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
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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
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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
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(a) Purchase and Sale. In reliance upon the representations,
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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
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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
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Section 1 to be performed at the Closing are subject to satisfaction of the
following conditions:
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(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
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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.
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(e) Registration Rights. The Purchaser shall have the registration
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rights specified in Registration Rights Statement attached hereto as Exhibit A.
2. Representations and Warranties of the Company. The Company hereby
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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
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Bylaws; Subsidiaries. Each of the Company and each of its material subsidiaries
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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
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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.
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(i) Corporate Action. All corporate and legal action on the
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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
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to this Agreement, will be validly issued, fully-paid and nonassessable.
(iii) No Preemptive Rights. No person has any right of first
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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
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performance of and compliance with this Agreement nor the issuance and sale of
the
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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,
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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
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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
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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
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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
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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
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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
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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.
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(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
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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,
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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'
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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
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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
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represents, and warrants to, and covenants with, the Company as follows:
(a) Investment Intent; Authority. The Purchaser is acquiring the
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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
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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"
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within the meaning of SEC Rule 501, as presently in effect.
4. Covenants.
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(a) Restrictions on Additional Purchases of Company Stock. The
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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
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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
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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
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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
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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
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(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.
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(a) Waivers and Amendments. Any provision of this Agreement may be
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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
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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
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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
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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
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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
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shall be in writing and shall be deemed to have been duly given at the time of
receipt if
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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
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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
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counterparts, and a Party's delivery of a signed counterpart by facsimile
transmission shall constitute that Party's due execution of this Agreement.
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(i) Business Day. As used herein, "Business Day" means any day other
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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.
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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
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Name: John Heyman
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Title: Chief Financial Officer
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AMERICA ONLINE, INC.
By: /s/ David M. Colburn
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Name: David M. Colburn
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Title: President, Business Affairs
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EXHIBIT 10.1 Execution Copy
EXHIBIT A
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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:
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(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
(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
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
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
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
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
(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,
7
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
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
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
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