EXHIBIT 2.1
Xxxxx and Xxxx Xxxxx
2016 East Xxxxxx Mill Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
February 10, 2003
Xx. Xxxxx Xxxxxx
Park Pharmacy Corporation
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Gentlemen:
This letter constitutes a letter of intent (the "Letter of Intent")
setting forth the understanding between Park Pharmacy Corporation (the "Seller")
on the one hand, and Xxxx Xxxxx, Xxxxx Xxxxx and assigns (collectively the
"Buyer"), on the other hand, with respect to the proposed sale by Seller to
Buyer of all the issued and outstanding shares of Total Pharmacy Supply, Inc.
("Total Pharmacy"), a wholly owned subsidiary of Seller. Seller is presently a
Debtor in Chapter 11 in Bankruptcy Case No. 02-80896-SAF-11 (the "Bankruptcy
Case"), pending before the United States Bankruptcy Court sitting in Dallas,
Texas (the "Bankruptcy Court"). It is proposed that the sale of such shares
shall be consummated on the following terms and conditions:
1. At Closing (hereinafter defined), the Seller shall sell, assign and
transfer to Buyer, free and clear of all liens, claims or encumbrances of any
kind whatsoever, all issued and outstanding shares of Total Pharmacy (the
"Shares").
2. At Closing, the Buyer shall sell, assign and transfer to Seller,
free and clear of all liens, claims or encumbrances of any kind whatsoever, all
issued and outstanding equity interests of Park Pharmacy Corporation owned by
Buyer.
3. The purchase price (the "Purchase Price") for the Shares shall be
Three Hundred and Fifty Thousand Dollars ($350,000.00), subject to upward or
downward adjustment as calculated in paragraph 4.
4. The Purchase Price shall be adjusted to the extent that the
aggregate of the following on the Closing Date (hereinafter defined) is greater
or lesser than $350,000.00:
(a) The value of Trade Accounts Receivable on the Closing Date;
plus
(b) The value of Inventory on the Closing Date; plus
(c) All cash in Total Pharmacy accounts on the Closing Date; plus
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(d) The value of all fixed assets purchased by Total Pharmacy
after December 1, 2002; plus
(e) Cash in the sum of $50,000; less
(f) The value of Trade Accounts Payable on the Closing Date.
Value for purposes of this calculation shall be as based upon the books and
records of Total Pharmacy as of the Closing Date, based upon accounting methods
used by Total Pharmacy consistently applied. Within three (3) business days
after entry of an Order of the Bankruptcy Court approving this transaction,
Seller shall provide to Buyer the Purchase Price calculation (the "Estimated
Purchase Price") in writing by telecopy.
5. In the event the Estimated Purchase Price in paragraph 4 above is
less than Three Hundred Thousand Dollars ($300,000.00), then Seller shall have
the absolute and sole discretion to not close this transaction, and, upon
refunding the Deposit to Buyer, shall have no further obligation or liability to
Buyer. In the event the Estimated Purchase Price in paragraph 4 is greater than
Four Hundred Thousand Dollars ($400,000.00), then Buyer shall have the absolute
and sole discretion to not close this transaction, shall be entitled to a refund
of the Deposit, and shall have no further obligation or liability to Seller. In
order to terminate this transaction pursuant to paragraph 5, the terminating
party must provide written notice to the non-terminating party by telecopy
within three (3) business days of the Estimated Purchase Price being provided by
Seller to Buyer pursuant to paragraph 4.
6. The Purchase Price is payable at Closing in immediately available
funds. Buyer represents to Seller that Buyer has access to the funds necessary
to close this transaction.
7. The following shall be specific conditions precedent to any
obligation on the part of Buyer to close the transaction contemplated hereby:
(a) All properties and assets reflected on the balance sheet of Total
Pharmacy at the time of Closing shall be free and clear of all liens, claims or
encumbrances of any kind whatsoever.
(b) Buyer shall have obtained any third party or governmental consents
required to consummate the contemplated transaction.
(c) Total Pharmacy shall have been fully released from any and all
obligations to its secured lenders or the lenders of Seller.
(d) Seller shall have provided notice of this transaction as required
by the Bankruptcy Code and related rules.
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8. Upon execution of this Letter of Intent, and subject to the terms
and conditions of the Confidentiality Agreement of even date herewith, Seller
shall give to Buyer and Xxxxx's counsel, accountants, consultants and
representatives, full and free access, throughout the period prior to the
Closing, to all of Total Pharmacy's assets and the books, contracts, commitments
and records relating to Total Pharmacy, and will provide Buyer with access
during such period to all information concerning Total Pharmacy, as Buyer may
reasonably request in order for Buyer to conduct an investigation and evaluation
of Total Pharmacy's business.
9. Upon execution of this Letter of Intent, Buyer shall deliver the sum
of Ten Thousand Dollars ($10,000.00) (the "Deposit") to Xxxxxx, Xxxxx &
Xxxxxxxx, a Professional Corporation, to be held in escrow pursuant to the terms
contained herein, and the Escrow Agreement, a copy of which is attached hereto
as Exhibit "A." The Deposit shall be refundable to Buyer if Seller does not file
a Motion with the Bankruptcy Court seeking approval of this Letter of Intent as
set out below, or if the Bankruptcy Court does not approve the transaction set
out herein or if the transaction does not close through no fault of Buyer, or if
the Formal Agreement (hereinafter defined) is not executed by all parties
through no fault of Buyer; otherwise, the Deposit shall be applied to the
Purchase Price to be paid at Closing.
10. Seller shall agree to indemnify and hold Buyer harmless from any
and all claims, causes of actions, damages or debts, including legal fees,
resulting from actions, occurrences or events which accrued prior to the Closing
and not reflected in or reserved against in Seller's financial statements or
which Seller did not disclose to Buyer. Buyer shall agree to indemnify Seller
from any and all claims, causes of actions, damages or debts, including legal
fees, resulting from actions, occurrences or events which occur after the
Closing and are the responsibility of Buyer hereunder.
11. Total Pharmacy hereby agrees to pay its debts as they mature.
Seller represents that the transfer of the Shares by Seller to Buyer will not
constitute a voidable preference or transfer in fraud against any creditor under
any applicable insolvency or fraudulent transfer laws.
12. Seller hereby agrees that there shall be no inter-company
obligations on the books and records of Total Pharmacy as of Closing, and that
Buyer shall not in no way be liable for any inter-company obligations after
Closing.
13. Seller and Total Pharmacy hereby agree to conduct the daily
business operations of Total Pharmacy in the ordinary course of business
consistent with historical practices; maintain historical levels of Inventory
and operate consistent with historical financial or accounting practices.
14. All employees of Total Pharmacy as of the Closing Date shall remain
employees of Total Pharmacy after Closing, and any obligations of Seller for
obligations owing to any employees which have accrued as of the Closing shall be
obligations of Total Pharmacy and not obligations of Seller; provided, however,
under no circumstances shall Seller deduct negative Paid
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Time Off or "PTO" from any employee's final compensation check. The foregoing
provision is not intended to and shall not give any employee the right to
continue as an employee of Total Pharmacy after Closing.
15. Excluding the Formal Agreement, Seller, Total Pharmacy and Buyer
shall terminate and release at Closing the other from any and all agreements
which the parties previously entered into.
16. Buyer shall have the right to assign this Letter of Intent and/or
any other rights and agreements incident or succeeding hereto to any entity
owned by Buyer which is financially able to close, and which is able to obtain
any consents required under paragraph 7(b), without the consent of Seller.
17. Seller and Buyer warrant to each other that no person is entitled,
either directly or indirectly, to compensation from Buyer or Seller for services
as a finder in connection with the proposed transaction contemplated hereby.
18. The parties hereto agree that the formal written agreement (the
"Formal Agreement") evidencing this transaction will not vary in any material
respect from this Letter of Intent or any Order approving this Letter of Intent,
will contain only such representations and warranties that are usual, customary
and appropriate in stock purchase transactions from a company in Chapter 11, and
shall contain no representation or warranties as to the solvency or insolvency
of Seller, or as to the profitability of Total Pharmacy. Xxxxx also acknowledges
that it is relying on its own due diligence in entering into this Letter of
Intent and the Final Agreement, and not any representations or promises of
Seller other than those set forth in this Letter of Intent or the Formal
Agreement.
19. The parties hereto agree that each shall be responsible for their
own attorneys' fees and expenses incurred in connection with the preparation of
this Letter of Intent and the Formal Agreement and any other Closing papers or
documents necessary to consummate the transactions contemplated hereby.
20. Buyer shall prepare initial drafts of the Formal Agreement and any
other Closing papers or documents necessary to consummate the transactions
contemplated hereby.
21. Buyer acknowledges that Seller is in Chapter 11, and that, in light
thereof, prior to Bankruptcy Court approval of this transaction, Seller may seek
other, better and higher offers for the property to be sold hereunder and the
transaction contemplated hereby. In the event Seller obtains a better or higher
offer, Seller shall so notify Buyer in writing and Buyer shall have the
opportunity to match such offer.
22. Any news release announcing the transaction shall be prepared
subject to the approval of both parties, other than the filing by Seller of an
8-K or other public filing with the
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Securities and Exchange Commission advising of this Letter of Intent, and other
than any notice determined by Seller to be given incident to seeking Bankruptcy
Court approval of this transaction.
23. The closing of the transactions contemplated in this Letter of
Intent shall take place at the office of Xxxxxxxx & Xxxxx, a Professional
Corporation, at 000 Xxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000, or at such other
location as may be mutually agreed upon. The actual closing is called "Closing"
and the actual date of Closing is called the "Closing Date."
24. This proposal, once accepted by Seller, is not enforceable against
either Buyer or Seller unless and until it has been approved by Order of the
Bankruptcy Court having jurisdiction over the Bankruptcy Case upon proper notice
and a Formal Agreement is executed by all parties. Once a Motion seeking
approval of the transactions contemplated hereby has been filed by Seller, Buyer
shall be obligated to close hereunder once this transaction has been approved by
Order of the Bankruptcy Court and a Formal Agreement is executed by all parties.
25. If Xxxxxx has not executed this Letter of Intent on or before the
close of business on February 20, 2003, the offer contained herein shall be
withdrawn and terminated. If this transaction has not been approved by Order of
the Bankruptcy Court entered on or before March 31, 2003, then the offer shall
terminate and the Deposit shall be immediately returned to Buyer, unless the
failure of Closing to timely occur shall be the fault of Buyer.
26. Once the Bankruptcy Court enters an Order approving this
transaction, Buyer and Seller shall have twenty (20) days to prepare the Formal
Agreement and ten (10) days to close this transaction following execution of the
Formal Agreement by all parties. If a Formal Agreement is not reached within
such twenty (20) day period due to no fault of Buyer, this offer shall terminate
and the Deposit shall be immediately returned to Buyer. Other than due to the
Purchase Price calculation as described in paragraphs 3 and 4 above, if Buyer
does not either (a) execute the Formal Agreement or (b) close within ten (10)
days from execution of the Formal Agreement, Buyer shall be in default and shall
owe to Seller as liquidated damages the sum of Ten Thousand Dollars
($10,000.00), to which the Deposit shall be applied. Notwithstanding the above,
Buyer shall not be in default if Closing is delayed by no fault of Buyer or if
either party fails to execute the Formal Agreement.
27. The parties agree to submit any dispute under this Letter of Intent
or the Formal Agreement first to mediation for resolution and, if not resolved
within thirty (30) days, then to the Bankruptcy Court for resolution.
28. All notices required or permitted herein must be in writing and
shall be deemed to have been duly given the first business day following the
date of service if served personally, or by telecopier or other similar
communication (with confirmation of receipt of the transmission) to the party or
parties to whom notice is to be given. All notices and other communications to
the parties shall be given as follows:
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Seller: Xxxxx Xxxxxx
Park Pharmacy Corporation
00000 Xxxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
with a copy to: Xxxx X. Trust
Trust Law Firm, P.C.
Attorneys and Counselors
Renaissance Tower
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Buyer: Xxxxx and Xxxx Xxxxx
0000 Xxxx Xxxxxx Xxxx Xxxx, Xxxxx 000
Xxxxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to: Xxx XxXxxx
Xxxxxxxx & Xxxxx
000 Xxxx Xxxxxx
Xxxx Xxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
29. This Letter of Intent may be executed by fax mail signature and any
number of counterparts, each of which is deemed an original, but all of which
taken together constitutes one and the same instrument.
If this Letter of Intent correctly sets forth the understanding of the
parties, please so indicate by signing and returning to the undersigned the
enclosed copy of this letter.
[Signatures on following page]
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Very truly yours,
Xxxxx Xxxxx
Xxxx Xxxxx
AGREED AND ACCEPTED ON
, 2003
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PARK PHARMACY CORPORATION
a Colorado corporation
By:
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Name:
-----------------------------------
Title:
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