EXHIBIT 2.1
STOCK PURCHASE AGREEMENT
(A Word Above, Inc.)
This STOCK PURCHASE AGREEMENT (the "Agreement"), dated as of the 28th day of
May, 1999 (the "Effective Date"), is by and among ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ and ▇▇▇
▇. ▇▇▇▇, married persons residing in Houston, ▇▇▇▇▇▇ County, Texas
(collectively, "Sellers"), A WORD ABOVE, INC., a Texas corporation (the
"Company"), and E-DOCS HEALTH CARE INFORMATION SERVICES, INC., a Delaware
corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Sellers are engaged in the medical transcription business (the
"Business");
WHEREAS, Sellers are the owners of all of the outstanding stock of the Company
(the "Company Stock");
WHEREAS, Purchaser is a wholly owned subsidiary of APPLIED VOICE RECOGNITION,
INC., a Delaware corporation doing business as ▇-▇▇▇▇.▇▇▇ ("▇-▇▇▇▇.▇▇▇");
WHEREAS, Sellers desire to sell to Purchaser, and Purchaser desires to
purchase from Sellers, the Company Stock, and Sellers and Purchaser 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,
Seller and Purchaser hereby agree as follows:
1. PURCHASE AND SALE. On the terms and subject to the conditions of this
Agreement, Sellers, at the Closing referred to in Section 8, agree to grant,
sell, transfer, convey and deliver to Purchaser, free and clear of all liens,
claims, encumbrances and interests, and Purchaser agrees to purchase from
Sellers, the Company Stock. In consideration for the Company Stock and in
reliance upon the representations and warranties of Seller contained herein, the
Purchaser agrees to deliver to Sellers the Purchase Price (as described in
Section 3 herein).
2. COMPANY ASSETS.
2.1. At Closing, the assets of the Company (the "Company Assets") shall
consist of all of the properties, assets and other rights owned or leased by the
Company, including, without limitation, the following:
(a) All real property leased by the Company, including, without
limitation, that certain space located at ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, and the improvements located within such leased space
(the "Company Facility");
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(b) The machinery, equipment, furniture, fixtures, supplies, materials
and other tangible personal property (other than computer hardware and
software) that are owned or used by the Company, including, but not limited
to, the property described on SCHEDULE 2.1(B) attached hereto (the "Company
Personal Property");
(c) All contracts and agreements which are in effect on the Closing Date
to which the Company is a party, which contracts shall include, but are not
limited to, the contracts and agreements listed on SCHEDULE 2.1(C) attached
hereto (the "Contracts"); and all warranties and guarantees, if any,
originally given to the Company relating to all or any portion of the
Company Personal Property (the "Warranties");
(d) All computer hardware and computer software owned or used by the
Company, including, but not limited to, the computer hardware and software
listed on SCHEDULE 2.1(D) attached hereto (the "Computer Hardware and
Software");
(e) All existing or pending trade names, trade marks, copyrights,
patents and other intellectual property and all marketing literature and
other materials owned, licensed or otherwise utilized by the Company,
including, without limitation, all such rights listed on SCHEDULE 2.1(E)
attached hereto;
(f) All existing books and records of the Company through the Closing
relating to the Business, including, without limitation, all of Company's
customer lists;
(g) The licenses, permits and certifications listed on SCHEDULE 2.1(G)
attached hereto;
(h) All accounts and notes receivable of the Company, including, without
limitation the accounts and notes receivable listed on SCHEDULE 2.1 (H)
attached hereto (the "Accounts Receivable"); and
(i) All cash on hand, including cash on deposit and ▇▇▇▇▇ cash ("Cash").
2.2 INCLUDED LIABILITIES. On the terms and subject to the conditions of this
Agreement, Purchaser, at the Closing, agrees to acquire the Company Stock
subject to all of the then-existing obligations of Company; provided, however,
that the Purchase Price (as defined in Section 3.1 herein) shall be reduced,
which reduction shall come from the ▇-▇▇▇▇.▇▇▇ Stock (as defined in Section
3.1(b)), by the aggregate value of those certain liabilities of the Company
listed on SCHEDULE 2.2 attached hereto (collectively, the "Included
Liabilities").
2.3 EXCLUDED ASSETS AND LIABILITIES. The assets and liabilities listed on
SCHEDULE 2.3 attached hereto (the "Excluded Assets and Liabilities") will be
conveyed to, assigned to and assumed by the Sellers prior to the Closing. From
and after the Closing, neither the Company nor the Purchaser shall be subject
to, or in any way be liable or responsible for, and Sellers shall indemnify and
hold harmless Purchaser and the Company from, all liabilities and obligations of
any kind or nature, known or unknown, relating to the Excluded Assets and
Liabilities and all consequences relating to the conveyance and assignment
thereof, including, without limitation, any tax consequences.
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3. PURCHASE PRICE; ADJUSTMENTS.
3.1 PURCHASE PRICE. The purchase price for the Company Stock (the "Purchase
Price") shall be ONE MILLION AND NO/100 DOLLARS ($1,000,000) less (A) the
aggregate amount of the Included Liabilities. The Purchase Price shall be paid
as follows:
(a) $300,000 in cash at Closing (the "Cash Portion of the Purchase
Price").
(b) the issuance and delivery by ▇-▇▇▇▇.▇▇▇ to Sellers of such number of
shares of convertible preferred stock of ▇-▇▇▇▇.▇▇▇ that have an aggregate
stated value (which shall be the liquidation preference other than accrued
but unpaid dividends, if any), herein referred to as the "Stated Value," of
$700,000 (the "▇-▇▇▇▇.▇▇▇ Stock"), less the aggregate amount of the
Included Liabilities (which will be deducted from the first installment of
▇-▇▇▇▇.▇▇▇ Stock), as reflected on the Closing Statement to be executed by
Purchaser, Sellers and the Company at the Closing, which ▇-▇▇▇▇.▇▇▇ Stock
shall be issued and delivered by ▇-▇▇▇▇.▇▇▇ in three (3) annual
installments on the day after each of the first, second and third
anniversaries of the Closing Date (as hereafter defined), which
installments, as adjusted for Included Liabilities, shall have a Stated
Value of (i) $233,333, (ii) $233,333 and $233,334, respectively. See
EXHIBIT "A" attached hereto and incorporated herein for a description of
the ▇-▇▇▇▇.▇▇▇ Stock.
3.2 ADJUSTMENTS TO PURCHASE PRICE. The parties hereby agree to adjust
the Purchase Price as follows:
(a) NON-RECURRING UNDISCLOSED LIABILITIES. In the event that Purchaser
discovers that any non-recurring liabilities or obligations exist with
respect to the Company and its operations that were not reflected in the
Financial Statements (as defined in Section 4.8) and were not incurred
after April 30, 1999 in the ordinary course of business (the "Non-Recurring
Undisclosed Liabilities"), then the parties hereby agree that the Purchase
Price shall automatically be adjusted down by the dollar amount of such
Non-Recurring Undisclosed Liabilities on a dollar for dollar basis (a "Non-
Recurring Liability Adjustment").
(b) RECURRING UNDISCLOSED LIABILITIES. In the event that Purchaser
discovers that any recurring liabilities or obligations exist with respect
to the Company that were not reflected in the Financial Statements (the
"Recurring Undisclosed Liabilities"), then the parties hereby agree that
the Purchase Price shall automatically be adjusted down by the dollar
amount that is equal to the aggregate amount of such Recurring Undisclosed
Liabilities that would accrue during the twelve (12) month period
immediately following the discovery of each of the Recurring Undisclosed
Liabilities multiplied by 4.7 (a "Recurring Liability Adjustment").
(c) MINIMUM CLOSING DATE ACCOUNTS RECEIVABLE. At Closing, the value of
the Accounts Receivable of the Company as of the Closing Date has been
estimated to be not less than ONE HUNDRED SEVENTY THOUSAND AND NO/100
DOLLARS ($170,000.00) (the "Estimated Value"), which amount is included in
the Purchase Price. Within thirty (30) days following the Closing Date, the
actual value of the total amount of the
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Accounts Receivable (the "Actual Value") shall be determined as of the
Closing Date. In the event that the Actual Value is less than the Estimated
Value, then the Purchase Price shall automatically be adjusted down by the
dollar amount by which the Estimated Value exceeds the Actual Value on a
dollar for dollar basis (the "Accounts Receivable Adjustment"). At the
Closing, Purchaser shall hold back THIRTY THOUSAND AND NO/100 ($30,000.00)
of the Cash Portion of the Purchase Price (the "Hold Back") which will be
used, at the Purchaser's option and in the Purchaser's sole discretion, to
satisfy any Accounts Receivable Adjustment. In the event that an Accounts
Receivable Adjustment is owed by Sellers to Purchaser, then Purchaser shall
be entitled, at the Purchaser's option and in the Purchaser's sole
discretion, to deduct such Accounts Receivable Adjustment from the Hold
Back and Purchaser shall deliver the balance of the Hold Back, if any, to
Sellers within such thirty (30) day period following the Closing Date,
together with reasonable backup documentation evidencing the calculation of
the Accounts Receivable Adjustment. In the event that the Accounts
Receivable Adjustment exceeds the Hold Back or the Purchaser decides not to
apply the Hold Back to the Accounts Receivable Adjustment (the "Excess A/R
Adjustment"), then such Excess A/R Adjustment shall be paid by Sellers to
Purchaser in accordance with Section 3.2(d).
(d) PURCHASE PRICE ADJUSTMENTS. Sellers and Purchaser hereby agree that
Purchaser shall calculate all Non-Recurring Adjustments, Recurring
Adjustments and the Excess A/R Adjustment (collectively, the "Purchase
Price Adjustments," and separately, a "Purchase Price Adjustment") and make
written demand on Sellers for the payment thereof, which written demand
shall include reasonable backup documentation evidencing such adjustments.
Any Purchase Price Adjustments shall be paid by Sellers to Purchaser as
follows:
(i) To the extent that any shares of the ▇-▇▇▇▇.▇▇▇ Stock have not been
issued to Sellers pursuant to Section 3.1(b) or used as an offset pursuant
to this Section 3.2 or Section 6.5, then the Purchaser shall be entitled to
offset the amount of all Purchase Price Adjustments against the unissued
shares of ▇-▇▇▇▇.▇▇▇ Stock, which offset(s) shall be made first against the
next shares to be issued.
(ii) To the extent that all of the shares of the ▇-▇▇▇▇.▇▇▇ Stock have
been issued to the Sellers pursuant to Section 3.1(b) or used as an offset
pursuant to this Section 3.2 or Section 6.5, then Sellers shall pay the
unpaid balance of all Purchase Price Adjustments to Purchaser in cash by
wire transfer of immediately available funds to the account designated by
Purchaser within twenty (20) days following Purchaser's delivery of written
notice to Sellers of the amount of any Purchase Price Adjustment. If
Sellers fail to pay any Purchase Price Adjustment to Purchaser by such
twenty (20) day deadline, then such Purchase Price Adjustment shall bear
interest at the lesser of (A) eighteen percent (18%) per annum, and (B) the
highest rate of interest allowed by law, from and including such twentieth
(20th) day, to but excluding the date of payment.
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4. REPRESENTATIONS AND WARRANTIES OF SELLERS. Sellers, jointly and
severally, represent and warrant to and agree with Purchaser that:
4.1 TITLE AND OWNERSHIP TO SHARES OF COMPANY STOCK.
(a) The shares of Company Stock listed to the right of each Seller's
name on SCHEDULE 4.1(A) attached hereto are owned of record by such Seller,
and constitute all of the issued and outstanding capital stock of the
Company;
(b) Sellers have full legal right, power and authority to enter
into this Agreement;
(c) At the time of Closing, Sellers will have full legal right, power
and authority to transfer and deliver to the Purchaser the shares of
Company Stock listed to the right of each such Seller's name on SCHEDULE
4.1(A); and
(d) The delivery to the Purchaser of the shares of Company Stock owned
by Sellers pursuant to the provisions of this Agreement will transfer valid
title thereto, free and clear of all liens, encumbrances, preemptive rights
and claims of every kind.
4.2 ORGANIZATION AND EXISTENCE. The Company is a corporation duly
organized and validly existing and in good standing under the laws of the State
of Texas 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. The Sellers have delivered to the Purchaser complete and correct
copies of the Articles of Incorporation and by-laws of the Company as in effect
on the Closing Date. SCHEDULE 4.2 attached hereto sets forth (i) all
subsidiaries, affiliates, officers and directors of the Company and (ii) each of
the jurisdictions in which the Company and each of its subsidiaries are
qualified to do business.
4.3 NO CONFLICT WITH OTHER INSTRUMENTS. Except for the matters listed on
SCHEDULE 4.3 attached hereto, the execution, delivery and performance of this
Agreement by the Sellers will not result in a violation or breach of any term or
provision of, or constitute a default or accelerate the performance required
under, any indenture, mortgage, deed of trust or other contract or agreement to
which the Company is a party or by which the Company or the Company's assets are
bound, or violate any order, writ, injunction or decree of any court,
administrative agency or governmental body.
4.4 CAPITALIZATION; OWNERSHIP OF COMPANY STOCK; AUTHORIZATION. The
authorized capital stock of the Company consists of 1,000,000 shares of common
stock, $1.00 par value, of which 2,000 shares are issued and outstanding on the
Closing Date. The Company has no treasury shares. All of the shares of Company
Stock are validly issued, fully paid and nonassessable and are owned of record
by Sellers, and were not issued in violation of the preemptive rights of any
shareholder of the Company. There are no existing subscriptions,
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options, warrants, calls, obligations or agreements (voting or otherwise)
relating to any of the authorized or outstanding capital stock of the Company.
4.5 SUBSIDIARIES. The Company 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 the Company does not, directly or indirectly, control the
management of any such entities.
4.6 RIGHTS TO PURCHASE THE COMPANY STOCK. Other than Purchaser pursuant to
this Agreement, no person, firm or entity has any right to purchase any of the
shares of Company Stock.
4.7 LITIGATION. Except as described on SCHEDULE 4.7 attached
hereto, neither the Company nor Sellers have received actual notice of any
claims, actions, suits, investigations or proceedings, pending against or
threatened against the Company or any of their respective assets or properties,
or which question the validity or legality of the transactions contemplated
hereby, at law or in equity or before or by any court or federal, state,
municipal or other governmental department, commission, board, agency or
instrumentality. Except as described on SCHEDULE 4.7, neither the Company nor
the Company's Assets are subject to any court or administrative order, writ,
injunction or decree to which the Company is, or Sellers are, a party, and there
does not exist any violation of or in default with respect to any order, writ,
injunction or decree of any court or federal, state, municipal or other
governmental department, commission, board, agency, instrumentality or
arbitrator to which the Company is, or Sellers are, a party.
4.8 FINANCIAL STATEMENTS. Sellers have heretofore furnished Purchaser with
complete copies of all currently available unaudited financial statements
relating to the Company for (i) the year ended December 31, 1998 and (ii) the
months ended January 31, February 28, March 31 and April 30, 1999, including
income statements through such dates and balance sheets as of such dates
(collectively, the "Financial Statements"). The Financial Statements are true
and complete in all material respects, have been prepared from the books and
records of the Company in accordance with generally accepted accounting
principles consistently applied throughout the entire period presented (except
as disclosed therein) for the periods reflected therein. The balance sheets
contained within the Financial Statements fairly present the financial condition
of the Company as of their respective dates; and the income statements contained
within the Financial Statements fairly present the results of operations of the
Company for their respective periods. None of the 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 Financial Statements
misleading.
4.9 COMPLIANCE WITH LAWS. The Company has 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 its property and the
conduct of its business, and neither Sellers nor the Company is a party to any
investigation or inquiry by any foreign, federal, state or local governmental
body or agency pending or, to
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Sellers' knowledge, threatened into its business, operations, affairs or
properties of the Company .
4.10 ILLEGAL PAYMENTS. Neither Sellers nor any director, officer,
partner, employee or agent of the Company, has, 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
Company which (i) might subject the Company (or Sellers) 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
or its operations, or (iii) if not continued in the future, might materially
adversely affect the Company.
4.11 EMPLOYEES. Attached hereto as SCHEDULE 4.11 is a schedule
listing the names and rates of compensation (not including bonuses, profit
sharing, incentive compensation and benefits) of each of the present officers,
employees, agents and independent contractors of the Company. Except as set
forth and described on SCHEDULE 4.11, there are no "employee pension benefit
plans", as such term is defined in Section 3(2) of the Employee Retirement
Income Security Act of 1974, as amended, or any other pension, profit sharing,
savings, bonus, incentive, option, insurance, welfare, stock purchase, stock
option, deferred compensation or other employee benefit plan or arrangement
maintained by the Company or to which the Company contributes or is required to
contribute. The Company has no collective bargaining agreements with any labor
unions. There have been and there are not pending or threatened, any labor
disputes, strikes or work stoppages which may have an adverse effect upon the
continued business or operation of the Company. The Company is in compliance
with all federal and state laws respecting employment and employment practices,
terms and conditions of employment and wages and hours.
4.12 INDEBTEDNESS. SCHEDULE 4.12 is an accurate list of all material
indebtedness (as the term "indebtedness" is defined in accordance with generally
accepted accounting principles) owed by the Company, or to which any of its
assets or properties are subject, including a description of the assets pledged
or otherwise subject thereto. A complete and correct copy of each loan
agreement, credit agreement or other similar instrument pursuant to which any
such indebtedness was incurred has been furnished to the Purchaser prior to the
Closing Date.
4.13 GUARANTIES; SURETYSHIPS; CONTINGENT LIABILITIES. Attached
hereto as SCHEDULE 4.13 is a list and brief description of all guaranties,
matters of suretyship and contingent liabilities of the Company.
4.14 ABSENCE OF UNDISCLOSED LIABILITIES. E xcept as set forth in
SCHEDULES 4.14 attached hereto, the Company does not have any material
liabilities, debts or obligations of any nature incurred by the Company, whether
accrued, absolute, contingent or otherwise, whether due or to become due,
including, without limitation, liabilities, debts or obligations on account of
taxes or other governmental charges, or penalties, interest or fines thereon or
in respect thereof, and whether such liabilities are normally shown or reflected
on a balance sheet prepared in a manner consistent with generally accepted
accounting principles. The term "material" contained in the preceding sentence
shall refer to liabilities, debts or obligations
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aggregating in excess of $3,000. The Company is not in default in respect of any
material term or condition of any indebtedness or liability, except as set forth
on SCHEDULE 4.14. Sellers do not have knowledge of any facts which could serve
as the basis for any assertion against the Company or any of its property of any
liability, debt or obligation not disclosed in this Agreement or in the
schedules delivered to the Purchaser pursuant to this Agreement.
4.15 TAX MATTERS. Sellers have provided to Purchaser copies of
all tax returns and related documents, and the Company has filed or timely filed
requests for extensions of, all federal, foreign, state, county, and local tax
returns required to be filed by it for periods ending on or before the Closing
Date. The Company has paid all Taxes shown to be due on such returns. For
purposes of this paragraph, the term "Taxes" shall mean, without limitation,
income taxes, corporate franchise taxes, payroll taxes, sales taxes, and ad
valorem taxes. The liabilities for such taxes are properly reflected in the
balance sheets of the Company, and represent, as of the date thereof, reasonable
provision for the payment of all accrued and unpaid taxes of the Company accrued
through that date, whether or not disputed, as well as deferred taxes required
under generally accepted accounting principles. The income tax returns of the
Company are not currently under audit by any federal, state or foreign taxing
authorities and have never been so audited by federal authorities except as
described in SCHEDULE 4.15. There are no agreements, waivers or other
arrangements providing for an extension of time with respect to the payment of
any tax or the assessment of any tax or deficiency of any nature against the
Company, nor are any suits or any other actions, proceedings, investigations or
claims now pending or threatened against the Company with respect to any tax or
assessment, nor are any matters under discussion with any federal, state,
foreign or local authority relating to any such taxes or assessments, or to any
claims for additional taxes or assessments asserted by any such authority. The
Sellers have made available to the Purchaser the federal income tax returns and
schedules thereto or requests for extensions thereof of the Company for the
three most recent fiscal years ending on or prior to the Closing Date as such
returns and schedules were filed with the Internal Revenue Service. The Sellers
will not cause or voluntarily permit a change in any federal income tax method
of accounting by the Company or in the method of allocation of the federal
income tax liability of the Company during or applicable to its current tax year
which would render inaccurate, misleading or incomplete the information
concerning taxes set forth or referred to in this Section 4.15, or which would
have a material adverse effect on the Company for any period prior to the
Closing Date.
4.16 INSURANCE. SCHEDULE 4.16 attached hereto sets forth a list and
brief description of all of the policies of insurance held by or for the benefit
of the Company on its property, assets, business or personnel. True and correct
copies of such policies or certificates evidencing such policies have heretofore
been furnished to Purchaser. The Company is not in default with respect to any
provision contained in any such insurance policy and all such policies carried
by the Company are in full force and effect except as noted on SCHEDULE 4.16
The policies designated on SCHEDULE 4.16 as carried by the Company or comparable
policies will be outstanding and in force on the Closing Date.
4.17 LICENSES AND PERMITS. SCHEDULE 2.1(G) describes all material
licenses, permits and certificates necessary to conduct the business of the
Company, all of which have been obtained by the Company and are valid and in
full force. True and correct copies of all such items have heretofore been
furnished to the Purchaser. No notices of violations of licenses
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or permits have been received by the Company, and no proceeding is pending or
threatened seeking the revocation or limitation of any of such licenses or
permits.
4.18 TITLE TO ASSETS, ETC. The Company has (i) good and
indefeasible title to all of the Company Assets reflected on any of the
schedules attached hereto as being owned by the Company, and (ii) right to
possession of all the Company Assets, in each case including those Company
Assets reflected in the Financial Statements (other than the Company Assets
reflected in the Financial Statements that have since been sold or otherwise
disposed of in the ordinary course of business, consistent with past practice,
and not involving any misrepresentation or breach of warranty or covenant in
this Agreement), free and clear of all liens, mortgages, pledges, title
retention agreements, restrictions, security interests and encumbrances, except
as set forth in SCHEDULE 4.18 attached hereto.
4.19 MACHINERY AND EQUIPMENT. Except as set forth on SCHEDULE
2.1(B), all items of Company Personal Property have been well 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 in the conduct of the Company's operations, and the
Company owns all such Company Personal Property disclosed on SCHEDULE 2.1(B).
Additionally, the Company has legal right to use all personal property which is
necessary to conduct its business as conducted as of the Closing Date, and,
except as set forth on SCHEDULE 2.1(B), all such rights are free and clear of
all liens and encumbrances.
4.20 CONTRACTS. Except for contracts and documents listed in SCHEDULE
2.1(C), the Company is not a party to or bound by any written or oral (i)
contract not made in the ordinary course of business; (ii) employment contract,
consulting contract or contract providing for the services of an independent
contractor; (iii) contract with any labor union or association; (iv) bonus,
pension, profit sharing, retirement, stock purchase, hospitalization, insurance
or other plan providing employee benefits; (v) lease with respect to any
property, real or personal, whether as lessor or lessee; (vi) contract or
commitment for the purchase of materials, supplies or equipment which contract
or commitment provides for expenditures in excess of $1,000 in any twelve month
period; (vii) sales or franchise agreement or legally enforceable commitment or
obligation with respect thereto; (viii) contract or commitment for capital
expenditures; (ix) contract relating to patents, trademarks, trade names,
copyrights, inventions, processes, know-how, formulae or trade secrets; (x)
contract or commitment for sale of the Company's services; or (xi) contract
continuing over a period of more than twelve months from the Closing Date. A
true copy of each contract listed in SCHEDULE 2.1(C) has heretofore been made
available to the Purchaser, and each written contract listed in SCHEDULE 2.1(C)
is in full force and effect and the parties thereto are not in default
thereunder nor does there exist any condition which with the passage of time or
notice or both might constitute such a default by any party thereto. Except as
indicated in SCHEDULE 2.1(C), no such contract not cancelable by one or both
parties within 120 days will be breached or give any other party a right of
termination as a result of the transactions contemplated by this Agreement.
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4.21 COMPUTER HARDWARE AND SOFTWARE. Except as set forth on
SCHEDULE 2.1(D), all items of Computer Hardware and Software have been well
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 in the conduct of the Company's
operations, and the Company owns all such Computer Hardware and Software
disclosed on SCHEDULE 2.1(D). Additionally, the Company has legal right to use
all computer hardware and software which is necessary to conduct its business as
conducted as of the Closing Date, and, except as set forth on SCHEDULE 2.1(D),
all such rights are free and clear of all liens and encumbrances.
4.22 PATENTS AND TRADEMARKS. SCHEDULE 2.1(E) attached hereto
includes a list of the Company's patents, patent applications, registered
trademarks, trademark applications, and registered copyrights. Except as
disclosed on SCHEDULE 2.1(E), to the extent such exist, the Company owns all
patents, registered trademarks and registered copyrights disclosed on SCHEDULE
2.1(E), and has legal right to use, all logos, patents, trademarks, trade names,
brand names, inventions, processes, know-how, trade secrets, copyrights and
other intellectual property which are necessary to conduct its business as
conducted as of the Closing Date, and, except as set forth on SCHEDULE 2.1(E),
all such rights are free and clear of all liens and encumbrances and, except as
set forth on SCHEDULE 2.1(E), have not been the subject of a claim of
infringement of another's rights or the subject of any interference, opposition
or cancellation proceedings. Except as disclosed on SCHEDULE 2.1(E), the
Company does not license from third parties any intellectual property which is
necessary to conduct its business as conducted as of the Closing Date. The
conduct of the Company's business as conducted as of the Closing Date does not
infringe any third party's logo, patent, trademark, trade name, copyright or
other intellectual property. Except as set forth on SCHEDULE 21(E), no
stockholder, director, officer, employee or consultant of the Company owns,
directly or indirectly, in whole or in part, any inventions or logos, patents,
trademarks, trade names, brand names, copyrights or third party test results or
applications therefor which the Company is presently using and the use of which
is necessary for the business of the Company as now conducted or has made any
invention not assigned to the Company which is necessary for the business of the
Company as conducted as of the Closing Date.
4.23 BANK ACCOUNTS; POWERS OF ATTORNEY; LINES OF CREDIT. Except as listed
on SCHEDULE 4.23 attached hereto, attached is a list setting forth (i) the name
of each bank, savings and loan or other financial institution in which the
Company 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, (ii) the name of each person, corporation, firm,
association or business entity or enterprise holding a general or special power
of attorney from the Company and the summary of the terms thereof and (iii) the
names of all persons authorized to execute notes, agreements or other
instruments relating to the borrowing of money or the extension of credit.
4.24 NOTES AND ACCOUNTS RECEIVABLE. The allowance for doubtful accounts
shown on SCHEDULE 2.1(H) has been determined in a manner consistent with that
applied in the preparation of the 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 Company in the ordinary course of the
Company's business.
10
4.25 ENVIRONMENTAL MATTERS. There is no violation by the Company of
any of the following (herein collectively called the "ENVIRONMENTAL LAWS") on,
under, within or with respect to the Company Facility: any federal, state or
local statute, law, ordinance, code, rule, regulation, order or decree
regulating, relating to, or imposing liability or standards of conduct
concerning, any substance deemed or considered hazardous to human health,
wildlife or the environment or giving rise to any clean-up or remediation
obligation on the part of the owner or operator of the property affected
thereby, or any party discharging or disposing of same, including, without
limitation, asbestos and the group or organic compounds known as polychlorinated
biphenyls (collectively, "HAZARDOUS SUBSTANCES"). There are no liens on or
affecting the Company Facility created, permitted or imposed by any
Environmental Laws and there is no actual, asserted or threatened liability or
obligation of the Company, related to the Company Facility, under any
Environmental Laws. Further, to Sellers' knowledge (i) no Hazardous Substances
have been generated, treated, stored, or disposed of, or otherwise deposited in
or located on, or released on or to the Company Facility, including, without
limitation, the surface and subsurface waters of the Company Facility, in
violation of any Environmental Laws, (ii) no party has engaged in any activity
on the Company Facility which would cause (A) the Company Facility to be a
hazardous waste treatment, storage or disposal facility within the meaning of or
otherwise bring the Company Facility within the ambit of any Environmental Laws,
or (B) the discharge of pollutants or effluents into any water source or system,
or the discharge into the air of any emissions, which would require a permit
under any Environmental Laws, and (iii) no underground storage tank is located
on or under the Company Facility.
4.26 COMPLETENESS. The representations, warranties and statements made by
or on behalf of the Company or Sellers herein do not include any untrue
statement of a material fact or omit to state any material fact necessary to
make the statements made, not misleading.
4.27 MISCELLANEOUS. All agreements, reports and other documents furnished
by Sellers to Purchaser are true, accurate and complete copies of the
agreements, reports and other documents they purport to be.
4.28 SECURITIES REPRESENTATIONS AND WARRANTIES. Sellers make the following
representations and warranties to Purchaser regarding the ▇-▇▇▇▇.▇▇▇ Stock:
(a) The shares of ▇-▇▇▇▇.▇▇▇ Stock are being acquired for Sellers' own
account, for investment purposes only, and not for the account of any other
person, and not with a view to distribution, assignment, or resale to
others or to fractionalization in whole or in part and that the transfer of
the shares of ▇-▇▇▇▇.▇▇▇ Stock to Sellers is intended to be exempt from
registration under the Securities Act of 1933 (the "Act") by virtue of the
exemption under Section 4(2) of the Act. Sellers understand that the shares
of ▇-▇▇▇▇.▇▇▇ Stock are and will be "restricted securities," as said term
is defined in Rule 144 of the Rules and Regulations promulgated under the
Act, that the certificates representing the shares of ▇-▇▇▇▇.▇▇▇ Stock will
bear a legend to the effect that the transfer of the securities represented
thereby is subject to the provisions hereof; and that stop transfer
instructions will be placed with the transfer agent for the shares of e-
▇▇▇▇.▇▇▇ Stock. In furtherance thereof, Sellers represent, warrant, and
agree as follows: (i) no other person has or will have a direct or indirect
beneficial interest in such shares of ▇-▇▇▇▇.▇▇▇ Stock, Sellers are not
acquiring the e-
11
▇▇▇▇.▇▇▇ Stock with a view toward resale, assignment, fractionalization or
distribution thereof, and Sellers will not sell, hypothecate, or otherwise
transfer any of the shares of ▇-▇▇▇▇.▇▇▇ Stock except in accordance with
the Act and applicable state securities laws or unless, in the opinion of
counsel for ▇-▇▇▇▇.▇▇▇, an exemption from the registration requirements of
the Act and such laws is available; and (ii) ▇-▇▇▇▇.▇▇▇ is under no
obligation to register the shares of ▇-▇▇▇▇.▇▇▇ Stock on behalf of Sellers
or to assist Sellers in complying with any exemption from registration.
(b) Sellers have been furnished with and has carefully read each of (i)
▇-▇▇▇▇.▇▇▇'s Annual Report on Form 10-K for fiscal year ended December 31,
1998, as amended; and (ii) ▇-▇▇▇▇.▇▇▇'s Quarterly Report on Form 10-Q for
fiscal quarter ended March 31, 1999. In evaluating the suitability of an
investment in ▇-▇▇▇▇.▇▇▇, Sellers have not relied upon any representations
or other information (whether oral or written) from ▇-▇▇▇▇.▇▇▇, Purchaser
or any of their respective agents, and no oral or written representations
have been made or oral or written information furnished to Sellers or their
advisors, if any, in connection with the acceptance of the shares of e-
▇▇▇▇.▇▇▇ Stock which were in any way inconsistent with the information set
forth in the documents listed in the first sentence of this Section
4.28(b). Purchaser and ▇-▇▇▇▇.▇▇▇ have granted to Sellers and their
representatives the opportunity to examine such documents and ask such
questions of Purchaser and ▇-▇▇▇▇.▇▇▇ as Sellers have deemed necessary, and
Sellers have received satisfactory answers from Purchaser and ▇-▇▇▇▇.▇▇▇
(or persons acting on Purchaser's or ▇-▇▇▇▇.▇▇▇'s behalf) concerning e-
▇▇▇▇.▇▇▇ and the terms and conditions of the ▇-▇▇▇▇.▇▇▇ Stock described
herein and all other information they have deemed necessary with making an
informed investment decision. Either Purchaser or ▇-▇▇▇▇.▇▇▇ will provide
to Sellers copies of all of ▇-▇▇▇▇.▇▇▇'s Quarterly Reports on 10-Q for each
fiscal quarter ended after the Closing Date, together with such additional
information as Sellers may reasonably request from ▇-▇▇▇▇.▇▇▇ or Purchaser
that is readily available to ▇-▇▇▇▇.▇▇▇ or Purchaser.
(c) ▇-▇▇▇▇.▇▇▇ and Purchaser have made available to Sellers all
documents and information that Sellers have requested relating to an
investment in ▇-▇▇▇▇.▇▇▇.
(d) Sellers recognize that an investment in ▇-▇▇▇▇.▇▇▇ involves
substantial risks, and Sellers have taken full cognizance of and understand
all of the risk factors related to the acceptance of the ▇-▇▇▇▇.▇▇▇ Stock.
(e) Sellers have carefully considered and have, to the extent Sellers
believe such discussion necessary, discussed with Sellers' professional
legal, tax and financial advisers the suitability of an investment in e-
▇▇▇▇.▇▇▇ for Sellers' particular tax and financial situation, and Sellers
have determined that the ▇-▇▇▇▇.▇▇▇ Stock is a suitable investment for
Sellers.
(f) All information which Sellers have provided to Purchaser and/or e-
▇▇▇▇.▇▇▇ concerning Sellers and the financial position of Sellers is
correct and complete as the date set forth below.
12
(g) Sellers have such knowledge and experience in financial and business
matters that they are capable of (i) evaluating the merits and risks of an
investment in the ▇-▇▇▇▇.▇▇▇ Stock, and (ii) making an informed investment
decision.
5. REPRESENTATIONS AND WARRANTIES OF PURCHASER. Purchaser represents and
warrants to and agrees with Sellers that:
5.1. PURCHASER'S AUTHORITY RELATIVE TO THIS AGREEMENT. This Agreement has
been duly executed and delivered by Purchaser, and no further corporate action
is necessary with respect to Purchaser to make this Agreement a valid and
binding obligation of Purchaser, enforceable in accordance with its terms. None
of the execution, delivery or performance of this Agreement by Purchaser will
result in a violation or breach of any term or provision under the Certificate
of Incorporation or Bylaws or any resolution of the Board of Directors or
shareholders of Purchaser or constitute a default or breach of, or accelerate
the performance required under, or require the consent of any person or entity
under any indenture, mortgage, deed of trust or other contract or agreement to
which Purchaser is a party or by which it or any of its assets are bound, or
violate any order, writ, injunction or decree of any court, administrative
agency or governmental body.
5.2. ORGANIZATION AND EXISTENCE. Purchaser is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power to carry on its business as now conducted
and to enter into and perform this Agreement.
6. NATURE AND SURVIVAL OF REPRESENTATIONS AND WARRANTIES.
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 or
Purchaser pursuant to this Agreement, or in connection with the transactions
contemplated hereby, shall be deemed representations and warranties by Sellers
or Purchaser, as the case may be.
6.2. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. Regardless of any
investigation at any time made by or on behalf of any party hereto or of any
information any party may have in respect thereof, all representations and
warranties made hereunder or pursuant hereto shall survive the Closing.
6.3 SELLERS' INDEMNITY. Sellers agree to indemnify, defend and hold
Purchaser 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 Purchaser
resulting from or arising out of, relating to, or by virtue of any breach by
Sellers of their representations, warranties and covenants in this Agreement, in
any schedule attached or to be delivered pursuant to this Agreement or in any
certificate or other instrument delivered by or on behalf of the Sellers
pursuant to this Agreement.
13
6.4 PURCHASER'S INDEMNITY. Purchaser agrees to indemnify, defend and hold
Sellers 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 Sellers
resulting from or arising out of, relating to, or by virtue of any breach by
Purchaser of its representations, warranties and covenants in this Agreement, in
any schedule attached to or to be delivered pursuant to this Agreement or in any
certificate or other instrument delivered by or on behalf of Purchaser pursuant
to this Agreement.
6.5. PURCHASER'S RIGHT OF OFFSET. In addition to Purchaser's other rights
and remedies under this Agreement and notwithstanding any other provision of
this Agreement, for so long as any portion of any shares of the ▇-▇▇▇▇.▇▇▇ Stock
have not been issued to Sellers, in the event Purchaser has a claim against
Sellers for breach of any of the representations, warranties and covenants made
by Sellers in this Agreement or is otherwise entitled to indemnity from Seller
pursuant to Sections 2.3 and 6.3, Purchaser shall be entitled to offset the
amount of such claim(s) or indemnity against the unissued ▇-▇▇▇▇.▇▇▇ Stock,
which offset(s) shall be made first against the next shares to be issued.
7. COVENANTS OF SELLERS. Sellers covenant with Purchaser that:
7.1. NO TAX DUE CERTIFICATE. To the extent applicable, promptly after
the Closing, Seller will order a certificate from the Comptroller of the State
of Texas as to no sales taxes being due and unpaid by Seller, and Seller will
deliver such certificate to Purchaser as soon thereafter after as practicable.
7.2 NONCOMPETE; WORKING FOR COMPETITOR. In further consideration of
Purchaser's payment of the Purchase Price under Section 3 hereof, except
pursuant to the terms of the Employment Agreement described in Section 8.5
herein, Sellers will not, at any time for twenty-four (24) months subsequent to
the Closing Date, directly or indirectly, within the United States, Canada,
Mexico, South America or Europe, for Sellers' own account or on behalf of any
direct competitors of the Company, Purchaser or ▇-▇▇▇▇.▇▇▇, engage in any
business or transaction involving the design, installation, integration, service
or consulting with respect to (i) transcription services, or (ii) voice
recognition software designs and applications (whether as an employee, employer,
independent contractor, consultant, agent, principal, partner, stockholder,
corporate officer, director or in any other individual or representative
capacity), without the prior written consent of Purchaser or ▇-▇▇▇▇.▇▇▇, as the
case may be, which consent may be withheld by Purchaser or ▇-▇▇▇▇.▇▇▇ in
Purchaser's or ▇-▇▇▇▇.▇▇▇'s sole and absolute discretion.
7.3 NON-SOLICITATION OF EMPLOYEES. For a period of twenty-four (24)
months after the Closing Date, Sellers will not in any way, directly or
indirectly (i) induce or attempt to induce any employee of the Company,
Purchaser or ▇-▇▇▇▇.▇▇▇ to quit employment with the Company, Purchaser or e-
▇▇▇▇.▇▇▇; (ii) otherwise interfere with or disrupt the Company's, Purchaser's or
▇-▇▇▇▇.▇▇▇'s relationship with its employees; (iii) solicit, entice or hire away
any employee of the Company, Purchaser or ▇-▇▇▇▇.▇▇▇; or (iv) hire or engage any
employee of the Company, Purchaser or ▇-▇▇▇▇.▇▇▇ or any former employee of the
Company, Purchaser or ▇-▇▇▇▇.▇▇▇ whose employment with the Company, Purchaser or
▇-▇▇▇▇.▇▇▇, as the case may be, ceased less than one year before the date of
such hiring or engagement. Sellers acknowledge that
14
any attempt on the part of Sellers to induce others to leave the Company's,
Purchaser's or ▇-▇▇▇▇.▇▇▇'s employ, or any effort by Sellers to interfere with
the Company's, Purchaser's or ▇-▇▇▇▇.▇▇▇'s relationship with its other employees
would be harmful and damaging to the Company, Purchaser or ▇-▇▇▇▇.▇▇▇, as the
case may be.
7.4 ACKNOWLEDGMENT. It is the express intention of all of the
parties hereto to comply with sections 15.50 et seq. of the Texas Business and
Commerce Code in effect as of the date of execution hereof. Sellers stipulate
that the provisions of this Agreement are not oppressive or overly burdensome to
Sellers and will not prevent Sellers from earning an income following the
Closing Date. Sellers warrant and represent that:
(a) Sellers are familiar with non-compete and non-solicitation
covenants.
(b) Sellers have discussed or acknowledge the opportunity to discuss the
provisions of the non-compete and non-solicitation covenants contained
herein with Sellers' attorney and have concluded that such provisions
(including, without limitation, the right to equitable relief and the
length of time provided for herein) are fair, reasonable and just under the
circumstances.
(c) Sellers are fully aware of the obligations, limitations and
liabilities included in the non-compete and non-solicitation covenants
contained in this Agreement.
(d) The limitations contained in this Agreement with respect to
geographic area, duration and scope of activity are reasonable; however, if
any court shall determine that the geographic area, duration or scope of
activity of any restriction contained in this Agreement is unenforceable,
it is the intention of the parties that such restrictive covenants set
forth herein shall not thereby be terminated, but shall be deemed amended
to the extent required to render such covenants valid and enforceable.
(e) The twenty-four (24)-month non-compete and non-solicitation
periods are fair, reasonable and necessary to protect the interests and
business operations of Purchaser.
8. THE CLOSING. Sellers and Purchaser hereby agree to consummate the closing
of the sale and purchase of the Company Stock (the "Closing") at the offices of
Purchaser's legal counsel, ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇, located at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (or such other place as Purchaser and Seller so
determine) immediately following execution of this Agreement (the "Closing
Date"). At the option of Purchaser 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:
8.1. CERTIFICATES REPRESENTING SHARES OF COMPANY STOCK. Sellers shall
deliver to Purchaser certificates representing the shares of Company Stock, duly
endorsed to Purchaser or accompanied by a duly executed stock power in blank,
and in proper form of transfer.
15
8.2. PURCHASE PRICE. Purchaser shall pay the amount of the Purchase Price in
the manner set forth in Section 3 above, including, without limitation, the cash
portion of such Purchase Price.
8.3. RESIGNATION LETTERS. Seller shall deliver to Purchaser executed letters
of resignation from all existing officers and directors of the Company for
purposes of resigning their respective positions, which letters shall expressly
set forth that, as of the Closing Date, each such person (i) is not a party to
any agreement with the Company, or, alternatively, that each resigns from all of
such person's respective salaried positions from the Company, and (ii) does not
have any claim of any nature whatsoever against the Company, including, without
limitation, claims for unpaid wages, severance expenses or wrongful termination.
Purchaser shall appoint new officers and directors as Purchaser shall designate.
8.4. DELIVERY OF BOOKS AND RECORDS. Sellers shall deliver to Purchaser all
of the original books and records of the Company, including, without limitation,
the original corporate minute book, and all employee files.
8.5. EMPLOYMENT AGREEMENT. Purchaser and ▇▇▇ ▇. ▇▇▇▇ shall execute an
Employment Agreement in the form attached hereto as EXHIBIT "B" (the "Employment
Agreement"), which Employment Agreement shall provide, in addition to the other
terms set forth therein, for (i) an initial term of two (2) years, (ii) a base
salary of $5,000 per month, and (iii) ▇▇▇. ▇▇▇▇'▇ agreement not to compete with
Purchaser following the termination of such Employment Agreement in accordance
with the terms of such Employment Agreement.
8.6. NONQUALIFIED STOCK OPTION AGREEMENT. ▇-▇▇▇▇.▇▇▇ and ▇▇▇. ▇▇▇▇ shall
execute a Nonqualified Stock Option Agreement in the form attached hereto as
EXHIBIT "C" (the "Option Agreement"), which Option Agreement shall provide, in
addition to the other terms set forth therein, for (i) the grant to ▇▇▇. ▇▇▇▇ of
options to acquire 15,000 shares of ▇-▇▇▇▇.▇▇▇'s common stock (the "Stock
Options") at a price per share more particularly set forth therein, (ii) as long
as ▇▇▇. ▇▇▇▇ is an employee of Purchaser, one-third (1/3) of such Stock Options
will vest, if ever, each year on the anniversary of the Closing Date, in other
words, 5,000 Stock Options will vest on the first anniversary of the Closing
Date, 5,000 Stock Options will vest on the second anniversary of the Closing
Date, and 5,000 Stock Options will vest on the third anniversary of the Closing
Date, and (iii) the Stock Options will be unregistered and restricted from being
sold for the period established by federal law.
8.7 BANK SIGNATURE CARDS. Sellers shall deliver to Purchaser original
replacement bank signature cards for all bank accounts owned by the Company.
9. CONDITIONS TO CLOSING. It shall be a condition precedent to Purchaser's
obligations under this Agreement that ▇-▇▇▇▇.▇▇▇'s Board of Directors shall have
approved the transaction described in this Agreement.
10. FURTHER ACTS. Sellers covenant and agree that, from time to time on and
after the Closing Date, at the request of the Purchaser, Sellers will execute
and deliver all documents that may reasonably be required to confirm and assure
Purchaser of its title and interest in the Company Stock.
16
11. POSSESSION. At the Closing, Sellers shall be obligated to deliver to
Purchaser the Company Facility and all tangible items constituting the Company
Assets.
12. EXPENSES AND COMMISSIONS. Sellers and Purchaser will pay their own
expenses incident to the transaction contemplated by this Agreement. Purchaser
and Sellers each represent to the other that there are no agents or brokers
entitled to a commission in connection with this purchase and sale of the
Assets. Sellers hereby agree to indemnify and hold harmless Purchaser against
any and all claims of any agent, broker, finder or similar party claiming
through Sellers, and Purchaser hereby agrees to indemnify and hold harmless
Sellers against any and all claims of any agent, broker, finder, or other
similar party claiming through Purchaser.
13. MISCELLANEOUS.
13.1. 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: ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Esq.
▇▇▇▇ & Revack
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
If to Purchaser, to: e-DOCS Health Care Information Services, Inc.
c/o Applied Voice Recognition, Inc. d/b/a ▇-▇▇▇▇.▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopy No. (▇▇▇) ▇▇▇-▇▇▇▇
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 13.1, 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, provided that such
facsimile transmission is confirmed within one (1) business day thereafter by
U.S. mail in accordance with
17
this Section 13.1. Notices delivered by any other means shall be deemed given
and received upon actual receipt of the above-specified address of the
addressee.
13.2. ASSIGNMENT. Except for assignment by Purchaser to an affiliate
business, this Agreement may not be assigned by any of the parties without the
prior written consent of the non-assigning parties. This Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
heirs, legal representatives, successors and permitted assigns.
13.3. 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.
13.4 GOVERNING LAW; VENUE. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF
THE STATE OF TEXAS. VENUE FOR ANY DISPUTE ARISING OUT OF THIS AGREEMENT SHALL
BE PROPER IN HOUSTON, ▇▇▇▇▇▇ COUNTY, TEXAS.
13.5 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.
NOTWITHSTANDING THE FOREGOING, THE PARTIES AGREE THAT A CLAIM ARISING UNDER
SECTIONS 7.2 OR 7.3 OF THIS AGREEMENT SHALL NOT BE SUBJECT TO MANDATORY
ARBITRATION UNDER THIS SECTION 13.5.
13.6 SCHEDULES AND EXHIBITS. All schedules and exhibits attached to and
referenced in this Agreement are incorporated in this Agreement and made a part
hereof.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as of
the Effective Date.
SELLERS:
-------
/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇
__________________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇
/s/ ▇▇▇ ▇. ▇▇▇▇
__________________________________________
▇▇▇ ▇. ▇▇▇▇
COMPANY:
-------
A WORD ABOVE, INC., a Texas corporation
By: /s/ ▇▇▇ ▇. ▇▇▇▇
_______________________________________
▇▇▇ ▇. ▇▇▇▇, President
PURCHASER:
---------
e-DOCS HEALTH CARE INFORMATION SERVICES,
INC., a Delaware corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_______________________________________
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, President
Signature Page to Stock Purchase Agreement
(A Word Above, Inc.)
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Schedules:
---------
2.1(b) Company Personal Property
2.1(c) Contracts
2.1(d) List of Computer Hardware and Software
2.1(e) List of Intellectual Property
2.1(g) List of Licenses and Permits
2.1(h) Accounts Receivable
2.2 Included Liabilities
2.3 Excluded Assets and Liabilities
4.1(a) Title to Shares of Company Stock
4.2 List of Subsidiaries, Affiliates, Officers and Directors of Company
and Jurisdictions where Qualified
4.3 Conflicting Instruments
4.7 Litigation
4.11 Employees
4.12 Indebtedness
4.13 Guaranties, Suretyships and Contingent Liabilities
4.14 Material Liabilities
4.15 Federal Tax Audits
4.16 Insurance
4.18 List of Encumbrances
4.23 Bank Accounts, Powers of Attorney and Lines of Credit
Exhibits:
--------
"A" Description of AVRI Stock
"B" Employment Agreement
"C" Option Agreement
20