable law, such
obligations of confidentiality shall continue in effect with respect to such
item for the maximum period permitted under applicable law.
ARTICLE 10
REPRESENTATIONS AND WARRANTIES
10.1 Mutual Representations and Warranties. Each Party represents and
-------------------------------------
warrants to the other Parties that:
(a) Such Party has the full corporate right, power and authority to
execute, deliver and perform this Agreement and to consummate the
transactions contemplated hereby;
21
<PAGE>
(b) The execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby have been
duly authorized by all necessary corporate action on the part of
such Party;
(c) This Agreement has been duly executed and delivered by an
authorized officer of such Party, and is a legal, valid and
binding obligation of such Party enforceable against it in
accordance with its terms, except as enforcement may be limited
by general principles of equity (regardless of whether such
enforceability is considered in a proceeding at law or in equity)
and the effect of applicable bankruptcy, insolvency, moratorium
and other similar laws of general application relating to or
affecting creditors' rights generally, including, without
limitation, the effect of statutory or other laws regarding
fraudulent conveyances and preferential transfers;
(d) Such Party's execution, delivery and performance of this
Agreement shall not constitute a breach or default under any
material contract or agreement to which such Party is a party or
by which it is bound or otherwise violate the rights of any third
party; and
(e) No consent, approval or authorization of or from any governmental
entity or any other Person not a Party to this Agreement, whether
prescribed by law, regulation, contract or agreement, is required
for such Party's execution, delivery and performance of this
Agreement or consummation of the transactions contemplated
hereby.
10.2 Representations and Warranties of RS. RS represents, warrants and
------------------------------------
covenants to each of AOL and MF that:
(a) It has not on or after the Term Sheet Effective Date contravened
the RS Covenant set forth in Section 4.9;
(b) The Services shall be provided in a workmanlike manner, in
accordance with the standards of care and diligence and the level
of skill, knowledge and judgment normally practiced by
nationally-recognized information technology services firms in
performing services of a similar nature;
(c) The Deliverables (other than MF Features to the extent a claim
that such MF Features infringe or otherwise conflict with third
party rights results from compliance with specifications
requested by MF or AOL where such infringement or conflict
otherwise could not reasonably have been avoided by RS), RS
Entertainment POS System, Other RS POS Systems, Enhanced POS
System and Module, and AOL's and MF's use of such Deliverables,
the RS Entertainment POS System, Other RS POS Systems, Enhanced
POS System and Module shall not infringe any patent, copyright,
trade secret or other proprietary right of any third party or
otherwise conflict with the rights of any third party;
22
<PAGE>
(d) There is no actual or threatened litigation concerning a claim of
infringement of any third party right or privilege as regarding
the Deliverables, RS Entertainment POS System, Other RS POS
Systems, Enhanced POS System or Module;
(e) The Deliverables, RS Entertainment POS System, Other RS POS
Systems, Enhanced POS System and Module are and shall remain free
from any security interests and other liens and encumbrances of
third parties;
(f) The Deliverables, RS Entertainment POS System, Other RS POS
Systems, Enhanced POS System and Module do not, and shall not,
contain, any back door, time bomb, drop dead device, protect
codes, data destruct keys, or other software routine primarily
designed to disable their interface with the MF System;
(g) The Deliverables, RS Entertainment POS System, Other RS POS
Systems, Enhanced POS System and Module do not, and shall not,
contain any virus, Trojan horse, worm or other software routine
designed to permit unauthorized access or to disable, erase,
modify, deactivate or otherwise harm the MF System; and, prior to
or at the time of the delivery of any foregoing, shall test the
foregoing using a current version of a reputable "antivirus"
program and remove any such unauthorized codes;
(h) All software and other operational items included in the
Deliverables, RS Entertainment POS System, Other RS POS Systems,
Enhanced POS System and Module shall: (i) properly execute with
all date data, whether from years in the same century or
different centuries, including by yielding correct results in
arithmetic operations, comparisons and sorting of date fields and
in leap year calculations; and (ii) not abnormally cease to
execute or return an error message due to date-related
processing; and
(i) The RS POS System and Other RS POS Systems substantially conform
to all published and publicly available documentation and
specifications for such system.
10.3 No Other Warranties. THE EXPRESS WARRANTIES IN THIS AGREEMENT SHALL
-------------------
BE IN LIEU OF ALL OTHER WARRANTIES, EXPRESS OR IMPLIED, INCLUDING THE IMPLIED
WARRANTIES OF MERCHANTABILITY AND FITNESS FOR A PARTICULAR PURPOSE.
ARTICLE 11
INDEMNIFICATION
11.1 Indemnity by RS. RS shall indemnify and hold harmless AOL and MF,
---------------
their Affiliates, and each of their respective directors, officers, employees
and agents (collectively, the "AOL Indemnitees"), from and against any Losses
incurred, arising out of or resulting from: (i) RS' material breach of any duty,
representation or warranty of this Agreement; and (ii) any infringement of any
patent, copyright, trademark, trade name, trade secret, or other proprietary
23
<PAGE>
right by any Deliverables, RS Entertainment POS System, Other RS POS Systems,
Enhanced POS System, Module or any other software, hardware or products provided
to such AOL Indemnitee by or on behalf of RS, except to the extent that such
Losses arise out of or result from the modification of such Deliverables, RS
Entertainment POS System, Other RS POS Systems, Enhanced POS System, Module or
other software, hardware or products by such AOL Indemnitee or its independent
contractors, and except to the extent such Losses result from compliance with
specifications requested by MF or AOL where such infringement otherwise could
not reasonably have been avoided by RS.
11.2 Indemnity by AOL and MF. Each of MF and AOL shall indemnify and hold
-----------------------
harmless RS, its Affiliates, and its and their respective directors, officers,
employees and agents (collectively, the "RS Indemnitees"), from and against any
Losses incurred, arising out of or resulting from (i) its material breach of any
duty, representation or warranty of this Agreement, and (ii) infringement of any
patent, copyright, trademark, trade name, trade secret, or other proprietary
right to the extent such Losses result from compliance with specifications
requested by MF or AOL where such infringement otherwise could not reasonably
have been avoided by RS.
11.3 Procedure. Any AOL Indemnitee or RS Indemnitee (each an "Indemnitee")
---------
shall notify the indemnifying Party promptly in writing of an indemnifiable
claim or cause of action under Section 11.1 or 11.2 upon receiving notice or
being informed of the existence thereof; provided, however, that failure to
notify the indemnifying Party of an indemnifiable claim or cause of action shall
not relieve the indemnifying Party of its obligation to provide indemnification
hereunder, except to the extent that such failure prejudices the indemnifying
Party's ability to defend or settle such claim or cause of action. The
indemnifying Party shall assume, at its cost and expense, the sole defense of
such claim or cause of action through counsel selected by the indemnifying Party
that is reasonably acceptable to the Indemnitees. The Indemnitees shall
cooperate in the defense of such claim or cause of action and may retain
separate counsel at their sole cost and expense (except that the indemnifying
Party shall be responsible for the fees and expenses of the separate co-counsel
to the extent that the Indemnitees reasonably conclude that the counsel selected
by the indemnifying Party has a conflict of interest). The indemnifying Party
shall maintain control of such defense, including any decision as to settlement,
provided that the indemnifying Party shall not, without the Indemnitees' prior
written consent, compromise or settle any claim, suit or proceeding if such
compromise or settlement would impose an injunction or other relief upon the
Indemnitees or if such compromise or settlement does not include as an
unconditional term thereof the claimant's release of the Indemnitees from all
liability relating to such claim, suit or proceeding. The indemnifying Party
shall bear the total costs of any court award or any settlement of such claim or
cause of action approved by the indemnifying Party and all other costs, fees and
expenses related to the resolution thereof (including reasonable attorneys'
fees, except for attorneys' fees for which the Indemnitees are responsible).
ARTICLE 12
LIMITATION ON LIABILITY
EXCEPT FOR A CLAIM OF INDEMNIFICATION PURSUANT TO ITEM (ii) OF SECTION 11.1 OR
ITEM (ii) OF SECTION 11.2, A BREACH OF ANY OF THE WARRANTIES SET
24
<PAGE>
FORTH IN SECTION 10.2, OR A BREACH OF THE LICENSE GRANT IN SECTION 7.6.3, (1) NO
PARTY SHALL BE LIABLE TO THE OTHER PARTIES HEREUNDER FOR ANY SPECIAL, EXEMPLARY
OR PUNITIVE DAMAGES, AND (2) NEITHER PARTY'S TOTAL LIABILITY HEREUNDER SHALL
EXCEED *** DOLLARS ($***).
ARTICLE 13
TERM AND TERMINATION
13.1 Term. This Agreement shall commence as of the Effective Date and,
----
unless terminated earlier in accordance with the provisions of Sections 13.2 or
13.3 below, shall remain in full force and effect for *** years thereafter (the
"Term").
13.2 Termination Rights of AOL and MF.
--------------------------------
13.2.1 Termination of the Agreement. AOL and MF shall have the right
----------------------------
to terminate this Agreement in the event of the breach by RS of, or the failure
of RS to perform, any of its material obligations hereunder and the failure to
remedy such material breach or nonperformance within 60 days following the
receipt of written notice of such breach or nonperformance from AOL or MF. Such
termination shall be immediately effective upon the receipt by RS of written
notice of termination from AOL or MF. Without limiting the foregoing, for
purposes of this Section, breach by RS of Sections 3.1 or Article 2 shall be
deemed a material breach.
13.2.2 Termination of the Statements of Work. AOL and MF shall have
-------------------------------------
the right to terminate any Statement of Work agreed pursuant to Section 3.4.1
upon fifteen days written notice to RS, provided that RS shall cease work as
soon as practicable beginning immediately upon receipt of such notice.
Termination of any Statement of Work will not affect the other rights or
obligations of the Parties under this Agreement or any other Statement of Work.
13.3 Termination Rights of RS.
------------------------
13.3.1 Termination of the Agreement. RS shall have the right to
----------------------------
terminate this Agreement in the event of the breach by AOL or MF of, or the
failure of AOL or MF to perform, any of its material obligations hereunder and
the failure to remedy such material breach or nonperformance within 60 days
following the receipt of written notice of such breach or nonperformance from
RS. Such termination shall be immediately effective upon the receipt by AOL or
MF of written notice of termination from RS.
13.3.2 Termination of the Statements of Work. RS shall have the
-------------------------------------
right to terminate a Statement of Work in the event of the breach by AOL or MF
of, or the failure of AOL or MF to perform, any of its material obligations
thereunder and the failure to remedy such material breach or nonperformance
within 30 days following the receipt of written notice of such breach or
nonperformance from RS.
_______________
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
25
<PAGE>
13.4 Return of Confidential Information. Within 30 calendar days following
----------------------------------
the termination of this Agreement, each Party upon request of another Party
shall either deliver to the applicable other Parties, or destroy, all copies of
any Confidential Information of the other Parties embodied in a tangible medium
that is in such Party's possession or under its control, and shall furnish to
the other Parties an affidavit signed by an officer of such Party certifying
that, to the best of its knowledge, such delivery or destruction has been fully
effected.
13.5 Survival. All rights granted to and obligations undertaken by the
--------
Parties hereunder shall terminate immediately upon the termination of this
Agreement, except for this Section 13.5 and the following rights and
obligations, which shall survive according to their terms:
(a) The obligation of the payor Party to pay any and all amounts
accrued hereunder;
(b) The right of each Party to inspect the books and records of the
other Party to the extent provided in Section 6.5;
(c) The provisions of Sections 7.1, 7.2, 7.3, 7.4 and 7.5, including
the licenses granted therein;
(d) Section 7.6.3, in the event any of the withdrawal conditions set
forth in Section 7.6.2 have occurred prior to the date of
termination;
(e) The dispute resolution provision of Article 8;
(f) The confidentiality and nondisclosure obligations of Article 9;
(g) The indemnification obligations of Article 11 and the limitation
on liability of Article 12; and
(h) The provisions of Sections 13.4, 14.4, 14.5, 14.8 and 14.10
below.
In addition, termination of this Agreement shall not affect the remedies of the
Parties otherwise available at law or in equity in relation to any rights
accrued under this Agreement prior to termination.
ARTICLE 14
MISCELLANEOUS
14.1 Compliance with Laws. In performing the Services and any other
--------------------
obligations or duties under this Agreement or Statements of Work, RS shall
comply with all laws and regulations applicable to the providing of such
Services, obligations and duties and obtain and pay for all licenses, permits
and approvals necessary for it to provide such Services, obligations and duties.
14.2 Relationship of the Parties. The Parties acknowledge and agree that
---------------------------
they are dealing with each other hereunder as independent contractors. Nothing
in this Agreement is
26
<PAGE>
intended or will be deemed to constitute a partnership, agency or joint venture
relationship between the Parties hereto.
14.3 Binding Effect; Assignment. This Agreement may not be assigned, in
--------------------------
whole or in part, by any Party without the prior written consent of the other
Parties, which consent may be withheld for any or no reason, except that MF may
assign this Agreement, or any its rights or duties hereunder to any Affiliate of
AOL, provided that MF guarantees the performance of all of MF's obligations
hereunder by such Affiliate. Any attempted assignment by any Party other than as
expressly permitted pursuant to this Section 14.3 shall be null and void. This
Agreement shall inure to the benefit of and be binding upon each of the Parties
hereto and their respective successors and permitted assigns.
14.4 Bankruptcy. Any Party's failure to assert its right to retain its
----------
benefits under this Agreement in accordance with 11 U.S.C. (S)365(n)(1)(B) (as
may be amended from time to time) shall not be construed as a termination of
this Agreement by such Party under 11 U.S.C. (S)365(n)(1)(A) (as may be amended
from time to time).
14.5 Governing Law. This Agreement shall be governed by the laws of the
-------------
Commonwealth of Virginia applicable to contracts made and to be performed
entirely within such jurisdiction and without giving effect to the choice or
conflict of laws, rules or principles of the Commonwealth of Virginia or of any
other jurisdiction.
14.6 Counterparts. This Agreement may be executed in any number of
------------
counterparts and may be executed by facsimile signature. All counterparts shall
collectively constitute one and the same Agreement.
14.7 Notices. In any case where any notice or other communication is
-------
required or permitted to be given hereunder, such notice or communication shall
be in writing and deemed to have been duly given and delivered: (a) if delivered
in person, on the date of such delivery; (b) if sent by overnight express or
registered or certified mail (with return receipt requested), on the date of
receipt of such mail; or (c) if sent by confirmed facsimile transmission (with
answer back received), on the date of such facsimile transmission provided that
notice is also sent on the same day by one of the methods set forth in (a) or
(b) above. Such notice or other communication shall be sent to the following
address(es) (or such other address(es) as a Party may designate from time to
time in writing):
If to AOL:
America Online, Inc.
22000 AOL Way
Dulles, VA 20166
Facsimile: 703-265-1206
Attention: Donn Davis, Senior Vice President
27
<PAGE>
Copy to:
America Online, Inc.
22000 AOL Way
Dulles, VA 20166
Facsimile: 703-265-1105
Attention: General Counsel
If to MF:
22000 AOL Way
Dulles, VA 20166
Facsimile: 703-265-0006
Attention: Paul F. Baker, Senior Vice President
If to RS:
Radiant Systems, Inc.
3925 Brookside Parkway
Alpharetta, GA 30022
Facsimile: 770-360-7325
Attention: John H. Heyman, Executive Vice President
14.8 Entire Agreement. The terms and conditions contained in this
----------------
Agreement (including the Exhibits attached hereto and any Statements of Work
entered into under this Agreement), constitute the entire agreement among the
Parties relating to the subject matter hereof and shall supersede all previous
agreements (including the "Memorandum of Understanding" between the Parties as
amended) and communications between the Parties with respect to the subject
matter of this Agreement. No Party has entered into this Agreement in reliance
upon any representation, warranty, covenant or undertaking of any other Party
that is not set out or referred to in this Agreement or any Statement of Work
executed hereunder.
14.9 Amendment. Except as expressly provided otherwise in this Agreement,
---------
this Agreement may be varied, amended or extended only by the written agreement
of the Parties through their duly authorized officers or representatives,
specifically referring to this Agreement.
14.10 Severability. In the event that any provision of this Agreement is
------------
held to be illegal, invalid or unenforceable in a final, unappealable order or
judgment (each such provision, an "invalid provision"), then such provision
shall be severed from this Agreement and shall be inoperative, and the Parties
promptly shall negotiate in good faith a lawful, valid and enforceable provision
that is as similar to the invalid provision as may be possible and that
preserves the original intentions of the Parties, while the remaining provisions
of this Agreement shall remain binding on the Parties hereto. Without limiting
the generality of the foregoing sentence, in the event a change in any
applicable law, rule or regulation makes it unlawful for a Party to comply with
any of its obligations hereunder, the Parties shall negotiate in good faith a
modification to such obligation to the extent necessary to comply with such law,
rule or regulation that is as
28
<PAGE>
similar in terms to the original obligation as may be possible while preserving
the original intentions of the Parties to the maximum extent feasible.
14.11 Headings. The descriptive headings of the Articles and Sections of
--------
this Agreement and its Exhibits are inserted for convenience only and do not
constitute a part of this Agreement.
14.12 No Waiver of Rights. No failure or delay on the part of a Party in
-------------------
the exercise of any power or right hereunder shall operate as a waiver thereof.
No single or partial exercise of any right or power hereunder shall operate as a
waiver of such right or of any other right or power. The waiver by any Party of
a breach of any provision of this Agreement shall not operate or be construed as
a waiver of any other or subsequent breach hereunder. No waiver shall be
effective unless in writing signed by the waiving Party.
14.13 Remedies Cumulative. Unless expressly provided otherwise in this
-------------------
Agreement all rights and remedies granted to each Party under this Agreement are
cumulative and in addition to, and not in lieu of, any other rights or remedies
otherwise available to such Party at law or in equity.
14.14 No Third Party Beneficiaries. This Agreement is entered into solely
----------------------------
among, and may be enforced only by, the Parties hereto; and this Agreement shall
not be deemed to create any rights in any third parties, including suppliers and
customers of any Party, or to create any obligations of a Party to any such
third parties.
14.15 Export Controls. Each Party agrees to comply fully with all relevant
---------------
export laws and regulations of the United States to ensure that no information
or technical data provided pursuant to this Agreement is exported or re-exported
directly or indirectly in violation of law.
14.16 Press Releases and Promotional Materials. Each Party will submit to
----------------------------------------
the other Parties, for their prior written approval, which will not be
unreasonably withheld or delayed, any marketing, advertising, press releases,
and all other promotional materials related to the transactions contemplated
hereunder or referencing the other Parties (the "Materials"). Each Party will
solicit and reasonably consider the views of the other Parties in designing and
implementing such Materials.
14.17 Consent. Whenever any provision of this Agreement is subject to the
-------
consent, approval or agreement of a Party, such Party's consent, approval or
agreement shall not be unreasonably withheld unless expressly provided otherwise
in this Agreement.
14.18 Usage. Wherever any provision of this Agreement uses the term
-----
"including" (or "includes"), such term shall be deemed to mean "including
without limitation" and "including but not limited to" (or "includes without
limitation" and "includes but is not limited to") regardless of whether the
words "without limitation" or "but not limited to" actually follow the term
"including" (or "includes").
29
<PAGE>
IN WITNESS WHEREOF, the Parties hereto have caused this Agreement to
executed by their duly authorized officers as of the Effective Date.
AMERICA ONLINE, INC.
By: /s/ David M. Colburn
---------------------------------------------
Name: David M. Colburn
-------------------------------------------
Title: President, Business Affairs
------------------------------------------
MOVIEFONE, INC.
By: /s/ David M. Colburn
----------------------------------------------
Name: David M. Colburn
--------------------------------------------
Title: President, Business Affairs
-------------------------------------------
RADIANT SYSTEMS, INC.
By: /s/ John Heyman
---------------------------------------------
Name: John Heyman
-------------------------------------------
Title: CFO
------------------------------------------
30
<PAGE>
CONFIDENTIAL TREATMENT REQUESTED Execution Copy
EXHIBIT 10.2
EXHIBIT A
STATEMENT OF WORK FOR DEVELOPMENT OF INITIAL ENHANCED POS SYSTEM
----------------------------------------------------------------
Statement of Work
<TABLE>
<CAPTION>
- -------------------------------------------------------------------------------
Purpose Design and implement the new API and enhanced POS
- -------------------------------------------------------------------------------
<S> <C>
Description The primary goals of the newly designed API and POS are to -
1. Expand the set of transactions and information between MF and
RS POS System to include all the transactions and information
which will be supported by the Enhanced POS System.
2. Streamline, simplify and strengthen the method of interfacing
the systems to ensure high levels of reliability, performance
and maintainability.
3. To ensure that the Enhanced POS System provides the same
functionality that presently exists in MARS and MARS Sequel.
- -------------------------------------------------------------------------------
Approach Our approach to achieving these goals is to deliver *** releases
of the New API. The *** establishes the platform for the *** and
supports the ***. The *** will add ***, such as ***. The *** will
support transactions that enable ***, such as ***. The features
in the *** will be specified in detail once *** is implemented,
and *** is under development. A *** unrelated to the New API will
involve developing for the Enhanced POS System new functionality
that presently exists in *** and ***.
For each release, the MF and RS implementation teams will work
closely to jointly plan, design and architect the deliverables.
The build stage of each release will consist of each of MF and RS
developing and enhancing respective platforms to support the new
transactions. As platform and New API components are developed,
MF and RS will jointly test/QA the New API to ensure that the end
to end process is working according to the specifications laid
out. Throughout the entire development process, MF and RS will
have periodic status meetings and work sessions as called for
during the planning portion of each release.
- -------------------------------------------------------------------------------
</TABLE>
- -----------------------
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
<PAGE>
<TABLE>
- ----------------------------------------------------------------------------------
<S> <C>
Requirements The requirements, which have been specified, are contained in
Specification the matrix below. Each requirement is described below and a
release number under the heading "Release" that indicates with
which release the functionality will be included. The parties
will agree on more specific design and implementation
requirements for the elements outlined in this Exhibit A as
appropriate, which requirements shall be consistent with the
provisions of this Exhibit A and the Agreement. In addition, the
parties may mutually agree on changes to the provisions of this
Exhibit A as appropriate as the design and implementation process
moves forward.
- ----------------------------------------------------------------------------------
Specification Section Release Requirement (see the Note with respect to
Number this column below this table)
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
</TABLE>
________________
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
<PAGE>
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
</TABLE>
Note: With respect to the "Requirements" column in the matrix above: (i) no
asterisk next to a Requirement entry shall mean that it is the responsibility of
RS alone as per the agreement; (ii) a single asterisk (*) next to a Requirement
entry shall mean that it is in the control of MF in enabling RS in its
obligations hereunder and, to the extent MF does not provide for such a
Requirement, RS will not be responsible for such functionality hereunder; and
(iii) a double asterisk (**) next to a Requirement entry shall mean that
enabling it is in the joint control of MF and RS to the extent that the
development necessary on the API and Enhanced POS System to enable such
Requirement is the responsibility of RS but RS will not be responsible for a
failure by MF to implement elements on its interface or systems which cause the
failure to effectively implement such Requirement.
- -----------------------
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
<PAGE>
In addition to the above requirements for the New API, the Enhanced POS System
shall include the following functionality that exists within *** or ***:
<TABLE>
- ----------------------------------------------------------------------------------
<S> <C> <C> <C>
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
*** *** *** ***
- ----------------------------------------------------------------------------------
</TABLE>
In addition to the above requirements, the parties agree to discuss specific
features and implementation of *** for implementation with the Enhanced POS
System.
- -----------------------
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
<PAGE>
<TABLE>
- ---------------------------------------------------------------------------------------
<S> <C>
Delivery The individual requirements will be bundled and implemented as part of
Schedule the following three releases:
+***
The releases are scheduled as follows (which dates may be modified as
appropriate by mutual agreement of the parties):
***
The milestones for each release are as follows:
+Requirements
+Design
+Build
+QA
+Roll Out
***
-Such release *** milestone dates will be agreed to by the parties as
appropriate to achieve commercial release of such releases according to
the dates for such commercial releases listed in this Exhibit A above.
- ---------------------------------------------------------------------------------------
</TABLE>
+ = Greater than
<PAGE>
EXHIBIT B
PERFORMANCE STANDARDS
---------------------
A. Enhanced POS System/New API. At all times, no less than *** percent
- -------------------------------
(***%) of all theaters using the Enhanced POS System (including the New API) or
another RS POS System for the Entertainment Segment shall conform to the
following performance standards:
I. RS equipment (non-ATMs) and software will not be out-of-service, or
actually or effectively inoperable for reasons within RS's reasonable
control for more than:
A. ***% of the time, on a twenty-four hours per day/seven days per week
basis, for any three months in a consecutive *** month period.
B. ***% of the time, on a twenty-four hours per day/seven days per week
basis, in any one month.
C. ***% of the time, on a twenty-four hours per day/seven days per week
basis, in any two week period.
II RS ATM equipment and software will not be out-of-service or actually or
effectively inoperable for reasons within RS's reasonable control for more
than:
A. ***% of the time, on a twenty-four hours per day/seven days per week
basis, for any three months in a consecutive *** month period.
B. ***% of the time, on a twenty-four hours per day/seven days per week
basis, in any one month.
C. ***% of the time, on a twenty-four hours per day/seven days per week
basis, in any two week period.
III. The New API shall conform to the following performance standards (net of
network time not in the control of RS): *** percent (***%) of the time the
New API will be able to process sales related transactions (to include
tickets, concessions, merchandise or any other item available through the
New API) within *** after the MF System queries the Enhanced POS System
through the New API. Also, *** percent (***%) of the time the New API will
be able to process all non-sales transactions (including but not limited to
schedule requests, sales recaps, or any other non-sale transaction
available through the New API) within *** after the MF System queries the
Enhanced POS System through the New API.
_______________
*** Denotes information that has been omitted from this Exhibit pursuant
to a confidential treatment request filed with the Commission.
<PAGE>
IV. Performance Reporting
The parties will mutually agree on appropriate quarterly reporting (and
process and format therefore) by RS and MF to allow the other party to
monitor the performance requirements under this Exhibit B (including
without limitation the content, form and frequency of such reporting).
V The parties agree that for the purpose of Sections I and II above, RS will
not be held responsible for downtime with respect to a particular RS
equipment or RS ATM failure under Sections I and II to the extent that such
downtime is due to reasonable delays in responding to and/or fixing such a
failure which is the result of the failure of an exhibitor to report a
problem and where RS does not actually know, or should not otherwise
reasonably have known about such problem.
B. MF System Performance. The primary MF telephone interface and the generally
available MF web site currently located at www.MovieFone.com (the "MovieFone
-----------------
Systems") will have uptime rates reasonably commensurate with industry standard
rates for such systems. In the event that MF fails to meet such standards
during a quarter of the Term, and fails to cure such failure within 30 days of
notice of such failure by RS, then to the extent such failure is causing
material increases in RS's customer support costs, the parties will meet and
agree on measures to address such increased RS costs (and such measures will be
RS's sole remedy for such MF failure).
<PAGE>
EXHIBIT C
MINIMUM TRAINING, SUPPORT AND MAINTENANCE
-----------------------------------------
I. Support Requirements.
--------------------
A. Each of RS and MF will notify the other's support desk before their
system is taken offline for any type of scheduled maintenance.
B. Each of RS and MF will notify the other's support desk once a system,
which was taken offline for scheduled maintenance, is brought back
online.
C. RS' scheduled maintenance of POS Systems for the Entertainment Segment
and MF's scheduled maintenance of the MovieFone Systems will occur
during non-peak times.
II. New Theater Installation - once an exhibitor has communicated to RS that a
------------------------
theater should be available for remote ticketing through MF using the New
API and the Enhanced POS System:
A. RS, while performing the Enhanced POS System installation (to the
extent that RS or an agent of RS is performing such installation),
will provide MF resources to install and activate the ticketing
interface.
B. MF will provide resources to RS to activate the theater for remote
ticketing services while the RS installation team is onsite.
C. RS will provide remote ticketing training for the theater at the time
of the installation of the Enhanced POS System. The installation will
not be considered complete unless remote ticketing activation is
complete.
D. To the extent that an exhibitor is not otherwise paying for the
training, maintenance and ongoing support resources committed by RS
under this Section II above, then MF will reimburse RS for such
resources consistent with the provisions of Section 3.8 of the
Agreement (and in the event that MF declines to reimburse RS in such
situations, then RS shall not have responsibility for such training,
maintenance and ongoing support hereunder for such exhibitor).
III. Existing Theater Activation - once an exhibitor has communicated to RS that
---------------------------
a theater with an RS POS System already installed should be available for
remote ticketing through MF:
A. RS will configure and setup the theater to accommodate remote
ticketing for MF within a reasonable period of time not to exceed
*** days after such communication.
___________________________
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
<PAGE>
B. MF will provide the necessary resources to RS to activate the theater
for remote ticketing services while RS is configuring the theater.
C. RS will provide remote ticketing training for the theater before
remote ticketing is established.
D. To the extent that an exhibitor is not otherwise paying for the
training resources committed by RS under this Section III above, then
MF will reimburse RS for such resources consistent with the provisions
of Section 3.8 of the Agreement (and in the event that MF declines to
reimburse RS in such situations, then RS shall not have responsibility
for such training hereunder for such exhibitor).
IV. Training - Subject to the fee provisions of Sections II.D. and III. D.
--------
above, Training will be provided by RS before the activation of remote
ticketing. Additionally, RS (in reasonable consultation with MF) will
create and update training and user documentation related to using and
maintaining remote ticketing availability and use of the Enhanced POS
System. This documentation will be integrated into the POS System
documentation. Such training will include all *** functions and capability.
When RS is providing installation on hardware per arrangement with an
exhibitor, RS will provide all necessary training on the day-to-day use of
upkeep on hardware items including, but not limited to, proper replacement
of ticket stock, ticket paper, ribbons, etc on all printers and ATMs.
V. Ongoing Support - RS will respond to, and will use all reasonable efforts
---------------
to resolve, any problems with the New API from *** to *** daily local time.
RS will resolve problems related to the New API not functioning properly
within the *** from the time a problem with the New API is presented to RS.
If the theater is ranked by MF as one of its top 50 theaters RS will
resolve any issues with the API within *** during peak times (peak times
are defined as Friday, Saturday, Holidays, and Wednesdays, if there is a
Wednesday opening). Problems may be communicated to RS by MF or by the
exhibitor directly to RS. Additionally, RS agrees to support at least the
previous *** releases of the Enhanced POS System beginning with the Initial
Enhanced POS System (with all releases of the Enhanced POS system,
including without limitation the Initial Enhanced POS System scheduled
pursuant to Exhibit A to this Agreement counting as one release for the
purposes of this paragraph V). RS will also support the third pervious
major version release of the Enhanced POS System in certain cases where
appropriate.
VI. RS and MF both will provide a liaison to be the point of contact for the
other party to handle escalation of problems. Such RS and MF point persons
shall be available, if the RS support desk (or equivalent MF support
system) is not able to resolve a problem effectively or if there are
special circumstances. MF and RS will jointly determine escalation plans
and assign specific personnel to escalation roles.
__________________________
*** Denotes information that has been omitted from this Exhibit pursuant
to a confidential treatment request filed with the Commission.
<PAGE>
VII. Reporting - in order to identify trends and help MF and RS find ways to
---------
make the remote ticketing interface better RS and MF shall provide
appropriate reporting to each other as shall be further agreed to. At
minimum, RS shall provide *** reports to MF no less than quarterly as
follows (in a format and/or alternate reports as may be mutually agreed):
Problem Category Report - providing a summary of all of the types of
problems with the API and Enhanced POS System experienced in the
reporting period. This report may also include issues concerning the
network mounting, application not running, etc. as appropriate.
Theater Problem Report - providing a summary of all the theaters which
had problems with the API and the Enhanced POS System and the types of
problems they had.
Statistical Summary - provide a top line summary of all of the calls
RS/MF help desk calls relating to the API and the Enhanced POS System,
the types of problems, and the time to resolve. It should also include
comparisons to prior periods.
VIII. Any enhancements made to the API by a customer's request must be
incorporated into the existing API and the enhanced API will continue to
support all prior functionality of the API.
_____________________
*** Denotes information that has been omitted from this Exhibit pursuant
to a confidential treatment request filed with the Commission.
<PAGE>
EXHIBIT D
MARKETING PLAN
--------------
I. Marketing Focus: MF and RS will immediately begin to jointly market the
benefits of the Enhanced POS System and New API to exhibitors. RS shall
leverage it relationship with existing clients to secure meetings to
deliver joint presentations. Additionally, MF and RS shall coordinate
their respective efforts, responsibilities and client messages at major
industry events, including but not limited to *** and ***. The parties
will work together to mutually agree on appropriate guidelines for joint
marketing to clients by 3/31/2000.
II. Training: All relevant MF and RS *** personnel will be initially and
regularly trained on the customer benefits of the Enhanced POS System and
New API and the value of the MF/RS partnership. MF and RS will organize
and schedule joint training sessions that include representatives from
both MF and RS to ensure a consistent message and comprehensive coverage
of MF and RS specialties and core competencies.
III. Personnel: MF will dedicate specific personnel responsible for
championing the Enhanced POS System and New API internally and within the
marketplace. MF & RS will assign specific marketing personnel to work
together to plan customer positioning events such as trade shows and
sponsorship opportunities. MF and RS sales personnel will meet regularly
to identify discuss and plan for sales opportunities. MF will also meet
with RS to share research, results, selling and positioning techniques,
training methods and implementation procedures for the purpose of selling
reserved seating. MF's reserved seating product manager will also be
available to accompany RS sales representatives on reserved seating sales
presentations and demonstrations. MF and RS will develop a communications
plan and escalation path between the respective account management, help
desk and client services organizations to ensure optimal customer service
and a unified approach to common clients. The managers of these
organizations (and of other personnel involved in implementing the
Marketing Plan outlined in this Exhibit D) shall meet on *** basis to
ensure results and commonality.
IV. Marketing Collateral:
- MF will include RS as its preferred provider in any appropriate
technology demonstrations highlighting the remote ticketing solution
at trade shows, sales calls and other industry events within a
reasonable time after the execution of this Agreement.
- MF and RS shall jointly develop and regularly update a joint
presentation that outlines the benefits of the Enhanced POS System and
New API to exhibitors no later than March 31, 2000.
________________
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
<PAGE>
- The parties will develop a comprehensive sales proposal to be
updated and customized for use with individual sales opportunities no
later than March 31, 2000.
- MF and RS will jointly agree on the contents of a letter
regarding the marketing relationship hereunder, targeted and to be
sent to mutually agreed upon exhibitors no later than March 31, 2000.
V. Pricing - From time to time MF may determine that purchasing RS POS
equipment on behalf of a client will prove strategically valuable. In
such cases RS shall provide such equipment to MF at the *** of:
1. Pricing consistent with industry standard pricing for such
equipment and
2. The *** offered to *** for such equipment during the *** (provided
that RS is not expressly prohibited from offering such pricing in
line with a particular RS customer contract).).
VI. Roll Out Schedule - MF and RS shall prioritize Customers for which RS
shall perform its obligations under Section 4.5 of the Agreement in
accordance with the following schedule.
Top ***%: within *** months of commercial release
Next ***%: within *** months of commercial release
Next ***%: within *** months of commercial release
Final ***%: within *** months of commercial release
VII. Strategic Meetings - as provided in Sections 4.1 and 4.4 of the Marketing
and Development Agreement, MF and RS shall review (and consider potential
modifications to) this Marketing Plan at the strategic meetings contemplated by
Section 4.4.
_____________________
*** Denotes information that has been omitted from this Exhibit pursuant
to a confidential treatment request filed with the Commission.
<PAGE>
EXHIBIT E
INCENTIVE PLAN
--------------
To ensure maximum marketing coverage for the MF/RS remote ticketing solution MF
will institute a commission plan for its Exhibitor Relations sales team to
encourage the positioning and sale of the Enhanced POS System to Exhibitors. The
commission will be incremental to the existing plan to ensure maximum incentive.
MF will pay its incentive based sales team $*** that include the Enhanced POS
System. This Plan will introduce significant upside to the teams' existing plan.
Strategic Meetings - as provided in Sections 4.1 and 4.4 of the Marketing and
Development Agreement, MF and RS shall review (and consider potential
modifications to) this Incentive Plan at the strategic meeting contemplated by
Section 4.4.
_______________
*** Denotes information that has been omitted from this Exhibit pursuant
confidential treatment request filed with the Commission.
<PAGE>
EXHIBIT F
CONTRACTS AND CUSTOMER ARRANGEMENTS
-----------------------------------
***
***
***
***
***
***
***
***
***
***
________________________
*** Denotes information that has been omitted from this Exhibit pursuant to a
confidential treatment request filed with the Commission.
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