EXHIBIT 2.1
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
-----------------------------------------
THIS AGREEMENT (this "Agreement"), dated as of this 12th day of
---------
October, 2001, is made by and among XXXXXX & XXXXXX, INC., a Louisiana
corporation (hereinafter "Seller") in its capacity as a Chapter 11 Debtor and/or
-----
in its corporate capacity under the Plan of Reorganization, confirmed by the
U.S. Bankruptcy Court for the Eastern District of Louisiana, Case No. 00-15681
"B", and DISCOUNT RX, INC., a Louisiana corporation, or its designee, or other
successful bidder (hereinafter "Buyer"), pursuant to the Bidding Procedures
-----
attached to the Disclosure Statement Under Plan of Reorganization.
ARTICLE I
PURCHASE AND SALE OF ASSETS
1.1 Purchase and Sale. In consideration of the Purchase Price
-----------------
(hereinafter defined) and subject to the terms and conditions set forth in this
Agreement, at the Closing (hereinafter defined), Seller will sell to Buyer and
Buyer will purchase from Seller all of the assets (real and personal, tangible
and intangible), properties and business of Seller as a debtor-in-possession, as
the same are more specifically set forth in Section 1.2 hereof.
-----------
1.2 Definitions; Purchased Assets.
-----------------------------
1.2.1 Definitions. For purposes of this Agreement, the following
-----------
terms have the meanings set forth below:
"Affiliates" means each shareholder, director, officer and employee of
----------
Seller, the family members, and any director, officer or employee of any
corporation, partnership or other entity in which Seller, any family member of
the Seller, or any director or officer of Seller has any financial interest or
is a controlling person, as that term is used in connection with the federal
securities laws, if such person or entity has, or in the past had, a contractual
relationship with or is transacting, or has in the past transacted, business
with Seller.
"Assumed Contracts" means those contracts of the Seller that Buyer has
-----------------
specifically agreed to assume, as set forth in Exhibit 1.
---------
"Bankruptcy Court" means the United States Bankruptcy Court for the Eastern
----------------
District of Louisiana or such other court having jurisdiction over the
Reorganization Case or any part thereof.
"Bankruptcy Case" means that case entitled In re Xxxxxx and Xxxxxx, Inc.,
---------------
currently pending in the United States Bankruptcy Court for the Eastern District
of Louisiana and bearing case number 00-15681 "B".
"Common Stock" means the Section 144 common stock of DrugMax, Inc., a
------------
publicly traded company, traded on the Nasdaq SmallCap Market under the symbol
DMAX, which is restricted as described herein, each share having a par value of
$0.001, and each share of which is entitled to one vote on all matters.
"Excluded Assets" means the assets, properties and rights of Seller owned
---------------
or used in the conduct of Seller's business which are not included in the
Purchased Assets and which are more particularly described in Section 1.4
-----------
hereof.
"Excluded Contracts" means any and all contracts of the Seller that are not
------------------
specifically listed as an "Assumed Contract" in Exhibit 1.
---------
"Generally Accepted Accounting Principles" or "GAAP" means such principles,
---------------------------------------- ----
applied on a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public Accountants
and/or in statements of the Financial Accounting Standards Board which are
applicable in the circumstances as of the date in question, and the requirement
that such principles be applied on a "consistent basis" means that accounting
----------------
principles observed in the current period are comparable in all material
respects to those applied in the preceding periods, except as change is
permitted or required under or pursuant to such accounting principles.
"LLC Lease" means that certain lease agreement dated July 20, 2000, for the
---------
property and structures located at 000 Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxxx, 00000
(as evidence by Exhibit 2) between Xxxxxxx Xxxxx Real Estate LLC and the Seller
relating to the Warehouse owned by such LLC which is currently used by the
Seller in the duration of its business.
"Laws" means, without limitation, all foreign, federal, state and local
----
laws, statutes, rules, regulations, codes, ordinances, plans, orders, judicial
decrees, writs, injunctions, notices, decisions or demand letters issued,
entered or promulgated pursuant to any foreign, federal, state or local law.
"Operating Assets" means the assets, properties and rights of Seller owned
----------------
or used in the conduct of Seller's business.
"Plan" means the Reorganization Plan, filed by the Seller and confirmed by
----
the Bankruptcy Court under Chapter 11 of the Bankruptcy Code.
1.2.2 Overview of Purchased Assets. The assets to be purchased are
-----------------------------
all of Seller's Operating Assets, properties and rights (real and personal,
tangible and intangible) owned or used in the conduct of its business as of the
Closing Date except for those assets which are Excluded Assets or which have
since been sold, transferred or disposed of in the ordinary and regular course
of business (hereinafter collectively referred to as the "Purchased Assets"),
----------------
which shall be sold to Buyer free and clear of any and all liens, claims,
interests, or encumbrances under and pursuant to Section 363 of the Bankruptcy
Code, and pursuant to the Plan. The Purchased Assets shall include, without
limitation, the following at the Closing Date:
2
(a) Equipment. All of Seller's machinery, equipment, furniture,
---------
fixtures, telephone numbers (toll-free and others) and other personal
property and all of Seller's fixed assets, as listed in Exhibit 3.
---------
(b) Accounts Receivable. All of Seller's trade notes receivable (and
-------------------
security therefor), accounts receivable and all other receivables of any
other kind.
(c) Records. All of Seller's books, financial and business records,
-------
insurance policies and any claims and credits thereunder.
(d) Inventory. All inventories and other supplies pertaining to
---------
Seller's operations on hand or at third party premises or in transit
including raw materials, work in process and finished goods, and including
any rights of Seller to warranties received from suppliers.
(e) Intellectual Property. All of Seller's interests and rights to
---------------------
all United States and foreign registered, pending and common law, trade
names, service marks, trademarks, domain names and logos, including the
name Xxxxxx & Xxxxxx, Inc., all of the good will of the Seller's business
associated therewith, all United States and foreign issued and pending
patents, all United States and foreign copyrights, whether or not
registered, rights of publicity, franchises and all technology rights and
licenses, including computer software, ( including but not limited to that
which is set forth in Exhibit 4 ) and all proprietary know-how, trade
----------
secrets, inventions, discoveries, developments, research, and formulas,
whether or not patentable, and all other proprietary information or
property relating to Seller's current business or business prospects and
any improvements, updates, enhancements or modifications related to any of
the foregoing (hereinafter collectively referred to as "Intellectual
------------
Property Assets").
---------------
(f) Other Intangibles. All of Seller's right, title and interest in
-----------------
and to franchises, licenses, permits, options and any inventions,
developments and ideas.
(g) Assumed Contracts. All of Seller's rights and privileges arising
-----------------
from the contracts specifically listed in Exhibit 1.
---------
1.3 Confirmation of Assets Excluded From Purchased Assets. The parties
-----------------------------------------------------
parties hereto acknowledge and agree that the Purchase Price (hereinafter
defined) has been calculated, and is being paid, based on the agreement and
understanding that the Purchased Assets do not include the Excluded Assets. The
Excluded Assets are Buyer's cash on hand and on deposit as of the Closing Date,
shares of DrugMax, Inc. common stock currently owned by Seller, and the shares
of DrugMax, Inc. Common Stock to be received as part of the Purchase Price.
1.4 Payment of the Purchase Price for the Purchased Assets. Subject to
------------------------------------------------------
the terms and conditions of this Agreement and in reliance on the
representations and warranties of Seller herein contained, and in consideration
of the sale, conveyance, transfer and delivery of the Purchased Assets free and
clear of all liens, claims, encumbrances, interests and security
3
interests, Buyer agrees to pay to Seller the following Purchase Price in a
combination of cash and two-year restricted DrugMax, Inc. Common Stock plus the
amount set forth herein for the acquisition of the Inventory and Accounts
Receivable as follows:
(a) $ 200,000 in cash, and
(b) The number of shares of Common Stock to be delivered to
Seller on the Closing Date shall be equal to $750,000 which number of
shares shall be calculated by dividing $750,000 by the five-day
average closing price of the Common Stock during the five trading days
preceding the Closing Date. The five-day average closing price of the
Common Stock during the five trading days preceding the Closing Date
shall hereinafter be referred to as the "Per Share Purchase Price."
The Buyer shall cause its affiliate, DrugMax, Inc., to issue the
Common Stock to Seller or it's the designee on at Closing.
(c) The value to be paid for the Accounts Receivable shall
be calculated as follows:
(i) Accounts Receivable :
(I) 85% of book value for 0-30 day receivables;
(II) 65% of book value for 31-60 day receivables;
(III) 50% of book value for 61-90 day receivables;
and
(IV) 0% of book value for 90+ day receivables.
(d) The value to be paid for the Inventory shall be
calculated as follows:
(I) 70% of book value for brand name products;
(II) 50% of book value for generic products; and
(III) 0% of book value for obsolete products referred
to as "morque" items.
(e) The value of the Fixed Assets shall be calculated as
follows:
(I) 10% of book value for computer software;
(II) 10% of original cost for furniture and
fixtures; and
(III) 0% for all other fixed assets, including
leasehold improvements, leased equipment, and
computers.
1.5 Schedule of Purchased Assets. At Closing, the Seller will
----------------------------
deliver to Buyer a schedule of all of the Purchased Assets, which may be in the
form of a depreciation schedule,
4
including (a) all of Seller's accounts and notes receivable (and the face
amounts thereof) which are outstanding on the Closing Date; (b) machinery,
equipment, furniture, fixtures, telephone numbers (toll-free and others) and
other personal property and Seller's fixed assets and the values thereof; (c)
all inventories and other supplies pertaining to Seller's operations on hand or
at third party premises or in transit including raw materials, work in process
and finished goods, and including any rights of Seller to warranties received
from suppliers and the values thereof; (d) all of Seller's books, financial and
business records, insurance policies and any claims and credits thereunder; and
(e) all of Seller's right, title and interest in and to franchises, licenses,
permits, options and any inventions, developments and ideas, and values thereof.
The Schedule of Purchased Assets will be attached to this agreement as Exhibit
-------
3. All accounts and notes receivable listed on Exhibit 3 delivered at the
---------
Closing will constitute valid claims against third parties not affiliated with
Seller arising in the ordinary course of business of Seller.
1.6 Product Claims and Returns. Seller shall be responsible for
---------------------------
customer claims relating to services rendered by Seller prior to the Closing
Date, and customer claims relating to, or returns of, products of Seller sold
and shipped by Seller prior to the Closing Date or in the finished goods
inventory of Seller as of the Closing Date.
1.7 Excluded Contracts. Seller shall be responsible and shall retain
------------------
all payment obligations, if any, for all liabilities arising under each of the
Excluded Contracts.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer, as follows:
2.1 Corporate Organization, etc. Seller is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the state of
Louisiana, which filed for relief under Chapter 11 of the Bankruptcy Code on
September 13, 2000 and has been operating as a debtor-in-possession since that
date pursuant to 11 U.S.C. (S)(S) 1107 and 1108.
2.1.1 Bankruptcy Court Authorization. Seller has received authority
------------------------------
to consummate this Agreement and sell the Purchased Assets free and clear of all
liens, claims and encumbrances pursuant to 11 U.S.C. (S)(S) 363 and 365 and
pursuant to the Order of the Bankruptcy Court Confirming the Debtor's Plan of
Reorganization.
2.2 No Violation. Seller is not subject to or obligated under any
------------
article or certificate of incorporation, bylaw, Law, or any agreement or
instrument, or any license, franchise or permit, which would be breached or
violated by Seller's execution, delivery and performance of this Agreement.
Seller will comply with all applicable Laws in connection with their execution,
delivery and performance of this Agreement and the transactions contemplated
hereby.
2.3 Governmental Authorities. Seller is not required to submit any
------------------------
notice, report or other filing with, and no consent, approval or authorization
is required, by any governmental or regulatory authority in connection with
their execution, delivery, consummation
5
or performance of this Agreement or the consummation of the transactions
contemplated hereby. Neither Seller nor any "Ultimate Parent Entity" (as defined
----------------------
in 16 C.F.R. (S) 801.1(a) (1988)) of Seller immediately prior to the
transactions contemplated hereunder is a person that has total assets or annual
net sales of $10,000,000 or more within the meaning of 15 U.S.C. Section 18a.
2.4 True and Complete Copies. Buyer has been provided true,
------------------------
accurate and complete copies of all Contracts. Copies of all additional
agreements and documents delivered and to be delivered hereunder by Seller are
and will be true and complete copies of such agreements and documents. All
written summaries of oral agreements will be true and complete.
2.5 Title and Related Matters. Seller has good and marketable
-------------------------
title to all Purchased Assets including, without limitation, the Equipment,
Accounts Receivable, Records, Personal Property, Inventories, Intellectual
Property Assets, Other Intangibles, Assumed Contracts, free and clear of all
mortgages, security interests, liens, pledges, claims, escrows, options, rights
of first refusal, indentures, easements, licenses, security agreements or other
agreements, arrangements, contracts, commitments, understandings, obligations,
charges or encumbrances of any kind or character. Seller owns or leases,
directly or indirectly, all of the assets and properties, and is a party to all
licenses and other agreements, presently used or necessary to carry on the
business or operations of Seller as presently conducted.
2.6 Intellectual Property. Exhibit 4 contains a complete and
--------------------- ---------
accurate list and summary description of all U.S. and foreign registered,
pending and common law, trade names, service marks, trademarks, domain names and
logos, all U.S. and foreign issued and pending patents, all U.S. and foreign
copyrights, whether or not registered, and any rights of publicity, franchises
and technology rights and licenses, including computer software, owned by or
licensed to Seller. Seller represents and warrants that Seller is the sole and
exclusive owner of the entire right, title and interest in and to the
Intellectual Property Assets (as defined in Section 1.2.2(f)), other than the
rights of licensor under any license agreements identified in Exhibit 5, and has
---------
good and marketable title to the Intellectual Property Assets free and clear of
all royalty obligations, security interests, liens and encumbrances. Seller
does not unlawfully or wrongfully use or possess any Intellectual Property
Assets and did not misappropriate the Intellectual Property Assets from another
person or entity. Seller's use of the Intellectual Property Assets does not
conflict with or infringe upon the rights of any third party and no such claim
of infringement or violation has been threatened or asserted or is pending
against Seller, itsend- end-user customers, licensees or licensors.
Furthermore, no product, including final and intermediate products, made,
imported, offered for sale, sold or distributed by Seller, or service provided
by Seller, violates any license or infringes any intellectual property rights of
any third party. The Seller is unaware that any of the foregoing claims or
demands by any third party will be, or is likely to be made, or of any fact or
circumstance that could reasonably give rise to any such claim or demand.
Seller has not entered into any agreement, license, release, or order that
restricts the right of Seller or Buyer to exploit the Intellectual Property
Assets in any way. The execution, delivery and performance of this Agreement by
Seller does not and will not violate any security agreement, indenture, order,
or other instrument to which Seller is a party or by which it or any of its
assets is bound. The Intellectual Property Assets are valid and enforceable and
Seller have taken all necessary steps to ensure the validity and enforceability
of the Intellectual Property Assets. Seller has the exclusive right to use all
Intellectual Property Assets
6
used in, or necessary for, the operation of the business as currently conducted.
Each Intellectual Property Asset owned or used by Seller immediately prior to
the Closing Date will be owned or available for use by Buyer on identical terms
and conditions immediately subsequent to the Closing Date hereunder.
2.7 Warranties. Except as set forth in Exhibit 5, to be provided
---------- ---------
at Closing, there are no claims existing or threatened under or pursuant to any
warranty, whether expressed or implied, on products or services sold by Seller
and the Balance Sheet reserves, if any, for anticipated claims are adequate to
cover any such claims. Exhibit 5 includes a copy of the form of all written
---------
warranties furnished by Seller to purchasers of any product since January 1,
1995.
2.8 Insurance. Exhibit 6, to be provided at Closing, lists and
--------- ---------
includes copies of all certificates of coverage regarding all of Seller's
existing insurance policies, the premiums therefor and the coverage of each
policy. Such policies and the amount of coverage and the risks insured are, in
the aggregate, sufficient to protect and insure Seller against perils, which
good business practice demands be insured against or which are normally insured
against by other industry members similarly situated. Seller will ensure that
all of Seller's existing insurance policies will remain in full force and effect
until the expiration of such policy, obtaining applicable riders or tails in
order to transfer such policies to Buyer.
2.9 Disclosure. No representation or warranty made by Seller in
----------
this Agreement or in any agreement, instrument, document, certificate, statement
or letter furnished to Buyer, by or on behalf of Seller in connection with any
of the transactions contemplated by this Agreement contains any untrue statement
of fact or omits to state a fact necessary in order to make the statements
herein or therein not misleading in light of the circumstances in which they are
made.
2.10 Investment Representations and Covenants.
----------------------------------------
2.10.1 Seller understands that the Common Stock will not be
registered under the Securities Act of 1933, as amended (the "Securities Act"),
or any state securities laws on the grounds that the issuance of the Common
Stock is exempt from registration pursuant to Section 4(2) of the Securities Act
under the Securities Act and applicable state securities laws, and that the
reliance of the Buyer, and its affiliate, DrugMax, Inc., a Nevada corporation
("Parent"), on such exemptions is predicated in part on the Seller's
representations, warranties, covenants and acknowledgments set forth in this
Section.
2.10.2 Seller represents and warrants that it is an "accredited
investor" as defined under the Securities Act and applicable state "Blue Sky"
laws.
2.10.3 Seller represents and warrants that the Common Stock to be
acquired by Seller upon consummation of the transactions described in this
Agreement will be acquired by Seller for Seller's own account, not as a nominee
or agent, and without a view to resale or other distribution within the meaning
of the Securities Act and the rules and regulations thereunder, except as
contemplated in this Agreement, and that Seller will not distribute any of the
Common
7
Stock in violation of the Securities Act. All Common Stock shall bear a
restrictive legend in substantially the following form:
"THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933. THEY MAY NOT BE SOLD, OFFERED FOR SALE, PLEDGED OR HYPOTHECATED IN
THE ABSENCE OF AN EFFECTIVE REGISTRATION STATEMENT AS TO THE SECURITIES
UNDER SAID ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE CORPORATION
THAT SUCH REGISTRATION IS NOT REQUIRED."
"THESE SECURITIES ARE SUBJECT TO ADDITIONAL RESTRICTIONS ON TRANSFER AND
OTHER AGREEMENTS SET FORTH IN AN ASSET PURCHASE AGREEMENT BETWEEN DISCOUNT
RX, INC. AND THE REGISTERED HOLDER OR ITS PREDECESSOR IN INTEREST, A COPY
OF WHICH MAY BE OBTAINED AT THE PRINCIPAL EXECUTIVE OFFICE OF THE
CORPORATION. ANY SALE, ASSIGNMENT, TRANSFER, PLEDGE OR DISPOSITION IN
CONFLICT WITH THE ASSET PURCHASE AGREEMENT IS VOID AND OF NO LEGAL FORCE,
EFFECT OR VALIDITY WHATSOEVER."
In addition, the Common Stock shall bear any legend required by the
securities or "Blue Sky" laws of any state where Seller resides as well as any
other legend deemed appropriate by the Buyer or its counsel. Seller further
acknowledges the transfer limitations imposed by Section 6.6 of this Agreement.
-----------
2.10.4 The principal residence of Seller is in the State of Louisiana.
2.10.5 Seller (i) acknowledges that the Common Stock issued to Seller
at the Closing must be held indefinitely unless subsequently registered under
the Securities Act or an exemption from registration is available, (ii) is aware
that any routine sales of Common Stock made pursuant to Rule 144 under the
Securities Act may be made only in limited amounts and in accordance with the
terms and conditions of that Rule and that in such cases where the Rule is not
applicable, compliance with some other registration exemption will be required,
and (iii) is aware that Rule 144 is not currently available for use for resale
of any of the Common Stock to be acquired by Seller upon consummation of the
transactions described in this Agreement.
2.10.6 Seller represents and warrants to the Buyer that Seller, either
alone or together with the assistance of Seller's own professional advisor, has
such knowledge and experience in financial and business matters such that Seller
is capable of evaluating the merits and risks of Seller's investment in any of
the Common Stock to be acquired by Seller upon consummation of the transactions
described in this Agreement.
2.10.7 Seller confirms that it has had the opportunity to ask
questions of and receive answers from the Buyer and Parent concerning the terms
and conditions of its investment in the Common Stock, and it has received to its
satisfaction, such additional information, in
8
addition to that set forth herein, about the Parent's and the Buyer's operations
and the terms and conditions of the offering as they have requested.
2.10.8 Seller agrees that after the Closing it will not sell or
otherwise transfer or dispose of Common Stock or any interest therein (unless
such shares have been registered under the Securities Act) without first
complying with Section 6.2 of this Agreement and either of the following
-----------
conditions, the expenses and costs of satisfaction of which shall be fully borne
and paid for by Seller:
(i) the Buyer and Parent shall have received a written legal
opinion from Seller's legal counsel, which opinion and counsel shall be
satisfactory to the Buyer and Parent in the exercise of their reasonable
judgment, or a copy of a "no-action" or interpretive letter of the Securities
and Exchange Commission, specifying the nature and circumstances of the proposed
transfer and indicating that the proposed transfer will not be in violation of
any applicable bankruptcy laws or the registration provisions of the Securities
Act and the rules and regulations promulgated thereunder; or
(ii) the Buyer and Parent shall have received an opinion from
their own counsel to the effect that the proposed transfer will not be in
violation of any applicable bankruptcy laws or the registration provisions of
the Securities Act and the rules and regulations promulgated thereunder.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller, as follows:
3.1 Corporate Organization, etc. Buyer is a corporation duly
---------------------------
organized, validly existing and in good standing under the laws of the State of
Nevada.
3.2 Authorization, etc. Buyer has full corporate power and
------------------
authority to enter into this Agreement and to carry out the transactions
contemplated hereby. The Board of Directors of Buyer has duly authorized the
execution and delivery of this Agreement and the transactions contemplated
hereby, and no other corporate proceedings on its part are necessary to
authorize this Agreement and the transactions contemplated hereby.
3.3 No Violation. Buyer is not subject to or obligated under any
------------
certificate of incorporation, bylaw, Law, or any agreement or instrument, or any
license, franchise or permit, which would be breached or violated by its
execution, delivery or performance of this Agreement. Buyer will comply with
all Laws in connection with its execution, delivery and performance of this
Agreement and the transactions contemplated hereby.
3.4 Governmental Authorities. Buyer is not required to submit
------------------------
any notice, report or other filing with and no consent, approval or
authorization is required by any
9
governmental or regulatory authority in connection with Buyer's execution or
delivery of this Agreement or the consummation of the transactions contemplated
hereby.
ARTICLE IV
COVENANTS OF SELLER
Except as otherwise consented to or approved by Buyer in writing, Seller
covenants and agrees that from the date hereof through the Closing Date (or such
other time frame as set forth hereinafter) Seller shall act as follows:
4.1 Consents and Approvals. Seller will use all necessary means at
----------------------
its disposal to obtain on or prior to the Closing Date all consents and
approvals necessary to the consummation of the transactions contemplated hereby,
including without limitation the consents of each of the Seller's secured
creditors to the transactions contemplated by this Agreement.
4.2 Breach of Agreement. Seller will not take any action, which, if
-------------------
taken prior to the Closing Date, would constitute a breach of this Agreement.
4.3 Fulfillment of Conditions. Seller shall satisfy each condition
-------------------------
to the obligations of Buyer contained in this Agreement and will not take or
fail to take any action that could reasonably be expected to result in the
nonfullfilment of any such condition.
ARTICLE V
NON-COMPETITION AGREEMENT
ARTICLE II
5.1 Non-competition Agreement. The agreement of Discount Rx, Inc. to
-------------------------
purchase the Purchased Assets is subject to and conditioned upon the execution
by Xxxxxx & Xxxxx, Inc. and Xxxxxxx Xxxxx, individually, of a Non-Competition
Agreement substantially in the form of Exhibit 10. However, Discount Rx, Inc.
----------
may waive this condition.
ARTICLE VI
OTHER AGREEMENTS
Buyer and Seller covenant and agree that:
6.1 Agreement to Defend. In the event any action, suit, proceesing
-------------------
or investigation of the nature specified in Section 7.3 or Section 8.2 hereof is
----------- -----------
commenced, whether before or after the Closing Date, all the parties hereto
agree to cooperate and use their best efforts to defend against and respond
thereto.
6.2 Transfer of Shares and Redemption.
---------------------------------
10
(a) Seller further agrees not to transfer the Subject
Shares for a period of two years from the date hereof (the "Lock-
Up Period").
(a) At any time during the Lock-Up Period, the Buyer may,
at its sole option and expense, redeem any or all of the Subject
Shares for a price per share equal to 120% of the Per Share Purchase
Price by delivering written notice to Seller of its desire to do so,
along with the applicable redemption price in cash.
(b) Until such time as Buyer has exercised its redemption
option pursuant to this Section 6.2, Seller shall be entitled to vote
-----------
such shares and to receive any and all dividends and proceeds relating
to same, subject to subparagraph (a) and (b) above.
ARTICLE VII
CONDITIONS TO THE OBLIGATIONS OF THE BUYER
Each and every obligation of Buyer under this Agreement shall be
subject to the satisfaction, on or before the Closing Date, of each of the
following conditions unless waived in writing by Buyer:
7.1 Representations and Warranties; Performance. The
-------------------------------------------
representations and warranties made by Seller herein shall be true and correct
on the date of this Agreement and on the Closing Date with the same effect as
though made on such date; Seller shall have performed and complied with all
agreements, covenants and conditions required by this Agreement to be performed
and complied with by them prior to the Closing Date.
7.2 Consents and Approvals; Payoff Letters. All consents from
--------------------------------------
and filings with third parties, regulators and governmental agencies
required to consummate the transactions contemplated hereby, or which,
either individually or in the aggregate, if not obtained, would cause an
adverse effect on Seller's financial condition or business shall have been
obtained and delivered to Buyer. Without limiting the generality of the
foregoing, Seller shall have obtained and delivered to Buyer the written
consent of each creditor (the "Secured Creditors") required to deliver the
Purchased Assets to Buyer free and clear of any liens, claims, securities
interests or encumbrances at the Closing. In addition, Seller shall have
obtained and delivered to Buyer, as applicable, any and all "payoff
letters" from the Secured Creditors which shall state that upon the payment
by the Seller of a sum certain amount at the Closing Date, all amounts owed
by the Seller to such creditors will be extinguished.
7.3 No Proceeding or Litigation. No action, suit or
---------------------------
proceeding before any court or any governmental or regulatory authority
shall have been commenced or threatened, and no investigation by any
governmental or regulatory authority shall have been commenced or
threatened against Seller or Buyer or any of their respective principals,
officers or directors seeking to restrain, prevent or change the
transactions contemplated hereby or questioning the validity or legality of
any of such transactions or seeking damages in connection with any of such
transactions.
11
7.4 Successful Bidder. Unless Discount or DrugMax is the
-----------------
successful bidder for the Purchased Assets of the Debtor, River Road Real
Estate LLC, will have no obligation to purchase any assets of Xxxxxxx Xxxxx
Real Estate, LLC, and there may be insufficient funds to pay off Hibernia
National Bank and Discount Rx, Inc., which may result in the Debtor's Plan
being unable to become effective. However, should the sale of the Purchased
Assets go forward, River Road Real Estate LLC has obtained a commitment to
fund a substantial portion of the $1,650,000 purchase price of the purchase
price for the immovable property and improvements described on Exhibit 2.
---------
7.5 Other Documents. Seller will furnish Buyer with such other
---------------
and further documents and certificates of Seller's officers and others as
Buyer shall reasonably request to evidence compliance with the conditions
set forth in this Agreement.
7.6 Final Order Confirming Plan. Buyer has the right to refuse
---------------------------
to close on this agreement prior to the date that the Order of the
Bankruptcy Court Confirming the Debtor's Plan of Reorganization becomes a
final order, not having been appealed within 10 days of the entry of the
order, pursuant to 28 U.S.C. (S) 158(a) and Bankruptcy Rule 8002. A copy of
the Order Confirming the Debtor's Plan of Reorganization shall be attached
hereto as Exhibit 9.
---------
7.7 Other Agreements. The Agreements described in Article VI
----------------
shall have been entered into and delivered.
7.8 Reports. Seller shall have furnished Buyer with an Inventory
-------
Report and a Receivables Report signed and dated by the Buyer and Seller as
of the Closing Date.
ARTICLE VIII
CONDITIONS TO THE OBLIGATIONS OF SELLER
Each and every obligation of Seller under this Agreement shall be subject
to the satisfaction, on or before the Closing Date, of each of the following
conditions unless waived in writing by Seller:
8.1 Representations and Warranties; Performance. The representations
-------------------------------------------
and warranties made by Buyer herein shall be true and correct on the date of
this Agreement and on the Closing Date with the same effect as though made on
such date; Buyer shall have performed and complied with all agreements,
covenants and conditions required by this Agreement to be performed and complied
with by it prior to the Closing Date.
8.2 No Proceeding or Litigation. No action, suit or proceeding
---------------------------
before any court or any governmental or regulatory authority shall have been
commenced, or threatened, and no investigation by any governmental or regulatory
authority shall have been commenced, or threatened, against Seller, Buyer, or
any of their respective principals, officers or directors, seeking to restrain,
prevent or change the transactions contemplated hereby or questioning the
validity or legality of any of such transactions or seeking damages in
connection with any of such transactions.
12
8.3 Payment. The payment(s) described in Section 1.5 shall have been
------- -----------
made.
8.4 Other Agreements. The agreements described in Article VI shall
----------------
have been entered into and delivered.
ARTICLE IX
CLOSING
9.1 Closing. Unless this Agreement shall have been terminated or
-------
abandoned pursuant to the provisions of Article X hereof, a closing (the
"Closing") shall be held on such date (the "Closing Date") mutually agreed upon
------- ------------
at such place or places as Buyer shall designate.
9.2 Deliveries at Closing.
---------------------
(a) At the Closing, Seller shall transfer and assign to
Buyer all of the Purchased Assets and the other agreements, certifications
and other documents required to be executed and delivered by the parties
hereunder at the Closing shall be duly and validly executed and delivered.
(b) At and after the Closing, Seller shall have the right
to review and obtain copies of any financial records of Seller, in the
possession of Buyer, necessary for the preparation of Seller's tax returns,
and Buyer agrees to retain such records until the statute of limitations
pertaining to the final tax returns filed by Seller expires, and Buyer
shall have the right to review and obtain copies of the minute book, stock
book and stock register of Seller.
(c) At the Closing, Seller shall deliver to Buyer (i) a
xxxx of sale substantially in the form of Exhibit 7, (ii) such assignments,
---------
deeds and other conveyances in form reasonably satisfactory to counsel for
Buyer, and (iii) all third party consents and releases as may be
appropriate or necessary to effect the transfer to Buyer of the property
and rights as contemplated herein.
(d) At the Closing, Seller shall deliver to Buyer an
opinion of Seller's counsel in the form of Exhibit 8, that the Debtor's
---------
deeds and Plan of Reorganization have been filed, approved, and
confirmed in accordance with law and that, as of the Closing Date, Seller's
counsel knows of no adverse claims or impediments to Closing, the
consequence of which could result in dissolution or impairment of the
transactions contemplated herein.
(e) From time to time after the Closing, at Buyer's request
and without further consideration from Buyer, Seller shall execute and
deliver such other instruments of conveyance and transfer and take such
other action as Buyer reasonably may require to convey, transfer to and
vest in Buyer and to put Buyer in possession of any assets or property to
be sold, conveyed, transferred and delivered hereunder. In addition, Seller
shall obtain and deliver any and all third-party consents and UCC
termination statements and other documents and to take such other action as
13
Buyer reasonably may require to convey, transfer to and vest in Buyer and
to put Buyer in possession of any assets or property to be sold, conveyed,
transferred and delivered hereunder. Without limiting the foregoing, Seller
shall endorse, assign and deliver any funds received after closing, which
are due Buyer hereunder or held at the time of Closing in Seller's bank's
lock box or accounts, to Buyer, without recourse, and all such funds
received by Seller shall be for the benefit of Buyer.
(f) From time to time after the Closing, at Seller's
request and without further consideration from Seller, Buyer shall execute
and deliver such stock certificates and take such other action as Seller
reasonably may require to convey, transfer to and vest in Buyer ownership
over the shares of Common Stock being issued to Seller pursuant hereto.
Provided that all such shares shall be subject to the provisions of Section
-------
6.2 of this Agreement.
---
9.3 Name Change. Upon the Closing, Seller shall change its name to
-----------
another name different from its present name and do such other things as shall
be necessary or desirable to permit Buyer to assume and use the name "XXXXXX &
XXXXXX, INC." and use all other names utilized by Seller in operating its
business as an ongoing concern.
ARTICLE X
TERMINATION AND ABANDONMENT
10.1 Methods of Termination. This Agreement may be terminated and the
----------------------
transactions herein contemplated may be abandoned at any time (notwithstanding
approval by the Board of Directors of Buyer):
(a) Buyer and Seller may terminate this Agreement by mutual
written consent at any time prior to the Closing;
(b) Buyer may terminate this Agreement by giving written notice
to Seller at any time prior to the Closing if the Closing shall not have
occurred on or before the Closing Date by reason of the failure of Seller
to have satisfied any material condition precedent under Article 7 hereof
(unless the failure results primarily from the Buyer itself breaching any
representation, warranty, or covenant contained in this Agreement); and
(c) Seller may terminate this Agreement by giving written notice
to Buyer at any time prior to the Closing, if the Closing shall not have
occurred on or before the Closing Date by reason of the failure of Buyer to
have satisfied any material condition precedent under Article 8 hereof
(unless the failure results primarily from Seller breaching any
representation, warranty, or covenant contained in this Agreement).
10.2 Procedure Upon Termination. In the event of termination and
--------------------------
abandonment pursuant to Section 10.1 hereof, this Agreement shall terminate and
------------
shall be abandoned, without further action by any of the parties hereto. If
this Agreement is terminated as provided herein:
14
(a) each party will upon request redeliver all documents and
other materials of any other party relating to the transactions
contemplated hereby, whether so obtained before or after the execution
hereof, to the party furnishing the same;
(b) no party hereto shall have any liability or further
obligation to any other party to this Agreement, except as the parties may
have otherwise previously agreed; and
(c) each party shall bear its own expenses, except as the parties
may have otherwise previously agreed.
ARTICLE XI
REMEDIES
11.1 Remedies of Buyer Upon Termination. Notwithstanding anything else
----------------------------------
herein to the contrary, in the event that Discount Rx, Inc. is not the
successful bidder for the Purchased Assets, and termination of this Agreement
occurs, Discount RX, Inc. is entitled to all of the right and remedies as set
forth in the Management Agreement, the Letter of Intent dated September 13,
2000, and the Debtor-In-Possession Financing and Security Agreement.
ARTICLE XII
MISCELLANEOUS PROVISIONS
12.1 Amendment and Modification. Subject to applicable law, this
--------------------------
Agreement may be amended, modified and supplemented only by written agreement of
Seller and Buyer.
12.2 Waiver of Compliance; Consents. Any failure of Seller on the one
------------------------------
hand, or Buyer on the other hand, to comply with any obligation, covenant,
agreement or condition herein may be waived in writing by Buyer or by Seller,
respectively, but such waiver or failure to insist upon strict compliance with
such obligation, covenant, agreement or condition shall not operate as a waiver
of, or estoppel with respect to, any subsequent or other failure. Whenever this
Agreement requires or permits consent by or on behalf of any party hereto, such
consent shall be given in writing in a manner consistent with the requirements
for a waiver of compliance as set forth in this Section 12.2.
------------
12.3 Expenses. Except as otherwise agreed, each party will pay its
--------
own legal, accounting and other expenses incurred by such party or on its behalf
in connection with this Agreement and the transactions contemplated herein.
2.2 amount.
12.4 Notices. Any notice, request, consent or communication
-------
(collectively a "Notice") under this Agreement shall be effective only if it is
------
in writing and (i) personally delivered, (ii) sent by certified or registered
mail, return receipt requested, postage prepaid, (iii)
15
sent by a nationally recognized overnight delivery service, with delivery
confirmed, or (iv) telexed or telecopied, with receipt confirmed, addressed as
follows:
(a) If to Seller:
Xxxxxxx Xxxxxxx Xxxxx, President
XXXXXX & XXXXXX, Inc.
00000 Xxxxx Xxxx
Xx. Xxxx, XX 00000
Telephone: 000-000-0000
Telecopier: 000-000-0000
in each case with a copy to:
Xxxxxxx X. Xxxxxx
Heller, Draper, Xxxxxx, Xxxxxxx & Horn, LLC
0000 Xxxxxxx Xxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
Telephone: 000-000-0000
Telecopier 000-000-0000
and
(b) If to Buyer to:
Xxxxxxx X. XxXxxxx, Chief Executive Officer
Discount Rx, Inc.
00000 Xxxxxxx Xxxx, Xxxxx X
Xx. Xxxxxxxxxx, Xxxxxxx
Telephone: 000-000-0000
Telecopier: 000-000-0000
with copies to:
Xxxxxxx X. Xxxxxx, Esq.
Xxxxxxxx Xxxx & Xxxxxxxx
000 Xxxx Xxxxxxx Xxxxxxxxx, Xxxxx 0000
Xxxxx, Xxxxxxx 00000
Telephone: 000-000-0000
Telecopier: 813-229-1660
Xxxx X. Duck, Esq.
Xxxxx & Xxxxx
0000 Xxx Xxxxx Xxxxxx
Xxx Xxxxxxx, XX 00000
16
Telephone: 000-000-0000
Telecopier: 000-000-0000
or such other persons or addresses as shall be furnished in writing by any party
to the other party. A Notice shall be deemed to have been given as of the date
when (i) personally delivered, (ii) five (5) days after the date when deposited
with the United States mail properly addressed, (iii) when receipt of a Notice
sent by an overnight delivery service is confirmed by such overnight delivery
service, or (iv) when receipt of the telex or telecopy is confirmed, as the case
may be, unless the sending party has actual knowledge that a Notice was not
received by the intended recipient.
12.5 Assignment. Except as provided in the Bidding Procedures, this
----------
Agreement and all of the provisions hereof shall be binding upon and inure to
the benefit of the parties hereto and their respective heirs, successors and
permitted assigns, but neither this Agreement nor any of the rights, interests
or obligations hereunder shall be assigned by Seller without the prior written
consent of Buyer.
12.6 Governing Law; Dispute Resolution.
---------------------------------
(a) This Agreement shall be governed by the laws of the state of
Louisiana (regardless of the laws that might otherwise govern under
applicable principles of conflicts of law of the state of Louisiana) as to
all matters including, but not limited to, matters of validity,
construction, effect, performance and remedies.
12.7 Counterparts. This Agreement may be executed in two or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
12.8 Neutral Interpretation. This Agreement constitutes the product
----------------------
of the negotiation of the parties hereto and the enforcement hereof shall be
interpreted in a neutral manner, and not more strongly for or against any party
based upon the source of the draftsmanship hereof.
12.9 Headings. The article and section headings contained in this
--------
Agreement are for reference purposes only and shall not affect in any way the
meaning or interpretation of this Agreement.
12.10 Entire Agreement. This Agreement, which term as used throughout
----------------
includes the Exhibits hereto, embodies the entire agreement and understanding of
the parties hereto in respect of the subject matter contained herein. There are
no restrictions, promises, representations, warranties, covenants or
undertakings other than those expressly set forth or referred to herein. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter, including without limitation the Agreement
for Purchase and Sale of Assets dated August 14, 2000 between the parties
hereto.
17
12.11 Purchase Price Proceeds. Seller agrees to apply the entire
-----------------------
Purchase Price to the satisfaction of the Seller's liabilities.
12.12 Third-Party Beneficiary Rights. Nothing expressed or implied in
------------------------------
this Agreement is intended or shall be construed to confer upon or give any
person, firm, corporation or other entity, other than the parties hereto any
rights or remedies under or by reason of this agreement.
18
IN WITNESS WHEREOF, the parties hereto have entered into this
Agreement as of the date first hereinabove set forth.
SELLER:
XXXXXX & XXXXXX, INC.
By: /s/ Xxxxxxx Xxxxxxx Xxxxx
----------------------------------
Name: Xxxxxxx Xxxxxxx Xxxxx
Title:President
BUYER:
DISCOUNT RX, INC.
By: /s/ Xxxxxxx XxXxxxx
----------------------------------
Name: Xxxxxxx XxXxxxx
Title: Chief Executive Officer
19
JOINDER
-------
DrugMax, Inc., a Nevada corporation, hereby joins in the Agreement for the
limited purpose of agreeing to the issuance of its shares pursuant to the
provisions of Section 1.5.
-----------
DRUGMAX, INC.
By: /s/ Xxxxxxx XxXxxxx
----------------------------------
Name: Xxxxxxx XxXxxxx
Title: Chief Executive Officer
20
SCHEDULE OF EXHIBITS
TO
AGREEMENT FOR PURCHASE AND SALE OF ASSETS
-----------------------------------------
Exhibits Title
-------- -----
Exhibit 1 Schedule of Contracts Assumed by Discount Rx, Inc.
Exhibit 2 Lease between Xxxxxxx Xxxxx Real Estate, LLC and
Xxxxxx & Xxxxxx, Inc.
Exhibit 3 Schedule of Purchased Assets
Exhibit 4 Schedule of Intellectual Property Rights
Exhibit 5 Warranties and Claims Under Warranties
Exhibit 6 Schedule of Insurance
Exhibit 7 Xxxx of Sale
Exhibit 8 Opinion of Seller's Counsel
Exhibit 9 Order Confirning the Debtor's Plan Reorganization
Exhibit 10 Non-competition Agreement between Discount Rx, Inc.
and Xxxxxxx Xxxxx and Xxxxxx & Xxxxxx, Inc.
21
