As filed with the Securities and Exchange Commission on April ___, 2000
Registration Statement No. ________
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- ------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
FAMOUS FIXINS, INC.
(Exact name of registrant as specified in its charter)
NEW YORK 13-3865655
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
250 W. 57th Street, Suite 1112, New York, New York 10107
(Address of principal executive offices) (Zip Code)
Issuer's telephone number: (212) 245-7773
Consulting Agreement with Matthew Markin
Consulting Agreement with Edward DeFudis
Employment Agreement with Jody King-Cheifetz
(Full Title of Plans)
Jason Bauer
Chief Executive Officer and President
Famous Fixins, Inc.
250 W. 57th Street, Suite 1112
New York, New York 10107
(Name and address of agent for service)
(212) 245-7773
(Telephone number, including area code, of agent for service)
CALCULATION OF REGISTRATION FEE
<TABLE>
=============================================================================================
Proposed Proposed
Maximum Maximum
Title of Each Offering Aggregate
Class of Securities Amount to be Price Per Offering Amount of
To be Registered Registered Share(1) Price(1) Registration Fee
- ---------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
common stock.............. 500,000 $0.57 $285,000 $ 75.24
common stock underlying... 504,000 $0.57 $287,280 $ 75.84
options
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TOTAL 1,004,000 $0.57 $572,280 $151.08
=============================================================================================
</TABLE>
(1) This calculation is made solely for the purpose of determining the
registration fee pursuant to Rule 457(h) and Rule 457(c) under the
Securities Act of 1933, as amended, and is based upon the average of
the high ask and low bid prices of $0.57 for the common stock on
March 31, 2000.
<PAGE>
EXPLANATORY NOTE
Famous Fixins, Inc. has prepared this registration statement in
accordance with the requirements of Form S-8 under the Securities Act of 1933
to register 500,000 shares of common stock and 504,000 shares of common stock
underlying options issued to three selling stockholders.
Under cover of this Form S-8 is a Reoffer Prospectus we prepared in
accordance with Part I of Form S-3 under the Securities Act. The Reoffer
Prospectus may be utilized for the resale of up to 1,004,000 shares of
common stock acquired by the selling stockholders.
<PAGE>
PART I
INFORMATION REQUIRED IN THE SECTION 10(A) PROSPECTUS
We will send or give the documents containing the information specified
in Part I of Form S-8 to consultants and an employee as specified by SEC Rule
428(b)(1) under the Securities At. We do not need to file these documents
with the SEC either as part of this registration statement or as prospectuses
or prospectus supplements under Rule 424 of the Securities Act.
<PAGE>
REOFFER PROSPECTUS
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FAMOUS FIXINS, INC.
-----
500,000 shares of common stock
504,000 shares of common stock underlying options
-----
This prospectus relates to the sale of a total of up to 1,004,000
shares of common stock of Famous Fixins, Inc., a New York corporation, of which:
- 500,000 shares of restricted common stock can be resold; and
- 504,000 shares of common stock can be resold upon exercise of
504,000 options.
The shares of common stock offered are being sold by the selling
stockholders. The shares are restricted securities under the Securities Act
before their sale under the Reoffer Prospectus. The Reoffer Prospectus has
been prepared for the purpose of registering the shares under the Securities
Act to allow for future sales by the selling stockholders to the public
without restriction.
We will not receive any of the proceeds from the resale of the shares
of common stock by the selling stockholders.
Our common stock is quoted on the OTC Bulletin Board under the symbol
"FIXN".
-----
SEE "RISK FACTORS" BEGINNING ON PAGE 4 FOR A DISCUSSION OF CERTAIN
FACTORS THAT SHOULD BE CONSIDERED BY PROSPECTIVE INVESTORS.
-----
Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or passed on the
adequacy or accuracy of the disclosures in this Prospectus. Any
representation to the contrary is a criminal offense.
-----
The date of this Prospectus is April __, 2000.
<PAGE>
TABLE OF CONTENTS
Where You Can Find More Information 2
Documents Incorporated by Reference 2
The Company 3
Risk Factors 4
We began operations in 1997 and we may not be profitable or
generate cash from operations in the future as we grow
our business 4
We sell many of our products in geographic markets associated with
the celebrity endorser and we may experience a limited market
for our food products 4
We depend on celebrity endorsements for the promotion of our
products 5
We depend on endorsement agreements with celebrities and need to
protect proprietary rights from infringement 5
Our success depends on consumer recognition of our celebrity
endorsed products and their acceptance of our products because
we do not conduct large marketing campaigns 5
We rely on a third party distributor to directly ship our products
to supermarket, and where direct distribution is not possible,
the costs of our products to consumers will be higher 6
We rely on a third party to manufacture our products 6
Our business of selling food products could expose us to tremendous
liability for which we may need to increase our insurance coverage 6
We do not have written employment agreements with all of our key
employees and we may not be able to retain the key personnel we
need to succeed 6
Our sale of debentures that are convertible into common stock at
below the market price of our common stock will have a dilutive
impact on our stockholders 7
As debenture holders convert and sell their common stock, the
resulting decrease in market price of the common stock may permit
them to convert debentures into a great number of shares which
could further decrease the market price 9
The decrease in the price of our common stock as debenture holders
convert could encourage short sales, which could result in
further reductions in the price of our common stock 9
The conversion of the debentures may result in substantial dilution
to the holders of common stock since the debenture holders may
ultimately convert and sell the full amount issuable on
conversion 9
We do not know the precise number of common stock shares issuable
upon conversion of the debentures because the conversion price
is linked to the future market price of the common stock 10
Penny stock regulation 10
Year 2000 issues may affect us 11
Material Change 12
Use of Proceeds 12
Selling Stockholders 13
Plan of Distribution 14
Description of Our Securities 16
Legal Matters 21
Experts 21
Indemnification 21
===============================================================================
You should only rely on the information incorporated by reference or
provided in this Reoffer Prospectus or any supplement. We have not
authorized any dealer, salesperson or other person to give any information or
to represent anything not contained in this Reoffer Prospectus. You must not
rely upon any unauthorized information. This Reoffer Prospectus is not an
offer to sell these securities and it is not a solicitation of an offer to
buy these securities in any state where the offer or sale is not permitted.
The information in this prospectus is not complete and may be changed. You
should not assume that the information in this prospectus is correct at any
time subsequent to its date.
===============================================================================
FAMOUS FIXINS, INC.
500,000 shares of common stock
504,000 shares of common stock underlying options
===============================================================================
<PAGE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any documents we file
at the SEC's public reference rooms in Washington, D.C. at 450 Fifth Street,
N.W., Washington, D.C. 20549, in New York, New York at 7 World Trade Center,
Suite 1300, New York, New York 10048, and in Chicago, Illinois at Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661. Please
call the SEC at 1-800-SEC-0330 for further information on the public
reference rooms. Our SEC filings are also available on the SEC's web site at
http://www.sec.gov.
DOCUMENTS INCORPORATED BY REFERENCE
The SEC allows us to incorporate by reference the information we file
with them into this Reoffer Prospectus, which means that we can disclose
important information to you by referring you to another document filed
separately with the SEC. The information incorporated by reference is deemed
to be part of this Reoffer Prospectus, except for any information superseded
by information in this Reoffer Prospectus.
We incorporate by reference the documents listed below and any future
filings made with the SEC:
(a) our annual report on Form 10-KSB for the fiscal
year ended December 31, 1999;
(b) our registration statement on Form 10-SB, as
amended, originally filed on September 1, 1999; and
(b) all of our other reports filed pursuant to
Section 13(a) or 15(d) of the Exchange Act for the
past twelve months.
All documents filed by us, pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, subsequent to the date of this
registration statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this registration statement and to be a part
hereof from the respective dates of filing such documents.
You may request a copy of these filings, at no cost, by writing or
telephoning us at the following address:
Jason Bauer, President
Famous Fixins, Inc.
250 West 57th Street, Suite 1112
New York, NY 10107
212-245-7773
You should rely on the information incorporate by reference or provided
in this Reoffer Prospectus or any supplement. We have authorized no one to
provide you with different information. We are not making an offer of these
securities in any state where the offer is not permitted. You should not
assume that the information in this Reoffer Prospectus or any supplement is
accurate as of any date other than the date on the front of the document.
-2-
<PAGE>
THE COMPANY
We are a New York corporation known as Famous Fixins, Inc.
We are a promoter and marketer of celebrity and athlete licensed food
products for sale in supermarkets, mass merchandisers, drug chains, specialty
stores and over the Internet. Our plan is to develop, market and sell
specialty products based on the diverse professional, cultural and ethnic
backgrounds of various celebrities. We create food products which include a
line of breakfast cereals endorsed by high profile athletes and a line of
salad dressings. We promote and market our products directly to supermarket
chain stores. We also operate an electronic commerce site from which our
products may be purchased. We utilize a nationwide network of food brokers to
distribute our products in supermarket chains, mass-merchandisers, drug
stores, restaurants and specialty retail stores throughout the United States.
We enlist third party manufacturers to produce our food products.
Our executive office is located at 250 West 57th Street, Suite 1112,
New York, New York 10107. Our telephone number is 212-245-7773.
-3-
<PAGE>
RISK FACTORS
You should carefully consider the risks described below before making
an investment. Although the factors identified below are important factors,
those are not the only ones facing us. If any of the following risks
actually occur, our actual results could differ significantly, and the
trading price of our common stock could decline, and you may lose all or part
of your investment. We have identified all of the material risks which we
believe may affect our business and make an investment one of high risk, and
the principal ways in which we anticipate that they may affect our business
or financial condition.
WE BEGAN OPERATIONS IN 1997 AND WE MAY NOT BE PROFITABLE OR GENERATE CASH
FROM OPERATIONS IN THE FUTURE AS WE GROW OUR BUSINESS.
We began our sales operations in March 1997 and we have a limited
operating history upon which you can base an evaluation of our performance.
As we grow our business and try to bring new products to market, we may
encounter substantial operating losses due to increased promotional and
marketing expenses and the payments of cash advances under license agreements.
We experienced losses in 1997 and 1999, our first two years of operations,
primarily due to start-up costs, slowly developed marketing and distribution
operations and the lack of sufficient licenses from celebrities for the use
of their names and reputations in promoting food products. We were also
hampered by an insufficient amount of credit and financing. We operated at a
loss in 1999. In 1999, we expanded our product line to include breakfast
cereals endorsed by several professional athletes. While our revenues was
significantly higher in 1999, as compared to prior years, the cost of goods
sold and operating expenses were also significantly higher in 1999. As we
enter into new licenses with celebrities and promote new products, we expect
to incur operating losses and net losses for as we incur additional costs
associated with obtaining new celebrity endorsements, development of new food
products, entry into new markets, and the expansion of our administrative,
operational, marketing and sales organizations. Because we intend to focus
our future products on new lines of food products that we have not previously
developed, we do not know how our financial condition will be affected. We
cannot assure you that our revenues will increase as a result of our
increased spending. If revenues grow more slowly than we anticipate, or if
operating expenses exceed our expectations, we may not become profitable.
Even if we become profitable, we may be unable to sustain our profitability.
WE SELL MANY OF OUR PRODUCTS IN GEOGRAPHIC MARKETS ASSOCIATED WITH THE
CELEBRITY ENDORSER AND WE MAY EXERPIENCE A LIMITED MARKET FOR OUR FOOD
PRODUCTS.
To date, we have had limited sales of our food products as compared to
our national competitors. Poor sales of our products will decrease our gross
margins. We cannot assure you that an adequate market exists for our
products. For many of our cereal products, we sell the products only in the
markets where we believe a demand may exist. Even with the endorsements of
high profile athletes, if an adequate market were to develop, we cannot
assure you that we will be able to compete successfully in that market. If
such a market fails to develop, our products may be discontinued based upon
poor sales. Due to our limited operating history and limited lines of
products, some supermarket chains, especially in rural markets, may initially
choose not to carry our products until such products develop a certain market
share, which may further hinder our efforts to develop a market for our
products.
-4-
<PAGE>
WE DEPEND ON CELEBRITY ENDORSEMENTS FOR THE PROMOTION OF OUR PRODUCTS.
Since we develop and market products utilizing the names and
reputations of various celebrities, attracting well-recognized celebrities
with whom we can develop food products for endorsement and promotion is
essential to our growth and success. If we cannot sign more celebrities,
we cannot introduce new food products and increase our breath of products,
which will not see an increase our revenues. We cannot assure you that we
will be able to attract and retain celebrities to endorse any of our
products, or if retained, that the reputations of various celebrities will
not become untarnished or unfavorable in the future. Even with endorsement
and promotion by celebrities, we cannot assure you that we can successful
develop and market such products. In addition, because we enter short term
license arrangements with celebrities, we need to enter many license
arrangements with numerous celebrities to develop a range of product
offerings. We expect to incur significant operating expenses associated
with the development and marketing of new products for new celebrities.
WE DEPEND ON ENDORSEMENT AGREEMENTS WITH CELEBRITIES AND NEED TO PROTECT
PROPRIETARY RIGHTS FROM INFRINGEMENT.
Our future success depends in part upon our ability to use the name and
likeness of celebrities. We may enter endorsement agreements with various
celebrities that include issuance of our securities, such as warrants to
purchase our common stock, and an up-front cash payment. Many of our
agreements with celebrities are short-term in duration and have no guaranteed
renewal terms. Because we depend on endorsement agreements, certain financial
terms that we agree to with various celebrities may be financially generous to
certain celebrities, and we may have to pay the financial arrangements even if
we later decide not to bring certain products to the market. We seek to
protect our intellectual property rights and to limit access to our
proprietary information through a combination of copyrights, and nondisclosure
and licensing arrangements, all of which, even if available, afford only
limited protection. We cannot assure you that that the steps we take to
protect our intellectual property rights will be adequate to prevent
misappropriation of our intellectual property rights. We face certain risks
because we are a licensee of the names and likenesses of certain celebrities,
and we are not the owner of certain intellectual property rights. If we fail
to use the name and likenesses of celebrities properly under the terms of the
applicable license agreements, those celebrities and other potential celebrity
endorser may not seek to conduct business with us in the future. If we
cannot secure and protect third party rights or consents, our ability to
market and promote our products will be greatly hampered.
OUR SUCCESS DEPENDS ON CONSUMER RECOGNITION OF OUR CELEBRITY ENDORSED PRODUCTS
AND THEIR ACCEPTANCE OF OUR PRODUCTS BECAUSE WE DO NOT CONDUCT LARGE MARKETING
CAMPAIGNS.
Food products that we develop and promote may be based on the
professional, personal and cultural background of celebrities, and there can
be no assurance that consumers will like our products, or that a significant
market will develop for any product line developed by us. In addition,
consumers may not be aware of our products because we do have not resources
to conduct large advertising campaigns. Our plans include marketing efforts
intended to create public awareness. These must be repeated often to build a
base of loyal consumers. All supermarket chains require a slotting fee to be
paid for authorizing our products for sale. There are no written agreements
with any supermarkets providing for a term certain or any other commitments
for sales of our products.
-5-
<PAGE>
WE RELY ON A THIRD PARTY DISTRIBUTOR TO DIRECTLY SHIP OUR
PRODUCTS TO SUPERMARKET, AND WHERE DIRECT DISTRIBUTION IS NOT POSSIBLE, THE
COSTS OF OUR PRODUCTS TO CONSUMERS WILL BE HIGHER.
We presently use direct distribution for most of our current business,
whereby our products are shipped directly from the manufacturing facility to
warehouses operated by supermarket chains. Crown Prince, Inc. provides us
with services related to the distribution of our products. Under the
marketing agreement, Crown Prince manages the distribution of our food
products in supermarkets and specialty stores throughout the country. Where
direct distribution cannot be achieved, we intend to utilize a direct store
delivery distribution method, whereby we will have the product shipped to an
independent distribution company who will be responsible for delivery to
stores. The indirect distribution method will increase our distribution
costs by about 30%, which we will pass by increasing the retail price to the
consumer. Any delays in establishing efficient distribution of our products
may have a material adverse affect on our business operations.
WE RELY ON A THIRD PARTY TO MANUFACTURE OUR PRODUCTS.
We engage third-party manufacturers to produce our products according
to the specifications and product formulas provided by us. Manufacturing
facilities are subject to regulations promulgated by the FDA. The FDA and
state regulatory agencies inspect the facilities of manufacturers on a
routine basis for regulatory compliance. We cannot assure you that the
third-party manufacturer can satisfy these requirements.
OUR BUSINESS OF SELLING FOOD PRODUCTS COULD EXPOSE US TO TREMENDOUS
LIABILITY FOR WHICH WE MAY NEED TO INCREASE OUR INSURANCE COVERAGE.
The marketing and sales of food products could expose us to certain
types of litigation, including product liability claims allegedly resulting
from the use or consumption of such products, which might be made by
consumers against us, the manufacturer, the distributor or the stores
which sell our products. Such litigation claims could have a material
adverse affect on our business, prospects, financial condition or results of
operations by reducing or eliminating demand for our products. Under license
agreements with celebrities, we have agreed to maintain adequate liability
insurance coverage. Our current coverage is for $8 million. We have not
faced a lawsuit related to our food products, so we cannot assure you that
the coverage will be adequate to protect us against claims as we
market more products, we will need to increase our coverage. We cannot
assure you that sufficient insurance coverage will be available to us on
acceptable terms.
WE DO NOT HAVE WRITTEN EMPLOYMENT AGREEMENTS WITH ALL OF OUR KEY EMPLOYEES AND
WE MAY NOT BE ABLE TO RETAIN THE KEY PERSONNEL WE NEED TO SUCCEED.
We are highly dependent on our present management to implement our
business strategies. But, since we elected not have employment agreements
with all of our officers or other employees, we could lose their services at
any time. We only have a written employment agreement with Jason Bauer, who
founded our predecessor, Famous Fixins, Inc. as a New York corporation in 1995
and served as our President and Chairman of the Board of Directors from its
inception until we acquired that company in 1998. He now is our Chief
Executive Officer, President and Chairman of the Board of Directors.
Michael Simon presently serves as Vice President and a director of our
company. We do not have a written employment agreement with him. Mr. Simon
previously has worked as a publicist for many actors. We rely on Mr. Simon's
contacts with the entertainment industry for promoting our products and for
developing relationships with celebrities. We will need more personnel in
management, sales and marketing positions as our operations increase.
Competition for qualified employees is intense. Consequently, we may not be
successful in attracting, training and retaining the people we need.
-6-
<PAGE>
OUR SALE OF DEBENTURES THAT ARE CONVERTIBLE INTO COMMON STOCK AT BELOW THE
MARKET PRICE OF OUR COMMON STOCK WILL HAVE A DILUTIVE IMPACT ON OUR
STOCKHOLDERS.
We have sold convertible debentures that will have a dilutive impact on
our stockholders. In October 1999, we sold 5% debentures with a principal
amount of $550,000 that are convertible into common stock at a discount to the
then-prevailing market price of our common stock. We presently have 5%
debentures with a principal amount of $200,000 outstanding and we issued
1,810,563 shares of common stock upon the conversion of a principal amount of
$350,000. In March 2000, we sold debentures with a principal amount of
$1,000,000 that are convertible into common stock at a fixed conversion rate
of $.40 per share.
The conversion for the 5% debentures is set at the lower of 80% of the
market price of our common stock at the time of conversion or $.55. As long
as the market price of our common stock is $.6875 or lower, the holders of 5%
debentures are entitled to convert at a 20% discount. If the market price of
our common stock exceeds $.6875, the holders are entitled to convert at $.55,
which could represent a discount of substantially more than 20% depending on
the prevailing market price of our common stock. Discounted sales resulting
from the conversion of the debentures could have an immediate adverse effect
on the market price of the common stock.
The table below assumes that we have 12,470,888 shares of common stock
presently outstanding in calculating the 9.9% and the percentage of class
after conversion. The table illustrates how the conversion would work for the
conversion of the principal amount of $200,000 debentures held by the
debenture holder who already owns 810,563 shares of common stock
Shares Shares Percentage
Principal 80% of Applicable Issuable at Issuable of Class
Debenture Market Market Conversion Conversion at 9.9% After
Amount Price Price Price Price Limit Conversion
- ------------------------------------------------------------------------------
$200,000 $.25 $.20 $.20 1,000,000 470,649 9.9%
$200,000 $.50 $.40 $.40 500,000 470,649 9.9%
$200,000 $.6875 $.55 $.55 363,636 363,636 9.1%
$200,000 $1.00 $.80 $.55 363,636 363,636 9.1%
The table illustrates that if the market price of our common stock is
$.6875 per share or more, the applicable conversion rate is $.55, since the
conversion rate must be the lower of the 80% of the market price or $.55. If
the market price is less than $.6875 per share, then the conversion price is
80% of the market price.
The table illustrates that at the conversion price of $.20, the number
of shares issued upon conversion of $200,000 debentures would not be 1,000,000
shares but 470,649 shares. This occurs because the maximum number of shares
of common stock that may be received upon conversion is 9.9% of our then-
outstanding common stock. However, if we had 20,000,000 shares of common
stock outstanding, all 1,000,000 shares would be issued since the holder would
own only 1,810,563 or 8.6% of our outstanding common stock after the
conversion. Further, this limit does not prevent a selling stockholder from
converting a portion of its debenture into a number of shares less than 9.9%
of our common stock, then selling those shares, and then converting the
remainder of the debenture.
We have outstanding convertible debentures with a $1,000,000 principal
amount due March 13, 2005. The three holders of the convertible debentures
are entitled to convert the debentures into shares of common stock. The
conversion price is $0.40 per share. However, the maximum number of shares
of common stock that may be received upon the conversion of the debentures by
any one holder is 9.9% of our then-outstanding common stock.
-7-
<PAGE>
The table below assumes that we have 12,470,888 shares of common stock
presently outstanding in calculating the 9.9% and the percentage of class
after conversion. The table illustrates how the conversion would work for the
conversion of the principal amount of:
- $250,000 debentures held by the holder who already owns 500,000
shares of common stock;
- $350,000 debentures held by the holder who already owns 500,000
shares of common stock; and
- $400,000 debentures held by the holder who does not presently
own any shares of common stock.
Holder of Shares Number of Shares Percentage
Principal Issuable at Shares Issuable of Class
Debenture Conversion Owned Before at 9.9% After
Amount Price of $0.40 Conversion Limit Conversion
- ------------------------------------------------------------------------------
$250,000 625,000 500,000 625,000 8.6%
$350,000 875,000 500,000 815,336 9.9%
$400,000 1,000,000 0 1,000,000 7.4%
The table illustrates that at the conversion price of $0.40, the holder
of $350,000 debentures who already owns 500,000 shares of common stock would
be able to convert its debentures into only 815,336 shares rather than
875,000. This occurs because the maximum number of shares of common stock
that may be received upon conversion is 9.9% of our then-outstanding common
stock. However, if we had 20,000,000 shares of common stock outstanding, the
holder of the $350,000 debentures would be able to convert its debentures into
875,000 shares of common stock since the holder would then own 1,375,000
shares of common stock or 6.6% of our common stock after the conversion.
Under the agreements for the convertible debentures, we were obligated
to prepare and file a registration statement under the Securities Act of 1933
for shares of common stock issuable upon the conversion of the convertible
debentures and the warrants within 15 days of our filing of our Form 10K-SB
for the year ended December 31, 1999. If the registration statement is not
timely filed with the SEC by the required filing date, the registration
statement is not declared effective by the SEC within 90 days of the required
filing date or five days of clearance by the SEC to request effectiveness, but
in no event later than July 15, 2000, the registration statement is not
maintained as effective by us for the requisite period, or the additional
registration statement is not filed within thirty days or declared effective
within ninety days, then we are to pay each holder of the convertible
debentures and warrants, as liquidated damages, one percent of the aggregate
market value of shares of common stock purchaseable or purchased from Famous
Fixins and held by the holder for the first month of such default, and two
percent for each month of default thereafter until such registration statement
has been filed, and in the event of late effectiveness or lapsed
effectiveness, one percent of the aggregate market value of shares of common
stock purchaseable or purchased from Famous Fixins and held by the holder for
the first month of such default and two percent for each month of default
thereafter until such registration statement has been declared effective. The
liquidated damages are not to exceed $50,000 per month. We have agreed with
the holders that each will hold harmless the other against any losses, claims,
damages or liabilities, joint or several, including all reasonable costs of
defense and investigation and all reasonable attorneys' fees and expenses, to
which they may become subject based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement,
prospectus, or based upon the omission or alleged omission to state therein a
material fact, unless the misleading or omitted information was provided by
the other in connection with the preparation of the registration statement or
prospectus.
-8-
<PAGE>
AS DEBENTURE HOLDERS CONVERT AND SELL THEIR COMMON STOCK, THE RESULTING
DECREASE IN MARKET PRICE OF THE COMMON STOCK MAY PERMIT THEM TO CONVERT
DEBENTURES INTO A GREAT NUMBER OF SHARES WHICH COULD FURTHER DECREASE THE
MARKET PRICE.
The resulting decrease in the market price of our common stock as the
holders of debentures convert and sell their shares of common stock could
permit the selling stockholder to convert their debentures into a greater
number of shares of common stock, as illustrated in the table above. As more
debentures are converted into common stock and sold, a further downward
pressure on the price of the common stock is likely to occur. This downward
pressure on the common stock is likely to occur until substantially all of the
debentures are sold and converted.
THE DECREASE IN THE PRICE OF OUR COMMON STOCK AS DEBENTURE HOLDERS CONVERT
COULD ENCOURAGE SHORT SALES, WHICH COULD RESULT IN FURTHER REDUCTIONS IN
THE PRICE OF OUR COMMON STOCK.
As debenture holders elect to convert and sell the common stock, the
downward pressure on the price of the common stock could cause further
reductions in the market price of our common stock. Downward pressure on the
price of our common stock could encourage short sales of the stock by the
selling stockholder or by other stockholders. Material amounts of short
selling could place further downward pressure on the market price of the
common stock. A short sale is a sale of stock that is not owned by the
seller. The seller borrows the stock for delivery at the time of the short
sale, and buys back the stock when it is necessary to return the borrowed
shares. If the price of the common stock declines between the time the
seller sells the stock and the time the seller subsequently repurchases the
common stock, the seller may realize a profit.
THE CONVERSION OF THE DEBENTURES MAY RESULT IN SUBSTANTIAL DILUTION TO THE
HOLDERS OF COMMON STOCK SINCE THE DEBENTURE HOLDERS MAY ULTIMATELY CONVERT
AND SELL THE FULL AMOUNT ISSUABLE ON CONVERSION.
The holders of common stock will experience substantial dilution as the
debenture holders convert and sell the common stock. Because the conversion
price of the 5% debentures is substantially below the market value of the
common stock, we expect the 5% debenture holder to ultimately convert the
entire principal amount and sell the common stock. Assuming a conversion
price of $.20 per share, we would have to issue up to 1,000,000 shares of
common stock if all of the outstanding 5% debentures with a principal amount
of $200,000 are converted, which would represent about 7.4% of our
outstanding common stock if conversion took effect today. In addition, we
have other debentures outstanding with the principal amount of $1,000,000
which can be converted at $.40 per share into 2,500,000 shares of common
stock, which would represented about 16.7% of our outstanding common stock
if conversion took effect today. The issuance of shares of common stock
upon the conversion of debentures will have a dilutive impact on our common
stock holders. As a result, our income per share could be materially and
adversely affected.
-9-
<PAGE>
WE DO NOT KNOW THE PRECISE NUMBER OF COMMON STOCK SHARES ISSUABLE UPON
CONVERSION OF THE 5% DEBENTURES BECAUSE THE CONVERSION PRICE IS LINKED TO
THE FUTURE MARKET PRICE OF THE COMMON STOCK.
The conversion of the 5% debentures is linked to a percentage discount
to the market price of our common stock at the time of conversion. Until
conversion occurs, we do not know the precise maximum number of common stock
shares that may be issued. The conversion is set at the lower of 80% of the
market price of our common stock at the time of conversion or $.55.
Accordingly, the conversion rate of the 5% debentures changes with the market
price of the common stock. Therefore, the lower the price of our common stock
at the time of conversion, the 5% debentures are convertible into more shares
of common stock, which will further dilute holders of common stock and cause
the common stock price to decline further.
PENNY STOCK REGULATION.
Because the trading price of our common stock is less than $5.00 per
share, trading in the common stock is subject to the requirements of Rule
15g-9 under the Exchange Act. Under this rule, broker/dealers who recommend
low-priced securities to persons other than established customers and
accredited investors must satisfy special sales practice requirements. The
broker/dealer must make an individualized written suitability determination
for the purchaser and receive the purchaser's written consent prior to the
transaction.
SEC regulations also require additional disclosure in connection with
any trades involving a stock defined as a "penny stock". Generally, a penny
stock is a stock with a market price of less than $5.00 per share. SEC
regulations requires the delivery of a disclosure schedule explaining the
penny stock market and its associated risks before any penny stock
transaction. Such requirements severely limit the liquidity of the common
stock in the secondary market because few broker or dealers are likely to
undertake such compliance activities.
-10-
<PAGE>
YEAR 2000 ISSUES MAY AFFECT US.
To date, we have not encountered any Year 2000 problems which have
adversely affected our business or operations. We believe that Year 2000
issues would not materially impact our business operations as presently
conducted. We have conducted a review of our computer programs and have
reason to believe that there are no significant Year 2000 issues within
our internal systems or services. We did not incur any significant expense
in ensuring that our internal systems are Year 2000 compliant. We believe a
reasonable worst case Year 2000 scenario for our internal operations would be
that we may need to purchase new software programs for word processing and
accounting, which costs are not expected to exceed $500.
We utilize and rely upon the services of third parties to conduct our
operations. We have made written inquires of all key third parties that we
utilize, including third party manufacturers and distributors of our products,
as to their Year 2000 compliance status. We requested that such third parties
provide to us a written response no later than November 30, 1999. The vast
majority of such third parties did not respond to our request. Although we
have completed an investigation of our internal Year 2000 compliance status,
because of the failure of third parties to cooperate with our Year 2000
investigation, we did not consider our Year 2000 investigation to be complete.
Although the failure of third parties' software applications or internal
systems, none of which we control, to be Year 2000 compliant upon January 1,
2000 could have a material adverse affect on our business, financial condition
and results of operations, we do not believe that Year 2000 issues will have
materially adverse affects on our business operations. We envisioned that a
reasonable worst case scenario for third party operations would be the
inability to print and send purchase orders by electronic means, in which
event, purchase orders can be transmitted by telephone.
-11-
<PAGE>
MATERIAL CHANGES
On February 8, 2000, pursuant to a consulting agreement with Matthew
Markin, we agreed to issue to him up to 250,000 shares of common stock and
options to purchase up to 250,000 shares of common stock in exchange for
business consulting services in a transaction deemed to be exempt under
Section 4(2) of the Securities Act of 1933. Options to purchase the first
125,000 shares of common stock are exercisable at $.1875 per share. Options
to purchase the other 125,000 shares of common stock are exercisable at $.25
per share. Fifty percent of the securities vested as of March 6, 2000, and
the reminder of the securities vested as of April 5, 2000. We agreed to file
a registration statement on Form S-8 for the issuance or resale of the
securities. Markin represented to us that he had the experience and knowledge
in business and financial matters to evaluate the risks and merits of the
transaction.
On February 8, 2000, pursuant to a consulting agreement with Edward
DeFudis, we agreed to issue to him up to 250,000 shares of common stock and
options to purchase up to 250,000 shares of common stock in exchange for
business consulting services in a transaction deemed to be exempt under
Section 4(2) of the Securities Act of 1933. Options to purchase the first
125,000 shares of common stock are exercisable at $.1875 per share. Options
to purchase the other 125,000 shares of common stock are exercisable at $.25
per share. Fifty percent of the securities vested as of March 6, 2000, and
the reminder of the securities vested as of April 5, 2000. We agreed to file
a registration statement on Form S-8 for the issuance or resale of the
securities. DeFudis represented to us that he had the experience and
knowledge in business and financial matters to evaluate the risk s and merits
of the transaction.
On April 3, 2000, pursuant to an employment agreement with Jody King-
Cheifetz, we agreed to issue to her options to purchase up to 304,000 shares
of common stock in a transaction deemed to be exempted under Section 4(2) of
the Securities Act of 1933. Options to purchase 4,000 shares of common stock
at $0.15 per share vested as of April 5, 2000. Options to purchase 60,000
shares of common stock shall vest on October 1, 2000, and the remaining
options shall vest in equal increments over the subsequent four years on
October 1. The exercise price of first 60,000 options shall be $.15 per
share. The exercise price of the remaining 240,000 options shall be equal to
a 50% discount from the closing bid price of the common stock on the last
trading date immediately preceding each vesting. In the event that King-
Cheifetz no longer serves as an employee of Famous Fixins on a continuous
basis through each vesting period, the unvested options shall terminate
immediately upon the termination of her employment. All options to purchase
up to 304,000 shares of common stock described above expire on April 3, 2005,
or as otherwise provided in the stock option agreement or employment
agreement. King-Cheifetz represented to us that she had the business,
financial and investment knowledge, experience and sophistication to make a
fully informed investment decision in entering the transaction.
USE OF PROCEEDS
We will not receive any proceeds from the resales of the shares of
common stock by the selling stockholders or from the resales of the shares
of common stock upon the exercise of the warrants or options.
-12-
<PAGE>
SELLING STOCKHOLDERS
This Reoffer Prospectus relates to the resale of a total of up to
1,004,000 shares of our common stock acquired by the selling stockholders
pursuant to consulting agreements and an employment agreement. All of the
shares being offered by the selling stockholders were acquired by them in
exchange for services pursuant to written compensation agreements for bona
fide services unrelated to capital raising transactions. Each of such
agreements constitutes an employee benefit plan, as defined in Rule 405 of the
Securities Act. For purposes of this Reoffer Prospectus, all of the shares
being registered are deemed "restricted shares" insofar as they were issued to
consultants and an employee under an employee benefit plan pursuant to a
Securities Act exemption prior to their inclusion in a registration statement
on Form S-8, of which this Reoffer Prospectus is a part. The securities
issued to the selling stockholders were issued in transactions deemed to be
exempt from registration under Section 4(2) of the Securities Act of 1933.
Each of the selling stockholders has had a material relationship with us
within the past three years. Matthew Markin and Edward DeFudis have served
and continue to serve as consultants to us since February 1999. Jody King-
Cheifetz have served as our employee since October 1999 and holds the
title, Director of Distribution.
The table below sets forth:
- the names of the selling stockholders;
- the number of shares of common stock beneficially owned by
each of the selling stockholders before this offering;
- the number of shares of common stock being offered under this
prospectus by each of the selling stockholders;
- the number and percentage of shares of stock of common stock
owned by each of the selling stockholder after the completion of
the offering.
The table below:
- is based on 12,470,888 shares of common stock issued and
outstanding on April 5, 2000; and
- for each person, is adjusted to include shares of common stock
that may be issuable upon the exercise of options included in
this registration statement.
The shares of common stock offered by this prospectus may be offered
from time to time by the selling stockholder. Our registration does not
necessarily mean that any selling stockholder will sell all or any of its
shares.
<TABLE>
<CAPTION>
Number of Shares Number of Shares Percent
Owned Prior Number of Shares Owned After Owned After
Name of Selling Stockholder to this Offering Being Offered this Offering(1) Offering(2)
- -----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
Matthew Markin 500,000 500,000 0 0%
Edward DeFudis 500,000 500,000 0 0%
Jody King-Cheifetz 4,000 4,000 0 0%
--------- --------- -
TOTAL 1,004,000 1,004,000 0
========= ========= =
</TABLE>
-13-
<PAGE>
PLAN OF DISTRIBUTION
The shares of common stock may be offered and sold from time to time by
the selling stockholders at various times in transactions:
- in the over-the-counter market;
- to purchasers directly;
- in ordinary brokerage transactions in which the broker solicits
purchasers;
- through purchases by a broker or dealer as principal and resale
by such broker or dealer for its own account pursuant to this
prospectus;
- block trades in which a broker-dealer so engaged will attempt
to sell the shares as agent but may take a position and resell
a portion of the block as principal to facilitate the
transaction;
- in connection with short sales; or
- in any combination of one or more of these methods.
Selling stockholders may sell their shares of common stock:
- at market prices prevailing at the time of sale;
- at prices related to such prevailing market prices;
- at negotiated prices, at fixed prices; or
- at a combination of such prices.
Selling stockholders may use dealers, agents or underwriters to
sell their shares. If this happens, the dealers, agents or underwriters may
receive compensation in the form of discounts or commissions from the selling
stockholder or from the purchasers of shares or from both, which
compensation to a particular broker might be in excess of customary
compensation.
Selling stockholder and any dealers, agents or underwriters that
participate with the selling stockholders in the distribution of the shares
may be deemed to be "underwriters" as this term is defined in the Securities
Act. Any commissions paid or any discounts or concessions allowed to any
such persons, and any profits received on the resale of such shares offered
by this prospectus, may be deemed to be underwriting commissions or discounts
under the Securities Act.
We may be required to file a supplemental prospectus in connection with
any activities involving a seller which may be deemed to be an
"underwriting." In that case, a supplement to this prospectus would contain:
- the name or names of the underwriters;
- whether the underwriters are acting as principals or agents;
- the compensation to be received by an underwriter; and
- the compensation to be received by any other broker-dealer, in
the event the compensation of such other broker-dealers is in
excess of usual and customary commissions.
Underwriters may be entitled under agreements with us to
indemnification by us against certain civil liabilities, including
liabilities under the Securities Act, or to contribution from us for payments
the underwriters may be required to make in connection with certain civil
liabilities. These underwriters may engage in transactions with, or perform
services for, us for customary compensation.
We will pay for substantially all of the expenses incident to the offer
and sale of the shares of common stock offered by the selling stockholders
using this prospectus. The selling stockholders will pay applicable stock
transfer taxes, transfer fees and brokerage commissions or underwriting or
other discounts.
-14-
<PAGE>
To comply with the securities laws of certain states, the shares of
common stock offered by this prospectus may need to be offered or sold in
such jurisdictions only through registered or licensed brokers or dealers.
The offering of the shares of common stock pursuant to this prospectus
will terminate on the earlier of the time when the shares of common stock:
- have been sold by the selling stockholders pursuant to this
prospectus;
- the time when all of the shares of common stock are eligible to
be sold pursuant to Rule 144(k) under the Securities Act; or
- this prospectus is no longer effective.
-15-
<PAGE>
DESCRIPTION OF OUR SECURITIES
General
Our authorized capital stock consists of 25,000,000 shares of common
stock, par value $.001 per share. As of April 5, 2000, we had 12,470,888
shares of common stock issued and outstanding.
Common Stock
The holders of the common stock are entitled to cast one vote for each
share held of record on all matters presented to stockholders. The holders of
common stock do not have cumulative voting rights, which means that the
holders of more than 50% of the outstanding shares voting for the election of
our directors can elect all of the directors, and in such an event, the
holders of the remaining shares will be unable to elect any of our directors.
Our certificate of incorporation does not provide that the holders of
common stock have any preemptive right.
Dividends
We have not paid any cash dividends on our common stock and do not
expect to declare or pay any cash dividends in the near future. After paying
interest on our outstanding 5% convertible debentures in the principal amount
of $200,000, we intend to retain any future earnings for use in our business.
Future cash dividends, if any, will be at the discretion of our Board of
Directors and will depend upon, among other things, our future operations and
earnings, capital requirements and surplus, general financial condition,
contractual restrictions, and such other factors as the Board of Directors may
deem relevant.
The holders of the outstanding shares of common stock are entitled to
receive dividends out of assets legally available at such times and in such
amounts as the Board of Directors may from time to time determine, subject to
the rights of the holders of our preferred stock. Upon our liquidation,
dissolution, or winding up, our assets that are legally available for
distribution to the stockholders will be distributed equally among the
holders of the shares.
We have never paid any cash dividends on the common stock. Future
cash dividends, if any, will be at the discretion of our Board of Directors
and will depend upon, among other things, our future operations and earnings,
capital requirements and surplus, general financial condition, contractual
restrictions, and such other factors as the Board of Directors may deem
relevant.
5% Convertible Debentures due October 30, 2002
We have outstanding 5% convertible debentures with a $200,000 principal
amount due October 30, 2002.
The holder of the convertible debentures are entitled to convert the
debentures and the interest on the debentures into shares of common stock.
The conversion price is the lower of 80% of the market price of our common
stock or $0.55. However, the maximum number of shares of common stock that
may be received upon the conversion of the debentures by any one holder is
9.9% of our then-outstanding common stock.
The table below assumes that we have 12,470,888 shares of common stock
presently outstanding in calculating the 9.9% and the percentage of class
after conversion.
-16-
<PAGE>
The table below illustrates how the conversion would work for the
conversion of the principal amount of $200,000 debentures held by the
debenture holder who already owns 810,563 shares of common stock
Shares Shares Percentage
Principal 80% of Applicable Issuable at Issuable of Class
Debenture Market Market Conversion Conversion at 9.9% After
Amount Price Price Price Price Limit Conversion
- ------------------------------------------------------------------------------
$200,000 $.25 $.20 $.20 1,000,000 470,649 9.9%
$200,000 $.50 $.40 $.40 500,000 470,649 9.9%
$200,000 $.6875 $.55 $.55 363,636 363,636 9.1%
$200,000 $1.00 $.80 $.55 363,636 363,636 9.1%
The table illustrates that if the market price of our common stock is
$.6875 per share or more, the applicable conversion rate is $.55, since the
conversion rate must be the lower of the 80% of the market price or $.55. If
the market price is less than $.6875 per share, then the conversion price is
80% of the market price.
The table illustrates that at the conversion price of $.20, the number
of shares issued upon conversion of $200,000 debentures would not be 1,000,000
shares but 470,649 shares. This occurs because the maximum number of shares
of common stock that may be received upon conversion is 9.9% of our then-
outstanding common stock. However, if we had 20,000,000 shares of common
stock outstanding, all 1,000,000 shares would be issued since the holder would
own only 1,810,563 or 8.6% of our outstanding common stock after the
conversion. Further, this limit does not prevent a selling stockholder from
converting a portion of its debenture into a number of shares less than 9.9%
of our common stock, then selling those shares, and then converting the
remainder of the debenture.
If the conversion price is less than $0.20 per share on any conversion
date, we may redeem the debentures in their entirety in cash or common stock.
The amount of cash to be delivered upon such redemption or conversion
shall equal the closing ask price on the conversion date or the date we give
notice of redemption multiplied by the number of shares of common stock that
would have been issued at the conversion price upon such conversion or
redemption. The interest on the convertible debentures is payable quarterly
and accrues from the date of issuance on the principal amount of the
convertible debentures. The convertible debentures are due October 30, 2002.
At our option, we may pay the interest on the convertible debentures in cash
or in registered shares of common stock.
Convertible Debentures due March 13, 2005
We have outstanding convertible debentures with a $1,000,000 principal
amount due March 13, 2005.
The three holders of the convertible debentures are entitled to convert
the debentures into shares of common stock. The conversion price is $0.40 per
share. However, the maximum number of shares of common stock that may be
received upon the conversion of the debentures by any one holder is 9.9% of our
then-outstanding common stock.
The table below assumes that we have 12,470,888 shares of common stock
presently outstanding in calculating the 9.9% and the percentage of class
after conversion.
-17-
<PAGE>
The table below illustrates how the conversion would work for the
conversion of the principal amount of:
- $250,000 debentures held by the holder who already owns 500,000
shares of common stock;
- $350,000 debentures held by the holder who already owns 500,000
shares of common stock; and
- $400,000 debentures held by the holder who does not presently
own any shares of common stock.
Holder of Shares Number of Shares Percentage
Principal Issuable at Shares Issuable of Class
Debenture Conversion Owned Before at 9.9% After
Amount Price of $0.40 Conversion Limit Conversion
- ------------------------------------------------------------------------------
$250,000 625,000 500,000 625,000 8.6%
$350,000 875,000 500,000 815,336 9.9%
$400,000 1,000,000 0 1,000,000 7.4%
The table illustrates that at the conversion price of $0.40, the holder
of $350,000 debentures who already owns 500,000 shares of common stock would
be able to convert its debentures into only 815,336 shares rather than
875,000. This occurs because the maximum number of shares of common stock
that may be received upon conversion is 9.9% of our then-outstanding common
stock. However, if we had 20,000,000 shares of common stock outstanding, the
holder of the $350,000 debentures would be able to convert its debentures into
875,000 shares of common stock since the holder would then own 1,375,000
shares of common stock or 6.6% of our common stock after the conversion.
Under the agreements for the convertible debentures, we were obligated
to prepare and file a registration statement under the Securities Act of 1933
for shares of common stock issuable upon the conversion of the convertible
debentures and the warrants within 15 days of our filing of our Form 10K-SB
for the year ended December 31, 1999. If the registration statement is not
timely filed with the SEC by the required filing date, the registration
statement is not declared effective by the SEC within 90 days of the required
filing date or five days of clearance by the SEC to request effectiveness, but
in no event later than July 15, 2000, the registration statement is not
maintained as effective by us for the requisite period, or the additional
registration statement is not filed within thirty days or declared effective
within ninety days, then we are to pay each holder of the convertible
debentures and warrants, as liquidated damages, one percent of the aggregate
market value of shares of common stock purchaseable or purchased from Famous
Fixins and held by the holder for the first month of such default, and two
percent for each month of default thereafter until such registration statement
has been filed, and in the event of late effectiveness or lapsed
effectiveness, one percent of the aggregate market value of shares of common
stock purchaseable or purchased from Famous Fixins and held by the holder for
the first month of such default and two percent for each month of default
thereafter until such registration statement has been declared effective. The
liquidated damages are not to exceed $50,000 per month. We have agreed with
the holders that each will hold harmless the other against any losses, claims,
damages or liabilities, joint or several, including all reasonable costs of
defense and investigation and all reasonable attorneys' fees and expenses, to
which they may become subject based upon any untrue statement or alleged
untrue statement of any material fact contained in any registration statement,
prospectus, or based upon the omission or alleged omission to state therein a
material fact, unless the misleading or omitted information was provided by
the other in connection with the preparation of the registration statement or
prospectus.
-18-
<PAGE>
New York Law
Our Certificate of Incorporation and By-laws do not contain any
provisions that are designed to delay, defer or prevent a change in control
of Famous Fixins. The Board of Directors is not presently aware of any
takeover attempts and is not aware of any agreements that exist in the event
of a change of control. The Board is Directors does not have any current
plans to propose any changes to the charter documents or corporate structure
that would have an anti-takeover purpose or effect.
New York has enacted a business combination statute that is contained
in Section 912 of the New York Business Corporation Law. Section 912
provides, among other things, that any person who acquires twenty percent or
more of a corporation's outstanding voting stock may not engage in a wide
range of business combinations with the corporation for a period of five
years of the control acquisition date unless the transaction was approved by
the corporation's board of directors prior to the control acquisition date.
A business combination is defined in the New York Business Corporation
Law to include:
- mergers or consolidations of a corporation with a shareholder
owning 20% of the voting stock;
- certain transactions with a shareholder owning 20% of the
voting stock that involves ten percent or more of the market
value of the corporation's assets,
- certain transactions with a shareholder owning 20% of the voting
stock that involves ten percent or more of the aggregate market
value of the corporation's outstanding stock
- certain transactions with a shareholder owning 20% of the voting
stock that involves ten percent or more of the corporation's
earning power or net income;
- certain transactions involving a shareholder owning 20% of the
voting stock that results in that shareholder acquiring at
least five percent of the market value of the corporation's
outstanding stock;
- the adoption of any plan or proposal of a shareholder owning
20% of the voting stock for the liquidation or
dissolution of the corporation;
- certain transactions resulting in increasing the proportionate
share of the voting stock of the corporation owned by a
shareholder owning 20% of the voting stock; or
- the receipt by a shareholder owning 20% of the voting stock
of the benefit of any loans, advances, guarantees, pledges or
other financial benefits provided by or through the corporation,
unless the benefit is given proportionately to all shareholders.
These restrictions do not apply under certain circumstances if the
corporation's certificate of incorporation or bylaws contain a provision
expressly electing not to be governed by Section 912. Our certificate of
incorporation and By-laws do not contain any provision electing not to be
governed by Section 912. Our Board of Directors believes that the provisions
of Section 912 will help ensure that a change in control of Famous Fixins does
not occur without the consent of the Board of Directors or the stockholders,
or both, and will encourage any person who seeks to acquire control of Famous
Fixins to do so by a negotiated transaction.
Transfer Agent
Continental Stock & Transfer Company, New York, New York, is our
transfer agent and registrar for our common stock.
-19-
<PAGE>
Market Information
Beginning on September 9, 1998, our common stock was quoted on the OTC
Bulletin Board under the symbol "FIXN". On about November 18, 1999, our
common stock was removed from quotation on the OTC Bulletin Board. On about
December 20, 1999, our common stock was reinstated for quotation on the OTC
Bulletin Board. The table below sets forth for the periods indicated, the
high and low closing bid prices for the common stock as reported by the OTC
Bulletin Board.
Fiscal Year Quarter Ended High Low
- ----------- ------------- ---- ---
1998 September 30, 1998 $1.75 $1.00
December 31, 1998 $1.25 $0.25
1999 March 31, 1999 $1.625 $0.375
June 30, 1999 $0.67 $0.350
September 30, 1999 $0.52 $0.34
December 31, 1999 $0.49 $0.25
2000 March 31, 2000 $0.6875 $0.1875
The foregoing quotations reflect inter-dealer prices, without retail
mark-up, mark-down or commission, and may not necessarily represent actual
transactions.
Holders
The approximate number of holders of record of our common stock as of
March 31, 2000 was 85. We estimate that there were approximately 1,566
beneficial holders of our common stock as of that date.
-20-
<PAGE>
LEGAL MATTERS
Our counsel, Law Offices of Dan Brecher, New York, New York, is giving
us an opinion on the validity of the shares offered by this prospectus. Dan
Brecher, the sole principal of the law firm, owns 93,125 shares of common
stock and warrants to purchase 69,552 shares of our common stock.
He is not a selling stockholder under this prospectus.
EXPERTS
The financial statements of Famous Fixins for the year ended December
31, 1999 included in our Annual Report on Form 10-KSB, which is incorporated
by reference, have been audited by Freeman & Davis LLP, independent auditors,
as stated in their report, and are incorporated by reference in reliance upon
such report given on the authority of said firm as experts in accounting and
auditing.
INDEMNIFICATION
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
small business issuer pursuant to the foregoing provisions, or otherwise, the
small business issuer has been advised that in the opinion of the Securities
and Exchange Commission such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable. In the
event that a claim for indemnification against such liabilities, other than
the payment by us of expenses incurred or paid by any of our directors,
officers or controlling persons in the successful defense of any action,
suit or proceeding, is asserted by such director, officer or controlling
person in connection with the securities being registered, we will, unless in
the opinion of our counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by us is against public policy as expressed in the
Securities Act and will be governed by the final adjudication of such issue.
-21-
<PAGE>
PART II
Item 3. Incorporation of Documents by Reference.
The following documents are incorporated by reference in this
registration statement:
(a) our annual report on Form 10-KSB for the fiscal
year ended December 31, 1999;
(b) our registration statement on Form 10-SB, as
amended, originally filed on September 1, 1999; and
(b) all of our other reports filed pursuant to
Section 13(a) or 15(d) of the Exchange Act for the
past twelve months.
All documents filed by us, pursuant to Sections 13(a), 13(c), 14 and
15(d) of the Securities Exchange Act of 1934, subsequent to the date of this
registration statement and prior to the filing of a post-effective amendment
which indicates that all securities offered have been sold or which
deregisters all securities then remaining unsold, shall be deemed to be
incorporated by reference into this registration statement and to be a part
hereof from the respective dates of filing such documents.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Our counsel, Law Offices of Dan Brecher, New York, New York, is giving
us an opinion on the validity of the shares offered by this prospectus. Dan
Brecher, the sole principal of the law firm, owns 93,125 shares of common
stock and warrants to purchase 69,552 shares of our common stock. He is not
an acquiring nor a selling stockholder under this registration statement.
Item 6. Indemnification of Directors and Officers.
Our Certificate of Incorporation provides: the corporation
shall, to the fullest extent permitted by Article 7 of the Business
Corporation Law, as the same may be amended and supplemented, indemnify any
and all persons whom it shall have power to indemnify under said Article from
and against any and all of the expenses, liabilities, or other matters
referred to in or covered by said Article, and the indemnification provided
for herein shall not be deemed exclusive of any other rights to which any
person may be entitled under any By-Law, resolution of shareholders,
resolution of directors, agreement, or otherwise, as permitted by said
Article, as to action in any capacity in which he served at the request of
the corporation.
<PAGE>
Article 7 of the New York Business Corporation Law provides the
following:
Section 721. Nonexclusivity of statutory provisions for
indemnification of directors and officers. The indemnification and
advancement of expenses granted pursuant to, or provided by, this article
shall not be deemed exclusive of any other rights to which a director or
officer seeking indemnification or advancement of expenses may be entitled,
whether contained in the certificate of incorporation or the by-laws or, when
authorized by such certificate of incorporation or by-laws, (i) a resolution
of shareholders, (ii) a resolution of directors, or (iii) an agreement
providing for such indemnification, provided that no indemnification may be
made to or on behalf of any director or officer if a judgment or other final
adjudication adverse to the director or officer establishes that his acts
were committed in bad faith or were the result of active and deliberate
dishonesty and were material to the cause of action so adjudicated, or that
he personally gained in fact a financial profit or other advantage to which
he was not legally entitled. Nothing contained in this article shall affect
any rights to indemnification to which corporate personnel other than
directors and officers may be entitled by contract or otherwise under law.
Section 722. Authorization for indemnification of directors and
officers.
(a) A corporation may indemnify any person made, or threatened
to be made, a party to an action or proceeding (other than one by or in the
right of the corporation to procure a judgment in its favor), whether civil
or criminal, including an action by or in the right of any other corporation
of any type or kind, domestic or foreign, or any partnership, joint venture,
trust, employee benefit plan or other enterprise, which any director or
officer of the corporation served in any capacity at the request of the
corporation, by reason of the fact that he, his testator or intestate, was a
director or officer of the corporation, or served such other corporation,
partnership, joint venture, trust, employee benefit plan or other enterprise
in any capacity, against judgments, fines, amounts paid in settlement and
reasonable expenses, including attorneys' fees actually and necessarily
incurred as a result of such action or proceeding, or any appeal therein, if
such director or officer acted, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan
or other enterprise, not opposed to, the best interests of the corporation
and, in criminal actions or proceedings, in addition, had no reasonable cause
to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of nolo
contenders, or its equivalent, shall not in itself create a presumption that
any such director or officer did not act, in good faith, for a purpose which
he reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan
or other enterprise, not opposed to, the best interest of the corporation or
that he had reasonable cause to believe that his conduct was unlawful.
<PAGE>
(c) A corporation may indemnify any person made, or
threatened to be made, a party to an action by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that he,
his testator or intestate, is or was a director or officer of the
corporation, or is or was serving at the request of the corporation as a
director or officer of any other corporation of any type or kind, domestic or
foreign, of any partnership, joint venture, trust, employee benefit plan or
other enterprise, against amounts paid in settlement and reasonable expenses,
including attorneys' fees, actually and necessarily incurred by him in
connection with the defense or settlement of such action, or in connection
with an appeal therein, if such director or officer acted, in good faith, for
a purpose which he reasonably believed to be in, or, in the case of service
for any other corporation or any partnership, joint venture, trust, employee
benefit plan or other enterprise, not opposed to, the best interests of the
corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is
settled or otherwise disposed of, or (2) 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 the action was brought,
or, if no action was brought, any court of competent jurisdiction, determines
upon application that, in view of all the circumstances of the case, the
person is fairly and reasonably entitled to indemnity for such portion of the
settlement amount and expenses as the court deems proper.
(d) For the purpose of this section, a 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 applicable law shall be
considered 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 which is not opposed to the best interests of the corporation.
Section 723. Payment of indemnification other than by court
award.
(a) A person who has been successful, on the merits or
otherwise, in the defense of a civil or criminal action or proceeding of the
character described in section 722 shall be entitled to indemnification as
authorized in such section.
(b) Except as provided in paragraph (a), any indemnification
under section 722 or otherwise permitted by section 721, unless ordered by a
court under section 724 (Indemnification of directors and officers by a
court), shall be made by the corporation, only if authorized in the specific
case:
(1) By the board acting by a quorum consisting of
directors who are not parties to such action or proceeding upon a finding
that the director or officer has met the standard of conduct set forth in
section 722 or established pursuant to section 721, as the case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable
or, even if obtainable, a quorum of disinterested directors so directs;
<PAGE>
(A) By the board upon the opinion in writing of
independent legal counsel that indemnification is proper in the circumstances
because the applicable standard of conduct set forth in such sections has
been met by such director or officer, or
(B) By the shareholders upon a finding that the
director or officer has met the applicable standard of conduct set forth in
such sections.
(C) Expenses incurred in defending a civil or criminal
action or proceeding may be paid by the corporation in advance of the final
disposition of such action or proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount as, and to the
extent, required by paragraph (a) of section 725.
Section 724. Indemnification of directors and officers by a
court.
(a) Notwithstanding the failure of a corporation to provide
indemnification, and despite and contrary resolution of the board or of the
shareholders in the specific case under section 723 (Payment of
indemnification other than by court award), indemnification shall be awarded
by a court to the extent authorized under section for indemnification of
directors and officers), 722 (Authorization for indemnification of directors
and officers) and paragraph (a) of section 723. Application therefor may be
made, in every case, either:
(1) In the civil action or proceeding in which the
expenses were incurred or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in
which case the application shall set forth the disposition of any previous
application made to any court for the same or similar relief and also
reasonable cause for the failure to make application for such relief in the
action or proceeding in which the expenses were incurred or other amounts
were paid.
(b) The application shall be made in such manner and form as
may be required by the applicable rules of court or, in the absence thereof,
by direction of a court to which it is made. Such application shall be upon
notice to the corporation. The court may also direct that notice be given at
the expense of the corporation to the shareholders and such other persons as
it may designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the
court may allow a person such reasonable expenses, including attorneys' fees,
during the pendency of the litigation as are necessary in connection with his
defense therein, if the court shall find that the defendant has by his
pleadings or during the course of the litigation raised genuine issues of
fact or law.
<PAGE>
Section 725. Other provisions affecting indemnification of
directors and officers.
(a) All expenses incurred in defending a civil or criminal
action or proceeding which are advanced by the corporation under paragraph
(c) of section 723 (Payment of indemnification other than by court award) or
allowed by a court under paragraph (c) of section 724 (Indemnification of
directors and officers by a court) shall be repaid in case the person
receiving such advancement or allowance is ultimately found, under the
procedure set forth in this article, not to be entitled to indemnification
or, where indemnification is granted, to the extent the expenses so advanced
by the corporation or allowed by the court exceed the indemnification to
which he is entitled.
(b) No indemnification, advancement or allowance shall be
made under this article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with
the law of the jurisdiction of incorporation of a foreign corporation which
prohibits or otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a
provision of the certificate of incorporation, a by-law, a resolution of the
board or of the shareholders, an agreement or other proper corporate action,
in effect at the time of the accrual of the alleged cause of action asserted
in the threatened or pending action or proceeding in which the expenses were
incurred or other amounts were paid, which prohibits or otherwise limits
indemnification; or
(3) If there has been a settlement approved by the court,
that the indemnification would be inconsistent with any condition with
respect to indemnification expressly imposed by the court in approving the
settlement.
(c) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders,
the corporation shall, not later than the next annual meeting of shareholders
unless such meeting is held within three months from the date of such
payment, and, in any event, within fifteen months from the date of such
payment, mail to its shareholders of record at the time entitled to vote for
the election of directors a statement specifying the persons paid, the
amounts paid, and the nature and status at the time of such payment of the
litigation or threatened litigation.
(d) If any action with respect to indemnification of
directors and officers is taken by way of amendment of the by-laws,
resolution of directors, or by agreement, then the corporation shall, not
later than the next annual meeting of shareholders, unless such meeting is
held within three months from the date of such action, and, in any event,
within fifteen months from the date of such action, mail to its shareholders
of record at the time entitled to vote for the election of directors a
statement specifying the action taken.
(e) Any notification required to be made pursuant to the
foregoing paragraph (c) or (d) of this section by any domestic mutual insurer
shall be satisfied by compliance with the corresponding provisions of section
one thousand two hundred sixteen of the insurance law.
<PAGE>
(f) The provisions of this article relating to
indemnification of directors and officers and insurance therefor shall apply
to domestic corporations and foreign corporations doing business in this
state, except as provided in section 1320 (Exemption from certain
provisions).
Section 726. Insurance for indemnification of directors and
officers.
(a) Subject to paragraph (b), a corporation shall have power
to purchase and maintain insurance:
(1) To indemnify the corporation for any obligation which
it incurs as a result of the indemnification of directors and officers under
the provisions of this article, and
(2) To indemnify directors and officers in instances in
which they may be indemnified by the corporation under the provisions of this
article, and
(3) To indemnify directors and officers in instances in
which they may not otherwise be indemnified by the corporation under the
provisions of this article provided the contract of insurance covering such
directors and officers provides, in a manner acceptable to the superintendent
of insurance, for a retention amount and for co-insurance.
(b) No insurance under paragraph (a) may provide for any
payment, other than cost of defense, to or on behalf of any director or
officer:
(1) if a judgment or other final adjudication adverse to
the insured director or officer establishes that his acts of active and
deliberate dishonesty were material to the cause of action so adjudicated, or
that he personally gained in fact a financial profit or other advantage to
which he was not legally entitled, or
(2) in relation to any risk the insurance of which is
prohibited under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a)
may be included in a single contract or supplement thereto. Retrospective
rated contracts are prohibited.
(d) The corporation shall, within the time and to the persons
provided in paragraph (c) of section 725 (Other provisions affecting
indemnification of directors or officers), mail a statement in respect of any
insurance it has purchased or renewed under this section, specifying the
insurance carrier, date of the contract, cost of the insurance, corporate
positions insured, and a statement explaining all sums, not previously
reported in a statement to shareholders, paid under any indemnification
insurance contract.
(e) This section is the public policy of this state to spread
the risk of corporate management, notwithstanding any other general or
special law of this state or of any other jurisdiction including the federal
government.
<PAGE>
Our Certificate of Incorporation further provides: personal liability
of the directors of the corporation is eliminated to the fullest extent
permitted by the provisions of paragraph (b) of Section 402 of the Business
Corporation Law, as the same may be amended and supplemented.
Section 402(b) of the New York Business Corporation Law provides: the
certificate of incorporation may set forth a provision eliminating or
limiting the personal liability of directors to the corporation or its
shareholders for damages for any breach of duty in such capacity, provided
that no such provision shall eliminate or limit: (1) the liability of any
director if a judgment or other final adjudication adverse to him establishes
that his acts or omissions were in bad faith or involved intentional
misconduct or a knowing violation of law or that he personally gained in fact
a financial profit or other advantage to which he was not legally entitled or
that his acts violated Section 719, or (2) the liability of any director for
any act or omissions prior to the adoption of a provision authorized by this
paragraph.
Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of Famous
Fixins pursuant to the foregoing provisions or otherwise, we are aware that
in the opinion of the SEC, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
Item 7. Exemption From Registration Claimed.
On February 8, 2000, pursuant to a consulting agreement with Matthew
Markin, we agreed to issue to him up to 250,000 shares of common stock and
options to purchase up to 250,000 shares of common stock in exchange for
business consulting services in a transaction deemed to be exempt under
Section 4(2) of the Securities Act of 1933. Options to purchase the first
125,000 shares of common stock are exercisable at $.1875 per share. Options
to purchase the other 125,000 shares of common stock are exercisable at $.25
per share. Fifty percent of the securities vested as of March 6, 2000, and
the reminder of the securities vested as of April 5, 2000. We agreed to file
a registration statement on Form S-8 for the issuance or resale of the
securities. Markin represented to us that he had the experience and knowledge
in business and financial matters to evaluate the risks and merits of the
transaction.
On February 8, 2000, pursuant to a consulting agreement with Edward
DeFudis, we agreed to issue to him up to 250,000 shares of common stock and
options to purchase up to 250,000 shares of common stock in exchange for
business consulting services in a transaction deemed to be exempt under
Section 4(2) of the Securities Act of 1933. Options to purchase the first
125,000 shares of common stock are exercisable at $.1875 per share. Options
to purchase the other 125,000 shares of common stock are exercisable at $.25
per share. Fifty percent of the securities vested as of March 6, 2000, and
the reminder of the securities vested as of April 5, 2000. We agreed to file
a registration statement on Form S-8 for the issuance or resale of the
securities. DeFudis represented to us that he had the experience and
knowledge in business and financial matters to evaluate the risk s and merits
of the transaction.
<PAGE>
On April 3, 2000, pursuant to an employment agreement with Jody King-
Cheifetz, we agreed to issue to her options to purchase up to 304,000 shares
of common stock in a transaction deemed to be exempted under Section 4(2) of
the Securities Act of 1933. Options to purchase 4,000 shares of common stock
at $0.15 per share vested as of April 5, 2000. Options to purchase 60,000
shares of common stock shall vest on October 1, 2000, and the remaining
options shall vest in equal increments over the subsequent four years on
October 1. The exercise price of first 60,000 options shall be $.15 per
share. The exercise price of the remaining 240,000 options shall be equal to
a 50% discount from the closing bid price of the common stock on the last
trading date immediately preceding each vesting. In the event that King-
Cheifetz no longer serves as an employee of Famous Fixins on a continuous
basis through each vesting period, the unvested options shall terminate
immediately upon the termination of her employment. All options to purchase
up to 304,000 shares of common stock described above expire on April 3, 2005,
or as otherwise provided in the stock option agreement or employment
agreement. King-Cheifetz represented to us that she had the business,
financial and investment knowledge, experience and sophistication to make a
fully informed investment decision in entering the transaction.
<PAGE>
Item 8. Exhibits.
Exhibit No. Description of Exhibit
4 Option Agreement with Jody King-Cheifetz
5 Opinion on Legality of Law Offices of Dan Brecher
10.1 Consulting Agreement with Matthew Markin
10.2 Consulting Agreement with Edward DeFudis
10.3 Employment Agreement with Jody King-Cheifetz
23.1 Consent of Freeman and Davis, LLP
23.2 Consent of Law Offices of Dan Brecher (included in
Exhibit 5)
Item 9. Undertakings.
Famous Fixins hereby undertakes:
(a) (1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by Section 10(a)(3)
of the Securities Act;
(ii) To reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the information in
the registration statement; and
(iii) To include any additional or changed material
information with respect to the plan of distribution not previously disclosed in
the registration statement or any material change to such information in the
registration statement; provided, however, only to the extent required by the
general rules and regulations of the SEC.
(2) That, for the purpose of determining any liability under
the Securities Act, each such post-effective amendment shall be deemed to be a
new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of the offering.
(b) That for purposes of determining any liability under the
Securities Act, each filing of Famous Fixins' annual report pursuant to
Section 13(a) or Section 15(d) of the Exchange Act (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Exchange Act) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide
offering thereof.
<PAGE>
(c) Insofar as indemnification for liabilities arising under the
Securities Act, as amended, may be permitted to directors, executive officers
and controlling persons of Famous Fixins as outlined above or otherwise,
Famous Fixins has been advised that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by Famous
Fixins of expenses incurred or paid by a director, executive officer or
controlling person of Famous Fixins in the successful defense of any action,
suit or proceeding) is asserted by such director, executive officer or
controlling person in connection with the securities being registered, Famous
Fixins will, unless in the opinion of its counsel the matter has been settled
by controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by it is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets
all of the requirements for filing on Form S-8 and has duly caused this
registration statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of New York, State of New York, on
the 10th day of April, 2000.
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
-------------------------------------
Jason Bauer
Chief Executive Officer and President
In accordance with the requirements of the Securities Act of 1933, this
registration statement has been signed by the following persons in the
capacities and on the dates stated.
<TABLE>
SIGNATURES TITLE DATE
- ---------- ----- ----
<S> <C> <C>
/s/ Jason Bauer Chairman of the Board, President, April 10, 2000
- ---------------------- Treasurer, Chief Executive
Jason Bauer Officer, Principal Financial
Officer and Principal Accounting
Officer
/s/ Peter Zorich Vice President, Secretary, April 10, 2000
- ---------------------- and Director
Peter Zorich
/s/ Michael Simon Vice President and Director April 10, 2000
- ----------------------
Michael Simon
</TABLE>
EXHIBIT 4
STOCK OPTION AGREEMENT
THIS STOCK OPTION AGREEMENT ("Agreement") is entered into as of April 3,
2000, by and between Famous Fixins, Inc., a New York corporation
("Corporation"), and Jody King-Cheifetz ("Optionee").
R E C I T A L S
A. On April 3, 2000, the Board of Directors of the Corporation approved
an employment agreement (the "Employment Agreement") with Optionee.
B. Pursuant to the employment agreement, the Corporation authorized
granting to Optionee options to purchase a total of 304,000 shares of the
common stock, $.001 par value, of the Corporation ("Shares") for the term and
subject to the terms and conditions hereinafter set forth.
A G R E E M E N T
It is hereby agreed as follows:
1. CERTAIN DEFINITIONS. Unless otherwise defined herein, or the context
otherwise clearly requires, terms with initial capital letters used herein
shall have the meanings assigned to such terms in the Employment Agreement.
2. GRANT OF OPTIONS. The Corporation hereby grants to Optionee, options
("Options") to purchase all or any part of Shares, upon and subject to the
terms and conditions of the Employment Agreement, which is incorporated in
full herein by this reference, and upon the other terms and conditions set
forth herein.
3. OPTION PERIOD. The Options shall be exercisable at any time during
the period commencing on the dates set forth in the Employment Agreement
(subject to the provisions of the Employment Agreement) and expiring on April
3, 2005, unless earlier terminated pursuant to the Employment Agreement or
this Agreement.
4. METHOD OF EXERCISE. The Options shall be exercisable by Optionee by
giving written notice to the Corporation of the election to purchase and of
the number of Shares Optionee elects to purchase, such notice to be
accompanied by such other executed instruments or documents as may be required
by the Committee pursuant to this Agreement, and unless otherwise directed by
the Committee, Optionee shall at the time of such exercise tender the purchase
price of the Shares he has elected to purchase. An Optionee may purchase less
than the total number of Shares for which the Option is exercisable, provided
that a partial exercise of an Option may not be for less than One Hundred
(100) Shares. If Optionee shall not purchase all of the Shares which she is
entitled to purchase under the Options, her right to purchase the remaining
unpurchased Shares shall continue until expiration of the Options. The Options
shall be exercisable with respect of whole Shares only, and fractional Share
interests shall be disregarded.
5. AMOUNT OF PURCHASE PRICE. The purchase price per Share for each
Share which Optionee is entitled to purchase under the Options shall be $per
Share.
1
<PAGE>
6. PAYMENT OF PURCHASE PRICE. At the time of Optionee's notice of
exercise of the Options, Optionee shall tender in cash or by certified or bank
cashier's check payable to the Corporation, the purchase price for all Shares
then being purchased. Provided, however, the Board of Directors may, in its
sole discretion, permit payment by the Corporation of the purchase price in
whole or in part with Shares. If the Optionee is so permitted, and the
Optionee elects to make payment with Shares, the Optionee shall deliver to the
Corporation certificates representing the number of Shares in payment for new
Shares, duly endorsed for transfer to the Corporation, together with any
written representations relating to title, liens and encumbrances, securities
laws, rules and regulatory compliance, or other matters, reasonably requested
by the Board of Directors. The value of Shares so tendered shall be their
Fair Market Value Per Share on the date of the Optionee's notice of exercise.
7. EFFECT OF TERMINATION OF RELATIONSHIP OR DEATH. If Optionee's
relationship with the Corporation as an employee terminates (whether
voluntarily or involuntarily, or if optionee dies, all options which have
previously vested shall expire six (6) months thereafter. All unvested options
shall lapse and automatically expire. During such six (6) month period (or
such shorter period prior to the expiration of the Option by its own terms),
such Options may be exercised by the Optionee, her executor or administrator
or the person or persons to whom the Option is transferred by will or the
applicable laws of descent and distribution, as the case maybe, but only to
the extent such Options were exercisable on the date Optionee ceased to have a
relationship with the Corporation as an employee or died.
8. NONTRANSFERABILITY OF OPTIONS. The Options shall not be
transferable, either voluntarily or by operation of law, otherwise than by
will or the laws of descent and distribution and shall be exercisable during
the Optionee's lifetime only by Optionee.
9. REPRESENTATIONS OF THE OPTIONEE. Optionee represents and warrants
to the Corporation that Optionee in making an investment intent in connection
with this Agreement and the Employment Agreement that: Optionee understands
all of the risks and merits associated with an investment decision in the
Corporation; Optionee is fully informed about the business of the Corporation;
Optionee has been provided with all documents about the Corporation as would
be required in a registration statement or prospectus, including a copy of the
Corporation's SEC filings; Optionee has been provided access to all documents
about the Corporation as Optionee has requested; the Corporation has responded
to all questions made by the Optionee in connection with Optionee's investment
decision; Optionee has such business, financial and investment knowledge,
experience and sophistication to make a fully informed investment decision.
10. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. As used herein, the term
"Adjustment Event" means an event pursuant to which the outstanding Shares of
the Corporation are increased, decreased or changed into, or exchanged for a
different number or kind of shares or securities, without receipt of
consideration by the Corporation, through reorganization, merger,
recapitalization, reclassification, stock split, reverse stock split, stock
dividend, stock consolidation or otherwise. Upon the occurrence of an
Adjustment Event, (i) appropriate and proportionate adjustments shall be made
to the number and kind and exercise price for the shares subject to the
Options, and (ii) appropriate amendments to this Agreement shall be executed
2
<PAGE>
by the Corporation and Optionee if the Committee determines that such an
amendment is necessary or desirable to reflect such adjustments. If
determined by the Committee to be appropriate, in the event of an Adjustment
Event which involves the substitution of securities of a corporation other
than the Corporation, the Committee shall make arrangements for the
assumptions by such other corporation of the Options. Notwithstanding the
foregoing, any such adjustment to the Options shall be made without change in
the total exercise price applicable to the unexercised portion of the Options,
but with an appropriate adjustment to the number of shares, kind of shares and
exercise price for each share subject to the Options. The determination by the
Committee as to what adjustments, amendments or arrangements shall be made
pursuant to this Section 10, and the extent thereof, shall be final and
conclusive. No fractional Shares shall be issued on account of any such
adjustment or arrangement.
11. NO RIGHTS TO CONTINUED EMPLOYMENT OR RELATIONSHIP. Nothing
contained in this Agreement shall obligate the Corporation to employ or have
another relationship with Optionee for any period or interfere in anyway with
the right of the Corporation to reduce Optionee's compensation or to terminate
the employment of or relationship with Optionee at any time.
12. TIME OF GRANTING AND VESTING OF OPTIONS. The time the Options shall
be deemed granted, sometimes referred to herein as the "date of grant," and
the time of vesting of the Shares, shall be determined in accordance with the
Employment Agreement.
13. PRIVILEGES OF STOCK OWNERSHIP. Optionee shall not be entitled to the
privileges of stock ownership as to any Shares not actually issued and
delivered to Optionee. No Shares shall be purchased upon the exercise of any
Options unless and until, in the opinion of the Corporation's counsel, any
then applicable requirements of any laws, or governmental or regulatory
agencies having jurisdiction, and of any exchanges upon which the stock of the
Corporation may be listed shall have been fully complied with.
14. SECURITIES LAWS COMPLIANCE. The Corporation will diligently
endeavor to comply with all applicable securities laws before any stock is
issued pursuant to the Options. Without limiting the generality of the
foregoing, the Corporation may require from the Optionee such investment
representation or such agreement, if any, as counsel for the Corporation may
consider necessary in order to comply with the Securities Act of 1933 as then
in effect, and may require that the Optionee agree that any sale of the Shares
will be made only in such manner as is permitted by the Committee.
The Corporation may in its discretion cause the Shares, or a part
of the Shares, underlying the Options to be registered under the Securities
Act of 1933, as amended, by filing a Form S-8 Registration Statement (or on
such other form as the Corporation deems appropriate) covering the Options and
the Shares underlying the Options. With respect to the Shares, Optionee shall
have the right to include registration of the Shares on the Corporation's
future registration statements, after the Shares or a portion of the Shares
have vested, provided however that such registration statement permits the
registration of the Shares. Optionee shall bear all of the costs associated
with such Form S-8 or other registration statement, including legal and
accounting fees, in reasonable proportion to the number of shares of common
stock being registered on such registration statement, except that the
Corporation shall bear all costs associated with the filing of a
3
<PAGE>
registration statement for options to purchase up to 4,000 shares of common
stock, as set forth in the Employment Agreement.
Optionee shall take any action reasonably requested by the
Corporation in connection with registration or qualification of the Shares
under federal or state securities laws.
15. INTENDED TREATMENT AS NON-QUALIFIED STOCK OPTIONS. The Options
granted herein are intended to be non-qualified stock options described in
U.S. Treasury Regulation ("Treas. Reg.") 1.83-7 to which Sections 421 and422A
of the Internal Revenue Code of 1986, as amended from time to time("Code") do
not apply, and shall be construed to implement that intent. If all or any part
of the Options shall not be described in Treas. Reg.1.83-7 or be subject to
Sections 421 and 422A of the Code, the Options shall nevertheless be valid and
carried into effect.
16. PLAN CONTROLS. The Options shall be subject to and governed by the
provisions of the Employment Agreement. All determinations and interpretations
of the Employment Agreement made by the Committee shall be final and
conclusive.
17. ADDITIONAL RESTRICTIONS REGARDING DISPOSITIONS OF SHARES. The
Shares acquired pursuant to the exercise of Options shall be subject to the
restrictions on resale and certificates evidencing such Shares shall bear a
restrictive legend and such other legends to the extent required by securities
laws and blue sky laws. If deemed necessary by the Corporation's counsel, all
certificates issued to represent Shares purchased upon exercise of the Options
shall bear such appropriate legend conditions as counsel for the Corporation
shall require.
18. MISCELLANEOUS.
18.1 Binding Effect. This Agreement shall bind and inure to the benefit
of the successors, assigns, transferees, agents, personal representatives,
heirs and legatees of the respective parties.
18.2 Further Acts. Each party agrees to perform any further acts and
execute and deliver any documents which may be necessary to carry out the
provisions of this Agreement.
18.3 Amendment. This Agreement may be amended at any time by the written
agreement of the Corporation and the Optionee.
18.4 Syntax. Throughout this Agreement, whenever the context so
requires, the singular shall include the plural, and the masculine gender
shall include the feminine and neuter genders. The headings and captions of
the various Sections hereof are for convenience only and they shall not limit,
expand or otherwise affect the construction or interpretation of this
Agreement.
18.5 Choice of Law. The parties hereby agree that this Agreement has
been executed and delivered in the State of New York and shall be construed,
enforced and governed by the laws thereof. This Agreement is in all respects
intended by each party hereto to be deemed and construed to have been jointly
prepared by the parties and the parties hereby expressly agree that any
uncertainty or ambiguity existing herein shall not be interpreted against
either of them.
4
<PAGE>
18.6 Severability. In the event that any provision of this Agreement
shall be held invalid or unenforceable, such provision shall be severable
from, and such invalidity or unenforceability shall not be construed to have
any effect on, the remaining provisions of this Agreement.
18.7 Notices. All notices and demands between the parties hereto shall
be in writing and shall be served either by registered or certified mail, and
such notices or demands shall be deemed given and made forty-eight (48) hours
after the deposit thereof in the United States mail, postage prepaid,
addressed to the party to whom such notice or demand is to be given or made,
and the issuance of the registered receipt therefor. If served by telegraph,
such notice or demand shall be deemed given and made at the time the telegraph
agency shall confirm to the sender, delivery thereof to the addressee. All
notices and demands to Optionee or the Corporation may be given to them at the
following addresses:
If to Optionee:
_________________________
_________________________
_________________________
If to Corporation:
Famous Fixins, Inc.
250 West 57th Street, Suite 1112
New York, NY 10107
Fax: (212) 245-7767
With a copy to:
Law Offices of Dan Brecher
99 Park Avenue, 16th Floor
New York, NY 10016
Fax: (212) 808-4155
Such parties may designate in writing from time to time such other place or
places that such notices and demands may be given.
18.8 Entire Agreement. This Agreement constitutes the entire agreement
between the parties hereto pertaining to the subject matter hereof, this
Agreement supersedes all prior and contemporaneous agreements and
understandings of the parties, and there are no warranties, representations or
other agreements between the parties in connection with the subject matter
hereof except as set forth or referred to herein. No supplement, modification
or waiver or termination of this Agreement shall be binding unless executed in
writing by the party to be bound thereby. No waiver of any of the provisions
of this Agreement shall constitute a waiver of any other provision hereof
(whether or not similar) nor shall such waiver constitute a continuing waiver.
18.9 Attorneys' Fees. In the event that any party to this Agreement
institutes any action or proceeding, including, but not limited to, litigation
or arbitration, to preserve, to protect or to enforce any right or benefit
created by or granted under this Agreement, the prevailing party in each
respective such action or proceeding shall be entitled, in addition to any and
all other relief granted by a court or other tribunal or body, as may be
appropriate, to an award in such action or proceeding of that sum of money
which represents the attorneys' fees reasonably incurred by the prevailing
5
<PAGE>
party therein in filing or otherwise instituting and in prosecuting or
otherwise pursuing or defending such action or proceeding, and, additionally,
the attorneys' fees reasonably incurred by such prevailing party in
negotiating any and all matters underlying such action or proceeding and in
preparation for instituting or defending such action or proceeding.
6
<PAGE>
IN WITNESS WHEREOF, the parties have entered into this Agreement as of
the date first set forth above.
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
--------------------------------
Jason Bauer, President
OPTIONEE
By: /s/ Jody King-Cheifetz
--------------------------------
Jody King-Cheifetz
7
EXHIBIT 5
OPINION OF LAW OFFICES OF DAN BRECHER
April 10, 2000
Famous Fixins, Inc.
250 West 57th Street, Suite 1112
New York, NY 10107
Re: Famous Fixins, Inc.
Registration Statement on Form S-8 for the resale of
1,004,000 shares of common stock
To the Board of Directors:
We have acted as counsel for Famous Fixins, Inc., a New York
corporation (the "Company"), in connection with the registration for resale
of 1,004,000 shares of common stock (the "Shares"), as described in the
Company's registration statement on Form S-8 (the "Registration Statement")
filed with the Securities and Exchange Commission under the Securities Act
of 1933, as amended.
As the Company is aware, no services rendered or billed to the
Company can be in any way related to "capital raising" transactions for the
issuances of Shares pursuant to the written compensation agreements listed
below.
In connection with rendering this opinion, we have reviewed and
examined originals or copies of the following documents:
1. Annual Report on Form 10-KSB for the year ended December
31, 1999;
2. Consulting Agreement with Matthew Markin;
3. Consulting Agreement with Edward DeFudis; and
4. Employment Agreement with Jody King-Cheifetz.
We have also examined various other documents, books, records,
instruments and certificates of public officials, directors, executive
officers and agents of the Company, and have made such investigations as we
have deemed reasonable, necessary or prudent under the circumstances.
We have assumed the genuineness of all signatures, the legal
capacity of natural persons, the authenticity of all documents submitted to us
as originals, the conformity with the original documents of all documents
submitted to me as certified or photostatic copies and the authenticity of the
originals of such copies. We have further assumed that the Selling
Stockholders of the Shares have been or will be paid the consideration
required under the terms of the written compensation plans prior to the
issuance of the Shares, and that none of the services performed or to be
performed by the Selling Stockholders are related to "capital raising"
transactions.
We have reviewed the Company's charter documents, the corporate
proceedings taken by the Company in connection with the original issuance
and sale of the Shares and a certificate of a Company officer regarding
(among other things) the Company's receipt of consideration upon the
original issuance and sale of the Shares. Based on such review, we are of
the opinion that the Shares are duly authorized, validly issued, fully paid
and nonassessable.
We consent to the filing of this opinion as Exhibit 5 to the
Registration Statement and to the reference to this firm under the caption
"Legal Matters" in the prospectus which is part of the Registration
Statement. In giving this consent, we do not thereby admit that we are
within the category of persons whose consent is required under Section 7 of
the Act, the rules and regulations of the Securities and Exchange Commission
promulgated thereunder or Item 509 of Regulation S-B.
Yours sincerely,
/s/ Law Offices of Dan Brecher
Law Offices of Dan Brecher
EXHIBIT 10.1
CONSULTING AGREEMENT
CONSULTING AGREEMENT (the "Agreement") entered into as of February 8,
2000 between Famous Fixins, Inc. with the principal offices located at 250
West 57th Street Suite 1112, New York, NY 10107 (the "Company") and MATTHEW
MARKIN with address at 3594 South Ocean Blvd., Highland Beach, FL 33487 (the
"Consultant").
WHEREAS, the Board of Directors of the Company has adopted a written
compensation agreement for compensation of Consultant who is a natural
person; and
WHEREAS, the Company has engaged Consultant to provide services at the
request of and subject to the satisfaction of the Company's management; and
WHEREAS, a general description of the nature of the services performed
by Consultant and the maximum value of such services under this Agreement are
set forth below; and
WHEREAS, the Company and Consultant intend that this Agreement and the
services performed hereunder shall be made, requested and performed in such a
manner that this Agreement shall be a "written compensation agreement" as
defined in Rule 405 of the Securities and Exchange Commission ("SEC")
pursuant to which the Company may issue "freely tradeable" shares of its
common stock as payment for services rendered pursuant to an S-8 Registration
Statement to be filed with the SEC by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, it is agreed:
1. The Company agrees to and does hereby engage Consultant for a one
year period which commenced as of February 8, 2000 and ends on February 7,
2001. The Company hereby employs Consultant and Consultant hereby accepts
such employment, and will perform the services requested by management of the
Company to its satisfaction during the term hereof. All such services are to
be performed only upon direct authorization from the Company. The services
performed by Consultant hereunder will be personally rendered by Consultant,
and no one acting for or on behalf of the Consultant, except those persons
normally employed by the Consultant in rendering services to others, such as
secretaries, bookkeepers and the like.
2. During the Term of this Agreement:
(a) Consultant shall provide to the Company consulting services
designed to assist the Company in marketing and product development activities
as related to the Company's food products and services, including the
preparation of business plans and reports on product market research. Such
services may include other tasks requested by the Company's management;
however, such services requested by the Company and to be provided by
Consultant:
- shall not be investor relations services;
- shall not be shareholder communications services;
- shall not be of a promotional nature that would directly or
indirectly promote or maintain a market for the Company's securities;
- shall not be in connection with or related to the offer or sale of
the Company's securities in a capital-raising transaction.
(b) The services of Consultant are non-exclusive and subject to
Section 4 hereof, Consultant may render services of the same or similar
nature, as herein described, to an entity whose business is in competition
with the Company or the Company's clients, directly or indirectly.
3. The Company shall pay to Consultant for its services hereunder as
follows: $250 per hour for services invoiced and $100 per hour for services
invoiced by any assistants of the Consultant. The payment shall be made in
the form of the Company's securities through a combination of shares of common
stock and options to purchase an equal number of shares of common stock. The
maximum compensation payable by the Company to Consultant under this Agreement
shall be a total of 250,000 shares of the Company's common stock and options
to purchase 250,000 shares of the Company's common stock. In no event can
more than 50% of the total number of securities vest prior to March 6, 2000.
The number of shares and options to be issued shall be computed in relation to
the closing bid price of the Company's common stock on the date invoice for
services is received by the Company; provided, however, such shares of common
stock shall be issued pursuant to and shall be subject to the filing and
effectiveness of a Registration Statement on Form S-8 covering such shares
with the SEC. The options to purchase the first 125,000 shares of common
stock are exercisable at $.1875 per share (the bid price on February 8, 2000).
The options to purchase the other 125,000 shares of common stock shall be
exercisable at $.25 per share. The options are exercisable for a period of
three years from the date of this Agreement. The options shall not be given,
granted sold, exchanged, transferred, pledged, encumbered, assigned or
otherwise disposed of by Consultant, other than by will or the laws of descent
and distribution, and during the lifetime of Consultant, shall be exercisable
only by Consultant. In the event the Company shall undergo a merger,
consolidation, reorganization, recapitalization, declare a stock dividend of
its shares of common stock or cause to be implemented a forward or reverse
stock split which affects the present number of issued and outstanding shares
of common stock, the securities issued under this Agreement shall be
appropriately adjusted to reflect any such event.
The Company agrees to use its best efforts to file a registration
statement for the aforementioned securities on Form S-8 in a timely manner
within 15 days after the Company submits its annual report on Form 10K-SB for
the year ended December 31, 1999. The Company shall engage the services of a
competent professional to prepare and file a Registration Statement on Form
S-8 with the Commission to cover the shares of common stock to be issued
under the Agreement. Consultant shall cooperate with such professional in
every manner whatsoever to the extent reasonably required or necessary so
that such Registration Statement shall be competently prepared, and so that
such Registration Statement will not contain any untrue statement of a
material fact or omit to state a material fact regarding Consultant necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Such Registration Statement
shall be prepared at the sole cost and expense of the Company. The Company
shall cause its transfer agent to deliver certificates for the shares due to
Consultant promptly after the effectiveness of the Registration Statement.
Consultant understands, acknowledges and agrees to comply with the Securities
Act in all respects in connection with the issuance and resale of such shares
of common stock.
Regardless of the Consultant's status as an "employee" under Rule
405 of the Commission, all services rendered by Consultant hereunder shall be
rendered as an independent contractor, and Consultant shall be liable for any
FICA taxes, withholding or other similar taxes or charges, and Consultant
shall indemnify and hold the Company harmless therefrom; it is understood and
agreed that the value of all such items has been taken into account by
Consultant in computing the billable rate for the services Consultant agreed
to render to the Company.
4. Consultant will not disclose to any other person, firm, or
corporation, nor use for its own benefit, during or after the term of this
Agreement, any trade secrets or other information designated as confidential
by the Company which are acquired by Consultant in the course of performing
services hereunder. A trade secret is information not generally known to the
trade which gives the Company an advantage over its competitors. Trade
secrets can include, by way of example, products or services under
development, production methods and processes, sources of supply, customer
lists, marketing plans and information concerning contract negotiations or the
filing or pendency of patent applications.
5. Consultant represents and warrants to the Company as follows:
(a) Consultant hereby accepts employment by the Company for the
services performed pursuant to this Agreement. The services performed by
Consultant hereunder will be personally rendered by Consultant, and no one
acting for or on behalf of Consultant.
(b) Consultant represents and warrants that, by reason of income,
net assets, education, background and business acumen, Consultant has the
experience and knowledge in business and financial matters to evaluate the
risks and merits attendant to an investment in the securities of the Company,
either singly or through the aid and assistance of a competent professional,
and is fully capable of bearing the economic risk of loss of the total
investment of services.
(c) None of the services rendered by Consultant and paid for by
the issuance of securities of the Company shall be services related to any
"capital raising" transaction or other prohibited service as described above.
6. (a) The Company and Consultant agree to indemnify and hold the
other harmless for any loss or damage resulting from any misstatement of a
material fact or omission to state a material fact by the other contained
herein or contained in the S-8 Registration Statement of the Company to be
filed hereunder, to the extent that any misstatement or omission contained in
the Registration Statement was based upon information supplied by the other.
(b) The Company agrees to indemnify and hold Consultant harmless
from and against all losses, claims, damages, liabilities, costs or expenses
including reasonable attorney's and accountant's fees arising out of the
performance of this Agreement, whether or not Consultant is a party to such
dispute. This indemnity shall not apply, however, where a court of competent
jurisdiction has made a final determination that Consultant engaged in
misconduct in the performance of its services hereunder which gave rise to the
loss, claim, damage, liability, cost or exposure sought to be recovered
hereunder.
(c) The provision of this Section 6 shall survive the termination
and expiration of this Agreement.
7. This Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and supersedes and cancels any prior
communications, understandings, and agreements between the parties. This
Agreement cannot be modified or changed, nor can any of its provisions be
waived, except by written agreement signed by all parties.
8. This Agreement shall be governed by the laws of the State of New
York. Any dispute arising out of this Agreement shall be adjudicated in the
courts of the State of New York or in the federal court for the Southern
District of the State of New York, and the parties hereby agree that service
of process upon them by certified mail at the addresses shown in this
Agreement shall be deemed adequate and lawful.
9. Prior to the performance of services hereunder, this Agreement
may be terminated by mutual consent of the parties. The Agreement shall
automatically terminate at the expiration of the term hereof or upon 30 days
written notice by either party; provided, however, all representations and
warranties shall survive the termination hereof; provided, further, however,
that any obligation of the Company to pay for any services actually rendered
by the Consultants hereunder shall survive any such termination.
10. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
February 8, 2000.
CONSULTANT:
/s/ Matthew Markin
- -------------------
MATTHEW MARKIN
THE COMPANY:
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
----------------------
Jason Bauer, President
EXHIBIT 10.2
CONSULTING AGREEMENT
CONSULTING AGREEMENT (the "Agreement") entered into as of February 8,
2000 between Famous Fixins, Inc. with the principal offices located at 250
West 57th Street Suite 1112, New York, NY 10107 (the "Company") and EDWARD
DEFUDIS with address at _________________________________________ (the
"Consultant").
WHEREAS, the Board of Directors of the Company has adopted a written
compensation agreement for compensation of Consultant who is a natural
person; and
WHEREAS, the Company has engaged Consultant to provide services at the
request of and subject to the satisfaction of the Company's management; and
WHEREAS, a general description of the nature of the services performed
by Consultant and the maximum value of such services under this Agreement are
set forth below; and
WHEREAS, the Company and Consultant intend that this Agreement and the
services performed hereunder shall be made, requested and performed in such a
manner that this Agreement shall be a "written compensation agreement" as
defined in Rule 405 of the Securities and Exchange Commission ("SEC")
pursuant to which the Company may issue "freely tradeable" shares of its
common stock as payment for services rendered pursuant to an S-8 Registration
Statement to be filed with the SEC by the Company;
NOW, THEREFORE, in consideration of the mutual covenants and promises
contained herein, it is agreed:
1. The Company agrees to and does hereby engage Consultant for a one
year period which commenced as of February 8, 2000 and ends on February 7,
2001. The Company hereby employs Consultant and Consultant hereby accepts
such employment, and will perform the services requested by management of the
Company to its satisfaction during the term hereof. All such services are to
be performed only upon direct authorization from the Company. The services
performed by Consultant hereunder will be personally rendered by Consultant,
and no one acting for or on behalf of the Consultant, except those persons
normally employed by the Consultant in rendering services to others, such as
secretaries, bookkeepers and the like.
2. During the Term of this Agreement:
(a) Consultant shall provide to the Company consulting services
designed to assist the Company in marketing and product development activities
as related to the Company's food products and services, including the
preparation of business plans and reports on product market research. Such
services may include other tasks requested by the Company's management;
however, such services requested by the Company and to be provided by
Consultant:
- shall not be investor relations services;
- shall not be shareholder communications services;
- shall not be of a promotional nature that would directly or
indirectly promote or maintain a market for the Company's securities;
- shall not be in connection with or related to the offer or sale of
the Company's securities in a capital-raising transaction.
(b) The services of Consultant are non-exclusive and subject to
Section 4 hereof, Consultant may render services of the same or similar
nature, as herein described, to an entity whose business is in competition
with the Company or the Company's clients, directly or indirectly.
3. The Company shall pay to Consultant for its services hereunder as
follows: $250 per hour for services invoiced and $100 per hour for services
invoiced by any assistants of the Consultant. The payment shall be made in
the form of the Company's securities through a combination of shares of common
stock and options to purchase an equal number of shares of common stock. The
maximum compensation payable by the Company to Consultant under this Agreement
shall be a total of 250,000 shares of the Company's common stock and options
to purchase 250,000 shares of the Company's common stock. In no event can
more than 50% of the total number of securities vest prior to March 6, 2000.
The number of shares and options to be issued shall be computed in relation to
the closing bid price of the Company's common stock on the date invoice for
services is received by the Company; provided, however, such shares of common
stock shall be issued pursuant to and shall be subject to the filing and
effectiveness of a Registration Statement on Form S-8 covering such shares
with the SEC. The options to purchase the first 125,000 shares of common
stock are exercisable at $.1875 per share (the bid price on February 8, 2000).
The options to purchase the other 125,000 shares of common stock shall be
exercisable at $.25 per share. The options are exercisable for a period of
three years from the date of this Agreement. The options shall not be given,
granted sold, exchanged, transferred, pledged, encumbered, assigned or
otherwise disposed of by Consultant, other than by will or the laws of descent
and distribution, and during the lifetime of Consultant, shall be exercisable
only by Consultant. In the event the Company shall undergo a merger,
consolidation, reorganization, recapitalization, declare a stock dividend of
its shares of common stock or cause to be implemented a forward or reverse
stock split which affects the present number of issued and outstanding shares
of common stock, the securities issued under this Agreement shall be
appropriately adjusted to reflect any such event.
The Company agrees to use its best efforts to file a registration
statement for the aforementioned securities on Form S-8 in a timely manner
within 15 days after the Company submits its annual report on Form 10K-SB for
the year ended December 31, 1999. The Company shall engage the services of a
competent professional to prepare and file a Registration Statement on Form
S-8 with the Commission to cover the shares of common stock to be issued
under the Agreement. Consultant shall cooperate with such professional in
every manner whatsoever to the extent reasonably required or necessary so
that such Registration Statement shall be competently prepared, and so that
such Registration Statement will not contain any untrue statement of a
material fact or omit to state a material fact regarding Consultant necessary
in order to make the statements made therein, in light of the circumstances
under which they were made, not misleading. Such Registration Statement
shall be prepared at the sole cost and expense of the Company. The Company
shall cause its transfer agent to deliver certificates for the shares due to
Consultant promptly after the effectiveness of the Registration Statement.
Consultant understands, acknowledges and agrees to comply with the Securities
Act in all respects in connection with the issuance and resale of such shares
of common stock.
Regardless of the Consultant's status as an "employee" under Rule
405 of the Commission, all services rendered by Consultant hereunder shall be
rendered as an independent contractor, and Consultant shall be liable for any
FICA taxes, withholding or other similar taxes or charges, and Consultant
shall indemnify and hold the Company harmless therefrom; it is understood and
agreed that the value of all such items has been taken into account by
Consultant in computing the billable rate for the services Consultant agreed
to render to the Company.
4. Consultant will not disclose to any other person, firm, or
corporation, nor use for its own benefit, during or after the term of this
Agreement, any trade secrets or other information designated as confidential
by the Company which are acquired by Consultant in the course of performing
services hereunder. A trade secret is information not generally known to the
trade which gives the Company an advantage over its competitors. Trade
secrets can include, by way of example, products or services under
development, production methods and processes, sources of supply, customer
lists, marketing plans and information concerning contract negotiations or the
filing or pendency of patent applications.
5. Consultant represents and warrants to the Company as follows:
(a) Consultant hereby accepts employment by the Company for the
services performed pursuant to this Agreement. The services performed by
Consultant hereunder will be personally rendered by Consultant, and no one
acting for or on behalf of Consultant.
(b) Consultant represents and warrants that, by reason of income,
net assets, education, background and business acumen, Consultant has the
experience and knowledge in business and financial matters to evaluate the
risks and merits attendant to an investment in the securities of the Company,
either singly or through the aid and assistance of a competent professional,
and is fully capable of bearing the economic risk of loss of the total
investment of services.
(c) None of the services rendered by Consultant and paid for by
the issuance of securities of the Company shall be services related to any
"capital raising" transaction or other prohibited service as described above.
6. (a) The Company and Consultant agree to indemnify and hold the
other harmless for any loss or damage resulting from any misstatement of a
material fact or omission to state a material fact by the other contained
herein or contained in the S-8 Registration Statement of the Company to be
filed hereunder, to the extent that any misstatement or omission contained in
the Registration Statement was based upon information supplied by the other.
(b) The Company agrees to indemnify and hold Consultant harmless
from and against all losses, claims, damages, liabilities, costs or expenses
including reasonable attorney's and accountant's fees arising out of the
performance of this Agreement, whether or not Consultant is a party to such
dispute. This indemnity shall not apply, however, where a court of competent
jurisdiction has made a final determination that Consultant engaged in
misconduct in the performance of its services hereunder which gave rise to the
loss, claim, damage, liability, cost or exposure sought to be recovered
hereunder.
(c) The provision of this Section 6 shall survive the termination
and expiration of this Agreement.
7. This Agreement sets forth the entire understanding of the parties
relating to the subject matter hereof, and supersedes and cancels any prior
communications, understandings, and agreements between the parties. This
Agreement cannot be modified or changed, nor can any of its provisions be
waived, except by written agreement signed by all parties.
8. This Agreement shall be governed by the laws of the State of New
York. Any dispute arising out of this Agreement shall be adjudicated in the
courts of the State of New York or in the federal court for the Southern
District of the State of New York, and the parties hereby agree that service
of process upon them by certified mail at the addresses shown in this
Agreement shall be deemed adequate and lawful.
9. Prior to the performance of services hereunder, this Agreement
may be terminated by mutual consent of the parties. The Agreement shall
automatically terminate at the expiration of the term hereof or upon 30 days
written notice by either party; provided, however, all representations and
warranties shall survive the termination hereof; provided, further, however,
that any obligation of the Company to pay for any services actually rendered
by the Consultants hereunder shall survive any such termination.
10. This Agreement may be executed in one or more counterparts, each
of which shall be deemed an original but all of which together shall
constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
February 8, 2000.
CONSULTANT:
/s/ Edward DeFudis
- -------------------
EDWARD DeFUDIS
THE COMPANY:
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
----------------------
Jason Bauer, President
EXHIBIT 10.3
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 3rd day April, 2000 between FAMOUF FIXINS,
INC., a New York corporation with offices at 250 West 57th Street, Suite 1112,
and JODY KING-CHEIFETZ ("Employee") residing at 6 Oakridge Rd Bloomfield, NJ
07003.
WITNESSETH:
WHEREAS, Employer desires to retain the services of Employee and
Employee desires to be employed by Employer upon the terms and conditions
hereinafter set forth;
NOW THEREFORE, in consideration of the agreements herein contained, the
parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Employee, and Employee
hereby agrees to serve, as Sales Manager of Employer, or such other position
and with such title as Employer may reasonably designate, for the Term of
Employment (as defined in Section 2). The duties of Sales Manager includes
responsibility for managing sales through Employer's broker-distribution
network. Employee agrees to perform such services as are customary for such
office or to such other offices as shall from time to time be assigned to
Employee by Employer's Board of Directors or its designee, and, in the absence
of such assignment, such services customary to such offices as are necessary
to the operations of Employer. Employee further agrees to use Employee's best
efforts to promote the interest of Employer and to devote Employee's full
business time and energies during normal business hours to the business and
affairs of Employer during the Term of Employment.
2. TERM OF EMPLOYMENT. The employment hereunder shall commence on
April 3, 2000 and shall continue for a term ending April 1, 2001 (the "Term of
Employment"), unless earlier terminated: (a) upon death of Employee; (b) at
the option of Employer upon 30 days' prior written notice to Employee, in the
event Employee, by reason of physical injury, illness or otherwise, is unable
to materially perform her duties hereunder for a continuous period of 30 days;
or (c) upon the discharge of Employee by the Board of Directors of Employer
for "cause" (as defined in Section 7 hereof). The Term of Employment may be
shortened, upon written notice of the Board of Directors of Employer given at
any time, as determined in the sole discretion of the Board of Directors of
Employer that Employer has insufficient business or revenues to continue
Employee's employment; in which event, the Term of Employment shall end thirty
days after written notice thereof is sent to Employee. The Term of Employment
shall be automatically renewed for additional one year periods, subject to
Employer's right to terminate "at will" at any time upon written notice.
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3. COMPENSATION.
A. Salary. As compensation for the services to be provided
hereunder, Employer shall pay Employee salary at the annualized rate of
seventy thousand dollars ($70,000) during the Term of Employment. In
consideration of Employee's agreement not to compete as set forth in Section
4, Employee shall be entitled to additional compensation at the annualized
rate of ten thousand dollars ($10,000) which is a draw against Bonus
Compensation during the Term of Employment.
B. Bonus Compensation. In consideration of Employee's
agreement not to compete as set forth in Section 4, Employee shall be entitled
to a sum, payable quarterly, equal to four and one-half percent (4.5%) of all
royalties paid by Employer to celebrity licensors during the Term of
Employment pursuant to a license agreement for the manufacture, sale and
marketing of a food product. Employee shall also be entitled to a sum equal
to one-half of one percent (0.5%) of the increase in net revenues during the
Term of Employment as compared to prior fiscal year, payable after Employer's
financial statements are finalized and released to the general public.
C. Option Bonus. In consideration of Employee's agreement
not to compete as set forth in Section 4, Employee shall be granted options to
purchase a total of 300,000 shares of Employer's unregistered and restricted
common stock, exercisable for five years from the date of grant, subject to
vesting during the Term of Employment. The first 60,000 options shall vest
October 1, 2000, and the remaining options shall vest in equal increments over
the subsequent four years during the Term of Employment. The exercise price
of the first 60,000 options shall be $.15 per share. The exercise price of
the remaining 240,000 options shall be equal to a 50% discount from the
closing bid price of the common stock on the last trading date immediately
preceding each vesting. In the event Employee no longer serves as an employee
of Employer on a continuous basis through each vesting period, the unvested
options shall terminate immediately upon the termination of Employee's Term of
Employment.
Employee shall be entitled to additional options to purchase
4,000 shares of common stock. Employer shall register the common stock
underlying the 4,000 options on its next registration statement on Form S-8 or
such other registration statement as Employer in its sole discretion deems
appropriate. The exercise price for the 4,000 options shall be $.15. The
4,000 options shall vest immediately upon the execution of the Employment
Agreement.
All options to purchase up to 304,000 shares of common stock
described above expire on April 3, 2005 or as otherwise provided in the Stock
Option Agreement between Employer and Employee.
4. COVENANT NOT TO COMPETE; INTELLECTUAL PROPERTY CONFIDENTLALITY.
A. Covenant Not to Compete and Solicit. During the Term of
Employment and for a period of three (3) years after termination of Employee's
employment with Employer, Employee will not, within any jurisdiction in which
Employer or any affiliate conducts its
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business operations, directly or indirectly, own, manage, operate, control, be
employed by or participate in the ownership, management, operation or control
of, or be connected in any manner with, any business of the type or character
engaged in or competitive with that conducted by Employer. The decision of
Employer's Board of Directors as to what constitutes a competing business
shall be final and binding upon Employee, and such decision shall be made in
good faith, or as adjudicated in a court of law. Employee confirms that the
Employer presently conducts business operations based on marketing of
celebrity endorsed products. For these purposes, ownership by Employee or any
affiliate of Employee of securities of a public company not in excess of one
percent (1%) of any class of such securities shall not be considered to be
competition with Employer. Employee represents to Employer that Employee was
not engaged in the business presently conducted by Employer prior to
Employee's affiliation with Employer, and Employee further represents to
Employer that the enforcement of this provision will not restrict Employee's
ability to make a living.
For a period of three (3) years after termination of
Employee's employment with Employer, Employee further agrees to refrain from
interfering with the employment relationship between Employer and its other
employees by soliciting any of such individuals to participate in any way in
any other business ventures and agrees to refrain from soliciting business
from any client or prospective client (as disclosed in a list, compiled in
good faith, to be provided to Employee by Employer at the time Employee ceases
to be employed, which list shall be binding upon Employee) of Employer's for
Employee's benefit or for any other entity.
It is the desire and intent of the parties that if any
provisions of this Section 4(A) shall be adjudicated to be invalid or
unenforceable, this Section 4(A) shall be deemed amended to delete therefrom
such provisions or portion adjudicated to be invalid or unenforceable, such
amendment to apply only with respect to the operation of this paragraph in the
particular jurisdiction in which such adjudication is made.
B. Intellectual Property. During the Term of Employment,
Employee will disclose to Employer all ideas, inventions and business plans
developed by Employee during such period which relates directly or indirectly
to the business of Employer or affiliates, including without limitation any
process, operation, product or improvement which may be patentable or
copyrightable. Employee agrees that such will be the property of Employer and
that Employee will, at Employer's request and cost, do whatever is reasonably
necessary to secure the rights thereto by patent, copyright or otherwise to
Employer.
C. Confidentiality. Employee agrees to not divulge to anyone
(other than Employer or any other persons employed or designated by Employer)
any knowledge or information of any type whatsoever of a confidential nature
relating to the business of Employer or any of its subsidiaries or affiliates,
including without limitation all types of trade secrets (unless readily
ascertainable from public or published information or trade sources). Employee
further agrees not to disclose, publish or make use of any such knowledge or
information of a confidential nature without prior written consent of
Employer.
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5. REIMBURSEMENT OF EXPENSES. Employee shall be entitled to be
reimbursed for reasonable travel and other reasonable expenses incurred in
connection with Employee's services to Employer pursuant to and during the
Term of Employment upon a basis consistent with the policies established or
announced by Employer.
6. BREACH BY EMPLOYEE. Both parties recognize that the services to
be rendered under this Agreement by Employee are special, unique and
extraordinary in character, and that in the event of a breach by Employee of
the terms and conditions of this Agreement to be performed by Employee, or in
the event Employee performs services during the Term of Employment for any
person, firm, corporation or other entity engaged in a competing line of
business with Employer, or otherwise breaches this Agreement, Employer shall
be entitled, if it so elects, to take all actions, either in law or in equity,
that it deems necessary to protect its rights and interests.
7. TERMINATION FOR CAUSE. Employer may terminate Employee for
cause upon ten days' prior written notice to Employee. For purposes of this
Agreement, an event or occurrence constituting "cause" shall mean:
A. Employee's willful failure or refusal after notice
thereof, to perform specific directives of Employer's Board of Directors, when
such directives are consistent with the scope and nature of Employee's duties
and responsibilities as set forth in Section 1 and elsewhere herein;
B. Dishonesty of Employee affecting Employer;
C. Employee's arrest for a felony or any crime involving fraud or
misrepresentation;
D. Any gross or willful conduct of Employee resulting in loss
to Employer, damage to Employer's reputation or theft from Employer;
E. Other than physical injury or illness, Employee's failure
to perform the duties and responsibilities under this Agreement; or
F. Any breach (not covered by any of the clauses (A) through
(E)) of any of the provisions of this Agreement, causing damage to Employer,
if such breach is not cured within five days after written notice thereof to
Employee by Employer.
8. ASSIGNMENT. This Agreement is a personal contract and, except as
specifically set forth herein, the rights and interests of Employee herein may
not be sold, transferred, assigned, pledged or hypothecated by Employee. The
rights and obligations of Employer hereunder shall be binding upon and run in
favor of the successors and assigns of Employer. In the event of any attempted
assignment or transfer of rights hereunder contrary to the provisions hereof,
Employer shall have no further liability for payments hereunder. Employee
specifically consents to assignment of this Agreement by Employer pursuant to
any reorganization or merger that Employer may effect hereafter.
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9. GOVERNING LAW; CAPTIONS. This Agreement contains the entire
agreement between the parties and shall be governed by the laws of the State
of New York. It may not be changed orally, but only by agreement in writing
signed by the party against whom enforcement of any waiver, change,
modification or discharge is sought, and consented to in writing by the
President of Employer. Section headings are for convenience or reference only
and shall not be considered a part of this Agreement.
10. PRIOR AGREEMENTS. This Agreement supersedes and terminates all
prior agreements between Employer and Employee relating to the subject matter
herein addressed.
11. NOTICES. Any notice or other communication required or
permitted hereunder shall be sufficiently given if delivered in person to
Employer by delivery to its Chairman of the Board of Directors or sent by
telex, telecopy or by registered or certified mail, postage prepaid, addressed
as follows:
If to Employee, to:
_____________________
_____________________
If to Employer, to:
Famous Fixins, Inc.
Attn: Chairman of the Board
250 West 57th Street, Suite 1112
New York, NY 10107
Fax: 212-245-7767
With a copy to:
Law Offices of Dan Brecher
99 Park Avenue, 16th Floor
New York, NY 10016
Fax: 212-808-4155
IN WITNESS WHEREOF, Employer has by its appropriate officer signed this
Agreement and Employee has signed this Agreement, on and as of the date and
year first above written.
FAMOUS FIXINS, INC.
By: /s/ Jason Bauer
--------------------------------
Jason Bauer, President
EMPLOYEE
By: /s/ Jody King-Cheifetz
Jody _________
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EXHIBIT 23.1
Famous Fixins, Inc.
250 West 57th Street, Suite 1112
New York, NY 10107
To the Board of Directors:
We hereby consent to the incorporation by reference in the Registration
Statement on Form S-8 dated April 10, 2000 relating to the financial
statements of Famous Fixins, Inc. for the year ended December 31, 1999.
We also hereby consent to the reference to us under the heading "Experts"
in such Registration Statement.
/s/ Freeman & Davis LLP
Freeman & Davis LLP
Certified Public Accountants
New York, New York
April 10, 2000
