SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
--------------------
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of report (Date of earliest event reported) December 30, 1999
-------------------------------
Park Pharmacy Corporation
- --------------------------------------------------------------------------------
(Exact Name of Registrant as Specified in Charter)
Colorado 000-15379 841029701
- --------------------------------------------------------------------------------
(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
10711 Preston Road, Suite 250, Dallas, Texas 75230
- --------------------------------------------------------------------------------
(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (214) 692-9921
-----------------------------
- --------------------------------------------------------------------------------
(Former Name or Former Address, if Changes Since Last Report)
Page 1 of 19
<PAGE>
ITEM 2. Acquisition or Disposition of Assets.
On December 30, 1999, Park Pharmacy Corporation, a Colorado corporation
("Park (CO)"), acquired all of the issued and outstanding stock of Dougherty's
Pharmacy, Inc., a privately held Texas corporation ("Dougherty's"). The
acquisition was closed pursuant to the terms of that certain Share Exchange
Agreement between Park (CO) and The Park Family Limited Partnership, a Texas
limited partnership and the sole shareholder of Dougherty's (the "Partnership"),
which was executed on December 30, 1999. In the acquisition, the Partnership
received an aggregate of 45,000 shares of Series A Preferred Stock, par value
$.001 per share, of Park (CO) in exchange for all of the issued and outstanding
shares of Dougherty's. As a result of the transaction, Dougherty's is now a
wholly-owned subsidiary of Park (CO) .
Messrs. Joe B. Park and Jay H. Park are the sole limited partners of
the Partnership, with Joe B. Park owning a 54.45% interest in the Partnership
and Jay H. Park owning a 44.55% interest in the Partnership. The sole general
partner of the Partnership is Park GP, Inc., a Texas corporation, which owns a
1% interest in the Partnership. Park GP, Inc. is owned by Messrs. Joe B. Park
and Jay H. Park. Mr. Joe B. Park is a director and the Chairman of the Board of
Park (CO). Mr. Joe B. Park is also currently a controlling shareholder of Park
(CO). Messrs. Joe B. Park and Jay H. Park are brothers.
Dougherty's, founded in 1929, operates two retail pharmacies in the
Dallas, Texas, area. In addition to prescription drugs and services, Dougherty's
retail pharmacies offer a broad range of over-the-counter medications, supplies
and equipment, health and beauty aids, cosmetics, gifts, greeting cards and
other general merchandise.
ITEM 7. Financial Statements and Exhibits.
(a) Financial Statements of Businesses Acquired.
(1) Audited Balance Sheet as of June 30, 1999, and June 30,
1998.
(2) Audited Statements of Income and Retained Earnings
for the Year ended June 30, 1999, and June 30, 1998.
(3) Audited Statements of Cash Flows for the Year ended
June 30, 1999, and June 30, 1998.
(4) Notes to Audited Financial Statements.
(5) Unaudited Balance Sheet as of September 30, 1999.
Page 2 of 19
<PAGE>
(6) Unaudited Statements of Income for the Three Months
ended September 30, 1999, and September 30, 1998.
(7) Unaudited Statements of Cash Flows for the Three
Months ended September 30, 1999, and September 30,
1998.
(8) Note to Financial Statements.
(b) Pro Forma Financial Information.
(1) Pro forma balance sheet as of September 30, 1999.
(2) Pro forma statements of operations for the Three
Months ended September 30, 1999, and for the Year
ended June 30, 1999.
(c) Exhibits.
(10.1) Share Exchange Agreement between Park (CO) and The
Park Family Limited Partnership dated as of December
30, 1999.
(99.1) Press Release dated December 30, 1999.
Page 3 of 19
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
PARK PHARMACY CORPORATION
(Registrant)
Date: January 14, 2000 By: /s/ Thomas R. Baker
-----------------------------------
Thomas R. Baker,
Chief Executive Officer & President
Page 4 of 19
<PAGE>
The Board of Directors and Shareholders November 5, 1999
DOUGHERTY'S Pharmacy, Inc.
Report of Independent Auditors
We have audited the accompanying balance sheet of DOUGHERTY'S Pharmacy, Inc. as
of June 30, 1999 and 1998, and the related statement of income and retained
earnings, and cash flows for the years then ended. These financial statements
are the responsibility of the Company's management. Our responsibility is to
express an opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of DOUGHERTY'S Pharmacy, Inc. at
June 30, 1999 and 1998, and the results of its operations and its cash flows for
the years then ended in conformity with generally accepted accounting
principles.
Howard & Waltrip, P.C.
Certified Public Accountants
Dallas, Texas
Page 5 of 19
<PAGE>
<TABLE>
<CAPTION>
DOUGHERTY'S PHARMACY, INC.
BALANCE SHEET
JUNE 30, 1999 and 1998
ASSETS 6/30/99 6/30/98
- ------ ---------- ----------
<S> <C> <C>
Current assets:
Cash $429,850 $458,405
Accounts receivable-trade, net of allowance for
uncollectible accounts of $103,000, and $57,000 1,152,285 1,005,052
Other receivables 12,817 26,692
Inventories, lower of cost or market 1,444,528 1,367,150
Prepaids, Deposits & Investments 26,714 25,239
---------- ----------
Total current assets 3,066,194 2,882,538
Fixed assets:
Furniture & fixtures 285,501 256,031
Computer equipment 229,179 207,590
Automobiles 139,861 139,861
Leasehold improvements 526,994 425,645
Accumulated depreciation (576,789) (504,566)
---------- ----------
Total net fixed assets 604,746 524,561
Other assets:
Receivable-affiliate (Note 6) 125,777 32,000
---------- ----------
TOTAL ASSETS $3,796,717 $3,439,099
========== ==========
LIABILITIES AND SHAREHOLDERS' EQUITY
- ------------------------------------
Current liabilities
Accounts payable-trade $1,009,832 $ 999,163
Accrued expenses 169,854 $ 196,999
Notes payable (note 4) 7,781 129,892
Income taxes payable (note 3) 132,000 120,000
---------- ----------
Total current liabilities 1,319,467 1,446,054
Deferred income taxes (note 3) 0 50,000
Shareholders' equity
Capital stock, $.10 par value, authorized 25,000 shares; 1,000 1,000
issued 10,000 shares
Additional paid in capital 84,241 84,241
Treasury stock (15,767) (15,767)
Retained earnings 2,407,776 1,873,571
---------- ----------
Total shareholders' equity 2,477,250 1,943,045
---------- ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $3,796,717 $3,439,099
========== ==========
</TABLE>
See accompanying notes.
Page 6 of 19
<PAGE>
DOUGHERTY'S PHARMACY, INC.
STATEMENT OF INCOME AND RETAINED EARNINGS
YEARS ENDED JUNE 30, 1999 and 1998
6/30/99 6/30/98
----------- -----------
Net sales $16,420,687 $14,535,570
Cost of sales 11,024,706 9,962,518
----------- -----------
Gross profit 5,395,981 4,573,052
Operating expenses:
Selling, general and administrative 4,606,559 4,212,869
Depreciation 72,223 70,728
----------- -----------
Total operating expenses 4,678,782 4,283,597
----------- -----------
Income from operations 717,199 289,455
Other income:
Miscellaneous income 29,006 49,925
----------- -----------
Income before provision for income taxes 746,205 339,380
Provision for income taxes-current (note 3) 262,000 120,000
----------- -----------
Net income 484,205 219,380
Beginning retained earnings 1,873,571 1,654,191
Prior period adjustment-deferred income taxes 50,000 0
----------- -----------
Ending retained earnings $ 2,407,776 $ 1,873,571
=========== ===========
See accompanying notes.
Page 7 of 19
<PAGE>
DOUGHERTY'S PHARMACY, INC.
STATEMENT OF CASH FLOWS
YEAR ENDED JUNE 30, 1999 and 1998
6/30/99 6/30/98
--------- ---------
Operating activities:
Net income $ 484,205 $ 219,380
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation 72,223 70,728
Change in operating assets and liabilities:
Accounts receivable-trade (147,233) (311,625)
Other receivables (79,902) (45,624)
Inventories, lower of cost or market (77,378) 141,137
Prepaids, Deposits & Investments (1,475) (6,607)
Accounts payable-trade 10,669 416,680
Accrued expenses (27,145) (90,485)
Income taxes payable 12,000 120,000
--------- ---------
Net cash provided by operating activities 245,964 513,584
Investing activities:
Purchase of fixed assets (152,408) (39,576)
Financing activities:
Payment on notes payable (122,111) (42,361)
--------- ---------
Net increase (decrease) in cash (28,555) 431,647
Cash at beginning of period 458,405 26,758
--------- ---------
Cash at end of period $ 429,850 $ 458,405
========= =========
Supplemental disclosure of interest paid $ 7,820 $ 9,189
========= =========
See accompanying notes.
Page 8 of 19
<PAGE>
DOUGHERTY'S Pharmacy, Inc.
Notes to Financial Statements
June 30, 1999 and 1998
1. Summary of Significant Accounting Policies
Organization
DOUGHERTY'S Pharmacy, Inc., a Texas corporation (the "Company"), was organized
on October 31, 1974. At June 30, 1999 and 1998, the Company owns and operates
two retail pharmacies located in the Dallas, Texas area.
Concentrations of Credit Risk
The Company maintains cash balances at several financial institutions located in
Dallas, Texas. Accounts at each institution are insured by the Federal Deposit
Insurance Corporation up to $100,000. At June 30, 1999, the Company's uninsured
cash balances total $217,000.
Financial instruments which potentially subject the Company to concentrations of
credit risk consist principally of accounts receivable. Accounts receivable are
unsecured and consist principally of receivables from third-party payment
providers (insurance companies and government agencies) under third-party
payment plans. Certain of these receivables are recorded net of any allowances
provided under the respective plans. Since payments due from certain third-party
payers are sensitive to payment criteria changes and legislative actions, the
allowance is reviewed continually and adjusted for accounts deemed uncollectible
by management.
Use of estimates
The preparation of financial statements in conformity with generally accepted
accounting principles requires management to make estimates and assumptions that
affect the amounts reported in the financial statements and accompanying notes.
Actual results inevitably will differ from those estimates, and such differences
may be material to the financial statements.
Cash equivalents
Cash equivalents include money-market investments with maturities of three
months or less when purchased.
Inventory
Inventories are stated at the lower of cost or market value with cost determined
using the first-in, first-out method.
Page 9 of 19
<PAGE>
DOUGHERTY'S Pharmacy, Inc.
Notes to Financial Statements
June 30, 1999 and 1998
1. Summary of Significant Accounting Policies (continued)
Depreciation
Depreciation of property and equipment is provided on a straight-line basis over
the estimated useful lives of 40 years for leasehold improvements and 3 to 15
years for equipment.
2. Leases
The Company leases its retail store facilities and corporate offices under
noncancelable operating leases for its retail store and corporate facilities.
Some leases require the Company to pay for taxes, maintenance and insurance and
contain renewable options. Rent expense was $330,510 and $352,832 for the years
ended June 30, 1999 and 1998, respectfully.
At June 30, 1999 the future minimum lease payments under operating leases are as
follows:
Year
2000 $ 301,122
2001 300,316
2002 255,663
2003 255,663
2004 127,832
-----------
Total $ 1,240,596
===========
3. Income taxes
The provision for income taxes is based on an estimated effective tax rate of
35%.
Deferred income taxes reflect the net tax effects of temporary differences
between the carrying amounts of assets and liabilities for financial reporting
purposes and the amounts used for income tax purposes. At June 30, 1999 and 1998
the deferred tax liability is estimated at zero and $50,000, respectfully.
Page 10 of 19
<PAGE>
DOUGHERTY'S Pharmacy, Inc.
Notes to Financial Statements
June 30, 1999 and 1998
4. Notes payable
The notes payable consists of a revolving line of credit and various installment
loans with interest rates ranging from eight to ten percent. All notes payable
are due within one year.
5. Year 2000
The Company is in the process of conducting a Year 2000 compilance assessment of
its information technology systems. The Year 2000 issue relates to the ability
of date-sensitive software to properly recognize the year 2000 in calculating
and processing computer system data. The Company has determined that some
existing software will need to be modified. Modifications to existing software
are expected to be completed well in advance of 2000. The Company anticipates
that timely completion of these modifications will mitigate the Year 2000 issue
internally.
The Company has not determined the potential impact of the year 2000 issue on
its significant vendors or suppliers at this time. Because third party failures
could have a material impact on the Company's ability to conduct business, plans
are being developed to address the Year 2000 issue with these third parties. The
Company anticipates completing this assessment process well in advance of 2000.
Based upon current expenditures and estimates, the costs of addressing the Year
2000 issue are not expected to have a material impact on future operating
results or financial position.
6. Related party transactions
The Company has agreed to advance operating funds of up to $150,000 to cover the
development stage expenses of an affiliated entity, owned by the majority
shareholder. These expenses include 50% of the Company's office rent, 40% of the
operating officer's salaries, 100% of the office equipment purchases and various
other expenses. At June 30, 1999 and 1998, the Company has advanced $125,777 and
$32,000, respectfully. These funds are being advanced on a non-interest-bearing
basis.
Page 11 of 19
<PAGE>
DOUGHERTY'S PHARMACY, INC.
BALANCE SHEET
SEPTEMBER 30, 1999
ASSETS
------
CURRENT ASSETS:
Cash $ 71,652
Accounts receivable 1,386,832
Other receivables 136,129
Inventories 1,430,987
Prepaid expenses 52,188
-----------
Total current assets 3,077,788
FIXED ASSETS, net of accumulated depreciation 747,529
-----------
Total assets $ 3,825,317
===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $ 743,596
Accrued expenses 302,006
-----------
Total current liabilities 1,045,602
NOTES PAYABLE 206,401
SHAREHOLDERS' EQUITY:
Common stock 1,000
Additional paid-in capital 84,241
Treasury stock (15,767)
Retained earnings 2,503,840
-----------
Total shareholders' equity 2,573,314
-----------
Total liabilities and shareholders' equity $ 3,825,317
===========
See accompanying note to these financial statements.
Page 12 of 19
<PAGE>
DOUGHERTY'S PHARMACY, INC.
STATEMENTS OF INCOME
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------
1999 1998
---------- ----------
NET SALES $4,441,063 $3,764,230
COST OF SALES 2,956,421 2,492,496
---------- ----------
Gross profit 1,484,642 1,271,734
SELLING, GENERAL AND ADMINISTRATIVE EXPENSES 1,383,287 1,081,965
---------- ----------
Income from operations 101,355 189,769
OTHER INCOME 33,710 1,849
---------- ----------
INCOME BEFORE PROVISION FOR INCOME TAXES 135,065 191,618
PROVISION FOR INCOME TAXES 39,000 65,000
---------- ----------
NET INCOME $ 96,065 $ 126,618
========== ==========
See accompanying note to these financial statements.
Page 13 of 19
<PAGE>
<TABLE>
<CAPTION>
DOUGHERTY'S PHARMACY, INC.
STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED
SEPTEMBER 30,
------------------------
1999 1998
---------- ----------
<S> <C> <C>
CASH FLOW FROM OPERATING ACTIVITIES:
Net income $ 96,065 $ 126,618
Adjustments to reconcile net income to net cash used by
operating activities:
Depreciation 21,615 18,202
Change in operating assets and liabilities:
Receivables (232,712) 17,042
Inventories 13,541 (131,841)
Prepaid expenses (25,474) 8,439
Accounts payable and accrued expenses (266,084) (305,252)
---------- ----------
Net cash used by operating activities (393,049) (266,792)
CASH FLOW FROM INVESTING ACTIVITIES -
Purchase of fixed assets (163,769) (18,104)
CASH FLOW FROM FINANCING ACTIVITIES -
Proceeds from (payments on) notes payable 198,620 (101,357)
---------- ----------
NET DECREASE IN CASH (358,198) (386,253)
CASH, beginning of period 429,850 458,405
---------- ----------
CASH, end of period $ 71,652 $ 72,152
========== ==========
</TABLE>
See accompanying note to these financial statements.
Page 14 of 19
<PAGE>
DOUGHERTY'S PHARMACY, INC.
NOTE TO FINANCIAL STATEMENTS
1. UNAUDITED INFORMATION
---------------------
The balance sheet as of September 30,1999 and the statements of income and
cash flows for the three month periods ended September 30, 1999 and 1998
were taken from the Company's books and records without audit. However, in
the opinion of management, such information includes all adjustments
(consisting only of normal recurring accruals) which are necessary to
properly reflect the financial position of the Company as of September 30,
1999 and the results of its operations and cash flows for the three months
ended September 30, 1999 and 1998.
Page 15 of 19
<PAGE>
Park Pharmacy Corporation
Unaudited Pro Forma Financial Statements
The accompanying unaudited pro forma financial statements have been prepared to
reflect the acquisition of 100% of the common stock of Dougherty's Pharmacy,
Inc. ("Dougherty's") by Park Pharmacy Corporation ("Park") on December 31, 1999
as if the acquisition had occurred on September 30, 1999 with respect to the pro
forma balance sheet and as of the beginning of the respective periods with
respect to the pro forma statements of operations. Park acquired Dougherty's for
45,000 shares of convertible preferred stock. The acquisition is recorded at the
book value of Dougherty's due to common control of Dougherty's and Park. The pro
forma financial statements also reflect the acquisition of RX Pro. Com, which
occurred on December 21, 1999 and has been previously reported in a Form 8-K
filing by the Company.
The accompanying unaudited pro forma financial statements should be read in
conjunction with the historical financial statements of Dougherty's included
herein and the aforementioned Form 8-K for the acquisition of RX Pro.Com. These
pro forma financial statements are not indicative of the financial position or
results of operations that would actually have occurred if the transactions
described above had occurred at the dates presented or which may be obtained in
the future.
Page 16 of 19
<PAGE>
<TABLE>
<CAPTION>
Park Pharmacy Corporation
Unaudited Pro Forma Balance Sheet
September 30, 1999
(2) Pro Forma Pro Forma
Park RX Pro Dougherty's Adjustments Balances
--------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C>
Current assets - 422,442 3,077,788 3,500,230
Property and equipment 14,001 20,705 747,529 1,000,000 (1) 1,782,235
Goodwill and Other assets 1,212 - 1,240,145 (1) 1,241,357
-------------------------------------------------------- --------------
Total assets 15,213 443,147 3,825,317 2,240,145 6,523,822
======================================================== ==============
Currents liabilities 195,191 528,542 1,045,602 1,769,335
Notes Payable - - 206,401 206,401
Stockholders equity (deficit) (179,978) (85,395) 2,573,314 2,154,750 (1)
85,395 (1) 4,548,086
-------------------------------------------------------- --------------
Total liabilities and stockholders'
equity 15,213 443,147 3,825,317 2,240,145 6,523,822
======================================================== ==============
Note
(1) Adjustment to record estimated value of stock issued to acquire RX Pro and
remove RX Pro equity. accounts. The purchase price is allocated to the
estimated fair value of the RX Pro assets.
(2) The acquisition of Dougherty's is recorded at book value due to common
ownership of the controlling interests of Dougherty's and Park.
Page 17 of 19
<PAGE>
Park Pharmacy Corporation
Unaudited Pro Forma Statement of Operations
Three Months Ended September 30, 1999
Pro Forma Pro Forma
Park RX Pro Dougherty's Adjustments Balances
------------------------------------------------------------------------------------
Sales - 39,691 4,441,063 4,480,754
Less cost of sales - 3,776 2,956,421 2,960,197
--------------------------------------------------------------- ----------------
Gross profit - 35,915 1,484,642 - 1,520,557
General and administrative expenses 71,107 70,521 1,383,287 112,007 (1) 1,636,922
--------------------------------------------------------------- ----------------
Income (loss) from operations (71,107) (34,606) 101,355 (112,007) (116,365)
Other income - - 33,710 33,710
--------------------------------------------------------------- ----------------
Income (loss) before income taxes (71,107) (34,606) 135,065 (112,007) (82,655)
Provision for income taxes - - 39,000 (39,000) (2) -
--------------------------------------------------------------- ----------------
Net Income (Loss) (71,107) (34,606) 96,065 (73,007) (82,655)
=============================================================== ================
Net loss per share - basic and diluted (0.01) (0.01)
=============== ================
weighted average shares 6,419,000 6,419,000
=============== ================
</TABLE>
Note
(1) Adjustment to reflect amortization of software and goodwill recorded in
acquisition of Rx Pro over five years.
(2) Adjustment to reduce income taxes to amount that would have occurred if
the companies had been combined at the beginning of the year.
Page 18 of 19
<PAGE>
<TABLE>
<CAPTION>
Park Pharmacy Corporation
Unaudited Pro Forma Statement of Operations
Year Ended June 30, 1999
(1) Pro Forma Pro Forma
Park RX Pro Dougherty's Adjustments Balances
----------- ----------- ----------- ----------- -----------
<S> <C> <C> <C> <C> <C>
Sales -- 170,307 16,420,687 16,590,994
Less cost of goods sold -- 20,680 11,024,706 11,045,386
----------- ----------- ----------- ----------- -----------
Gross profit -- 149,627 5,395,981 -- 5,545,608
General and administrative expenses 105,725 265,130 4,678,782 448,029(2) 5,497,666
----------- ----------- ----------- ----------- -----------
Income (loss) from operations (105,725) (115,503) 717,199 (448,029) 47,942
Other income -- -- 29,006 29,006
----------- ----------- ----------- ----------- -----------
Income (loss) before income taxes (105,725) (115,503) 746,205 (448,029) 76,948
Provision for income taxes -- -- 262,000 (247,000)(3) 15,000
----------- ----------- ----------- ----------- -----------
Net income (loss) (105,725) (115,503) 484,205 (201,029) 61,948
=========== =========== =========== =========== ===========
Net loss per share - basic and diluted
(0.02) 0.01
=========== ===========
Weighted average shares 6,419,000 6,419,000
=========== ===========
</TABLE>
Notes
(1) The RX Pro statement of operations includes the nine months ended
September 30, 1999, with an adjustment to add the three months ended
September 30, 1998 in order to put the statements on a full year basis to
conform with the Park statement of operations.
(2) Adjustment to reflect amortization of software and goodwill recorded in
acquisition of Rx Pro over five years.
(3) Adjustment to reduce income taxes to amount that would have occurred if
the companies had been combined at the beginning of the year.
Page 19 of 19
EXHIBIT 10.1
SHARE EXCHANGE AGREEMENT
Between
PARK PHARMACY CORPORATION
and
THE PARK FAMILY LIMITED PARTNERSHIP
Dated as of December 30, 1999
<PAGE>
SHARE EXCHANGE AGREEMENT
This Share Exchange Agreement (this "Agreement") is entered into as of
December 30, 1999, by and among Park Pharmacy Corporation, a Colorado
corporation (the "Company"), and The Park Family Limited Partnership, a Texas
limited partnership (the "Partnership").
R E C I T A L S :
-----------------
A. The Partnership owns all of the outstanding shares (the "Dougherty's
Shares") of capital stock of Dougherty's Pharmacy, Inc., a Texas corporation
("Dougherty's");
B. The Company desires to acquire the Dougherty's Shares in accordance
with the terms and conditions set forth in this Agreement; and
C. The Partnership desires to acquire from the Company, in exchange for
the Dougherty's Shares and in accordance with the terms and conditions set forth
in this Agreement, the Park Pharmacy Shares (as defined herein).
A G R E E M E N T :
-------------------
NOW, THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Company and the Partnership
hereby agree as follows:
ARTICLE 1
The Share Exchange; Closing
---------------------------
1.1 The Share Exchange. Upon the terms and subject to the conditions set
forth in this Agreement, on the Closing Date (as herein defined), the
Partnership shall deliver the Dougherty's Shares to the Company, free and clear
of all liens, claims and encumbrances, and the Company shall issue to the
Partnership 45,000 shares of Series A Preferred Stock, par value $.001 per share
of the Company (the "Park Pharmacy Shares"), free and clear of all liens, claims
and encumbrances. Following the Closing, Dougherty's will become a wholly owned
subsidiary of the Company.
1.2 Closing. The closing of the Merger (the "Closing") shall take place
at the offices of Carrington, Coleman, Sloman & Blumenthal, L.L.P., 200 Crescent
Court, Suite 1500, Dallas, Texas 75201, at 9:00 a.m., local time, on the date
hereof, or at such other time and place and/or on such other date, as the
parties hereto may agree upon in writing. The date on which the Closing occurs
is hereinafter referred to as the "Closing Date."
-1-
<PAGE>
1.3 Subsequent Action. If, at any time after the Closing, any party
shall consider or be advised that any deeds, bills of sale, assignments,
assurances or any other actions or things are necessary or desirable to vest,
perfect or confirm of record or otherwise in such party, its right, title or
interest in, to or under the Dougherty's Shares, in the case of the Company, or
the Park Pharmacy Shares, in the case of the Partnership, or otherwise to carry
out this Agreement, the officers and directors of the appropriate party shall,
and each is hereby authorized, to execute and deliver, in the name and on behalf
of such party, all such deeds, bills of sale, assignments and assurances and to
take and do, in the name and on behalf of such party, all such other actions and
things as may be necessary or desirable to vest, perfect or confirm any and all
right, title and interest in, to and under such rights, titles, or interests, in
such shares, or otherwise to carry out this Agreement.
1.4 Definitions. All financial terms used herein shall have the meanings
ascribed to them in accordance with generally accepted accounting principles
consistently applied ("GAAP"). All terms capitalized herein are defined the
first time they are used, except as otherwise noted.
1.5 Tax Treatment. This transaction is intended to be a tax-free
reorganization pursuant to Section 368(a)(1) of the Internal Revenue Code of
1986, as amended.
ARTICLE 2
Representations and Warranties of the Company
---------------------------------------------
The Company hereby represents and warrants to the Partnership as follows
(with the understanding that the Partnership is relying materially on such
representations and warranties in entering into and performing this Agreement):
2.1 Due Organization. The Company is a corporation, validly existing and
in good standing under the laws of its state of incorporation, and has full
corporate power and authority to enter into and perform this Agreement and each
other instrument, agreement and document to be executed by it in connection
herewith.
2.2 Due Authorization; No Conflicts. The Company has full power and
authority to execute and deliver, enter into, and approve and adopt this
Agreement and to execute and deliver such other agreements, instruments and
documents to be executed in connection herewith, and carry out the transactions
contemplated hereby. The Board of Directors of the Company has duly and validly
taken all action it is required by law, its Certificate (or Articles) of
Incorporation, its bylaws or otherwise to take to duly authorize the approval,
adoption, execution and delivery of this Agreement, the performance of its
obligations hereunder, and the consummation of the transactions contemplated
hereby. This Agreement has been duly and validly executed and delivered by the
Company and constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting the
enforcement of creditors' rights generally and the application of general
principles of equity. The execution, delivery and performance of this Agreement
by the Company will not (a) violate any federal, state, county or local law,
rule or regulation applicable to the Company or (b) violate or conflict with any
provision of the Company's Certificate (or Articles) of Incorporation or bylaws.
No action, consent or approval of or filing with any federal, state, county or
local governmental authority is required in connection with the execution,
delivery or performance of this Agreement (or any other agreement, instrument or
document executed in connection herewith by the Company) by the Company, except
for any required filings under any applicable state securities laws.
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2.3 Brokers. The Company has not engaged, or caused to be incurred any
liability to, any finder, broker or sales agent in connection with the
execution, delivery or performance of this Agreement or the transactions
contemplated hereby.
2.4 No Liens on Shares All of the Park Pharmacy Shares, when issued to
the Partnership, shall be duly authorized, validly issued, fully paid and
nonassessable. None of the Park Pharmacy Shares will be issued in violation of,
or be subject to, any preemptive rights or preferential rights of any person.
2.5 Company Reports. Since October 19, 1999, the Company has filed all
reports and other documents (the "Company Reports") that it was required to file
with the Securities and Exchange Commission (the "SEC"). As of their respective
dates, the Company Reports did not, and any Company Reports filed with the SEC
subsequent to the date hereof will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances in which
they were made, not misleading.
ARTICLE 3
Representations and Warranties of the Partnership
-------------------------------------------------
The Partnership hereby represents and warrants to the Company as follows
(with the understanding that the Company is relying materially on such
representations and warranties in entering into and performing this Agreement):
3.1 Capitalization; Ownership of Shares; No Liens on Shares. The
authorized capital stock of Dougherty's consists of 25,000 shares of common
stock, $.10 par value per share, 9,622.1807 of which are issued and outstanding.
All such issued and outstanding Dougherty's Shares are duly authorized, validly
issued, fully paid and nonassessable. All of the Dougherty's Shares are owned of
record by the Partnership. None of the Dougherty's Shares were issued in
violation of, or are subject to, any preemptive or preferential rights of any
person. There are no other shares of capital stock of Dougherty's, or securities
convertible into or exchangeable or exercisable for shares of capital stock of
Dougherty's outstanding, and there are no outstanding options, warrants, rights,
calls, contracts, commitments, understandings, arrangements, or claims of any
character by which Dougherty's is, or may become, bound to issue, transfer or
sell, or repurchase or otherwise acquire or retire, any shares of capital stock
of Dougherty's, or any securities convertible into or exchangeable or
exercisable for, or otherwise evidencing a right to acquire, any such shares.
3.2 Due Organization. Dougherty's is a corporation, validly existing and
in good standing under the laws of the State of Texas and has full power and
authority to carry on its business as now conducted. Dougherty's is qualified to
do business and is in good standing in all jurisdictions where such
qualification is required.
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3.3 Subsidiaries. Dougherty's does not directly or indirectly have (or
possess any options or other rights to acquire) any subsidiaries or any direct
or indirect ownership interests in any person, corporation, partnership,
association, joint venture, trust or other entity.
3.4 Due Authorization; No Conflicts.
(a) The Partnership has full limited partnership power and authority
to execute and deliver, enter into, and approve and adopt this Agreement
and to execute and deliver such other agreements, instruments and documents
required to be executed in connection herewith, and to carry out the
transactions contemplated hereby. The Board of Directors and the
shareholders of the corporate general partner of the Partnership have duly
and validly taken all action required by law, the corporate general
partner's Articles of Incorporation, the corporate general partner's
bylaws, the Partnership's partnership agreement, or otherwise to duly
authorize the approval, adoption, execution and delivery of this Agreement,
the performance of its obligations hereunder and the consummation of the
transactions contemplated hereby. No other corporate or limited partnership
proceeding on the part of the Partnership is necessary to authorize this
Agreement or to consummate the transactions so contemplated. This Agreement
has been duly and validly executed and delivered by the Partnership and
constitutes a valid and binding obligation of the Partnership enforceable
in accordance with its terms, except as the same may be limited by
applicable bankruptcy, insolvency, reorganization or other laws affecting
the enforcement of creditors' rights generally and the application of
general principles of equity.
(b) The execution, delivery and performance of this Agreement by the
Partnership, the execution, delivery and performance by the Partnership of
such other agreements, instruments or documents required to be executed by
it in connection herewith, and the consummation of the transactions
contemplated hereby shall not (i) violate any federal, state, county or
local law, rule or regulation applicable to the Partnership or its
properties, (ii) violate or conflict with, or permit the cancellation of,
any agreement to which the Partnership is a party, or by which it or its
properties is bound, or result in the creation of any lien, security
interest, charge or encumbrance upon any of such properties, (iii) permit
the acceleration of the maturity of any indebtedness of, or indebtedness
secured by the property of, the Partnership, or (iv) violate or conflict
with any provision of the Partnership's agreement of limited partnership.
(c) No action, consent or approval of or filing with any federal,
state, county or local governmental authority is required in connection
with the execution, delivery or performance of this Agreement (or any other
agreement, instrument or document executed in connection herewith by the
Partnership).
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<PAGE>
3.5 Financial Statements. The following Financial Statements (herein so
called) of Dougherty's have been delivered to the Company:
(a) The audited balance sheets and related statements of income,
retained earnings, and cash flows of Dougherty's as of and for the years
ended June 30, 1998, and June 30, 1999, together with the notes thereto
(the "Audited Financials").
(b) The unaudited balance sheets and related statements of income,
retained earnings, and cash flows of the Company, as of and for the three
(3) months ended September 30, 1999, and September 30, 1998 (the "Interim
Financial Statements").
The Financial Statements have been prepared in accordance with GAAP. The
Financial Statements present fairly, in all material respects, the financial
position, results of operations and changes in financial position of Dougherty's
as of the indicated dates and for the indicated periods except, in the case of
the Interim Financial Statements, for the absence of notes thereto and subject
to normal year-end adjustments and accruals required to be made in the ordinary
course of business which are not materially adverse and are consistent with past
practices. Except as set forth in the Interim Financial Statements, since
December 31, 1998, there has been no material change in the financial position,
assets, liabilities, results of operations, business or prospects of
Dougherty's.
3.6 Conduct of Business; Certain Actions. Since June 30, 1999,
Dougherty's has conducted its business and operations in the ordinary course and
consistent with its past practices in all material respects, and there has been
no material adverse change in the financial condition, assets, operation or
business prospects of Dougherty's.
3.7 Proprietary Rights. Schedule 3.7 attached hereto lists all
Proprietary Rights used in or necessary to the business of Dougherty's as now
being conducted (other than for off-the-shelf software programs that have not
been customized for use by Dougherty's). Except as set forth in Schedule 3.7,
Dougherty's owns or has the right to use all material Proprietary Rights
necessary to the conduct of its business as presently conducted. Except as
indicated in Schedule 3.7, (a) Dougherty's owns all right, title, and interest
in and to or a valid and enforceable license or waiver to use all of such
material Proprietary Rights, trade secrets and confidential information and
other proprietary rights, (b) there are no outstanding claims received by
Dougherty's asserting the invalidity, abuse, misuse, or unenforceability of any
of such rights by Dougherty's and, to the Partnership's knowledge, there are no
grounds for the same, and (c) to the knowledge of the Partnership, the conduct
of Dougherty's business has not infringed any such rights of others. All of the
material patents, trademarks and copyrights owned by Dougherty's have been duly
registered in, filed in or issued by the United States Patent and Trademark
Office or Register of Copyrights or the corresponding offices of other
countries, and have been properly maintained and renewed, consistent with
prudent business practices, in accordance with all applicable provisions of law
and administrative regulations in the United States and each such country. The
term "Proprietary Rights" means any patents, patent applications, patent
disclosures and inventions as well as any reissues, continuations,
continuations-in-part, divisions, extensions or reexaminations thereof;
trademarks, service marks, trade dress, logos, trade names and corporate names,
together with all goodwill associated therewith, copyrights and copyrightable
works; mask works; and registrations, applications and renewals for any of the
foregoing; computer software; and all copies and tangible embodiments of the
foregoing (in whatever form or medium), Internet domain names, service marks,
registered trade names and applications for each of the foregoing, if any,
subject to licenses described herein.
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<PAGE>
3.8 Compliance with Laws. Dougherty's has complied in all respects, and
is in compliance in all respects, with all federal, foreign, state, county and
local laws, regulations and orders applicable to its business and has filed with
the proper authorities all statements and reports required by the laws,
regulations and orders to which Dougherty's or any of its properties or
operations are subject. No claim has been made or to the best knowledge of the
Partnership, threatened by any governmental authority to the effect that the
business conducted by Dougherty's fails to comply, in any respect, with any law,
rule, regulation or ordinance.
3.9 ERISA Compliance. Dougherty's is in compliance in all material
respects with the currently applicable provisions of The Employee Retirement
Income Security Act of 1974, as amended ("ERISA"), and the applicable provisions
of Section 401(a) of the Internal Revenue Code of 1986, as amended. No employee
benefit plan established or maintained, or to which contributions have been
made, by Dougherty's, which is subject to part 3 of Subtitle B or Title I of
ERISA, had an accumulated funding deficiency (as such term is defined in Section
302 of ERISA) as of the last day of the most recent fiscal year of such plan
ended prior to the date hereof, and no material liability to the Pension Benefit
Guaranty Corporation has been incurred with respect to any such plan by
Dougherty's.
3.10 Contracts and Agreements. Attached hereto as Schedule 3.10 is a list
of all material written or oral contracts, commitments, leases and other
agreements (including, without limitation, promissory notes, loan agreements and
other evidences of indebtedness) to which Dougherty's is a party or by which
Dougherty's or its respective properties are bound. Neither Dougherty's nor, to
the best knowledge of the Partnership, any other party thereto, is in default
(and no event has occurred which, with the passage of time or the giving of
notice or both, would constitute a default) under any such contracts,
commitments, leases or other agreements, and Dougherty's has not waived any
right under any such contracts, commitments, leases or other agreements.
3.11 Claims and Proceedings. Attached hereto as Schedule 3.11 is a list
and description of all investigations known to the Partnership that are pending
or threatened against Dougherty's or any of its properties or assets, and all
claims, actions, suits, and proceedings pending or, to the best knowledge of the
Partnership, threatened against Dougherty's or any of its properties or assets,
at law or in equity, or before or by any court, municipal or other governmental
department, commission, board, agency or instrumentality. No inquiry, action or
proceeding has been instituted or, to the best knowledge of the Partnership,
threatened to restrain or prohibit the carrying out of the transactions
contemplated by this Agreement or to challenge the validity of such transactions
or any part thereof or seeking damages on account thereof.
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<PAGE>
3.12 Taxes. Dougherty's has filed, has caused to be filed or has been
granted an extension by the appropriate government agency of any filing deadline
with respect to, all federal, state and local income tax returns and all other
federal, state and local tax returns which are required to be filed
(collectively "Tax Returns"). All Tax Returns which have been filed have been
prepared in accordance with all applicable laws and regulations, and are true
and accurate in all material respects. Dougherty's has paid or caused to be paid
all taxes shown on all Tax Returns or on any assessment therefor received by
Dougherty's to the extent that such taxes have become due, or has set aside on
its book reserves (segregated to the extent required by GAAP deemed by
Dougherty's adequate with respect thereto. None of the federal income tax
returns of Dougherty's for tax years after 1994 have been audited by the
Internal Revenue Service, and neither the state nor local income tax returns of
Dougherty's for tax years after 1994 have been audited by any state or local tax
or revenue agency or authority and Dougherty's has not received notice of any
such proposed or potential tax audit. Dougherty's is not a party to, or bound
by, any tax sharing or allocation agreement or, to the knowledge of the
Partnership, has any current or potential contractual obligation to indemnify
any other person with respect to any taxes.
3.13 Bank Accounts. Attached hereto as Schedule 3.13 is a list of all
banks or other financial institutions with which Dougherty's has an account or
maintains a safe deposit box, showing the type and account number of each such
account and safe deposit box and the names of the persons authorized as
signatories thereon or to act or deal in connection therewith.
3.14 Environmental Matters. Dougherty's is not in violation, or alleged
to be in violation, of any judgment, decree, order, law, license, rule or
regulation pertaining to environmental matters, including without limitation,
those arising under the Comprehensive Environmental Response, Compensation and
Liability Act as amended, the Resource Conservation and Recovery Act, as
amended, the Superfund Amendments and Reauthorization Act of 1986, the Federal
Clean Water Act, the Federal Clean Air Act, the Toxic Substances Control Act, or
any federal, state, local or foreign statute, regulation, ordinance, order or
decree relating to health, safety or the environment (collectively
"Environmental Laws"), and Dougherty's has not engaged in any activities that
would give rise to a violation of any judgment, decree, order, law, license,
rule or regulation pertaining to Environmental Laws.
3.15 Brokers. The Partnership has not engaged, or caused any liability to
be incurred to, any finder, broker or sales agent in connection with the
execution, delivery or performance of this Agreement or the transactions
contemplated hereby.
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<PAGE>
3.16 Investment Intent. The Partnership represents, warrants and
acknowledges: (i) that it is acquiring the Park Pharmacy Shares hereunder for
its own account for investment and not with a view to, or for sale or other
disposition in connection with, any distribution thereof, nor with any present
intention of selling or otherwise disposing of the same; (ii) that it is an
Accredited Investor (as that term is defined in Rule 501 promulgated by the
Securities and Exchange Commission under the Securities Act of 1933, as amended
(the "Securities Act")); and (iii) that it is fully informed that the shares of
Park Pharmacy Shares exchanged hereunder are being exchanged pursuant to a
private offering exemption under the Securities Act and are not being registered
under the Securities Act or under the securities or blue sky laws of any state
or foreign jurisdiction, that such shares must be held indefinitely unless they
are subsequently registered under the Securities Act and any applicable state
securities or blue sky laws, or unless an exemption from registration is
available thereunder, and that the Company has no obligation to register such
shares. Each certificate representing the Park Pharmacy Shares shall bear a
legend substantially in the following form:
"SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1993, AS AMENDED, AND
MAY NOT BE OFFERED, SOLD OR OTHERWISE TRANSFERRED, PLEDGED
OR HYPOTHECATED UNLESS AND UNTIL SUCH SHARES ARE REGISTERED
UNDER SUCH ACT OR AN OPINION OF COUNSEL SATISFACTORY TO THE
COMPANY IS OBTAINED TO THE EFFECT THAT SUCH REGISTRATION IS
NOT REQUIRED."
3.17 Year 2000 Compliance. All hardware and internally developed software
systems and, to the best knowledge of the Partnership third-party supplied
software, owned or licensed and utilized by Dougherty's in its business are
"Year 2000 Compliant", i.e., they shall be capable of performing proper
date-related processing prior to, in or beyond the year 2000, and shall not
cease to operate or operate abnormally or incorrectly as a result of not being
Year 2000 Compliant where such cessation or abnormal or incorrect operating may
have an adverse impact on its operations.
ARTICLE 4
Conditions to Closing
---------------------
4.1 Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, or written waiver by the Company, of each of the
following conditions:
(a) The representations and warranties of the Partnership contained
in this Agreement shall be true and correct in all material respects at and
as of the Closing Date with the same effect as though such representations
and warranties had been made on and as of the Closing Date; and the Company
shall have received an officers' certificate, dated as of the Closing Date,
signed by the President and the Chief Financial Officer of the corporate
general partner of the Partnership to the foregoing effect; and
(b) No action or proceeding shall have been instituted or threatened
for the purpose or with the probable or reasonably likely effect of
enjoining or preventing the consummation of this Agreement or seeking
damages on account thereof.
4.2 Conditions to Obligations of the Partnership. The obligations of the
Partnership to consummate the transactions contemplated by this Agreement are
subject to the fulfillment, or written waiver by the Partnership, of each of the
following conditions.
(a) The Company's representations and warranties contained in this
Agreement shall be true and correct in all material respects at and as of
the Closing Date with the same effect as though such representations and
warranties had been made on and as of the Closing Date; and the Partnership
shall have received a certificate, dated as of the Closing Date, from the
Company, signed by an authorized representative to the foregoing effect;
and
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(b) No action or proceeding shall have been instituted or threatened
for the purpose or with the probable or reasonably likely effect of
enjoining or preventing the consummation of this Agreement or seeking
damages on account thereof.
ARTICLE 5
Indemnification
---------------
5.1 Indemnification.
(a) The Partnership agrees to indemnify and hold harmless the Company
and each officer, director, employee, representative and affiliate of the
Company (collectively, the "Company Indemnified Parties") from and against
any and all damages, losses, claims, liabilities, demands, charges, suits,
penalties, costs and expenses (including court costs and reasonable
attorneys' fees and expenses incurred in investigating and preparing for
any litigation or proceeding) (collectively, "Indemnifiable Costs") which
any of the Company Indemnified Parties may sustain, or to which any of the
Company Indemnified Parties may be subjected, arising directly or
indirectly out of any breach or default by the Partnership of or under any
of its representations, warranties, covenants, agreements, waivers or other
provisions of this Agreement or any agreement, document or instrument
executed in connection herewith. The indemnification obligations set forth
in this Section 5.1(a) shall be the exclusive remedy of each of the Company
Indemnified Parties for any Indemnifiable Costs that they may sustain or be
subjected to, arising directly or indirectly out of any breach or default
by the Partnership of or under any of its representations, warranties,
covenants, agreements, waivers or other provisions of this Agreement or any
agreement, document or instrument executed in connection herewith.
(b) The Company agrees to indemnify and hold harmless the Partnership
and each representative, officer, director, employee and affiliate of the
Partnership (collectively, the "Partnership Indemnified Parties") from and
against any and all Indemnifiable Costs which any of the Partnership
Indemnified Parties may sustain, or to which any of the Partnership
Indemnified Parties may be subjected, arising out of any breach or default
by the Company of or under any of its representations, warranties,
covenants, agreements, waivers or other provisions of this Agreement or any
agreement, document or instrument executed in connection herewith. The
indemnification obligations set forth in this Section 5.1(b) shall be the
exclusive remedy of each of the Partnership Indemnified Parties for any
Indemnifiable Costs that they may sustain or be subjected to, arising
directly or indirectly out of any breach or default by the Company of or
under any of its representations, warranties, covenants, agreements,
waivers or other provisions of this Agreement or any agreement, document or
instrument executed in connection herewith.
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<PAGE>
(c) Notwithstanding the provisions of Section 5.1(a), the
Partnership's liability under Section 5.1(a) shall in no event exceed the
value of the Park Pharmacy Shares as of the date any claim is asserted
under Section 5.1(a), and the Partnership may satisfy any such claim be
delivering to the Company that number of shares of the Park Pharmacy Shares
necessary to satisfy such claims based on the valuation of such shares as
of the date the claim is asserted.
(d) All representations and warranties of the Company and the
Partnership set forth herein or in any agreement, instrument, or document
executed and delivered in connection herewith shall survive the Closing and
shall then expire on, and be of no further force or effect from and after,
December 31, 2000.
ARTICLE 6
Miscellaneous
-------------
6.1 Collateral Agreements, Amendments and Waivers. This Agreement
supersedes all prior documents, understandings and agreements, oral or written,
relating to this transaction and constitutes the entire understanding among the
parties with respect to the subject matter hereof. Any modification or amendment
to, or waiver of, any provision of this Agreement (or any document delivered
pursuant to this Agreement unless otherwise expressly provided therein) may be
made only by an instrument in writing executed by the party against whom
enforcement thereof is sought.
6.2 Successors and Assigns. The Partnership and the Company shall not
assign any of their rights or obligations under this Agreement without the
written consent of the other. Any assignment in violation of the foregoing shall
be null and void. Subject to the preceding sentences of this Section 6.2, the
provisions of this Agreement (and, unless otherwise expressly provided therein,
of any document delivered pursuant to this Agreement) shall be binding upon and
inure to the benefit of the parties hereto and their respective heirs, legal
representatives, successors and assigns.
6.3 Waiver. No failure or delay on the part of any party in exercising
any right, power or privilege hereunder or under any of the documents delivered
in connection with this Agreement shall operate as a waiver of such right, power
or privilege; nor shall any single or partial exercise of any such right, power
or privilege preclude any other or future exercise thereof or the exercise of
any other right, power or privilege.
6.4 Notices. Any notices required or permitted to be given under this
Agreement (and, unless otherwise expressly provided therein, under any document
delivered pursuant to this Agreement) shall be given in writing and shall be
deemed received (a) when personally delivered to the relevant party at such
party's address as set forth below, (b) if sent by mail (which must be certified
or registered mail, postage prepaid), when received or rejected by the relevant
party at such party's or representative's address indicated below, or (c) if
sent by facsimile transmission, when confirmation of delivery is received by the
sending party:
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If to the Company:: Park Pharmacy Corporation
10711 Preston Road, Suite 250
Dallas, Texas 75230
With a copy to: Carrington, Coleman, Sloman & Blumenthal, L.L.P.
200 Crescent Court
Suite 1500
Dallas, TX 75201
Attn: John W. Wesley, Esq.
Fax: (214) 855-1333
If to the Partnership:: Park GP, Inc.
Attn: Joe B. Park
10711 Preston Road, Suite 250
Dallas, Texas 75230
Each party may change its address for purposes of this Section 6.4 by
proper notice to the other parties.
6.5 Survival of Representations and Warranties. The representations and
warranties of the parties hereto contained in this Agreement or in any
certificate, instrument, or document delivered pursuant hereto shall survive the
Closing, regardless of any investigation made by or on behalf of any party.
6.6 Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Texas.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement in
one or more counterparts (all of which shall constitute one and the same
agreement) as of the day and year first above written.
COMPANY:
PARK PHARMACY CORPORATION,
a Colorado corporation
By: /s/ Thomas R. Baker
--------------------
Thomas R. Baker
Its: President
PARTNERSHIP:
THE PARK FAMILY LIMITED PARTNERSHIP
By: PARK GP, INC., its sole general partner
By: /s/ Joe B. Park
-----------------------------------
Joe B. Park, R. Ph., President
- 11 -
EXHIBIT 99.1
PARK PHARMACY ANNOUNCES ACQUISITION
OF
DOUGHERTY'S PHARMACY INC.
DALLAS--(BUSINESS WIRE)--Dec. 30, 1999--Park Pharmacy Corporation, a Colorado
corporation ("Park") (OTC BB: PPRX), announced today that the previously
announced planned acquisition of Dougherty's Pharmacy Inc., a privately-held
Texas corporation ("Dougherty's") has been consummated today.
Pursuant to the terms of a Share Exchange Agreement, the shareholder of
Dougherty's received an aggregate of 45,000 shares of Series A Preferred Stock
of Park in exchange for all of the issued and outstanding shares of capital
stock of Dougherty's. As a result of this transaction, Dougherty's is now a
wholly-owned subsidiary of Park.
About Dougherty's Pharmacy
Dougherty's Pharmacy is a privately-held Texas corporation in the retail
pharmacy business with two locations in the Dallas area. Dougherty's was founded
in 1929 and has been in continuous operation for over 70 years. Dougherty's
annual sales for FYE June 30, 1999, were $16,420,687.00 with $746,205.00 pre-tax
income and a sustained cumulative growth rate of 17% over the last five years.
The company offers a higher degree of professional pharmacy products, which are
not typically found in "chain store" operations. Dougherty's provides special
customer services features such as home delivery, durable medical equipment
("DME") and other home healthcare services including intravenous infusion
pharmacy services (IVs).
In addition to prescription drugs and services, the Company's retail pharmacies
offer a broad range of over-the-counter medications, supplies and equipment,
health and beauty aids, cosmetics, gifts, greeting cards and other general
merchandise.
About Park
The reverse acquisition of Park (CO) (formerly Power-Cell, Inc.) by the
shareholders of Park (TX) was closed on Oct. 19, 1999. The transaction was
consummated pursuant to a Stock Purchase Agreement dated March 9, 1999, and took
place after the Company's shareholders approved the transaction at a meeting in
Dallas on Oct. 12, 1999. The Company's business plan is to close the acquisition
of Rx-Pro.Com, which was accomplished in December 1999, and to acquire
independent non-Internet retail pharmacies, such as Dougherty's and others.
SAFE HARBOR STATEMENT UNDER THE PRIVATE SECURITIES LITIGATION REFORM ACT:
Statements in this press release that are not historical facts, including
statements about plans and expectations regarding plans and opportunities, and
future financial condition and results are forward-looking. Forward-looking
statements involve risks and uncertainties, which may cause the Company's actual
results in future periods to differ materially and adversely from those
expressed. These uncertainties and risks include competition, changing consumer
preferences, lack of success of new businesses, the inability to acquire retail
pharmacies, and other factors discussed from time to time in the Company's
filings with the Securities and Exchange Commission.
