EXHIBIT 2.1
REORGANIZATION AGREEMENT
This Reorganization Agreement ("Agreement") is made and entered into this
_____ day of December, 1996 between and among (i) Summa Vest Inc., a Utah
corporation, which is referred to herein as the "Company," (ii) Applied Voice
Recognition, Inc., a Delaware corporation, which is referred to herein as "AVR,"
(iii) those persons identified in Schedule A-1 attached hereto, who are the
beneficial owners of 9,073,00 shares of common stock of AVR, $0.01 par value per
share, which constitutes 100% of the issued and outstanding capital stock of AVR
(the "AVR Shareholders"), (iv) those persons identified in Schedule A-2 hereto,
who are the holders of the AVR common stock purchase warrants (the "Warrants")
entitling them, to purchase a total of 770,000 shares of AVR's common stock (the
"Warrant Holders"), (v) those persons identified in Schedule A-3 hereto, who are
the holders of options (the "Options") to purchase a total of 150,000 shares of
AVR's common stock (the "Option Holders"), and (vi) those subscribers to shares
of the common stock of AVR that shall execute and deliver to AVR a Counterpart
Signature Page to this Agreement, which shall be identified on Schedule B to
this Agreement (the "Share Subscribers"). The AVR Shareholders, the AVR Warrant
Holders, the Option Holders and the Share Subscribers shall hereinafter be
referred to collectively as the "Shareholders."
WHEREAS, the AVR Shareholders, as set forth in Schedule A-1 hereto, own
and have the right to sell, transfer and convey, 9,073,00 shares of AVR's common
stock which constitutes one hundred percent (100%) of the issued and outstanding
capital stock of AVR; and
WHEREAS, the AVR Warrant Holders, as set forth in Schedule A-2 hereto, own
and have the right to sell, transfer and convey the AVR Warrants, which
constitutes one hundred percent (100%) of the issued and outstanding Warrants of
AVR; and
WHEREAS, the Option Holders, as set forth in Schedule A-3 hereto, own and have
the right to sell, transfer and convey the Options, which constitutes one
hundred percent (100%) of the issued and outstanding Options of AVR; and
WHEREAS, The Share Subscribers, which shall be set forth in Schedule B
hereto, shall have subscribed for the purchase of a total of that number of
shares of AVR's common stock as set forth in Schedule B hereto pursuant to an
offering of AVR's common stock conducted in accordance with Section 4(2) and
Rule 903(c)(3) of Regulation S both promulgated under the Securities Act of
1933, as amended (the "Act"); and
WHEREAS, the Company wishes to acquire one hundred percent (100%) of the
issued and outstanding capital stock of AVR, including those share presently
held by the AVR Shareholders, and those shares issuable to the Share Subscribers
through (1) exchanging for the 9,073,00 shares of AVR's common stock held by the
AVR Shareholders, 9,073,00 shares
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of the Company's $0.001 par value per share common stock; and (2) exchanging for
the shares of AVR's common stock issuable to the Share Subscribers, as set forth
in Schedule B hereto shares of the Company's $0.001 par value per share common
stock on a share for share basis; and
WHEREAS, the Company also wishes to acquire one hundred percent (100%) of
the issued and outstanding Warrants of AVR, from the Warrant Holders through
exchanging for the Warrants held by such Warrant Holders, the Company's common
stock purchase warrants possessing identical rights, terms and provisions as the
AVR Warrants.
WHEREAS, the Company also wishes to acquire one hundred percent (100%) of
the issued and outstanding Options of AVR, from the Option Holders through
exchanging for the Options held by such Option Holders, the options possessing
identical rights, terms and provisions as the AVR Options.
WHEREAS, the AVR Shareholders have agreed to deliver 9,073,00 shares of
AVR's common stock which constitutes one hundred percent (100%) of the issued
and outstanding shares of common stock of AVR to the Company in exchange for
9,073,00 newly issued shares of the Company's $0.001 par value per share common
stock; and
WHEREAS, the Share Subscribers in connection with their subscriptions
shall delivery Counter Part Signature Pages to this Agreement evidencing their
agreement, pursuant to the terms of this Agreement, to exchange the shares of
AVR's common stock issuable upon acceptance of such subscriptions for shares of
the Company's $0.001 par value per share common stock on a share for share
basis; and
WHEREAS, the Warrant Holders have agreed to, to exchange the AVR's
Warrants for the Company's newly issued common stock warrants possessing
identical rights, terms and conditions as the AVR Warrants ;
WHEREAS, the parties hereto wish to formalize the above mentioned
agreements and thereafter accomplish such exchange on the terms and conditions
set forth herein.
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants hereinafter set forth, the parties hereto have agreed and by these
presents do hereby agree as follows:
1. REPRESENTATIONS AND WARRANTIES BY AVR AND THE AVR SHAREHOLDERS.
AVR, and the AVR Shareholders, hereby jointly and severally make the
following express representations and warranties to the Company:
A. AVR is a corporation duly organized, validly existing and in
good standing under the laws of the State of Delaware and has
the
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corporate power to own its property and carry on its business
in the State of Delaware. Copies of AVR's Certificate of
Incorporation and by-laws have heretofore been furnished to
the Company by AVR and/or the AVR Shareholders, and all such
copies are true, correct and complete copies of the original
Articles of Incorporation and by-laws including all amendments
thereto.
B. AVR has the corporate authority to issue a total of 15,000,000
shares of common stock, of which 9,173, 000 shares have been
issued and are outstanding. In addition, AVR has issued and
outstanding those common stock purchase Warrants set forth in
Schedule A-2 and those Options set forth in Schedule A-3
hereto.
C. AVR has undertaken the private placement of a total of a
minimum of 225,000 shares and a maximum of 510,000 shares of
its common stock at a purchase price of $2.00 per share for
total consideration of a minimum of $510,000 and a maximum of
$1,020,000 (the "Offering"). Such private placement is being
conducted through delivery by AVR of a placement memorandum
dated October 28, 1996, as supplemented ("Placement
Memorandum"). In connection therewith, AVR has received
subscriptions to purchase a total of that number of shares of
its common stock set forth in Schedule B hereto.
D. Each person who shall subscribed to purchase any of the shares
specified in subparagraph 1C herein above, as a condition of
sale, has assented to all of the terms and conditions of this
Agreement and has executed a counterpart signature thereto.
The identity of each such subscriber to shares shall be set
forth on Schedule B to this Agreement
F. The AVR Shareholders have full power and authority to exchange
the 9,073,00 shares of AVR's common stock which are held by
them upon the terms and conditions provided for in this
Agreement, and said shares of common stock have been duly and
validly issued and will be free and clear of any lien or other
encumbrance on the Closing Date specified herein.
G. The AVR Warrant Holders and the AVR Option Holders each have
full power and authority to exchange the Warrants and the
Options, respectively which are held by them upon the terms
and conditions provided for in this Agreement, and said
Warrants and Options have been duly and validly issued and
will be free and clear of any lien or other encumbrance on the
Closing Date specified herein.
H. The AVR balance sheet dated August 15, 1996 (the "Balance
Sheet") contained in the Placement Memorandum, along with the
Placement Memorandum contain substantially true and correct
statements
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concerning AVR and the financial condition of AVR's assets and
liabilities as of such date. Except as described in this
Agreement or disclosed in the Placement Memorandum or to the
Company in writing, AVR has not:
(1) issued any additional shares of its capital stock, or
any options to acquire such stock, to any person other
than those persons listed in Schedule B to this
Agreement, who have subscribed to purchase shares of
AVR's common stock in connection with the private
placement which is described in paragraph 1C herein
above;
(2) paid or declared any dividends or distributions of
capital, surplus, or profits with respect to any of its
issued and outstanding shares of capital stock; or
(3) entered into any other transaction or agreement which
would, or might, materially impair the shareholder's
equity of AVR.
I. Since August 15, 1996, and except as provided herein or
disclosed in the Placement Memorandum or to the Company in
writing, AVR has not engaged in any material transactions
other than transactions in the normal course of the operation
of its business, which would, or might, materially impair the
shareholder's equity of AVR as reflected in the Balance Sheet.
J. AVR is not involved in any pending or threatened litigation
which would, or might, materially affect its financial
condition and which has not been:
(1) disclosed in the Balance Sheet, or
(2) disclosed in the Placement Memorandum, or
(3) disclosed to the Company in writing.
K. AVR has good and marketable title to all of the property and
assets free and clear of any and all liens, encumbrances or
restrictions, except for:
(1) taxes and assessments which may become due and payable
in the ordinary course of business; and
(2) easements or other minor restrictions with respect to
its property which do not materially affect the present
use of such property.
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L. There are no unpaid assessments or proposed assessments of
State or Federal income taxes pending against AVR and all
liabilities for Federal and State income or franchise taxes,
as shown on the tax returns filed, or to be filed, by AVR,
have been paid or the liability therefor has been provided for
and all Federal and State income or franchise taxes for
periods subsequent to the periods covered by said returns
likewise have been paid or adequately accrued; except where
the failure to pay would not have a material adverse effect on
the business of AVR.
M. The AVR Shareholders are acquiring the common stock of the
Company, the Warrant Holders are acquiring the common stock
purchase warrants of the Company, the AVR Option Holders are
acquiring the options of the Company and the subscription
agreement to be executed by the Share Subscribers contain
representations evidencing the fact that the Share Subscribers
are acquiring the common stock of the Company solely for their
own accounts, for investment, and not with a view to any
subsequent "distribution" thereof within the meaning of the
Act. The AVR Shareholders understand that the Company's common
stock, the Warrant Holders understand that the Company's
Warrants and the shares of the Company's common stock issuable
upon exercise of the its warrants (subject to any registration
rights respecting such warrants), the Option Holders
understand that the Company's options and the shares of the
Company's common stock issuable upon exercise of the its
options (subject to any registration rights respecting such
options), and the subscription agreement to be executed by the
Share Subscribers contain representations evidencing the fact
that the Share Subscribers understand that the Company's
common stock issuable to them hereunder or thereunder have not
been registered under the Act or securities laws of any State
("State Act") by reason of the specific exemptions therefrom,
which exemptions depend in part upon their subjective
investment intent as expressed herein.
N. The AVR and the AVR Shareholders hereby acknowledge and the
subscription agreement to be executed by the Share Subscribers
contain acknowledgments of the Share Subscribers that:
(1) They are an "Accredited Investor" as such term is
defined in Regulation D promulgated under the Act, or
they have such knowledge and experience in financial and
business matters that they are capable of evaluating the
merits and risks of the proposed exchange of AVR's
securities for securities of the Company, and
(2) They are able to bear the economic risks of the
investment in the Company's securities and they are able
to protect their own
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interests in an investment of this nature.
AVR, and the AVR Shareholders further represent and warrant that all of
the representations and warranties set forth above are true as of the date of
this Agreement, shall be true at the Closing Date and shall survive the Closing
for a period of one year from the Closing Date.
2. REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The
Company hereby makes the following express representations and warranties to AVR
and the Shareholders:
A. The Company is a corporation duly organized, validly existing and in
good standing under the laws of the State of Utah and has the
corporate power to own its properties and carry on its business as
now being conducted. Certified copies of the Company's Articles of
Incorporation and By-Laws have heretofore been furnished to AVR by
the Company, and all such copies are true, correct and complete
copies of the original Articles of Incorporation and By-Laws
including all amendments thereto.
B. The Company has the corporate authority to issue a total of
50,000,000 shares of $0.001 par value per share common stock, of
which 325,198 shares are presently issued and outstanding. As of the
date of Closing, there are not any outstanding or authorized
options, warrants, rights, subscriptions, claims of any character,
agreements, obligations, convertible or exchangeable securities, or
other commitments, contingent or otherwise, relating to the
Company's capital stock, pursuant to which the Company is or may
become obligated to issue shares of the Company's common stock, any
other shares of its capital stock or any securities convertible
into, exchangeable for., or evidencing the right to subscribe for,
any shares of the capital stock of the Company. All of the shares of
the Company's common stock have the same voting and other rights.
C. Commencing January 29, 1986 and ending in March of 1986, the Company
offered and sold to the public, 11,900,000 shares of its common
stock for gross offering proceeds of $238,000. Such offering was
conducted by the Company pursuant to registration on Form S-18 of
the Securities and Exchange Commission ("SEC").
D. Since the conclusion of such public registration, the Company has
continued to report under Section 15(d) of the Securities Exchange
Act of 1934, as amended (the "Exchange Act") and has not filed a
transitional report submitting it to the reporting requirement of
Section 12(g) under the Exchange Act. On or about the Closing date
hereunder, the Company will have filed forms necessary to make it
current in all reporting requirements under the Exchange Act.
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D. Subsequent to the Closing Date of this Reorganization Agreement, the
Company will file an amendment to its Articles of Incorporation and
adopt such resolutions as necessary for the purpose of 1) changing
the name of the Company to "Applied "Voice Recognition, Inc.."
E. On or before the Closing Date of this Reorganization Agreement,
225,000 shares of the restricted $0.001 par value per share common
stock of the Company will be repurchased by the Company for a
nominal consideration and canceled forthwith. Further, on or before
the Closing Date the Company shall issue a total of 969,400 shares
of its common stock to those entities set forth in Schedule C-1
hereto pursuant to Form S-8, as promulgated under the Act and an
additional 202,402 shares of its common stock to those entities set
forth in Schedule C-2 hereto pursuant to Rule 903(c)2 of Regulation
S, as promulgated under the Act.. Upon the completion of the above
referenced stock repurchase and share issuances, the Company will
have a total of 1,272,000 shares of common stock, with a par value
of $0.001 per share, which are fully paid, validly issued and
outstanding.
F. The audited Financial Statements of the Company which are attached
hereto as Exhibit 1 (the "Financial Statements") constitute
substantially true and correct statements of the financial condition
of the Company and the Company's assets, liabilities and income as
of such date. Since the date of the Balance Sheet contained in the
Financial Statements, the Company has not, except as provided in
paragraph 2E herein above:
(1) issued any additional shares of its common stock to any
person;
(2) paid or declared any dividends or distributions of capital,
surplus, or profits with respect to any of its issued and
outstanding shares of common stock;
(3) paid or agreed to pay any consideration in redemption of any
of its issued and outstanding shares of common stock; or
(4) entered into any other transaction or agreement which would,
or might, materially impair the shareholder's equity of the
Company as reflected in such Balance Sheet.
G. The Company, subject to obtaining shareholder approval of the
proposed amendments to its Articles of Incorporation, as
contemplated hereby, which the Company hereby agrees to faithfully
undertake and complete, has the corporate power and authority to
execute and perform all of its duties and obligations under the
terms of this Agreement and to issue and deliver to the AVR
Shareholders and the Share Subscribers, those shares of its $0.001
par value per share common stock that are required to be issued and
delivered
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under the terms of this Agreement and to issue and deliver to the
AVR Warrant Holders, those common stock purchase warrants that are
required to be issued and delivered under the terms of this
Agreement and to issue to the AVR Option Holders, those options that
are required to be issued and delivered under the terms of this
Agreement.
.
H The execution and delivery of this Agreement, and the issuance of
the Company's $0.001 par value per share common stock and common
stock purchase warrants and options required to be issued hereunder,
will have been duly authorized by all necessary corporate action and
neither the execution nor delivery of this Agreement nor the
issuance of the Company's $0.001 par value per share common stock
and common stock purchase warrants and options, nor the performance,
observance or compliance with the terms and provisions of this
Agreement will violate any provision of law, any order of any court
or other governmental agency, the Articles of Incorporation or By-
Laws of the Company or any indenture, agreement or other instrument
to which the Company is a party, or by which it is bound or by which
any of its property is bound.
I. The Company is not involved in any pending or threatened litigation
which would, or might, materially affect its financial condition and
which has not been:
(1) provided for in the Financial Statements attached hereto as
Exhibit 1, or
(2) disclosed to AVR, the AVR Shareholders, the AVR Warrant
Holders and the Option Holders in writing.
J. The Company has duly and timely filed or prior to Closing will file
with any federal, state, local or foreign governmental taxing
authority, body or agency, all federal, state, local and foreign tax
returns, declarations, reports estimates, informational returns and
statements (collectively ("Returns") required to be filed or sent by
or on behalf of the Company, at or prior to the date of Closing, and
all such Returns are or will be true, correct and complete. There
are no unpaid assessments or proposed assessments of State or
Federal income taxes pending against the Company. All liabilities
for Federal and State income or franchise taxes, as shown on the tax
returns filed, or to be filed, by the Company, have been paid or the
liability therefor has been provided for in the attached Balance
Sheet and all Federal and State income or franchise taxes for
periods subsequent to the periods covered by said returns likewise
have been paid or adequately accrued; except where the failure to
pay would not have a material adverse effect on the business of the
Company.
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K. The shares of the Company's $0.001 par value per share common stock
which will be delivered to the AVR Shareholders and the Shares
Subscribers pursuant to the terms of this Agreement will, on
delivery in accordance with the terms hereof, be duly authorized,
validly issued and fully paid and non assessable. The Company's
common stock purchase warrants issuable to the Warrant Holders, the
Company's options issuable to the Option Holders and the shares of
common stock issuable upon exercise of the Company's common stock
purchase warrants issued to the Warrant Holders and the Company's
options issuable to the Option Holders have been duly and validly
authorized and, when issued and delivered against payment as
provided herein, will be validly issued, fully paid and non
assessable. The shares of common stock issuable upon exercise of the
Company's common stock purchase warrants issued to the Warrant
Holders and the options issuable to the Option Holders, upon
exercise of the warrants and the options upon issuance, will not be
subject to the preemptive rights of any shareholders of the Company
or any restrictions upon voting or transfer pursuant to the
Company's Articles of Incorporation, Bylaws, or any agreement to
which the Company is a party. The Company's common stock purchase
warrants issued to the Warrant Holders and the Company's options
issued to the Option Holders, when delivered, will constitute valid
and binding obligations of the Company enforceable in accordance
with their terms. A sufficient number of shares of the Company's
$0.001 par value per share common stock have been or shall be
reserved, for issuance upon exercise if the Company's common stock
purchase warrants deliverable to the Warrant Holders and the
Company's options deliverable to the Option Holders. Upon delivery
of and payment for the shares of common stock issuable upon exercise
of the Company's common stock purchase warrants issued to the
Warrant Holders and the Company's options issued to the Option
Holders, the holder of the Company's common stock purchase warrants
and options will receive good and marketable title thereto, free and
clear of all liens, encumbrances, charges and claims except those
created by, through or under the Company's common stock purchase
warrants and options and except restrictions on transfer arising
under federal and state securities laws and their rules and
regulations. The Company will have on the at the time of delivery of
its common stock purchase warrants to the Warrant Holders and its
options to the Option Holders the, full legal corporate right and
power and all authorization and approval required by corporate law
to sell, transfer and deliver such common stock purchase warrants
and options in the manner provided hereunder, except for applicable
restrictions on transfer arising under federal and state securities
laws and their rules and regulations respecting the offer and sale
of securities.
L. On the Closing Date, the Company will cause the following
individuals to be elected to the Company's Board of Directors:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Jan ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, H. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇.
M. The consummation of the transaction contemplated hereby will not:
(i) violate any provision of the charter, By-laws or other
organizational documents of the Company, (2) Violate in any material
respect any statute, ordinance, rule, regulations, order or decree
of any court of -any governmental or regulatory body, agency or
authority applicable to the Company, (3) require the filing with, or
obtaining any permit, consent or approval of, or the giving of any
notice to, any governmental or regulatory body, agency or authority;
or (.4) result in a material violation, termination or breach of,
conflict with, constitute (with or without the giving of notice or
lapse of time or both ) a default (or give rise to any right of
termination, cancellation, payment or acceleration)
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under, result in the creation of any lien, security interest, charge
or encumbrance upon any of the properties or assets of the Company,
result in the forfeiture of any rights, entitlements or privileges
under, create any right or entitlement including without limitation,
to employment or compensation) not expressly provided for herein, or
require the consent or approval of any party under, any of the
terms, conditions or provisions of any note, bond, mortgage,
indenture, license, franchise, permit agreement, lure, agreement or
other instrument or obligation to which the Company is a party,
except for such violations, filings, consents, approvals, notices,
terminations, breaches, conflicts, defaults, Hens, security
interests, charges, encumbrances, forfeitures, rights and
entitlements that would not, individually or in the aggregate, have
a materially adverse effect on the condition of the Company taken as
a whole.
N. Except as set forth in the audited balance sheet of the Company
attached hereto as Exhibit 1, the Company has no material claims
against it, liabilities or indebtedness, contingent or otherwise.
The Company does not know or have reason to know of any basis for
the assertion against the Company of any liability of any material
nature or in any material amount not fully reflected or reserved
against in the Company's audited balance sheet.
O. There is no legal, administrative, arbitral or other proceedings
claim, action, cause of action or governmental investigation of any
nature seeking to impose, or that could result in the imposition, on
the Company of any liability easing under any local, state or
federal environmental statute, regulation or ordinance, including,
without limitation, the Comprehensive Environmental Response
Compensation and Liability Act of 1980, as amended, pending or
threatened against the Company, which would be required to be
disclosed pursuant to Item 103 or 303 of Regulation SK (17 CFR 229).
To the best knowledge of the Company there is no reasonable basis
for any such proceeding, claim action, or governmental investigation
that would impose any such liability; and the Company is not subject
to any agreement order, judgment, decree or memorandum by or with
any court, governmental authority, regulatory agency third party
imposing any such liability.
P. The Company has not established, maintained or contributed to any
employee benefit plans. As used herein, the term "Employee Benefit
Plans" means all employee benefit plans within the meaning of
section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"). As of the date of Closing all other plans,
including but not limited to, programs and arrangements providing
profit sharing, retirement, pension, savings, thrift, deferred
compensation, stock option, stock purchase, group insurance,
accident, sickness, medical, dental, disability, have been
terminated and there are no continuing obligations by the Company
pursuant to said plans. All vacation pay, severance pay, incentive
compensation and bonuses have been paid, and there are no continuing
obligations by the Company.
The Company further represents and warrants that all of the
representations and warranties set forth above are true as of the date of this
Agreement, shall be true at the Closing Date and shall survive the closing for a
period of one year from the Closing Date.
3. CONDITIONS TO THE OBLIGATIONS OF THE COMPANY. The obligations of the
Company hereunder shall be subject to the following conditions:
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A. The Company shall not have discovered any material error,
misstatement or omission in any of the representations and
warranties made by AVR, and/or the AVR Shareholders herein and all
the terms and conditions of this Agreement to be performed and
complied with have been performed and complied with.
B. There shall have been no substantial adverse changes in the
financial condition, business or operations of AVR from the date of
this Reorganization Agreement, until the Closing Date, except for
changes resulting from operations in the usual and ordinary course
of its business, and between such dates no business and assets of
AVR shall have been materially adversely affected as the result of
any fire, explosion, earthquake, flood, accident, strike, lockout,
combination of the workmen, taking over of any such assets by any
governmental authorities, riot, activities of armed forces, or Acts
of God or of the public enemies.
4. CONDITIONS TO THE OBLIGATIONS OF THE SHAREHOLDERS AND AVR. The
obligations of the AVR Shareholders, the Share Subscribers and AVR hereunder are
subject to the following conditions:
A. The AVR Shareholders and AVR shall not have discovered any material
error or misstatement in any of the representations and warranties
made by the Company herein and all the terms and conditions of this
Agreement to be performed and complied with by the Company have been
performed and complied with.
B. There shall have been no substantial adverse changes in the
financial condition, business or operations of the Company, except
for changes resulting from those operations in the usual ordinary
course of the business, and no business and assets of the Company
shall have been materially adversely affected as the result of any
fire, explosion, earthquake, flood, accident, strike, lockout,
combination of the workmen, taking over of any such assets by any
governmental authorities, riot, activities of armed forces, or Acts
of God or of the public enemies.
5. CLOSING DATE. The Closing of this Agreement ("Closing Date") shall take
place on or before December 31, 1996.
6. EXCHANGE OF SECURITIES. Subject to the terms and conditions set forth
herein,
A. At the time of the Closing referred to in Section 5 hereof the
Company will issue and deliver, or cause to be issued and delivered
to the AVR Shareholders identified in Schedule A-1 hereto
certificates evidencing the ownership of the securities as
designated therein and concurrently therewith
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the AVR Shareholders identified in Schedule A-1 hereto shall
directly or through their agent deliver or cause to be delivered to
the Company, certificates evidencing the ownership of securities as
designated therein, all duly endorsed to the Company, and
B. At the time of the Closing referred to in Section 5 hereof the
Company will issue and deliver, or cause to be issued and delivered
to the AVR Warrant Holders identified in Schedule A-2 hereto
certificates evidencing the ownership of the securities as
designated therein and concurrently therewith the AVR Warrant
Holders identified in Schedule A-2 hereto shall directly or through
their agent deliver or cause to be delivered to the Company,
certificates evidencing the ownership of securities as designated
therein, all duly endorsed to the Company, and
C. At the time of the Closing referred to in Section 5 hereof the
Company will issue and deliver, or cause to be issued and delivered
to the AVR Option Holders identified in Schedule A-3 hereto
certificates evidencing the ownership of the securities as
designated therein and concurrently therewith the AVR Option Holders
identified in Schedule A-3 hereto shall directly or through their
agent deliver or cause to be delivered to the Company, certificates
evidencing the ownership of securities as designated therein, all
duly endorsed to the Company, and
D. at the time of the Closing referred to in Section 5 hereof the
Company will issue and deliver, or cause to be issued and delivered
to the Share Subscribers identified in Schedule B hereto
certificates evidencing the ownership of the securities as
designated therein and concurrently therewith the Share Subscribers
identified in Schedule B hereto shall directly or through their
agent deliver or cause to be delivered to the Company, certificates
evidencing the ownership of securities as designated therein, all
duly endorsed to the Company.
7. ACTIONS AT THE CLOSING. At the Closing of this Agreement, the Company
and the AVR Shareholders and the AVR Warrant Holders and the AVR Option Holders
and the Share Subscribers will each deliver, or cause to be delivered to the
other, the securities to be exchanged in accordance with Section 6 of this
Agreement and each party shall pay any and all Federal and State taxes required
to be paid in connection with the issuance and the delivery of their own
securities. All stock certificates shall be in the name of the party to which
the same are deliverable. In addition to the above mentioned exchange of
certificates, the following transactions will take place at the Initial and any
Subsequent Closings.
THE COMPANY WILL DELIVER TO THE SHAREHOLDERS, AND AVR:
A. Duly certified copies of corporate resolutions and other corporate
proceedings taken by the Company to authorize the execution,
delivery and performance of this Agreement;
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B. A certificate executed by a principal officer of the Company
attesting to the fact that all of the foregoing representations and
warranties of the Company are true and correct as of the Closing
Date and that all of the conditions to the obligations of the AVR
Shareholders, the Warrant Holders, and the Share Subscribers which
are to be performed by the Company have been performed as of the
Closing Date; and
C. A certificate of corporate good standing for the Company from the
State of Utah which shall be dated no more than 60 days prior to the
Closing Date; and
THE AVR SHAREHOLDERS AND AVR WILL DELIVER TO THE COMPANY:
A. Duly certified copies of corporate resolutions and other corporate
proceedings taken by AVR to authorize the execution, delivery and
performance of this Agreement;
B. A certificate of corporate good standing for AVR from the Secretary
of State of the State of Delaware which shall be dated no more than
60 days prior to the Closing Date; and
C. A certificate by a principal officer of AVR and the AVR that each of
the representations and warranties of the AVR Shareholders and AVR
are true and correct as of the Closing Date and that all of the
conditions to the obligations of the Company which are to be
performed by AVR and the AVR Shareholders have been performed as of
the Closing Date.
8. CONDUCT OF BUSINESS. Between the date hereof and the Closing Date, AVR
shall conduct its business in the same manner in which it has heretofore been
conducted and the Shareholders will not permit AVR to (1) enter into any
contract, other than in the ordinary course of business, or (2) declare or make
any distribution in the nature of a dividend or return of capital to the AVR
Shareholder's, without first obtaining the written consent of the Company.
9. BOARD OF DIRECTORS. Immediately after the Closing, the Board of
Directors of the Company shall have a meeting, at which all of the present
directors of the Company shall resign, and they shall fill the vacancies created
by their respective resignations, as members of the Company's Board of
Directors, in accordance with the By-Laws of the Company, with such individuals
as the Directors of AVR shall designate to the Company in writing.
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10. FUTURE REGISTRATION. The AVR Shareholders, the AVR Warrant Holders and
the AVR Option Holders understand and the subscription agreement to be executed
by the Share Subscribers contain representations evidencing the fact that the
Share Subscribers understand that because the Company's common stock and the
Company's common stock purchase warrants to be issued to the Warrant Holders and
the Option Holders have not been registered under the Act or any State Act, they
must hold the Company's common stock, the Company's common stock purchase
warrants and the Company's options indefinitely, and cannot dispose of any or
all of them unless such they are subsequently registered under the Act and any
applicable State Act, or exemptions from registration are available. The AVR
Shareholders, Warrant Holders and Option Holders acknowledge and understand and
the subscription agreement to be executed by the Share Subscribers contain
representations evidencing the fact that the Share Subscribers acknowledge and
understand that (unless they have received an independent registration rights
agreement executed by the Company pertaining to the Company's securities they
hold) they have no independent right to require the Company to register the
securities held by them. The AVR Shareholders, Warrant Holders and Option
Holders further understand and the subscription agreement to be executed by the
Share Subscribers contain representations evidencing the fact that the Share
Subscribers further understand that the Company may, as a condition to the
transfer of any of the shares of the Company's common stock or the Company's
common stock purchase warrants or options, require that the request for transfer
be accompanied by an opinion of counsel, in form and substance satisfactory to
the Company, provided at such AVR Shareholder's or Warrant Holder's or Option
Holder's or Share Subscriber's expense, to the effect that the proposed transfer
does not result in violation of the Act or any applicable State Act, unless such
transfer is covered by an effective registration statement under the Act and is
in compliance with all applicable State Acts.
11. TRANSFERABILITY. All shares of the Company's common stock, the
Company's common stock purchase warrants and options which are issued to the AVR
Shareholders, Warrant Holders and Option Holders and the Share Subscribers
pursuant to the terms of this Agreement shall be "restricted securities" within
the meaning of Regulation D of the Act. The Company shall issue stop transfer
instructions to the transfer agent for its common stock and common stock
purchase warrants and shall place the following legend on the certificates
representing such stock and common stock purchase warrants and options:
"THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED
PURSUANT TO A TRANSACTION EFFECTED IN RELIANCE UPON AN EXEMPTION UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), AND HAVE NOT BEEN THE
SUBJECT TO A REGISTRATION STATEMENT UNDER THE ACT OR ANY STATE SECURITIES
ACT. THE SECURITIES MAY NOT BE SOLD OR OTHERWISE TRANSFERRED IN THE
ABSENCE OF SUCH REGISTRATION OR APPLICABLE EXEMPTION THEREFROM UNDER THE
ACT OR ANY APPLICABLE STATE SECURITIES ACT."
12. ACCESS TO INFORMATION. Concurrently herewith, the Company has
delivered to the AVR Shareholders and the Warrant and Option Holders correct and
complete copies of all documents and records requested by the Shareholders. In
addition, the AVR Shareholders and the Warrant and Option Holders have had the
opportunity to ask questions
14
of, and received answers from, officers and directors of the Company, and
persons acting on its behalf concerning such information and the terms and
conditions of the Agreement, and have received sufficient information relating
to the Company to enable them to make an informed decision with respect to the
acquisition of the common stock, the common stock purchase warrants and the
options.
13. NO SOLICITATION. At no time were the AVR Shareholders, Warrant
Holders, Option Holders or the Share Subscribers presented with or solicited by
any leaflet, public promotion meeting, circular, newspaper or magazine article,
radio or television advertisement, or any other form of general advertising in
connection with their acquisition of the common stock or the Company's common
stock purchase warrants or options.
14. EXPENSES. The AVR Shareholders, the Warrant and Option Holders, AVR
and the Company shall each pay their respective expenses incident to this
Agreement and the transactions contemplated hereby, including all fees of their
counsel and accountants, whether or not such transactions shall be consummated.
15. FINDERS. The AVR Shareholders, the Warrant and Option Holders and AVR
shall indemnify and hold the Company harmless against and with respect to all
claims or brokerage or other commissions relative to this Agreement or the
transactions contemplated hereby, based on any agreements, arrangements, or
understandings claimed to have been made by the AVR Shareholders and AVR with
any third party. The Company shall indemnify and hold the AVR Shareholders, the
Warrant and Option Holders and AVR harmless against and with respect to all
claims for brokerage or other commissions relative to this Agreement or the
transactions contemplated hereby, based in any agreements, arrangements, or
understandings claimed to have been made by the Company with any third party.
Except as provided in Exhibit D, each party to this Agreement represents and
warrants to each other party that it has not dealt with and does not know of any
person, firm or corporation asserting a brokerage, finder's or similar claim in
connection with the making or negotiation of this Agreement or the transactions
contemplated hereby.
16. ATTORNEY'S FEES. In the event of any litigation among the parties
related to this Agreement, the prevailing party shall be entitled to reasonable
attorney's fees and costs to be fixed by the court, said fees to include appeal
and collection of judgment.
17. MISCELLANEOUS.
A. This Agreement shall be controlled, construed and enforced in
accordance with the laws of the State of Texas.
B. This Agreement shall not be assignable by either party without prior
written consent of the other.
15
C. All paragraph headings herein are inserted for convenience only.
This Agreement may be executed in several counterparts, each of
which shall be deemed an original, which together shall constitute
one and the same instrument.
D. This Agreement sets forth the entire understanding between the
parties, there being no terms, conditions, warranties or
representations other than those contained herein, and no amendments
hereto shall be valid unless made in writing and signed by the
parties hereto.
E. This Agreement shall be binding upon and shall inure to the benefit
of the heirs, executors, administrators and assigns of the AVR
Shareholders, the AVR Warrant and Option Holders and AVR and upon
the successors and assigns of the Company.
F. All notices, requests, instructions, or other documents to be given
hereunder shall be in writing and sent by registered mail:
IF TO AVR SHAREHOLDERS, THE AVR WARRANT HOLDERS OR AVR:
Applied Voice Recognition ,Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
WITH COPIES TO:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇ P.C.
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
IF TO THE COMPANY:
Summa Vest Inc.
c/o ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Hermes Building Suite 200
455 East ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
G. This Agreement may be executed in counterparts, each of which shall
be deemed an original, but all of which shall constitute the same
instrument.
16
REORGANIZATION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
Summa Vest Inc., a Utah corporation
By:_______________________
17
REORGANIZATION AGREEMENT
COUNTERPART SIGNATURE PAGE
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as of
the day and year first above written.
APPLIED VOICE RECOGNITION, INC., A
DELAWARE CORPORATION
By:_______________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
18
AVR CORPORATION
COUNTERPART
REORGANIZATION AGREEMENT SIGNATURE PAGE
AVR SHAREHOLDER
The undersigned, in his, her or its capacity as the beneficial owner of
_______________ shares of the $0.01 par value per share common stock of Applied
Voice Recognition, Inc., a Delaware corporation (the "Company"), hereby joins in
and executes the Reorganization between and among Summa Vest Inc. the Company
and those Shareholders and Warrant and Option Holders of the Company and Share
Subscribers that shall execute and deliver this Counterpart Signature Page to
the Reorganization Agreement, upon the terms and conditions stated in the
Company's Private Placement Memorandum dated October 28, 1996.
The undersigned hereby grants a Special Power of Attorney to the duly authorized
officers of the Company and constitutes and appoints such officers as his, her
or its true and lawful Attorney-In -Fact with full power and authority to act in
his, her or its name, place and stead to execute, acknowledge and swear to the
Reorganization Agreement on his, her or its behalf if, as and when such
Reorganization Agreement is execute by the Company.
Such officers and the Company are also specifically authorized and empowered to
attach this Signature Page to the executed Reorganization Agreement with the
same force and legal effect as would obtain if the undersigned had personally
performed such act. The Power of Attorney granted hereby shall be deemed to be a
power coupled with an interest, which is irrevocable and shall survive the
death, incompetency or incapacity of the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Counterpart Signature Page
in the City of ____________ State of _____________ this ________ day of
_________ 1996.
---------------------------------
Signature
--------------------------------
Name Printed
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇, ▇▇▇▇▇, Zip
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AVR CORPORATION
COUNTERPART
REORGANIZATION AGREEMENT SIGNATURE PAGE
AVR WARRANT HOLDER
The undersigned, in his, her or its capacity as the beneficial owner of _common
stock purchase warrants entitling him to purchase, for a period of five years a
total of______________ shares of the $0.01 par value per share common stock of
Applied Voice Recognition, Inc., a Delaware corporation (the "Company"), hereby
joins in and executes the Reorganization between and among Summa Vest Inc. the
Company and those Shareholders and Warrant and Option Holders of the Company and
Share Subscribers that shall execute and deliver this Counterpart Signature Page
to the Reorganization Agreement, upon the terms and conditions stated in the
Company's Private Placement Memorandum dated October 28, 1996.
The undersigned hereby grants a Special Power of Attorney to the duly authorized
officers of the Company and constitutes and appoints such officers as his, her
or its true and lawful Attorney-In -Fact with full power and authority to act in
his, her or its name, place and stead to execute, acknowledge and swear to the
Reorganization Agreement on his, her or its behalf if, as and when such
Reorganization Agreement is execute by the Company.
Such officers and the Company are also specifically authorized and empowered to
attach this Signature Page to the executed Reorganization Agreement with the
same force and legal effect as would obtain if the undersigned had personally
performed such act. The Power of Attorney granted hereby shall be deemed to be a
power coupled with an interest, which is irrevocable and shall survive the
death, incompetency or incapacity of the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Counterpart Signature Page
in the City of ____________ State of _____________ this ________ day of
_________ 1996.
---------------------------------
Signature
--------------------------------
Name Printed
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇, ▇▇▇▇▇, Zip
20
AVR CORPORATION
COUNTERPART
REORGANIZATION AGREEMENT SIGNATURE PAGE
AVR OPTION HOLDER
The undersigned, in his, her or its capacity as the beneficial owner of _options
entitling him to purchase, for a period of _________ years a total
of______________ shares of the $0.01 par value per share common stock of Applied
Voice Recognition, Inc., a Delaware corporation (the "Company"), hereby joins in
and executes the Reorganization between and among Summa Vest Inc. the Company
and those Shareholders and Warrant and Option Holders of the Company and Share
Subscribers that shall execute and deliver this Counterpart Signature Page to
the Reorganization Agreement, upon the terms and conditions stated in the
Company's Private Placement Memorandum dated October 28, 1996.
The undersigned hereby grants a Special Power of Attorney to the duly authorized
officers of the Company and constitutes and appoints such officers as his, her
or its true and lawful Attorney-In -Fact with full power and authority to act in
his, her or its name, place and stead to execute, acknowledge and swear to the
Reorganization Agreement on his, her or its behalf if, as and when such
Reorganization Agreement is execute by the Company.
Such officers and the Company are also specifically authorized and empowered to
attach this Signature Page to the executed Reorganization Agreement with the
same force and legal effect as would obtain if the undersigned had personally
performed such act. The Power of Attorney granted hereby shall be deemed to be a
power coupled with an interest, which is irrevocable and shall survive the
death, incompetency or incapacity of the undersigned.
IN WITNESS WHEREOF, the undersigned has executed this Counterpart Signature Page
in the City of ____________ State of _____________ this ________ day of
_________ 1996.
---------------------------------
Signature
--------------------------------
Name Printed
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇
-------------------------------
▇▇▇▇, ▇▇▇▇▇, Zip
21
SCHEDULE A-1
AVR SHAREHOLDERS
SCHEDULE A-1 AVR SHAREHOLDERS:
NAME OF AVR SHAREHOLDER NO. OF AVR SHARES NO. OF COMPANY SHARES
-------------------------- ---------------------- ---------------------------
SCHEDULE A-2AVR WARRANT HOLDERS:
NAME OF AVR WARRANT HOLDER NO. AVR SHARES COVERED NO. COMPANY'S SHARES COVERED
------------------------- ---------------------- ---------------------------
SCHEDULE A-3AVR OPTION HOLDERS
NAME OF AVR OPTION HOLDER NO. AVR SHARES COVERED NO. COMPANY'S SHARES COVERED
------------------------- ---------------------- ----------------------------
22
SCHEDULE B
SCHEDULE B SUBSCRIBERS TO AVR'S COMMON STOCK PURSUANT TO THE PRIVATE PLACEMENT
MEMORANDUM ("SHARE SUBSCRIBERS"):
NAME OF SUBSCRIBER NO. OF AVR SHARES NO. OF COMPANY SHARES
------------------ ----------------- ---------------------------
23
SCHEDULE C
SCHEDULE C-1SHARES ISSUED BY THE COMPANY PURSUANT TO FORM S-8
NAME NUMBER OF SHARES
-------------- ----------------
SCHEDULE C-2 SHARES ISSUED BY THE COMPANY PURSUANT TO RULE 903(C)(2) OF
REGULATION S, AS PROMULGATED UNDER THE ACT.
NAME NUMBER OF SHARES
-------------- ----------------
24
Schedule D
Finders
None
25
REORGANIZATION AGREEMENT
EXHIBIT 1
Summa Vest, Inc., Financial Statements
26