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STOCK PURCHASE AGREEMENT
BY AND AMONG
OPTIO SOFTWARE, INC.,
XXXXXXX CORPORATION,
SHAREHOLDERS OF XXXXXXX CORPORATION,
XXXXXXX X. XXXXXXX
AND
XXXXXXXX XXXXXXX
DATED AS OF MARCH 27, 2000
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TABLE OF CONTENTS
PAGE
ARTICLE I PURCHASE AND SALE...................................................................................... 1
1.1 AGREEMENT TO PURCHASE AND SELL SHARES......................................................... 1
1.2 PURCHASE PRICE................................................................................ 1
1.3 CLOSING....................................................................................... 2
1.4 SHAREHOLDER DELIVERABLES...................................................................... 2
ARTICLE II REPRESENTATIONS AND WARRANTIES OF XXXXXXX AND AFFILIATES.............................................. 2
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES ................................................. 2
2.2 ARTICLES OF INCORPORATION AND BYLAWS ......................................................... 3
2.3 CAPITALIZATION ............................................................................... 3
2.4 XXXXXXX'X AUTHORITY RELATIVE TO THIS AGREEMENT ............................................... 4
2.5 AFFILIATES' AUTHORITY RELATIVE TO THIS AGREEMENT ............................................. 4
2.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS ................................................... 4
2.7 COMPLIANCE; PERMITS .......................................................................... 5
2.8 FINANCIAL STATEMENTS ......................................................................... 5
2.9 NO UNDISCLOSED LIABILITIES ................................................................... 6
2.10 ABSENCE OF CERTAIN CHANGES OR EVENTS ......................................................... 6
2.11 ABSENCE OF LITIGATION ........................................................................10
2.12 EMPLOYEE BENEFIT PLANS .......................................................................10
2.13 LABOR MATTERS ................................................................................13
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES ..........................................................13
2.15 TITLE TO PROPERTY ............................................................................13
2.16 REAL PROPERTY LEASES .........................................................................14
2.17 TAXES ........................................................................................15
2.18 ENVIRONMENTAL MATTERS ........................................................................17
2.19 BROKERS ......................................................................................18
2.20 INTELLECTUAL PROPERTY ........................................................................18
2.21 AGREEMENTS, CONTRACTS AND COMMITMENTS ........................................................22
2.22 INSURANCE ....................................................................................24
2.23 CERTAIN BUSINESS RELATIONSHIPS WITH XXXXXXX ..................................................25
2.24 CUSTOMERS AND SUPPLIERS ......................................................................25
2.25 CERTAIN PAYMENTS .............................................................................25
2.26 EMPLOYEES AND CONSULTANTS ....................................................................25
2.27 NOTES AND ACCOUNTS RECEIVABLE ................................................................26
2.28 PRODUCT WARRANTY .............................................................................26
2.29 COMPLETE COPIES OF MATERIALS .................................................................26
2.30 XXXX-XXXXX-XXXXXX REPRESENTATIONS ............................................................26
2.31 BANK ACCOUNTS ................................................................................26
2.32 AMOUNTS OWING ................................................................................27
2.33 POWERS OF ATTORNEY ...........................................................................27
2.34 REPRESENTATIONS COMPLETE .....................................................................27
ii
ARTICLE III REPRESENTATIONS AND WARRANTIES OF OPTIO.................................................................27
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES .....................................................27
3.2 ARTICLES OF INCORPORATION AND BYLAWS .............................................................27
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT .............................................................27
3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS .......................................................28
3.5 FINANCIAL STATEMENTS .............................................................................28
3.6 BROKERS ..........................................................................................29
3.7 BOARD APPROVAL ...................................................................................29
3.8 ABSENCE OF LITIGATION ............................................................................29
ARTICLE IV ADDITIONAL AGREEMENTS....................................................................................29
4.1 PURCHASE PRICE ADJUSTMENTS .......................................................................29
4.2 CONFIDENTIALITY; ACCESS TO INFORMATION ...........................................................30
4.3 PUBLIC DISCLOSURE ................................................................................30
4.4 REASONABLE EFFORTS; NOTIFICATION .................................................................30
4.5 POST CLOSING COVENANTS ...........................................................................31
4.6 LITIGATION SUPPORT ...............................................................................31
4.7 TERMINATION OF 401(k) PLAN .......................................................................31
4.8 TERMINATION OF SEVERANCE PLAN ....................................................................31
ARTICLE V CONDITIONS TO THE TRANSACTION.............................................................................32
5.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE TRANSACTION ................................32
5.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE AFFILIATES ...........................................32
5.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF OPTIO ................................................33
ARTICLE VI SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SETOFF.......................................................35
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS ............................................35
6.2 XXXXXXX INDEMNIFICATION ..........................................................................35
6.3 OPTIO INDEMNIFICATION ............................................................................38
ARTICLE VII FEES, AMENDMENT AND WAIVER..............................................................................40
7.1 FEES AND EXPENSES ................................................................................40
7.2 AMENDMENT ........................................................................................40
7.3 EXTENSION; WAIVER ................................................................................40
ARTICLE VIII GENERAL PROVISIONS.....................................................................................40
8.1 NOTICES ..........................................................................................40
8.2 INTERPRETATION; DEFINITIONS ......................................................................42
8.3 COUNTERPARTS .....................................................................................43
8.4 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES ......................................................43
8.5 SEVERABILITY .....................................................................................44
8.6 OTHER REMEDIES; SPECIFIC PERFORMANCE .............................................................44
8.7 GOVERNING LAW; BINDING ARBITRATION ...............................................................44
8.8 RULES OF CONSTRUCTION ............................................................................44
8.9 ASSIGNMENT .......................................................................................45
iii
INDEX OF EXHIBITS
Exhibit A Promissory Note
Exhibit B Form of Optio Legal Opinion
Exhibit C Form of Related Company Release
Exhibit D Form of Noncompetition Agreement
Exhibit E Form of Xxxxxxx Legal Opinion
Exhibit F Employment Agreements
Exhibit G Form of Affiliate Release
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT is made and entered into as of March 27,
2000, among Optio Software, Inc., a Georgia corporation ("OPTIO"), Xxxxxxx
Corporation, a Florida corporation ("XXXXXXX"), the MA Xxxxxxx Family Limited
Partnership I, of which the Xxxxxxx X. Xxxxxxx Family Trust, with X. Xxxxxxx (as
defined below) as trustee, and the Xxxxx X. Xxxxxxx Family Trust, with Xxxxx
Xxxxxxx as trustee, are the general partners (the "MA LP"), the Xxxxxxx Family
Limited Partnership I, of which the Xxxxxxxx X. Xxxxxxx Family Trust, with X.
Xxxxxxx (as defined below) as trustee, and the Xxxxxxxxx X. Xxxxxxx Family
Trust, with Xxxxxxxxx Xxxxxxx as trustee, are the general partners (the "XXXXXXX
XX"), and Xxxxx Xxxxxx ("XXXXXX") (each of MA LP, Xxxxxxx XX and Xxxxxx are
separately referred to herein as a "SHAREHOLDER" and collectively as the
"SHAREHOLDERS"), Xxxxxxx X. Xxxxxxx ("X. XXXXXXX"), and Xxxxxxxx Xxxxxxx ("X.
XXXXXXX") (each of X. Xxxxxxx and X. Xxxxxxx are separately referred to herein
as a "PRINCIPAL" and collectively as the "PRINCIPALS") (the Shareholders and
the Principals shall collectively be referred to herein as "AFFILIATES"). Optio,
Xxxxxxx, each Shareholder and each Principal are sometimes referred to herein
individually as a "PARTY" and collectively as the "PARTIES".
RECITALS
A. Prior to this Agreement, but not in connection with the
transactions contemplated herein, X. Xxxxxxx and X. Xxxxxxx, as former
shareholders of Xxxxxxx, transferred all of their ownership interests in
Xxxxxxx to certain family limited partnerships of which they are the general
partners and over which they maintain control.
B. The Shareholders own all of the issued and outstanding shares of
capital stock (the "SHARES") of Xxxxxxx.
C. The Shareholders desire to sell, and Optio desires to purchase,
all of the Shares owned by the Shareholders.
NOW, THEREFORE, in consideration of the covenants, promises and
representations set forth herein, and for other good and valuable consideration,
the receipt and sufficiency of which are hereby acknowledged, the parties agree
as follows:
ARTICLE I
PURCHASE AND SALE
1.1 AGREEMENT TO PURCHASE AND SELL SHARES. Subject to the terms and
conditions of this Agreement, the Shareholders agree to sell, transfer and
assign to Optio, and Optio agrees to purchase, on the Closing Date (as defined
in Section 1.3 below), all of the Shares of Xxxxxxx, free and clear of all
security interests, pledges, liens, encumbrances, charges, or restrictions on
the ownership, use, voting, transfer, receipt of dividends or other attributes
of ownership (the "TRANSACTION").
1.2 PURCHASE PRICE.
(a) The aggregate purchase price (the "PURCHASE PRICE") shall
be Twenty-Eight Million and No/100 Dollars ($28,000,000.00), subject to the
adjustments made, if any, pursuant to Section 4.1 of this Agreement. The
Purchase Price shall be allocated among the Shareholders in the manner set forth
on Schedule 1.2(a) attached hereto.
(b) Subject to Section 4.1 hereof, at the Closing,
$20,000,000 shall be paid to the Shareholders in cash (the "CASH PAYMENT") in
accordance with the allocations set forth on Schedule 1.2(a), and $8,000,000
(the "DEFERRED PAYMENT") shall be subject to three (3) promissory notes
substantially in the form of EXHIBIT A attached hereto (the "PROMISSORY
NOTE").
1.3 CLOSING. Subject to the terms and conditions hereof, the closing
("CLOSING") shall take place at the offices of Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.,
1600 Atlanta Financial Center, 0000 Xxxxxxxxx Xxxx, X.X., Xxxxxxx, Xxxxxxx on
March 27, 2000 (the "CLOSING DATE").
1.4 SHAREHOLDER DELIVERABLES. At the Closing the Shareholders shall
deliver to Optio the certificates representing the Shares, duly endorsed in
blank by the Shareholders or accompanied by signed stock powers duly executed in
blank by the Shareholders. The Shareholders agree to cure promptly any
deficiencies with respect to the endorsement of the certificates or other
documents of conveyance with respect to the Shares or with respect to the stock
powers accompanying the Shares.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF XXXXXXX AND AFFILIATES
As of the date hereof and as of the Closing Date, each of Xxxxxxx and
each Affiliate, jointly and severally, hereby represents, warrants and covenants
to Optio subject to such exceptions as are specifically disclosed in writing in
the Schedules attached hereto (the "XXXXXXX SCHEDULES") as follows (nothing in
any schedule shall be deemed adequate to disclose an exception to a
representation or warranty made herein, however, unless such schedule identifies
the exception with reasonable particularity and describes the relevant facts in
reasonable detail such that the facts, information or events disclosed can be
readily verified or ascertained from the books records, and files of Xxxxxxx or
the Affiliates. Without limiting the generality of the foregoing, the mere
listing (or inclusion of a copy) of a document or other item shall not be deemed
adequate to disclose an exception to a representation or warranty made herein
(unless the representation or warranty has to do with the existence of the
document or other item itself)):
2.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES.
(a) Xxxxxxx is a corporation duly organized, validly existing
and in good standing under the laws of the jurisdiction of its incorporation and
has the requisite corporate power and authority to own, lease and operate its
assets and properties and to carry on its business as it is now being conducted.
Xxxxxxx is in possession of all franchises, grants, authorizations, licenses,
permits, easements, consents, certificates, approvals and orders ("APPROVALS")
necessary to own, lease and operate the properties it purports to own, operate
or
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lease and to carry on its business as it is now being conducted, except where
the failure to have such approvals would not, individually or in the aggregate,
be material to Xxxxxxx. Xxxxxxx is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, be material to Xxxxxxx.
(b) Xxxxxxx has no subsidiaries. Xxxxxxx has not agreed nor is
obligated to make nor is bound by any written, oral or other agreement,
contract, subcontract, lease, binding understanding, instrument, note, option,
warranty, purchase order, license, sublicense, insurance policy, benefit plan,
commitment or undertaking of any nature, as of the date hereof or as may
hereafter be in effect (a "CONTRACT") under which it may become obligated to
make, any future investment in or capital contribution to any other entity.
Xxxxxxx does not directly or indirectly own any equity or similar interest in or
any interest convertible, exchangeable or exercisable for, any equity or similar
interest in, any corporation, partnership, joint venture or other business,
association or entity.
2.2 ARTICLES OF INCORPORATION AND BYLAWS. Xxxxxxx has previously
furnished to Optio a complete and correct copy of its Articles of Incorporation
and Bylaws as amended to date (together, the "XXXXXXX CHARTER DOCUMENTS"). Such
Xxxxxxx Charter Documents are in full force and effect. Xxxxxxx is not in
violation of any of the provisions of the Xxxxxxx Charter Documents.
2.3 CAPITALIZATION.
(a) The authorized capital stock of Xxxxxxx consists of seven
thousand five hundred (7,500) shares of Xxxxxxx Common Stock, $1.00 par value
per share. As of the Closing Date, four hundred (400) shares of Xxxxxxx Common
Stock are issued and outstanding, all of which are validly issued, fully paid
and nonassessable and no shares of Xxxxxxx Common Stock were held in treasury by
Xxxxxxx. All shares of Xxxxxxx Common Stock are owned of record and beneficially
by the Shareholders free and clear of all Liens (as defined below) and in the
amounts set forth on Schedule 2.3(a). All outstanding shares of Xxxxxxx Common
Stock have been issued and granted in compliance with (i) all applicable
securities laws and other applicable Legal Requirements (as defined below) and
(ii) all requirements set forth in applicable Contracts. For the purposes of
this Agreement, "LEGAL REQUIREMENTS" means any federal, state, local, municipal,
foreign or other law, statute, constitution, principle of common law,
resolution, ordinance, code, edict, decree, rule, regulation, ruling or
requirement issued, enacted, adopted, promulgated, implemented or otherwise put
into effect by or under the authority of any Governmental Entity (as defined
below) and (ii) all requirements set forth in applicable contracts, agreements,
and instruments.
(b) Except for Xxxxxxx securities owned by the Shareholders
free and clear of all liens, pledges, hypothecations, charges, mortgages,
security interests, encumbrances, claims, infringements or interferences
(collectively, "LIENS"), as of the date of this Agreement, there are no equity
securities, partnership interests or similar ownership interests of any class of
equity
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security of Xxxxxxx, or any security exchangeable or convertible into or
exercisable for such equity securities, partnership interests or similar
ownership interests, issued, reserved for issuance or outstanding. Except as set
forth in Section 2.3(a) there are no subscriptions, options, warrants, equity
securities, partnership interests or similar ownership interests, calls, rights
(including preemptive rights), commitments or agreements of any character to
which Xxxxxxx is a party or by which it is bound obligating Xxxxxxx to issue,
deliver or sell, or cause to be issued, delivered or sold, or repurchase, redeem
or otherwise acquire, or cause the repurchase, redemption or acquisition of, any
shares of capital stock, partnership interests or similar ownership interests of
Xxxxxxx or obligating Xxxxxxx to xxxxx, extend, accelerate the vesting of or
enter into any such subscription, option, warrant, equity security, call, right,
commitment or agreement. As of the date of this Agreement, except as
contemplated by this Agreement, there are no registration rights and there is no
voting trust, proxy, rights plan, anti-takeover plan or other agreement or
understanding to which Xxxxxxx is a party or by which they are bound with
respect to any equity security of any class of Xxxxxxx.
2.4 XXXXXXX'X AUTHORITY RELATIVE TO THIS AGREEMENT. Xxxxxxx has all
necessary corporate power and authority to execute and deliver this Agreement
and to perform its obligations hereunder. The execution and delivery of this
Agreement by Xxxxxxx and the consummation by Xxxxxxx of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Xxxxxxx and no other proceedings on the part of
Xxxxxxx is necessary to authorize this Agreement or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Xxxxxxx and, assuming the due authorization, execution and
delivery by Optio constitutes legal and binding obligations of Xxxxxxx,
enforceable against Xxxxxxx in accordance with its terms except (i) as limited
by applicable bankruptcy, insolvency, reorganization, moratorium and other laws
of general application affecting enforcement of creditors' rights generally and
(ii) as limited by laws relating to the availability of specific performance,
injunctive relief, or other equitable remedies.
2.5 AFFILIATES' AUTHORITY RELATIVE TO THIS AGREEMENT. The Affiliates
have all necessary power and authority to execute and deliver this Agreement and
to perform their obligations hereunder. The execution and delivery of this
Agreement by the Affiliates and the consummation by the Affiliates of the
transactions contemplated hereby have been duly and validly authorized by all
necessary action on the part of the Affiliates and no other proceedings on the
part of the Affiliates are necessary to authorize this Agreement or to
consummate the transactions so contemplated. This Agreement has been duly and
validly executed and delivered by the Affiliates and, assuming the due
authorization, execution and delivery by Optio constitutes the legal and binding
obligation of the Affiliates, enforceable against the Affiliates in accordance
with its terms except (i) as limited by applicable bankruptcy, insolvency,
reorganization, moratorium and other laws of general application affecting
enforcement of creditors' rights generally and (ii) as limited by laws relating
to the availability of specific performance, injunctive relief, or other
equitable remedies.
2.6 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) Except as set forth on Schedule 2.6, the execution and
delivery of this Agreement by Xxxxxxx and the Affiliates does not, and the
performance of this Agreement by
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Xxxxxxx and the Affiliates shall not, (i) conflict with or violate Xxxxxxx
Charter Documents, (ii) conflict with or violate any law, rule, regulation,
order, judgment or decree applicable to Xxxxxxx or the Affiliates or by which
its or any of their respective properties are bound or affected, or (iii) result
in any breach of or constitute a default (or an event that with notice or lapse
of time or both would become a default) under, or impair Xxxxxxx'x rights or
alter the rights or obligations of any third party under, or give to others any
rights of termination, amendment, acceleration or cancellation of, or result in
the creation of a lien or encumbrance on any of the properties or assets of
Xxxxxxx pursuant to, any note, bond, mortgage, indenture, contract, agreement,
lease, license, permit, franchise or other instrument or obligation to which
Xxxxxxx is a party or by which Xxxxxxx or its or any of their respective
properties are bound or affected.
(b) The execution and delivery of this Agreement by Xxxxxxx
and the Affiliates does not, and the performance of this Agreement by Xxxxxxx
and the Affiliates shall not, require any consent, approval, authorization or
permit of, or filing with or notification to, any court, administrative agency,
commission, governmental or regulatory authority, domestic or foreign (a
"GOVERNMENTAL ENTITY"), except where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
would not be material to Xxxxxxx or Optio or have a Material Adverse Effect on
the parties hereto, prevent the consummation of the Transaction or otherwise
prevent the parties hereto from performing their obligations under this
Agreement.
2.7 COMPLIANCE; PERMITS.
(a) Xxxxxxx is not in conflict with, or in default or
violation of, (i) any law, rule, regulation, order, judgment or decree
applicable to Xxxxxxx or by which its properties are bound or affected, or (ii)
any material note, bond, mortgage, indenture, contract, agreement, lease,
license, permit, franchise or other instrument or obligation to which Xxxxxxx is
a party or by which Xxxxxxx or its properties are bound or affected, except for
any conflicts, defaults or violations that (individually or in the aggregate)
would not cause Xxxxxxx to lose any material benefit or incur any material
liability. No investigation or review by any governmental or regulatory body or
authority is pending or, to the knowledge of Xxxxxxx or the Affiliates,
threatened against Xxxxxxx, nor has any governmental or regulatory body or
authority indicated an intention to conduct the same, other than, in each such
case, those the outcome of which could not, individually or in the aggregate,
reasonably be expected to have the effect of prohibiting or materially impairing
any business practice of Xxxxxxx, any acquisition of material property by
Xxxxxxx or the conduct of business by Xxxxxxx.
(b) Except as set forth on Schedule 2.7, Xxxxxxx holds all
permits, licenses, variances, exemptions, orders and approvals from governmental
authorities which are material to operation of the business of Xxxxxxx
(collectively, the "XXXXXXX PERMITS"), which Xxxxxxx Permits shall vest in or be
held by Xxxxxxx after the Closing with no action, approval or filing by Xxxxxxx.
Xxxxxxx is in compliance in all material respects with the terms of Xxxxxxx
Permits.
2.8 FINANCIAL STATEMENTS.
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(a) Xxxxxxx has provided to Optio its (i) reviewed balance
sheets as of March 31, 1997 and 1998, (ii) audited balance sheet as of Xxxxx 00,
0000, (xxx) reviewed statements of operations, statements of shareholders'
equity and statements of cash flows for the twelve month periods ended March 31,
1997 and 1998, and (iv) audited statements of operations, statements of
shareholders' equity and statements of cash flows for the twelve month period
ended March 31, 1999 (collectively, the "YEARLY FINANCIAL STATEMENTS"). Xxxxxxx
has also provided to Optio its unaudited balance sheet as of February 29, 2000
(the "MOST RECENT BALANCE SHEET") and its unaudited statement of operations for
the approximately 51 week period ended March 24, 2000 (the "MOST RECENT INCOME
STATEMENT", together with the Most Recent Balance Sheet and the Yearly Financial
Statements, collectively, the "FINANCIAL STATEMENTS"). Each of the Financial
Statements was prepared in accordance with generally accepted accounting
principles ("GAAP") applied on a consistent basis throughout the periods
involved (except as may be indicated in the notes thereto and, in the case of
unaudited statements, they do not contain footnotes and Xxxxxxx has accrued all
expenses through March 24, 2000 as discussed with Optio and Xxxxxxx adjusted its
accounts receivable to reflect a reserve of $310,000 for doubtful accounts) and
each fairly presents the consolidated financial position of Xxxxxxx at the
respective dates thereof and the consolidated results of its operations and cash
flows for the periods indicated, except that the unaudited interim financial
statements were or are subject to normal adjustments which were not or are not
expected to be, individually or in the aggregate, material in amount.
(b) From March 31, 1999 to the Closing Date, the Affiliates
have not withdrawn and will not withdraw, in excess of $2,500,000 in the
aggregate, as dividends, shareholders distributions or as compensation. There
are no reserved and unpaid dividends or other distributions, not any obligations
of Xxxxxxx to pay any dividends or distributions to the Affiliates. For
Xxxxxxx'x fiscal year ended March 31, 1999, total dividends and compensation
paid to the Affiliates was approximately $1,500,000, in the aggregate.
2.9 NO UNDISCLOSED LIABILITIES. Xxxxxxx has no liabilities (absolute,
accrued, contingent or otherwise) which are, individually or in the aggregate,
material to the business, results of operations or financial condition of
Xxxxxxx, except (i) liabilities provided for in Xxxxxxx'x balance sheet as of
December 31, 1999 or (ii) liabilities incurred since December 31, 1999 in the
Ordinary Course of Business, none of which is individually or in the aggregate
are material to the business, results of operations, financial condition or
prospects of Xxxxxxx.
2.10 ABSENCE OF CERTAIN CHANGES OR EVENTS. Since December 31, 1999:
(a) there has not been any Material Adverse Effect (as defined
below) on Xxxxxxx;
(b) there has not been any declaration, setting aside or
payment of any dividend on, or other distribution (whether in cash, stock or
property) in respect of, any of Xxxxxxx'x capital stock, or any purchase,
redemption or other acquisition by Xxxxxxx of any of Xxxxxxx'x capital stock or
any other securities of Xxxxxxx or any options, warrants, calls or rights to
acquire any such shares or other securities except for repurchases from
employees following their termination pursuant to the terms of their
pre-existing stock option or purchase agreements;
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(c) Xxxxxxx has not issued, delivered, sold, authorized,
pledged or otherwise encumbered or proposed any of the foregoing with respect
to, any shares of capital stock or any securities convertible into shares of
capital stock, or subscriptions, rights, warrants or options to acquire any
shares of capital stock or any securities convertible into shares of capital
stock, or enter into other agreements or commitments of any character obligating
it to issue any such shares or convertible securities;
(d) there has not been any split, combination or
reclassification of any of Xxxxxxx'x capital stock;
(e) there has not been any granting by Xxxxxxx of any increase
in compensation or fringe benefits, except for normal increases of cash
compensation to non-officer employees in the Ordinary Course of Business (as
defined below) consistent with past practice, or any payment by Xxxxxxx of any
bonus, except for bonuses made to non-officer employees in the Ordinary Course
of Business consistent with past practice, or any granting by Xxxxxxx of any
increase in severance or termination pay or any entry by Xxxxxxx into any
currently effective employment, severance, termination or indemnification
agreement or any agreement the benefits of which are contingent or the terms of
which are materially altered upon the occurrence of a transaction involving
Xxxxxxx of the nature contemplated hereby;
(f) Xxxxxxx has not entered into any licensing or other
agreement with regard to the acquisition or disposition of any Intellectual
Property (as defined in Section 2.20);
(g) there has not been any material change by Xxxxxxx in its
accounting methods, principles or practices, except as required by concurrent
changes in GAAP;
(h) there has not been any revaluation by Xxxxxxx of any of
its assets, including, without limitation, writing down the value of capitalized
inventory or writing off notes or accounts receivable or any sale of assets of
Xxxxxxx other than in the Ordinary Course of Business;
(i) Xxxxxxx has not sold, leased, transferred, or assigned any
assets or properties, tangible or intangible, outside the Ordinary Course of
Business;
(j) Xxxxxxx has not acquired or agreed to acquire by merging
or consolidating with, or by purchasing any equity interest in or a portion of
the assets of, or by any other manner, any business or any corporation,
partnership, association or other business organization or division thereof, or
otherwise acquire or agree to acquire any assets or enter into any joint
ventures, strategic partnerships or alliances;
(k) Xxxxxxx has not entered into, assumed or become bound
under or obligated by any agreement, contract, lease or commitment (collectively
a "XXXXXXX AGREEMENT") or extended or modified the terms of any Xxxxxxx
Agreement which (i) involves the payment of greater than $10,000 per annum or
which extends for more than one (1) year, (ii) involves any payment or
obligation to any affiliate of Xxxxxxx other than in the Ordinary
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Course of Business, (iii) involves the sale of any material assets, or (iv)
involves any license of any Xxxxxxx Intellectual Property;
(l) no party (including Xxxxxxx) has accelerated, terminated,
made modifications to, or canceled any agreement, contract, lease, or license to
which Xxxxxxx is a party or by which it is bound and Xxxxxxx has not modified,
canceled or waived or settled any debts or claims held by it, outside the
Ordinary Course of Business, or waived or settled any rights or claims of a
substantial value, whether or not in the Ordinary Course of Business;
(m) none of the assets of Xxxxxxx, tangible or intangible, has
become subject to any Lien (other than assets acquired in the Ordinary Course of
Business which became subject to a bank lien under an after-acquired property
clause);
(n) Xxxxxxx has not made any capital expenditures except in
the Ordinary Course of Business and not exceeding $50,000 in the aggregate of
all such capital expenditures;
(o) Xxxxxxx has not made any capital investment in, or any
loan to, any other person;
(p) Xxxxxxx has not created, incurred, assumed, prepaid or
guaranteed any indebtedness for borrowed money and capitalized lease
obligations, or extended or modified any existing indebtedness (other than
advances under a pre-existing line of credit);
(q) Other than in the Ordinary Course of Business to Customers
pursuant to valid License Agreements discussed in the Schedules hereto, Xxxxxxx
has not granted any license or sublicense of any rights under or with respect to
any Xxxxxxx Intellectual Property (as defined below);
(r) there has been no change made or authorized in the
Articles of Incorporation or bylaws of Xxxxxxx;
(s) there has not been (i) any change in Xxxxxxx'x authorized
or issued capital stock, (ii) any grant of any stock option or right to purchase
shares of capital stock of Xxxxxxx, (iii) the issuance of any security
convertible into such capital stock, (iv) the grant of any registration rights,
(v) any purchase, redemption, retirement, or other acquisition by Xxxxxxx of any
shares of any such capital stock or (vi) any declaration or payment of any
dividend or other distribution or payment in respect of shares of capital stock;
(t) Xxxxxxx has not experienced any damage, destruction, or
loss (whether or not covered by insurance) to its property in excess of $10,000
in the aggregate of all such damage, destruction and losses;
(u) Xxxxxxx has not suffered any repeated, recurring or
prolonged shortage, cessation or interruption of communications, customer
access, supplies or utility services;
(v) Xxxxxxx has not made any loan to, or entered into any
other transaction with, or paid any bonuses in excess of an aggregate of $10,000
to, any of its affiliates, directors,
-8-
officers, or employees or their Affiliates, and, in any event, any such
transaction was on fair and reasonable terms no less favorable to Xxxxxxx than
would be obtained in a comparable arm's length transaction with a Person which
is not such a director, officer or employee or Affiliate thereof;
(w) Xxxxxxx has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of any
existing such contract or agreement;
(x) Xxxxxxx has not granted any increase in the compensation
or fringe benefits of any of its directors or officers, or, except in the
Ordinary Course of Business, any of its employees;
(y) Xxxxxxx has not adopted, amended, modified, or terminated
any bonus, profit sharing, incentive, severance, or other plan, contract, or
commitment for the benefit of any of its directors, officers, or employees (or
taken any such action with respect to any other Plan (as defined below));
(z) Xxxxxxx has not made any other change in employment terms
for any of its directors or officers, and Xxxxxxx has not made any other change
in employment terms for any other employees outside the Ordinary Course of
Business;
(aa) Xxxxxxx has not suffered any adverse change or any threat
of any adverse change in its relations with, or any loss or threat of loss of,
any of its major customers, distributors or partners;
(bb) Xxxxxxx has not suffered any adverse change or any threat
of any adverse change in its relations with, or any loss or threat of loss of,
any of it major suppliers;
(cc) neither Xxxxxxx nor the Affiliates have received notice
and have no knowledge of any actual or threatened labor trouble or strike, or
any other occurrence, event or condition of a similar character;
(dd) Xxxxxxx has not changed any of the accounting principles
followed by it or the method of applying such principles;
(ee) Xxxxxxx has not made a change in any of its banking or
safe deposit arrangements;
(ff) Xxxxxxx has not entered into any transaction other than
in the Ordinary Course of Business, except as otherwise disclosed in the
Schedules to this Section 2.10; or
(gg) Xxxxxxx has not become obligated to do any of the
foregoing.
-9-
2.11 ABSENCE OF LITIGATION.
(a) Except as set forth on Schedule 2.11(a), there are (and
since Xxxxxxx'x inception there have been) no claims, actions, suits or
proceedings pending or, to the knowledge of Xxxxxxx and the Affiliates,
threatened (or, to the knowledge of Xxxxxxx and the Affiliates, any governmental
or regulatory investigation pending or threatened) against Xxxxxxx or any
properties or rights of Xxxxxxx, before any court, arbitrator or administrative,
governmental or regulatory authority or body, domestic or foreign. None of
Xxxxxxx or any of its properties or rights are subject to any outstanding
injunction, order, decree, ruling or charge.
(b) There are no claims, actions, suits or proceedings pending
or, to the knowledge of the Affiliates, threatened (or, to the knowledge of the
Affiliates, any governmental or regulatory investigation pending or threatened)
against the Affiliates or any properties or rights of the Affiliates, before any
court, arbitrator or administrative, governmental or regulatory authority or
body, domestic or foreign. None of the Affiliates or any of their properties or
rights are subject to any outstanding injunction, order, decree, ruling or
charge.
2.12 EMPLOYEE BENEFIT PLANS.
(a) All employee compensation, incentive, fringe or benefit
plans, programs, policies, commitments or other arrangements (whether or not set
forth in a written document and including, without limitation, all "employee
benefit plans" within the meaning of Section 3(3) of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA")) covering (at any time within
the last seven years) any current or former employee, director or consultant of
Xxxxxxx, any trade or business (whether or not incorporated) which is a member
of a controlled group or which is under common control with Xxxxxxx within the
meaning of Section 414 of the Code (for purposes of Section 2.12 and Section
2.13 , an "ERISA AFFILIATE"), and any current or former employee, director or
consultant of Hillcrest Solutions, Inc. ("HILLCREST") who performed services for
Xxxxxxx or any ERISA Affiliate of Xxxxxxx, or any spouse, child or other
dependent of such current or former employee, director or consultant, or with
respect to which Xxxxxxx has or may in the future have liability, are listed on
Schedule 2.12(a) (the "PLANS"). Xxxxxxx has provided to Optio: (i) correct and
complete copies of all documents embodying each existing Plan of Xxxxxxx
including (without limitation) all amendments thereto, all related trust
documents, and all written agreements and contracts relating to each such Plan;
(ii) the three (3) most recent annual reports (Form Series 5500 and all
schedules and financial statements attached thereto), if any, required under
ERISA or the Code in connection with each Plan; (iii) the most recent summary
plan description together with the summary(ies) of material modifications
thereto, if any, required under ERISA with respect to each Plan; (iv) all IRS or
DOL determination, opinion, notification and advisory letters; (v) all
correspondence to or from any governmental agency relating to any Plan; (vi) all
COBRA forms and related notices; (vii) all discrimination tests for each Plan
for the most recent three (3) plan years; (viii) the most recent annual
actuarial valuations, if any, prepared for each Plan; (ix) if the Plan is
funded, the most recent annual and periodic accounting of Plan assets; (x) all
written agreements and contracts relating to each Plan, including, but not
limited to, administrative service agreements, group annuity contracts and group
insurance contracts; (xi) all communications to employees or former employees,
relating to any amendments, terminations, establishments, increases or decreases
in
-10-
benefits, acceleration of payments or vesting schedules or other events which
would result in any liability under any Plan or proposed Plan; (xii) all
policies pertaining to fiduciary liability insurance covering the fiduciaries
for each Plan or pertaining to bonding of fiduciaries in accordance with Section
412 of ERISA; (xiii) all insurance contracts, administrative services agreements
or contracts relating to any Plan, and (xiv) all registration statements, annual
reports (Form 11-K and all attachments thereto) and prospectuses prepared in
connection with any Plan.
(b) Each Plan has been operated, maintained and administered
in all respects in compliance with its terms and with the requirements
prescribed by any and all statutes, orders, rules and regulations (foreign or
domestic), including but not limited to ERISA and the Code, which are applicable
to such Plans. No suit, action or other litigation (excluding claims for
benefits incurred in the ordinary course of Plan activities) has been brought,
or to the knowledge of Xxxxxxx or the Affiliates is threatened, against or with
respect to any such Plan. There are no audits, inquiries, investigations or
other proceedings pending or, to the knowledge of Xxxxxxx or the Affiliates,
threatened by the Internal Revenue Service (the "IRS"), the Department of Labor
(the "DOL"), or any other governmental agency with respect to any Plans. All
contributions, reserves or premium payments required to be made or accrued as of
the Closing Date to the Plans have been timely made or accrued or will be timely
made or accrued. Each Plan shall be fully funded as of the Closing Date in an
amount sufficient to pay all liabilities (whether or not vested) accrued
(including liabilities and obligations for health care, life insurance and other
benefits after termination of employment) and claims incurred to the Closing
Date, or adequate reserves will be set up on the books and records of Xxxxxxx as
of the Closing Date for all such liabilities, or paid-up insurance shall be
effective to fund all such liabilities. Any Plan intended to be qualified under
Section 401(a) of the Code and each trust intended to qualify under Section
501(a) of the Code (i) has either obtained a favorable determination,
notification, advisory and/or opinion letter, as applicable, as to its qualified
status from the IRS or still has a remaining period of time under applicable
Treasury Regulations or IRS pronouncements in which to apply for such letter and
to make any amendments necessary to obtain a favorable determination, and (ii)
incorporates or has been amended to incorporate all provisions required to
comply with the Tax Reform Act of 1986 and subsequent legislation. Xxxxxxx does
not have any plan or commitment to establish any new Plan, to modify any Plan
(except to the extent required by law or to conform any such Plan to the
requirements of any applicable law, in each case as previously disclosed to
Optio in writing, or as required by this Agreement), or to enter into any new
Plan. Each Plan can be amended, terminated or otherwise discontinued after the
Closing Date in accordance with its terms, without liability to Optio, Xxxxxxx
or any of its ERISA Affiliates, and Hillcrest (other than ordinary
administration expenses), and each Plan contains provisions which allow
additional and/or future benefits under the Plan to be discontinued at any time
and for any reason, and which allow the Plan to be terminated by Xxxxxxx at any
time and for any reason, and if such Plan were terminated on or prior to the
Closing Date, no additional liability would be incurred by Xxxxxxx by such
action.
(c) Neither Xxxxxxx, nor any of its ERISA Affiliates has at
any time ever maintained, established, sponsored, participated in, or
contributed to, or has or could have any liability because of (i) any plan
subject to Title IV of ERISA, (ii) any plan subject to Section 412 of the Code,
(iii) any "multiemployer plan," as such term is defined in Sections 3(37) or
4001(a)(3) of ERISA, (iv) any "defined benefit plan" as defined in Section 3(35)
of ERISA, or
-11-
(v) any plan described in Section 413(c) of the Code in existence on or prior to
the Closing Date. Neither Xxxxxxx or any of its ERISA Affiliates, nor any
officer or director of Xxxxxxx or its ERISA Affiliates is subject to any
liability or penalty under Section 4975 through 4980B of the Code or Title I of
ERISA. There are no audits, inquiries or proceedings pending or, to the
knowledge of Xxxxxxx or its ERISA Affiliates, threatened by the IRS or DOL with
respect to any Plan. No "prohibited transaction," within the meaning of Section
4975 of the Code or Sections 406 and 407 of ERISA, and not otherwise exempt
under Section 408 of ERISA, has occurred with respect to any Plan. No person who
would be a fiduciary of any Plan has, on or prior to the Closing Date, breached
any responsibility or obligation imposed by law which would subject Xxxxxxx or
any ERISA Affiliate, or any person whom Xxxxxxx or any ERISA Affiliate has an
obligation to indemnify, to any liability. All communications with respect to
each Plan by Xxxxxxx or any ERISA Affiliate or Hillcrest on or prior to the
Closing Date have reflected accurately the documents and operations of such
Plan, and there are no communications or failures to communicate with respect to
any Plan which could subject Xxxxxxx or any ERISA Affiliate to any liability.
(d) Neither Xxxxxxx, nor any of its ERISA Affiliates, nor
Hillcrest, nor any of their agents, employees servants, independent contractors,
attorneys, representatives, actuaries, accountants, officers, or directors, has,
prior to the Closing Date, violated any of the health continuation requirements
of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended
("COBRA"), the requirements of the Family Medical Leave Act of 1993, as amended,
the requirements of the Women's Health and Cancer Rights Act, as amended, the
requirements of the Newborns' and Mothers' Health Protection Act of 1996, as
amended, the requirements of Title VII of the Civil Rights Act of 1964 and/or
the Civil Rights Act of 1991 and/or 42 U.S.C. Section 1981, all as amended, the
requirements of the Age Discrimination in Employment Act of 1967, the Age
Discrimination Claims Assistance Act of 1988, and the Older Workers' Benefit
Protection Act, all as amended, the requirements of the Americans with Disabilit
Act, as amended, the requirements of the Employee Retirement Income Security Act
of 1974, as amended, or any similar provisions of state law applicable to
employees of Xxxxxxx or any of its subsidiaries which could result in liability
for Xxxxxxx or any of its subsidiaries. None of the Plans promises or provides
retiree medical or other retiree welfare benefits to any person except as
required by applicable law, and neither Xxxxxxx nor any of its subsidiaries has
represented, promised or contracted (whether in oral or written form) to provide
such retiree benefits to any employee, former employee, director, consultant or
other person, except to the extent required by statute.
(e) Neither Xxxxxxx nor Hillcrest is bound by or subject to
(and none of its respective assets or properties is bound by or subject to) any
arrangement with any labor union. No employee of Xxxxxxx or Hillcrest is
represented by any labor union or covered by any collective bargaining agreement
and, to the knowledge of Xxxxxxx or the Affiliates, no campaign to establish
such representation is in progress. There is no pending or, to the knowledge of
Xxxxxxx or the Affiliates, threatened labor dispute involving Xxxxxxx or
Hillcrest and any group of its employees nor has Xxxxxxx experienced any labor
interruptions over the past three (3) years, and Xxxxxxx and Hillcrest consider
their relationships with their employees to be good.
-12-
(f) Neither the execution and delivery of this Agreement nor
the consummation of the transactions contemplated hereby will (i) result in any
payment (including severance, unemployment compensation, golden parachute, bonus
or otherwise) becoming due to any shareholder, director or employee of Xxxxxxx
under any Plan or otherwise, (ii) increase any benefits otherwise payable under
any Plan, or (iii) result in the acceleration of the time of payment or vesting
of any such benefits. No payment or benefit which will or may be made by Xxxxxxx
or its ERISA Affiliates with respect to any current or former employee,
consultant or director will be characterized as a "parachute payment," within
the meaning of Section 280G(b)(2) of the Code.
(g) Xxxxxxx and Hillcrest: (i) are in compliance in all
respects with all applicable foreign, federal, state and local laws, rules and
regulations respecting employment, employment practices, terms and conditions of
employment, immigration, and wages and hours, in each case, with respect to
current and former employees, consultants and directors; (ii) have withheld and
reported all amounts required by law or by agreement to be withheld and reported
with respect to wages, salaries and other payments to current and former
employees, consultants and directors; (iii) are not liable for any arrears of
wages or any taxes or any penalty for failure to comply with any of the
foregoing; and (iv) are not liable for any payment to any trust or other fund
governed by or maintained by or on behalf of any governmental authority, with
respect to unemployment compensation benefits, social security or other benefits
or obligations for current and former employees, consultants and directors
(other than routine payments to be made in the normal course of business and
consistent with past practice). There are no pending, threatened or reasonably
anticipated claims or actions against Xxxxxxx or Hillcrest under any worker's
compensation policy or long-term disability policy.
2.13 LABOR MATTERS. (i) There are no controversies pending or, to the
knowledge of Xxxxxxx or the Affiliates, threatened, between Xxxxxxx or Hillcrest
and any of their respective employees; (ii) neither Xxxxxxx nor Hillcrest is (or
has ever been) a party to any collective bargaining agreement or other labor
union contract applicable to persons employed by Xxxxxxx or Hillcrest nor does
Xxxxxxx and the Affiliates know of any activities or proceedings of any labor
union to organize any such employees; and (iii) none of Xxxxxxx or its ERISA
Affiliates or Hillcrest have knowledge of any strikes, slowdowns, work stoppages
or lockouts, or threats thereof, by or with respect to any employees of Xxxxxxx.
2.14 RESTRICTIONS ON BUSINESS ACTIVITIES. There is no agreement,
commitment, judgment, injunction, order or decree binding upon Xxxxxxx or to
which Xxxxxxx is a party which has or could reasonably be expected to have the
effect of prohibiting or materially impairing any business practice of Xxxxxxx,
any acquisition of property by Xxxxxxx or the conduct of business by Xxxxxxx as
currently conducted.
2.15 TITLE TO PROPERTY. Schedule 2.15 contains a true and correct list and
a description of all assets of Xxxxxxx, including, but not limited to, vehicles,
equipment, furniture, and fixtures and all other items of personal property of
Xxxxxxx indicating, with respect to each, those which are owned by Xxxxxxx and
those which are leased by Xxxxxxx. Xxxxxxx has (a) with respect to those assets
listed on Schedule 2.15 as "owned," good and merchantable title to all such
assets, including, but not limited to, furniture, fixtures, equipment, vehicles,
and other items of personal
-13-
property, free and clear of all liens, claims, charges, security interests, and
other encumbrances of any kind and of any nature, except as disclosed on
Schedule 2.15, and (b) with respect to assets listed on Schedule 2.15, as
"leased," a valid, and enforceable leasehold interest. All of Xxxxxxx'x assets
are in good operating condition (normal wear and tear excepted), are reasonably
fit for the purposes for which such properties are presently used, are adequate
and usable for the continued operation of Xxxxxxx as the same is presently
conducted, and none of such properties are in need of maintenance or repairs
except for ordinary, routine maintenance and repairs, the cost of which will not
vary materially from historic patterns.
2.16 REAL PROPERTY LEASES.
(a) Xxxxxxx does not hold any interest in real property
(including, but not limited to, any interest as a fee owner or any interest as
lessor, lessee, sublessor, sublessee, assignor, assignee or guarantor or other
surety) except for the leasehold interests described on Schedule 2.16, and such
Schedule specifies in the case of each lease the name of the lessor, sublessor,
lessee or sublessee thereunder, the lease term and the basic annual rental and
other items paid or payable with respect thereto.
(b) Xxxxxxx has valid, binding and enforceable leases and
subleases with respect to all real property, as leased or subleased by it free
and clear of all liens, claims and encumbrances of any kind, except that the
enforceability of the leases and subleases may be limited by (i) applicable
bankruptcy, insolvency, reorganization, moratorium and similar laws affecting
creditors' rights generally and (ii) equitable principles which may limit the
availability of certain equitable remedies (such as specific performance). To
the knowledge of Xxxxxxx or the Affiliates, there is no development affecting
any such properties pending or that might curtail in any material respect the
present or future use of such property for the purpose for which it is used.
Neither Xxxxxxx nor, to the knowledge of Xxxxxxx or the Affiliates, any other
party to any such lease has breached any material provision of, or is in default
in any material respect under, the terms of such lease, nor to the knowledge of
Xxxxxxx and the Affiliates does there exist any event which with notice or the
lapse of time or both would constitute a material breach or cause a default in
any material respect under the terms of any such lease. The transactions
contemplated by this Agreement do not require the consent of any lessor under,
and will not result in the termination of any such lease.
(c) The copies of the leases heretofore provided by Xxxxxxx to
Optio are true, correct and complete copies of such leases. The leases have not
been modified or amended since the commencement of the terms specified in the
respective leases, except as disclosed in the copies made available to Optio,
and each lease continues to be valid, binding and enforceable in accordance with
its terms, except that the enforceability of the leases may be limited by (iii)
applicable bankruptcy, insolvency, reorganization, moratorium and similar laws
affecting creditors' rights generally and (iv) equitable principles which may
limit the availability of certain equitable remedies (such as specific
performance).
-14-
2.17 TAXES.
(a) For the purposes of this Agreement, "TAX" or "TAXES"
refers to (i) any and all federal, territorial, state, local and foreign taxes,
assessments and other governmental charges, duties, impositions and liabilities
relating to taxes, including taxes based upon or measured by gross receipts,
income, profits, sales, use and occupation, and value added, ad valorem,
transfer, franchise, withholding, payroll, recapture, employment, excise and
property taxes and escheatment payments, together with all interest, penalties
and additions imposed with respect to such amounts and any obligations under any
agreements or arrangements with any other person with respect to such amounts
and including any liability for taxes of a predecessor entity; (ii) any
liability for the payment of any amounts of the type described in clause (i) as
a result of being or ceasing to be a member of an affiliated, consolidated,
combined or unitary group for any period (including, without limitation, any
liability under Treas. Reg. Section 1.1502-6 or any comparable provision of
foreign, state or local law); and (iii) any liability for the payment of any
amounts of the type described in clause (i) or (ii) as a result of any express
or implied obligation to indemnify any other person or as a result of any
obligations under any agreements or arrangements with any other person with
respect to such amounts and including any liability for taxes of a predecessor
entity.
(b) (i) Xxxxxxx has timely filed all federal, territorial,
state, local and foreign returns, estimates, information statements and reports
("RETURNS") relating to Taxes required to be filed by Xxxxxxx with any Tax
authority. All such Returns are correct and complete in all respects. Xxxxxxx
has paid all Taxes shown to be due on such Returns. Xxxxxxx is not currently the
beneficiary of any extensions of time within which to file any Returns.
(ii) Xxxxxxx, as of the Closing Date, will have withheld and
paid to the proper authority all Taxes required to have been withheld and paid
in connection with amounts paid or owing to any employee, independent
contractor, creditor, stockholder, or other third party.
(iii) Xxxxxxx has not been delinquent in the payment of any
Tax nor is there any Tax deficiency outstanding, proposed or assessed against
Xxxxxxx, nor has Xxxxxxx executed any unexpired waiver of any statute of
limitations on or extending the period for the assessment or collection of any
Tax.
(iv) There is no dispute, claim, or proposed adjustment
concerning any Tax liability of Xxxxxxx either (A) claimed or raised by any
authority in writing or (B) based upon personal contact with any agent of such
authority. Xxxxxxx is not a party to nor has it been notified that it is the
subject of any pending, proposed, or threatened action, investigation,
proceeding, audit, claim or assessment by or before the Internal Revenue Service
or any other governmental authority; and the is no claim for assessment,
deficiency, or collection of Taxes, or proposed assessment, deficiency or
collection from the Internal Revenue Service or any other governmental authority
against Xxxxxxx which has not been satisfied, nor does Xxxxxxx have any reason
to believe that any such notice will be received in the future. The Internal
Revenue Service has never audited any federal income tax return of Xxxxxxx.
Xxxxxxx has not filed any requests for rulings with the Internal Revenue
Service. No power of attorney has been granted by
-15-
Xxxxxxx or Affiliates with respect to any matter relating to Taxes of Xxxxxxx.
There are no tax liens of any kind upon any property or assets of Xxxxxxx,
except for inchoate liens for taxes not yet due and payable.
(v) Xxxxxxx has no any liability for any unpaid Taxes which
has not been accrued for or reserved on Xxxxxxx the Most Recent Balance Sheet in
accordance with GAAP, whether asserted or unasserted, contingent or otherwise.
(vi) There is no contract, agreement, plan or arrangement to
which Xxxxxxx is a party as of the date of this Agreement, including but not
limited to the provisions of this Agreement, covering any employee or former
employee of Xxxxxxx that, individually or collectively, would reasonably be
expected to give rise to the payment of any amount that would not be deductible
pursuant to Sections 280G, 404 or 162(m) of the Code. There is no contract,
agreement, plan or arrangement to which Xxxxxxx is a party or by which it is
bound to compensate any individual for excise taxes paid pursuant to Section
4999 of the Code.
(vii) Xxxxxxx has not filed any consent agreement under
Section 341(f) of the Code or agreed to have Section 341(f)(2) of the Code apply
to any disposition of a subsection (f) asset (as defined in Section 341(f)(4) of
the Code) owned by Xxxxxxx.
(viii) Xxxxxxx is not party to or has any obligation under any
tax-sharing, tax indemnity or tax allocation agreement or arrangement.
(ix) None of Xxxxxxx'x assets are tax exempt use property
within the meaning of Section 168(h) of the Code.
(x) Xxxxxxx has not been a United States real property holding
corporation within the meaning of Code Sec. 897(c)(2) during the applicable
period specified in Code Sec. 897(c)(1)(A)(ii). Xxxxxxx (A) has not been a
member of any affiliated group within the meaning of Code Sec. 1504 or any
similar group defined under a similar provision of territorial, state, local, or
foreign law (an "AFFILIATED GROUP") filing a consolidated income Tax Return
(other than a group the common parent which was Xxxxxxx) and (B) has no
liability for the taxes of any Person (other than Xxxxxxx) under Treas. Reg.
Section 1.1502-6 (or any similar provision of territorial, state, local, or
foreign law), as a transferee or successor, by contract, or otherwise. Xxxxxxx
has not requested or received a ruling from any taxing authority or signed a
closing agreement with any taxing authority. No claim has ever been made by a
taxing authority in a jurisdiction where Xxxxxxx does not file Tax returns that
Xxxxxxx is or may be subject to taxation by such jurisdiction. Xxxxxxx has not
been a "distributing corporation" (within the meaning of Section 355(c)(2) of
the Code) with respect to a transaction described in Section 355 of the Code
within the three-year period ending as of the date of this Agreement. Xxxxxxx
has not received a Tax opinion with respect to any transaction relating to
Xxxxxxx other than a transaction in the ordinary course of business. Xxxxxxx is
not the direct or indirect beneficiary of a guarantee of Tax benefits or any
other arrangement that has the same economic effect with respect to any
transaction or Tax opinion relating to Xxxxxxx. Xxxxxxx is not a party to an
understanding or arrangement described in Section 6111(d) or Section
6662(d)(2)(C)(iii) of the
-16-
Code. Xxxxxxx is not a party to a lease arrangement involving a defeasance of
rent, interest, or principal.
2.18 ENVIRONMENTAL MATTERS. Xxxxxxx (i) has obtained all applicable
permits, licenses and other authorizations that are required under Environmental
Laws the absence of which would have a Material Adverse Effect on Xxxxxxx; (ii)
is in compliance (and has complied) in all material respects with all terms and
conditions of such required permits, licenses and authorizations, and also is in
compliance in all material respects with all other limitations, restrictions,
conditions, standards, prohibitions, requirements, obligations, schedules and
timetables contained in such laws or contained in any regulation, code, plan,
order, decree, judgment, notice or demand letter issued, entered, promulgated or
approved thereunder; (iii) has no knowledge of and has not received notice of
any event, condition, circumstance, activity, practice, incident, action or plan
that is reasonably likely to interfere with or prevent continued compliance or
that would give rise to any common law or statutory liability, or otherwise form
the basis of any Environmental Claim with respect to Xxxxxxx or any person or
entity whose liability for any Environmental Claim Xxxxxxx has retained or
assumed either contractually or by operation of law; (iv) has not disposed of,
released, discharged or emitted any Hazardous Materials into the soil or
groundwater at any properties owned or leased at any time by Xxxxxxx, or at any
other property, or exposed any employee or other individual to any Hazardous
Materials or condition in such a manner as would result in any liability or
result in any corrective or remedial action obligation; and (v) has taken all
actions necessary under Environmental Laws to register any products or materials
required to be registered by Xxxxxxx (or any of its agents) thereunder. No
Hazardous Materials are present in, on or under any properties owned, leased or
used at any time (including both land and improvements thereon) by Xxxxxxx, and
no reasonable likelihood exists that any Hazardous Materials will come to be
present in, on or under any properties owned, leased or used at any time
(including both land and improvements thereon) by Xxxxxxx, so as to give rise to
any liability or corrective or remedial obligation under any Environmental Laws.
For the purposes of this Section 2.18, "ENVIRONMENTAL CLAIM" means any notice,
claim, act, cause of action or investigation by any person alleging potential
liability (including potential liability for investigatory costs, cleanup costs,
governmental response costs, natural resources damages, property damages,
personal injuries or penalties) arising out of, based on or resulting from (i)
the presence, or release into the environment, of any Hazardous Materials or
(ii) any violation, or alleged violation, of any Environmental Laws.
"ENVIRONMENTAL LAWS" means all Federal, state, local and foreign laws and
regulations relating to pollution of the environment (including ambient air,
surface water, ground water, land surface or subsurface strata) or the
protection of human health and worker safety, including, without limitation,
laws and regulations relating to emissions, discharges, releases or threatened
releases of Hazardous Materials, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials. "HAZARDOUS MATERIALS" means chemicals,
pollutants, contaminants, wastes, toxic substances, radioactive and biological
materials, asbestos-containing materials, hazardous substances, petroleum and
petroleum products or any fraction thereof, excluding, however, Hazardous
Materials contained in products typically used for office and janitorial
purposes properly and safely maintained in accordance with Environmental Laws.
-17-
2.19 BROKERS. Except with regard to Genevea Corporate Finance, and all
fees and other amounts owed thereto, Xxxxxxx has not incurred, nor will it
incur, directly or indirectly, any liability for brokerage or finders' fees or
agents' commissions or any similar charges in connection with this Agreement or
any transaction contemplated hereby.
2.20 INTELLECTUAL PROPERTY. For the purposes of this Agreement, the
following terms have the following definitions:
"INTELLECTUAL PROPERTY" shall mean any or all of the following
and all rights therein or arising therefrom: (i) all United States and
foreign patents and applications therefor and all reissues, divisions,
renewals, extensions, provisionals, continuations and
continuations-in-part thereof ("PATENTS"); (ii) all inventions (whether
patentable or not), invention disclosures, improvements, trade secrets,
proprietary information, proprietary processes or formulae, franchises,
licenses, know how, technology, technical data and customer lists, and
all documentation relating to any of the foregoing; (iii) all
copyrights, copyright registrations and applications therefor and all
other rights corresponding thereto throughout the world; (iv) all
rights to all mask works and reticles, mask work registrations and
applications therefor; (v) all industrial designs and any registrations
and applications therefor throughout the world; (vi) all trade names,
logos, domain names, URLs, common law trademarks and service marks;
trademark and service xxxx registrations and applications therefor and
all goodwill associated therewith throughout the world; (vii) all
databases and data collections and all rights therein throughout the
world; (viii) all computer software including all source code, object
code, algorithms, display screens, layouts, firmware, development
tools, files, records and data, all media on which any of the foregoing
is recorded, all Web addresses, sites and domain names; (ix) any
similar, corresponding or equivalent rights to any of the foregoing;
and (x) all documentation related to any of the foregoing.
"XXXXXXX INTELLECTUAL PROPERTY" shall mean any Intellectual
Property that is owned by or licensed to Xxxxxxx or any of its
affiliates. Without in any way limiting the generality of the
foregoing, Xxxxxxx Intellectual Property includes all Intellectual
Property owned or licensed by Xxxxxxx or its affiliates related to
Xxxxxxx'x products, including without limitation all rights in any
design code, documentation, and tooling for packaging of semiconductors
in connection with all current products and products in design and
development.
"REGISTERED INTELLECTUAL PROPERTY" shall mean all United
States, international and foreign: (i) patents, patent applications
(including provisional applications); (ii) registered trademarks,
applications to register trademarks, intent-to-use applications, or
other registrations or applications related to trademarks; (iii)
registered copyrights and applications for copyright registration; (iv)
any mask work registrations and applications to register mask works;
and (v) any other Xxxxxxx Intellectual Property that is the subject of
an application, certificate, filing, registration or other document
issued by, filed with, or recorded by, any state, government or other
public legal authority.
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"XXXXXXX REGISTERED INTELLECTUAL PROPERTY" means all of the
Registered Intellectual Property owned by, or filed in the name of,
Xxxxxxx or its affiliates.
(a) Schedule 2.20(a) is a complete and accurate list of all
Xxxxxxx Registered Intellectual Property and specifies, where applicable, the
jurisdictions in which each such item of Xxxxxxx Registered Intellectual
Property has been issued or registered and lists any proceedings or actions
before any court, tribunal (including the United States Patent and Trademark
Office (the "PTO") or equivalent authority anywhere in the world) related to any
of Xxxxxxx Registered Intellectual Property.
(b) Schedule 2.20(b) is a complete and accurate list (by name
and version number) of all software products or service offerings of Xxxxxxx
("XXXXXXX PRODUCTS") that have been distributed or provided in the ten (10)-year
period preceding the date hereof or which Xxxxxxx intends to distribute or
provide in the future, including any products or service offerings under
development.
(c) No Xxxxxxx Intellectual Property or Xxxxxxx Products is
subject to any proceeding or outstanding decree, order, judgment, contract,
license, agreement, or stipulation restricting in any manner the use, transfer,
or licensing thereof by Xxxxxxx, or which may affect the validity, use or
enforceability of such Xxxxxxx Intellectual Property or Xxxxxxx Products.
(d) Each material item of Xxxxxxx Registered Intellectual
Property is valid and subsisting, all necessary registration, maintenance and
renewal fees currently due in connection with such Xxxxxxx Registered
Intellectual Property have been made and all necessary documents, recordations
and certificates in connection with such Xxxxxxx Registered Intellectual
Property have been filed with the relevant patent, copyright, trademark or other
authorities in the United States or foreign jurisdictions, as the case may be,
for the purposes of maintaining such material items of Xxxxxxx Registered
Intellectual Property. There are no actions that must be taken by Xxxxxxx within
one hundred and twenty (120) days of the Closing Date, including the payment of
any registration, maintenance or renewal fees or the filing of any documents,
applications or certificates for the purposes of maintaining, perfecting or
preserving or renewing any material items of Xxxxxxx Registered Intellectual
Property. In each case in which Xxxxxxx has acquired any Intellectual Property
rights from any person, Xxxxxxx has obtained a valid and enforceable assignment
sufficient to irrevocably transfer all rights in such Intellectual Property
(including the right to seek past and future damages with respect to such
Intellectual Property) to Xxxxxxx and, to the maximum extent provided for by,
and in accordance with, applicable laws and regulations, Xxxxxxx has recorded
each such assignment with the relevant governmental authorities, including the
PTO, the U.S. Copyright Office, or their respective equivalents in any relevant
foreign jurisdiction, as the case may be.
(e) Xxxxxxx Intellectual Property constitutes all the
Intellectual Property used in and/or necessary to the conduct of the business of
Xxxxxxx as it currently is conducted or is reasonably contemplated to be
conducted, including, without limitation, the design, development, manufacture,
use, import and sale of Xxxxxxx Products. Xxxxxxx owns and has good and
exclusive title to or has a valid license to use, each material item of Xxxxxxx
Intellectual Property free and clear of any lien or encumbrance (excluding
non-exclusive licenses and related
-19-
restrictions granted in the ordinary course). Without limiting the foregoing:
(i) Xxxxxxx is the exclusive owner of all trademarks and trade names used in
connection with the operation or conduct of the business of Xxxxxxx, including
the sale, distribution or provision of any Xxxxxxx Products by Xxxxxxx; (ii)
Xxxxxxx owns exclusively, and has good title to, all copyrighted works that are
Xxxxxxx Products or which Xxxxxxx otherwise purports to own; and (iii) to the
knowledge of the Affiliates or Xxxxxxx to the extent that any Patents would be
infringed by any Xxxxxxx Products, Xxxxxxx is the exclusive owner of such
Patents.
(f) To the extent that any technology, software or material
Intellectual Property has been developed or created independently or jointly by
a third party for Xxxxxxx or is incorporated into any of Xxxxxxx Products,
Xxxxxxx has a written agreement with such third party with respect thereto and
Xxxxxxx thereby either (i) has obtained ownership of, and is the exclusive owner
of, or (ii) has obtained a perpetual, non-terminable license (sufficient for the
conduct of its business as currently conducted and as proposed to be conducted)
to all such third party's Intellectual Property in such work, material or
invention by operation of law or by valid assignment, to the fullest extent it
is legally possible.
(g) Xxxxxxx has not transferred ownership of, or granted any
exclusive license with respect to, any Intellectual Property that is or was
material Xxxxxxx Intellectual Property, to any third party, or permitted
Xxxxxxx'x rights in such material Xxxxxxx Intellectual Property to lapse or
enter the public domain.
(h) Schedule 2.20(h) lists all contracts, licenses and
agreements to which Xxxxxxx is a party: (i) with respect to Xxxxxxx Intellectual
Property licensed or transferred to any third party (other than end-user
licenses in the ordinary course); or (ii) pursuant to which a third party has
licensed or transferred any material Intellectual Property to Xxxxxxx.
(i) All contracts, licenses and agreements relating to either
(i) Xxxxxxx Intellectual Property or (ii) Intellectual Property of a third party
licensed to Xxxxxxx are in full force and effect. The consummation of the
transactions contemplated by this Agreement will neither violate nor result in
the breach, modification, cancellation, termination or suspension of such
contracts, licenses and agreements or cause the forfeiture, modification or
termination or give right of forfeiture, modification or termination of any
Xxxxxxx Intellectual Property or in any way impair the right of Xxxxxxx to use,
sell, license or dispose of or to bring any action for the infringement of any
Xxxxxxx Intellectual Property or portion thereof. Xxxxxxx is in material
compliance with, and has not materially breached any term of any such contracts,
licenses and agreements and, to the knowledge of Xxxxxxx or the Affiliates, all
other parties to such contracts, licenses and agreements are in compliance with,
and have not materially breached any term of, such contracts, licenses and
agreements. Following the Closing Date, Optio will be permitted to exercise all
of Xxxxxxx'x rights under such contracts, licenses and agreements to the same
extent Xxxxxxx would have been able to had the transactions contemplated by this
Agreement not occurred and without the payment of any additional amounts or
consideration other than ongoing fees, royalties or payments which Xxxxxxx would
otherwise be required to pay. Neither this Agreement nor the transactions
contemplated by this Agreement, including the assignment to Optio by operation
of law or otherwise of any contracts or agreements to which Xxxxxxx is a party,
will result in (i) Optio's granting to any third party any right to or with
respect to any
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Intellectual Property right owned by, or licensed to, it, (ii) Optio's being
bound by, or subject to, any non-compete or other restriction on the operation
or scope of its business, or (iii) Optio's being obligated to pay any royalties
or other amounts to any third party in excess of those payable by Optio prior to
the Closing.
(j) The operation of the business of Xxxxxxx as such business
currently is conducted or is reasonably contemplated to be conducted, including
(i) Xxxxxxx'x design, development, manufacture, distribution, reproduction,
marketing or sale of the products or services of Xxxxxxx (including Xxxxxxx
Products) and (ii) Xxxxxxx'x use of any product, device or process, has not,
does not and will not infringe or misappropriate the Intellectual Property of
any third party, constitute unfair competition or trade practices under the laws
of any jurisdiction or violate any license or agreement between Xxxxxxx and any
person.
(k) Xxxxxxx has not received notice from any third party that
the operation of the business of Xxxxxxx or any act, product or service of
Xxxxxxx, infringes or misappropriates the Intellectual Property of any third
party or constitutes unfair competition or trade practices under the laws of any
jurisdiction.
(l) Neither the development, manufacture, marketing, license,
sale nor use of any product, technology or service currently licensed, sold or
used by Xxxxxxx or currently under development violates or will violate any
license or agreement with any third party or infringes or will infringe any
Intellectual Property of any other person which would have a Material Adverse
Effect; there is no pending or, to Xxxxxxx'x or the Affiliates' knowledge,
threatened claim or litigation contesting the validity, ownership or right to
use, sell, license or dispose of any Xxxxxxx Intellectual Property nor, to
Xxxxxxx'x or the Affiliates' knowledge, is there any basis for any such claim,
nor has Xxxxxxx received any notice asserting that any Xxxxxxx Intellectual
Property or the proposed use, sale, license or disposition thereof conflicts or
will conflict with the rights of any other person, nor is there any basis for
any such assertion.
(m) To the knowledge of Xxxxxxx or the Affiliates, no person
has or is infringing or misappropriating any Xxxxxxx Intellectual Property.
(n) Xxxxxxx has taken reasonable steps to protect Xxxxxxx'x
rights in its confidential information and trade secrets that it wishes to
protect or any trade secrets or confidential information of third parties
provided to Xxxxxxx, and, without limiting the foregoing, Xxxxxxx has and
enforces a policy requiring each employee and contractor (including employees of
Hillcrest) to execute a proprietary information/confidentiality agreement
substantially in the form provided to Optio and all current and former employees
and contractors of Xxxxxxx (including employees of Hillcrest) have executed such
an agreement, except where the failure to do so is not reasonably expected to be
material to Xxxxxxx.
(o) Schedule 2.20(o) lists all information concerning users of
Xxxxxxx Products (and all information about their use of Xxxxxxx Products) that
is captured or collected by Xxxxxxx Products or otherwise collected by Xxxxxxx
(the "CAPTURED USER DATA"). The Captured User Data does not include unique
identifier information. Xxxxxxx has not disclosed
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Captured User Data which includes unique identifier information to any third
parties without the prior consent of the users to which such information
pertains.
(p) All of Xxxxxxx Products (i) will record, store, process,
calculate and present calendar dates falling on and after (and if applicable,
spans of time including) January 1, 2000, and will calculate any information
dependent on or relating to such dates in the same manner, and with the same
functionality, data integrity and performance, as the products record, store,
process, calculate and present calendar dates on or before December 31, 1999, or
calculate any information dependent on or relating to such dates (collectively,
"YEAR 2000 COMPLIANT"), (ii) will lose no functionality with respect to the
introduction of records containing dates falling on or after January 1, 2000,
and (iii) will be interoperable with other products used and distributed by
Optio that may reasonably deliver records to Xxxxxxx'x products or receive
records from Xxxxxxx'x products, or interact with Xxxxxxx'x products. All of
Xxxxxxx'x Information Technology (as defined below) is Year 2000 Compliant, and
will not cause an interruption in the ongoing operations of Xxxxxxx'x business
on or after January 1, 2000. For purposes of the foregoing, the term
"INFORMATION TECHNOLOGY" shall mean and include all software, hardware,
firmware, telecommunications systems, network systems, embedded systems and
other systems, components and/or services (other than general utility services
including gas, electric, telephone and postal) that are owned or used by Xxxxxxx
in the conduct of its business, or purchased by Xxxxxxx from third-party
suppliers.
2.21 AGREEMENTS, CONTRACTS AND COMMITMENTS. Xxxxxxx is not a party to
or is bound by:
(a) any employment or consulting agreement, contract or
commitment with any officer or director or higher level employee or member of
Xxxxxxx'x Board of Directors, other than those that are terminable by Xxxxxxx on
no more than thirty (30) days' notice without liability or financial obligation
to Xxxxxxx;
(b) any agreement or plan, including, without limitation, any
stock option plan, stock appreciation right plan or stock purchase plan, any of
the benefits of which will be increased, or the vesting of benefits of which
will be accelerated, by the occurrence of any of the transactions contemplated
by this Agreement or the value of any of the benefits of which will be
calculated on the basis of any of the transactions contemplated by this
Agreement;
(c) any agreement of indemnification or any guaranty other
than any agreement of indemnification entered into in connection with the sale
or license of software products in the Ordinary Course of Business;
(d) any agreement, contract or commitment containing any
covenant limiting in any respect the right of Xxxxxxx to engage in any line of
business or to compete with any person or granting any exclusive distribution
rights;
(e) any agreement, contract or commitment currently in force
relating to the disposition or acquisition by Xxxxxxx after the date of this
Agreement of a material amount of
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assets not in the Ordinary Course of Business or pursuant to which Xxxxxxx has
any material ownership interest in any corporation, partnership, joint venture
or other business enterprise;
(f) any dealer, distributor, joint marketing or development
agreement currently in force under which Xxxxxxx has continuing material
obligations to jointly market any product, technology or service and which may
not be canceled without penalty upon notice of ninety (90) days or less, or any
material agreement pursuant to which Xxxxxxx has continuing material obligations
to jointly develop any intellectual property that will not be owned, in whole or
in part, by Xxxxxxx and which may not be canceled without penalty upon notice of
ninety (90) days or less;
(g) any agreement, contract or commitment currently in force
to provide source code to any third party for any product or technology that is
material to Xxxxxxx;
(h) any agreement, contract or commitment currently in force
to license any third party to manufacture or reproduce any Xxxxxxx product,
service or technology or any agreement, contract or commitment currently in
force to sell or distribute any Xxxxxxx products, service or technology except
agreements with distributors or sales representative in the normal course of
business cancelable without penalty upon notice of ninety (90) days or less and
substantially in the form previously provided to Optio;
(i) any mortgages, indentures, guarantees, loans or credit
agreements, security agreements or other agreements or instruments relating to
the borrowing of money or extension of credit or granting any Lien on any assets
or properties of Xxxxxxx;
(j) any settlement agreement entered into within five (5)
years prior to the date of this Agreement;
(k) any other agreement, contract or commitment that has a
value of $50,000 or more individually;
(l) any agreement (or group of related agreements) for the
lease of personal property to or from any person that involves aggregate annual
payments of more than $20,000;
(m) any agreement under which the consequences of a default or
termination could have a Material Adverse Effect on Xxxxxxx;
(n) any agreement (or group of related agreements) for the
purchase or sale of commodities, supplies, products, or other personal property,
or for the furnishing or receipt of services, the performance of which will
extend over a period of more than one year or involve consideration in excess of
$20,000;
(o) any agreement for the purchase of supplies, components,
products or services from single source suppliers, custom manufacturers or
subcontractors that involves aggregate annual payments of more than $20,000;
(p) any agreement concerning a partnership or joint venture;
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(q) any agreement with any Xxxxxxx stockholder or any of such
Xxxxxxx stockholder's Affiliates (other than Xxxxxxx) or with any Affiliate of
Xxxxxxx;
(r) any profit sharing, stock option, stock purchase, stock
appreciation, deferred compensation, severance, or other plan or arrangement for
the benefit of its current or former directors, officers or employees;
(s) any collective bargaining agreement;
(t) any executory agreement under which Xxxxxxx has advanced
or loaned any amount to any of its directors, officers, and employees;
(u) any advertising services, e-commerce or other agreement
involving the promotion of products and services of third parties by Xxxxxxx;
(v) any executory agreement pursuant to which Xxxxxxx is
obligated to provide maintenance, support or training for its services or
products;
(w) any agreement, contract or commitment currently in force
relating to Xxxxxxx'x leasing of any personal property;
(x) any revenue or profit participation agreement which
involves aggregate annual payments of more than $20,000; and
(y) any license, agreement or other permission which Xxxxxxx
or any Affiliate of Xxxxxxx has granted to any third party with respect to any
of the Intellectual Property used in Xxxxxxx'x business.
Neither Xxxxxxx, and to Xxxxxxx'x or the Affiliates'
knowledge, nor any other party to a Xxxxxxx Contract (as defined below), is in
breach, violation or default under, and Xxxxxxx has not received written notice
that it has breached, violated or defaulted under, any of the material terms or
conditions of any of the agreements, contracts or commitments to which Xxxxxxx
is a party or by which it is bound that are required to be disclosed in Xxxxxxx
Schedule (any such agreement, contract or commitment, a "XXXXXXX CONTRACT") in
such a manner as would permit any other party to cancel or terminate any such
Xxxxxxx Contract, or would permit any other party to seek material damages or
other remedies (for any or all of such breaches, violations or defaults, in the
aggregate).
2.22 INSURANCE. Xxxxxxx maintains insurance policies and fidelity
bonds covering the assets, business, equipment, properties, operations,
employees, officers and directors of Xxxxxxx (collectively, the "INSURANCE
POLICIES") which are of the type and in amounts customarily carried by persons
conducting businesses similar to those of Xxxxxxx. With respect to each such
insurance policy: (A) the policy is legal, valid, binding, enforceable, and in
full force and effect (and there has been no notice of cancellation or
nonrenewal of the policy received); (B) neither Xxxxxxx nor any other party to
the policy is in breach or default (including with respect to the payment of
premiums or the giving of notices), and no event has occurred which, with notice
or the lapse of time, would constitute such a breach or default, or permit
termination, modification,
-24-
or acceleration, under the policy; (C) no party to the policy has repudiated any
provision thereof; and (D) there has been no failure to give any notice or
present any claim under the policy in due and timely fashion. There is no
material claim by Xxxxxxx pending under any of the material Insurance Policies
as to which coverage has been questioned, denied or disputed by the underwriters
of such policies or bonds.
2.23 CERTAIN BUSINESS RELATIONSHIPS WITH XXXXXXX. To Xxxxxxx'x or the
Affiliates' knowledge, neither Xxxxxxx'x Shareholders nor any director or
officer of Xxxxxxx, nor any member of their immediate families, nor any
Affiliate of any of the foregoing, owns, directly or indirectly, has an
ownership interest in or is employed by (a) any business (corporate or
otherwise) which is a party to, or in any property which is the subject of, any
business arrangement or relationship of any kind with Xxxxxxx, or (b) any
business (corporate or otherwise) which conducts the same business as, or a
business similar to, that conducted by Xxxxxxx.
2.24 CUSTOMERS AND SUPPLIERS. As of the date hereof, no customer which
individually accounted for more than 5% of Xxxxxxx'x gross revenues during the
12 month period preceding the date hereof and no supplier of Xxxxxxx has
canceled or otherwise terminated, or made any written threat to Xxxxxxx to
cancel or otherwise terminate its relationship with Xxxxxxx or has at any time
on or after March 31, 1999, decreased materially its services or supplies to
Xxxxxxx in the case of any such supplier, or its usage of these services or
products of Xxxxxxx in the case of such customer, and to Xxxxxxx'x or the
Affiliates' knowledge, no supplier or customer has indicated either orally or in
writing that it will cancel or otherwise terminate its relationship with Xxxxxxx
or decrease materially its services or supplies to Xxxxxxx or its usage of the
services or products of Xxxxxxx, as the case may be. Xxxxxxx and the Affiliates
have not engaged in any fraudulent conduct with respect to any customer or
supplier of Xxxxxxx.
2.25 CERTAIN PAYMENTS. To Xxxxxxx'x or the Affiliates' knowledge,
neither Xxxxxxx nor any director, officer, agent, or employee of Xxxxxxx or
any other person or entity associated with or acting for or on behalf of
Xxxxxxx, has directly or indirectly (a) made any contribution, gift, bribe,
rebate, payoff, influence payment, kickback, or other payment to any person
or entity, private or public, regardless of form, whether in money, property,
or services: (1) to obtain favorable treatment in securing business; (2) to
pay for favorable treatment for business secured; (3) to obtain special
concessions or for special concessions already obtained, for or in respect of
Xxxxxxx or any Affiliate of Xxxxxxx; or (4) in violation of any federal,
state, local, municipal, foreign or other constitution, ordinance,
regulation, statute, treaty, or other law, or (b) established or maintained
any fund or asset that has not been recorded in the books and records of
Xxxxxxx.
2.26 EMPLOYEES AND CONSULTANTS. Schedule 2.26 lists all of Xxxxxxx'x
officers, directors, employees (also stating their position) and consultants,
including a list of any employees, officers, directors or consultants of
Hillcrest working for Xxxxxxx, and any and all compensation, pension or benefit
arrangements, whether written or oral, between Xxxxxxx and said officers,
directors, employees and consultants as of the date of this Agreement. As used
in this Section 2.26, the term "compensation" means current annual compensation
including bonuses and all other taxable income. None of such officers,
directors, employees and consultants has informed Xxxxxxx nor do Xxxxxxx or the
Affiliates have reason to believe that he
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or she intends to terminate his or her employment or relationship with Xxxxxxx
during the next 12 months.
2.27 NOTES AND ACCOUNTS RECEIVABLE . The accounts receivable have not
been recorded in excess of their net realizable value on the Financial
Statements. Attached hereto as Schedule 2.26 is a list and aging of all
accounts receivables and notes of Xxxxxxx. All accounts receivable set forth
on the Financial Statements or incurred thereafter, up to the Closing Date,
(i) to the knowledge of Xxxxxxx or the Affiliates, are and shall be valid
obligations of the respective makers thereof, (ii) have and shall have arisen
in the Ordinary Course of Business, (iii) to the knowledge of Xxxxxxx or the
Affiliates, are and shall be fully collectible in the ordinary course of
Xxxxxxx'x business, subject to the reserve for doubtful accounts, and need
not be written off as uncollectible.
2.28 PRODUCT WARRANTY . The technologies or products licensed, sold,
leased, and delivered and all services provided by Xxxxxxx have conformed in all
material respects with all applicable contractual commitments and all express
and implied warranties, and Xxxxxxx has no liability (whether known or unknown,
whether asserted or unasserted, whether absolute or contingent, whether accrued
or unaccrued, whether liquidated or unliquidated, and whether due or to become
due) for replacement or modification thereof or other damages in connection
therewith, other than in the Ordinary Course of Business in an aggregate amount
not exceeding $20,000.
2.29 COMPLETE COPIES OF MATERIALS. Xxxxxxx has delivered or made
available true and complete copies of each document (or summaries of same)
that has been requested by Optio or its counsel.
2.30 XXXX-XXXXX-XXXXXX REPRESENTATIONS. The Shareholders, defined for
purposes of this section to include their spouses and any minor children, are
the only persons who could be considered an Ultimate Optio Entity of Xxxxxxx
as defined under the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as
amended (the "HSR ACT"). Each of the Shareholders, individually, is not a $10
million person as defined under the HSR Act: none of the Shareholders,
individually, has investment assets, voting securities and/or
income-producing property, including all of the total assets of Xxxxxxx and
any other entity a Shareholder controls, that total $10 million or more in
value; nor does any of the Shareholders, individually, control entities,
including but not limited to Xxxxxxx, that generated total revenue of $10
million or more in the last year.
No other shareholder of Xxxxxxx is required to file a
Notification and Report Form under Section 801.2(e) of the HSR Act concerning
its receipt of a portion of the Cash Payment as consideration to be received
in the Transaction.
2.31 BANK ACCOUNTS. Schedule 2.31 attached lists all of the (a) names
of each bank, savings and loan, or other financial institution in which
Xxxxxxx has an account, including cash contribution accounts, and the account
numbers and names of all persons authorized to draw thereon or having access
thereto, (b) locations of all lock boxes and safe deposit boxes of Xxxxxxx
and the names of all persons authorized to draw thereon or having access
thereto.
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2.32 AMOUNTS OWING. On or prior to the Closing Date, Xxxxxxx has
collected or cancelled any amounts loaned or advanced to or receivable from its
directors, officers, the Affiliates or affiliates of Xxxxxxx, all of which are
listed on Schedule 2.32.
2.33 POWERS OF ATTORNEY. Xxxxxxx has no powers of attorney or
comparable delegations of authority outstanding in connection with its business.
2.34 REPRESENTATIONS COMPLETE. Neither any of the representations or
warranties made by Xxxxxxx in this Agreement, nor any statements made in any
exhibit, schedule or certificate furnished by Xxxxxxx pursuant to this Agreement
contains or will contain at the Closing, any untrue statement of a material
fact, or omits or will omit at the Closing to state any material fact necessary
in order to make the statements contained herein or therein, in the light of the
circumstances under which made, not misleading.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF OPTIO
Optio represents and warrants to Shareholders, subject to such
exceptions as are specifically disclosed in writing in the disclosure letter and
referencing a specific representation supplied by Optio to Xxxxxxx dated as of
the date hereof and certified by a duly authorized officer of Optio (the "OPTIO
SCHEDULE"), as follows:
3.1 ORGANIZATION AND QUALIFICATION; SUBSIDIARIES. Each of Optio and
its subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation and has the
requisite corporate power and authority to own, lease and operate its assets and
properties and to carry on its business as it is now being conducted, except
where the failure to do so would not, individually or in the aggregate, have a
Material Adverse Effect on Optio. Each of Optio and its subsidiaries is in
possession of all Approvals necessary to own, lease and operate the properties
it purports to own, operate or lease and to carry on its business as it is now
being conducted, except where the failure to have such Approvals would not,
individually or in the aggregate, have a Material Adverse Effect on Optio. Each
of Optio and its subsidiaries is duly qualified or licensed as a foreign
corporation to do business, and is in good standing, in each jurisdiction where
the character of the properties owned, leased or operated by it or the nature of
its activities makes such qualification or licensing necessary, except for such
failures to be so duly qualified or licensed and in good standing that would
not, either individually or in the aggregate, have a Material Adverse Effect on
Optio.
3.2 ARTICLES OF INCORPORATION AND BYLAWS. Optio has previously
furnished to Xxxxxxx complete and correct copies of its Articles of
Incorporation and Bylaws as amended to date (together, the "OPTIO CHARTER
DOCUMENTS"). Such Optio Charter Documents and equivalent organizational
documents of each of its subsidiaries are in full force and effect. Optio is not
in violation of any of the provisions of Optio Charter Documents, and no
subsidiary of Optio is in violation of any of its equivalent organizational
documents.
3.3 AUTHORITY RELATIVE TO THIS AGREEMENT. Optio has all necessary
corporate power and authority to execute and deliver this Agreement, and to
perform its obligations hereunder and
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to consummate the transactions contemplated hereby. The execution and delivery
of this Agreement by Optio and the consummation by Optio of the transactions
contemplated hereby have been duly and validly authorized by all necessary
corporate action on the part of Optio and no other corporate proceedings on the
part of Optio are necessary to authorize this Agreement, or to consummate the
transactions so contemplated. This Agreement has been duly and validly executed
and delivered by Optio and, assuming the due authorization, execution and
delivery by Xxxxxxx, constitute legal and binding obligations of Optio
enforceable against Optio in accordance with their respective terms except (i)
as limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other laws of general application affecting enforcement of creditors' rights
generally and (ii) as limited by laws relating to the availability of specific
performance, injunctive relief, or other equitable remedies.
3.4 NO CONFLICT; REQUIRED FILINGS AND CONSENTS.
(a) The execution and delivery of this Agreement by Optio does
not, and the performance of this Agreement by Optio shall not, (i) conflict with
or violate the Articles of Incorporation, Bylaws or equivalent organizational
documents of Optio or any of its subsidiaries, (ii) subject to compliance with
the requirements set forth in Section 3.4(b) below, conflict with or violate any
law, rule, regulation, order, judgment or decree applicable to Optio or any of
its subsidiaries or by which it or their respective properties are bound or
affected, or (iii) result in any breach of or constitute a default (or an event
that with notice or lapse of time or both would become a default) under, or
impair Optio's or any such subsidiary's rights or alter the rights or
obligations of any third party under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of a lien or encumbrance on any of the properties or assets of Optio or
any of its subsidiaries pursuant to, any material note, bond, mortgage,
indenture, contract, agreement, lease, license, permit, franchise or other
instrument or obligation to which Optio or any of its subsidiaries is a party or
by which Optio or any of its subsidiaries or its or any of their respective
properties are bound or affected, except to the extent such conflict, violation,
breach, default, impairment or other effect could not in the case of clauses
(ii) or (iii) individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect on Optio.
(b) The execution and delivery of this Agreement by Optio does
not, and the performance of this Agreement by Optio shall not, require any
consent, approval, authorization or permit of, or filing with or notification
to, any Governmental Entity except where the failure to obtain such consents,
approvals, authorizations or permits, or to make such filings or notifications,
(x) would not prevent consummation of the Transaction or otherwise prevent Optio
from performing its obligations under this Agreement or (y) could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect on Optio.
3.5 FINANCIAL STATEMENTS. Each set of consolidated financial
statements (including, in each case, any related notes thereto) contained in
each report, schedule, registration statement and definitive proxy statement
filed by Optio with the SEC on or after July 1, 1999 was prepared in accordance
with GAAP applied on a consistent basis throughout the periods involved (except
as may be indicated in the notes thereto or, in the case of unaudited
statements, do not contain footnotes as permitted by Form 10-Q of the Exchange
Act) and each fairly presents the
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consolidated financial position of Optio and its subsidiaries at the respective
dates thereof and the consolidated results of its operations and cash flows for
the periods indicated, except that the unaudited interim financial statements
were or are subject to normal adjustments which were not or are not expected to
be material in amount.
3.6 BROKERS. Optio has not incurred, nor will it incur, directly or
indirectly, any liability for brokerage or finders' fees or agents' commissions
or any similar charges in connection with this Agreement or any transaction
contemplated hereby.
3.7 BOARD APPROVAL. The Board of Directors of Optio has, as of the
date of this Agreement, approved this Agreement and the transactions
contemplated hereby.
3.8 ABSENCE OF LITIGATION. Except as disclosed in the most recent
documents required to be filed by Optio with the SEC, there are no claims,
actions, suits or proceedings pending or, to the knowledge of Optio, threatened
(or, to the knowledge of Optio, any governmental or regulatory investigation
pending or threatened) against Optio or any of its subsidiaries or any
properties or rights of Optio or any of its subsidiaries, before any court,
arbitrator or administrative, governmental or regulatory authority or body,
domestic or foreign, which if determined against Optio would have a Material
Adverse Effect on Optio.
ARTICLE IV
ADDITIONAL AGREEMENTS
4.1 PURCHASE PRICE ADJUSTMENTS.
(a) Within 90 days following the Closing Date, Optio shall
prepare, at its sole expense, a balance sheet of Xxxxxxx as of the Closing Date
(the "CLOSING BALANCE SHEET"), and related statements of income for the period
then ended. The completion of the Closing Balance Sheet shall be conducted in
accordance with generally accepted accounting principles. The Closing Balance
Sheet shall be used to determine the Net Book Value (as defined below) of
Xxxxxxx as of the Closing Date. The Cash Payment shall be adjusted downward, on
a dollar-for-dollar basis, to the extent that the Net Book Value of Xxxxxxx on
the Closing Date is less than $1,200,000. For purposes of this Agreement, "NET
BOOK VALUE" shall mean the total assets of Xxxxxxx, including capitalized
software, minus, without duplication, (i) the sums attributable to (a) goodwill,
(b) intangible items such as unamortized debt discount and expense, patents,
trade and service marks, copyrights, and research and development expenses, and
(c) all reserves not already deducted from assets, and (ii) total liabilities
(total liabilities shall include the amount of all obligations that should in
accordance with generally accepted accounting principles be classified as
liabilities on the balance sheet of Xxxxxxx, including in any event, all
indebtedness, contingent or otherwise). Promptly upon completion, Optio shall
deliver the Closing Balance Sheet to the Shareholders together with working
papers. In the event that Optio and the Shareholders agree in writing as to the
Closing Balance Sheet (after any mutually agreed modifications thereto are
made), then such Closing Balance Sheet shall be final and binding upon the
parties hereto; PROVIDED, HOWEVER, that the determination of whether Optio and
the Shareholders agree as to the Closing Balance Sheet shall be made no later
than 30 days following the Shareholders' the receipt of the Closing Balance
Sheet. In the event that the Shareholders
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and Optio cannot so agree in writing within 30 days following the Shareholders'
the receipt of the Closing Balance Sheet, then any items or issues in dispute
shall be resolved in accordance with Section 8.7 below or by an accounting firm
mutually agreed upon by the Parties. At the sole discretion of Optio, any
amounts owed hereunder may be offset against the Promissory Notes.
(b) In addition to, but not in duplication of, the Purchase
Price adjustment for the Net Book Value determination, the Purchase Price shall
also be adjusted downward (the "ACCOUNTS RECEIVABLE ADJUSTMENT"),
dollar-for-dollar to the extent that any accounts receivable of Xxxxxxx on the
Closing Date are not fully collected within six (6) months after the Closing
Date. At the sole discretion of Optio, any amounts owed hereunder may be offset
against the Promissory Notes.
4.2 CONFIDENTIALITY; ACCESS TO INFORMATION.
(a) The parties acknowledge that Xxxxxxx and Optio have
previously executed a letter agreement, dated as of February 17, 2000, and a
Confidentiality Agreement, dated February 23, 1999 (collectively, the
"CONFIDENTIALITY AGREEMENTS"), the confidentially provisions of which will
continue in full force and effect in accordance with their terms.
(b) Xxxxxxx will afford Optio and Optio's accountants, counsel
and other representatives reasonable access to its properties, books, records
and personnel during the period prior to the Closing Date to obtain all
information concerning its business as Optio may reasonably request. No
information or knowledge obtained in any investigation pursuant to this Section
4.2 will affect or be deemed to modify any representation or warranty contained
herein or the conditions to the obligations of Optio to consummate the
Transaction.
4.3 PUBLIC DISCLOSURE. Optio and Xxxxxxx will consult with each other
and agree before issuing any press release or otherwise making any public
statement with respect to this Agreement and will not issue any such press
release or make any such public statement prior to such agreement, except as may
be required by law or any listing agreement with a national securities exchange,
in which case reasonable efforts to consult with the other party will be made
prior to any such release or public statement. The parties have agreed to the
text of the joint press release announcing the signing of this Agreement.
4.4 REASONABLE EFFORTS; NOTIFICATION.
(a) Upon the terms and subject to the conditions set forth in
this Agreement, each of the parties agrees to use all reasonable efforts to
take, or cause to be taken, all actions, and to do, or cause to be done, and to
assist and cooperate with the other parties in doing, all things necessary,
proper or advisable to consummate and make effective, in the most expeditious
manner practicable, the transactions contemplated by this Agreement, including
using reasonable efforts to accomplish the following: (i) the taking of all
reasonable acts necessary to cause the conditions precedent set forth in Article
V to be satisfied, (ii) the obtaining of all necessary actions or nonactions,
waivers, consents, approvals, orders and authorizations from Governmental
Entities and the making of all necessary registrations, declarations and filings
(including registrations, declarations and filings with Governmental Entities,
if any) and the
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taking of all reasonable steps as may be necessary to avoid any suit, claim,
action, investigation or proceeding by any Governmental Entity, (iii) the
obtaining of all necessary consents, approvals or waivers from third parties,
(iv) the defending of any suits, claims, actions, investigations or proceedings,
whether judicial or administrative, challenging this Agreement or the
consummation of the transactions contemplated hereby, including seeking to have
any stay or temporary restraining order entered by any court or other
Governmental Entity vacated or reversed and (v) the execution or delivery of any
additional instruments necessary to consummate the transactions contemplated by,
and to fully carry out the purposes of, this Agreement. Notwithstanding anything
herein to the contrary, nothing in this Agreement shall be deemed to require
Optio or Xxxxxxx or affiliate thereof to agree to any divestiture by itself or
any of its affiliates of shares of capital stock or of any business, assets or
property, or the imposition of any material limitation on the ability of any of
them to conduct their business or to own or exercise control of such assets,
properties and stock.
4.5 POST CLOSING COVENANTS; GENERAL. In case at any time after the
Closing any further action is necessary to carry out the purposes of this
Agreement, each of the Parties will take such further action (including the
execution and delivery of such further instruments and documents) as any other
Party reasonably may request, all at the sole cost and expense of the requesting
Party (unless the requesting Party is entitled to indemnification therefor under
Article VI below).
4.6 LITIGATION SUPPORT. In the event and for so long as any Party
actively is contesting or defending against any action, suit, proceeding,
hearing, investigation, charge, complaint, claim, or demand in connection with
(i) any transaction contemplated under this Agreement or (ii) any fact,
situation, circumstance, status, condition, activity, practice, plan,
occurrence, event, incident, action, failure to act, or transaction (A) on or
prior to the Closing involving Xxxxxxx or (B) arising out of Optio's operation
of the business of Xxxxxxx following the Closing Date in the manner in which it
is presently conducted and planned to be conducted, each of the other Parties
will cooperate with the Party and its counsel in the contest or defense, make
available their personnel, and provide such testimony and access to their books
and records as shall be reasonably necessary in connection with the contest or
defense, all at the sole cost and expense of the contesting or defending Party
(unless the contesting or defending Party is entitled to indemnification
therefor under Article VI below).
4.7 TERMINATION OF 401(k) PLAN. Xxxxxxx and its affiliates, as
applicable, each agrees to terminate its 401(k) plan immediately prior to
Closing, unless Optio, in its sole and absolute discretion, agrees to sponsor
and maintain such plan by providing Xxxxxxx with written notice of such election
at least three (3) days before the Closing Date. Unless Optio provides such
notice to Xxxxxxx, Optio shall receive from Xxxxxxx evidence that Xxxxxxx'x and
each Affiliate's (as applicable) 401(k) plan has been terminated pursuant to
resolutions of each such entity's Board of Directors (the form and substance of
which resolutions shall be subject to review and approval of Optio), effective
as of the day immediately preceding the Closing Date.
4.8 TERMINATION OF SEVERANCE PLAN. Xxxxxxx and its Affiliates, as
applicable, each agrees to terminate any and all group severance, separation or
salary continuation plans, programs or arrangements that are covered under ERISA
immediately prior to Closing. Optio shall receive from Xxxxxxx evidence that
Xxxxxxx'x and each Affiliate's (as applicable) plan(s)
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has been terminated pursuant to resolution of each such entity's Board of
Directors (the form and substance of which resolutions shall be subject to
review and approval of Optio), effective as of the day immediately preceding the
Closing Date.
ARTICLE V
CONDITIONS TO THE TRANSACTION
5.1 CONDITIONS TO OBLIGATIONS OF EACH PARTY TO EFFECT THE TRANSACTION.
The respective obligations of each party to this Agreement to effect the
Transaction shall be subject to the satisfaction at or prior to the Closing Date
of the following conditions:
(a) NO LITIGATION. There shall not have been issued any
temporary restraining order, preliminary or permanent injunction or other order
issued by any court of competent jurisdiction or other legal or regulatory
restraint or prohibition preventing the consummation of the Transaction or
limiting or restricting Optio's conduct or operation of the business of Optio
after the Transaction, nor shall any proceeding brought by any Governmental
Entity, seeking any of the foregoing be pending; nor shall there be any action
taken, or any statute, rule, regulation or order enacted, entered, enforced or
deemed applicable to the Transaction which makes the consummation of the
Transaction illegal.
5.2 ADDITIONAL CONDITIONS TO OBLIGATIONS OF THE AFFILIATES. The
obligation of Xxxxxxx and the Affiliates to consummate and effect the
Transaction shall be subject to the satisfaction at or prior to the Closing Date
of each of the following conditions, any of which may be waived, in writing,
exclusively by the Affiliates:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Optio contained in this Agreement (i) shall have been true and
correct as of the date of this Agreement and (ii) shall be true and correct on
and as of the Closing Date with the same force and effect as if made on the
Closing Date except (A) for such failures to be true and correct that do not in
the aggregate constitute (and are not reasonably likely to have) a Material
Adverse Effect on Optio and (B) for those representations and warranties which
address matters only as of a particular date (which representations shall have
been true and correct (subject to the qualifications set forth in the preceding
clause (A)) as of such particular date) (it being understood that, for purposes
of determining the accuracy of such representations and warranties, all
"Material Adverse Effect" qualifications and other qualifications based on the
word "material" or similar phrases contained in such representations and
warranties shall be disregarded). Xxxxxxx shall have received a certificate with
respect to the foregoing signed on behalf of Optio by an authorized officer of
Optio.
(b) LEGAL OPINION. The Affiliates shall have received a legal
opinion from Xxxxxx, Xxxxxxx & Xxxxxx, LLP, legal counsel to Optio in the form
of EXHIBIT B attached hereto.
(c) AGREEMENTS AND COVENANTS. Optio shall have performed or
complied in all material respects with all agreements and covenants required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and the Affiliates shall have received a certificate to such effect signed
on behalf of Optio by an authorized officer of Optio.
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(d) TRANSLINK PURCHASE AGREEMENT. On or before the Closing
Date, Optio shall have consummated the purchase of the assets of Translink
Solutions Corporation pursuant to the terms of the Translink Purchase Agreement.
5.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF OPTIO . The obligation
of Optio to consummate and effect the Transaction shall be subject to the
satisfaction at or prior to the Closing Date of each of the following
conditions, any of which may be waived, in writing, exclusively by Optio:
(a) REPRESENTATIONS AND WARRANTIES. Each representation and
warranty of Xxxxxxx and each Affiliate contained in this Agreement (i) shall
have been true and correct as of the date of this Agreement and (ii) shall be
true and correct on and as of the Closing Date with the same force and effect as
if made on and as of the Closing Date except (A) for such failures to be true
and correct that do not in the aggregate constitute a Material Adverse Effect on
Xxxxxxx; provided, however, such Material Adverse Effect qualifier shall be
inapplicable with respect to representations and warranties and (B) for those
representations and warranties which address matters only as of a particular
date (which representations shall have been true and correct (subject to the
qualifications set forth in the preceding clause (A)) as of such particular
date) (it being understood that, for purposes of determining the accuracy of
such representations and warranties, all "Material Adverse Effect"
qualifications and other qualifications based on the word "material" or similar
phrases contained in such representations and warranties shall be disregarded).
Optio shall have received a certificate with respect to the foregoing signed on
behalf of Xxxxxxx by an authorized officer of Xxxxxxx.
(b) TRANSLINK PURCHASE AGREEMENT. On or before the Closing
Date, Optio shall have consummated the purchase of the assets of Translink
Solutions Corporation pursuant to the terms of the Translink Purchase Agreement.
(c) PAYMENT OF BANK DEBT. Xxxxxxx and the Affiliates shall
have paid, satisfied and cancelled all debt owing by Xxxxxxx to any bank or
other financial institution and such bank or other financial institution lien
shall have been cancelled. On or before Closing, Xxxxxxx shall provide to Optio
copies of all UCC-3 Financing Statement termination filing documents in
connection with the cancellation of the debt owing by Xxxxxxx and the liens
filed pursuant to such debt.
(d) AMOUNTS OWING. Xxxxxxx will have cancelled any amounts
loaned or advanced to its directors, officers, the Affiliates or affiliates of
Xxxxxxx.
(e) LEASE PAYMENTS. Xxxxxxx shall have paid off all
obligations with respect to personal property leased by it and Xxxxxxx shall
obtain good and merchantable title to all such leased property free and clear of
all Liens. On or before Closing, Xxxxxxx shall provide to Optio (i) evidence of
the cancellation of such obligations with respect to the personal property
leased by it, (ii) Bills of Sale relating to such property, and (iii) UCC-3
Financing Statement termination filing documents where necessary.
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(f) XXXXXXX FINANCIAL RESOURCES AND B&N FINANCING & LEASING,
INC. RELEASES. Each of Xxxxxxx Financial Resources and B&N Financing & Leasing,
Inc. (each a "RELATED COMPANY") shall have executed and delivered to Optio a
Related Company Release in substantially the form attached hereto as EXHIBIT C,
and such Releases shall be in full force and effect.
(g) AGREEMENTS AND COVENANTS. Xxxxxxx and the Affiliates shall
have performed or complied in all material respects with all agreements and
covenants required by this Agreement to be performed or complied with by them at
or prior to the Closing Date, and Optio shall have received a certificate to
such effect signed on behalf of Xxxxxxx and the Affiliates by the Chief
Executive Officer and the Chief Financial Officer of Xxxxxxx.
(h) NONCOMPETITION AGREEMENTS. The persons set forth on
EXHIBIT D-1 hereto shall have entered into Noncompetition Agreements
substantially in the form attached hereto as EXHIBIT D-2 and such agreements
shall be in full force and effect.
(i) CONSENTS. Xxxxxxx shall have obtained all consents,
waivers and approvals required in connection with the consummation of the
transactions contemplated hereby in connection with the agreements, contracts,
licenses or leases set forth on Schedule 5.3(i).
(j) RESIGNATION OF DIRECTORS. Optio shall have received a
written resignation from each of the directors of Xxxxxxx, effective as of the
Closing Date.
(k) LEGAL OPINION. Optio shall have received a legal opinion
from Xxxxxxxx, Loop & Xxxxxxxx, LLP, legal counsel to Xxxxxxx, substantially in
the form attached hereto as EXHIBIT E.
(l) CORPORATE MINUTE BOOKS; SECRETARY'S CERTIFICATE. Xxxxxxx
shall have delivered the original corporate minute books of Xxxxxxx to Optio.
The corporate minute books shall contain minutes and consents of all Board of
Directors' and shareholders' actions and meetings, cancelled stock certificates
of all previously issued, but no longer outstanding, stock certificates of
Xxxxxxx, a recently issued good standing certificate from the State of Florida
and those states in which Xxxxxxx is qualified to do business as a foreign
corporation, the resignations of all officers and directors of Xxxxxxx effective
the close of business on the Closing Date, copies of the Articles of
Incorporation of Xxxxxxx and any amendments thereto certified by the office of
the Secretary of State of Florida, the Bylaws of Xxxxxxx, and the stock ledger
with all issued or previously issued stock certificates accounted for. Each of
MA LP and Xxxxxxx XX shall have delivered to Optio a recently issued good
standing certificate from the State of Nevada and copies of the Articles of
Organization of each partnership and any amendments thereto certified by the
office of the Secretary of State of Nevada. In addition, Xxxxxxx shall have
delivered to Optio and its legal counsel a certificate of Xxxxxxx'x Secretary
relating to (i) Xxxxxxx'x Articles of Incorporation, stating that such articles
have not been amended since the date of certification by the Florida Secretary
of State, (ii) Xxxxxxx'x Bylaws, stating that such Bylaws have not been amended
from the form presented, (iii) resolutions adopted by Xxxxxxx'x Board of
Directors authorizing and directing the execution and delivery of this Agreement
(and
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the document related hereto) by Xxxxxxx, and (iv) the incumbency and genuiness
of the signature of each officer of Xxxxxxx executing this Agreement and the
Documents related hereto.
(m) NO MATERIAL ADVERSE CHANGE. There shall not have occurred
any event or condition of any character that has had or is reasonably likely to
have a Material Adverse Effect on Xxxxxxx since the date of this Agreement,
other than payoffs required by Optio.
(n) NEW EMPLOYMENT ARRANGEMENTS. Each of the Principals, shall
have entered into employment agreements with Optio or a subsidiary thereof
substantially in the forms of EXHIBIT F.
(o) STOCKHOLDER'S RELEASE. Each of the Affiliates shall have
executed and delivered to Optio an Affiliate's Release in substantially the form
attached hereto as EXHIBIT G, and such Releases shall be in full force and
effect.
(p) XXXXX RELEASE AND CONSULTING AGREEMENT CANCELLATION.
Xxxxxx Xxxxx shall have executed and delivered to Optio a General Release and
Acknowledgement of Cancellation of Consulting Agreement, and such Release shall
be in full force and effect.
ARTICLE VI
SURVIVAL OF REPRESENTATIONS AND WARRANTIES; SETOFF
6.1 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Xxxxxxx and the Affiliates contained in this
Agreement, or in any certificate or other instrument delivered pursuant to this
Agreement, shall terminate on June 30, 2002; PROVIDED, HOWEVER, that the
representations and warranties of Xxxxxxx contained in Section 2.18 and Section
2.20 hereof shall survive for five (5) years from the Closing Date, and those
contained in Section 2.3, Section 2.12 and Section 2.17 hereof shall survive
until the expiration of the applicable statute of limitations and any extensions
thereof. The representations and warranties of Optio contained in this
Agreement, or in any certificate or other instrument delivered pursuant to this
Agreement, shall terminate on June 30, 2002.
6.2 XXXXXXX INDEMNIFICATION.
(a) The Affiliates jointly and severally agree to indemnify
and hold Optio and its officers, directors and affiliates, including Xxxxxxx
after the Closing (the "XXXXXXX INDEMNIFIED PARTIES"), harmless against all
claims, losses, liabilities, damages, deficiencies, costs and expenses,
including reasonable attorneys' fees and expenses of investigation and defense
relating to such claim, loss, liability, damage, deficiency, cost or expense
(hereinafter individually a "LOSS" and collectively "LOSSES") incurred or
suffered by the Xxxxxxx Indemnified Parties, or any of them (including Xxxxxxx
after the Closing), directly or indirectly, as a result of (i) any breach or
inaccuracy of a representation or warranty of Xxxxxxx or the Affiliates
contained in this Agreement, (ii) any failure by Xxxxxxx or the Affiliates to
perform or comply with any covenant applicable to it contained in this
Agreement, (iii) any adjustment to the Purchase Price pursuant to Section 4.1
hereof in connection with the Net Book Value determination or the Accounts
Receivable Adjustment, or (iv) the incurrence by Xxxxxxx and/or
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the Affiliates of third party expenses, including without limitation legal and
accounting fees incurred by Xxxxxxx and/or the Affiliates in connection with
this Agreement and the Transaction. The aggregate indemnification obligation of
the Affiliates shall be limited to the Purchase Price, plus any consideration
received by the Shareholders pursuant to the terms of the Translink Agreement
("INDEMNIFICATION FUND"). In addition, no Affiliate will be obligated to pay to
Optio more than the amount of the Indemnification Fund received by such
Affiliate as set forth on Schedule 1.2(a) hereof (and, the purposes of these
provisions, the PRO RATA portion of the Indemnification Fund for (i) X. Xxxxxxx
shall include amounts paid to MA LP and (ii) X. Xxxxxxx shall include amounts
paid to Xxxxxxx XX [for purposes of clarification, Optio may not collect the
same amount twice for the same loss from the Shareholder and the Principal
thereof]). The Affiliates shall not have any right of contribution from Xxxxxxx
with respect to any Loss claimed by a Xxxxxxx Indemnified Party, including, but
not limited to, a claim pursuant to Section 6.2(b) hereof.
(b) TAX INDEMNIFICATION AND OTHER TAX MATTERS.
(i) Notwithstanding anything to the contrary in the
Agreement, the Affiliates shall, jointly and severally, indemnify, save and hold
harmless the Xxxxxxx Indemnified Parties from and against any and all damages,
losses, costs, claims, expenses and liabilities including without limitation,
interest, penalties, reasonable attorneys' fees and expenses, incurred in
connection with, arising out of, resulting from or relating to (i) any fact
inconsistent with, or any untruth or inaccuracy of, any representation or
warranty of Xxxxxxx or the Affiliates contained in Section 2.17, (ii) any and
all Taxes attributable to Xxxxxxx or the assets and/or the business of Xxxxxxx
(A) with respect to all periods ending on or prior to the Closing Date and (B)
with respect to any period beginning before the Closing and ending after the
Closing Date, but only with respect to the portion of such period up to and
including the Closing Date (such portion shall be referred to herein as the "
PRE-CLOSING TAX PERIOD" and the portion of such period after the Closing Date
shall be referred to herein as the "POST-CLOSING TAX PERIOD").
(ii) For purposes of this Section 6.2(b), Tax or
Taxes shall include the amount of Taxes which would have been paid but for the
application of any credit or net operating or capital loss deduction
attributable to periods or portions of a period beginning after the Closing
Date.
(iii) Any Taxes for a period including a Pre-Closing
Period and a Post-Closing Period shall be apportioned between such Pre-Closing
Period and such Post-Closing Period, based, in the case of real and personal
property Taxes, on a per diem basis and, in the case of other Taxes, on the
basis of a closing of the books as of the Closing Date.
(iv) Without limiting the foregoing provisions of
this Section 6.2(b), the definitions of "Loss" or "Losses" above shall include
any claim or right to indemnification pursuant to this Section 6.2(b).
(c) INDEMNIFICATION PROCEDURE.
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(i) Promptly after receipt by a Xxxxxxx Indemnified Party of
notice by a third party of any complaint or the commencement of any action or
proceeding with respect to which indemnification is being sought under this
Agreement, such Xxxxxxx Indemnified Party shall notify the Shareholders of such
complaint or of the commencement of such action or proceeding; PROVIDED,
HOWEVER, that failure to so notify the Shareholders shall not relieve the
Shareholders from liability for such claims except and only to the extent that
such failure to notify the Shareholders results in the forfeiture of, or
otherwise prejudices the Shareholder's ability to establish, rights and defenses
otherwise available to the Shareholders with respect to such claim. The
Shareholders shall have the right, upon written notice to the Xxxxxxx
Indemnified Party, to assume the defense of such action or proceeding, including
the employment of counsel reasonably satisfactory to the Xxxxxxx Indemnified
Party and the payment of the fees and disbursements of such counsel as incurred.
If the Shareholders do not elect to assume control of the defense of any such
claims, the Shareholders shall be bound by the results otherwise obtained with
respect to such claim. In the event, however, that the Shareholders decline or
fail to assume the defense of the action or proceeding or to employ counsel
reasonably satisfactory to such Xxxxxxx Indemnified Party, in either case in a
timely manner, then such Xxxxxxx Indemnified Party may employ counsel to
represent or defend it in any such action or proceeding and the Shareholders
shall pay the reasonable fees and disbursements of such counsel upon receipt of
an invoice; PROVIDED, HOWEVER, that the Shareholders shall not be required to
pay the fees and disbursements of more than one counsel for all Xxxxxxx
Indemnified Parties in any jurisdiction in any single action or proceeding.
However, in the event, that an action or proceeding relating to the Xxxxxxx
Intellectual Property arises after March 31, 2001 in which the Shareholders
decline or fail to assume the defense of the action or proceeding or to employ
counsel reasonably satisfactory to such Xxxxxxx Indemnified Party in such action
or proceeding, in either case in a timely manner, then such Xxxxxxx Indemnified
Party may employ counsel to represent or defend it, Xxxxxxx or the Affiliates in
any such action or proceeding relating to the Xxxxxxx Intellectual Property and
Optio shall pay the fees and disbursements of such counsel if it is determined
that there is no liability by Optio, Xxxxxxx or the Affiliates to such third
party. In any action or proceeding with respect to which indemnification is
being sought under this Agreement, the Xxxxxxx Indemnified Parties or the
Shareholders, whichever is not assuming the defense of such action, shall have
the right to participate in such litigation and to retain its own counsel at
such party's own expense. The Xxxxxxx Indemnified Parties or the Shareholders,
as the case may be, shall at all times use reasonable efforts to keep the
Shareholders or the Xxxxxxx Indemnified Parties, as the case may be, reasonably
apprised of the status of the defense of any claim the defense of which they are
maintaining, and to cooperate in good faith with each other with respect to the
defense of any such action.
(ii) Notwithstanding anything herein to the contrary (including
responsibility for defense of the claim), no Xxxxxxx Indemnified Party may
settle or compromise any claim or consent to the entry of any judgment with
respect to which indemnification is being sought from the Shareholders under
this Agreement, unless such settlement, compromise or consent includes an
unconditional release of the Shareholders from all liability arising out of such
claim, otherwise the prior written consent of the Shareholders must be obtained.
The Shareholders shall not, without the prior written consent of Optio, settle
or compromise any claim or consent to the entry of any judgment with respect to
which indemnification is being
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sought under this Agreement unless such settlement, compromise or consent
includes an unconditional release of the Xxxxxxx Indemnified Parties from all
liability arising out of such claim and does not contain any equitable order,
judgment or term which in any manner affects, restrains or interferes with the
business of Optio, any of the Xxxxxxx Indemnified Parties or any of their
respective affiliates.
(iii) In the event that a Xxxxxxx Indemnified Party does claim a
right to payment pursuant to this Agreement, such Xxxxxxx Indemnified Party
shall send written notice of such claim to the Shareholders. Such notice shall
specify the basis for such claim. As promptly as possible after the Xxxxxxx
Indemnified Party has given such notice, such Xxxxxxx Indemnified Party and the
Shareholders shall establish the merits and amount of such claim (by mutual
agreement or arbitration as set forth in Section 8.8 hereof). However,
notwithstanding any other provision of this Agreement, Optio shall not be
entitled to indemnification hereunder and may not make any claim for a Loss
unless and until one or more claims have been made according to this Article VI
and the Translink Agreement, and said claims are in excess of $100,000 in the
aggregate (the "BASKET AMOUNT"), in which case Optio shall be entitled to
recover all Losses in excess of the Basket Amount. Notwithstanding the
foregoing, the Basket Amount shall not apply with respect to (i) the Purchase
Price adjustment for Net Book Value, if any, to be made in accordance with
Section 4.1(a), (ii) any breaches of representations, warranties or covenants
contained in Sections 2.3 (Capitalization) or 2.19 (Brokers) or (iii) legal and
accounting fees incurred by Xxxxxxx in connection with this Agreement or the
transactions contemplated hereby remaining unpaid after the Closing.
(iv) At Optio's option, it may setoff against the outstanding
principal and interest due and payable to the Shareholders under the Promissory
Note(s) the payment of any claims due to Optio under this Article VI.
6.3 OPTIO INDEMNIFICATION.
(a) Optio agrees to indemnify (up to the Deferred Payment
among) and hold the Shareholders (the "OPTIO INDEMNIFIED PARTIES"), harmless
against all Losses incurred or suffered by the Optio Indemnified Parties, or any
of them, directly or indirectly, as a result of (i) any breach or inaccuracy of
a representation or warranty of Optio contained in this Agreement, or (ii) any
failure by Optio to perform or comply with any covenant applicable to it
contained in this Agreement.
(b) INDEMNIFICATION PROCEDURE.
(i) Promptly after receipt by a Optio Indemnified Party of
notice by a third party of any complaint or the commencement of any action or
proceeding with respect to which indemnification is being sought under this
Agreement, such Optio Indemnified Party shall notify Optio of such complaint or
of the commencement of such action or proceeding; provided, however, that
failure to so notify Optio does not relieve Optio from liability for such claim
except and only to the extent that such failure to notify Optio results in the
forfeiture of, or otherwise prejudices Optio's or any of its affiliates ability
to establish rights and defenses otherwise available to Optio or any of its
affiliates with respect to such claim. Optio will have the
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right, upon written notice to Optio Indemnified Party, to assume the defense of
such action or proceeding, including the employment of counsel reasonably
satisfactory to Optio Indemnified Party and the payment of the reasonable fees
and disbursements of such counsel as incurred. If Optio does not elect to assume
control of the defense of any such claims, Optio shall be bound by the results
otherwise obtained with respect to such claim. In the event, however, that Optio
declines or fails to assume the defense of the action or proceeding or to employ
counsel reasonably satisfactory to such Optio Indemnified Party, in either case
in a timely manner, then such Optio Indemnified Party may employ counsel to
represent or defend it in any such action or proceeding and Buyer shall pay the
reasonable fees and disbursements of such counsel as incurred; provided,
however, that Optio is not required to pay the fees and disbursements of more
than one counsel for all Optio Indemnified Parties in any jurisdiction in any
single action or proceeding. In any action or proceeding with respect to which
indemnification is being sought under this Agreement, Optio Indemnified Parties
or Optio, whichever is not assuming the defense of such action, shall have the
right to participate in such litigation and to retain its own counsel at such
party's own expense. Optio Indemnified Parties or Optio, as the case may be,
shall at all times use reasonable efforts to keep Optio or Optio Indemnified
Parties, as the case may be, reasonably apprised of the status of the defense of
any claim the defense of which they are maintaining and to cooperate in good
faith with each other with respect to the defense of any such action.
(ii) No Optio Indemnified Party may settle or compromise any
claim or consent to the entry of any judgment with respect to which
indemnification is being sought from Optio under this Agreement without the
prior written consent of Optio, unless such settlement, compromise or consent
includes an unconditional release of Optio and its affiliates from all liability
arising out of such claim and does not contain any equitable order, judgment or
term which in any manner affects, restrains or interferes with the business of
Optio, any of the Optio Indemnified Parties or any of their respective
affiliates. Optio shall not, without the prior written consent of each Optio
Indemnified Party, settle or compromise any claim or consent to the entry of any
judgment with respect to which indemnification is being sought under this
Agreement unless such settlement, compromise or consent includes an
unconditional release of Optio Indemnified Party from all liability arising out
of such claim and does not contain any equitable order, judgment or term which
in any material manner affects, restrains or interferes with the business of
Optio Indemnified Parties or any of their respective affiliates.
(iii) In the event that an Optio Indemnified Party does
claim a right to payment pursuant to this Agreement, such Optio Indemnified
Party shall send written notice of such claim to Optio. Such notice shall
specify the basis for such claim. As promptly as possible after such Optio
Indemnified Party has given such notice, Shareholders and Optio shall establish
the merits and amount of such claim (by mutual agreement, litigation,
arbitration, mediation or otherwise) and, within five business days of the final
determination of the merits and amount of such claim, Optio shall deliver an
amount of cash in immediately available funds to such Optio Indemnified Party as
appropriate to satisfy and discharge such claim as so determined.
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ARTICLE VII
FEES, AMENDMENT AND WAIVER
7.1 FEES AND EXPENSES. All fees and expenses incurred in connection
with this Agreement and the transactions contemplated hereby shall be paid by
the party incurring such expenses whether or not the Transaction is consummated,
with the exception that such legal, accounting and other expenses incurred by
Xxxxxxx in connection with the Transaction shall be paid by the Shareholders.
7.2 AMENDMENT. Subject to applicable law, this Agreement may be amended
by the parties hereto at any time by execution of an instrument in writing
signed on behalf of each of Optio, Xxxxxxx and the Affiliates.
7.3 EXTENSION; WAIVER. At any time prior to the Closing, any party
hereto may, to the extent legally allowed, (i) extend the time for the
performance of any of the obligations or other acts of the other parties hereto,
(ii) waive any inaccuracies in the representations and warranties made to such
party contained herein or in any document delivered pursuant hereto and (iii)
waive compliance with any of the agreements or conditions for the benefit of
such party contained herein. Any agreement on the part of a party hereto to any
such extension or waiver shall be valid only if set forth in an instrument in
writing signed on behalf of such party. Delay in exercising any right under this
Agreement shall not constitute a waiver of such right.
ARTICLE VIII
GENERAL PROVISIONS
8.1 NOTICES. All notices and other communications hereunder shall be in
writing and shall be deemed given if delivered personally or by commercial
delivery service, or sent via telecopy (receipt confirmed) to the parties at the
following addresses or telecopy numbers (or at such other address or telecopy
numbers for a party as shall be specified by like notice):
(a) if to Optio to:
Optio Software, Inc.
Xxxxxxxx Xxxxx
Xxxxxxxx Xxxxxxxx XX
Xxxxxxxxxx, XX 00000
Attention: Xxxxx Cape, Chief Executive Officer
Telecopy No.: (000) 000-0000
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with a copy to:
Xxxxxx, Xxxxxxx & Xxxxxx, L.L.P.
1600 Atlanta Financial Center
0000 Xxxxxxxxx Xxxx, X.X.
Xxxxxxx, Xxxxxxx 00000
Attention: Xxxx X. Xxxxxxx
Telecopy No.:(000) 000-0000
(b) if to Xxxxxxx to:
Xxxxxxx Corporation
000 X. Xxxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxxxx Xxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
with a copy to:
Xxxxxxxx Xxxx and Xxxxxxxx, LLP
Xxxxxxx Plaza, Suite 2800
000 Xxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
(c) if to Shareholders to:
MA Xxxxxxx Family Limited Partnership I
0000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxxx
Telecopy No.: (000) 000-0000
Xxxxxxx Family Limited Partnership I
000 Xxxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Attention: Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
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with a copy to:
Xxxxxxxx Xxxx and Xxxxxxxx, LLP
Xxxxxxx Plaza, Suite 2800
000 Xxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
(d) if to Principals to:
Xxxxxxx X. Xxxxxxx
0000 Xxxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxx 00000
Telecopy No.: (000) 000-0000
Xxxxxxxx Xxxxxxx
000 Xxxxxx Xxxx Xxxxxx
Xxxxxxxx, Xxxxxxx 00000
Xxxxx Xxxxxx
000 Xxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxx 00000
with a copy to:
Xxxxxxxx Xxxx and Xxxxxxxx, LLP
Xxxxxxx Plaza, Suite 2800
000 Xxxx Xxxxxxx Xxxx.
Xxxxx, Xxxxxxx 00000
Attention: Xxxxxxx X. Xxxxxx
Telecopy No.: (000) 000-0000
8.2 INTERPRETATION; DEFINITIONS.
(a) When a reference is made in this Agreement to Exhibits, such
reference shall be to an Exhibit to this Agreement unless otherwise indicated.
When a reference is made in this Agreement to Sections, such reference shall be
to a Section of this Agreement. Unless otherwise indicated the words "include,"
"includes" and "including" when used herein shall be deemed in each case to be
followed by the words "without limitation." The table of contents and headings
contained in this Agreement are for reference purposes only and shall not affect
in any way the meaning or interpretation of this Agreement. When reference is
made herein to "the business of" an entity, such reference shall be deemed to
include the business of all direct and indirect subsidiaries of such entity.
Reference to the subsidiaries of an entity shall be deemed to include all direct
and indirect subsidiaries of such entity.
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(b) For purposes of this Agreement:
(i) the term "KNOWLEDGE" means with respect to any corporate
party hereto, with respect to any matter in question, knowledge of the executive
officers of such party after reasonable inquiry and with respect to any
individual parties hereto, actual knowledge;
(ii) the term "MATERIAL ADVERSE EFFECT" when used in
connection with an entity means any change, event, violation, inaccuracy,
circumstance or effect that is materially adverse to the business, assets,
liabilities, financial condition, results of operations or prospects of such
entity and its subsidiaries taken as a whole; PROVIDED, HOWEVER, that in no
event shall a decrease in such entity's stock price or the failure to meet or
exceed Wall Street research analysts' in and of itself constitute a Material
Adverse Effect;
(iii) the term "PERSON" shall mean any individual, corporation
(including any non-profit corporation), general partnership, limited
partnership, limited liability partnership, joint venture, estate, trust,
company (including any limited liability company or joint stock company), firm
or other enterprise, association, organization, entity or Governmental Entity;
(iv) the term "ORDINARY COURSE OF BUSINESS" shall mean an
action taken by a person only if: (A) such action is consistent with the past
practices of such person and is taken in the ordinary course of the normal
day-to-day operations of such person; (B) such action is not required to be
authorized by the board of directors of such person (or by any Person or group
of persons exercising similar authority) and is not required to be specifically
authorized by the parent company (if any) of such person; and (C) such action is
similar in nature and magnitude to actions customarily taken, without any
authorization by the board of directors (or by any person or group of persons
exercising similar authority), in the ordinary course of the normal day-to-day
operations of other persons that are in the same line of business as such
person;
(v) the term "AFFILIATE" of a person means any other person
that directly or indirectly, through one or more intermediaries, controls, is
controlled by, or is under common control with such person.
8.3 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, all of which shall be considered one and the same agreement and
shall become effective when one or more counterparts have been signed by each of
the parties and delivered to the other party, it being understood that all
parties need not sign the same counterpart.
8.4 ENTIRE AGREEMENT; THIRD PARTY BENEFICIARIES. This Agreement and
the documents and instruments and other agreements among the parties hereto as
contemplated by or referred to herein, including Xxxxxxx Disclosure Schedule and
Optio Disclosure Schedule (a) constitute the entire agreement among the parties
with respect to the subject matter hereof and supersede all prior agreements and
understandings, both written and oral, among the parties with respect to the
subject matter hereof, it being understood that the Confidentiality Agreements
shall continue in
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full force and effect until the Closing and shall survive any termination of
this Agreement; and (b) are not intended to confer upon any other person any
rights or remedies hereunder.
8.5 SEVERABILITY. In the event that any provision of this Agreement, or
the application thereof, becomes or is declared by a court of competent
jurisdiction to be illegal, void or unenforceable, the remainder of this
Agreement will continue in full force and effect and the application of such
provision to other persons or circumstances will be interpreted so as reasonably
to effect the intent of the parties hereto. The parties further agree to replace
such void or unenforceable provision of this Agreement with a valid and
enforceable provision that will achieve, to the extent possible, the economic,
business and other purposes of such void or unenforceable provision.
8.6 OTHER REMEDIES; SPECIFIC PERFORMANCE. Except as otherwise provided
herein, any and all remedies herein expressly conferred upon a party will be
deemed cumulative with and not exclusive of any other remedy conferred hereby,
or by law or equity upon such party, and the exercise by a party of any one
remedy will not preclude the exercise of any other remedy. The parties hereto
agree that irreparable damage would occur in the event that any of the
provisions of this Agreement were not performed in accordance with their
specific terms or were otherwise breached. It is accordingly agreed that the
parties shall be entitled to seek an injunction or injunctions to prevent
breaches of this Agreement and to enforce specifically the terms and provisions
hereof in any court of the United States or any state having jurisdiction, this
being in addition to any other remedy to which they are entitled at law or in
equity.
8.7 GOVERNING LAW; BINDING ARBITRATION.
(a) This Agreement shall be governed by and construed in
accordance with the laws of the State of Georgia, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
(b) Except as otherwise specifically provided herein, all disputes
arising under this Agreement shall be submitted to and settled by arbitration.
Arbitration shall be by one (1) arbitrator selected in accordance with the rules
of the American Arbitration Association, Xxxxxx County, Georgia ("AAA"), by the
AAA. The hearing before the arbitrator shall be held in Xxxxxx County, Georgia
and shall be conducted in accordance with the rules existing at the date thereof
of the AAA, to the extent not inconsistent with this Agreement. The decision of
the arbitrator shall be final and binding as to any matters submitted to them
under this Agreement. All costs and expense incurred in connection with any such
arbitration proceeding and those incurred in any civil action to enforce the
same shall be borne by the party against which the decision is rendered.
8.8 RULES OF CONSTRUCTION. The parties hereto agree that they have been
represented by counsel during the negotiation and execution of this Agreement
and, therefore, waive the application of any law, regulation, holding or rule of
construction providing that ambiguities in an agreement or other document will
be construed against the party drafting such agreement or document.
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8.9 ASSIGNMENT. No party may assign either this Agreement or any of
its rights, interests, or obligations hereunder without the prior written
approval of the other parties. Subject to the preceding sentence, this Agreement
shall be binding upon and shall inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
*****
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XXXXX XXXXXXXX AGREEMENT SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized respective officers as of the date first
written above.
OPTIO SOFTWARE, INC.
By: /s/ C. Wayne Cape
-------------------------------------
Its: Chief Executive Officer
--------------------------------
XXXXXXX CORPORATION
By: /s/ Xxxxxxx Xxxxxxx
-------------------------------------
Its: President
--------------------------------
AFFILIATES:
MA XXXXXXX FAMILY LIMITED PARTNERSHIP I
By: Xxxxxxx X. Xxxxxxx Family Trust
General Partner of the MA Xxxxxxx Family
Limited Partnership I
By: /s/ Xxxxxxx Xxxxxxx
------------------------------------
Xxxxxxx X. Xxxxxxx, Trustee
By: Xxxxx X. Xxxxxxx Family Trust
General Partner of the MA Xxxxxxx Family
Limited Partnership I
By: /s/ Xxxxx Xxxxxxx
------------------------------------
Xxxxx X. Xxxxxxx, Trustee
STOCK PURCHASE AGREEMENT SIGNATURE PAGE CONTINUED
XXXXXXX FAMILY LIMITED PARTNERSHIP I
By: Xxxxxxxx X. Xxxxxxx Family Trust
General Partner of the Xxxxxxx Family
Limited Partnership I
By: /s/ Xxxxxxxx Xxxxxxx
---------------------------------
Xxxxxxxx X. Xxxxxxx, Trustee
By: Xxxxxxxxx X. Xxxxxxx Family Trust
General Partner of the Xxxxxxx Family
Limited Partnership I
By: /s/ Xxxxxxxxx Xxxxxxx
---------------------------------
Xxxxxxxxx X. Xxxxxxx, Trustee
/s/ Xxxxx Xxxxxx
-----------------------------------------
Xxxxx Xxxxxx
/s/ Xxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxxx X. Xxxxxxx
/s/ Xxxxxxxx Xxxxxxx
-----------------------------------------
Xxxxxxxx Xxxxxxx
