<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-QSB
QUARTERLY REPORT ISSUED UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the Nine-Month period ending March 31, 2000
GOURMETMARKET.COM, INC.
- -------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 51-0347728 000-27391
- ---------------------------- ---------------------- ----------------
(State or other jurisdiction (IRS Employer Commission File
of Incorporation) Identification Number) Number
507 Howard Street, Suite 200, San Francisco, California 94105
- --------------------------------------------------------------------------------
(Address of principal executive offices)
Registrant's telephone number, including area code: (415) 979-0990
--------------
Indicate by check mark whether the registrant (1) has filed all documents and
reports required to be filed by Section 13 or 15 (d) of the Securities and
Exchange Act of 1934 during the preceding 12 months (or such shorter period that
the Registrant was required to file such reports) and (2) has been subject to
such filing requirements for the past 90 days.
Yes [X] No[ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the registrant filed all documents and reports required to be
filed by Section 12, 13, or 15(d) of the Exchange Act after distribution of
securities under a plan confirmed by a court.
Yes [ ] No [ ]
APPLICABLE TO CORPORATE ISSUERS
On May 15, 2000, the Registrant had outstanding 19,394,671 shares of common
stock.
Traditional Small Business Disclosure Format: Yes [ ] No [X]
Page 1 of
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GOURMETMARKET.COM, INC.
INDEX
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Item 2. Management's Discussion and Analysis or Plan of Operation
Part II. OTHER INFORMATION
Item 1. Legal Proceedings
Item 2. Changes in Securities
Item 3. Defaults Upon Senior Securities
Item 4. Submission of Matters to a Vote of Security Holdings
Item 5. Other Information
Item 6. Exhibits and Reports on Form 8-K
Page 2 of
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GOURMETMARKET.COM, INC.
CONSOLIDATED BALANCE SHEET
(Unaudited)
<TABLE>
<CAPTION>
ASSETS
CURRENT ASSETS
<S> <C>
Cash $ 15,431
Accounts receivable, less allowance for doubtful accounts of $9,933 44,626
Inventories 83,686
Prepaid expenses 30,668
-----------
Total current assets 174,411
-----------
PROPERTY AND EQUIPMENT, At Cost
Computer Software and Hardware 56,988
Equipment 3,749
-----------
60,737
Less accumulated depreciation 9,568
-----------
Net property and equipment 51,169
-----------
OTHER ASSETS
Investments 140,000
Note Receivable 0
Security Deposits 20,748
Deferred organization costs, less accumulated amortization of $1,057 1,055
Deferred license agreements, less accumulated amortization of $103,616 319,884
-----------
Total other assets 481,687
-----------
Total assets $ 707,267
===========
LIABILITIES AND STOCKHOLDERS' DEFICIT
CURRENT LIABILITIES
Accrued stock options $ 432,255
Current maturities of long-term debt 1,005,000
Accounts payable 561,904
Accrued expenses 106,752
-----------
Total current liabilities 2,105,911
-----------
LONG-TERM DEBT 0
-----------
STOCKHOLDERS' DEFICIT
Convertible preferred stock (Series A), $.001 par value; authorized 10,000,000 shares:
issued 0
Common stock, $.001 par value; authorized 100,000,000 shares:
issued and outstanding 19,394,671 shares 18,870
Additional paid-in capital 3,417,267
Accumulated deficit (4,521,659)
Less subscriptions receivable (313,122)
-----------
Total stockholders' deficit (1,398,644)
-----------
Total liabilities and stockholders' deficit $ 707,267
===========
</TABLE>
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GOURMETMARKET.COM, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
Three Month Period
Ended March 31
----------------------------
2000 1999
------------ ------------
Net Sales $ 302,824 $ 75,916
Cost of Good Sold 243,342 85,880
------------ ------------
Gross Profit (Loss) 59,482 (9,964)
Operating Expenses
Selling 145,729 60,429
General and administrative 395,644 1,417,826
------------ ------------
541.373 1,478,255
------------ ------------
Income (Loss) from Operations (481,891) (1,488,219)
------------ ------------
Other Income (Expense)
Miscellaneous income 1,802 150
Miscellaneous expenses (9,270) (41,230)
Interest expense (16,508) (5,625)
Gain on the sale of Travlang.com
273, 400 (0)
------------ ------------
Total other income/ (Expense) 231,163 (46,705)
------------ ------------
Income gain (loss) before taxes (232,468) (1,534,924)
Provision for Income Taxes 0 0
------------ ------------
Net Income (Loss) $ (232,468) $ (1,534,924)
============ ============
Net Income (Loss) per Share $ (0.01) $ (0.12)
============ ============
Weighted Average Common
Shares Outstanding 19,394,671 13,170,637
============ ============
See Notes to Consolidated Financial Statements
4
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GOURMETMARKET.COM, INC.
CONSOLIDATED STATEMENT OF STOCKHOLDERS' (DEFICIT) EQUITY
THREE MONTHS ENDED MARCH 31, 2000
(Unaudited)
<TABLE>
<CAPTION>
Retained
Common Additional Earnings
Shares Stock Paid-in Capital (Deficit) Totals
------ ----- --------------- --------- ------
<S> <C> <C> <C> <C> <C>
Balance (deficit), January 1, 2000 18,025,920 $ 17,501 $ 2,626,898 $(4,289,192) $ (1,644,793)
Subscriptions Receivable at
January 1, 2000 (13,122) (13,122)
Purchases of Options dated 3/20/99 300,000 300 299,700 300,000
Conversion of 8% notes maturing
1/20/02 into common shares 1,068,751 1,069 490,669 491,738
Additional Subscriptions (300,000) (300.000)
Net loss - March 31, 2000 -- -- -- (232,468) (223,514)
---------- ----------- ----------- ----------- -----------
Balance (deficit) March 31, 2000 19,394,671 $ 18,870 $ 3,417,267 $(4,834,781) $(1,398,644)
========== =========== =========== =========== ===========
</TABLE>
See Notes to Consolidated Financial Statements
5
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GOURMETMARKET.COM, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
THREE MONTHS ENDED MARCH 31, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
CASH FLOWS FROM OPERATING ACTIVITIES March 31, 2000 March 31, 1999
-------------- - -------------
<S> <C> <C>
Net loss $ (232,468) $ (1,534,925)
Item not requiring cash:
Depreciation 2,506 18,500
Non cash compensation 921,180
Changes in:
Accounts receivable 14,392 (14,282)
Inventories 6,147
Prepaid expenses (30,668)
Other assets 111 113
Deferred Revenue (15,414)
Accounts payable and accrued expenses & deferred Revenue (53,705) (13,595)
---------- -------------
Net cash provided (used) in operating activities (308,338) (623,009)
---------- -------------
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment (2,309) (6,133)
Asset Disposed (52,999)
Acquisition of License agreements net (12,500)
Investments - Stock (140,000)
Notes Receivable
Net cash provided (used) in investing activities (195,308) (18,633)
---------- -------------
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from Note Payables
Convertible Notes 250,000
Net Proceeds from Sale of Assets 124,148
Proceeds from issuance of common stock 16,737 988,765
---------- -------------
Net cash provided (used) in financing activities 390,885 988,765
---------- -------------
INCREASE (DECREASE) IN CASH (112,761) 347,123
CASH, BEGINNING OF PERIOD 128,192 41,378
---------- -------------
CASH, END OF PERIOD $ 15,431 $ 388,501
========== =============
</TABLE>
See Notes to Consolidated Financial Statements
6
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GOURMETMARKET.COM, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Unaudited)
Note 1: Summary of Significant Accounting Policies
Description of Company
GourmetMarket.com, Inc. (the "Company") is an online culinary marketplace for
gourmet and specialty food, wine and cookware. The Company has developed the
technology used in its website, established relationships with leading culinary
suppliers, and developed revenue and traffic-building partnerships. The software
used in the Company's website enables the Company to instantly update the
website with new merchandise, unique internet addresses, special pricing and
promotions. The Company's state-of-the art back-office software package can
handle thousands of orders per day.
The GourmetMarket.com website delivers not only products, but also a lifestyle.
By offering superior quality products along with expert information and
resources via the Internet, the Company provides customers with easy
accessibility to the "good life." The Company intends to expand the range of
products and services offered through its web site to encompass other high-end
lifestyle products and services.
Significant Accounting Policies
The accounting policies followed by the Company are set forth in Note 1 to the
Company's financial statements included in its Annual Report on Form 10-KSB for
the fiscal year ended December 31, 1999.
Note 2: Interim Financial Statements
The accompanying consolidated financial statements have been prepared in
accordance with the instructions to Form 10-QSB of the Securities and Exchange
Commission and in accordance with generally accepted accounting principles
applicable to interim financial statements and do not include all of the
information and footnotes required by generally accepted accounting principles
for audited financial statements. The financial statements should be read in
conjunction with the audited consolidated financial statements and accompanying
notes of the Company for the year ended December 31, 1999, which are included in
its Annual Report on Form 10-KSB for the fiscal year ended December 31, 1999.
In the opinion of the management of the Company, the accompanying consolidated
financial statements reflect all adjustments necessary to present fairly the
financial position of the Company as of March 31, 2000, and the results of its
operations, stockholders' equity and cash flows for the three month period then
ended.
The results of operations for the period ended March 31, 2000, are not
necessarily indicative of the results to be expected for the entire year. See
"Management's Discussion and Analysis or Plan of Operation - Seasonality."
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Note 3: Income Per Share Information
Net loss per share is determined by dividing net loss by the weighted average
common shares outstanding. The outstanding common shares reflect the
reorganization of GourmetMarket.com. Common stock equivalents, consisting of
stock options in fiscal 1999 and 1998, were antidilutive and were not included
in the calculation of net loss per share. The company has adopted Statement of
Financial Accounting Standards, (SFAS) No. 128, "Earnings Per Share" which
simplifies the accounting for earnings per share by presenting basic earnings
per share including only outstanding common stock and diluted earnings per share
including the effect of dilutive common stock equivalents. The Company's basic
and diluted earnings per share are the same, on the Company's common stock
equivalents are dilutive. Note 4: Convertible Debentures
On January 26, 2000, 8% convertible long-term debt totaling $475,000 and accrued
interest of $16,738 were converted into 1,068,750 shares of common stock.
8
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Item 2. Management's Discussion and Analysis or Plan of Operation
General
The discussion and analysis set forth below should be read in conjunction with
our Financial Statements and the related Notes thereto appearing elsewhere in
this quarterly report. The information presented for the three months ended
March 31, 2000, and March 31, 1999, was derived from unaudited financial
statements which, in our opinion, reflect all adjustments (consisting only of
normal recurring adjustments) necessary for a fair presentation.
Forward Looking-Statements
When used in this report, press releases and elsewhere by the management of the
Company from time to time, the words "believes", "anticipates", and "expects"
and similar expressions are intended to identify forward-looking statements that
involve certain risks and uncertainties. Additionally, certain statements
contained in this discussion may be deemed forward-looking statements that
involve a number of risks and uncertainties. Among the factors that could cause
actual results to differ materially are the following: the ability of the
Company to meet its working capital and liquidity needs, the status of relations
between the Company, its primary customers and distributors, the availability of
long-term credit, unanticipated changes in the U.S. and international economies,
business conditions and growth in the e-commerce and the timely development and
acceptance of new products, the impact of competitive products and pricing, and
other risks detailed from time to time in the Company's SEC reports. Readers are
cautioned not to place undue reliance on these forward-looking statements which
speak only as of the date hereof. The Company undertakes no obligation to
publicly release the results of any events or circumstances after the date
hereof or to reflect the occurrence of unanticipated events.
Going Concern
The Company's viability as a going concern has been dependent since inception
upon its ability to raise sufficient working capital from equity and debt
financing. The Company experienced a loss from operations in 1999 and had a
working capital deficit at December 31, 1999. The Company experienced a loss
from operations of $505,867 for the three months ended March 31, 2000, and had a
working capital deficit of $1.93 million at March 31, 2000. See "Liquidity and
Capital Resources," below.
Results of Operations
Three Months Ended March 31, 2000 Compared to the Three Months Ended
March 31, 1999
Net sales for the three months ended March 31, 2000, increased by $226,908 to
$302,824 from $75,916 for the three months ended March 31, 1999. Net sales for
the three months ended March 31, 2000 of Store, Club, Travlang, and other sales
were $233,013, $33,495, $0, and $36,316 respectively, as compared with $56,937,
$3,796, $6,445 and $8,738, respectively, for the three months ended March 31,
1999 The increase in sales resulted primarily from the Company's marketing
efforts to date include a combination of different offline and online programs.
While the cost and effectiveness of each program varies, our current rate of
converting visitors to buyers is between 1.75% and 2%.
9
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Cost of goods sold for the three months ended March 31, 2000 increased by
$157,463 to $243,342 from $85,880 for the three months ended March 31, 1999. The
increase resulted from the increase in sales and the corresponding decrease in
inventory purchases.
Gross profit for the three months ended March 31, 2000, was $59,482, or 19.64%
of net sales, compared to a loss of $9,964, or 12.97% of net sales, for the
three months ended March 31, 1999. The increase in gross profit percentage was
primarily due to relatively higher gross margins realized due to the increase in
sales. For the three months ended March 31, 2000, Store, Club, Travlang, and
other sales accounted for 14.1%, 49.2%,0% and 36.7% of net sales, respectively,
as compared with 75.0%, 5.0%, 8.48%, and 11.52% of net sales, respectively, for
the three months ended March 31, 1999.
Selling and Internet expenses increased by $85,300 to $145,729 for the three
months ended March 31, 2000, from $60,429 for the three months ended March 31,
1999. This increase in selling expenses resulted from an increase in the
marketing and internet site expenses. General and administrative expenses were
$395,644 for the three months ended March 31, 2000, compared with $1,417,826,
for the three months ended March 31, 1999, The decrease in the general and
administrative expenses was due to savings from a Company reorganization.
The Company's interest expense for the three months ended March 31, 2000, was
$16,508, compared to $5,625 for the three months ended March 31, 1999. The
increase in interest expense was primarily due to an increase in loans.
For the three months ended March 31, 2000, the Company had income from the sale
of assets of $273,400, which reduced the loss for the three months ending March
31, 2000, to $232,468. For the three months ended March 31, 1999, the Company
had a stock option charge of $950,000, which increased the loss for the three
months ending March 31, 1999 to $1,534,924.
Year 2000 Compliance
The Company's transition into the year 2000 was seamless to both the Company and
its customers. The Company's systems in place have been year 2000 compliant,
which has enabled the Company to operate its website and to service its
customers on an ongoing basis without technical difficulties.
Liquidity and Capital Resources
Our viability as a going concern is dependent upon our ability to raise
sufficient working capital. The Company experienced a loss from operations
during the three months ended March 31, 2000, and March 31, 1999, and had a
working capital deficiency of approximately $1.93 million, primarily as a result
of the current portion of long-term debt. As a result, the Company has faced an
on-going liquidity deficit. Working capital may vary from time to time as a
result of seasonal inventory requirements and the level of accounts receivable
balances.
The Company has incurred significant net losses and negative cash flows from
operations since its organization in November 1997 as a result of the
development of its GourmetMarket business operations. The Company has funded
these losses primarily from the issuance of common stock to the Company's
founders, loans by related parties, loans by third party lenders and the private
placement of the
10
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Company's securities to individuals. The Company will be dependent in the
foreseeable future on raising capital on a debt or equity basis to meet its
operating expenses, as it will in all probability continue to incur substantial
losses through calendar year 2000. The Company anticipates that it will be able
to continue to obtain working capital through the proceeds of equity or debt
financing on a private basis, and also from operating income. The Company
competes for capital with a significant number of other internet and technology
ventures and more traditional businesses. Accordingly, although the Company has
in the past been able to obtain capital to meet its operating losses, there can
be no assurance that the Company will be able to continue to meet its operating
expenses from its fund-raising activities until such time, if any, as the
Company is able to operate at a profit.
On January 14, 2000, the Company sold the assets of Travlang.com, an Internet
foreign travel language website, to iiGroup, Inc., a publicly-traded related
party. Terms of the purchase were 250,000 common shares of iiGroup, Inc., which
the parties valued at $140,000 ($.56 per share) and $250,000 payable $191,028 in
cash, and $58,973 by the assumption of liabilities. This asset sale has not
changed our business substantially, as the Company is primarily an e-commerce
website.
On January 26, 2000, the holders of the Company's 8% convertible long-term debt
totaling $475,000 and accrued interest of $16,738 was converted into 1,068,750
shares of common stock.
In February 2000, the iiGroup, Inc., loaned a total of $250,000 to the Company
pursuant to two (2) 8% Convertible Bridge Notes. The Bridge Notes provide that
they may be prepaid at any time, but are mandatorily prepayable upon the sale of
all of the outstanding shares of the Company, the sale substantially all of the
Company's assets, or the closing of financing of at least $5,000,000. The
Convertible Notes are convertible into common sock of the Company at the lower
of $1.00 per share or 75% of the average closing bid price of the Company's
common stock in the five days proceeding the date of conversion. These Bridge
Notes mature on December 31, 2000.
11
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings
None.
Item 2. Changes in Securities and Use of Proceeds
On January 26, 2000, the Company's 8% Convertible long-term debt maturing on
June 20, 2002, totaling $475,000, together with accrued interest of $16,738, was
converted into 1,068,750 shares of common stock.
In February 2000 the iiGroup, Inc., a publicly-traded company related to the
Company, loaned a total of $250,000 to the Company pursuant to two (2) 8%
Convertible Bridge Notes. The Bridge Notes provide that they may be prepaid at
any time, but are mandatorily prepayable upon the sale of all of the outstanding
shares of the Company, the sale substantially all of the Company's assets, or
the closing of financing of at least $5,000,000. The Convertible Notes are
convertible into common sock of the Company at the lower of $1.00 per share or
75% of the average closing bid price of the Company's common stock in the five
days proceeding the date of conversion. These Bridge Notes mature on December
31, 2000. The Bridge Notes were sold pursuant to the exemption from registration
provided by Section 4(2) of the Securities Exchange Act of 1933.
Item 3. Defaults Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
A. Exhibit 10.13 Asset Purchase Agreement dated January 14, 2000,
between GourmetMarket.com, Inc., and
Travlang.com, Inc.
Exhibit 10.14 8% Convertible Bridge Note dated February 29, 2000
Exhibit 10.15 8% Convertible Bridge Note dated March 13, 2000
B. Reports on Form 8-K
None.
12
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SIGNATURES
In accordance with the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned, duly authorized.
GOURMETMARKET.COM, INC.
-----------------------
(Registrant)
Dated: May 19, 2000 By: /s/ Chanan Steinhart
------------------------
Chanan Steinhart, President
13
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ASSET PURCHASE AGREEMENT
THIS AGREEMENT ("Agreement") made and entered into as of January 14,
2000, by and among GOURMETMARKET.COM, INC., a Delaware corporation having a
principal place of business at 507 Howard Street, Suite 200, San Francisco,
California 94105 ("Seller"), and TRAVLANG.COM, INC., a Florida corporation
having a principal place of business at 7000 W. Palmetto Park Road, Suite 501,
Boca Raton, Florida 33433 ("Buyer").
W I T N E S S E T H :
WHEREAS, Seller owns and operates an unincorporated business under the
name "Travlang.com" (the "Business"); and
WHEREAS, the parties desire that Buyer purchase all of the assets of
Seller used or useful in the operation of the Business as described herein.
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained, the parties, intending to be legally bound, agree as follows:
1. PROPERTY AND LIABILITIES.
1.1 Assets to be Conveyed. Seller hereby agrees to sell,
assign, transfer, convey and deliver to Buyer the following (the "Assets"):
(a) All the fixed and tangible personal property used
in the operation of the Business, which is described in Exhibit "1.1(a)"
attached hereto and made a part hereof.
(b) The contracts and other agreements, if any,
listed or described in Exhibit "1.1(b)," attached hereto and made a part hereof
(the "Contracts").
(c) All of Seller's right, title and interest in and
to the names "Travlang" and "Travlang.com" and all other tradenames,
servicemarks, logos, copyrights and similar materials or rights used to identify
or promote the Business (the "Promotional Rights"). Immediately after closing,
Seller shall discontinue all use of the Promotional Rights, including without
limitation the names "Travlang" and "Travlang.com" and all similar names and
abbreviations thereof.
(d) All of Seller's right, title and interest in the
goodwill and other intangible property used in the operation of the Business,
including, but not limited to, all magnetic media, electronic data processing
files, systems and programs, telephone number or numbers, patents, trade
secrets, know-how, domain names, sales and operating plans, customer and supply
lists, and non-competition covenants.
(e) All Seller's right, title and interest in any
licenses, permits and authorizations issued by any federal, state or local
regulatory agencies that are used in the operation of the Business to the extent
the same are transferrable.
Page 1 of 14
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(f) All business records of Seller used in the
operation of the Business and not relating solely to Seller's internal affairs,
in whatever medium they may be stored (the "Business Records"), subject to
Seller's right, after closing, to have access thereto and make copies thereof
pursuant to Article 11 hereof. The Business Records shall include, without
limitation, all books of account, customer lists, supplier lists, employee
personal files, business studies, consultants' reports, budgets and financial
reports and projections.
(g) All of Seller's right, title and interest in
property used in the operation of the Business not otherwise included in
subparagraphs (a) through (h) above shall be included property and shall be
conveyed or transferred by Seller to Buyer; provided, however, that the
following shall be excluded property (the "Excluded Property") and shall not be
conveyed to Buyer:
(1) Such books and records as pertain solely
to the organization, existence and capitalization of Seller;
(2) Seller's cash and cash equivalents on
hand or in banks, certificates of deposit, money market funds, securities and
similar type investments as of the closing date (hereinafter defined);
(3) Except to the extent otherwise noted
herein, all employee pension benefit and profit-sharing plans, all trusts
established thereunder and all assets thereof;
(4) Seller's personal computers on which the
Business' financial and other business data reside.
1.2 Liabilities to be Assumed. On the closing date
(hereinafter defined), Buyer shall assume only those liabilities of Seller
specifically set forth in Exhibit "1.2" hereto (the "Liabilities").
1.3 Collection of Accounts Receivable. Commencing on the
Closing Date, Buyer shall use its best efforts to collect those accounts
receivable of Seller set forth in Exhibit 1.3 hereto. Upon receipt and clearance
of payment of any of Seller's accounts received by Buyer, Buyer shall forthwith
forward to Seller such account payments. Buyer shall provide Seller monthly at
the end of each month commencing February 1, 2000, and ending May 1, 2000, a
statement of the dollar amount and source of all of Seller's accounts received
by Buyer in such reporting month.
2. CLOSING DATE AND INSPECTION PERIOD.
2.1 The closing of this Agreement (the "Closing") shall occur
on or before January 14, 2000, at 10:00 A.M. (the "Closing Date") in the offices
of Buyer or at such other location as mutually agreed to by Buyer and Seller.
The Closing Date may be extended only by the mutual written consent of the
parties.
Page 2 of 14
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2.2 Commencing upon the date of execution of this Agreement and
continuing until the Closing Date (the "Investigation Period"), the Buyer may,
in Buyer's sole discretion, review all books and records relating to the
Business and the Assets, including but not limited to all accounting records and
support documents, all governmental licenses, all inventory, customer lists,
material contracts, the premises at which the Business is located, and all
documents relating to the management, operation, maintenance or ownership or use
of the Assets and the Business. Buyer and its agents shall have the right to
make copies of such books, documents and records and to conduct such review as
Buyer deems appropriate.
3. PURCHASE PRICE AND METHOD OF PAYMENT.
3.1 Purchase Price. The purchase price of the Assets (the
"Purchase Price") shall be (i) Two Hundred Fifty Thousand Dollars ($250,000)
payable as provided in this Agreement (ii) Buyer's delivery to Seller at Closing
a certificate, duly legended in conformity with applicable securities law
requirements, for 250,000 shares of restricted common stock of iiGroup, Inc., a
Delaware corporation which is the parent company of Buyer; and (iii) Buyer's
agreement, which shall be self-executing without further documentation at
Closing, that for a period of one year from Closing no company other than Seller
shall advertise or be promoted as a gourmet food products provider on Buyer's
Travlang.com website.
3.2 Payment of the Cash Portion of the Purchase Price. Seller
hereby confirms that prior to the date of this Agreement Buyer has deposited
with Seller Forty Thousand Dollars ($40,000) as a payment against the cash
portion of the Purchase Price. The balance of the cash portion, being Two
Hundred Ten Thousand Dollars ($210,000), shall be paid as follows:
(i) $50,000 shall be paid in cash at Closing;
(ii) $100,000 shall be paid on or before February 15,
2000; and
(iii) $60,000 shall be paid by Buyer's assumption of the
Liabilities at Closing.
The payment of $100,000 set forth in subparagraph (ii) shall
be evidenced by the Buyer's unsecured promissory note in the form of Exhibit 3.2
hereto (the "Note").
3.3 Consulting Agreement. Buyer shall assume Seller's
consulting agreement with Michael C. Martin in the form of Exhibit 3.3 hereto
("Consulting Agreement").
4. APPORTIONMENT OF INCOME AND EXPENSES.
In the event this transaction is ultimately closed on the
Closing Date or another date mutually agreeable to Seller and Buyer, Seller
shall be entitled to all income earned by Seller from the operation of the
Business until 11:59 p.m. on the day immediately preceding the Closing
regardless of whether it was received prior to Closing. Upon Closing, Buyer
shall be entitled to all income earned from the operation of the Business after
11:59 p.m. on the day immediately preceding the Closing regardless of when such
sum is received. In the event this transaction does not close, no such
apportionment of income shall occur.
Page 3 of 14
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5. EMPLOYEES.
Seller shall be responsible for the payment of all
compensation due to Seller's employees through 11:59 p.m. on the day immediately
preceding Closing, including without limitation all sales commissions,
profit-sharing and the like arising from the operation of the Business.
6. NONCOMPETITION COVENANT.
Except as otherwise provided herein, Seller covenants and
agrees that for a period of two (2) years after the Closing, it shall not, for
its account or as agent, consultant or employee, or as a shareholder (except as
a passive shareholder in a New York Stock Exchange or NASDAQ company) of any
corporation or a member of any partnership, (i) engage in, invest in, or
otherwise be connected with any business competitive with the Business, directly
or indirectly, in any jurisdiction in which Seller does business from
time-to-time; (ii) take any action to finance or provide any other material
assistance to any person or entity engaged in such competition against Buyer;
(iii) without Buyer's prior written consent, offer employment to or solicit an
offer of employment from any employee of Buyer, or attempt to influence any
employee of Buyer to terminate his or her employment with Buyer; or (iv)
encourage or entice any customer or independent contractor of the Buyer to cease
doing business with the Buyer. Seller acknowledges that compliance with the
provision of this paragraph is of material importance to Buyer and that in the
event of any breach of the foregoing provisions Buyer could not be reasonably or
adequately compensated by monetary damages. Therefore, Seller agrees that Buyer
shall be entitled to injunctive or other equitable relief in the event of a
breach or threatened breach of this paragraph by Seller, in addition to, and not
in lien of, any other relief to which Buyer may be entitled.
7. CLOSING.
7.1 Seller's Performance. Prior to or on the Closing Date of
this Agreement, Seller shall deliver to Buyer:
(a) Third-Party Consents. Except as otherwise
provided herein, all third-party consents, assignments or approvals otherwise
required for Buyer's assumption of any contracts, leases and agreements as are
binding on Seller pursuant to the present terms of such contracts, leases and
agreements. This provision shall not require Seller to undertake any
extraordinary measures to secure any required third-party consents, assignments
or approvals and shall not require Seller to pay for or to undertake any
extraordinary measures or to institute litigation against any third-party
failing to give such required consent, assignment or approval; however, if
Seller fails to deliver any material covenant, assignment or approval required
by this Paragraph 7.1(a), Buyer shall have the absolute right to terminate this
Agreement.
(b) A bill of sale in the form of Exhibit 7.1(b)
attached hereto.
7.2 Buyer's Performance. Prior to or at Closing Buyer shall
deliver to Seller:
(a) Assumption Agreements. Such assumption agreements
and other instruments and documents as are reasonably required to make, confirm
and evidence Buyer's assumption of and obligation to pay, perform and discharge
the obligations of Seller assumed hereby or to be performed after the closing.
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(b) Purchase Price. The cash payment to be made at
Closing and to be paid as provided in Paragraph 3 above and the delivery of all
other documents or instruments necessary or appropriate for the consummation of
this transaction. After closing, the parties shall execute such other
instruments and documents and perform such other acts as may be necessary or
appropriate for the full implementation and consummation of this Agreement.
(c) Assumption of Consulting Agreement. Buyer shall
assume the Consulting Agreement.
8. SELLER'S REPRESENTATIONS, WARRANTIES AND COVENANTS.
Seller hereby represents, warrants and covenants as of the
date of execution of this Agreement and as of the Closing Date, as follows:
8.1 Existence and Power. Seller has full power and authority
to carry on the Business as now being conducted and to enter into and to perform
this Agreement.
8.2 Binding Agreement. The execution, delivery and performance
of this Agreement by Seller have been duly authorized by all necessary action.
This Agreement has been duly executed and delivered to Buyer and constitutes a
legal, valid and binding agreement of Seller, enforceable in accordance with its
terms.
8.3 Effect of Agreement. The execution, delivery and
performance of this Agreement by Seller and the consummation of the transactions
contemplated hereby will not, with or without the giving of notice and the lapse
of time, or both, (a) violate any provision of law, statute, rule or regulation
to which the Seller is subject; (b) violate any judgment, order, writ or decree
of any court applicable to the Seller; (c) have any effect on any of the
permits, licenses, orders or approvals referred to in Paragraph 8.5 hereof or
the ability of Buyer to make use of such permits, licenses, orders or approvals;
or (d) result in the breach of or conflict with any term, covenant, condition or
provision of, result in the modification or termination of, constitute a default
under, or result in the creation or imposition of any lien, security interest,
charge or encumbrance upon any of the properties or assets of the Seller
pursuant to commitments, contracts or other agreements or instruments to which
the Seller is a party or by which any of his respective Assets is or may be
bound or affected.
8.4 No Violation. The execution, delivery and performance of
this Agreement by Seller and the consummation of the transaction contemplated
hereby will not, with or without the giving of notice or the lapse of time or
both, violate, contravene, or conflict with or result in a material breach of or
constitute a default or accelerate the performance required under (i) any writ,
order, judgment or decree of any court, arbitrator or governmental agency
applicable to Seller; (ii) any law, rule or regulation applicable to Seller or
to the operation of the Business; or (iii) any mortgage, deed of trust, lien,
lease, restriction or other contract or agreement to which Seller is a party or
by which any of the Assets is bound.
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8.5 Compliance with Applicable Laws. To the best of Seller's
knowledge, (i) Seller is not in default in any material respect under any
executive, legislative, judicial, administrative or private (such as
arbitration) ruling, order, writ, injunction or decree; and (ii) no material
permits, licenses or approvals of any governmental or administrative authorities
are required for Seller to own, lease and operate its properties and to carry on
the Business substantially as presently conducted except as set forth in Exhibit
"8.4" hereto.
8.6 Government and Other Consents. No consents, authorization
or approval of, or exemption by, any governmental or public body or authority is
required in connection with the execution, delivery and performance by the
Seller of this Agreement or any of the instruments or agreements herein referred
to, or the taking of any action herein contemplated.
8.7 Title to Properties; Absence of Liens and Encumbrances,
Etc. The Seller has good title to all properties and assets free and clear of
all mortgages, claims, liens, charges and encumbrances except as (i) referred to
in Exhibit "8.7" to this Agreement, and (ii) such imperfections of title, if
any, which do not materially detract from the value, or interfere with the use,
of the properties of the Seller or otherwise materially impair its business
operations. No default or event of default exists and no event which with notice
or lapse of time (or both) would constitute a default has occurred and is
continuing under the terms or provisions, express or implied, of any of such
leases, agreements or other instruments or under the terms or provisions of any
agreement to which any of such properties is subject. The Seller has not
received notice of violation of any applicable law, ordinance, regulation, order
or requirement relating to its operations or its owned or leased properties.
8.8 Condition of Equipment. The equipment owned, operated, or
leased by the Seller are in good condition and repair and suitable for the uses
for which intended. All such equipment is in conformity with all applicable
laws, ordinances, regulations, orders, and other requirements relating thereto
currently in effect or scheduled to come into effect.
8.9 Contracts. The contracts listed or described in Exhibit
"8.9" include all the contracts to which Seller is a party or by which Seller is
bound and which have a material effect on Seller's revenues or expenses. To the
best of Seller's knowledge, except as set forth in Exhibit 8.9.1 hereto: (i)
each contract is in full force and effect and is unimpaired by any acts or
omissions of Seller or Seller's officers, directors, employees or agents; (ii)
there has not occurred as to any contract any material default by Seller or any
event which, with the lapse of time or otherwise will become a material default
of Seller; and (iii) there has not occurred as to any contract any material
default by the other parties thereto or any event which, with the lapse of time
or the election of any person other than Seller, will become a default under
such contract. Except as set forth in Exhibit 8.9.1 hereto, neither the Seller,
nor to the knowledge of the Seller any other party, is in arrears in respect of
the performance or satisfaction of the terms or conditions on its part to be
performed or satisfied under any of the contractual commitments and no waiver or
indulgence has been granted by any of the parties thereto. Seller has no
knowledge of any loss or expected loss of any business relationship of the
Seller, whether with a customer, supplier, or significant employee. There are no
existing laws, regulations or decrees nor, to the knowledge of the Seller, any
proposed laws, regulations or decrees which adversely affect or might adversely
affect the rights of the Seller under any of its existing contracts by reason of
the present ownership by the Business or by reason of the proposed sale of the
Assets by the Seller to the Buyer as contemplated by this Agreement.
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8.10 Compliance with Labor Laws. To the best of Seller's
knowledge, Seller is in compliance with all applicable laws, rules and
regulations relating to the employment of labor, including those relating to
wages, hours, equal employment opportunity, collective bargaining, pension and
welfare benefit plans, and the payment of Social Security and similar taxes, and
is not liable for any arrears of wages or any tax penalties for failure to
comply with any of the foregoing.
8.11 Litigation. To the best of Seller's knowledge, there is
no litigation, action, suit, investigation or other proceeding pending or
threatened that may give rise to any claim against any of the Assets, or which
may adversely affect the Business to be acquired by the Buyer hereunder, or
which may adversely affect Seller's ability to perform in accordance with the
terms of this Agreement, and Seller is not aware of any facts that could
reasonably result in any such proceeding.
8.12 Liabilities. The financial information contained in
Exhibit "8.12" delivered by Seller to Buyer prior to the execution of this
Agreement (the "Financial Statements") fairly represents the financial condition
and results of operations of the Business at the time and for the dates the
Financial Statements were prepared and contains a complete, correct and accurate
list of all assets and liabilities of Seller as of the date noted in such
financial information.
8.13 Tax Matters. The Seller has: (i) prepared and filed with
the appropriate governmental agencies, and all foreign countries and political
subdivisions thereof, if applicable, all tax returns required to be filed; (ii)
paid all taxes shown on such tax returns to be payable or which have become due
pursuant to any assessment, deficiency, notice, 30-day letter or similar notice
received by it; and (iii) paid all withholding, FICA and other federal, state
and local tax payments required to be paid. Any provisions for income taxes
payable in the financial statements are sufficient for all accrued and unpaid
domestic and foreign taxes, whether or not disputed and for all periods to and
including the date of the Financial Statements. The Seller has not executed or
filed with the Internal Revenue Service or any other taxing authority any
agreement extending the period for assessment or collection of any income taxes
nor is it a party to any pending action or proceeding by any governmental
authority for assessment or collection of taxes, and no claim for assessment or
collection of taxes has been, or with reasonable cause could be, asserted
against it.
8.14 Operations Prior to Closing. Between the date of this
Agreement and the Closing:
(a) Seller will operate the Business in the usual,
regular and ordinary manner; and, to the extent consistent with such operation,
has used and will use his best efforts to (i) preserve Seller's present business
organization intact; (ii) keep available the services of Seller's employees; and
(iii) preserve Seller's business relationship with customers, suppliers and
others having business dealings with it.
(b) Seller will advise Buyer of any material changes
in its financial condition or the results of its operations.
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8.15 No Brokers or Commissions. Seller has not engaged any
brokers, finder or similar individuals in connection with this transaction.
Seller hereby agrees to indemnify, defend and hold harmless Buyer on account of
any commissions, fees, expense, or other compensation due to any other broker
which Seller has employed, or which claims to have been employed, in connection
with the sale of the Business to the Buyer.
8.18 Agreements, Plans, Arrangements. Except as set forth in
Exhibit "8.9," or on any other Exhibit hereto, the Seller is not a party to, nor
are any of its respective properties and assets bound or affected by, any
(a) agreements for the purchase or sale of goods,
materials, supplies, machinery or capital assets in excess of $5,000 in any one
case or in excess of $10,000 in the aggregate;
(b) agreement with any labor union;
(c) agreement with any distributor, dealer, sales
agent or representative;
(d) agreement with any manufacturer or supplier with
respect to discounts or allowances;
(e) agreement guaranteeing, indemnifying or otherwise
becoming liable for the obligations or liabilities of another;
(f) except as set forth in Exhibit 8.18(f), agreement
granting any person a lien, security interest or mortgage on any property or
asset of the Seller, including, without limitation, any loan agreement, any
factoring agreement or agreement for the assignment of accounts receivable or
inventory;
(g) advertising agreement with a newspaper, magazine
or radio or television station;
(h) agreement which restricts it from doing business
anywhere in the world;
(i) agreement, statute or regulation giving any party
the right to renegotiate or require a reduction in prices or the repayment of
any amount previously paid; or
(j) other agreement affecting the Seller or the
Business except written contracts for the purchase or sale of goods or services
made in the usual and ordinary course of business terminable without liability
to the Seller upon notice to the other party thereto of not more than thirty
(30) days and not otherwise referred to above.
8.19 Purchase or Sale Obligations. All unfilled purchases and
sales orders and other commitments for purchases and sales made by the Seller
were made in the usual and ordinary course of its business at the then current
market prices. None of such orders or commitments call for deliveries thereunder
beyond a period of ninety (90) days from the Closing.
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8.20 Books and Records. The books of account and other
financial and corporate records of the Seller are in all material respects
complete and correct, are maintained in accordance with good business practices,
and are accurately reflected in the Financial Statements.
8.21 No Material Misrepresentations or Omissions. The
representations of Seller in this Agreement and the Exhibits hereto, including
without limitation the Financial Statements, do not now, nor shall they at
Closing, contain any untrue statement of a material fact, nor do this Agreement
and the Exhibits hereto now omit, nor will they omit at Closing, to state any
material fact, necessary to make the representations of Seller not misleading.
9. BUYER'S REPRESENTATIONS, WARRANTIES AND COVENANTS. Buyer hereby
represents, warrants and covenants as of the date of execution of this Agreement
and as of Closing as follows:
9.1 Existence and Power. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida, with full power under its Articles of Incorporation and Bylaws to enter
into and to perform this Agreement.
9.2 Binding Agreement. This Agreement has been duly executed
and delivered to Seller and constitutes the legal, valid and binding agreement
of Buyer enforceable in accordance with its terms.
9.3 No Violation. The execution, delivery and performance of
this Agreement by Buyer and the consummation of the transaction contemplated
hereby will not, with or without the giving of notice or the lapse of time or
both, violate, contravene or conflict with or result in a breach of or
constitute a default under (i) any writ, order, judgment or decree of any court
arbitrator or governmental agency applicable to Buyer; (ii) Buyer's Articles of
Incorporation or Bylaws; (iii) any contract, lease or other agreement to which
Buyer is a party or by which Buyer is bound; or (iv) to the best of Buyer's
knowledge, any law, rule or regulation applicable to Buyer.
9.4 No Brokers or Commissions. Buyer has engaged no brokers,
finders or similar individuals in connection with this transaction.
10. SURVIVAL OF REPRESENTATIONS; INDEMNIFICATION.
10.1 Survival of Representations and Warranties. All of the
representations and warranties of the Seller and the Buyer herein contained
shall survive the Closing for a period of twenty-four (24) months with respect
to any investigation made by or on behalf of either party and with respect to
any breach thereof.
10.2 Buyer's Right to Indemnification. Seller undertakes and
agrees to (a) indemnify, defend and hold harmless Buyer against and in respect
of, and (b) reimburse Buyer upon demand for and against, any and all losses,
costs, liabilities, claims, obligations and expenses, including reasonable
attorneys' fees, incurred or suffered by Buyer arising from (i) the
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operation of the Business or ownership of the Assets prior to Closing; (ii) the
breach, misrepresentation or other violation of any of Seller's covenants,
warranties or representations contained in this Agreement; (iii) all liabilities
of Seller not expressly assumed by Buyer pursuant to this Agreement; (iv) all
liens, charges or encumbrances on any of the Assets which are not expressly
disclosed to Buyer by Seller in this Agreement; and (v) all claims for damages
made by any party to a Contract whose claim for damages is based on the premise
that Seller breached that Contract by assigning same to Buyer. The obligations
under this Paragraph 10.2 shall cease and terminate three years from the Closing
Date and Buyer shall have no right of indemnification unless such claim for
indemnification is made within three years from the Closing Date.
10.3 Seller's Right to Indemnification. Buyer undertakes and
agrees to hold Seller harmless against any and all losses, costs, liabilities,
claims, obligations and expenses, including reasonable attorneys' fees, incurred
or suffered by Seller arising from (i) the operation of the Business after
Closing; (ii) breach, misrepresentation or other violation of any of Buyer's
covenants, warranties and representations contained in this Agreement; (iii) all
liabilities of Buyer and all Liabilities of Seller which are assumed by Buyer;
and (iv) all liabilities of the Business accruing after the Closing Date.
Buyer's obligations under this Paragraph 10.3 shall cease and terminate three
years from the Closing Date and Seller shall have no right of indemnification
unless such claim for indemnification is made within three years from the
Closing Date.
10.4 Procedure. If any claim or proceeding covered by the
foregoing agreements to indemnify and hold harmless shall arise, the party who
seeks indemnification (the "Indemnified Party") shall given written notice
thereof to the other party (the "Indemnitor") promptly (in no event more than
ten (10) days) after it learns of the existence of such claim or proceeding. Any
claim for indemnification hereunder shall be accompanied by evidence
demonstrating the Indemnified Party's right or possible right to
indemnification, including a copy of all supporting documents relevant thereto.
The Indemnitor shall have the right to employ counsel reasonably acceptable to
the Indemnified Party to defend against any such claim or proceeding, or to
compromise, settle or otherwise dispose of the same; provided, however, that no
settlement or compromise shall be effected without the consent of the
Indemnified Party, which consent shall not be unreasonably withheld and provided
further, that in the event the Indemnified Party does not consent to a bona fide
offer of settlement made by a third party and the settlement involves only the
payment of money, then the Indemnitor may, in lieu of payment of such settlement
to such third party, pay such amount to the Indemnified Party. After the payment
to the Indemnified Party, the Indemnitor shall have no further liability with
respect to such claim or proceeding and the Indemnified Party shall assume full
responsibility to defend the same. After notice from the Indemnitor to the
Indemnified Party of its election to assume the defense of such claim or
proceeding, the Indemnitor shall not be liable to the Indemnified Party under
this paragraph for any legal or other expenses subsequently incurred by the
Indemnified Party in connection with the defense thereof; provided, however,
that the Indemnified Party shall have the right to employ counsel to represent
it if, in the Indemnified Party's sole judgment, it is advisable for the
Indemnified Party to be represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Indemnified
Party. The parties will fully cooperate in any such action, making available to
each other books or records for the defense of any such claim or proceeding. If
the Indemnitor fails to acknowledge in writing its obligation to defend against
or settle such claim or proceeding within twenty (20) days after receiving
notice of the claim or proceeding from the Indemnified Party (or such shorter
time specified in the notice as
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the circumstances of the matter may dictate), the Indemnified Party shall be
free to dispose of the matter, at the expense of the Indemnitor (but subject to
the Indemnitor's right subsequently to contest through appropriate proceedings
its obligation to provide indemnification), in any way which the Indemnified
Party deems in its best interest.
11. ACCESS TO INFORMATION AND DOCUMENTS AFTER CLOSING.
At Buyer's request, Seller shall permit Buyer to have reasonable
access, after closing, to the books and records included in the Excluded
Property to the extent Buyer has legitimate need therefor, and to make copies of
such materials for Buyer's own and confidential use.
12. GENERAL PROVISIONS.
12.1 Bulk Sales Act. Seller does not believe that the
provisions of any bulk sales or fraudulent conveyance statute are applicable to
the transaction contemplated by this Agreement, and agrees to indemnify and hold
Buyer harmless against any cost or expense as a result of any failure to comply
with any such statute.
12.2 Expenses. Except as otherwise provided herein, each party
shall pay its own expenses incident to the negotiation and preparation of this
Agreement and the transaction contemplated hereby. All documentary stamp taxes
on the Note and the costs of filing or recording any security instrument
pertaining to the Note shall be paid by Buyer. All other recording costs for
bills of sale and other instruments of transfer, and all stamp, sales, use and
transfer taxes shall be paid by Seller.
12.3 Notices. All notices, requests, demands and other
communications pertaining to this Agreement shall be in writing and shall be
deemed duly given when delivered personally with a receipt, when delivered by an
overnight courier service or mailed by certified mail, return receipt requested,
postage prepaid, addressed as follows:
(a) To Seller: GourmetMarket.Com, Inc.
507 Howard Street, Suite 200
San Francisco, California 94105
Attn: Mr. Chanan Steinhart
With a copy to: Jonathan L. Shepard, Esquire
Siegel, Lipman, 7Dunay & Shepard, LLP
5355 Town Center Road, Suite 801
Boca Raton, Florida 33486
(b) To Buyer: Travlang.com, Inc.
c/o iiGroup, Inc.
7000 W. Palmetto Park Road #501
Boca Raton, Florida 33433
With a copy to: Michael Karsch, Esquire
Broad & Cassel
7777 Glades Road, Suite 300
Boca Raton, Florida 33434
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Either party may change its address for notices by written notice to the other
given pursuant to this paragraph.
12.4 Prior Negotiations. This Agreement supersedes in all
respects all prior and contemporaneous oral and written negotiations,
understandings and agreements between the parties with respect to the subject
matter hereof. All of said prior and contemporaneous negotiations,
understandings and agreements are merged herein and superseded hereby.
12.5 Entire Agreement; Amendment. This Agreement and the
Exhibits to this Agreement set forth the entire understanding between the
parties in connection with the transaction contemplated herein, there being no
terms, conditions, warranties or representations other than those contained
herein, referenced herein or provided for herein. Neither this Agreement nor any
term or provision hereof may be altered or amended in any manner except as an
instrument in writing signed by the party against whom the enforcement of any
such change is sought.
12.6 Exhibits. The Exhibits attached hereto or referred to
herein are a material part of this Agreement, as if set forth in full herein. In
the event any Exhibit is not attached hereto at the time of execution of this
Agreement, Seller shall attach such Exhibit as soon as practicable following the
date of execution of this Agreement.
12.7 Severability. If any term of this Agreement is illegal or
enforceable at law or in equity, the validity, legality and enforceability of
the remaining provisions contained herein shall not in any way be affected or
impaired thereby. Any illegal or unenforceable term shall be deemed to be void
and of no force and effect only to the minimum extent necessary to bring such
term within the provisions of any applicable law or laws and such term, as so
modified, and the balance of this Agreement shall then be fully enforceable.
12.8 Survival of Representations and Warranties. Unless
otherwise specifically noted herein, the several representations, warranties and
covenants of the parties contained herein shall survive the closing for a period
of two years from the Closing Date. Thereafter neither party shall have any
liability to the other based upon any of the representations, warranties and
covenants set forth herein.
12.9 Waiver. Unless otherwise specifically agreed in writing
to the contrary: (i) the failure of either party at any time to require
performance by the other of any provision of this Agreement shall not affect
such party's right thereafter to enforce the same, (ii) no waiver by either
party of any default by the other shall be taken or held to be a waiver by such
party of any other preceding or subsequent default, and (iii) no extension of
time granted by either party for the performance of any obligation or act by the
other party shall be deemed to be an extension of time for the performance of
any other obligation or act hereunder.
12.10 Number and Gender. Whenever the context so requires,
words used in the singular shall be construed to mean or include the plural and
vice versa, and pronouns of any gender shall be construed to mean or include any
other gender or genders.
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12.11 Headings and Cross-References. The headings of this
Agreement are included for convenience of reference only, and shall in no way
limit or affect the meaning or interpretation of the specific provisions hereof.
All cross-references to paragraphs herein shall mean the paragraphs of this
Agreement unless otherwise stated or clearly required by the context. All
references to Exhibits herein shall mean the Exhibits to this Agreement which
have been separately initialed by Seller and Buyer. Words such as "herein" and
"hereof" shall be deemed to refer to this Agreement as a whole and not to any
particular provision of this Agreement unless otherwise stated or clearly
required by the context.
12.12 Counsel. Each party has been represented by its own
counsel in connection with the negotiation and preparation of this Agreement
and, consequently, each party hereby waives the application of any rule or law
that would otherwise be applicable in connection with the interpretation of this
Agreement, including, but not limited to, any rule of law to the effect that any
provision of this Agreement shall be interpreted or construed against the party
whose counsel drafted that provision.
12.13 Choice of Laws. This Agreement is to be construed and
governed by the laws of the State of Florida, except for the choice of law rules
utilized in that jurisdiction.
12.14 Arbitration. Any dispute arising under or related to
this Agreement that Seller and Buyer are unable to resolve by themselves shall
be settled by arbitration in West Palm Beach, Florida, by a panel of three
arbitrators. Seller and Buyer shall each designate one disinterested arbitrator,
and the two arbitrators so designated shall select the third arbitrator. The
persons selected as arbitrators need not be professional arbitrators, and
persons such as accountants, appraisers and bankers shall be acceptable. Before
undertaking to resolve the dispute, each arbitrator shall be duly sworn
faithfully and fairly to hear and examine the matters in controversy and to make
a just award according to the best of his or her understanding. The arbitration
hearing shall be conducted in accordance with the rules of the American
Arbitration Association. The written decision of a majority of the arbitrators
shall be final and binding on Seller and Buyer. Costs and expenses of the
arbitration proceeding shall be assessed between Seller and Buyer in a manner to
be decided by a majority of the arbitrators, and the assessment shall be set
forth in the decision and award of the arbitrators. No action at law or suit in
equity based upon any claim arising out of or relating to this Agreement shall
be instituted in any court by Seller or Buyer against the other except an action
to compel arbitration pursuant to this paragraph, an action to enforce the award
of the arbitration panel rendered in accordance with this paragraph, or a suit
for injunction or other equitable relief pursuant to Article 6.
12.15 Successors. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the parties hereto and their
respective successors and assigns.
12.16 Third Parties. Nothing in this Agreement, whether
expressed or implied, is intended to (i) confer any rights or remedies on any
person other than Buyer, Seller and their respective successors and assigns,
(ii) relieve or discharge the obligation or liability of any third party, or
(iii) or give any third party any right of subrogation or action against either
Buyer or Seller.
12.17 Counterparts. This Agreement may be signed in
counterparts with the same
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effect as if the signature on each counterpart were on the same instrument. Each
of the counterparts, when signed, shall be deemed to be an original, and all of
the signed counterparts together shall be deemed to be one and the same
instrument.
12.18 No Offer. This Agreement has been provided for
examination only and does not constitute an offer. This Agreement shall become
effective only after execution hereof (or counterparts hereof) by both Seller
and Buyer.
IN WITNESS WHEREOF, Seller and Buyer have caused this Agreement to be
executed by their duly authorized officers as of the date and year first above
written.
ATTEST/WITNESS: SELLER:
GOURMETMARKET.COM, INC., a
Delaware corporation
/s/ unreadable By: /s/ Chanan Steinhart
- -------------------------------------- -----------------------
Chanan Steinhart, President
BUYER:
TRAVLANG.COM, INC., a Florida
corporation
/s/ Mindy Stein By: /s/ Bruce Hausman
- --------------------------------------- ---------------------
Bruce Hausman, President
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THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED UNDER ANY OTHER APPLICABLE SECURITIES LAWS. NO SALE OR TRANSFER OF
THIS NOTE MAY BE MADE EXCEPT PURSUANT TO A REGISTRATION STATEMENT OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.
GOURMETMARKET.COM, INC.
8% Convertible Bridge Note
$160,000
GOURMETMARKET.COM, INC., a Delaware corporation (the "Company"), having
its principal place of business at 507 Howard Street, Suite 200, San Francisco,
California 94105, for value received, hereby promises to pay to iiGroup, Inc.,
or permitted registered assigns ("Holder"), on December 31, 2000 (the "Maturity
Date"), the principal sum of One Hundred Sixty Thousand Dollars ($160,000) (the
"Principal Amount"). Simultaneously with the execution of this Note, the Company
is issuing to the Holder 40,000 shares of its Common Stock as additional
consideration for the loan evidenced by this Note.
1. Interest. The Company shall pay interest on the outstanding
Principal Amount from the date hereof at the rate of eight percent (8%) per
annum. All interest shall accrue and be payable on the Maturity Date. All
computations on interest shall be made on the basis of a year of 360 days on the
actual number of days any such Principal Amount is outstanding. At the election
of the Company, the Company may pay interest in shares of its Common Stock at a
price calculated at the average closing bid price of the Common Stock for the
five (5) business days preceding the interest payment.
2. Prepayment. At any time following the date hereof, the Company may
prepay the outstanding Principal Amount of this Note and accrued and unpaid
interest thereon. The Company shall be required to prepay this Note upon (i) the
sale of all of the outstanding shares of the Company, (ii) the sale of
substantially all of the assets of the Company, or (iii) upon the closing of a
financing or series of financings by the Company in which the gross proceeds to
the Company are at least $5 million.
3. Conversion. The Holder may convert the outstanding Principal Amount,
together with accrued but unpaid interest, at any time or from time-to-time, in
whole or in part, into Common Stock of the Company at the lower of $1.00 per
share or a price calculated at seventy-five percent (75%) of the average closing
bid price of the Common Stock in the five days preceding the date of conversion.
Page 1 of 3
<PAGE>
4. Events of Default; Remedies.
---------------------------
4.1 Events of Default; Acceleration. If any of the following
conditions or events ("Events of Default") shall occur (whether voluntary or
involuntary or arising by operation of law or otherwise):
(a) the Company shall default in the payment of any
principal of interest under this Note; or
(b) the Company (i) files, or consents by answer (or
failure to contest) or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement of any other petition in bankruptcy, for
liquidation of dissolution or to take advantage of any present or future
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) seek or consent to the appointment of a
custodian, receiver, trustee, liquidator or other officer wit similar powers of
itself or of any substantial part of its property, (iv) be adjudicated a
bankrupt or an insolvent or be liquidated or dissolved, or (v) take corporate
action for the purpose of any of the foregoing;
then the unpaid principal amount of this Note, together with
the interest accrued thereon, shall automatically become and be due and payable,
without presentment, demand, protest, notice or other requirements of any kind,
all of which are hereby expressly waived by the Company.
4.2 Remedies of Default. If any Event of Default shall have
occurred and be continuing for a period of twenty (20) days, the Holder of this
Note may proceed to and protect and enforce the rights available to such Holder
either by an action at law, suit in equity or both, whether for the specific
performance of any agreement contained in this Note, or for an injunction
against a violation of any of the terms hereof, or in aid of the exercise of any
power granted hereby or by law or otherwise. The Company will pay the Holder all
such further amounts to cover the cost and expenses of collection including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
4.3 Remedies Not Waived. No course of dealing and no delay on
the part of Holder in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice Holder's rights, powers or remedies.
4.4 Remedies Not Cumulative. No right, power or remedy
conferred upon Holder shall be exclusive of any other right, power or remedy
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.
Page 2 of 3
<PAGE>
5. Modification and Waiver. The rights and obligations of the Company
may not be modified or waived, except in writing signed by the Company and the
Holder.
6. Governing Law. This Note shall be governed by and construed in
accordance with the substantive laws of the State of Florida without reference
to its principles governing conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal as of the date which appears below.
Dated: February 29, 2000 GOURMETMARKET.COM, INC.
By: /s/ Chanan Steinhart
----------------------------
Chanan Steinhart, President
Page 3 of 3
<PAGE>
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED,
OR QUALIFIED UNDER ANY OTHER APPLICABLE SECURITIES LAWS. NO SALE OR TRANSFER OF
THIS NOTE MAY BE MADE EXCEPT PURSUANT TO A REGISTRATION STATEMENT OR AN
EXEMPTION FROM REGISTRATION UNDER SUCH LAWS.
GOURMETMARKET.COM, INC.
8% Convertible Bridge Note
$90,000
GOURMETMARKET.COM, INC., a Delaware corporation (the "Company"), having
its principal place of business at 507 Howard Street, Suite 200, San Francisco,
California 94105, for value received, hereby promises to pay to iiGroup, Inc.,
or permitted registered assigns ("Holder"), on December 31, 2000 (the "Maturity
Date"), the principal sum of Ninety Thousand Dollars ($90,000) (the "Principal
Amount"). Simultaneously with the execution of this Note, the Company is issuing
to the Holder 22,250 shares of its Common Stock as additional consideration for
the loan evidenced by this Note.
1. Interest. The Company shall pay interest on the outstanding
Principal Amount from the date hereof at the rate of eight percent (8%) per
annum. All interest shall accrue and be payable on the Maturity Date. All
computations on interest shall be made on the basis of a year of 360 days on the
actual number of days any such Principal Amount is outstanding. At the election
of the Company, the Company may pay interest in shares of its Common Stock at a
price calculated at the average closing bid price of the Common Stock for the
five (5) business days preceding the interest payment.
2. Prepayment. At any time following the date hereof, the Company may
prepay the outstanding Principal Amount of this Note and accrued and unpaid
interest thereon. The Company shall be required to prepay this Note upon (i) the
sale of all of the outstanding shares of the Company, (ii) the sale of
substantially all of the assets of the Company, or (iii) upon the closing of a
financing or series of financings by the Company in which the gross proceeds to
the Company are at least $5 million.
3. Conversion. The Holder may convert the outstanding Principal Amount,
together with accrued but unpaid interest, at any time or from time-to-time, in
whole or in part, into Common Stock of the Company at the lower of $1.00 per
share or a price calculated at seventy-five percent (75%) of the average closing
bid price of the Common Stock in the five days preceding the date of conversion.
Page 1 of 3
<PAGE>
4. Events of Default; Remedies.
---------------------------
4.1 Events of Default; Acceleration. If any of the following
conditions or events ("Events of Default") shall occur (whether voluntary or
involuntary or arising by operation of law or otherwise):
(a) the Company shall default in the payment of any
principal of interest under this Note; or
(b) the Company (i) files, or consents by answer (or
failure to contest) or otherwise to the filing against it of, a petition for
relief or reorganization or arrangement of any other petition in bankruptcy, for
liquidation of dissolution or to take advantage of any present or future
bankruptcy or insolvency law of any jurisdiction, (ii) make an assignment for
the benefit of its creditors, (iii) seek or consent to the appointment of a
custodian, receiver, trustee, liquidator or other officer wit similar powers of
itself or of any substantial part of its property, (iv) be adjudicated a
bankrupt or an insolvent or be liquidated or dissolved, or (v) take corporate
action for the purpose of any of the foregoing;
then the unpaid principal amount of this Note, together with
the interest accrued thereon, shall automatically become and be due and payable,
without presentment, demand, protest, notice or other requirements of any kind,
all of which are hereby expressly waived by the Company.
4.2 Remedies of Default. If any Event of Default shall have
occurred and be continuing for a period of twenty (20) days, the Holder of this
Note may proceed to and protect and enforce the rights available to such Holder
either by an action at law, suit in equity or both, whether for the specific
performance of any agreement contained in this Note, or for an injunction
against a violation of any of the terms hereof, or in aid of the exercise of any
power granted hereby or by law or otherwise. The Company will pay the Holder all
such further amounts to cover the cost and expenses of collection including,
without limitation, reasonable attorneys' fees, expenses and disbursements.
4.3 Remedies Not Waived. No course of dealing and no delay on
the part of Holder in exercising any right, power or remedy shall operate as a
waiver thereof or otherwise prejudice Holder's rights, powers or remedies.
4.4 Remedies Not Cumulative. No right, power or remedy
conferred upon Holder shall be exclusive of any other right, power or remedy
referred to herein or now or hereafter available at law, in equity, by statute
or otherwise.
Page 2 of 3
<PAGE>
5. Modification and Waiver. The rights and obligations of the Company
may not be modified or waived, except in writing signed by the Company and the
Holder.
6. Governing Law. This Note shall be governed by and construed in
accordance with the substantive laws of the State of Florida without reference
to its principles governing conflicts of law.
IN WITNESS WHEREOF, the Company has caused this Note to be duly
executed under its corporate seal as of the date which appears below.
Dated: March 13, 2000 GOURMETMARKET.COM, INC.
By: /s/ Chanan Steinhart
----------------------------
Chanan Steinhart, President
Page 3 of 3
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
The schedule contains summary financial information extracted from the Company's
financial statements and is qualified in its entirety by reference to such
financial statements.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-2000
<PERIOD-START> JAN-01-2000
<PERIOD-END> MAR-31-2000
<CASH> 15,431
<SECURITIES> 140,000
<RECEIVABLES> 44,626
<ALLOWANCES> 0
<INVENTORY> 83,686
<CURRENT-ASSETS> 174,411
<PP&E> 60,737
<DEPRECIATION> 9,568
<TOTAL-ASSETS> 707,267
<CURRENT-LIABILITIES> 2,105,911
<BONDS> 0
0
0
<COMMON> 18,870
<OTHER-SE> 4,521,659
<TOTAL-LIABILITY-AND-EQUITY> 0
<SALES> 302,824
<TOTAL-REVENUES> 302,824
<CGS> 243,343
<TOTAL-COSTS> 243,343
<OTHER-EXPENSES> 565,349
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 16,508
<INCOME-PRETAX> (232,468)
<INCOME-TAX> 0
<INCOME-CONTINUING> (232,468)
<DISCONTINUED> 0
<EXTRAORDINARY> 273,400
<CHANGES> 0
<NET-INCOME> (232,468)
<EPS-BASIC> (0.01)
<EPS-DILUTED> (0.01)
</TABLE>
