EXHIBIT 10.11
PURCHASE AND SALE AGREEMENT
This Purchase and Sale Agreement is entered into this 16th day of June,
2000 (the "Agreement") by and among Professional Veterinary Products, Ltd., a
Nebraska corporation ("PVPL"), AAHA Services Corporation, a Colorado
corporation, ("Company") and American Animal Hospital Association, an Illinois
non-profit corporation ("AAHA").
RECITALS
A. PVPL desires to become a shareholder of Company, and
B. Company desires to issue Company shares equal to 20% of the issued
and outstanding shares of the Company to PVPL, and PVPL desires to purchase
such shares.
C. Following the issuance of the shares to PVPL, PVPL and AAHA will be the
owners of all of the issued and outstanding capital stock of the Company.
NOW THEREFORE, in consideration of the above premises and other good and
valuable consideration the parties agree as follows:
ARTICLE 1
PURCHASE AND SALE OF SHARES
1.1 AUTHORIZATION OF STOCK. The Company has, or prior to Closing (as
defined in Section 1.2 below) will have, authorized the sale and issuance of
1,250 shares of its common stock (the "Stock" or the "Shares") to PVPL. It is
the intent of the parties that PVPL will acquire 1,250 Shares at Closing.
1.2 PURCHASE PRICE.
a. The purchase price for PVPL's Shares shall be $1,500,000.00 (the
"Purchase Price").
b. PVPL shall pay to Company at the Closing the Purchase Price by
wire transfer or in the form of a certified or cashier's check.
c. The closing of the transactions contemplated by this Agreement
(the "Closing") shall take place at PVPL's offices at 00000 X. 000xx
Xxxxxx, Xxxxx, Xxxxxxxx on June 16, 2000 (the "Closing Date").
d. At the Closing, (i) Company will deliver to PVPL one or more
certificates representing 1,250 Shares, which is equal to TWENTY percent
(20%) of the issued and outstanding Shares of the Company, endorsed by all
relevant and necessary parties and in such a manner that no other action is
necessary by Company to issue the Shares; (ii) Company will provide proof
satisfactory to PVPL that it has converted $295,000 of its debt to equity
on its books and records as described in Section 6.1 herein; (iii) PVPL will
deliver
to Company the consideration specified in Section 1.2(a) above; and (iv) the
parties will execute a shareholders agreement in the form attached hereto as
Exhibit "A" (the "Shareholders Agreement").
ARTICLE 2
REPRESENTATIVES AND WARRANTIES OF COMPANY
Company represents and warrants to PVPL that the statements contained in
this Article 2 are correct and complete as of the Closing Date.
2.1 REPRESENTATIONS AND WARRANTIES. Company represents and warrants the
following to be true in all material respects:
a. Company does not have any liabilities in excess of $10,000.00
other than those disclosed on Schedule 2.1(a).
b. To the best of its knowledge, Company has duly filed or caused to
be filed all tax reports and returns it is and was required to file.
c. Company has good and marketable title to, or a valid leasehold
interest in, each item of tangible personal property used by it or
reflected on its books and records as owned by it, including all machinery,
automobiles, equipment and all physical inventories, free and clear of any
encumbrance.
d. Company owns or has the right to use pursuant to license,
agreement or permission all intellectual property necessary for the
operation of its business, including but not limited to, all trademarks,
service marks and copyrights.
e. Company is not a guarantor or otherwise liable for any obligation
of any other person, firm or entity.
f. All notes and accounts receivable of Company are reflected
properly on the books and records of Company, are valid receivables, are
not subject to any setoffs or counterclaims, are presently current and are
collectible consistent with ordinary business practices.
g. To the best of its knowledge, Company has complied with all
applicable laws (including rules and regulations thereunder) of federal,
state, local and foreign governments (and all agencies thereof) concerning
the environment, public health and safety and employee health and safety,
and no charge, complaint, action, suit, proceeding, hearing, investigation,
claim, demand or notice is pending against any Company alleging any failure
to comply with or liabilities arising under any such law or regulation.
2.2 APPROVAL OF XX. XXXXXX. Company's Shareholder approved Xx. Xxxxxx
Xxxxxx as an additional member of Company's Board of Directors, effective as of
Closing. He will retain his office until the next regularly scheduled election
of the Board of Directors. At and after the next regularly scheduled election,
PVPL's right and ability to elect one or more directors shall be governed by the
Company's Articles and Bylaws and Section 10 of the Shareholders Agreement.
2.3 FINANCIAL STATEMENT. Company shall provide to PVPL its most recent
unaudited financial statement within 30 days after Closing.
2.4 COMPANY STATUS. Company is a subchapter "C" corporation duly
organized, validly existing and in good standing under the laws of the State of
Colorado. Company has full power and authority and all authorizations, licenses
and permits necessary to carry on the business in which it is engaged or in
which it presently proposes to engage and to own and use the properties owned
and used by it.
2.5 AUTHORITY TO EXECUTE AGREEMENT. Company has full power and authority
to execute and deliver this Agreement and all other agreements contemplated
hereby to which the Company is a party, and to perform its obligations hereunder
and thereunder. Company's Board of Directors has duly authorized the execution,
delivery and performance of the Agreement.
2.6 AUTHORIZED AND ISSUED CAPITAL STOCK. The entire authorized capital
stock of Company consists of Ten Thousand (10,000) Shares of which SIX THOUSAND
TWO HUNDRED FIFTY (6,250) Shares will be issued and outstanding after the
issuance of the PVPL Shares. All of the issued and outstanding Shares have been
duly authorized, are validly issued, fully paid and nonassessable and are held
of record by the Company. As of the date of Closing, the Shares are owned by
AAHA (5,000 Shares) and PVPL (1,250 Shares).
2.7 OUTSTANDING OPTIONS. There are no outstanding or authorized options,
warrants, rights, contracts, calls, puts, rights to subscribe, conversion rights
or other agreements or commitments to which Company is a party or which are
binding upon Company providing for the issuance, transfer, disposition or
acquisition of any of its capital stock; there are no outstanding or authorized
equity appreciation, phantom stock or similar rights with respect to Company;
and, there are no voting trusts, proxies or any other agreements or
understandings with respect to the voting of the capital stock of Company.
2.8 SHAREHOLDER AGREEMENTS. Except for the Shareholders Agreement
executed in conjunction herewith, there are no agreements between shareholders,
buy-sell agreements or any other agreements by and among Company's shareholders.
2.9 COMPLIANCE. Neither the execution and the delivery of this Agreement,
or any other Material Agreements contemplated hereby to which either AAHA or
Company is a party, nor the consummation of the transactions contemplated hereby
or thereby, will (i) conflict with, result in a breach of, constitute a default
under, result in the acceleration of, or require the payment of any amounts
under, or create in any party the right to accelerate, terminate, modify or
cancel or require any notice under any shareholder agreement, contract, lease,
sublease, license, franchise, permit, indenture, agreement or mortgage for
borrowed money, instrument of indebtedness, security interest or other
obligation to which Company is a party or by which it is bound or to which any
of its assets is subject (or result in the imposition of any security interest
upon any of its assets) or (ii) violate any provision of the Articles of
Incorporation, Bylaws or other organization documents of Company, or any
statute, regulation, rule, judgment, order, decree, stipulation, injunction,
charge or other restriction of any government, governmental agency or court to
which Company is subject. No notice to, filing with or authorization, consent or
approval of any government or governmental agency by Company is necessary for
the consummation of the transactions contemplated by this
Agreement. For purposes of Sections 2.9 and 2.10, "Material Agreements" shall
include and be limited to the following:
- SETTLEMENT AGREEMENT WITH WALCO
- Services Agreement with AAHA dated August 22, 1996
- Logistics Agreement with PVPL
- All agreements with vendors of services and/or products to Company
2.10 CHANGES SINCE MAY 25TH DUE DILIGENCE. Except as disclosed herein or
in the Material Agreements, there has not been any material adverse change in
the assets, liabilities, business, financial condition, operations, results of
operations or business prospects of Company since May 25, 2000. Without limiting
the generality of the foregoing, since May 25, 2000.
a. Company has not sold, leased, transferred or assigned any of its
assets, tangible or intangible, other than for a fair consideration in the
ordinary course of business;
b. Company has not imposed any mortgage or pledge of, or subjection
to any lien, charge, security interest or encumbrance of any kind on any of
its assets, tangible or intangible;
c. Company has not made any capital expenditure (or series of
related capital expenditures) except as recorded on the Company books;
d. Company has not made any capital investment in, any loan to or
any acquisition of the securities or assets of any other person (or series
of related capital investments, loans and acquisitions) involving more than
$10,000.00;
e. Company has not created, incurred, assumed or guaranteed any
indebtedness (including capitalized lease obligations) involving more than
$10,000.00 in the aggregate;
f. Company has not cancelled, delayed or postponed (beyond its
normal practice) the payment of accounts payable and other liabilities;
g. Company has not cancelled, compromised, waived or released any
right or claim (or series of related rights and claims) involving more than
$10,000.00 in the aggregate;
h. In each contract in which Company has granted any license of any
rights under or with respect to any intellectual property, Company has
sought to protect its ownership of such rights;
i. With the exception of the Amendment to the Articles attached
hereto as Exhibit "B", and the Amendments to the Bylaws attached hereto as
Exhibit "C", there has been no change made or authorized in the Articles,
Bylaws or other organizational documents of Company;
j. Company has not issued, sold or otherwise disposed of any of its
capital stock or other equity securities, or granted any options, warrants
or other rights to purchase or obtain (including upon conversion or
exercise) any of its capital stock.
k. Company has not experienced any damage, destruction or loss
(whether or not covered by insurance) materially adversely affecting its
property or business;
l. Company has not made any loan to any of its directors, officers
and employees giving rise to any claim or right on its part against the
person or on the part of the person against it;
m. Company has not entered into any employment contract or
collective bargaining agreement, written or oral, or modified the terms of
any existing such contract or agreement;
n. Company has not committed to any of the foregoing.
2.11 PVPL OWNERSHIP. Upon consummation of the Closing, PVPL will own TWENTY
percent (20%) of the issued and outstanding Shares of the Company.
2.12 NO SUBSIDIARIES. Company has no subsidiaries. Company does not control
directly or indirectly or have any direct or indirect equity participation in
any corporation, partnership, trust, joint venture, limited liability company or
other business association.
2.13 INSURANCE. Company maintains commercial general liability insurance,
property insurance, casualty insurance and directors and officers insurance in
amounts which are sufficient to cover its exposure and typical of similar
entities of its type and size.
2.14 NO REAL PROPERTY. Company does not own any real property. Company
currently utilizes space owned by AAHA. There is no separate written lease
agreement for such space; PROVIDED, HOWEVER, a portion of the consideration paid
by Company to AAHA as part of the Services Agreement includes rent for the space
Company is utilizing.
2.15 NO UNTRUE STATEMENTS. To the best knowledge of Company, this Article 2
does not contain, and at the Closing Date, will not contain, any untrue
statement of material fact and does not omit to state any material fact
necessary in order to make the statements and information contained herein not
misleading.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES CONCERNING PVPL
PVPL represents and warrants to Company that the statements contained in
this Article 3 are correct and complete as of the Closing Date.
3.1 GOOD STANDING. PVPL is duly organized, validly existing and in good
standing under the laws of the State of Nebraska.
3.2 POWER AND AUTHORITY. PVPL has full power and authority to execute and
deliver this Agreement, and all other agreements contemplated hereby to which
PVPL is a party, and to perform its obligations hereunder and thereunder. PVPL's
Board of Directors has duly authorized the execution, delivery and performance
of this Agreement.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES CONCERNING AAHA
AAHA represents and warrants to PVPL that the statements contained in this
Article 4 are correct and complete as of the Closing Date.
4.1 GOOD STANDING. AAHA is duly organized, validly existing and in good
standing under the laws of the State of Illinois.
4.2 POWER AND AUTHORITY. AAHA has full power and authority to execute and
deliver this Agreement, and all other agreements contemplated hereby to which
AAHA is a party, and to perform its obligations hereunder and thereunder.
ARTICLE 5
PREEMPTIVE RIGHTS
The parties shall have such preemptive rights as are described in Section 9
of the Shareholders Agreement.
ARTICLE 6
CONDITIONS PRECEDENT TO CLOSING
6.1 CONVERSION OF DEBT TO EQUITY. Company shall convert $295,000 of the
debt evidenced on its books and records to equity.
6.2 CUMULATIVE VOTING. Company's Articles of Incorporation shall be amended
to provide that as long as AAHA owns 80% of the Shares and PVPL owns 20% of the
Shares, AAHA will be entitled to appoint six (6) members of the Board of
Directors and PVPL will be entitled to appoint ONE (1) member of the Board of
Directors, all as described in Section 10 of the Shareholders Agreement.
6.3 PREEMPTIVE RIGHTS. Company's Articles of Incorporation shall be amended
to allow such preemptive rights as are necessary to implement Article 5 herein.
A copy of the Amended Articles of Incorporation are attached hereto as Exhibit
"B".
6.4 SHAREHOLDERS AGREEMENT. The parties hereto shall execute the
Shareholders Agreement.
ARTICLE 7
POST-CLOSING COVENANTS
The parties agree as follows with respect to the period following the
Closing:
7.1 FURTHER ACTION. In case at any time after the Closing any further
action is necessary or desirable to carry out the purposes of this Agreement,
the parties shall take all reasonable action (including the execution and
delivery of such further instruments and documents) as the other parties
reasonably may request for such purposes. AAHA and Company acknowledge and agree
that from and after the Closing, PVPL will be entitled to review and/or
duplicate of all documents, books, records, agreements and financial data of any
sort relating to Company in accordance with Colorado Revised Statutes
Section 0-000-000.
7.2 CONFIDENTIALITY. From and after the Closing Date, PVPL, AAHA and
Company will maintain all information pertaining to the sale of AAHA's Shares in
confidence and not disclose any portion of information to any person other than
their attorneys, accountants, employees, advisors and bankers who need to know
such information; PROVIDED, HOWEVER, a) any party may issue a press release
pertaining to this transaction as long as the other parties have approved its
content, b) PVPL and Company may reference their relationship with each other in
their marketing materials; and c) PVPL will disclose the necessary information
required by the Securities Exchange Commission as required in its 10K and 10Q
filings. All prior Confidentiality Agreements between one or more of the
parties, including but not limited to, the Agreement dated May 25, 2000 are
hereby superceded by this Agreement and have no further force or effect after
the date of Closing.
7.3 APPLICATION OF PROCEEDS. THE PROCEEDS FROM THE $1.5 MILLION PURCHASE
PRICE WILL BE UTILIZED BY COMPANY AS FOLLOWS: APPROXIMATELY $695,000 WILL BE
UTILIZED TO PAY ALL REMAINING DEBT TO WALCO; APPROXIMATELY $140,000 WILL BE PAID
TO MISCELLANEOUS VENDORS; AND THE ENTIRETY OF ALL PAYABLES DUE TO AAHA WILL BE
PAID IN FULL (SUCH AMOUNT IS ESTIMATED TO BE $570,000 AS OF MAY 31, 2000). THE
$695,000 PAYABLE TO WALCO WILL BE PAID IN TWO INSTALLMENTS; $595,000 WILL BE
PAID IMMEDIATELY AFTER CLOSING. THE REMAINING $100,000 WILL BE PLACED IN
ESCROW AND BE PAID TO WALCO ONLY AFTER COMPANY'S BOOKS AND RECORDS ARE
RETURNED TO COMPANY BY WALCO. COMPANY SPECIFICALLY REPRESENTS TO PVPL THAT
THE PAYMENT OF SUCH SUM TO WALCO WILL RELEASE IT FROM ANY AND ALL OBLIGATIONS
OWING TO WALCO NOW OR ANY TIME IN THE FUTURE. IN EXCHANGE FOR SUCH PAYMENT,
BOTH WALCO AND COMPANY WILL EXECUTE A SETTLEMENT AGREEMENT.
Payment by PVPL of the $1.5 MILLION dollar purchase price shall be
conditioned upon the receipt of the duly executed SETTLEMENT AGREEMENT FROM
WALCO by legal counsel for Company. Upon notification from Company's legal
counsel to PVPL that such executed Settlement Agreement has been received and
placed in escrow, PVPL shall immediately wire transfer the $1.5 MILLION dollars
to Company and Company shall, in turn, wire the amount due to WALCO and place
$100,000 in escrow as provided for in the Settlement Agreement. Upon notice from
WALCO that the monies due have been received by WALCO, legal counsel for Company
shall then release the Settlement Agreement to Company.
7.4 LINE OF CREDIT. After Closing and application of the payments described
herein, Company will not have any outstanding debt except for the amounts
payable to PVPL listed on Schedule 2.1(a); PROVIDED, HOWEVER, after closing
Company may thereafter utilize a line of credit through a state or federally
regulated financial institution as needed for ordinary business purposes.
7.5 EXCHANGE OF FINANCIAL INFORMATION. Company and PVPL agree to exchange
financial information, including annual audited and semi-annual unaudited
financial statements, income statements, balance sheets and cashflow statements
at least on an annual basis. In addition, the parties agree to provide the other
party any other financial information, and provide access to the other party's
books and records, upon reasonable request.
ARTICLE 8
REMEDIES
8.1 INDEMNIFICATION PROVISIONS FOR BENEFIT OF PVPL. Company agrees to
indemnify PVPL from and against all losses incurred by PVPL resulting from,
arising out of, relating to, in the nature of or caused by any breach of any
representation or warranty contained in Article 2 hereof or any breach or
failure to perform or comply with any obligation, agreement or covenant
contained in this Agreement.
8.2 INDEMNIFICATION PROVISIONS FOR BENEFIT OF COMPANY. PVPL agrees to
indemnify Company from and against all losses resulting from, arising out of,
relating to, in the nature of or caused by the breach of any representation or
warranty of PVPL contained in Article 3 or any breach of failure to perform or
comply with any obligation, agreement or covenant contained in this Agreement.
8.3 EXPIRATION OF INDEMNITIES. The representations and warranties and
rights of indemnification of this Agreement shall expire three years after the
Closing Date.
ARTICLE 9
MISCELLANEOUS
9.1 SURVIVAL. Unless otherwise specifically provided herein, all
representations, warranties, covenants and agreements contained in this
Agreement will survive the execution and delivery of this Agreement.
9.2 ENTIRE AGREEMENT. This Agreement (including the documents referred to
herein) constitutes the entire understanding among the parties and supersedes
any prior understandings, agreements or representations by or among the parties,
written or oral, that may have related in any way to the subject matter hereof.
9.3 SUCCESSION AND ASSIGNMENT. This Agreement shall be binding upon and
inure to the benefit of the parties named herein and their respective successors
and permitted assigns. No party may assign either this Agreement or any of such
party's rights, interests or obligations hereunder without the prior written
approval of the other party.
9.4 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original but all of which
together will constitute one and the same instrument.
9.5 HEADINGS. The section headings contained in this Agreement are inserted
for convenience only and shall not affect in any way the meaning or
interpretation of this Agreement.
9.6 NOTICES. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement or any of the
Agreements contemplated hereby shall be in writing and shall be deemed to have
been given when delivered personally to the recipient, one business day after
being sent to the recipient by reputable overnight courier service (charges
prepaid), or five business days after being mailed to the recipient by certified
or registered mail, return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to each party at the address
below:
If to PVPL: Professional Veterinary Products, Ltd.
Attn: Xx. Xxxxxx Xxxxxx
00000 X. 000xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
If to AAHA: American Animal Hospital Association
Attn: Dr. Xxxx Xxxxxx
00000 X. Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
If to Company: AAHA Services Corporation
Attn: Dr. Xxxx Xxxxxx
00000 X. Xxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxx 00000
Any party may give any notice, request, demand, claim or other
communication hereunder using any other means (including personal delivery,
expedited courier, messenger service, telecopy, telex, ordinary mail or
electronic mail), but no such notice, request, demand, claim or other
communication shall be deemed to have been duly given unless and until it
actually is received by the individual for whom it is intended. Any party may
change the address to which notices, requests, demands, claims and other
communications hereunder are to be delivered by giving the other parties notice
in the manner herein set forth.
9.7 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of Colorado.
9.8 AMENDMENTS AND WAIVERS. No amendment, modification or waiver of any
provision of this Agreement shall be valid unless the same shall be in writing
and signed by the parties.
9.9 SEVERABILITY. Any term or provision of this Agreement that is invalid
or unenforceable in any situation in any jurisdiction shall not affect the
validity or enforceability of the remaining terms and provisions hereof or the
validity or enforceability of the offending term or provision in any other
situation or in any other jurisdiction.
IN WITNESS WHEREOF, this Agreement is executed as of the date first above
written.
PROFESSIONAL VETERINARY PRODUCTS, LTD.
By: /s/ Xxxxxx X. Xxxxxx, D.V.M.
------------------------------------
Its: President
AMERICAN ANIMAL HOSPITAL ASSOCIATION
By: /s/ Xxxx X. Xxxxxx, D.V.M.
------------------------------------
Its: Executive Director
AAHA Services Corporation
By: /s/ Xxxx X. Xxxxxx, D.V.M.
------------------------------------
Its: Chief Executive Officer
SCHEDULE 2.1(a)
1. $570,000 (ESTIMATED) ACCOUNTS PAYABLE DUE THE AMERICAN ANIMAL HOSPITAL.
2. $140,000 (ESTIMATED) ACCOUNTS PAYABLE DUE VARIOUS VENDORS. THE MAJORITY OF
THE AMOUNT PAYABLE IS DUE TO SCHERING-PLOUGH AND NOVARTIS.
3. $695,212.96 LINE OF CREDIT DUE WALCO INTERNATIONAL.
4. $573,881.97 (ESTIMATED) ACCOUNTS PAYABLE DUE TO PVPL.
5. ROYALTY AGREEMENT WITH AMERICAN HOSPITAL ASSOCIATION FOR USE OF TRADEMARK.
THE AGREEMENT CALLS FOR A QUARTERLY PAYMENT OF 1% SALES.
Note: ITEMS 1, 2 AND 3 TO BE PAID IN FULL WITH A PORTION OF THE INVESTMENT FROM
PVPL.
