EXHIBIT 2.1
ASSET PURCHASE AGREEMENT
(PROJECT GREEN)
BY AND AMONG
▇▇▇▇▇▇▇▇ MEDICAL TRANSCRIPTION USA, INC.,
L & H INVESTMENT COMPANY N.V.,
AS PURCHASER
AND
APPLIED VOICE RECOGNITION, INC.,
E-DOCS HEALTH CARE INFORMATION SERVICES, INC. AND
A WORD ABOVE, INC.,
AS SELLERS
INDEX
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Page
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1. Purchase and Sale....................................................... 3
1.1 Purchase and Sale................................................. 3
1.2 Excluded Assets................................................... 3
1.3 Assumed Liabilities............................................... 4
1.4 Excluded Liabilities.............................................. 4
2. Consideration for Assets................................................ 4
3. Accounts Receivable Reconciliation; Security Interest................... 5
4. Representations and Warranties of Seller................................ 5
4.1 Organization and Existence........................................ 5
4.2 Sellers' Authority Relative to this Agreement..................... 6
4.3 Sellers' Authority to Conduct Business............................ 6
4.4 Rights to Purchase the Company Assets............................. 6
4.5 Title to Company Assets........................................... 6
4.6 Litigation........................................................ 6
4.7 Financial Statements.............................................. 7
4.8 Compliance with Laws.............................................. 7
4.9 Illegal Payments.................................................. 7
4.10 Employees........................................................ 7
2.15 Labor and Employee Relations..................................... 8
4.11 Licenses and Permits............................................. 8
4.12 Contracts........................................................ 8
4.13 Representations and Warranties Regarding the Shares and OTPI..... 8
4.14 Notes and Accounts Receivable.................................... 9
4.15 Present Compliance with Obligations and Laws..................... 9
4.16 Absence of Undisclosed Liabilities............................... 9
4.17 Payment of Taxes................................................. 10
4.18 Intellectual Property Rights..................................... 10
4.19 Employee Benefits and ERISA...................................... 10
4.20 Insurance........................................................ 10
4.21 Disclosure of Material Information............................... 11
4.22 Year 2000 Compliance............................................. 11
4.23 Covenant to Reserve Shares....................................... 11
4.24 Covenant to Make Filings......................................... 11
4.25 Transition....................................................... 11
5. Representations, Warranties and Covenants of Purchaser.................. 13
5.1 Organization and Existence........................................ 13
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5.2 Purchasers' and ▇▇▇▇▇▇▇▇'▇ Authority Relative to this Agreement... 13
5.3 Title to Notes, Stock and Warrants................................ 13
5.4 Acquisition Entirely for Own Account.............................. 13
5.5 Reliance Upon ▇▇▇▇▇▇▇▇'▇ Representations.......................... 14
5.6 Receipt of Information............................................ 14
5.7 Investment Experience............................................. 14
5.8 Accredited Investor............................................... 14
5.9 Restricted Securities............................................. 14
5.10 Legends........................................................... 15
5.11 Foreign Investor.................................................. 15
5.12 Stock Options..................................................... 15
5.13 Transition........................................................ 15
6. Nature and Survival of Representations and Warranties; Indemnities....... 16
6.1 Nature of Statements.............................................. 16
6.2 Survival of Representations, Warranties and Covenants............. 16
6.3 Sellers' Indemnity................................................ 16
6.4 Purchasers' and ▇▇▇▇▇▇▇▇'▇ Indemnity.............................. 16
7. The Closing.............................................................. 18
7.1 Lien Releases..................................................... 18
7.2 ▇▇▇▇ of Sale, Assignment and Assumption Agreement................. 18
7.3 Assignment and Assumption of ▇▇▇▇▇▇▇ Employment Agreement......... 18
7.4 Amendment II to Value Added Reseller Agreement.................... 19
7.5 Technology License Agreement...................................... 19
7.6 Medical Transcription Services Agreement.......................... 19
7.7 Termination of Voting Agreement................................... 19
7.8 Termination of Co-Sale and Tag-Along Rights Agreement............. 19
7.9 Series D Stock.................................................... 19
7.10 LHIC Note......................................................... 19
7.11 LHSP Note......................................................... 20
7.12 LISP Warrants..................................................... 20
7.13 Replacement Warrants.............................................. 20
7.14 UCC-3 Termination Statements...................................... 20
7.15 Termination of Trademark Security Agreement....................... 20
7.16 Termination of Patent Security Agreement.......................... 20
7.17 Termination of Copyright Security Agreement....................... 20
7.18 Pledged Stock..................................................... 20
7.19 UCC-1 Financing Statement......................................... 20
7.20 OTPI Stock Certificates........................................... 20
7.21 Trust Agreements.................................................. 20
7.22 Officer and Director Resignation Letters.......................... 20
7.23 Termination of Employment Agreements.............................. 21
7.24 Employee Termination Letters...................................... 21
7.25 Indemnity Agreements.............................................. 21
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7.26 Sellers' Legal Opinion............................................ 21
7.27 Purchasers' Legal Opinions........................................ 21
7.28 Apportionments; Closing Statement................................. 22
7.29 Cash Portion of Consideration..................................... 22
8. Conditions to Closing.................................................... 22
9. Further Acts............................................................. 22
10. Possession............................................................... 23
11. Expenses and Commissions................................................. 23
12. Miscellaneous............................................................ 23
12.1. Notices............................................................ 23
12.2. Assignment......................................................... 25
12.3. Entire Agreement................................................... 25
12.4. Schedules and Exhibits............................................. 25
12.5. Governing Law; Venue............................................... 25
12.6. Dispute Resolution................................................. 25
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ASSET PURCHASE AGREEMENT
(Project Green)
This ASSET PURCHASE AGREEMENT (the "Agreement"), is executed on January 7,
2000, to be effective as of December 20, 1999 (the "Effective Date"), is by and
among ▇▇▇▇▇▇▇▇ MEDICAL TRANSCRIPTION USA, INC., a Delaware corporation
("▇▇▇▇▇▇▇▇"), L & H INVESTMENT COMPANY N.V., a Belgium company ("LHIC") (LHIC is
sometimes hereinafter referred to as a "Purchaser", and as the "Purchasers"),
and APPLIED VOICE RECOGNITION, INC., a Delaware corporation doing business as e-
▇▇▇▇.▇▇▇ ("AVRI"), E-DOCS HEALTH CARE INFORMATION SERVICES, INC., a Delaware
corporation ("HCIS"), and A WORD ABOVE, INC., a Texas corporation ("AWA"; AVRI,
HCIS and AWA are sometimes hereinafter each referred to individually as a
"Seller", and collectively as the "Sellers").
W I T N E S S E T H:
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WHEREAS, ▇▇▇▇▇▇▇▇ is an indirect, wholly-owned subsidiary of LHIC;
WHEREAS, HCIS is the wholly-owned subsidiary of AVRI, and AWA is a wholly-
owned subsidiary of HCIS;
WHEREAS, Sellers are engaged in the medical transcription business (the
"Business");
WHEREAS, as of December 31, 1998, AVRI issued to LHIC (i) 5,000 shares of
Series D Preferred Stock of AVRI (the "Series D Stock"), and (ii) three (3)
separate warrant agreements to purchase an aggregate of 2,500,000 shares of
common stock of AVRI at an exercise price of $1.25 per share (the "1998
Warrants"), which Series D Stock and 1998 Warrants were issued pursuant to that
certain Series D Preferred Stock and Warrant Purchase Agreement dated as of
December 31, 1998 (the "Series D Purchase Agreement");
WHEREAS, as of May 24, 1999, AVRI issued to LHIC that certain Convertible
Promissory Note (the "LHIC Note"), in the original principal amount of
$1,500,000, which LHIC Note was issued pursuant to that certain Convertible
Promissory Note Purchase Agreement dated May 24, 1999 (the "LHIC Note Purchase
Agreement"), executed by and between AVRI and LHIC;
WHEREAS, as of May 24, 1999, AVRI issued to LHIC one (1) warrant agreement to
purchase such number of shares of common stock of AVRI as determined in
accordance with a formula set forth in such warrant agreement at a price of
$1.25 per share (the "1999 Warrants"), which 1999 Warrants were issued pursuant
to that certain LHIC Note Purchase Agreement (the 1998 Warrants and the 1999
Warrants are collectively referred to herein as the "LHIC Warrants");
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WHEREAS, as of November 5, 1999, AVRI issued to LERNOUT & HAUSPIE SPEECH
PRODUCTS, N.V., a Belgium company ("LHSP"), that certain Convertible Secured
Promissory Note (the "LHSP Note"), in the original principal amount of
$2,000,000, which LHSP Note was issued pursuant to that certain Convertible
Secured Promissory Note Purchase Agreement dated November 5, 1999, executed by
and between AVRI and LHSP;
WHEREAS, as security for the repayment of the LHIC Note and the LHSP Note,
LHIC and LHSP collectively hold a first lien priority security interest in all
of the assets of AVRI other than accounts receivable pursuant to that certain
Security Agreement dated as of November 5, 1999 (the "Security Agreement"),
which lien is evidenced by those certain UCC Financing Statements executed by
AVRI for the benefit of LHIC and LHSP listed on SCHEDULE A attached hereto (the
"Financing Statements");
WHEREAS, as further security for the repayment of the LHIC Note and the LHSP
Note, AVRI granted to LHIC and LHSP a first lien priority security interest in
AVRI's patents, trademarks and copyrights pursuant to that certain (i) Patent
Security Agreement dated as of November 5, 1999 (the "Patent Security
Agreement"), filed for record in the United States Patent and Trademark Office;
(ii) Trademark Security Agreement dated as of November 5, 1999 (the "Trademark
Security Agreement"), filed for record in the United States Patent and Trademark
Office; and (iii) Copyright Security Agreement dated as of November 5, 1999 (the
"Copyright Security Agreement"), filed for record in the United States Copyright
Office, each executed by and among AVRI, LHIC and LHSP;
WHEREAS, as further security for the repayment of the LHIC Note and the LHSP
Note, AVRI pledged to LHIC and LHSP all of the stock owned by AVRI in HCIS, and
all of the stock owned by HCIS in AWA and in Outsource Transcription
Philippines, Inc., a stock corporation formed under the laws of the Republic of
the Philippines ("OTPI"), pursuant to that certain Pledge Agreement dated as of
November 5, 1999 (the "Pledge Agreement"), executed by and among AVRI, LHIC and
LHSP;
WHEREAS, as of the Effective Date, LHSP has assigned to LHIC the LHSP Note;
WHEREAS, pursuant to the terms of that certain Term Sheet dated as of the
Effective Date, executed by and among AVRI, LHIC and LHSP, Sellers desire to
sell to Purchasers, and Purchasers desire to purchase from Sellers (with
Purchasers' designee, ▇▇▇▇▇▇▇▇, designated to take title to), certain assets
owned by Sellers and utilized by Sellers in connection with the Business, and
Sellers, Purchasers and ▇▇▇▇▇▇▇▇ desire to set forth the terms and conditions of
their agreement;
NOW THEREFORE, for and in consideration of the premises, and the mutual
promises and covenants contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
Sellers, Purchasers and ▇▇▇▇▇▇▇▇ hereby agree as follows:
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1. PURCHASE AND SALE.
1.1. PURCHASE AND SALE. On the terms and subject to the conditions of this
Agreement, Sellers agree to grant, sell, transfer, convey and deliver to
▇▇▇▇▇▇▇▇, as Purchasers' designee, free and clear of all liens, claims,
encumbrances and interests (except those specifically set forth herein), and
Purchasers agree to purchase from Sellers (with ▇▇▇▇▇▇▇▇ designated to take
title), certain assets of Sellers (collectively, the "Company Assets"), which
Company Assets shall consist of the following:
(a) The 997 shares of common stock of OTPI (the "OTPI Stock");
(b) Those certain leases of real property covering the facilities
commonly known as (i) ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, (ii)
▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, and (iii) ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, together with the improvements, if any,
located within such leased facilities (collectively, the "Assigned
Facilities");
(c) The machinery, equipment, furniture, fixtures, supplies, materials
and other tangible personal property (other than computer hardware and
software) that are described on SCHEDULE 1.1(C) attached hereto (the
"Company Personal Property");
(d) All contracts and agreements listed on SCHEDULE 1.1(D) attached
hereto, including, without limitation, the contracts of each of the Assumed
Contractors (as defined in Section 4.10) (the "Assigned Contracts"); and
all warranties and guarantees, if any, originally given to Sellers relating
to all or any portion of the Company Personal Property (the "Warranties");
(e) All rights of Sellers in and to the computer hardware and computer
software listed on SCHEDULE 1.1(E) attached hereto (the "Computer Hardware
and Software");
(f) All rights of Sellers, if any, in and to the trade names, trade
marks, copyrights, patents and other intellectual property listed on
SCHEDULE 1.1(F) attached hereto (the "Intellectual Property");
(g) The licenses, permits and certifications listed on SCHEDULE 1.1(G)
attached hereto (the "Licenses and Permits");
(h) The accounts and notes receivable of Sellers listed on SCHEDULE
1.1(H) (collectively, the "Accounts Receivable"); and
(i) All customer lists used in operating the portion of the Business
represented by the Company Assets, which lists shall be delivered by
Sellers to ▇▇▇▇▇▇▇▇ at Closing.
1.2. EXCLUDED ASSETS. Except for the Company Assets specifically described
herein, no other assets owned by Sellers shall be conveyed pursuant to this
Agreement.
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1.3. ASSUMED LIABILITIES . On the terms and subject to the conditions of
this Agreement, ▇▇▇▇▇▇▇▇, at the Closing, agree to assume all of the following
obligations of Sellers, but only to the extent that such obligations arise after
the Effective Date (collectively, the "Assumed Liabilities"):
(a) The liabilities and obligations of Sellers under the Assigned
Contracts (including the contracts of the Assumed Employees and the Assumed
Contractors) and the leases for the Assigned Facilities;
(b) The liabilities and obligations of Sellers listed on SCHEDULE 1.3
attached hereto; and
(c) The accrued vacation, sick leave and other obligations and
liabilities relating to the Executives, the Assumed Employees, the Hired
Employees, and the Assumed Contractors (each as defined in Section 4.10).
At the Closing, ▇▇▇▇▇▇▇▇ will reimburse AVRI for all employment and
contract costs accruing after the Effective Date for the Executives, the
Assumed Employees, the Hired Employees and the Assumed Contractors, such
costs to include salary, bonuses, "stay bonuses" and all benefits,
including taxes and insurance, with such amount to be paid being
specifically set forth on the Closing Statement (as defined in Section
7.28(b)).
1.4. EXCLUDED LIABILITIES. Except for the Assumed Liabilities, ▇▇▇▇▇▇▇▇
shall not assume or be subject to, or in any way be liable or responsible for,
and Sellers shall retain responsibility for all liabilities and obligations of
Sellers of any kind or nature, known or unknown, relating to the Company Assets,
the Business or Sellers.
2. CONSIDERATION FOR ASSETS. The consideration to be given to Sellers by the
Purchasers and ▇▇▇▇▇▇▇▇ for the Company Assets (the "Consideration") shall be as
follows:
(a) the surrender to AVRI for cancellation of the LHIC Note;
(b) the surrender to AVRI for cancellation of the LHSP Note;
(c) the surrender to AVRI for cancellation of the certificate held by
LHIC evidencing the Series D Stock for retirement and cancellation,
accompanied by a blank stock power duly endorsed by LHIC;
(d) the surrender to AVRI for cancellation of the LHIC Warrants in
exchange for the issuance and delivery by AVRI to ▇▇▇▇▇▇▇▇ of (i) new
warrants (the "Replacement Warrants") to purchase 800,000 shares of common
stock of AVRI at an exercise price of $0.37 per share, and (ii) a
Registration Rights Agreement between AVRI and ▇▇▇▇▇▇▇▇ (the "▇▇▇▇▇▇▇▇
Registration Rights Agreement");
(e) the payment to Sellers by ▇▇▇▇▇▇▇▇ of an amount equal to the face
value of the Accounts Receivable on the Closing Date, eighty percent (80%)
of which amount shall be paid by ▇▇▇▇▇▇▇▇ to Sellers at the Closing (the
"Closing A/R Payment"), and the balance will be paid pursuant to Section 3;
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(f) ▇▇▇▇▇▇▇▇'▇ offer of employment to each of the Hired Employees,
pursuant to the employee termination letters described in Section 7.24.
(g) the assumption by ▇▇▇▇▇▇▇▇ of the Assumed Liabilities, as
reflected in the Closing Statement.
3. ACCOUNTS RECEIVABLE RECONCILIATION; SECURITY INTEREST.
(a) ▇▇▇▇▇▇▇▇ shall collect the Accounts Receivable after the Closing.
Sellers and ▇▇▇▇▇▇▇▇ shall reconcile the collected Accounts Receivable
within 120 days after the Closing Date. Sellers shall cooperate with
▇▇▇▇▇▇▇▇ and take all reasonable action to notify the account debtors
obligated under the Accounts Receivable to forward payment to ▇▇▇▇▇▇▇▇
instead of Sellers or Sellers' lockbox. Sellers shall hold in trust for
▇▇▇▇▇▇▇▇ and promptly deliver to ▇▇▇▇▇▇▇▇, in the same form received, any
payments that Sellers receive with respect to the Accounts Receivable. If
the aggregate amount received by ▇▇▇▇▇▇▇▇ with respect to the Accounts
Receivable after the Closing exceeds the Closing A/R Payment, then ▇▇▇▇▇▇▇▇
shall pay to Sellers in cash the amount by which such aggregate collections
exceed the Closing A/R Payment. No adjustment shall be made if the
aggregate amount of Accounts Receivable collected by ▇▇▇▇▇▇▇▇ after the
Closing is less than the Closing A/R Payment. Notwithstanding the
foregoing, however, during the interim period between the Closing Date and
the date of such final reconciliation of the Accounts Receivable, as
▇▇▇▇▇▇▇▇ collects the Accounts Receivable, ▇▇▇▇▇▇▇▇ will forward to the
Sellers on a monthly basis any aggregate collections in excess of the
Closing A/R Payment. From and after the Closing Date, ▇▇▇▇▇▇▇▇ shall
prepare and deliver to AVRI within five (5) days after the end of each
month a written report listing the Accounts Receivable collected by
▇▇▇▇▇▇▇▇ during the prior month; provided, however, that upon ▇▇▇▇▇▇▇▇'▇
collection of an amount equal to the Closing A/R Payment, ▇▇▇▇▇▇▇▇ will
prepare and deliver to AVRI on Tuesday of each week during the remainder of
the interim period between the Closing Date and the date of such final
reconciliation a written report listing the Accounts Receivable collected
by ▇▇▇▇▇▇▇▇ during the prior week. Such monthly and weekly reports shall be
in such form as is mutually agreeable to ▇▇▇▇▇▇▇▇ and AVRI. ▇▇▇▇▇▇▇▇'▇
obligation to make payments required hereunder shall be limited to the
extent provided in Section 6.5 (which section sets forth ▇▇▇▇▇▇▇▇'▇ set off
rights with respect to costs incurred by ▇▇▇▇▇▇▇▇ to bring OTPI into
compliance with Philippines corporate and tax laws with respect to prior
transactions involving the transfers of the stock of OPTI).
(b) In the event that the purchase of the Accounts Receivable provided
for herein is deemed to be a financing rather than a true sale, as security
for Sellers' obligation to repay the financing associated with the Accounts
Receivable, the Sellers hereby grant to ▇▇▇▇▇▇▇▇ a continuing security
interest in and line on, and assign, transfer, set over and pledge to
▇▇▇▇▇▇▇▇, the Accounts Receivable and the proceeds thereof.
4. REPRESENTATIONS AND WARRANTIES OF SELLER. Each Seller jointly and
severally represents and warrants to and agrees with Purchasers and ▇▇▇▇▇▇▇▇
that:
4.1 ORGANIZATION AND EXISTENCE. Each Seller is a corporation duly
organized and validly existing and in good standing under the laws of the state
of its incorporation and has all
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requisite corporate power to own, lease and otherwise operate its properties and
assets and to carry on its business as now being conducted and is duly qualified
as a foreign corporation and is in good standing in each jurisdiction in which
the nature of its business or the location of its properties requires such
qualification, and is duly authorized and licensed and, except as set forth on
SCHEDULE 4.1, has all licenses, franchises, permits and other governmental
authorizations required under all applicable laws, regulations, ordinances and
orders of public authorities to carry on its business in the places and in the
manner as now conducted.
4.2 SELLERS' AUTHORITY RELATIVE TO THIS AGREEMENT. This Agreement has
been duly executed and delivered by each Seller, this Agreement is a valid and
binding obligation of each Seller, and no further corporate or shareholder
action is necessary with respect to any Seller to make this Agreement a valid
and binding obligation of each Seller, enforceable in accordance with its terms.
Neither the execution, delivery nor performance of this Agreement by any Seller
will:
(a) Violate any order, writ, injunction or decree of any court,
administrative agency or governmental body;
(b) Require any consent, authorization or approval of any person,
entity or governmental authority; or
(c) Result in the creation or imposition of any lien, charge or
encumbrance upon the property of the Sellers.
4.3 SELLERS' AUTHORITY TO CONDUCT BUSINESS. Except as set forth on
SCHEDULE 4.1, each Seller has all requisite power and authority to carry on its
business as now conducted and to enter into and perform this Agreement.
4.4 RIGHTS TO PURCHASE THE COMPANY ASSETS. Other than ▇▇▇▇▇▇▇▇ pursuant to
this Agreement, no person, firm or entity has any right to purchase any of the
Company Assets or any part thereof.
4.5 TITLE TO COMPANY ASSETS. Except as set forth in SCHEDULE 4.5, Sellers
have good title to the Company Assets, are in possession of all of the Company
Assets, and will convey the Company Assets to ▇▇▇▇▇▇▇▇, free and clear of all
liens, claims, security interests and encumbrances.
4.6 LITIGATION. Except for matters described in SCHEDULE 4.6, there is no
action, suit, claim, proceeding, investigation or arbitration proceeding pending
(or, to the knowledge of Sellers', threatened) against or otherwise involving
Sellers or OTPI or any of the officers, directors, former officers or directors,
employees, shareholders or agents of Sellers (in their capacities as such) and
there are no outstanding court orders to which any of the Sellers or OTPI are a
party or by which any of their assets are bound, any of which (a) question this
Agreement, or any action to be taken hereunder or affect the transactions
contemplated hereby, or (b) materially restrict the present business properties,
operations, prospects, assets or condition, financial or otherwise, of Sellers,
or (c) will result in any materially adverse change in
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the business, properties, operations, prospects, assets or the condition,
financial or otherwise, of Sellers.
4.7 FINANCIAL STATEMENTS. AVRI has heretofore furnished Purchasers and
▇▇▇▇▇▇▇▇ with complete copies of all currently available (i) audited financial
statements relating to AVRI for (a) the year ended December 31, 1998, (b) the
quarter ended September 30, 1999, and (ii) unaudited financial statements for
each of the months ended October 31, 1999 and November 30, 1999, including in
each case, income statements through such dates and balance sheets as of such
dates (the "Seller Financial Statements"). The Seller Financial Statements are
true and complete in all material respects, have been prepared from the books
and records of AVRI in accordance with generally accepted accounting principles
consistently applied throughout the entire period presented (except as disclosed
therein and except for the unaudited financial statements which do not contain
notes) for the periods reflected therein. The balance sheets contained within
the Seller Financial Statements fairly present the financial condition of AVRI
as of their respective dates; and the income statements contained within the
Seller Financial Statements fairly present the results of operations of AVRI for
their respective periods. None of the Seller Financial Statements, as of the
dates and the periods thereof, misstates or omits to state any liability,
absolute or contingent, the omission of which renders the Seller Financial
Statements materially misleading.
4.8 COMPLIANCE WITH LAWS. Except as set forth on SCHEDULE 4.1, Sellers
have each complied in all material respects with all applicable foreign,
federal, state, municipal and other political subdivision or governmental agency
statutes, ordinances and regulations, including, without limitation, those
imposing taxes, in every applicable jurisdiction, in respect of the ownership of
their respective properties and the conduct of their respective businesses, and
Sellers are not parties to any investigation or inquiry by any foreign, federal,
state or local governmental body or agency pending or, to Sellers' knowledge,
threatened into the business, operations, affairs or properties of Sellers.
4.9 ILLEGAL PAYMENTS. None of the Sellers, OTPI nor any director, officer,
employee or agent of the Sellers or OTPI, have, directly or indirectly, given or
agreed to give any illegal payment (in kind or in cash), gift or similar benefit
to any customer, supplier, governmental employee, lobbyist, labor union,
political action committee, candidate for public office or other person or
entity who is or may be in a position to help or hinder the business of the
Sellers which (i) might subject the Company Assets to any damage or penalty in
any civil, criminal or governmental litigation or proceeding, (ii) if not given
in the past, might have had a material adverse effect on the Company Assets, or
(iii) if not continued in the future, might materially adversely affect the
Company Assets.
4.10 EMPLOYEES. Attached hereto as SCHEDULE 4.10 is a schedule listing the
names of certain officers and employees of the Sellers that are employed
pursuant to employment agreements with Sellers that ▇▇▇▇▇▇▇▇ will employ
pursuant to employment agreements to be executed between such employees and
▇▇▇▇▇▇▇▇ at Closing (the "Executives"). Also listed on Schedule 4.10 is a list
of employees who have employment agreements with Sellers that ▇▇▇▇▇▇▇▇ will
assume at the Closing (the "Assumed Employees"). Also listed on SCHEDULE 4.10
is a list of employees that do not have employment agreements with Sellers but
that ▇▇▇▇▇▇▇▇ has agreed to employ after Closing (the "Hired Employees"). Also
listed on SCHEDULE 4.10 is a list of
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independent contractors who have written or oral agreements with Sellers for the
provision of medical transcription services (the "Assumed Contractors"). Nothing
herein is intended to, nor shall it be construed to, provide any third party
beneficiary rights upon any of the Executives, Hired Employees or the Assumed
Contractors. Except with respect to H. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, OTPI and as shown on
SCHEDULE 4.10 and SCHEDULE 1.1(D), there are no currently effective consulting
or employment agreements or other agreements with individual consultants or
employees to which Sellers are a party or of which Sellers are a beneficiary
(including noncompetition covenants) relating to the portion of the Business
made up of the Company Assets.
4.11 LICENSES AND PERMITS. SCHEDULE 1.1(G) describes all material
Licenses and Permits relating to the Company Assets, all of which have been
obtained by the Company and are valid and in full force. Copies of any such
Licenses and Permits have heretofore been furnished to the Purchasers and
▇▇▇▇▇▇▇▇. Each of the Licenses and Permits is in full force and effect and
Sellers are current on all of their obligations with respect thereto. No
notices of violations of any such Licenses and Permits have been received by the
Sellers, and no proceeding is pending, or, to Sellers' knowledge, threatened
seeking the revocation or limitation of any of such Licenses and Permits.
4.12 CONTRACTS. A true copy of each Assigned Contract (including the leases
covering the Assigned Facilities) listed in SCHEDULE 1.1(D) has heretofore been
made available to the Purchasers and ▇▇▇▇▇▇▇▇, and each Assigned Contract is in
full force and effect and the parties thereto are not in default thereunder.
4.13 REPRESENTATIONS AND WARRANTIES REGARDING THE SHARES AND OTPI.
Sellers hereby make the following additional representations and warranties to
▇▇▇▇▇▇▇▇ regarding the OTPI Stock:
(a) The authorized capital stock of OTPI consists of 4,000 shares of
common stock, $100 par value, of which 1,000 shares are issued and
outstanding on the Effective Date, of which HCIS owns 997 shares. OTP has
no treasury shares. There are no existing subscriptions, options, warrants,
calls, obligations or agreements (voting or otherwise) relating to any of
the authorized or outstanding capital stock of OTPI.
(b) OTPI has no subsidiaries and does not, directly or indirectly, own
or control any capital stock, bonds or other securities of, or have any
proprietary interest in, any corporation, association, partnership, firm,
joint venture or other business organization or enterprise, and OTPI does
not, directly or indirectly, control the management of any such entities.
(c) OTPI has (i) good and indefeasible title to all of its assets
reflected on any of the schedules attached hereto as being owned by OTPI,
and (ii) right to possession of all such assets, free and clear of all
liens, mortgages, pledges, title retention agreements, and security
interests. To the Seller's knowledge, (i) the buildings, plants,
structures, appurtenances, machinery, equipment and other property owned or
used by OTPI have been maintained and repaired and are in good operating
condition, ordinary wear and tear excepted, and are free from any known
defects, except such as require routine maintenance and except such minor
defects as do not substantially interfere with the continued use thereof;
and (ii) no written notice of any violation of building or
8
zoning laws or other ordinances, regulations or provisions of law relating
to such assets and their use have been received by Sellers or OTPI.
(d) Attached hereto as SCHEDULE 4.13(D) is a list setting forth the
name of each bank, savings and loan or other financial institution in which
OTPI has any account or safe deposit box, the style and number of each such
account or safe deposit box and the names of all persons authorized to draw
thereon or have access thereto.
(e) OTPI has no collective bargaining agreements with any labor
unions. As of the Closing Date, there have not been and there are not
pending or, to Seller's knowledge, threatened, any labor disputes, strikes
or work stoppages which may have a materially adverse effect upon the
continued business or operation of OTPI.
Purchasers and ▇▇▇▇▇▇▇▇ hereby acknowledge that Purchasers' and ▇▇▇▇▇▇▇▇
are aware that OTPI may not be in compliance with applicable laws with respect
to, without limitation, employment practices and procedures, provision of
benefits to its employees, filing of tax returns, payment of taxes and filing of
corporate documents with the applicable authorities. Section 6.5 sets forth the
terms relating to resolving the non-compliance issues.
4.14 NOTES AND ACCOUNTS RECEIVABLE. The allowance for doubtful accounts
shown on SCHEDULE 1.1(H) has been determined in a manner consistent with that
applied in the preparation of the Seller Financial Statements, and such
allowance is adequate to account for those accounts receivable and notes
receivable that are not expected to be collected by the Sellers in the ordinary
course of the Sellers' business. As of the Closing Date, each of the Accounts
Receivable will be (a) valid and enforceable claims, (b) which arose out of
transactions with unaffiliated parties, and (c) to the Sellers' knowledge
subject to no set-off, defense or counterclaim. Seller has not entered into any
agreement for the prepayment (whether actual or accrued) of services to be
performed after the Effective Date. No agreements or deductions or discounts
have been made with respect to any services to be performed on or after the
Effective Date or to encourage or induce the early collection of Accounts
Receivable. None of Accounts Receivable has at any time been placed for
collection with any attorney, collection agency or similar individual or entity.
4.15 PRESENT COMPLIANCE WITH OBLIGATIONS AND LAWS. Each Seller is not:
(a) in violation of its Certificate of Incorporation or Articles of
Incorporation, as applicable, to its bylaws; (b) in default in the performance
of any material obligation, agreement or condition of any material debt
instrument which (with or without the passage of time or the giving of notice)
affords to any person the right to accelerate any material indebtedness or
terminate any material right; (c) in material default of or material breach of
(with or without the passage of time or the giving of notice) any other material
contract to which it is a party or by which it or any of the Company Assets are
bound; or (d) except as disclosed on SCHEDULE 4.1, in material violation of any
law, regulation, administrative order or judicial order applicable to it or its
business or the Company Assets.
4.16 ABSENCE OF UNDISCLOSED LIABILITIES. As of the date of the most recent
Seller Financial Statements, Seller had no material liabilities of any nature,
whether accrued,
9
absolute, contingent or otherwise (including without limitation liabilities as
guarantor or otherwise with respect to obligations of others, or liabilities for
taxes due or then accrued or to become due), except: (a) liabilities stated or
adequately reserved against on the Seller Financial Statements; (b) liabilities
arising in the ordinary course of business since the date of the Seller
Financial Statements; and (c) liabilities disclosed in the schedules hereto.
4.17 PAYMENT OF TAXES. Other than with respect to OTPI, Sellers have filed
all Federal, state, local, and foreign government income, excise, gross receipts
and franchise tax returns, real estate and personal property tax returns, sales
and use tax returns and all other tax returns required to be filed by them, and
they have paid all taxes owing by them except taxes which have not yet accrued
or otherwise become due, for which adequate provision has been made in the
Seller Financial Statements. Except as specifically provided in this Agreement,
all transfer, excise and other taxes payable to any jurisdiction by reason of
the sale and transfer of the Company Assets pursuant to this Agreement shall be
paid or provided for by Seller.
4.18 INTELLECTUAL PROPERTY RIGHTS.
(a) For purposes of this Section 4.18, "Intellectual Property" means
all patents, patent applications, trade marks (whether registered or
unregistered) or service marks, trade marks, trade names, copyrights,
applications to register or registrations of any of the foregoing,
inventions, processes, methods, trade secrets, know-how, employee invention
disclosures, licenses and computer software (in both source code and object
code form), owned or used, or held for use by, Sellers.
(b) All rights of ownership of, or material licenses to use,
Intellectual Property held by Sellers and that are included in the Company
Assets are listed on SCHEDULE 1.1(E). There are no Intellectual Property
rights other than those set forth on SCHEDULE 1.1(E), necessary to or
regularly used in, the conduct of the portion of the Business made up of
the Company Assets being transferred hereunder.
(c) No claim is pending or, to the best knowledge of Seller,
threatened, relating to Seller's ownership or present or past use of the
Intellectual Property or that alleges that such ownership or present or
past use conflicts with or infringes upon any rights of any third party.
4.19 EMPLOYEE BENEFITS AND ERISA. The Sellers have an employee funded 401K
savings plan in which certain of their employees who meet the applicable
eligibility requirements are entitled to participate. Sellers are current on
their obligations to deposit employee withholdings into the 401K savings plan.
Sellers do not have any other profit sharing plans, programs or arrangements
relating to employee benefits or fringe benefits.
4.20 INSURANCE. Except for amounts deductible under policies of insurance
maintained by the Sellers, Sellers are not, nor have been at any time, subject
to any liability as a self-insurer of the business or assets of Sellers that is
reasonably likely to have a material adverse effect upon the business, assets,
revenues, condition (financial or otherwise) or prospects of Sellers. There are
no claims pending or, to the knowledge of Sellers, overtly threatened, under
10
any of Sellers' policies of insurance, or disputes with insurers, and all
premiums due and payable thereunder have been paid, and all such policies are in
full force and effect in accordance with their respective terms. No notice of
cancellation or termination has been received with respect to any such policy.
4.21 DISCLOSURE OF MATERIAL INFORMATION. Neither this Agreement nor any
schedule or exhibit hereto or certificate issued pursuant hereto contains any
untrue statement of a material fact, or omits to state a material fact necessary
to make the statements herein or therein not misleading, relating to the
business or affairs of Sellers.
4.22 YEAR 2000 COMPLIANCE. To the best of Sellers' knowledge, all hardware,
software and embedded systems owned, leased or licensed and currently used by
Sellers, including any hardware, software and embedded systems used in
connection with product and service development, operations and production,
financial operations, office and administration operations, human resources
functions, and legal and audit functions (the "Systems") are designed to be used
prior to, during, and for a reasonable period of time after the calendar year
2000. To the best of Sellers' knowledge, the Systems operate and will operate
during each such time periods without material error relating to date data.
4.23 COVENANT TO RESERVE SHARES. Sellers hereby covenant that AVRI shall at
all times reserve and keep available out of its authorized and unissued common
stock or treasury shares, solely for issuance upon the exercise of the
Replacement Warrants, free from any preemptive rights, 800,000 shares of common
stock of AVRI.
4.24 COVENANT TO MAKE FILINGS. Sellers hereby covenant that AVRI will use
reasonable efforts to complete such actions as may be necessary to ensure the
continued availability to ▇▇▇▇▇▇▇▇ of Rule 144 of the Securities and Exchange
Act of 1934 (in accordance with its terms), including the filing all required
documents with the Securities and Exchange Commission.
4.25 TRANSITION. Except as provided in Section 6.5, for a period of ninety
(90) days after the Closing Date, AVRI will provide reasonable transitional
advisory assistance to ▇▇▇▇▇▇▇▇ in connection with the Manila and New Jersey
operations being acquired by ▇▇▇▇▇▇▇▇, and will cooperate in all aspects of
ensuring continued health insurance coverage (at ▇▇▇▇▇▇▇▇'▇ cost and at no cost
to Sellers) for all of Seller's employees who become ▇▇▇▇▇▇▇▇ employees.
Additionally, until the end of January, 2000, ▇▇▇▇▇▇▇▇ shall be entitled to
utilize the office equipment (e.g., telephones and telephone system, computers,
servers, fax machines, copiers) currently located in AVRI's corporate offices at
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
PURCHASERS AND ▇▇▇▇▇▇▇▇ ACKNOWLEDGE AND AGREE THAT PURCHASERS AND ▇▇▇▇▇▇▇▇
ARE EXPERIENCED IN THE OWNERSHIP AND OPERATION OF ASSETS SIMILAR TO THE COMPANY
ASSETS AND THAT PURCHASERS AND ▇▇▇▇▇▇▇▇'▇ PRIOR TO THE CLOSING DATE WILL HAVE
INSPECTED THE COMPANY ASSETS TO THEIR SATISFACTION AND ARE QUALIFIED TO MAKE
SUCH INSPECTION. PURCHASERS AND ▇▇▇▇▇▇▇▇ ACKNOWLEDGE THAT PURCHASERS AND
▇▇▇▇▇▇▇▇ ARE FULLY RELYING
11
ON PURCHASERS' AND ▇▇▇▇▇▇▇▇'▇ (OR PURCHASERS' AND ▇▇▇▇▇▇▇▇'▇ REPRESENTATIVES')
INSPECTIONS OF THE COMPANY ASSETS AND NOT UPON ANY STATEMENTS (ORAL OR WRITTEN)
WHICH MAY HAVE BEEN MADE OR MAY BE MADE (OR PURPORTEDLY MADE) BY SELLERS OR ANY
OF SELLERS' REPRESENTATIVES EXCEPT AS EXPRESSLY SET FORTH IN THIS AGREEMENT. AS
A MATERIAL PART OF THE CONSIDERATION FOR THIS AGREEMENT AND THE ACQUISITION
CONTEMPLATED HEREIN, ▇▇▇▇▇▇▇▇ HEREBY AGREES TO ACCEPT THE COMPANY ASSETS ON THE
CLOSING DATE IN THEIR "AS-IS, WHERE IS" CONDITION, WITH ALL FAULTS, AND WITHOUT
REPRESENTATIONS AND WARRANTIES OF ANY KIND, EXPRESS OR IMPLIED, OR ARISING BY
OPERATION OF LAW, EXCEPT ONLY THE REPRESENTATIONS OF SELLERS SET FORTH IN THIS
AGREEMENT AND THE WARRANTIES EXPRESSLY SET FORTH IN THE DOCUMENTS EXECUTED BY
SELLERS AT THE CLOSING. WITHOUT IN ANY WAY LIMITING THE GENERALITY OF THE
FOREGOING, IN CONNECTION WITH THE CONVEYANCE OF THE COMPANY ASSETS TO ▇▇▇▇▇▇▇▇,
THE CONVEYANCE OF THE COMPANY ASSETS IS WITHOUT ANY WARRANTY, AND SELLERS AND
SELLERS' OFFICERS, AGENTS, DIRECTORS, EMPLOYEES, ATTORNEYS, CONTRACTORS AND
AFFILIATES (COLLECTIVELY, "SELLERS' RELATED PARTIES") HAVE MADE NO, AND
EXPRESSLY AND SPECIFICALLY DISCLAIM, AND PURCHASERS AND ▇▇▇▇▇▇▇▇ ACCEPT THAT
SELLERS AND SELLERS' RELATED PARTIES HAVE DISCLAIMED, ANY AND ALL
REPRESENTATIONS, GUARANTIES OR WARRANTIES, EXPRESS OR IMPLIED, OR ARISING BY
OPERATION OF LAW (EXCEPT AS SET FORTH IN THIS AGREEMENT AND THE DOCUMENTS
EXECUTED BY SELLERS AT THE CLOSING), OF OR RELATING TO THE COMPANY ASSETS,
INCLUDING WITHOUT LIMITATION, OF OR RELATING TO: (I) THE USE, INCOME POTENTIAL,
EXPENSES, OPERATION, CHARACTERISTICS OR CONDITION OF THE COMPANY ASSETS OR ANY
PORTION THEREOF, INCLUDING WITHOUT LIMITATION, WARRANTIES OF SUITABILITY,
HABITABILITY, MERCHANTABILITY, DESIGN OR FITNESS FOR ANY SPECIFIC PURPOSE OR A
PARTICULAR PURPOSE, OR GOOD AND WORKMANLIKE DESIGN OR MANUFACTURE; AND (II) THE
NATURE, MANNER OR CONDITION OF THE COMPANY ASSETS, WHETHER OR NOT OBVIOUS,
VISIBLE OR APPARENT. OTHER THAN IN CONNECTION WITH ANY BREACH OF A
REPRESENTATION OR WARRANTY CONTAINED IN THIS AGREEMENT OR ANY DOCUMENT EXECUTED
BY SELLERS AT THE CLOSING, PURCHASERS AND ▇▇▇▇▇▇▇▇ HEREBY WAIVE, RELEASE, ACQUIT
AND FOREVER DISCHARGE SELLERS, SELLERS' RELATED PARTIES AND ANY OTHER PERSON
ACTING ON BEHALF OF SELLERS OF AND FROM, ANY CLAIMS, ACTIONS, CAUSES OF ACTION,
DEMANDS, RIGHTS, DAMAGES, LIABILITIES, COSTS AND EXPENSES WHATSOEVER (INCLUDING
COURT COSTS AND ATTORNEYS' FEES), DIRECT OR INDIRECT, KNOWN OR UNKNOWN, FORESEEN
OR UNFORESEEN, WHICH PURCHASERS OR ▇▇▇▇▇▇▇▇ NOW HAVE OR WHICH MAY ARISE IN THE
FUTURE, ON ACCOUNT OF OR IN ANY WAY GROWING OUT OF OR IN CONNECTION WITH THE
PHYSICAL CONDITION OF THE COMPANY ASSETS
12
OR ANY LAW OR REGULATION APPLICABLE THERETO. THE PROVISIONS OF THIS SECTION
SHALL SURVIVE THE CLOSING.
5. REPRESENTATIONS, WARRANTIES AND COVENANTS OF PURCHASER. Purchaser and
▇▇▇▇▇▇▇▇ jointly and severally represents, warrants and, as applicable,
covenants, to and agrees with Sellers that:
5.1 ORGANIZATION AND EXISTENCE. Purchaser and ▇▇▇▇▇▇▇▇ each is a
corporation duly organized and validly existing and in good standing under the
laws of the state or country of its incorporation and has all requisite
corporate power to own, lease and otherwise operate its properties and assets
and to carry on its business as now being conducted and is duly qualified as a
foreign corporation and is in good standing in each jurisdiction in which the
nature of its business or the location of its properties requires such
qualification, and is duly authorized and licensed and has all licenses,
franchises, permits and other governmental authorizations required under all
applicable laws, regulations, ordinances and orders of public authorities to
carry on its business in the places and in the manner as now conducted.
5.2 PURCHASERS' AND ▇▇▇▇▇▇▇▇'▇ AUTHORITY RELATIVE TO THIS AGREEMENT.
This Agreement has been duly executed and delivered by each Purchaser and
▇▇▇▇▇▇▇▇, this Agreement is a valid and binding obligation of each Purchaser and
▇▇▇▇▇▇▇▇, and no further corporate action is necessary with respect to any
Purchaser or ▇▇▇▇▇▇▇▇ to make this Agreement a valid and binding obligation of
each Purchaser and ▇▇▇▇▇▇▇▇, enforceable in accordance with its terms. Neither
the execution, delivery nor performance of this Agreement by any Purchaser or
▇▇▇▇▇▇▇▇ will:
(a) Violate any order, writ, injunction or decree of any court,
administrative agency or governmental body;
(b) Require any consent, authorization or approval of any person,
entity or governmental authority; or
(c) Result in the creation or imposition of any lien, charge or
encumbrance upon the property of the Purchasers or ▇▇▇▇▇▇▇▇.
5.3 TITLE TO NOTES, STOCK AND WARRANTS. Purchasers will convey, transfer,
assign and surrender the LHIC Note, the LHSP Note, the Series D Stock, and the
LHIC Warrants to Sellers, free and clear of all liens, claims, security
interests and encumbrances.
5.4 ACQUISITION ENTIRELY FOR OWN ACCOUNT. This Agreement is made with the
Purchasers and ▇▇▇▇▇▇▇▇ in reliance upon the Purchasers' and ▇▇▇▇▇▇▇▇'▇
representation to the Sellers, which by Purchasers' and ▇▇▇▇▇▇▇▇'▇ execution of
this Agreement Purchasers and ▇▇▇▇▇▇▇▇ hereby confirm, that the Replacement
Warrants and the common stock of AVRI issuable upon exercise of the Replacement
Warrants (collectively, the "Securities") are being acquired for investment for
▇▇▇▇▇▇▇▇'▇ own account, not as a nominee or agent, and not with a view to the
resale or distribution of any part thereof, and that ▇▇▇▇▇▇▇▇ has no present
intention of selling, granting any participation in, or otherwise distributing
the same. By executing this Agreement, ▇▇▇▇▇▇▇▇ further represents that ▇▇▇▇▇▇▇▇
does not have any contract, undertaking,
13
agreement or arrangement with any person to sell, transfer or grant
participations to such person or to any third person, with respect to any of the
Securities.
5.5 RELIANCE UPON ▇▇▇▇▇▇▇▇'▇ REPRESENTATIONS. Each Purchaser and ▇▇▇▇▇▇▇▇
understands that the Replacement Warrants and the common stock of AVRI acquired
on exercise thereof, at the time of issuance will not be, registered under the
Securities Act because the issuance of securities hereunder is exempt from
registration under the Securities Act pursuant to Section 4(2) thereof, and that
the Sellers' reliance on such exemption is predicated on Purchasers' and
▇▇▇▇▇▇▇▇'▇ representations set forth herein. Purchasers and ▇▇▇▇▇▇▇▇ realize
that the basis for the exemption may not be present if, notwithstanding such
representations, ▇▇▇▇▇▇▇▇ has in mind merely acquiring the Replacement Warrants
with a present intention to sell those securities in the near future.
5.6 RECEIPT OF INFORMATION . Each Purchaser and ▇▇▇▇▇▇▇▇ believes it has
received all the information it considers necessary or appropriate for deciding
whether to enter into the transactions made the subject of this Agreement. Each
Purchaser and ▇▇▇▇▇▇▇▇ further represents that it has had an opportunity to ask
questions and receive answers from the Sellers regarding the condition of the
Sellers' business, properties, prospects and financial condition and to obtain
additional information (to the extent the Sellers possessed such information or
could acquire it without unreasonable effort or expense) necessary to verify the
accuracy of any information furnished to it or to which it had access. The
foregoing, however, does not limit or modify the representations and warranties
of the Sellers in Section 4 of this Agreement or the right of Purchasers or
▇▇▇▇▇▇▇▇ to rely thereon.
5.7 INVESTMENT EXPERIENCE. Each Purchaser represents that such Purchaser is
experienced in evaluating and investing in securities of companies in the
development stage and acknowledges that it is able to fend for itself, can bear
the economic risk of its investment, and has such knowledge and experience in
financial or business matters that it is capable of evaluating the merits and
risks of the transactions made the subject of this Agreement. ▇▇▇▇▇▇▇▇ also
represents that ▇▇▇▇▇▇▇▇ has not been organized for the sole purpose of
acquiring the an interest in the Replacement Warrants.
5.8 ACCREDITED INVESTOR. Each of the Purchasers and ▇▇▇▇▇▇▇▇ is an
"Accredited Investor" within the meaning of Securities and Exchange Commission
rule 501 of Regulation D, as now in effect.
5.9 RESTRICTED SECURITIES. ▇▇▇▇▇▇▇▇ understands that the Replacement
Warrants (and any common stock of AVRI issued on exercise thereof) may not be
sold, transferred, or otherwise disposed of without registration under the
Securities Act or an exemption therefrom, and that in the absence of an
effective registration statement covering the Replacement Warrants (or any
common stock of AVRI issued on exercise thereof) or an available exemption from
registration under the Securities Act, the Replacement Warrants (and any common
stock of AVRI issued upon exercise thereof) must be held indefinitely. In
particular, ▇▇▇▇▇▇▇▇ is aware that the Replacement Warrants (and any common
stock of AVRI issued on exercise thereof) may not be sold pursuant to Rule 144
promulgated under the
14
Securities Act unless all of the conditions of that Rule are met. Among the
conditions for use of Rule 144 is the availability of current information to the
public about AVRI.
5.10 LEGENDS. Each certificate or other document evidencing any of the
Replacement Warrants or any common stock of AVRI issued upon exercise thereof,
shall be endorsed with the legends set forth below, and ▇▇▇▇▇▇▇▇ covenants that,
except to the extent such restrictions are waived by AVRI, ▇▇▇▇▇▇▇▇ shall not
transfer the shares represented by any such certificate without complying with
the restrictions on transfer described in the legends endorsed on such
certificate:
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
UNITED STATES SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD,
TRANSFERRED, ASSIGNED, PLEDGED, OR HYPOTHECATED ABSENT AN EFFECTIVE
REGISTRATION THEREOF UNDER SUCH ACT OR COMPLIANCE WITH RULE 144
PROMULGATED UNDER SUCH ACT, OR UNLESS THE COMPANY HAS RECEIVED AN
OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND ITS COUNSEL, THAT
SUCH REGISTRATION IS NOT REQUIRED."
5.11 FOREIGN INVESTOR. To the extent that ▇▇▇▇▇▇▇▇ is not a U.S. person or
entity, ▇▇▇▇▇▇▇▇ hereby represents that it has satisfied itself as to the full
observance of the laws of its jurisdiction in connection with its acquisition of
the Replacement Warrants or any use of this Agreement, including (i) the legal
requirements within ▇▇▇▇▇▇▇▇'▇ jurisdiction for the acquisition of the
Replacement Warrants, (ii) any foreign exchange restrictions applicable to such
acquisition, (iii) any governmental or other consents which may need to be
obtained, and (iv) the income tax and other tax consequences, if any, which may
be relevant to the acquisition, holding, redemption, sale or transfer of the
Replacement Warrants or the common stock of AVRI issued upon the exercise
thereof. ▇▇▇▇▇▇▇▇'▇ acquisition, and its continued beneficial ownership, of the
Replacement Warrants will not violate any applicable securities or other laws of
▇▇▇▇▇▇▇▇'▇ jurisdiction.
5.12 STOCK OPTIONS. Following the Closing, Purchasers and ▇▇▇▇▇▇▇▇ shall
use reasonable efforts to obtain cancellations or releases of all options to
acquire shares of common stock of AVRI held by Raoul Teh, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇
and ▇▇▇▇▇▇▇▇▇ San ▇▇▇▇ pursuant to written stock option agreements between AVRI
and each of such persons.
5.13 TRANSITION. For a period of ninety (90) days after the Closing Date,
▇▇▇▇▇▇▇▇ (and LHSP with respect to the services of H. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇) will
provide reasonable transitional advisory assistance to AVRI in connection with
(i) the transition of AVRI's auditor relationship from Ernst & Young, (ii) the
preparation of AVRI's 2000 business plan and budget, (iii) the completion of
AVRI's 1999 audit and annual 10K report, (iv) technical support for AVRI's
transcription business, (v) the services of ▇▇▇▇ ▇▇▇▇▇▇▇ in connection with the
design of the AVRI's Virtual Physician Network ("VPN"), and (vi) the transition
of operating
15
responsibility to the extent that any of AVRI's employees involved in operations
accept employment with ▇▇▇▇▇▇▇▇.
6. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES; INDEMNITIES.
6.1. NATURE OF STATEMENTS. All statements contained in any schedule hereto
or in any supplemental schedule or in any certificate or other document executed
in connection with these transactions delivered by or on behalf of Sellers,
Purchasers or ▇▇▇▇▇▇▇▇ pursuant to this Agreement, or in connection with the
transactions contemplated hereby, shall be deemed representations and warranties
by Sellers, Purchasers or ▇▇▇▇▇▇▇▇, as the case may be, under this Agreement.
6.2 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND COVENANTS. The
representations and warranties of Sellers, Purchasers and ▇▇▇▇▇▇▇▇ set forth
herein shall survive the Closing for a period beginning on the Closing Date and
expiring on the date that is thirty (30) days following completion of the
financial audit by AVRI's independent certified public accountants for the year
ended December 31, 2000, except for claims under Sections 4.1, 4.2, 4.4, 4.5,
4.6, 4.17 and 4.21, which shall continue without limitation as to time, and
shall not be merged with the ▇▇▇▇ of Sale (as defined in Section 7.2); provided
that claims regarding a breach of a representation or warranty (that is subject
to the forgoing limitation as to time) made in writing by any party to any other
within such period shall survive until resolution of such claims even if
resolution extends beyond such period. All covenants contained herein that by
their nature require performance following the Closing shall be automatically
deemed to survive the Closing until the performance is no longer required.
6.3 SELLERS' INDEMNITY. Sellers jointly and severally agree to indemnify,
defend and hold Purchasers, ▇▇▇▇▇▇▇▇, their affiliates, directors, officers,
employees, stockholders and agents forever harmless from and against any and all
liability, demands, claims, actions, or causes of action, assessments, losses,
costs, damages or expenses, whether asserted or unasserted, direct or indirect,
existing or inchoate, known or unknown, having arisen or to arise in the future,
including reasonable attorney's fees and court costs, sustained or incurred by
Purchasers or ▇▇▇▇▇▇▇▇ resulting from or arising out of, relating to, or by
virtue of (i) any breach by Sellers of their representations, warranties and
covenants in this Agreement; (ii) except for the Assumed Liabilities, all
liabilities and obligations of Sellers of any kind or nature, known or unknown,
relating to the Company Assets, or the Sellers; (iii) with respect to the
Assigned Contracts, all liabilities and obligations resulting from or arising
out of the performance and observance by Sellers of, or the failure of Sellers
to perform and observe, any of the covenants, terms and conditions of the
Assigned Contracts prior to the Effective Date; and (iv) Sellers' operation of
the Company Assets other than the Assigned Contracts prior to the Effective
Date.
6.4 PURCHASERS' AND ▇▇▇▇▇▇▇▇'▇ INDEMNITY. Purchasers and ▇▇▇▇▇▇▇▇
jointly and severally agree to indemnify, defend and hold Sellers, their
affiliates, directors, officers, employees, stockholders and agents forever
harmless from and against any and all liability, demands, claims, actions, or
causes of action, assessments, losses, costs, damages or expenses, whether
asserted or unasserted, direct or indirect, existing or inchoate, known or
unknown, having arisen or to arise in the future, including reasonable
attorney's fees and court costs,
16
sustained or incurred by Sellers resulting from or arising out of, relating to,
or by virtue of (i) any breach by Purchasers or ▇▇▇▇▇▇▇▇ of their
representations, warranties and covenants in this Agreement; (ii) all
liabilities and obligations of Purchasers or ▇▇▇▇▇▇▇▇ of any kind or nature,
known or unknown, relating to the Assumed Liabilities or Purchasers or ▇▇▇▇▇▇▇▇,
including, without limitation, with respect to the employment agreement with H.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ assumed by LHSP; (iii) with respect to the Assigned Contracts,
all liabilities and obligations resulting from or arising out of the performance
and observance by ▇▇▇▇▇▇▇▇ of, or the failure of ▇▇▇▇▇▇▇▇ to perform and
observe, any of the covenants, terms and conditions of the Assigned Contracts on
and after the Effective Date; and (iv) ▇▇▇▇▇▇▇▇'▇ operation of the Company
Assets other than the Assigned Contracts as of and after the Effective Date.
6.5 COSTS ASSOCIATED WITH OTPI; OFFSET RIGHTS.
(a) Sellers jointly and severally agree to indemnify and hold harmless
Purchasers and ▇▇▇▇▇▇▇▇ for all amounts that Purchasers, ▇▇▇▇▇▇▇▇ or OTPI
may incur in connection with paying (i) all capital gains taxes,
documentary stamp taxes, and other taxes, fees and charges, including
penalties, interest and surcharges relating thereto, with respect to the
original formation of OTPI, the transfer of the shares of OTPI from ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, to ▇▇▇▇▇▇▇ Transcription, Inc., the transfer
of shares of OTPI from Cornell Transcription, Inc. to HCIS, and the
transfer of shares of OTPI from HCIS to ▇▇▇▇▇▇▇▇ (which taxes, fees,
penalties, interest and surcharges are estimated by OTPI's Philippines
legal counsel to be approximately $2,000), and (ii) all penalties and
surcharges relating to OTPI's failure to file annual corporate reports and
financial statements required under Philippines law for the years 1998 and
1999 (which penalties and surcharges are estimated by OTPI's Philippines
legal counsel to be approximately $1,500).
(b) Sellers shall take all action necessary to resolve the non-
compliance matters described in Section 6.5(a), and pay costs associated
therewith. If Sellers do not diligently pursue the resolution of such
matters, Purchaser, ▇▇▇▇▇▇▇▇ or OTPI may take such actions deemed by them
to be necessary to resolve such matters and Sellers shall immediately
reimburse Purchaser, ▇▇▇▇▇▇▇▇ or OTPI, as applicable, for such costs,
including reasonable attorneys fees and expenses of Philippines legal
counsel in connection with completing such filings and tax returns (and
Purchaser, ▇▇▇▇▇▇▇▇ and OTPI will provide Sellers with reasonable evidence
of such payment and completion in reasonable detail).
(c) Sellers' reimbursement of Purchasers, ▇▇▇▇▇▇▇▇ or OTPI pursuant to
Section 6.5(b) shall be made from time to time within five (5) business
days after AVRI's receipt from Purchasers, ▇▇▇▇▇▇▇▇ or OTPI of a written
request for reimbursement of such expense (together with evidence of the
payment thereof). If Sellers fail to reimburse Purchasers, ▇▇▇▇▇▇▇▇ or OTPI
such requested amount within such five (5) business day period, ▇▇▇▇▇▇▇▇
shall be entitled to offset such reimbursement amount against any payment
then due and owing by ▇▇▇▇▇▇▇▇ to Sellers with respect to collected
Accounts Receivable in excess of the Closing A/R Payment that would
otherwise be payable by ▇▇▇▇▇▇▇▇ to Sellers pursuant to the terms of
Section 3(a).
(d) Following the Closing, Purchasers, ▇▇▇▇▇▇▇▇ and OTPI shall
cooperate with Sellers in connection with Sellers' efforts under Section
6.5(a), including, without
17
limitation, executing such documents, certificates and affidavits as
Sellers may reasonably request, which agreement to cooperate shall survive
the closing indefinitely. Sellers shall provide similar cooperation to
Purchasers, ▇▇▇▇▇▇▇▇ and OPTI in the event, pursuant to Section 6.5(b),
Purchasers, ▇▇▇▇▇▇▇▇ or OTPI undertake such efforts.
7. THE CLOSING. Sellers, Purchasers and ▇▇▇▇▇▇▇▇ hereby agree to consummate
the closing of the sale and purchase of the Company Assets (the "Closing") at
the offices of Sellers' legal counsel, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, located at ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (or such other place as Purchasers,
Lonestar and Sellers so determine) immediately following execution of this
Agreement on January 7, 2000 (the "Closing Date"). At the option of Purchasers,
▇▇▇▇▇▇▇▇ and Sellers, the documents relating to the Closing may be exchanged by
overnight courier without the necessity of all parties being present at the
Closing. At the Closing, the following shall occur:
7.1 LIEN RELEASES. Sellers shall obtain and file for record in the
appropriate offices each of the releases and partial releases listed on SCHEDULE
7.1.
7.2 ▇▇▇▇ OF SALE, ASSIGNMENT AND ASSUMPTION AGREEMENT. Sellers and ▇▇▇▇▇▇▇▇
shall execute a ▇▇▇▇ of Sale, Assignment and Assumption Agreement (the "▇▇▇▇ of
Sale"), in the form attached hereto as EXHIBIT "7.2", (a) conveying good title
to the Company Assets to ▇▇▇▇▇▇▇▇ free and clear of all liens, claims,
encumbrances and interests (except as otherwise as set forth in this Agreement),
and (b) effecting the assumption by ▇▇▇▇▇▇▇▇ of the Assigned Contracts,
including, without limitation, the following:
(a) Master Equipment Lease, No. 2147, dated May 13, 1998 (the
"Sterling Bank Lease"), executed by and between HCIS, as successor-in-
interest to Cornell Transcription, Inc. and Sterling National Bank.
(b) Promissory Note in the original principal amount of $42,000, dated
June 17, ▇▇▇▇ (▇▇▇ "▇▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇ Note"), executed by AWA in
favor of Southwest Bank of Texas, N.A.
(c) Office Lease Agreement dated December 4, 1996, executed by and
between AVRI, as lessee, and ▇. ▇▇▇▇ Price Renaissance Fund, Ltd., as
lessor, with respect to the office space located at ▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇;
(d) Office Lease Agreement dated November 29, 1999, executed by and
between AVRI, as lessee, and HSDRY, LLC, as lessor, with respect to the
office space located at ▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇; and
(e) Office Lease Agreement dated March 23, 1999, executed by and
between AWA, as lessee, and Lutheran Brotherhood d/b/a ▇▇▇▇▇▇▇▇▇▇▇
Professional Center, predecessor in interest to ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Properties, as lessor, with respect to the office space located at ▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇.
7.3 ASSIGNMENT AND ASSUMPTION OF EMPLOYMENT AGREEMENTS.
18
(a) AVRI, LHSP and H. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ shall execute an Assignment and
Assumption Agreement with respect to ▇▇. ▇▇▇▇▇▇▇' Employment Agreement, in
a form acceptable to all such parties.
(b) AVRI and ▇▇▇▇▇▇▇▇ shall execute an Assignment and Assumption
Agreement with respect to each of the following Assumed Employee's
Employment Agreements, in a form acceptable to such parties (following the
closing, AVRI and ▇▇▇▇▇▇▇▇ will obtain the execution to such Assignment and
Assumption Agreements by each of the respective employees):
(i) ▇▇▇▇▇ ▇▇▇▇▇▇▇
(ii) ▇▇▇▇▇ ▇▇▇▇▇
(iii) ▇▇▇ ▇▇▇▇
7.4 AMENDMENT II TO VALUE ADDED RESELLER AGREEMENT. AVRI and LHSP shall
execute an amendment (the "Amendment to VAR") in a form mutually acceptable to
both parties extending the term of that certain Value Added Reseller Agreement
dated September 30, 1998, executed by and between AVRI and LHSP.
7.5 TECHNOLOGY LICENSE AGREEMENT. Sellers and ▇▇▇▇▇▇▇▇ shall execute a
perpetual, nonexclusive, royalty-free license agreement for the use of the
technology included within the Company Assets in a form mutually acceptable to
both parties, pursuant to which agreement ▇▇▇▇▇▇▇▇ will license the technology
listed on SCHEDULE 1.1(E) and SCHEDULE 1.1(F) back to AVRI, which license will
be transferable by Sellers only in connection with a sale by Sellers of the
Sellers' medical transcription business or the VPN.
7.6 MEDICAL TRANSCRIPTION SERVICES AGREEMENT. AVRI and ▇▇▇▇▇▇▇▇ shall
execute an agreement regarding the processing of AVRI data through OTPI's
facility in Manila, The Philippines, for a period of up to eighteen (18) months,
in a form mutually acceptable to both parties.
7.7 TERMINATION OF VOTING AGREEMENT. Voice Technologies Partners, Ltd., a
shareholder of AVRI, AVRI and LHIC will execute an agreement terminating that
certain Voting Agreement dated as of December 31, 1998.
7.8 TERMINATION OF CO-SALE AND TAG-ALONG RIGHTS AGREEMENT. Each of Voice
Technologies Partners, Ltd., a shareholder of AVRI, AVRI and LHIC will execute
an agreement terminating that certain Co-Sale and Tag-Along Rights Agreement
dated as of December 31, 1998.
7.9 SERIES D STOCK. LHIC shall deliver to Sellers certificate(s)
representing the Series D Stock , duly endorsed or accompanied by a duly
executed stock power in blank, and in proper form for transfer.
7.10 LHIC NOTE. LHIC shall deliver to Sellers for cancellation the LHIC
Note.
19
7.11 LHSP NOTE. LHIC shall deliver to Sellers for cancellation the LHSP
Note.
7.12 LHIC WARRANTS. AVRI and LHIC shall execute an agreement terminating
the LHIC Warrants.
7.13 REPLACEMENT WARRANTS. AVRI shall issue to ▇▇▇▇▇▇▇▇ the Replacement
Warrants, and AVRI and ▇▇▇▇▇▇▇▇ shall execute the ▇▇▇▇▇▇▇▇ Registration Rights
Agreement.
7.14 UCC-3 TERMINATION STATEMENTS. Each of LHIC and LHSP shall deliver to
Sellers executed UCC-3 Termination Statements terminating each of the Financing
Statements.
7.15 TERMINATION OF TRADEMARK SECURITY AGREEMENT. AVRI, LHIC and LHSP shall
enter into an agreement terminating the Trademark Security Agreement.
7.16 TERMINATION OF PATENT SECURITY AGREEMENT. AVRI, LHIC and LHSP shall
enter into an agreement terminating the Patent Security Agreement.
7.17 TERMINATION OF COPYRIGHT SECURITY AGREEMENT. AVRI, LHIC and LHSP shall
enter into an agreement terminating the Copyright Security Agreement.
7.18 PLEDGED STOCK. Purchasers shall deliver to Sellers each certificate
representing shares of stock in HCIS, AWA and OTPI held by Purchasers as
security pursuant to the Pledge Agreement, together with the original blank
stock powers relating thereto.
7.19 UCC-1 FINANCING STATEMENT. The Sellers shall execute and deliver to
▇▇▇▇▇▇▇▇ new UCC-1 Financing Statements to be filed with the Texas Secretary of
State evidencing Sellers' grant of a lien in favor of ▇▇▇▇▇▇▇▇ covering the
Accounts Receivable purchased by ▇▇▇▇▇▇▇▇.
7.20 OTPI STOCK CERTIFICATES. Upon Sellers' receipt from Purchasers of the
original certificates representing the shares of OTPI stock owned by HCIS,
Sellers shall deliver to ▇▇▇▇▇▇▇▇ such certificate, duly endorsed or accompanied
by a duly executed stock power in blank, in proper form for transfer to
▇▇▇▇▇▇▇▇.
7.21 TRUST AGREEMENTS. Following the Closing, Sellers shall deliver to
▇▇▇▇▇▇▇▇ written trust agreements regarding the ownership of shares of OTPI
executed by Raoul Teh, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇▇ and ▇▇▇▇▇▇▇▇▇ San ▇▇▇▇.
7.22 OFFICER AND DIRECTOR RESIGNATION LETTERS. Sellers shall have received
letters of resignation in a form acceptable to Sellers executed by the persons
listed on SCHEDULE 7.22 for purposes of resigning their respective positions
with AVRI, HCIS and AWA, as applicable, which letters shall expressly set forth
that, as of the Effective Date, each such person (i) is not a party to any
agreement with Sellers, or, alternatively, that each resigns from all of such
person's respective salaried positions from Sellers, and (ii) does not have any
claim of any nature whatsoever against Sellers, including, without limitation,
claims for unpaid wages, severance expenses or
20
wrongful termination. ▇▇▇▇▇▇▇▇ shall appoint such new officers and directors of
OTPI as ▇▇▇▇▇▇▇▇ shall designate.
7.23 TERMINATION OF EMPLOYMENT AGREEMENTS. Sellers and each of the
Executives shall execute and deliver to each other written agreements
terminating the respective employment agreements of each of the Executives.
7.24 EMPLOYEE TERMINATION LETTERS. Sellers and ▇▇▇▇▇▇▇▇ shall execute and
deliver to each other termination of employment letters in the form attached
hereto as EXHIBIT "7.24" with respect to the Hired Employees (following the
closing, AVRI and ▇▇▇▇▇▇▇▇ will obtain the execution to such termination letters
by each of the employees shown therein). The execution of such letters shall
not impart any third party beneficiary rights upon any such employees.
7.25 INDEMNITY AGREEMENTS. ▇▇▇▇▇▇▇▇ shall have executed an indemnification
agreement with each of ▇▇▇▇ ▇. Black and ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, in the form
attached hereto as EXHIBIT "7.25".
7.26 SELLERS' LEGAL OPINION. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP, special counsel to AVRI,
shall deliver to the Purchasers a legal opinion in a form acceptable to the
parties, opining on the due organization of the Sellers and their authority to
consummate the transactions made subject of this Agreement, and such other
matters as may be reasonably requested by Purchasers.
7.27 PURCHASERS' LEGAL OPINIONS.
(a) Brown, Rudnick, Freed & Gesmer, counsel to ▇▇▇▇▇▇▇▇ and
Purchasers, shall deliver to Sellers a legal opinion in a form acceptable
to the parties, opining on the due organization of ▇▇▇▇▇▇▇▇ and its
authority to consummate the transactions made subject of this Agreement,
and such other matters as may be reasonably requested by Sellers.
(b) A Belgian law firm reasonably acceptable to Sellers shall deliver
to Sellers a legal opinion in a form acceptable to the parties, opining on
the due organization of LHIC and their authority to consummate the
transactions made subject of this Agreement, and such other matters as may
be reasonably requested by Sellers.
21
7.28 APPORTIONMENTS; CLOSING STATEMENT.
(a) All revenue and expenses relating to the Company Assets, the
Executive, the Hired Employees and the Assigned Contractors shall be
prorated as of the Effective Date, including, without limitation, the
Accounts Receivable, all recurring fees paid or payable, all utility
expenses, all marketing expenses, and all personal property taxes, income
and employment taxes and other assessments. Purchasers and ▇▇▇▇▇▇▇▇ shall
be entitled to a credit for all such revenue collected by Sellers on and
after the Effective Date, and Sellers shall be entitled to retain all such
revenue collected by Sellers prior to the Effective Date. Similarly,
Purchasers and ▇▇▇▇▇▇▇▇ shall be responsible for and shall reimburse
Sellers at Closing for all such expenses incurred by Sellers on and after
the Effective Date, and Sellers shall retain responsibility for all such
expenses incurred by Sellers prior to the Effective Date. In the event that
any post Closing payments or adjustments are due to ▇▇▇▇▇▇▇▇ by Sellers
that are not addressed on the Closing Statement with respect to (i)
Accounts Receivable collected in trust for the benefit of ▇▇▇▇▇▇▇▇ pursuant
to Section 3(a), (ii) reimbursements under Section 6.5(c), or (iii) any
post Closing adjustments of expenses and income pursuant to the terms of
the Closing Statement, ▇▇▇▇▇▇▇▇ shall be entitled to offset such amount
against any payment then due and owing by ▇▇▇▇▇▇▇▇ to Sellers with respect
to collected Accounts Receivable in excess of the Closing A/R Payment that
would otherwise be payable by ▇▇▇▇▇▇▇▇ to Sellers pursuant to Section 3(a).
In addition, Sellers shall be entitled to be reimbursed by Purchasers and
▇▇▇▇▇▇▇▇ for all security and other deposits held by third parties as of
the Effective Date with respect to the Company Assets.
(b) Prior to Closing, Sellers, Purchasers and ▇▇▇▇▇▇▇▇ shall jointly
prepare a closing statement (the "Closing Statement") containing a schedule
of all payments, reimbursements, prorations and other adjustments as of the
Effective Date between the Sellers, the Purchasers and ▇▇▇▇▇▇▇▇ as the
result of the transactions made the subject of this Agreement, including,
without limitation, the adjustments and prorations made pursuant to Section
7.28(a) and the Closing A/R Payment.
7.29 CASH PORTION OF CONSIDERATION. Purchasers and ▇▇▇▇▇▇▇▇ shall deliver
to Sellers via wire transfer of immediately available funds to an account to be
designated by Sellers the aggregate amount owed by Purchasers and ▇▇▇▇▇▇▇▇ to
Sellers with respect to the transactions made the subject of this Agreement
pursuant to the adjustments and calculations reflected on the Closing Statement.
8. CONDITIONS TO CLOSING. Sellers have obtained an opinion from ▇▇▇▇▇▇, ▇▇▇▇
& ▇▇▇▇▇▇▇▇ regarding the "fairness" of the transactions contemplated by this
Agreement to AVRI and its holders of common stock, which opinion is satisfactory
to Sellers, Purchasers and ▇▇▇▇▇▇▇▇.
9. FURTHER ACTS. The parties hereto hereby covenant and agree that, from
time to time on and after the Closing Date, at the request of any other party,
each party hereto will execute and deliver all confirmatory bills of sale,
assignments and other documents that such party may reasonably request,
including, without limitation, using reasonable efforts to obtain written
consents from Sterling Bank, Southwest Bank of Texas, N.A., HSDRY, LLC, ▇. ▇▇▇▇
Price Renaissance Fund, Ltd., and Lutheran Brotherhood d/b/a ▇▇▇▇▇▇▇▇▇▇▇
Professional Center, predecessor in interest to
22
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Properties, to the assignment and assumption of their
respective agreements to ▇▇▇▇▇▇▇▇.
10. POSSESSION. Immediately following the Closing, Sellers shall deliver to
▇▇▇▇▇▇▇▇ at the Assigned Facilities all tangible items constituting the Company
Assets.
11. EXPENSES AND COMMISSIONS. Each of Sellers, Purchasers and ▇▇▇▇▇▇▇▇ will pay
their own expenses incident to the transactions contemplated by this Agreement.
Purchasers, ▇▇▇▇▇▇▇▇ and Sellers each represent to the other that there are no
agents or brokers entitled to a commission in connection with the transactions
made the subject of this Agreement. Sellers hereby agree to indemnify and hold
harmless Purchasers and ▇▇▇▇▇▇▇▇ against any and all claims of any agent,
broker, finder or similar party claiming through Sellers, and Purchasers and
▇▇▇▇▇▇▇▇ hereby agree to indemnify and hold harmless Sellers against any and all
claims of any agent, broker, finder, or other similar party claiming through
Sellers. Sellers, Purchasers and ▇▇▇▇▇▇▇▇ agree to share equally the cost of the
fairness opinion described in Section 8.
12. MISCELLANEOUS.
12.1. NOTICES. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been given if
personally delivered or mailed, first class, registered or certified mail,
postage prepaid to the following:
If to Sellers, to: c/o Applied Voice Recognition, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Chairman
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇▇@▇-▇▇▇▇.▇▇▇
With copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: J. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
With copy to: ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇▇▇▇▇.▇▇▇
23
If to Purchasers, to: c/o Lernout & Hauspie Speech Products, N.V.
Flanders Language Valley 50, B-8900
Ieper Belgium
Attention: ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: 011 325 722 9545
Email: ▇▇▇▇▇▇.▇▇▇▇▇@▇▇▇.▇▇
AND
c/o Lernout & Hauspie Speech Products USA, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
With copy to: Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇@▇▇▇▇.▇▇▇
If to ▇▇▇▇▇▇▇▇, to: c/o Lernout & Hauspie Speech Products USA, Inc.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇ ▇▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇▇▇@▇▇▇▇.▇▇▇
With copy to: Brown, Rudnick, Freed & Gesmer
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Email: ▇▇▇▇▇@▇▇▇▇.▇▇▇
or to such other address as shall be given in writing by any party to the
others. If sent by U.S. mail in accordance with this Section 12.1, such notices
shall be deemed given and received on the earlier to occur of (a) actual receipt
at the above specified address of the mailed addressee, or (b) the third (3rd)
business day after deposit with the U.S. Postal Service in the manner herein
provided. Notices may also be transmitted by facsimile or email, provided that
such facsimile or email transmission is confirmed within one business day
thereafter by U.S. mail in accordance with this Section 12.1. Notices delivered
by any other means shall be deemed given and received upon actual receipt of the
above specified address of the addressee.
24
12.2. ASSIGNMENT. This Agreement may not be assigned by any party without
the prior written consent of the other parties. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and permitted assigns.
12.3. ENTIRE AGREEMENT. This Agreement (including the exhibits and
schedules attached hereto) is the entire agreement among the parties hereto
regarding the subject matter dealt with herein and supersedes all prior
agreements and understandings whether written or oral.
12.4. SCHEDULES AND EXHIBITS. All schedules and exhibits attached to and
referenced in this Agreement are incorporated in this Agreement and made a part
hereof.
12.5. GOVERNING LAW; VENUE. This Agreement shall be governed by the laws
of the State of Texas. This Agreement is to be performed and consummated in
Houston, ▇▇▇▇▇▇ County, Texas.
12.6. DISPUTE RESOLUTION. The parties agree that all disputes, claims,
damages and questions arising in connection with this Agreement or between the
parties hereto shall be settled by arbitration in accordance with the rules of
the American Arbitration Association in effect in Houston, Texas. Any dispute
may be submitted by either party to the American Arbitration Association and all
proceedings with respect thereto shall be conducted in Houston, Texas by a one
person arbitrator, unless the parties mutually agree otherwise. The award of
the arbitrator shall be final, conclusive, non-appealable and enforceable in a
court of competent jurisdiction. The prevailing party shall be entitled to
costs and reasonable attorney's fees arising out of such arbitration.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
25
IN WITNESS WHEREOF, this Agreement has been duly executed by the parties on
this the 7th day of January, 2000, to be effective as of the Effective Date.
AVRI:
APPLIED VOICE RECOGNITION, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Title: Chairman of the Board
--------------------------
HCIS:
----
e-DOCS HEALTH CARE INFORMATION
SERVICES, INC.,
a Delaware corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Title: President
--------------
AWA:
---
A WORD ABOVE, INC.,
a Texas corporation
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------
Title: President
--------------
▇▇▇▇▇▇▇▇:
--------
▇▇▇▇▇▇▇▇ MEDICAL TRANSCRIPTION
USA, INC., a Delaware corporation
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
-------------------
Title: President
--------------
LHIC:
----
L & H INVESTMENT COMPANY N.V.,
a Belgium company
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
--------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
---------------------
Title: Financial Officer
----------------------
26
* The following Schedules and Exhibits have been omitted. The Company agrees to
furnish supplementally a copy of any omitted Schedule or Exhibit to the
Securities and Exchange Commission upon its request.
Schedules:
---------
A List of Financing Statements
1.1(c) List of Company Personal Property
1.1(d) List of Assigned Contracts
1.1(e) List of Computer Hardware and Software
1.1(f) List of Intellectual Property
1.1(g) List of Licenses and Permits
1.1(h) List of Accounts Receivable
1.3 List of Assumed Liabilities
4.1 Disclosures Regarding Compliance
4.5 List of Liens and Security Interests Encumbering the Company Assets
4.6 Litigation
4.10 List of Executives, Hired Employees and Assumed Contractors
4.13(d) List of OTPI Banking Information
7.1 List of Releases and Partial Releases
7.22 List of Persons to Resign Prior to Closing (Directors & Officers)
Exhibits:
--------
"7.2" ▇▇▇▇ of Sale, Assignment and Assumption Agreement
"7.24" Employee Termination Letter Form
"7.25" Indemnity Agreement Form
27