<PAGE> 1
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
AMENDMENT NO. 2 TO
FORM 10-QSB
[x] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1999
OR
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934
For the transition period from to
---------------- ------------------
Commission File Number 0-15379
POWER-CELL, INC.
Exact name of Registrant as specified in its charter
Colorado 84-1029701
State of Incorporation IRS Employer Identification Number
10711 Preston Road
Suite 250
Dallas, Texas 75230
214/692-9921
Address and telephone number of principal executive offices
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the Registrant was
required to file such reports), and (2) has been subject to filing requirements
for the past 90 days.
Yes x No
--- ---
<PAGE> 2
This Form 10-QSB/A2 is filed to amend Item 2 and the Exhibits. The
remaining items of the Form 10-QSB previously filed are not amended
hereby.
Item 2. Management's Discussion and Analysis of Financial Condition
and Results of Operations Liquidity and Capital Resources
On October 21, 1992, the Company entered into a limited partnership
agreement with several other limited partners and a sole general
partner to provide for management funding, manufacturing and marketing
of the Power Cell reserve battery unit on a worldwide basis. The
Company initially owned an 11% interest in the limited partnership,
which may increase or decrease due to the occurrence of certain events.
The interest decreased to 7.35% during fiscal 1996 due to the addition
of outside investors, resulting in a pro rata dilution. In addition, a
separate license royalty agreement between the Company and the limited
partnership provides that the Company will receive royalty payments on
all Power Cell units produced and sold in the United States and its
territories. Royalty payments on international sales of Power Cell
units will be paid to individual international rights holders, or their
designees, some of which are affiliates of the Company, and all of
which are limited partners in the partnership, as follows: one-third
(33 1/3%) to J. C. Rambin; one-third (33 1/3%) to Rudy Marich;
seventy-five percent of one-third to Howard Farkas (75% of 1/3) and
twenty-five percent of one-third to Burt Kanter (25% of 1/3). These
royalty payments will be due and payable when, and if, royalty funds
are received.
The contract agreement has no provision for direct funding of
Power-Cell, Inc. Its earnings, if any, will be derived from an interest
in the limited partnership together with royalties, if any, from the
license royalty agreement.
On July 1, 1996, Reserve Battery Cell, L.P. (Reserve Battery) announced
initial market release in select cities of the Power Cell Reserve
Battery unit. Around March 1997, the Company was informed that all
activities and operations of Reserve Battery Cell, L.P. had ceased due
to lack of funding. As a result, at such time, for all practical
purposes the operations of the Company ceased.
Plan of Operation
The Company has not engaged in any material operations since
the spring of 1997 and has had virtually no revenues from operations
during the last two fiscal years.
On March 9, 1999, the Company and Park Pharmacy Corporation
("Park") executed a Stock Purchase Agreement, pursuant to which the
Company will acquire 100% of the issued and outstanding shares of
capital stock of Park from its shareholders (the "Selling
Shareholders") in exchange for shares of a newly authorized and
designated series of preferred stock of the Company (the "Reverse
Acquisition"). As a result of the Reverse Acquisition, the Selling
Shareholders will be entitled to vote approximately 87% of the total
number of votes entitled to be cast at any
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<PAGE> 3
meeting of the Company's shareholders, and Park's designees will
constitute five (5) of the six (6) members on the Company's Board of
Directors. The Reverse Acquisition has been structured as a tax free
exchange. The parties will submit the Stock Purchase Agreement as soon
as possible to the shareholders of the Company for approval.
Park is a Dallas, Texas based development stage company that
plans to acquire several independent retail pharmacies and associated
home healthcare facilities. Park was established in June 1998 to
acquire independent retail pharmacies that have a demonstrated history
of profitability. In addition to prescription drugs and general
merchandise, Park's business plan for its acquired pharmacies involves
sales of more profitable, higher technical products such as compounded
prescriptions and specialty medications, such as infusion therapy. The
Company's plan of operation for the next twelve months is to consummate
the Reverse Acquisition with Park and assist Park in its operations and
implementing its business plan.
In the event the transactions contemplated by the Stock
Purchase Agreement are not consummated, the Company's plan of operation
is to pursue an alternative business combination with another entity
that may benefit the Company and its shareholders. Foreseeable cash
requirements relating to maintenance of the Company in good standing
and expenses associated with receiving and investigating a potential
business combination will be met by personal funds advanced from Mr.
Rambin. Because the Company has no revenues or cash resources,
management anticipates that to achieve any such combination, the
Company plans to issue shares of Company Common Stock as the sole
consideration for such combination. However, the consummation of any
such combination may require the Company to obtain debt or equity
financing. The Company has no current plan to obtain additional
financing and no assurance can be given that such financing will be
available to enter into a particular business combination.
Year 2000
The Company currently has virtually no active business
operations. The issues associated with computing difficulties that may
affect existing computer systems as a result of programming code
malfunctions in distinguishing 21st century dates from 20th century
dates are known as the "Year 2000" issue. The Year 2000 issue is a
pervasive problem affecting many information technology systems and
embedded technologies in all industries. The Company has determined
that the consequences of its Year 2000 issues will not have a material
effect on the Company's business, results of operations, or financial
condition.
The Company does not currently have any significant
information technology ("IT") systems, including computer hardware
systems or software.
The Company's assessment of the Year 2000 issue does not
necessitate a review of non-information technology ("non-IT" systems)
(systems that contain
- 3 -
<PAGE> 4
embedded technology in process control equipment containing
microprocessors or other similar circuitry), because the Company has no
internal equipment and facilities.
The Company's current plans, as previously discussed, involve
implementing Park's plan of operations, which consist of the pursuit of
new investment opportunities. Due diligence with any potential
acquisition candidate will include a review of any Year 2000 exposure.
Since the Company has not yet consummated a business acquisition, the
Company is unable to estimate Year 2000 compliance costs that may arise
from such business acquisition opportunities.
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<PAGE> 5
SIGNATURE
In accordance with the requirements of the Exchange Act, the registrant
caused this amendment to report to be signed on its behalf by the undersigned,
thereunto duly authorized.
POWER-CELL, INC.
(Registrant)
By: /s/ James C. Rambin
--------------------------------
James C. Rambin, President
and Chief Executive Officer
Date: August 4, 1999
------------------------------
<PAGE> 6
INDEX TO EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER EXHIBIT
- -------------- -------
<S> <C>
3.1.1 (1) Articles of Incorporation and Amendment to Articles of
Incorporation
3.1.2 (2) Articles of Amendment to Articles of Incorporation
3.2 (3) Bylaws
10.1 (4) Stock Purchase Agreement
27 (4) Financial Data Schedule
</TABLE>
(1) Incorporated herein by reference to Exhibit 3(a) in the Company's
Registration Statement on Form S-18 filed on August 8, 1986 with the
Securities and Exchange Commission.
(2) Incorporated herein by reference to Exhibit 3.1.2 in the Company's
Amendment to Form 10-KSB filed on July 22, 1999, with the Securities
and Exchange Commission.
(3) Incorporated herein by reference to Exhibit 3(b) in the Company's
Registration Statement on Form S-18 filed on August 8, 1986 with the
Securities and Exchange Commission.
(4) Filed herewith.
<PAGE> 1
EXHIBIT 10.1
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is effective as of the 9th day of March, 1999, by and
among POWER-CELL, INC., a Colorado corporation ("Purchaser"), Park Pharmacy
Corporation, a Texas corporation ("Park") and Joe B. Park, Thomas R. Baker and
David W. Frauhiger (the "Selling Shareholders").
W I T N E S S E T H:
WHEREAS, Purchaser is a publicly held corporation that desires to
combine with a business which has growth potential;
WHEREAS, Park has a business plan to acquire independent retail
pharmacies and associated home care facilities, if any, and appears to have
growth potential; and
WHEREAS, Purchaser desires to acquire one hundred percent (100%) of the
issued and outstanding shares of common stock, $0.0001 par value, of Park
Pharmacy Corporation (the "Park Common Stock") owned by the Selling Shareholders
in exchange for shares of Series A Preferred Stock, $0.001 par value, of
Purchaser (the "Power Preferred Stock") in a tax-free transaction pursuant to
the provisions of Section 368(a)(1)(B) of the Internal Revenue Code of 1986;
NOW, THEREFORE, for and in consideration of the mutual representations,
warranties and covenants herein contained, and on the terms and subject to the
conditions set forth herein, the parties hereto agree as follows:
ARTICLE I
PURCHASE AND SALE
1.01 Sale and Purchase of Stock. Subject to and upon the terms and
conditions contained herein, at the Closing (as hereinafter defined), the
Selling Shareholders shall sell, assign, transfer, convey and deliver to
Purchaser and Purchaser shall purchase, accept and acquire from the Selling
Shareholder the Park Common Stock owned by them. Purchaser shall purchase,
accept and acquire from the Selling Shareholder in the aggregate 7,600,000
shares of Park Pharmacy Corporation common stock.
1.02 Closing. The closing of the transaction contemplated hereby (the
"Closing") shall occur within ten (10) days after the approval of this Agreement
by the shareholders of Purchaser. The Closing shall occur in the offices of
Purchaser or at such other place as shall be mutually agreed to in writing by
the parties hereto.
1.03 Purchase Price. In consideration of the shares of Park Common
Stock to be purchased from the Selling Shareholders, Purchaser at the Closing
shall deliver to Selling
<PAGE> 2
Shareholders one or more certificates representing an aggregate of 2,567,816
shares of Power Series A Preferred Stock, free and clear of any liens,
encumbrances or charges whatsoever, subject to the restrictive legend in
substantially the following form:
THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE BEEN ACQUIRED FOR INVESTMENT AND
MAY NOT BE SOLD OR TRANSFERRED UNLESS THE SAME ARE REGISTERED UNDER THE
SECURITIES ACT OF 1933, OR THE COMPANY RECEIVES AN OPINION FROM COUNSEL
SATISFACTORY TO IT THAT SUCH REGISTRATION IS NOT REQUIRED FOR SALE OR TRANSFER
OR THAT THE SHARES HAVE BEEN LEGALLY SOLD IN BROKER TRANSACTIONS PURSUANT TO
RULE 144 OF THE RULES AND REGULATIONS OF THE SECURITIES AND EXCHANGE COMMISSION
PROMULGATED UNDER THE SECURITIES ACT OF 1933.
A description of terms of the Series A Preferred Stock is attached as Exhibit
1.03.
1.04 Instruments of Transfer; Further Assurances. In order to
consummate the transaction contemplated hereby, the following documents and
instruments shall be delivered:
(a) Documents from Selling Shareholder. Selling Shareholders
shall deliver to Purchaser at the Closing one or more stock certificates
representing in the aggregate the number of shares of Park Common Stock owned by
them plus a duly executed stock power or other instrument of transfer for each
such stock certificate.
(b) Documents from Purchaser. Purchaser shall deliver to
Selling Shareholders at the Closing one or more stock certificates representing
in the aggregate the number of shares of Power Preferred Stock to which such
Selling Shareholders are entitled, to be in such denominations as shall be
requested by Selling Shareholders not less than three (3) business days prior to
the Closing Date.
(c) Further Documents. At the Closing, and at all times
thereafter as may be necessary (i) Selling Shareholders shall execute and
deliver to Purchaser such other instruments of transfer as shall be reasonably
necessary or appropriate to vest in Purchaser good and indefeasible title to the
shares the Park Common Stock owned by them and to comply with the purposes and
intent of this Agreement, and (ii) Purchaser shall execute and deliver to
Selling Shareholder such other instruments as shall be reasonably necessary or
appropriate to comply with the purposes and intent of this Agreement.
ARTICLE II
PURCHASER'S REPRESENTATIONS AND WARRANTIES
Purchaser represents and warrants that the following are true and
correct as of this date and will be true and correct through the Closing Date as
if made on that date:
2.01 Organization and Good Standing. Purchaser is a corporation duly
organized, validly existing and in good standing under the laws of the state of
its incorporation, with all requisite power
<PAGE> 3
and authority to carry on the business in which it is engaged, to own the
properties it owns and to execute and deliver this Agreement and to consummate
the transactions contemplated hereby.
2.02 Authorization and Validity. The execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby have been or will be prior to Closing duly authorized by
Purchaser. This Agreement constitutes or will constitute the legal, valid and
binding obligation of Purchaser, enforceable against Purchaser in accordance
with its terms.
2.03 No Violation. Neither the execution and performance of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Purchaser or any agreement, indenture or other instrument under which
Purchaser is bound or to which the assets of Purchaser are subject, or result in
the creation or imposition of any lien, charge or encumbrance upon any of such
assets, or (b) violate or conflict with any judgment, decree, order, statute,
rule or regulation of any court or any public, governmental or regulatory agency
or body having jurisdiction over Purchaser or the properties or assets of
Purchaser. Purchaser has complied in all material respects with all applicable
laws, regulations and licensing requirements, and has filed with the proper
authorities all necessary statements and reports. Purchaser possesses all
necessary licenses, franchises, permits and governmental authorizations to
conduct its business as now conducted.
2.04 Disclosure. No representation or warranty by Purchaser in this
Agreement nor any statement or certificate furnished or to be furnished by it
pursuant hereto or in connection with the transactions contemplated hereby
contains or will contain any untrue statement of a material fact or omits or
will omit to state a material fact necessary to make the statements contained
therein not misleading or necessary in order to provide Park and the Selling
Shareholders with complete and accurate information.
2.05 Consents. There is no authorization, consent, approval, permit or
license of, or filing with, any governmental or public body or authority, any
lender or lessor or any other person or entity is required to authorize, or is
required in connection with, the execution, delivery and performance of this
Agreement or the agreements contemplated hereby on the part of Purchaser.
2.06 Compliance with Laws. There are no existing violations of any
applicable federal, state or local law or regulation that could materially
adversely affect the property or business of Purchaser and there are no known,
noticed or threatened violations of any zoning, building, fire, safety or wage
and hour laws or regulations.
2.07 Litigation. Purchaser has not had any legal action or
administrative proceeding or investigation instituted or, to the best of the
knowledge of Purchaser, threatened against or affecting any of the assets or
business of Purchaser. Purchaser is not (a) subject to any continuing court or
administration order, writ, injunction or decree applicable specifically to
Purchaser or to its business, assets, operations or employees, or (b) in default
with respect to any such order, writ, injunction or decree. Purchaser knows of
no basis for any such action, proceeding or investigation.
<PAGE> 4
2.08 Tax Returns. Purchase has prepared and filed, or has caused to be
prepared and filed, with the appropriate United States, state and local
government agencies, and all political subdivisions thereof, all tax returns
required to be filed by, on behalf of or on account of the operations of
Purchaser and has paid or caused to be paid all assessments shown to be due and
claimed to be due on such tax returns.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PARK
AND THE SELLING SHAREHOLDERS
Park and the Selling Shareholders, jointly and severally, represent and
warrant that the following are true and correct as of this date and will be true
and correct through the Closing Date as if made on that date:
3.01 Organization and Good Standing. Park is a corporation duly
organized, validly existing and in good standing under the laws of its state of
incorporation with all requisite power and authority to carry on the business in
which it is engaged and to own the properties it owns. Park is duly qualified
and licensed to do business and is in good standing in all jurisdictions where
the nature of its business makes such qualification necessary.
3.02 Authorization and Validity. The execution, delivery and
performance of this Agreement by Park and the consummation of the transactions
contemplated hereby have been or will be prior to Closing duly authorized by
Park. This Agreement constitutes or will constitute legal, valid and binding
obligations of Park, enforceable against Park in accordance with its terms. This
Agreement constitutes the valid and binding agreement of the Selling
Shareholders, enforceable in accordance with its terms.
3.03 Financial Statements. Park has furnished to Purchaser Park's
audited balance sheet and related statements of income and changes in financial
position at September 30, 1998 (the "Park Financial Statements"). The Park
Financial Statements fairly present the financial condition and results of
operations of Park as of the dates and for the periods indicated and have been
prepared in conformity with generally accepted accounting principles.
3.04 No Violation. Neither the execution and performance of this
Agreement nor the consummation of the transactions contemplated hereby will (a)
conflict with, or result in a violation or breach of the terms, conditions and
provisions of, or constitute a default under, the Articles of Incorporation or
Bylaws of Park or any agreement, indenture or other instrument under which Park
is bound or to which any of the assets of Park are subject, or result in the
creation or imposition of any lien, charge or encumbrance upon any of such
assets, or (b) violate or conflict with any judgment, decree, order, statute,
rule or regulation of any court or any public, governmental or regulatory agency
or body having jurisdiction over Park or the properties or assets of Park. Park
has complied in all material respects with all applicable laws, regulations and
licensing requirements, and has filed with the proper authorities all necessary
statements and reports. Park possesses all necessary licenses, franchises,
permits and governmental authorizations to conduct its business as now
conducted.
<PAGE> 5
3.05 Compliance with Laws. There are no existing violations of any
applicable federal, state or local law or regulation that could materially
adversely affect the property or business of Park and there are no known,
noticed or threatened violations of any pharmacy, zoning, building, fire,
safety, discrimination or wage and hour laws or regulations.
3.06 Disclosure. No representation or warranty by Park or the Selling
Shareholders in this Agreement nor any statement or certificate furnished or to
be furnished by it or them pursuant hereto or in connection with the
transactions contemplated hereby contains or will contain any untrue statement
of a material fact or omits or will omit to state a material fact necessary to
make the statements contained therein not misleading or necessary in order to
provide Purchaser with complete and accurate information.
3.07 Tax Returns. Park has prepared and filed, or has caused to be
prepared and filed, with the appropriate United States, state and local
government agencies, and all political subdivisions thereof, all tax returns
required to be filed by, on behalf of or on account of, the operations of Park
and has paid or caused to be paid all assessments shown to be due and claimed to
be due on such tax returns.
ARTICLE IV
PARK'S COVENANTS
Park agrees that on or prior to the Closing:
4.01 Business Operations. Park shall operate its business only in the
ordinary course and Park shall use its best efforts to preserve the business of
Park intact, to retain its present customers and suppliers so that they will be
available to Purchaser after the Closing and to cause the consummation of the
transactions contemplated by this Agreement in accordance with its terms and
conditions. Park shall not take any action that might impair the business or
assets of Park without the prior consent of Purchaser or take or fail to take
any action that would cause or permit the representations made in Article III
hereof to be inaccurate at the time of Closing or preclude Park from making such
representations and warranties at the Closing.
4.02 Access. Park shall permit Purchaser and its authorized
representatives full access to, and make available for inspection, all of the
assets and business of Park, including Park's employees, customers and
suppliers, and Park shall furnish Purchaser all documents, records and
information with respect to the affairs of Park as Purchaser and its
representatives may reasonably request.
4.03 Material Change. Prior to the Closing, Park shall promptly inform
Purchaser in writing of any material adverse change in the condition of the
business of Park. Notwithstanding the disclosure to Purchaser of any such
material adverse change, Park shall not be relieved of any liability for, nor
shall the providing of such information by Park to Purchaser be deemed a waiver
by Purchaser of, the breach of any representations or warranty of Park contained
in this Agreement.
<PAGE> 6
ARTICLE V
PURCHASER'S COVENANTS
Purchaser agrees that on or prior to the Closing:
5.01 Access. Purchaser shall permit Park and its authorized
representatives full access to, and make available for inspection, all of the
assets and business of Purchaser, and Purchaser shall furnish Park all
documents, records and information with respect to the affairs of Purchaser as
Park and its representatives may reasonably request.
5.02 Sales of Stock. Except as stated on Schedule 5.03, Purchaser will
not without Park's prior written consent, after the date hereof, issue any
shares of its common stock nor will it issue or enter into an agreement to issue
any securities, rights, subscriptions, warranty or options to purchase shares of
its common stock or preferred stock or which are convertible into shares of its
common stock or preferred stock in whole or in part.
5.03 Material Change. Prior to the Closing, Purchaser shall promptly
inform Park in writing of any material adverse change in the condition of the
business of Purchaser. Notwithstanding the disclosure to Park of any such
material adverse change, Purchaser shall not be relieved of any liability for,
nor shall the providing of such information by Purchaser to Park be deemed a
waiver by Park of, the breach of any representation or warranty of Purchaser
contained in this Agreement.
5.04 Approvals of Third Parties. As soon as practicable after the
execution of this Agreement, but in any event prior to the Closing Date,
Purchaser will use its best efforts to secure all necessary approvals and
consents of third parties to the consummation of the transactions contemplated
by this Agreement.
5.05 Name Change. Prior to or on the date of the Closing, Purchaser
shall take all required actions to change its name to PARK PHARMACY CORPORATION.
5.06 Board Representation. At the closing, the current members of the
Board of Directors of Purchaser shall hold a special meeting at which all of the
resignations of the directors of Power will be accepted and the new directors of
Power, designated by Park, will be elected.
5.07 Delivery of Corporate Records. At the closing, Purchaser shall
deliver to Selling Shareholders all the corporate and business records of
Purchaser, including, but not limited to the Minute Book, book of accounts,
filings with the SEC and all banking records.
ARTICLE VI
PURCHASER'S CONDITIONS PRECEDENT
Except as may be waived in writing by Purchaser, the obligations of Purchaser
hereunder are subject to the fulfillment at or prior to the Closing of each of
the following conditions:
6.01 Representations and Warranties. The representations and warranties
of Park contained herein shall be true and correct in all material respects as
of the Closing, and Purchaser shall
<PAGE> 7
not have discovered any material error, misstatement or omission therein. At the
Closing, Power shall have received a certificate, dated the date of the Closing,
and executed by the President of Park and Selling Stockholders, certifying in
such detail as Power may reasonably request as to the accuracy of such
representations and warranties and the fulfillment of the obligations and
compliance with the covenants referred to in Section 6.02 below as of the
Closing.
6.02 Covenants. Park shall have performed and complied with all
covenants or conditions required by this Agreement to be performed and complied
with by it prior to or at the Closing.
6.03 Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
6.04 Consents and Approvals. Park shall have obtained, and delivered to
Purchaser evidence thereof, all consents and approvals required to be obtained
in connection with the consummation of the transactions contemplated hereby.
6.05 No Material Adverse Change. No material, adverse change in the
assets, business operations or financial conditions of Park shall have occurred
after the date hereof and prior to the Closing.
6.06 Representation Letters. On or before the date of the Closing,
Power shall have received a representation of investment intent letter from
Selling Shareholder confirming his understanding that the Power Preferred Stock
to be received by them is restricted and may not be freely resold unless the
shares are registered or an exemption from registration is available, as well as
such other representations as are reasonably required by Power.
6.07 Approval of Purchaser's Shareholders. This Agreement shall have
been approved by the Board of Directors of Power and by the holders of the
majority of the outstanding capital stock of Power.
ARTICLE VII
CONDITIONS PRECEDENT OF SELLING SHAREHOLDERS
Except as may be waived in writing by the Selling Shareholder, the
obligations of the Selling Shareholder hereunder are subject to fulfillment at
or prior to the Closing of each of the following conditions:
7.01 Representations and Warranties. The representations and warranties
of Purchaser contained herein shall be true and correct in all material respects
as of the Closing, and the Selling Shareholders shall not have discovered any
material error, misstatement or omission therein. At the Closing, Selling
Shareholder shall have received a certificate, dated the date of the Closing,
and executed by the President of Power, certifying in such detail as Selling
Shareholder may reasonably request as to the accuracy of such representations
and warranties and the fulfillment of the obligations and compliance with
covenants referred to in Section 7.02 as of the Closing.
<PAGE> 8
7.02 Covenants. Purchaser shall have performed and complied in all
material respects with all covenants or conditions required by this Agreement to
be performed and complied with by it prior to or at the Closing.
7.03 Proceedings. No action, proceeding or order by any court or
governmental body or agency shall have been threatened in writing, asserted,
instituted or entered to restrain or prohibit the carrying out of the
transactions contemplated by this Agreement.
7.04 Consents and Approvals. Purchaser shall have obtained, and
delivered to Park evidence thereof, all consents and approvals required to be
obtained in connection with the consummation of the transactions contemplated
hereby.
7.05 No Material Adverse Change. No material, adverse change in the
assets, business operations or financial condition of Purchaser shall have
occurred after the date hereof and prior to the Closing.
7.06 Approval of Purchaser's Shareholders. This Agreement and the
authorization of the Preferred Shares contemplated by Section 1.03 and Section
7.07 shall have been approved by the holders of the majority of the outstanding
capital stock of Power. The terms, conditions, preferences and rights of the
Series A Preferred Shares shall be established by the Board of Directors of
Power prior to the Closing pursuant to the terms stated in Schedule 1.03,
attached hereto.
7.07 Conversion of Current Shareholders. At the Closing the following
current shareholders of Power shall exchange the outstanding Power Common Shares
for new issue Series A Preferred Shares of stock of Power set forth opposite
their names:
<TABLE>
<CAPTION>
Shareholder Current Common Shares Series A Preferred Shares
<S> <C> <C>
Rudy Marich Trust 1,000,000 100,000
JCR Family Trust 1,000,000 100,000
</TABLE>
ARTICLE VIII
MISCELLANEOUS
8.01 Amendment. This Agreement may be amended, modified or supplemented
only by an instrument in writing executed by the party against which enforcement
of the amendment, modification or supplement is sought.
8.02 Parties in Interest. This Agreement shall be binding on and inure
to the benefit of and be enforceable by Selling Shareholders, Park, and the
Purchaser, their respective heirs, executors, administrators, legal
representatives, successors and assigns, except as otherwise expressly provided
herein.
<PAGE> 9
8.03 Assignment. Neither this Agreement nor any right created hereby
shall be assignable by either party hereto except by Purchaser to a wholly-owned
subsidiary of Purchaser.
8.04 Notice. Any notice or communication must be in writing and given
by depositing the same in the United States mail, addressed to the party to be
notified, postage prepaid and registered or certified with return receipt
requested or by delivering the same in person. Such notice shall be deemed
received on the date on which it is hand-delivered or on the third business day
following the date on which it is so mailed. For purposes of notice, the
addresses of the parties shall be:
If to Park:
Thomas R. Baker
10711 Preston Road, Suite 250
Dallas, Texas 75230
If to the Selling Shareholders:
At the address set forth above.
If to Purchaser:
James Rambin, President
Power-Cell, Inc.
4032 Bandera Drive
Plano, Texas 75074
Any party may change its address for notice by written notice given to the other
parties.
8.05 Entire Agreement. This Agreement and the exhibits hereto supersede
all prior agreements and understandings relating to the subject matter hereof,
except that the obligations of any party under any agreement executed pursuant
to this Agreement shall not be affected by this Section.
8.06 Costs, Expenses and Legal Fees. Whether or not the transactions
contemplated hereby are consummated, Park shall bear all costs and expenses
(including attorneys' fees).
8.07 Severability. If any provision of this Agreement is held to be
illegal, invalid or unenforceable under present or future laws effective during
the term hereof, such provision shall be fully severable and this Agreement
shall be construed and enforced as if such illegal, invalid or unenforceable
provision never comprised a part hereof; and the remaining provisions hereof
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance herefrom. Furthermore, in
lieu of such illegal, invalid or unenforceable provision, there shall be added
automatically as part of this Agreement, a provision as similar in its terms to
such illegal, invalid or unenforceable provision as may be possible and be
legal, valid and enforceable.
<PAGE> 10
8.08 Governing Law. This Agreement and the rights and obligations of
the parties hereto shall be governed, construed and enforced in accordance with
the laws of the State of Texas. The parties agree that any litigation relating
directly or indirectly to this Agreement must be brought before and determined
by a court of competent jurisdiction with the State of Texas.
8.09 Captions. The captions in this Agreement are for convenience of
reference only and shall not limit or otherwise affect any of the terms or
provisions hereof.
8.10 Counterparts. This Agreement may be executed in multiple
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement effective
as of the date first written above.
SELLING SHAREHOLDERS: PURCHASER:
Power-Cell, Inc.
/s/ Joe B. Park /s/ James Rambin
- ----------------------------- ---------------------------
Joe B. Park James Rambin, President
/s/ Thomas R. Baker Park:
- -----------------------------
Thomas R. Baker
Park Pharmacy Corporation
/s/ David W. Frauhiger
- -----------------------------
David W. Frauhiger
/s/ Thomas R. Baker
---------------------------
Thomas R. Baker, President
<PAGE> 11
DESCRIPTION OF SERIES A PREFERRED SHARES
The Board of Directors has designated 5,000,000 Preferred Shares as
Series A Preferred, par value $0.001 per share, with the following rights and
preferences:
1. Holders of the Series A Preferred Stock may convert one share of
Preferred for ten (10) shares of Common Stock at any time after June 30, 2001,
upon delivery of the preferred shares certificate duly endorsed to the offices
of the Company.
2. Holders of the Series A Preferred Stock will not be entitled to
receive any dividends.
3. In case of any voluntary of involuntary liquidation, dissolution or
winding up of the affairs of the Company, the holders of Series A Preferred
Stock will be entitled to receive in full out of the assets of the Company which
are available for payment to shareholders, before any amount is paid or
distributed among the holders of Common Stock, liquidating distributions in the
amount of $10.00 per share. If, upon any liquidation, dissolution or winding up
of the Company, the amount payable with respect to the Series A Preferred Stock,
and any other stock ranking as to any such distribution on a parity with the
Preferred Stock is not paid in full, the holders of the Series A Preferred
Stock, and of such other stock, will shares ratably in any such distribution of
assets in proportion to the full respective preferential amounts to which they
are entitled. After payment of the full amount of the liquidating distribution
to which they are entitled, the holders of shares of Series A Preferred Stock
will not be entitled to any further right or claim to any of the remaining
assets of the Company.
4. In the event that the Corporation shall at any time subdivide or
combine in a greater or lesser number of shares the outstanding shares of Common
Stock, the number of shares of Common Stock issuable upon conversion of the
Series A Preferred Stock shall be proportionately increased in the case of
subdivision or decreased in the case of a combination, effective in either case
at the close of business on the date when such subdivision or combination shall
become effective.
5. In the event that the Corporation shall be recapitalized,
consolidated with or merged into any other corporation, or shall sell or convey
to any other corporation all or substantially all of its property as an
entirety, provision shall be made as part of the terms of such recapitalization,
consolidation, merger, sale or conveyance so that any holder of Series A
Preferred Stock may thereafter receive in lieu of the Common Stock otherwise
issuable to him upon conversion of his Series A Preferred Stock or the same kind
and amount of securities or assets as may be distributable upon such
recapitalization, consolidation, merger, sale or conveyance, with respect to the
Common Stock of the Company.
6. In the event that the Corporation shall at any time pay to the
holders of Common Stock a dividend in Common Stock, the number of shares of
Common Stock issuable upon conversion of the Series A Preferred Stock shall be
proportionately increased, effective at the close of business on the record date
for determination of the holders of Common Stock entitled to such dividend.
<PAGE> 12
7. In the event that the Company shall at any time pay any dividend or
made any other distribution on its Common Stock in property, other than in cash
or in Common Stock of the Corporation, then provision shall be made as part of
the terms of such dividend or distribution so that the holder of any Series A
Preferred Stock surrendered for conversion after the record date for
determination of holders of Common Stock entitled to such dividend or
distribution shall be entitled to receive the same kind and the same
proportionate share of such property which he would have been entitled to
receive had such Series A Preferred Stock been converted immediately prior to
such record date.
8. Such adjustments shall be made successively if more than one event
listed in subdivisions 4, 5, 6 and 7 shall occur.
9. The Company is not obligated to redeem the Series A Preferred
shares.
10. At every meeting of the stockholders of the Company, holders of
Series A Preferred shares shall be entitled to ten (10) votes for each share of
Series A Preferred Stock standing in their name on the books of the Company. The
Series A Preferred Stock and any other stock having voting rights shall vote
together as one class.
11. The holders of the Series A Preferred Stock have no preemptive
rights.
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