EXHIBIT 2.2
STOCK PURCHASE AGREEMENT
THIS STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of the 18th
day of February, 1998, is by and among DocuCorp International, Inc., a
Delaware corporation ("DocuCorp"), Maitland Software, Inc., a Maine
corporation (the "Company"), Xxxxx X. Xxxxxx ("Xxxxxx"), and Xxxxx X. Xxxxxxx
("Xxxxxxx"). Each of Rourke and Xxxxxxx shall be referred to individually
herein as the "Shareholder" and collectively herein as the "Shareholders".
W I T N E S S E T H:
WHEREAS, the Shareholders collectively own, directly or indirectly, all
of the outstanding capital stock (collectively, the "Shares") of the Company;
and
WHEREAS, the Shareholders desire to sell to DocuCorp, and DocuCorp
desires to purchase from the Shareholders, the Shares; and
NOW, THEREFORE, in consideration of the premises and the mutual
covenants and agreements herein contained, and other good and valuable
consideration, the receipt and sufficiency of which is hereby acknowledged,
the parties hereto agree as follows:
I. SALE AND PURCHASE OF SHARES
1.1 PURCHASE AND SALE OF SHARES. Upon the terms and subject to
the conditions set forth in this Agreement, at the Closing (as defined in
Section 2.2 hereof), the Shareholders shall assign, transfer, convey and
deliver to DocuCorp, and DocuCorp shall purchase from the Shareholders, all
right, title and interest in and to all of the Shares, free and clear of all
liens, security interests, charges, encumbrances and rights of others.
1.1 EMPLOYMENT AGREEMENTS. At the Closing, DocuCorp and each
Shareholder shall enter into an employment agreement substantially in the
form of Exhibit A hereto (collectively, the "Employment Agreements").
1 CONSIDERATION; CLOSING
1.1 PURCHASE PRICE. The consideration to be received by the
Shareholders in exchange for the Shares, which consideration shall be
apportioned between them equally, shall be 170,000 shares (the "DocuCorp
Shares") of common stock, $.01 par value, of DocuCorp ("DocuCorp Common
Stock").
1.1 TIME OF CLOSING. A closing (the "Closing") for the sale and
purchase of the Shares shall be held at 9:00 a.m., Dallas, Texas time, no
later than March 31, 1998 (the "Closing
Date"), at the executive offices of DocuCorp in Dallas, Texas, or at such
other place or places and/or time as may be agreed upon by DocuCorp and the
Shareholders.
1.2 CLOSING PROCEDURE. At the Closing, the Shareholders shall
deliver to DocuCorp stock certificates or other evidence of the Shares
suitable to DocuCorp, duly endorsed to DocuCorp, in form sufficient to vest
record and beneficial title fully in DocuCorp to the Shares. DocuCorp shall
issue and deliver to the Shareholders the 170,000 shares of DocuCorp Common
Stock as described in Section 2.1 above. Each party will cause to be
prepared, executed and delivered all documents required to be delivered by
such party pursuant to Article 8 hereof and all other appropriate and
customary documents as another party or its counsel may reasonably request
for the purpose of consummating the transactions contemplated by this
Agreement. All actions taken at the Closing shall be deemed to have been
taken simultaneously at 12:01 a.m., Dallas, Texas time, on the Closing Date.
1 REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE SHAREHOLDERS.
The Shareholders and the Company, jointly and severally, represent and
warrant to DocuCorp that, except as qualified by the Sellers' Disclosure
Schedule attached hereto (the "Sellers' Disclosure Schedule"):
1.1 ORGANIZATION; GOOD STANDING. The Company is a corporation
duly incorporated, validly existing and in good standing under the laws of
Maine and has all requisite corporate power and authority to own and lease
its properties and assets and to carry on its business as currently
conducted. The Company has no subsidiaries and no equity, profit sharing,
participation or other ownership interest (including any general partnership
interest) in any corporation, partnership, limited partnership or other
entity. The Company is duly qualified and licensed to do business and is in
good standing in all jurisdictions where such qualification is required, a
list of which is set forth on the Sellers' Disclosure Schedule.
1.1 DUE AUTHORIZATION. The Shareholders have full power and
authority to enter into and perform this Agreement and the Employment
Agreements and to carry out the transactions contemplated hereby and thereby.
The Company has full corporate power and authority to enter into this
Agreement and to carry out its obligations hereunder. The execution and
delivery of this Agreement and the consummation of the transactions
contemplated hereby have been duly authorized by all necessary corporate
action on the part of the Company.
1.1 EXECUTION AND DELIVERY. This Agreement has been duly executed
and delivered by the Company and the Shareholders and constitutes their
legal, valid and binding obligation, enforceable against each of them in
accordance with its terms, except as may be limited by the availability of
equitable remedies or by applicable bankruptcy, insolvency, reorganization,
moratorium or other laws affecting creditors' rights generally. The execution
and delivery by the Company and the Shareholders of this Agreement, the
execution and delivery by the Shareholders of the Employment Agreements and
the consummation of the transactions contemplated hereby and thereby will
not: (i) conflict with or result in a breach of the articles of incorporation
or bylaws of the Company, (ii) violate any law, statute, rule or regulation
or any order, writ, injunction or decree of any court or governmental
authority, or (iii) violate or conflict with or constitute a default under
(or give rise to any right of termination, cancellation or acceleration
under) any indenture, mortgage,
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lease, contract or other instrument to which the Company or either
Shareholder is a party or by which they are bound or affected.
1.1 GOVERNMENTAL CONSENTS. No approval, authorization, consent,
order or other action of, or filing with, any governmental authority or
administrative agency is required in connection with the execution and
delivery by the Company and the Shareholders of this Agreement or the
consummation of the transactions contemplated hereby. No approval,
authorization or consent of any other third party is required in connection
with the execution and delivery by the Company and the Shareholders of this
Agreement and the consummation of the transactions contemplated hereby.
1.1 TRANSACTIONS WITH AFFILIATES. At the time of the Closing,
none of the Company's Affiliates (as defined herein) will have any interest
in or will own any property or right used principally in the conduct of the
Company's business. The term "Affiliate" shall mean any Shareholder or any
of the Company's officers, employees and directors, any partner of any such
person, or any member of the immediate family (including brother, sister,
descendant, ancestor or in-law) of any such person, or any corporation,
partnership, trust or other entity in which any such person or any such
family member has a substantial interest or is a director, officer, partner
or trustee.
1.1 TITLE TO ASSETS. The Company is the sole and exclusive legal
owner of all right, title and interest in, and has good and marketable title
to, all of the assets of the Company's business that it purports to own, free
and clear of liens, claims and encumbrances except (i) liens, claims and
encumbrances to be released at Closing and (ii) liens for taxes not yet
payable.
1.1 CONDITION OF ASSETS. All of the fixed assets of the Company
(considered as a whole and not on an item by item basis) are in good
condition and working order, ordinary wear and tear excepted, and are
suitable in all material respects for the uses for which they are intended,
free from any known material defects that would substantially interfere with
the continued use thereof.
1.1 INTELLECTUAL PROPERTY. The Seller's Disclosure Schedule
contains a list, complete and accurate in all material respects, of
copyrights, trademarks, tradenames and license rights (collectively the
"Intellectual Property") which are material to the business of the Company.
To the knowledge of the Company and the Shareholders, the Company's use of
the Intellectual Property does not infringe upon the rights of, nor otherwise
require the consent or approval of, any third parties.
1.1 TAXES. All tax reports and returns relating to the Company's
assets and operations (including sales, use, income, property, franchise and
employment taxes) that are due have been filed with the appropriate federal,
state and local governmental agencies, and the Company has paid all taxes,
penalties, interest, deficiencies, assessments or other charges due as
reflected on the filed returns or claimed to be due by such federal, state or
local taxing authorities (other than taxes, deficiencies, assessments or
claims which are being contested in good faith and which in the aggregate are
not material). There are no examinations or audits pending or unresolved
examinations or audit issues with respect to the Company's federal, state or
local tax returns. All additional taxes, if any, assessed as a result of
such examinations or audits have been paid. There are no pending claims or
proceedings relating to, or asserted for, taxes, penalties, interest,
deficiencies or assessments against the Company.
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1.1 LITIGATION. There is no order of any court, governmental
agency or authority and no action, suit, proceeding or investigation,
judicial, administrative or otherwise, of which the Company or the
Shareholders have actual knowledge that is pending or threatened against or
affecting the Company or a Shareholder which, if adversely determined, might
materially and adversely affect the business, operations, properties, assets
or conditions (financial or otherwise) of the Company or which challenges the
validity or propriety of any of the transactions contemplated by this
Agreement.
1.1 EMPLOYEE BENEFIT PLANS. The Company has no liabilities under
The Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or
similar laws with respect to employee benefit plans. No liability under
Title IV of ERISA has been incurred by the Company or an Affiliate thereof
that has not been satisfied in full, and no condition exists that presents a
material risk to the Company or its Affiliates of incurring liability under
such Title IV. The Company has complied in all material respects with all
laws relating to the employment of labor, including any provisions thereof
relating to wages, hours, collective bargaining and the payment of social
security and other taxes, and is not liable for any material arrearages of
wages or any taxes or penalties for failure to comply with any of the
foregoing.
1.1 CAPITALIZATION. All of the issued and outstanding Shares have
been duly authorized and validly issued and are fully paid and nonassessable,
and are owned of record and beneficially by the Shareholders. There is no
outstanding subscription, contract, option, warrant, call or other right
obligating the Company to issue, sell, exchange or otherwise dispose of, or
to purchase, redeem or otherwise acquire, shares of, or securities
convertible into or exchangeable for, equity interests of any type of the
Company. The Shareholders are the lawful, sole and beneficial owner of the
Shares, free and clear of all liens, claims and encumbrances of every kind,
and, at the Closing, the Shareholders will convey to DocuCorp good and
indefeasible title to the Shares.
1.1 FINANCIAL STATEMENTS AND RECORDS OF THE COMPANY.
1.1.1 The Company has delivered to DocuCorp true, correct and
complete copies of the balance sheet of the Company as of December 31, 1997,
and the related statement of operations for the year then ended (the "Company
Financial Statements").
1.1.1 The Company Financial Statements present fairly the
assets, liabilities and financial position of the Company as of the dates
thereof and the results of operations thereof for the period then ended and
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis with prior periods. The books and
records of the Company have been and are being maintained in accordance with
good business practice, reflect only valid transactions, are complete and
correct in all material respects and present fairly in all material respects
the basis for the financial position and results of operations of the Company
set forth in the Company Financial Statements.
(c) As of the Closing Date, (i) the working capital of the Company
will be no less than $7,500 and (ii) the Company will have no indebtedness
for borrowed money.
1.1 ABSENCE OF CERTAIN CHANGES. Since December 31, 1997, the
Company has not (i) suffered any change in its financial condition or results
of operations other than changes in the
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ordinary course of business that, individually or in the aggregate, have had
a material adverse effect on the Company, (ii) acquired or disposed of any
asset, or incurred, assumed, guaranteed or endorsed any liability or
obligation, or subjected or permitted to be subjected any material amount of
assets to any lien, claim or encumbrance of any kind, except in the ordinary
course of business, (iii) entered into or terminated any Material Contract
(as hereinafter defined), or agreed or made any material changes in any
Material Contract, other than renewals and extensions thereof in the ordinary
course of business or as described in the Sellers' Disclosure Schedule, (iv)
declared, paid or set aside for payment any dividend or distribution in
excess of a cumulative aggregate of $40,000 with respect to its capital
stock, entered into any collective bargaining, employment, consulting,
compensation or similar agreement with any person or group, (vi) entered
into, adopted or amended any employee benefit plan or (viii) taken any action
that would be prohibited under Section 5.4.
1.1 UNDISCLOSED LIABILITIES. Other than as set forth on the
Company Financial Statements, there are no liabilities or obligations of the
Company of a nature required to be disclosed on financial statements prepared
in accordance with generally accepted accounting principles.
1.1 CONTRACTS AND AGREEMENTS. The Sellers' Disclosure Schedule
contains a list, complete and accurate in all material respects, of all of
the following categories of contracts and agreements to which the Company is
bound at the date hereof: (i) employee benefit plans, employment, consulting
or similar contracts, (ii) contracts relating to leasehold interests, (iii)
contracts that involve remaining aggregate payments by the Company in excess
of $10,000 or which have a remaining term in excess of one year, (iv)
insurance policies, (v) licenses of software by the Company, (vi) agreements
of the Company with resellers or other third party distributors of its
products and (vii) any contracts, other than as listed above, which are not
made in the ordinary course of business (collectively the "Material
Contracts"). The Company is not in default with respect to any of the
Material Contracts.
1.1 RECEIPT OF DOCUCORP SHARES. In connection with the receipt of
DocuCorp Shares pursuant to the transactions contemplated hereby, each of the
Shareholders understand and acknowledge the following:
(a) Such Shareholder understands the merits and risks involved in an
investment in DocuCorp. DocuCorp has afforded such Shareholder the
opportunity to ask questions and receive answers concerning the terms and
conditions of the issuance of the DocuCorp Shares and to obtain any
additional information regarding DocuCorp that such Shareholder deems
necessary;
(b) Such Shareholder understands that the DocuCorp Shares to be
issued hereunder have not been registered under the Securities Act of
1933, as amended, or under the securities laws of any state and,
therefore, cannot be sold unless they are subsequently so registered or an
exemption from such registration is available.
(c) Such Shareholder is acquiring the DocuCorp Shares to be issued
hereunder for his own account and without any intention of reselling or
distributing them. Such Shareholder has not offered for sale or agreed to
sell any portion of the foregoing shares.
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Nothing contained in the foregoing representation is intended to limit the
rights of the Shareholders to registration of the resale of the DocuCorp
Shares, as described in Section 5.6 herein.
1.1 FINDERS AND BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
the Shareholders directly with DocuCorp. No person has as a result of any
agreement or action of the Company or the Shareholders any valid claim
against any of the parties hereto for a brokerage commission, finder's fee or
other like payment.
1 REPRESENTATIONS AND WARRANTIES OF DOCUCORP
DocuCorp hereby represents and warrants to the Shareholders as follows:
1.1 ORGANIZATION AND GOOD STANDING. DocuCorp is a corporation,
duly incorporated, validly existing and in good standing under the laws of
the State of Delaware and has all requisite corporate power and authority to
own and lease its properties and carry on its business as currently conducted.
1.1 DUE AUTHORIZATION. DocuCorp has full corporate power and
authority to enter into this Agreement and to carry out its obligations
hereunder. The execution and delivery of this Agreement and the Employment
Agreements, and the consummation of the transactions contemplated hereby and
thereby have been duly authorized by all necessary corporate action on the
part of DocuCorp.
1.1 EXECUTION AND DELIVERY. This Agreement has been duly executed
and delivered by DocuCorp and constitutes its legal, valid and binding
obligation, enforceable against it in accordance with its terms, except as
may be limited by the availability of equitable remedies or by applicable
bankruptcy, insolvency, reorganization, moratorium or other laws affecting
creditors' rights generally. The execution and delivery by DocuCorp of this
Agreement and the Employment Agreements and the consummation of the
transactions contemplated hereby and thereby will not: (i) conflict with or
result in a breach of the certificate of incorporation or bylaws of DocuCorp,
(ii) violate any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or governmental authority, or (iii) violate
or conflict with or constitute a default under (or give rise to any right of
termination, cancellation or acceleration under) any indenture, mortgage,
lease, contract or other instrument to which DocuCorp is a party or by which
it is bound or affected.
1.1 DOCUCORP SHARES. The DocuCorp Shares to be issued to the
Shareholders will, upon issuance be duly and validly issued, fully paid and
nonassessable.
1.1 SEC REPORTS. DocuCorp has furnished to the Shareholders true
and complete copies of (i) DocuCorp's Annual Report on Form 10-K for the year
ended July 31, 1997, (ii) the DocuCorp's Quarterly Report on Form 10-Q for
the first quarter of fiscal 1998 and (iii) DocuCorp's Registration Statement
on Form S-1 filed on January 16, 1998 (collectively the "SEC Reports"). The
SEC Reports did not, on their respective dates of filing, contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. DocuCorp has filed
on a timely basis all documents required to be filed by it with the
Securities and Exchange Commission (the "SEC") and all such documents
complied as to form with the applicable
6
requirements of law. All financial statements included in such documents,
including without limitation, the SEC Reports, (i) complied as to form in all
material respects with the applicable accounting requirements and the
published rules and regulations of the SEC with respect thereto, (ii) were
prepared in accordance with generally accepted accounting principles applied
on a consistent basis throughout the periods covered thereby (except as may
be indicated therein), (iii) fairly present the financial position, results
of operations and cash flows of DocuCorp as of the respective dates thereof
and for the periods referred to therein, and (iv) are consistent with the
books and records of DocuCorp. Since the date of the most recent SEC
Reports, there has not been any material adverse change in the assets,
business, financial condition or results of operations of DocuCorp.
1.1 FINDERS AND BROKERS. All negotiations relative to this
Agreement and the transactions contemplated hereby have been carried on by
DocuCorp directly with the Shareholders and the Company. No person has as a
result of any agreement or action of DocuCorp any valid claim against any of
the parties hereto for a brokerage commission, finder's fee or other like
payment.
1 CERTAIN COVENANTS AND AGREEMENTS
The Company and the Shareholders, jointly and severally (subject to the
provisions of Section 15.10 hereof), covenant and agree that, from and after
the execution and delivery of this Agreement to and including the Closing
Date (and thereafter as reflected below), they shall cause the Company to
comply with the covenants set forth below, and DocuCorp covenants and agrees
that it shall similarly comply with said covenants to the extent applicable
to it.
1.1 ACCESS. Upon reasonable notice, the Company and the
Shareholders will give to DocuCorp and its counsel, accountants and other
authorized representatives, full access during reasonable business hours to
all of the Company's properties, books, contracts, documents and records and
shall furnish DocuCorp with all such information concerning their affairs,
including financial statements, as the other may reasonably request in order
that DocuCorp may have full opportunity to make such reasonable
investigations as it shall desire for the purpose of verifying the
performance of and compliance with the representations, warranties, covenants
and the conditions contained herein or for other purposes reasonably related
to the transactions contemplated hereby. The Company and the Shareholders
will take all action necessary to enable DocuCorp, its counsel, accountants
and other representatives to discuss the affairs, properties, business,
operations and records of the Company at such times and as often as DocuCorp
may reasonably request with executives, independent accountants and counsel
of the Company and the Shareholders. In the event that the Closing does not
occur and this Agreement is terminated, the Company and the Shareholders, on
the one hand, and DocuCorp, on the other, shall (i) maintain the
confidentiality of all information obtained from the other party in
connection herewith, except for such information as is in the public domain,
(ii) not use any such information so obtained to the detriment or competitive
disadvantage of the other party, and (iii) promptly return copies of all
books, records, contracts and any other documentation of the other delivered
to such party pursuant to the transactions contemplated hereby.
1.1 BEST EFFORTS. The Company, the Shareholders and DocuCorp
shall take all reasonable actions necessary to consummate the transactions
contemplated by this Agreement and will use all necessary and reasonable
means at their disposal to obtain all necessary consents and approvals of
other persons and governmental authorities required to enable it to
consummate the transactions contemplated by this Agreement. Each party shall
make all filings, applications, statements and
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reports to all governmental agencies or entities which are required to be
made prior to the Closing Date by or on its behalf pursuant to any statute,
rule or regulation in order to consummate the transactions contemplated by
this Agreement, and copies of all such filings, applications, statements and
reports shall be provided to the other.
1.1 PUBLIC ANNOUNCEMENTS. Prior to the Closing Date, all notices
to third parties and other publicity relating to the transaction contemplated
by this Agreement shall be jointly planned and agreed to by the Shareholders
and DocuCorp.
1.1 ORDINARY COURSE OF BUSINESS. Except as contemplated by this
Agreement, during the period from the execution and delivery of this
Agreement through the Closing Date, the Company shall (i) conduct its
operations in the ordinary course of business consistent with past and
current practices, (ii) use good faith efforts to maintain and preserve
intact its goodwill and business relationships, (iii) not enter into any
agreement which involves the payment by the Company of an aggregate amount
exceeding $10,000, or which has a term exceeding one year, (iv) not increase,
or agree to increase, the level of compensation payable to any of its
employees or the Shareholders, or pay any bonuses to Shareholders, or (v)
take any action which would cause any representation contained in Article 3
to be untrue as of the Closing Date.
5.5 EMPLOYMENT OF XXXX XXXXXXXX. Upon the occurrence of the Closing,
DocuCorp will offer employment to Xxxx Xxxxxxxx, at an initial annual salary
of $65,000, for such individual to continue to serve in his present function
with the Company, as set forth in DocuCorp's standard employee employment
agreement.
5.6 REGISTRATION OF DOCUCORP SHARES.
(a) As soon as practicable after the written request of the
Shareholders (which request may be made on and after the later of (i) May
15, 1998 or (ii) the expiration of the lock-up period applicable to
DocuCorp's initial public offering of its common stock, such expiration to
be no later than October 31, 1998), DocuCorp shall prepare and file with
the SEC a Registration Statement on Form S-3 (the "Registration
Statement") registering the DocuCorp Shares for resale to the public.
DocuCorp shall cause the Registration Statement (i) to become effective as
soon as practicable after the filing thereof and (ii) to remain effective
so that the DocuCorp Shares may be offered and sold on a continuous or
delayed basis in accordance with Rule 415 under the 1933 Act, until such
time as all of the DocuCorp Shares have been either sold by the
Shareholders or are legally entitled to be sold without registration under
the 1933 Act.
(b) Based upon the written opinion of DocuCorp's securities law
counsel, DocuCorp may, by written notice to the Shareholders, for a period
not to exceed 30 days, suspend or withdraw the Registration Statement and
require that the Shareholders cease sales of the DocuCorp Shares
thereunder, if (i) DocuCorp is engaged in negotiations or preparations for
any transaction that DocuCorp desires to keep confidential for valid
business reasons, and (ii) DocuCorp determines in good faith that the
public disclosure requirements imposed on DocuCorp as a result of the
Registration Statement would require public disclosure of such
negotiations or preparations; provided, however, that DocuCorp may not
exercise this right on more than one occasion.
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(c) DocuCorp agrees to indemnify and hold harmless the Shareholders,
and any broker or agent selling the DocuCorp Shares on behalf of the
Shareholders, against any losses, claims, damages or liabilities to which
any such person may become subject under the 1933 Act, or otherwise,
insofar as such losses, claims, damages or liabilities arise from any
untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement or prospectus included therein, or any
supplemental filings, or other documents, incident to the Registration
Statement, or arise out of or are based upon the omission to state therein
a fact required to be stated therein or necessary to make the statements
therein not misleading (except insofar as such losses, claims, damages or
liabilities arise out of or are based upon information furnished in
writing to DocuCorp by or on behalf of the Shareholders specifically for
use in such Registration Statement or prospectus).
(d) DocuCorp shall bear all expenses of the Registration Statement
filed hereunder, which shall include, without limitation, all registration
and filing fees and the reasonable fees and disbursements of counsel and
accountants for DocuCorp; but which shall not include any selling
commissions or underwriting discounts or stock transfer taxes for the
Shareholders or their brokers or underwriters or of any counsel or
accountants retained by the Shareholders.
5.7 REPURCHASE OF CERTAIN DOCUCORP SHARES.
(a) The Shareholders hereby grant to DocuCorp the right and option
(the "Call Option") to repurchase 100,000 of the DocuCorp Shares (the
"Callable Shares") upon the terms and conditions set forth in this Section
5.7. DocuCorp may exercise the Call Option if Transit Revenues (as
defined herein) for the 42 months ending July 31, 2001 are $6.0 million or
less. DocuCorp may exercise the Call Option by giving written notice to
the Shareholders of its exercise of the Call Option during the 30 day
period which is the first full month after the completion of DocuCorp's
audit report for the year ending July 31, 2001 (such exercise month
expected to be the month of October 2001). Upon DocuCorp's exercise of
the Call Option, the Shareholders shall be required to sell the Callable
Shares to DocuCorp, and DocuCorp shall be required to repurchase the
Callable Shares. A closing for the repurchase of the Callable Shares
shall be held on the date specified by DocuCorp, which shall be no later
than the 30th day after the exercise of the Call Option. At such closing,
the Shareholders shall deliver to DocuCorp stock certificates representing
the Callable Shares, duly endorsed to DocuCorp, against payment by
DocuCorp to the Shareholders (apportioned equally between them) of the
exercise price set forth in subsection (b) below.
(b) The exercise price for the Callable Shares shall be (i) if
Transit Revenues for the 42 months ending July 31, 2001 are $3.0 million
or less, $3.00 per Callable Share, (ii) if Transit Revenues for the 42
months ending July 31, 2001 exceed $3.0 million but are $6.0 million or
less, $5.00 per Callable Share, and (iii) if Transit Revenues for the 42
months ending July 31, 2001 exceed $6.0 million, $15.00 per Callable
Share.
(c) The amount of Transit Revenues for the 42 months ending July 31,
2001 shall be set forth on a written statement prepared by DocuCorp and
delivered to the Shareholders. The Shareholders shall have the right to
contest the statement at any time within 30 days after their receipt
thereof by delivering their objection in writing to DocuCorp. The parties
shall
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use their best efforts to resolve any contest promptly, and the
Shareholders shall be entitled to examine the accounting records of
DocuCorp for such purpose. If DocuCorp and the Shareholders are unable to
resolve such dispute within 30 days after notification of such objection,
the parties shall submit such dispute to KPMG Peat Marwick (the
"Independent Auditors") to make the final determination. The decision of
the Independent Auditors shall be final and binding on the parties. The
Shareholders shall bear the cost of the Independent Auditors unless the
decision of such Independent Auditors results in an adjustment of the
exercise price in favor of the Shareholders or results in the Call Option
becoming non-exercisable. As used herein, "Transit Revenues" shall mean
licensing and maintenance revenues of the "Transit" software products sold
by the Company, as determined in accordance with generally accepted
accounting principles. In the event that the Transit product is bundled
or otherwise sold in conjunction with other products of DocuCorp, a fair
and equitable allocation (based upon the relative prices which the
products had been sold separately) shall be made between the Transit
product and such other products.
(d) The Shareholders hereby acknowledge that DocuCorp will place
restrictive legends on the Callable Shares referencing DocuCorp's Call
Option and the existence of this Agreement.
(e) At all times prior to July 31, 2001, DocuCorp will use its
reasonable best efforts to encourage the development and sale of the
Transit product. To this end, for such period and so long as the Transit
product retains its present functionality and customer acceptance,
DocuCorp will (i) incorporate Transit into its product line as the
featured data acquisition product (it being recognized, however, that
DocuCorp will not disband traditional DocuCorp legacy methods of acquiring
data) and (ii) allow Transit to be sold on a stand-alone basis and allow
the continued development of the Maitland customer base.
5.8 TAX-FREE REORGANIZATION. The parties will use their reasonable
best efforts to ensure that the sale of the Shares to DocuCorp under this
Agreement will not result in the recognition of income for federal income tax
purposes.
1 CONDITIONS TO DOCUCORP'S CLOSING
All obligations of DocuCorp under this Agreement shall be subject to the
fulfillment at or prior to the Closing of the following conditions, it being
understood that DocuCorp may, in its sole discretion, waive any or all of
such conditions in whole or in part:
1.1 REPRESENTATIONS, ETC. The Company and the Shareholders shall
have performed in all material respects the covenants and agreements
contained in this Agreement that are to be performed by each of them at or
prior to the Closing, and the representations and warranties of the Company
and the Shareholders contained in this Agreement shall be true and correct as
of the Closing Date with the same effect as though made at such time (except
as contemplated or permitted by this Agreement).
1.1 CONSENTS. All consents and approvals from any third parties
required to consummate the transactions contemplated by this Agreement shall
have been obtained without material cost or other materially adverse
consequence to DocuCorp.
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1.1 NO ADVERSE LITIGATION. No order or preliminary or permanent
injunction shall have been entered and no action, suit or other legal or
administrative proceeding by any court or governmental authority, agency or
other person shall be pending or threatened on the Closing Date which may
have the effect of (i) making any of the transactions contemplated hereby
illegal, (ii) materially adversely affecting the value of the assets or
business of the Company or (iii) making DocuCorp or the Company liable for
the payment of a material amount of damages to any person.
1.2 INTELLECTUAL PROPERTY DUE DILIGENCE. DocuCorp shall have
received documentation satisfactory to it confirming the title of, and
ownership by, the Company of the intellectual property associated with the
"Transit" software product.
1.1 CLOSING DELIVERIES. DocuCorp shall have received each of the
documents or items required to be delivered to it pursuant to Section 8.1
hereof.
1 CONDITIONS TO SHAREHOLDERS' AND COMPANY'S CLOSING
All obligations of the Company and the Shareholders under this Agreement
shall be subject to the fulfillment at or prior to the Closing of the
following conditions, it being understood that the Company and the
Shareholders may, in their sole discretion, waive any or all of such
conditions in whole or in part:
1.1 REPRESENTATIONS, ETC. DocuCorp shall have performed in all
material respects the covenants and agreements contained in this Agreement
that are to be performed by it at or prior to the Closing, and the
representations and warranties of DocuCorp contained in this Agreement shall
be true and correct as of the Closing Date with the same effect as though
made at such time (except as contemplated or permitted by this Agreement).
1.1 NO ADVERSE LITIGATION. No order or preliminary or permanent
injunction shall have been entered and no action, suit or other legal or
administrative proceeding by any court or governmental authority, agency or
other person shall be pending or threatened on the Closing Date which may
have the effect of (i) making any of the transactions contemplated hereby
illegal or (ii) making the Shareholders liable for the payment of a material
amount of damages to any person.
1.1 CLOSING DELIVERIES. The Company and the Shareholders shall
have received each of the documents or items required to be delivered to them
pursuant to Section 8.2 hereof.
1 DOCUMENTS TO BE DELIVERED AT CLOSING
1.1 TO DOCUCORP. At the Closing, there shall be delivered to
DocuCorp:
1.1.1 the Shares, in form satisfactory to DocuCorp and its
counsel;
1.1.1 the Employment Agreements;
1.1.1 a copy of all consents and approvals referred to in Section
6.2 hereof;
(d) the corporate records of the Company; and
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(e) all other items reasonably requested by DocuCorp.
1.1 TO THE SHAREHOLDERS. At the Closing, there shall be delivered
to the Shareholders:
1.1.1 170,000 shares of DocuCorp Common Stock as contemplated
by Section 2.1 hereof;
(b) the Employment Agreements; and
(c) all other items reasonably requested by the Shareholders.
1 SURVIVAL
All representations, warranties, covenants and agreements made by any
party to this Agreement or pursuant hereto shall be deemed to be material and
to have been relied upon by the parties hereto and shall survive the Closing
for a period of 12 months; provided, however, that (i) the representations
contained in Section 3.9 shall survive until the statute of limitations with
respect to tax matters expires; (ii) the covenants contained in Sections 5.6
and 5.7 shall survive for the periods referenced therein, and (iii) the
representations contained in Section 3.12 shall survive indefinitely. The
representations and warranties hereunder shall not be affected or diminished
by any investigation at any time by or on behalf of the party for whose
benefit such representations and warranties were made. All statements
contained herein or in any certificate, exhibit, list or other document
delivered pursuant hereto or in connection with the transactions contemplated
hereby shall be deemed to be representations and warranties.
1 INDEMNIFICATION OF THE SHAREHOLDERS
DocuCorp shall indemnify and hold the Shareholders harmless from,
against, for and in respect of:
1.1.1 any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action and
encumbrances suffered, sustained, incurred or required to be paid by the
Shareholders because of the breach of any written representation, warranty,
agreement or covenant of DocuCorp contained in or made in connection with
this Agreement;
1.1.1 any and all liabilities, obligations, claims and demands
arising out of the ownership and operation of the Company on and after the
Closing Date, except to the extent the same arises from a breach of any
written representation, warranty, agreement or covenant of any Company or any
Shareholder contained in or made in connection with this Agreement; and
1.1.1 all reasonable costs and expenses (including, without
limitation, attorneys' fees, interest and penalties) incurred by the
Shareholders in connection with any action, suit, proceeding, demand,
assessment or judgment incident to any of the matters indemnified against in
this Section 10.
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2 INDEMNIFICATION OF DOCUCORP
The Shareholders (jointly and severally) shall indemnify and hold DocuCorp
harmless from, against, for and in respect of:
1.1.1 any and all damages, losses, settlement payments,
obligations, liabilities, claims, actions or causes of action and
encumbrances suffered, sustained, incurred or required to be paid by DocuCorp
because of the breach of any written representation, warranty, agreement or
covenant of the Company or any Shareholder contained in or made in connection
with this Agreement; and
1.1.1 all reasonable costs and expenses (including, without
limitation, attorneys' fees, interest and penalties) incurred by DocuCorp in
connection with any action, suit, proceeding, demand, assessment or judgment
incident to any of the matters indemnified against in this Section 11.
1 GENERAL RULES REGARDING INDEMNIFICATION
1.1.1 The obligations and liabilities of each indemnifying
party hereunder with respect to claims resulting from the assertion of
liability by the other party shall be subject to the following terms and
conditions:
1.1.1.1 The indemnified party shall give prompt written notice
(which in no event shall exceed 30 days from the date on which the
indemnified party first became aware of such claim or assertion) to the
indemnifying party of any claim which might give rise to a claim by the
indemnified party against the indemnifying party based on the indemnity
agreements contained in Section 10 or 11 hereof, stating the nature and basis
of said claims and the amounts thereof, to the extent known;
1.1.1.1 If any action, suit or proceeding is brought against the
indemnified party with respect to which the indemnifying party may have
liability under the indemnity agreements contained in Section 10 or 11
hereof, the action, suit or proceeding shall, upon the written acknowledgment
by the indemnifying party that is obligated to indemnify under such indemnity
agreement, be defended (including all proceedings on appeal or for review
which counsel for the indemnified party shall deem appropriate) by the
indemnifying party. The indemnified party shall have the right to employ its
own counsel in any such case, but the fees and expenses of such counsel shall
be at the indemnified party's own expense unless the employment of such
counsel and the payment of such fees and expenses both shall have been
specifically authorized in writing by the indemnifying party in connection
with the defense of such action, suit or proceeding, in which event the
indemnifying party shall not have the right to direct the defense of such
action, suit or proceeding on behalf of the indemnified party. The
indemnified party shall be kept fully informed of such action, suit or
proceeding at all stages thereof whether or not it is represented by separate
counsel.
1.1.1.1 The indemnified party shall make available to the
indemnifying party and its attorneys and accountants all books and records of
the indemnified party relating to such proceedings or litigation and the
parties hereto agree to render to each other such
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assistance as they may reasonably require of each other in order to ensure
the proper and adequate defense of any such action, suit or proceeding.
1.1.1.1 The indemnified party shall not make any settlement of
any claims without the written consent of the indemnifying party, which
consent shall not be unreasonably withheld or delayed.
1.1.1.1 If any claims are made by third parties against an
indemnified party for which an indemnifying party would be liable, and it
appears likely that such claims might also be covered by the indemnified
party's insurance policies, the indemnified party shall make a timely claim
under such policies and to the extent that such party obtains any recovery
from such insurance, such recovery shall be offset against any sums due from
an indemnifying party (or shall be repaid by the indemnified party to the
extent that an indemnifying party has already paid any such amounts). The
parties acknowledge, however, that if an indemnified party is self-insured as
to any matters, either directly or through an insurer which assesses
retroactive premiums based on loss experience, then to the extent that the
indemnified party bears the economic burden of any claims through
self-insurance or retroactive premiums or insurance ratings, the indemnifying
party's obligation shall only be reduced by any insurance recovery in excess
of the amount paid or to be paid by the indemnified party in insurance
premiums.
(vi) An indemnified party shall not make any claim
hereunder unless and until it has incurred damages and expenses
of a cumulative aggregate of $10,000 (the "Floor") and shall
thereafter be entitled to make a claim only for amounts incurred
in excess of such Floor.
(vii) The Shareholders shall be entitled to satisfy all
claims for indemnification hereunder by surrendering shares of
DocuCorp Common Stock to DocuCorp, which shares shall for such
purposes be valued at a price per share which is equal to the
average closing price of DocuCorp Common Stock on the Nasdaq
National Market (or if the shares are not then trading on such
market, using such other market as will best approximate the
fair market value of DocuCorp Common Stock) for the 30 trading
days ending 10 days prior to the date on which the Shareholders
have satisfied such claim.
1.1.1 Except as herein expressly provided, the remedies
provided in Sections 10 through 12 hereof shall be cumulative and shall not
preclude assertion by any party of any other rights or the seeking of any
other rights or remedies against any other party hereto.
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1 FAILURE TO CLOSE BECAUSE OF DEFAULT
In the event that the Closing is not consummated by virtue of a material
default made by a party in the observance or in the due and timely
performance of any of its covenants or agreements herein contained
("Default"), the parties shall have and retain all of the rights afforded
them at law or in equity by reason of that Default. In addition, the Company
and the Shareholders, on the one hand, and DocuCorp, on the other,
acknowledge that the Shares and the transactions contemplated hereby are
unique, that a failure by any of them to complete such transactions will
cause irreparable injury to the other, and that actual damages for any such
failure may be difficult to ascertain and may be inadequate. Consequently,
DocuCorp, the Company and the Shareholders agree that each shall be entitled,
in the event of a Default by the other, to specific performance of any of the
provisions of this Agreement in addition to any other legal or equitable
remedies to which the non-defaulting party may otherwise be entitled. In the
event any action is brought, the prevailing party shall be entitled to
recover court costs, arbitration expenses and reasonable attorneys' fees.
1 TERMINATION RIGHTS
This Agreement may be terminated by either DocuCorp or the Company, if
either such party is not then in Default, upon written notice to the other
upon the occurrence of any of the following:
1.1.1 If the Closing has not occurred on or before March 31,
1998;
1.1.1 If either party Defaults and such Default has not been
cured within 30 days of written notice of such Default by the other party;
1.1.1 Subject to the provisions of Sections 6 and 7 hereof, by
the Company or DocuCorp, if on the Closing Date any of the conditions
precedent to the obligations of the Company or DocuCorp, respectively, set
forth in this Agreement have not been satisfied or waived by such party; or
1.1.1 By mutual consent of the Company and DocuCorp.
1 MISCELLANEOUS PROVISIONS
1.1 EXPENSES. DocuCorp shall pay the fees and expenses incurred
by it in connection with the transactions contemplated by this Agreement and
the Shareholders shall pay the fees and expenses incurred by them and the
Company in connection with the transactions contemplated by this Agreement.
If any action is brought for breach of this Agreement or to enforce any
provision of this Agreement, the prevailing party shall be entitled to
recover court costs, arbitration expenses and reasonable attorneys' fees
incurred in enforcing such provision as a result of the breach.
1.1 AMENDMENT. This Agreement may be amended at any time but only
by an instrument in writing signed by the parties hereto.
1.1 NOTICES. All notices and other communications delivered
hereunder shall be in writing and shall be deemed given if delivered
personally or upon actual receipt if mailed by certified
15
mail, return receipt requested or delivered by nationally recognized
"next-day" delivery service, to the parties at the addresses set forth below:
If to the Shareholders and (prior to the Closing) the Company:
X.X. Xxx 0000
Xxxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
If to DocuCorp:
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: President
Telephone: (000) 000-0000
Telecopy: (000) 000-0000
or such other address or addresses as any party shall have designated by
notice to each other party in accordance with this Section 15.3.
1.1 ASSIGNMENT. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors, heirs and
permitted assigns. Neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by any of the parties hereto
without the prior written consent of the others.
1.1 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
1.1 HEADINGS. The headings of the Sections of this Agreement are
inserted for convenience only and shall not constitute a part hereof.
1.1 ENTIRE AGREEMENT. This Agreement and the documents referred
to herein contain the entire understanding of the parties hereto in respect
of the subject matter contained herein. There are no restrictions, promises,
warranties, conveyances or undertaking other than those expressly set forth
herein. This Agreement supersedes any prior agreements and understandings
between the parties with respect to the subject matter.
1.1 WAIVER. No attempted waiver of compliance with any provision
or condition hereof, or consent pursuant to this Agreement, will be effective
unless evidenced by an instrument in writing by the party against whom the
enforcement of any such waiver or consent is sought.
1.1 GOVERNING LAW. This Agreement shall be governed by and
construed in accordance with the laws of the State of Delaware.
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1.1 ASSERTION OF CLAIMS AGAINST THE COMPANY. In any proceeding by
DocuCorp to assert or prosecute any claims under, or to otherwise enforce,
the Agreement, the Shareholders agree that they shall not assert as a defense
or bar to recovery, and hereby waive any right to so assert such defense or
bar such recovery, that (a) prior to Closing the Company shall have had
knowledge of the circumstances giving rise to the claim being pursued by it;
(b) prior to Closing, the Company engaged in conduct or took action that
caused or brought about the circumstances giving rise to its claim, or
otherwise contributed thereto; or (c) the Shareholders have a right of
contribution from the Company to the extent that there is any recovery
against the Shareholders.
1.1 FRANCHISE TAXES OF THE COMPANY. Liability for state corporate
franchise taxes assessed on the Shares by the state of Maine, if any, payable
with respect to the tax year in which the Closing Date falls shall be
prorated as between the Shareholders and DocuCorp on the basis of the number
of days of the tax year elapsed to and including such date. To the extent
possible, such proration shall be made on the Closing Date based upon
estimates of such franchise tax (without giving effect to any changes in the
tax rate or amount due as a result of actions by the Company or DocuCorp
after the Closing).
1.1 SEVERABILITY. The event that any of the provisions contained
in this Agreement is held to be invalid, illegal or unenforceable shall not
affect any other provision hereof, and this Agreement shall be construed as
if such invalid, illegal or unenforceable provisions had not been contained
herein.
1.1 INTENDED BENEFICIARIES. The rights and obligations contained
in this Agreement are hereby declared by the parties hereto to have been
provided expressly for the exclusive benefit of such entities as set forth
herein and shall not benefit, and do not benefit, any unrelated third parties.
1.1 MUTUAL CONTRIBUTION. The parties to this Agreement and their
counsel have mutually contributed to its drafting. Consequently, no
provision of this Agreement shall be construed against any party on the
ground that such party drafted the provision or caused it to be drafted or
the provision contains a covenant of such party.
[signature page to follow]
17
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
DocuCorp International, Inc.
By: /s/ Xxxxxxx X. Xxxxxxxx
------------------------
Xxxxxxx X. Xxxxxxxx
President
Maitland Software, Inc.
By: /s/ Xxxxx X. Xxxxxxx
-------------------------
Xxxxx X. Xxxxxxx
President
Shareholders:
/s/ Xxxxx X. Xxxxxx
------------------------
Xxxxx X. Xxxxxx
/s/ Xxxxx X. Xxxxxxx
------------------------
Xxxxx X. Xxxxxxx
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