SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(A) OF
THE SECURITIES EXCHANGE ACT OF 1934 (AMENDMENT NO. )
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11(c) or Section 240.14a-12
Park Pharmacy Corporation
(Name of Registrant as Specified In Its Charter)
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(Name of Person(s) Filing Proxy Statement, if other than the
Registrant)
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PARK PHARMACY
Thomas R. Baker
Chief Executive Officer and President
December __, 2000
Dear Park Pharmacy Stockholder:
I am pleased to invite you to Park Pharmacy's Annual Meeting
of Stockholders. The meeting will be held at 10:00 a.m. local
time on Tuesday, January 16, 2001 at the Doubletree Hotel at
Lincoln Center, 5410 LBJ Freeway, Dallas, Texas 75240 (for
directions, please call the hotel at 972-934-8400).
At the meeting, you and the other stockholders will be asked
to (1) elect seven directors to the Park Pharmacy board; (2)
approve the merger of the company into a wholly owned subsidiary
to be organized under the laws of the State of Delaware ("Park
Pharmacy-Delaware") in order to effect the change of the
company's state of incorporation from Colorado to Delaware; (3)
in connection with the re-incorporation, approve and adopt
provisions of the Certificate of Incorporation of Park Pharmacy-
Delaware ("Delaware Certificate") in the form attached as
Exhibit A to the attached Proxy Statement that would (i) reduce
the authorized capital stock of the company from one billion
shares to 150 million shares, (ii) reduce the number of
authorized shares of common stock from 750 million shares to 140
million shares, and (iii) reduce the number of shares of
preferred stock from 250 million shares to 10 million shares;
(iv) provide that the liability of directors will be limited, and
that officers and directors of the company will receive
indemnification from the company, to the fullest extent permitted
by Delaware law; and (v) require the vote of holders of 66-2/3%
of the voting power of the company to (A) amend provisions of the
Delaware Certificate prohibiting actions by consent, limiting the
liability of directors of the company, or providing
indemnification to officers and directors of the company, or (B)
amend or repeal the Bylaws of Park Pharmacy-Delaware, if
stockholder action is taken to amend such Bylaws; (4) approve and
adopt the Bylaws of Park Pharmacy-Delaware in the form attached
as Exhibit B to the attached Proxy Statement; and (5) approve the
Park Pharmacy Corporation 2000 Stock Incentive Plan in the form
attached as Exhibit F to the attached Proxy Statement. You will
also have the opportunity to hear what has happened in our
business in the past year and to ask questions. You will find
other detailed information about Park Pharmacy and its
operations, including its audited financial statements, in the
enclosed Annual Report.
We hope you can join us on January 16, 2001. Whether or not
you can attend, please read the enclosed Proxy Statement. When
you have done so, please mark your vote on the enclosed proxy,
sign and date the proxy, and return it to us in the enclosed
envelope. Your vote is important, so please return your proxy
promptly.
Yours truly,
Thomas R. Baker
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[LOGO]
PARK PHARMACY CORPORATION
Notice of 2000 Annual Meeting of Stockholders and Proxy Statement
<PAGE>
PARK PHARMACY
Park Pharmacy Corporation
10711 Preston Road, Suite 250
Dallas, Texas 75230
December __, 2000
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To Be Held January 16, 2001
Park Pharmacy will hold its Annual Meeting of Stockholders
at the Doubletree Hotel at Lincoln Center, 5410 LBJ Freeway,
Dallas, Texas 75240 on Tuesday, January 16, 2001 at 10:00 a.m.
local time.
We are holding this meeting:
* To elect seven directors to serve until the 2001 Annual
Meeting of Stockholders or until their respective
successors are elected and qualified;
* To approve the merger of the company into a wholly
owned subsidiary to be organized under the laws of the
State of Delaware ("Park Pharmacy-Delaware") in order
to effect the change of the company's state of
incorporation from Colorado to Delaware;
* In connection with the re-incorporation, to approve and
adopt provisions of the Certificate of Incorporation of
Park Pharmacy-Delaware (the "Delaware Certificate") in
the form attached as Exhibit A to the attached Proxy
Statement, which provisions would (i) reduce the
authorized capital stock of the company from one
billion shares to 150 million shares, (ii) reduce the
number of authorized shares of common stock from 750
million shares to 140 million shares, (iii) reduce the
number of authorized shares of preferred stock from 250
million shares to 10 million shares; (iv) provide that
the liability of directors will be limited, and that
officers and directors of the company will receive
indemnification from the company, to the fullest extent
permitted by Delaware law; and (v) require the vote of
holders of 66-2/3% of the voting power of the company
to (A) amend provisions of the Delaware Certificate
prohibiting actions by consent, limiting the
liabilities of directors of the company, or providing
indemnification to officers and directors of the
company, or (B) amend or repeal the Bylaws of Park
Pharmacy-Delaware, if stockholder action is taken to
amend such Bylaws;
* To approve and adopt the Bylaws of Park Pharmacy-
Delaware in the form attached as Exhibit B to the
attached Proxy Statement;
* To approve the Park Pharmacy Corporation 2000 Stock
Incentive Plan in the form attached as Exhibit F to the
attached Proxy Statement; and
* To transact any other business that properly comes
before the meeting.
<PAGE>
We have selected November 30, 2000 as the record date for
determining stockholders entitled to vote at the meeting. A list
of stockholders on that date will be available for inspection at
Park Pharmacy Corporation, 10711 Preston Road, Suite 250, Dallas,
Texas, for at least ten days before the meeting.
All stockholders are cordially invited to attend the meeting
and vote in person.
Pursuant to the Colorado Business Corporation Act ("CBCA"),
shareholders who do not vote in favor of the proposals and comply
with the detailed provisions contained in Article 113 of the CBCA
will be entitled to dissent and seek the payment of fair value of
their shares of Park Pharmacy. A copy of Article 113 of the CBCA
is reproduced as Exhibit E to the Proxy Statement.
This Notice of Annual Meeting, Proxy Statement, proxy and
2000 Annual Report to Stockholders are being distributed on or
about December __, 2000.
For the Board of Directors,
Gwendolyn Park
Secretary
<PAGE>
TABLE OF CONTENTS
Page
Questions and Answers..........................................1
Item 1. Election of Directors.................................4
Nominees for Election.........................................4
Compensation of Directors.....................................5
Meetings and Committees of the Board Directors................5
Audit Committee...............................................5
Stock Ownership................................................6
Beneficial Ownership of Certain Stockholders and
Management..................................................6
Management.....................................................8
Executive Officers............................................8
Key Management Employees......................................9
Executive Compensation....................................... 9
Stock Options................................................10
Employment Contracts and Change in Control Arrangements......10
Familial Relationships.......................................10
Certain Transactions.........................................10
Item 2. Re-incorporation of Park Pharmacy from Colorado
to Delaware..........................................11
General......................................................11
Principal Features of the Re-incorporation and the Merger....11
Principal Reasons for the Re-incorporation...... ...........12
Possible Disadvantages of Re-incorporation...................13
Amendment, Deferral or Termination of the
Re-incorporation Merger Agreement...........................13
Federal Income Tax Consequences of the Re-incorporation......14
Exchange of Stock Certificates...............................14
Dissenters' Rights...........................................15
Adoption of Delaware Certificate Proposals and
Delaware Bylaws Proposal.....................................15
Delaware Certificate Proposal One: Reduction of Capital
Stock.......................................................15
General......................................................15
Principal Reasons for Reduction..............................15
Possible Disadvantages of Reduction..........................15
Delaware Certificate Proposal Two: Reduction of
Common Stock................................................16
General......................................................16
Principal Reasons for Reduction..............................16
Possible Disadvantages of Reduction..........................16
Delaware Certificate Proposal Three: Reduction of
Preferred Stock.............................................16
General......................................................16
Principal Reasons for Reduction..............................16
Possible Disadvantages of Reduction..........................16
Delaware Certificate Proposal Four: Liability Limitation
Indemnification of Officers and Directors...................17
General......................................................17
Reason for Proposal..........................................17
Possible Disadvantages.......................................17
Delaware Certificate Proposal Five: Super-Majority
Voting Requirements to Amend or Repeal Certain
Provisions of the Certificate of Incorporation or
Bylaws.....................................................17
General......................................................17
Reason for Proposal..........................................18
Possible Disadvantages.......................................18
Delaware Bylaws Proposal......................................18
Interested Parties............................................19
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Item 3. Approval of Park Pharmacy Corporation 2000 Stock
Incentive Plan.......................................20
Purpose......................................................20
Administration...............................................20
Eligibility..................................................21
Awards.......................................................21
Effect of Termination........................................23
Non-Transferability..........................................23
Adjustment...................................................24
Change in Control............................................24
Amendment and Termination of the Plan........................24
Federal Income Tax Consequences..............................24
Awards Granted Under the 2000 Stock Incentive Plan...........26
Independent Accountants.......................................27
Shareholder Proposals.........................................27
Annual Meeting Advance Notice Requirements....................27
Copies of the Annual Report on Form 10-KSB Filed with the
Securities and Exchange Commission..........................27
Exhibits
Certificate of Incorporation of Park Pharmacy
Corporation, a Delaware corporation...................Exhibit A
Bylaws of Park Pharmacy Corporation, a Delaware
corporation.......................................... Exhibit B
Agreement and Plan of Merger........................... Exhibit C
Comparison of Colorado and Delaware Corporation Law.... Exhibit D
Colorado Business Corporation Act Dissenters'
Rights Statute....................................... Exhibit E
2000 Stock Incentive Plan.............................. Exhibit F
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QUESTIONS AND ANSWERS
1. Who is soliciting my proxy?
We, the Board of Directors of Park Pharmacy, are sending you this
Proxy Statement in connection with our solicitation of proxies
for use at Park Pharmacy's 2000 Annual Meeting of Stockholders.
Certain directors, officers and employees of Park Pharmacy also
may solicit proxies on our behalf by mail, telephone, fax or in
person.
2. Who is paying for this solicitation?
Park Pharmacy will pay for the solicitation of proxies. Park
Pharmacy will also reimburse banks, brokers, custodians, nominees
and fiduciaries for their reasonable charges and expenses in
forwarding our proxy materials to the beneficial owners of Park
Pharmacy common stock and Series A preferred stock.
3. What am I voting on?
Nine items: (a) the election of Joe B. Park, Thomas R. Baker, Jim
Moncrief, Gwendolyn Park, Richard M. Allen, William D. Breedlove
and Jon J. Gergen to the Board of Directors; (b) the approval of
the merger of the company into a wholly owned subsidiary to be
organized under the laws of the State of Delaware ("Park Pharmacy-
Delaware") in order to effect the change of the company's state
of incorporation from Colorado to Delaware; (c) in connection
with the re-incorporation, the approval and adoption of
provisions of the Certificate of Incorporation of Park Pharmacy-
Delaware ("Delaware Certificate") in the form attached as
Exhibit A that would (i) reduce the authorized capital stock of
the company from one billion shares to 150 million shares,
(ii) reduce the number of authorized shares of common stock from
750 million shares to 140 million shares, (iii) reduce the number
of authorized shares of preferred stock from 250 million shares
to 10 million shares; (iv) provide that the liability of officers
and directors will be limited, and that officers and directors of
the company will receive indemnification from the company, to the
fullest extent permitted by Delaware law; and (v) require the
vote of holders of 66-2/3% of the voting power of the company to
(A) amend provisions of the Delaware Certificate prohibiting
actions by consent, limiting the liability of directors of the
company, or providing indemnification to officers and directors
of the company or (B) amend or repeal the Bylaws of Park Pharmacy-
Delaware if stockholder action is taken to amend such Bylaws
(each, a "Delaware Certificate Proposal"); (d) the approval and
adoption of the Bylaws of Park Pharmacy-Delaware in the form
attached as Exhibit B (the "Delaware Bylaws Proposal"); and
(e) the approval of the Park Pharmacy Corporation 2000 Stock
Incentive Plan in the form attached as Exhibit F.
4. Who can vote?
Only those who owned common stock or Series A preferred stock at
the close of business on November 30, 2000, the record date for
the Annual Meeting, can vote. If you owned common stock on the
record date, you have one vote per share for each matter
presented at the Annual Meeting. If you owned Series A preferred
stock on the record date, you have ten votes per share for each
matter presented at the Annual Meeting. As of the record date,
there were 5,722,551 shares of common stock outstanding
(representing a total of 5,722,551 votes) and 3,020,430 shares of
Series A preferred stock outstanding (representing a total of
30,204,300 votes), resulting in a total of 35,926,851 votes being
entitled to be cast at the annual meeting.
5. How do I vote?
You may vote your shares either in person or by proxy. To vote by
proxy, you should mark, date, sign and mail the enclosed proxy in
the enclosed prepaid envelope. Giving a proxy will not affect
your right to vote your shares if you attend the Annual Meeting
and want to vote in person - by voting at the Annual Meeting you
automatically revoke your proxy. You also may revoke your proxy
at any time before the voting by giving the secretary of Park
Pharmacy written notice of your revocation or by submitting a
later-dated proxy.
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6. What if I don't indicate a voting preference on the proxy
that I return?
If you execute, date and return your proxy but do not mark your
voting preference, the individuals named as proxies will vote
your shares FOR the election of the nominees for director, FOR
the approval of the re-incorporation merger; FOR the approval of
each of the Delaware Certificate Proposals; FOR the adoption of
the Delaware Bylaws Proposal; and FOR the approval of the Park
Pharmacy Corporation 2000 Stock Incentive Plan.
7. What constitutes a quorum?
Voting can take a place at the Annual Meeting only if
stockholders owning a majority of the voting power of the common
stock and Series A preferred stock (that is a majority of the
total number of votes entitled to be cast) are present in person
or represented by effective proxies. Both abstentions and broker
nonvotes are counted as present for purposes of establishing the
quorum necessary for the meeting to proceed. A broker nonvote
results from a situation in which a broker holding your shares in
"street" or "nominee" name indicates to us on a proxy that it
lacks discretionary authority to vote your shares.
8. What vote of the stockholders will result in the matters
being passed?
Election of Directors. Directors need the affirmative vote of
holders of a plurality of the voting power present, represented
by the shares of common stock and Series A preferred stock voting
as a single class, to be elected. At this year's meeting, the
seven nominees receiving the greatest number of votes will be
deemed to have received a plurality of the voting power present.
Neither abstentions nor broker nonvotes will have any effect on
the election of directors.
Re-incorporation Merger. Stockholders holding a majority of the
voting power represented by the issued and outstanding shares of
common stock and Series A preferred stock voting together as a
single class must affirmatively vote to approve the re-
incorporation merger. Abstentions and broker nonvotes have the
same effect as votes "against" this proposal.
Delaware Certificate Proposals and Delaware Bylaws Proposal.
Stockholders holding a majority of the voting power represented
by the issued and outstanding shares of common stock and Series A
preferred stock, voting together as a single class, must
affirmatively vote to approve the Delaware Bylaws Proposal and
the Delaware Certificate Proposals, other than the proposals that
would have the effect of reducing the number of shares of our
company's common stock or preferred stock. Stockholders holding
a majority of the issued and outstanding shares of common stock
must affirmatively vote to approve the Delaware Certificate
Proposal that would result in a reduction of the authorized
number of shares of common stock. Stockholders holding a
majority of the issued and outstanding shares of preferred stock
must affirmatively vote to approve the Delaware Certificate
Proposal that would reduce the number of authorized shares of
preferred stock. For each of the Delaware Certificate Proposals
and the Delaware Bylaws Proposal, abstentions and broker nonvotes
have the same effect as votes "against" each proposal.
2000 Stock Incentive Plan. Stockholders holding a majority of
the voting power present, represented by the shares of common
stock and Series A preferred stock voting together as a single
class, must affirmatively vote to approve the 2000 Stock
Incentive Plan. For this proposal, abstentions have the same
effect as a vote "against" the proposal, while broker nonvotes
have no effect at all.
9. How does the Board recommend that we vote on the matters
proposed?
The Board of Directors of Park Pharmacy unanimously recommends
that stockholders vote FOR each of the subject proposals at the
upcoming Annual Meeting.
10. Will I have the right to dissent from the proposal to
reincorporate the company from Colorado to Delaware?
Yes. Holders of shares of our common stock and Series A
preferred stock will have the right to dissent and seek the
payment of "fair value" of their shares with regard to the re-
incorporation proposal. For a complete
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discussion of your rights in this regard, see the section of this
Proxy Statement entitled, "Re-incorporation of Park Pharmacy from
Colorado to Delaware--Dissenters' Rights" beginning on page 14.
11. Will there be other matters proposed at the 2000 Annual
Meeting?
Park Pharmacy's Bylaws limit the matters presented at the
upcoming Annual Meeting to those in the notice of the meeting,
those otherwise properly presented by the Board of Directors and
those presented by stockholders so long as the stockholder gave
the Secretary written notice of the matter on or before December
9, 2000. We do not expect any other matter to come before the
meeting. If any other matter is properly presented at the Annual
Meeting, your signed proxy gives the individuals named as proxies
authority to vote your shares in their discretion.
12. When are 2001 stockholder proposals due if they are to be
included in the Company's proxy materials?
To be considered for presentation at Park Pharmacy's 2001 Annual
Meeting of Stockholders and included in the Company's proxy
statement, a stockholder proposal must be received at Park
Pharmacy's offices no later than August 14, 2001. To curtail
controversy as to the date on which a proposal was received by
us, we suggest that proponents submit their proposals by
certified mail, return receipt requested.
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ITEM 1.
ELECTION OF DIRECTORS
The Board of Directors of Park Pharmacy has currently set
the number of directors constituting the whole board at seven.
At the upcoming Annual Meeting, you and the stockholders will
elect seven individuals to serve as directors. All nominees are
now members of the Board of Directors.
The individuals named as proxies will vote the enclosed
proxy for the election of all of the nominees unless you direct
them to withhold your votes. If any nominee becomes unable to
serve as a director before the meeting (or decides not to serve),
the individuals named as proxies may vote for a substitute or we
may reduce the number of members of the Board.
We recommend a vote FOR all nominees.
Below are the names and ages of the nominees for directors,
the years they became directors, their principal occupations or
employment for at least the past five years, and certain of their
other directorships, if any.
Nominees for Election
Joe B. Park, R.Ph. - Age 63, has served as Director and
Chairman of the Board of our company since October 1999. Mr.
Park owned and served as the president of Dougherty's Pharmacy,
Inc. from 1959 until our acquisition of Dougherty's in December
of 1999. Mr. Park has an active member of the Dallas County
Pharmaceutical Society where he has served in various capacities
including past president. Mr. Park is also an active member of
the Texas Pharmaceutical Association, National Council of Hospice
Professionals and the International Academy of Compounding
Pharmacists.
Thomas R. Baker - Age 59, has served as Director, President
and Chief Executive Officer of our company since October 1999.
From June 1998 until October 1999, Mr. Baker served as president
and chief operating officer of a development-stage company that
was a predecessor to our company prior to our reverse acquisition
transaction with Power-Cell, Inc. in October 1999. From 1993 to
June 1998, Mr. Baker served as managing partner and senior
consultant for Management-by-Action, Inc., a specialized
management consulting firm. From 1991 to 1993, Mr. Baker served
as president and chief executive officer of Medical Warning
Systems, Inc., a medical products company. From 1986 to 1991,
Mr. Baker served as director of mergers and acquisitions and
president of West Coast operations for Home Shopping Network,
Inc.
Jim Moncrief - Age 48, has served as a Director of our
company since June 2000 and Executive Vice President of our
company since April 2000. From May 1997 through March 2000, Mr.
Moncrief was vice president of marketing for Hoak Breedlove
Wesneski & Co., a Dallas-based investment banking firm. From
1994 through May 1997, Mr. Moncrief was responsible for business
development at The Perryman Group, a national litigation support
company.
Gwendolyn L. Park - Age 63, has served as a Director and
Secretary of our company since October 1999. Mrs. Park has served
as Secretary, Treasurer and Office Manager of Dougherty's since
1980. Mrs. Park has been active in the Auxiliary to the Dallas
County Pharmaceutical Society, holding various positions and
served as president. Mrs. Park has also been active in the Texas
Pharmaceutical Association.
Richard M. Allen, R.Ph. - Age 53, has served as Director of
our company since June 2000 and as Chief Operating Officer of our
subsidiary, Park Infusion Services, L.P., since August 2000. Mr.
Allen has also served as Clinical Infusion Director for
Dougherty's Homecare Infusion, a division of Dougherty's Pharmacy
since March 1997. From 1991 to 1997, Mr. Allen was a past
pharmacy director of Option Care, a nationally based home
infusion company. Prior to that time, he owned and served as the
chief executive officer of North Star Pharmacy, Inc. Mr. Allen
has twenty-five years experience in retail and home infusion
pharmacy. Mr. Allen has served as founding director of Texas
Heritage Savings & Loan, Rowlett, Texas and director of First
Federal Savings Bank, Denton, Texas and presently serves on the
board of directors of Jefferson Heritage Bank, St. Louis,
Missouri.
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William D. Breedlove - Age 60, has served as a director of
our company since November 28, 2000. Mr. Breedlove is president
of HBW Investments, Inc. an investment firm. Prior to the
formation of HBW Investments in 1996, Mr. Breedlove was Chairman,
managing director and co-founder of Breedlove Wesneski & Co., a
private merchant banking firm formed as Breedlove and Associates
in 1985. From 1984 to 1989, Mr. Breedlove also served as
president and director of Equus Capital Corporation, the
corporate general partner of three public and private limited
partnerships operating primarily as private equity management
buyout funds. Mr. Breedlove has over 30 years experience in
commercial and merchant banking, and served for 22 years at First
National Bank in Dallas, the last three of which he served as
Chairman and CEO of the lead bank and vice Chairman of InterFirst
Corporation. Mr. Breedlove currently serves as a director of NCI
Building Systems, Inc. an integrated manufacturer of products for
the metal building industry. Mr. Breedlove has previously served
as a director of several other public-held companies, including
InterFirst Corporation, Texas Oil and gas Corporation, Dillard's
Department Stores and Cronus Industries, Inc.
Jon J. Gergen - Age 55, has served as a director of our
company since November 28, 2000. Mr. Gergen has served as the
president and chief executive officer of Spectrum Management,
L.L.C., a provider of tracking, location, recovery and
safety/security services and products, since November of 1999.
In 1996, Mr. Gergen also founded and continues to serve as the
principal executive officer of Ross Holdings, L.L.C., a private
equity management fund for various family trusts. From 1988-
1995, Mr. Gergen served as a contract executive and consultant to
various telecommunications and information services firms,
including Teleconference Services, Inc., WestTel, Inc., American
Express Information Services, Inc. and U.S. West, Inc.
Advisory Directors
Our Bylaws provide for advisory directors. Advisory
directors are entitled to attend and participate in all meetings
of our Board of Directors, however, advisory directors are not
entitled to vote at any meetings and do not count for purposes of
determining the quorum for any meeting. On November 28, 2000,
Jerry F. White was selected to serve an advisory director of our
company. Mr. White is the director of the Caruth Institute of
Owner-Managed business at Southern Methodist University's Cox
School of Business in Dallas, Texas. Mr. White has taught courses
in entrepreneurship since 1972. Mr. White is the Chairman of the
Southwest Venture Forum, a bi-monthly meeting of entrepreneurs,
venture investors and professionals. He is also a co-founder of
the Dallas 100 Awards, an annual event which identifies and
honors the 100 fastest growing, privately-held companies in
Dallas, Texas. Mr. White is also an independent management
consultant, specializing in growth-oriented entrepreneurial
businesses. Mr. White has served on the Board of Directors for
numerous companies for more than two decades and serves as an
advisor to many chief executive officers. Mr. White is the co-
author of The Entrepreneur's Master Planning Guide (Prentice-
Hall) and Administering the Closely-Held Company (Prentice-Hall),
and has been published in the Harvard Business Review, The
Journal of Small Business Management and other publications.
Compensation of Directors
None of our directors received any compensation for service
as directors during the fiscal year ended June 30, 2000.
Meetings and Committees of the Board of Directors
During the fiscal year ended June 30, 2000, the entire Board
of Directors of Park Pharmacy met nine times and each director
attended at least 75% of the total of all meetings of the Board
of Directors. No executive committee or audit committee meetings
were held during the fiscal year.
Executive Committee. On June 30, 2000, the Board of
Directors of Park Pharmacy established an Executive Committee.
The Executive Committee may exercise all authority of the Board
of Directors in the management of the business and affairs of our
company, except for matters that require the authorization of the
entire Board of Directors. The Executive Committee typically
meets weekly to review operations, capital resources, acquisition
opportunities and other matters. The Executive Committee is
currently comprised of Messrs. Baker, Moncrief and Park.
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Audit Committee and Report. On November 28, 2000, the Board
of Directors established an Audit Committee comprised of Messrs.
Breedlove and Gergen. The Board of Directors has not adopted a
written charter for the Audit Committee. The duties of the Audit
Committee include the making of recommendations to the Board of
Directors for engaging and discharging the Company's independent
auditors; reviewing the completed audit with the independent
auditors regarding the conduct of the audit, accounting
adjustments, recommendations for improving internal controls and
any other significant findings during the audit; meeting
periodically with management; monitoring accounting and financial
controls; and initiating and supervising any special
investigations it deems necessary. Prior to the establishment of
the Audit Committee, the entire Board of Directors fulfilled the
responsibilities of the Audit Committee. Set forth is the report
of our Audit Committee (Board of Directors) for the most recent
fiscal year:
During the fiscal year ended June 30, 2000 and for
the period thereafter while the audit for the period
was completed, the Audit Committee was comprised of
members of the Board of Directors who also served as
the senior executive officers of our company.
Therefore, there was no separate meeting with
management to discuss the company's audited financial
statements. The Board of Directors did discuss with the
company's independent auditors the matters required to
be discussed by Statement on Auditing Standards on No.
61, and received disclosures from the company's
auditors regarding the auditor's independence as
required by Independent Standard Board Standard No. 1.
In addition, the entire Board of Directors recommended
that the audited financial statements be included in
the company's Annual Report on Form 10-KSB for the
fiscal year ended June 30, 2000.
Members of the Board of Directors:
/s/ Thomas R. Baker
/s/ Jim Moncreif
/s/ Joe B. Park
/s/ Gwendolyn Park
/s/ Richard M. Allen
STOCK OWNERSHIP
Beneficial Ownership of Certain Stockholders and Management
This table shows, as of November 30, 2000, the beneficial
ownership of Park Pharmacy common stock and Series A preferred
stock by
* each person known to us to be the beneficial owner of
more than 5% of our common stock and/or Series A
preferred stock;
* each director and director nominee;
* each executive officer named in the Summary
Compensation Table on page 10; and
* all directors, director nominee and executive officers
as a group.
Except as noted in the footnotes to the table, each person
has sole voting and investment power over the shares shown in
this table.
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<PAGE>
<TABLE>
Amount and Nature of Series Amount and Nature
A Preferred Stock of Common Stock
Beneficially Owned (1)(2) Beneficially Owned (1)(2)
--------------------------- -------------------------
Number of Number of
Shares Shares Percentage
Beneficially Percent of Beneficially Percent of of all Voting
Name of Beneficial Owners Owned Class (3) Owned Class (3) Securities (4)
------------------------- -------------- ----------- ------------ ---------- ---------------
<S> <C> <C> <C> <C> <C>
Beneficial Owners of 5% or
More of our Common or
Series A Preferred Stock:
S. A. Hellerstein (5) - - 1,089,235 19.0% 3.0%
Trustee for the Farkas
Trusts
1139 Delaware Street
Denver, Colorado 80204
Financial Investment - - 363,078 6.3% 1.0%
Partners (6)
208 S. LaSalle Street,
Suite 1040
Chicago, Illinois 60604-
1101
Marich Investments, Ltd. (7) 100,000 3.3% 452,314 7.9% 4.0%
821 9th Street
Greeley, Colorado 80631
Directors and Named
Executive Officers:
Joe B. Park (8)(9) 2,341,233 77.5% - - 65.2%
Thomas R. Baker (8) 183,373 6.1% 5.1%
Jim Moncrief (8) - - - - -
Gwendolyn Park (8)(10) - - - - -
Richard M. Allen (8) - - 1,000 * *
Michael J. Nault (8) - - 1,190,000(11) 20.8% 3.3%
James C. Rambin (12) 150,000(13) 5.0% 452,314(14) 7.9% 5.4%
- - - - -
William D. Breedlove
Hoak Breedlove Wesenski & Co.
13355 Noel Road
Dallas, TX 75240
- - - - -
Jon J. Gergen
Spectrum Management
2545 Tarpley Road
Carrollton, TX 75006
- - - - -
Jerry F. White**
Southern Methodist
University
P.O. Box 750333
Dallas, TX 75275-0333
All Executive Officers and 2,524,606 83.6% 1,191,000(11) 20.8% 73.6%
Directors as a Group (10
persons) (15).............
</TABLE>
_________________
* Less than one percent.
** Advisory Director.
(1) Beneficial ownership is determined in accordance with the
rules of the Securities and Exchange Commission and generally
includes voting or investment power with respect to securities.
Shares of common stock subject to options that are presently
exercisable or exercisable within 60 days of September 19, 2000
are deemed to be beneficially owned by the person holding such
options for the purpose of computing the beneficial ownership of
such person, but are not treated as outstanding for the purpose
of computing the beneficial ownership of any other person.
(2) Holders of common stock are entitled to one (1) vote per
share. Holders of Series A preferred stock are entitled to ten
(10) votes per share.
(3) Applicable percentage of ownership is based on 5,722,551
voting shares of common stock and 3,020,430 voting shares of
Series A preferred stock outstanding on November 30, 2000.
(4) For matters where all stockholders vote as a single class.
<PAGE>
(5) Includes 1,089,235 shares held by the Farkas Trusts, a group
of trusts of which the beneficiaries include family members of
Howard L. Farkas, a former director of our company. S. A.
Hellerstein serves as the Trustee of the Farkas Trusts and
exercises voting and investment control over these shares. Mr.
Farkas disclaimed beneficial ownership of the shares owned by the
Farkas Trusts.
(6) This entity is composed of certain interests of family
members of Burton W. Kanter, a former director of our company.
Mr. Kanter disclaims beneficial ownership of the shares owned by
this entity.
(7) Janet M. Dickson serves as Trustee of the Marich Family
Trust, a trust established for the beneficiaries of family
members of Rudy Marich, a former officer and director of our
company. Ms. Dickson exercises voting and investment control
with regard to the securities.
(8) The address for each director and executive officer is 10711
Preston Road, Suite 250, Dallas, Texas 75230.
(9) Includes 2,308,733 shares of Series A preferred stock owned
by Park Family Limited Partnership over which Mr. Park exercises
voting and investment control.
(10) Ms. Park is the wife of Joe B. Park. Excludes shares held
by Mr. Park.
(11) Does not include up to 260,000 shares of common stock that
may be issued by the Company to Mr. Nault following the
satisfaction of any indemnity obligations of Mr. Nault arising in
connection with the Company's acquisition of MJN Enterprises from
Mr. Nault in November 2000.
(12) Mr. Rambin resigned as our chief executive officer and as a
director on October 19, 1999.
(13) Includes 100,000 shares held by the Rambin Family Trust over
which Mr. Rambin exercises voting and investment power as Trustee
of the Trust. The beneficiaries of the Rambin Family Trust are
Ronald E. Rambin, J. Steven Rambin, and Michael C. Rambin, each
of whom are sons of Mr. James C. Rambin.
(14) Includes 453,314 shares held by the Rambin Family Trust over
which Mr. Rambin exercises voting and investment power as Trustee
of the Trust. The beneficiaries of the Rambin Family Trust are
Ronald E. Rambin, J. Steven Rambin, and Michael C. Rambin, each
of whom are sons of Mr. James C. Rambin.
(15) Excludes shares beneficially owned by James C. Rambin, a
former officer and director of our company.
On October 19, 1999, we consummated a Stock Purchase
Agreement with Park Pharmacy Corporation (a predecessor to our
Company), Joe B. Park, Thomas R. Baker and David W. Frauhiger.
As a result of this transaction, Messrs. Park, Baker and
Frauhiger acquired 80% of our voting stock, with Mr. Park
controlling a majority of our voting stock and elected a majority
of the directors of our Company. In addition, in connection with
that transaction, our shareholders approved amendments to our
Articles of Incorporation that authorize us to issue classes of
preferred stock determined by our Board of Directors.
Section 16(a) Beneficial Ownership Reporting Compliance
Under U.S. securities laws, directors, certain executive
officers and persons holding more than 10% of Park Pharmacy's
common stock must report their initial ownership of the common
stock and Series A preferred stock, and any changes in that
ownership, to the Securities and Exchange Commission. The
Securities and Exchange Commission has designated specific due
dates for these reports. Based solely on our review of copies of
the reports filed with the Securities and Exchange Commission and
written representations of our directors and executive officers,
(i) Mr. Joe B. Park failed to timely report three changes in his
ownership relating to his receipt of shares in connection with
our acquisition of Dougherty's Pharmacy, Inc. and Rx-Pro.Com,
Inc., and his conveyance of shares held by him personally to a
family limited partnership; (ii) Ms. Gwendolyn L. Park failed to
report two changes in ownership relating to her indirect
ownership of shares held by Mr. Joe B. Park, (iii) Mr. Baker
failed to timely report a change in his ownership relating to
gifts of shares to his relatives; and (iv) Messrs. Allen,
Brayton, Moncrief and Sommerhalder, each failed to timely file
their initial ownership reports (although such persons did not
own any shares of our stock during the fiscal year, other than
Mr. Allen who received 1,000 shares of common stock during the
year).
MANAGEMENT
Executive Officers
Below are the names and ages of the executive officers of
Park Pharmacy as of November 30, 2000 and a brief description of
their prior experience and qualifications.
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<PAGE>
Joe B. Park - Mr. Park is our Chairman of the Board and
President of Dougherty's Pharmacy, one of our subsidiaries. See
biography of Mr. Park on page 4.
Thomas R. Baker - Mr. Baker is our Chief Executive Officer
and President. See biography of Mr. Baker on page 4.
Jim Moncrief - Mr. Moncrief is our Executive Vice President.
See biography of Mr. Moncrief on page 4.
Gwendolyn Park - Ms. Park is our Secretary. See biography
of Ms. Park on page 4.
Richard M. Allen - Mr. Allen is the Chief Operating Officer
of our subsidiary, Park Infusion Services, L.P. See biography of
Mr. Allen on page 4.
Key Management Employees
Set forth below are the names and ages of certain key
management employees of our company and a brief description of
their prior experience and qualifications.
Joe Brayton - Age 41, has served as the Chief Operating
Officer of our subsidiary, Rx-Pro.Com, Inc., since April 2000.
From 1999 until joining our company, Mr. Brayton served as a
consultant to Rx-Pro.Com, Inc. and was instrumental in the
development of the company's Internet-based systems. From 1995
to 1999, Mr. Brayton served as senior vice president of
technology for jASCorp, a pharmacy software company. Mr. Brayton
is a Certified Public Accountant, Certified Management Accountant
and Certified Information Systems Auditor.
Michael J. Nault - Age 34, has served as the President of
our subsidiary, MJN Enterprises, Inc., since our acquisition of
that company on November 10, 2000. Mr. Nault founded MJN
Enterprises, Inc., an institutional pharmacy doing business under
the name Total Health Care, in 1995 and has served as its sole
shareholder and chief executive officer since its inception.
John D. Sommerhalder - Age 35, has served as Chief Financial
Officer of our subsidiary, Rx-Pro.Com, Inc., since April 2000.
From 1998 to 2000, Mr. Sommerhalder served as vice president of
investment banking for Hoak Breedlove Wesneski & Co., a Dallas-
based investment banking firm. Prior to joining Hoak Breedlove
Wesneski & Co., Mr. Sommerhalder held various positions with
Andersen Consulting, Banc One Capital Partners and Bank One.
Executive Compensation
Summary Compensation. The following table shows for the
fiscal years ended June 30, 1998, 1999 and 2000, compensation
awarded or paid to, or earned by, each person that served as our
Chief Executive Officer during the 2000 fiscal year. None of our
executive officers earned more than $100,00 in salary and bonuses
during such periods.
-9-
<PAGE>
Summary Compensation Table
<TABLE>
Long-Term
Compensation
Annual Compensation Awards
---------------------------- -------------
Restricted
Name and Principal Other Annual Stock All Other
Positions Year Salary Bonus Compensation Awards ($) Compensation
------------------ -------- -------- ------- ------------ ------------- ------------
<S> <C> <C> <C> <C> <C> <C>
Thomas R. Baker 2000 $51,923 - - - -
Chief Executive 1999 - - - - -
Officer, President 1998 - - - - -
and Director
-
James C. Rambin (1) 2000 - - - 30,000(2) -
1999 - - - - -
1998 - - - - -
</TABLE>
___________________
(1)Mr. Rambin served as the Chief Executive Officer of Power-
Cell, Inc., a predecessor to our company, until October 19,
1999.
(2)Represents value of 50,000 shares of Series A Preferred Stock
received by Mr. Rambin as compensation in fiscal 2000.
Stock Options
No Stock Options were granted in fiscal 2000, and there were
no outstanding stock options to acquire shares of our company
during our last fiscal year.
Employment Contracts and Change in Control Arrangements
We have entered into an employment contract with Mr. Baker.
Mr. Baker receives an annual base salary of $125,000 under his
contract. Mr. Baker's agreement is dated August 6, 2000, and he
serves at the discretion of Joe B. Park, our Chairman. His
agreement provides for renewals for successive 1-year periods
upon the expiration of the initial term, unless terminated at the
expiration of the initial term or any renewal term upon sixty
(60) days prior written notice. His agreement provides that it
may be terminated "for cause," which generally means (i) failing
to perform applicable duties after written notice and thereafter
failing to correct the performance within ten (10) days, (ii)
engaging in conduct injurious to our company, (iii) being
convicted of a felony or other crime of moral turpitude, or (iv)
engaging in misconduct or dishonest conduct of a material nature
that impugns an employee's reputation in the community or impairs
his ability to perform duties to our company. His employment
contract also contains non-solicitation and confidentiality
provisions, as well as a prohibition on competitive activities
during the terms of the employment contract and for a period of
two years after termination.
Familial Relationships
Joe B. Park, a Director and our Chairman and controlling
shareholder, and Gwendolyn Park, a Director and our Secretary,
are husband and wife. Mrs. Park received $26,880 in
consideration for her services to our company during the fiscal
year ended June 30, 2000.
Certain Transactions
As a result of the Stock Purchase Agreement dated
October 19, 1999, Joe B. Park, our Chairman, became a controlling
shareholder of our Company. In connection with the transaction,
James C. Rambin, our former director and chief executive officer,
received 50,000 shares of Series A preferred stock in
satisfaction bonus arrangements approved during the 1998 fiscal
year. In addition, at the closing of the agreement, the Marich
Family Trust and the Rambin Family Trust, each of which owned
approximately 23% of our issued and outstanding shares prior to
the transaction, exchanged one million shares of our common stock
for 100,000 shares of our Series A preferred stock.
On December 21, 1999, we acquired all of the outstanding
shares of Rx-Pro.Com, Inc. The shareholders of Rx-Pro.Com,
Messrs. Joe B. Park, Jack R. Munn and John A. Blomgren, each
served as directors of our Company at
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<PAGE>
the time of the acquisition and each received 32,500 shares (for
an aggregate of 97,500 shares) of our Series A preferred stock.
Mr. Park was also our Chairman and controlling shareholder at the
time of the acquisition.
On December 30, 1999, we acquired all of the issued and
outstanding stock of Dougherty's Pharmacy, Inc. from the Park
Family Limited Partnership. Our Chairman, Joe B. Park, and his
brother J.H. Park, own 54.45% and 44.55% interests, respectively,
in the partnership. Mr. Joe B. Park was a director and the
controlling shareholder and Chairman of our Company at the time,
and the partnership received 45,000 shares of our Series A
preferred stock in that transaction.
ITEM 2.
RE-INCORPORATION OF PARK PHARMACY FROM COLORADO TO DELAWARE
General
Your board of directors has approved and recommends that the
stockholders approve the proposed merger of the company into a
wholly owned subsidiary to be incorporated under the laws of the
State of Delaware for the purpose of changing our state of
incorporation from the State of Colorado to the State of
Delaware. We believe that this redomestication will result in
significant advantages as more fully described below. In this
discussion, the terms "company" or "Park Pharmacy-Colorado" refer
to the existing Colorado corporation and the term "Park Pharmacy-
Delaware" refers to the new Delaware corporation which is the
proposed successor to Park Pharmacy-Colorado.
The following discussion summarizes certain aspects of our
proposed redomestication into the State of Delaware. This summary
is not intended to be complete and is subject to, and qualified
in its entirety by, reference to the following:
* the Certificate of Incorporation of Park Pharmacy-
Delaware, a copy of which is attached as Exhibit A to
this Proxy Statement;
* the Bylaws of Park Pharmacy-Delaware, a copy of which
is attached as Exhibit B to this Proxy Statement;
* the Agreement and Plan of Merger, a copy of which is
attached as Exhibit C to this Proxy Statement;
* the "Comparison of Colorado and Delaware Corporation
Law" attached as Exhibit D to this Proxy Statement; and
* the Colorado Business Corporation Act Dissenters'
Rights Statute, a copy of which is attached as
Exhibit E to this Proxy Statement.
Copies of our current Articles of Incorporation and Bylaws
are available for inspection at our principal executive offices
and copies will be sent to stockholders, without charge, upon
oral or written request directed to Park Pharmacy Corporation,
10711 Preston Road, Suite 250, Dallas, Texas 75230, Attention:
Corporate Secretary, (214) 692-9921.
Principal Features of the Re-incorporation and the Merger
The re-incorporation will be effected by the merger of Park
Pharmacy-Colorado with and into Park Pharmacy-Delaware, which
will be incorporated under the Delaware General Corporation Law
("DGCL") for purposes of the merger. Park Pharmacy-Delaware will
be the surviving corporation in the merger. The separate
existence of Park Pharmacy-Colorado will cease to exist as a
result of the merger.
Upon completion of the merger, each outstanding share of
common stock, par value $.0001 per share, of Park Pharmacy-
Colorado will be converted into one share of common stock, $.0001
par value, of Park Pharmacy-Delaware; and each outstanding share
of Series A preferred stock, par value $.001 per share, of Park
Pharmacy-Colorado will be converted into one share of Series A
preferred stock, $.0001 par value, of Park Pharmacy-Delaware. As
a result, the existing stockholders of Park Pharmacy-
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<PAGE>
Colorado will automatically become stockholders of Park Pharmacy-
Delaware. Park Pharmacy-Colorado stock certificates will be
deemed to represent the same number of Park Pharmacy-Delaware
shares as were represented by such Park Pharmacy-Colorado stock
certificates prior to the merger.
Our re-incorporation in Delaware will not result in any
change to the daily business operations of the company or the
present location of the principal executive offices in Dallas,
Texas. The financial condition and results of operations of Park
Pharmacy-Delaware immediately after the consummation of this
transaction will be identical to that of Park Pharmacy-Colorado
immediately prior to the consummation of the re-incorporation. In
addition, at the effective time of the merger, the board of
directors of Park Pharmacy-Delaware will consist of those persons
who were directors of Park Pharmacy-Colorado immediately prior to
the merger; namely, Joe B. Park, Thomas R. Baker, Jim Moncrief,
Gwendolyn Park, Richard M. Allen, William D. Breedlove and Jon J.
Gergen. In addition, the individuals serving as executive
officers of Park Pharmacy-Colorado immediately prior to the
merger will serve as executive officers of Park Pharmacy-Delaware
upon the effectiveness of the merger. The company does not
anticipate that any state or federal regulatory approvals will be
required to effect the reincorporation.
Principal Reasons for the Re-incorporation
As the company plans for the future, the board of directors
and management believe that it is essential to be able to draw
upon well established principles of corporate governance in
making legal and business decisions. The prominence and
predictability of Delaware corporate law provide a reliable
foundation on which our governance decisions can be based. We
believe that the stockholders will benefit from the
responsiveness of Delaware corporate law to their needs and to
those of the Corporation they own.
For many years, the State of Delaware has followed a policy
of encouraging incorporation in that state and, in furtherance of
that policy, has adopted comprehensive, modern and flexible
corporate laws which are periodically updated and revised to meet
changing business needs. As a result, many corporations have been
initially incorporated in Delaware or have subsequently
reincorporated in Delaware in a manner similar to that proposed
by us. Because of Delaware's prominence as a state of
incorporation for many corporations, the Delaware courts have
developed considerable expertise in dealing with corporate
issues, and a substantial body of case law has developed
construing the DGCL and establishing public policies with respect
to corporations incorporated in Delaware. Consequently, the DGCL
is comparatively well known and understood. It is anticipated
that, as in the past, the DGCL will continue to be interpreted
and explained in a number of significant court decisions. We
believe that re-incorporation in Delaware should provide greater
predictability with respect to our corporate affairs.
In addition, the Delaware Secretary of State is particularly
flexible, expert and responsive in its administration of the
filings required for mergers, acquisitions and other corporate
transactions. Delaware has become a preferred domicile for most
major corporations in the United States and Delaware law and
administrative practices have become comparatively well-known and
widely understood. As a result of these factors, it is
anticipated that Delaware law will provide greater efficiency,
predictability and flexibility in our legal affairs than
presently available under Colorado law.
We believe that the proposed re-incorporation under Delaware
law will enhance our ability to attract and retain qualified
directors and officers, as well as encourage directors and
officers to continue to make independent decisions in good faith
on behalf of the company. The law of Delaware offers greater
certainty and stability from the perspective of those who serve
as corporate officers and directors. To date, we have not
experienced difficulty in retaining directors or officers.
However, as a result of the significant potential liability and
lack of compensation associated with service as a director, we
believe that the better understood, and comparatively stable,
corporate environment afforded by Delaware will enable us to
compete more effectively with other public companies, most of
which are incorporated in Delaware, in the recruitment of
talented and experienced directors and officers. The parameters
of director and officer liability are more extensively addressed
in Delaware court decisions and therefore are better defined and
better understood than under Colorado law.
We believe that Delaware law strikes an appropriate balance
with respect to personal liability of directors and officers, and
that the proposed re-incorporation under Delaware law will
enhance our ability to recruit and
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<PAGE>
retain directors and officers in the future, while providing
appropriate protection for stockholders from possible abuses by
directors and officers. Delaware law permits a corporation to
eliminate or limit the personal liability of its directors to the
corporation or any of its stockholders for monetary damages for
breach of fiduciary duty as a director of the corporation;
however, directors' personal liability is not, and can not be,
eliminated under Delaware law for intentional misconduct, bad
faith conduct or any transaction from which the director derives
an improper personal benefit, or for violations of federal laws
such as federal securities laws.
We have not viewed the increased protections permitted under
the DGCL as a reason for recommending the re-incorporation.
Stockholders should note, however, that because members of the
board of directors will receive the benefit of expanded
indemnification provisions and limitations on liability, the
board of directors may be viewed as having a personal interest in
the approval of the re-incorporation at the potential expense of
stockholders.
Possible Disadvantages of Re-incorporation
The DGCL has been publicly criticized on the grounds that it
does not afford minority stockholders all the same substantive
rights and protections that are available under the laws of a
number of other states (including Colorado). For example, if the
re-incorporation is consummated, we will not be required in the
future under the DGCL to obtain stockholder approval, or to grant
class voting and appraisal rights, in connection with certain
kinds of mergers and corporate reorganizations which under
Colorado law would be subject to those requirements. For
information regarding those and other material differences
between the CBCA and the DGCL, see Exhibit D attached to this
Proxy Statement. We believe that the advantages of the re-
incorporation to the company and its stockholders outweigh its
possible disadvantages.
STOCKHOLDERS ARE STRONGLY URGED TO READ THE SUMMARY OF
CERTAIN SIGNIFICANT DIFFERENCES IN THE PROVISIONS OF THE CBCA AND
THE DGCL AFFECTING THE RIGHTS AND INTERESTS OF STOCKHOLDERS SET
FORTH IN EXHIBIT D ATTACHED TO THIS PROXY STATEMENT.
Amendment, Deferral or Termination of the Re-incorporation Merger
Agreement
If approved by the stockholders at the Annual Meeting, it is
anticipated that the re-incorporation merger will become
effective at the earliest practicable date. However, the merger
agreement may be amended, modified or supplemented before or
after approval by the stockholders of the company; but no such
amendment, modification or supplement may be made if it would
have a material adverse effect upon the rights of the company's
stockholders unless it has been approved by the stockholders. The
merger agreement also provides that the company may terminate and
abandon the merger or defer its consummation for a reasonable
period, notwithstanding stockholder approval, if in the opinion
of the board of directors or, in the case of deferral, of an
authorized officer, such action would be in the best interests of
the company and its stockholders.
Federal Income Tax Consequences of the Re-incorporation
We believe that, for federal income tax purposes, no gain or
loss will be recognized by the holders of stock of Park Pharmacy-
Colorado as a result of the consummation of the re-incorporation
and no gain or loss will be recognized by Park Pharmacy-Colorado
or Park Pharmacy-Delaware. Each holder of stock of Park Pharmacy-
Colorado will have the same tax basis in the Park Pharmacy-
Delaware stock received pursuant to the re-incorporation (other
than those who exercise dissenters' rights) as such stockholder
had in the stock of Park Pharmacy-Colorado held immediately prior
to the re-incorporation, and the stockholder's holding period
with respect to the Park Pharmacy-Delaware stock will include the
period during which such stockholder held the corresponding
stock, so long as the stock was held as a capital asset at the
time of consummation of the re-incorporation.
ALTHOUGH IT IS NOT ANTICIPATED THAT STATE OR LOCAL INCOME
TAX CONSEQUENCES TO STOCKHOLDERS WILL VARY FROM THE FEDERAL
INCOME TAX CONSEQUENCES DESCRIBED ABOVE, STOCKHOLDERS SHOULD
CONSULT THEIR OWN TAX ADVISORS AS TO THE EFFECT OF THE RE-
INCORPORATION UNDER STATE, LOCAL OR FOREIGN INCOME TAX LAWS.
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<PAGE>
We also believe that Park Pharmacy-Delaware will succeed
without adjustment to the tax attributes of Park Pharmacy-
Colorado. Stockholders should be aware that franchise taxes in
the State of Delaware are likely to be higher than those in the
State of Colorado.
A dissenting stockholder who receives payment for his shares
upon exercise of his rights of dissent may recognize gain or loss
for federal income tax purposes, measured by the difference
between the tax basis for his shares and the amount of the
payment received. Stockholders who dissent and seek cash payment
for their shares should consult with their tax advisors.
Exchange of Stock Certificates
The conversion of shares of Park Pharmacy-Colorado common
stock and Series A preferred stock into Park Pharmacy-Delaware
common stock and Series A preferred stock, respectively, will
occur automatically upon the completion of the merger without any
action on the part of stockholders and without regard to the date
certificates representing shares of common stock or Series A
preferred stock, as applicable, prior to the merger are
physically surrendered.
As soon as practicable after the consummation of the merger,
transmittal forms will be mailed to each holder of record of Park
Pharmacy-Colorado to be used in forwarding stock certificates for
surrender and exchange for certificates representing the number
of shares of Park Pharmacy-Delaware capital stock such
stockholder is entitled to receive as a consequence of the
merger. The transmittal forms will be accompanied by instructions
specifying other details of the exchange. Upon receipt of such
transmittal form, each stockholder should surrender the
certificates representing shares of capital stock, in accordance
with the applicable instructions. Each holder who surrenders
certificates will receive new certificates representing the
number of shares of Park Pharmacy-Delaware common stock or
Series A preferred stock, as applicable, that he or she holds as
a result of the merger. STOCKHOLDERS SHOULD NOT SEND THEIR STOCK
CERTIFICATES UNTIL THEY RECEIVE A TRANSMITTAL FORM.
After the consummation of the merger, each certificate
representing shares of common stock and Series A preferred stock
outstanding prior to the consummation of the merger will, until
surrendered and exchanged as described above, be deemed, for all
corporate purposes, to evidence ownership of that number of
shares of Park Pharmacy-Delaware common stock or Series A
preferred stock, as applicable, into which the shares evidenced
by such certificate have been converted as a result of the
consummation of the merger.
Dissenters' Rights
Holders of shares of common stock and Series A preferred
stock of Park Pharmacy-Colorado will have the right to dissent
and seek the payment of "fair value" of their shares with regard
to the re-incorporation proposal. Pursuant to Article 113 of the
CBCA, such holders of record of Park Pharmacy-Colorado capital
stock who object and who follow the procedures prescribed by
Article 113 of the CBCA will be entitled to receive a cash
payment equal to the "fair value" of the shares of Park Pharmacy-
Colorado capital stock held by them. Set forth below is a summary
of the procedures such holders of Park Pharmacy-Colorado capital
stock must follow in order to exercise their dissenters' rights
under the CBCA. This summary does not purport to be complete and
is qualified in its entirety by reference to Article 113 of the
CBCA (a copy of which is attached to this Proxy Statement as
Exhibit E) and to any amendments to, or modifications of, such
provisions as may be adopted after the date hereof.
Any such holder of shares of capital stock of Park Pharmacy-
Colorado contemplating a possibility of objecting to the re-
incorporation proposal (or the prior merger into Park Pharmacy-
Colorado) should carefully review the text of Exhibit E
(particularly the specified procedural steps required to perfect
their dissenters' rights) and should consult as appropriate with
such holder's legal counsel. YOUR DISSENTERS' RIGHTS WILL BE LOST
IF THE PROCEDURAL REQUIREMENTS OF ARTICLE 113 OF THE CBCA ARE NOT
FULLY AND PRECISELY SATISFIED.
A record stockholder may assert dissenters' rights to fewer
than all shares registered in his name only if he dissents with
respect to all shares beneficially owned by a beneficial holder
for whom he acts as nominee and notifies the company in writing
of the name, address and federal taxpayer identification number
of each person on whose
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<PAGE>
behalf he has asserted dissenters' rights. A beneficial holder
may assert dissenters' right as to shares held on his behalf only
if he submits to the company the record holder's written consent
to the dissent not later than the time the beneficial stockholder
asserts dissenters' rights and does so with respect to all shares
to which he is beneficial owner.
Under Article 113 of the CBCA, any stockholder who desires
to assert dissenters' rights shall deliver to the company before
the vote is taken written notice of his intent to demand payment
for his shares if the proposed action is effected and shall not
vote his shares in favor of the proposed action. If the proposed
corporate action is effected, the company shall deliver a written
dissenters' notice to all stockholders who properly exercised
their dissenters' rights within ten (10) days after the effective
date of the corporate action. Such notice from company shall
include, among other items, a form for demanding payment, an
address where certificates representing shares of Park Pharmacy-
Colorado must be deposited along with the demand for payment, and
a date not less than thirty (30) days after the date of the
company's delivery of the initial dissenters' notice by which the
company must receive the payment demand. A stockholder who
demands payment and deposits his share certificates in accordance
with the terms of the company's dissenters' notice shall be
entitled to receive from the company the amount that the company
estimates to be the "fair value" of the shares plus accrued
interest. Such payment is to be accompanied by specified
financial information regarding the company, a statement of the
company's estimate of the fair value of the shares and an
explanation of how any accrued interest was calculated. If a
dissenting stockholder disagrees with the company's calculation
of the "fair value" for the shares tendered, he may notify the
corporation in writing of his own estimate of fair value or
reject the company's offer and demand payment of fair value of
his shares. A dissenting stockholder waives his rights to contest
the company's determination of "fair value" unless he notifies
the company of his demand of payment of a different value in
writing within thirty (30) days after the company made or offered
payment for his shares.
If a demand for payment remains unresolved, the company may
commence a proceeding within sixty (60) days after receiving the
payment demand and petition the court to determine the fair value
of the shares and accrued interest. If the company does not
commence a proceeding within the sixty day period, it must pay to
each dissenting stockholder the amount demanded by such
stockholder.
ADOPTION OF DELAWARE CERTIFICATE PROPOSALS
AND DELAWARE BYLAWS PROPOSAL
In connection with the re-incorporation, shareholders of the
company are being asked to approve certain provisions of the
Delaware Certificate set forth in its entirety in Exhibit A
hereto that differ from the current provisions of the Colorado
Articles and alter the rights currently given to shareholders
under the Colorado Articles and Colorado Bylaws. The proposed
provisions include (i) the reduction of the capital stock of the
company from one billion shares of capital stock under the
Colorado Articles to 150 million shares of capital stock under
the Delaware Certificate, (ii) the reduction of the number of
authorized shares of common stock from 750 million shares under
the Colorado Articles to 140 million shares under the Delaware
Certificate, (iii) the reduction of the number of authorized
shares of preferred stock from 250 million shares under the
Colorado Articles to 10 million shares under the Delaware
Certificate; (iv) the limitation of officer and director
liability, and the indemnification of the company's officers and
directors to the fullest extent permitted by Delaware law; and
(v) a two-thirds vote of the voting power of the shareholders
(A) to amend the provisions described in (iv) above, (B) to
eliminate the prohibition on actions by shareholder consent and
(C) if shareholder action is ever sought to amend the Delaware
Bylaws, to amend the Delaware Bylaws. In addition, shareholders
are being requested to adopt the Delaware Bylaws set forth in
Exhibit B hereto. The Delaware Bylaws will eliminate any
authority of shareholders to call a special meeting of the
Company and will impose certain notice requirements on
shareholders seeking to present proposals at annual meetings of
shareholders and seeking to nominate directors. Shareholders
should further be aware that following the re-incorporation,
changes to the Bylaws (including changes to the provisions
adopted pursuant to this Proxy Statement) may be repealed by the
Board of Directors without shareholder approval. Shareholders
should review the sections describing the principal provisions of
the Delaware Certificate and Bylaws below and Exhibit D for a
more complete summary of material differences in the rights of
shareholders of Park Pharmacy-Colorado compared to the rights
available to shareholders of Park Pharmacy-Delaware.
APPROVAL AND ADOPTION OF THE RE-INCORPORATION MERGER
AGREEMENT AND THE DELAWARE ARTICLES AND BYLAWS WILL AFFECT
CERTAIN RIGHTS OF SHAREHOLDERS.
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ACCORDINGLY, SHAREHOLDERS ARE URGED TO READ CAREFULLY THIS ENTIRE
PROXY STATEMENT AND THE EXHIBITS TO THE PROXY STATEMENT BEFORE
VOTING.
DELAWARE CERTIFICATE PROPOSAL ONE:
REDUCTION OF CAPITAL STOCK
General
The Colorado Articles presently authorize one billion shares
of capital stock. The Delaware Certificate authorizes 150
million shares of capital stock.
Principal Reasons for Reduction
The Board of Directors believes that the authorization of a
reduced number of capital stock is in the best interest of the
company and its stockholders and believes that it is advisable to
reduce the number of authorized shares to reduce the company's
franchise taxes in the state of Delaware. The company believes
that the proposed authorized capital stock of the company
provides the company with sufficient shares for possible future
transactions, such as financings, strategic alliances,
acquisitions, and other uses.
Possible Disadvantages of Reduction
If we propose to enter into a transaction at a time in which
we lack the sufficient authorized capital stock to complete the
transaction, we would be required to seek shareholder approval to
further amend the Delaware Certificate to increase the authorized
capital stock, which could result in a delay, or jeopardize the
consummation, of any proposed transaction, such as a financing,
strategic alliance or acquisition. Therefore, the reduction of
our authorized capital stock could have possible disadvantages to
the company.
THE BOARD OF DIRECTORS HAS APPROVED DELAWARE CERTIFICATE
PROPOSAL ONE AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
DELAWARE CERTIFICATE PROPOSAL TWO:
REDUCTION OF COMMON STOCK
General
The Colorado Articles presently authorize 750 million shares
of common stock. The Delaware Certificate authorizes 140 million
shares of common stock.
Principal Reasons for Reduction
The Board of Directors believes that the authorization of a
reduced number of common stock is in the best interest of the
company and its stockholders and believes that it is advisable to
reduce the number of authorized shares to reduce the company's
franchise taxes in the state of Delaware. The company believes
that the proposed authorized common stock of the company provides
the company with sufficient shares for possible future
transactions, such as financings, strategic alliances,
acquisitions, and other uses.
Possible Disadvantages of Reduction
If we propose to enter into a transaction at a time in which
we lack the sufficient authorized common stock to complete the
transaction, we would be required to seek shareholder approval to
further amend the Delaware Certificate to increase the authorized
common stock, which could result in a delay, or jeopardize the
consummation, of any proposed transaction, such as a financing,
strategic alliance or acquisition. Therefore, the reduction of
our authorized common stock could have possible disadvantages to
the company.
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THE BOARD OF DIRECTORS HAS APPROVED DELAWARE CERTIFICATE
PROPOSAL TWO AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
DELAWARE CERTIFICATE PROPOSAL THREE:
REDUCTION OF PREFERRED STOCK
General
The Colorado Articles presently authorize 250 million shares
of preferred stock. The Delaware Certificate authorizes 10
million shares of preferred stock. Both the Colorado Articles
and the Delaware Certificate designate five million shares of
preferred stock as Series A preferred stock. As a result, the
number of undesignated shares of preferred stock under the
Colorado Articles is 245 million, while the number of
undesignated shares of preferred stock under the Delaware
Certificate is five million.
Principal Reasons for Reduction
The Board of Directors believes that the authorization of a
reduced number of preferred stock is in the best interest of the
company and its stockholders and believes that it is advisable to
reduce the number of authorized shares to reduce the company's
franchise taxes in the state of Delaware. The company believes
that the proposed authorized preferred stock of the company
provides the company with sufficient shares for possible future
transactions, such as financings, strategic alliances,
acquisitions, and other uses.
Possible Disadvantages of Reduction
If we propose to enter into a transaction at a time in which
we lack the sufficient authorized preferred stock to complete the
transaction, we would be required to seek shareholder approval to
further amend the Delaware Certificate to increase the authorized
preferred stock, which could result in a delay, or jeopardize the
consummation, of any proposed transaction, such as a financing,
strategic alliance or acquisition. Therefore, the reduction of
our authorized preferred stock could have possible disadvantages
to the company.
THE BOARD OF DIRECTORS HAS APPROVED DELAWARE CERTIFICATE
PROPOSAL THREE AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
DELAWARE CERTIFICATE PROPOSAL FOUR:
LIABILITY LIMITATION; INDEMNIFICATION OF OFFICERS AND DIRECTORS
General
The Delaware Certificate would, to the fullest extent
permitted under applicable law as from time to time in effect,
(i) limit the liability of the company's directors and
(ii) require indemnification (including advancement of expenses)
of the company's directors and officers and, at the option of the
Board of Directors in any particular case, the company's
employees and agents.
Reason for Proposal
The Board of Directors believes that this proposal is
desirable in order for the company to be able to continue to
attract and retain responsible individuals to serve as its
directors and officers, in light of the present difficult
environment in which such persons, particularly directors, must
serve. In recent years, investigations, claims, actions, suits
or proceedings (including derivative actions) seeking to impose
liability on directors and officers of corporations have become
increasingly common. Such proceedings can be extremely expensive,
whatever their eventual outcome. In view of the costs and
uncertainties of litigation in general, it is often prudent to
settle proceedings in which claims against a director or officer
are made. Settlement amounts, even if immaterial to the
corporation involved and minor compared to the enormous amounts
frequently claimed, often exceed the financial resources of most
individual director or officer defendants. As a result, an
individual may conclude that potential exposure to the costs and
risks of proceedings in which he or she may become involved may
exceed any benefit to him or her from serving as a director or
officer of a corporation.
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Possible Disadvantages
The proposed provision will have the effect of limiting the
liability of directors of the Company and expanding the scope of
actions for which the company indemnifies its directors and
officers. The proposed provision will also permit the Board of
Directors to extend such indemnification benefits to the
company's employees and agents. The expansion or extension of
such benefits may result in additional expenses to the company
than presently provided for under the company's Colorado Articles
and Colorado Bylaws.
THE BOARD OF DIRECTORS HAS APPROVED DELAWARE CERTIFICATE
PROPOSAL FOUR AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
DELAWARE CERTIFICATE PROPOSAL FIVE:
SUPER-MAJORITY VOTING REQUIREMENTS TO AMEND OR REPEAL
CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION OR BYLAWS
General
The Delaware Certificate requires the affirmative vote of at
least 66-2/3% of the outstanding voting power of the company to
amend, repeal or adopt (i) any provision inconsistent with either
Delaware Certificate Proposal Four (Liability Limitation and
Indemnification); (ii) any provision of the Delaware Certificate
eliminating the ability of stockholders to act without a meeting
(by written consent); or (iii) the Bylaws, if stockholder action
is sought to amend or repeal the Bylaws.
Reason for Proposal
Under the DGCL, amendments to the Certificate of
Incorporation would generally require the approval of the holders
of a majority of the outstanding votes entitled to vote thereon,
but the law also permits a corporation to include provisions in
its charter documents that require a greater vote than the vote
otherwise required by law for any corporate action. The
requirement of an increased shareholder vote is designed to
prevent a person holding or controlling a majority, but less than
66-2/3% of the outstanding votes of the company from avoiding the
requirements of the proposed amendments by simply repealing them.
Further, the Board of Directors of the company deems it advisable
and in the best interests of the company and its shareholders to
provide that the company's Bylaws may not be amended by the
shareholders unless such action is approved by the affirmative
vote of the holders of not less than 66-2/3% of the voting power
of all shares of stock of the company entitled to vote thereon.
The Bylaws may still be amended without shareholder approval by
the Board of Directors consistent with the provisions of
applicable Delaware law and the express permission given in the
Delaware Certificate.
Possible Disadvantages
The super-majority voting requirement for certain amendments
to the Delaware Certificate or the Delaware Bylaws may deter
potential acquisitions of the company in transactions that are
not approved by or negotiated with the Board. Further, these
provisions also make it more difficult for shareholders to repeal
the indemnification benefits extended to the company's directors
and officers.
THE BOARD OF DIRECTORS HAS APPROVED DELAWARE CERTIFICATE
PROPOSAL FIVE AND RECOMMENDS THAT SHAREHOLDERS VOTE FOR THIS
PROPOSAL.
DELAWARE BYLAWS PROPOSAL
In connection with the re-incorporation and the adoption of
the Delaware Certificate, shareholders are also being asked to
approve the Delaware Bylaws, a copy of which is attached as
Exhibit B. While the Delaware Bylaws contain many of the same
provisions in the Bylaws of Park Pharmacy-Colorado, the
indemnification provisions, among others, differ in the respects
set forth below. In addition, shareholders should be aware that
following the re-incorporation, the Bylaws of Park Pharmacy-
Delaware may be further amended by the Board of Directors of the
company, without the need for further shareholder action.
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Indemnification of Directors and Officers
The Colorado Bylaws provide for indemnification of directors
or officers only if required by law, individual contract, or at
the sole discretion of the company. In contrast, the Delaware
Bylaws indemnify the directors and officers if such persons acted
in good faith and reasonably believed their actions were not
opposed to the best interests of the Company. Under the Delaware
Bylaws, the directors or the shareholders may determine if
indemnification is proper.
Expenses of Contested Indemnification Claims
The Delaware Bylaws include an extra provision stating that
if a claim is not paid in full by the company within thirty (30)
days after a written claim has been received by the company, the
claimant may at any time thereafter bring suit against the
company to recover the unpaid amount of the claim and, if
successful in whole or in part, the claimant shall also be
entitled to be paid the expenses of prosecuting such a claim.
THE BOARD OF DIRECTORS HAS APPROVED THE DELAWARE BYLAWS
PROPOSAL AND RECOMENDS THAT SHAREHOLDERS VOTE FOR THIS PROPOSAL.
INTERESTED PARTIES
Except as described above with regard to potential benefits
to be received by the officers and directors of the company
arising from the liability limitation and indemnification
provisions under the DGCL, no director or executive officer of
the company has any interest, direct or indirect, in the merger,
the proposed re-incorporation, or the Certificate/Bylaws
Proposals, other than any interest arising from the ownership of
securities in the company.
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ITEM 3.
APPROVAL OF PARK PHARMACY CORPORATION 2000 STOCK INCENTIVE PLAN
On September 19, 2000, the Board of Directors adopted,
subject to stockholder approval, the 2000 Stock Incentive Plan of
Park Pharmacy Corporation, the text of which is attached as
Exhibit F to this Proxy Statement. Unless the 2000 Stock
Incentive Plan is approved by the stockholders on or before
September 18, 2001, it and all awards granted pursuant thereto
will, under the terms of the plan, be null and void. The material
features of the 2000 Stock Incentive Plan are discussed below,
but the description is subject to, and is qualified in its
entirety by, the full text of the 2000 Stock Incentive Plan.
Stockholders are urged to read the 2000 Stock Incentive Plan in
its entirety.
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE
PROPOSAL TO APPROVE THE 2000 STOCK INCENTIVE PLAN.
Purpose
The purpose of the 2000 Stock Incentive Plan is to promote
the interests of the company (including its subsidiaries) and its
stockholders by using investment interests in the company to
attract, retain and motivate its management and other persons,
including officers, directors, key employees and certain
consultants, to encourage and reward such persons' contributions
to the performance of the company and to align their interests
with the interests of the company's stockholders. In furtherance
of this purpose, the 2000 Stock Incentive Plan authorizes the
granting of the following types of stock-based awards (each, an
"Award"):
* stock options;
* restricted stock awards;
* unrestricted stock awards; and
* performance stock awards.
Each of these types of Awards is described below under
"Awards."
A total of 8,659,465 shares of common stock (subject to
adjustment as described below) are reserved for issuance under
the 2000 Stock Incentive Plan. Shares of common stock issued
under the 2000 Stock Incentive Plan may be authorized but
unissued shares, or shares reacquired by the company, including
shares purchased on the open market. The unexercised, unearned or
yet-to-be acquired portions of any Award that expire, terminate
or are canceled, and shares of common stock issued pursuant to
Awards under the 2000 Stock Incentive Plan that are reacquired by
the company pursuant to the terms under which such shares were
issued, will again become available for the grant of further
Awards.
Nothing in the 2000 Stock Incentive Plan or in any Award
granted pursuant to it confers upon any participant any right to
continue in the employ of the company or to interfere in any way
with the right of the company to terminate the employment of any
person at any time.
The holder of an Award granted pursuant to the 2000 Stock
Incentive Plan does not have any of the rights or privileges of a
stockholder, except with respect to shares that have actually
been issued. Stockholders are urged to read the 2000 Stock
Incentive Plan in its entirety.
Administration
The 2000 Stock Incentive Plan is administered by the Stock
Plan Committee of the Board of Directors, which must be comprised
of at least two non-employee directors, unless the board elects
to opt-out of this committee requirement. The Stock Plan
Committee may, but is not required to, be the same as the
Compensation Committee of the Board. The Stock Plan Committee
currently consists of Messrs. Breedlove and Gergen. The Stock
Plan Committee has full authority, in its discretion, to:
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* select the persons to whom Awards will be granted;
* grant Awards under the 2000 Stock Incentive Plan;
* determine the number of shares to be covered by each
Award;
* determine the nature, amount, pricing, timing and other
terms of the Award;
* interpret, construe and implement the provisions of the
2000 Stock Incentive Plan (including the authority to
adopt rules and regulations for carrying out the
purposes of the plan); and
* terminate, modify or amend the 2000 Stock Incentive
Plan.
Eligibility
Key employees (including employees who are also directors or
officers), directors and certain consultants of the company are
eligible to be granted Awards under the 2000 Stock Incentive Plan
at the discretion of the Stock Plan Committee. In determining the
eligibility of any employee, as well as in determining the number
of shares to be covered by an Award and the type or types of
Awards to be made, the Stock Plan Committee may consider:
* the position, responsibilities and importance of the
participant to the company; and
* such other factors as the Stock Plan Committee deems
relevant.
Awards
Stock Options. Incentive stock options and non-qualified
stock options may be granted for such number of shares of common
stock as the Stock Plan Committee determines, except that the
maximum number of incentive options that may be granted under the
plan may not exceed four million shares, and no participant may
be granted options to acquire more than two million shares of
common stock in any one calendar year.
The exercise price for each stock option is determined by
the Stock Plan Committee. Stock options must have an exercise
price of at least 100% (or at least 110% in the case of incentive
stock options granted to certain employees owning more than 10%
of the outstanding voting stock) of the fair market value of the
common stock on the date the stock option is granted. Under the
2000 Stock Incentive Plan, fair market value of the common stock
for a particular date is generally the average of the closing bid
and asked prices per share for the stock as quoted the OTC
Bulletin Board on such date.
No stock option may be exercised after the expiration of ten
years from the date of grant (or five years in the case of
incentive stock options granted to certain employees owning more
than 10% of the outstanding voting stock). Pursuant to the 2000
Stock Incentive Plan, the aggregate fair market value of the
common stock for which one or more incentive stock options
granted to any participant may for the first time become
exercisable as incentive stock options under the federal tax laws
during any one calendar year shall not exceed $100,000.
A stock option may be exercised in whole or in part
according to the terms of the applicable stock option agreement
by delivery of written notice of exercise to the company
specifying the number of shares to be purchased. The exercise
price for each stock option may be paid by the participant in
cash or by such other means as the Stock Plan Committee may
authorize. Fractional shares are not to be issued upon exercise
of a stock option.
The Stock Plan Committee may, in its discretion, at any time
after the grant of a stock option, accelerate vesting of such
option as a whole or in part by increasing the number of shares
then purchasable. However, the Stock Plan Committee may not
increase the total number of shares subject to an option.
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Subject to the foregoing and the other provisions of the
2000 Stock Incentive Plan, stock options may be exercised at such
times and in such amounts and be subject to such restrictions and
other terms and conditions, if any, as determined by the Stock
Plan Committee.
Restricted Stock. Restricted stock may be awarded by the
Stock Plan Committee subject to such terms, conditions and
restrictions as it deems appropriate. Restrictions may include
limitations on voting rights and transferability of the shares,
restrictions based on the duration of employment or engagement
with the company, and company or individual performance.
Restricted stock may not be sold or encumbered until all
restrictions are terminated or expire. In this regard, the
Secretary of the company or such other escrow holder as the Stock
Plan Committee may appoint shall retain physical custody of each
certificate representing restricted stock until all restrictions
imposed under the applicable Award agreement shall expire or be
removed.
The Stock Plan Committee may require a participant to pay
the company an amount at least equal to the par value of the
common stock awarded to the participant. Subject to any
limitations imposed by the applicable Award agreement, from the
date a participant becomes the holder of record of restricted
stock, a participant has all the rights of a stockholder with
respect to such shares, including the right to vote the shares
and to receive all dividends and other distributions paid with
respect to the shares.
The 2000 Stock Incentive Plan provides that to the extent
the Stock Plan Committee elects to grant an Award of restricted
stock, the Award agreement applicable thereto shall, except in
certain specified situations, provide the company with the right
to repurchase the restricted stock then subject to restrictions
immediately upon a termination of employment or engagement for
any reason whatsoever at a cash price per share equal to the
price paid by the participant for the restricted stock.
Unrestricted Stock. The Stock Plan Committee may, in its
discretion, grant an Award of unrestricted stock to any eligible
participant, pursuant to which such participant may receive
shares of common stock free of any vesting restrictions under the
2000 Stock Incentive Plan. The Stock Plan Committee may also sell
shares of unrestricted stock to eligible participants at a
purchase price determined in its discretion. Unrestricted stock
may be granted or sold in respect of past services or other valid
consideration, or in lieu of any cash compensation due to such
individual.
Each participant who has made an election to receive shares
of unrestricted stock will have the right to defer receipt of up
to 100% of such shares in accordance with rules established by
the Stock Plan Committee for that purpose and such election shall
be effective on the later of six months and one day from the date
of such election or the beginning of the next calendar year. The
deferred unrestricted stock shall be entitled to receive dividend
equivalent rights (as described below) settled in shares of
common stock.
Performance Stock Awards. The Stock Plan Committee may make
performance stock awards under the 2000 Stock Incentive Plan
based upon terms and conditions it deems appropriate. The Stock
Plan Committee may make performance stock awards independent of
or in connection with the granting of any other Award under the
2000 Stock Incentive Plan. The Stock Plan Committee, in its
discretion, shall determine whether and to whom performance stock
awards shall be made, the performance criteria applicable under
each such Award, the periods during which performance is to be
measured, and all other limitations and conditions applicable to
the awarded shares. The Stock Plan Committee may utilize any of
the following performance criteria when granting performance
stock awards:
* net income;
* pre-tax income;
* operating income;
* cash flow;
* earnings per share;
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* return on equity;
* return on invested capital or assets;
* cost reductions or savings;
* funds from operations;
* appreciation in the fair market value of the common
stock;
* earnings before any one or more of the following:
interest, taxes, depreciation or amortization; and
* such other criteria deemed appropriate by the Stock
Plan Committee.
A participant receiving a performance stock award shall have
the rights of a stockholder only as to shares actually received
by the participant and not with respect to shares subject to the
Award but not actually received. At any time prior to the
participant's termination of employment (or other business
relationship) by the company, the Stock Plan Committee may, in
its discretion, accelerate, waive or, subject to the other
provisions of the 2000 Stock Incentive Plan, amend any and all
performance criteria specified under any performance stock award.
Effect of Termination
Unless provided otherwise in writing (which may be entered
into at any time before or after termination of employment of the
participant), in the event of the termination of a participant's
engagement, all of the participant's unvested Awards shall
terminate and all of the participant's unexercised Awards shall
expire and become unexercisable as of the earlier of:
* the date such Awards would have expired in accordance
with their terms had the participant remained employed
or otherwise engaged by the company;
* the date of any "just cause" dismissal;
* one year after the participant's engagement is
terminated as a result of death or permanent
disability; and
* thirty days after the participant's engagement is
terminated for any other reason.
The Stock Plan Committee may, in its discretion, designate
shorter or longer periods to exercise Awards following a
participant's termination of engagement; however, any shorter
periods shall be effective only if provided for in the Award
agreement or is otherwise consented to by the affected
participant. Awards may only be claimed to the extent that
installments thereof had become exercisable on or before the date
of termination of the engagement. Further, the Stock Plan
Committee may, in its discretion, elect to accelerate the vesting
of all or any portion of any Awards that had not vested prior to
the date of termination.
Non-Transferability
No Award made under the 2000 Stock Incentive Plan may be
sold, pledged or otherwise assigned in any manner other than by
will or the laws of descent and distribution or, subject to the
consent of the Stock Plan Committee, pursuant to a qualified
domestic relations order, unless and until such Award has been
exercised, or the shares underlying such Award have been issued,
and all restrictions applicable to such shares have lapsed.
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Adjustment
In general, the aggregate number of shares as to which
Awards may be granted to participants under the 2000 Stock
Incentive Plan, the number and kind of shares thereof covered by
each outstanding Award, and/or the price per share thereof in
each such Award will, upon a determination of the Stock Plan
Committee, all be proportionately adjusted for any increase or
decrease in the number of issued shares of common stock resulting
from an increase, decrease or exchange in the outstanding shares
of common stock or additional shares or new or different shares
are distributed in respect of such shares of common stock,
through merger, consolidation, sale or exchange of all or
substantially all of the assets of the company, reorganization,
recapitalization, reclassification, stock dividend, stock split,
reverse stock split, spin-off or other distribution with respect
to such shares.
Fractional interests will not be issued upon any adjustments
made by the Stock Plan Committee; however, the committee may, in
its discretion, make a cash payment in lieu of any fractional
shares of common stock issuable as a result of such adjustments.
Change in Control
The 2000 Stock Incentive Plan provides that, in the event of
a change in control of the company, outstanding Awards, whether
or not vested, shall automatically terminate unless:
* the 2000 Stock Incentive Plan is continued and the
outstanding Awards assumed;
* the outstanding Awards are substituted with new awards
covering the securities of a successor entity; or
* the Board of Directors of the company has otherwise
provided for:
* the acceleration of the vesting of the Awards
and/or
* the cancellation of the Awards and their automatic
conversion into the right to receive the
consideration payable to the holders of the common
stock as a result of the change in control
If the Awards terminate because none of the preceding actions
were provided for, then each participant shall have the right,
prior to the change in control event, to exercise the
participant's Awards to the fullest extent, including any
installments which had not previously vested.
Amendment and Termination of the Plan
The 2000 Stock Incentive Plan terminates on August 31, 2010.
The 2000 Stock Incentive Plan provides that the Stock Plan
Committee may at any time suspend, discontinue, revise or amend
the plan and the plan as so revised or amended will govern all
Awards granted thereunder, including those granted before such
revision or amendment. The 2000 Stock Incentive Plan
acknowledges, however, that no revision or amendment will
function to alter, impair or diminish any rights or obligations
under any Award previously granted (without the consent of the
affected participants).
Federal Income Tax Consequences
The following is a brief summary of the principal federal
income tax consequences of the grant and exercise of Awards under
present law. This summary is not intended to be exhaustive and
does not describe foreign, state or local tax consequences.
RECIPIENTS OF AWARDS ARE ADVISED TO CONSULT THEIR PERSONAL TAX
ADVISORS WITH REGARD TO ALL TAX CONSEQUENCES ARISING WITH RESPECT
TO THE AWARDS.
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Tax Withholding. If a distribution is made under this 2000
Stock Incentive Plan in cash, the company will withhold taxes as
required by law. If an Award is satisfied in the form of shares
of the common stock, then no shares may be issued unless and
until arrangements satisfactory to the company have been made to
satisfy any tax withholding obligations applicable with respect
to such Award.
Deductibility of Awards. Company deductions for Awards
granted under the 2000 Stock Incentive Plan are limited by
Section 162(m) of the Internal Revenue Code of 1986 (the "Code")
which generally limits the company's deduction for non-
performance based compensation to $1.0 million per year for the
company's CEO and its other four most highly compensated
officers. The company has not paid any compensation to any
executive officers that was not deductible by reason of the
prohibition of Section 162(m).
Incentive Stock Options. Pursuant to the 2000 Stock
Incentive Plan, employees may be granted stock options which are
intended to qualify as "incentive stock options" under the
provisions of Section 422 of the Code. An optionee will not
recognize any taxable income for federal income tax purposes upon
receipt of an incentive stock option or, generally, at the time
of exercise of an incentive stock option. The exercise of an
incentive stock option generally will result in an increase in an
optionee's taxable income for alternative minimum tax purposes.
If an optionee exercises an incentive stock option and does
not dispose of the shares received in a subsequent "disqualifying
disposition" (generally, a sale, gift or other transfer within
two years after the date of grant of the incentive stock option
or within one year after the shares are transferred to the
optionee), upon disposition of the shares any amount realized in
excess of the optionee's tax basis in the shares disposed of will
be treated as a long-term capital gain, and any loss will be
treated as a long-term capital loss. In the event of a
disqualifying disposition, the difference between the fair market
value of the shares received on the date of exercise and the
exercise price (limited, in the case of a taxable sale or
exchange, to the excess of the amount realized upon disposition
over the optionee's tax basis in the shares) will be treated as
compensation received by the optionee in the year of disposition.
Any additional gain will be taxable as a capital gain and any
loss as a capital loss, which will be long-term or short-term
depending on the length of time the optionee held the shares.
If the exercise price of an incentive stock option is paid
in whole or in part with shares of common stock, no income gain
or loss generally will be recognized by the optionee with respect
to the shares of common stock paid as the exercise price.
However, if such shares of common stock were received upon the
exercise of an incentive stock option, the use of those shares as
payment of the exercise price will be considered a disposition
for purposes of determining whether there has been a
disqualifying disposition of those shares.
Neither the company nor any of its subsidiaries will be
entitled to a deduction with respect to shares received by an
optionee upon exercise of an incentive stock option and not
disposed of in a disqualifying disposition. If an amount is
treated as compensation received by an optionee because of a
disqualifying disposition, the company or one of its subsidiaries
generally will be entitled to a corresponding deduction in the
same amount for compensation paid.
Non-Qualified Stock Options. An optionee will not recognize
any taxable income for federal income tax purposes upon receipt
of a non-qualified stock option. Upon the exercise of a non-
qualified stock option the amount by which the fair market value
of the shares received, determined as of the date of exercise,
exceeds the exercise price will be treated as compensation
received by the optionee in the year of exercise. If the exercise
price of a non-qualified stock option is paid in whole or in part
with shares of common stock, (i) no income, gain or loss will be
recognized by the optionee on the receipt of shares equal in
value on the date of exercise to the shares delivered in payment
of the exercise price, and (ii) no income, gain or loss will be
recognized by the optionee with respect to the shares of common
stock paid as the exercise price of the option. The fair market
value of the remainder of the shares received upon exercise of
the non-qualified stock option, determined as of the date of
exercise, less the amount of cash, if any, paid upon exercise
will be treated as compensation income received by the optionee
on the date of exercise of the stock option. The company or one
of its subsidiaries generally will be entitled to a deduction for
compensation paid in the same amount treated as compensation
received by the optionee.
Restricted Stock. A recipient of restricted stock will not
recognize any taxable income for federal income tax purposes in
the year of the Award, provided the shares are subject to
restrictions (that is, they are non-transferable and subject to a
substantial risk of forfeiture). However, the recipient may elect
under Section 83(b) of
-25-
<PAGE>
the Code to recognize compensation income in the year of the
Award in an amount equal to the fair market value of the shares
on the date of the Award (less the amount paid by the recipient
for such shares), determined without regard to the restrictions.
If the recipient does not make a Section 83(b) election, the fair
market value of the shares on the date the restrictions lapse
(less the amount paid by the recipient for such shares) will be
treated as compensation income to the recipient and will be
taxable in the year the restrictions lapse. The company or one of
its subsidiaries generally will be entitled to a deduction for
compensation paid in the same amount treated as compensation
income to the recipient.
Unrestricted Stock. Any shares of common stock received
pursuant to an Award of unrestricted stock will be treated as
compensation income received by the recipient generally in the
year in which the recipient receives such shares. In each case,
the amount of compensation income will equal the fair market
value of the shares of common stock on the date compensation
income is recognized (less the amount, if any, paid by the
recipient for such shares). The company or one of its
subsidiaries generally will be entitled to a corresponding
deduction in the same amount for compensation paid.
Performance Stock Awards. A recipient of a performance
stock award will not recognize any taxable income for federal
income tax purposes upon receipt of the Award. Any shares of
common stock received pursuant to the Award will be treated as
compensation income received by the recipient generally in the
year in which the recipient receives such shares of common stock.
The amount of compensation income will equal the fair market
value of the shares of common stock on the date compensation
income is recognized. The company or one of its subsidiaries
generally will be entitled to a deduction for compensation paid
in the same amount treated as compensation income to the
recipient.
Other Tax Matters. The exercise by a recipient of a stock
option, the lapse of restrictions on restricted stock, or the
deemed earnout of performance stock awards following the
occurrence of a change in control, in certain circumstances, may
result in:
(1) a 20% federal excise tax (in addition to federal income
tax) to the recipient on certain payments of common
stock or cash resulting from such exercise or deemed
earnout of performance stock awards or, in the case of
restricted stock, on all or a portion of the fair
market value of the shares on the date the restrictions
lapse; and
(2) the loss of a compensation deduction which would
otherwise be allowable to the company or one of its
subsidiaries as explained above.
Awards Granted Under the 2000 Stock Incentive Plan
Presently, approximately 100 persons would be eligible to be
considered for Awards under the 2000 Stock Incentive Plan.
It is not possible to determine the number of shares that
will be awarded under the 2000 Stock Incentive Plan in the future
to any particular individual. No Awards have as yet been granted
under the 2000 Stock Incentive Plan.
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<PAGE>
INDEPENDENT ACCOUNTANTS
Your Board of Directors has approved the engagement of
Hein + Associates LLP as the company's independent public
accountants for the year ended June 30, 2000.
The Board of Directors of the company has not yet selected
independent auditors to examine Park Pharmacy's financial
statements for the year ending June 30, 2001. Representatives of
Hein + Associates LLP, who audited the company's financial
statements for the year ended June 30, 2000, are expected to be
present at the Annual Meeting with the opportunity to make a
statement if they desire to do so and to be available to respond
to appropriate questions.
SHAREHOLDER PROPOSALS
Stockholders may present proposals for inclusion in the
proxy statement for consideration at its 2001 Annual Meeting of
Stockholders. Such proposals must be received by Park Pharmacy
by August 14, 2001 and must comply with the requirements of Rule
14a-8 of the Securities Exchange Act of 1934.
ANNUAL MEETING ADVANCE NOTICE REQUIREMENTS
Our Bylaws provide that stockholder proposals and director
nominations by stockholders may be made in compliance with
certain advance notice, informational and other applicable
requirements. With respect to stockholders proposals (concerning
matters other than the nomination of directors), the individual
submitting the proposal must file a written notice with the
secretary of Park Pharmacy at 10711 Preston Road, Suite 250,
Dallas, Texas 75230 setting forth certain information about the
stockholder and all persons acting in concert with him or her,
including the following information:
* a brief description of the business desired to be
brought before the meeting and the reasons for
conducting such business at the annual meeting;
* the names and addresses of the supporting stockholders;
* the class and number of shares of our stock that are
beneficially owned by such persons; and
* any material interest of such persons in the matter
presented.
The notice must be delivered to the secretary (1) at least
90 days before any scheduled meeting or (2) if less than 100 days
notice or prior public disclosure of the meeting is given, by the
close of business on the 10th day following the giving of notice
or the date public disclosure was made, whichever is earlier.
A stockholder may recommend a nominee to become a director
of Park Pharmacy by giving the secretary (at the address set
forth above) a written notice setting forth certain information,
including:
* the name, age, business and residence address of the
person intended to be nominated;
* a representation that the nominating stockholders in
fact a holder of record of Park Pharmacy common stock
entitled to vote at the meeting and that he or she
intends to be present at the meeting to nominate the
person specified;
* a description of all arrangements between the
nominating stockholder, the nominee and other persons
concerning the nomination;
* any other information about the nominee that must be
disclosed in proxy solicitations under Rule 14(a) of
the Securities Exchange Act of 1934; and
* the nominee's written consent to serve, if elected.
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<PAGE>
Such nominations must be made pursuant to the same advance
notice requirements for stockholder proposals set forth in the
preceding paragraph. Park Pharmacy's annual meetings will usually
be held on the second Tuesday of December of each year.
Accordingly, our 2001 annual meeting of stockholders is currently
scheduled for December 11, 2001. Copies of our Bylaws are
available upon written request made to the secretary of Park
Pharmacy at the above address. The requirements described above
do not supersede the requirements or conditions established by
the Securities and Exchange Commission for stockholder proposals
to be included in Park Pharmacy's proxy materials for a meeting
of stockholders. The Chairman of the meeting may refuse to bring
before a meeting any business not brought in compliance with
applicable law and our Bylaws.
Copies of the Annual Report on Form 10-KSB
FILED WITH THE SECURITIES AND EXCHANGE COMMISSION
Park Pharmacy, without charge, will provide to each
stockholder, on written request, a copy of its Annual Report on
Form 10-KSB, but without exhibits, required to be filed with the
Securities and Exchange Commission for the fiscal year ended June
30, 2000. Written requests for such Form 10-KSB should be
directed to Ms. Gwendolyn Park, Vice President, Treasurer and
Corporate Secretary, Park Pharmacy Corporation, 10711 Preston
Road, Suite 250, Dallas, Texas 75230.
For the Board of Directors
Gwendolyn Park,
Corporate Secretary
Dallas, Texas
December __, 2000
It is important to us that you return your proxy promptly.
If you do not expect to attend the annual meeting and wish your
stock to be voted, then you shall date, sign and return the
accompanying proxy in the enclosed self-addressed envelope. No
postage is required if mailed in the United States.
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<PAGE>
Exhibit A
---------
CERTIFICATE OF INCORPORATION
OF
PARK PHARMACY CORPORATION
FIRST: The name of the Corporation is Park Pharmacy
Corporation (the "Corporation").
SECOND: The name and mailing address of the Incorporator
of the Corporation is William L. Rivers, c/o Arter & Hadden LLP,
1717 Main Street, Suite 4100, Dallas, Texas 75201.
THIRD: The address of its registered office in the State
of Delaware is 1209 Orange Street, in the City of Wilmington,
County of New Castle 19801. Its registered agent at such address
is The Corporation Trust Company.
FOURTH: The purpose of the Corporation is to engage in any
lawful act or activity for which corporations may be organized
under the Delaware General Corporation Law ("DGCL").
FIFTH: The Corporation is to have perpetual existence.
SIXTH: The aggregate number of shares of all classes of
stock which the corporation shall have authority to issue is One
Hundred Fifty Million (150,000,000) shares, consisting of (A) One
Hundred Forty Million (140,000,000) shares of common stock, par
value $0.0001 per share (the "Common Stock"), and (B) Ten Million
(10,000,000) shares of preferred stock, par value $0.001 per
share (the "Preferred Stock"), of which five million (5,000,000)
shares of Preferred Stock are designated as Class A Preferred
Stock, as further provided in part (C) below.
The designations, powers, preferences and relative,
participating, optional and other special rights, and the
qualifications, limitations and restrictions thereof with respect
to the Common Stock and the Preferred Stock are as follows:
(A) Common Stock.
Each holder of the Common Stock of the Corporation shall be
entitled to one vote for every share of Common Stock outstanding
in his name on the books of the Corporation. Except for and
subject to those rights expressly granted to the holders of the
Preferred Stock or except as may be provided by the laws of the
State of Delaware, the holders of Common Stock shall have
exclusively all other rights of stockholders including, without
limitation, (i) the right to receive dividends, when and as
declared by the Board of Directors out of assets legally
available therefor, and (ii) in the event of any distribution of
assets upon liquidation, dissolution or winding up of the
Corporation or otherwise, the right to receive ratably and
equally with all holders of all Common Stock all the assets and
funds of the Corporation remaining after the payment to the
holders of the Preferred Stock of the specific amounts that they
are entitled to receive upon such liquidation, dissolution or
winding up of the Corporation, if any.
(B) Preferred Stock.
Preferred Stock may be issued from time to time in one or
more series, each of such series to have such terms as stated in
the resolution or resolutions providing for the establishment of
such series adopted by the Board of Directors of the Corporation
as hereinafter provided. Except as otherwise expressly stated in
the resolution or resolutions providing for the establishment of
a series of Preferred Stock, any shares of
A-1
<PAGE>
Preferred Stock that may be redeemed, purchased or acquired by
the Corporation may be reissued except as otherwise expressly
provided by law. Different series of Preferred Stock shall not
be construed to constitute different classes of stock for the
purpose of voting by classes unless expressly provided in the
resolution or resolutions providing for the establishment
thereof. The Board of Directors of the Corporation is hereby
expressly authorized to issue, from time to time, shares of
Preferred Stock in one or more series, and, in connection with
the establishment of any such series by resolution or
resolutions, to determine and fix the number of shares
constituting that series and the distinctive designation of that
series and to determine and fix such voting powers, full or
limited, or no voting powers, and such other powers,
designations, preferences and relative, participating, optional
and other rights, and the qualifications, limitations and
restrictions thereof, including, without limitation, dividend
rights, conversion rights, redemption privileges and liquidation
preferences, as shall be stated in such resolution or
resolutions, all to the fullest extent permitted by the DGCL.
Without limiting the generality of the foregoing, the resolution
or resolutions providing for the establishment of any series of
Preferred Stock may, to the extent permitted by law, provide that
such series shall be superior to, rank equally with or be junior
to the Preferred Stock of any other series. Except as otherwise
expressly provided in the resolution or resolutions providing for
the establishment of any series of Preferred Stock, no vote of
the holders of shares of Preferred Stock or Common Stock shall be
a prerequisite to the issuance of any shares of any series of the
Preferred Stock authorized by and complying with the conditions
of this Certificate of Incorporation.
(A) Designation of Class A Preferred Stock
Five Million (5,000,000) shares of Preferred Stock are
hereby designated 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 Series A Preferred Stock 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 or 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 to 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 Series A
Preferred Stock is not paid in full, the holder of the Series A
Preferred Stock, and of such other stock, will share 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 rights or
claims 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,
A-2
<PAGE>
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 as the close of business on the record date for
determination of the holders of Common Stock entitled to such
dividend.
7. In the event that the Company shall at any time pay any
dividend or made any other distribution on its Common Stock is
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 distributions so that the holders 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 distributions 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 on subdivisions, 4, 5, 6 and 7 shall occur.
9. The Company is not obligated to redeem the Series A
Preferred Stock.
10. At every meeting of the stockholders of the Company,
holders of Series A Preferred Stock 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.
SEVENTH: In furtherance and not in limitation of the powers
conferred on it by the laws of the State of Delaware, the Board
of Directors is expressly authorized to adopt, amend or repeal
the Bylaws of the Corporation.
EIGHTH: No action required to be taken or which may be
taken at any annual or special meeting of stockholders of the
Corporation may be taken without a meeting, and the power of
stockholders to consent in writing, without a meeting, to the
taking of any action is specifically denied.
NINTH: No director of the Corporation shall be personally
liable to the Corporation or any of its stockholders for monetary
damages for breach of fiduciary duty as a director of the
Corporation; PROVIDED, HOWEVER, that the foregoing is not
intended to eliminate or limit the liability of a director of the
Corporation for (i) any breach of a director's duty of loyalty to
the Corporation or its stockholders, (ii) acts or omissions not
in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) a violation of Section 174 of the
DGCL, or (iv) any transaction from which the director derived an
improper personal benefit. If the DGCL is hereafter amended to
authorize corporate action further eliminating or limiting the
personal liability of directors, then the liability of a director
of the Corporation shall be eliminated or limited to the fullest
extent permitted by the DGCL, as so amended. No amendment to or
repeal of this Article NINTH shall apply to or have any effect on
the liability or alleged liability of any director of the
Corporation for or with respect to any acts or omissions of such
director occurring prior to such amendment.
A-3
<PAGE>
TENTH: The Corporation shall, to the fullest extent
permitted by Section 145 of the DGCL, as that Section may be
amended and supplemented from time to time, indemnify any
director or officer of the Corporation (and any director, trustee
or officer of any corporation, business trust or other entity to
whose business the Corporation shall have succeeded) which it
shall have power to indemnify under that Section against any
expenses, liabilities or other matter referred to in or covered
by that Section. The indemnification provided for in this
Article TENTH (a) shall not be deemed exclusive of any other
rights to which those indemnified may be entitled under any
Bylaw, agreement or vote of stockholders or disinterested
directors or otherwise, both as to action in their official
capacities and as to action in another capacity while holding
such office, (b) shall continue as to a person who has ceased to
be a director or officer and (c) shall inure to the benefit of
the heirs, executors and administrators of such a person. To
assure indemnification under this Article TENTH of all such
persons who are determined by the Corporation or otherwise to be
or to have been "Fiduciaries" of any employee benefit plan of the
Corporation that may exist from time to time and that is governed
by the Act of Congress entitled "Employee Retirement Income
Security Act of 1974," as amended from time to time, such Section
145 shall, for the purposes of this Article, be interpreted as
follows: an "other enterprise" shall be deemed to include such
an employee benefit plan; the Corporation shall be deemed to have
requested a person to serve an employee benefit plan where the
performance by such person of his duties to the Corporation also
imposes duties on, or otherwise involves services by, such person
to the plan or participants or beneficiaries of the plan; excise
taxes assessed on a person with respect to an employee benefit
plan pursuant to such Act of Congress shall be deemed "fines;"
and action taken or omitted by a person with respect to an
employee benefit plan in the performance of such person's duties
for a purpose reasonably believed by such person to be in the
interest of the participants and beneficiaries of the plan shall
be deemed to be for a purpose that is not opposed to the best
interests of the Corporation.
ELEVENTH: Notwithstanding anything contained in this
Certificate of Incorporation to the contrary, the affirmative
vote of at least 662/3% of the voting power of the Corporation
shall be required to amend or repeal Articles EIGHTH, NINTH,
TENTH OR ELEVENTH of this Certificate of Incorporation or to
adopt any provision inconsistent therewith. Further, the
affirmative vote of at least 662/3% of the voting power of the
Corporation shall be required to amend or repeal the Bylaws of
the Corporation, if the stockholders of the Corporation are
required by the DGCL, the Certificate of Incorporation or the
Bylaws to vote thereon. Except as provided herein, the
Corporation reserves the right to amend, alter, change or repeal
any provision contained in this Certificate of Incorporation in
the manner now or hereafter prescribed by the laws of the State
of Delaware, and all rights herein conferred are granted subject
to this reserved power.
TWELFTH: Meetings of stockholders may be held within or
without the State of Delaware as the Bylaws may provide. The
books of the Corporation may be kept (subject to any provision
contained in the DGCL) outside the State of Delaware at such
place or places as may be designated form time to time by the
Board of Directors or in the Bylaws of the Corporation.
IN WITNESS WHEREOF, I have hereunto set my hand this ____
day of _______, 2001, and affirm the statements contained therein
as true under penalties of perjury.
-----------------------------
William L. Rivers
Incorporator
A-4
Exhibit B
---------
BYLAWS
of
PARK PHARMACY CORPORATION
adopted ___________, 2001
<PAGE>
BYLAWS
of
PARK PHARMACY CORPORATION
(a Delaware corporation)
ARTICLE I
Offices
SECTION 1.1. The registered office of the Corporation
shall be in the City of Wilmington, County of New Castle, State
of Delaware.
SECTION 1.2. The Corporation may also have offices at such
other places both within and without the State of Delaware as the
Board of Directors may from time to time determine or the
business of the Corporation may require.
ARTICLE II
Meetings of Stockholders
SECTION 2.1. Annual Meetings. The annual meeting of the
stockholders for the election of directors and for the
transaction of such other business as may properly come before
the meeting shall be held at such place within or without the
State of Delaware, and at such hour of the day as the Board of
Directors shall determine by resolution.
SECTION 2.2. Special Meetings. Special meetings of the
stockholders for any purpose or purposes, unless otherwise
prescribed by statute or by the Certificate of Incorporation, may
be called by order of the Chairman, or if none is appointed, the
President, and shall be called by the Chairman or Secretary at
the request in writing of a majority of the Board of Directors or
the whole Executive Committee. Special meetings of the
stockholders of the Corporation may not be called by any other
person or persons. Special meetings of the stockholders shall be
held at such place within or without the State of Delaware, on
such date, and at such time as may be designated by the person or
persons calling the meeting.
SECTION 2.3. Notice of Meetings. Written notice of every
meeting of stockholders, stating the time, place and purposes
thereof, shall be given personally, by courier or by mail at
least ten (10), but not more than sixty (60), days (except as
otherwise provided by law) before the date of such meeting to
each person who appears on the stock transfer books of the
Corporation as a stockholder and who is entitled to vote at such
meeting. If such notice is mailed, it shall be directed to such
stockholder at his address as it appears on the stock transfer
books of the Corporation.
SECTION 2.4. Quorum. At any meeting of the stockholders
the holders of a majority of the votes entitled to be cast at
such meeting, present in person or represented by proxy, shall
constitute a quorum for all purposes, except where otherwise
provided by law or in the Certificate of Incorporation. A
quorum, once established, shall not be broken by the withdrawal
of enough votes to leave less than a quorum and the votes present
may continue to transact business until adjournment, provided
that any action (other than adjournment) is approved by at least
a majority of the shares required to constitute a quorum.
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<PAGE>
SECTION 2.5. Adjournments. If at any meeting of
stockholders a quorum shall fail to attend in person or by proxy,
the holders of a majority of the shares present in person or by
proxy and entitled to vote at such meeting may adjourn the
meeting from time to time until a quorum shall attend, and
thereupon any business may be transacted which might have been
transacted at the meeting as originally called. Notice need not
be given of the adjourned meeting if the time and place thereof
are announced at the meeting at which the adjournment is taken,
provided, however, that if the adjournment is for more than
thirty (30) days or if after the adjournment a new record date is
fixed, notice of the adjourned date shall be given.
SECTION 2.6. Organization. The Chairman, if one is
elected, and in his absence the President, and in their absence
the Vice President, shall call meetings of the stockholders to
order and shall act as chairman thereof. The Secretary or an
Assistant Secretary of the Corporation shall act as secretary at
all meetings of the stockholders when present, and, in the
absence of both, the presiding officer may appoint any person to
act as secretary. The chairman of any meeting of stockholders
shall determine the order of business and the procedure at the
meeting, including such regulation of the manner of voting and
the conduct of discussion as he may deem appropriate in his
discretion.
SECTION 2.7. Voting. At each meeting of the stockholders,
each holder of the shares of Common Stock shall be entitled to
one vote, and each holder of other shares of capital stock shall
have the number of votes set forth in the provision of the
Certificate of Incorporation establishing such class, on such
matter for each such share and may exercise such voting right
either in person or by proxy appointed by an instrument in
writing subscribed by such stockholder or his duly authorized
attorney. No such proxy shall be voted or acted upon after three
(3) years from its date unless the proxy provides for a longer
period. Voting need not be by ballot. All elections of
directors shall be decided by a plurality vote and all questions
decided and actions authorized by a majority vote, except as
otherwise required by law.
SECTION 2.8. Inspectors. At any meeting of stockholders,
inspectors of election may be appointed by the presiding officer
of the meeting for the purpose of opening and closing the polls,
receiving and taking charge of the proxies, and receiving and
counting the ballots or the vote of stockholders otherwise given.
The inspectors shall be appointed by the presiding officer of the
meeting, shall be sworn to faithfully perform their duties, and
shall in writing certify to the returns. No candidate for
election as director shall be appointed or act as inspector.
SECTION 2.9. Stockholder List. At least ten (10) days
before every meeting of stockholders, a complete list of the
stockholders entitled to vote at the meeting, arranged in
alphabetical order, and showing the address of each stockholder
and the number of shares registered in the name of such
stockholder, shall be prepared and held open to the examination
of any stockholder, for any purpose germane to the meeting,
during ordinary business hours for said ten (10) days either at a
place within the city where the meeting is to be held, which
place shall be specified in the notice of the meeting, or, if not
so specified, at the place where the meeting is to be held. The
list shall also be produced and kept at the meeting during the
whole time thereof, and may be inspected by any stockholder who
is present.
SECTION 2.10. Business to be Transacted at Meetings. At a
meeting of the stockholders, only such business shall be
conducted as shall have been properly brought before the meeting.
To be properly brought before a special meeting, business must be
specified in the notice of the meeting (or any supplement
thereto). To be properly brought before an annual meeting,
business must be (a) specified in the notice of the meeting (or
any supplement thereto) given by or at the direction of the Board
of Directors, (b) otherwise properly brought before the meeting
by or at the direction of the Board of Directors or (c) otherwise
properly brought before the meeting by a stockholder. For
business to be properly brought before an annual meeting by a
stockholder, the stockholder must, in addition to any
requirements imposed by federal securities law or other laws,
have given timely notice thereof in writing
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to the secretary of the Corporation. To be timely for an annual
meeting, a stockholder's notice must be delivered to or mailed
and received at the principal executive offices of the
Corporation, no later than ninety (90) days prior to the
scheduled meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however,
if less than one hundred (100) days notice or prior public
disclosure of the date of the scheduled meeting is given, notice
by the stockholders must be so delivered or received not later
than the close of business on the tenth (10th) day following the
earlier of the day on which such notice of the date of the
scheduled annual meeting was mailed or the day on which public
disclosure was made. A stockholder's notice to the secretary with
regard to an annual meeting shall set forth as to each matter
that the stockholder proposes to bring before the meeting, (a) a
brief description of the business desired to be brought before
the meeting and the reasons for conducting such business at the
annual meeting, (b) the name and address, as they appear on the
Corporation's books, of the stockholders supporting such
proposal, (c) the class and number of shares of the Corporation
that are beneficially owned by the supporting stockholders on the
date of the presenting stockholders' notice and (d) any material
interest of the presenting or supporting stockholders in such
business. The chairman of the meeting may refuse to bring before
a meeting any business not properly brought before the meeting in
compliance with this section.
ARTICLE III
Directors
SECTION 3.1. Functions and Number. The property, business
and affairs of the Corporation shall be managed and controlled by
a board of directors, who need not be stockholders, citizens of
the United States or residents of the State of Delaware. The
number of members which shall constitute the Board of Directors,
excluding advisory directors, shall be such number, not less than
three, determined by resolution of the Board of Directors or by
the stockholders at an annual or special meeting held for that
purpose, but no decrease in the Board of Directors shall have the
effect of shortening the term of an incumbent director. The
first Board of Directors shall consist of seven (7) members, such
number to constitute the first whole Board of Directors. The use
of the phrase "whole Board" herein refers to the total number of
directors which the Corporation would have if there were no
vacancies. Except as otherwise provided by law or in these
Bylaws or in the Certificate of Incorporation, the directors
shall be elected by the stockholders entitled to vote at the
annual meeting of stockholders of the Corporation, and shall be
elected to serve until the next annual meeting of stockholders
and until their successors shall be elected and shall qualify.
Advisory directors, who shall not have the power to vote on
matters submitted to a vote of the board of directors, may be
selected by a majority of the directors other than advisory
directors and such numbers as the directors (other than the
advisory directors) deem desirable. Advisory directors shall
serve until such time as they resign or are removed by a majority
of the directors other than advisory directors.
SECTION 3.2. Removal. Any director may be removed, with
or without cause, by the affirmative vote of the holders of a
majority of the then outstanding shares of Common Stock.
SECTION 3.3. Vacancies. Unless otherwise provided in the
Certificate of Incorporation or in these Bylaws, vacancies among
the directors, whether caused by resignation, death,
disqualification, removal, an increase in the authorized number
of directors or otherwise, may be filled by a majority of the
directors then in office, although less than a quorum, or by a
sole remaining director.
SECTION 3.4. Place of Meeting. The directors may hold
their meetings and may have one or more offices and keep the
books of the Corporation (except as otherwise may at any time be
provided by law) at such place or places within or without the
State of Delaware as the Board may from time to time determine.
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SECTION 3.5. Annual Meeting. The newly elected Board may
meet for the purpose of organization, the election of officers
and the transaction of other business, at such time and place
within or without the State of Delaware as shall be fixed as
provided in Section 3.7 of this Article for special meetings of
the Board of Directors.
SECTION 3.6. Regular Meetings. Regular meetings of the
Board of Directors shall be held at such time and place within or
without the State of Delaware as the Board of Directors shall
from time to time by resolution determine and no notice of such
regular meetings shall be required.
SECTION 3.7. Special Meetings. Special meetings of the
Board of Directors shall be held whenever called by the direction
of the Chairman or a majority of the directors (other than
advisory directors) then in office. The Secretary or some other
officer or director of the Corporation shall give notice to each
director of the time and place of each special meeting either (a)
by mailing the same at least five (5) days before the meeting,
(b) by delivery by personal delivery or courier the same not
later than the day before the meeting, or (c) by telefaxing, e-
mailing, telexing, telegraphing or telephoning the same not later
than the day before the meeting, at the residence address (or
e-mail address, telephone number or facsimile number) of each
director or at his usual place of business. Special meetings of
the Board shall be held at such place within or without the State
of Delaware as shall be specified in the call for the meeting.
Unless expressly required by statute, by the Certificate of
Incorporation or by the Bylaws, neither the business to be
transacted at, nor the purpose of, any special meeting of the
Board of Directors need be specified in the notice of a meeting.
SECTION 3.8. Quorum. Except as otherwise provided by law
or in the Certificate of Incorporation, a majority of the
directors in office (other than advisory directors) shall
constitute a quorum for the transaction of business. A majority
of those directors (other than advisory directors) present at the
time and place of any regular or special meeting, if less than a
quorum be present, may adjourn from time to time without notice,
until a quorum be had. The act of a majority of directors (other
than advisory directors) present at any meeting at which there is
a quorum shall be the act of the Board of Directors, except as
may be otherwise provided by law or in the Certificate of
Incorporation.
SECTION 3.9. Compensation. The Board of Directors shall
have the authority to fix by resolution the compensation of
directors.
SECTION 3.10. Organization. At all meetings of the Board
of Directors, the Chairman, or in his absence, the President, or
in his absence the Vice President if he is a member of the Board,
or in their absence, a chairman chosen by the directors shall
preside. The Secretary or an Assistant Secretary of the
Corporation shall act as secretary at all meetings of the Board
of Directors when present, and, in the absence of both, the
presiding officer may appoint any person to act as secretary.
SECTION 3.11. Telephone Meetings. Any member of the Board
of Directors may participate in any meeting of such Board by
means of conference telephone or similar communications equipment
by means of which all persons participating in the meeting can
hear each other, and participation in any meeting pursuant to
this provision shall constitute presence in person at such
meeting.
SECTION 3.12. Action Without Meeting. Any action required
or permitted to be taken at any meeting of the Board of
Directors, or any committee thereof, may be taken without a
meeting if all the members of the Board (other than advisory
directors) consent thereto in writing, and the writing or
writings are filed with the minutes of proceedings of the Board.
SECTION 3.13. Nomination of Director Candidates. Subject
to the rights of the holders of Preferred Stock or any other
class of capital stock of the Corporation (other than Common
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Stock) or any series of any of the foregoing that has been
outstanding, nominations for the election of directors may be
made by the Board of Directors, by any duly appointed committee
thereof or by any stockholder entitled to vote for the election
of directors. Any stockholder entitled to vote for the election
of directors at any meeting may nominate persons for election as
directors only if written notice of such stockholder's intent to
make such nomination is given, either by personal delivery or by
United States Mail, postage prepaid, to the Secretary of the
Corporation not later than ninety (90) days prior to the
scheduled meeting, regardless of any postponements, deferrals or
adjournments of that meeting to a later date; provided, however,
if less than one hundred (100) days notice or prior public
disclosure of the date of the scheduled meeting is given, notice
by the stockholders must be so delivered or received not later
than the close of business on the tenth (10th) day following the
earlier of the day on which such notice of the date of the
scheduled annual meeting was mailed or the day on which public
disclosure was made. Each such notice shall set forth: (a) the
name, age, business address and residence address of the person
or persons intended to be nominated; (b) a representation that
the stockholder is a holder of record of stock of the Corporation
entitled to vote at such meeting and intends to appear in person
or by proxy at the meeting to nominate the person or persons
specified in the notice; (c) a description of all arrangements or
understandings between the stockholder and each nominee and any
other person or persons (naming such person or persons) pursuant
to which the nomination or nominations are to be made by the
stockholder; (d) such other information regarding each nominee
proposed by such stockholder as would have been required to be
included in a proxy statement filed pursuant to the proxy rules
of the Securities and Exchange Commission had such requirements
been applicable and each nominee been nominated, or intended to
be nominated, by the Board of Directors; and (e) the consent of
each nominee to serve as a director of the Corporation if so
elected. The chairman of the meeting may refuse to acknowledge
the nomination of any person not made in compliance with this
section.
ARTICLE IV
Committees
SECTION 4.1. Executive Committee. The Board of Directors,
by a resolution passed by a vote of a majority of the whole
Board, may appoint an Executive Committee of one or more
directors, which to the extent permitted by law and in said
resolution shall, during the intervals between the meetings of
the Board of Directors, in all cases where special directions
shall not have been given by the Board, have and exercise the
powers of the Board of Directors, including those powers
enumerated in these Bylaws which are not specifically reserved to
the Board of Directors, in the management of the property,
business and affairs of the Corporation; provided, however, that
the Executive Committee shall not have any power or authority to
amend the Certificate of Incorporation, to adopt any agreement of
merger or consolidation, to recommend to the stockholders the
sale, lease or exchange of all or substantially all of the
Corporation's property and assets, to recommend to the
stockholders a dissolution of the Corporation or a revocation of
dissolution, to amend the Bylaws of the Corporation, to declare a
dividend, to authorize the issuance of stock or to adopt a
certificate of ownership and merger. The Executive Committee
shall have power to authorize the seal of the Corporation to be
affixed to all papers which may require it. The Board of
Directors shall appoint the Chairman of the Executive Committee.
The members of the Executive Committee shall receive such
compensation and fees as from time to time may be fixed by the
Board of Directors.
SECTION 4.2. Alternates and Vacancies. The Board of
Directors may designate one or more directors as alternate
members of the Executive Committee who may replace any absent or
disqualified member at any meeting of the Executive Committee.
In the absence or disqualification of a member of the Executive
Committee, the member or members thereof present at any meeting
and not disqualified from
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voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the Board of Directors to
act at the meeting in the place of any such absent or
disqualified member. All other vacancies in the Executive
Committee shall be filled by the Board of Directors in the same
manner as original appointments to such Committee.
SECTION 4.3. Committees to Report to Board. The Executive
Committee shall keep regular minutes of its proceedings and all
action by the Executive Committee shall be reported to the Board
of Directors at its meeting next succeeding such action.
SECTION 4.4. Procedure. The Executive Committee shall fix
its own rules of procedure, and shall meet where and as provided
by such rules or by resolution of the Board of Directors. The
presence of a majority of the then appointed number of each
committee created pursuant to this Article IV shall constitute a
quorum and in every case an affirmative vote by a majority of the
members of the committee present and not disqualified from voting
shall be the act of the committee.
SECTION 4.5. Other Committees. From time to time the
Board of Directors by a resolution adopted by a majority of the
whole Board may appoint any other committee or committees for any
purpose or purposes, to the extent lawful, which shall have such
powers as shall be determined and specified by the Board of
Directors in the resolution of appointment.
SECTION 4.6. Termination of Committee Membership. In the
event any person shall cease to be a director of the Corporation,
such person shall simultaneously therewith cease to be a member
of any committee appointed by the Board of Directors, or any
subcommittee thereof.
ARTICLE V
Officers
SECTION 5.1. Executive Officers. The executive officers
of the Corporation may consist of a Chairman, a President and
Chief Executive Officer, one or more Vice Presidents, a Treasurer
and a Secretary, all of whom shall be elected annually by the
Board of Directors. Unless otherwise provided in the resolution
of election, each officer shall hold office until the next annual
election of directors and until his successor shall have been
qualified. Any two of such offices may be held by the same
person.
SECTION 5.2. Subordinate Officers. The Board of Directors
may appoint one or more Assistant Secretaries, one or more
Assistant Treasurers and such other subordinate officers and
agents as it may deem necessary or advisable, for such term as
the Board of Directors shall fix in such appointment, who shall
have such authority and perform such duties as may from time to
time be prescribed by the Board.
SECTION 5.3. Compensation. The Board of Directors shall
have the power to fix the compensation of all officers, agents
and employees of the Corporation, which power, as to other than
elected officers, may be delegated as the Board of Directors
shall determine.
SECTION 5.4. Removal. All officers, agents and employees
of the Corporation shall be subject to removal, with or without
cause, at any time by affirmative vote of the majority of the
whole Board of Directors whenever, in the judgment of the Board
of Directors, the best interests of the Corporation will be
served thereby. The power to remove agents and employees, other
than officers or agents elected or appointed by the Board of
Directors, may be delegated as the Board of Directors shall
determine.
SECTION 5.5. Chairman. If a Chairman is elected, he shall
be chosen from among the members of the Board of Directors and
shall preside at all meetings of the directors and the
stockholders of the
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Corporation. The Chairman shall be the chief executive officer
of the Corporation and shall have the general powers and duties
of supervision and management of the Corporation and shall have
supervisory power over the President and all other officers of
the Corporation.
SECTION 5.6. The President. The President shall be the
chief operating officer of the Corporation. The President shall,
in the absence of the Chairman, preside at all meetings of the
stockholders and directors at which he is present. The President
shall also perform such other duties as may from time to time be
assigned to him by the Chairman or the Board of Directors.
SECTION 5.7. Vice Presidents. Each Vice President shall
perform such duties and shall have such authority as from time to
time may be assigned to him by the Board of Directors, the
Chairman or the President.
SECTION 5.8. The Treasurer. The Treasurer shall have the
general care and custody of all the funds and securities of the
Corporation which may come into his hands and shall deposit the
same to the credit of the Corporation in such bank or banks or
depositaries as from time to time may be designated by the Board
of Directors or by an officer or officers authorized by the Board
of Directors to make such designation, and the Treasurer shall
pay out and dispose of the same under the direction of the Board
of Directors. He shall have general charge of all securities of
the Corporation and shall in general perform all duties incident
to the position of Treasurer.
SECTION 5.9. The Secretary. The Secretary shall keep the
minutes of all proceedings of the Board of Directors and the
minutes of all meetings of the stockholders and also, unless
otherwise directed by such committee, the minutes of each
standing committee, in books provided for that purpose, of which
he shall be the custodian; he shall attend to the giving and
serving of all notices for the Corporation; he shall have charge
of the seal of the Corporation, of the stock certificate books
and such other books and papers as the Board of Directors may
direct; and he shall in general perform all the duties incident
to the office of Secretary and such other duties as may be
assigned to him by the Board of Directors.
SECTION 5.10. Vacancies. All vacancies among the officers
for any cause shall be filled only by the Board of Directors.
SECTION 5.11. Bonding. The Board of Directors shall have
power to require any officer or employee of the Corporation to
give bond for the faithful discharge of his duties in such form
and with such surety or sureties as the Board of Directors may
deem advisable.
ARTICLE VI
Stock
SECTION 6.1. Form and Execution of Certificates. The
shares of stock of the Corporation shall be represented by
certificates in such form as shall be approved by the Board of
Directors; provided that the Board of Directors of the
Corporation may provide by resolution that some or all of any or
all classes or series of its stock shall be uncertificated
shares. Any such resolution shall not apply to shares
represented by a certificate until such certificate is
surrendered to the Corporation; and, notwithstanding the adoption
of such a resolution by the Board of Directors, every holder of
stock represented by certificates and every holder of
uncertificated shares shall be entitled to a certificate or
certificates representing his shares upon delivery of a written
request therefor to the Secretary of the Corporation. The
certificates shall be signed by both (a) the Chairman, the
President or a Vice President and (b) the Treasurer or the
Secretary or an Assistant Treasurer or Assistant Secretary,
except that where any such certificates shall be countersigned by
a transfer agent and by a registrar, the signatures of any of the
officers above specified, and the seal of the
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Corporation upon such certificates, may be facsimiles, engraved
or printed. In case any officer, transfer agent or registrar
who has signed or whose facsimile signature has been placed upon
such certificate shall have ceased to be such officer, transfer
agent or registrar before such certificate is issued, it may be
issued by the Corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of its issue.
SECTION 6.2. Regulations. The Board of Directors may make
such rules and regulations consistent with any governing statute
as it may deem expedient concerning the issue, transfer and
registration of certificates of stock and concerning certificates
of stock issued, transferred or registered in lieu or replacement
of any lost, stolen, destroyed or mutilated certificates of
stock.
SECTION 6.3. Fixing of Record Date. For the purpose of
determining the stockholders entitled to notice of, and to vote
at, any meeting of stockholders or any adjournment thereof, or to
express consent to corporate action in writing without a meeting,
or for the purpose of determining stockholders entitled to
receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock, or for the purpose
of any other lawful action, the Board of Directors may fix, in
advance, a date as the record date for any such determination of
stockholders, and all persons who are stockholders of record on
the date so fixed, and no others, shall be entitled to notice of,
and to vote at, such meeting or any adjournment thereof, or to
express consent to corporate action in writing without a meeting,
or to receive payment of any dividend or other distribution or
allotment of any rights, or to exercise any rights in respect of
any change, conversion or exchange of stock or to take any other
lawful action, as the case may be. Such record date shall not be
more than sixty (60) days nor less than ten (10) days before the
date of any such meeting, nor more than sixty (60) days prior to
any other action, provided that any record date established by
the Board of Directors may not precede the date of the resolution
establishing the record date. The record date for determining
stockholders entitled to consent to corporate actions in writing
shall not be more than ten (10) days after the date upon which
the resolution fixing the record date was adopted. If no record
date is established prior to an action undertaken by consent, the
record date shall be, if no action of the Board of Directors is
required, the first date on which a signed written consent
setting forth the action taken is delivered to the corporation.
If action by the Board of Directors is required, the record date
shall be the close of business on the day the board adopts the
resolution taking the prior action.
Section 6.4. Transfer Agent and Registrar. The Board of
Directors may appoint a transfer agent or transfer agents and a
registrar or registrars for any or all classes of the capital
stock of the Corporation, and may require stock certificates of
any or all classes to bear the signature of either or both.
ARTICLE VII
Seal
SECTION 7.1. Seal. The seal of the Corporation shall be
circular in form and contain the name of the Corporation, the
year of its organization, and the words "CORPORATE SEAL,
DELAWARE", which seal shall be in charge of the Secretary to be
used as directed by the Board of Directors.
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ARTICLE VIII
Fiscal Year
SECTION 8.1. Fiscal Year. The fiscal year of the
Corporation shall end June 30, of each year unless otherwise
fixed by resolution of the Board of Directors.
ARTICLE IX
Waiver of Notice
SECTION 9.1. Waiver of Notice. Any person may waive any
notice required to be given by law, in the Certificate of
Incorporation or under these Bylaws by attendance in person, or
by proxy if a stockholder, at any meeting, except when such
person attends a meeting for the express purpose of objecting, at
the beginning of the meeting, to the transaction of any business
because the meeting is not lawfully called or convened, or by a
writing signed by the person or persons entitled to said notice,
whether before or after the time stated in said notice, which
waiver shall be deemed equivalent to such notice. Neither the
business to be transacted at, nor the purpose of, any regular or
special meeting of the stockholders, directors, or members of a
committee appointed by the Board of Directors need be specified
in any written waiver of notice.
ARTICLE X
Checks, Notes, Drafts, Contracts, Voting of Securities, Etc.
SECTION 10.1. Checks, Notes, Drafts, Etc. All checks,
notes, drafts or other orders for the payment of money of the
Corporation shall be signed, endorsed or accepted in the name of
the Corporation by such officer, officers, person or persons as
from time to time may be designated by the Board of Directors or
by an officer or officers authorized by the Board of Directors to
make such designation.
SECTION 10.2. Execution of Contracts, Deeds, Etc. The
Board of Directors may authorize any officer or officers, agent
or agents, in the name and on behalf of the Corporation, to enter
into or execute and deliver any and all deeds, bonds, mortgages,
contracts and other obligations or instruments, and such
authority may be general or confined to specific instances.
SECTION 10.3. Provision Regarding Conflicts of Interests.
No contract or transaction between the Corporation and one or
more of its directors or officers, or between the Corporation and
any other corporation, partnership, association, or other
organization in which one or more of its directors or officers
are directors or officers, or have a financial interest, shall
be void or voidable solely for this reason, or solely because the
director or officer is present at or participates in the meeting
of the Board of Directors or committee thereof which authorizes
the contract or transaction, or solely because his or their votes
are counted for such purpose, if:
(a) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the Board of Directors or the committee, and
the Board or committee in good faith authorizes the contract
or transaction by the affirmative votes of a majority of the
disinterested directors, even though the disinterested
directors be less than a quorum; or
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(b) The material facts as to his relationship or
interest and as to the contract or transaction are disclosed
or are known to the shareholders entitled to vote thereon,
and the contract or transaction is specifically approved in
good faith by vote of the shareholders; or
(c) The contract or transaction is fair as to the
Corporation as of the time it is authorized, approved or
ratified by the Board of Directors, a committee thereof, or
the shareholders.
Common or interested directors may be counted in determining
the presence of a quorum at a meeting of the Board of Directors
or of a committee which authorizes the contract or transaction.
SECTION 10.4. Voting of Securities Owned by the
Corporation. Subject always to the specific directions of the
Board of Directors, any share or shares of stock or other
securities issued by any other corporation and owned or
controlled by the Corporation may be voted, whether by written
consent as set forth hereinbelow or at any meeting of such other
corporation, by the Chairman of the Corporation, or in the
absence of the Chairman, by the President of the Corporation, or
in the absence of the Chairman, the President, by any Vice
President of the Corporation who may be present at such meeting
or available to sign such written consent. Whenever in the
judgment of the Chairman, or in his absence, of the President, or
in his absence, of any Vice President, it shall be desirable for
the Corporation to execute a proxy or give a consent with respect
to any share or shares of stock or other securities issued by any
other corporation and owned by the Corporation, such proxy or
consent shall be executed in the name of the Corporation by the
Chairman, the President or one of the Vice Presidents of the
Corporation without necessity of any authorization by the Board
of Directors. Any person or persons so designated as the proxy
or proxies of the Corporation shall have full right, power and
authority to vote the share or shares of stock or other
securities issued by such other corporation and owned by the
Corporation.
ARTICLE XI
Indemnification and Insurance
SECTION 11.1. Third-Party Actions. The Corporation shall
indemnify and hold harmless any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed proceeding (other than an action by or in the right of
the Corporation) by reason of the fact that he or she is or was a
director or officer of the Corporation, against expenses
(including reasonable attorneys' fees), judgments, fines,
liabilities, losses and amounts paid in settlement actually and
reasonably incurred by him or her in connection with such
proceeding if he or she acted in good faith and in a manner he or
she reasonably believed to be in or not opposed to the best
interests of the Corporation and, with respect to any criminal
proceeding, had no reasonable cause to believe his or her conduct
was unlawful. The termination of any proceeding by judgment,
order, settlement, conviction or upon a plea of nolo contendere
or its equivalent, shall not, of itself, create a presumption
that the person did not act in good faith and in a manner he or
she reasonably believed to be in, or not opposed to, the best
interest of the Corporation, and, with respect to any criminal
proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
SECTION 11.2. Derivative Actions. The Corporation shall
indemnify and hold harmless any person who was or is a party or
is threatened to be made a party to any threatened, pending or
completed proceeding by or in the right of the Corporation to
procure a judgment in its favor by reason of the fact that he or
she is or was a director or officer of the Corporation, against
expenses (including reasonable attorneys' fees) actually and
reasonably incurred by him or her in connection with the defense
or settlement of such proceeding if he or she acted in good faith
and in a manner he or she
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reasonably believed to be in or not opposed to the best interests
of the Corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such
person shall have been adjudged to be liable to the Corporation
unless and only to the extent that the court in which such
proceeding was brought shall determine upon application that,
despite the adjudication of liability but in view of all the
circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses that the court shall deem
proper.
SECTION 11.3. Right to Indemnification of Expenses. To the
extent that a director or officer of the Corporation has been
successful on the merits or otherwise in defense of any
proceeding referred to in Sections 11.1 and 11.2 or in defense of
any claim, issue or matter therein, he or she shall be
indemnified against expenses (including reasonable attorneys'
fees) actually and reasonably incurred by him or her in
connection therewith.
SECTION 11.4 Determination of Indemnification. Any
indemnification under Sections 11.1 and 11.2 (unless ordered by a
court) shall be made by the Corporation only as authorized in the
specific case upon a determination that indemnification of the
director or officer is proper in the circumstances because he or
she has meet the applicable standards of conduct set forth in
Sections 11.1 and 11.2. Such determination shall be made (A) by
the Board of Directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or
proceeding, (B) if such a quorum is not obtainable, or, even if
obtainable, if a quorum of disinterested directors so directs, by
independent legal counsel in a written opinion or (C) by the
stockholders.
SECTION 11.5 Expenses of Contested Indemnification Claims.
If a claim under Section 11.1 or 11.2 is not paid in full by the
Corporation within thirty (30) days after a written claim has
been received by the Corporation, the claimant may at any time
thereafter bring suit against the Corporation to recover the
unpaid amount of the claim and, if successful in whole or in
part, the claimant shall also be entitled to be paid the expenses
of prosecuting such claim.
SECTION 11.6 Advancement of Expenses. Expenses (including
reasonable attorneys' fees) incurred by a director or officer in
defending any proceeding or prosecuting a claim under Section
11.5 shall be paid by the Corporation in advance of the final
disposition of such proceeding or suit upon receipt of a written
affirmation by the director or officer of his or her good faith
belief that he or she has met the standard of conduct necessary
for indemnification and a written undertaking by or on behalf of
the director or officer to repay such amount if it shall
ultimately be determined that he or she is not entitled to be
indemnified by the Corporation as authorized in this Article.
SECTION 11.7 Indemnification Not Exclusive. The
indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall not be deemed exclusive
of any other rights to which those seeking indemnification or
advancement of expenses may be entitled under the Certificate of
Incorporation, any other bylaw, agreement, vote of stockholders
or disinterested directors or otherwise, both as to action in his
or her official capacity and as to action in another capacity
while holding such office.
SECTION 11.8 Survival of Indemnification and Advancement
of Expenses. The indemnification and advancement of expenses
provided by, or granted pursuant to, this Article shall, unless
otherwise provided when authorized or ratified, continue as to a
person who has ceased to be a director or officer and shall inure
to the benefit of the heirs, executors and administrators of such
person.
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SECTION 11.9 Employees, Agents and Others. The
Corporation may, to the fullest extent of the provisions of this
Article with respect to directors and officers and to the extent
authorized from time to time by the Board of Directors, grant
rights of indemnification and advancement of expenses to any
employee or agent of the Corporation or any other person who is
or was serving at the request of the Corporation as a director,
officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise.
SECTION 11.10 Contract Right. Each of the rights of
indemnification and advancement of expenses provided by, or
granted pursuant to, this Article shall be a contract right and
any repeal or amendment of the provisions of this Article shall
not adversely affect any such right of any person existing at the
time of such repeal or amendment with respect to any act or
omission occurring prior to the time of such repeal or amendment,
and further, shall not apply to any proceeding, irrespective of
when the proceeding is initiated, arising from the service of
such person prior to such repeal or amendment.
SECTION 11.11 Insurance. The Corporation shall have power
to purchase and maintain insurance on behalf of any person who is
or was a director, officer, employee or agent of the Corporation
or is or was serving at the request of the Corporation as a
director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her
in any such capacity, or arising out of his or her status as
such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions
of this Article.
SECTION 11.12 Certain References Under Article XI. For
purposes of this Article, the following references shall have the
following meanings:
(A) "the Corporation" shall include, in addition to
the resulting corporation, any constituent corporation (including
any constituent of a constituent) absorbed in a consolidation or
merger that, if its separate existence had continued, would have
had power and authority to indemnify its directors, officers,
employees or agents so that any person who is or was a director,
officer, employee or agent of such constituent corporation, or is
or was serving at the request of such constituent corporation as
a director, officer, employee or agent of another corporation,
partnership, joint venture, trust or other enterprise shall stand
in the same position under the provisions of this Article with
respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its
separate existence had continued;
(B) "fines" shall include any excise taxes assessed on
a person with respect to an employee benefit plan;
(C) a person who acted in good faith and in a manner
he or she reasonably believed to be in the best interest of the
participants and beneficiaries of an employee benefit plan shall
be deemed to have acted in a manner "not opposed to the best
interests of the corporation;"
(D) "other enterprises" shall include employee benefit
plans;
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(E) "proceeding" shall include any pending or
completed action, suit or proceeding, whether formal or informal
or civil, criminal, administrative, arbitrative or investigative,
any appeal in such an action, suit or proceeding, and any inquiry
or investigation that could lead to such an action, suit or
proceeding;
(F) "serving at the request of the Corporation" shall
include any service as a director, officer, employee or agent of
the Corporation that imposes duties on, or involves services by,
such director, officer, employee or agent with respect to an
employee benefit plan,
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Exhibit C
---------
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER ("Merger Agreement") is
entered into on this __ day of _________, 2000 by and between
PARK PHARMACY CORPORATION., a Colorado corporation ("Park
Pharmacy-Colorado") and PARK PHARMACY CORPORATION , a Delaware
corporation (hereinafter referred to as "Park Pharmacy-
Delaware").
RECITALS:
WHEREAS, Park Pharmacy-Colorado is a corporation duly
organized and existing under the laws of the State of Colorado;
WHEREAS, Park Pharmacy-Delaware is a corporation duly
organized and existing under the laws of the State of Delaware
and a wholly-owned subsidiary of Park Pharmacy-Colorado.
WHEREAS, on the date hereof, the authorized capital of Park
Pharmacy-Colorado consists of (A) Seven Hundred Fifty Million
(750,000,000) shares of common stock, par value $.0001 per share
("Park Pharmacy-Colorado Common Stock"), of which ___ shares are
issued and outstanding, and (B) Two Hundred Fifty Million
(250,000,000) shares, par value $.001 per share, of which Five
Million (5,000,000) of preferred stock have been designated as
"Series A Preferred Stock," of which ____ shares are issued and
outstanding.
WHEREAS, on the date hereof, the authorized capital of Park
Pharmacy-Delaware consists of (A) One Hundred Forty Million
(140,000,000) shares of common stock, par value $.0001 per share
("Park Pharmacy-Delaware Common Stock"), of which 100 shares are
issued and outstanding and (B) Ten Million (10,000,000) shares of
preferred stock, par value $.001 per share, of which Five Million
(5,000,000) shares have been designated as "Series A Preferred
Stock," of which no shares are issued and outstanding.
WHEREAS, the respective Boards of Directors of Park Pharmacy-
Colorado and Park Pharmacy-Delaware have determined that it is
advisable and in the best interests of each such corporation that
Park Pharmacy-Colorado merge with and into Park Pharmacy-Delaware
upon the terms and subject to the conditions of this Merger
Agreement for the purpose of effecting the reincorporation of
Park Pharmacy-Colorado in the State of Delaware, and the
respective Boards of Directors of Park Pharmacy-Colorado and Park
Pharmacy-Delaware have, by resolutions duly adopted, approved and
adopted this Merger Agreement; and
WHEREAS, the parties intend by this Merger Agreement to
effect a "reorganization" under Section 368(a)(1)(F) of the
Internal Revenue Code of 1986, as amended.
NOW, THEREFORE, in consideration of the foregoing and the
representations, warranties and agreements contained herein, the
parties hereto agree as follows:
AGREEMENTS:
1. Merger. At the Effective Time (as hereinafter defined),
Park Pharmacy-Colorado shall be merged with and into Park
Pharmacy-Delaware (the "Merger"). Park Pharmacy-Delaware shall
be the surviving corporation of the Merger (hereinafter sometimes
referred to as the "Surviving Corporation"),
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and the separate corporate existence of Park Pharmacy-Colorado
shall cease. The Merger shall become effective upon the filing
of a Certificate of Merger with the Secretary of State of the
State of Delaware and the Secretary of State of the State of
Colorado. The date and time when the Merger shall become
effective is herein referred to as the "Effective Time."
2. Governing Documents.
a. The Certificate of Incorporation of Park Pharmacy-Delaware
as it may be amended or restated subject to applicable law, and
as in effect immediately prior to the Effective Time, shall
constitute the Certificate of Incorporation of the Surviving
Corporation without further change or amendment until thereafter
amended in accordance with the provisions thereof and applicable
law.
b. The Bylaws of Park Pharmacy-Delaware as in effect
immediately prior to the Effective Time shall constitute the
Bylaws of the Surviving Corporation without change or amendment
until thereafter amended in accordance with the provisions
thereof and applicable law.
3. Officers and Directors. At the Effective Time, the board of
directors of Park Pharmacy-Delaware will consist of those persons
who were directors of Park Pharmacy-Colorado immediately prior to
the merger; namely Joe B. Park, Thomas R. Baker, Jim Moncrief,
Gwendolyn Park, Richard M. Allen, William D. Breedlove and Jon J.
Gergen. In addition, the persons serving as executive officers
of Park Pharmacy-Colorado immediately prior to the Effective Time
shall, after the Effective Time, be the executive officers of the
Surviving Corporation, without change until their respective
successors have been duly elected or appointed and qualified or
until their earlier death, resignation, or respective removal in
accordance with the Surviving Corporation's Certificate of
Incorporation and Bylaws and applicable law.
4. Rights, Privileges, Etc. At the Effective Time, the
separate corporate existence of Park Pharmacy-Colorado shall
cease, and the Surviving Corporation shall possess all the
rights, privileges, powers and franchises of a public or private
nature and be subject to all the restrictions, disabilities and
duties of Park Pharmacy-Colorado; and all the rights, privileges,
powers and franchises of Park Pharmacy-Colorado on whatever
account, as well for share subscriptions and all other things in
action, shall be vested in the Surviving Corporation; and all
property, rights, privileges, powers and franchises, and all and
every other interest shall be thereafter as effectively the
property of the Surviving Corporation as the same were of Park
Pharmacy-Colorado, and the title to any real estate vested by
deed or otherwise shall not revert or be in any way impaired by
reason of the Merger, but all rights of creditor and liens upon
any property of Park Pharmacy-Colorado shall be reserved
unimpaired, and all debts, liabilities and duties of Park
Pharmacy-Colorado shall thenceforth attach to the Surviving
Corporation and may be enforced against it to the same extent as
if such debts, liabilities and duties had been incurred or
contracted by it; provided, however, that such liens upon
property of Park Pharmacy-Colorado will be limited to the
property affected thereby immediately prior to the Merger. All
corporate acts, plans, policies, agreements, arrangements,
approvals and authorizations of Park Pharmacy-Colorado, its
shareholders, Board of Directors and committees thereof, officers
and agents which were valid and effective immediately prior to
the Effective Time, shall be taken for all purposes as the acts,
plans, policies, agreements, arrangements, approvals and
authorizations of the Surviving Corporation, its shareholders,
Board of Directors and committees thereof, respectively, and
shall be as effective and binding thereon a the same were with
respect to Park Pharmacy-Colorado.
5. Conversion of Shares. At the Effective Time, by virtue of
the Merger and without any action on the part of the holder
thereof:
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a. Each share of Park Pharmacy-Colorado Common Stock
outstanding immediately prior to the Effective Time shall, except
as provided in Section 8 hereof, be converted into, and shall
become, one fully paid and nonassessable share of Park Pharmacy-
Delaware Common Stock.
b. Each share of Park Pharmacy-Colorado Common Stock held in
the treasury of Park Pharmacy-Colorado immediately prior to the
Effective Time shall be automatically converted into one share of
Park Pharmacy-Delaware Common Stock, which shares shall continue
to be retained and held by Park Pharmacy-Delaware in the treasury
thereof.
c. Each share of Park Pharmacy-Colorado Series A Preferred
Stock outstanding immediately prior to the Effective Time shall,
except as provided in Section 8 hereof, be converted into, and
shall become, one fully paid and nonassessable share of Park
Pharmacy-Delaware Series A Preferred Stock.
d. Each option, warrant, purchase right, convertible debt
instrument or other security of Park Pharmacy-Colorado issued and
outstanding immediately prior to the Effective Time shall be
changed and converted into and shall be an identical security of
Park Pharmacy-Delaware, and the same number of shares of Park
Pharmacy-Delaware Common Stock shall be reserved for purposes of
the exercise of such option, warrant, purchase right, convertible
debt instrument or other securities as is equal to the number of
shares of Park Pharmacy-Colorado Common Stock so reserved at the
Effective Time.
e. Each share of Park Pharmacy-Delaware Common Stock issued and
outstanding immediately prior to the Effective Time shall be
canceled and retired, and no payment shall be made with respect
thereto, and such shares shall resume the status of unauthorized
and unissued shares of Park Pharmacy-Delaware Common Stock.
6. Stock Certificates. At and after the Effective Time, all of
the outstanding certificates which immediately prior to the
Effective Time represented shares of Park Pharmacy-Colorado
Common Stock or Park Pharmacy-Colorado Series A Preferred Stock
shall be deemed for all purposes to evidence ownership of, and to
represent shares of, Park Pharmacy-Delaware Common Stock or Park
Pharmacy-Colorado Series A Preferred Stock, as the case may be,
into which the shares of Park Pharmacy-Colorado formerly
represented by such certificates have been converted as herein
provided. The registered owner on the books and records of Park
Pharmacy-Colorado or its transfer agent of any such outstanding
stock certificate shall, until such certificate shall have been
surrendered for transfer or otherwise accounted for to the
Surviving Corporation or its transfer agent, have and be entitled
to exercise any voting or other rights with respect to and to
receive any dividends and other distributions upon the shares of
Park Pharmacy-Delaware Common Stock or Park Pharmacy-Colorado
Series A Preferred Stock evidenced by such outstanding
certificate as above provided.
7. Employee Benefit Plans. As of the Effective Time, the
Surviving Corporation hereby assumes all obligations of Park
Pharmacy-Colorado under any and all employee compensation or
benefit plans in effect as of the Effective Time or with respect
to which employee rights or accrued benefits are outstanding as
of the Effective Time.
8. Dissenting Stockholders.
a. Notwithstanding the provisions of Section 5.a. hereof, any
outstanding shares of Park Pharmacy-Colorado held by a
stockholder who shall have elected to dissent from the Merger and
who shall have exercised and perfected his right to dissent with
respect to such
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<PAGE>
shares in accordance with Article 113 of the Colorado
Business Corporation Act (a "Dissenting Stockholder") shall
not be converted into shares of Park Pharmacy-Delaware as a
result of the Merger, but such Dissenting Stockholders shall
be entitled to receive in lieu thereof only such
consideration as shall be provided in such Article 113,
except that shares of Park Pharmacy-Colorado Common Stock or
Park Pharmacy-Colorado Series A Preferred Stock, outstanding
immediately prior to the Effective Time and held by a
Dissenting Stockholder who shall thereafter withdraw his
election to dissent from the Merger or lose his right to
dissent from the Merger as provided in such Article 113
shall be deemed converted, as of the Effective Time, into
such number of shares of Park Pharmacy-Delaware as such
holder otherwise would have been entitled to receive as a
result of the Merger.
b. Park Pharmacy-Delaware hereby agrees that it may be served
with process in the State of Colorado in any proceeding to
enforce any obligation or the rights of a Dissenting Stockholder
arising from the Merger. Park Pharmacy-Delaware appoints the
Secretary of State of Colorado as its agent to accept service of
process for any such proceeding and a copy of such process shall
be mailed by the Secretary of State of the State of Colorado to
Park Pharmacy-Delaware at 10711 Preston Road, Suite 250, Dallas,
Texas 75230, Attention: Corporate Secretary.
9. Governing Law. This Merger Agreement shall be governed by
and construed in accordance with the laws of the State of
Delaware without regard to its conflict of law principles.
10. Amendment. Subject to applicable law and subject to the
rights of Park Pharmacy-Colorado's stockholders further to
approve any amendment which would have a material adverse effect
on such stockholders, this Merger Agreement may be amended,
modified or supplemented by written agreement of the parties
hereto at any time prior to the Effective Time with respect to
any of the terms contained herein.
11. Deferral or Abandonment. At any time prior to the Effective
Time, this Merger Agreement may be terminated and the Merger may
be abandoned or the time of consummation of the Merger may be
deferred for a reasonable time by the Board of Directors of
either Park Pharmacy-Colorado or Park Pharmacy-Delaware or both,
notwithstanding approval of this Merger Agreement by the
stockholders of Park Pharmacy-Colorado or the stockholders of
Park Pharmacy-Delaware, or both, if circumstances arise which, in
the opinion of the Board of Directors of Park Pharmacy-Colorado
or Park Pharmacy-Delaware or, in the case of deferral, of an
authorized officer, make the Merger inadvisable or such deferral
of the time of consummation thereof advisable.
12. Counterparts. This Merger Agreement may be executed in any
number of counterparts, each of which shall constitute an
original document but all of which together shall constitute one
and the same Agreement.
13. Further Assurances. From time to time, as and when required
or requested by either Park Pharmacy-Colorado or Park Pharmacy-
Delaware, as applicable, or by its respective successors and
assigns, there shall be executed and delivered on behalf of the
other corporation, or by its respective successors and assigns,
such deeds, assignments and other instruments, and there shall be
taken or caused to be taken by it all such further and other
action, as shall be appropriate or necessary in order to vest,
perfect or confirm, of record or otherwise, in the Surviving
Corporation the title to and possession of all property,
interests, assets, rights, privileges, immunities, powers,
franchise and authority of Park Pharmacy-Colorado and otherwise
to carry out the purposes of this Merger Agreement, and the
officers and directors of each corporation are fully authorized
in the name and on behalf of such corporation or
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<PAGE>
otherwise, to take any and all such action and to execute and
deliver any and all such deeds, assignments and other
instruments.
IN WITNESS WHEREOF, Park Pharmacy-Colorado and Park Pharmacy-
Delaware have caused this Merger Agreement to be signed by their
respective duly authorized officers and delivered this __ day of
_______, 2001.
Park Pharmacy Corporation
a Colorado corporation
----------------------------------
By:
Its:
Park Pharmacy Corporation
a Delaware corporation
-----------------------------------
By:
Its:
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<PAGE>
Exhibit D
---------
COMPARISON OF COLORADO AND DELAWARE CORPORATION LAW
The rights of the stockholders of Park Pharmacy
Corporation., a Colorado corporation ("Park Pharmacy-Colorado")
are governed by the Colorado Business Corporation Act ("CBCA").
The stockholders of Park Pharmacy-Colorado will become
stockholders of a Delaware corporation to be formed as a wholly-
owned subsidiary of Park Pharmacy-Colorado ("Park Pharmacy-
Delaware") upon the consummation of the merger of Park Pharmacy-
Colorado into Park Pharmacy-Delaware (the "Merger"). As
stockholders of Park Pharmacy-Delaware, the stockholders' rights
will differ in certain respects (in some cases materially) from
those presently held under the CBCA and the Articles of
Incorporation of Park Pharmacy-Colorado (the "Park Pharmacy-
Colorado Articles").
Certain differences and similarities between the rights of
stockholders of Park Pharmacy-Delaware and those of Park Pharmacy-
Colorado are set forth below. This summary is not intended to be
relied upon as an exhaustive list of the differences or a
detailed description and analysis of the provisions discussed and
is qualified in its entirety by the CBCA, the Park Pharmacy-
Colorado Articles, the General Corporation Law of Delaware
("DGCL") and the Certificate of Incorporation of Park Pharmacy-
Delaware (the "Park Pharmacy-Delaware Certificate").
Business Combinations
Under the DGCL, the approval by the affirmative vote of the
holders of a majority of the outstanding stock of a corporation
entitled to vote on the matter is required to consummate a merger
or consolidation or sale, lease or exchange, of all or
substantially all of a corporation's assets, unless the
certificate of incorporation provides for more or less than one
vote for any share, in which case a majority of the votes shall
be required. No vote of stockholders of a constituent
corporation surviving a merger, however, is required (unless the
Corporation provides otherwise in its certificate of
incorporation) if (i) the merger agreement does not amend the
certificate of incorporation of the surviving corporation, (ii)
each share of stock of the surviving corporation outstanding
before the merger is an identical outstanding or treasury share
after the merger, and (iii) the number of shares to be issued by
the surviving corporation in the merger does not exceed 20% of
the shares outstanding immediately prior to the merger. The Park
Pharmacy-Delaware Certificate does not make any provision with
respect to such mergers.
Under the CBCA, for a corporation in existence prior to June
30, 1994 (such as Park Pharmacy-Colorado), unless the articles of
incorporation provide otherwise, any merger or share exchange or
sale, lease, exchange or disposition of all or substantially of a
corporation's assets requires the approval of 2/3 of all votes
entitled to be cast on a transaction. The Park Pharmacy-Colorado
Articles require the approval of only a majority of the votes for
such proposals.
The CBCA also provides that certain mergers need not be
approved by the stockholders of the surviving corporation if (i)
the articles of incorporation will not change in the merger,
except for specified permitted amendments, (ii) no change occurs
in the number, designations, preferences, limitations, and
relative rights of shares held by those stockholders who were
stockholders prior to the merger, (iii) the number of voting
shares outstanding immediately after the merger, plus the voting
shares issuable as a result of the merger, will not exceed 20% of
the total number of voting shares of the surviving corporation
outstanding immediately prior to the merger, or (iv) the number
of participating shares outstanding immediately after the merger,
plus the number of participating shares issuable as a
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result of the merger, will not exceed 20% of the total number of
participating shares outstanding immediately prior to the merger.
Dissenters' Rights
Under the DGCL, stockholders generally have the right to
demand and receive payment of the fair value of their stock in
the event of a merger or consolidation; provided, however, that
no dissenters' or appraisal rights are available for the shares
of any class or series of stock which, at the record date for the
meeting held to approve such transaction, were either listed on a
national securities exchange or designated as a national market
system security on an interdealer quotation system by the NASD,
or held of record by more than 2,000 holders, or in the case of a
merger in which the Delaware corporation is the surviving
corporation, if: (i) the agreement of merger does not amend the
certificate of incorporation of the surviving corporation; (ii)
each share of stock of the surviving corporation outstanding
immediately prior to the effective date of the merger is to be an
identical outstanding share of the surviving corporation after
the effective date of the merger; and (iii) the increase in the
outstanding shares as a result of the merger does not exceed 20%
of the shares of the surviving corporation outstanding
immediately prior to the merger. Notwithstanding the limitations
of the previous sentence, appraisal rights are available if the
stockholders receive in the merger or consolidation anything
except: (i) shares of stock of the Corporation surviving or
resulting from such merger or consolidation; (ii) shares of stock
of any other corporation which at the effective date of the
merger or consolidation will be either listed on a national
securities exchange or designated as a National Market System
security on an interdealer quotation system by the NASD or held
of record by more than 2,000 holders; (iii) cash in lieu of
fractional shares of the Corporations described in clause (i) or
(ii) of this sentence; or (iv) any combination of shares of stock
and cash in lieu of fractional shares described in the foregoing
clauses (i), (ii) and (iii) of this sentence.
Under the CBCA, stockholders generally have the right to
dissent and obtain payment of the fair value of their shares in
the event of, a merger or consolidation, a share exchange or a
sale or exchange of all or substantially all of the property of a
corporation. Stockholders are not entitled to dissent and obtain
payment of the fair value of their shares which either were
listed on a national securities exchange or on the National
Market System of the Nasdaq, or were held of record by more than
two thousand stockholders. However, the limitation set forth in
the previous sentence shall not apply if the stockholder will
receive for the stockholder's shares anything except (i) shares
of the corporation surviving the merger or share exchange, (ii)
shares of any other corporation which at the effective date of
the plan of merger or share exchange either will be listed on a
national securities exchange or on the National Market System of
the Nasdaq, or will be held of record by more than two thousand
stockholders, (iii) cash in lieu of fractional shares; or (iv)
any combination of the foregoing described shares or cash in lieu
of fractional shares.
The CBCA imposes significant duties on stockholders who wish
to avail themselves of the right to demand and receive payment of
the fair cash value of their stock, and any stockholder who does
not satisfy these duties will not be entitled to payment for his
or her shares. The stockholders of Park Pharmacy-Colorado will
be entitled to exercise dissenters' rights in connection with the
proposed redomestication merger.
Business Combinations With Interested Stockholders
Section 203 of the DGCL generally prohibits any business
combination (defined to include a variety of transactions,
including (i) mergers and consolidations; (ii) sales or
dispositions of assets having an aggregate market value equal to
10% or more of either the aggregate market value of the
Corporation determined on a consolidated basis or all of the
Corporation's outstanding stock; (iii)
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<PAGE>
issuances or transfers of stock (except for certain pro rata and
other issuances); and (iv) disproportionate benefits from the
Corporation (including loans and guarantees)) between a Delaware
corporation and any interested stockholder (defined generally as
any person who, directly or indirectly, beneficially owns 15% or
more of the outstanding voting stock of the Corporation) for a
period of three years after the date on which the interested
stockholder became an interested stockholder. Section 203 only
applies to certain publicly held corporations that have voting
stock that is (i) listed on a national securities exchange, (ii)
authorized for quotation on the Nasdaq Stock Market, or (iii)
held of record by more than 2,000 stockholders. These
restrictions were designed to discourage hostile take-over
attempts of Delaware corporations by third parties. These
restrictions do not apply, however, (a) if, prior to such date,
the board of directors of the Corporation approved either the
business combination or the transaction which resulted in such
stockholder becoming an interested stockholder; (b) if, upon
consummation of the transaction resulting in such stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the Corporation at the
time the transaction was commenced (excluding, for the purposes
of determining the number of shares outstanding, shares owned by
persons who are directors and also officers and by certain
employee plans of the Corporation); (c) if, on or subsequent to
such date, the business combination is approved by the board of
directors and the holders of at least 662/3% of the shares not
involved in the transaction; or (d) under certain other
circumstances.
The CBCA contains no corresponding prohibition on business
combinations with interested stockholders.
Transactions with Officers or Directors
The DGCL provides that contracts or transactions between a
corporation and one or more of its officers or directors or an
entity in which they have an interest is not void or voidable
solely because of such interest or the participation of the
director or officer in a meeting of the board or a committee
which authorizes the contract or transaction if: (i) the
material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the board
or the committee, and the board or committee in good faith
authorizes the contract or transaction by the affirmative votes
of a majority of disinterested directors, even though the
disinterested directors are less than a quorum; or (ii) the
material facts as to the relationship or interest and as to the
contract or transaction are disclosed or are known to the
stockholders entitled to vote thereon, and the contract or
transaction is specifically approved in good faith by vote of the
stockholders; or (iii) the contract or transaction is fair as to
the Corporation as of the time it is authorized, approved or
ratified, by the board of directors, a committee thereof, or the
stockholders.
The CBCA has similar provisions with respect to conflicting
interest transactions involving directors. A conflicting
interest transaction shall not be void or voidable or be
enjoined, set aside, or give rise to an award of damages or other
sanctions in a proceeding by a stockholder or by or in the right
of the Corporation, solely because the conflicting interest
transaction involves a director of the Corporation or an entity
in which a director of the Corporation is a director or officer
or has a financial interest solely because the director is
present at or participates in the meeting of the Corporation's
board of directors or of the committee of the board of directors
which authorizes, approves, or ratifies the conflicting interest
transaction or solely because the director's vote is counted for
such purpose if: (i) the material facts as to the director's
relationship or interest and as to the conflicting interest
transaction are disclosed or are known to the board of directors
or the committee, and the board of directors or committee in good
faith authorizes, approves, or ratifies the conflicting interest
transaction by the affirmative vote of a majority of the
disinterested directors, even though the disinterested directors
are less than a quorum; or (ii) the material facts as to the
director's relationship or interest and as to the conflicting
interest transaction are disclosed or are known to the
stockholders entitled to vote thereon,
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and the conflicting interest transaction is specifically
authorized, approved, or ratified in good faith by a vote of the
stockholders; or (iii) the conflicting interest transaction is
fair as to the Corporation.
Amendments to Certificate of Incorporation/Articles of
Incorporation
Under the DGCL, unless otherwise provided in the certificate
of incorporation, a proposed amendment to the certificate of
incorporation requires the affirmative vote of a majority of all
shares outstanding and entitled to be cast on the matter. The
holders of the outstanding shares of a class shall be entitled to
vote as a class upon a proposed amendment, whether or not
entitled to vote thereon by the certificate of incorporation, if
the amendment would increase or decrease the aggregate number of
authorized shares of such class, increase or decrease the par
value of the shares of such class, or alter or change the powers,
preferences, or special rights of the shares of such class so as
to affect them adversely. The Park Pharmacy-Delaware Certificate
does not provide additional requirements regarding amendments to
its Certificate of Incorporation except that the affirmative vote
of at least 66 2/3% of the outstanding voting power of the
Corporation shall be required to amend or repeal provisions of
the Park Pharmacy-Delaware Certificate dealing with (i) the
limitation of liability of directors and indemnification of
directors and officers and (ii) the prohibiting of stockholder
actions without a meeting.
The CBCA authorizes a corporation's board of directors to
make various changes to its articles of incorporation without
stockholder approval. These so called housekeeping changes
include changes of the words corporation, incorporated, company
or limited in the corporate name, and deletions of the names and
addresses of the initial directors and of the initial registered
agent or registered office. Otherwise, amendments to a
corporation's articles of incorporation must be recommended to
the stockholders by the board of directors or the holders of
shares representing at least 10% (ten percent) of all of the
votes entitled to be cast on the amendment, unless the board
determines that because of a conflict of interest or other
special circumstances, it should make no recommendation and
communicates the basis for its determination to the stockholders
with the amendment. Such amendment then must be approved by the
voting groups entitled to vote on the amendment. An amendment is
approved if the votes cast within the voting group(s) favoring
the action exceed the votes cast within the voting group(s)
opposing the action unless a greater number of affirmative votes
is required by the CBCA, the articles of incorporation, bylaws
adopted by the stockholders, or the proposing board of directors
or the proposing stockholders condition the effectiveness of the
amendment on a greater vote.
Preemptive Rights
Under the DGCL, a stockholder does not possess preemptive
rights unless such rights are specifically granted in the
certificate of incorporation. The Park Pharmacy-Delaware
Certificate does not provide for preemptive rights.
Under the CBCA, a stockholder does not possess preemptive
rights unless such rights are specifically granted in the
articles of incorporation. The Park Pharmacy-Colorado Articles
do not provide for preemptive rights.
Dividend Sources
Under the DGCL, a board of directors may authorize a
corporation to make distributions to its stockholders, subject to
any restrictions in its certificate of incorporation, either (i)
out of surplus; or (ii) if there is no surplus, out of net
profits for the fiscal year in which the dividend is declared
and/or the preceding fiscal year. Under the DGCL, no
distribution out of net profits is permitted, however, if the
Corporation's capital is less than the amount of capital
represented by the issued and outstanding stock of
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all classes having a preference upon the distribution of assets,
until such deficiency has been repaired. The Park Pharmacy-
Delaware Certificate does not provide additional requirements
regarding the distribution of dividends.
Under the CBCA, a board of directors may authorize a
corporation to make distributions to its stockholders subject to
any restrictions imposed by the articles of incorporation,
provided that no distribution may be made if after giving it
effect (i) the Corporation would not be able to pay its debts as
they become due in the usual course of business, or (ii) the
Corporation's total assets would be less than the sum of its
total liabilities plus (unless the articles of incorporation
permit otherwise) the amount that would be needed, if the
Corporation were to be dissolved at the time of distribution, to
satisfy the preferential rights upon dissolution of stockholders
whose preferential rights are superior to those receiving the
distribution. The Park Pharmacy-Colorado Articles do not provide
additional requirements regarding the distribution of dividends.
Duration of Proxies
Generally, under the DGCL, no proxy is valid for more than
three years after its date unless otherwise provided in the
proxy. The Park Pharmacy-Delaware Bylaws provide that no proxy
shall be voted or acted upon after three years months from its
date unless the proxy provides for a longer period.
Under the CBCA, no proxy is valid for more than eleven
months unless a longer period is expressly provided in the proxy.
The Park Pharmacy-Colorado Bylaws do not alter the effective
period of a proxy.
Stockholder Action Without a Meeting
Under the DGCL, unless otherwise provided in the certificate
of incorporation, action requiring the vote of stockholders may
be taken without a meeting, without prior notice and without a
vote, by the written consent of stockholders having not less than
the minimum number of votes that would be necessary to take such
action at a meeting at which all shares entitled to vote thereon
were present and acted. The Park Pharmacy-Delaware Certificate
prohibits the stockholders from acting by written consent.
Under the CBCA, action without a meeting by stockholders may
be taken only if written consents setting forth such action are
signed by holders of all of the outstanding shares entitled to
vote thereon. The Park Pharmacy-Colorado Bylaws prohibit
shareholders from acting by written consent.
Special Stockholder Meetings
The DGCL provides that a special meeting of stockholders may
be called by the board of directors or by such person or persons
as may be authorized by the certificate of incorporation or by
the bylaws. The Park Pharmacy-Delaware Bylaws do not allow
stockholders to call a special meeting of stockholders.
The CBCA provides that a special meeting of stockholders may
be called by the board of directors, any person or persons
authorized by the articles of incorporation or bylaws, or the
holders of at least 10% of all votes entitled to be cast on any
issue proposed to be considered at the proposed special meeting
upon one or more written demands by such holders. The Park
Pharmacy-Colorado Bylaws prohibit shareholders from calling a
special meeting of shareholders.
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Cumulative Voting
The DGCL permits cumulative voting for the election of
directors if provided for in a corporation's certificate of
incorporation. The Park Pharmacy-Delaware Certificate does not
provide for cumulative voting for the election of directors.
The CBCA permits cumulative voting for the election of
directors unless otherwise provided in the Corporation's Articles
of Incorporation. The Park Pharmacy-Colorado Articles provide
that stockholders may not cumulate their votes in the election of
directors.
Number and Election of Directors
The DGCL permits the certificate of incorporation or the
bylaws of a corporation to contain provisions governing the
number and terms of directors. However, if the certificate of
incorporation contains provisions fixing the number of directors,
such number may not be changed without amending the certificate
of incorporation. The Park Pharmacy-Delaware Certificate does
not fix the number of directors. The Park Pharmacy-Delaware
Bylaws provide that from time to time, the number of members of
the Board of Directors (but not less than three) shall be
determined by resolution of the Board of Directors or by the
stockholders at an annual or special meeting held for that
purpose. The Park Pharmacy-Delaware Bylaws establish the initial
number of directors at seven (7).
The DGCL permits the certificate of incorporation of a
corporation, the initial bylaws or a bylaw adopted by the
stockholders to provide that directors be divided into one, two
or three classes. The term of office of one class of directors
shall expire each year with the terms of office of no two classes
expiring the same year.
The CBCA requires that the number of persons constituting a
corporation's board of directors, whether a specified number or a
range of size, be fixed by or in accordance with the bylaws,
provided that the number of directors shall not be less than one.
The CBCA permits either the board of directors or the
stockholders to amend the provision in the bylaws that
establishes the number of directors, although a bylaw adopted by
the stockholders fixing the size of the board might prohibit
further amendment by the directors. The terms for all directors
expire at the next annual meeting of the stockholders following
their election unless their terms are staggered under the
provisions of the CBCA. The Park Pharmacy-Colorado Bylaws
provide for the number of directors to be determined by the Board
of Directors, provided that such number may not be less than
three (3).
Removal of Directors
The DGCL provides that a director or directors may be
removed with or without cause by the holders of a majority of the
shares then entitled to vote at an election of directors, except
that (i) members of a classified board may be removed only for
cause, unless the certificate of incorporation provides otherwise
and (ii) in the case of a corporation having cumulative voting,
if less than the entire board is to be removed, no director may
be removed without cause if the votes cast against such
director's removal would be sufficient to elect such director if
then cumulatively voted at an election of the entire board of
directors or of the class of directors of which such director is
a part. The Park Pharmacy-Delaware Bylaws provide a director may
be removed with or without cause.
The CBCA provides that the stockholders may remove one or
more directors with or without cause unless the articles of
incorporation provide that the directors may be removed only for
cause. If a director is elected by a voting group of
stockholders, only the stockholders of that voting group may
participate in the vote to remove him. A director may be removed
only if the number of votes cast in favor of removal exceeds the
number of votes cast against removal, except that if cumulative
voting is in effect, a director may not be removed if the number
of votes sufficient to elect the director under cumulative voting
is voted against such removal. A director may be removed by the
stockholders only at a meeting called for the purpose of removing
him and the meeting notice shall state that the purpose or one of
the purposes of the meeting is removal of a director.
Vacancies
Under the DGCL, unless otherwise provided in the certificate
of incorporation or the bylaws, vacancies on the board of
directors and newly created directorships resulting from an
increase in the authorized number of directors may be filled by a
majority of the directors then in office, although less than a
quorum, or by the sole remaining director, provided that, in the
case of a classified board, such vacancies and newly created
directorships may be filled by a majority of the directors
elected by such class, or by the sole remaining director so
elected. In the case of a classified board, directors elected to
fill vacancies or newly created directorships shall hold office
until the next election of the class for which such directors
have been chosen, and until their successors have been duly
elected and qualified. In addition, if, at the time of the
filling of any such vacancy or newly created directorship, the
directors in office constitute less than a majority of the whole
board (as constituted immediately prior to any such increase),
the Delaware Court of Chancery may, upon application of any
stockholder or stockholders holding at least 10% of the total
number of outstanding shares entitled to vote for such directors,
summarily order an election to fill any such vacancy or newly
created directorship, or replace the directors chosen by the
directors then in office. Neither the Park Pharmacy-Delaware
Certificate nor the Park Pharmacy-Delaware Bylaws provide
additional requirements regarding vacancies of directors.
Under the CBCA, unless the articles of incorporation provide
otherwise, if a vacancy occurs on the board of directors,
including a vacancy resulting from an increase in the number of
directors, the stockholders or the board of directors may fill
the vacancy, except that if the directors remaining in office
constitute fewer than a quorum, the board of directors may fill
the vacancy by the affirmative vote of a majority of all
directors remaining in office. If the vacancy was held by a
director elected by a voting group of stockholders (i) if such
vacancy is to be filled by the stockholders, only the holders of
shares of that voting group are entitled to vote to fill such
vacancy, and (ii) if such vacancy is to be filled by directors,
only such directors who were elected by the same voting group are
entitled to vote to fill such vacancy by the affirmative vote of
a majority of such directors remaining in office.
Indemnification of Directors and Officers
Under the DGCL, a corporation may indemnify a director,
officer, employee or agent of a corporation who was or is a party
or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal,
administrative or investigative against expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement
actually and reasonably incurred by him or her in connection with
such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not
opposed to the best interests of the Corporation and, with
respect to any criminal action or proceeding, had no reasonable
cause to believe his or her conduct was unlawful. In the case of
an action brought by or in the right of a corporation, the
Corporation may indemnify a director, officer, employee or agent
of the Corporation against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection with
the defense or settlement of such action or suit if he or she
acted in good faith and in a manner he or she reasonably believed
to be in or not opposed to, the best interests of the
Corporation, except that no indemnification shall be made in
respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable to the Corporation unless
the court in which such action or suit was brought or the
Delaware Court of Chancery determines that, in view of all the
circumstances of the case, such
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<PAGE>
person is fairly and reasonably entitled to indemnity for
such expenses as the Court of Chancery or such other court shall
deem proper. The Park Pharmacy-Delaware Bylaws provide that such
persons shall be indemnified to the fullest extent authorized by
the DGCL.
A present or former director or officer of a corporation who
is successful, on the merits or otherwise, in defense of any
proceeding subject to the DGCL's indemnification provisions shall
be indemnified by the Corporation for reasonable expenses
incurred therein, including attorneys' fees. The DGCL states
that any indemnification, unless ordered by a court, shall be
made only upon a determination that a present or former director,
officer, employee or agent has met the required standard of
conduct before such person may be indemnified. Such
determination shall be made, with respect to a person who is a
director or officer at the time of such determination (1) by a
majority vote of the directors who are not parties to such
action, suit or proceeding, even though less than a quorum, or
(2) by a committee of such directors designated by majority vote
of such directors, even though less than a quorum, or (3) if
there are no such directors, or if such directors so direct, by
independent legal counsel in a written opinion, or (4) by the
stockholders.
Park Pharmacy-Delaware may advance reasonable expenses to a
director or officer in advance of the final disposition of such
proceeding or suit upon a written undertaking by or on behalf of
the director or officer to repay such amount to the Corporation
if it is ultimately determined that the required standard of
conduct has not been met, and that he or she is not entitled to
be indemnified by the Corporation. This indemnification and
advancement of expenses is not exclusive of any other rights to
which those seeking indemnification or advancement of expenses
may be entitled under any Bylaw, agreement, vote of stockholders
or disinterested directors or otherwise. Delaware corporations
may procure insurance for purposes of indemnification of
directors, officers, employees or agents of the corporation.
Under the CBCA, a corporation has the power to indemnify a
director, officer, employee, fiduciary or agent made a party to a
proceeding, or advance or reimburse reasonable expenses incurred
in a proceeding, under any circumstances, except that no such
indemnification shall be allowed on account of: (i) acts or
omissions of such persons finally adjudged liable to the
Corporation or (ii) any transaction with respect to which it was
finally adjudged that such person derived an improper personal
benefit.
Under the CBCA, a corporation may indemnify an individual
made a party to a proceeding because the individual is or was a
director, officer, employee, fiduciary or agent against
reasonable expenses (including counsel fees), judgments,
settlements, penalties and fines incurred by him or her in
connection with the proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in the best
interests of the Corporation in the case of conduct in his or her
official capacity as a director, officer, employee, fiduciary or
agent and in all other cases not opposed to the best interests of
the Corporation and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct
was unlawful. In the case of an action brought by or in the
right of a corporation, indemnification is limited to reasonable
expenses incurred in connection with the proceeding and the
Corporation may not indemnify a director, officer, employee,
fiduciary or agent if the director, officer, employee, fiduciary
or agent was adjudged to be liable to the Corporation. A
corporation also may not indemnify a director, officer, employee,
fiduciary or agent in connection with any other proceeding
charging improper personal benefit to the director, officer,
employee, fiduciary or agent in which the director, officer,
employee, fiduciary or agent was adjudged liable on the basis
that personal benefit was improperly received. A director,
officer, employee, fiduciary or agent who was wholly successful,
on the merits or otherwise, in defense of any proceeding to which
the director, officer, employee or agent was a party because of
being a director, officer, employee, fiduciary or agent of the
Corporation must be indemnified by the Corporation for reasonable
expenses incurred therein in connection with the proceeding. The
CBCA states that any indemnification described above in this
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paragraph shall be made only upon a determination that the
director, officer, employee, fiduciary or agent has met the
required standard of conduct before the director, officer,
employee, fiduciary or agent may be indemnified. The
determination shall be made (i) by a majority vote of a quorum of
directors not at the time a party to the proceedings; (ii) if a
quorum of directors not at the time a party to the proceedings is
not obtainable, by a majority vote of a committee duly designated
by the board of directors, consisting solely of two or more
directors not at the time a party to the proceedings; or (iii) by
independent legal counsel; or (iv) by the stockholders.
The CBCA permits Park Pharmacy-Colorado to pay for or
reimburse the reasonable expenses of a director, officer,
employee, fiduciary or agent who is a party to a proceeding in
advance of final disposition of the proceeding if such director,
officer, employee, fiduciary or agent provides a written
affirmation of his or her good faith belief that he or she meets
the standard of conduct described above and a written undertaking
to repay the Corporation if it is ultimately determined that the
required standard of conduct has not been met. Colorado
corporations may procure insurance for purposes of
indemnification of directors, officers, employees, fiduciaries or
agents of the Corporation.
In addition, a director, officer, employee, fiduciary or
agent of a Colorado corporation who is or was a party to a
proceeding may apply for indemnification to the court conducting
the proceeding or to another court of competent jurisdiction.
Park Pharmacy-Colorado's Articles provide that any person
who is or was a director, officer, agent, fiduciary or employee
of the Corporation shall be indemnified to the fullest extent
authorized by the CBCA.
Limitation of Personal Liability of Directors
The DGCL provides that a corporation's Certificate of
Incorporation may include a provision limiting the personal
liability of a director to the Corporation or its stockholders
for monetary damages for breach of a fiduciary duty as a
director. However, no such provision can eliminate or limit the
liability of a director for (i) any breach of the director's duty
of loyalty to the Corporation or its stockholders; (ii) acts or
omissions not in good faith or which involve intentional
misconduct or a knowing violation of the law; (iii) violation of
certain provisions of the DGCL; (iv) any transaction from which
the director derived an improper personal benefit; or (v) any act
or omission prior to the adoption of such a provision in the
Certificate of Incorporation. The Park Pharmacy-Delaware
Certificate provides a provision eliminating the personal
liability for monetary damages of its directors to the fullest
extent permitted under the DGCL.
The CBCA provides that a corporation's articles of
incorporation may include a provision that eliminates or limits
the personal liability of a director to the Corporation or its
stockholders for monetary damages for breach of a fiduciary duty
as a director. The provision, however, may not eliminate or
limit the liability of a director for acts or omissions not in
good faith or that involve intentional misconduct by a director,
a knowing violation of law by a director, for unlawful
distributions, or for any transaction from which the director
will personally receive a benefit in money, property, or services
to which the director is not legally entitled. The Park Pharmacy-
Colorado Articles eliminate the personal liability of its
directors for money damages to the fullest extent permitted under
the CBCA.
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Exhibit E
---------
COLORADO BUSINESS CORPORATIONS ACT
DISSENTERS' RIGHTS STATUTE
CBCA Section 7-113-101. Definitions
For purposes of this article:
(1) "Beneficial shareholder" means the beneficial owner of
shares held in a voting trust or by a nominee as the record
shareholder.
(2) "Corporation" means the issuer of the shares held by a
dissenter before the corporate action, or the surviving or
acquiring domestic or foreign corporation, by merger or share
exchange of that issuer.
(3) "Dissenter" means a shareholder who is entitled to
dissent from corporate action under section 7-113-102 and who
exercises that right at the time and in the manner required by
part 2 of this article.
(4) "Fair value", with respect to a dissenter's shares,
means the value of the shares immediately before the effective
date of the corporate action to which the dissenter objects,
excluding any appreciation or depreciation in anticipation of the
corporate action except to the extent that exclusion would be
inequitable.
(5) "Interest" means interest from the effective date of the
corporate action until the date of payment, at the average rate
currently paid by the corporation on its principal bank loans or,
if none, at the legal rate as specified in section 5-12-101,
C.R.S.
(6) "Record shareholder" means the person in whose name
shares are registered in the records of a corporation or the
beneficial owner of shares that are registered in the name of a
nominee to the extent such owner is recognized by the corporation
as the shareholder as provided in section 7-107-204.
(7) "Shareholder" means either a record shareholder or a
beneficial shareholder.
CBCA Section 7-113-102. Right to dissent
(1) A shareholder, whether or not entitled to vote, is
entitled to dissent and obtain payment of the fair value of the
shareholder's shares in the event of any of the following
corporate actions:
(a) Consummation of a plan of merger to which the
corporation is a party if:
(I) Approval by the shareholders of that corporation is
required for the merger by section 7-111-103 or 7-111-104 or
by the articles of incorporation; or
(II) The corporation is a subsidiary that is merged
with its parent corporation under section 7-111-104;
(b) Consummation of a plan of share exchange to which
the corporation is a party as the corporation whose shares
will be acquired;
E-1
(c) Consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of
the corporation for which a shareholder vote is required
under section 7-112-102 (1); and
(d) Consummation of a sale, lease, exchange, or other
disposition of all, or substantially all, of the property of
an entity controlled by the corporation if the shareholders
of the corporation were entitled to vote upon the consent of
the corporation to the disposition pursuant to section 7-112-
102 (2).
(1.3) A shareholder is not entitled to dissent and obtain
payment, under subsection (1) of this section, of the fair value
of the shares of any class or series of shares which either were
listed on a national securities exchange registered under the
federal "Securities Exchange Act of 1934", as amended, or on the
national market system of the national association of securities
dealers automated quotation system, or were held of record by
more than two thousand shareholders, at the time of:
(a) The record date fixed under section 7-107-107 to
determine the shareholders entitled to receive notice of the
shareholders' meeting at which the corporate action is
submitted to a vote;
(b) The record date fixed under section 7-107-104 to
determine shareholders entitled to sign writings consenting
to the corporate action; or
(c) The effective date of the corporate action if the
corporate action is authorized other than by a vote of
shareholders.
(1.8) The limitation set forth in subsection (1.3) of this
section shall not apply if the shareholder will receive for the
shareholder's shares, pursuant to the corporate action, anything
except:
(a) Shares of the corporation surviving the consummation of
the plan of merger or share exchange;
(b) Shares of any other corporation which at the effective
date of the plan of merger or share exchange either will be
listed on a national securities exchange registered under
the federal "Securities Exchange Act of 1934", as amended,
or on the national market system of the national association
of securities dealers automated quotation system, or will be
held of record by more than two thousand shareholders;
(c) Cash in lieu of fractional shares; or
(d) Any combination of the foregoing described shares or
cash in lieu of fractional shares.
(2.5) A shareholder, whether or not entitled to vote, is
entitled to dissent and obtain payment of the fair value of the
shareholder's shares in the event of a reverse split that reduces
the number of shares owned by the shareholder to a fraction of a
share or to scrip if the fractional share or scrip so created is
to be acquired for cash or the scrip is to be voided under
section 7-106-104.
(3) A shareholder is entitled to dissent and obtain payment
of the fair value of the shareholder's shares in the event of any
corporate action to the extent provided by the bylaws or a
resolution of the board of directors.
(4) A shareholder entitled to dissent and obtain payment for
the shareholder's shares under this article may not challenge the
corporate action creating such entitlement unless the action is
unlawful or fraudulent with respect to the shareholder or the
corporation.
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<PAGE>
CBCA Section 7-113-103. Dissent by nominees and beneficial owners
(1) A record shareholder may assert dissenters' rights as to
fewer than all the shares registered in the record shareholder's
name only if the record shareholder dissents with respect to all
shares beneficially owned by any one person and causes the
corporation to receive written notice which states such dissent
and the name, address, and federal taxpayer identification
number, if any, of each person on whose behalf the record
shareholder asserts dissenters' rights. The rights of a record
shareholder under this subsection (1) are determined as if the
shares as to which the record shareholder dissents and the other
shares of the record shareholder were registered in the names of
different shareholders.
(2) A beneficial shareholder may assert dissenters' rights
as to the shares held on the beneficial shareholder's behalf only
if:
(a) The beneficial shareholder causes the corporation to
receive the record shareholder's written consent to the
dissent not later than the time the beneficial shareholder
asserts dissenters' rights; and
(b) The beneficial shareholder dissents with respect to all
shares beneficially owned by the beneficial shareholder.
(3) The corporation may require that, when a record
shareholder dissents with respect to the shares held by any
one or more beneficial shareholders, each such beneficial
shareholder must certify to the corporation that the
beneficial shareholder and the record shareholder or record
shareholders of all shares owned beneficially by the
beneficial shareholder have asserted, or will timely assert,
dissenters' rights as to all such shares as to which there
is no limitation on the ability to exercise dissenters'
rights. Any such requirement shall be stated in the
dissenters' notice given pursuant to section 7-113-203.
CBCA Section 7-113-201. Notice of dissenters' rights
(1) If a proposed corporate action creating dissenters'
rights under section 7-113-102 is submitted to a vote at a
shareholders' meeting, the notice of the meeting shall be given
to all shareholders, whether or not entitled to vote. The notice
shall state that shareholders are or may be entitled to assert
dissenters' rights under this article and shall be accompanied by
a copy of this article and the materials, if any, that, under
articles 101 to 117 of this title, are required to be given to
shareholders entitled to vote on the proposed action at the
meeting. Failure to give notice as provided by this subsection
(1) shall not affect any action taken at the shareholders'
meeting for which the notice was to have been given, but any
shareholder who was entitled to dissent but who was not given
such notice shall not be precluded from demanding payment for the
shareholder's shares under this article by reason of the
shareholder's failure to comply with the provisions of section 7-
113-202 (1).
(2) If a proposed corporate action creating dissenters'
rights under section 7-113-102 is authorized without a meeting of
shareholders pursuant to section 7-107-104, any written or oral
solicitation of a shareholder to execute a writing consenting to
such action contemplated in section 7-107-104 shall be
accompanied or preceded by a written notice stating that
shareholders are or may be entitled to assert dissenters' rights
under this article, by a copy of this article, and by the
materials, if any, that, under articles 101 to 117 of this title,
would have been required to be given to shareholders entitled to
vote on the proposed action if the proposed action were submitted
to a vote at a shareholders' meeting. Failure to give notice as
provided by this subsection (2) shall not affect any action taken
pursuant to
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<PAGE>
section 7-107-104 for which the notice was to have been given,
but any shareholder who was entitled to dissent but who was not
given such notice shall not be precluded from demanding payment
for the shareholder's shares under this article by reason of the
shareholder's failure to comply with the provisions of section 7-
113-202 (2).
CBCA Section 7-113-202. Notice of intent to demand payment
(1) If a proposed corporate action creating dissenters'
rights under section 7-113-102 is submitted to a vote at a
shareholders' meeting and if notice of dissenters' rights has
been given to such shareholder in connection with the action
pursuant to section 7-113-201 (1), a shareholder who wishes to
assert dissenters' rights shall:
(a) Cause the corporation to receive, before the vote
is taken, written notice of the shareholder's intention to
demand payment for the shareholder's shares if the proposed
corporate action is effectuated; and
(b) Not vote the shares in favor of the proposed
corporate action.
(2) If a proposed corporate action creating dissenters'
rights under section 7-113-102 is authorized without a meeting of
shareholders pursuant to section 7-107-104 and if notice of
dissenters' rights has been given to such shareholder in
connection with the action pursuant to section 7-113-201 (2), a
shareholder who wishes to assert dissenters' rights shall not
execute a writing consenting to the proposed corporate action.
(3) A shareholder who does not satisfy the requirements of
subsection (1) or (2) of this section is not entitled to demand
payment for the shareholder's shares under this article.
CBCA Section 7-113-203. Dissenters' notice
(1) If a proposed corporate action creating dissenters'
rights under section 7-113-102 is authorized, the corporation
shall give a written dissenters' notice to all shareholders who
are entitled to demand payment for their shares under this
article.
(2) The dissenters' notice required by subsection (1) of
this section shall be given no later than ten days after the
effective date of the corporate action creating dissenters'
rights under section 7-113-102 and shall:
(a) State that the corporate action was authorized and state
the effective date or proposed effective date of the
corporate action;
(b) State an address at which the corporation will receive
payment demands and the address of a place where
certificates for certificated shares must be deposited;
(c) Inform holders of uncertificated shares to what extent
transfer of the shares will be restricted after the payment
demand is received;
(d) Supply a form for demanding payment, which form shall
request a dissenter to state an address to which payment is
to be made;
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(e) Set the date by which the corporation must receive the
payment demand and certificates for certificated shares,
which date shall not be less than thirty days after the date
the notice required by subsection (1) of this section is
given;
(f) State the requirement contemplated in section 7-113-103
(3), if such requirement is imposed; and
(g) Be accompanied by a copy of this article.
CBCA Section 7-113-204. Procedure to demand payment
(1) A shareholder who is given a dissenters' notice pursuant
to section 7-113-203 and who wishes to assert dissenters' rights
shall, in accordance with the terms of the dissenters' notice:
(a) Cause the corporation to receive a payment demand, which
may be the payment demand form contemplated in section 7-113-
203 (2) (d), duly completed, or may be stated in another
writing; and
(b) Deposit the shareholder's certificates for certificated
shares.
(2) A shareholder who demands payment in accordance with
subsection (1) of this section retains all rights of a
shareholder, except the right to transfer the shares, until the
effective date of the proposed corporate action giving rise to
the shareholder's exercise of dissenters' rights and has only the
right to receive payment for the shares after the effective date
of such corporate action.
(3) Except as provided in section 7-113-207 or 7-113-209 (1)
(b), the demand for payment and deposit of certificates are
irrevocable.
(4) A shareholder who does not demand payment and deposit
the shareholder's share certificates as required by the date or
dates set in the dissenters' notice is not entitled to payment
for the shares under this article.
CBCA Section 7-113-205. Uncertificated shares
(1) Upon receipt of a demand for payment under section 7-113-
204 from a shareholder holding uncertificated shares, and in lieu
of the deposit of certificates representing the shares, the
corporation may restrict the transfer thereof.
(2) In all other respects, the provisions of section 7-113-
204 shall be applicable to shareholders who own uncertificated
shares.
CBCA Section 7-113-206. Payment
(1) Except as provided in section 7-113-208, upon the
effective date of the corporate action creating dissenters'
rights under section 7-113-102 or upon receipt of a payment
demand pursuant to section 7-113-204, whichever is later, the
corporation shall pay each dissenter who complied with section 7-
113-204, at the address stated in the payment demand, or if no
such address is stated in the payment demand, at the address
shown on the corporation's current record of shareholders for the
record
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shareholder holding the dissenter's shares, the amount the
corporation estimates to be the fair value of the dissenter's
shares, plus accrued interest.
(2) The payment made pursuant to subsection (1) of this
section shall be accompanied by:
(a) The corporation's balance sheet as of the end of its
most recent fiscal year or, if that is not available, the
corporation's balance sheet as of the end of a fiscal year
ending not more than sixteen months before the date of
payment, an income statement for that year, and, if the
corporation customarily provides such statements to
shareholders, a statement of changes in shareholders' equity
for that year and a statement of cash flow for that year,
which balance sheet and statements shall have been audited
if the corporation customarily provides audited financial
statements to shareholders, as well as the latest available
financial statements, if any, for the interim or full-year
period, which financial statements need not be audited;
(b) A statement of the corporation's estimate of the fair
value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's right to demand payment
under section 7-113-209; and
(e) A copy of this article.
CBCA Section 7-113-207. Failure to take action
(1) If the effective date of the corporate action creating
dissenters' rights under section 7-113-102 does not occur within
sixty days after the date set by the corporation by which the
corporation must receive the payment demand as provided in
section 7-113-203, the corporation shall return the deposited
certificates and release the transfer restrictions imposed on
uncertificated shares.
(2) If the effective date of the corporate action creating
dissenters' rights under section 7-113-102 occurs more than sixty
days after the date set by the corporation by which the
corporation must receive the payment demand as provided in
section 7-113-203, then the corporation shall send a new
dissenters' notice, as provided in section 7-113-203, and the
provisions of sections 7-113-204 to 7-113-209 shall again be
applicable.
CBCA Section 7-113-208. Special provisions relating to shares
acquired after announcement of proposed corporate action
(1) The corporation may, in or with the dissenters' notice
given pursuant to section 7-113-203, state the date of the first
announcement to news media or to shareholders of the terms of the
proposed corporate action creating dissenters' rights under
section 7-113-102 and state that the dissenter shall certify in
writing, in or with the dissenter's payment demand under section
7-113-204, whether or not the dissenter (or the person on whose
behalf dissenters' rights are asserted) acquired beneficial
ownership of the shares before that date. With respect to any
dissenter who does not so certify in writing, in or with the
payment demand, that the dissenter or the person on whose behalf
the dissenter asserts dissenters' rights acquired beneficial
ownership of the shares before such date, the corporation may, in
lieu of making the payment provided in section 7-113-206, offer
to make such payment if the dissenter agrees to accept it in full
satisfaction of the demand.
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<PAGE>
(2) An offer to make payment under subsection (1) of this
section shall include or be accompanied by the information
required by section 7-113-206 (2).
CBCA Section 7-113-209. Procedure if dissenter is dissatisfied
with payment or offer
(1) A dissenter may give notice to the corporation in
writing of the dissenter's estimate of the fair value of the
dissenter's shares and of the amount of interest due and may
demand payment of such estimate, less any payment made under
section 7-113-206, or reject the corporation's offer under
section 7-113-208 and demand payment of the fair value of the
shares and interest due, if:
(a) The dissenter believes that the amount paid under
section 7-113-206 or offered under section 7-113-208 is less
than the fair value of the shares or that the interest due
was incorrectly calculated;
(b) The corporation fails to make payment under section 7-
113-206 within sixty days after the date set by the
corporation by which the corporation must receive the
payment demand; or
(c) The corporation does not return the deposited
certificates or release the transfer restrictions imposed on
uncertificated shares as required by section 7-113-207 (1).
(2) A dissenter waives the right to demand payment under
this section unless the dissenter causes the corporation to
receive the notice required by subsection (1) of this section
within thirty days after the corporation made or offered payment
for the dissenter's shares.
CBCA Section 7-113-301. Court action
(1) If a demand for payment under section 7-113-209 remains
unresolved, the corporation may, within sixty days after
receiving the payment demand, commence a proceeding and petition
the court to determine the fair value of the shares and accrued
interest. If the corporation does not commence the proceeding
within the sixty-day period, it shall pay to each dissenter whose
demand remains unresolved the amount demanded.
(2) The corporation shall commence the proceeding described
in subsection (1) of this section in the district court of the
county in this state where the corporation's principal office is
located or, if the corporation has no principal office in this
state, in the district court of the county in which its
registered office is located. If the corporation is a foreign
corporation without a registered office, it shall commence the
proceeding in the county where the registered office of the
domestic corporation merged into, or whose shares were acquired
by, the foreign corporation was located.
(3) The corporation shall make all dissenters, whether or
not residents of this state, whose demands remain unresolved
parties to the proceeding commenced under subsection (2) of this
section as in an action against their shares, and all parties
shall be served with a copy of the petition. Service on each
dissenter shall be by registered or certified mail, to the
address stated in such dissenter's payment demand, or if no such
address is stated in the payment demand, at the address shown on
the corporation's current record of shareholders for the record
shareholder holding the dissenter's shares, or as provided by
law.
(4) The jurisdiction of the court in which the proceeding is
commenced under subsection (2) of this section is plenary and
exclusive. The court may appoint one or more persons as
appraisers to receive evidence and recommend a decision on the
question of fair value. The appraisers have the powers
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described in the order appointing them, or in any amendment to
such order. The parties to the proceeding are entitled to the
same discovery rights as parties in other civil proceedings.
(5) Each dissenter made a party to the proceeding commenced
under subsection (2) of this section is entitled to judgment for
the amount, if any, by which the court finds the fair value of
the dissenter's shares, plus interest, exceeds the amount paid by
the corporation, or for the fair value, plus interest, of the
dissenter's shares for which the corporation elected to withhold
payment under section 7-113-208.
CBCA Section 7-113-302. Court costs and counsel fees
(1) The court in an appraisal proceeding commenced under
section 7-113-301 shall determine all costs of the proceeding,
including the reasonable compensation and expenses of appraisers
appointed by the court. The court shall assess the costs against
the corporation; except that the court may assess costs against
all or some of the dissenters, in amounts the court finds
equitable, to the extent the court finds the dissenters acted
arbitrarily, vexatiously, or not in good faith in demanding
payment under section 7-113-209.
(2) The court may also assess the fees and expenses of
counsel and experts for the respective parties, in amounts the
court finds equitable:
(a) Against the corporation and in favor of any dissenters
if the court finds the corporation did not substantially
comply with the requirements of part 2 of this article; or
(b) Against either the corporation or one or more
dissenters, in favor of any other party, if the court finds
that the party against whom the fees and expenses are
assessed acted arbitrarily, vexatiously, or not in good
faith with respect to the rights provided by this article.
(3) If the court finds that the services of counsel for any
dissenter were of substantial benefit to other dissenters
similarly situated, and that the fees for those services
should not be assessed against the corporation, the court
may award to said counsel reasonable fees to be paid out of
the amounts awarded to the dissenters who were benefited.
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Exhibit F
---------
==============================================================
PARK PHARMACY CORPORATION
2000 STOCK INCENTIVE PLAN
Adopted Effective September 19, 2000
==============================================================
<PAGE>
TABLE OF CONTENTS
-----------------
ARTICLE 1. PURPOSE OF PLAN.............................1
ARTICLE 2. EFFECTIVE DATE AND TERM OF PLAN..............1
2.1 TERM OF PLAN........................................1
2.2 EFFECT ON AWARDS....................................1
2.3 SHAREHOLDER APPROVAL................................1
ARTICLE 3. SHARES SUBJECT TO PLAN.......................1
3.1 RESERVED NUMBER OF SHARES...........................1
3.2 SOURCE OF SHARES....................................1
3.3 AVAILABILITY OF UNUSED SHARES.......................2
3.4 ADJUSTMENT PROVISIONS...............................2
3.5 SUBSTITUTE AWARDS...................................3
ARTICLE 4. ADMINISTRATION OF PLAN......................3
4.1 ADMINISTERING BODY..................................3
4.2 AUTHORITY OF ADMINISTERING BODY.....................4
4.3 ELIGIBILITY.........................................5
4.4 NO LIABILITY........................................5
4.5 AMENDMENTS..........................................5
4.6 OTHER COMPENSATION PLANS............................6
4.7 PLAN BINDING ON SUCCESSORS..........................6
4.8 REFERENCES TO SUCCESSOR STATUTES,
REGULATIONS AND RULES...............................6
4.9 ISSUANCES FOR COMPENSATION PURPOSES ONLY............6
4.10 INVALID PROVISIONS.................................6
4.11 GOVERNING LAW......................................7
ARTICLE 5. GENERAL AWARD PROVISIONS....................7
5.1 PARTICIPATION IN THE PLAN...........................7
5.2 AWARD AGREEMENTS....................................7
5.3 EXERCISE OF WARDS...................................8
5.4 PAYMENT FOR WARDS...................................8
5.5 NO EMPLOYMENT OR OTHER CONTINUING RIGHTS............9
5.6 RESTRICTIONS UNDER APPLICABLE LAWS AND
REGULATIONS.........................................9
5.7 ADDITIONAL CONDITIONS..............................10
5.8 NO PRIVILEGES OF STOCK OWNERSHIP...................11
5.9 TRANSFERABILITY OF AWARDS..........................11
5.10 INFORMATION TO RECIPIENTS.........................12
5.11 WITHHOLDINGTAXES..................................13
5.12 LEGENDS ON COMMON STOCK CERTIFICATES..............13
5.13 EFFECT OF TERMINATION OF EMPLOYMENT ON AWARDS -
EMPLOYEES ONLY..................................13
5.14 EFFECT OF TERMINATION OF ENGAGEMENT ON AWARDS -
NON-EMPLOYEES ONLY..............................14
5.15 TRANSFER; LEAVE OF ABSENCE........................15
5.16 LIMITS ON AWARDS TO CERTAIN ELIGIBLE PERSONS......16
5.17 PERFORMANCE-BASED COMPENSATION....................16
ARTICLE 6. STOCK OPTIONS..............................17
6.1 NATURE OF STOCK OPTIONS............................17
6.2 OPTION EXERCISE PRICE..............................17
6.3 OPTION PERIOD AND VESTING..........................17
6.4 SPECIAL PROVISIONS REGARDING INCENTIVE STOCK
OPTIONS...........................................17
6.5 RESTRICTIONS.......................................18
ARTICLE 7. RESTRICTED STOCK AWARDS.....................18
I
<PAGE>
7.1 NATURE OF RESTRICTED STOCK AWARDS..................18
7.2 RIGHTS AS STOCKHOLDERS.............................18
7.3 RESTRICTIONS.......................................19
7.4 FORFEITURE OR REPURCHASE OR RESTRICTED STOCK.......19
7.5 CERTIFICATES; ESCROWS..............................19
7.6 VESTING OF RESTRICTED STOCK........................20
7.7 WAIVER, DEFERRAL AND REINVESTMENT OF
DIVIDENDS.........................................20
7.8 SECTION 83(B) ELECTION.............................20
ARTICLE 8. REORGANIZATIONS............................20
8.1 CORPORATE TRANSACTIONS NOT INVOLVING A CHANGE IN
CONTROL...........................................20
8.2 CORPORATE TRANSACTIONS INVOLVING A CHANGE IN
CONTROL...........................................20
ARTICLE 9. DEFINITIONS................... ............21
ii
<PAGE>
PARK PHARMACY CORPORATION
2000 STOCK INCENTIVE PLAN
_______________________________________________________
1. PURPOSE OF PLAN
The Company adopted this Plan to promote the interests of the
Company, its Affiliated Entities and their respective
stockholders by using investment interests in the Company to
attract, retain and motivate management and other persons,
including officers, directors, employees and certain consultants
of the Company and the Affiliated Entities, to encourage and
reward such persons' contributions to the performance of the
Company and to align their interests with the interests of the
Company's stockholders. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to them in Article 9.
2. EFFECTIVE DATE AND TERM OF PLAN
2.1 Term of Plan. This Plan became effective as of the
Effective Date and shall continue in effect until the Expiration
Date, at which time this Plan shall automatically terminate.
2.2 Effect on Awards. Awards may be granted during the Plan
Term, but no Awards may be granted after the Plan Term.
Notwithstanding the foregoing, each Award properly granted under
this Plan during the Plan Term shall remain in effect after
termination of this Plan until such Award has been exercised,
terminated or expired, as applicable, in accordance with its
terms and the terms of this Plan.
2.3 Shareholder Approval. This Plan must be approved by the
Company's stockholders within twelve (12) months after the
Effective Date. The effectiveness of any Awards granted prior to
such shareholder approval shall be specifically subject to, and
conditioned upon, such shareholder approval.
3. SHARES SUBJECT TO PLAN
3.1 Reserved Number of Shares. The maximum number of shares of
Common Stock that may be issued pursuant to Options or other
Awards granted under this Plan shall be Eight Million Six Hundred
Fifty Nine Thousand Four Hundred Sixty-Five (8,659,465), subject
in any case to adjustment as set forth in Section 3.4; and
provided, further, that the maximum number of shares of Common
Stock that may be issued pursuant to Incentive Stock Options
granted under this Plan shall be Four Million (4,000,000),
subject in any case to adjustment as set forth in Section 3.4.
3.2 Source of Shares. The Common Stock to be issued under this
Plan will be made available, at the discretion of the Board,
either from authorized but unissued shares of Common Stock or
from previously issued shares of Common
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Stock reacquired by the Company, including without limitation,
shares purchased on the open market.
3.3 Availability of Unused Shares. Shares of Common Stock
subject to and/or underlying any unexercised, unearned or yet-to-
be acquired portions of any Award granted under this Plan that
expire, terminate or are canceled, and shares of Common Stock
issued pursuant to Awards under this Plan that are reacquired by
the Company pursuant to the terms under which such shares were
issued, will again become available for the grant of further
Awards under this Plan. Notwithstanding the provisions of this
Section 3.3, no shares of Common Stock may again be optioned,
granted or awarded if such action would cause an Incentive Stock
Option to fail to qualify as an incentive stock option under
Section 422 of the IRC or any successor statute thereto.
3.4 Adjustment Provisions.
(a) If (i) the outstanding shares of Common Stock are increased,
decreased or exchanged for a different number or kind of shares
or other securities, or if additional shares or new or different
shares or other securities are distributed in respect of such
shares of Common Stock (or any stock or securities received with
respect to such Common Stock), through merger, consolidation,
sale or exchange of all or substantially all of the assets of the
Company, reorganization, recapitalization, reclassification,
stock dividend, stock split, reverse stock split, spin-off, split-
off or other distribution with respect to such shares of Common
Stock (or any stock or securities received with respect to such
Common Stock), or (ii) the value of the outstanding shares of
Common Stock is reduced by reason of an extraordinary dividend
payable in cash or property, an appropriate and proportionate
adjustment may be made in (1) the maximum number and kind of
shares or securities available for issuance under this Plan, (2)
the number and kind of shares or other securities that can be
granted to any one individual Recipient under his or her Awards,
(3) the number and kind of shares or other securities subject to
then outstanding Awards under this Plan, and/or (4) the price for
each share or other unit of any other securities subject to then
outstanding Awards under this Plan.
(b) No fractional interests will be issued under this Plan
resulting from any adjustments, but the Administering Body, in
its sole discretion, may make a cash payment in lieu of any
fractional shares of Common Stock or other securities issuable as
a result of such adjustments.
(c) Any adjustment pursuant to this Section 3.4 shall be made by
the Administering Body, in its discretion, to preserve the
benefits or potential benefits intended to be made available
under this Plan or with respect to any outstanding Awards or
otherwise necessary to reflect any capital change or other event
described in Section 3.4(a). The determination made by the
Administering Body with respect to the foregoing shall be final,
binding and conclusive upon all persons and entities.
(d) The grant of Awards pursuant to this Plan shall not affect
in any way the right or power of the Company to make adjustments,
reclassifications, reorganizations or changes of its capital or
business structure or to merge or to consolidate or to dissolve,
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<PAGE>
liquidate or sell, or transfer all or any part of its
business or assets or to engage in any other corporate
transaction.
(e) No adjustment to the terms of an Incentive Stock Option
shall be made if such adjustment would cause such Incentive Stock
Option to lose its status as an incentive stock option under the
provisions of the IRC, unless the Administering Body determines
otherwise.
3.5 Substitute Awards. The Administering Body may grant Awards
under this Plan in substitution for stock and stock-based awards
held by employees of another corporation who become employees of
the Company or an Affiliated Entity as a result of a merger,
consolidation or other business combination of the employing
corporation with the Company or an Affiliated Entity or the
acquisition by the Company or an Affiliated Entity of property or
stock of the employing corporation. The Administering Body may
direct that the substitute Awards be granted on such terms and
conditions as the Administering Body considers appropriate in the
circumstances.
4. ADMINISTRATION OF PLAN
4.1 Administering Body.
(a) This Plan shall be administered by the Board; provided,
however, that if the Board appoints a Stock Plan Committee
pursuant to Section 4.1(b) herein, this Plan shall be
administered by the Stock Plan Committee, subject to the right of
the Board to exercise, at any time and from time to time, any and
all of the duties and responsibilities of the Stock Plan
Committee as the Administering Body, including, but not limited
to, establishing procedures to be followed by the Stock Plan
Committee; provided further, however, that the Board shall not
exercise any authority regarding matters which under applicable
law, rule or regulation, including, without limitation, any
exemptive rule under Section 16 of the Exchange Act (including
Rule 16b-3) or IRC Section 162(m), are required to be determined
in the sole discretion of the Stock Plan Committee.
(b)
(i) The Board in its sole discretion may from time to
time appoint a Stock Plan Committee of not less than
two (2) Board members to administer this Plan. The
Board may from time to time increase or decrease (but
not below two (2)) the number of members of the Stock
Plan Committee, remove from membership on the Stock
Plan Committee all or any portion of its members,
and/or appoint such person or persons as it desires to
fill any vacancy existing on the Stock Plan Committee,
whether caused by removal, resignation or otherwise.
The Board may disband the Stock Plan Committee at any
time and thereby revest in the Board the administration
of this Plan.
(ii) Notwithstanding the foregoing provisions of
Section 4.1(b)(i) to the contrary, so long as the
Company remains an Exchange Act Registered Company and
if the Company has not, by action of the Board, elected
to opt out of the provisions of this Section
4.1(b)(ii), (1) the Board shall appoint the Stock
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<PAGE>
Plan Committee, (2) this Plan shall be administered by
the Stock Plan Committee and (3) each member of the
Stock Plan Committee shall be a Non-employee Director,
and, in addition, if Awards are to be made to persons
subject to Section 162(m) of the IRC and such Awards
are intended to constitute Performance-Based
Compensation, then each member of the Stock Plan
Committee shall, in addition to being a Non-employee
Director, be an Outside Director.
(iii) The Stock Plan Committee shall report to the
Board the names of Eligible Persons granted Awards, the
precise type of Award granted, the number of shares of
Common Stock issuable pursuant to such Award, if any,
and the terms and conditions of each such Award.
4.2 Authority of Administering Body.
(a) Subject to the express provisions of this Plan, the
Administering Body shall have the power to interpret and construe
this Plan and any agreements or other documents defining the
rights and obligations of the Company or any Affiliated Entity
and such Eligible Persons who have been granted Awards hereunder
and thereunder, to determine all questions arising hereunder and
thereunder, to adopt and amend such rules and regulations for the
administration hereof and thereof as it may deem desirable to
correct any errors, supply any omissions and reconcile any
inconsistencies in this Plan and/or any Award Agreement or any
other instrument relating to any Award, and to otherwise carry
out the terms of this Plan and such agreements and other
documents. Such interpretations and constructions by the
Administering Body of any provisions of this Plan or of any
Award, as well as any other decisions, actions or inactions of
the Administering Body relating to this Plan, any Award or any
Award Agreement, shall be within the absolute discretion of the
Administering Body (subject only to the express terms of this
Plan and the Award Agreement and all applicable laws, regulations
and rules) shall be final, conclusive and binding upon all
persons and entities.
(b) Subject to the express provisions of this Plan, the
Administering Body may from time to time, in its discretion,
select the Eligible Persons to whom, and the time or times at
which, such Awards shall be granted; the nature of each Award;
the number of shares of Common Stock that comprise or underlie
each Award; the period for the purchase or exercise of each
Award, as applicable, the Performance Criteria applicable to the
Award, if any, and such other terms and conditions applicable to
each individual Award as the Administering Body shall determine.
Subject to Section 5.16(a), the Administering Body may grant, at
any time, new Awards to an Eligible Person who has previously
received Awards whether such prior Awards are still outstanding,
have previously been canceled, disposed of or exercised as a
whole or in part, as applicable, or are canceled in connection
with the issuance of new Awards. The Administering Body may
grant Awards singly, in combination or in tandem with other
Awards, as it determines in its discretion. Subject to
Section 5.16(a), any and all terms and conditions of the Awards,
including, without limitation, the purchase or exercise price,
may be established by the Administering Body without regard to
existing Awards.
F-4
<PAGE>
(c) Any action of the Administering Body with respect to the
administration of this Plan shall be taken pursuant to a majority
vote of the authorized number of members of the Administering
Body or by the unanimous written consent of its members;
provided, however, that (i) if the Administering Body is the
Stock Plan Committee and consists of two (2) members, then
actions of the Administering Body must be unanimous and (ii) if
the Administering Body is the Board, actions taken at a meeting
of the Board shall be valid if approved by directors constituting
a majority of the required quorum for such meeting.
(d) Except to the extent prohibited by applicable law,
including, without limitation, the requirements applicable under
IRC Section 162(m) to any Award intended to be Performance-Based
Compensation, or the requirements for any Award granted to an
officer of the Company or a Director to be covered by any
exemptive rule under Section 16 of the Exchange Act (including
Rule 16b-3), or the rules of a stock exchange or automated
quotation system then listing shares of Common Stock, the
Administering Body may, in its discretion, allocate all or any
portion of its responsibilities and powers under this Plan to any
one or more of its members and/or delegate all or any part of its
responsibilities and powers under this Plan to any person or
persons selected by it; provided, however, that the Administering
Body may not delegate its authority to correct errors, omissions
or inconsistencies in this Plan. Any such authority delegated or
allocated by the Administering Body under this Section 4.2(d)
shall be exercised in accordance with the terms and conditions of
this Plan and any rules, regulations or administrative guidelines
that may from time to time be established by the Administering
Body, and any such allocation or delegation may be revoked by the
Administering Body at any time.
4.3 Eligibility. Only Eligible Persons shall be eligible to
receive Awards under this Plan.
4.4 No Liability. No member of the Board or the Stock Plan
Committee or any designee thereof will be liable for any action
or inaction with respect to this Plan or any Award or any
transaction arising under this Plan or any Award, except in
circumstances constituting bad faith or willful misconduct of
such member.
4.5 Amendments.
(a) The Administering Body may, insofar as permitted by
applicable law, rule or regulation, from time to time suspend or
discontinue this Plan or revise or amend it in any respect
whatsoever, and this Plan as so revised or amended will govern
all Awards hereunder, including those granted before such
revision or amendment; provided, however, that, except as
otherwise provided by this Plan, no such revision or amendment
shall materially impair or diminish any rights or obligations
under any Award previously granted under this Plan, without the
written consent of the Recipient. Without limiting the
generality of the foregoing, the Administering Body is authorized
to amend this Plan to comply with or take advantage of amendments
to applicable laws, rules or regulations, including amendments to
the Securities Act, Exchange Act or the IRC or any rules or
regulations promulgated thereunder. No such revision or
amendment
F-5
<PAGE>
of this Plan shall be made without first obtaining approval
of the stockholders of the Company to the extent such
approval is required by (i) applicable law, rule or
regulation, or (ii) the requirements of any stock exchange
or automated quotation system then listing the shares of
Common Stock or any applicable requirements related to
Incentive Stock Options, for exemption from IRC Section
162(m) or the applicable requirements of Rule 16b-3.
(b) The Administering Body may amend the terms and conditions of
an Award previously granted under this Plan, including any Award
Agreement, retroactively or prospectively, provided that no such
amendment shall materially impair or diminish any rights or
obligations of a Recipient under such Award without such
Recipient's written consent. Without limiting the generality of
the foregoing, the Administering Body may, in its discretion, at
any time and from time to time after the grant of any Award (i)
accelerate or extend the vesting or exercise period, or lapse of
restrictions, applicable to any Award in whole or in part, (ii)
adjust or reduce the purchase or exercise price, as applicable,
of Awards held by such Recipient by cancellation of such Awards
and granting of Awards at lower purchase or exercise prices or by
modification, extension or renewal of such Awards, and (iii)
reduce or otherwise modify the Performance Criteria applicable to
any Award. In the case of Incentive Stock Options, Recipients
acknowledge that extensions of the exercise period and other
modifications may result in the loss of the favorable tax
treatment afforded Incentive Stock Options under Section 422 of
the IRC.
4.6 Other Compensation Plans. The adoption of this Plan shall
not affect any other stock option, securities purchase, incentive
or other compensation plans in effect for the Company or an
Affiliated Entity, and this Plan shall not preclude the Company
or an Affiliated Entity from establishing any other forms of
incentive or other compensation for Employees, Directors,
Consultants or others, whether or not approved by stockholders of
the Company.
4.7 Plan Binding on Successors. This Plan shall be binding upon
the successors and assigns of the Company.
4.8 References to Successor Statutes, Regulations and Rules.
Any reference in this Plan to a particular statute, regulation or
rule shall also refer to any successor provision of such statute,
regulation or rule.
4.9 Issuances for Compensation Purposes Only. This Plan
constitutes an "employee benefit plan" as defined in Rule 405
promulgated under the Securities Act. Awards to eligible
Employees or Directors shall be granted for any lawful
consideration, including compensation for services rendered,
promissory notes or otherwise. Awards to eligible Consultants
shall be granted only in exchange for bona fide services rendered
by such Consultants and such services must not be in connection
with the offer and sale of securities in a capital-raising
transaction.
4.10 Invalid Provisions. In the event that any provision of this
Plan is found to be invalid, illegal or otherwise unenforceable
under any applicable law, such invalidity, illegality or
unenforceability shall not be construed as rendering any other
provisions contained herein invalid, illegal or unenforceable,
and all such other provisions shall be given full force and
effect
F-6
<PAGE>
to the same extent as though the invalid, illegal and
unenforceable provision were not contained herein.
4.11 Governing Law. This Plan and each Award Agreement shall be
governed by and interpreted in accordance with the internal laws
of the state of incorporation of the Company, as it may be from
time to time, without giving effect to the principles of the
conflicts of laws thereof.
5. GENERAL AWARD PROVISIONS
5.1 Participation in the Plan.
(a) A person shall be eligible to receive Award grants under
this Plan if, at the time of the grant of such Award, such person
is an Eligible Person.
(b) Incentive Stock Options may be granted only to Employees
who, at the date of granting of such Incentive Stock Options, are
Employees of the Company or a Parent Corporation or a Subsidiary
Corporation, and otherwise meet the employment requirements of
Section 422 of the IRC, or a similar statute governing Incentive
Stock Options.
(c) Notwithstanding anything to the contrary herein, the
Administering Body may, in its discretion, in order to fulfill
the purposes of this Plan, modify grants of Awards to Recipients
who are foreign nationals or employed outside of the United
States to recognize differences in applicable law, tax policy or
local custom.
5.2 Award Agreements.
(a) Each Award granted under this Plan shall be evidenced by an
Award Agreement duly executed on behalf of the Company and by the
Recipient or, in the Administering Body's discretion, a
confirming memorandum issued by the Company to the Recipient,
setting forth such terms and conditions applicable to such Award
as the Administering Body may in its discretion determine. Award
Agreements may but need not be identical and shall comply with
and be subject to the terms and conditions of this Plan, a copy
of which shall be provided to each Recipient and incorporated by
reference into each Award Agreement. Any Award Agreement may
contain such other terms, provisions and conditions not
inconsistent with this Plan as may be determined by the
Administering Body.
(b) In case of any conflict between this Plan and any Award
Agreement, this Plan shall control except as specifically
provided in the Award Agreement.
(c) In case of any conflict between this Plan and any Award
Agreement, on the one hand, and any Employment Agreement between
a Recipient and either the Company and/or an Affiliated Entity,
on the other hand, the terms and conditions of the Employment
Agreement with such Recipient shall apply with respect to those
items specifically addressed in the Employment Agreement.
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<PAGE>
(d) In consideration of the granting of an Award under this Plan
and if requested by the Company, the Recipient shall agree, in
the Award Agreement, to remain in the employ of (or to consult
for or to serve as a Director of, as applicable) the Company or
any Affiliated Entity for a period of at least one (1) year (or
such shorter period as may be fixed in the Award Agreement or by
action of the Administering Body following grant of the Award)
after the Award is granted (or, in the case of a Director, until
the next annual meeting of stockholders of the Company).
5.3 Exercise of Awards. No Award granted hereunder shall be
issuable or exercisable, except in respect of whole shares, and
fractional share interests shall be disregarded. Not less than
100 shares of Common Stock (or such other amount as is set forth
in the applicable Award Agreement) may be purchased or issued at
one time upon exercise of a Stock Option, or under any other
Award, and Stock Options and other Awards must be exercised,
issued or purchased, as applicable, in multiples of 100 shares,
unless the number of shares purchased is the total number of
shares at the time available under the terms of the Award. An
Award shall be deemed to be claimed or exercised when the
Secretary or other official of the Company designated by the
Administering Body receives appropriate written notice, on such
form acceptable to the Administering Body, from the Recipient,
together with payment of the applicable purchase or exercise
price made in accordance with the Award Agreement and any amounts
required under Section 5.11 of this Plan. Notwithstanding any
other provision of this Plan, the Administering Body may impose,
by rule and/or in Award Agreements, such conditions upon the
exercise of Awards (including, without limitation, conditions
limiting the time of exercise to specified periods) as may be
required to satisfy applicable regulatory requirements,
including, without limitation, Rule 16b-3 and Rule 10b-5 under
the Exchange Act or any other applicable law, regulation or rule,
including, without limitation, any other applicable requirements
under the IRC, or the regulations or rules promulgated
thereunder.
5.4 Payment for Awards.
(a) Awards requiring payment of a purchase or exercise price
shall be payable upon the exercise or purchase of such Award by
delivery of legal tender of the United States or payment of such
other consideration as the Administering Body may from time to
time deem acceptable in any particular instance, including
consideration pursuant to subparagraphs (b) and (c) of this
Section 5.4.
(b) The Company may, in the discretion of the Administering
Body, assist any Recipient (including, without limitation, any
Employee, Director or Consultant) in the payment of the exercise
price or other amounts payable in connection with the receipt or
exercise of such Award, by lending such amounts to such person on
such terms and at such rates of interest and upon such security
(if any) as shall be approved by the Administering Body.
(c) In the discretion of the Administering Body, and subject to
such limitations or conditions as it may prescribe, if permitted
by applicable law, (i) payments for purchase or exercise of
Awards may be by matured capital stock of the Company (i.e.,
capital stock owned longer than six (6) months by the person
delivering such capital stock (or by such person and his or her
spouse jointly) delivered in transfer to the
F-8
<PAGE>
Company by or on behalf of the person exercising or
purchasing the Award and duly endorsed in blank or
accompanied by stock powers duly endorsed in blank, with
signatures guaranteed in accordance with the Exchange Act if
required by the Administering Body (valued at Fair Market
Value as of the exercise or purchase date), or such other
consideration as the Administering Body may from time to
time in the exercise of its discretion deem acceptable in
any particular instance; (ii) the Administering Body may
allow the exercise of Stock Options in a broker-assisted or
similar transaction in which the exercise price is not
received by the Company until promptly after exercise,
and/or (iii) the Administering Body may allow the Company to
loan the applicable purchase or exercise price to the
Recipient, if the purchase or exercise will be followed by a
prompt sale of some or all of the underlying shares and a
portion of the sale proceeds is dedicated to full payment of
the purchase or exercise price and amounts required pursuant
to Section 5.11 of this Plan.
5.5 No Employment or Other Continuing Rights. Nothing contained
in this Plan (or in any Award Agreement or in any other agreement
or document related to this Plan or to Awards granted hereunder)
shall confer upon (a) any Eligible Person or Recipient any right
to continue in the employ (or other business relationship) of the
Company or any Affiliated Entity or constitute any contract or
agreement of employment or engagement, or interfere in any way
with the right of the Company or any Affiliated Entity to reduce
such person's compensation or other benefits or to terminate the
employment or engagement of such Eligible Person or Recipient,
with or without cause; or (b) any Recipient any right to exercise
or claim his or her Award otherwise than in accordance with the
express terms and conditions of his or her Award Agreement and
this Plan. Except as expressly provided in this Plan or in any
Award Agreement pursuant to this Plan, the Company and any
Affiliated Entity, as applicable, shall have the right to deal
with each Recipient in the same manner as if this Plan and any
such Award Agreement did not exist, including, without
limitation, with respect to all matters related to the hiring,
retention, discharge, compensation and conditions of the
employment or engagement of the Recipient. Any questions as to
whether and when there has been a termination of a Recipient's
employment or engagement, the reason (if any) for such
termination, and/or the consequences thereof under the terms of
this Plan or any statement evidencing the grant of Awards
pursuant to this Plan shall be determined by the Administering
Body, and the Administering Body's determination thereof shall be
final, conclusive and binding upon all persons and entities.
5.6 Restrictions Under Applicable Laws and Regulations.
--------------------------------------------------
(a) All Awards granted under this Plan shall be subject to the
requirement that, if at any time the Company shall determine, in
its discretion, that the listing, registration or qualification
of the shares subject to any such Award granted under this Plan
upon any securities exchange or under any federal, state or
foreign law, or the consent or approval of any government
regulatory body, is necessary or desirable as a condition of, or
in connection with, the granting of such Awards or the issuance,
if any, or purchase of shares in connection therewith, such
Awards may not be granted or exercised as a whole or in part
unless and until such listing, registration, qualification,
consent or approval shall have been effected or obtained free of
any conditions not acceptable to the Administering Body. During
the term of this Plan, the Company will use reasonable efforts to
seek to obtain from the appropriate regulatory agencies any
requisite
-9-
<PAGE>
qualifications, consents, approvals or authorizations in
order to issue and sell such number of shares of its Common
Stock as shall be sufficient to satisfy the requirements of
this Plan. The inability of the Company to obtain from any
such regulatory agency having jurisdiction thereof the
qualifications, consents, approvals or authorizations deemed
by the Company to be necessary for the lawful issuance and
sale of any shares of its Common Stock hereunder shall
relieve the Company of any liability in respect of the
nonissuance or sale of such stock as to which such requisite
qualification, consent, approval or authorization shall not
have been obtained.
(b) The Company shall be under no obligation to register or
qualify the issuance of Awards or underlying shares of Common
Stock under the Securities Act or applicable state securities
laws. Unless the shares of Common Stock applicable to any such
Award have been registered under the Securities Act and qualified
or registered under applicable state securities laws, the Company
shall be under no obligation to issue any shares of Common Stock
covered by any Award unless the Award and underlying shares of
Common Stock, as applicable, may be issued pursuant to applicable
exemptions from such registration or qualification requirements.
In connection with any such exempt issuance, the Administering
Body may require the Recipient to provide a written
representation and undertaking to the Company, satisfactory in
form and scope to the Administering Body and upon which the
Company may reasonably rely, that such Recipient is acquiring
such shares of Common Stock for his or her own account, as an
investment and not with a view to, or for sale in connection
with, the distribution of any such shares of Common Stock, and
that such person will make no transfer of the same except in
compliance with any rules and regulations in force at the time of
such transfer under the Securities Act and other applicable law,
and that if shares of Common Stock are issued under this Plan
without such registration, a legend to this effect (together with
any other legends deemed appropriate by the Administering Body)
may be endorsed upon the certificates evidencing the shares of
Common Stock so issued. The Administering Body may also order
its transfer agent to stop transfers of such shares. The
Administering Body may also require the Recipient to provide the
Company such information and other documents as the Administering
Body may request in order to satisfy the Administering Body as to
the investment sophistication and experience of the Recipient and
as to any other conditions for compliance with any such
exemptions from registration or qualification.
5.7 Additional Conditions. The grant and/or exercise of an
Award and the issuance of shares in connection with the exercise
of an Award may also be conditioned upon or subject to such other
provisions (whether or not applicable to any other Award or
Eligible Person) as the Administering Body, in its sole
discretion, determines appropriate, in accordance with this Plan
and the Award Agreement, including, without limitation, (a)
provisions to assist the Recipient in financing the purchase of
Common Stock issuable as a result of such Award, (b) provisions
for the forfeiture of or restrictions on resale or other
disposition of shares of Common Stock acquired under any Award,
(c) provisions giving the Company the right to repurchase shares
of Common Stock acquired under any Award in the event the
Recipient elects to dispose of such shares, (d) provisions to
comply with federal and state securities laws and federal, state
or foreign income or employment tax withholding requirements,
(e) provisions conditioned upon the declaration of effectiveness
by the SEC of a registration statement relating to a primary
offering
F-10
<PAGE>
of the Common Stock, filed by the Company with the SEC under the
Securities Act, (f) provisions conditioned upon the satisfaction
of withholding tax or other withholding liabilities,
(g) provisions conditioned upon the listing, registration or
qualification of any to-be-issued shares upon any securities
exchange, any NASDAQ or other trading or quotation system or
under any state or federal law, (h) provisions conditioned upon
the consent or approval of any regulatory body, (i) provisions
conditions upon the execution of a lock-up agreement with one or
more prospective underwriters, or (j) provisions conditioned upon
the execution of a buy-sell or stockholders agreement with other
stockholders of the Company. The Administering Body shall, in
its sole discretion, determine whether any one or more of these
conditions is necessary or desirable to be satisfied in
connection with the exercise of an Award or the delivery or
purchase of shares pursuant to the exercise of an Award. If the
Administering Body determines that any one or more of the
foregoing conditions must be satisfied, the exercise of an Award
shall not be effective unless and until such condition shall have
been satisfied free of any conditions not acceptable to the
Administering Body in its sole discretion.
5.8 No Privileges of Stock Ownership. Except as otherwise set
forth herein, a Recipient shall have no rights as a shareholder
with respect to any shares issuable or issued in connection with
an Award until the date of the exercise of the Stock Option in
accordance with the Award Agreement and this Plan, and the
receipt by the Company of all amounts payable in connection with
the purchase or exercise, as applicable, of the Award, the
satisfaction or waiver of all applicable performance goals and
performance by the Recipient of all conditions and obligations
applicable to the Award, in accordance with this Plan and the
applicable Award Agreement. Status as an Eligible Person shall
not be construed as a commitment that any Award will be granted
under this Plan to an Eligible Person or to Eligible Persons
generally. No person shall have any right, title or interest in
any fund or in any specific asset (including shares of capital
stock) of the Company by reason of any Award granted hereunder.
Neither this Plan (nor any documents related hereto) nor any
action taken pursuant hereto (or thereto) shall be construed to
create a trust of any kind or a fiduciary relationship between
the Company and any Person. To the extent that any Person
acquires any right with respect to Awards hereunder, such right
shall be no greater than the right of any unsecured general
creditor of the Company.
5.9 Transferability of Awards.
(a) Except as otherwise provided by this Section 5.9 or by the
Administering Body, no Award under this Plan may be sold,
pledged, assigned, transferred, encumbered, alienated,
hypothecated or otherwise disposed of (whether voluntarily or
involuntarily or by operation of law by judgment, levy,
attachment, garnishment or any other legal or equitable
proceedings (including bankruptcy)) in any manner other than by
will or the laws of descent and distribution or, subject to the
consent of the Administering Body, pursuant to a DRO, unless and
until such Award has been exercised, if applicable, and the
shares of Common Stock underlying such Award have been issued,
and all restrictions applicable to such shares have lapsed, and
no Award or interest or right therein shall be liable for the
debts, contracts, liabilities or contractual obligations of the
Recipient thereof. Any attempted disposition of an Award or any
interest therein shall be null and void and of no effect, except
to the extent that such disposition is permitted by the preceding
sentence.
F-11
<PAGE>
(b) Except as otherwise provided by the Administering Body,
during the lifetime of a Recipient, only he or his court
appointed guardian may exercise an Award (or any portion thereof)
granted to him under this Plan, unless it has been transferred in
accordance with paragraph (c) of this Section 5.9 or, with the
consent of the Administering Body, pursuant to a DRO. After the
death of a Recipient, any exercisable or vested but unpaid
portion of an Award may, prior to the time when such portion
becomes unexercisable or is terminated or expires under this Plan
or the applicable Award Agreement, be exercised by or paid to the
beneficiary most recently named by such Recipient in a written
designation thereof filed with the Company, to the extent
permitted by the Recipient's Award Agreement, or, in the absence
of a validly designated beneficiary, his or her personal
representative or by any person empowered to do so under the
deceased Recipient's will or under the then applicable laws of
descent and distribution. In the event any Award is to be
exercised by, or paid to, the executors, administrators, heirs or
distributees of the estate of a deceased Recipient, or such
Recipient's beneficiary, or an incapacitated Recipient's
guardian, or the transferee of such Award, in any case pursuant
to the terms and conditions of this Plan and the applicable Award
Agreement, and in accordance with such terms and conditions as
may be specified from time to time by the Administering Body, the
Company shall be under no obligation to issue shares of Common
Stock or make any payment under such Award unless and until the
Administering Body is satisfied that the person or persons
exercising or to receive payment under such Award is the duly
appointed legal representative of the deceased Recipient's estate
or the proper legatee or distributees thereof.
(c) The Administering Body may, in its discretion, permit the
transfer of an Award to, exercise of an Award by, or payment of
an Award to, a person other than the Recipient who received the
grant of such Award in accordance with and/or under the Award
Agreement and such terms and conditions as the Administering Body
may specify from time to time.
(d) Notwithstanding the foregoing, no Stock Option owned by a
Recipient subject to Section 16 of the Exchange Act may be
assigned or transferred in any manner inconsistent with Rule 16b-
3, and Incentive Stock Options (or other Stock Options subject to
transfer restrictions under the IRC) may not be assigned or
transferred if such assignment or transfer would cause such an
Incentive Stock Option to fail to qualify under Section 422 of
the IRC (or any comparable or successor provision) or the
regulations thereunder.
5.10 Information to Recipients.
(a) The Administering Body in its sole discretion shall
determine what, if any, financial and other information shall be
provided to Recipients and when such financial and other
information shall be provided after giving consideration to
applicable federal, state and foreign laws, rules and
regulations, including, without limitation, applicable federal,
state and foreign securities laws, rules and regulations.
(b) The furnishing of financial and other information that is
confidential to the Company shall be subject to the Recipient's
agreement that the Recipient shall maintain
F-12
<PAGE>
the confidentiality of such financial and other information,
shall not disclose such information to third parties, and
shall not use the information for any purpose other than
evaluating an investment in the Company's securities under
this Plan. The Administering Body may impose other
restrictions on the access to and use of such confidential
information and may require a Recipient to acknowledge the
Recipient's obligations under this Section 5.10(b) (which
acknowledgment shall not be a condition to the Recipient's
obligations under this Section 5.10(b)).
5.11 Withholding Taxes. Whenever the granting, vesting, exercise
or payment of any Award granted under this Plan, or the transfer
of any shares issued upon exercise of any Award, gives rise to
tax or tax withholding liabilities or obligations, the
Administering Body shall have the right, as a condition to the
issuance of any shares of Common Stock under, or other payment
of, such Award, to require the Recipient to remit to the Company
an amount sufficient to satisfy such federal, state, local and
foreign tax requirements, and the Company or any Affiliated
Entity shall, to the extent permitted by applicable law, have the
right to deduct any such taxes from any payment of any kind
otherwise due to such Recipient. The Administering Body may, in
the exercise of its discretion, permit a Recipient to satisfy
such tax withholding requirements by (a) delivery to the Company
of Common Stock owned by such Recipient (or by such Recipient and
his or her spouse jointly) or (b) electing withholding by the
Company of a portion of the Common Stock otherwise issuable in
connection with such Recipient's Award (provided, however, that
the amount of any Common Stock so withheld shall not exceed the
amount necessary to satisfy required federal, state, local and
foreign withholding obligations using the minimum statutory
rate), to the extent permitted by applicable law and pursuant to
procedures approved by the Administering Body.
5.12 Legends on Common Stock Certificates. Each certificate
representing shares acquired as a result of any Award granted
hereunder shall be endorsed with all legends, if any, required by
applicable federal and state securities or other laws or
agreements or the Administering Body to be placed on the
certificate. The determination of which legends, if any, shall
be placed upon such certificates shall be made by the
Administering Body in its sole discretion and such decision shall
be final and binding.
5.13 Effect of Termination of Employment on Awards - Employees
Only.
(a) Termination for Just Cause Dismissal. Subject to Section
5.13(c), and except as otherwise provided in a written agreement
(including, without limitation, any Award Agreement) between the
Company and/or an Affiliated Entity and the Recipient, which may
be entered into at any time before or after termination of
employment of the Recipient, in the event of a Just Cause
Dismissal of an Employee Recipient from employment with the
Company or any Affiliated Entity, all of the Recipient's unvested
Awards shall be terminated and become void, and all of the
Recipient's unexercised Awards (whether or not vested) shall be
forfeited, expire and become void, as of the date of such Just
Cause Dismissal.
(b) Termination Other than for Just Cause Dismissal. Subject to
Section 5.13(c), and except as otherwise provided in a written
agreement (including, without limitation, any Award Agreement)
between the Company and/or an Affiliated Entity
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<PAGE>
and the Recipient, which may be entered into at any time
before or after termination of employment, in the event of
an Employee Recipient's termination of employment with the
Company or any Affiliated Entity for:
(i) any reason other than for Just Cause Dismissal, death,
Permanent Disability or Retirement, the Recipient's unvested
and/or unexercised Awards, whether or not vested, shall expire
and become void as of the earlier of (A) the date such Awards
would have expired in accordance with their terms had the
Recipient remained employed and (B) three (3) months after the
date of such termination; or
(ii) death, Permanent Disability or Retirement, the Recipient's
unvested and/or unexercised, whether or not vested, Awards shall
expire and become void as of the earlier of (A) the date such
Awards would have expired in accordance with their terms had the
Recipient remained employed and (B) one (1) year after the date
of such termination; provided, however, that the one-year period
provided in (B) shall be three (3) months for Incentive Stock
Options following termination of employment for Retirement.
(c) Alteration of Vesting and Exercise Periods. Notwithstanding
anything to the contrary in Section 5.13(a) or Section 5.13(b),
the Administering Body may in its discretion designate shorter or
longer periods to claim or otherwise exercise Awards following a
Recipient's termination of employment with the Company or any
Affiliated Entity; provided, however, that any shorter periods
determined by the Administering Body shall be effective only if
provided for in the Award Agreement that evidences the
Recipient's Award or if such shorter period is agreed to in
writing between the Recipient and the Company. Notwithstanding
anything to the contrary herein, Awards shall be claimed, paid or
exercisable by a Recipient following such Recipient's termination
of employment with the Company or any Affiliated Entity only to
the extent that installments thereof had become exercisable or
vested (i.e., in the case of any Restricted Stock Awards, to the
extent restrictions described in Article 7 applicable to such
Awards have lapsed) on or prior to the date of such termination;
and provided further that the Administering Body may, in its
discretion, elect to accelerate the vesting or exercisability of,
or lapse of restrictions applicable to, all or any portion of any
Awards that had not become vested or exercisable on or prior to
the date of such termination, in the event of a termination of
employment due to the Recipient's death or Permanent Disability,
or, except with respect to any Award intended to qualify as
Performance-Based Compensation, in the event of Retirement or
otherwise. Furthermore, at any time prior to a Recipient's
termination of employment with the Company or any Affiliated
Entity, the Administering Body may, in its discretion, accelerate
the vesting or exercisability, or waive or, subject to the other
provisions of this Plan, amend any and all of the goals,
restrictions or conditions imposed under any Award; provided,
however, no such acceleration, waiver or amendment shall cause
any Award otherwise intended to qualify as Performance-Based
Compensation to fail to so qualify.
5.14 Effect of Termination of Engagement on Awards - Non-
Employees Only.
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<PAGE>
(a) Termination of Engagement. Subject to Section 5.14(b), and
except as otherwise provided in a written agreement between the
Company and/or an Affiliated Entity and the Recipient, which may
be entered into at any time before or after termination of
engagement of the Recipient, in the event of the termination of
any non-Employee Recipient's engagement with the Company or any
Affiliated Entity (including any such Recipient who is a
Director, but not also an Employee or a Consultant), all of the
Recipient's unvested Awards shall be terminated and become void,
and all of the Recipient's unexercised Awards (whether or not
vested) shall be forfeited, expire and become void as of the
earlier of (i) the date such Awards would expire in accordance
with their terms had the Recipient remained engaged by the
Company or such Affiliated Entity and (ii)(A) three (3) months
after such termination as a result of death or Permanent
Disability and (B) thirty (30) days after such termination for
any other reason.
(b) Alteration of Vesting and Exercise Periods. Notwithstanding
anything to the contrary in Section 5.14(a), the Administering
Body may, in its discretion, designate shorter or longer periods
to claim or otherwise exercise Awards following a non-Employee
Recipient's termination of engagement with the Company or any
Affiliated Entity; provided, however, that any shorter periods
determined by the Administering Body shall be effective only if
provided for in the Award Agreement that evidences the
Recipient's Award or if such shorter period is agreed to in
writing by the Recipient. Notwithstanding anything to the
contrary herein, Awards shall be claimed, paid or exercisable by
a Recipient following such Recipient's termination of engagement
with the Company or any Affiliated Entity only to the extent that
the installments thereof had become exercisable or vested (i.e.,
in the case of any Restricted Stock Awards, to the extent
restrictions described in Article 7 applicable to such Awards
have lapsed) on or prior to the date of such termination; and
provided further that the Administering Body may, in its
discretion, elect to accelerate the vesting or exercisability of,
or lapse of restrictions applicable to, all or any portion of any
Awards that had not become vested or exercisable on or prior to
the date of such termination. Furthermore, at any time prior to a
Recipient's termination of engagement with the Company or any
Affiliated Entity, the Administering Body may, in its discretion,
accelerate the vesting or exercisability, or waive or, subject to
the other provisions of this Plan, amend any and all of the
goals, restrictions or conditions imposed under any Award.
5.15 Transfer; Leave of Absence. For purposes of this Plan, the
transfer by a Recipient to the employment or engagement of (i)
the Company from an Affiliated Entity, (ii) from the Company to
an Affiliated Entity or (iii) from one Affiliated Entity to
another Affiliated Entity (including, with respect to
Consultants, the assignment between the Company and an Affiliated
Entity or between two Affiliated Entities, as applicable, of an
agreement pursuant to which such services are rendered) or, with
respect solely to Employees, an approved leave of absence for
military service, sickness, or for any other purpose approved by
the Company, shall not be deemed a termination of employment or
engagement of such Recipient, as the case may be; provided,
however, that a change in status of a Recipient from an Employee
to a Consultant, or to a Director who is not an Employee, shall
be considered a termination of such Recipient's employment with
the Company or an Affiliated Entity for purposes of this Plan and
such Recipient's Awards, except to the extent that the
Administering Body determines, in its discretion, otherwise with
respect to any Award that is not an Incentive Stock Option. In
no
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event, however, shall an Award be exercisable after the date such
Award would expire in accordance with its terms had the Recipient
remained continuously employed or engaged in the service of the
Company or an Affiliated Entity. Whether a Recipient's
employment or service with the Company or any Affiliated Entity
has terminated, and, if so, whether such termination constituted
Just Cause Dismissal, shall be determined by the Administering
Body, in its good faith discretion, in accordance with this Plan,
and any such determination shall be final, binding and conclusive
upon all persons and entities.
5.16 Limits on Awards to Certain Eligible Persons.
(a) Limitations Applicable to IRC Section 162(m) Participants.
Notwithstanding any other provision of this Plan, in order for
the compensation attributable to Awards hereunder to qualify as
Performance-Based Compensation, no one Eligible Person shall be
granted any one or more Awards with respect to more than Two
Million (2,000,000) shares of Common Stock in any one calendar
year. The limitation set forth in this Section 5.16(a) shall be
subject to adjustment as provided in Section 3.4 or Section
4.5(b) and Article 8, but only to the extent such adjustment
would not affect the status of compensation attributable to
Awards hereunder as Performance-Based Compensation. To the extent
required by Section 162(m) of the IRC, shares of Common Stock
subject to Awards which are canceled shall continue to be counted
against such limitation and if, after the grant of an Award, the
price of shares subject to such Award is reduced and the
transaction is treated as a cancellation of the Award and a grant
of a new Award, both the Award deemed to be canceled and the
Award deemed to be granted shall be counted against such
limitation.
(b) Limitations Applicable to Section 16 Persons.
Notwithstanding any other provision of this Plan, this Plan, and
any Award granted or awarded to any individual who is then
subject to Section 16 of the Exchange Act, shall be subject to
any additional limitations set forth in any applicable exemptive
rule under Section 16 of the Exchange Act (including Rule 16b-3)
that are requirements for the application of such exemptive rule.
To the extent permitted by applicable law, this Plan and Awards
granted or awarded hereunder shall be deemed amended to the
extent necessary to conform to such applicable exemptive rule.
5.17 Performance-Based Compensation. If the amount of
compensation an Eligible Person may receive under any Award is
not based solely on an increase in the value of Common Stock
after the date of grant, the Administering Body, in order to
qualify such Awards as Performance-Based Compensation, may
condition the payment, granting, vesting or exercisability or
purchase price of such Awards on the attainment of one or more
pre-established, objective performance goals that are determined
over a measurement period or periods established by the
Administering Body and relate to one or more Performance
Criteria. The Administering Body shall establish and administer
any such performance goals. Payment of compensation in respect
of any such Award shall not be made unless and until the
Administering Body certifies in writing that the applicable
Performance Criteria, performance goals and any other material
terms of such Award were in fact satisfied, except as otherwise
provided by the Administering Body in accordance with this Plan
and the applicable Award Agreement in the
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event of termination of a Recipient's employment or service with
the Company or an Affiliated Entity due to death or Disability or
in the event of a Change in Control.
6. STOCK OPTIONS
6.1 Nature of Stock Options. Subject to the limitations
provided otherwise herein, Stock Options may be Incentive Stock
Options or Non-qualified Stock Options. Each Award Agreement
relating to a Stock Option shall state whether such Option will
be treated as an Incentive Stock Option or a Non-qualified Stock
Option.
6.2 Option Exercise Price. The exercise price for each Stock
Option shall be determined by the Administering Body as of the
date such Stock Option is granted and shall be stated in the
Award Agreement. The exercise price shall be no less than the
Fair Market Value of the Common Stock subject to the Option on
the date such option is granted; provided, however, that the
Administering Body may, in its discretion, with the consent of
the Recipient in the case of an Incentive Stock Option, amend the
terms of any Stock Option not intended to qualify as Performance-
Based Compensation to provide that the exercise price of the
shares remaining subject to the Stock Option shall be
reestablished at a price not less than 100% of the Fair Market
Value of the Common Stock on the effective date of the amendment.
6.3 Option Period and Vesting. Stock Options granted hereunder
shall vest and may be exercised as determined by the
Administering Body and stated in the Award Agreement, except that
exercise of such Stock Options after termination of the
Recipient's employment or engagement shall be subject to Section
5.13 or 5.14, as the case may be. Each Stock Option granted
hereunder and all rights or obligations thereunder shall expire
on such date as shall be determined by the Administering Body,
but not later than ten (10) years after the date the Stock Option
is granted and shall be subject to earlier termination as
provided herein or in the Award Agreement. The Administering
Body may, in its discretion at any time and from time to time
after the grant of a Stock Option, accelerate vesting of such
Stock Option as a whole or in part by increasing the number of
shares then purchasable, provided that the total number of shares
subject to such Stock Option may not be increased. Except as
otherwise provided herein, a Stock Option shall become
exercisable, as a whole or in part, on the date or dates, or upon
satisfaction of such conditions, specified by the Administering
Body and thereafter shall remain exercisable until the expiration
or earlier termination of the Stock Option.
6.4 Special Provisions Regarding Incentive Stock Options.
(a) Notwithstanding anything in this Article 6 to the contrary,
the exercise price and vesting Period of any Stock Option
intended to qualify as an Incentive Stock Option shall comply
with the provisions of Section 422 of the IRC and the regulations
thereunder. As of the Effective Date, such provisions require,
among other matters, that (i) the exercise price must not be less
than the Fair Market Value of the underlying stock as of the date
the Incentive Stock Option is granted, and not less than 110% of
the Fair Market Value as of such date in the case of a grant to a
Significant Shareholder; and (ii) that the Incentive Stock Option
not be exercisable after the expiration of five (5) years from
the date of grant in the case of an Incentive Stock Option
granted to a Significant Shareholder.
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(b) The aggregate Fair Market Value (determined as of the
respective date or dates of grant) of the Common Stock for which
one or more Incentive Stock Options granted to any Recipient
under this Plan (or any other option plan of the Company or an
Affiliated Entity) may for the first time become exercisable as
"incentive stock options" under the IRC during any one calendar
year shall not exceed $100,000.
(c) Any Options granted as Incentive Stock Options pursuant to
this Plan that for any reason fail or cease to qualify as such
shall be treated as Non-qualified Stock Options.
6.5 Restrictions The Administering Body, in its sole and
absolute discretion, may impose such restrictions on the
ownership and transferability of the shares purchasable upon the
exercise of a Stock Option as it deems appropriate. Any such
restriction shall be set forth in the respective Award Agreement
and may be referred to on the certificates evidencing such
shares. The Recipient shall give the Company prompt notice of any
disposition of shares of Common Stock acquired by exercise of an
Incentive Stock Option within (i) two years from the date of
granting (including the date the Option is modified, extended or
renewed for purposes of Section 424(h) of the IRC) such Option to
such Recipient or (ii) one year after the transfer of such shares
to such Recipient.
7. RESTRICTED STOCK AWARDS
7.1 Nature of Restricted Stock Awards. The Administering Body
may grant Restricted Stock Awards to any Eligible Person. A
Restricted Stock Award is an Award entitling the Recipient to
acquire Restricted Stock at par value or such other purchase
price, if any, determined by the Administering Body at the time
of grant of the Restricted Stock Award (but not less than the par
value thereof unless permitted by applicable state law).
Conditions may be based on continuing employment (or other
business relationships) with the Company or an Affiliated Entity
and/or, in the case of Restricted Stock Awards intended to be
Performance-Based Compensation, the achievement of pre-
established, objective performance goals that are determined over
a measurement period or periods established by the Administering
Body and relate to one or more Performance Criteria. Any
Restricted Stock Award must be accepted by the applicable
Recipient within a period of sixty (60) days (or a shorter period
as determined by the Administering Body at the time of award)
after the award date, by executing the applicable Award Agreement
and providing to the Administering Body or its designee a copy of
such executed Award Agreement and payment of the applicable
purchase price, if any, of such shares of Restricted Stock.
7.2 Rights as Stockholders. Subject to Section 7.3, upon
delivery of the shares of the Restricted Stock to a Recipient, or
creation of a book entry evidencing a Recipient's ownership of
shares of Restricted Stock, pursuant to Section 7.5, the
Recipient shall have, unless otherwise provided by the
Administering Body, all the rights of a shareholder with respect
to said shares of Restricted Stock, subject to the restrictions
in his or her Award Agreement, including the right to receive all
dividends and other distributions paid or made with respect to
the shares; provided, however, that in the discretion of the
Administering Body, any extraordinary distributions with respect
to the Common Stock shall be subject to the restrictions set
forth in Section 7.3.
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7.3 Restrictions. All shares of Restricted Stock issued under
this Plan (including any shares received by holders thereof with
respect to shares of Restricted Stock as a result of stock
dividends, stock splits or any other form of recapitalization)
shall, in the terms of each individual Award Agreement, be
subject to such restrictions as the Administering Body shall
provide, which restrictions may include, without limitation,
restrictions concerning voting rights and transferability and
restrictions based on duration of employment or engagement with
the Company or its Affiliated Entities, Company performance and
individual performance; provided, however, that, unless the
Administering Body otherwise provides in the terms of the Award
Agreement or otherwise, no share of Restricted Stock granted to a
person subject to Section 16 of the Exchange Act shall be sold,
assigned or otherwise transferred until at least six (6) months
and one (1) day have elapsed from the date on which the
Restricted Stock was issued, and provided, further, that, except
with respect to shares of Restricted Stock intended to qualify as
Performance-Based Compensation, by action taken after the
Restricted Stock is issued, the Administering Body may, on such
terms and conditions as it may determine to be appropriate,
remove any or all of the restrictions imposed by the terms of the
Award Agreement. Restricted Stock may not be sold, transferred,
assigned or encumbered until all restrictions are terminated or
have expired.
7.4 Forfeiture or Repurchase of Restricted Stock. The
Administering Body shall provide in the terms of each individual
Award Agreement for forfeiture and reversion to the Company of a
Recipient's shares of Restricted Stock or, that the Company shall
have a right to repurchase such shares of Restricted Stock, at a
cash price per share equal to the price, if any, paid by the
Recipient for such shares of Restricted Stock, to the extent
shares are then subject to restrictions under the Award
Agreement, immediately upon any failure to satisfy applicable
conditions set forth in the Award Agreement or upon a termination
of employment (with or without cause and for any reason
whatsoever) or, if applicable, upon a termination of engagement
(with or without cause and for any reason whatsoever) between the
Recipient and the Company, or an Affiliated Entity, subject, in
any case, to Sections 5.13 and 5.14, as applicable.
7.5 Certificates; Escrows. Each Recipient receiving a Restricted
Stock Award shall be issued a stock certificate or certificates
evidencing the shares of Common Stock covered by such Award
registered in the name of such Recipient. The Administering Body
may require a Recipient who receives a certificate or
certificates evidencing a Restricted Stock Award to immediately
deposit such certificate or certificates, together with a stock
power or other appropriate instrument of transfer, endorsed in
blank by the Recipient, with signatures guaranteed in accordance
with the Exchange Act if required by the Administering Body, with
the Secretary of the Company or an escrow holder as provided in
the immediately following sentence. The Secretary of the Company
or such other escrow holder as the Administering Body may appoint
shall retain physical custody of each certificate representing
Restricted Stock until all of the restrictions imposed under the
Award Agreement with respect to the shares evidenced by such
certificate expire or shall have been removed. The foregoing to
the contrary notwithstanding, the Administering Body may, in its
discretion, provide that a Recipient's ownership of Restricted
Stock prior to lapse of the restrictions set forth in the Award
Agreement shall, in lieu of certificates, be evidenced by a "book
entry" (i.e., a computerized or manual entry) in the records of
the Company or its designated agent in the name of such
Recipient. Such records of the Company or such agent shall,
absent manifest error, be binding on all Recipients
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who receive Restricted Stock Awards. The holding of shares of
Restricted Stock by the Company or an escrow holder, in
accordance with this Section 7.5, or the use of book entries to
evidence the ownership of shares of Restricted Stock, in
accordance with this Section 7.5, shall not affect the rights of
Recipients as owners of their shares of Restricted Stock, nor
affect the restrictions applicable to such shares under the Award
Agreement of this Plan.
7.6 Vesting of Restricted Stock. The Administering Body at the
time of grant shall specify and state in the Award Agreement the
date or dates and/or, in the case of Restricted Stock Awards
intended to qualify as Performance-Based Compensation, attainment
of performance goals and other conditions, on which Restricted
Stock shall become vested and free of restrictions applicable
thereto, subject to Section 7.4 and to such further rights of the
Company or its assigns as may be specified in the Award Agreement
or other instrument evidencing the Restricted Stock Award. Upon
expiration or termination of the restrictions applicable to a
Recipient's shares of Restricted Stock, pursuant to the
applicable Award Agreement and this Plan, the Company shall,
subject to Sections 5.6, 5.11 and 5.12, then deliver to such
Recipient a certificate or certificates evidencing such shares
registered in the name of such Recipient.
7.7 Waiver, Deferral and Reinvestment of Dividends. The Award
Agreement or other written instrument evidencing a Restricted
Stock Award may require or permit the immediate payment, waiver,
deferral or investment of dividends paid on the Restricted Stock.
7.8 Section 83(b) Election. If a Recipient of a Restricted Stock
Award makes an election under Section 83(b) of the IRC, or any
successor section thereto, to be taxed with respect to the
Restricted Stock as of the date of transfer of the Restricted
Stock rather than as of the date or dates upon which such
Recipient would otherwise be taxable under Section 83(a) of the
IRC, such Recipient shall deliver a copy of such election to the
Company immediately after filing such election with the Internal
Revenue Service. Such election shall be in the sole discretion
of any such Recipient. None of the Company or any Affiliated
Entity shall have any liability or responsibility relating to or
arising out of the filing or the failure to file of any such
election or any defects in its construction.
8. REORGANIZATIONS
8.1 Corporate Transactions Not Involving a Change in Control.
If the Company shall consummate any Reorganization not involving
a Change in Control in which holders of shares of Common Stock
are entitled to receive in respect of such shares any securities,
cash or other consideration (including without limitation a
different number of shares of Common Stock), each Award
outstanding under this Plan shall thereafter be claimed or
exercisable, in accordance with this Plan, only for the kind and
amount of securities, cash and/or other consideration receivable
upon such Reorganization by a holder of the same number of shares
of Common Stock as are subject to that Award immediately prior to
such Reorganization, and any adjustments will be made to the
terms of the Award, and the underlying Award Agreement, in the
sole discretion of the Administering Body as it may deem
appropriate to give effect to the Reorganization.
8.2 Corporate Transactions Involving a Change in Control. As of
the effective time and date of any Change in Control, this Plan
and any then outstanding Awards (whether or
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not vested) shall automatically terminate unless (a) provision is
made in writing in connection with such transaction for the
continuance of this Plan and for the assumption of such Awards,
or for the substitution for such Awards of new grants covering
the securities of a successor entity or other party to the
transaction resulting in such Change in Control or an affiliate
thereof, with appropriate adjustments as to the number and kind
of securities and exercise prices, in which event this Plan and
such outstanding Awards shall continue or be replaced, as the
case may be, in the manner and under the terms provided by the
Administering Body and/or in any written agreement relating to
such Change in Control transaction; or (b) the Board otherwise
has provided or shall provide in writing for such adjustments as
it deems appropriate in the terms and conditions of the then-
outstanding Awards (whether or not vested), including without
limitation (i) accelerating the vesting or exercisability of
outstanding Awards and/or (ii) providing for the cancellation of
Awards and their automatic conversion into the right to receive
the securities, cash and/or other consideration that a holder of
the shares underlying such Awards would have been entitled to
receive upon consummation of such Change in Control had such
shares been issued and outstanding immediately prior to the
effective date and time of the Change in Control (net of the
appropriate option exercise prices). If, pursuant to the
foregoing provisions of this Section 8.2, this Plan and any
outstanding Awards granted hereunder shall terminate by reason of
the occurrence of a Change in Control without provision for any
of the actions described in clause (a) or (b) hereof, then any
Recipient holding outstanding Awards shall have the right, at
such time immediately prior to the consummation of the Change in
Control as the Administering Body shall designate, to convert,
claim or exercise, as applicable, the Recipient's Awards to the
full extent not theretofore converted, claimed or exercised,
including any installments which have not yet become vested or
exercisable.
9. DEFINITIONS
Capitalized terms used in this Plan and not otherwise defined
shall have the meanings set forth below:
"Administering Body" means the Board as long as no Stock Plan
Committee has been appointed and is in effect and shall mean the
Stock Plan Committee as long as the Stock Plan Committee is
appointed and in effect.
"Affiliated Entity" means any (i) any corporation or limited
liability company, other than the Company, in an unbroken chain
of corporations or limited liability companies ending with the
Company if each corporation or limited liability company owns
stock or membership interests (as applicable) possessing more
than fifty percent (50%) of the total combined voting power of
all classes of stock in one of the other corporations or limited
liability companies in such chain; (ii) any corporation, trade or
business (including, without limitation, a partnership or limited
liability company) which is more than fifty percent (50%)
controlled (whether by ownership of stock, assets or an
equivalent ownership interest or voting interest) by the Company
or another Affiliated Entity; or (iii) any other entity, approved
by the Administering Body as an Affiliated Entity under the Plan,
in which the Company or any other Affiliated Entity has a
material equity interest.
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"Award" or "Awards," except where referring to a particular
category or grant under this Plan, shall include Incentive Stock
Options, Non-qualified Stock Options and Restricted Stock Awards.
"Award Agreement" means the agreement or confirming memorandum
setting forth the terms and conditions of the Award.
"Board" means the Board of Directors of the Company.
"Change in Control" means the following and shall be deemed to
occur if any of the following events specified in clauses (a),
(b), (c) or (d) occur:
(a) Any Person (other than a Park Affiliate) becomes, after the
Effective Date, the beneficial owner (within the meaning of Rule
13d-3 promulgated under the Exchange Act), directly or
indirectly, of fifty percent (50%) or more of the combined voting
power of the Company's then outstanding securities; or
(b) During any period of two (2) consecutive years, individuals,
who at the beginning of such period, constitute the Board and any
new Director of the Company (other than a Director designated by
a person who has entered into an agreement with the Company to
effect a transaction described in clause (a), (c) or (d) of this
definition) whose election by the Board or nomination for
election by the Company's stockholders was approved by a vote of
at least two-thirds (2/3rds) of the Directors of the Company then
still in office who either were Directors of the Company at the
beginning of the two-year period or whose election or nomination
for election was previously so approved, cease for any reason to
constitute at least a majority of the Board;
(c) A merger or consolidation of the Company with any other
corporation, other than a merger or consolidation that would
result in the voting securities of the Company outstanding
immediately prior thereto continuing to represent (either by
remaining outstanding or by being converted into voting
securities of the surviving entity) more than fifty percent (50%)
of the combined voting power of the voting securities of the
Company or such surviving entity outstanding immediately after
such merger or consolidation; provided, however, that a merger or
consolidation effected to implement a recapitalization of the
Company (or similar transaction) in which no person acquires more
than fifty percent (50%) of the combined voting power of the
Company's then outstanding securities or a merger or
consolidation primarily effected to change the Company's
jurisdiction of incorporation shall not constitute a Change in
Control, and provided further a merger or consolidation in which
the Company is the surviving entity (other than as a wholly owned
subsidiary of another entity) and in which the Board of Directors
of the Company or the successor to the Company after giving
effect to the merger or consolidation, is comprised of a majority
of members who are either (x) Directors of the Company
immediately preceding the merger or consolidation, or (y)
appointed to the Board of Directors by the Company (or the Board)
as an integral part of such merger or consolidation, shall not
constitute a Change in Control; or
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(d) Approval by the stockholders of the Company or any order by
a court of competent jurisdiction of a plan of liquidation of the
Company, or the sale or disposition by the Company of all or
substantially all of the Company's assets other than (i) the sale
or disposition of all or substantially all of the assets of the
Company to a person or persons who beneficially own, directly or
indirectly, at least fifty percent (50%) or more of the combined
voting power of the outstanding voting securities of the Company
at the time of the sale; or (ii) pursuant to a dividend in kind
or spin-off type transaction, directly or indirectly, of such
assets to the stockholders of the Company;
(e) Notwithstanding the foregoing, a Change in Control of the
type described in clauses (b), (c) or (d) above shall be deemed
to be completed on the date it occurs, and a Change in Control of
the type described in clause (a) above shall be deemed to be
completed as of the date the entity or group attaining fifty
percent (50%) or greater ownership has elected its
representatives to the Board of Directors and/or caused its
nominees to become officers of the Company with the authority to
terminate or alter the terms of any Employee's employment.
"Common Stock" means the common stock of the Company, par value
$.01 per share, as constituted on the Effective Date, and as
thereafter adjusted as a result of any one or more events
requiring adjustment of outstanding Awards under Section 3.4
above or any other provision of this Plan.
"Company" means Park Pharmacy Corporation, a Colorado
corporation, and its successors.
"Consultant" means any consultant or advisor if:
(a) the consultant or advisor renders bona fide services to
the Company or any Affiliated Entity;
(b) the services rendered by the consultant or advisor are
not in connection with the offer or sale of securities in a
capital-raising transaction and do not directly or
indirectly promote or maintain a market for the Company's
securities; and
(c) the consultant or advisor is a natural person who has
contracted directly with the Company or an Affiliated Entity
to render such services.
"Director" means any person serving on the Board of the Company
or the Board of Directors of an Affiliated Entity irrespective of
whether such person is also an Employee of the Company or an
Affiliated Entity.
"DRO" means a domestic relations order as defined by the IRC or
Title I of ERISA or the rules thereunder.
"Effective Date" means September 19, 2000, which is the date this
Plan was adopted by the Board.
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"Eligible Person" shall include key Employees, Directors and
Consultants of the Company or of any Affiliated Entity.
"Employee" means any officer or other employee (as defined in
accordance with Section 3401(c) of the IRC) of the Company or any
Affiliated Entity.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Exchange Act Registered Company" means that the Company has any
class of any equity security registered pursuant to Section 12 of
the Exchange Act.
"Expiration Date" means the tenth anniversary of the Effective
Date.
"Fair Market Value" of a share of the Company's capital stock as
of a particular date shall be: (a) if the stock is listed on an
established stock exchange or exchanges (including for this
purpose, the NASDAQ National Market), the closing sale price of
the stock quoted for such date as reported in the transactions
index of each such exchange, as published in The Wall Street
Journal and determined by the Administering Body, or, if no sale
price was quoted in any such index for such date, then as of the
next preceding date on which such a sale price was quoted; or
(b) if the stock is not then listed on an exchange or the NASDAQ
National Market, the average of the closing bid and asked prices
per share for the stock in the over-the-counter market as quoted
on the NASDAQ Small Cap Market on such date, or if not so quoted,
on the OTC Bulletin Board on such date; or (c) if the stock is
not then listed on an exchange or quoted in the over-the-counter
market or the OTC Bulletin Board, an amount determined in good
faith by the Administering Body; provided, however, that (i) when
appropriate, the Administering Body, in determining Fair Market
Value of capital stock of the Company, may take into account such
other factors as it may deem appropriate under the circumstances
and (ii) if the stock is traded on the NASDAQ Small Cap Market
and both sales prices and bid and asked prices are quoted or
available, the Administering Body may elect to determine Fair
Market Value under either clause (a) or (b) above.
Notwithstanding the foregoing, the Fair Market Value of capital
stock for purposes of grants of Incentive Stock Options shall be
determined in compliance with applicable provisions of the IRC.
"Incentive Stock Option" means a Stock Option that qualifies as
an incentive stock option under Section 422 of the IRC, or any
successor statute thereto.
"IRC" means the Internal Revenue Code of 1986, as amended.
"Just Cause Dismissal" shall mean a termination of a Recipient's
employment for any of the following reasons: (a) the Recipient
violates any reasonable rule or regulation of the Board, the
Company's Chief Executive Officer or the Recipient's superiors
that results in material damage to the Company or an Affiliated
Entity or which, after written notice to do so, the Recipient
fails to correct within a reasonable time; (b) any willful
misconduct or gross negligence by the Recipient in the material
responsibilities assigned to the Recipient; (c) any willful
failure to perform the Recipient's job as required to meet the
objectives of the Company and/or an Affiliated Entity; (d) any
wrongful conduct of a Recipient that has a material adverse
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impact on the Company or an Affiliated Entity or which
constitutes a misappropriation of assets of the Company or an
Affiliated Entity; (e) the Recipient's performing services for
any other person or entity that competes with the Company and/or
an Affiliated Entity while the Recipient is employed by the
Company or an Affiliated Entity, without the express written
approval of the Chief Executive Officer of the Company or an
Affiliated Entity, as applicable; or (f) any other conduct that
the Administering Body determines constitutes just cause for
dismissal; provided, however, that if a Recipient is party to an
employment agreement with the Company and/or an Affiliated Entity
providing for just cause dismissal (or some comparable notion) of
such Recipient from his or her employment with the Company or an
Affiliated Entity, "Just Cause Dismissal" for purposes of this
Plan shall have the same meaning as ascribed thereto or to such
comparable notion in such employment agreement.
"Non-Employee Director" means any director of the Company who
qualifies as a "non-employee director" within the meaning of
Rule 16b-3.
"Non-qualified Stock Option" means a Stock Option that is not an
Incentive Stock Option.
"Outside Director" means an "outside director" as defined in the
regulations adopted under Section 162(m) of the IRC.
"Park Affiliate" means Joe B. Park, Park Family Limited
Partnership, or any entity controlled by Joe B. Park or Park
Family Limited Partnership.
"Parent Corporation" means any parent corporation of the Company
as defined in Section 424(e) of the IRC.
"Performance-Based Compensation" means performance-based
compensation as described in Section 162(m)4(C) of the IRC.
"Performance Criteria" means the following business criteria with
respect to the Company, any Affiliated Entity or any division or
operating unit of any thereof: (a) income or net income, (b) pre-
tax income, (c) operating income or net operating income, (d)
cash flow, (e) earnings per share (including earnings before
interest, taxes and amortization), (f) return on equity, (g)
return on invested capital or assets, (h) cost reductions or
savings, (i) funds from operations, (j) appreciation in the fair
market value of Common Stock, (k) earnings before any one or more
of the following items: interest, taxes, depreciation or
amortization, (1) book value of Common Stock, (m) total
stockholder return, (n) return on capital, (o) return on assets
or net assets, or (p) operating margin.
"Permanent Disability" means that the Recipient becomes
physically or mentally incapacitated or disabled so that the
Recipient is unable to perform substantially the same services as
the Recipient performed prior to incurring such incapacity or
disability (the Administering Body, at its option and the
Company's expense, may retain a physician to confirm the
existence of such incapacity or disability, and the determination
of such physician shall be binding upon the Company and the
Recipient), and such incapacity or disability continues for a
period of three consecutive months or six months in any 12-month
period or such other period(s) as may be determined by the
Administering Body with respect to any Award, provided that for
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<PAGE>
purposes of determining the period during which an Incentive
Stock Option may be exercised pursuant to Section 5.13(b)(ii)
hereof, Permanent Disability shall mean "permanent and total
disability" as defined in Section 22(e) of the IRC.
"Person" means any person, entity or group, within the meaning of
Section 13(d) or 14(d) of the Exchange Act, but excluding (a) the
Company and its Affiliated Entities, (b) any employee stock
ownership or other employee benefit plan maintained by the
Company that is qualified under ERISA, (c) any trustee or other
fiduciary holding securities under any employee benefit plan of
the Company or an Affiliated Entity, (d) any company owned,
directly or indirectly, by the stockholders of the Company in
substantially the same proportions as their ownership of Common
Stock of the Company, or (e) any entity holding non-participating
shares of an entity which is a shareholder of the Company or
which owns or controls, directly or indirectly, a shareholder of
the Company becomes the "beneficial owner" (as defined in Rule
13d-3 under the Act), directly or indirectly, of securities of
the Company representing fifty percent (50%) or more of the
combined voting power of the Company's then outstanding
securities.
"Plan" means this 2000 Stock Incentive Plan of the Company.
"Plan Term" means the period during which this Plan remains in
effect (commencing on the Effective Date and ending on the
Expiration Date).
"Recipient" means an Eligible Person who has received an Award or
Awards under this Plan or any person who is recognized under the
Plan as the successor in interest to such Eligible Person with
respect to such Eligible Person's Award.
"Reorganization" means any merger, consolidation, business
combination, other reorganization or other similar transaction.
"Restricted Stock" means the shares of Common Stock subject to
such restrictions and conditions as the Administering Body may
determine at the time of grant.
"Restricted Stock Awards" means any Award of Restricted Stock
granted pursuant to Article 7 of this Plan.
"Retirement" means normal retirement from employment with the
Company or an Affiliated Entity in accordance with the retirement
policies of the Company or any such Affiliated Entity then in
effect as determined by the Administering Body.
"Rule 16b-3" means Rule 16b-3 under the Exchange Act or any
successor or similar rule under the Exchange Act, as the same may
be amended from time to time.
"Securities Act" means the Securities Act of 1933, as amended.
"Significant Shareholder" is an individual who, at the time an
Award is granted to such individual under this Plan, owns more
than ten percent (10%) of the combined voting power of all
classes of stock of the Company or of any Parent Corporation or
Subsidiary Corporation (after application of the attribution
rules set forth in Section 424(d) of the IRC).
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<PAGE>
"Stock Option" or "Option" means a right to purchase stock of the
Company granted under Article 6 of this Plan to an Eligible
Person.
"Stock Plan Committee" means the committee appointed by the Board
to administer this Plan pursuant to Section 4.1.
"Subsidiary Corporation" means any subsidiary corporation of the
Company as defined in Section 424(f) of the IRC.
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<PAGE>
Appendix A
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PROXY
PARK PHARMACY CORPORATION
ANNUAL MEETING OF SHAREHOLDERS
JANUARY 16, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby constitutes and appoints Thomas R. Baker
and Jim Moncrief, or either of them, as the true and lawful
attorneys and proxies of the undersigned, with full power of
substitution, to represent the undersigned and to vote all of the
shares of Common Stock of Park Pharmacy Corporation (the
"Company"), that the undersigned is entitled to vote at the
Annual Meeting of Shareholders of the Company to be held on
January 16, 2001 and at any adjournments thereof.
1. Election of Directors
FOR WITHHOLD AUTHORITY NOMINEES
All nominees named to vote for all Joe B. Park,
to the right (except nominees named to Thomas R. Baker,
as marked to the the right Jim Moncrief,
contrary) Gwendolyn Park,
Richard M. Allen,
William D. Breedlove
and Jon J. Gergen
[ ] [ ] (INSTRUCTION: To
withhold authority
to vote for any
individual nominee,
write the nominee's
name on the line
below.)
-------------------
2. To approve the merger of the company into a wholly-owned
subsidiary to be organized under the laws of the State of
Delaware ("Park Pharmarcy-Delaware") in order to effect a change
of the Company's state of incorporation from Colorado to
Delaware.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. In connection with the proposed reincorporation, to approve
and adopt provisions of the Certificate of Incorporation of Park
Pharmacy-Delaware (the "Delaware Certificate") in the form
attached as Exhibit A to the Proxy Statement that would reduce
the number of authorized shares of capital stock of the Company
from one billion to 150 million.
<PAGE>
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. In connection with the proposed reincorporation, to approve
and adopt provisions of the Delaware Certificate that would
reduce the number of authorized shares of common stock from 750
million to 140 million.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. In connection with the proposed reincorporation, to approve
and adopt provisions of the Delaware Certificate that would
reduce the number of authorized shares of preferred stock from
250 million to 10 million.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
6. In connection with the proposed reincorporation, to approve
and adopt provisions of the Delaware Certificate that would
provide that the liability of directors would be limited, and
that officers and directors of the Company would receive
indemnification from the Company, to the fullest extent permitted
by Delaware law.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
7. In connection with the proposed reincorporation, to approve
and adopt provisions of the Delaware Certificate that would
require the vote of holders of two-thirds of the voting power of
the Company to (a) amend provisions of the Delaware Certificate
prohibiting actions by consent, limiting the liability of
directors of the Company, or providing indemnification to
officers and directors of the Company, or (b) to amend or repeal
the bylaws of Park Pharmacy-Delaware, if stockholder action is
taken to amend such Bylaws.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
8. To approve and adopt the bylaws of Park Pharmacy-Delaware in
the form attached as Exhibit B to the Proxy Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
9. To approve the Company's 2000 Stock Incentive Plan in the
form attached as Exhibit F to the Proxy Statement.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFIC DIRECTIONS
ARE GIVEN, THIS PROXY WILL BE VOTED "FOR" THE ELECTION OF
DIRECTORS, "FOR" EACH OF THE PROPOSALS SET FORTH HEREIN.
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<PAGE>
Please sign exactly as the name appears on the certificate or
certificates representing shares to be voted by this proxy. When
signing as executor, administrator, attorney, trustee or
guardian, please give full title as such. If a corporation,
please sign in full corporate name by president or other
authorized person. If a partnership, please sign in partnership
name by authorized person.
Dated: _________________ ____________________________
Signature of Shareholder
[INSERT MAILING LABEL] ____________________________
Signature (if jointly owned)
PLEASE MARK, SIGN, DATE AND RETURN THIS PROXY PROMPTLY USING THE
ENCLOSED ENVELOPE.
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