EXHIBIT 2.1
Stock Sale Agreement
("Agreement")
CONTENTS
SECTION
1. Sale of Shares, Rights, Title and Interest
2. Representations and Warranties of SELLER
3. Representations and Warranties of the Companies
4. Representations and Warranties of BUYER
5. Indemnities
6. Transactions Completed at Closing
7. Governance of BUYER
8. Remedies upon Breach
9. Governing Law
10. Amendment and Waiver
11. Assignment
12. Notices
13. Section Headings
14. Severability
15. Interpretation
16. Counterparts
17. Publicity
18. Separate Counsel
19. Attorney's Fees
20. Entire Agreement
Agreement dated the 27th day of June, 2003, among ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, a
person of full age of majority domiciled in the Parish of Jefferson, State of
Louisiana ("SELLER"), MedEx Systems, Inc. ("MedEx"), a Louisiana corporation and
Pegasus Pharmacy, Inc. ("Pegasus"), a Louisiana corporation (collectively
referred to herein as the "Companies"), and RTIN Holdings, Inc., a Texas
corporation ("BUYER"). The transaction shall sometimes be referred to herein as
"the Closing".
WITNESSETH:
WHEREAS, SELLER owns 100% of the outstanding shares of common stock
(the "Shares") of the Companies, no par value, which SELLER wishes to sell to
BUYER and BUYER wishes to purchase from SELLER, all on the terms hereinafter set
forth;
WHEREAS, the Companies deem that it is in the best interest of the
Companies for the BUYER to purchase the Shares, and the Companies are entering
into this Agreement to induce the BUYER to purchase the Shares in accordance
with this Agreement;
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WHEREAS, SELLER and/or Companies own all of the rights, title, and
interest (past, present or future) and all intellectual property rights,
including those listed in Schedule 2.1(f) assets, buildings and any other
property used, owned or held in connection with the business and operations of
the Companies;
NOW, THEREFORE, the parties hereby agree as follows.
1. Sale of Shares, Rights, Title and Interest.
1.1 SELLER hereby sells, assigns, transfers, and delivers to BUYER, and
BUYER hereby purchases from SELLER, the Shares and all of his rights,
title, and interest (past, present or future) in and to intellectual
property rights, assets, buildings and any other property used, owned
or held in connection with the business and operations of the Companies
for a total price of U.S. $1,256,000 ("the Cash Purchase Price")
payable as follows:
(a) U.S. $100,000 which was paid to SELLER on April 4, 2003, 2003;
(b) U.S. $156,000 which was paid to SELLER on May 1, 2003;
(c) U.S. $100,000 which was paid to SELLER on May 26, 2003;
(d) U.S. $900,000 which is due at Closing.
1.2 Intentionally blank.
1.3 As additional consideration for the sale of the Shares, at the Closing,
BUYER will issue to SELLER One Million, Two Hundred Fifty Thousand
(1,250,000) restricted shares of RTIN Holdings, Inc. common stock ("the
RTIN Shares"). The RTIN Shares shall be subject to a Shareholder's
Agreement in the form set forth in Exhibit 1.3A.
The term "restricted shares" when used in this Agreement shall be
defined as: The restrictions imposed pursuant to Rule 144 of the
Securities Act of 1933, as amended. Each certificate representing the
RTIN Holdings, Inc. restricted stock will bear the following legend
substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE MORTGAGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES
ACT OF 1933 OR AN OPINION OF COUNSEL FOR THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
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Any shares of stock herein referred to and designated as "restricted
shares" shall mean that any transfer, sale and ownership of such shares
are expressly subject to the limitations and restrictions imposed by
Rule 144 of the Federal Securities Act of 1933 as the same may be
amended from time to time. BUYER shall provide to SELLER a written
opinion from BUYER's attorney concerning the restrictions on
transferability of the RTIN Shares, a copy of which is attached as
Exhibit 1.3(B).
1.4 As additional consideration for the sale of the Shares and in
consideration of the release and satisfaction of the Indebtedness as
defined in Section 5.5 herein, BUYER will issue to SELLER One Million
Seventy Five Thousand (1,075,000) restricted shares of RTIN Holdings,
Inc. common stock (the MedEx/Pegasus Creditor Shares"). The
MedEx/Pegasus Creditor Shares shall be issued to SELLER in
consideration of the release and satisfaction of the Indebtedness
defined in Section 5.5 herein, concerning indebtedness owed by SELLER
to the following parties ("the Creditors and/or Creditor Shareholder"):
Name Number of Shares to be Issued
▇▇▇▇ ▇▇▇▇▇▇▇ 206,380
▇▇▇▇ ▇▇▇▇ 213,397
▇▇▇▇▇ ▇▇▇▇▇▇ 26,425
▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ( Whitney bank debt) 329,400
▇▇▇▇▇▇ ▇▇▇▇▇▇ 93,965
▇▇▇▇▇▇▇ ▇▇▇▇▇ 59,875
▇▇▇▇ ▇▇▇▇▇ 58,000
Misc. Creditors 32,558
From and after delivery of the 1,020,000 shares to SELLER,
BUYER shall have no obligation to pay any of the above named creditors
or their heirs or assigns and SELLER shall indemnify and hold BUYER
harmless therefrom. Seller shall provide BUYER with a written release
of any further liability and obligations to the Creditors by Companies
and BUYER. In the event SELLER, does not deliver or cause to be
delivered the MedEx/Pegasus Creditor Shares in accordance with this
Paragraph 1.4, then BUYER shall be under no obligation to indemnify
SELLER for the indebtedness due and owing to the Creditor who was
supposed to receive satisfaction of the Indebtedness from the
MedEx/Pegasus Creditor Shares. BUYER and SELLER agree to execute any
and all documents and to perform such acts as may be deemed reasonably
necessary to accomplish the foregoing. BUYER agrees to provide the
Creditors with an agreement that should any one or more of those
Creditors, at any time, subject only to its restricted terms, choose to
sell his or her MedEx/Pegasus Creditor Shares when the market price as
determined by the Stock Exchange upon which RTIN Holdings, Inc. shares
are publicly traded ("the Market Price") is less than $2.00 per share,
RTIN Holdings, Inc. agrees and obligates itself to pay to that Creditor
a sum equal to the difference between the net market price per share,
after payment of standard or discounted commissions and transaction
fees (not to exceed $.10 in the aggregate) and $2.00 per share for all
of such shares then sold by the particular creditor. BUYER agrees to
execute any and all documents deemed reasonably necessary by the
Creditors and/or
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SELLER to memorialize its obligations to the Creditors and/or SELLER
with respect to this Paragraph.
SELLER will provide to the Creditor Share holders a copy of the letter
provided to SELLER from BUYER's attorney concerning the restrictions on
transferability of the RTIN Shares in the same form as Exhibit 1.3(B).
1.5 Intentionally blank.
1.6 As additional consideration for the sale of the Shares, BUYER agrees to
grant SELLER the right to open two (2) stores in Miami, Florida or one
(1) store in Miami, Florida and one (1) store in Kendall, Florida
pursuant to the standard market partner licensing agreements employed
by BUYER, except as otherwise provided in this Section. SELLER shall
pay to BUYER four (4%) of the gross sales generated for the locations
as the licensing fee for the life of the stores, which right may be
assigned or transferred subject to the licensing agreement then in
existence as to that transferred store and subject to a right of first
refusal by BUYER. SELLER shall be under no obligation to pay any other
licensing fees for the two (2) stores to BUYER. SELLER and/or assigns
has the sole right to choose his locations, without exclusions or
conditions, providing that ▇▇▇▇▇, Buyer and/or any other licensee shall
not be permitted to open any store locations within two (2) miles of
any then existing location or location then having been identified in
writing to all parties .
1.7 As additional consideration for the sale of Shares, SELLER shall be
entitled to receive 75% of the gross proceeds of the sale of the
territories listed on Exhibit 1.7(a) ("▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇") or $20,000 per
250,000 capita population, whichever is greater until such time as
SELLER has been paid $5.3 million. If, after a period of thirty-six
(36) months from the date of this Agreement, BUYER has not paid to
SELLER a net sum of $5.3 million pursuant to the terms of this Section
1.7, exclusive of sums received pursuant to Section 1.1 herein, then
SELLER shall be entitled to receive interest on the remaining balance
due to him at a rate determined by the Wall Street Journal prime
interest rate, except that such rate shall not be less than 5% per
annum nor greater than 7% per annum. BUYER shall be obligated to pay to
SELLER the interest due to him on a quarterly basis until such time as
SELLER has received the full payment of $5.3 million, exclusive of
interest and sums received pursuant to Section 1.1. BUYER shall execute
a Promissory Note in the form of Exhibit 1.7(B) as evidence of this
Indebtedness.
As security for the indebtedness reflected in the Promissory Note
attached as Exhibit 1.7(B), BUYER shall execute a Security Agreement in
the form of Exhibit 1.7(C) wherein BUYER grants to SELLER a security
interest in the Territories, which security interest shall be partially
released as to each Territory sold upon payment to SELLER of the gross
proceeds due on account of the sale of that Territory. All remaining
Territories shall be released from the security interest upon the
receipt by SELLER of $5.3 million, exclusive of sums received pursuant
to Section 1.1 herein or interest paid.
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2. Representations and Warranties of SELLER.
2.1 SELLER represents and warrants to the BUYER as follows.
(a) The Companies are both duly incorporated and validly existing under the
laws of Louisiana; the SELLER and the Companies have the corporate
power and authority to execute, deliver and perform this Agreement and
any other agreement or document executed by either of them under or in
connection with this Agreement; and each has taken all necessary
corporate action to authorize the execution, delivery and performance
of this Agreement and any such other agreement or document. This
Agreement constitutes, and any such other agreement or document when
executed will constitute, the legal, valid and binding obligations of
SELLER and the Companies enforceable against SELLER and the Companies
in accordance with their respective terms.
(b) Neither the execution nor delivery of this Agreement nor the
transactions contemplated herein, nor compliance with the terms and
conditions of this Agreement will:
(i) contravene any provision of law or any statute, decree, rule or
regulation binding upon SELLER or the Companies or contravene any
judgment, decree, franchise, order or permit applicable to SELLER or
the Companies; or
(ii) conflict with or result in any breach of any terms, covenants,
conditions or provisions of, or constitute a default (with or without
the giving of notice or passage of time or both) under the Articles of
Incorporation or By-Laws of the Companies or any agreement or other
instrument to which SELLER or the Companies is a party or by which
either is bound, or result in the creation or imposition of any lien,
security interest, charge or encumbrance upon any of the assets,
rights, contracts or other property of the Companies.
(c) All authorizations, consents or approvals of, or exemptions by, any
governmental, judicial or public body or authority required to
authorize, or required in connection with (i) the execution, delivery
and performance of this Agreement by SELLER and the Companies, or (ii)
any of the transactions contemplated by this Agreement, or (iii) any of
the certificates, instruments or agreements executed by SELLER or the
Companies in connection with this Agreement, or (iv) the taking of any
action by SELLER or the Companies, have been obtained and are in full
force and effect. Applications have been made to the DEA and the
Louisiana Board of Pharmacy for approval of the transfer and/or
re-issuance of Pegasus' licenses.
(d) True and complete copies of the Articles of Incorporation and By-Laws
of the Companies are produced, and the same have not been amended and
are in full force and effect.
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(e) The audited financial statements of the Companies and the unaudited
financial statements of the Companies, including profit and loss
statements for the periods then ended and balance sheets as of these
dates, (the "Financial Statements") present fairly, in the case of the
profit and loss statements, the results of operations of the Companies
for the one-year and monthly periods then ended, and in the case of the
balance sheets, the financial condition of the Companies at said dates.
As at said dates, the Companies did not have any liabilities
(contingent or otherwise) or assets which are not disclosed in the
Financial Statements or, in the case of liabilities, reserved against
therein or otherwise disclosed in writing. The Financial Statements
have been prepared in accordance with generally accepted accounting
principles and practices in the United States consistently applied.
SELLER affirms that since the dates of the Financial Statements, (i)
there have been no adverse changes in the business or financial
condition of the Companies, and the Companies have conducted its
business in accordance with its normal and past practices, (ii) the
Companies have not incurred any additional obligations or liabilities
except trade debts in the ordinary course of business, (iii) the
Companies have not declared or paid any dividend or made or agreed to
make any other distribution or payment in respect of any of its shares
or otherwise to any of its shareholders, and (iv) the Companies have
not purchased or redeemed or agreed to purchase or redeem any of its
shares. BUYER affirms that it has had the opportunity to review the
Financial Statements and upon the assumption that such is true,
accurate and reflective of the financial condition of the Companies
accepts the same as being satisfactory.
The Companies have filed all tax returns which they have been required
to file and have paid all taxes and interest and penalties, if any,
which they have been required to pay other than as disclosed in writing
to BUYER in Schedule 2.1(e).
(f) On Schedule 2.1 (f), the SELLER discloses all of the patent
applications, patents, copyrights, trademarks, service marks and
technical information disclosures of the Companies and/or SELLER; and
all other assets of the Companies; collectively called the "Companies
Assets". SELLER will affirm that all of the information concerning the
Companies Assets is true and correct, that the Companies own all of the
rights in and to the Companies Assets; the issued patents and the
copyrights, trademarks and service marks are valid patents, copyrights,
trademarks and service marks under the laws of the United States and,
except as noted, are duly and properly registered and recorded in the
name of the Companies and/or SELLER; those copyrights, trademarks and
service marks which are not registered and recorded may be properly
registered and recorded in the name of the Companies and/or SELLER; all
technical information disclosures are the sole property of the
Companies and/or SELLER and are protected as trade secrets; and, except
as previously disclosed, none of the rights in or to any of the
Companies Assets has been sold, leased, assigned, encumbered or
transferred in any way, except as noted in Exhibit 2.1(f), and there
are no rights, options or privileges outstanding with respect to any of
the Companies Assets. BUYER has had an opportunity to inspect the
Companies Assets to the extent the same have been made available to it
and accepts the same as is without waiving any right it may have to
defects known or that should have been known by SELLER and not
disclosed to BUYER.
Apart from the Companies Assets and other assets set forth in the
Financial Statements, the Companies have no assets, rights or other
property, and no other asset right or property is required or advisable
for the Companies to conduct any of its business or activities.
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(g) Neither any of the Companies Assets nor the use of any of them (i)
violates or infringes any contract, copyright, trademark, service ▇▇▇▇,
right of privacy, patent or other right, or (ii) contains any material
which the Companies is not duly authorized to use, or (iii) misuses or
misappropriates any trade secret or confidential or proprietary
information.
(h) On Schedule 2.1(h), the SELLER discloses all litigation or arbitration
to which the Companies are a party. There is no other litigation or
arbitration or administrative proceeding or claim asserted, pending or
threatened respecting or involving the Companies, the business of the
Companies or any of the Companies Assets or other assets of the
Companies other than as previously disclosed in writing to BUYER.
(i) On Schedule 2.1(i), the SELLER shall disclose all orders, writs,
injunctions or decrees of any court, government or governmental agency
or any arbitration award affecting the Companies, the business of the
Companies. There are no other orders, writs, injunctions or decrees of
any court, government or governmental agency or any arbitration award
affecting the Companies, the business of the Companies or any of the
Companies Assets or other assets of the Companies other than as
previously disclosed in writing to BUYER. The Companies and its assets
and operations are in compliance with all applicable laws, rules,
regulations and ordinances.
(j) On Schedule 2.1(j), the Seller provides a list of all the banks at
which the Companies have any bank accounts.
(k) SELLER is the sole owner of the Shares of the Companies and of all
rights in and to the Shares; the Shares are represented by share
certificates, and SELLER may sell the Shares to BUYER pursuant to this
Agreement without the consent or approval of any person, corporation,
partnership, governmental authority or other entity; the Shares are
fully paid and non-assessable and, except as provided in this
Agreement, SELLER has not sold, transferred or assigned any of its
rights in or to any of the Shares; the Shares are free and clear of any
liens, claims, encumbrances and restrictions of any kind except for the
approvals noted above and except as noted in Schedule 2.1(k).
(l) There is no option, warrant, privilege, or other right outstanding with
respect to any unissued shares of the Companies, whether treasury
shares or otherwise, and there is no option, warrant, privilege or
other right outstanding with respect to any of the Shares; the
Companies has issued and outstanding 1,000 shares of MedEx Systems,
Inc. common stock, and 100 shares of Pegasus Systems, Inc. common
stock, no par value, of which, 100% is owned by SELLER; there are no
other shares of the Companies outstanding; the Companies are not
authorized to issue any additional shares of common stock nor any other
class or classes of stock.
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3. Representations and Warranties of the Companies.
3.1 The Companies represent and warrant to BUYER that the representations
and warranties of SELLER under Section 2.1 insofar as they pertain to
the Companies are true and correct.
4. Representations and Warranties of BUYER.
4.1 BUYER represents and warrants to SELLER and the Companies as follows.
(a) BUYER is duly incorporated and validly existing under the laws of
Texas; BUYER has the corporate power and authority to execute, deliver
and perform this Agreement, the Note, and any other agreement or
document executed by either of them under or in connection with this
Agreement; and each has taken all necessary corporate action to
authorize the execution, delivery and performance of this Agreement and
any such other agreement or document. This Agreement constitutes, and
any such other agreement or document when executed will constitute, the
legal, valid and binding obligations of BUYER enforceable against BUYER
in accordance with their respective terms.
(b) Neither the execution nor delivery of this Agreement nor the
transactions contemplated herein, nor compliance with the terms and
conditions of this Agreement will:
(i) contravene any provision of law or any statute, decree, rule or
regulation binding upon BUYER or contravene any judgment, decree,
franchise, order or permit applicable to BUYER; or
(ii) conflict with or result in any breach of any terms, covenants,
conditions or provisions of, or constitute a default (with or without
the giving of notice or passage of time or both) under the Articles of
Incorporation or By-Laws of the BUYER or any agreement or other
instrument to which BUYER is a party or by which either is bound, or
result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the assets, rights, contracts or
other property of the BUYER.
(c) All authorizations, consents or approvals of, or exemptions by, any
governmental, judicial or public body or authority required to
authorize, or required in connection with (i) the execution, delivery
and performance of this Agreement by BUYER, or (ii) any of the
transactions contemplated by this Agreement, or (iii) any of the
certificates, instruments or agreements executed by BUYER in connection
with this Agreement, or (iv) the taking of any action by BUYER, have
been or at the Closing will have been obtained and at the Closing will
be in full force and effect.
(d) True and complete copies of the Articles of Incorporation and By-Laws
of the BUYER have been produced to SELLER, and the same have not been
amended and are in full force and effect.
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(e) As of the date hereof, the authorized capital stock of BUYER consists
of Twenty-Five Million (25,000,000) shares of common stock, Eleven
Million Eight Hundred Fourteen Thousand Three Hundred Thirty Five
(11,814,335) shares of which are issued and outstanding and Ten Million
(10,000,000) shares of preferred stock, One Million Nine Hundred
Ninety-Nine Thousand Nine Hundred Twenty (1,999,920) shares of which
Series A preferred are issued and outstanding. All outstanding shares
of Series A Preferred Stock will be purchased and retired by BUYER
pursuant to a "Series A Agreement", and "Conversion Commitment
Agreement", copies of which are attached as Exhibit 4.1(e)(1) All of
the presently outstanding shares of capital stock of BUYER (i) have
been validly authorized and issued and (ii) are fully paid and
non-assessable. BUYER has not issued any other shares of its capital
stock, and there are no outstanding options, warrants, calls,
commitments, subscriptions, agreements or other rights of any character
(including conversion, redemption or preemptive rights) relating to the
acquisition of any issued or unissued capital stock of BUYER that would
have a material affect upon the restricted shares issued and to be
issued under this Agreement except as otherwise provided in the Series
A Agreement, the Conversion Commitment Agreement, Subscription
Agreement, and Series A, B and C Warrant Agreements. All outstanding
options, warrants, calls, commitments, subscriptions, agreements or
other rights of any character (including conversion, redemption or
preemptive rights) relating to the acquisition of any issued or
unissued capital stock of BUYER are listed on Schedule 4.1(e)(2). No
dividends are accrued but unpaid on any capital stock of BUYER.
(f) Subject to the restrictions imposed upon and affecting the RTIN Shares
that BUYER issues to SELLER in accordance with Section 1.3 at the
Closing shall be duly and validly issued, fully paid and
non-assessable, free of preemptive rights and free of other
restrictions on transfer except those imposed by applicable federal and
state securities laws or otherwise disclosed in writing to SELLER.
BUYER shall provide to SELLER a written opinion from BUYER's attorney
concerning the restrictions on transferability of the RTIN Shares in
the form set forth in Exhibit 1.3(B).
(g) BUYER has filed all reports, schedules, forms, statements and other
documents required to be filed by it with the Securities and Exchange
Commission (the "SEC") pursuant to the Securities Exchange Act of 1934,
as amended, (the "Exchange Act") and has filed all registration
statements and other documents required to be filed by it with the SEC
pursuant to the Securities Act (all of the foregoing filed prior to the
date hereof and all exhibits included therein and financial statements
and schedules thereto and documents incorporated by reference therein,
collectively, the "SEC Documents"). As of their respective dates, the
SEC Documents complied in all material respects with the requirements
of the Exchange Act or the Securities Act, as the case may be, and the
rules and regulations of the SEC promulgated thereunder applicable to
the SEC Documents, and none of the SEC Documents, at the time they were
filed with the SEC, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. Any
statements made in any such SEC Documents that are or were required to
be updated and amended under applicable law have been so updated or
amended. As of their respective dates, the financial statements of
BUYER included in the SEC Documents complied in all material respects
with applicable accounting requirements and the published rules and
regulations of the SEC applicable with respect thereto. Such financial
statements have been prepared in accordance with GAAP, consistently
applied, during the period involved (except (i) as may be otherwise
indicated in such financial statements or the notes thereto or (ii) in
the case of unaudited interim statements, to the extent they may not
include footnotes or may be condensed or summary statements) and fairly
present in all material respects the consolidated financial position of
BUYER as of the dates thereof and the results of operations and cash
flows for the periods then ended (subject, in the case of unaudited
statements, to normal and recurring year-end audit adjustments that are
not material).
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(h) The Financial Statements present fairly, in the case of the profit and
loss statements, the results of operations of the BUYER for the
one-year and monthly periods then ended, and in the case of the balance
sheets, the financial condition of the BUYER at said dates. As at said
dates, the BUYER did not have any material liabilities (contingent or
otherwise) or assets which are not disclosed in the Financial
Statements or, in the case of liabilities, reserved against therein.
The Financial Statements have been prepared in accordance with
generally accepted accounting principles and practices in the United
States consistently applied. BUYER affirms that since the dates of the
Financial Statements, (i) there have been no adverse changes in the
business or financial condition of the BUYER, and the BUYER has
conducted its business in accordance with its normal and past
practices, (ii) the BUYER has not incurred any additional material
obligations or liabilities except trade debts in the ordinary course of
business, (iii) the BUYER has not declared or paid any dividend or made
or agreed to make any other distribution or payment in respect of any
of its shares or otherwise to any of its shareholders, and (iv) the
BUYER has not purchased or redeemed or agreed to purchase or redeem any
of its shares other than the Series A Preferred Shares referenced
hereinabove. The obligation of BUYER imposed by this Section shall
survive the date of Closing, however, upon satisfaction of all
obligations of BUYER to SELLER outlined herein, SELLER shall have no
further rights, title or interest to request or receive the Financial
Statements.
The BUYER has filed all tax returns which it has been required to file
and has paid all taxes and interest and penalties, if any, which it has
been required to pay.
(i) Intentionally blank.
(j) On Schedule 4.1(j), the BUYER discloses all litigation or arbitration
to which the BUYER is a party. There is no other litigation or
arbitration or administrative proceeding or claim asserted, pending or
threatened respecting or involving the BUYER, the business of the BUYER
or any of the BUYER's Assets or other assets of the BUYER.
(k) On Schedule 4.1(k), the BUYER discloses all orders, writs, injunctions
or decrees of any court, government or governmental agency or any
arbitration award affecting the BUYER, and the business of the BUYER.
There are no other orders, writs, injunctions or decrees of any court,
government or governmental agency or any arbitration award affecting
the BUYER, the business of the BUYER or any of the BUYER's Assets. The
BUYER and its assets and operations are in compliance with all
applicable laws, rules, regulations and ordinances.
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(l) BUYER is acquiring the MedEx Stock and the Pegasus Stock for its own
account, for investment, and not with a view to any "distribution"
within the meaning of the Securities Act. BUYER has no present
intention to make any transfer of the MedEx Stock or the Pegasus Stock.
(m) BUYER understands that because the MedEx Stock and the Pegasus Stock
have not been registered under the Securities Act, it cannot dispose of
any or all of the MedEx Stock or Pegasus Stock unless such shares are
subsequently registered under the Securities Act or exemptions from
registration are available. BUYER understands that no public market now
exists for the MedEx Stock or Pegasus Stock and that there is no
assurance that a public market will ever exist for such securities.
BUYER acknowledges and understands that it has no registration rights.
By reason of these restrictions, BUYER understands that it may be
required to hold the MedEx Stock and the Pegasus Stock for an
indefinite period of time. BUYER agrees that in no event will it make a
transfer or disposition of any of the MedEx Stock or the Pegasus Stock
unless and until, if requested by the applicable Company, at the
expense of BUYER or transferee, it shall have furnished to the
applicable Company an opinion of counsel or other evidence, reasonably
satisfactory to such Company, to the effect that such transfer may be
made without registration under the Securities Act. BUYER understands
that each certificate representing the MedEx Stock and the Pegasus
Stock will bear the following legend substantially as follows:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933. THESE SHARES HAVE
BEEN ACQUIRED FOR INVESTMENT AND NOT WITH A VIEW TO
DISTRIBUTION OR RESALE, AND MAY NOT BE MORTGAGED,
HYPOTHECATED, OR OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE
REGISTRATION STATEMENT FOR SUCH SHARES UNDER THE SECURITIES
ACT OF 1933 OR AN OPINION OF COUNSEL FOR THE CORPORATION THAT
REGISTRATION IS NOT REQUIRED UNDER SUCH ACT.
(n) BUYER is knowledgeable and experienced in making investment decisions
and is able to bear the economic risk of loss of its investment in the
Companies, except to the extent that such loss is the result of a
material misrepresentation or breach by SELLER and/or the Companies.
(o) BUYER is acting on its own behalf in connection with the investigation
and examination of the Companies and its decision to execute these
documents.
(p) BUYER'S common stock is traded on the OTC BB. No circumstances exist
that could reasonably be expected to result in Buyer's being ineligible
for trading on the OTC BB as of the Closing.
11
(q) Within twelve months of the date of this Agreement, BUYER shall use
commercially reasonable efforts to cause it to be substituted for
SELLER as a guarantor of the Companies and attempt to obtain full
releases of SELLER'S personal guarantees of Companies indebtedness to
the extent that the guarantees of SELLER are listed with specificity
upon Schedule 4.1(q) hereof and provided further, however, that the
existence of the obligation that is guaranteed by SELLER does not
result in a default under this Agreement.
5. Indemnities.
5.1 The representations and warranties of the Companies, SELLER and BUYER
will be deemed made on execution of this Agreement and at the Closing,
and all of those representations and warranties and all of the
covenants and obligations of the parties under this Agreement will
survive the Closing.
5.2 BUYER will hold SELLER and the Companies harmless from and pay any
loss, damage, cost or expense (including, without limitation, legal
fees and court costs) which either SELLER or the Companies incurs by
reason of any representation or warranty of BUYER being incorrect or by
reason of any breach by BUYER of any of its covenants or obligations
under this Agreement.
5.3 The Companies will hold BUYER harmless from and pay any loss, damage,
cost or expense (including, without limitation, legal fees and court
costs) which BUYER incurs by reason of any representation or warranty
of the Companies being incorrect or by reason of any breach by the
Companies of any of its covenants or obligations under this Agreement.
5.4 SELLER will hold BUYER harmless from and pay any loss, damage, cost or
expense (including, without limitation, legal fees and court costs)
which BUYER incurs by reason of any representation or warranty of
SELLER being incorrect or by reason of any breach by SELLER of any of
its covenants or obligations under this Agreement.
5.5 BUYER acknowledges that SELLER has represented to it that there is
approximately $6 million owed by SELLER and the Companies in the
aggregate to third party creditors ("the Indebtedness") including
monies borrowed by SELLER personally for the use and benefit and on
behalf of the Companies for business purposes. For each creditor
holding a portion of the Indebtedness there is shown on Exhibit 5.5A
hereof the name and address of such creditor with the current balance,
evidence and terms of the Indebtedness due and owing that creditor.
BUYER shall have no obligation to assume and pay any indebtedness of
SELLER unless such indebtedness is itemized and listed upon Exhibit
5.5A or elsewhere specifically identified by creditor and the amount of
the indebtedness. BUYER shall have no obligation to indemnify SELLER
for those debts listed in Section 1.4 herein for whom MedEx/Pegasus
Creditor Shares are issued to SELLER. SELLER shall personally negotiate
the payment of the indebtedness owed to the third party creditors
listed on Exhibit 5.5B, and BUYER agrees not to contact those third
party creditors listed on Exhibit 5.5B.
BUYER will make monthly payments of $20,500.00 to SELLER for payment of
the MedEx/Pegasus Creditors listed on Exhibit 5.5C, and after 24
months, BUYER shall pay SELLER the sum of $1,040,000 for payment by
SELLER of the remaining indebtedness owed to the Creditors listed on
Exhibit 5.5C.
12
5.6 The parties will hold each other harmless, defend and indemnify each
other from any loss, damage, cost or expense (including, without
limitation, legal fees and court costs) from any claim for commissions,
transaction fees and brokerage fees arising, directly or indirectly, to
the transaction made the subject of this Agreement and SELLER and
Companies expressly warrant and represent that there are no
commissions, transaction fees, brokerage fees or other fees due and
owing or which may become due and owing as the result of any
relationship, agreement or understanding between SELLER, Companies and
a third party. SELLER for valuable consideration paid agrees to hold
BUYER harmless for claims for commissions, transaction fees and
brokerage fees arising, directly or indirectly, from the transaction
made the subject of this Agreement brought by ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ and/or
Threnody, L.L.C.
5.7 The rights and remedies of the parties under this Section 5 are in
addition to and not by the way of limitation upon any other rights and
remedies. The rights and remedies of the parties are cumulative, but a
party will not be entitled to incidential or consequential damages or
loss of profits.
6. Transactions Completed at Closing.
6.1 The following requirements will be completed or satisfied, as the case
may be, at the Closing.
(a) SELLER delivers to BUYER share certificates representing the Shares,
which certificates will be duly endorsed by SELLER to BUYER.
(b) To effect transfer, BUYER delivers said share certificates to the
Companies and the Companies will deliver to BUYER a certificate, duly
executed and issued in the name of BUYER, representing 100% of the
issued and outstanding shares of the Companies, no par value,
registered in the name of BUYER.
(c) BUYER delivers to SELLER the sum of $900,000.
(d) Intentionally blank.
(e) SELLER and BUYER will deliver a Shareholder's Agreement in the form of
Exhibit 1.3(a) hereto, and the Shareholder's Agreement is in full force
and effect.
(f) Intentionally blank.
(g) Buyer acknowledges and agrees to honor the employment contracts between
the Companies and the following: (1) ▇▇▇▇▇ ▇▇▇▇▇▇▇ (2) ▇▇▇▇▇ ▇▇▇▇▇ (3)
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ (4) ▇▇▇▇ ▇▇▇▇▇ provided that a Contract has not been
breached by the respective employee.
13
(h) Within four business days of the Closing, BUYER, or its transfer agent,
delivers to SELLER the certificates for restricted shares representing
the RTIN Shares, registered in the name of SELLER.
(i) Within four business days of the Closing, BUYER, or its transfer agent,
delivers to SELLER the certificates for restricted shares representing
the MedEx/Pegasus Creditor Shares, registered in the name of SELLER.
(j) Intentionally blank.
(k) Intentionally blank.
(l) BUYER is furnished with copies of all approvals and consents required
in connection with this Agreement and a certificate by an officer or
director of the Companies and an officer or director of SELLER
certifying that the same are in full force and effect.
(m) Intentionally blank. .
(n) BUYER executes a Security Agreement in which BUYER's and MedEx's
interest in the Territories are pledged as security for BUYER's and
MedEx's obligations pursuant to this Agreement.
(o) SELLER and the Companies certify that the officers and directors of the
Companies are as follows:
(i) Officers of MedEx Systems, Inc.:
President: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Secretary: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Treasurer: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
(ii) Directors of MedEx Systems, Inc. and Pegasus Pharmacy, Inc.:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
(iii) Officers of Pegasus Pharmacy, Inc.:
President: ▇▇▇▇ ▇▇▇▇▇
Secretary: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Treasurer: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
14
(p) The Companies will be furnished with resignations by all current
officers and directors of the Companies and the BUYER will be furnished
with copies of these.
(q) The parties furnish each other with certificates by one of their
officers or directors (i) certifying the adoption by their directors
and, if necessary, by their shareholders, of resolutions authorizing
the execution, delivery and performance of this Agreement and any other
agreements and documents in connection herewith, and (ii) also
certifying the names, positions and signatures of the persons
authorized to sign on their behalf.
(r) The parties will furnish each other with certificates of the
appropriate governmental authority in Louisiana or Texas, as the case
may be, dated within five (5) days of the Closing confirming that the
parties are in existence and good standing in their respective
jurisdictions ("Certificates of Good Standing").
6.2 Except for the Certificates of Good Standing, the agreements,
certificates, consents and other documents to be executed and delivered
at the Closing shall be dated the date of the Closing.
6.3 BUYER shall notify the applicable governing authorities concerning this
transaction within the applicable periods provided by law. SELLER shall
comply with all reasonable requests by BUYER to assist in the
notification of the governing authorities and transfer of licenses, if
applicable.
6.4 Completion or satisfaction, as the case may be, of all of the
requirements under Section 6 (including the correctness of the
statements in the certificates and other documents delivered) are
conditions precedent to completing the Closing under this Agreement. No
part of the Closing under this Agreement will be deemed completed
unless all requirements under this Agreement shall have been completed
or satisfied.
7. Governance of BUYER.
(a) SELLER shall be entitled to notice and an opportunity to attend and be
heard at all meetings of BUYER's Board of Directors or other matters
involving BUYER's Board action.
(b) Intentionally omitted.
(c) So long as SELLER owns 5% or greater of the outstanding stock of BUYER
or 5 years, whichever occurs last, the Board of Directors of BUYER
shall be prohibited from taking any action, either prior to or after
Closing, that would be inconsistent with any term or condition set
forth in this Agreement without prior written consent of SELLER.
8. Remedies upon Breach.
In the event that any party, without good cause, fails to fulfill any
material obligations outlined in this Agreement ("the Breaching
Party"), then the other party ("the Non-Breaching Party") may demand
the immediate payment, as liquidated damages of $250,000 cash
("Liquidated Damages") and, in the case of SELLER, he may retain the
funds paid to him and/or MedEx and/or Pegasus by RTIN in addition to
the Liquidated Damages.
15
9. Governing Law.
This Agreement will be governed by and construed in accordance with the
law of Louisiana. Venue shall lie solely in the United States District
Court, Eastern District of Louisiana.
10. Amendment and Waiver.
10.1 This Agreement may not be amended or terminated except by an instrument
in writing signed by all of the parties hereto or upon material breach
with remedies stated therefor.
10.2 No provision of this Agreement and no right or obligation under this
Agreement may be waived except by an instrument in writing signed by
the party waiving the provision, right or obligation in question.
11. Assignment.
No party may transfer or assign any of its rights or obligations under
this Agreement and any attempt thereat shall be null and void.
12. Notices.
12.1 Any notice, request, demand, waiver, consent, approval, or other
communication which is required or permitted to be given to any party
under this Agreement shall be in writing and shall be given to that
party with copy at the addresses or fax numbers set forth below or, in
the event of a change in any address or fax number, then to such other
address or fax number as to which notice of the change is given:
(a) If to SELLER:
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇ #▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to (which shall not constitute notice):
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
One Lakeway Center, Suite 605
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
16
(b) If to the Companies:
MedEx Systems, Inc.
Pegasus Pharmacy, Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
(c) If to BUYER:
RTIN Holdings, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to (which shall not constitute notice):
▇▇▇▇▇ ▇. ▇▇▇▇▇
P. O. Drawer 2072
▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No. (▇▇▇) ▇▇▇ ▇▇▇▇
12.2 Notice shall be deemed given on receipt.
13. Section Headings.
Section headings are for convenient reference only and shall not affect
the meaning or have any bearing on the interpretation of any provision
of this Agreement.
14. Severability.
If any provision of this Agreement is held invalid under applicable
law, such provision will be deemed ineffective to the extent of such
invalidity, and such invalid provision will be modified to the extent
necessary to make it valid and enforceable. Any such invalidity will
not invalidate the remainder of this Agreement to the extent that such
remainder does not result in an unjust hardship or an inequitable
hardship on one or both of the parties.
17
15. Interpretation.
Neither this Agreement nor any uncertainty or ambiguity herein shall be
construed or resolved against BUYER and SELLER, whether under any rule
of construction or otherwise. On the contrary, this Agreement has been
reviewed by all parties and shall be construed and interpreted
according to the ordinary meaning of the words used so as to fairly
accomplish the purposes and intentions of all parties hereto.
16. Counterparts.
This Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when
executed and delivered, shall be deemed to be an original, and all of
which, when taken together, shall constitute but one and the same
Agreement.
17. Publicity.
No party shall make any publicity release or announcement concerning
this Agreement or the transactions contemplated hereby without the
prior written approval thereof by the other parties, as the case may
be, except as required by applicable law and regulations, in which case
the party issuing the release will so advise the other parties in
writing and submit a copy of such release in advance of such issuance.
18. Separate Counsel.
The Parties acknowledge and agree that with respect to the agreements
contained in this Agreement, each such party is relying solely on its
own legal counsel and not on any advice, statements or representations
of the other party's counsel.
19. Attorney's Fees.
In the event either party retains an attorney to enforce any of the
provisions of this Agreement, the prevailing party shall be entitled to
the award of its attorney's fees incurred in connection therewith.
20. Entire Agreement.
SELLER, the Companies, BUYER and others entered into a document as the
result of the settlement (cumulatively "the settlement documents") of a
legal proceeding in Civil Action Docket No. 2-02CV-159, United States
District Court for the Eastern District of Texas, Marshall Division on
or about the 4th day of April, 2003, (which is incorporated herein by
reference) such settlement documents and the terms thereof and by the
execution of this Agreement are ratified, confirmed and acknowledged as
being in full force and effect. The settlement documents are a separate
and independent agreement which does not merge into nor become a part
of this Agreement and exists outside this Agreement and survive the
terms, provisions and conditions of this Agreement.
18
21. Execution by Facsimile.
Delivery of an executed counterpart of a signature page to this
Agreement by telecopier or facsimile transmission shall be as effective
as delivery of a manually executed counterpart of this Agreement.
This Agreement constitutes the entire agreement among the parties with
respect to the other matters described herein.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
RTIN Holdings, Inc.
By:
--------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇, President
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Individually
MedEx Systems, Inc.
By:
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President
Pegasus Pharmacy, Inc.
By:
--------------------------------
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Secretary