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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 25, 2000
PowerSource Corporation
(Exact name of registrant as specified in its charter)
Nevada 001-15071 61-1180504
(State or other jurisdiction of (Commission (I.R.S. Employer
incorporation or organization) File Number) Identification No.)
3660 Wilshire Boulevard, Suite 1104, Los Angeles, California 90010
(Address of principal executive offices) (zip code)
Registrant's telephone number, including area code: (213) 383-4443
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Item 1. Change in Control of Registrant
On April 25, 2000, the Registrant closed an Acquisition Agreement (the
"Agreement" with North Star Enterprises, LLC ("North Star") whereby North Star
would acquire a controlling interest in the Registrant in exchange for specified
consideration. Pursuant to the terms of the agreement, North Star agreed to
assume any and all liabilities and operating costs of the Registrant from the
date of the agreement in exchange for the shares of the Registrant's common
stock. The Registrant issued 2,229,597 shares of common stock [twenty percent of
its issued and outstanding shares of common stock] to North Star pursuant to the
Agreement.
The Registrant also issued 11,147,987 shares of common stock, which constitutes
forty percent (40%) of its issued and outstanding shares of common stock, to
North Star pursuant to the Agreement. However, as a condition precedent to
closing, forty percent (40%) of the Registrant's issued and outstanding common
stock was to be delivered to an Escrow Agent. Under the essential terms of the
Agreement, the shares are to be held in escrow for the benefit of the North Star
and will be issued and released to North Star as North Star expands the
Registrant's customer base to certain specified levels. The correlation of new
customers that North Star will bring the Registrant and the number of shares
that will be released to North Star has been set forth in the agreement as
Schedule A. The aforementioned 11,147,987 shares were delivered to the Escrow
Agent on April 25, 2000.
As a result of the Registrant's issuance of shares to North Star and to the
escrow agent on behalf of North Star, North Star now holds the voting rights to
sixty percent (60%) of the Registrant's issued and outstanding shares of common
stock. North Star also acquired the right to name three directors of the
Registrant according to the agreement between North Star and the Registrant
dated April 11, 2000.
As consideration for its transaction with the Registrant, North Star agreed to
commit 40,000 condominium units over a twenty-four month schedule to the
Registrant, provide funding for the operation of the Registrant, a security bond
to the Power Exchange on behalf of the Registrant, and administrative
assistance. The funding for this transaction originated from the treasury of
North Star.
Item 5. Other events
On April 20, 2000, the Registrant accepted the resignation of director, German
Teitelbaum. The resignation was not caused by any disagreement between Mr.
Teitelbaum and the Registrant on any matter relating to the Company's
operations, policies, or practices. Effective April 21, 2000, the Registrant
amended its bylaws to increase the number of authorized directors from five (5)
to nine (9). On the same date, the Company appointed three new directors: Betty
Gail Howard, Richard D. Boyd, and Richard S. Manns.
Item 7. Exhibits
Exhibit 2.1: Acquisition Agreement between North Star Enterprises, LLC
and PowerSource Corporation, dated April 21, 2000
Exhibit 2.2: List of Omitted Schedules
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PowerSource Corporation
(Registrant)
Date: May 8, 2000 By: /S/ E. Douglas Mitchell
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Name: E. Douglas Mitchell
Title: President
Exhibit 2.1
ACQUISITION AGREEMENT
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THIS ACQUISITION AGREEMENT (this "Agreement"), dated effective as of
April 5, 2000, is made and entered into by and among NORTH STAR ENTERPRISES,
LLC, a California limited liability company (the "Buyer") at 29716 Avenida De
Las Banderas, Rancho Santa Margarita, California 92688 and POWERSOURCE
CORPORATION, a Nevada corporation having its principal place of business at 3660
Wilshire Boulevard, Suite 1104, Los Angeles, California 90010 ("Seller").
RECITALS
A. Seller is engaged in the business of providing electrical service to
residents of the State of California.
B. Seller desires to sell, assign and transfer to Buyer, and Buyer
desires to purchase from Seller, a certain percentage of Common Stock Shares of
Seller, as defined in Schedule A, a certain number of seats on the board of
directors of Seller, on the terms and conditions hereinafter set forth. ANY TAX
CONSEQUENCE ARISING FROM THIS TRANSACTION AND AGREEMENT SHALL BE THE
RESPONSIBILITY OF THE PARTIES INDIVIDUALLY.
AGREEMENT
NOW, THEREFORE, in consideration of the respective representations,
warranties, covenants and agreements hereinafter set forth, Buyer and Seller
each intending legally to be bound, represents, warrants, covenants and agrees
as follows:
ARTICLE I: SUBJECT OF ACQUISITION
Subject to the terms, provisions and conditions set forth in this
Agreement, Seller agrees to sell, assign, transfer and convey all of its right,
title and interest in a certain amount Restricted Common Stock Shares of Seller,
as defined in Schedule A, to Buyer for the consideration (the "Purchase Price")
set forth in Article 2 below. The closing of this transaction (the "Closing
Date") would occur as soon as possible after the termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), if such provisions are applicable to the transaction, or as
soon as practicable upon completion and execution of this Acquisition Agreement.
The transaction will also be subject to all rules and regulations prescribed
under the Federal and state securities laws governing same.
ARTICLE II: TERMS AND CONDITIONS
2.1 CONSIDERATION. In consideration of the sale, issuance and transfer of the
Restricted Common Stock Shares, pursuant to the milestones defined in Schedule
A, to Buyer in accordance with and subject to the terms and conditions hereof,
Buyer hereby agrees to the following purchase terms and conditions:
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(a) Buyer agrees to assume any and all liabilities and costs of
operations of Seller from the date of this Agreement. Buyer agrees it
shall be responsible for the payment of all liabilities of Seller
related to its operation of the Business subsequent to the Closing Date
(as defined herein), as and when the same become due including, but not
limited to, monthly operating costs, payroll, insurance related
expenses and State, Federal and local tax liability.
(b) Buyer agrees to effectuate all tenant conversions by communicating
with and assisting property owners and tenants in the transfer of
service. Seller agrees to fully cooperate, as permitted by law, by
providing point of sale material and the requisite regulatory
documentation to effectuate the transfer of each customer account.
(c) Buyer agrees to provide all capitalization necessary for the
operation of Seller. It is agreed and understood that such
capitalization will not exceed an aggregate of Sixty Thousand Dollars
($60,000.00) per month, for the first three (3) months following the
Closing Date. After the first three (3) months, Buyer agrees to
continue to provide all capitalization necessary for the operation of
Seller, subject to a good faith budget evaluation to be made by the
board of directors of Seller at a duly called and held special meeting
of the board of directors.
(d) Buyer agrees to arrange the cash, bond or equivalent necessary to
purchase an adequate amount of power from the Automated Power Exchange
("APX"), or any other power supplier approved by the Seller, to service
all of Seller's accounts. Buyer hereby acknowledges and agrees that
such expenses will be between three (3) and five (5) million dollars
per month.
(e) Buyer agrees to accept full responsibility for all marketing
activities of Seller. As consideration for the marketing services
rendered, Seller agrees to pay to Buyer $3.00 per account thirty (30)
days after the first payment is received from the respective account as
allowed by law. Furthermore, Buyer agrees to accept Seller's common
stock in lieu of payment for the first ninety (90) days that each
account is online. Such stock is in addition to any other stock
referenced herein and shall be valued at a fixed price of $1.25 per
common stock share.
(f) Buyer agrees to allow the executives of Seller to sell a maximum of
twenty five percent (25%) of their shares respectively at the time of a
secondary offering on a prior preferred basis and as permitted by law.
Seller agrees to grant Buyer the right of first refusal on the sale of
such shares. Seller further agrees to provide notice of Seller's intent
to sell, in the manner prescribed by Section 8.3, ten (10) days prior
to the anticipated sale.
(g) Buyer agrees that any and all stock issued by Seller to its
officers and directors after February 11, 2000, except for those shares
specifically used to satisfy the increased ownership interests of Buyer
as defined in Schedule B, will be subject to non-dilution.
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(h) Buyer agrees to honor the attached employment agreements and agrees
that it will not cause the termination of such employment agreements
without cause for the term of such contracts.
(i) Buyer agrees that all personal tax liabilities resulting from the
deferred executive compensation of the Seller's executives, in an
amount equal to and not exceeding Forty Thousand Dollars ($40,000.00),
will be paid in full by Seller when due.
(j) Buyer agrees to fund the existing marketing activities of Seller
until such time as the joint marketing of Buyer and Seller is begun,
evidenced by a joint marketing agreement. All marketing plans of Seller
will be subject to good faith review and approval by Buyer.
(k) Buyer agrees that this Agreement and the terms and conditions
contained herein are subject to the necessary approval by the Seller's
shareholders, whether by written consent or proxy, according to the law
governing Seller and at the Seller's discretion.
2.2 STOCK. Upon execution of this Agreement, Buyer shall be issued an amount of
Seller's Common Stock equal to Twenty Percent (20%) of the total issued and
outstanding shares of Seller (subject to adjustment for stock split, stock
dividends and similar events). Additionally, upon execution of this Agreement,
Seller shall place an additional Forty Percent (40%) of the issued and
outstanding Common Stock of Seller (subject to adjustment for stock split, stock
dividends and similar events) in an escrow account held by an escrow agent, as
defined in Schedule D, for the benefit of Buyer. Such common stock shares shall
be issued and released to Buyer upon the occurrence of certain performance
milestones defined in Schedule A.
2.3 RIGHT TO NAME DIRECTOR. Upon execution of this Agreement, Buyer shall have
the right to name three (3) directors to Seller's Board of Directors which
currently consists of a total of five (5) Directors.
2.4 IMPLEMENTATION OF EMPLOYEE STOCK INCENTIVE PLAN. Furthermore, no later than
Closing, Seller shall have implemented an Incentive Stock Option Plan for
employees of Seller, attached hereto in Schedule C. The terms, conditions and
amounts of stock to be issued pursuant to such a plan will be determined by
management of Seller in good faith prior to Closing.
2.5 EXECUTION OF ESCROW AGREEMENT. Prior to the Closing, Seller agrees to place
forty percent (40%) of Seller's total issued and outstanding common stock in an
escrow account as described in Schedule D. Such shares will be held in escrow,
pursuant to the terms and conditions of the Escrow Agreement, incorporated
herein by reference, for the benefit of Buyer. Such shares shall be released to
the Buyer upon the satisfaction of the performance milestones, as defined in
Schedule A. The share, when and if released to the Buyer will be fully paid and
non-assessable. In the event that Buyer does not commit a minimum of Ten
Thousand (10,000) units, as defined in Schedule A, in addition to the
performance milestones set forth in Schedule A, such shares will be returned to
the company for cancellation.
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2.6 MASTER DISTRIBUTORSHIPS OF SELLER. Seller agrees not to sell any Master
Distributorships ("Distributorships"), in addition to the three (3)
Distributorships sold or committed prior to the Closing, without consulting with
Buyer. Seller agrees to offer the investors of the three (3) previously sold
Distributorships an option to convert One Hundred and Twenty-five Percent (125%)
of the purchase price of each Distributorship into Common Stock of Seller at a
conversion rate of $2.50 per share.
ARTICLE III: CLOSING
3.1 CLOSING. The transfer and purchase of Assets and the consummation of the
other transactions contemplated by this Agreement (the "Closing") shall occur at
the offices of Buyer as soon as possible after the termination of the applicable
waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976
(the "HSR Act"), if such provisions are applicable to the transaction, or as
soon as practicable upon completion and execution of this Acquisition Agreement.
The transaction will also be subject to all rules and regulations prescribed
under the Federal and state securities laws governing same.
3.2 CLOSING DOCUMENTS. As a condition precedent to Closing, the following
documents and certificates shall be executed and delivered at the Closing:
(a) Seller shall deliver to Buyer: (i) a Common Stock Certificate with
a restrictive legend subject to Rule 144, representing twenty percent (20%) of
the Seller's issued and outstanding Common Stock Shares; (ii) an Escrow
Agreement evidencing the deposit of a Common Stock Certificate with a
restrictive legend subject to Rule 144, representing forty percent (40%) of the
Seller's issued and outstanding Common Stock Shares to be held in escrow for the
benefit of the Buyer; (iii) a good standing certificate evidencing the corporate
existence and status of Buyer in Nevada; (iv) such other conveyance documents to
effect the transfer and conveyance of the Assets.
(b) Buyer shall deliver to the Escrow Agent, Forty Percent (40%) of the
issued and outstanding common stock of Seller to be held in escrow for the
benefit of Buyer. Such common stock shares shall be issued and released to Buyer
upon the occurrence of certain performance milestones defined in Schedule A.
ARTICLE IV: REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Buyer that:
4.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWERS. Seller is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Nevada and has the corporate power to carry on its business as now
being conducted.
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4.2 AUTHORIZATION OF TRANSACTIONS BY SELLER. Seller and the persons executing
this document and other documents associated with this sale of Assets have full
power and authority to enter into this Agreement and to perform its obligations
hereunder, subject to the requisite approval by Seller's shareholders. The
execution and delivery of this Agreement and the consummation of the
transactions contemplated hereby have been duly authorized by all necessary
corporate action, in compliance with all applicable law, and the Seller's
Articles of Incorporation (the "Articles of Incorporation"), and By-Laws, and a
certified copy of the official corporate resolutions setting forth these
authorizations is attached to this Agreement. This Agreement constitutes the
valid and legally binding obligation of the Seller, enforceable against the
Seller in accordance with its terms and conditions, except to the extent the
enforceability thereof is limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors rights generally or by general
equitable principles. Neither the execution or the delivery of this Agreement,
nor the consummation of the transactions contemplated hereby will conflict with
or result in a breach of the terms, conditions or provisions of or constitute a
default under the Articles of Incorporation or By-Laws of Seller.
4.3 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and delivery by
Seller of this Agreement and the other documents, respectively, nor the
consummation by Seller of the transactions contemplated hereby and thereby, nor
the compliance by Seller with any of the provisions hereof or thereof will (i)
violate or breach any provision of or constitute a default (or an event which,
with notice or lapse of time or both, would constitute a default) under, or
result in the creation of a lien or encumbrance on any of the Assets pursuant
to, any of the terms, covenants, conditions or provisions of any note, bond,
class of stock, mortgage, indenture, deed of trust, franchise, permit, contract,
agreement or other instrument, commitment or obligation to which Seller is a
party, or by which Seller or any of the Assets may be bound, except for such as
to which requisite waivers or consents have been obtained; or (ii) to the best
of the Seller's knowledge, violate any order, writ, injunction, decree,
judgment, statute, law, regulation or ruling of any court or governmental
authority applicable to any of them.
4.4 LITIGATION AND COURT ORDERS. Except as disclosed in Schedule F, the Officers
of Seller have no actual knowledge of any outstanding orders, judgments,
certificates of judgment, injunctions, citations, awards or decrees of any
court, governmental or regulatory body or arbitration tribunal against Seller
which would materially adversely affect the Assets or the operation of the
Business. There is no action, suit, claim, arbitration, investigation or other
legal proceeding (whether or not the defense thereof or liabilities in respect
thereof are covered by insurance) actually filed and served against Seller or
with respect to any of the Assets which would materially adversely affect
Seller's Business. To the best of each of the Officers of Seller's knowledge,
there is no pending action, suit or proceeding which has been brought by or on
behalf of Seller with respect to the Assets or Seller's operation of the
Business in any court or before any governmental body or arbitration tribunal
other than collection suits currently pending or to be commenced in the future
relating to accounts receivables accruing prior to Closing.
4.5 BOOKS AND RECORDS. The books and records of Seller as they relate directly
to Seller's Business, fairly reflect all material transactions affecting the
Assets and Seller's Business.
4.6 TAXES. All tax returns, reports and forms required to be filed by Seller
with any state or federal authority have been timely prepared and filed in
accordance with all applicable laws. Except as described in Article 2.1(i)
herein, there are no existing deficiencies or adjustments, fees, tax
assessments, levies, or other tax-related encumbrances of any kind associated
with the Assets.
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4.7 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or warranty by
Seller in this Agreement, no certificate, Schedule, or Schedule hereto furnished
or to be furnished by or on behalf of Seller pursuant to this Agreement, and no
document or certificate delivered to Buyer pursuant to this Agreement or in
connection with any actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statements contained herein or therein not misleading.
4.8 PERMITS AND LICENSES. There is set forth in the Schedule G a list of all
material permits, licenses or other authorizations of any governmental authority
in effect on the date hereof applicable to any of the Assets, including the
Business. The operation of the Business is conducted in all material respects in
accordance with the requirements of all such permits, licenses or authorizations
and in accordance with the requirements of all governmental authorities having
jurisdiction thereof.
4.9 COMPLIANCE WITH LAWS. Seller has operated the Business so as to materially
comply in all material respects with all applicable laws and ordinances, rules
and regulations of any governmental authority and all applicable orders,
judgments or decrees of any court, arbitrator or governmental authority where
the failure to comply would have a material adverse effect on the operation of
the Business or the Assets.
4.10 UNDISCLOSED LIABILITIES. Except as disclosed herein, to Seller's knowledge,
Seller has no liabilities arising from Seller's operations that would have a
material adverse effect on the business condition of Seller.
4.11 CONTRACTS.
Except as previously disclosed, there is no written contract,
agreement, commitment or arrangement entered into or made by Seller
("Contract"), or any outstanding unaccepted written offer made by Seller
("Offer") (a) that primarily affects any of the Purchased Assets, or (b) that is
binding on Seller and, in each case:
(i) that is or relates to a mortgage, indenture, security
agreement or other agreement or instrument relating to the borrowing of money
by, or any extension of credit to, Seller;
(ii) that is or relates to a collective bargaining agreement
or union contract;
(iii) that contains or relates to covenants or other
provisions limiting the right of Seller or owners thereof to compete in any line
of business with any person that is directly competitive with Buyer;
(iv) that involves any remaining or unsatisfied obligation (A)
to make capital expenditures (whether through the purchase of real or personal
property or otherwise) involving U.S. $50,000 or more in the case of any one
item or group of items, (B) to purchase goods involving U.S. $100,000 or more in
the case of any one item or group of items, or (C) to supply products or provide
services involving U.S. $100,000 or more in the case of any one item or group of
items;
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(v) that involves any sales agency, manufacturer's
representative, distributorship or marketing agreement that is not by its terms
(without regard to the law of the applicable jurisdiction) cancelable by Seller
without penalty on 90 days notice; or
(vi) that is any other Contract or Offer that is material to
the business condition of the Seller.
Except as otherwise set forth in herein and subject to the last sentence of this
Section 4.13, to Seller's knowledge, all Contracts described or reflected
therein are in full force and effect. For purpose of this Section 4.13, the term
"Contract" shall not include any employee benefit plans.
4.12 TRANSACTIONS WITH INTERESTED PERSONS. Except as set forth in the disclosure
Schedules, (a) Seller is not indebted to any director, officer, employee or
agent of Seller, except for amounts due as normal salaries, commissions, wages,
bonuses, or in reimbursement of ordinary expenses on a current basis, and (b) no
employee or agent of Seller is indebted to Seller except for advances for
ordinary business expenses.
4.13 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement shall survive the Closing Date by One
Hundred and Eighty (180) days.
ARTICLE V:
REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to Seller as follows:
5.1 ORGANIZATION, QUALIFICATION AND CORPORATE POWERS. Buyer is a limited
liability company duly organized, validly existing and in good standing under
the law of the State of California. Buyer has full power and authority to carry
on the Seller's Business and to own and use the Assets and properties owned and
used by it in the operation of Seller's Business.
5.2 AUTHORIZATION OF TRANSACTIONS BY BUYER. Buyer and the persons executing this
document and other documents contemplated herein have full power and authority
to enter into this Agreement and to perform its obligations hereunder and have
received all material consents and approvals necessary for the consummation of
the acquisition and the operation by Buyer of the Business of Seller in
substantially the manner presently being operated by Seller. The execution and
delivery of this Agreement and the consummation of the transactions contemplated
hereby have been duly authorized by all necessary company action, in compliance
with all applicable laws, and Buyer's Articles of Organization and Operating
Agreement. This Agreement constitutes the valid and legally binding obligation
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of the Buyer enforceable against Buyer in accordance with its terms and
conditions, except to the extent the enforceability thereof is limited by
bankruptcy, insolvency, moratorium or similar laws affecting creditors' rights
generally or by general equitable principles. Neither the execution or the
delivery of this Agreement, nor the consummation of the transactions
contemplated hereby, will conflict with or result in a breach of the terms and
conditions or provisions of or constitutes a default under the Articles of
Organization or Operating Agreement of Buyer.
5.3 LITIGATION OR COURT ORDERS. There is no outstanding order, judgment,
injunction, award or decree of any court, governmental or regulatory body or
arbitration tribunal against Buyer, and there is no action, suit, claim,
arbitration, investigation or other legal proceeding actually filed, or to the
best of Buyer's knowledge, pending and served against Buyer, enjoining or
prohibiting or seeking to enjoin or prohibit the transactions contemplated
hereby, or which would impair the Buyer's ability to consummate the transactions
contemplated hereby.
5.4 CONSENTS AND APPROVALS; NO VIOLATION. Neither the execution and delivery by
Buyer of this Agreement and the other documents, respectively, nor the
consummation by Buyer of the transactions contemplated hereby and thereby, nor
the compliance by Buyer with any of the provisions hereof or thereof will (i)
conflict with or breach any provision of the Articles of Organization or
Operating Agreement of Buyer; (ii) violate or breach any provision of or
constitute a default (or an event which, with notice or lapse of time or both,
would constitute a default) under, or result in the creation of a lien or
encumbrance on any of the Assets pursuant to, any of the terms, covenants,
conditions or provisions of any note, bond, class of stock, mortgage, indenture,
deed of trust, franchise, permit, lease, contract, agreement or other
instrument, commitment or obligation to which Buyer is a party, or by which
Buyer or any of the Assets may be bound, except for such as to which requisite
waivers or consents have been obtained; or (iii), to the best of Buyer's
knowledge, violate any order, writ, injunction, decree, judgment, statute, law,
regulation or ruling of any court or governmental authority applicable to any of
them.
5.5 ACCURACY OF REPRESENTATIONS AND WARRANTIES. No representation or warranty by
Buyer in this Agreement, no certificate, Schedule, or Schedule hereto furnished
or to be furnished by or on behalf of Buyer pursuant to this Agreement, and no
document or certificate delivered to Seller pursuant to this Agreement or in
connection with any actions contemplated hereby, contains or shall contain any
untrue statement of material fact or omits or shall omit a material fact
necessary to make the statements contained herein or therein not misleading.
5.6 COMPLIANCE WITH LAWS. Buyer has operated the Business so as to materially
comply in all material respects with all applicable laws and ordinances, rules
and regulations of any governmental authority and all applicable orders,
judgments or decrees of any court, arbitrator or governmental authority where
the failure to comply would have a material adverse effect on the operation of
the Business or the Assets.
5.7 UNDISCLOSED LIABILITIES. Except as disclosed herein, to Buyer's knowledge,
Buyer has no liabilities arising from Buyer's operations that would have a
material adverse effect on the business condition of Buyer.
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5.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in this Agreement shall survive the Closing Date by One
Hundred and Eighty (180) days.
ARTICLE VI: INDEMNIFICATION
6.1 INDEMNIFICATION. Subject to all the provisions of this Article VI,
indemnification shall be fully mutual between the Buyer and Seller. The
execution by Seller and Buyer of this Agreement. Whether in counterpart or
otherwise, shall be conclusive as to Seller's and Buyer's assent to these
provisions, whether or not Seller or Buyer shall have caused, directly of
indirectly, the event giving rise to the demand for indemnification under this
Article VI.
6.2 INDEMNIFICATION OF BUYER. Seller will reimburse, indemnify, defend, save and
hold harmless Buyer and each director, officer, shareholder (and each director
and officer thereof) and any other affiliate of any of them (each a "Buyer
Indemnified Person") for a period of One Hundred and Eighty (180) days from the
Closing Date hereof from and against any and all claims, demands, damages,
liabilities, losses, costs, expenses, assessments, settlement payments and
judgments of any nature whatsoever (including without limitation reasonable
attorneys' fees and other costs and expenses incident to any claim, suit, action
or proceeding) (collectively, "Damages") suffered, sustained, incurred or
required to be paid by Buyer Indemnified Person because of or that result from,
relate to or arise out of (i) the breach of or the failure to fulfill any
representation, warranty, covenant or agreement made by Seller pursuant to this
Agreement, or (ii) any liability of Seller resulting from conditions existing or
acts or omissions occurring prior to the Closing date hereof which give rise to
liabilities.
6.3 INDEMNIFICATION OF SELLER. Buyer will reimburse, indemnify, defend, save and
hold harmless Seller and each director, officer, shareholder (and each director
and officer thereof) and any other affiliate of any of them (each a "Seller
Indemnified Person") for a period of One Hundred and Eighty (180) days from the
Closing Date hereof from and against any and all claims, demands, damages,
liabilities, losses, costs, expenses, assessments, settlement payments and
judgments of any nature whatsoever (including without limitation reasonable
attorneys' fees and other costs and expenses incident to any claim, suit, action
or proceeding) (collectively, "Damages") suffered, sustained, incurred or
required to be paid by Seller Indemnified Person because of or that result from,
relate to or arise out of (i) the breach of or the failure to fulfill any
representation, warranty, covenant or agreement made by Buyer pursuant to this
Agreement, or (ii) any liability of Buyer resulting from conditions existing or
acts or omissions occurring prior to the Closing date hereof which give rise to
liabilities.
6.4 SURVIVAL OF REPRESENTATIONS AND WARRANTIES AND INDEMNIFICATION OBLIGATION.
The representations, warranties, covenants and agreements of Seller and Buyer
herein set forth shall survive the Closing.
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6.5 CLAIMS.
(a) Should any claim be made, or suit or proceeding (including, without
limitation, an audit by any taxing authority) ("Claim") be instituted against
Seller, Buyer or any other Buyer Indemnified Person or Seller Indemnified Person
(an "Indemnified Person") for which any of the aforementioned parties wish to
engage counsel, it shall be at their own expense unless it is later held that
the Indemnification provision herein covers that expense. The Indemnified Person
shall notify the indemnifying party in writing concerning said Claim promptly
after the assertion or commencement thereof. The Indemnified Person shall in the
first instance file in a timely manner any answer or pleading with respect to a
suit or proceeding if such action is necessary to avoid default or other adverse
results. The indemnifying party shall control the defense of any Claim and shall
use its best efforts to defeat or minimize any loss resulting from such Claim.
The Indemnified Person shall provide the indemnifying party with such
information and opportunity for consultation as may reasonably be requested by
the indemnifying party and the Indemnified Person shall be entitled, at its own
expense, to participate in the defense of a Claim and to engage counsel for such
purpose.
(b) No settlement of a Claim involving liability of an indemnifying
party under this Article VI shall be made without prior written consent thereto
by or on behalf of such party, which consent shall not be unreasonably withheld
or delayed and which consent will be final and binding on all involved parties.
6.6 REQUEST FOR INDEMNIFICATION
(a) If at any time or from time to time an Indemnified Person
determines that it is entitled to indemnification under this Article VI, the
Indemnified Person shall give written notice to the Indemnifying Party
specifying in reasonable detail to the extent then known the basis on which
indemnification is sought, the amount of the actual or potential loss, damage or
expense and requesting indemnification. Upon receipt of any request for
indemnification (whether or not involving a Claim), the Indemnifying Party may
object thereto by delivering written notice of such objection to the Indemnified
Person specifying in reasonable detail the basis on which such objection is made
within 30 days after receipt of the request for indemnification. Failure on the
part of the Indemnifying Party so to object to any request for indemnification
shall constitute acceptance by the Indemnifying Party of such request.
(b) The Indemnifying Party shall pay promptly any amounts which it is
obligated to pay pursuant to this Article VI, upon acceptance or determination
of such obligation and from time to time as any such obligations become, to any
extent, liquidated as to amount.
ARTICLE VII: CONDITIONS
7.1 CONDITIONS PRECEDENT TO BUYER'S OBLIGATIONS. All obligations of Buyer at the
Closing are subject, at the option of Buyer, to the fulfillment of each of the
following conditions at or prior to the Closing Date (any one or more of which
may be waived by Buyer), and Seller shall exert reasonable commercial efforts to
cause each such condition to be so fulfilled, including finalization of all
disclosure schedules and the foregoing items necessary to effectuate the
Closing, as soon as reasonably possible:
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(a) All representations and warranties of Seller contained herein or in
any document delivered pursuant hereto shall be true and correct in all material
respects when made.
(b) All covenants, agreements and obligations required by the terms of
this Agreement to be performed by Seller at or before the Closing shall have
been duly and properly performed.
(c) All corporate and other proceedings of Seller in connection with
the transaction contemplated by this Agreement, and all documents and
instruments incident to such corporate proceedings, shall be reasonably
satisfactory in form and substance to Buyer and its counsel.
(d) Buyer shall have received from Seller delivery of the corporate
By-laws and Articles of Incorporation.
(d) Since the date of this Agreement, there shall not have occurred any
material adverse change in the business condition of the Seller.
7.2 CONDITIONS PRECEDENT TO SELLER'S OBLIGATIONS. All obligations of seller at
the Closing are subject, at the option of Seller, to the fulfillment of each of
the following conditions at or prior to the Closing Date (any one or more of
which may be waived by Seller), and Buyer shall exert reasonable commercial
efforts to cause each such condition to be so fulfilled, including finalization
of all disclosure schedules and the foregoing items necessary to effectuate the
Closing, as soon as reasonably possible:
(a) All representatives and warranties of Buyer contained herein or in
any document delivered pursuant hereto shall be true and correct in all material
respects when made.
(b) All covenants, agreements and obligations required by the terms of
this Agreement to be performed by Buyer at or before the Closing shall have been
duly and properly performed.
(c) Since the date of this Agreement, there shall not have occurred any
material adverse change in the business condition of the Buyer.
(d) Seller shall have approved the Employee Stock Incentive Plan and
the Employment Agreements.
ARTICLE VIII: GENERAL PROVISIONS
8.1 AMENDMENT. No amendment of any provision of this Agreement shall in any
event be effective, unless the same shall be in writing and signed by the
parties hereto, and then such amendment or consent shall be effective only in
the specific instance and for the specific purpose for which given.
<PAGE>
8.2 WAIVER. No waiver by either party of any default with respect to any of the
binding provisions, conditions or requirements of this Acquisition Agreement
shall be deemed to be a continuing waiver in the future or a waiver of any other
binding provisions, conditions or requirement hereof, nor shall any delay or
omission of either party to exercise any right hereunder in any manner impair
the exercise of any such right occurring to it thereafter. The parties hereto
waive any and all rights to a jury trial in connection with any action or
proceeding arising under this Acquisition Agreement or the transactions
contemplated hereby.
8.3 NOTICE. All notices, requests, demands and other communications hereunder
shall be in writing and shall be sent by personal delivery or registered or
certified mail, postage prepaid or by reputable overnight courier, as follows:
IF TO SELLER: Mr. Roman Gordon, Chairman
PowerSource Corporation
3660 Wilshire Boulevard, Suite 1104
Los Angeles, California 90010
WITH COPIES TO: Gerard N. Casale
CASALE COFFEE NOJIMA, LLP
11755 Wilshire Boulevard, Suite 1200
Los Angeles, California 90025
IF TO BUYER: Gail Howard, Chief Executive Officer
North Star Enterprises, LLC
29716 Avenida De Las Banderas
Rancho Santa Margarita, California 92688
Any party may change its address for receiving notice by written notice
given to the other party in the manner referred to in this Section 8.2.
8.4 ACCESS TO INFORMATION AND DOCUMENTS PRIOR TO CLOSING. Upon reasonable notice
to Seller's representatives in Los Angeles, California, and during regular
business hours, Seller will give Buyer and Buyer's attorneys, accountants and
other representatives reasonable access to Seller's personnel and all
properties, documents, contracts, books and records of Seller relating to the
business of Seller or the Purchased Assets and will furnish Buyer with copies of
such documents (certified by an appropriate officer of Seller if so requested)
and with such information with respect to the affairs of the Seller as Buyer may
from time to time reasonably request. There will be no material interference
with Seller's business operations as a result of such investigations by Buyer.
8.5 COUNTERPARTS. This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same Agreement.
8.6 PARTIES IN INTEREST. This Agreement shall bind and inure to the benefit of
the parties named herein and their respective heirs, successors and assigns.
<PAGE>
8.7 ENTIRE AGREEMENT. This Agreement, including the Schedules and Schedules
attached hereto and the documents delivered pursuant hereto, constitute the
entire agreement among the parties with respect to the transactions contemplated
hereby and supersedes all other agreements and understandings among the parties.
8.8 GOVERNING LAW. This Agreement shall be governed by and construed in
accordance with the laws of the State of California. Proper venue for any
dispute shall be in Los Angeles, California.
8.9 HEADINGS. The sections and other headings contained in this Agreement are
for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.10 EXPENSES. The Buyer will bear their own costs and expenses for legal,
accounting, other professional fees and any other costs or disbursements
incurred in connection with the transactions contemplated hereby, except to the
extent expressly provided in Article VI above. Seller will be reimbursed by
Buyer for all legal fees incurred in connection with this Agreement in the event
that the transaction contemplated under this Agreement does not take place.
8.11 COSTS. The Parties will be responsible for and bear all of their own costs
and expenses (including any broker's or finder's fees and the expenses of its
representatives) incurred at any time in connection with pursuing or
consummating the Contemplated transaction.
8.12 JURISDICTION: SERVICE OF PROCESS. Any action or proceeding seeking to
enforce any provision of, or based on any right arising out of, this Agreement
may be brought against any of the parties in the courts of the State of
California, County of Los Angeles, or, if it has or can acquire jurisdiction, in
the United States District Court for the Central District of California, and
each of the parties consents to the jurisdiction of such courts (and of the
appropriate appellate courts) in any such action or proceeding and waives any
objection to venue laid therein. Process in any action or proceeding referred to
in the preceding sentence may be served on any party anywhere in the world.
8.13 ASSIGNMENT. The Binding Provisions shall be binding upon and inure to the
benefit to the parties and their permitted successors and permitted assigns.
Neither Seller nor Buyer shall assign this Agreement or any rights or
obligations hereunder without the prior written consent of the other (which
consent may be withheld for any reason in the sole discretion of the party from
whom consent is sought); provided, however, that Seller may assign its rights
and obligations hereunder as a result of any transaction or to any acquirer of
substantially all of the assets of Seller.
8.14 CONFIDENTIALITY. Except as and to the extent required by law, neither Party
shall disclose or use, and will direct its representatives not to disclose or
use to the detriment of the other Party, any Confidential Information (as
defined below) provided by the other Party in any manner other than in
connection with its evaluation of the transaction proposed in this Acquisition
Agreement. For purposes of this Paragraph, "Confidential Information" means any
information about any Party whether or not stamped "confidential" or identified
<PAGE>
in writing as such to the party being provided information, unless (i) such
information is already known to the party being provided information or its
representatives or to others not bound by a duty of confidentiality or such
information becomes publicly available through no fault of any Party or its
representatives, (b) the use of such information is necessary or appropriate in
making any filing or obtaining any consent or approval required for the
consummation of the Contemplated Acquisition, or (c) the furnishing or use of
such information is required by or necessary or appropriate in connection with
legal proceedings. Upon the written request by the providing Party, the other
Party will promptly return to the providing party or destroy any Confidential
Information in its possession and certify in writing to such requesting Party
that it has done so.
8.15 DISCLOSURE. Either Party may disclose the existence of negotiations
regarding the proposed acquisition in the form of press release or otherwise
upon the mutual approval of the parties, said approval not to be unreasonably
withheld. The Seller may have to disclose certain information as required by law
to the Securities and Exchange Commission and/or the Seller's shareholders
8.16 CONSENTS. During the period from the Execution Date until the Closing Date,
the Buyer and Seller will cooperate with each other and proceed, as promptly as
is reasonably practical, to prepare and to file the notifications required by
the HSR Act, the Secretary of State of California, and other regulatory bodies
as required, if applicable and receive other necessary consents and approval as
indicated herein, as necessary.
8.17 PUBLICITY. Any and all publicity or public disclosure relating to this
transaction and the method of its release shall be determined by mutual
agreement of both the Buyer and Seller, except as to Seller's notification of
the transactions contemplated by this Agreement to its employees.
8.18 SEVERABILITY. To the extent permitted by applicable law, the parties hereby
waive any provision of law which renders any provision of this Agreement
prohibited or unenforceable in any respect. Whenever possible, each provision of
this Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Agreement or the application
of any provision hereof is held invalid, such provision shall be deemed amended
to accomplish the objectives of the provision as originally written to the
fullest extent permitted by law and the remainder of this Agreement and the
application of such provision to other persons or circumstances shall not be
affected unless the provision held invalid shall substantially impair the
benefits of the remainder of the Agreement.
8.19 ATTORNEYS' FEES. The prevailing party in any proceedings (including,
without limitation any arbitration proceedings) arising in connection with this
Agreement shall be entitled to reimbursement for its reasonable fees and costs
incurred in connection therewith, including reasonable attorneys' fees.
IN WITNESS WHEREOF, each of the parties has caused this Agreement to be
executed by its duly authorized representatives as of the date first written
above.
<PAGE>
FOR: BUYER: NORTH STAR ENTERPRISES, LLC
BY: /S/ GAIL HOWARD
GAIL HOWARD, CHIEF EXECUTIVE OFFICER
FOR: SELLER: POWERSOURCE CORPORATION
BY: /S/ E. DOUGLAS MITCHELL
E. DOUGLAS MITCHELL, PRESIDENT
FOR: SELLER: POWERSOURCE CORPORATION
BY: /S/ ILLYA BOND
ILLYA BOND, CHIEF EXECUTIVE OFFICER
FOR: SELLER: POWERSOURCE CORPORATION
BY: /S/ ROMAN GORDON
ROMAN GORDON, CHAIRMAN
FOR: SELLER: POWERSOURCE CORPORATION
BY: /S/ GERMAN TEITELBAUM
GERMAN TEITELBAUM, CHIEF FINANCIAL OFFICER
Exhibit 2.2
LIST OF OMITTED SCHEDULES
-------------------------
o Schedule A detailing the phases and terms of the escrow agreement
contained in the agreement
o Schedule B, which includes the Written Consent of Directors of
PowerSource Corporation to issue additional shares of common stock
pursuant to a non-dilution policy; Earn-Out Structure of the agreement;
and Valuation & Anti-Dilutive Considerations.
o Schedule C, which includes PowerSource 2000 Incentive Stock Option Plan
and the Director's Action by Unanimous Consent to Adopt the 2000
Incentive Stock Option Plan
o Schedule D, which is PowerSource's statement of intent to use the law
firm of Casale Coffee Nojima, LLP as the escrow agent pursuant to the
terms and conditions of the escrow contained in the agreement.
o Schedule F, which is a summary all pending litigation against
PowerSource
o Schedule G, which includes copies all licenses and permits currently
held by PowerSource
Pursuant to Item 601(b)(2) of Regulation S-K, the Company agrees to furnish
supplementally a copy of the omitted Disclosure Schedule to the Commission, upon
the Commission's request.
