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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
May 10, 2000
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Date of Report (Date of Earliest event reported):
Envision Development Corporation
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(Exact name of registrant as specified in its charter)
Florida 001-15311 65-0981457
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State of Commission File IRS Employer
Incorporation Number Identification No.
4 Mount Royal Avenue, Marlboro, Massachusetts 01752
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Address of principal executive offices
(508) 481-8303
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Registrant's telephone number, including area code
11701 N.W. 101st Road, Miami, Florida 33178
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(Former name or former address, if changed since last report)
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Item 2. Acquisition or Disposition of Assets.
On May 10, 2000, Envision Development Corporation ("Envision") sold
its wholly-owned subsidiary, perfumania.com, inc. ("perfumania.com"), to E Com
Ventures, Inc. ("E Com"), formerly known as Perfumania, Inc., pursuant to the
terms of a Stock Purchase Agreement (the "Agreement"), dated April 29, 2000,
among Envision, ZERO.NET, Inc. ("ZERO.NET") and E Com. The transaction needs to
be ratified by Envision's shareholders.
Envision sold all the common stock of perfumania.com in exchange for
400,000 shares of common stock of Envision from E Com. As part of the
transaction, ZERO.NET acquired 100,000 shares of common stock of Envision from E
Com for $2,500,000, and Alta Limited ("Alta") acquired 500,000 shares of common
stock of Envision from E Com through the exercise of an option granted by E Com
pursuant to an Option Agreement (the "Option Agreement"), dated December 10,
1999, among Perfumania, Inc., Alta and Wainwright Facilities Corporation. On
May 10, 2000, Alta sold the 500,000 share of Envision common stock to ZERO.NET
for $4,000,000 in addition to a warrant to purchase 100,000 shares of ZERO.NET
common stock at $9.00 per share.
Immediately prior to this transaction, ZERO.NET held 3,224,567
shares of Envision common stock and was, and continues to be, the largest single
shareholder of Envision. On April 20, 2000, Garrick Hileman, an officer of
ZERO.NET, resigned from the Board of Envision, and James Weinstock, the Chief
Executive Officer and a member of the Board of Directors of ZERO.NET, was
elected by Envision's Board for the balance of Garrick Hileman's unexpired term.
Sunny Vanderbeck and Dean Willard were elected by Envision's Board as members
since January, 2000. Dean Willard has been a member of the Board of ZERO.NET
since its inception. Sunny Vanderbeck has been a member of the Board of ZERO.NET
since January, 2000.
Immediately prior to this transaction, E Com held 2,000,000 shares
of Envision. Perfumania, Inc. was the former parent of perfumania.com before its
reorganization on February 10, 2000. On February 10, 2000, perfumania.com
effectuated a reorganization (the "Reorganization") in accordance with Section
607.11045, Florida Statutes, which does not require the approval of its
shareholders, pursuant to an Agreement and Plan of Merger. Under the
Reorganization, (i) perfumania.com became a wholly-owned subsidiary of Envision
and (ii) each outstanding share of common stock, $0.01 par value, of
perfumania.com was converted into one share of common stock, $0.01 par value, of
Envision.
Immediately prior to this transaction, Alta held an option to
purchase shares of common stock of Envision at a price of $8.00 per share,
pursuant to the Option Agreement.
perfumania.com is an on-line discount fragrance retailers and
wholesale distributors specializing in the sale of genuine designer fragrances,
bath and body products, cosmetics and skin care treatment and related gifts and
accessories for men, women and children.
A copy of the Agreement is included herein as Exhibit 2.1, and a
copy of Envision's press release with respect to the transaction is included
herein as Exhibit 99.1. The Agreement, the press release and Envision's
Schedule 14f-1 filed with the Securities and Exchange Commission on January 21,
2000 containing information on the Option Agreement, are incorporated herein by
reference into this Item 2 and the foregoing description of such transaction is
qualified in its entirety by reference to such exhibits and Schedule 14f-1.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
(b) Pro Forma Financial Information
As of the date of filing of this Current Report on Form 8-K, it
is impracticable for the Registrant to provide the pro forma financial
information required by Item 7(b). In accordance with Item 7(b)(2) of Form 8-K,
such pro forma financial information shall be filed by amendment to this Current
Report on Form 8-K no later than 75 days from the date of this Current Report,
or July 21, 2000.
(c) Exhibits
Exhibit No. Description
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2.1 Perfumania.com, Inc. Stock Purchase Agreement, dated
as of April 29, 2000, Among Registrant, E Com
Ventures, Inc. and ZERO.NET, Inc.*
99.1 Press Release, dated May 15, 2000.
99.2 Schedule 14f-1 filed on January 21, 2000.
* Exhibits and Schedules to the Stock Purchase Agreement have been omitted.
Registrant agrees to provide Exhibits and Schedules to the Securities and
Exchange Commission upon request.
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SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of
1934, the Company has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized this 25th day of May, 2000.
ENVISION DEVELOPMENT CORPORATION
By: /s/ MICHAEL E. AMIDEO
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Michael E. Amideo
Chief Financial Officer
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EXHIBIT 2.1
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PERFUMANIA.COM, INC. STOCK PURCHASE AGREEMENT
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AMONG
E COM VENTURES, INC.,
ZERO.NET, INC.,
AND
ENVISION DEVELOPMENT CORPORATION
APRIL 29, 2000
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STOCK PURCHASE AGREEMENT
This STOCK PURCHASE AGREEMENT (the "Agreement") is made and entered
into effective as of April 29, 2000, by and among E Com Ventures, Inc., a
Florida corporation (the "Buyer "), ZERO.NET, Inc., a Delaware Corporation
(`ZERO") and Envision Development Corporation, a Florida corporation (the
"Seller").
WHEREAS, the Seller owns one hundred percent (100%) of the issued and
outstanding shares of common stock (the "Shares") of perfumania.com, Inc., a
Florida corporation (the "Company") which it desires to sell to Buyer; and
WHEREAS, an Affiliate of the Buyer originally organized a company (the
"Original Company") to conduct the business of selling perfumes and other
related items over the Internet and the world wide web and the business
conducted by its wholly owned subsidiary Post-A-Card.com (the "Business"); and
WHEREAS, an Affiliate of the Buyer caused the Original Company to
conduct an initial public offering of its securities; and
WHEREAS, voting control of the Original Company was later acquired by
Affiliates of the Seller and the Original Company was reorganized so that the
Business (and its assets) became owned and operated by the Company, the wholly
owned subsidiary of Seller; and
WHEREAS, certain assets unrelated to the Business (but used in
connection with Seller's business) became commingled with the assets of the
Company ("Non-Business Assets"); and
WHEREAS, the Buyer now desires to purchase the Shares in order to
reacquire the Business, all upon the terms and subject to the conditions set
forth herein; and
WHEREAS, the consideration which Buyer will pay to Seller in exchange
for the Shares shall be four hundred thousand (400,000) shares of Seller's $0.01
par value common stock (the "Exchanged Shares"); and
WHEREAS, ZERO desires to acquire from Buyer one hundred thousand
(100,000) shares of Seller's $0.01 par value common stock (the "Purchased
Shares") for a total purchase price of two million five hundred thousand dollars
($2,500,000) (the "Cash Purchase Price"). The Exchanged Shares and the Purchased
Shares are collectively referred to in this Agreement as the "EDV Shares"; and
WHEREAS, Alta Limited, a corporation organized under the laws of the
Jersey Channel Islands ("Alta") has exercised its option to acquire five hundred
thousand (500,000) shares of Seller's $0.01 par value common stock ("Exercise
Shares) from Buyer pursuant to an existing option granted by Buyer to Alta in a
certain stock option agreement dated December 10, 1999 (the "Option Exercise").
In connection with the Option Exercise, Alta is required to pay the total option
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price of four million dollars ($4,000,000) to the Buyer (the "Exercise Price")
to effect the Exercise Option.
NOW, THEREFORE, in consideration of the forgoing and the mutual
representations, warranties, covenants, and agreements herein contained, and
intending to be legally bound hereby, the parties hereto agree as follows:
ARTICLE I. - SALE AND PURCHASE OF SHARES
1.01 SALE AND PURCHASE OF SHARES. On the terms and subject to the
conditions of this Agreement, at the Closing referred to in Section 2.01:
(a) Seller shall sell, convey, assign, transfer and
deliver to Buyer, and Buyer shall purchase, acquire and accept delivery of, the
Shares, free and clear of any and all liens, mortgages, adverse claims, charges,
security interests, encumbrances or other restrictions or limitations
whatsoever; and
(b) Buyer shall transfer to Seller the Exchanged Shares
free and clear of any and all liens, mortgages, adverse claims, charges,
security interests, encumbrances or other restrictions or limitations
whatsoever, in payment for the Shares.
1.02 ZERO PURCHASE; ALTA OPTION EXERCISE. On the Closing Date ZERO will
purchase the Purchased Shares from Buyer in the manner set forth below and ALTA
will effect the Option Exercise and will acquire the Exercise Shares in the
manner set forth below. Buyer shall transfer to ZERO and ALTA the Purchased
Shares and the Exercise Shares, respectively, free and clear of any and all
liens, mortgages, adverse claims, charges, security interests, encumbrances or
other restrictions or limitations whatsoever.
1.03 TRANSFER AGENT AND DELIVERIES. To effect the transfers
contemplated by Sections 1.01 and 1.02, at the Closing:
(a) Buyer shall deliver or cause to be delivered to Continental Stock
Transfer and Trust Company which is the transfer agent of Seller
("Transfer Agent") the stock certificates representing all of the
Exchanged Shares, the Purchased Shares and Exercise Shares,
accompanied by stock powers duly executed in blank and otherwise
in form acceptable to the Transfer Agent together with all
documents to cause the transfer on the books of the Seller as set
forth below.
(b) Seller shall deliver or cause to be delivered to Buyer, all of the
items described in Section 2.02 including, without limitation,
stock certificates representing the Shares being sold by Seller
hereunder, accompanied by stock powers duly executed in blank and
otherwise in form acceptable to Buyer for transfer on the books of
the Company and Buyer shall immediately deliver to seller a
receipt of such items for delivery to the Transfer Agent.
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(c) As soon as possible following execution of this Agreement, the
Parties shall mutually establish an account at the Transfer Agent
into which ZERO and Alta shall each deposit the funds set forth in
section 1.04(a) below together with irrevocable instructions to
pay the funds so held to Buyer when the Transfer Agent has all of
the documents necessary to transfer all of the Exercise Shares to
Alta, the Exchanged Shares to Seller and the Purchased Shares to
ZERO. Attached hereto as Exhibit "A" is an Escrow Agreement among
Alta, Buyer, Seller, ZERO and the Transfer Agent which will be
executed and delivered concurrently with this Agreement.
1.04 CONCURRENT TRANSACTIONS AND CONDITIONS TO CLOSING. Buyer's
obligation to purchase the Shares and Seller's obligation to sell the Shares are
contingent upon the occurrence of the following events:
(a) The deposit by ZERO on May 4, 2000 of two million
five hundred thousand dollars ($2,500,000) to the Transfer Agent and the deposit
by Alta on May 4, 2000 of four million dollars ($4,000,000) to the Transfer
Agent.
(b) Receipt by Buyer of two million five hundred thousand
dollars ($2,500,000) from the Transfer Agent on May 4, 2000, as payment of the
Cash Purchase Price for the Purchased Shares and the concurrent transfer of the
Purchased Shares by the Transfer Agent from Buyer to Seller.
(c) Receipt by Buyer of four million dollars ($4,000,000)
from the Transfer Agent on May 4, 2000, as payment of the Exercise Price and the
concurrent transfer of the Exercise Shares by the Transfer Agent to Alta.
1.05 CLOSING BALANCE SHEET. Attached hereto as Exhibit 1.05 is a
proforma balance sheet for the Company, which includes $1,900,000 of net worth,
("The Minimum Requirements"). Seller shall have the exclusive right to manage
the Company and the Business until 12:01 a.m. EDT on Saturday, May 6, 2000. In
this regard, Seller shall have the right to sell or exchange assets of the
Company; provided, however, at the end of such period, the net worth of the
Company shall be no less than $1,900,000. As of the Closing Date, the Company
has $300,000 in cash which it will use to pay to Buyer the amounts owed for fees
and inventory purchases from January 11, 2000 through May 6, 2000. As soon as
practical (and in no event later than thirty days (30) after the Closing Date),
Seller shall cause to be prepared and delivered to the Buyer an adjusted balance
sheet for the Company dated as of May 6, 2000 ("the Closing Balance Sheet"). The
Buyer and its accountants shall be entitled to review the Closing Balance Sheet,
and any working papers, source documents, trial balances and similar materials
relating to the Closing Balance Sheet prepared by Seller or its accountants.
Seller shall also provide Buyer and its accountants with timely access, during
Seller's normal business hours, to Seller's personnel, properties, books and
records to the extent related to the Closing Balance Sheet. The Closing Balance
Sheet shall show all of the assets associated with the Business (which include
cash, inventories, fixed assets and prepaid expenses) as well as all liabilities
associated with the Business (including accounts payable and accrued
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liabilities), all showing a net book value no less than $1,900,000. Prior to May
6, 2000, Seller shall cause all Non-Business Assets to be transferred from the
Company to the account of Seller; provided, however, if any Non-Business Asset
has not been so transferred by the Closing Date, Buyer will cooperate with
Seller to cause the Company to transfer all such Non-Business Assets to Seller
as soon as possible thereafter. Because of the "carve out" of the Non-Business
Assets, the Closing Balance Sheet may not conform to generally accepted
accounting principles and shall not be required to so conform.
ARTICLE II. - CLOSING
2.01 CLOSING. The closing of the transactions contemplated herein (the
"Closing") shall occur on May 4, 2000 at the offices of the Buyer unless the
parties agree to another date and/or place. The term "Closing Date" shall mean
the date on which the Closing occurs.
2.02 DELIVERIES BY SELLER. At the Closing, the Seller shall deliver to
Buyer:
(a) certificates representing all of the Shares, duly endorsed in
blank for transfer, or with appropriate stock powers in blank attached;
(b) the resignations of all officers and directors of the Company.
(c) the stock book, stock ledger, minute books and corporate seal
of the Company;
(d) a certificate executed by Seller to the effect that the
conditions set forth in Section 6.02(a) have been satisfied;
(e) possession of all originals and copies of agreements,
instruments, documents, deeds, books, records, files and other data and
information within the possession of the Seller or any Affiliate of Seller
pertaining to the Company (collectively, the "Records"); provided, however, that
the Seller may retain (1) copies of any tax returns and copies of Records
relating thereto; (2) copies of any Records that the Seller is reasonably likely
to need for complying with requirements of law; and (3) copies of any Records
that in the reasonable opinion of the Seller will be required in connection with
the performance of its obligations under Article VII;
(f) evidence satisfactory to Buyer that Buyer's designees shall be
the only authorized signatories with respect to the Company's various accounts,
credit lines, safe deposit boxes or vaults set forth or required to be set forth
in Schedule 3.18.
ARTICLE III. - REPRESENTATIONS AND WARRANTIES
OF SELLER
The Seller hereby represents and warrants to Buyer that to the best of
its knowledge:
3.01 CORPORATE EXISTENCE AND QUALIFICATION. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Florida; the Company has the corporate power to own, manage,
lease and hold its Properties and to carry on its Business as and where such
Properties are presently located and such business is presently conducted; and
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neither the character of the Company's Properties nor the nature of the
Company's business requires the Company to be duly qualified to do business as a
foreign corporation in any jurisdiction outside those in which it is currently
qualified in Schedule 3.01 attached hereto lists any changes in jurisdiction of
qualification since January 11, 2000, and the Company is in good standing in
each jurisdiction in which it is qualified as a foreign corporation.
3.02 AUTHORITY, APPROVAL AND ENFORCEABILITY This Agreement has been
duly authorized by all necessary corporate action including approval by the
Board of Directors , no shareholder approval is required. This Agreement has
been duly executed and delivered by the Company and the Seller, and the Seller
and the Company each have all requisite power and legal capacity to execute and
deliver this Agreement and all Collateral Agreements executed and delivered or
to be executed and delivered in connection with the transactions provided for
hereby, to consummate the transactions contemplated hereby and by the Collateral
Agreements, and to perform its obligations hereunder and under the Collateral
Agreements. This Agreement and each Collateral Agreement to which the Seller
and/or the Company is a party constitutes, or upon execution and delivery will
constitute, the legal, valid and binding obligation of such party, enforceable
in accordance with its terms, except as such enforcement may be limited by
general equitable principles or by applicable bankruptcy, insolvency,
moratorium, or similar laws and judicial decisions from time to time in effect
which affect creditors' rights generally.
3.03 CAPITALIZATION AND CORPORATE RECORDS.
(a) Schedule 3.03(a) sets forth the authorized and outstanding
capital stock of the Company. The issued and outstanding shares of capital stock
are owned beneficially and of record by the persons shown on Schedule 3.03(a),
free and clear of any and all liens, mortgages, adverse claims, charges,
security interests, encumbrances or other restrictions or limitations
whatsoever. All of the outstanding shares of the Company are duly authorized,
validly issued, fully paid and non-assessable and were not issued in violation
of (i) any preemptive or other rights of any Person to acquire securities of the
Company, or (ii) any applicable federal or state securities laws, and the rules
and regulations promulgated thereunder (collectively, the "Securities Laws").
There are no outstanding subscriptions, options, convertible securities, rights
(preemptive or otherwise), warrants, calls or agreements relating to any shares
of capital stock of the Company. The copies of the Articles of Incorporation and
Bylaws of the Company provided to Buyer are true, accurate, and complete and
reflect all amendments made through the date of this Agreement. The Company's
stock and minute books made available to Buyer for review were correct and
complete as of the date of such review, no further entries have been made
through the date of this Agreement, and such minute books contain an accurate
record of all shareholder and corporate actions of the shareholders and
directors (and any committees thereof) of the Company taken by written consent
or at a meeting. All corporate actions taken by the Company have been duly
authorized or ratified. All accounts, books, ledgers and official and other
records of the Company fairly and accurately reflect all of the Company's
transactions, properties, assets and liabilities.
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(b) Except as shown on Schedule 3.03(b) hereto, the Company does
not own, directly or indirectly, any outstanding voting securities of or other
interests in, or controls, any other corporation, partnership, joint venture or
other business entity.
3.04 NO SELLER DEFAULTS OR CONSENTS. Except as otherwise set forth in
Schedule 3.04 hereto, the execution and delivery of this Agreement and the
Collateral Agreements by the Seller and the performance by the Seller of his
obligations hereunder and thereunder will not violate any provision of law or
any judgment, award or decree or any indenture, agreement or other instrument to
which the Seller is a party, or by which the properties or assets of any Seller
is bound or affected, or conflict with, result in a breach of or constitute
(with due notice or lapse of time or both) a default under, any such indenture,
agreement or other instrument, in each case except to the extent that such
violation, default or breach could not reasonably be expected to delay or
otherwise significantly impair the ability of the parties to consummate the
transactions contemplated hereby.
3.05 NO COMPANY DEFAULTS OR CONSENTS. Except as otherwise set forth in
Schedule 3.05 attached hereto, neither the execution and delivery of this
Agreement nor the carrying out of any of the transactions contemplated hereby
will:
(a) violate or conflict with any of the terms, conditions or
provisions of the charter or bylaws of the Company;
(b) violate any Legal Requirements applicable to the Company;
(c) violate, conflict with, result in a breach of, constitute a
default under (whether with or without notice or the lapse of time or both), or
accelerate or permit the acceleration of the performance required by, or give
any other party the right to terminate, any Contract or Permit binding upon or
applicable to the Company;
(d) result in the creation of any lien, charge or other
encumbrance on any Properties of the Company; or
(e) require the Seller or the Company to obtain or make any
waiver, consent, action, approval or authorization of, or registration,
declaration, notice or filing with, any private non-governmental third party or
any Governmental Authority.
3.06 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to the Knowledge of the Company, threatened before any Governmental Authority
seeking to restrain the Company or the Seller or prohibit their entry into this
Agreement or prohibit the Closing, or seeking damages against the Company or its
Properties as a result of the consummation of this Agreement.
3.07 EMPLOYEE BENEFIT MATTERS.
The Company has no employee benefit programs subject to ERISA or
any comparable state law and:
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(a) Except as set forth in Schedule 3.07(a) neither the
execution and delivery of this Agreement nor the
consummation of any or all of the transactions contemplated
hereby will: (A) entitle any current or former employee of
the Company to severance pay, unemployment compensation or
any similar payment, (B) accelerate the time of payment or
vesting or increase the amount of any compensation due to
any such employee or former employee, or (C) directly or
indirectly result in any payment made to or on behalf of
any person to constitute a "parachute payment" within the
meaning of Section 280G of the Code;
(b) Except as set forth in Schedule 3.07(a) since January 11,
2000, there have not been any (i) work stoppages, labor
disputes or other significant controversies between the
Company and its employees, (ii) labor union grievance or
organizational efforts, or (iii) unfair labor practice or
labor arbitration proceeding pending or threatened.
(c) Except as set forth in Schedule 3.07(a), the Company is not
a party to any agreement, and has not established any
policy or practice, requiring the Company to make a payment
or provide any other form or compensation or benefit to any
person performing services for the Company upon termination
of such services which would not be payable or provided in
the absence of the consummation of the transactions
contemplated by this Agreement.
(d) Schedule 3.07(e) sets forth by number and employment
classification the approximate numbers of employees
employed by the Company as of the date of this Agreement,
and, except as set forth therein, none of said employees
are subject to union or collective bargaining agreements
with the Company.
3.08 FINANCIAL STATEMENTS.
(a) The Seller has delivered to Buyer true and complete copies of
Financial Statements with respect to the Seller including the Business as of and
for the fiscal year ended January 29, 2000 (the "Financial Statements"). The
independent accountants have certified that such Financial Statements present
fairly the financial condition and results of operations of the Seller for the
dates or periods indicated thereon and that such Financial Statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods indicated.
(b) The Closing Balance Sheet will contain a fair statement of the
net book value of the Business of the Company on May 6, 2000.
(c) Seller is the "ultimate parent entity" as such term is defined
in C.F.R. Section 801.1(a)(3). Seller, together with all entities controlled by
it, does not hold assets having an aggregate book value of $10 million or more
as shown on its last regularly prepared balance sheet and did not have revenues
of $10 million or more as shown on its most recent fiscal year statement (in
each case determined in accordance with 16 C.F.R. Section 801.11. The term
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"controlled by" as used in this section shall have the same meaning set forth in
16 C.F.R. 802.1(b). This representation and warranty is made for the purpose of
determining the applicability of the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, to the transactions contemplated by this Agreement.
3.09 ABSENCE OF CERTAIN CHANGES.
(a) Except as otherwise set forth in Schedule 3.09(a) attached
hereto, since January 11, 2000, there has not been:
(i) any event, circumstance or change that had or might have a
material adverse effect on the business, operations, prospects, Properties,
financial condition or working capital of the Company;
(ii) any damage, destruction or loss (whether or not covered
by insurance) that had or might have a material adverse effect on the business,
operations, prospects, Properties or financial condition of the Company; or
(iii) any material adverse change in the Company's sales
patterns, pricing policies, accounts receivable or accounts payable.
(b) Except as otherwise set forth in Schedule 3.09(b) attached
hereto, since January 11, 2000, the Company has not done any of the following:
(i) merged into or with or consolidated with, any other
corporation or acquired the business or assets of any Person;
(ii) purchased any securities of any Person;
(iii) created, incurred, assumed, guaranteed or otherwise
become liable or obligated with respect to any indebtedness, or made any loan or
advance to, or any investment in, any person, except in each case in the
ordinary course of business;
(iv) made any change in any existing election, or made any new
election, with respect to any tax law in any jurisdiction which election could
have an effect on the tax treatment of the Company or the Company's business
operations;
(v) entered into, amended or terminated any material
agreement;
(vi) sold, transferred, leased, mortgaged, encumbered or
otherwise disposed of, or agreed to sell, transfer, lease, mortgage, encumber or
otherwise dispose of, any Properties except (i) in the ordinary course of
business, or (ii) pursuant to any agreement specified in Schedule 3.13;
(vii) settled any claim or litigation, or filed any motions,
orders, briefs or settlement agreements in any proceeding before any
Governmental Authority or any arbitrator;
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(viii) incurred or approved, or entered into any agreement or
commitment to make, any expenditures in excess of $25,000 (other than those
required pursuant to any agreement specified in Schedule 3.13 and those in the
ordinary course of business);
(ix) changed its books of account other than in the usual,
regular and ordinary manner on a basis consistent with prior periods or made any
material change in any of its accounting methods or practices;
(x) adopted any employee benefit program, or granted any
increase in the compensation payable or to become payable to directors, officers
or employees (including, without limitation, any such increase pursuant to any
bonus, profit-sharing or other plan or commitment), other than merit increases
to employees in the ordinary course of business and consistent with past
practice;
(xi) suffered any extraordinary losses or waived any rights of
material value;
(xii) forgiven any indebtedness due or owing from Seller to
the Company;
(xiii) (A) except in the ordinary course of business,
liquidated Inventory or accepted product returns, (B) accelerated receivables,
(C) delayed payables, or (D) changed in any material respect the Company's
practices in connection with the payment of payables and/or the collection of
receivables;
(xiv) engaged in any one or more activities or transactions
with an Affiliate or outside the ordinary course of business;
(xv) declared, set aside or paid any dividends, or made any
distributions or other payments in respect of its equity securities, or
repurchased, redeemed or otherwise acquired any such securities;
(xvi) amended its charter or bylaws;
(xvii) issued any capital stock or other securities, or
granted, or entered into any agreement to grant, any options, convertible
rights, other rights, warrants, calls or agreements relating to its capital
stock; or
(xviii) committed to do any of the foregoing.
3.10 COMPLIANCE WITH LAWS. Except as otherwise set forth in Schedule
3.10(1), the Company is and has been in compliance in all respects with any and
all Legal Requirements applicable to the Company, other than failures to so
comply that would not have an adverse effect on the business, operations,
prospects, Properties or financial condition of the Company. Except as otherwise
set forth in Schedule 3.10(2), since January 11, 2000 the Company (x) has not
received or entered into any citations, complaints, consent orders, compliance
schedules, or other similar enforcement orders or received any written notice
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from any Governmental Authority or any other written notice that would indicate
that there is not currently compliance with all such Legal Requirements, except
for failures to so comply that would not have an adverse effect on the business,
operations, prospects, Properties or financial condition of the Company, and (y)
is not in default under, and no condition exists (whether covered by insurance
or not) that with or without notice or lapse of time or both would constitute a
default under, or breach or violation of, any Legal Requirement or Permit
applicable to the Company. Without limiting the generality of the foregoing,
since January 11, 2000 the Company has not received notice of and there is no
basis for, any claim, action, suit, investigation or proceeding that might
result in a finding that the Company is not or has not been in compliance with
Legal Requirements relating to (a) the development, testing, manufacture,
packaging, distribution and marketing of products, (b) employment, safety and
health, and (c) environmental protection, building, zoning and land use.
3.11 LITIGATION. Except as otherwise set forth in Schedule 3.11, there
are no claims, actions, suits, investigations or proceedings against the Company
pending or, to the Knowledge of the Company, threatened in any court or before
or by any Governmental Authority, or before any arbitrator, that might have an
adverse effect (whether covered by insurance or not) on the business,
operations, prospects, Properties or financial condition of the Company and
there is no basis for any such claim, action, suit, investigation or proceeding.
Schedule 3.11 also includes a true and correct listing of all material actions,
suits, investigations, claims or proceedings that were pending, settled or
adjudicated since January 11, 2000.
3.12 OWNERSHIP OF COMPANY PROPERTIES.
(a) Except as provided under the provisions of the agreements
described in Schedule 3.12(a), the Company has and will have as of the Closing
Date legal and beneficial ownership of its Properties, free and clear of any and
all liens, mortgages, pledges, adverse claims, encumbrances or other
restrictions or limitations whatsoever ("Liens").
(b) Schedule 3.12(b)(1) sets for a list of any modifications that
have occurred since January 11, 2000 with respect to all real property or any
interest therein (including without limitation any option or other right or
obligation to purchase any real property or any interest therein) currently
owned, or ever owned, by the Company, in each case setting forth the street
address or legal description of each property covered thereby (the "Owned
Premises"). Schedule 3.12(b)(2) sets forth a list of all leases, licenses or
similar agreements relating to the Company's use or occupancy of real estate
owned by a third party ("Leases") that have been modified in any respect since
January 11, 2000, true and correct copies of which have previously been
furnished to Buyer, in each case setting forth (i) the lessor and lessee thereof
and the commencement date, term and renewal rights under each of the Leases, and
(ii) the street address or legal description of each property covered thereby
(the "Leased Premises"). The Leases are in full force and effect and have not
been amended, and no party thereto is in default or breach under any such Lease.
No event has occurred which, with the passage of time or the giving of notice or
both, would cause a material breach of or default under any of such Leases. With
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respect to each such Owned Premises and Leased Premises, as applicable: (i) the
Company has a valid ownership interest in the Owned Premises and a valid
leasehold interest in the Leased Premises, free and clear of any Liens,
covenants and easements or title defects that have had or could have an adverse
effect on the Company's use and occupancy of the Owned Premises and the Leased
Premises; (ii) the portions of the buildings located on the Owned Premises and
the Leased Premises that are used in the business of the Company are each in
good repair and condition, normal wear and tear excepted, and are in the
aggregate sufficient to satisfy the Company's current and reasonably anticipated
normal business activities as conducted thereat; (iii) each of the Owned
Premises and the Leased Premises (a) has direct access to public roads or access
to public roads by means of a perpetual access easement, such access being
sufficient to satisfy the current transportation requirements of the business
presently conducted at such parcel; and (b) is served by all utilities in such
quantity and quality as are sufficient to satisfy the current normal business
activities conducted at such parcel; and (iv) the Company has not received
notice of (a) any condemnation, eminent domain or similar proceeding affecting
any portion of the Owned Premises or the Leased Premises or any access thereto,
and, to the Knowledge of the Company, no such proceedings are contemplated, or
(b) any special assessment which may affect any of the Owned Premises or the
Leased Premises.
(c) Set forth on Schedule 3.12(c) is a list and description of any
modifications that have occurred since January 11, 2000 with respect to all
material foreign and domestic patents, patent rights, trademarks, service marks,
trade names, brands and copyrights (whether or not registered and, if
applicable, including pending applications for registration) owned, Used,
licensed or controlled by the Company and all goodwill associated therewith. The
Company owns or has the right to use and shall as of the Closing Date own or
have the right to use any and all information, know-how, trade secrets, patents,
copyrights, trademarks, tradenames, software, formulae, methods, processes and
other intangible properties that are necessary or customarily Used by the
Company for the ownership, management or operation of its Properties
("Intangible Rights") including, but not limited to, the Intangible Rights
listed on Schedule 3.12(c). Except as set forth on Schedule 3.12(c): (i) the
Company is the sole and exclusive owner of all right, title and interest in and
to all of the Intangible Rights, and has the exclusive right to use and license
the same, free and clear of any claim or conflict with the Intangible Rights of
others; (ii) no royalties, honorariums or fees are payable by the Company to any
person by reason of the ownership or use of any of the Intangible Rights; (iii)
there have been no claims made against the Company asserting the invalidity,
abuse, misuse, or unenforceability of any of the Intangible Rights and no
grounds for any such claims exist; (iv) the Company has not made any claim of
any violation or infringement by others of any of its Intangible Rights or
interests therein and, to the Knowledge of the Company, no grounds for any such
claims exist; (v) the Company has not received any notice that it is in conflict
with or infringing upon the asserted intellectual property rights of others in
connection with the Intangible Rights, and neither the use of the Intangible
Rights nor the operation of the Company's businesses is infringing or has
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infringed upon any intellectual property rights of others; (vi) the Intangible
Rights are sufficient and include all intellectual property rights necessary for
the Company to lawfully conduct its business as presently being conducted; (vii)
no interest in any of the Company's Intangible Rights has been assigned,
transferred, licensed or sublicensed by the Company to any person other than the
Buyer pursuant to this Agreement; (viii) to the extent that any item
constituting part of the Intangible Rights has been registered with, filed in or
issued by, any Governmental Authority, such registrations, filings or issuances
are listed on Schedule 3.12(c) and were duly made and remain in full force and
effect; and (ix) to the Knowledge of the Company, there has not been any act or
failure to act by the Company or any of its directors, officers, employees,
attorneys or agents during the prosecution or registration of, or any other
proceeding relating to, any of the Intangible Rights or of any other fact which
could render invalid or unenforceable, or negate the right to issuance of any of
the Intangible Rights. To the extent any of the Intangible Rights constitutes
proprietary or confidential information, the Company has adequately safeguarded
such information from disclosure. All of the Intangible Rights are assignable to
the Buyer without alteration or impairment.
(d) Set forth on Schedule 3.12(d) is a list of any additions,
deletions or modifications that have occurred since January 11, 2000 with
respect to all authorizations, consents, approvals, franchises, licenses and
permits required by any Person (other than a Governmental Authority) for the
operation of the business of the Company as presently operated (the "Other
Person Authorizations"). All of the Other Person Authorizations have been duly
issued or obtained and are in full force and effect, and the Company is in
compliance with the terms of all the Other Person Authorizations. Neither the
Company nor any Seller has any knowledge of any facts which could be expected to
cause them to believe that the Other Person Authorizations will not be renewed
by the appropriate Person in the ordinary course. Each of the Other Person
Authorizations may be assigned and transferred to the Buyer in accordance with
this Agreement and will continue in full force and effect thereafter, in each
case without (i) the occurrence of any breach, default or forfeiture of rights
thereunder, or (ii) the consent, approval, or act of, or the making of any
filings with, any Person.
3.13 COMMITMENTS.
(a) Except as otherwise set forth in Schedule 3.13, since January
11, 2000 the Company has not become a party to or bound by any of the following
nor has the Company terminated or modified the terms of any of the following,
whether written or oral:
(i) any Contract that cannot by its terms be terminated by the
Company with 30 days' or less notice without penalty or whose term continues
beyond one year after the date of this Agreement;
(ii) contract or commitment for capital expenditures by the
Company in excess of $25,000 per calendar quarter in the aggregate;
(iii) lease or license with respect to any Properties, real or
personal, whether as landlord, tenant, licensor or licensee;
(iv) agreement, contract, indenture or other instrument
relating to the borrowing of money or the guarantee of any obligation or the
deferred payment of the purchase price of any Properties;
(v) partnership agreement;
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(vi) contract with any Affiliate of the Company (including the
Seller) relating to the provision of goods or services by or to the Company;
(vii) agreement for the sale of any assets, other than
inventory in the normal course of business, that in the aggregate have a net
book value on the Company's books of greater than $25,000;
(viii) agreement that purports to limit the Company's freedom
to compete freely in any line of business or in any geographic area;
(ix) preferential purchase right, right of first refusal, or
similar agreement; or
(x) other Contract that is material to the business of the
Company.
(b) All of the Contracts listed or required to be listed in
Schedule 3.13 are valid, binding and in full force and effect, and the Company
has not been notified or advised by any party thereto of such party's intention
or desire to terminate or modify any such Contract in any respect, except as
disclosed in Schedule 3.13. Neither the Company nor, to the Knowledge of the
Company, any other party is in breach of any of the terms or covenants of any
Contract listed or required to be listed in Schedule 3.13. Following the
Closing, Buyer will be entitled to all of the benefits of the Company under each
Contract listed or required to be listed in Schedule 3.13.
(c) Except as otherwise set forth in Schedule 3.13(c), the Company
is not a party to or bound by any Contract or Contracts the terms of which were
arrived at by or otherwise reflect less-than-arm's-length negotiations or
bargaining.
3.14 INSURANCE. Schedule 3.14 hereto is a complete and correct list of
any additions, deletions or modifications since January 11, 2000 to insurance
policies that relate to the Company or its Properties. Such policies are
sufficient for compliance by the Company with all applicable Legal Requirements
and all material Contracts. None of the insurance carriers has indicated to the
Company an intention to cancel any such policy. The Company has no claim pending
or anticipated against any of the insurance carriers under any of such policies
and, to the Knowledge of the Company, there has been no actual or alleged
occurrence of any kind, which could reasonably be expected to give rise to any
such claim.
3.15 INVENTORIES. Except as otherwise set forth in Schedule 3.15(1),
the Inventory of the Company as of the Closing Date shall consist of items of a
quality, condition and quantity consistent with normal seasonally-adjusted
Inventory levels of the Company and be usable and saleable in the ordinary and
usual course of business for the purposes for which intended. Except as
otherwise set forth in Schedule 3.15(2), such Inventory is valued on the
Company's books of account on a basis consistent with the Company's historical
practices prior to January 11, 2000.
3.16 EQUIPMENT AND OTHER TANGIBLE PROPERTY. Except as otherwise set
forth on Schedule 3.16, the Company's equipment, furniture, machinery, vehicles,
structures, fixtures and other tangible property included in the Properties (the
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"Tangible Company Properties"), other than Inventory, is suitable for the
purposes for which intended and in good operating condition and repair
consistent with normal industry standards, except for ordinary wear and tear,
and except for such Tangible Company Properties as shall have been taken out of
service on a temporary basis for repairs or replacement consistent with the
Company's prior practices and normal industry standards.
3.17 PERMITS; ENVIRONMENTAL MATTERS.
(a) Except as otherwise set forth in Schedule 3.17(a), the Company
has all Permits necessary for the Company to construct, own, operate, use and/or
maintain its Properties and to conduct its business and operations as presently
conducted and as expected to be conducted in the future. Except as otherwise set
forth in Schedule 3.17(a), all such Permits are in effect, no proceeding is
pending or, to the Knowledge of the Company, threatened to modify, suspend or
revoke, withdraw, terminate, or otherwise limit any such Permits, and no
administrative or governmental actions have been taken or, to the Knowledge of
the Company, threatened in connection with the expiration or renewal of such
Permits which could adversely affect the ability of the Company to own, operate,
use or maintain any of its Properties or to conduct its business and operations
as presently conducted and as expected to be conducted in the future. Except as
otherwise set forth in Schedule 3.17(a), (i) no violations have occurred that
remain uncured, unwaived, or otherwise unresolved, or are occurring in respect
of any such Permits, other than inconsequential violations, and (ii) no
circumstances exist that would prevent or delay the obtaining of any requisite
consent, approval, waiver or other authorization of the transactions
contemplated hereby with respect to such Permits that by their terms or under
applicable law may be obtained only after Closing.
(b) Except as set forth on Schedule 3.17(b), there are no claims,
liabilities, investigations, litigation, administrative proceedings, whether
pending or, to the Knowledge of the Company, threatened, or judgments or orders
relating to any Hazardous Materials (collectively called "Environmental Claims")
asserted or threatened against the Company or relating to any real property
currently or formerly owned, leased or otherwise used by the Company. Neither
the Company nor, to the Knowledge of the Company, any prior owner, lessee or
operator of said real property, has caused or permitted any Hazardous Material
to be used, generated, reclaimed, transported, released, treated, stored or
disposed of in a manner which could form the basis for an Environmental Claim
against the Company or the Buyer. Except as set forth on Schedule 3.17(b), the
Company has not assumed any liability of any Person for cleanup, compliance or
required capital expenditures in connection with any Environmental Claim.
(c) Except as set forth on Schedule 3.17(c), no Hazardous
Materials are or were stored or otherwise located, and no underground storage
tanks or surface impoundments are or were located, on real property currently or
formerly owned, leased or Used by the Company or, to the Knowledge of the
Company, on adjacent parcels of real property, and no part of such real property
or, to the Knowledge of the Company, any part of such adjacent parcels of real
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property, including the groundwater located thereon, is presently contaminated
by Hazardous Materials.
(d) Except as set forth on Schedule 3.17(d), the Company has been
and is currently in compliance with all applicable Environmental Laws, including
obtaining and maintaining in effect all Permits required by applicable
Environmental Laws.
3.18 BANKS. Schedule 3.18 sets forth (i) the name of each bank, trust
company or other financial institution and stock or other broker with which the
Company has an account, credit line or safe deposit box or vault, (ii) the names
of all persons authorized to draw thereon or to have access to any safe deposit
box or vault, (iii) the purpose of each such account, safe deposit box or vault,
and (iv) the names of all persons authorized by proxies, powers of attorney or
other like instrument to act on behalf of the Company in matters concerning any
of its business or affairs. Except as otherwise set forth in Schedule 3.18, no
such proxies, powers of attorney or other like instruments are irrevocable.
3.19 SUPPLIERS AND CUSTOMERS. Schedule 3.19 sets forth any change since
January 11, 2000 in (i) the principal suppliers of the Company together with the
dollar amount of goods purchased by the Company from each such supplier during
each such period, and (ii) the principal customers of the Company during such
period together with the dollar amount of goods and/or services sold by the
Company to each such customer during each such period. Except as otherwise set
forth in Schedule 3.19, to the Knowledge of the Company, the Company maintains
good relations with all suppliers and customers as well as with governments,
partners, financing sources and other parties with whom the Company has
significant relations, and no such party has canceled, terminated or made any
threat to the Company to cancel or otherwise terminate its relationship with the
Company or to materially decrease its services or supplies to the Company or its
direct or indirect purchase or usage of the products or services of the Company.
3.20 ABSENCE OF CERTAIN BUSINESS PRACTICES. Neither the Company, Seller
nor any other Affiliate or agent of the Company, or any other person acting on
behalf of or associated with the Company, acting alone or together, has: (a)
received, directly or indirectly, any rebates, payments, commissions,
promotional allowances or any other economic benefits, regardless of their
nature or type, from any customer, supplier, employee or agent of any customer
or supplier, official or employee of any government (domestic or foreign), or
any political party or candidate for office (domestic or foreign) or other
person; or (b) directly or indirectly, given or agreed to give any money, gift
or similar benefit to any customer, supplier, employee or agent of any customer
or supplier, official or employee of any government (domestic or foreign), or
any political party or candidate for office (domestic or foreign), or other
person who was, is or may be in a position to help or hinder the business of the
Company (or assist the Company in connection with any actual or proposed
transaction) which (i) may subject the Company to any damage or penalty in any
civil, criminal or governmental litigation or proceeding, (ii) if not given in
the past, may have had an adverse effect on the assets, business, operations or
prospects of the Company, or (iii) if not continued in the future, may adversely
affect the assets, business, operations or prospects of the Company.
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3.21 TRANSACTIONS WITH AFFILIATES. Except as set forth on Schedule 3.21
and except for normal advances to employees consistent with past practices,
payment of compensation for employment to employees consistent with past
practices, and participation in scheduled Plans or Benefit Programs and
Agreements by employees, the Company has not purchased, acquired or leased any
property or services from, or sold, transferred or leased any property or
services to, or loaned or advanced any money to, or borrowed any money from, or
entered into or been subject to any management, consulting or similar agreement
with, or engaged in any other significant transaction with Seller or any
officer, director or shareholder of the Seller or its Affiliates. Except as set
forth on Schedule 3.21, neither Seller nor any Affiliate of the Seller is
indebted to the Company for money borrowed or other loans or advances, and the
Company is not indebted to Seller or any Affiliate of Seller.
3.22 OTHER INFORMATION. The information furnished by the Seller and the
Company to Buyer pursuant to this Agreement (including, without limitation,
information contained in the exhibits hereto, the Schedules identified herein,
the instruments referred to in such Schedules and the certificates and other
documents to be executed or delivered pursuant hereto by the Seller and/or the
Company at or prior to the Closing) is not, nor at the Closing will be, false or
misleading in any material respect, or contains, or at the Closing will contain,
any misstatement of material fact, or omits, or at the Closing will omit, to
state any material fact required to be stated in order to make the statements
therein not misleading.
3.23 LIMITATION. To the extent that Buyer or any Affiliate of Buyer
knows that any representation or warranty is untrue or has sufficient
information to ascertain that any representation or warranty is incorrect or
untrue, Buyer shall not have the right to rely on such representation or
warranty for any purpose.
ARTICLE IV. - REPRESENTATIONS AND WARRANTIES OF BUYER
Buyer hereby represents and warrants to the Seller that:
4.01 CORPORATE EXISTENCE AND QUALIFICATION. Buyer is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Florida; has the corporate power to own, manage, lease and hold its properties
and to carry on its business as and where such properties are presently located
and such business is presently conducted; and is duly qualified to do business
and is in good standing as a foreign corporation in each of the jurisdictions
where the character of its properties or the nature of its business requires it
to be so qualified.
4.02 AUTHORITY, APPROVAL AND ENFORCEABILITY. This Agreement has been
duly executed and delivered by Buyer and Buyer has all requisite corporate power
and legal capacity to execute and deliver this Agreement and all Collateral
Agreements executed and delivered or to be executed and delivered by Buyer in
connection with the transactions provided for hereby, to consummate the
transactions contemplated hereby and by the Collateral Agreements, and to
perform its obligations hereunder and under the Collateral Agreements. The
execution and delivery of this Agreement and the Collateral Agreements and the
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performance of the transactions contemplated hereby and thereby have been duly
and validly authorized and approved by all corporate action necessary on behalf
of Buyer. This Agreement and each Collateral Agreement to which Buyer is a party
constitutes, or upon execution and delivery will constitute, the legal, valid
and binding obligation of Buyer, enforceable in accordance with its terms,
except as such enforcement may be limited by general equitable principles or by
applicable bankruptcy, insolvency, moratorium, or similar laws and judicial
decisions from time to time in effect which affect creditors' rights generally.
4.03 NO PROCEEDINGS. No suit, action or other proceeding is pending or,
to Buyer's knowledge, threatened before any Governmental Authority seeking to
restrain Buyer or prohibit its entry into this Agreement or prohibit the
Closing, or seeking Damages against Buyer or its properties as a result of the
consummation of this Agreement.
4.04 TITLE. Seller will receive good title to the EDV Shares free and
clear of all liens, claims, encumbrances, charges or liabilities of any kind or
nature whatsoever.
ARTICLE V. - COOPERATION
Each of the parties hereto shall use commercially reasonable efforts to
take, or cause to be taken, all appropriate actions, and to do, or cause to be
done, all things necessary, proper or advisable under applicable laws and
regulations to consummate and make effective the transactions contemplated
herein, including, without limitation, (i) cooperating with the other in the
preparation and filing of all forms, notifications, reports and information, if
any, required or reasonably deemed advisable pursuant to any law, statute, rule
or regulation; (ii) using commercially reasonable efforts to obtain all
licenses, permits, consents, approvals, authorizations, qualifications and
orders of any Government Entity or other Persons (including parties to Contracts
with the Company as are necessary for the consummation of the transactions
contemplated hereby), (iii) making on a prompt and timely basis all governmental
or regulatory notifications and filings required to be made by it for the
consummation of the transactions contemplated hereby, (iv) defending all Legal
Proceedings challenging this Agreement or the consummation of the transactions
contemplated hereby and to lift or rescind any injunction or restraining Order
or other Order adversely affecting the ability of the parties to consummate the
transactions contemplated hereby, and (v) executing and delivering such
additional instruments and other documents and shall take such further actions
as may be necessary or appropriate to effectuate, carry out and comply with all
of the terms of this Agreement and the transactions contemplated hereby. Buyer
and Seller shall agree to jointly elect to have Section 338 (h)(10) of the
Internal Revenue Code apply to the transfer of the Shares and shall execute and
file an election to that effect as soon as reasonably possible (the "338
Election").
ARTICLE VI. - CONDITIONS TO SELLER'S AND BUYER'S OBLIGATIONS
6.01 CONDITIONS TO OBLIGATIONS OF THE SELLER. The obligations of Seller
to carry out the transactions contemplated by this Agreement are subject, at the
option of Seller, to the satisfaction or waiver of the following conditions at
or prior to the Closing:
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(a) Buyer shall have furnished Seller with a certified copy of all
necessary corporate action on its behalf approving its execution, delivery and
performance of this Agreement.
(b) All representations and warranties of Buyer contained in this
Agreement shall be true and correct in all material respects at and as of the
Closing, and Buyer shall have performed and satisfied in all material respects
all covenants and agreements required by this Agreement to be performed and
satisfied by Buyer at or prior to the Closing.
(c) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by or on behalf of the Company or Seller)
shall be pending or threatened before any Governmental Authority seeking to
restrain the Company or prohibit the Closing or seeking Damages against the
Company as a result of the consummation of this Agreement.
6.02 CONDITIONS TO OBLIGATIONS OF BUYER. The obligations of Buyer to
carry out the transactions contemplated by this Agreement are subject, at the
option of Buyer, to the satisfaction, or waiver by Buyer, of the following
conditions at or prior to the Closing:
(a) All representations and warranties of the Company and Seller
contained in this Agreement shall be true and correct in all material respects
at and as of the Closing, and the Company and Seller shall have performed and
satisfied in all material respects all agreements and covenants required by this
Agreement to be performed and satisfied by it at or prior to the Closing.
(b) As of the Closing Date, no suit, action or other proceeding
(excluding any such matter initiated by or on behalf of Buyer) shall be pending
or threatened before any court or governmental agency seeking to restrain Buyer
or prohibit the Closing or seeking Damages against Buyer or the Company or its
Properties as a result of the consummation of this Agreement.
(c) Except for matters disclosed in Schedule 3.09(a) or 3.09(b)
attached hereto, since January 11, 2000 and up to and including the Closing,
there shall not have been any event, circumstance, change or effect that,
individually or in the aggregate, had or might have a material adverse effect on
the Company's Business, operations, prospects, Properties or financial
condition.
(d) All agreements, commitments and understandings between the
Company and Seller (or any Affiliate thereof) shall have been terminated in all
respects on terms satisfactory to Buyer, and all obligations, claims or
entitlements thereunder shall be unconditionally waived and released by the
Seller and/or such Affiliates, as applicable, and written evidence thereof
satisfactory in form and substance to Buyer shall have been delivered to Buyer.
(e) All proceedings to be taken by the Company in connection with
the transactions contemplated hereby and all documents incident thereto shall be
satisfactory in form and substance to Buyer and its counsel, and Buyer and said
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counsel shall have received all such counterpart originals or certified or other
copies of such documents as it or they may reasonably request.
(f) Buyer shall have received written evidence, in form and
substance satisfactory to Buyer, of the consent to the transactions contemplated
by this Agreement of all governmental, quasi-governmental and private third
parties (including, without limitation, persons or other entities leasing real
or personal property to the Company) where the absence of any such consent would
result in a violation of law or a breach or default under any agreement to which
the Company is subject.
(g) No proceeding in which the Seller or the Company shall be a
debtor, defendant or party seeking an order for its own relief or reorganization
shall have been brought or be pending by or against such person under any United
States or state bankruptcy or insolvency law.
ARTICLE VII. - POST-CLOSING OBLIGATIONS
7.01 FURTHER ASSURANCES. Following the Closing, the Company, the Seller
and the Buyer shall execute and deliver such documents, and take such other
action, as shall be reasonably requested by any other party hereto to carry out
the transactions contemplated by this Agreement. In addition, Buyer shall
continue to allow the Seller to utilize the facilities and employees of the
Company and the Buyer in connection with payroll for Seller's employees, payment
of accounts payable of Seller and for other similar transition requirements.
Such use and services shall terminate within 30 days and shall be subject to the
same terms and charges in accordance with the Intercompany Services Agreement,
dated May 1, 1999; provided, however, Seller shall use reasonable efforts to
transition these functions as soon as reasonably possible on a practical basis.
7.02 PUBLICITY. A press release concerning this transaction must be
issued. None of the parties hereto shall issue or make, or cause to have issued
or made, any public release or announcement concerning this Agreement or the
transactions contemplated hereby, without the advance approval in writing of the
form and substance thereof by each of the other parties, except as required by
law or by the rules of the National Association of Securities Dealers or the
United States Securities and Exchange Commission (in which case, so far as
possible, there shall be consultation among the parties prior to such
announcement), and the parties shall endeavor jointly to agree on the text and
timing of any announcement or circular so approved or required.
7.03 POST-CLOSING INDEMNITY BY THE SELLER. Subject to the provisions of
Section 8.01, from and after the Closing, the Seller shall indemnify and hold
harmless Buyer and its Affiliates, directors, officers and employees from and
against any and all Damages arising out of, resulting from or in any way related
to (i) a breach of, or the failure to perform or satisfy any of, the
representations, warranties, covenants and agreements made by the Seller in this
Agreement or in any document or certificate delivered by the Seller at the
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Closing pursuant hereto, and (ii) the occurrence of any event on or prior to the
date of Closing that is (or would be, but for any deductible thereunder) covered
by individual policies of insurance, blanket insurance policies or self
insurance programs maintained by the Company.
7.04 NONDISCLOSURE.
(a) GENERAL. Seller shall not at any time, disclose, directly or
indirectly, to any person, firm, corporation, partnership, association or other
entity, any confidential information relating to the Company or to Buyer, its
subsidiaries or Affiliates, or any information concerning their respective
financial condition, customers, sources of leads and methods of obtaining new
business or the methods generally of doing and operating their respective
businesses, except to the extent that such information is a matter of public
knowledge or is required to be disclosed by law of judicial or administrative
process. Buyer shall not at any time, disclose, directly or indirectly, to any
person, firm, corporation, partnership, association or other entity, any
confidential information relating to Seller, its subsidiaries or Affiliates, or
any information concerning their respective financial condition, customers,
sources of leads and methods of obtaining new business or the methods generally
of doing and operating their respective businesses, except to the extent that
such information is a matter of public knowledge or is required to be disclosed
by law of judicial or administrative process.
(b) INJUNCTION. It is recognized and hereby acknowledged by the
parties hereto that a breach or violation by Seller of any or all of the
covenants and agreements contained in this Agreement may cause irreparable harm
and damage to Buyer in a monetary amount which may be virtually impossible to
ascertain. As a result, Seller recognizes and hereby acknowledges that Buyer
shall be entitled to an injunction from any court of competent jurisdiction
enjoining and restraining any breach or violation of any or all of the covenants
and agreements contained in this Agreement by Seller and/or its associates,
Affiliates, partners or agents, either directly or indirectly, and that such
right to injunction shall be cumulative and in addition to whatever other rights
or remedies the Buyer may possess hereunder, at law or in equity. Nothing
contained in this Section 7.04 shall be construed to prevent Buyer from seeking
and recovering from Seller damages sustained by it as a result of any breach or
violation by Seller of any of the covenants or agreements contained herein.
7.05 ASSIGNMENT OF CONTRACTS. At the option of Buyer, and
notwithstanding anything in this Agreement to the contrary, neither this
Agreement nor the consummation of the transactions contemplated by this
Agreement shall constitute an assignment of any claim, contract, license,
franchise, lease, commitment, sales order, sales contract, supply contract,
service agreement, purchase order or purchase commitment if an attempted
assignment thereof without the consent of a third party thereto would constitute
a breach thereof or in any way adversely affect the rights of Buyer thereunder.
If such consent is not obtained, or if any attempt at an assignment thereof
would be ineffective or would affect the rights of the Company thereunder so
that Buyer would not in fact receive all such rights, the Seller shall cooperate
with Buyer to the extent necessary to provide for Buyer the benefits under such
claim, contract, license, franchise, lease, commitment, sales order, sales
contract, supply contract, service agreement, purchase order or purchase
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<PAGE> 22
commitment, including enforcement for the benefit of Buyer of any and all rights
of the Seller against a third party thereto arising out of the breach or
cancellation by such third party or otherwise. The foregoing shall not apply to
Seller's right to transfer all Non-Business Assets from Buyer to Seller prior to
the Closing Date.
7.06 338 ELECTION. Buyer and Seller will each execute and file the 338
Election in the manner prescribed by applicable regulations for doing so.
7.07 RATIFICATION OF SHAREHOLDERS. Buyer and Seller shall use their
best efforts to support ratification and/or approval and shall urge their
respective Affiliates to ratify and/or approve any action which may be required
to consummate this Agreement.
7.08 MEDIATOR INDEMNIFICATION. Buyer and Seller each acknowledge that
various individuals (who may or may not be related to Buyer or Seller and
various individuals assisting them, participated in mediating the agreements
contained in this Agreement and in the preparation of this Agreement and all of
the transactions which are contemplated by this Agreement (the "Mediators"). The
Mediators for Buyer are Frank A. Buttacavoli and Albert F. Vercillo. The
Mediators for Seller are Dean M. Willard and George Barraza. They have been
assisted by Buddy H. Epstein (who is also a Mediator). Buyer and Seller further
acknowledge and agree that none of the Mediators in their individual capacities
or otherwise shall have any personal responsibility or liability of any kind or
nature whatsoever resulting from their efforts to assist the parties in reaching
the resolution of various matters resolved by this Agreement. Therefore, Buyer
and Seller hereby each agrees to indemnify each of its Mediators, to hold each
of them harmless and to defend each of them with separate independent counsel
(reasonably selected) of his choice from and against any action, liability,
loss, cost, expense, claim or proceeding ensuing out of, or in any way connected
with this Agreement, the matters covered by this Agreement and any actions taken
by either party in connection therewith. None of the Mediators for either party
have purported to give legal, accounting or business advice to that party or the
other party and each party has retained such legal counsel and other advisors as
it deemed appropriate in connection with the preparation of this Agreement, the
ratification or adoption of this Agreement, or the consummation of the
transactions contemplated hereby and relied upon such professional advice.
ARTICLE VIII. - MISCELLANEOUS
8.01 TERMINATION. This Agreement may be terminated at any time prior to
the Closing:
(a) by mutual written consent of Buyer and Seller; or
(b) by either Buyer or Seller:
(i) if the Closing shall not have occurred on or before May 9,
2000; provided, however, that the right to terminate the Agreement under this
subsection shall not be available to any party whose failure to fulfill any
obligation under this Agreement has been the cause of, or resulted in, the
failure of the Closing to occur on or before the date;
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<PAGE> 23
(ii) if (A) there shall be a final nonappealable Order of a
Government Entity restraining or prohibiting the consummation of the
transactions contemplated by this Agreement, or (B) there shall be a law,
statute, rule, regulation or Order decree enacted, entered, promulgated or
enforced by any Government Entity which prohibits or materially restricts the
consummation of the transactions contemplated hereby; or
(c) by Seller, if Buyer shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(i) would give rise to the failure of a condition set forth in Section 6.01, and
(ii) cannot be or has not been cured within 45 days after the giving of written
notice to Buyer of such breach (a "Buyer Material Breach") (provided that Seller
is not then in Seller Material Breach (as defined in Section 8.01(d)) of any
representation, warranty, covenant or other agreement contained in this
Agreement); or
(d) by Buyer, if Seller shall have breached or failed to perform
in any material respect any of its representations, warranties, covenants or
other agreements contained in this Agreement, which breach or failure to perform
(A) would give rise to the failure of a condition set forth in Section 6.02, and
(B) cannot be or has not been cured within 45 days after the giving of written
notice to Seller of such breach (a "Seller Material Breach") (provided that
Buyer is not then in Buyer Material Breach of any representation, warranty,
covenant or other agreement contained in this Agreement).
In the event of termination of this Agreement by Seller or Buyer
pursuant to this Section, written notice thereof shall promptly be given to the
other party hereto, and upon such notice this Agreement shall terminate. Except
for Sections 8.7 and 8.11 or as provided elsewhere herein, in the event of the
termination of this Agreement pursuant to this Section, this Agreement shall
forthwith become void and of no further force and effect, there shall be no
liability on the part of Seller or Buyer or any of their respective
Representatives to the other, all rights and obligations of any party hereto
shall cease and the parties shall be released from any and all obligations.
Notwithstanding the foregoing, nothing contained in this Agreement shall relieve
any party from liability for damages resulting from the breach of any of its
representations, warranties, covenants or agreements set forth in this
Agreement.
8.02 LIMITATION ON LIABILITY.
(a) Subject to the limitations contained in Section 3.23,
representations, warranties, agreements, and indemnities of the Seller set forth
in this Agreement or in connection with the transactions contemplated hereby
shall survive the Closing for one year.
(b) For purposes of this Section 8.02(b), a party making a claim
for indemnity under Section 7.03 is hereinafter referred to as an "Indemnified
Party" and the party against whom such claim is asserted is hereinafter referred
to as the "Indemnifying Party." All claims by any Indemnified Party under
Section 7.03 shall be asserted and resolved in accordance with the following
provisions. If any claim or demand for which an Indemnifying Party would be
liable to an Indemnified Party is asserted against or sought to be collected
from such Indemnified Party by such third party, said Indemnified Party shall
with reasonable promptness notify in writing the Indemnifying Party of such
claim or demand stating with reasonable specificity the circumstances of the
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<PAGE> 24
Indemnified Party's claim for indemnification; provided, however, that any
failure to give such notice will not waive any rights of the Indemnified Party
except to the extent the rights of the Indemnifying Party are actually
prejudiced or to the extent that any applicable period set forth in Section
8.01(b) has expired without such notice being given. After receipt by the
Indemnifying Party of such notice, then upon reasonable notice from the
Indemnifying Party to the Indemnified Party, or upon the request of the
Indemnified Party, the Indemnifying Party shall defend, manage and conduct any
proceedings, negotiations or communications involving any claimant whose claim
is the subject of the Indemnified Party's notice to the Indemnifying Party as
set forth above, and shall take all actions necessary, including but not limited
to the posting of such bond or other security as may be required by any
Governmental Authority, so as to enable the claim to be defended against or
resolved without expense or other action by the Indemnified Party. Upon request
of the Indemnifying Party, the Indemnified Party shall, to the extent it may
legally do so and to the extent that it is compensated in advance by the
Indemnifying Party for any costs and expenses thereby incurred,
(i) take such action as the Indemnifying Party may reasonably
request in connection with such action,
(ii) allow the Indemnifying Party to dispute such action in
the name of the Indemnified Party and to conduct a defense to such action on
behalf of the Indemnified Party, and
(iii) render to the Indemnifying Party all such assistance as
the Indemnifying Party may reasonably request in connection with such dispute
and defense.
8.03 NOTICES. Any notice, request, instruction, correspondence or other
document to be given hereunder by any party hereto to another (herein
collectively called "Notice") shall be in writing and delivered personally or
mailed by registered or certified mail, postage prepaid and return receipt
requested, or by telecopier, as follows:
BUYER: E Com Ventures, Inc.
11701 N.W. 101st Road
Miami, FL 33178
Facsimile: (305) 592-3528
E-Mail: [email protected]
Attention: Ilia Lekach
WITH A COPY TO:
Greenberg Traurig, P.A.
1221 Brickell Avenue
Miami, Florida 33131
Attention: Kenneth Hoffman, Esq.
Telecopy No. (305) 579-0717
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<PAGE> 25
SELLER: Envision Development Corporation
4 Mount Royal Avenue
Marlboro, MA 01752
Facsimile: (508) 481-8304
E-Mail: [email protected]
Attention: Michael E. Amideo, CFO
WITH A COPY TO:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, New York 10017
Facsimile: (212) 455-2502
E-Mail: [email protected]
Attention: Gary Horowitz, Esq.
ZERO: ZERO.NET, Inc.
650 Mission Street
San Francisco, CA 94105
Facsimile: (415) 369-0230
E-Mail: WWW.ZERO.NET
Attention: Jake Weinstock
Each of the above addresses for notice purposes may be changed by providing
appropriate notice hereunder. Notice given by personal delivery or registered
mail shall be effective upon actual receipt. Notice given by telecopier shall be
effective upon actual receipt if received during the recipient's normal business
hours, or at the beginning of the recipient's next normal business day after
receipt if not received during the recipient's normal business hours. All
Notices by telecopier shall be confirmed by the sender thereof promptly after
transmission in writing by registered mail or personal delivery. Anything to the
contrary contained herein notwithstanding, notices to any party hereto shall not
be deemed effective with respect to such party until such Notice would, but for
this sentence, be effective both as to such party and as to all other persons to
whom copies are provided above to be given.
8.03 GOVERNING LAW. The provisions of this agreement and the documents
delivered pursuant hereto shall be governed by and construed in accordance with
the laws of the State of Florida (excluding any conflict of law rule or
principle that would refer to the laws of another jurisdiction). Each party
hereto irrevocably submits to the jurisdiction of the Circuit Court of the State
of Florida, Miami-Dade County, in any action or proceeding arising out of or
relating to this Agreement or any of the Collateral Agreements, and each party
hereby irrevocably agrees that all claims in respect of any such action or
proceeding must be brought and/or defended in such court; provided, however,
that matters which are under the exclusive jurisdiction of the Federal courts
shall be brought in the Federal District Court for the Southern District of
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<PAGE> 26
Florida. Each party hereto consents to service of process by any means
authorized by the applicable law of the forum in any action brought under or
arising out of this Agreement or any of the Collateral Agreements, and each
party irrevocably waives, to the fullest extent each may effectively do so, the
defense of an inconvenient forum to the maintenance of such action or proceeding
in any such court. EACH PARTY HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT IT MAY LEGALLY AND EFFECTIVELY DO SO, TRIAL BY
JURY IN ANY SUIT, ACTION OR PROCEEDING ARISING HEREUNDER.
8.04 REPRESENTATIONS AND WARRANTIES. Each of the representations and
warranties of each of the parties to this Agreement shall be deemed to have been
made again at and as of the Closing by and on behalf of the party on behalf of
whom such certificates are delivered.
8.05 ENTIRE AGREEMENT; AMENDMENTS AND WAIVERS. This Agreement, together
with all exhibits and schedules attached hereto, constitutes the entire
agreement between and among the parties hereto pertaining to the subject matter
hereof and supersedes all prior agreements, understandings, negotiations and
discussions, whether oral or written, 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 specifically
herein or contemplated hereby. No supplement, modification or waiver 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 be deemed or
shall constitute a waiver of any other provision hereof (regardless of whether
similar), nor shall any such waiver constitute a continuing waiver unless
otherwise expressly provided.
8.06 BINDING EFFECT AND ASSIGNMENT. This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
permitted successors and assigns; but neither this Agreement nor any of the
rights, benefits or obligations hereunder shall be assigned, by operation of law
or otherwise, by any party hereto without the prior written consent of the other
party, provided, however, that nothing herein shall prohibit the assignment of
Buyer's rights and obligations to any direct or indirect subsidiary or prohibit
the assignment of Buyer's rights (but not obligations) to any lender. Nothing in
this Agreement, express or implied, is intended to confer upon any person or
entity other than the parties hereto and their respective permitted successors
and assigns, any rights, benefits or obligations hereunder.
8.07 REMEDIES. The rights and remedies provided by this Agreement are
cumulative, and the use of any one right or remedy by any party hereto shall not
preclude or constitute a waiver of its right to use any or all other remedies.
Such rights and remedies are given in addition to any other rights and remedies
a party may have by law, statute or otherwise.
8.08 EXHIBITS AND SCHEDULES. The Exhibits and Schedules referred to
herein are attached hereto and incorporated herein by this reference. Disclosure
of a specific item in any one Schedule shall be deemed restricted only to the
Section to which such disclosure specifically relates except where (i) there is
an explicit cross-reference to another Schedule, and (ii) Buyer could reasonably
be expected to ascertain the scope of the modification to a representation
intended by such cross-reference.
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<PAGE> 27
8.09 MULTIPLE COUNTERPARTS. 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.
8.10 REFERENCES AND CONSTRUCTION.
(a) Whenever required by the context, and is used in this
Agreement, the singular number shall include the plural and pronouns and any
variations thereof shall be deemed to refer to the masculine, feminine, neuter,
singular or plural, as the identification the person may require. References to
monetary amounts, specific named statutes and generally accepted accounting
principles are intended to be and shall be construed as references to United
States dollars, statutes of the United States of the stated name and United
States generally accepted accounting principles, respectively, unless the
context otherwise requires.
(b) The provisions of this Agreement shall be construed according
to their fair meaning and neither for nor against any party hereto irrespective
of which party caused such provisions to be drafted. Each of the parties
acknowledge that it has consulted with an attorney in connection with the
preparation and execution of this Agreement.
8.11 SURVIVAL. Any provision of this Agreement which contemplates
performance or the existence of obligations after the Closing Date, and any and
all representations and warranties set forth in this Agreement, shall not be
deemed to be merged into or waived by the execution and delivery of the
instruments executed at the Closing, but shall expressly survive Closing and
shall be binding upon the party or parties obligated thereby in accordance with
the terms of this Agreement, subject to any limitations expressly set forth in
this Agreement.
8.12 ATTORNEYS' FEES. In the event any suit or other legal proceeding
is brought for the enforcement of any of the provisions of this Agreement, the
parties hereto agree that the prevailing party or parties shall be entitled to
recover from the other party or parties upon final judgment on the merits
reasonable attorneys' fees (and sales taxes thereon, if any), including
attorneys' fees for any appeal, and costs incurred in bringing such suit or
proceeding.
ARTICLE IX. - DEFINITIONS
Capitalized terms used in this Agreement are used as defined in this
Article IX or elsewhere in this Agreement.
9.01 AFFILIATE. The term "Affiliate" shall mean, with respect to any
person, any other person controlling, controlled by or under common control with
such person. The term "Control" as used in the preceding sentence means, with
respect to a corporation, the right to exercise, directly or indirectly, more
than 50% of the voting rights attributable to the shares of the controlled
corporation and, with respect to any person other than a corporation, the
possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such person.
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<PAGE> 28
9.02 COLLATERAL AGREEMENTS. The term "Collateral Agreements" shall mean
any or all of the exhibits to this Agreement and any and all other agreements,
instruments or documents required or expressly provided under this Agreement to
be executed and delivered in connection with the transactions contemplated by
this Agreement.
9.03 CONTRACTS. The term "Contracts," when described as being those of
or applicable to any person, shall mean any and all contracts, agreements,
franchises, understandings, arrangements, leases, licenses, registrations,
authorizations, easements, servitudes, rights of way, mortgages, bonds, notes,
guaranties, liens, indebtedness, approvals or other instruments or undertakings
to which such person is a party or to which or by which such person or the
property of such person is subject or bound, excluding any Permits.
9.04 DAMAGES. The term "Damages" shall mean any and all damages,
liabilities, obligations, penalties, fines, judgments, claims, deficiencies,
losses, costs, expenses and assessments (including without limitation income and
other taxes, interest, penalties and attorneys' and accountants' fees and
disbursements).
9.05 FINANCIAL STATEMENTS. The term "Financial Statements" shall mean
any or all of the financial statements, including balance sheets and related
statements of income and statements of changes in financial position and the
accompanying notes thereto of the Company's business prepared (to the knowledge
of Seller's current officers and directors) in accordance with generally
accepted accounting principles consistently applied, except as may be otherwise
provided herein.
9.06 GOVERNMENTAL AUTHORITIES. The term "Governmental Authorities"
shall mean any nation or country (including but not limited to the United
States) and any commonwealth, territory or possession thereof and any political
subdivision of any of the foregoing, including but not limited to courts,
departments, commissions, boards, bureaus, agencies, ministries or other
instrumentalities.
9.07 HAZARDOUS MATERIAL. The term "Hazardous Material" means all or any
of the following: (a) substances that are defined or listed in, or otherwise
classified pursuant to, any applicable laws or regulations as "hazardous
substances," "hazardous materials," "Hazardous wastes," "toxic substances" or
any other formulation intended to define, list or classify substances by reason
of deleterious properties such as ignitability, corrosivity, reactivity,
carcinogenicity, reproductive toxicity or "EP toxicity"; (b) oil, petroleum or
petroleum derived substances, natural gas, natural gas liquids or synthetic gas
and drilling fluids, produced waters and other wastes associated with the
exploration, development or production of crude oil, natural gas or geothermal
resources; (c) any flammable substances or explosives or any radioactive
materials; and (d) asbestos in any form or electrical equipment which contains
any oil or dielectric fluid containing levels of polychlorinated biphenyls in
excess of fifty parts per million.
9.08 INVENTORY. The term "Inventory" shall mean all goods, merchandise
and other personal property owned and held for sale, and all raw materials,
works-in-process, materials and supplies of every nature which contribute to the
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<PAGE> 29
finished products of the Company in the ordinary course of its business,
specifically excluding, however, damaged, defective or otherwise unsaleable
items.
9.09 KNOWLEDGE OF THE COMPANY. The term "Knowledge of the Company"
shall mean the actual knowledge of any current director or officer of that
company.
9.10 LEGAL REQUIREMENTS. The term "Legal Requirements," when described
as being applicable to any person, shall mean any and all laws (statutory,
judicial or otherwise), ordinances, regulations, judgments, orders, directives,
injunctions, writs, decrees or awards of, and any Contracts with, any
Governmental Authority, in each case as and to the extent applicable to such
person or such person's business, operations or properties.
9.11 PERMITS. The term "Permits" shall mean any and all permits,
rights, approvals, licenses, authorizations, legal status, orders or Contracts
under any Legal Requirement or otherwise granted by any Governmental Authority.
9.12 PERSON. The term "Person" shall mean any individual, partnership,
joint venture, firm, corporation, association, limited liability company, trust
or other enterprise or any governmental or political subdivision or any agency,
department or instrumentality thereof.
9.13 PROPERTIES. The term "Properties" shall mean any and all
properties and assets (real, personal or mixed, tangible or intangible) owned or
used by the Company in connection with the Business but shall not include the
Non-Business Assets.
9.14 REAL PROPERTY. The term "Real Property" shall mean the real
property Used by the Company in the conduct of its business.
9.15 REGULATIONS. The term "Regulations" shall mean any and all
regulations promulgated by the Department of the Treasury pursuant to the
Internal Revenue Code.
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<PAGE> 30
9.16 USED. The term "Used" shall mean, with respect to the Properties,
Contracts or Permits of the Company, those owned, leased, licensed or otherwise
held by the Company which were acquired for use or held for use by the Company
in connection with the Company's Business and operations, whether or not
reflected on the Company's books of account EXECUTED as of the date first
written above.
BUYER:
E COM VENTURES, INC.
By: /s/ Ilia Lekach
-------------------------------------
Name: Ilia Lekach
Title: Chief Executive Officer
COMPANY:
PERFUMANIA.COM
By: /s/ William Patch
-------------------------------------
Name: William Patch
Title: Chairman and Chief Executive Officer
SELLER:
ENVISION DEVELOPMENT CORPORATION
By: /s/ William Patch
-------------------------------------
Name: William Patch
Title: Chairman and Chief Executive Officer
ZERO:
ZERO.NET, Inc.
By: /s/ Jake Weinstock
-------------------------------------
Name: Jake Weinstock
Title: Chief Executive Officer
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<PAGE> 1
EXHIBIT 99.1
COMPANY CONTACTS:
Desiree Chope, Envision Development Corporation, 508-481-8303 ext. 323,
[email protected]
MEDIA CONTACTS:
David Politis, Politis Communications, 801-523-3730 (wk)/801-556-8184(cell),
[email protected] Jason Olsen, Politis Communications, 801-523-3730,
[email protected]
BROKER CONTACTS:
Leonardo Zangani, L.G. Zangani, 908-788-9660, [email protected]
FOR IMMEDIATE RELEASE
ENVISION DEVELOPMENT CORPORATION SELLS PERFUMANIA.COM
AND POSTACARD.COM TO E COM VENTURES
MARLBORO, Mass. - May 15, 2000 - Envision Development Corporation (AMEX: EDV),
the emerging leader in web-centric transactive technologies and eBusiness
solutions, today announced that the company has sold its wholly owned
subsidiaries, perfumania.com and PostaCard.com, to E Com Ventures, Inc. (NASDAQ:
ECMV). The terms of the transaction are not being disclosed at this time.
The sale of these businesses stems from Envision's strategy to focus on delivery
of innovative, transactive eBusiness solutions. Envision seeks to deliver these
benefits with a services/products spectrum including eBusiness Consulting,
eBusiness System Development, eMarketing, and Application Licensing through its
IsoStructure(TM) platform.
"For the past several months we have taken a number of meaningful steps to focus
our attention on our transactive technologies and eBusiness solutions," said
William J. Patch, Envision chairman and chief executive officer. "The decision
announced today is one more step in that direction."
Envision is currently seeking to be a leader in transactive technologies that
protect, secure and manage Internet document exchange as a part of the eBusiness
solution. The company's flagship product, InterosaTM, was chosen by attendees at
the EMA 2000 exhibition in Boston, Mass. as the best emerging technology in the
field.
The company will be retiring shares of its common stock, thereby resulting in an
anti-dilutive effect for our shareholders. Michael E. Amideo, chief financial
officer said, "At this time, we believe this strategic decision is a logical
continuation of our ongoing efforts to focus on the high tech business sector
while at the same time taking actions to unlock value for our shareholders."
"Envision's strategy is based upon the premise that organizations wishing to
participate in the Internet economy are increasingly turning to eBusiness
experts," Patch explained. "These organizations wish not only to tap into the
expertise and innovative skills that are needed to create and deploy competitive
and timely eBusiness systems, but even more importantly, the eBusiness and
eMarketing savvy to make their companies successful in the Internet economy."
E COM VENTURES, INC. facilitates the cross marketing and cross-promotional
opportunities between its member companies, its e-commerce investments and its
wholly owned subsidiary, Perfumania Marketing, with its approximately 1,600
employees, 269 brick and mortar stores and $190 million in annual sales. E Com
Ventures, Inc. supports startups or existing B-to-B or B-to-C companies with
development strategies, marketing and financial support to increase sales as
well as to introduce products and services into Internet businesses.
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<PAGE> 2
ENVISION DEVELOPMENT CORP. TO SELL PERFUMANIA.COM AND POSTACARD.COM PAGE 2
- -------------------------------------------------------------------------------
ENVISION DEVELOPMENT CORPORATION (www.edvcorp.com) is a rapidly growing leader
in providing web-centric transactive technologies through breakthrough
applications development and end-to-end eBusiness solutions.
# # #
This press release contains forward-looking statements that involve risks and
uncertainties that could cause actual results to differ materially from those
set forth in the forward-looking statements. Such risks and uncertainties are
described in the company's filings with the SEC, including its Registration
Statement on Form S-1.
IsoStructure is a trademark of Envision Development Corporation. All other
trademarks are the property of their respective owners.
<PAGE> 1
Exhibit 99.2
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------
SCHEDULE 14f-1
INFORMATION STATEMENT
Pursuant to Section 14(f) of the
Securities Exchange Act of 1934
and Rule 14f-1 thereunder
perfumania.com, inc.
- --------------------------------------------------------------------------------
(Exact name of registrant as specified in its charter)
Florida 001-15311 65-0884688
----------- ------------- ---------------
(State of Incorporation) (Commission File Number) (IRS Employer
Identification No.)
11701 N.W. 101st Road, Miami, Florida 33178
- ------------------------------------------------ --------
(Address of principal executive office) (Zip Code)
Registrant's telephone number, including area code: (305) 889-1600
-------------------
<PAGE> 2
PERFUMANIA.COM, INC.
11701 N.W. 101ST ROAD
MIAMI, FLORIDA 33178
INFORMATION STATEMENT PURSUANT TO SECTION 14(F) OF
THE SECURITIES EXCHANGE ACT OF 1934 AND RULE 14F-1 THEREUNDER
The information contained herein is being furnished to holders of the
common stock, par value $.01 per share (the "Common Stock"), of perfumania.com,
inc., a Florida corporation (the "Company"), pursuant to the requirements of
Section 14(f) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and Rule 14f-1 under the Exchange Act in order to effect a change in
majority control of the Company's Board of Directors other than by a meeting of
shareholders.
SUMMARY
On December 10, 1999, Perfumania, Inc. ("PFI"), the Company's majority
shareholder, entered into an option agreement, which was amended on December 20,
1999 (the "Option Agreement") with Alta Limited ("Alta") and Wainwright
Facilities Corporation ("WFC"). Pursuant to the Option Agreement, PFI granted to
Alta, WFC and their permitted assignees (collectively, the "Optionees"), (i) an
option to purchase from PFI 2,000,000 shares of the Company's Common Stock at a
price of $6.00 per share on or prior to January 15, 2000 (the "First Option")
and (ii) an option to purchase from PFI, 500,000 shares of the Company's Common
Stock at a price of $8.00 per share on or prior to December 31, 2000, subject to
certain conditions, including exercise of the First Option (the "Second
Option"). In addition, Alta was granted the right, upon exercise of the First
Option, to appoint a majority of the members of the Company's Board of
Directors, subject to compliance with Section 14(f) of the Exchange Act and Rule
14f-1 under the Exchange Act.
On January 11, 2000 (the "Closing Date"), the First Option was
exercised. Rachmil Lekach, Daniel Manella and Daniel Sawicki, directors of the
Company, resigned their positions effective the Closing Date and Ilia Lekach,
resigned as director effective ten days from the date the Company files with the
Securities and Exchange Commission (the "SEC") and mails to shareholders of
record, this Information Statement (the "Effective Date"). Two designees of
Alta, Sunny C. Vanderbeck and Dean M. Willard, were appointed to the Company's
Board of Directors effective on the Closing Date and four additional designees
of Alta, Thomas Carmody, Garrick M. Hileman, William J. Patch and Alan E. Rudd,
were appointed to the Company's Board of Directors, such appointments to become
effective on the Effective Date in accordance with the requirements of Section
14(f) of the Exchange Act and Rule 14f-1 under the Exchange Act.
<PAGE> 3
In addition to the foregoing, on the Closing Date, Rachmil Lekach
resigned as the Company's President and Chief Executive Officer and William J.
Patch was appointed as the Company's President and Chief Operating Officer.
Michael E. Amideo, who served as the Company's Chief Financial Officer, Chief
Operating Officer and a director, will continue to serve as Chief Financial
Officer, Secretary and a director.
NO ACTION IS REQUIRED BY THE SHAREHOLDERS OF THE COMPANY IN CONNECTION
WITH THE RESIGNATION AND APPOINTMENT OF DIRECTORS. However, Section 14(f) of the
Exchange Act requires the mailing to the Company's shareholders of the
information set forth in this Information Statement. The Company will notify its
shareholders of the change in majority control of the Company's Board of
Directors by filing a Current Report on Form 8-K with the SEC and by mailing
this Information Statement to shareholders of record as of January 19, 2000.
At January 20, 2000, the Company had 7,500,000 shares of Common Stock
outstanding. The Common Stock is the only class of securities of the Company
outstanding and entitled to vote. Each share of Common Stock is entitled to one
non-cumulative vote. Shareholders of the Company will have the opportunity to
vote with respect to the election of directors at the next annual meeting of the
Company's shareholders.
THE OPTION AGREEMENT
On December 10, 1999, PFI entered into the Option Agreement with Alta
and WFC, which Option Agreement was amended on December 20, 1999. The Option
Agreement granted the Optionees two options to acquire from PFI up to 2,500,000
shares of Common Stock. The First Option provided the Optionees with the right
to purchase 2,000,000 shares of Common Stock of the Company from PFI at a price
of $6.00 per share on or prior to January 15, 2000. The First Option was
exercised on January 11, 2000 as described above. The Option Agreement also
provided that upon the exercise of the First Option, nominees of Alta would be
appointed to the Board of Directors of the Company and would constitute the
majority of the members of the Board of Directors of the Company subject to
compliance with Section 14(f) of the Exchange Act and Rule 14f-1 under the
Exchange Act. In addition, following the exercise of the First Option, limits
are placed on the amount of shares of Common Stock that may be sold by PFI from
time to time, as well as the timing of any such sales.
The Second Option, conditioned upon the exercise of the First Option,
provides the Optionees with the right to purchase 500,000 shares of Common Stock
of the Company from PFI at a price of $8.00 per share on or prior to the earlier
to occur of (x) December 31, 2000 or (y) any of the following events: (i)
approval by the shareholders of the Company of a reorganization, merger,
consolidation or other form of corporate transaction or series of transactions,
in each case, with respect to which persons who were the shareholders of the
Company immediately prior to such reorganization, merger or consolidation or
other transaction do not, immediately thereafter, own more than 50% of the
combined voting power entitled to vote generally in the election of directors of
the reorganized, merged or consolidated company's then outstanding voting
securities, in substantially the same proportions as their ownership immediately
prior to such reorganization, merger, consolidation or other transaction, (ii) a
liquidation or dissolution of the Company, (iii) the sale of all or
substantially all of the assets of the Company, whether in a
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<PAGE> 4
single transaction or a series of transactions, (iv) individuals who constitute
the Board of Directors of the Company following the Effective Date who are
nominees of Alta cease for any reason to constitute at least a majority of the
Board of Directors of the Company, provided that any person becoming a director
subsequent to the Effective Date whose election, or nomination for election, by
the Company's shareholders, was approved by a vote of at least a majority of the
directors then comprising the Board of Directors of the Company (other than an
election or nomination of an individual whose initial assumption of office is in
connection with an actual or threatened election context relating to the
election of the directors of the Company, as such terms are used in Rule 14a-11
of Regulation 14A under the Exchange Act) shall be considered as though such
person were a nominee member of the Board of Directors of the Company subsequent
to the Effective Date, or (v) the acquisition by any person, entity or "group"
(other than Alta), within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act, of more than 50% of either the then outstanding shares of the
Company's Common Stock or the combined voting power of the Company's then
outstanding voting securities entitled to vote generally in the election of
directors (hereinafter referred to as the ownership of a "Controlling Interest")
excluding, for this purpose, any acquisitions by (1) the Company or its
Subsidiaries, (2) any person, entity or "group" that as of December 10, 1999
owns beneficial ownership (within the meaning of Rule 13d-3 promulgated under
the Exchange Act) of a Controlling Interest or (3) any employee benefit plan of
the Company or its Subsidiaries.
The Option Agreement also provides that following the exercise of the
First Option and as long as PFI owns at least 5% of the outstanding shares of
Common Stock of the Company, until December 31, 2000, unless otherwise required
by law, at any meeting of the shareholders of the Company called to vote upon
any matter or at any adjournment thereof or in any other circumstance upon which
a vote, consent or other approval (including by written consent) is sought from
the shareholders of the Company with respect to (i) a proposed business
combination between the Company and Biz2Net, Inc. ("Biz2Net") or a newly formed
Delaware corporation for the purpose and effect of changing the state of
incorporation of the Company, (ii) eliminating the applicability of any state
law anti-takeover provisions to the Company in general or to any shares of
Common Stock of the Company (regardless as to whether such shares of Common
Stock of the Company were purchased prior to December 11, 1999), and/or (iii)
the acquisition of Biz2Net by the Company and the issuance of shares of Common
Stock of the Company in connection with such business combination, PFI shall
grant a proxy to Alta to vote all of PFI's shares of Common Stock (including any
shares of Common Stock issued upon exercise of the Second Option) in favor of
each of the foregoing, provided, however, that PFI shall not be required to
grant such a proxy in connection with a proposed merger with Biz2Net if such
transaction is not materially on the following terms: the consideration paid to
Biz2Net shareholders shall be not more than 4,000,000 shares of Common Stock of
the Company and the transaction will be subject to standard terms and conditions
for agreements of its type and size (including the delivery of a fairness
opinion to the shareholders of the Company from a nationally recognized
investment bank).
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<PAGE> 5
BENEFICIAL SECURITY OWNERSHIP
The following table sets forth information with respect to the
beneficial ownership of the Company's Common Stock as of January 20, 2000, by
(i) each person who is known by the Company to beneficially own 5% or more of
the Company's outstanding Common Stock, (ii) the Company's Chief Executive
Officer ("CEO"), (iii) each director and director nominee, and (iv) all
directors, director nominees and executive officers of the Company as a group.
The Company is not aware of any beneficial owner of more than 5% of the
outstanding Common Stock other than as set forth in the following table.
<TABLE>
<CAPTION>
NAME AND ADDRESS OF BENEFICIAL OWNER, DIRECTORS, NUMBER OF SHARES PERCENT OF CLASS
DIRECTOR NOMINEES AND EXECUTIVE OFFICERS (1) BENEFICIALLY OWNED(2) OUTSTANDING
---------------------------------------------------------- --------------------------- --------------------
<S> <C> <C>
DIRECTORS, DIRECTOR NOMINEES AND EXECUTIVE OFFICERS:
William J. Patch 0 (3) 0
Michael E. Amideo 50,000 (4) *
Richard Veliz 50,000 (4) *
Sunny C. Vanderbeck 0 0
Dean M. Willard 0 0
Thomas Carmody 0 0
Garrick M. Hileman 0 0
Alan E. Rudd 0 0
Ilia Lekach 2,200,000 (5) 29.3
All directors, director nominees, executive officers
as a group (nine persons) 2,300,000 30.6
5% OR GREATER SHAREHOLDERS:
Alta Limited (6) 1,833,400 (7) 24.4
Dominion Income Management Corp. (8) 1,239,000 (8) 16.5
Dominion Income Management Corp Profit Sharing Plan (8) 800,000 (8) 10.6
Perfumania, Inc 2,000,000 26.6
</TABLE>
- ----------------
* less than 1%
(1) Except as otherwise indicated, the address of each beneficial owner is c/o
11701 N.W. 101st Road, Miami, Florida.
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<PAGE> 6
(2) Except as otherwise indicated, the persons named in this table have sole
voting and investment power with respect to all shares of Common Stock
listed, which include shares of Common Stock that such persons have the
right to acquire within 60 days.
(3) See "1999 Incentive Stock Option Plan-Outstanding Options" and
"Certain Relationships and Related Transactions" below.
(4) Represents 50,000 shares of Common Stock issuable upon exercise of stock
options. See "Employment Agreements-Michael E. Amideo," "Employment
Agreements-Richard Veliz," and "1999 Incentive Stock Option Plan-Change of
Control" below.
(5) Represents 2,000,000 shares of Common Stock owned by PFI and 200,000
shares of Common Stock issuable upon exercise of stock options.
(6) The address of Alta Limited is 8 Church Street, 3rd Floor, St. Helier,
Jersey, Channel Islands JE2 3NN.
(7) Represents 1,745,900 shares of Common Stock owned by Alta Limited and
87,500 shares of Common Stock exercisable under the Second Option.
(8) The address of Dominion Income Management Corp. and Dominion Income
Management Corp Profit Sharing Plan is 15302 25th Dr. SE, Mill Creek,
Washington 98102. According to the Schedule 13D filed by such parties,
they may be deemed to be affiliates of each other. Pursuant to Section
607.0902 of the Florida Statutes, these shares will not have voting rights
until granted by a vote of the Company's shareholders.
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<PAGE> 7
DIRECTORS AND EXECUTIVE OFFICERS
Upon the Effective Date, the resignation of Ilia Lekach will become
effective and those directors noted below as nominees will take office in
addition to Sunny C. Vanderbeck and Dean M. Willard, who were appointed to the
Board of Directors on the Closing Date and Michael E. Amideo who will remain as
a director of the Company.
The following table sets forth each of the directors or nominees for
director, such person's age and position with the Company.
<TABLE>
<CAPTION>
Name Age Position Held
-------------------------------- --------- ---------------------------------------------
<S> <C> <C>
William J. Patch 53 President, Chief Operating Officer and
Director nominee
Michael E. Amideo 30 Chief Financial Officer, Secretary and
Director
Richard Veliz 30 Chief Technology Officer
Sunny C. Vanderbeck 26 Director
Dean M. Willard 52 Director
Thomas Carmody 51 Director nominee
Garrick M. Hileman 26 Director nominee
Alan E. Rudd 48 Director nominee
Ilia Lekach 50 Director
</TABLE>
WILLIAM J. PATCH. Mr. Patch became the Company's President and Chief
Operating Officer on the Closing Date. Mr. Patch founded and has served as
President of VP Incorporated since 1989. At VP, his responsibilities have
included developing and managing global enterprise network programs,
professional services, logistics, acquisitions, sales, and strategic planning
for clients including Compaq, Dell, IBM, Kodak, SonicAir/UPS, and dozens of
smaller entrepreneurial companies. From 1976 to 1980, Mr. Patch was employed in
a number of executive positions with Bell Atlantic Business Systems Services and
its predecessor Sorbus Inc., including Vice President, marketing and sales. From
1972 to 1976, Mr. Patch was manager of equal employment opportunity for NCR
Corporation.
MICHAEL E. AMIDEO. Mr. Amideo has served as the Chief Financial Officer
and a director of the Company since June 1999 and as Secretary of the Company
since the Closing Date. From July 1999 until the Closing Date, he also served as
the Company's Chief Operating Officer. From April 1999 to June 1999, Mr. Amideo
served as controller of PFI. From 1995 to 1999, Mr. Amideo was employed by
PricewaterhouseCoopers LLP as a certified public accountant. From
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<PAGE> 8
1994 to 1995, Mr. Amideo was employed by Arthur Andersen LLP, as a certified
public accountant.
RICHARD VELIZ. Mr. Veliz has served as the Company's Chief Technology
Officer since April 1999. Mr. Veliz worked in Internet design and development
for Strategic Business Systems from July 1997 until April 1999. He performed the
same function for AIC, a computer consulting business, from August 1998 until
April 1999 and for Sterling Solutions Group, an IT solutions business from
February 1997 until April 1998. Mr. Veliz worked in software design for
Blockbuster Entertainment Group from May 1996 until January 1997 and for The
College Experience from December 1992 until May 1996.
SUNNY C. VANDERBECK. Mr. Vanderbeck is a co-founder of Data Return
Corporation ("Data Return") and has served as its Chairman and Chief Executive
Officer since Data Return's formation in August 1997. Before founding Data
Return, from July 1996 to January 1997, Mr. Vanderbeck was a technical product
manager and Lead Internet/Intranet Consultant for Software Spectrum, a reseller
of Microsoft products. From May 1995 to June 1996, while employed by Software
Spectrum, Mr. Vanderbeck served as an independent consultant to Microsoft where
he served as a team leader for Microsoft Messaging products and as a product
support engineer. From July 1994 to May 1995, Mr. Vanderbeck was an independent
consultant. From 1990 to 1994, Mr. Vanderbeck served in the U.S. Army Special
Operations unit as a Section Leader in the 2nd Ranger Battalion.
DEAN M. WILLARD. Mr. Willard has served as Chairman and Chief Executive
Officer of PBT Brands, Inc., a holding company which owns and operates Permatex,
Inc. ("Permatex") and Advanced Chemistry & Technology, Inc. ("AC Tech") since
August 1999. Permatex is a leading supplier of functional chemicals to the
automotive after market. AC Tech, a company founded by Mr. Willard, supplies
high performance sealant to the aircraft industry. Mr. Willard has also been
Chairman of the Board of Directors of Automotive Performance Group ("APG") since
September 1998 and its Chief Executive Officer since November 1998.
Mr. Willard also serves on the Board of Directors of American Pacific
Corporation, the sole source producer in North America of ammonium perchlorate,
the primary chemical component of solid propellants used in rocket and booster
motors by NASA, the military and a growing number of commercial launch vehicles.
From 1972 to 1989, Mr. Willard served as President and Chief Executive
Officer of Products Research & Chemical Corporation, an New York Stock Exchange
listed company ("PRC"). PRC was sold to Courtaulds PLC in 1989 and Mr. Willard
continued through 1995 in various capacities including Chief Executive Officer
and Vice Chairman. Prior to joining PRC, Mr. Willard served on the audit staff
of PricewaterhouseCoopers, LLP. Mr. Willard is a certified public accountant.
THOMAS H. CARMODY. Mr. Carmody has served as President and Chief
Executive Officer of Summit International since July 1999. Mr. Carmody served as
President and Chief Executive Officer of Continental Sports Group from 1998 to
July 1999. Mr. Carmody also serves as a director of APG. From 1989 to 1998, Mr.
Carmody was a Senior Vice President and General
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<PAGE> 9
Manager of Operations of Reebok International, Ltd. ("Reebok") where he had
management responsibility for Reebok's North American operations including
sales, marketing and distribution. Prior to joining Reebok, Mr. Carmody served
as a Director of Marketing for Nike and was a Deputy District Attorney for Santa
Clara County, California.
GARRICK M. HILEMAN. Mr. Hileman has served as a Managing Director of
ZeroDotNet, Inc. ("Zero.net") since September 1999. Zero.net is engaged
primarily in the development and implementation of a next-generation portal,
which supports business-to-business e-commerce. Currently, Zero.net has
approximately 20 investments in both private and public Internet companies
primarily in the business-to-business e-commerce. Zero.net works closely with
those companies to meet their growth objectives and form relationships with
strategic and financial partners. Mr. Hileman specializes in business
development, start-up financing, merger and acquisition analysis and management
consulting for the firm. In addition, Mr. Hileman currently serves on the board
of directors of Take to Auction, Inc., a privately held web-based community of
entrepreneurs and a Zero.net portfolio company. From 1996 to 1999, Mr. Hileman
was employed at Montgomery Securities where he worked both in the Financial
Services Investment Banking Group as a Financial Analyst and in the Equity
Research department. He received his B.A. in Business Administration with a
concentration in accounting from the University of Washington in 1996. Mr.
Hileman served as a student body president of the University of Washington from
1995 to 1996.
ALAN E. RUDD. Mr. Rudd has served as the Chief Executive Officer and
Chairman of Sundog Technologies, Inc., a Delaware corporation ("Sundog") since
November 1999. Sundog is the creator of Universal Update, a software product
that facilitates the sharing of information among disparate databases. Mr. Rudd
has served on the board of directors of several startup companies and is the
currently the chairman of Qui Vive Inc., a Colorado company that focuses on
email policy management software.
From 1996 to November 1999, Mr. Rudd was the Chief Executive Officer of
Vinca Corporation, a Utah-based company ("Vinca") that provided continuous
availability software for Microsoft, Novell and IBM distributed network
platforms. Under Mr. Rudd's leadership, Vinca became a recognized worldwide
leader in providing high availability solutions. In recognition of his
achievements, Mr. Rudd was named Utah's 1999 Entrepreneur of the Year. Vinca was
acquired by Legato Systems of Palo Alto, CA on July 31, 1999.
Mr. Rudd was part of the early management team at Novell Inc.
("Novell") from 1986 to 1996, where he played an integral role in establishing
Novell as the worldwide leader in the providing network computing solutions. At
Novell, Rudd held several key management positions in sales and marketing
including Vice President of OEM Operations.
From 1979 to 1986, Mr. Rudd practiced law in Chicago, Illinois with
State Farm Insurance and Prime Computer. Mr. Rudd holds B.S. and J.D. degrees
from Brigham Young University.
ILIA LEKACH . Mr. Lekach served as a director of the Company since its
inception in January 1999 and as the Company's Chairman of the Board and Chief
Executive Officer from January 1999 to July 1999. Mr. Lekach is a co-founder of
PFI and was PFI's Chairman of the Board and
8
<PAGE> 10
Chief Executive Officer from its incorporation in 1988 until his resignation in
April 1994. In October 1998, Mr. Lekach was reappointed PFI's Chairman of the
Board and Chief Executive Officer. Mr. Lekach served as Chairman of the Board of
L. Luria & Son, Inc., a South Florida-based catalog retailer from January 1997
through August 1997. Mr. Lekach has also served as Chairman of the Board and
Chief Executive Officer of Parlux Fragrances, Inc., a publicly traded
manufacturer of fragrance and related products since 1990.
In August 1996, ORM, Inc. and its affiliates, of which Mr. Lekach, and
Rachmil Lekach, a former executive officer and director of the Company, are
principals, purchased a controlling interest in L. Luria & Son, Inc., a catalog
showroom with serious financial problems. Shortly thereafter they joined L.
Luria & Son, Inc. in management positions and attempted to work out its problems
with the creditors. Those efforts failed and on August 13, 1997, L. Luria & Son,
Inc. filed for relief under Chapter 11 of the Bankruptcy Code and has since been
liquidated.
Following the Effective Date, the Company will designate audit and
compensation committees of the Board of Directors, which will each have a
majority of non-employee directors.
The Company's amended and restated Articles of Incorporation divide the
Board of Directors into three approximately equal classes with staggered terms.
Directors are elected for three-year terms and, in each case, until their
successors are duly elected and qualified or until their earlier death,
resignation or removal. The members of each class will be appointed following
the Effective Date.
Executive officers are elected annually by the Board of Directors and
serve at the discretion of the Board of Directors.
COMPENSATION OF DIRECTORS
The Company's non-employee directors will receive compensation for
their services as a member of the Board of Directors of the Company in the
amount of $5,000 per year. The Company will reimburse the non-employee directors
for any expenses related to attendance at meetings. Non-employee directors will
also be eligible to receive grants of stock options under the Company's 1999
Incentive Stock Option Plan.
COMPLIANCE WITH SECTION 16(a) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's executive
officers, directors and holders of more than 10% of the Company's Common Stock,
to file reports of ownership and changes in ownership with the Securities and
Exchange Commission (the "Commission"). Such persons are required to furnish the
Company with copies of all Section 16(a) forms they file. The Company has only
been subject to the requirement of Section 16(a) since completion of its initial
public offering in September 1999.
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<PAGE> 11
LIMITATION OF LIABILITY AND INDEMNIFICATION MATTERS
The Company's amended and restated Articles of Incorporation contains
provisions to indemnify directors and officers to the extent permitted by
Florida law. Under current law, indemnification or advancement of expenses may
not be made to or on behalf of any director, officer, employee, or agent of the
Company if a judgment or other final adjudication establishes that his or her
actions, or omissions to act, were material to the cause of action so
adjudicated and constitute:
o a violation of the criminal law, unless the director, officer,
employee, or agent had reasonable cause to believe his or her
conduct was lawful or had no reasonable cause to believe his
or her conduct was unlawful;
o a transaction from which the director, officer, employee, or
agent derived an improper personal benefit;
o in the case of a director, liability for unlawful
distributions; or
o willful misconduct or a conscious disregard for our best
interests in a proceeding by or in the right of the
corporation to procure a judgment in its favor or in the
proceeding by or in the right of a shareholder.
The Company's bylaws provide that the Company will indemnify its
directors, officers and employees against judgments, fines, amounts paid in
settlement and reasonable expenses.
EXECUTIVE COMPENSATION
The Company incorporated in January 1999 and through December 31, 1999
have paid compensation to Ilia Lekach, Rachmil Lekach, Michael E. Amideo and
Richard Veliz, in the amounts of $50,000, $332,346, $63,773 and $68,297
respectively. See "1999 Incentive Stock Option Plan" with respect to stock
options granted to Rachmil Lekach, Michael E. Amideo and Richard Veliz.
EMPLOYMENT AGREEMENTS
RACHMIL LEKACH. Effective May 1, 1999, the Company entered into an
employment agreement with Rachmil Lekach under which Mr. Lekach served as the
Company's President. The employment agreement provided for a base salary of
$200,000 and other benefits, including certain health benefits. Pursuant to the
employment agreement, Mr. Lekach has been granted options under the 1999
Incentive Stock Option Plan to purchase 225,000 shares of Common Stock at an
exercise price of $7.00 per share. These stock options vested as of the date of
grant and will expire ten years from the date of the grant.
Pursuant to the employment agreement, if Mr. Lekach's employment is
terminated following a change in control of the Company, he is entitled to
receive a lump sum payment equal to three times his base salary. In
contemplation of the exercise of the First Option, Mr. Lekach received a payment
of $600,000.
10
<PAGE> 12
MICHAEL E. AMIDEO. The Company is party to an employment agreement with
Michael E. Amideo for a term of three years expiring in July 2002. The
employment agreement provides for a base salary of $120,000 with an annual
increase of at least 5%, and other benefits, including health benefits. Mr.
Amideo has been granted options under the Company's 1999 Incentive Stock Option
Plan to purchase 50,000 shares of Common Stock vesting over a three-year period
with an exercise price of $7.00 per share.
Pursuant to the employment agreement by and between the Company and
Michael E. Amideo, in the event of a change in control of the Company, his
salary and his stock options would increase by 100% and his stock options would
automatically vest. Accordingly, if this change of control provision in the
employment agreement is triggered upon the exercise of the First Option, Mr.
Amideo's salary would be increased to $240,000 and his number of stock options
would increase to 100,000. As of January 20, 2000, no determination has been
made as to the applicability of the change of control provision to the exercise
of the First Option.
RICHARD VELIZ. The Company is party to an employment agreement with
Richard Veliz for a term of three years expiring in July 2002. The employment
agreement provides for a base salary of $140,000 with an annual increase of at
least 5%, and other benefits, including health benefits. Mr. Veliz has been
granted options under the Company's 1999 Incentive Stock Option Plan to purchase
50,000 shares of Common Stock vesting over a three-year period with an exercise
price of $7.00 per share.
Pursuant to the employment agreement by and between the Company and
Richard Veliz, in the event of a change in control of the Company, his salary
and his stock options would increase by 100% and his stock options would
automatically vest. Accordingly, if this change of control provision in the
employment agreement is triggered upon the exercise of the First Option, Mr.
Veliz's salary would be increased to $280,000 and his number of stock options
would increase to 100,000. As of January 20, 2000, no determination has been
made as to the applicability of the change of control provision to the exercise
of the First Option.
1999 INCENTIVE STOCK OPTION PLAN
GENERAL. The Company's 1999 Incentive Stock Option Plan provides that
options to acquire shares of Common Stock may be granted to key officers,
employees, consultants, advisors and directors or others designated by the Board
of Directors. The 1999 Incentive Stock Option Plan assists in attracting and
retaining individuals who will contribute to the Company's success and achieve
appreciation in their investment. Awards under the 1999 Incentive Stock Option
Plan may take the form of stock options, including corresponding share
appreciation rights or SARs. The Board of Directors of the Company will amend
the 1999 Incentive Stock Option Plan to increase the number of shares of Common
Stock authorized and reserved for issuance under the 1999 Incentive Stock Option
Plan, subject to shareholder approval.
SHARE AUTHORIZATION. Up to 1,000,000 shares of Common Stock may be
awarded under the 1999 Incentive Stock Option Plan. Unexercised portions of
options, forfeited options and Common Stock subject to any awards that are
otherwise surrendered by a participant without
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<PAGE> 13
receiving any payment or other benefit with respect thereto may again be subject
to new awards under the 1999 Incentive Stock Option Plan. Shares subject to
options with respect to which SARs are exercised, are not again available for
the grant of awards under the 1999 Incentive Stock Option Plan.
The shares to be issued or delivered under the 1999 Incentive Stock
Option Plan are authorized and unissued shares, or issued shares that may be
acquired in the open market or from private sources by the Company, or both.
1999 INCENTIVE STOCK OPTION PLAN ADMINISTRATION. The 1999 Incentive
Stock Option Plan is administered by the compensation committee. The Board of
Directors may remove members from, add members to, or fill vacancies in the
compensation committee. The committee may establish such rules and regulations
as it may deem appropriate for the conduct of meetings and proper administration
of the 1999 Incentive Stock Option Plan. Subject to the provisions of the 1999
Incentive Stock Option Plan, the committee may grant awards under the 1999
Incentive Stock Option Plan, interpret the provisions of the 1999 Incentive
Stock Option Plan and administer the 1999 Incentive Stock Option Plan or any
award thereunder as it may deem necessary or advisable.
OPTIONS. Incentive stock options meeting requirements of Section 422 of
the Internal Revenue Code of 1986, as amended, and nonqualified stock options
that do not meet such requirements are both available for under the 1999
Incentive Stock Option Plan. The term of each option will be determined by the
committee. No option will be exercisable prior to six months from the date of
grant or more than ten years after the date of grant (except in the case of
options that are nonqualified stock options, where the committee can specify a
longer period). Options may also be subject to restrictions on exercise, such as
exercise in periodic installments, as determined by the committee.
In general, the exercise price for incentive stock options must be at
least equal to 100% of the fair market value of the shares on the date of the
grant and the exercise price for nonqualified stock options will be determined
by the compensation committee at the time of the grant and will be at least
equal to 50% of the fair market value of the shares on the date of the grant.
The exercise price can be paid in cash or by tendering shares owned by the
participant and held for at least six months. Options are not transferable
except by will or the laws of descent and distribution and may generally be
exercised only by the participant (or his guardian or legal representative)
during his or her lifetime, provided, however, the nonqualified stock options
may, under certain circumstances, be transferable to family members and trusts
for the benefit of the participant or his family members.
SHARE APPRECIATION RIGHTS. The 1999 Incentive Stock Option Plan
provides that SARs may be granted in connection with the grant of options. Each
SAR must be associated with a specific option and must be granted at the time of
grant of such option. A SAR is exercisable only to the extent the related option
is exercisable.
ANTIDILUTION PROVISIONS. The number of shares authorized to be issued
under the 1999 Incentive Stock Option Plan and subject to outstanding awards
(and the grant or exercise price
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<PAGE> 14
thereof) may be adjusted to prevent dilution or enlargement of rights under
certain circumstances.
CHANGE IN CONTROL. Upon the occurrence of a change in control of the
Company (as defined in the 1999 Incentive Stock Option Plan), stock options and
related SARs may become immediately exercisable, the restricted shares may fully
vest and stock purchase loans may be forgiven in full.
TERMINATION AND AMENDMENT. The 1999 Incentive Stock Option Plan will
automatically terminate in 2009. No awards may be made after that date. Awards
outstanding on the termination date will remain valid in accordance with their
terms. The terms of awards under the 1999 Incentive Stock Option Plan may be
amended by the compensation committee.
OUTSTANDING OPTIONS. As of December 31, 1999, the Company has granted
options to purchase a total of 740,000 shares of Common Stock at a price ranging
from $7.00 to $10.50 per share under the 1999 Incentive Stock Option Plan,
including options to purchase 200,000, 225,000, 50,000 and 50,000 shares at a
price of $7.00 per share granted to Ilia Lekach, Rachmil Lekach, Michael E.
Amideo and Richard Veliz, respectively. The options to purchase shares of Common
Stock to Michael E. Amideo and Richard Veliz may be subject to increase as
described in "Employment Agreements" above. On January 11, 2000, the Company
granted options to William J. Patch to purchase 400,000 shares of Common Stock
at an exercise price which will equal the closing price of the Common Stock on
the date of the grant less a discount, to be determined by the Board of
Directors. 100,000 of such options vest one year from the date of grant with the
remaining 300,000 options vesting in equal monthly installments over the next 36
months. These options are subject to the Company's Board of Directors and
shareholders of the Company approving an increase in the number of shares of
Common Stock authorized and reserved for issuance under the 1999 Incentive Stock
Option Plan.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In connection with his joining the Company as President and Chief
Operating Officer, the Company will negotiate an employment agreement with
William J. Patch. The terms of such employment agreement are expected to provide
for a base salary, a performance bonus and stock options to purchase 400,000
shares of Common Stock and/or restricted stock grants. In addition, the Company
may acquire the assets of a privately held software company owned by William J.
Patch for cash and/or stock. The total number of shares of Common Stock that
will be issued to William J. Patch under restricted stock grants and/or in the
asset acquisition will not exceed 100,000 shares of Common Stock. The terms of
all such arrangements are being negotiated and have not been finalized. Such
arrangements will be subject to approval by a vote of disinterested members of
the Board of Directors.
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SIGNATURES
In accordance with Section 13 or 15(d) of the Securities Exchange Act
of 1934, the Registrant has duly caused this report to be signed on its behalf
by the undersigned, thereunto duly authorized.
perfumania.com, inc.
Dated: January 20, 2000 By: /s/ William J. Patch
----------------------------------
William J. Patch, President
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