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
January 4, 2001
Date of Report (Date of earliest event reported)
EBIZ ENTERPRISES, INC.
(Exact name of registrant as specified in its charter)
Nevada 0-27721 84-1075269
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(State or other Jurisdiction of (Commission File No.) (IRS Employer
Incorporation Identification No.)
15695 North 83rd Way
Scottsdale, Arizona 85260
(Address of Registrant's Principal Executive Offices) (Zip Code)
(480) 778-1000
(Registrant's telephone number, including area code)
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Item 2. Acquisition or Disposition of Assets.
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Effective January 4, 2001 (the "Effective Time"), JBSI Acquisition,
Inc. ("Merger Sub"), a newly formed Texas corporation and wholly-owned
subsidiary of EBIZ Enterprises, Inc., a Nevada corporation (the "Company"),
merged (the "Merger") with and into Jones Business Systems, Inc., a Texas
Corporation ("JBSI") pursuant to an Agreement and Plan of Merger dated November
17, 2000 (the "Merger Agreement"). JBSI assembles markets and sells customized
computer servers. The description contained in this Item 2 of the transactions
consummated pursuant to the terms and conditions of the Merger Agreement is
qualified in its entirety by reference to the full text of the Merger Agreement,
and the amendments thereto, which are incorporated herein by reference and are
filed as exhibits to this Current Report on Form 8-K (this "Form 8-K").
At the Effective Time, each outstanding share of the common stock,
$0.01 par value per share, of JBSI ("JBSI Common Stock") was converted into the
right to receive 1.549911636 shares of common stock of the Company, par value
$.001 per share ("EBIZ Common Stock"), and each outstanding share of the Series
A Convertible Preferred Stock, $0.01 par value per share, of JBSI ("JBSI
Preferred Stock") was converted into the right to receive 13.01925775 shares of
EBIZ Common Stock. A total of 8,300,000 shares of EBIZ Common Stock were issued
in the merger. In addition, each unexpired outstanding option to purchase
JBSI Common Stock was converted into an exercisable option to purchase that
number of shares of EBIZ Common Stock equal to the number of shares of JBSI
Common Stock that could have been purchased under such option multiplied by
1.78, at a price per share of EBIZ Common Stock equal to the per share exercise
price of such option divided by 1.78. Options to acquire a total of 3,695,912
shares of EBIZ Common Stock were issued in the merger. The number of shares
of EBIZ Common Stock to which each holder of securities of JBSI is entitled to
recieve under the Merger Agreement was determined by negotiations between the
parties.
On a pro rata basis, five percent of the shares of EBIZ Common Stock
issued to the holders of JBSI Common Stock and JBSI Preferred Stock will be held
in escrow pending the resolution of any indemnification claims. Indemnification
claims must be made within nine months following the effective date of the
Merger. The maximum indemnity liability of the JBSI shareholders is $1,000,000
and no indemnification claims will be paid if the net indemnification amount is
less than $250,000.
The Merger was intended to qualify as a tax deferred reorganization
under Section 368(a) of the Internal Revenue Code of 1986, as amended, and to be
accounted for on a purchase basis. Neither the Company nor any of its
affiliates, directors, or officers or any affiliate of any of the Company's
directors or officers had any material relationship with the holders of
securities of JBSI at or before the Effective Time, with the exception that Alok
Mohan is a member of the Board of Directors for both the Company and JBSI and in
addition is the chairman of the Board of Directors of Santa Cruz Operations,
Inc., which is a shareholder in both the Company and JBSI.
In connection with the Merger, several other agreements were executed,
including a Shareholder Voting Agreement and Proxy, by and among the Company and
certain shareholders of the Company, dated December 28, 2000 (the "Shareholder
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Agreement"), attached to this Form 8-K as Exhibit 2.4, a Registration Rights
Agreement, by and among the Company and certain shareholders of JBSI, dated as
of January 4, 2001, attached to this Form 8-K as Exhibit 2.5, and a Lock Up
Agreement, dated as of November 30, 2000, attached to this Form 8-K as Exhibit
2.6. Pursuant to the Shareholder Agreement, at the Effective Time Bruce Parsons
was elected to the Board of Directors of the Company.
Item 7. Financial Statements, Pro Forma Financial Information and Exhibits.
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(a) Financial Statements of Business Acquired.
The financial statements required to be filed in this Form 8-K will be
filed as soon as practicable, but not later than 60 days after the date of
filing of this Form 8-K.
(b) Pro Forma Financial Information.
The financial statements required to be filed in this Form 8-K will be
filed as soon as practicable, but not later than 60 days after the date of
filing of this Form 8-K.
(c) Exhibits.
Exhibit No. Description
2.1 Agreement and Plan of Merger, dated November 17, 2000,
by and among Ebiz Enterprises, Inc., a Nevada corporation,
Jones Business Systems, Inc., a Texas corporation, and JBSI
Acquisition, Inc., a Texas corporation.
2.2 First Amendment to Agreement and Plan of Merger, dated
December 22, 2000.
2.3 Second Amendment to Agreement and Plan of Merger, dated
January 3, 2001.
2.4 Shareholder Voting Agreement and Proxy by and among the
Ebiz Enterprises, Inc., a Nevada corporation ("EBIZ"), and
certain shareholders of EBIZ, dated December 28, 2000.
2.5 Registration Rights Agreement, by and among Ebiz
Enterprises, Inc., a Nevada corporation, and Shareholders
of Jones Business Systems, Inc., dated as of January 4,
2001.
2.6 Lock-up Letter dated as of November 30, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
EBIZ ENTERPRISES, INC.
By: /s/ David S. Shaw
David S. Shaw
Chief Executive Officer
Dated: January 19, 2001
