EXHIBIT 2.2
ASSET PURCHASE AGREEMENT
(Xxxxx Xxxxxxx Transcription Resources)
This ASSET PURCHASE AGREEMENT (the "Agreement"), dated as of the 17th day
of March 1998 (the "Effective Date"), is by and between XXXXX XXXXXXX, an
individual residing in Dallas County, Texas ("Seller"), and APPLIED VOICE
RECOGNITION, INC., a Delaware corporation ("Purchaser").
W I T N E S S E T H:
WHEREAS, Seller is the sole proprietor of, and does business as,
Transcription Resources (the "Company");
WHEREAS, Seller desires to sell to Purchaser, and Purchaser desires to
purchase from Seller, certain assets of owned by Seller and utilized by the
Company, and Seller 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.
1.1 Purchase and Sale. On the terms and subject to the conditions of
this Agreement, Seller, at the Closing referred to in Section 7, agrees 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
Seller, certain assets of Seller (collectively, the "Company Assets"), which
Company Assets shall consist of the following:
(a) All real property owned or leased by Seller for the use of the
Company, including, without limitation, that certain leased space located at
00000 Xxxxxxx Xxxx, Xxxxx 000X, Xxxxxx, Xxxxx 00000, and the improvements
located within such leased space (collectively, the "Company Facilities");
(b) The machinery, equipment, furniture, fixtures, supplies,
materials and other tangible personal property (other than computer hardware and
software) that are described on Schedule 1.1(b) attached hereto (the "Company
Personal Property");
(c) All contracts and agreements listed on Schedule 1.1(c) attached
hereto (the "Assigned Contracts"); and all warranties and guarantees, if any,
originally given to Seller relating to all or any portion of the Company
Personal Property (the "Warranties");
(d) All rights of Seller in and to the computer hardware and
computer software listed on Schedule 1.1(d) attached hereto;
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(e) All rights of Seller in and to 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 1.1(e) attached hereto;
(f) All existing books and records of the Company through the
Closing, including, without limitation, all of the Company's customer lists;
and
(g) The licenses, permits and certifications listed on Schedule
1.1(g) attached hereto.
1.2 Excluded Assets and Liabilities. Except for the Company Assets
specifically described herein, no other assets owned by Seller or utilized by
the Company shall be conveyed pursuant to this Agreement. Except for obligations
of Seller under the Assigned Contracts and the ad valorem taxes, if any,
relating to the Company Assets for 1998 (as described in Section 7.3 below, and
referred to herein as the "Seller's Tax Share"), Purchaser shall not assume or
be subject to, or in any way be liable or responsible for, and Seller shall
indemnify and hold Purchaser harmless from, any liabilities or obligations of
Seller of any kind or nature, known or unknown, relating to the Company Assets
or Seller.
2. Purchase Price. The purchase price for the Company Assets (the "Purchase
Price") shall be $150,000 less (a) the aggregate amount of Seller's liabilities
to be assumed by Purchaser under the Assigned Contracts, and (b) Seller's Tax
Share. The Purchase Price shall be payable by Purchaser's execution and delivery
to Seller of a promissory note in the form attached hereto as Exhibit "A" (the
"Note"). The Note shall be due and payable on or before or January 1, 1999, and,
at Seller's option, shall be payable either (i) in cash, or (ii) by the issuance
and delivery by Purchaser to Seller of the number of shares of Purchaser's
common stock determined by dividing the Purchase Price by the closing price of
Purchaser's common stock on the trading day immediately preceding the Closing
Date (the "AVRI Stock"). The AVRI Stock will be unregistered and restricted from
being sold for the period established by federal law. Seller will notify
Purchaser at least ten (10) days prior to the due date of the Note with respect
to whether Seller desires the Note to be paid in cash or the AVRI Stock.
Seller's failure to notify Purchaser of such election by such deadline shall be
deemed an election by Seller to be paid in AVRI Stock.
3. Representations and Warranties of Seller. Seller represents and warrants
to and agrees with Purchaser that:
3.1 Seller's Authority Relative to this Agreement. This Agreement has
been duly executed and delivered by Seller, and no further action is necessary
with respect to Seller to make this Agreement a valid and binding obligation of
Seller, enforceable in accordance with its terms. The conveyance evidenced by
this Agreement does not include all or substantially all of the assets of
Seller, but merely substantially all of the assets of Seller utilized by the
Company. Neither the execution, delivery nor performance of this Agreement by
Seller will:
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(a) Violate any order, writ, injunction or decree of any court,
administrative agency or governmental body;
(b) Require any consent, authorization or approval of any person,
entity or governmental authority; or
(c) Result in the creation or imposition of any lien, charge or
encumbrance upon the property of Seller.
3.2 Seller's Authority to Conduct Business. Seller has all requisite
power and authority to carry on its business as now conducted and to enter into
and perform this Agreement.
3.3 Rights to Purchase the Company Assets. Other than Purchaser pursuant
to this Agreement, no person, firm or entity has any right to purchase any of
the Company Assets or any part thereof.
3.4 Title to Company Assets. Seller has good and marketable title to the
Company Assets, is in possession of all of the Company Assets, and will convey
the Company Assets to Purchaser, free and clear of all liens, claims, security
interests and encumbrances. Other than ad valorem taxes for 1998 which are not
yet past due, there are no sales or ad valorem taxes due and unpaid by Seller.
3.5 Litigation. There are no private or governmental actions, suits,
proceedings or investigations, pending, or to Seller's knowledge threatened,
against, affecting or on behalf of Seller, the Company or the Company Assets.
3.6 Miscellaneous. All agreements, reports and other documents furnished
by Seller to Purchaser are true, accurate and complete copies of the agreements,
reports and other documents they purport to be.
3.7 Securities Representations and Warranties. In the event that Seller
elects to accept the AVRI Stock in payment of the Note, Seller will
automatically be deemed to have made, and at Purchaser's request Seller will
confirm in writing, each of the following representations and warranties to, and
agreements with, Purchaser regarding the AVRI Stock:
(a) The shares of AVRI Stock are being acquired for Seller's 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
AVRI Stock is intended to be exempt from registration under the Securities Act
of 1933 (the "Act") by virtue of the so-called 4(2) exemption under the Act.
Seller understands that the shares of AVRI 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 AVRI
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 AVRI
Stock. In furtherance
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thereof, Seller represents, warrants, and agrees as follows: (i) no other person
has or will have a direct or indirect beneficial interest in such shares of AVRI
Stock, and Seller will not sell, hypothecate, or otherwise transfer any of the
shares of AVRI Stock except in accordance with the Act and applicable state
securities laws or unless, in the opinion of counsel for Purchaser, an exemption
from the registration requirements of the Act and such laws is available; and
(ii) Purchaser is under no obligation to register the shares of AVRI Stock on
behalf of Seller or to assist Seller in complying with any exemption from
registration.
(b) Seller has been furnished with and has carefully read each of
(i) selected portions of the Private Placement Memorandum dated July 29, 1997;
(ii) Purchaser's Annual Report on Form 10-K for fiscal year ended December 31,
1997; (iii) Purchaser's Quarterly Report on Form 10-Q for fiscal quarter ended
June 30, 1997; and (iv) Purchaser's Quarterly Report on Form 10-Q for fiscal
quarter ended March 31, 1997. In evaluating the suitability of an investment in
Purchaser, Seller has not relied upon any representations or other information
(whether oral or written) from Purchaser or any of Purchaser's agents, and no
oral or written representations have been made or oral or written information
furnished to Seller or Seller's advisors, if any, in connection with the
acceptance of the shares of AVRI Stock in payment of the Note which were in any
way inconsistent with the information set forth in the documents listed in the
first sentence of this Section 3.7(b). In the event that Seller elects to accept
the AVRI Stock in payment of the Note, then Purchaser will provide to Seller
copies of all Quarterly Reports on 10-Q for each fiscal quarter ended after the
Effective Date, together with such additional information as Seller may
reasonably request from Purchaser that is readily available to Purchaser.
(c) Purchaser has made available to Seller all documents and
information that Seller has requested relating to an investment in Purchaser.
(d) Seller recognizes that an investment in Purchaser involves
substantial risks, and Seller has taken full cognizance of and understand all of
the risk factors related to the acceptance of the AVRI Stock in payment of the
Note.
(e) Seller has carefully considered and has, to the extent Seller
believes such discussion necessary, discussed with Seller's professional legal,
tax and financial advisers the suitability of an investment in Purchaser for
Seller's particular tax and financial situation and Seller has determined that
the AVRI Stock is a suitable investment for Seller.
(f) All information which Seller has provided to Purchaser
concerning Seller and the financial position of Seller is correct and complete
as the date set forth below.
4. Representations and Warranties of Purchaser. Purchaser represents and
warrants to and agrees with Seller that:
4.1 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,
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enforceable in accordance with its terms. Neither the execution, delivery nor
performance of this Agreement by Purchaser will result in a violation or breach
of any term or provision under the Articles 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.
4.2 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.
5. Nature and Survival of Representations and Warranties.
5.1 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
Seller or Purchaser pursuant to this Agreement, or in connection with the
transactions contemplated hereby, shall be deemed representations and warranties
by Seller or Purchaser, as the case may be.
5.2 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. Covenants of Seller. Seller covenants with Purchaser that:
6.1 Employees. Attached hereto as Schedule 6.1 is a list of all
employees of the Seller, other than Seller, and all independent contractors
utilized by the Seller in connection with the Company's business. Seller will
pay, on or before the Closing Date, all outstanding liability for the payment of
(i) wages, vacation pay (whether accrued or otherwise), salaries, bonuses or any
other compensation with respect to all persons employed by Seller prior to the
Closing Date, and (ii) fees and commissions with respect to independent
contractors engaged by Seller prior to the Closing Date. Purchaser shall assume
no liability, obligation or responsibility under any bonus, life insurance,
health insurance, or other plan whereby Seller provides benefits for any of its
employees, independent contractors or their respective beneficiaries, and
Purchaser shall be permitted, but not obligated, to (a) hire any of the
employees of Seller, or (b) engage any independent contractors of Seller.
6.2 No Tax Due Certificate. 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.
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7. The Closing. Seller and Purchaser hereby agree to consummate the closing
of the sale and purchase of the Company Assets (the "Closing") at the offices of
Purchaser's legal counsel, Xxxxx, Xxxxx & Xxxxxx, located at 0000 Xxx Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (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 Seller, the documents relating to the
Closing may be exchanged by overnight courier without the necessity of all
parties being present at the Closing. At the Closing, the following shall
occur:
7.1 Xxxx of Sale, Assignment and Assumption Agreement. Seller and
Purchaser shall execute a Xxxx of Sale, Assignment and Assumption Agreement (the
"Xxxx of Sale"), in the form attached hereto as Exhibit "B", (a) conveying good
and marketable title to the Company Assets to Purchaser free and clear of all
liens, claims, encumbrances and interests, and (b) effecting the assumption by
Purchaser of the Assigned Contracts.
7.2 Purchase Price. Purchaser shall pay the Note in the amount of the
Purchase Price pursuant to the terms of Section 2 above.
7.3 Apportionment. All ad valorem taxes, if any, shall be prorated
through the date of Closing, with such prorations based on tax rates and
assessments for the calendar year during which the Closing occurs unless such
rates and assessments are unavailable, in which event such prorations shall be
made based on the rates and assessments for the prior year. At the Closing,
Purchaser agrees to assume Seller's pro rated portion of the ad valorem taxes
and, Purchaser shall be entitled to offset such portion from the Purchase Price.
Notwithstanding that the parties intend to make a final settlement with respect
to certain items as of the Closing Date (i) all payments for utility services,
contract services, ad valorem and personal property taxes relating to the
Company Assets (which are not prorated as of the Closing Date) shall be prorated
between Seller and Purchaser as soon as reasonably practicable as of the Closing
Date, and (ii) settlement of such items shall occur within five (5) business
days after receipt of a request therefor accompanied by evidence that such
proration and payment is required hereunder.
7.4 Employment Agreement. Seller and Purchaser shall execute an
Employment Agreement in the form attached hereto as Exhibit "C" (the "Employment
Agreement"), which Employment Agreement shall provide, in addition to the other
terms set forth therein, for (i) an initial term of three (3) years, (ii) a base
salary of $5,000 per month, and (iii) Seller's agreement not to compete with
Purchaser following the termination of such Employment Agreement in accordance
with the terms of such Employment Agreement.
7.5 Option Agreement. Seller and Purchase shall execute an Nonqualified
Stock Option Agreement in the form attached hereto as Exhibit "D" (the "Option
Agreement'), which Option Agreement shall provide, in addition to the other
terms set forth therein, for (i) the grant to Seller options to acquire 50,000
shares of Purchaser's common stock (the "Stock Options") at a price per share
equal to the closing price of Purchaser's common stock on the trading day
immediately preceding the Closing Date, (ii) for so long as Seller 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, 16,667 Stock
Options will vest on the first anniversary of the Closing Date,
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16,667 Stock Options will vest on the second anniversary of the Closing Date,
and 16,666 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. Further Acts. Seller covenants and agrees that, from time to time on and
after the Closing Date, at the request of the Purchaser, Seller will execute and
deliver all consummatory bills of sale, assignments and other documents that may
reasonably be required to confirm and assure Purchaser of its title and interest
in the entirety of the Company Assets.
9. Possession. At the Closing, Seller shall be obligated to deliver to
Purchaser at the Leased Premises all tangible items constituting the Company
Assets.
10. Expenses and Commissions. Each of Seller and Purchaser will pay their
own expenses incident to the transaction contemplated by this Agreement.
Purchaser and Seller 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 Company Assets. Seller hereby agrees to indemnify and hold harmless
Purchaser against any and all claims of any agent, broker, finder or similar
party claiming through Seller, and Purchaser hereby agrees to indemnify and hold
harmless Seller against any and all claims of any agent, broker, finder, or
other similar party claiming through Purchaser.
11. Miscellaneous.
11.1 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 Seller, to: Xxxxx Xxxxxxx
00000 Xxxxxxx Xxxx, Xxxxx 000X
Xxxxxx, Xxxxx 00000
Telecopy No. (214) ___-____
With a copy to: Xxxxxx Xxxxxxxxxx, Esq.
_____________________
Dallas, Texas 75_____
Telecopy No. (000) 000-0000
If to Purchaser, to: Applied Voice Recognition, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Telecopy No. (000) 000-0000
With a copy to: Xxxxx X. Xxxxx, Esq.
Xxxxx, Xxxxx & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Telecopy No. (000) 000-0000
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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 11.1, 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 business day thereafter by U.S.
mail in accordance with this Section 11.1. Notices delivered by any other means
shall be deemed given and received upon actual receipt of the above specified
address of the addressee.
11.2 Assignment. Except for assignment by Purchaser to an affiliate
company, this Agreement may not be assigned by either party without the prior
written consent of the other. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, personal legal
representatives, successors and permitted assigns.
11.3 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.
11.4 Schedules and Exhibits. All schedules and exhibits attached to and
referenced in this Agreement are incorporated in this Agreement and made a part
hereof.
[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.
SELLER:
/s/ Xxxxx Xxxxxxx
___________________________________________
Xxxxx Xxxxxxx
PURCHASER:
APPLIED VOICE RECOGNITION, INC.,
a Delaware corporation
By: /s/ Xxxxxxx X. Xxxxxxxx
________________________________________
(Signature)
Name: Xxxxxxx X. Xxxxxxxx
(Printed Name)
Title: Chief Executive Officer
Schedules:
1.1(b) Company Personal Property
1.1(c) Assigned Contracts
1.1(d) List of Computer Hardware and Software
1.1(e) List of Intellectual Property
1.1(g) List of Licenses and Permits
6.1 List of Employees and Contract Workers
Exhibits:
"A" Promissory Note
"B" Xxxx of Sale, Assignment and Assumption Agreement
"C" Employment Agreement
"D" Nonqualified Option Agreement
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SCHEDULE 1.1(b)
To
Asset Purchase Agreement
Company Personal Property
-------------------------
8 Computer desks
1 Executive desk
1 Round conference table with five chairs
8 Secretarial chairs
1 420 Back-UPS Pro surge protector
1 700 Smart-UPS surge protectors
4 Sanyo dictaphones
7 VDI dictaphones
2 Filing cabinets
1 Refrigerator
1 Panasonic KX-F1150 plain paper fax machine
SCHEDULE 1.1(c)
To
Asset Purchase Agreement
Assigned Contracts
1. LJP Leasing Business Equipment Master Lease dated October 3, 1997, by and
between LJP Leasing, as lessor, and Transcription Resources, Inc., as
lessee, with respect to (i) one Voicetech 416 with 8 ports, 93 redundant
hours, S/N 0416-0873, and (ii) ten Transcribe Stations with Foot Controls
and Headsets, S/N 27650, 27651, 27652, 27653, 27654, 27655, 27656, 27657,
27658 and 27659.
2. LJP Leasing Business Equipment Master Lease dated January 20, 1997, by and
between LJP Leasing, as lessor, and Transcription Resources, as lessee, with
respect to (i) one Voicetech 408 with 8 ports, 25 hours, 1 port outdial, S/N
4080-176, and (ii) five Transcribe Stations, S/N 21193, 21194, 21195, 21196
and 21197.
3. Office Space Lease Agreement dated as of May 6, 1997, by and between
Carillon/Alpha Limited, as Landlord, and Transcription Resources, as Tenant,
with respect to Suite 201W located at 00000 Xxxxxxx Xxxx, Xxxxxx, Xxxxx
00000.
4. Agreements for Transcription Services dated as of the date indicated by and
between Transcription Resources and each of the following contract parties:
Date Contract Party
a. September 26, 1997 Urology Specialty Care
b. September 11, 1997 Cardiology of Georgia, P.C.
c. January 29, 1998 Xxxxx, Hildeith and Zenicek
d. September 18, 1997 Xxxxxx Xxxxxx, M.D.
e. July 16, 1997 Xxxxx X. Xxxxxxxxx, M.D.
f. November 3, 1997 Three Rivers Urology
g. February 19, 1998 Xxxx X. Xxxxx, M.D.
h. April 11, 1997 Georgia Urology
i. March 3, 1997 Xxxxx Xxxxxxxxx, M.D.
j. November 17, 1997 Northwest Oncology/Hematology
5. All right, title and interest of Transcription Resources in and to any oral
or written agreements with the parties listed on the list attached hereto
under the column titled "Client."
SCHEDULE 1.1(d)
To
Asset Purchase Agreement
List of Computer Hardware and Software
--------------------------------------
4 NEC 200 Pentium Computers
1 Compaq 486 Pentium Computer
1 Packard Xxxx 486 Computer
2 HP Laser Jet 6P Printers
All software licensed and loaded on computers
SCHEDULE 1.1(e)
To
Asset Purchase Agreement
List of Intellectual Property
-----------------------------
1. Name: "Transcription Resources"
SCHEDULE 1.1(g)
To
Asset Purchase Agreement
List of Licenses and Permits
----------------------------
1. All software licenses utilized in the operation of the business of
Transcription Resources.
SCHEDULE 6.1
To
Asset Purchase Agreement
List of Employees and Independent Contractors
---------------------------------------------
(See attached list)
