EXHIBIT 10.7
CONSULTING AND STOCKHOLDER AGREEMENT
This Consulting and Stockholder Agreement (this "Agreement"), effective as
of the 15th day of January, 1997 (the "Effective Date"), is by and between
APPLIED VOICE RECOGNITION, INC., a Utah corporation with its principal offices
in Houston, Texas (the "Company"), and XXXXXXXXX X. XXXXXXX, an individual
residing in Houston, Texas (the "Consultant").
The parties agree as to the following:
1. Engagement. The Company agrees to engage the Consultant on a non-
exclusive basis and the Consultant accepts such engagement for the period
beginning on January 15, 1997 and ending on February 15, 1998, unless earlier
terminated in accordance with the terms of Section 5 (the "Consulting Period").
2. Consulting Services. During the Consulting Period, the services
rendered by the Consultant shall include, without limitation, review of
strategic and operational plans and participation in the planning process;
review of financial budgets, controls and reports; review of expansion plans;
review of investment opportunities (including, without limitation, mergers,
acquisitions, expansions or sale of majority or minority interests in the
Company); participation in communications with the Board of Directors of the
Company; and assisting the Chairman of the Board of Directors and the President
of the Company as requested. The services to be performed by the Consultant
pursuant to this Agreement shall be referred to herein as the "Services."
Notwithstanding anything in this Agreement to the contrary, during the term of
this Agreement, the Consultant shall not be prohibited from and shall be allowed
to provide services (including services identical to the Services) to persons or
entities other than the Company; provided, however, that the performance of such
services by the Consultant shall not prevent the Consultant from performing, or
relieve the Consultant of Consultant's obligation to perform, the Services
pursuant to this Agreement.
3. Time. During the Consulting Period, the Consultant shall render at
least two (2) full eight (8) hour days per calendar month for the period from
the Effective Date through June 30, 1997, and at least two (2) full eight (8)
hour days per calendar month for the period from July 1, 1997 through February
15, 1998 (including attendance at meetings of the Board of Directors of the
Company) of Services.
4. Award of Common Stock. The Company hereby agrees to grant (the
"Grant"), as of January 15, 1997, to the Consultant 200,000 shares of common
stock, $.001 par value (the "Common Stock") of the Company which shall be
subject to the restrictions set forth in Section 12(c) (the "Restrictions")
(such shares being referred to herein in the aggregate as the "Shares").
5. Termination. Consultant's engagement 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"):
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(a) The death of the Consultant;
(b) The written agreement of the Consultant and the Company;
(c) At the Company's option, immediately in the event of the
violation of any provisions of this Agreement by the Consultant or if the
Consultant fails to perform the Services requested of the Consultant pursuant to
this Agreement and such failure continues for a period of ten (10) days
following written notice from the Company to the Consultant; or
(d) At either party's option and in such party's sole discretion,
upon thirty (30) days' prior written notice to the other party.
6. Demand Registration.
(a) From and after February 15, 1998, subject to the limitations set
forth in this Agreement and prior to the fifth year anniversary of the Effective
Date, the Consultant shall be entitled to demand in writing that the Company
file a registration statement, at the Consultant's sole cost and expense, on
either Form S-3 or Form S-8 under the Securities Act of 1933, as amended (the
"Securities Act"). Upon the Company's receipt of such written demand, the
Company shall use its reasonable efforts to as expeditiously as reasonably
practicable effect the registration of the Shares under the Securities Act;
provided, however, that the Company shall not be required to file a registration
statement, register the Shares under the Securities Act or otherwise undertake
any action based on such demand by the Consultant (i) if the use of the Form S-3
or Form S-8 to register the Shares is not available to the Company for any
reason; or (ii) for a period of one hundred fifty (150) days following the
effective date of any letter of intent between the Company and a securities
underwriter regarding a registration of the Company's stock, provided that the
Company gives written notice of the execution of any such letter of intent to
the Consultant within ten (10) days following the effective date of such letter
of intent.
(b) If, in the opinion of the Company's underwriter, it is appropriate
because of marketing factors to limit the number of Shares to be included in the
offering, then the Company shall be required to include in the registration only
that number of Shares, if any, which the Company's underwriter believes should
be included therein. If the number of Shares to be included in the offering in
accordance with the foregoing is less than the total number of Shares which the
Consultant has requested to be included, then the Consultant and the other
holders of securities entitled to be included in such registration shall
participate in the registration pro rata based upon their total ownership of
shares of unregistered Common Stock.
(c) The Consultant shall be solely responsible for paying all
registration expenses relating to any registration under the terms of this
Section 6; provided, however, that if after the Consultant's demand for
registration the Company or other holders of securities of the Company desire
and are entitled to participate in such registration, then the Consultant and
the other holders of securities to be included in such registration shall share
the cost of such registration pro rata based
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upon their respective number of shares of unregistered Common Stock included
within such registration. For purposes of this Section 6, the term "registration
expenses" shall mean all expenses incurred by the Company in complying with this
Section 6, including, without limitation, all registration and filing fees,
exchange listing fees, printing expenses, fees and expenses of counsel for the
Company and the fees and expenses of any counsel selected by the Consultant and
the other owners of the Company's securities participating in such registration
to represent such parties, state blue sky fees and expenses, and the expense of
any special audits incident to or required by any such registration, and also
including underwriting discounts and selling commissions.
7. Piggy Back Registration.
(a) If, at any time after February 15, 1998 and prior to the date on
which the Company files the registration statement required under Section 6, the
Company proposes to file a registration statement with respect to an offering of
Ten Million Dollars ($10,000,000) or more of Common Stock, the Company will,
prior to such filing, give written notice to the Consultant of its intention to
do so. Upon the written request of the Consultant given within 10 days after the
Company provides such notice (which request shall state the intended method of
disposition of such Shares), the Company shall use its best efforts to cause all
Shares which the Company has been requested by the Consultant to register to be
registered under the Securities Act to the extent necessary to permit their sale
or other disposition in accordance with the intended methods of distribution
specified in the Consultant's request; provided, however, that the Company shall
have the right to postpone or withdraw any registration effected pursuant to
this Section 7 without any obligation to the Consultant whatsoever.
(b) In connection with any registration under this Section 7 involving
an underwritten offering, the Company shall not be required to include any
Shares in such registration unless the Consultant accepts the terms of the
underwriting as agreed upon between the Company and the underwriters selected by
it. If, in the opinion of the Company's underwriter, it is appropriate because
of marketing factors to limit the number of Shares to be included in the
offering, then the Company shall be required to include in the registration only
that number of Shares, if any, which the underwriter believes should be included
therein, and shall be entitled to include before such Shares up to the number of
shares of Common Stock to be issued by the Company in the offering. If the
number of Shares to be included in the offering in accordance with the foregoing
is less than the total number of Shares which the Consultant has requested to be
included, then the Consultant and the other holders of securities entitled to be
included in such registration shall participate in the registration pro rata
based upon their total ownership of shares of unregistered Common Stock.
(c) The Company will pay all registration expenses relating to all
registrations under this Section 7. For purposes of this Section 7, the term
"registration expenses" shall mean all expenses incurred by the Company in
complying with this Section 7, including, without limitation, all registration
and filing fees, exchange listing fees, printing expenses, fees and expenses of
counsel for the Company and the reasonable fees and expenses of any counsel
selected by the Consultant and the other owners of the Company's securities
participating in such registration to represent such
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parties, state blue sky fees and expenses, and the expense of any special audits
incident to or required by any such registration, but excluding underwriting
discounts, selling commissions and the fees and expenses of the Consultant's
separate counsel (other than the counsel selected to represent the Consultant
and the other owners of the Company's securities participating in such
registration).
8. Registration Procedures. If and whenever the Company is required by
the provisions of this Agreement to use its best efforts to effect the
registration of any of the Shares under the Securities Act, the Company shall:
(a) File within a reasonable period of time with the Securities and
Exchange Commission (or any other federal agency at the time administering the
Securities Act) (the "Commission") a registration statement with respect to such
Shares and use its best efforts to cause that registration statement to become
and remain effective;
(b) As expeditiously as possible prepare and file with the Commission
any amendments and supplements to such registration statement and the prospectus
included in such registration statement as may be necessary to keep such
registration statement effective, in the case of a firm commitment underwritten
public offering, until each underwriter has completed the distribution of all
securities purchased by it but not more than 9 months after the effective date
and, in the case of any other offering, until the earlier of the sale of all
Shares covered thereby or 120 days after the effective date thereof;
(c) As expeditiously as possible furnish to the Consultant such
reasonable numbers of copies of the prospectus, including a preliminary
prospectus, in conformity with the requirements of the Securities Act, and such
other documents as the Consultant may reasonably request in order to facilitate
the public sale or other disposition of the Shares owned by the Consultant; and
(d) As expeditiously as possible use the Company's best efforts to
register or qualify the Shares covered by such registration statement under the
securities or blue sky laws of such states as the Consultant shall reasonably
request, and do any and all other acts and things that may be necessary or
desirable to enable the Consultant to consummate the public sale or other
disposition in such states of the Shares owned by the Consultant; provided,
however, that the Company shall not be required in connection with this Section
8(d) to qualify as a foreign corporation or execute a general consent to service
of process in any jurisdiction.
If the Company has delivered preliminary or final prospectuses to the
Consultant and after having done so the prospectus is amended to comply with the
requirements of the Securities Act, the Company shall promptly notify the
Consultant and, if requested, the Consultant shall immediately cease making
offers of Shares and return all prospectuses to the Company. The Company shall
promptly provide the Consultant with revised prospectuses and, following receipt
of the revised prospectuses, the Consultant shall be free to resume making
offers of the Shares.
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9. Indemnification.
(a) In the event of any registration of any of the Shares under the
Securities Act pursuant to this Agreement, the Company will indemnify and hold
harmless the seller of such Shares, each underwriter of such Shares, and each
other person, if any, who controls such seller or underwriter within the meaning
of the Securities Act or the Securities Exchange Act of 1934, as amended (or any
similar federal statute and the rules and regulations promulgated thereunder)
(the "Exchange Act") against any losses, claims, damages or liabilities, joint
or several, to which such seller, underwriter or controlling person may become
subject under the Securities Act, the Exchange Act, state securities or blue sky
laws or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of any material fact contained in any registration
statement under which such Shares were registered under the Securities Act, any
preliminary prospectus or final prospectus contained in such he registration
statement, or any amendment or supplement to such registration statement, or
arise out of or are based upon the omission or alleged omission to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading; and the Company will reimburse such seller, underwriter
and each such controlling person for any legal or any other expenses reasonably
incurred by such seller, underwriter or controlling person in connection with
investigating or defending any such loss, claim, damage, liability or action;
provided, however, that the Company will not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon any untrue statement or omission made in such registration statement,
preliminary prospectus or final prospectus, or any such amendment or supplement,
(i) in reliance upon and in conformity with information furnished to the
Company, in writing, by or on behalf of such seller, underwriter or controlling
person specifically for use in the preparation thereof, or (ii) which untrue
statement was corrected by the Company and delivered to the seller prior to
consummation of the sale by the seller resulting in such loss, claim, damage or
liability.
(b) In the event of any registration of any of the Shares under the
Securities Act pursuant to this Agreement, the Consultant will indemnify and
hold harmless the Company, each of its directors and officers and each
underwriter (if any) and each person, if any, who controls the Company or any
such underwriter within the meaning of the Securities Act or the Exchange Act,
against any losses, claims, damages or liabilities, joint or several, to which
the Company, such directors and officers, underwriter or controlling person may
become subject under the Securities Act, Exchange Act, state securities or blue
sky laws or otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement under which such Shares were registered under the
Securities Act, any preliminary prospectus or final prospectus contained in such
registration statement, or any amendment or supplement to such registration
statement, or arise out of or are based upon any omission or alleged omission to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading, provided that such statement or omission was
made in reliance upon and in conformity with information relating to the
Consultant furnished in writing to the Company by and on behalf of the
Consultant specifically for use in connection with the preparation of such
registration statement, prospectus, amendment or supplement; provided, however,
that the obligations of the Consultant hereunder shall
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be limited to an amount equal to the proceeds received by the Consultant for the
Shares sold in connection with such registration.
(c) Each party entitled to indemnification under this Section 9 (the
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after such Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that counsel for the
Indemnifying Party, who shall conduct the defense of such claim or litigation,
shall be approved by the Indemnified Party (whose approval shall not be
unreasonably withheld); and, provided, further, that the failure of any
Indemnified Party to give notice as provided herein shall not relieve the
Indemnifying Party of its obligations under this Section 9, except to the extent
that such delay prejudices such indemnifying party. The Indemnified Party may
participate in such defense at such party's expense; provided, however, that the
Indemnifying Party shall pay such expense if representation of such Indemnified
Party by the counsel retained by the Indemnifying Party would be inappropriate
due to actual or potential differing interests between the Indemnified Party and
any other party represented by such counsel in such proceeding. No Indemnifying
Party, in the defense of any such claim or litigation shall, except with the
consent of each Indemnified Party, consent to entry of any judgment or enter
into any settlement which does not include as an unconditional term thereof the
giving by the claimant or plaintiff to such Indemnified Party of a release from
all liability in respect of such claim or litigation, and no Indemnified Party
shall consent to entry of any judgment or settle such claim or litigation
without the prior written consent of the Indemnifying Party.
10. Indemnification with Respect to Underwritten Offering. In the event
that the Shares are sold pursuant to a registration statement in an underwritten
offering pursuant to Section 6, the Company agrees to enter into an underwriting
agreement containing customary representations and warranties with respect to
the business and operations of an issuer of the securities being registered and
customary covenants and agreements to be performed by such issuer, including
without limitation customary provisions with respect to indemnification by the
Company of the underwriters of such offering.
11. Information by the Consultant. In the event the Consultant includes
Shares in any registration, the Consultant shall furnish to the Company such
information regarding the Consultant and the distribution proposed by the
Consultant as the Company may reasonably request in writing and as shall be
required in connection with any registration, qualification or compliance
referred to in this Agreement.
12. Restricted Period.
(a) Subject to the limitations set forth in Sections 12(c) through
12(h) of this Agreement, for a period commencing on January 15, 1997, and ending
February 15, 1998 (the "Restricted Period") the Shares shall be subject to the
Restrictions as set forth in this Agreement; provided, however, that during the
Consulting Period, upon the occurrence of each of the dates set
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forth below (separately, a "Restriction Release Date"), the Restrictions shall
expire on the number of Shares set forth opposite each respective Restriction
Release Date:
Restriction Release Date # of Shares Released
------------------------ --------------------
May 15, 1997 50,000 shares
August 15, 1997 50,000 shares
November 15, 1997 50,000 shares
February 15, 1998 50,000 shares
The Shares which from time to time remain subject to the Restrictions after
application of the schedule set forth above shall hereinafter be referred to as
"Restricted Shares."
(b) Notwithstanding the schedule of Restriction Release Dates set
forth in Section 12(a), if during the Restriction Period one or more new capital
sources contribute or otherwise invest in the aggregate in excess of TWO MILLION
AND NO/100 DOLLARS ($2,000,000) of new capital in the Company (net of any fees
and costs relating to such investment(s)), then upon the Company's receipt of
such funds the Restrictions shall immediately expire with respect to any
remaining Restricted Shares.
(c) During the Restricted Period, (1) the Shares, the right to vote
the Shares and the right to receive dividends on the Shares may not be sold,
assigned, transferred, exchanged, pledged, hypothecated, or otherwise
encumbered, and (2) no such sale, assignment, transfer, exchange, pledge,
hypothecation or encumbrance, whether made or created by voluntary act of the
Consultant or any agent of the Consultant or by operation of law, shall be
recognized by, or be binding upon, or shall in any manner affect the rights of,
the Company or any agent or any custodian holding certificates for the Shares.
(d) The Company shall effect the issuance of the Shares, and the
issuance of a certificate or certificates for the Shares, as soon as
practicable. Each certificate issued for Shares to the Consultant shall be
registered in the Consultant's name and shall be either deposited with the
Secretary of the Company or its designee in an escrow account or held by the
Secretary of the Company, together with stock powers or other instruments of
transfer appropriately endorsed in blank by the Consultant (the Consultant
hereby agreeing to execute such stock powers or other instruments of transfer as
requested by the Company). Such certificate or certificates shall remain in such
escrow account or with the Secretary of the Company until the expiration of the
Restricted Period. Certificates representing the Restricted Shares shall bear
the following legend:
THE SHARES REPRESENTED BY THIS CERTIFICATE MAY BE TRANSFERRED ONLY IN
COMPLIANCE WITH THE CONDITIONS SPECIFIED IN A CONSULTING AND STOCKHOLDER
AGREEMENT DATED AS OF JANUARY 15, 1997 BETWEEN APPLIED VOICE RECOGNITION,
INC. (THE
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"COMPANY") AND XXXXXXXXX X. XXXXXXX. A COMPLETE AND CORRECT COPY OF SUCH
CONSULTING STOCKHOLDER AGREEMENT IS AVAILABLE FOR INSPECTION AT THE
PRINCIPAL OFFICE OF THE COMPANY AND WILL BE FURNISHED WITHOUT CHARGE TO THE
HOLDER OF SUCH SHARES UPON WRITTEN REQUEST.
(e) The Consultant shall, during the Restricted Period, have all of
the other rights of a shareholder with respect to the Shares including, but not
limited to, the right to receive dividends, if any, as may be declared on such
Shares from time to time, and the right to vote (in person or by proxy) such
Shares at any meeting of shareholders of the Company.
(f) If the Termination Date shall occur prior to the expiration of
the Restricted Period:
(1) The Restrictions shall expire on a number of Restricted
Shares determined by multiplying the number of Shares for which the
Restrictions would have expired on the Restriction Release Date that
immediately follows the Termination Date by a fraction, the numerator
of which is the number of days that have elapsed between the
Restriction Release Date that immediately precedes the Termination
Date and the Termination Date and the denominator of which shall be
the number of days between the Restriction Release Date that
immediately precedes the Termination Date and the Release Restriction
Date that immediately follows the Termination Date; and
(2) Except as set forth in Section 12(f)(1), any Restricted
Shares for which the Restrictions shall not have expired shall be
forfeited by the Consultant to the Company (the "Forfeited Shares"),
without the payment of any consideration or further consideration by
the Company, and neither the Consultant nor any heirs, personal
representatives, successors or assigns of the Consultant shall
thereafter have any further rights or interest in the Forfeited Shares
or certificates therefor, and the Consultant's name shall thereupon be
deleted from the list of the Company's stockholders with respect to
the Forfeited Shares.
(g) If (i) the Company shall not be the surviving entity in any merger
or consolidation (or survives only as a subsidiary of another entity), (ii) the
Company sells all or substantially all of its assets to any other person or
entity (other than a wholly-owned subsidiary), (iii) any person or entity
(including a "group" as contemplated by Section 13(d)(3) of the Securities
Exchange Act of 1934) acquires or gains ownership or control of (including,
without limitation, power to vote) more than 50% of the outstanding shares of
Common Stock, (iv) the Company is to be dissolved and liquidated, or (v) as a
result of or in connection with a contested election of directors, the persons
who were directors of the Company before such election shall cease to constitute
a majority of the Company's Board of Directors, any Restrictions on the
Restricted Shares
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set forth in this Agreement shall be deemed to have expired, and the Restricted
Shares shall thereby be free of the Restrictions set forth in the Section 12(c).
(h) If the Termination Date shall occur prior to the expiration of the
Restricted Period, and there exists a dispute between the Consultant and the
Company as to the satisfaction of the conditions to the release of the Shares
from the Restrictions hereunder or the terms and conditions of the Grant, the
Shares shall remain subject to the Restrictions until the resolution of such
dispute, regardless of any intervening expiration of the Restricted Period,
except that any dividends that may be payable to the holders of record of Common
Stock as of a date during the period from termination of the Consultant's
engagement to the resolution of such dispute (the "Suspension Period") shall:
(1) To the extent to which such dividends would have been payable
to the Consultant on the Shares, be held by the Company as part of its
general funds, and shall be paid to or for the account of the Consultant
only upon, and in the event of, a resolution of such dispute in a manner
favorable to the Consultant, and then only with respect to such of the
Shares as to which such resolution shall be so favorable; and
(2) Be canceled upon, and in the event of, a resolution of such
dispute in a manner unfavorable to the Consultant, and then only with
respect to such of the Shares as to which such resolution shall be so
unfavorable.
(i) Upon expiration of the Restricted Period, and upon compliance by
the Consultant with all obligations of the Consultant hereunder, the Restricted
Shares shall be released from all further restrictions and prohibitions
hereunder and the Company shall thereupon deliver or cause to be delivered to
the Consultant or the Consultant's legal representative the certificate or
certificates for the Shares free of any legend provided in Section 12(d) of this
Agreement.
13. Confidential Information. During the term of this Agreement, the
Consultant may have access to confidential information of the Company including,
but not limited to, financial information, personnel information, lists of
financial information, personnel information lists of customers and suppliers
and other trade secrets. To insure the continued secrecy of this confidential
information, the Consultant agrees that he will not at any time while engaged as
a Consultant pursuant to this Agreement at any time or thereafter divulge such
confidential information to any party not associated with the Company. The
Consultant shall not take from the premises of the Company, or otherwise retain,
and shall surrender to the Company, any such confidential information and any
records, files or other documents, or copies thereof, relating to the business
or affairs of the Company.
14. Compliance with Securities Laws. Prior to the issuance of a
certificate(s) for any Shares, the Consultant shall enter into such written
representations, warranties and agreements as the Board of Directors of the
Company may reasonably request in order to comply with applicable federal
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and state securities laws or with this Agreement. In addition to the foregoing,
the Consultant hereby represents and warrants to the Company as follows:
(a) The Consultant acknowledges that the Shares constitute securities
under the Securities Act, and the applicable state securities laws (the
Securities Act and such state securities laws being collectively referred to as
the "Acts").
(b) The Consultant understands and agrees that notwithstanding any
other provision in this Agreement the transfer of the Shares has not been
registered under the Acts in reliance upon exemptions therefrom from non-public
offerings and that the certificates representing the Shares will be legended in
the manner set forth below, the Shares must be held indefinitely and the
Consultant may not be able to sell or dispose of any of the Shares unless the
sale thereof is subsequently registered under the Acts or an exemption or
exemptions from such registration are available, except as set forth in Section
6 of this Agreement, the Company has no obligation to so register any of the
Shares, and, if and until such time as the Shares are registered pursuant to
Section 6 above, that prior to any proposed transfer of any of the Shares by the
Consultant, the Consultant must provide the Company with an opinion reasonably
satisfactory to its counsel, that any proposed transfer of Shares by the
Consultant does not violate any applicable federal or state securities laws.
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR ANY STATE SECURITIES LAWS
(THE "ACTS"). THE SECURITIES HAVE BEEN ACQUIRED FOR INVESTMENT AND MAY NOT
BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN THE ABSENCE OF AN
EFFECTIVE REGISTRATION STATEMENT FOR THE SECURITIES UNDER SUCH ACTS OR AN
OPINION OF COUNSEL SATISFACTORY TO THE COMPANY THAT SUCH REGISTRATION IS
NOT REQUIRED.
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Such certificates shall also be conspicuously endorsed on the front thereof
substantially as follows:
SEE RESTRICTIVE LEGENDS ON REVERSE SIDE
(c) The Consultant is an "accredited investor" as such term is
defined in Rule 501 (a) under the Securities Act.
(d) The Consultant has such knowledge and experience in financial and
business matters that the Consultant is capable of evaluating the merits and
risks of his acquisition of the Shares.
(e) The Consultant has had access to and an opportunity to inspect all
relevant information relating to the Company to enable the Consultant to
evaluate the merits and risks of Consultant's acquisition of the Shares. The
Consultant also has had the opportunity to ask questions and receive answers
respecting, and to obtain such additional information as the Consultant has
desired regarding the business, financial condition and affairs of the Company.
(f) The Consultant's acquisition of the Shares is for the Consultant's
own account, is for investment purposes, and is without a view to, or for offer
or sale for the Company in connection with, any distribution of the Shares. The
Consultant is not participating and does not have a participation in any such
distribution or the underwriting of any such distribution.
15. Dispute Resolution. 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 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.
16. General.
(a) Changes in Capital Structure. The existence of the Company's
commitment to issue the Shares shall not affect in any way the right or power of
the Company or its shareholders to make or authorize any or all adjustments,
recapitalization, reorganizations or other changes in the Company's capital
structure or its business, or any merger or consolidation of the Company, or any
issuance of Common Stock or subscription rights thereto, or any issuance of
bonds, debentures, or preferred stock ahead of or affecting the Shares or the
rights thereof, or the dissolution or liquidation of the Company, or any sale or
transfer of all or any part of its assets or business, or any other corporate
act or proceedings, whether of a similar character or otherwise. However, if
the outstanding shares of Common Stock of the Company shall at any time be
changed or exchanged by declaration of a stock dividend, stock split,
combination of shares, or recapitalization, the number and kind of shares
subject to this Agreement shall be appropriately and equitably adjusted so as to
maintain the proportionate number of shares.
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(b) Compliance With Other Laws. Notwithstanding any of the other
provisions of this Agreement, the Consultant agrees that the Company's
obligation to issue any Shares pursuant to this Agreement, shall be subject to
and limited by the Company's obligation to comply with all laws or regulations
of any governmental authority.
(c) Assignment. This Agreement and the rights and obligations of the
Consultant hereunder shall not be transferable or assignable by the Consultant
without the prior written consent of the Company.
(d) 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 the Company and the Consultant as follows:
If to the Company: Applied Voice Recognition, Inc.
0000 Xxxx Xxx Xxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: President
Facsimile No.: (000) 000-0000
With Copy to: Xxxxx, Xxxxx & Xxxxxx
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: J. Xxxxxxx Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to the Consultant: Xx. Xxxxxxxxx X. Xxxxxxx
00000 Xxxxxxxxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Facsimile No.: (000) 000-0000
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 (15) days prior to the intended effective date of such change.
(e) Entire Agreement; Amendments and Waivers; Successors and Assigns.
This Agreement constitutes the entire agreement between the parties hereto
pertaining to the subject matter hereof and supersede all prior agreements,
understandings, negotiations and discussions, whether oral or written, of the
parties, and there are no warranties, representations or other agreements
between the parties in connection with the subject matter hereof except as set
forth
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specifically herein or contemplated hereby. No supplement, modification or
waiver of this Agreement shall be binding unless executed in writing by the
party to be bound thereby. The failure of a party to exercise any right or
remedy shall not be deemed or constitute a waiver of such right or remedy in the
future. No waiver of any of the provisions of this Agreement shall be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided. This Agreement is intended to bind and inure to
the benefit of and be enforceable by the Consultant, the Company and their
respective successors and permitted assigns, provided that in no event shall
Consultant's obligation to perform future services for the Company be delegated
or transferred by the Consultant.
(f) Severability. If any provision of the Agreement is rendered or
declared invalid, illegal or unenforceable by reason of any existing or
subsequently enacted legislation or by decree of a court of last resort, such
invalidity, illegality or unenforceability will not affect any other provision
or any other jurisdiction, but this Agreement will be reformed, construed or
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein.
(g) Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original and all of which shall
constitute one instrument
(h) Governing Law. The provisions of this Agreement shall be governed
by and construed and enforced in accordance with the laws of the State of Texas
(excluding any conflicts-of-law rule or principle that might refer same to the
laws of another jurisdiction).
(i) Independent Contractor. The Consultant is an independent
contractor with the responsibility for, and control over, the details and means
of performing the Services. Nothing contained in this Agreement shall be
construed as constituting the Consultant as agent, representative or employee of
the Company and the Consultant shall not represent to the contrary to any
person. The Consultant shall not be entitled to any benefits afforded to
employees of the Company, except as otherwise specifically contemplated herein.
(j) Defined Terms. Each of the following terms is defined in the part
or Section of this Agreement set forth opposite such term:
Term Section
---- -------
Acts 14(a)
Agreement Preamble
Commission 8(a)
Common Stock 4
Company Preamble
13
Term Section
---- -------
Consultant Preamble
Consulting Period 1
Effective Date Preamble
Exchange Act 9(a)
Forfeited Shares 12(f)(2)
Grant 4
Indemnified Party 9(c)
Indemnifying Party 9(c)
Registration Expenses 6(c) and 7(c)
Restricted Period 12(a)
Restricted Shares 12(a)
Restriction Release Date 12(a)
Restrictions 4
Securities Act 6(a)
Services 2
Shares 4
Suspension Period 12(h)
Termination Date 5
[REST OF PAGE INTENTIONALLY LEFT BLANK]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement to be
effective as of the Effective Date.
COMPANY:
APPLIED VOICE RECOGNITION, INC., a Utah
corporation
By: /S/ XXXXXXX X. XXXXXXXX
----------------------------------------
Xxxxxxx X. Xxxxxxxx, President
CONSULTANT:
/S/ XXXXXXXXX X. XXXXXXX
-----------------------------------------
XXXXXXXXX X. XXXXXXX
Signature Page to
Consulting and Stockholder Agreement
15
