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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 ***% 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 ***
shares of its common stock (the "Stock" or the "Shares") to PVPL. It is the
intent of the parties that PVPL will acquire *** Shares at Closing.
1.2 PURCHASE PRICE.
a. The purchase price for PVPL's Shares shall be $*** (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 10077
S. 134th Street, Omaha, Nebraska on June 16, 2000 (the "Closing Date").
d. At the Closing, (i) Company will deliver to PVPL one or
more certificates representing *** Shares, which is equal to ***
percent (***%) 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
$*** 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").
*** Confidential material omitted pursuant to a request for
confidential treatment and filed separately with the Securities and
Exchange Commission.
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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 DR. REILLY. Company's Shareholder approved Dr. Lionel
Reilly 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.
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2.6 AUTHORIZED AND ISSUED CAPITAL STOCK. The entire authorized capital
stock of Company consists of Ten Thousand (10,000) Shares of which ***** (***)
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 (**** Shares) and PVPL
(**** 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:
- *******
- 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;
*** Confidential material omitted pursuant to a request for
confidential treatment and filed separately with the Securities and
Exchange Commission.
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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
*** percent (***%) 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.
*** Confidential material omitted pursuant to a request for
confidential treatment and filed separately with the Securities and
Exchange Commission.
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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 $**** of the
debt evidenced on its books and records to equity.
*** Confidential material omitted pursuant to a request for
confidential treatment and filed separately with the Securities and
Exchange Commission.
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6.2 CUMULATIVE VOTING. Company's Articles of Incorporation shall be
amended to provide that as long as AAHA owns ***% of the Shares and PVPL owns
***% of the Shares, AAHA will be entitled to appoint six (6) members of the
Board of Directors and PVPL will be entitled to appoint *** (**) 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
7-116-102.
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. ***********
Payment by PVPL of the *** dollar purchase price shall be conditioned
upon the receipt of the duly executed **** 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 $*** dollars to Company and Company shall, in turn, wire the amount
due to *** and place $*** in escrow as provided for in the Settlement Agreement.
Upon notice from *** that the monies due have been received by ***, 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.
*** Confidential material omitted pursuant to a request for
confidential treatment and filed separately with the Securities and
Exchange Commission.
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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: Dr. Lionel Reilly
10077 S. 134th Street
Omaha, Nebraska 68138
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If to AAHA: American Animal Hospital Association
Attn: Dr. John Albers
12575 W. Bayaud Avenue
Lakewood, Colorado 80228
If to Company: AAHA Services Corporation
Attn: Dr. John Albers
12575 W. Bayaud Avenue
Lakewood, Colorado 80228
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/ Lionel L. Reilly, D.V.M.
Its: President
AMERICAN ANIMAL HOSPITAL ASSOCIATION
By: /s/ John W. Albers, D.V.M.
Its: Executive Director
AAHA Services Corporation
By: /s/ John W. Albers, D.V.M.
Its: Chief Executive Officer
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SCHEDULE 2.1(a)
1. ****
2. ****
3. ****
4. ****
5. ****
Note: ****
*** Confidential material omitted pursuant to a request for
confidential treatment and filed separately with the Securities and
Exchange Commission.
