Document:

Prepared by R.R. Donnelley Financial -- Loan and Security Agreement

Table of Contents

 EXECUTION COPY 
  
 Exhibit
10.24 
  
 
 
 LOAN AND SECURITY AGREEMENT

 OPTIO SOFTWARE, INC. 
  
 

 1 

Table of Contents

  
 
TABLE OF CONTENTS  
  
 
	  	  	  	  	  	  	 Page
 

	 1
 	  	  	  	 
ACCOUNTING AND OTHER TERMS 
 	  	 4
 
	 
	 2
 	  	  	  	 
LOAN AND TERMS OF PAYMENT 
 	  	 4
 
	  	  	  	  	 
2.1    Promise to Pay. 
 	  	 4
 
	  	  	  	  	 
2.2    Overadvances.
 	  	 5
 
	  	  	  	  	 
2.3    Interest Rate, Payments 
 	  	 5
 
	  	  	  	  	 
2.4    Fees.
 	  	 6
 
	 
	 3
 	  	  	  	 
CONDITIONS OF LOANS
 	  	 6
 
	  	  	  	  	 
3.1    Conditions Precedent to Initial Credit Extension 
 	  	 6
 
	  	  	  	  	 
3.2    Conditions Precedent to all Credit Extensions
 	  	 6
 
	 
	 4
 	  	  	  	 
CREATION OF SECURITY INTEREST 
 	  	 6
 
	  	  	  	  	 
4.1    Grant of Security Interest.
 	  	 6
 
	 
	 5
 	  	  	  	 
REPRESENTATIONS AND WARRANTIES
 	  	 7
 
	  	  	  	  	 
5.1    Due Organization and Authorization
 	  	 7
 
	  	  	  	  	 
5.2    Collateral 
 	  	 7
 
	  	  	  	  	 
5.3    Litigation 
 	  	 7
 
	  	  	  	  	 
5.4    No Material Adverse Change in Financial Statements..
 	  	 7
 
	  	  	  	  	 
5.5    Solvency. 
 	  	 7
 
	  	  	  	  	 
5.6    Regulatory Compliance 
 	  	 8
 
	  	  	  	  	 
5.7    Subsidiaries.
 	  	 8
 
	  	  	  	  	 
5.8    Deposit Accounts. 
 	  	 8
 
	  	  	  	  	 
5.9    Full Disclosure.
 	  	 8
 
	 
	 6
 	  	  	  	 
AFFIRMATIVE COVENANTS
 	  	 10
 
	  	  	  	  	 
6.1    Government Compliance.
 	  	 10
 
	  	  	  	  	 
6.2    Financial Statements, Reports, Certificates.
 	  	 10
 
	  	  	  	  	 
6.3    Inventory; Returns.
 	  	 11
 
	  	  	  	  	 
6.4    Taxes.
 	  	 11
 
	  	  	  	  	 
6.5    Insurance
 	  	 11
 
	  	  	  	  	 
6.6    Primary Accounts.
 	  	 11
 
	  	  	  	  	 
6.7    Financial Covenants
 	  	 11
 
	  	  	  	  	 
6.8    Further Assurances
 	  	 12
 
	 
	 7
 	  	  	  	 
NEGATIVE COVENANTS
 	  	 12
 
	  	  	  	  	 
7.1    Dispositions.
 	  	 12
 
	  	  	  	  	 
7.2    Changes in Business, Ownership, Management or Business Locations 
 	  	 12
 
	  	  	  	  	 
7.3    Mergers or Acquisitions
 	  	 12
 
	  	  	  	  	 
7.4    Indebtedness
 	  	 12
 
	  	  	  	  	 
7.5    Encumbrance.
 	  	 13
 
	  	  	  	  	 
7.6    Distributions; Investments
 	  	 13
 

 
 

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7.7    Transactions with Affiliates
 	  	 13
 
	  	  	 
7.8    Subordinated Debt.
 	  	 13
 
	  	  	 
7.9    Compliance 
 	  	 13
 
	 
	 8
 	  	 
EVENTS OF DEFAULT
 	  	 13
 
	  	  	 
8.1    Payment Default 
 	  	 13
 
	  	  	 
8.2    Covenant Default
 	  	 14
 
	  	  	 
8.3    Material Adverse Change.
 	  	 14
 
	  	  	 
8.4    Attachment 
 	  	 14
 
	  	  	 
8.5    Insolvency 
 	  	 14
 
	  	  	 
8.6    Other Agreements
 	  	 14
 
	  	  	 
8.7    Judgments. 
 	  	 14
 
	  	  	 
8.8    Misrepresentations
 	  	 15
 
	  	  	 
8.9    Guaranty.
 	  	 15
 
	 
	 9
 	  	 
BANK’S RIGHTS AND REMEDIES
 	  	 15
 
	  	  	 
9.1    Rights and Remedies
 	  	 15
 
	  	  	 
9.2    Power of Attorney
 	  	 16
 
	  	  	 
9.3    Accounts Collection 
 	  	 16
 
	  	  	 
9.4    Bank Expenses
 	  	 16
 
	  	  	 
9.5    Bank’s Liability for Collateral.
 	  	 16
 
	  	  	 
9.6    Remedies Cumulative
 	  	 17
 
	  	  	 
9.7    Demand Waiver
 	  	 17
 
	 
	 10
 	  	 
NOTICES
 	  	 18
 
	 
	 11
 	  	 
CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER
 	  	 18
 
	 
	 12
 	  	 
GENERAL PROVISIONS
 	  	 18
 
	  	  	 
12.1    Successors and Assigns
 	  	 18
 
	  	  	 
12.2    Indemnification.
 	  	 19
 
	  	  	 
12.3    Time of Essence
 	  	 19
 
	  	  	 
12.4    Severability of Provision
 	  	 19
 
	  	  	 
12.5    Amendments in Writing, Integration.
 	  	 19
 
	  	  	 
12.6    Counterparts
 	  	 19
 
	  	  	 
12.7    Survival.
 	  	 19
 
	  	  	 
12.8    Confidentiality.
 	  	 19
 
	  	  	 
12.9    Attorneys’ Fees, Costs and Expenses
 	  	 20
 
	 
	 13
 	  	 
DEFINITIONS
 	  	 21
 
	  	  	 
13.1    Definitions.
 	  	 21
 

 
 

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       This LOAN AND SECURITY AGREEMENT dated April 25,
2002, between SILICON VALLEY BANK (“Bank”), whose address is 3343 Peachtree Rd., Suite 312, Atlanta, GA 30326 and OPTIO SOFTWARE, INC. (“Borrower”), whose address is 3015 Windward Plaza, Fairways II, Alpharetta, GA 30005,
provides the terms on which Bank will lend to Borrower and Borrower will repay Bank. The parties agree as follows: 
  
 1.
          ACCOUNTING AND OTHER TERMS  
  
       Accounting terms not defined in this Agreement will be construed following GAAP. Calculations and determinations must be made following GAAP. The term “financial statements” includes the notes
and schedules. The terms “including” and “includes” always mean “including (or includes) without limitation,” in this or any Loan Document.   
  
 2.
          LOAN AND TERMS OF PAYMENT  
  
 2.1
        Promise to Pay.  
  
       Borrower promises to pay Bank the unpaid principal amount of all Credit Extensions and interest on the unpaid principal amount of the Credit Extensions. 
  
 2.1.1     Revolving Advances. 
  
       (a)  Bank will make Advances not exceeding (i) the lesser of (A) the Committed Revolving Line or (B) the Borrowing Base. Amounts borrowed under this Section may be repaid
and reborrowed during the term of this Agreement. 
  
       (b)  To obtain an Advance,
Borrower must notify Bank by facsimile or telephone by 3:00 p.m. Eastern time on the Business Day the Advance is to be made. Borrower must promptly confirm the notification by delivering to Bank the Payment/Advance Form attached as Exhibit B (the
“Payment/Advance Form”). Bank will credit Advances to Borrower’s deposit account. Bank may make Advances under this Agreement based on instructions from a Responsible Officer or his or her designee or without instructions if the
Advances are necessary to meet Obligations which have become due. For purposes of this Section 2.1.1(b), Bank may rely on any telephone notice given by a person whom Bank reasonably believes is a Responsible Officer or designee. Borrower will
indemnify Bank for any loss Bank suffers due to such reliance. 
  
       (c)  The Committed
Revolving Line terminates on the Revolving Maturity Date, when all Advances are immediately payable. 
  
       (d)  Bank’s obligation to lend the undisbursed portion of the Obligations will terminate if, in Bank’s sole but reasonable discretion, there has been a material adverse change in the
general affairs, management, results of operation, condition (financial or otherwise) or the prospect of repayment of the Obligations, or there has been any material adverse deviation by Borrower from the most recent business plan of Borrower
presented to and accepted by Bank prior to the execution of this Agreement. 
 

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 2.2

    
      Overadvances. 
  
       If Borrower’s Obligations under Section 2.1.1 exceed the lesser of either (i) the Committed Revolving Line or (ii) the Borrowing Base, Borrower shall immediately, upon determining that there is an
overage, but no later than upon delivery of the Borrowing Base Certificate in accordance with Section 6.2(b), pay Bank the excess. 
  
 
2.3
    
      Interest Rate, Payments.
 
  
       (a)  Interest
Rate.    So long as Borrower’s Quick Ratio exceeds 2.00:1.00, Advances shall accrue interest on the outstanding principal balance at a per annum rate equal to the Prime Rate. From and after any month where
Borrower’s Quick Ratio is less than 2.00:1.00 and continuing until such time as Borrower’s Quick Ratio exceeds 2.00:1.00, Advances shall accrue interest on the outstanding principal balance at a per annum rate equal of .5 percentage points
above the Prime Rate. After an Event of Default, Obligations accrue interest at 5 percent above the rate effective immediately before the Event of Default. The interest rate increases or decreases when the Prime Rate changes. Interest is computed on
a 360 day year for the actual number of days elapsed. 
  
       (b)  Payments.    Interest due on the Committed Revolving Line is payable on the first Business Day of each month. Bank may debit any of Borrower’s deposit
accounts including Account Number 3300293105 for principal and interest payments owing or any amounts Borrower owes Bank. Bank will promptly notify Borrower when it debits Borrower’s accounts. These debits are not a set-off. Payments received
after 2:00 p.m. Eastern time are considered received at the opening of business on the next Business Day. When a payment is due on a day that is not a Business Day, the payment is due the next Business Day and additional interest accrues.

  
       (c)  Agreements Regarding Interest and Other
Charges.    Borrower and the Bank agree that the only charges imposed or to be imposed by Bank upon Borrower for the use of money in connection with the Obligations is and will be the interest required to be paid under the
provisions of this Agreement as well as the related provisions of the Loan Documents. The amount of interest due and payable under this Agreement or the Loan Documents will not exceed the maximum rate of interest allowed by applicable law and, if
any payment is made by Borrower or received by Bank in excess of such payment, such sum shall be credited as a payment of principal. It is the express intent that Borrower not pay and the Bank not receive, directly or indirectly or in any manner,
interest in excess of that which may be lawfully paid under applicable law. All interest and other charges, fees or other amounts deemed to be interest which are paid or agreed to be paid to Bank under this Agreement or the Loan Documents shall, to
the maximum extent permitted by applicable law, be amortized, allocated and spread on a pro-rata basis throughout the entire actual term of the Obligations. Any and all fees payable under this Agreement are not intended, and will not be
deemed to be interest or a charge for use of money, but rather will constitute an “other charge” within the meaning of O.C.G.A. §7-4-2(a)(1). 
 

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2.4        Fees. 
  
       Borrower will pay: 
  
 (a)  Facility
Fee.    A fully earned, non-refundable facility fee of $25,000 for the Committed Revolving Line. Borrower has remitted a good-faith deposit of $12,500 and the remaining $12,500 will be due on the Closing Date; and

  
 (b)  Bank Expenses.    All Bank Expenses (including reasonable
attorneys’ fees and reasonable expenses) incurred through and after the date of this Agreement, are payable when due. However, attorneys’ fees in connection with the negotiation and preparation of the Loan Documents through the Closing
Date, shall not exceed $6,000. 
  
 
3.
          
CONDITIONS OF LOANS 
  
 
3.1        Conditions Precedent to Initial Credit Extension. 
  
       Bank’s obligation to make the initial Credit Extension is subject to the condition precedent that it receive the agreements, documents and fees required hereunder, as well as verification of its
first priority interest in the Collateral. 
  
 
3.2        Conditions Precedent to all Credit Extensions. 
  
       Bank’s obligations to make each Credit Extension, including the initial Credit Extension, is subject to the following: 
  
 (a)  timely receipt of any Payment/Advance Form; and 
  
 (b)  the representations and warranties in Section 0, to the knowledge of Borrower, must be materially true on the date of the Payment/Advance Form and on the
effective date of each Credit Extension and no Event of Default may have occurred and be continuing, or result from the Credit Extension. Each Credit Extension is Borrower’s representation and warranty on that date that the representations and
warranties of Section 0 remain true. 
  
 
4
.        
  CREATION OF SECURITY INTEREST 
  
 
4.1        Grant of Security Interest. 
  
       Borrower grants Bank a continuing security interest in all presently existing and later acquired Collateral to secure all Obligations and performance of each of Borrower’s duties under the Loan
Documents. Except for Permitted Liens, any security interest will be a first priority security interest in the Collateral. Bank may place a “hold” on any deposit account pledged as Collateral; provided, however, that such “hold”
shall be limited to the outstanding amount of Obligations, and any balances in such deposit accounts in excess of such Obligations shall not be held by Bank and shall be available for Borrower’s use. If this Agreement is terminated, Bank’s
lien and security interest in the Collateral will continue until Borrower fully satisfies its Obligations. 
 

 6 

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5.          REPRESENTATIONS AND WARRANTIES 
  
       Borrower represents and warrants as follows: 
  
 5.1
        Due Organization and Authorization. 
  
       Borrower and each Subsidiary is duly existing and in good standing in its state of formation and qualified and licensed to do business in, and in good standing in, any state in which the conduct of its
business or its ownership of property requires that it be qualified, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
  
       The execution, delivery and performance of the Loan Documents have been duly authorized, and do not conflict with Borrower’s formation documents,
nor constitute an event of default under any material agreement by which Borrower is bound, except where such default could not reasonably be expected to cause a Material Adverse Change. Borrower is not in default under any agreement to which or by
which it is bound in which the default could reasonably be expected to cause a Material Adverse Change. 
  
 5.2
        Collateral.  
  
       Borrower has good title to the Collateral, free of Liens except Permitted Liens. The Accounts are bona fide, existing obligations, and the service or property has been performed or delivered to the
account debtor or its agent for immediate shipment to and unconditional acceptance by the account debtor. To the knowledge of Borrower’s Responsible Officers, Borrower has no notice of any actual or imminent Insolvency Proceeding of any account
debtor whose accounts are an Eligible Account in any Borrowing Base Certificate. All material Inventory is in all material respects of good and marketable quality, free from material defects. 
  

5.3
        Litigation. 
  
       Except as shown in the Schedule, there are no actions or proceedings pending or, to the knowledge of Borrower’s Responsible Officers, threatened by or against Borrower or any Subsidiary in which a
likely adverse decision could reasonably be expected to cause a Material Adverse Change. 
  
 5.4
        No Material Adverse Change in Financial Statements.  
  
       All consolidated financial statements for Borrower, and any Subsidiary, delivered to Bank fairly present in all material respects as of the dates of such financial statements, Borrower’s consolidated
financial condition and Borrower’s consolidated results of operations. There has not been any material deterioration in Borrower’s consolidated financial condition since the date of the most recent financial statements submitted to Bank.

  
 5.5
        Solvency.  
  
       The fair salable value of Borrower’s assets (including goodwill minus disposition costs) exceeds the fair value of its liabilities; the Borrower is not left with unreasonably small capital after

 

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 the transactions in this Agreement; and Borrower is able to pay its debts (including trade debts) as they mature. 
  
 5.6        
Regulatory Compliance.  
  
       Borrower is not an “investment
company” or a company “controlled” by an “investment company” under the Investment Company Act. Borrower is not engaged as one of its important activities in extending credit for margin stock (under Regulations T and U of
the Federal Reserve Board of Governors). Borrower has complied in all material respects with the Federal Fair Labor Standards Act. Borrower has not violated any laws, ordinances or rules, the violation of which could reasonably be expected to cause
a Material Adverse Change. None of Borrower’s or any Subsidiary’s properties or assets has been used by Borrower or any Subsidiary or, to the best of Borrower’s knowledge, by previous Persons, in disposing, producing, storing,
treating, or transporting any hazardous substance other than legally. Borrower and each Subsidiary has timely filed all required tax returns and paid, or made adequate provision to pay, all material taxes, except those being contested in good faith
with adequate reserves under GAAP. Borrower and each Subsidiary has obtained all consents, approvals and authorizations of, made all declarations or filings with, and given all notices to, all government authorities that are necessary to continue
its business as currently conducted, except where the failure to do so could not reasonably be expected to cause a Material Adverse Change. 
  
 5.7        
Subsidiaries.  
  
       Borrower does not own any stock, partnership
interest or other equity securities except for Permitted Investments. 
  
 5.8        
Deposit Accounts.  
  
       Within thirty (30) days of the Closing
Date, but prior to Bank making any Advances, and except as provided below, Borrower will maintain all of its deposit accounts, operating accounts, and excess investment balances at or through Bank. Borrower does not have deposit accounts at any
other financial institutions, except those disclosed on the Schedule. Borrower shall have the right to maintain a deposit account with financial institutions other than Bank for the purpose of making small incidental deposits with any such financial
institutions, so long as such financial institutions enter into Bank’s standard form of Deposit Account Control Agreement, as required for Bank to perfect its security interest in those accounts. 
  
 5.9        
Full Disclosure.  
  
       No written representation, warranty or
other statement of Borrower in any certificate or written statement given to Bank (taken together with all such written certificates and written statements to Bank) contains any untrue statement of a material fact or omits to state a material fact
necessary to make the statements contained in the certificates or statements not misleading. It being recognized by Bank that the projections and forecasts provided by Borrower in good faith and based upon reasonable assumptions are not viewed as
facts and that actual results during the period or

 

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periods covered by such projections and forecasts may differ from the projected and forecasted results. 
 

 9 

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 6.
          AFFIRMATIVE COVENANTS  
  
       Borrower will do all of the following for so long as Bank has an obligation to lend, or there are outstanding Obligations: 
  
 6.1
        Government Compliance.  
  
       Borrower will maintain its and all Subsidiaries’ legal existence and good standing in its jurisdiction of formation and maintain qualification in each jurisdiction in which the failure to so qualify
would reasonably be expected to cause a material adverse effect on Borrower’s business or operations. Borrower will comply, and have each Subsidiary comply, with all laws, ordinances and regulations to which it is subject, noncompliance with
which could reasonably be expected to have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change. 
  
 6.2        
Financial Statements, Reports, Certificates.  
  
       (a)  Borrower will deliver to Bank: (i) As soon as available, but no later than 30 days after the last day of each month (other than a quarter-ending month), a company prepared consolidated
balance sheet and income statement covering Borrower’s consolidated operations during the period certified by a Responsible Officer and in a form reasonably acceptable to Bank; (ii) as soon as available, but no later than 45 days after the last
day of each of Borrower’s fiscal quarters (other than a year-ending quarter), a company prepared consolidated balance sheet and income statement covering Borrower’s consolidated operations during the period certified by a Responsible
Officer and in a form reasonably acceptable to Bank, along with Borrower’s 10-Q for that quarter and, (iii) as soon as available, but no later than 90 days after the last day of Borrower’s fiscal year, audited consolidated financial
statements prepared under GAAP, consistently applied, together with an unqualified opinion on the financial statements from an independent certified public accounting firm reasonably acceptable to Bank, including any “Big 5” accounting
firm, which firms are hereby deemed reasonably acceptable to Bank, along with Borrower’s 10-K for that year; (iv) a prompt report of any legal actions pending or threatened against Borrower or any Subsidiary that could reasonably be expected to
result in damages or costs to Borrower or any Subsidiary of $100,000 or more; (v) budgets, sales projections, operating plans or other financial information Bank reasonably requests; and (vi) prompt notice of any material change in the composition
of the Intellectual Property or knowledge of an event that materially adversely affects the value of the Intellectual Property. 
  
       (b)  Within 30 days after the last day of each month, Borrower will deliver to Bank a Borrowing Base Certificate signed by a Responsible Officer in the form of Exhibit C, with aged listings of
accounts receivable and accounts payable. 
  
       (c)  All reports on Form 10-K and 10-Q
and all financial statements delivered to Bank pursuant to Section 6.2(a) above shall be accompanied by a Compliance Certificate signed by a Responsible Officer in the form of Exhibit D. 
  

      (d)  Allow Bank, with 5 Business Days’ prior notice (unless an Event of Default has

 

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occurred and is continuing, in which case Bank shall not be required to give any prior notice), to audit that portion of Borrower’s Collateral related to Accounts at Borrower’s expense.
The initial audit will occur as soon as practical after the Closing Date. Such audits will be conducted no more often than once per year, unless an Event of Default has occurred and is continuing. 
  
 
6.3        Inventory; Returns. 
  
 Borrower will keep all
material Inventory in good and marketable condition, free from material defects. Returns and allowances between Borrower and its account debtors will follow Borrower’s customary practices as they exist at execution of this Agreement. Borrower
must promptly notify Bank of all returns, recoveries, disputes and claims, that involve more than $50,000. 
  
 
6.4        Taxes. 
  
 Borrower will make, and cause each
Subsidiary to make, timely payment of all material federal, state, and local taxes or assessments (other than taxes and assessments which Borrower is contesting in good faith, with adequate reserves maintained in accordance with GAAP) and will
deliver to Bank, on demand, appropriate certificates attesting to the payment. 
  
 
6.5        Insurance. 
  
 Borrower will keep its business and
the Collateral insured for risks and in amounts standard for Borrower’s industry, and as Bank may reasonably request. Insurance policies will be in a form, with companies, and in amounts that are satisfactory to Bank in Bank’s reasonable
discretion. All property policies will have a lender’s loss payable endorsement showing Bank as an additional loss payee and all liability policies will show the Bank as an additional insured and provide that the insurer must give Bank at least
20 days notice before canceling its policy. At Bank’s request, Borrower will deliver certified copies of policies and evidence of all premium payments. Proceeds payable under any policy will, at Bank’s option, be payable to Bank on account
of the Obligations. 
  
 
6.6        Primary Accounts. 
  
 Borrower will maintain its
primary banking relationship with Bank, which relationship shall include Borrower maintaining account balances in any accounts at or through Bank representing 100% of all account balances of Borrower at any financial institution. 

 
 
6.7        Financial Covenants. 
  
 Borrower will maintain as
of the last day of each month: 
  
 (i)  Quick Ratio.    A monthly (for
intra-quarter months only) ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 1.50 to 1.00, and a quarterly ratio of Quick Assets to Current Liabilities minus Deferred Revenue of at least 1.75 to 1.00. 

 
 (ii)  Tangible Net Worth.    A quarterly Tangible Net Worth of at least $4,000,000

 

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 for the quarters ending April 30 and October 31, 2002 and at least $5,000,000 for the quarter ending January 31, 2003, and thereafter. 
  
 
6.8        Further Assurances. 
  
 Borrower will execute any further instruments and take further action as Bank reasonably requests to perfect or continue Bank’s security interest in the Collateral or to effect the purposes of this Agreement. 
  
 
7.          NEGATIVE COVENANTS  
  
 Borrower
will not do any of the following without Bank’s prior written consent, which will not be unreasonably withheld, for so long as Bank has an obligation to lend or there are any outstanding Obligations: 
  
 
7.1        Dispositions.  
  
 Convey, sell, lease, transfer or otherwise dispose of (collectively “Transfer”), or permit any of its Subsidiaries to Transfer, all or any part of its business or any material real or personal property, including all of
Borrower’s Intellectual Property, except for Transfers (i) of Inventory in the ordinary course of business; (ii) of non-exclusive licenses and similar arrangements for the use of the property of Borrower or its Subsidiaries in the ordinary
course of business; (iii) of worn-out or obsolete Equipment; or (iv) Transfers, which, in the aggregate, do not exceed $75,000 in any fiscal year. 
  
 7.2        
Changes in Business, Ownership, Management or Business Locations. 
  
 Engage
in or permit any of its Subsidiaries to engage in any business other than the businesses currently engaged in by Borrower or reasonably related thereto or have a material change in its (i) management or (ii) ownership of greater than 25% (other than
by the sale of Borrower’s equity securities in a public or private offering so long as Borrower identifies any private investors prior to the closing of the investment, or other than as set forth in Section 7.3, below). Borrower will not,
without at least 30 days prior written notice, relocate its chief executive office. 
  
 7.3    
    Mergers or Acquisitions. 
  
 Merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with any other Person, or acquire, or permit any of its Subsidiaries to acquire, all or substantially all of the capital stock or property of another Person, except where (i) no Event of
Default has occurred and is continuing or would result from such action during the term of this Agreement and (ii) such transaction would not result in a decrease of more than 25% of Tangible Net Worth. A Subsidiary may merge or consolidate into
another Subsidiary or into Borrower. 
  
 7.4    
    Indebtedness.  
  
 Create, incur, assume, or be
liable for any Indebtedness, or permit any Subsidiary to do so, other than Permitted Indebtedness. 
 

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7.5        Encumbrance.  
  
 Create, incur,
or allow any Lien on any of its property, or assign or convey any right to receive income, including the sale of any Accounts, or permit any of its Subsidiaries to do so, except for Permitted Liens, or permit any Collateral not to be subject to the
first priority security interest granted here, subject to Permitted Liens. 
  
 
7.6        Distributions; Investments.  
  
 Except as permitted pursuant to Section 7.3, directly or indirectly acquire or own any Person, or make any Investment in any Person, other than Permitted Investments, or permit any of its Subsidiaries to do so. Pay any cash dividends or
make any distribution or redeem, retire or purchase any of Borrower’s capital stock. 
  
 7.7        
Transactions with Affiliates.  
  
 Directly or indirectly enter into or permit to exist any
material transaction with any Affiliate of Borrower except for transactions that are in the ordinary course of Borrower’s business, upon fair and reasonable terms that are no less favorable to Borrower than would be obtained in an arm’s
length transaction with a nonaffiliated Person. 
  
 7.8        
Subordinated Debt.  
  
 Make or permit any payment on any Subordinated Debt, except under
the terms of the Subordinated Debt, or amend any provision in any document relating to the Subordinated Debt without Bank’s prior written consent. 
  
 7.9        
Compliance. 
  
 Become an “investment company” or a company controlled by an
“investment company,” under the Investment Company Act of 1940 or undertake as one of its important activities extending credit to purchase or carry margin stock, or use the proceeds of any Credit Extension for that purpose; fail to meet
the minimum funding requirements of ERISA, permit a Reportable Event or Prohibited Transaction, as defined in ERISA, to occur; fail to comply with the Federal Fair Labor Standards Act or violate any other law or regulation, if the violation could
reasonably be expected to have a material adverse effect on Borrower’s business or operations or would reasonably be expected to cause a Material Adverse Change, or permit any of its Subsidiaries to do so. 
  
 8.        
  EVENTS OF DEFAULT
  
  
 Any one of the following is an Event of Default: 
  
 
8.1        Payment Default. 
  
 If Borrower
fails to pay any of the Obligations within 5 days after their due date. During the additional period the failure to cure the default is not an Event of Default (but no Credit Extension will be made during the cure period); 
 

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8.2        Covenant Default. 
  
 If Borrower
does not perform any obligation in Section 6 or violates any covenant in Section 7, or if Borrower does not perform or observe any other material term, condition or covenant in this Agreement, any Loan Documents, or in any agreement between Borrower
and Bank and as to any default under a term, condition or covenant that can be cured, has not cured the default within 10 days after it occurs, or if the default cannot be cured within10 days or cannot be cured after Borrower’s attempts within
10 day period, and the default may be cured within a reasonable time, then Borrower has an additional period (of not more than 30 days) to attempt to cure the default. During the additional time, the failure to cure the default is not an Event of
Default (but no Credit Extensions will be made during the cure period); 
  
 8.3        
Material Adverse Change.  
  
 If there (i) occurs a material adverse change in the
business, operations, or condition (financial or otherwise) of the Borrower, or (ii) is a material impairment of the prospect of repayment of any portion of the Obligations or (iii) is a material impairment of the value or priority of Bank’s
security interests in the Collateral. 
  
 
8.4        Attachment. 
  
 If any material
portion of Borrower’s assets is attached, seized, levied on, or comes into possession of a trustee or receiver and the attachment, seizure or levy is not removed in 10 days, or if Borrower is enjoined, restrained, or prevented by court order
from conducting a material part of its business or if a judgment or other claim becomes a Lien on a material portion of Borrower’s assets, or if a notice of lien, levy, or assessment is filed against any of Borrower’s assets by any
government agency and not paid within 10 days after Borrower receives notice. These are not Events of Default if stayed or if a bond is posted pending contest by Borrower (but no Credit Extensions will be made during the cure period); 

 
 8.5        
Insolvency.  
  
 If Borrower becomes insolvent or if Borrower begins an Insolvency
Proceeding or an Insolvency Proceeding is begun against Borrower and not dismissed or stayed within 30 days (but no Credit Extensions will be made before any Insolvency Proceeding is dismissed); 
  

8.6        Other Agreements.  
  
 If there
is a default in any agreement between Borrower and a third party that gives the third party the right to accelerate any Indebtedness exceeding $100,000 or that could cause a Material Adverse Change; 
  
 8.7        
Judgments.  
  
 If a money judgment(s) in the aggregate of at least $100,000 is rendered
against Borrower 
 

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 and is unsatisfied and unstayed for 10 days (but no Credit Extensions will be made before the judgment is stayed or satisfied); 
  
 
8.8        Misrepresentations.  
  
       If Borrower or any Person acting for Borrower makes any material misrepresentation or material misstatement now or later in any warranty or representation in this Agreement or in any writing delivered to
Bank or to induce Bank to enter this Agreement or any Loan Document; or 
  
 
8.9        Guaranty.  
  
       Any guaranty of any Obligations ceases for any reason to be in full force or any Guarantor does not perform any obligation under any guaranty of the Obligations, or any material misrepresentation or
material misstatement exists now or later in any warranty or representation in any guaranty of the Obligations or in any certificate delivered to Bank in connection with the guaranty, or any circumstance described in Sections 8.4, 8.5 or 8.7 occurs
to any Guarantor. 
  
 
9.          BANK’S RIGHTS AND REMEDIES  
  
 
9.1        Rights and Remedies.  
  
       When an Event of Default occurs and continues Bank may, without notice or demand, do any or all of the following during any such period: 
  
 (a)  Declare all Obligations immediately due and payable (but if an Event of Default described in Section 8.5 occurs all Obligations are immediately due and
payable without any action by Bank); 
  
 (b)  Stop advancing money or extending credit for
Borrower’s benefit under this Agreement or under any other agreement between Borrower and Bank; 
  
 (c)  Settle or adjust disputes and claims directly with account debtors for amounts, on terms and in any order that Bank considers reasonably advisable; 
  
 (d)  Make any payments and do any acts it considers necessary or reasonable to protect its security interest in the Collateral. Borrower will assemble the
Collateral if Bank requires and make it available as Bank designates. Bank may enter premises where the Collateral is located, take and maintain possession of any part of the Collateral, and pay, purchase, contest, or compromise any Lien which
appears to be prior or superior to its security interest and pay all expenses incurred. Borrower grants Bank a license to enter and occupy any of its premises, without charge, to exercise any of Bank’s rights or remedies; 

 
 (e)  Apply to the Obligations any (i) balances and deposits of Borrower it holds, or (ii) any amount held by Bank
owing to or for the credit or the account of Borrower; 
  
 (f)  Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell the Collateral. Bank is granted a non-exclusive, royalty-free license or other right 
 

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 to use, without charge, Borrower’s labels, Patents, Copyrights, Mask Works, rights of use of any name, trade secrets, trade names, Trademarks, service
marks, and advertising matter, or any similar property as it pertains to the Collateral, in completing production of, advertising for sale, and selling any Collateral and, in connection with Bank’s exercise of its rights under this Section,
Borrower’s rights under all licenses and all franchise agreements (to the extent allowable under such licenses and agreements) inure to Bank’s benefit; and 
  
     (g)  Dispose of the Collateral according to the Code. 
  
 
9.2        Power of Attorney. 
  
 Effective only when an
Event of Default occurs and continues, Borrower irrevocably appoints Bank as its lawful attorney to: (i) endorse Borrower’s name on any checks or other forms of payment or security; (ii) sign Borrower’s name on any invoice or bill of
lading for any Account or drafts against account debtors, (iii) make, settle, and adjust all claims under Borrower’s insurance policies; (iv) settle and adjust disputes and claims about the Accounts directly with account debtors, for amounts
and on terms Bank determines reasonable; and (v) transfer the Collateral into the name of Bank or a third party as the Code permits. Bank may exercise the power of attorney to sign Borrower’s name on any documents necessary to perfect or
continue the perfection of any security interest regardless of whether an Event of Default has occurred. Bank’s appointment as Borrower’s attorney in fact, and all of Bank’s rights and powers, coupled with an interest, are irrevocable
until all Obligations have been fully repaid and performed and Bank’s obligation to provide Credit Extensions terminates. 
  
 9.3
        Accounts Collection.  
  
 When an Event of Default
occurs and continues, Bank may notify any Person owing Borrower money of Bank’s security interest in the funds and verify the amount of the Account. Borrower must collect all payments in trust for Bank and, if requested by Bank, immediately
deliver the payments to Bank in the form received from the account debtor, with proper endorsements for deposit. 
  
 
9.4        Bank Expenses.  
  
 If Borrower fails to pay any
amount or furnish any required proof of payment to third persons, Bank may make all or part of the payment or obtain insurance policies required in Section 6.5, and take any action under the policies Bank deems prudent. Any amounts paid by Bank are
Bank Expenses and immediately due and payable, bearing interest at the then applicable rate and secured by the Collateral. No payments by Bank are deemed an agreement to make similar payments in the future or Bank’s waiver of any Event of
Default. 
  
 9.5
        Bank’s Liability for Collateral. 
  
 If Bank
complies with reasonable banking practices and the Code, it is not liable for: (a) the safekeeping of the Collateral; (b) any loss or damage to the Collateral; (c) any diminution in the value of the Collateral; or (d) any act or default of any
carrier, warehouseman, bailee, or other person. Subject to the foregoing, Borrower bears all risk of loss, damage or destruction of the 
 

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 Collateral. 
  
 
9.6        Remedies Cumulative. 
  
       Bank’s rights and remedies under this Agreement, the Loan Documents, and all other agreements are cumulative. Bank has all rights and remedies provided under the Code, by law, or in equity.
Bank’s exercise of one right or remedy is not an election, and Bank’s waiver of any Event of Default is not a continuing waiver. Bank’s delay is not a waiver, election, or acquiescence. No waiver is effective unless signed by Bank and
then is only effective for the specific instance and purpose for which it was given. 
  
 
9.7        Demand Waiver.  
  
       Borrower waives demand, notice of default or dishonor, notice of payment and nonpayment, notice of any default, nonpayment at maturity, release, compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees held by Bank on which Borrower is liable. 
 

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 10.        
NOTICES 
  
       All notices or demands by any party about this
Agreement or any other related agreement must be in writing and be personally delivered or sent by an overnight delivery service, by certified mail, postage prepaid, return receipt requested, or by telefacsimile to the addresses set forth below:

  
 
	 If to Borrower:
 	  	 Optio Software, Inc.
 
	  	  	 3015 Windward Plaza
 
	  	  	 Fairways II
 
	  	  	 Alpharetta, Georgia 30005
 
	  	  	 Attention: Harvey A. Wagner
 
	  	  	 Fax No.: 770-576-3642
 
	 
	 with Copy to:
 	  	 Morris, Manning & Martin, LLP
 
	  	  	 1600 Atlanta Financial Center
 
	  	  	 3343 Peachtree Road, NE
 
	  	  	 Atlanta, Georgia 30326
 
	  	  	 Attention: Ward S. Bondurant, Esq
 
	  	  	 Fax No.: 404-365-9532
 
	 
	 If to Bank:
 	  	 Silicon Valley Bank
 
	  	  	 3343 Peachtree Road, Suite 312
 
	  	  	 Atlanta, Georgia 30326
 
	  	  	 Attention: Alan Spurgin, Senior Vice President
 
	  	  	 Fax No.: 404-261-2202
 

 
  
       A party may change its notice address by
giving the other party written notice. 
  
 
11.        CHOICE OF LAW, VENUE AND JURY TRIAL WAIVER  
  
       Georgia law governs the Loan Documents without regard to principles of conflicts of law. Borrower and Bank each submit to the exclusive jurisdiction of the State and Federal courts
in Fulton County, Georgia. 
  
 BORROWER AND BANK EACH WAIVE THEIR RIGHT TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION ARISING OUT OF ANY OF THE LOAN
DOCUMENTS OR ANY CONTEMPLATED TRANSACTION, INCLUDING CONTRACT, TORT, BREACH OF DUTY AND ALL OTHER CLAIMS. THIS WAIVER IS A MATERIAL INDUCEMENT FOR BOTH PARTIES TO ENTER INTO THIS AGREEMENT. EACH PARTY HAS REVIEWED THIS WAIVER WITH ITS COUNSEL.

  
 
12.        GENERAL PROVISIONS  
  
 
12.1      Successors and Assigns.  
  
       This Agreement binds and is for the benefit of the successors and permitted assigns of each party. Borrower may not assign this Agreement or any rights under it without Bank’s prior written consent
which may be granted or withheld in Bank’s discretion. Bank has the right, without the 
 

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 consent of or notice to Borrower, to sell, transfer, negotiate, or grant participation in all or any part of, or any interest in, Bank’s obligations,
rights and benefits under this Agreement. 
  
 
12.2      Indemnification. 
  
 Except for losses caused by Bank’s
gross negligence or willful misconduct, Borrower will indemnify, defend and hold harmless Bank and its officers, employees, and agents against: (a) all obligations, demands, claims, and liabilities asserted by any other party in connection with the
transactions contemplated by the Loan Documents; and (b) all losses or Bank Expenses incurred, or paid by Bank from, following, or consequential to transactions between Bank and Borrower (including reasonable attorneys fees and expenses).

  
 
12.3      Time of Essence. 
  
 Time is of the essence for the
performance of all obligations in this Agreement. 
  
 
12.4      Severability of Provision. 
  
 Each provision of this
Agreement is severable from every other provision in determining the enforceability of any provision. 
  
 
12.5      Amendments in Writing, Integration. 
  
 All amendments to
this Agreement must be in writing and signed by Borrower and Bank. This Agreement represents the entire agreement about this subject matter, and supersedes prior negotiations or agreements. All prior agreements, understandings, representations,
warranties, and negotiations between the parties about the subject matter of this Agreement merge into this Agreement and the Loan Documents. 
  
 
12.6      Counterparts. 
  
 This Agreement may be executed in any
number of counterparts and by different parties on separate counterparts, each of which, when executed and delivered, are an original, and all taken together, constitute one Agreement. 
  
 
12.7      Survival. 
  
 All covenants, representations and warranties
made in this Agreement continue in full force while any Obligations remain outstanding. The obligations of Borrower in Section 12.2 to indemnify Bank will survive until all statutes of limitations for actions that may be brought against Bank have
run. 
  
 
12.8      Confidentiality. 
  
 In handling any confidential
information, Bank will exercise the same degree of care that it exercises for its own proprietary information, but disclosure of information may be made (i) to Bank’s subsidiaries or affiliates in connection with their business with Borrower,
(ii) to prospective 
 

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 transferees or purchasers of any interest in the loans (provided, however, Bank shall use commercially reasonable efforts in obtaining such prospective
transferee or purchasers agreement of the terms of this provision), (iii) as required by law, regulation, subpoena, or other order, (iv) as required in connection with Bank’s examination or audit and (v) as Bank considers appropriate exercising
remedies under this Agreement. Confidential information does not include information that either: (a) is in the public domain or in Bank’s possession when disclosed to Bank, or becomes part of the public domain after disclosure to Bank; or (b)
is disclosed to Bank by a third party, if Bank does not know that the third party is prohibited from disclosing the information. 
  
 
12.9       Attorneys’ Fees, Costs and Expenses.  
  
       In any action or proceeding between Borrower and Bank arising out of the Loan Documents, the prevailing party will be entitled to recover its reasonable attorneys’ fees and other reasonable costs and
expenses incurred, in addition to any other relief to which it may be entitled. 
 

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13.          DEFINITIONS 
  
 
13.1        

Definitions.  
  
       In this Agreement: 
  
       “Accounts” are all existing and later arising accounts, contract rights, and other obligations owed
Borrower in connection with its sale or lease of goods (including licensing software and other technology) or provision of services, all credit insurance, guaranties, other security and all merchandise returned or reclaimed by Borrower and
Borrower’s Books relating to any of the foregoing. 
  
       “Advance” or
“Advances” is a loan advance (or advances) under the Committed Revolving Line. 
  
       “Affiliate” of a Person is a Person that owns or controls directly or indirectly the Person, any Person that controls or is controlled by or is under common control with the Person, and
each of that Person’s senior executive officers, directors, partners and, for any Person that is a limited liability company, that Person’s managers and members. 
  
       “Bank Expenses” are all audit fees and expenses and reasonable costs and expenses (including reasonable attorneys’ fees and
expenses) for preparing, negotiating, administering, defending and enforcing the Loan Documents (including appeals or Insolvency Proceedings). 
  
       “Big 5 Accounting Firm” means any of Arthur Andersen, Deloitte & Touche, Ernst & Young, KPMG and PriceWaterhouse Coopers, and each of their respective
successors and assigns. 
  
       “Borrower’s Books” are all Borrower’s
books and records including ledgers, records regarding Borrower’s assets or liabilities, the Collateral, business operations or financial condition and all computer programs or discs or any equipment containing the information. 

 
       “Borrowing Base” is (i) when Borrower’s monthly Quick Ratio is at least 2.50 to
1.00, 100% of Eligible Accounts up to outstanding Advances of $1,000,000, as determined by Bank from Borrower’s most recent Borrowing Base Certificate, or (ii) when (a) Borrower’s monthly Quick Ratio is less than 2.50 to 1.00 or (b) the
balances of outstanding Advances exceeds $1,000,000, 80% of Eligible Accounts as determined by Bank from Borrower’s most recent Borrowing Base Certificate; provided, however, that, in either instance, Bank may lower the percentage
of the Borrowing Base after performing an audit of Borrower’s Collateral that is not satisfactory to the Bank. 
  
       “Business Day” is any day that is not a Saturday, Sunday or a day on which the Bank is closed. 
  
       “Closing Date” is the date of this Agreement. 
  
       “Code” is the Georgia Uniform Commercial Code, as applicable. 
 

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 “Collateral” is the property described on Exhibit A. 

 
 “Committed Revolving Line” is an Advance, or Advances, of up to $5,000,000. 
  
 “Contingent Obligation” is, for any Person, any direct or indirect liability, contingent or not, of that Person for (i) any
indebtedness, lease, dividend, letter of credit or other obligation of another such as an obligation directly or indirectly guaranteed, endorsed, co-made, discounted or sold with recourse by that Person, or for which that Person is directly or
indirectly liable; (ii) any obligations for undrawn letters of credit for the account of that Person; and (iii) all obligations from any interest rate, currency or commodity swap agreement, interest rate cap or collar agreement, or other agreement
or arrangement designated to protect a Person against fluctuation in interest rates, currency exchange rates or commodity prices; but “Contingent Obligation” does not include endorsements in the ordinary course of business. The amount of a
Contingent Obligation is the stated or determined amount of the primary obligation for which the Contingent Obligation is made or, if not determinable, the maximum reasonably anticipated liability for it determined by the Person in good faith; but
the amount may not exceed the maximum of the obligations under the guarantee or other support arrangement. 
  
 “Copyrights” are all copyright rights, applications or registrations and like protections in each work or authorship or derivative work, whether published or not (whether or not it is a trade secret) now or later existing,
created, acquired or held. 
  
 “Credit Extension” is each Advance, or any other extension of credit by Bank for
Borrower’s benefit. 
  
 “Current Assets” are amounts that under GAAP should be included on that date as
current assets on Borrower’s consolidated balance sheet. 
  
 “Current Liabilities” are the aggregate amount
of Borrower’s Total Liabilities which mature within one (1) year. 
  
 “Deferred Revenue” is all amounts
received in advance of performance under contracts and not yet recognized as revenue. 
  
 “Eligible Accounts” are
Accounts in the ordinary course of Borrower’s business that meet all Borrower’s representations and warranties in Section 5; but Bank may change eligibility standards by giving Borrower thirty (30) days prior written notice. Unless
Bank agrees otherwise in writing, Eligible Accounts will not include: 
  
 (a) Accounts that the account debtor
has not paid within 90 days of invoice date, except for those receivables due from McKesson, Inc. (the “McKesson Accounts”), which shall be “Eligible Accounts” unless they are not paid within 120 days of invoice date;

  
 (b) Accounts for an account debtor, 50% or more of whose Accounts have not been paid within 90 days of
invoice date (except for the McKesson Accounts, which will be considered “Eligible Accounts” unless 50% or more of the McKesson Accounts have not been paid
 
 

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      within 120 days of our invoice date): 
  

(c) Credit balances over 90 days from invoice date; 
  
 (d) Accounts for an account debtor, including Affiliates, whose total obligations to Borrower exceed 25% of all Accounts, for the amounts that exceed that percentage, unless the Bank approves in writing; 

 
 (e) Accounts for which the account debtor does not have its principal place of business in the United States (other than
Eligible Foreign Accounts); 
  
 (f) Accounts for which the account debtor is a federal, state or local government
entity or any department, agency, or instrumentality; 
  
 (g) Accounts for which Borrower owes the account
debtor, but only up to the amount owed (sometimes called “contra” accounts, accounts payable, customer deposits or credit accounts); 
  
 (h) Accounts for demonstration or promotional equipment, or in which goods are consigned, sales guaranteed, sale or return, sale on approval, bill and hold, or other
terms if account debtor’s payment may be conditional; 
  
 (i) Accounts for which the account debtor is
Borrower’s Affiliate, officer, employee, or agent; 
  
 (j) Accounts in which the account debtor disputes
liability or makes any claim and Bank believes there may be a basis for dispute (but only up to the disputed or claimed amount), or if the Account Debtor is subject to an Insolvency Proceeding, or becomes insolvent, or goes out of business;

  
 (k) Accounts for which Bank reasonably determines  collection to be doubtful. 
  
 “Eligible Foreign Accounts” are Accounts for which the account debtor does not have its principal place of business in the United
States but are: (i) covered by credit insurance reasonably satisfactory to Bank, less any deductible; or (ii) supported by letter(s) of credit reasonably acceptable to Bank; or (iii) that Bank approves in writing. 
  
 “ERISA” is the Employment Retirement Income Security Act of 1974, and its regulations. 
  
 “GAAP” is generally accepted accounting principles. 
  
  “Guarantor” is any present or future guarantor of the Obligations. 
  
 “Indebtedness” is (a) indebtedness for borrowed money or the deferred price of property or services, such as reimbursement and other obligations for surety bonds and letters of credit, (b) obligations
evidenced by notes, bonds, debentures or similar instruments, (c) capital lease 
 

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 obligations, which in the aggregate, exceed $1,000,000 and (d) Contingent Obligations. 
  
 “Insolvency Proceeding” are proceedings by or against any Person under the United States Bankruptcy Code, or any other bankruptcy or insolvency law, including
assignments for the benefit of creditors, compositions, extensions generally with its creditors, or proceedings seeking reorganization, arrangement, or other relief. 
  
 “Intangible Assets” are intangible items such as unamortized debt discount and expense, Intellectual Property and research and development expenses, not including
prepaid expenses. 
  
 “Intellectual Property” is: 
  
 (a) Copyrights, Trademarks, Patents, and Mask Works including amendments, renewals, extensions, and all licenses or other rights to use and all license fees and
royalties from the use; 
  
 (b) Any trade secrets and any intellectual property rights in computer software and
computer software products now or later existing, created, acquired or held; 
  
 (c) All design rights which may
be available to Borrower now or later created, acquired or held; 
  
 (d) Any claims for damages (past, present or
future) for infringement of any of the rights above, with the right, but not the obligation, to sue and collect damages for use or infringement of the intellectual property rights above; 
  
 All proceeds and products of the foregoing, including all insurance, indemnity or warranty payments. 
  
 “Inventory” is present and future inventory in which Borrower has any interest, including merchandise, raw materials, parts, supplies, packing and shipping materials,
work in process and finished products intended for sale or lease or to be furnished under a contract of service, of every kind and description now or later owned by or in the custody or possession, actual or constructive, of Borrower, including
inventory temporarily out of its custody or possession or in transit and including returns on any accounts or other proceeds (including insurance proceeds) from the sale or disposition of any of the foregoing and any documents of title.

  
 “Investment” is any beneficial ownership of (including stock, partnership interest or other securities) any
Person, or any loan, advance or capital contribution to any Person. 
  
 “Lien” is a mortgage, lien, deed of trust,
charge, pledge, security interest or other encumbrance. 
  
 “Loan Documents” are, collectively, this Agreement,
any note, or notes or guaranties executed by Borrower or Guarantor, and any other present or future agreement between Borrower and/or for the benefit of Bank in connection with this Agreement, all as amended, extended or restated. 

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 “Mask Works” are all mask works or similar rights available for the protection
of semiconductor chips, now owned or later acquired. 
  
 “Material Adverse Change” is described in Section 8.3.

  
 “Obligations” are debts, principal, interest, Bank Expenses and other amounts Borrower owes Bank now or later,
including cash management services, letters of credit and foreign exchange contracts, if any and including interest accruing after Insolvency Proceedings begin and debts, liabilities, or obligations of Borrower assigned to Bank. 

 
 “Patents” are patents, patent applications and like protections, including improvements, divisions, continuations, renewals,
reissues, extensions and continuations-in-part of the same. 
  
 “Permitted Indebtedness” is: 

 
 (a) Borrower’s indebtedness to Bank under this Agreement or any other Loan Document; 
  
 (b) Indebtedness existing on the Closing Date and shown on the Schedule; 
  
 (c) Subordinated Debt, except that Borrower shall not incur any additional indebtedness from Bankers/Softech/Mid-States after the Closing Date; 
  
 (d) Indebtedness to trade creditors incurred in the ordinary course of business; 
  

(e) Indebtedness secured by Permitted Liens; 
  
 (f) Indebtedness incurred by Subsidiaries, not to exceed $150,000 in the aggregate at any time, and any guaranty of the same by Borrower; and 
  
 “Permitted Investments” are: 
  
 (a) Investments shown on the Schedule and existing on the Closing Date; and 
  
 (b) (i) marketable
direct obligations issued or unconditionally guaranteed by the United States or its agency or any State maturing within 1 year from its acquisition, (ii) commercial paper maturing no more than 1 year after its creation and having the highest rating
from either Standard & Poor’s Corporation or Moody’s Investors Service, Inc., and (iii) Bank’s certificates of deposit issued maturing no more than 1 year after issue. 
  
 “Permitted Liens” are: 
  
 (a)
Liens existing on the Closing Date and shown on the Schedule or arising under this Agreement or other Loan Documents; 
  
 (b) Liens for taxes, fees, assessments or other government charges or levies, either not delinquent or being contested in good faith and for which Borrower maintains adequate reserves on its Books, if they have no priority over any of
Bank’s security interests; 
 

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 (c) Purchase money Liens (i) on Equipment acquired or held by Borrower or its
Subsidiaries incurred for financing the acquisition of the Equipment, or (ii) existing on equipment when acquired, if the Lien is confined to the property and improvements and the proceeds of the equipment; 
  
 (d) Licenses or sublicenses granted in the ordinary course of Borrower’s business and any interest or title of a licensor or
under any license or sublicense, if the licenses and sublicenses permit granting Bank a security interest; 
  
 (e) Leases or subleases granted in the ordinary course of Borrower’s business, including in connection with Borrower’s leased premises or leased property; 
  
 (f) Liens incurred in the extension, renewal or refinancing of the indebtedness secured by Liens described in (a) through (c), but any extension, renewal or
replacement Lien must be limited to the property encumbered by the existing Lien and the principal amount of the indebtedness may not increase. 
  
 “Person” is any individual, sole proprietorship, partnership, limited liability company, joint venture, company association, trust, unincorporated organization, association, corporation, institution,
public benefit corporation, firm, joint stock company, estate, entity or government agency. 
  
 “Prime Rate” is
Bank’s most recently announced “prime rate,” even if it is not Bank’s lowest rate. 
  
 “Quick
Assets” is, on any date, the Borrower’s consolidated, unrestricted cash, cash equivalents, net billed accounts receivable and investments with maturities of fewer than 12 months determined according to GAAP. 
  
 “Responsible Officer” is each of the Chief Executive Officer, the President, the Chief Financial Officer and the Controller of
Borrower. 
  
 “Revolving Maturity Date” is April 25, 2003. 
  

“Schedule” is any attached schedule of exceptions. 
  
 “Stockholder’s Equity” is Borrower’s consolidated assets minus its Total Liabilities. 
  
 “Subordinated Debt” is debt incurred by Borrower subordinated to Borrower’s indebtedness owed to Bank and which is reflected in a written agreement in a manner and form acceptable to Bank and approved by Bank in
writing. 
  
 “Subsidiary” is for any Person, or any other business entity of which more than 50% of the voting
stock or other equity interests is owned or controlled, directly or indirectly, by the Person or one or more Affiliates of the Person. 
 

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       “Tangible Net Worth” is, on any date,
Stockholder’s Equity minus, any amounts attributable to (a) goodwill, (b) intangible items such as unamortized debt discount and expense, Intellectual Property and research and development expenses except prepaid expenses, and (c)
reserves not already deducted from assets. 
  
       “TotalLiabilities” is on
any day, obligations that should, under GAAP, be classified as liabilities on Borrower’s consolidated balance sheet, including all Indebtedness, and current portion Subordinated Debt allowed to be paid, but excluding all other Subordinated
Debt. 
  
       “Trademarks” are trademark and servicemark rights, registered or
not, applications to register and registrations and like protections, and the entire goodwill of the business of Assignor connected with the trademarks. 
  
 
	 
	 BORROWER:
 
	 
	 OPTIO SOFTWARE, INC.
 
	 
	 By:
 	 	 /s/    HARVEY WAGNER        
 

	 
	 Title:
 	 	 Chief Financial Officer
 

 
  
 
	 
	 BANK:
 
	 SILICON VALLEY BANK
 
	 
	 By:
 	 	 /s/    ALAN SPURGIN
 

	 
	 Title:
 	 	 Senior Vice President
 

 
  
  
  
 

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 EXECUTION COPY 
  
 Schedule to Loan and Security Agreement 
  
 The exact correct corporate name of Borrower is
(attach a copy of the formation documents, e.g., articles, partnership agreement):            Optio Software, Inc. 
  
 Borrower’s State of formation:                    Georgia 

 
 Borrower has operated under only the following other names (if none, so state):
                 
  
 Technology
Marketing, Inc. and Xpoint Corporation 
  
 All other address at which the Borrower does business are as follows (attach additional
sheets if necessary and include all warehouse addresses):  
  
 Executive Offices - 3015 Windward
Plaza, Windward Fairways II, Alpharetta, GA 30005 USA; Optio Software Europe, SA - 20 quater, rue Schnapper, B.P. 5290, 78175 Saint Germain-en-Laye Cedex (France); West Coast Sales Office - 500 Airport Blvd., Suite #100, Burlingame, CA
94010; Optio Software UK Ltd. - Enterprise Centre, Coventry University Technology Park, Puma Way, Coventry CV1 2PT (England); Optio Software Asia Pacific Pty. Ltd. - Suites 8-11, 481 Logan Road, Greenslopes, QLD 4120. 

 
 Borrower has deposit accounts and/or investment accounts located only at the following institutions: 
  
 Branch Banking & Trust 
  
 List Acct. Numbers:        Collateral Reserve Account #5145370355; Trust Account #5145370363 
  
 Liens existing on the Closing Date and disclosed to and accepted by Bank in writing: 
  
 UCC-1 007-1999-003168 in favor of IBM Credit Corporation; UCC-1 007-1999-013516 in favor of Fidelity Leasing, Inc.; UCC-1 007-2000-004723 in favor of Softech; UCC-1
060-2000- 017334 in favor of Softech; UCC-1 006-2001-016067 in favor of Hewlett-Packard Company; UCC-1 002-2002-002616 in favor of Siemens Financial Services, Inc.; UCC-1 002-2002-002617 in favor of Siemens Financial Services, Inc.; and UCC-1
200000277714 in favor of IBM Credit Corporation. 
  
 Investments existing on the Closing Date and disclosed to and accepted by Bank
in writing: 
  
 ec-Hub Inc., Optio Software, Inc. owns 1,333,334 shares of Series A Preferred Stock, or
approximately 4.1% percent of the outstanding capital stock, on a fully-diluted basis. 
  
 Subordinated Debt: 

 
 Indebtedness on the Closing Date and disclosed to and consented to by Bank in writing: 
 

 28 

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 Siemens Financial Services Capital Lease, 60-month lease ending on 2/28/06, monthly payments are $7,436.67; Steelcase Financial Capital
Lease, $27,344 balance due as of 1/31/2002; and note in favor of Pamela McCabe and Betty Drumheller in the principal amount of $52,800, due upon demand and bearing interest at 12% per year. 
  
 The following is a list of the Borrower’s copyrights (including copyrights of software) which are registered with the United States Copyright Office. (Please include name of the
copyright and registration number and attach a copy of the registration): 
  
 None. 
                                       
                                        
                    
  
                                       
                                        
                    
  
                                       
                                        
                    
  
 The
following is a list of all software which the Borrower sells, distributes or licenses to others, which is not registered with the United States Copyright Office. (Please include versions which are not registered: 
  
 Optio e.ComIntegrate®, OptioDCS, Optio e.ComPresent, Optio DesignStudio, OptioFax, Optio Enterprise ProcessPACKS, Optio e.ComPayments, Optio MedFormsTM, Optio MedFormsDR and Optio Healthcare ProcessPACKS 
  
 The following
is a list of all of the Borrower’s patents which are registered with the United States Patent Office. (Please include name of the patent and registration number and attach a copy of the registration.): 
  
 None. 
                                       
                                        
                    
  
                                       
                                        
                    
  
                                       
                                        
                    
  
 The
following is a list of all of the Borrower’s patents which are pending with the United States Patent Office. (Please include name of the patent and a copy of the application.): 
  
 None. 
                                       
                                        
                    
  
 The
following is a list of all of the Borrower’s registered trademarks. (Please include name of the trademark and a copy of the registration.): 
  
 OPTIO logo U.S. Registration No. 2,204,450; and OPTIO E.COMINTEGRATE U.S. Registration No. 2,546,428; OPTIO E.COMINTEGRATE Australia Registration No. 865248; OPTIO
E.COMINTEGRATE Japanese Application No. 2001-020061; Xpoint Corporation logo U.S. Registration No. 1,265,942 (no longer in use); and ReportView mark Registration No. 2,012,293 (no longer in use). 
  

Borrower is not subject to litigation which would have a material adverse effect on the Borrower’s financial condition, except the following (attach additional comments, if
needed): 
  
 Wagner, et al v. Optio Software, Inc.; Kevin Dewey vs. Optio Software, Inc., et. al.;
            Cameron Ashley Building Products vs. Optio Software, Inc.; and Compass Bank, as assignee for TRMG, Inc. vs. Optio Software, Inc. 
  
 Tax ID Number:
                            58-1435435 
 

 29 

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 Organizational Number, if any:     
 

 30 

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 EXHIBIT A 
  
 The Collateral consists of all of Borrower’s right, title and interest in and to the following: 
  
 All goods and equipment now owned or hereafter acquired, including, without limitation, all machinery, fixtures, vehicles (including motor vehicles and trailers), and any interest in any
of the foregoing, and all attachments, accessories, accessions, replacements, substitutions, additions, and improvements to any of the foregoing, wherever located; 
  
 All inventory, now owned or hereafter acquired, including, without limitation, all merchandise, raw materials, parts, supplies, packing and shipping materials, work in process and
finished products including such inventory as is temporarily out of Borrower’s custody or possession or in transit and including any returns upon any accounts or other proceeds, including insurance proceeds, resulting from the sale or
disposition of any of the foregoing and any documents of title representing any of the above; 
  
 All contract rights and general
intangibles now owned or hereafter acquired, including, without limitation, goodwill, trademarks, servicemarks, trade styles, trade names, patents, patent applications, leases, license agreements, franchise agreements, blueprints, drawings, purchase
orders, customer lists, route lists, infringements, claims, computer programs, computer discs, computer tapes, literature, reports, catalogs, design rights, income tax refunds, payments of insurance and rights to payment of any kind; 

 
 All now existing and hereafter arising accounts, contract rights, royalties, license rights and all other forms of obligations owing to
Borrower arising out of the sale or lease of goods, the licensing of technology or the rendering of services by Borrower, whether or not earned by performance, and any and all credit insurance, guaranties, and other security therefor, as well as all
merchandise returned to or reclaimed by Borrower; 
  
 All documents, cash, deposit accounts, securities, securities entitlements,
securities accounts, investment property, financial assets, letters of credit, certificates of deposit, instruments and chattel paper now owned or hereafter acquired and Borrower’s Books relating to the foregoing; 
  
 All Borrower’s Books relating to the foregoing and any and all claims, rights and interests in any of the above and all substitutions for,
additions and accessions to and proceeds thereof. 
  
 Notwithstanding the foregoing, the Collateral shall not be deemed to include
any copyrights, copyright applications, copyright registration and like protection in each work of authorship and derivative work thereof, whether published or unpublished, now owned or hereafter acquired; any patents, patent applications and like
protections including without limitation improvements, divisions, continuations, renewals, reissues, extensions and continuations-in-part of the same, trademarks, servicemarks and applications therefor, whether registered or not, and the goodwill of
the business of Borrower connected with and symbolized by such trademarks, any trade secret rights, including any rights to unpatented inventions, know-how, operating manuals, license rights and agreements and confidential information, now owned or
hereafter acquired; or any claims for damage by way of any past, present and future infringement of any of the foregoing (collectively, the “Intellectual Property”) except that the Collateral shall include the proceeds of all the
Intellectual 
 

 31 

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 Property that are accounts, (i.e. accounts receivable) of Borrower, or general intangibles consisting of rights to payment, if a judicial authority (including a
U.S. Bankruptcy Court) holds that a security interest in the underlying Intellectual Property is necessary to have a security interest in such accounts and general intangibles of Borrower that are proceeds of the Intellectual Property, then the
Collateral shall automatically, and effective as of the Closing Date, include the Intellectual Property to the extent necessary to permit perfection of Bank’s security interest in such accounts and general intangibles of Borrower that are
proceeds of the Intellectual Property. 
 

 32 

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 EXECUTION COPY 
  
 EXHIBIT B 
  
 LOAN PAYMENT/ADVANCE REQUEST
FORM 
  
 DEADLINE FOR SAME DAY
PROCESSING IS 3:00 E.S.T. 
  
 
	 Fax To:
 	 	 (404) 495-4500  
 	  	 Date:                                     
       
 

 

	 	

 
	  ̈
 	 	 Loan Payment:
 	    	  	  	  
	  	 	 Optio Software, Inc. (Borrower)
 
	 
	  	 	 From Account
#                                  
 	  	 To Account
#                                        
          
 
	  	 	 (Deposit Account #)
 	  	 (Loan Account #)
 
	  	 	 Principal
$                                        
      
 	  	 and/or Interest
$                                        
      
 
	 
	  	 	 All Borrower’s representation and warranties in the Loan and Security Agreement, to the knowledge of Borrower, are true, correct and complete in all material
respects to on the date of the telephone transfer request for and advance, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of the date:
 
	 
	  	 	 Authorized
Signature:                          
 	  	 Phone
Number:                                       
       
 
	 
	  ̈
 	 	 LOAN ADVANCE:
 	  	  
	  	 	 Complete Outgoing Wire Request section below if all or a portion of the funds from this loan advance are for an outgoing
wire.
 
	 
	  	 	 From Account
#                                      

	  	 To Account
#                                        
            
 
	  	 	 (Loan Account #)
 	  	 (Deposit Account #)
 
	 
	  	 	 Amount of Advance
$                          
 	  	  
	 
	  	 	 All Borrower’s representation and warranties in the Loan and Security Agreement, to the knowledge of Borrower, are true, correct and complete in all
material respects to on the date of the telephone transfer request for and advance, but those representations and warranties expressly referring to another date shall be true, correct and complete in all material respects as of the
date:
 
	 
	  	 	 Authorized
Signature:                          
 	  	 Phone
Number:                                       
       
 

 
  
 
	  ̈
 	 	 OUTGOING WIRE REQUEST
 
	  	 	 Complete only if all or a portion of funds from the loan advance above are to
be wired.
 Deadline for same day processing is 3:00pm, E.S.T.
 
	 
	  	 	 Beneficiary
Name:                      
 	  	 Amount of
Wire:$                                       
   
 
	 
	  	 	 Beneficiary
Bank:                                  
 	  	 Account
Number:                                       
       
 
	 
	  	 	 City and
Sate:                                       
   
 	  	  
	  	 	 Beneficiary Bank Transit (ABA) #:             
                          Beneficiary Bank Code (Swift, Sort, Chip, etc.)
 
	 
	  	 	 (For International Wire Only)
 
	  	 	 Intermediary
Bank:                          
 	  	 Transit (ABA)
#:                                       
       
 

 
  
 

 33 

Table of Contents

  
 For Further Credit
to:                                       
                                        
                                        
              
  
 Special
Instruction:                                      
                                        
                                        
                   
  
 By signing below, I (we) acknowledge
and agree that my (our) funds transfer request shall be processed in accordance with and subject to the terms and conditions set forth in the agreements(s) covering funds transfer service(s), which agreements(s) were previously received and executed
by me (us). 
  
 
	 Authorized
Signature:                                      
        
 	 	 2nd Signature (If
Required):                                     
 
 
	 Print Name/Title:
                                        
            
 	 	 Print
Name/Title:                                      
                  
 
	 Telephone
#:                                       
                     
 	 	 Telephone
#                                        
                        
 

 
 

 2 

Table of Contents

  
 EXHIBIT C 
 BORROWING
BASE CERTIFICATE 
  
 
	
	
	

	 
	 Borrower:    Optio Software, Inc.
 	 	 Bank:    Silicon Valley Bank
 
	 
	 Commitment Amount:    $5,000,000
 	 	  
	
	
	

 
  
 ACCOUNTS RECEIVABLE 
  
 
	  	  	  	  
	 1. Accounts Receivable Book Value as of
 	  	 $
 	  
 
	 2. Additions (please explain on
reverse)                     
 	  	 $
 	                 
 
	 3.        TOTAL ACCOUNTS RECEIVABLE     
 	  	 $
 	  
 
	 
	 ACCOUNTS RECEIVABLE DEDUCTIONS (without duplication)
 	  	  	  
	 4. Amounts over 90 days due (120 days for McKesson)          
 	  	 $
 	  
 
	 5. Balance of 50% over 90 day accounts (120 days for
McKesson)                        
 	  	 $
 	  
 
	 6. Credit balances over 90 days*           
 	  	 $
 	  
 
	 7. Concentration Limits*           
 	  	 $
 	  
 
	 8. Foreign Accounts           
 	  	 $
 	  
 
	 9. Governmental Accounts           
 	  	 $
 	  
 
	 10. Contra Accounts                

	  	 $
 	  
 
	 11. Promotion or Demo Accounts           
 	  	 $
 	  
 
	 12. Intercompany/Employee Accounts           
 	  	 $
 	  
 
	 13. Other (please explain on reverse)           
 	  	 $
 	  
 
	 
	 14.       TOTAL ACCOUNTS RECEIVABLE
DEDUCTIONS           
 	  	 $
 	  
 
	 15. Eligible Accounts (#3 minus #14)           
 	  	 $
 	  
 
	 
	 16. LOAN VALUE OF ACCOUNTS (X1% of #15)          
 	  	 $
 	  
 

 
 

	X1
	 
	= 100% when Borrower’s monthly Quick Ratio is at least 2.50 to 1.00, up to $1,000,000 and 80% when either (a) Borrower’s monthly Q uick Ratio is less than 2.50 to
1.00 or (b) the balances of outstanding Advances exceeds $1,000,000. 
 

  
 BALANCES 
 
	 17.  Maximum Loan Amount
 	  	 $5,000,000
 
	 18.  Total Funds Available [Lesser of #17 or #16]
 	  	 $                  
 
	 19.  Present balance owing on Line of Credit
 	  	 $                  
 
	 20.  RESERVE POSITION (#18 minus #19)
 	  	 $                  
 

 
  
 The undersigned represents and warrants that this is true, complete and correct in all material
respects, and that the information in this Borrowing Base Certificate complies with the representations and warranties in the Loan and Security Agreement between the undersigned and Silicon Valley Bank. 
  
 
	 COMMENTS:
 	  	 BANK USE ONLY
 
	 
	 Optio Software, Inc.
 	  	 Rec’d
By                                   
 
	 
	 By:                                      
                   
 	  	                     Auth. Signer 
 
	 
	 Authorized Signer
 	  	 Date:                                     
 
 
	 
	  	  	 Verified:                                   

	  	  	                     Auth. Signer
 
	  	  	 Date:                                     
 
 

 
 

 35 

Table of Contents

  
 EXECUTION COPY 
  
 EXHIBIT D 
 COMPLIANCE CERTIFICATE 
  
 TO:     SILICON VALLEY BANK 
  
 FROM:    OPTIO SOFTWARE, INC. 
  
 The undersigned authorized officer of Optio Software, Inc. (“Borrower”) certifies that under the terms and conditions of the Loan and Security
Agreement between Borrower and Bank (the “Agreement”), (i) Borrower is in complete compliance for the period ending
                         with all required covenants except as noted below and (ii) all representations and warranties in the
Agreement, to the knowledge of Borrower, are true and correct in all material respects on this date. Attached are the required documents supporting the certification. The Officer certifies that these are prepared in accordance with Generally
Accepted Accounting Principles (GAAP) consistently applied from one period to the next except as explained in an accompanying letter or footnotes. The Officer acknowledges that no borrowings may be requested at any time or date of determination that
Borrower is not in compliance with any of the terms of the Agreement, and that compliance is determined not just at the date this certificate is delivered. 
  
 Please indicate compliance status by circling Yes/No under “Complies” column. 
  
 
	 Reporting Covenant
 
	  	 Required
 
	  	 Complies
 

	 Monthly financial statements + CC
 	  	 Monthly within 30 days (except FQE)
 	  	 Yes
 	  	 No
 
	 Quarterly + 10-Q + CC
 	  	 FQE within 45 days (except FYE)
 	  	 Yes
 	  	 No
 
	 Annual (Audited) + 10-K + CC
 	  	 FYE within 90 days
 	  	 Yes
 	  	 No
 
	 A/R Agings
 	  	 Monthly within 30 days
 	  	 Yes
 	  	 No
 
	 A/R Audit
 	  	 Initial and Annual
 	  	 Yes
 	  	 No
 
	 Borrowing Base Certificate
 	  	 Monthly within 30 days
 	  	 Yes
 	  	 No
 

 
  
 
	 Financial Covenant
 
	  	 Required
 
	  	 Actual
 
	  	 Complies
 

	 Maintain:
 	  	  	  	  	  	  	  	  
	 Monthly Minimum Quick Ratio
 	  	 1.50:1.00
 	  	         :1.00
 	  	 Yes
 	  	 No
 
	 Quarterly Minimum Quick Ratio
 	  	 1.75:1.00
 	  	         :1.00
 	  	 Yes
 	  	 No
 
	 Quarterly Minimum Tangible Net Worth for:
 	  	  	  	  	  	  	  	  
	 Q ending April 30, 2002 through Q ending October 31, 2002
 	  	 $4,000,000
 	  	 $                
 	  	 Yes
 	  	 No
 
	 Q ending January 31, 2003 and thereafter.
 	  	 $5,000,000
 	  	 $                
 	  	 Yes
 	  	 No
 

 
  

	Have
	 
	there been updates to Borrower’s intellectual property, if appropriate?     Yes / No 
 

 

 36 

Table of Contents

  
 
	 Comments Regarding Exceptions: See Attached.
 	  	 BANK USE ONLY
 
	 
	 Sincerely,
 	  	 Received
by:                                    
 
	 Optio Software, Inc.
 	  	             Authorized Signer
 
	 
	                                       
          
 	  	 Date:                                     
      
 
	 
	 SIGNATURE
 	  	 Verified:                                     
   
 
	                                       
          
 	  	             Authorized Signer
 
	 
	 TITLE
 	  	 Date:                                     
      
 
	                                       
          
 	  	 Compliance Status:             Yes
            No
 
	 
	 DATE
 	  	  

 
 

 37 

Table of Contents

  
 NEGATIVE PLEDGE AGREEMENT 
  
 This Negative Pledge Agreement is made as of April 25, 2002 by and between Optio Software, Inc. (“Borrower”) and Silicon Valley Bank (“Bank”). 

 
 In connection with, among other documents, the Loan and Security Agreement (the “Loan Documents”) being concurrently executed
herewith between Borrower and Bank, Borrower agrees as follows: 
  

	 	1.
	 
	Borrower shall not, without the prior written consent of the Bank, mortgage, pledge, grant a security interest in, or encumber any of Borrower’s intellectual property,
including, without limitation, the following: 
 

  

	 	a.
	 
	Any and all copyright rights, copyright applications, copyright registrations and like protections in each work or authorship and derivative work thereof, whether published or
unpublished and whether or not the same also constitutes a trade secret, now or hereafter existing, created, acquired or held; 
 

  

	 	b.
	 
	All mask works or similar rights available for the protection of semiconductor chips, now owned or hereafter acquired; 
 

  

	 	c.
	 
	Any and all trade secrets, and any and all intellectual property rights in computer software and computer software products now or hereafter existing, created, acquired or
held; 
 

  

	 	d.
	 
	Any and all design rights which may be available to Borrower now or hereafter existing, created, acquired or held; 
 

  

	 	e.
	 
	All patents, patent applications and like protections including, without limitation, improvements, divisions, continuations, renewals, reissues, extensions and
continuations-in-part of the same, including without limitation the patents and patent applications; 
 

  

	 	f.
	 
	Any trademark and servicemark rights, whether registered or not, applications to register and registrations of the same and like protections, and the entire goodwill of the
business of Borrower connected with and symbolized by such trademarks, including without limitation; 
 

  

	 	g.
	 
	Any and all claims for damages by way of past, present and future infringements of any of the rights included above, with the right, but not the obligation, to sue for and
collect such damages for said use or infringement of the intellectual property rights identified above; 
 

  

	 	h.
	 
	All licenses or other rights to use any of the Copyrights, Patents, Trademarks of Mask Works, and all license fees and royalties arising from such use to the extent permitted
by such license or rights; and 
 

  

	 	i.
	 
	All amendments, extensions, renewals and extensions of any of the Copyrights, Trademarks, Patents, or Mask Works; and 
 

 

 38 

Table of Contents

	 	j.
	 
	All proceeds and products of the foregoing, including without limitation all payments under insurance or any indemnity or warranty payable in respect of any of the foregoing.

 

  
 Borrower also has obligations under a Loan and Security Agreement of even date herewith which may prohibit
the sale, transfer, assignment or other disposition of any of the foregoing. 
  

	 	2.
	 
	It shall be an event of default under the Loan Documents between Borrower and Bank if there is a breach of any term of this Negative Pledge Agreement. 

  

	 	3.
	 
	Capitalized terms used but not otherwise defined herein shall have the same meaning as in the Loan Documents. 
 

  
 BORROWER: 
  
 OPTIO SOFTWARE, INC. 
  
 
	 
	 By:
 	 	 

	 
	 Name:
 	 	 

	 
	 Title:
 	 	 

 
  
 BANK: 
  

SILICON VALLEY BANK 
  
 
	 
	 By:
 	 	 

	 
	 Name:
 	 	 

	 
	 Title:
 	 	 

 
 

 39STOCK PURCHASE AGREEMENT

     THIS STOCK PURCHASE  AGREEMENT (this  "Agreement"),  is made as of April 9,
2002 between RATEXCHANGE  CORPORATION,  a Delaware  corporation  ("Seller"),  BL
PARTNERS  LLC, a California  limited  liability  company  ("Purchaser")  and RMG
PARTNERS  CORPORATION,  a Delaware  corporation  ("RMGP"),  under the  following
circumstances:

A. Seller is the  beneficial  and record  owner of One Hundred  (100)  shares of
Common Stock of RMGP (the "RMGP Shares").

B. Pursuant to that certain  Agreement  dated as of April 8, 2001 between Seller
and Purchaser (the "Option  Agreement"),  (1) RMGP was capitalized with $300,000
in cash and Two Million Two Hundred Thousand  (2,200,000) shares of Common Stock
issued by Seller (the "RTX  Capital  Shares") and (2)  Purchaser  was granted an
option to purchase all of Seller's  interest in RMGP,  including the RMGP Shares
(the "RMGP Purchase Option").

C. Under  Section 1 of the Option  Agreement  and Article IX of the RMGP bylaws,
the RMGP Purchase Option does not extend to the RTX Capital Shares which are not
"Controlled Shares", as defined in the RMGP bylaws.

D. Pursuant to a letter  addressed to Seller dated February 19, 2002,  Purchaser
has given notice of its intent to exercise the RMGP Purchase Option.

E. Schedule 1 attached  hereto sets forth the  determination  of the  Controlled
Shares as of the date of this Agreement in accordance with the Option  Agreement
and the RMGP bylaws.  The parties have agreed that in accordance with the Option
Agreement and Article IX of the RMGP bylaws,  immediately before the transfer of
the RMGP Shares to Purchaser  pursuant to the RMGP Purchase  Option,  RMGP shall
transfer to Seller 1,050,124 shares of Common Stock of Seller,  constituting the
RTX Capital Shares which are not Controlled Shares (the "Unvested RTX Shares").

F. The parties wish to confirm their  agreement with respect to the purchase and
sale of the RMGP Shares,  the  transfer of the Unvested RTX Shares,  and certain
related matters.

     NOW, THEREFORE, the parties hereto agree as follows:

     1. Transfer of Unvested RTX Shares.

          (a)  Transfer  of Shares.  Upon the  execution  and  delivery  of this
Agreement,  RMGP shall transfer the Unvested RTX Shares to Seller, by delivering
to Seller  stock  certificate(s)  representing  the  Unvested  RTX Shares,  duly
endorsed for transfer to Seller or accompanied  by an executed stock  assignment
separate from certificate.

                                       1
<PAGE>

          (b)  Certificate For Controlled  Shares.  To the extent that the stock
certificate(s) described in Section 1(a) immediately above represent RTX Capital
Shares in excess of the Unvested  RTX Shares,  Seller shall upon receipt of such
stock  certificate(s)  and the stock assignment  described in Section 1(a) above
deliver to RMGP a stock  certificate  representing  such RTX  Capital  Shares in
excess of the Unvested RTX Shares.

     2.  Section  83.  The fair  market  value of the RMGP  Shares is  $472,481,
including the fair market value of the Controlled Shares, which is $172,481. For
purposes of Internal  Revenue Code Section 83, the bargain  element is $172,481,
which Seller shall claim as a deduction and  Purchaser  shall include as income.
Schedule 2 attached  hereto  sets forth true and  correct  copies of the balance
sheet of RMGP as of the date of this Agreement, and the income statement of RMGP
for the period from January 1, 2002 to April 8, 2002. Such financial  statements
have been prepared in accordance with generally accepted accounting  principles,
and  fairly  present  the  financial  position  of RMGP  as of the  date of this
Agreement, and the results of its operations for the period from January 1, 2002
to April 8, 2002.

     3. Registration Rights.

          (a)  Registration.  Seller shall register with the SEC the RTX Capital
Shares via piggyback  registration  upon the next  registration  of  RateXchange
securities following the date hereof.

          (b)  Expenses.  All expenses  other than  underwriting  discounts  and
commissions incurred in connection with registrations, filings or qualifications
pursuant to this Section 3,  including  without  limitation,  all  registration,
filing and  qualification  fees,  printers' and  accounting  fees,  and fees and
disbursements of counsel for Seller shall be borne by Seller.

          (c)  Seller's  Obligations.  Whenever  Seller is  required  under this
Section  3  to  register  any  of  the  Controlled  Shares,   Seller  shall,  as
expeditiously as reasonably possible:

               (i) prepare and file with the Securities and Exchange  Commission
(the "SEC") a registration  statement with respect to such Controlled Shares and
cause such registration statement to become effective,  and, upon the request of
Purchaser,  keep such registration statement effective for a period of up to one
hundred  twenty (120)  successive  days or, if earlier,  until the  distribution
contemplated in such registration statement has been completed;

               (ii)  prepare  and  file  with  the  SEC  such   amendments   and
supplements to such registration statement and the prospectus used in connection
with  such  registration  statement  as may be  necessary  to  comply  with  the
provisions  of the  Securities  Act of 1933  (the  "Act")  with  respect  to the
disposition of all securities covered by such registration statement;

                                       2
<PAGE>

               (iii)   furnish  to  Purchaser   such  numbers  of  copies  of  a
prospectus,   including  a  preliminary  prospectus,   in  conformity  with  the
requirements of the Act, and such other documents as they may reasonably request
in order to facilitate the disposition of the Controlled Shares;

               (iv) register and qualify the Controlled  Shares under such other
securities  or Blue Sky laws of such  jurisdictions  as  shall be  requested  by
Purchaser;

               (v) in the event of any underwritten public offering,  enter into
and  perform  its  obligations  under an  underwriting  agreement,  in usual and
customary form, with the managing underwriter of such offering;

               (vi)  notify  Purchaser  at any time when a  prospectus  relating
thereto is required to be delivered  under the Act of the happening of any event
as a result of which the prospectus included in such registration  statement, as
then in effect,  includes  an untrue  statement  of a material  fact or omits to
state a material  fact  required to be stated  therein or  necessary to make the
statements  therein  not  misleading  in the  light  of the  circumstances  then
existing;

               (vii) cause all of the Controlled Shares  registered  pursuant to
this  Section  3 to be  listed  on each  securities  exchange  on which  similar
securities issued by Seller are then listed; and

               (viii)  provide a transfer agent and registrar for all Controlled
Shares registered  pursuant hereunder and a CUSIP number for all such Controlled
Shares, in each case not later than the effective date of such registration.

          (d)  Indemnification.  If any  Controlled  Shares  are  included  in a
registration  statement pursuant to this Section 3, then to the extent permitted
by law,  Seller  will  indemnify  and hold  harmless  Purchaser,  the  officers,
directors and members of Purchaser, legal counsel and accountants for Purchaser,
any underwriter (as defined in the Act) for Purchaser,  and each person, if any,
who  controls  Purchaser  or  underwriter  within the  meaning of the Act or the
Securities  Exchange Act of 1934 (the "1934 Act"),  against any losses,  claims,
damages or liabilities (joint or several) to which they may become subject under
the Act,  the 1934 Act or any state  securities  laws,  insofar as such  losses,
claims,  damages, or liabilities (or actions in respect thereof) arise out of or
are based upon any of the following statements, omissions or violations: (i) any
untrue  statement or alleged  untrue  statement of a material fact  contained in
such  registration  statement,  including  any  preliminary  prospectus or final
prospectus contained therein or any amendments or supplements thereto,  (ii) the
omission or alleged  omission to state  therein a material  fact  required to be
stated therein,  or necessary to make the statements therein not misleading,  or
(iii) any violation or alleged violation by Seller of the Act, the 1934 Act, any
state securities laws or any rule or regulation  promulgated  under the Act, the
1934 Act or any state securities  laws; and Seller will reimburse  Purchaser and
each such officer,  director,  member, underwriter or controlling person for any
legal  or  other  expenses  reasonably  incurred  by  them  in  connection  with
investigating or defending any such loss, claim, damage, liability or action.

                                       3
<PAGE>

          (e) Assignment.  The rights to cause Seller to register the Controlled
Shares pursuant to this Section 3 may be assigned to one or more  transferees or
assignees of the Controlled Shares.

     4. Purchase and Sale of the RMGP Shares.

          (a) Transfer.  Upon the terms and subject to the conditions herein set
forth,  Seller  hereby  sells and  delivers  the RMGP Shares to  Purchaser,  and
Purchaser hereby purchases the RMGP Shares from Seller,  for a purchase price of
Three Thousand Dollars ($3,000.00) per share, or a total purchase price of Three
Hundred Thousand Dollars ($300,000.00) (the "Purchase Price"), free and clear of
all liens, claims, pledges, charges, restrictions and encumbrances of any nature
whatsoever. The closing of the sale and purchase of the RMGP Shares contemplated
hereby shall take place upon the execution and delivery of this Agreement.

          (b)  Stock  Certificates.  Upon the  execution  and  delivery  of this
Agreement, Seller shall deliver to Purchaser the certificate or certificates for
the RMGP Shares,  duly endorsed for transfer to Purchaser or  accompanied  by an
executed  Stock  Assignment  Separate  From  Certificate  with  respect  to such
certificate(s).

          (c) Purchase Price. Upon the execution and delivery of this Agreement,
Purchaser  shall  deliver to Seller a cashier's  check  payable to Seller in the
amount of the Purchase Price.

          (d)  Corporate  Records.  Upon  the  execution  and  delivery  of this
Agreement,  Seller shall deliver to Purchaser the minute book, stock book, stock
ledger, corporate seal, and other corporate books and records of RMGP.

          (e) Resignation  and Release.  Upon the execution and delivery of this
Agreement,  Seller shall deliver the written resignation of D. Jonathan Merriman
as director of RMGP.

     5. Representations and Warranties of Seller. Seller represents and warrants
to Purchaser as follows:

          (a) Title to RMGP  Shares.  Seller is the owner,  beneficially  and of
record, of all of the RMGP Shares, which represent all of the outstanding shares
of capital  stock of RMGP.  Seller owns all of the RMGP Shares free and clear of
all liens,  encumbrances,  security  agreements,  options,  claims,  charges and
restrictions. Seller has full power and authority to transfer the RMGP Shares to
Purchaser  without the consent of any other  person.  Upon  delivery of the RMGP
shares to Purchaser pursuant to this Agreement,  Purchaser will receive good and
marketable title thereto, free and clear of all liens, claims,  encumbrances and
equities  whatsoever.  Following such transfer,  Seller will not own any further
interest in or to the stock or other securities of RMGP.

          (b) No Conflict.  The execution of this Agreement and the consummation
of the  transactions  contemplated  hereby  will not result in the breach of any
term or

                                       4
<PAGE>

provision  of,  or  constitute  a  default  under,   any  contract,   agreement,
instrument,  understanding,  judgment or decree to which Seller is a party or by
which Seller is bound.

          (c) No Undisclosed Liabilities.  Seller has incurred no liabilities or
obligations  for which RMGP may be obligated and which are  attributable to acts
and/or actions by Seller except as disclosed to and approved by Purchaser.

          (d) Status of RMGP Shares. The RMGP Shares are duly and validly issued
by RMGP, and are fully paid and non-assessable.

          (e) No Other Interest.  The RMGP Shares  represent the entire interest
of Seller in RMGP,  and RMGP does not owe any debt,  liability or  obligation to
Seller or any officer, director, subsidiary, or affiliate of Seller.

          (f) No Misstatements. No representation or warrant by Seller contained
in this Agreement and no document or certificate furnished or to be furnished to
Purchaser  by  Seller  in  connection   herewith,   or  with  the   transactions
contemplated hereby,  contains an untrue statement of material fact, or omits to
state a material fact necessary to make the statements of fact contained  herein
or therein not misleading.

     6.  Representations,  Warranties  and  Agreements of  Purchaser.  Purchaser
represents and warrants to and agrees with Seller as follows:

          (a)  Authority.  Purchaser has the full right,  power and authority to
enter into and perform its  obligations  under this Agreement and to acquire the
RMGP Shares, and this Agreement has been duly authorized, executed and delivered
by Purchaser  and  constitutes  the valid and binding  obligation  of Purchaser,
enforceable   against  it  in  accordance   with  its  terms,   except  as  such
enforceability may be limited by applicable bankruptcy,  insolvency, moratorium,
reorganization  or similar laws  affecting  creditors'  rights  generally and by
general equitable principles.

          (b) Restricted Securities. Purchaser understands and acknowledges that
(i) the RMGP Shares are restricted  securities (as defined under  Securities and
Exchange  Commission  Rule  144)  and may  not be  offered,  sold  or  otherwise
transferred  unless and until registered under the Securities Act or pursuant to
an  exemption  from  the   registration   requirements   thereof  and  (ii)  the
certificates  representing  the RMGP Shares will bear a legend  substantially in
the following form:

                    THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN
                    REGISTERED  UNDER THE SECURITIES ACT OF 1933,
                    AS  AMENDED  (THE   "SECURITIES   ACT"),   OR
                    APPLICABLE  STATE SECURITIES LAWS AND MAY NOT
                    BE OFFERED FOR SALE, SOLD, PLEDGED,  ASSIGNED
                    OR OTHERWISE  DISPOSED OF, AND NO TRANSFER OF
                    THE SECURITIES MAY BE EFFECTED BY THE COMPANY
                    OR ITS TRANSFER AGENT, IN THE ABSENCE OF SUCH
                    REGISTRATION OR ANY EXEMPTION THEREFROM.

                                       5
<PAGE>

     7.  Termination of Agreements.  Effective as of the date of this Agreement,
all agreements and understandings between Seller, on the one hand, and Purchaser
and/or  RMGP,  on the other  hand,  whether  oral or  written  (other  than this
Agreement),  are hereby  terminated,  including  without  limitation all revenue
sharing, expense sharing, and consulting agreements.

     8. Indemnification.

          (a) By Seller. Seller shall indemnify Purchaser and its affiliates and
subsidiaries,  and  each of their  respective  directors,  officers,  employees,
members and agents (each a "Purchaser Indemnified Person") and hold each of them
harmless  from  and in  respect  of any and all  losses,  damages,  liabilities,
reasonable expenses  (including,  without limitation,  expenses of investigation
and defense  and fees and  disbursements  of  counsel),  claims,  liens or other
obligations  of any nature  whatsoever,  including  the cost of  enforcing  this
provision  (collectively,  "Losses"),  that  may be  incurred  by any  Purchaser
Indemnified  Person  directly or indirectly  by virtue of or resulting  from the
inaccuracy  of any  representation  or the breach of any  warranty,  covenant or
agreement  made by Seller in this Agreement or in any  certificate,  document or
instrument delivered by Seller to Purchaser in connection with this Agreement.

          (b) By Purchaser.  Purchaser  shall  indemnify  Seller and each of its
agents (each a "Seller Indemnified  Person") and hold each of them harmless from
and in  respect  of any  and all  Losses  that  may be  incurred  by any  Seller
Indemnified  Person  directly or indirectly  by virtue of or resulting  from the
inaccuracy  of any  representation  or the breach of any  warranty,  covenant or
agreement made by Purchaser in this Agreement or in any certificate, document or
instrument  delivered by Purchaser to Seller (or to any agent or  representative
of Seller) in connection with this Agreement.

     9.  Closing.   The  execution  and  delivery  of  this  Agreement  and  the
consummation of the  transactions  contemplated by this Agreement shall occur at
the offices of Purchaser at 2 p.m. on the date of this Agreement.

     10. Submission to Jurisdiction; Service of Process; Governing Law.

          (a)  Jurisdiction  and Venue.  The  parties to this  Agreement  hereby
irrevocably  submit to the jurisdiction of any Federal or State court located in
the City and  County  of San  Francisco,  California  over any  suit,  action or
proceeding  arising  out of or relating to this  Agreement.  The parties  hereby
irrevocably  waive,  to the fullest  extent  permitted  by  applicable  law, any
objection  which  they may now or  hereafter  have to the laying of venue of any
such suit, action or proceeding brought in such court.

          (b) Service of  Process.  Service of process may be made in any manner
permitted by law.

          (c) Governing  Law.  This  Agreement  and the  transactions  described
herein  shall be governed by and  construed in  accordance  with the laws of the
State of California, without regard to choice-of-law provisions.

                                       6
<PAGE>

     11.  Notices.  All  notices,  requests,  demands  and other  communications
required  or  permitted  under this  Agreement  shall be in writing and shall be
deemed  to  have  been  duly  given,  made  and  received  only  when  delivered
(personally,  by facsimile,  by courier  service or by other  messenger) or when
deposited in the United States mails, registered or certified,  postage prepaid,
return receipt requested, addressed as set forth below:

         If to Purchaser:

         BL Partners,  LLC
         350 California Street, Suite 1780
         San Francisco, CA  94104
         Attention:  Sanjay Lillaney, Ph.D., Chief Executive Officer
         Telephone: (415) 544-4214
         Facsimile: (415) 434-4199

         If to Seller:

         RateXchange Corporation
         100 Pine Street, Suite 500
         San Francisco, CA 94111
         Attention: Jon Merriman and Christopher Aguilar
         Telephone: (415) 274-5650
         Facsimile: (415) 274-5651

     12. Miscellaneous.

          (a) Successors and Assigns.  This Agreement  shall be binding upon and
shall  inure to the benefit of the parties  hereto and their  respective  heirs,
personal representatives, successors and assigns.

          (b)  Severability.  If any  part  of  this  Agreement  is  held  to be
unenforceable  or invalid under,  or in conflict with, the applicable law of any
jurisdiction,  the  unenforceable,  invalid or  conflicting  part shall,  to the
extent  permitted  by  applicable  law, be narrowed or  replaced,  to the extent
possible,  with a judicial  construction in such  jurisdiction  that effects the
intent of the parties regarding this Agreement and such  unenforceable,  invalid
or conflicting part. To the extent permitted by applicable law,  notwithstanding
the unenforceability,  invalidity or conflict with applicable law or any part of
this Agreement,  the remaining parts shall be valid,  enforceable and binding on
the parties.

          (c)  Counterparts.  This  Agreement  may be  executed in any number of
counterparts,  each of which  shall be deemed to be an  original  as against any
party  whose  signature  appears  thereon,  and  all  of  which  shall  together
constitute one and the same instrument. This Agreement shall become binding when
one or more counterparts hereof,

                                       7
<PAGE>

individually or taken together,  shall bear the signatures of all of the parties
reflected hereon as the signatories.

          (d) Entire Agreement. This Agreement contains the entire understanding
between  the parties  hereto with  respect to the  subject  matter  hereof,  and
supersedes  all  prior  and   contemporaneous   agreements  and  understandings,
inducements or conditions, express or implied, oral or written, except as herein
contained,  except  that the  Option  Agreement  shall  stand  alone  and not be
modified by this Agreement.  This Agreement may not be modified or amended other
than by an agreement in writing.

          (e)  Further  Assurances.  If,  at any time  after the  execution  and
delivery of this  Agreement,  Purchaser  shall  consider or be advised  that any
assignments,  assurances or any other similar actions or things are necessary or
desirable to vest,  perfect or confirm of record or  otherwise in Purchaser  its
rights,  title or interest in, to or under any of the Shares,  Seller shall take
such  actions as may be  reasonably  necessary or desirable to vest in Purchaser
and to perfect or confirm in respect of Purchaser  any and all right,  title and
interest in, to and under such Shares.

          (f)  Expenses.  Seller  and  Purchaser  shall pay their own  expenses,
including the fees and expenses of their respective counsel (if any) incurred by
them in connection  with the sale and delivery of the Shares and the  execution,
delivery and performance of this Agreement.

          (g)  Reliance  On and  Survival  of  Representations  and  Warranties.
Notwithstanding  any  investigation  at any time conducted by any of the parties
hereto,   each  of  the  parties  hereto  shall  be  entitled  to  rely  on  the
representation  and  warranties  of  the  other  party  set  forth  herein.  All
representations  and warranties  set forth in this  Agreement  shall survive the
execution and delivery of this Agreement.

          (h) Headings.  The headings of the  paragraphs  of this  Agreement are
included for purposes of convenience only, and shall not affect the construction
or interpretation of any of its provisions.

                                       8
<PAGE>

     IN WITNESS  WHEREOF,  the parties hereto have executed this Agreement as of
the date first written above.

RATEXCHANGE CORPORATION                 BL PARTNERS LLC
a Delaware corporation                  a California limited liability company

By:  __________________________         By:  RMG Holdings Corporation
                                             a California corporation
                                             Its Manger
Title:  _______________________
                                             By:  ____________________________
                                                   Sanjay Lillaney, President
RMG PARTNERS CORPORATION
a Delaware corporation
                                             By:  ____________________________
                                                   Mark Burger, Secretary
By:  __________________________

Title:  _______________________

                                       9
<PAGE>

                                LIST OF SCHEDULES

Schedule       Description
--------       -----------

    1          Determination of Controlled Shares

    2          Financial Statements of RMGP

<PAGE>

                                   TRANSFER OF

                            RMG PARTNERS CORPORATION

                                       TO

                                BL PARTNERS, LLC

                                  CLOSING LIST

 No.     Agreement         Description
 ---      Section          -----------
          -------

 1         1(a)         Certificate for Unvested RTX Shares and Stock Assignment

 2         1(b)         Certificate for the Controlled Shares

 3         4(b)         Certificate for RMGP Shares and Stock Assignment

 4         4(c)         Cashier's check for $300,000

 5         4(d)         Minute book, stock book, stock ledger, corporate seal
                        and other corporate books and records of RMGP

 6         4(e)         Resignation of D. Jonathan Merriman

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