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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of Earliest Event Reported):
JUNE 14, 1999 (May 28, 1999)
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APPLIED VOICE RECOGNITION, INC.
(Exact Name of Registrant as Specified in its Charter)
DELAWARE
(State or Other Jurisdiction of Incorporation)
0-23607 76-0513154
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(Commission File (IRS Employer
Number) Identification No.)
4615 POST OAK PLACE, SUITE 111, HOUSTON, TEXAS 77027
(Address of Principal Executive Offices) (Zip Code)
(713) 621-5678
(Registrant's telephone number, including area code)
N/A
(Former Name or Former Address, if Changed Since Last Report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
As part of its continuing strategy to acquire existing traditional
transcription companies, APPLIED VOICE RECOGNITION, INC., a Delaware corporation
doing business as e-DOCS.net (the "Company"), acquired A WORD ABOVE, INC., a
Texas Corporation ("A Word Above"), from Timothy E. Cook and Kay F. Cook in the
form of a stock purchase. The acquisition was completed by the Company's
wholly-owned subsidiary, e-DOCS Health Care Information Services, Inc., a
Delaware corporation (the "Acquisition Sub"). A Word Above has been in business
since January 1998, and specializes in providing transcription services to the
healthcare industry in the Houston, Texas metropolitan area.
Pursuant to the Stock Purchase Agreement (the "Agreement") the Company
acquired all of the outstanding capital stock of A Word Above. The total
purchase price consisted of: (i) $300,000 in cash, (ii) and $700,000 of the
Company's Series 2 Preferred Stock, par value $.10 per share (the "Preferred
Stock"). The Preferred Stock will issue in three equal annual installments with
a stated value of approximately $233,333 each installment. These installments
are payable on May 29, 2000, May 29, 2001, and May 29, 2002. The actual amount
of these installments is subject to certain adjustments with respect to
undisclosed liabilities and the actual value of A Word Above's accounts
receivable on the closing date. In addition, the Company, through the
Acquisition Sub, entered into an Employment Agreement with Kay F. Cook for a
term expiring on May 28, 2001.
The Preferred Stock carries an 8% cumulative dividend payable in cash or in
additional shares of Preferred Stock at the Company's option. Dividends are
payable quarterly and in arrears on the first day of each January, April, July
and October commencing on July 1, 2000. Each share of the Preferred Stock when
issued will be convertible, at any time, into a number of shares of Common Stock
equal to (i) $100 per share of Preferred Stock being converted, plus any earned,
but unpaid dividends, if any, divided by (ii) the greater of $1.00 per share or
the average daily closing price of the Company's Common Stock for the thirty day
period immediately preceding the effective date of any such conversion on the
Over-The-Counter Bulletin Board. These shares of Preferred Stock are subject to
automatic conversion if the Company undertakes an underwritten public offering
with an aggregate market value of $10,000,000 or more. Any shares of the
Preferred Stock may be redeemed, at the Company's option, after the third
anniversary of the date of their issuance, at a redemption price of $100 per
share plus any accrued but unpaid dividends. Except as otherwise required by the
Delaware General Corporate Law, the holders of the Preferred Stock shall have no
voting rights.
ITEM 7. FINANCIAL STATEMENTS, PRO FORMA FINANCIAL INFORMATION AND EXHIBITS
(1) Financial Statements
None.
(2) Pro Forma Financial Statements
None.
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(3) Exhibits
The following exhibits are filed with this report on Form 8-K:
2.1 Stock Purchase Agreement by and among Timothy E. Cook and Kay F. Cook, A
Word Above, Inc. and e-DOCS Health Care Information Services, Inc. dated
May 28, 1999.
3.1 Series 2 Preferred Stock Certificate of Designation (Incorporated herein
by reference to Exhibit 3.1 to the Company's Form 8-K filed on January 15,
1999.)
10.1 Employment Agreement by and between the Company and Kay F. Cook date
May 28, 1999.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
APPLIED VOICE RECOGNITION, INC.
June 14, 1999 /S/ RICHARD A. CABRERA
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Richard A. Cabrera,
Chief Financial Officer and
Secretary
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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 TIMOTHY E. COOK and KAY
F. COOK, married persons residing in Houston, Harris 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 e-DOCS.net ("e-DOCS.net");
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 7062 Lakeview Haven Drive, Suite
105, Houston, Texas, 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 petty 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 e-DOCS.net 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 e-DOCS.net to Sellers of such number of
shares of convertible preferred stock of e-DOCS.net 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 "e-DOCS.net Stock"), less the aggregate amount of the
Included Liabilities (which will be deducted from the first installment of
e-DOCS.net Stock), as reflected on the Closing Statement to be executed by
Purchaser, Sellers and the Company at the Closing, which e-DOCS.net Stock
shall be issued and delivered by e-DOCS.net 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 e-DOCS.net 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 e-DOCS.net 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 e-DOCS.net 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 e-DOCS.net 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.
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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 e-DOCS.net Stock:
(a) The shares of e-DOCS.net 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 e-DOCS.net 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 e-DOCS.net 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 e-DOCS.net 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-
DOCS.net 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 e-DOCS.net Stock, Sellers are not
acquiring the e-
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DOCS.net 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 e-DOCS.net Stock except in accordance with
the Act and applicable state securities laws or unless, in the opinion of
counsel for e-DOCS.net, an exemption from the registration requirements of
the Act and such laws is available; and (ii) e-DOCS.net is under no
obligation to register the shares of e-DOCS.net 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)
e-DOCS.net's Annual Report on Form 10-K for fiscal year ended December 31,
1998, as amended; and (ii) e-DOCS.net's Quarterly Report on Form 10-Q for
fiscal quarter ended March 31, 1999. In evaluating the suitability of an
investment in e-DOCS.net, Sellers have not relied upon any representations
or other information (whether oral or written) from e-DOCS.net, 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-
DOCS.net 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 e-DOCS.net have granted to Sellers and their
representatives the opportunity to examine such documents and ask such
questions of Purchaser and e-DOCS.net as Sellers have deemed necessary, and
Sellers have received satisfactory answers from Purchaser and e-DOCS.net
(or persons acting on Purchaser's or e-DOCS.net's behalf) concerning e-
DOCS.net and the terms and conditions of the e-DOCS.net Stock described
herein and all other information they have deemed necessary with making an
informed investment decision. Either Purchaser or e-DOCS.net will provide
to Sellers copies of all of e-DOCS.net'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 e-DOCS.net or Purchaser
that is readily available to e-DOCS.net or Purchaser.
(c) e-DOCS.net and Purchaser have made available to Sellers all
documents and information that Sellers have requested relating to an
investment in e-DOCS.net.
(d) Sellers recognize that an investment in e-DOCS.net involves
substantial risks, and Sellers have taken full cognizance of and understand
all of the risk factors related to the acceptance of the e-DOCS.net 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-
DOCS.net for Sellers' particular tax and financial situation, and Sellers
have determined that the e-DOCS.net Stock is a suitable investment for
Sellers.
(f) All information which Sellers have provided to Purchaser and/or e-
DOCS.net concerning Sellers and the financial position of Sellers is
correct and complete as the date set forth below.
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(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 e-DOCS.net 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.
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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 e-DOCS.net 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 e-DOCS.net 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 e-DOCS.net, 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 e-DOCS.net, as the
case may be, which consent may be withheld by Purchaser or e-DOCS.net in
Purchaser's or e-DOCS.net'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 e-DOCS.net to quit employment with the Company, Purchaser or e-
DOCS.net; (ii) otherwise interfere with or disrupt the Company's, Purchaser's or
e-DOCS.net's relationship with its employees; (iii) solicit, entice or hire away
any employee of the Company, Purchaser or e-DOCS.net; or (iv) hire or engage any
employee of the Company, Purchaser or e-DOCS.net or any former employee of the
Company, Purchaser or e-DOCS.net whose employment with the Company, Purchaser or
e-DOCS.net, as the case may be, ceased less than one year before the date of
such hiring or engagement. Sellers acknowledge that
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any attempt on the part of Sellers to induce others to leave the Company's,
Purchaser's or e-DOCS.net's employ, or any effort by Sellers to interfere with
the Company's, Purchaser's or e-DOCS.net's relationship with its other employees
would be harmful and damaging to the Company, Purchaser or e-DOCS.net, 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, Boyar, Simon & Miller, located at 4265 San Felipe,
Suite 1200, Houston, Texas 77027 (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.
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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 Kay F. Cook 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) Mrs. Cook's 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. e-DOCS.net and Mrs. Cook 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 Mrs. Cook of
options to acquire 15,000 shares of e-DOCS.net's common stock (the "Stock
Options") at a price per share more particularly set forth therein, (ii) as long
as Mrs. Cook 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 e-DOCS.net'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.
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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: 7062 Lakeview Haven Drive, Suite 105
Houston, Texas 77095
Telecopy No.: (281) 859-3127
With a copy to: Wayne E. Revack, Esq.
Gill & Revack
9894 Bissonnet, Suite 250
Houston, Texas 77036
Telecopy No. (713) 271-2112
If to Purchaser, to: e-DOCS Health Care Information Services, Inc.
c/o Applied Voice Recognition, Inc. d/b/a e-DOCS.net
4615 Post Oak Place, Suite 111
Houston, Texas 77027
Attention: Chief Financial Officer
Telecopy No. (713) 621-5870
With a copy to: Brian D. Baird, Esq.
Boyar, Simon & Miller
4265 San Felipe, Suite 1200
Houston, Texas 77027
Telecopy No. (713) 552-1758
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
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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, HARRIS 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.
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IN WITNESS WHEREOF, this Agreement has been duly executed by the parties as of
the Effective Date.
SELLERS:
-------
/s/TIMOTHY E. COOK
__________________________________________
TIMOTHY E. COOK
/s/ KAY F. COOK
__________________________________________
KAY F. COOK
COMPANY:
-------
A WORD ABOVE, INC., a Texas corporation
By: /s/ Kay F. Cook
_______________________________________
Kay F. Cook, President
PURCHASER:
---------
e-DOCS HEALTH CARE INFORMATION SERVICES,
INC., a Delaware corporation
By: /s/ Robin P. Ritchie
_______________________________________
Robin P. Ritchie, 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
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EXHIBIT 10.1
EMPLOYMENT AGREEMENT
(Kay F. Cook)
THIS EMPLOYMENT AGREEMENT (the "Agreement") is made as of May 28, 1999 (the
"Effective Date"), by and between E-DOCS HEALTH CARE INFORMATION SERVICES, INC.,
a Delaware corporation ("Employer"), and KAY F. COOK, an individual residing in
Houston, Texas ("Employee").
W I T N E S S E T H:
-------------------
WHEREAS, Employer and Employee desire to enter into an agreement regarding
Employee's employment with Employer pursuant to the terms and conditions set
forth herein;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, and other good and valuable consideration, the receipt and
sufficiency of which is hereby acknowledged, and intending to be legally bound
hereby, the parties covenant and agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee and Employee hereby accepts
employment with Employer on the terms and conditions set forth in this
Agreement.
2. TERM OF EMPLOYMENT. The term of Employee's employment hereunder (the
"Term") shall commence as of May 28, 1999 (the "Commencement Date") and shall
continue (subject to termination by either Employer or Employee as hereinafter
provided) for an initial term (the "Initial Term") expiring on May 28, 2001
(the "Expiration Date"). The Expiration Date shall be automatically extended
unless terminated by Employer or Employee for successive one-year periods
following the expiration of the Initial Term. If Employer desires to terminate
Employee's employment under this Agreement at the end of the Initial Term or at
the end of any succeeding one year term, Employer shall give written notice of
such desire to Employee at least one month prior to the expiration of the
Initial Term or any succeeding one year term. If Employee desires to terminate
Employee's employment under this Agreement at the end of the Initial Term or at
the end of any succeeding one year term, Employee shall give written notice of
such desire to Employer at least one month prior to the expiration of the
Initial Term or any succeeding one year term. Upon termination, Employer shall
have no further obligation to Employee other than payment of any earned and
unpaid Base Salary (as hereafter defined) under Section 3(a) and any earned and
unpaid bonus under Section 3(b), and Employee shall have no further obligation
to Employer except as set forth in Sections 7, 8, 9 and 10.
3. COMPENSATION AND OTHER BENEFITS.
a. As compensation for all services rendered by Employee in performance of
Employee's duties or obligations under this Agreement, Employer shall pay
Employee a monthly base salary of Five Thousand and No/100 Dollars ($5,000.00)
(the "Base Salary"). Employee's Base Salary shall be payable in equal semi-
monthly installments or in the manner and
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on the timetable which Employer's payroll is customarily handled or at such
intervals as Employer and Employee may hereafter agree to from time to time.
b. For so long as this Agreement is in effect, in addition to the Base
Salary, for the annual period year beginning June 1, 2000 and each annual period
thereafter during the Term hereof, Employee shall be entitled to a bonus of up
to an aggregate of $6,000.00 per annual period if, and only if, Employee has met
the performance criteria set by Employer for the applicable annual period. In
connection therewith, Employer agrees that by January 30 of each year, it
shall set the performance criteria for Employee's bonus to be earned during the
applicable annual period and shall communicate such criteria to Employee in
writing. If Employee successfully meets the performance criteria established by
Employer (in the discretion of Employer), Employer shall pay to Employee the
bonus within ninety (90) days of the end of the applicable annual period.
c. Employee shall be entitled to be reimbursed by Employer for all
reasonable and necessary expenses incurred by Employee in carrying out
Employee's duties under this Agreement in accordance with Employer's standard
policies regarding such reimbursements.
d. Employee shall be entitled during the Term, upon satisfaction of
all eligibility requirements, if any, to participate in all health, dental,
disability, life insurance and other benefit programs now or hereafter
established by Employer which cover substantially all other of Employer's
employees and shall receive such other benefits as may be approved from time to
time by Employer.
e. Employee shall be entitled to receive two weeks of paid vacation
for each year during the Term following the first anniversary of the
Commencement Date and shall be entitled to receive paid holidays as enjoyed by
all other employees of Employer.
4. DUTIES.
a. Employee is employed to act as a manager of the Employer and in
such other office or position as shall be assigned to Employee from time to time
by Employer, and to perform such duties as are commensurate with Employee's
position with Employer.
b. Employee agrees that during the period of employment, Employee
shall devote full-time efforts to Employee's duties as an employee of Employer
and Employee shall use Employee's best efforts to perform the duties of
Employee's position in an efficient and competent manner and shall use
Employee's best efforts to promote the interests of Employer and any affiliated
companies.
c. During the period of employment, Employee agrees not to (i)
solely or jointly with others undertake or join any planning for or organization
of any business activity competitive with the business activities of Employer,
and (ii) directly or indirectly, engage or participate in any other activities
in conflict with the best interests of Employer.
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d. Employee agrees that during the period of employment
Employee shall refer to Employer all opportunities (i) in the transcription
industry, and (ii) in the computer industry related to voice recognition
software designs and applications, to which Employee might become exposed in
carrying out Employee's duties and responsibilities hereunder.
5. STOCK OPTION PLAN. As a further inducement to Employee to accept
employment upon the terms set forth herein and in consideration of Employee's
execution of this Agreement, Employee shall be granted options entitling
Employee to purchase 15,000 shares of Employer's common stock, par value $0.001
(the "Initial Options"), pursuant to, and Employee shall be entitled to
otherwise participate in, that certain Applied Voice Recognition, Inc. 1997
Incentive Plan, as amended from time to time. The granting instrument for the
Initial Options will provide, in addition to other terms set forth therein, that
(i) the purchase price for the Initial Options as more particularly set forth
therein, and (ii) one-third of the Initial Options (being options to purchase
5,000 shares of common stock of Employer) shall vest on the first, second and
third anniversaries of the Commencement Date.
6. TERMINATION OF EMPLOYMENT. Employee's employment and this Agreement shall
terminate upon the earliest to occur of any of the following events (the actual
date of such termination being referred to herein as the "Termination Date"):
a. The termination of the Agreement pursuant to Section 2.
b. Employee's employment pursuant hereto shall terminate in the
event of the death of Employee.
c. Employer may terminate Employee's employment under this Agreement
for cause without any prior notice, upon the occurrence of any of the following
events:
(1) any embezzlement or wrongful diversion of funds of Employer or
any affiliate of Employer by Employee;
(2) gross malfeasance by Employee in the conduct of Employee's
duties;
(3) material breach of this Agreement;
(4) gross neglect by Employee in carrying out Employee's duties; or
(5) the failure of Employee to be able to perform Employee's duties
hereunder for a period of not less than sixty days by reason of
disability. For purposes of this Agreement, Employee shall be deemed
to have become disabled when the Board of Directors of Employer, upon
the advice of a qualified
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<PAGE>
physician, shall have determined that Employee has become physically
or mentally incapable (excluding infrequent and temporary absences due
to ordinary illness) of performing Employee's duties under this
Agreement. Before making any termination decision pursuant to this
Section 6(c)(5), the Board of Directors of Employer shall determine
whether there is any reasonable accommodation (within the meaning of
the Americans with Disabilities Act) which would enable Employee to
perform the essential functions of Employee's position under this
Agreement despite the existence of any such disability. If such a
reasonable accommodation is possible, Employer shall make that
accommodation and shall not terminate Employee's employment hereunder
based on such disability.
d. If Employee's employment is terminated for any of the reasons
specified in Section 6(b), (c) or (e), Employer shall no longer be obligated to
make the payments specified under Section 3 or to pay to Employee any other
compensation or benefits whatsoever, except as may otherwise be provided in
Section 6(e). Notwithstanding the foregoing, if for any reason Employee's
employment is terminated hereunder, any compensation payable under Section 3(a)
which shall have been earned but not yet paid shall be paid by Employer to
Employee or Employee's estate, as the case may be. If Employee's employment is
terminated for any of the reasons specified in Section 6(c), any unvested
Initial Options shall be cancelled upon termination. In no event shall the
termination of Employee's employment hereunder affect Employer's or Employee's
obligations under the Purchase Agreement.
e. Employer shall have the right to terminate Employee's employment
hereunder without prior notice and without cause; provided, however, in the
event Employer exercises its right under this Section 6(e) during (i) the first
year of the Term of this Agreement, Employee shall continue to receive
Employee's Base Salary for two (2) months following the date of such
termination; and (ii) during the second year of the Term of this Agreement,
Employee shall continue to receive Employee's Base Salary four (4) months
following the date of such termination. If this Agreement is terminated by
Employer under this Section 6(e), Employee shall be immediately entitled to all
vested Initial Options and all unvested Initial Options that are scheduled to
vest during the year in which Employee is terminated. All other unvested Initial
Options shall immediately terminate.
7. INVENTIONS AND CREATIONS BELONG TO EMPLOYER.
a. Any and all inventions, discoveries, improvements or creations
(collectively, "Creations") which Employee has conceived or made or may conceive
or make during the period of employment in any way, directly or indirectly,
connected with Employer's business shall be the sole and exclusive property of
Employer. Employee agrees that all copyrightable works created by Employee or
under Employer's direction in connection with Employer's business are "works
made for hire" and shall be the sole and complete property of Employer and that
any and all copyrights to such works shall belong to Employer. To the extent any
of the works described in the preceding sentence are not deemed to be "works
made for hire," Employee hereby assigns all proprietary rights, including
copyright, in these works to Employer without further compensation.
4
<PAGE>
b. Employee further agrees to (i) disclose promptly to Employer all
such Creations which Employee has made or may make solely, jointly or commonly
with others during the period of employment to the extent connected with
Employer's business, (ii) assign all such Creations to Employer, and (iii)
execute and sign any and all applications, assignments or other instruments
which Employer may deem necessary in order to enable Employer, at Employer's
expense, to apply for, prosecute and obtain copyrights, patents or other
proprietary rights in the United States and foreign countries or in order to
transfer to Employer all right, title and interest in said Creations.
8. CONFIDENTIALITY; OWNERSHIP OF INFORMATION. Employer promises
that Employer will, during the Term, provide Employee with access to such
Confidential Information (as defined in Section 7(a)) owned by Employer and that
is used in the operation of Employer's business as reasonably necessary to allow
Employee to perform Employee's obligations hereunder. Employee acknowledges
that Employer has agreed to provide Employee with a definite term of employment
and with access to such Confidential Information of Employer during that term of
employment.
a. DEFINITION. For purposes of this Agreement, "Confidential
Information" means any and all information relating directly or indirectly to
Employer that is not generally ascertainable from public or published
information or trade sources and that represents proprietary information to
Employer, excluding, however, (i) Employees' business contacts, (ii) information
already known to Employee prior to Employee's employment with Employer, and
(iii) information required to be divulged in any legal or administrative
proceeding in which Employee is involved. Confidential Information shall
consist of, for example, and not intending to be inclusive, (A) software (source
and object codes), algorithms, computer processing systems, techniques,
methodologies, formulae, processes, compilations of information, drawings,
proposals, job notes, reports, records and specifications, and (B) information
concerning any matters relating to the business of Employer, any of its
customers, prospective customers, customer contacts, licenses, the prices it
obtains or has obtained for the licensing of its software products and services,
or any other information concerning the business of Employer and Employer's
goodwill.
b. NO DISCLOSURE. During the Term and at all times thereafter,
Employee shall not disclose or use in any manner, directly or indirectly, and
shall use Employee's best efforts and shall take all reasonable precautions to
prevent the disclosure of, any such trade secrets or other Confidential
Information, except to the extent required in the performance of Employee's
duties or obligations to Employer hereunder or by express prior written consent
of a duly authorized officer or director of Employer (other than Employee).
c. OWNERSHIP OF INFORMATION. Such Confidential Information is
and shall remain the sole and exclusive property and proprietary information of
Employer or Employer's customers, as the case may be, and is disclosed in
confidence by Employer or permitted to be acquired from such customers in
reliance on Employee's agreement to maintain
5
<PAGE>
such Confidential Information in confidence and not to use or disclose such
Confidential Information to any other person except in furtherance of Employer's
business.
d. RETURN OF MATERIAL. Upon the expiration or earlier termination of
this Agreement for any reason, Employee shall immediately turn over to Employer
all documents, disks or other magnetic media, or other material in Employee's
possession or under Employee's control that (i) may contain or be derived from
Creations or Confidential Information, or (ii) are connected with or derived
from Employee's services to Employer. Employee shall not retain any Confidential
Information in any form (e.g., computer hard drive, microfilm, etc.) upon the
expiration or earlier termination of this Agreement.
9. NONCOMPETE; WORKING FOR COMPETITOR. In consideration of Employee's
employment by Employer, Employee will not, at any time during the Term or at any
time for twenty-four (24) months subsequent to any termination of Employee's
employment, whether voluntary or otherwise, directly or indirectly, within the
United States, Canada, Mexico, South America or Europe, for Employee's own
account or on behalf of any direct competitors of Employer, 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 Employer, which consent may be
withheld by Employer in Employer's sole and absolute discretion.
10. NON-SOLICITATION OF EMPLOYEES. During the Term and for a period of twenty-
four (24) months after the date of termination of employment, Employee will not
in any way, directly or indirectly (i) induce or attempt to induce any employee
of Employer to quit employment with Employer; (ii) otherwise interfere with or
disrupt Employer's relationship with its employees; (iii) solicit, entice or
hire away any employee of Employer; or (iv) hire or engage any employee of
Employer or any former employee of Employer whose employment with Employer
ceased less than one year before the date of such hiring or engagement. Employee
acknowledges that any attempt on the part of Employee to induce others to leave
Employer's employ, or any effort by Employee to interfere with Employer's
relationship with its other employees would be harmful and damaging to Employer.
11. EMPLOYEE'S ACKNOWLEDGEMENT. It is the express intention of Employee and
Employer to comply with Sections 15.50 et seq. of the Texas Business and
Commerce Code in effect as of the date of execution hereof. Employee stipulates
that the provisions of this Agreement are not oppressive or overly burdensome to
Employee and will not prevent Employee from earning an income following
termination of this Agreement. Employee warrants and represents that:
a. Employee is familiar with non-compete and non-solicitation
covenants;
6
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b. Employee has discussed or acknowledges the opportunity to discuss
the provisions of the non-compete and non-solicitation covenants contained
herein with Employee's attorney and has 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. Employee is fully aware of the obligations, limitations and
liabilities included in the non-compete and non-solicitation covenants contained
in this Agreement;
d. The scope of activities covered hereby are substantially similar to
those activities to be performed by Employee under this Agreement;
e. The twenty-four (24) month non-compete and non-solicitation period
is a reasonable restriction, giving consideration to the following factors: (1)
Employee and Employer reasonably anticipate that this Agreement, although
terminable under certain provisions, will continue in effect for sufficient
duration to allow Employee to attain superior bargaining strength and an ability
for unfair competition with respect to the customers covered hereby; (2) the
duration of the twenty-four (24) month non-compete and non-solicitation period
is a reasonably necessary period to allow Employer to restore its position of
equivalent bargaining strength and fair competition with respect to those
customers covered hereby; and (3) historically, employees of all types have
remained with Employee for a duration of longer than the duration of the twenty-
four (24) month non-compete and non-solicitation period; and
f. 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.
12. REMEDIES; INJUNCTION. In the event of a breach or threatened breach by
Employee of any of the provisions of this Agreement, Employee agrees that
Employer, in addition to and not in limitation of any other rights, remedies or
damages available to Employer at law or in equity, shall be entitled to a
permanent injunction without the necessity of proving actual monetary loss in
order to prevent or restrain any such breach by Employee or by Employee's
partners, agents, representatives, servants, employees and/or any and all
persons directly or indirectly acting for or with Employee. It is expressly
understood between the parties that this injunctive or other equitable relief
shall not be Employer's exclusive remedy for any breach of this Agreement, and
Employer shall be entitled to seek any other relief or remedy which it may have
by contract, statute, law or otherwise for any breach hereof.
13. ARBITRATION. THE PARTIES AGREE THAT ALL DISPUTES OR QUESTIONS
ARISING IN CONNECTION WITH THIS AGREEMENT AND/OR THE TERMINATION OF EMPLOYEE'S
EMPLOYMENT HEREUNDER SHALL BE
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SETTLED BY A SINGLE ARBITRATOR PURSUANT TO THE RULES OF THE AMERICAN ARBITRATION
ASSOCIATION IN THE CITY OF HOUSTON, TEXAS, AND THE AWARD OF THE ARBITRATORS
SHALL BE FINAL, NON-APPEALABLE, CONCLUSIVE AND ENFORCEABLE IN A COURT OF
COMPETENT JURISDICTION; PROVIDED, HOWEVER, NOTWITHSTANDING THE FOREGOING, IN NO
EVENT SHALL ANY DISPUTE, CLAIM OR DISAGREEMENT ARISING UNDER SECTIONS 7, 8, 9
AND 10 OF THIS AGREEMENT THAT REQUIRES INJUNCTIVE OR OTHER EQUITABLE RELIEF BE
REQUIRED TO BE SUBMITTED TO ARBITRATION PURSUANT TO THIS PROVISION OR OTHERWISE.
14. NOTICES. Any notice, demand or request which may be permitted,
required or desired to be given in connection therewith shall be given in
writing and directed to Employer and Employee as follows:
If to Employer, at: e-DOCS Health Care Information Services, Inc.
c/o Applied Voice Recognition, Inc.
d/b/a e-DOCS.net
4615 Post Oak Place, Suite 111
Houston, Texas 77027
Attention: Chief Financial Officer
Facsimile No.: (713) 621-5870
with a copy to: Boyar, Simon & Miller
4265 San Felipe, Suite 1200
Houston, Texas 77027
Attention: Brian D. Baird, Esq.
Facsimile No.: (713) 552-1758
or, if to Employee, at: Kay F. Cook
17910 Shady Bridge
Houston, Texas 77095
Facsimile No.: (___) ___-______
with a copy to: Wayne E. Revack, Esq.
9894 Bissonnet, Suite 250
Houston, Texas 77036
Facsimile No.: (713) 271-2112
Notices shall be deemed properly delivered and received when and if either: (i)
personally delivered; (ii) delivered by nationally-recognized overnight courier;
(iii) when deposited in the U.S. Mail, by registered or certified mail, return
receipt requested, postage prepaid; or (iv) sent via facsimile transmission with
confirmation mailed by regular U.S. mail. Any party may change its notice
address for purposes hereof to any address within the continental United States
by giving written notice of such change to the other parties hereto at least
fifteen days prior to the intended effective date of such change.
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15. SEVERABILITY. If any provision of this Agreement is rendered or
declared illegal or unenforceable by reason of any existing or subsequently
enacted legislation or by decree of a court of last resort, Employer and
Employee shall promptly meet and negotiate substitute provisions for those
rendered or declared illegal or unenforceable, but all the remaining provisions
of this Agreement shall remain in full force and effect.
16. ASSIGNMENT. This Agreement may not be assigned by any party without
the prior written consent of the other parties.
17. BINDING AGREEMENT. This Agreement shall be binding upon and shall
inure to the benefit of the parties hereto, and their respective legal
representatives, heirs, successors and permitted assigns
18. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
19. ATTORNEYS FEES. In the event of any dispute between the parties
regarding this Agreement, the prevailing party shall be entitled to be
reimbursed for such prevailing party's attorneys fees and costs of court (or
cost of arbitration, as applicable) by the non-prevailing party.
20. AGREEMENT READ, UNDERSTOOD AND FAIR. Employee has carefully read and
considered all provisions of this Agreement and agrees that all of the
restrictions set forth are fair and reasonable and are reasonably required for
the protection of the interests of Employer.
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties have executed this Agreement on this 28th
day of May, 1999, effective as of the Effective Date.
EMPLOYER:
E-DOCS HEALTH CARE INFORMATION SERVICES, INC., a
Delaware corporation
By: /s/ ROBIN P. RITCHIE
---------------------------------------------
Robin P. Ritchie, President
EMPLOYEE:
/s/ KAY F. COOK
---------------------------------------------
Kay F. Cook
Signature Page to
Employment Agreement
(Kay F. Cook)
10
