<PAGE> SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
(Amendment No. )
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Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ x ]
Check the appropriate box:
[ ] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)(2))
[x] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section
240.14a-12
PREMIER CONCEPTS, INC.
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(Name of Registrant as Specified In Its Charter)
Neuman, Drennen & Stone, LLC, 1507 Pine Street, Boulder, Colorado 80302
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(Name of Person Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box)
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-
11.
1) Title of each class of securities to which transaction applies:
2) Aggregate number of securities to which transaction applies:
3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on
which the filing fee is calculated and state how it was
determined):
4) Proposed maximum aggregate value of transaction:
5) Total fee paid:
[ ] Fee Paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the Form or Schedule and the date of its filing.
1) Amount Previously Paid:
2) Form, Schedule or Registration Statement No.:
3) Filing Party:
4) Date Filed:
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
NOTICE OF SPECIAL MEETING OF SHAREHOLDERS
TO BE HELD JUNE 5, 1999
A Special Meeting of Shareholders of Premier Concepts, Inc. ("Premier" or the
"Company") will be held at the principal executive offices of the Company,
3033 South Parker Road, Suite 120, Aurora, Colorado 80014 on June 5, 1999 at
10:00 o'clock a.m. for the purpose of considering and voting upon the
following:
1. To ratify and approve the Second Stock Purchase Agreement between
the Company, on the one hand, and Infusion Capital Partners, LLC, on
the other, and the other transactions provided for in such
Agreements.
2. In the event Proposal No. 1 above is rejected by the Shareholders,
to ratify and approve the issuance by the Company to Equisition
Capital Partners, LLC a common stock purchase warrant exercisable to
purchase 35,200 shares of Common Stock at an exercise price of $4.10
per share.
3. Any other matters properly brought before said meeting or any
adjournment thereof.
Information relating to the above matters is set forth in the accompanying
Proxy Statement. Only holders of outstanding shares of Premier Common Stock
of record at the close of business on December 10, 1998 will be entitled to
vote at the meeting or any adjournment thereof.
Shareholders are cordially invited to attend the meeting in person.
IMPORTANT
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN PERSON, IT WOULD BE
APPRECIATED IF YOU WOULD PROMPTLY FILL IN, SIGN AND DATE THE ENCLOSED PROXY
STATEMENT AND RETURN IT IN THE ENCLOSED STAMPED ENVELOPE. Any proxy may be
revoked at any time before it is voted by written notice mailed or delivered
to the Secretary, by receipt of a proxy properly signed and dated subsequent
to an earlier proxy, and by revocation of a written proxy by request in person
at the Annual Meeting of Shareholders. If not so revoked, the shares
represented by the proxy will be voted in accordance with your instruction on
the proxy form.
PREMIER CONCEPTS, INC.
By: /s/ Todd Huss
------------------------------------
Todd Huss, Secretary
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
3033 South Parker Road, Suite 120
Aurora, Colorado 80014
PROXY STATEMENT
FOR
SPECIAL MEETING OF SHAREHOLDERS
We are furnishing this Proxy Statement to you, as a shareholder of
Premier Concepts, Inc. (the "Company") in connection with our solicitation
of proxies to be used at the Company's Special Meeting of Shareholders (the
"Meeting"). The Meeting will be held on June 5, 1999, at the time, place
and for the purposes set forth in the accompanying Notice of Special
Meeting of Shareholders, and at any adjournment thereof. When you properly
execute and return the accompanying proxy, the shares of common stock it
represents will be voted at the Meeting and, where you specify a choice on
the proxy, will be voted in accordance with your specifications. If you do
not specify a choice on the proxy, the shares it represents will be voted
FOR the ratification and approval of that certain Second Stock Purchase
Agreement dated as of March 11, 1999 ("Stock Purchase Agreement" or the
"Agreement") between the Company, on the one hand, and Infusion Capital
Partners, LLC ("Infusion"), on the other, or, should the Second Stock
Purchase Agreement not be ratified and approved by the Company's
Shareholders at the Meeting, FOR the ratification and approval of the
issuance to Equisition Capital LLC of a warrant exercisable to purchase
35,200 shares of the Company's Common Stock as more fully described
hereinbelow, and according to the judgment of the persons named in the
enclosed proxies as to any other action which may properly come before the
Meeting or any adjournment thereof.
YOU MAY REVOKE YOUR PROXY AND RECLAIM YOUR RIGHT TO VOTE AT ANY TIME
BEFORE YOUR PROXY IS VOTED BY MAILING OR DELIVERING A WRITTEN NOTICE OF
REVOCATION TO THE SECRETARY. WE WILL ALSO CONSIDER YOUR PROXY TO HAVE BEEN
REVOKED IF WE RECEIVE A PROPERLY SIGNED PROXY THAT IS DATED AFTER AN
EARLIER PROXY. YOUR PROXY MAY ALSO BE REVOKED BY REQUEST, IN PERSON, AT
THE MEETING. IF YOU DO NOT REVOKE YOUR PROXY, THE SHARES REPRESENTED BY
IT WILL BE VOTED IN ACCORDANCE WITH THE INSTRUCTIONS ON THE PROXY FORM.
We are mailing this Statement on or about May 3, 1999, to our
Shareholders eligible to vote at the Meeting. Concurrently with the
mailing of this Statement, we are furnishing a copy of the Agreement.
We are bearing all costs of soliciting proxies, and expressly reserve the
right to solicit proxies otherwise than by mail. We may follow the
solicitation of proxies by mail with telephone, telegraph or other personal
solicitations of certain Shareholders and brokers which may be conducted by
one or more of our Directors or by certain of our officers or employees.
We may request banks and brokers or other similar agents or fiduciaries for
the voting instructions of beneficial owners and reimburse the expenses
incurred by such agents or fiduciaries in obtaining such instructions. As
of the date of this mailing, however, we have not made any contracts or
arrangements for such solicitations, hence we cannot identify any parties
or estimate the cost of such solicitation.
Only Shareholders of record as of the close of business on April 30, 1999
(the "Record Date") will be entitled to vote at the Meeting.
Representation of a majority of our shares of common stock outstanding on
such date, either in person or by proxy, constitutes a quorum for the
Meeting. When a quorum is present, the vote by the holders of a majority
of the shares represented at the Meeting shall decide the proposals to be
voted upon at the Meeting. As of the Record Date, giving effect to the 1-
for-2 reverse split effected on April 24, 1999, we had outstanding
1,067,277 shares of common stock, $.002 par value ("Common Stock"), with
each share being entitled to one vote.
1. SECURITY OWNERSHIP OF MANAGEMENT AND PRINCIPAL STOCKHOLDERS.
This table sets forth, as of the date of this Proxy Statement, and as
adjusted for the sale of Option Stock, the stock ownership of each person
we know to be the beneficial owner of five (5%) percent or more of our
common stock, of all our directors individually and of all our directors
and officers as a group. Each person listed below has sole voting and
investment power with respect to the shares shown, except as noted.
<TABLE>
<CAPTION>
Name & Address Shares Beneficially Owned
of Beneficial Owner -------------------------
- -------------------- Number Percent
------ -------
<S> <C> <C>
Sissel B. Greenberg(2) 80,000 7.1%
3033 S. Parker Rd., #120
Aurora, CO 80014
William Nandor(3) 9,000 0.8%
2698 Gapwall Court
Pleasanton, California 94566
Simona Katz Yuffa(4) 7,500 0.7%
3033 S. Parker Rd., #120
Aurora, CO 80014
John M. Gerber, Esq.(5) -0- 0.%
1601 Market Street, Suite 2450
Philadelphia, PA 19103
Todd Huss(6) 42,000 3.8%
3033 S. Parker Rd., #120
Aurora, CO 80014
Kevin O'Brien(7) 10,000 0.9%
3033 S. Parker Rd., #120
Aurora, CO 80014
Equisition Capital, LLC(8) 176,615 16.6%
1601 Market Street, Suite 2450
Philadelphia, PA 19103
Birgit LaFace 54,000 5.1%
1168 Olympic View Lane
Avacortas, WA 98221
Directors and Officers as 144,300 12.1%
a Group (6 persons)
- ------------------------------------
</TABLE>
(1) Shares not outstanding but deemed beneficially owned by virtue of the
individual's right to acquire them as of the date of this Proxy
Statement, or within sixty (60) days of such date, are treated as
outstanding when determining the percent of the class owned by such
individual and when determining the percent owned by a group.
(2) Includes incentive stock options to purchase 25,000 shares of the
Common Stock at an exercise price of $1.375 per share, 20,000 shares
of the Common Stock at an exercise price of $3.75 per share, 10,000
shares of the Company's common stock at an exercise price of $5.00 per
share and 12,500 shares of the Common Stock at an exercise price of
$6.50 per share, all of which were granted under the Company's Stock
Incentive Plan. Also includes non-qualified stock options to purchase
1,500 shares of the Common Stock at an exercise price of $5.00 per
share granted to Ms. Greenberg in return for her agreement to
personally guarantee the Company's corporate office lease. Does not
include incentive stock options exercisable to purchase up to 50,000
shares of common stock at a price equal to the market price of the
Common Stock on the date of grant, subject to future grant and
vesting.
(3) Includes non-qualified stock options exercisable to purchase 2,500
shares of Common Stock at an exercise price of $6.50 per share and
non-qualified stock options exercisable to purchase 5,000 shares of
Common Stock at an exercise price of $7.00 per share.
(4) Includes non-qualified stock options exercisable to purchase 2,500
shares of Common stock at an exercise price of $3.25 per share and
non-qualified stock options exercisable to purchase 5,000 shares of
Common Stock at an exercise price of $7.00 per share.
(5) Does not include non-qualified stock options exercisable to purchase
5,000 shares of the Common Stock at an exercise price of $2.00 per
share which are subject to future vesting.
(6) Includes incentive stock options exercisable to purchase 12,500 shares
of the Common Stock at an exercise price of $1.375, 10,000 shares of
Common Stock at an exercise price of $5.00 per share, incentive stock
options exercisable to purchase 2,500 shares of Common Stock at an
exercise price of $6.50 per share, and incentive stock options
exercisable to purchase an additional 10,000 shares of Common Stock at
an exercise price of $7.00. Does not include additional Incentive
Stock Options exercisable to purchase an additional 2,500 shares of
Common Stock at an exercise price of $7.00 per share which are not yet
vested. Does not include additional incentive stock options
exercisable to purchase up to 25,000 shares of Common Stock at an
exercise price equal to the market value of the Company's Common Stock
on the date of grant, which additional incentive stock options are
subject to future grant and vesting.
(7) As part of his employment agreement as Chief Operating Officer of the
Company, Mr. O'Brien was granted incentive stock options exercisable
to purchase 10,000 shares of Common Stock at an exercise price of
$1.375. Does not reflect additional incentive stock options
exercisable to purchase up to 20,000 shares of Common Stock at
exercise prices equal to the fair market value of the Company's Common
Stock on the date of grant which may be granted to Mr. O'Brien on the
first and second anniversaries of his employment, subject to his
continued employment on those dates.
(8) Equisition Capital, LLC is a Delaware limited liability company whose
managers are David M. M. Taffet, Todd M. Spehler and Therese Zangara.
Voting and investment power with respect to the securities
beneficially owned by Equisition Capital, LLC is exercised by its
managers. Mr. Taffet is the indirect controlling voting equity member
of Equisition Capital, LLC. Mr. Taffet, Mr. Spehler and Ms. Zangara
disclaim beneficial ownership of shares owned by Equisition Capital,
LLC for purposes of Section 16 under the Exchange Act. Also does not
give effect to the issuance of additional securities in the event the
Second Stock Purchase Agreement is ratified and consummated.
Certain Relationships and Related Transactions
Stock Redemption
On December 27, 1996, we completed a bridge financing (the "Bridge
Note Financing") consisting of $1,120,000 in Convertible Notes and 200,000
Class B Warrants, realizing net proceeds of $1,041,600. We used $624,325
of the net proceeds to redeem from certain former securityholders an
aggregate of 94,590 shares of Common Stock and 32,500 Class C Warrants. The
redemption consisted of all the equity securities of the Company owned by
these former securityholders. We undertook this redemption in order to
facilitate a secondary public offering of our securities which we
successfully completed on April 25, 1997. The redemption was also
undertaken to expedite our application to have our securities listed on
NASDAQ. The price paid to these former securityholders in connection with
this redemption was $6.50 per share of Common Stock and an aggregate
redemption price of $10,000 for all 32,500 Class C Warrants.
All transactions between the Company and our officers, Directors,
principal shareholders, or other affiliates have been and will be on terms
no less favorable to the Company than could be obtained from unaffiliated
third parties on an arms-length basis and will be approved by a majority of
our independent, disinterested Directors.
Infusion Capital Agreements
Effective February 26, 1999, the Company entered into an Agreement
Regarding Basic Terms with Infusion Capital Partners, LLC ("Infusion") (the
"Basic Agreement"). Under the terms of the Basic Agreement, effective
March 11, 1999, the Company entered into a Management Services Agreement
with Infusion and a First Stock Purchase Agreement with Equisition Capital,
LLC ("Equisition"). Mr. David M. M. Taffet would be deemed a controlling
person of both Infusion and Equisition.
Under the terms of the Management Services Agreement, Infusion will
provide certain financial advisory services for the Company for an initial
term of one year. In consideration of those services, Infusion received an
initial payment of $10,000, will receive additional monthly payments of
$5,000 payable over the next three months and an additional $25,000 payable
upon consummation of a Second Stock Purchase Agreement described below,
until a total of $50,000 has been paid. In addition, concurrently with the
consummation of the Second Stock Purchase Agreement, Infusion will receive
a warrant exercisable for three years to purchase 25,000 shares of the
Company's Common Stock at an exercise price of $1.25 per share.
Under the terms of the First Stock Purchase Agreement, Equisition
purchased an aggregate of 176,615 shares of the Company's Common Stock at a
price of $1.25 per share. In addition, Equisition exercised its right to
designate one person to serve as a member of the Company's Board of
Directors by designating John M. Gerber, who became elected to serve as an
outside director of the Company effective March 12, 1999. Mr. Gerber is a
licensed attorney practicing in Philadelphia, Pennsylvania who serves as
corporate counsel to Infusion and Equisition.
The Basic Agreement also provides for the execution and delivery of a
Second Stock Purchase Agreement more fully described below, subject to the
approval of the Company's shareholders which is being sought by the
solicitation of proxies pursuant to this Proxy Statement.
Compliance with Section 16(a) of the Exchange Act
Section 16(a) of the Securities Exchange Act of 1934 (the "Exchange
Act") requires any person who owns more than ten percent of any class of
any equity security which is registered pursuant to Section 12 of the
Exchange Act, or who is a director or an officer of the issuer of such
security, to file reports of ownership and changes in ownership with the
Securities and Exchange Commission (the "SEC"). Directors, officers, and
greater than ten-percent shareholders are also required by SEC regulation
to furnish the issuer of such securities with copies of all Section 16(a)
reports filed.
Because we do not have a class of equity securities which is
registered pursuant to Section 12 of the Exchange Act, no persons are
required to file reports of ownership and changes in ownership with the
SEC, or to provide us with copies of such reports.
2. SECOND STOCK PURCHASE AGREEMENT AND RELATED TRANSACTIONS.
The following discussion is qualified in its entirety by its reference to
the more detailed information appearing elsewhere herein, including the
Second Stock Purchase Agreement and Agreement Regarding Basic Terms, which
have been attached to this Proxy Statement as Appendices A and B and which
are incorporated herein by this reference. Shareholders should examine
carefully this Statement and the Appendices in their entirety.
Background of the Transaction
Throughout fiscal 1999, the Company engaged in active discussions with
several parties in an effort to obtain additional working capital to enable
the Company to (i) expand its e-commerce marketing activity (ii) reduce
debt and (iii) provide additional general working capital. Following
extensive negotiations, the Company has entered into certain agreements
described below with Infusion Capital Partners, LLC ("Infusion") and
certain affiliated entities (hereafter collectively referred to as the
"Infusion Agreements").
Agreement Regarding Basic Terms
The Company has entered into the Basic Agreement with Infusion which
serves as an omnibus agreement for the various transactions covered by the
Infusion Agreements, all of which are either with Infusion or affiliates of
Infusion. The Basic Agreement provides for the execution of the following
further agreements:
1. Management Services Agreement with Infusion
2. First Stock Purchase Agreement with Equisition Capital, LLC
3. E-Commerce Services Agreement with MeridianTelesis, LLC
4. Second Stock Purchase Agreement with Infusion
Effective March 11, 1999, the Company executed and delivered in a
concurrent closing the Management Services Agreement, the First Stock
Purchase Agreement and deferred execution of the E-Commerce Services
Agreement which are summarized below.
Management Services Agreement
Under the Management Services Agreement, the Company engaged the
services of Infusion to provide financial advisory and other related
services for an initial term of one year. Under the agreement, the Company
will pay to Infusion the sum of $50,000, payable as follows: (i) $10,000
was paid at closing; (ii) the sum of $15,000 is payable in three
consecutive monthly installments of $5,000 each; and (iii) the remaining
$25,000 is payable upon and subject to the consummation of the Second Stock
Purchase Agreement in the same manner as the initial $25,000 in payments.
In addition, subject to consummation of the Second Stock Purchase
Agreement, the Company has also agreed to issue to Infusion as an
additional financing fee a warrant exercisable for three years to purchase
25,000 shares of the Company's Common Stock at an exercise price of $1.25
per share. In the event the Second Stock Purchase Agreement does not
close, Infusion's cash compensation under the Management Services Agreement
and the number of shares issuable under Infusion's Warrant will be reduced
by a factor of 56%.
First Stock Purchase Agreement
The Company also consummated the First Stock Purchase Agreement
pursuant to which Equisition purchased a total of 176,615 shares of the
Company's Common Stock for $1.25 per share, or a total purchase price of
$220,768.75. The shares issued to Equisition represented immediately prior
to their issuance 19.9% of the Company's then issued and outstanding shares
of Common Stock. In addition, under the First Stock Purchase Agreement,
Equisition had the right to designate one person to serve as a member of
the Company's Board of Directors, which Equisition exercised by designating
John M. Gerber as a director of the Company. Mr. Gerber was elected as a
member of the Company's Board of Directors effective March 12, 1999. Mr.
Gerber serves as legal counsel to Infusion, Equisition and its other
affiliated entities.
E-Commerce Services Agreement
Under the E-Commerce Services Agreement, MeridianTelesis, LLC will
assist the Company in developing its e-commerce marketing.
MeridianTelesis, LLC is an affiliated entity of Infusion and Equisition in
which Mr. David M. M. Taffet serves as a control person. While the total
scope of services to be performed under the E-Commerce Services Agreement
has yet to be determined, the Company has agreed to pay at least $175,000
to develop its e-commerce marketing in consultation with MeridianTelesis,
LLC.
Second Stock Purchase Agreement
Concurrently with the execution and delivery of the First Stock
Purchase Agreement and Management Services Agreement, the Company also
entered into the Second Stock Purchase Agreement with Infusion, the
material terms of which will be summarized below. However, while the First
Stock Purchase Agreement and Management Services Agreement became effective
and operative immediately upon execution, actual performance and
consummation of the transactions provided for under the Second Stock
Purchase Agreement is expressly subject to and contingent upon the approval
of such transactions by the Company's shareholders. The Company is seeking
shareholder approval of the Second Stock Purchase Agreement in order to
comply with the requirements of the Nasdaq Stock Market Rules of
Governance. Management of the Company is seeking such shareholder approval
at the Special Meeting.
Summary of Second Stock Purchase Agreement
The following is a summary of certain provisions of the Second Stock
Purchase Agreement, a copy of which is attached as Appendix A to this
Statement and incorporated herein by this reference. This summary is
qualified in its entirety by reference to the Second Stock Purchase
Agreement. Unless otherwise indicated, the capitalized terms set forth
below shall have the meanings ascribed to them in the Second Stock Purchase
Agreement.
General
If consummated, the Second Stock Purchase Agreement contemplates the
sale by the Company of (i) 223,385 shares of Series A Convertible Preferred
Stock, par value $.10 per share (the "Preferred Stock") and (ii) a warrant
exercisable for three years to purchase 80,000 shares of the Company's
Common Stock at an exercise price of $4.10 per share (the "Warrant"). The
purchase price for the Preferred Stock and Warrant will be $279,231.25.
The Second Stock Purchase Agreement was entered into between the
Company and Infusion. Upon demand by the Company, Infusion will identify
an investor to consummate the transactions covered by the agreement
("Investor"). The Investor may be Equisition or some other entity
identified by Infusion. No determination has been made as to the identity
of the Investor, although it is expected that the Investor will be
Equisition.
Rights and Preferences of Series A Convertible Preferred Stock
Stated Value: $1.25 per share
Dividends: Holders of the Preferred Stock shall be entitled
to receive dividends at the annual rate of 10%
per annum based upon the Stated Value per share.
The dividend will be payable by the issuance by
the Company of shares of Common Stock valued at
their fair market value on the dividend payment
date. Fair market value shall be deemed the
average closing bid price of the Company's
Common Stock on the over-the-counter market for
the 15 trading days immediately preceding the
dividend payment date.
Liquidation Rights: Holders of the Preferred Stock shall be entitled
to a liquidation preference equal to the Stated
Value per share in the event of the dissolution
and liquidation of the Company.
Redemption: The Company shall neither have the right nor the
obligation to redeem any of the outstanding
Preferred Stock, and holders of the Preferred
Stock shall not have the right to demand the
redemption of any of the outstanding Preferred
Stock.
Voting Rights: Holders of the shares of Preferred Stock shall
be entitled to vote with the holders of shares
of Common Stock as a single class on all matters
presented for a vote to the shareholders of the
Company.
Conversion: Holders of the shares of Preferred Stock shall
have the option at any time to convert each
share of Preferred Stock into one share of the
Company's Common Stock. In addition, the
Company shall have the right to compel the
conversion of all outstanding shares of
Preferred Stock into an equal number of shares
of Common Stock in the event there exists an
effective registration statement registering for
sale under the Securities Act the shares of the
Company's Common Stock issuable upon such
conversion, and the closing bid price of the
Company's Common Stock has been equal to or
greater than $1.875 per share for 20 or more
consecutive trading days.
Terms of Warrant
The Warrant shall be exercisable for three years to purchase 80,000
shares of the Company's Common Stock at an exercise price of $4.10 per
share. It is anticipated, although there is no commitment, that the
Investor, if not Equisition, will reassign a portion of the Warrant to
Equisition in proportion of the percentage ownership of each in the
Company's Common Stock.
Registration Rights
Equisition, Infusion and the Investor have been granted certain
registration rights with respect to the securities of the Company issued
pursuant to the Infusion Agreements. All registration rights are
exercisable at the sole cost and expense of the Company.
Conditions Precedent
In addition to the approval of the consummation of the Second Stock
Purchase Agreement by the Company's shareholders, the obligations of the
parties under the Second Stock Purchase Agreement are contingent upon the
receipt of customary consents and approvals of governmental bodies and
third parties, that there be no material adverse change in the business,
operations or assets of the Company prior to the closing, the receipt of
customary documents and other conditions customary in transactions of this
nature. Additionally, consummation of the sale is subject to certain other
conditions, including the accuracy of the Company's representations and
warranties in the Second Stock Purchase Agreement.
Representations and Warranties; Covenants
The Second Stock Purchase Agreement contains representations and
warranties with respect to the Company which are generally typical in a
transaction of this type. The Company has represented and warranted, among
other things, that it has good and marketable title to its assets and
certain other matters. The Company has covenanted, among other things, to
grant Infusion and the Investor access to its operations and records during
the period prior to the closing and to conduct its business prior to the
closing only in the ordinary course and to use its best efforts to preserve
and maintain good relationships with its clients, customers, vendors and
employees.
Use of Proceeds
The Company has agreed to use at least $175,000 of the combined
proceeds of the First and Second Stock Purchase Agreements to engage the
services of MeridianTelesis, LLC under the E-Commerce Services Agreement in
order to establish and expand the Company's e-commerce capabilities. The
remaining proceeds of such transactions will be used to cover expenses of
the transactions, to pay Infusion pursuant to the Management Services
Agreement, to reduce the Company's outstanding bank indebtedness, to
acquire new stores and renovate existing stores and for general working
capital.
Management Employment Agreements - Interest of Management in Infusion
Transactions
Concurrently with the execution and delivery of the First Stock
Purchase Agreement, the Company entered into new written Employment
Agreements with Sissel Greenberg, as President, Todd Huss, as Chief
Financial Officer, and Kevin O'Brien, as Chief Operating Officer.
Summarized below, those written Employment Agreements may be deemed to
constitute or represent a financial interest of management in the Infusion
transactions:
The Company's Employment Agreement with Sissel Greenberg has an
initial term of three years and provides for payment of a base salary of
$130,000 per year. In addition, Ms. Greenberg will be entitled to receive
a bonus equal to 5% of the Company's annual pre-tax net income, not to
exceed $50,000 per year. Finally, the agreement provides for the grant to
Ms. Greenberg of incentive stock options exercisable to purchase up to
75,000 shares of the Company's Common Stock as follows: (i) 25,000 options
exercisable at a price of $1.375 per share were granted and vested
immediately upon execution of the agreement; (ii) 25,000 options will be
granted on the first anniversary of the date of the agreement having an
exercise price equal to the current market price of the Company's Common
Stock on the date of grant; and (iii) 25,000 will be granted on the second
anniversary date of the date of the agreement having an exercise price
equal to the current market price of the Company's Common Stock on that
date of grant.
The Company's Employment Agreement with Todd Huss also has an initial
term of three years and provides for payment of a base salary of $60,000
per year. In addition, Mr. Huss will be entitled to receive a bonus equal
to 5% of the Company's annual pre-tax net income, not to exceed $25,000 per
year. The agreement also provides for the grant to Mr. Huss of incentive
stock options exercisable to purchase up to 37,500 shares of the Company's
Common Stock as follows: (i) 12,500 options exercisable at a price of
$1.375 per share were granted and vested immediately upon execution of the
agreement; (ii) 12,500 options will be granted on the first anniversary of
the date of the agreement having an exercise price equal to the current
market price of the Company's Common Stock on the date of grant; and (iii)
12,500 will be granted on the second anniversary date of the date of the
agreement having an exercise price equal to the current market price of the
Company's Common Stock on that date of grant.
The Company's Employment Agreement with Kevin O'Brien has an initial
term of three years and provides for payment of an annual base salary of
$69,000 per year. In addition, Mr. O'Brien will be entitled to receive a
bonus during the first full fiscal year of employment, subject to and
contingent upon the Company achieving a 5% increase in comparable same
store sales during the fiscal year ending January 28, 2000 over the prior
fiscal year, equal to $5,000. During the remaining two years of the
agreement's three year term, Mr. O'Brien will be entitled to receive a
bonus equal to 5% of the increase in comparable same store sales compared
to the previous fiscal year's sales up to a maximum of $25,000 per year.
Finally, the agreement provides for the grant to Mr. O'Brien of incentive
stock options exercisable to purchase up to 30,000 shares of the Company's
Common Stock as follows: (i) 10,000 options exercisable at a price of
$1.375 per share were granted and vested immediately upon execution of the
agreement; (ii) 10,000 options will be granted on the first anniversary of
the date of the agreement having an exercise price equal to the current
market price of the Company's Common Stock on the date of grant; and (iii)
10,000 will be granted on the second anniversary date of the date of the
agreement having an exercise price equal to the current market price of the
Company's Common Stock on that date of grant.
Governance - Board of Directors
Under the terms of the Second Stock Purchase Agreement, upon
consummation of the transactions covered thereby, the Company's Board of
Directors shall be constituted to consist of five directors, of which the
Investor under the Second Stock Purchase Agreement shall be entitled to
designate a number of directors in proportion to its percentage equity
interest in the Company, but in no event less than one person. Initially, the
Investor shall have the right to designate one member to the Board of
Directors in addition to Mr. Gerber who was elected to serve as a member
of the Board of Directors by Equisition under the First Stock Purchase
Agreement. As a result, immediately following the consummation of the
Second Stock Purchase Agreement, the Infusion affiliates will have the right
to designate two out of the five members of the Company's Board of Directors.
Recommendation of the Board of Directors
The Board of Directors of the Company has approved the execution of
the Second Stock Purchase Agreement and recommends the approval by the
Company's shareholders of the transactions provided for therein. The Board
of Directors has concluded that the terms of the Second Stock Purchase
Agreement are fair and reasonable under the circumstances.
The Company has neither obtained nor intends to obtain a fairness
opinion from a qualified business appraiser, certified public accountant or
investment banker regarding the fairness of the terms of the Second Stock
Purchase Agreement. The terms of the Second Stock Purchase Agreement are
the result of arms-length negotiations by the Company's management and its
advisors and does not reflect terms as they have been determined by an
independent expert.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A
VOTE IN FAVOR OF THE AUTHORIZATION AND APPROVAL OF THE SECOND STOCK
PURCHASE AGREEMENT AND THE CONSUMMATION BY THE COMPANY OF THE TRANSACTIONS
PROVIDED FOR THEREIN, ALL IN ACCORDANCE WITH AND SUBJECT TO ITS TERMS AND
CONDITIONS.
3. EQUISITION WARRANTS
Under the terms of the First Stock Purchase Agreement, in the event
the Company is unable to obtain Shareholder approval for or otherwise fails
to complete the second financing covered by the Second Stock Purchase
Agreement, then the Company has agreed to issue Equisition a pro rata
portion of the 80,000 warrants issuable under the Second Stock Purchase
Agreement equal to the percent that the funding under the First Stock
Purchase Agreement ($220,768.75) bears to the total agreed upon funding of
$500,000. This would represent 44%, or 35,200 of the total 80,000 warrants
provided for under the Second Stock Purchase Agreement.
However, Rules of Governance of the Nasdaq Stock Market preclude the
Company from issuing, without shareholder approval, equity securities
representing or securities exercisable to acquire equity securities
representing more than 20% of the Company's total outstanding shares of
Common Stock at a price below the greater of the Company's book value or
the prevailing market price of the Company's Common Stock without
shareholder approval. Accordingly, in order for the Company to be
permitted under the Nasdaq rules of governance to issue to Equisition
35,200 of the 80,000 warrants bargained for, such issuance can only be
undertaken pursuant to the approval of the Company's Shareholders.
In view of the foregoing, the Company is herewith soliciting proxies
to obtain shareholder approval for the issuance to Equisition of 35,200
warrants, each exercisable for three years to purchase one share of the
Company's Common Stock at an exercise price of $4.10 per share, which
shareholder approval, if obtained, would become operative only in the event
the shareholders fail to approve or the Company otherwise is unable to
consummate the financing under the Second Stock Purchase Agreement.
Recommendation of the Board of Directors
The Board of Directors of the Company has approved the issuance to
Equisition of the 70,400 warrants described above and has concluded that
the terms of such warrants are fair and reasonable under the circumstances.
FOR THE REASONS SET FORTH ABOVE, THE BOARD OF DIRECTORS RECOMMENDS A
VOTE IN FAVOR OF THE AUTHORIZATION AND APPROVAL OF THE COMPANY'S AGREEMENT
TO ISSUE TO EQUISITION 35,200 WARRANTS IN ACCORDANCE WITH THE FOREGOING IN
THE EVENT IT IS OTHERWISE UNABLE TO CONSUMMATE THE TRANSACTIONS PROVIDED
FOR IN THE SECOND STOCK PURCHASE AGREEMENT.
4. OTHER MATTERS
We are not aware of other matters which may come before the Meeting.
The Directors' designees or other persons named in the accompanying form of
proxy will vote said proxy in accordance with their judgment if any other
matter does properly come before the Meeting. A majority of those votes
present at the Meeting cast in favor of any such matter will result in the
passage of such matter.
PREMIER CONCEPTS, INC.
By: /s/ Todd Huss
-------------------------------------
Todd Huss, Secretary
<PAGE>
<PAGE>
PREMIER CONCEPTS, INC.
PROXY SOLICITED ON BEHALF OF THE COMPANY
The undersigned hereby constitutes and appoints Sissel B. Greenberg or
Todd Huss (SEE NOTE BELOW) or either of them acting in the absence of the
other, with full power of substitution the true and lawful attorneys or
attorney and proxies of the undersigned to attend the Special Meeting of
the Shareholders of Premier Concepts, Inc. (the "Company") to be held at
3033 South Parker Road, Suite 120, Aurora, Colorado 80014, on June 5, 1999
at 10:00 o'clock a.m. Mountain Daylight Time, or any adjournment or
adjournments thereof, and vote all the shares of the Company standing in
the name of the undersigned with all the powers the undersigned would
possess if present at said meeting.
(1) FOR AGAINST ABSTAIN
---------- -------- --------
To ratify and approve the Second Stock Purchase Agreement
between the Company, on the one hand, and Infusion Capital
Partners, LLC, on the other, and the other transactions
provided for in such Agreements.
(2) FOR AGAINST ABSTAIN
---------- -------- --------
In the event Proposal No. 1 above is rejected by the
Shareholders, to ratify and approve the issuance by the Company
to Equisition Capital Partners, LLC a common stock purchase
warrant exercisable to purchase 35,200 shares of Common Stock
at an exercise price of $4.10 per shares.
(3) Upon such other matters as may properly come before the
meeting.
UNLESS OTHERWISE SPECIFIED, THIS PROXY WILL BE VOTED FOR ITEM 1 AND ITEM 2,
AND IN THE DISCRETION OF THE PERSON HOLDING THE PROXY FOR ANY OTHER
BUSINESS.
(NOTE: Should you desire to appoint a proxy other than the management
designees named above, strike out the names of the management designees and
insert the name of your proxy in the space provided above. Should you do
this, give this proxy card to the person you appoint instead of returning
the proxy card to the Company.)
(PLEASE DATE, SIGN AND PROMPTLY RETURN THIS PROXY IN THE ENCLOSED
ENVELOPE.)
Receipt is acknowledged of Notice of Annual Meeting and Proxy Statement for
the meeting.
Date , 199
-------------------------------------------- ---
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Name (please type or print)
--------------------------------------------------------
Signature
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Signature, if held jointly
Please sign exactly as name appears to the left. When shares are held by
joint tenants, both should sign. When signing as executor, administrator,
attorney, trustee, or guardian, please give full title as such. If a
corporation, please sign in full corporation name by President or other
authorized officer. If a partnership, please sign in partnership name by
authorized person.
<PAGE>
<PAGE>
SECOND STOCK PURCHASE AGREEMENT
This Agreement is made this day of March, 1999, by and between
Premier Concepts, Inc., a Colorado corporation ("Premier"), and Infusion
Capital Partners, LLC, a Delaware limited liability company ("Infusion").
In consideration of the mutual covenants and agreements set forth in
this Agreement, the parties, intending to be legally bound, agree as
follows:
1. Request for Second Funding and Assignment to Investor. At any
time within the six (6) month period after the date of this Agreement,
Premier may provide Infusion with a written request for Infusion to arrange
for one or more Persons (defined below) determined by Infusion (an
"Investor") to consummate the transactions contemplated hereby. As soon as
is reasonably practicable (but in no event more than thirty (30) days)
after its receipt of such request, Infusion shall assign this Agreement,
and its rights and obligations hereunder, without the consent of Premier,
to the Investor(s). Such assignment shall be made on terms and conditions
mutually satisfactory to Infusion and Investor, and a copy of the
agreements regarding the assignment shall be provided to Premier.
Notwithstanding such assignment, Infusion shall continue to be obligated to
arrange for one or more Persons to consummate the transactions contemplated
hereby in the event the initial Investor(s) fail to do so.
2. Authorization of Second Funding. Premier shall solicit and use
its best efforts to obtain stockholder approval for the transactions
contemplated by this Agreement (and any related transactions) on the terms
of this Agreement (and on such other terms as may be reasonably requested
by Investor) prior to Premier's filing of its report on Form 10-K for its
fiscal year ended January 31, 1999. Premier shall obtain Investor's
advance approval, which shall not be unreasonably withheld, of any
materials to be distributed or filed, and of any action to be taken, with
respect to such approval. Without limiting the foregoing, the stockholder
approval shall include a separate approval of the sale and issuance of the
warrants to Infusion and Equisition Capital Partners, LLC, a Delaware
limited liability company ("Equisition") referred to in agreements between
Premier and such Persons.
3. Transactions at Closing
3.1 Purchase and Sale of Stock and Warrant. Subject to the
terms and conditions set forth herein, at Closing, Investor hereby agrees
to purchase from Premier, and Premier hereby agrees to issue and sell to
Investor, (i) 446,770 shares of Premier's Series A Convertible Preferred
Stock, par value $.10 per share (the "Stock"), having the rights and
preferences set forth in Exhibit A hereto, each share of Stock being
convertible into one share of Premier's common stock, par value $.002 per
share, and (ii) a Warrant in the form of Exhibit B hereto to purchase that
portion of the aggregate 160,000 shares under such Warrant as shall be
allocated to Investor by Infusion, Investor and Equisition (the "Investor
Warrant"), for the purchase price of $279,231.25 (giving the Stock a stated
value of $5/8 ($.625) per share).
3.2 The Closing. The closing of such purchase and sale (the
"Closing") shall take place promptly (but no more than 15 days) after
Infusion's assignment of this Agreement as set forth in Section 1, on a
date mutually agreed upon by Premier and Investor.
4. Use of Proceeds. Premier shall use at least $175,000 of the
proceeds of this transaction, together with the proceeds of the
transactions contemplated by the First Stock Purchase Agreement (defined on
Exhibit C), to engage MeridianTelesis, LLC, a Delaware limited liability
company ("MeridianTelesis"), to establish and expand Premier's e-commerce
capabilities (such funds to be expended in accordance with a schedule
determined by MeridianTelesis based on discussions with Premier regarding
the strategic rollout of Premier's e-commerce platform). Premier shall use
the remaining proceeds of such transactions for expenses of the
transactions (including expenses associated with necessary filings and to
secure stockholder approval for the consummation of this Agreement), to pay
Infusion pursuant to the Management Services Agreement (defined on Exhibit
C), to reduce the outstanding principal of Premier's bank debt, to acquire
new stores and renovate existing stores and for working capital (all in
accordance with a budget to be adopted by Premier satisfactory to Investor
and Infusion (the "Proceeds Budget").
5. Conditions to Investor's Obligations. The obligations of
Investor to purchase and pay for the Stock and to consummate the Closing
are subject to the satisfaction or waiver as of the Closing of the
following conditions:
5.1 Request for Second Funding. Premier shall have made the
request set forth in Section 1 above or Infusion shall have exercised its
right to require Premier to consummate the transactions contemplated hereby
as provided in Section 6.8 of the Management Services Agreement.
5.2 Other Agreements. Premier shall have entered into mutually
satisfactory agreements set forth on Exhibit C hereto with the parties
identified thereon, and each of such agreements shall be in full force and
effect as of the Closing.
5.3 Other Rights. Premier shall have taken all necessary
actions so that the terms and provisions set forth on Exhibit D (which are
incorporated into and made a part of this Agreement by this reference)
shall be valid, binding and enforceable against Premier.
5.4 Representations, Warranties and Covenants. Premier's
representations and warranties shall be true and correct at and as of the
Closing, and Premier shall have performed and complied with all agreements,
covenants and conditions contained herein (including, without limitation,
those on Exhibit D) and in the other agreements, instruments and documents
to be executed or delivered by Premier in connection herewith which are
required to be performed or complied with at or before the Closing.
5.5 No Defaults. There shall have occurred no breach,
violation, default, noncompliance, misrepresentation or untrue statement by
Premier under or in any of the agreements set forth on Exhibit C or the
Agreement Regarding Basic Terms dated February 26, 1999 between Premier and
Infusion.
5.6 Adverse Proceedings. No action, suit, demand, proceeding,
appeal, order, investigation, inquiry or claim before any judicial,
arbitral, regulatory or governmental body shall be pending or threatened
which, in the judgment of Investor, makes it inadvisable or undesirable to
consummate the transactions contemplated by this Agreement.
5.7 Legal Prohibitions. None of the transactions contemplated
by this Agreement shall be prohibited by any Applicable Law (defined
below), and the consummation of such transactions shall not subject
Investor to any penalty, liability or onerous condition under or pursuant
to any Applicable Law. "Applicable Law" means, with respect to any Person,
all provisions of constitutions, statutes, rules, regulations, rulings,
ordinances, codes, requirements and orders of governmental bodies or
regulatory agencies applicable to or affecting such Person, and all orders,
decisions, judgments and decrees of all courts and arbitrators in
proceedings or actions to which the Person is a party or by which it (or
any of its property) is bound.
5.8 Proceedings and Consents. Premier shall have taken all
actions and proceedings required in connection with the transactions
contemplated hereby to be consummated at or prior to the Closing (which
shall be satisfactory in form and substance to Investor), and all necessary
Consents (defined below), filings and notices with respect to the
transactions contemplated by this Agreement shall have been obtained, made
or given by Premier. Without limiting the foregoing, (i) Premier shall
have obtained the stockholder approval set forth in Section 2 and such
approval shall be in full force and effect and shall not have been amended
or modified and (ii) Premier shall have duly adopted, executed and filed
properly a Certificate of Designation establishing the terms and the
relative rights and preferences of the Stock set forth on Exhibit A and
such Certificate of Designation shall be in full force and effect and shall
not have been amended or modified. "Consent" means any consent,
authorization, approval, order, decree, permit, certification, license,
registration or third party action of any kind.
5.9 Receipt of Stock and Warrant. Investor shall have received
certificates evidencing the Stock and shall have received the Investor
Warrant, each duly issued by Premier to Investor. Infusion shall have
received the warrant referred to in Section 4.1(ii) of the Management
Services Agreement, duly issued by Premier to Infusion (the "Infusion
Warrant"). Equisition shall have received a Warrant in the form of Exhibit
B hereto to purchase that portion of the aggregate 140,000 shares under
such Warrant as shall be allocated to Equisition by Infusion, Investor and
Equisition (the "Equisition Warrant"). There shall have occurred no event
or action which could result in a dilution in the percentage ownership in
Premier to be acquired by Investor, Equisition or Infusion.
5.10 Closing Documents. Premier shall have delivered to Investor the
documents set forth on Exhibit D and such other documents, agreements,
Consents and other instruments relating to the transactions contemplated by
this Agreement as Investor or its counsel may reasonably request.
Any condition specified in this Section 5 may be waived if expressly
consented to by Investor, provided that no such waiver shall be effective
against Investor, even if Closing occurs, unless it is set forth in a
writing executed by Investor.
6. Conditions to Premier's Obligations. The obligations of Premier
to issue and sell the Stock and Investor Warrant to Investor and to
consummate the Closing are subject to the satisfaction or waiver as of the
Closing of the following conditions:
6.1 Representations and Warranties. Investor's representations
and warranties shall be true and correct at and as of the Closing.
6.2 Proceedings and Consents. All actions and proceedings taken
or required to be taken in connection with the transactions contemplated
hereby to be consummated at or prior to the Closing shall be satisfactory
in form and substance to Premier, and all necessary Consents, filings and
notices to have been obtained, made or given by Investor with respect to
the transactions contemplated by this Agreement shall have been obtained,
made or given by Investor.
6.3 Receipt of Purchase Price. Premier shall have received
payment for the Stock by wire transfer of immediately available funds in
accordance with written wire instructions provided by Premier.
6.4 Closing Documents. Investor shall have delivered to Premier
an Officer's Certificate (defined on Exhibit E), dated the date of the
Closing, stating that the obligations of Investor under Section 3 and the
conditions specified in this Section 6 have been fully satisfied.
7. Representations and Warranties of Premier. As a material
inducement to Investor to enter into this Agreement, to purchase the Stock,
and to consummate the Closing, Premier hereby represents and warrants as
follows:
7.1 Organization and Power. Premier is a corporation duly
organized, validly existing and in good standing under the laws of the
State of Colorado and is qualified to do business in every jurisdiction in
which its ownership of property or conduct of business requires it to
qualify. Premier has all requisite power and authority necessary to own
and operate its properties, to carry on its businesses as now conducted and
presently proposed to be conducted and to carry out the transactions
contemplated by this Agreement and the other agreements, instruments and
documents to be executed or delivered by Premier in connection with this
Agreement.
7.2 Authorization. Premier has full power and authority
(corporate or otherwise) to enter into and carry out the terms of this
Agreement and all other agreements, instruments and documents contemplated
hereby and to consummate all transactions contemplated hereby and thereby.
The execution, delivery and performance of this Agreement and all other
agreements, instruments and documents contemplated hereby to which Premier
is a party and the consummation of all transactions contemplated hereby and
thereby have been duly authorized by Premier. This Agreement and all other
agreements, instruments and documents contemplated hereby to which Premier
is a party constitute the valid and binding obligations of Premier and are
enforceable in accordance with their respective terms.
7.3 No Breach. The execution and delivery by Premier of this
Agreement and all other agreements, instruments and documents contemplated
hereby to which Premier is a party, the offer, sale and issuance of the
Stock hereunder and the other securities contemplated hereby and the
fulfillment of and compliance with the respective terms hereof and thereof
by Premier, do not and shall not (a) conflict with or result in a breach of
the terms, conditions or provisions of, (b) constitute a default under, (c)
result in the creation of any lien, security interest, charge or
encumbrance upon Premier's capital stock or assets pursuant to, (d) give
any third party the right to accelerate any obligation under, (e) result in
a violation of, or (f) require any Consent, filing, exemption or other
action pursuant to the Certificate of Incorporation or Bylaws of Premier or
any agreement, instrument or Applicable Law to which Premier is subject or
by which it is bound.
7.4 Subsidiaries. Premier does not own, directly or
indirectly, any shares of stock or other equity interests or security in
any corporation, partnership, limited liability company, association or
other entity or business enterprise (including individuals) (a "Person"),
and Premier has no obligation to make an investment or acquisition in any
such Person.
7.5 Capital Stock and Related Matters
(i) As of the Closing and immediately thereafter, the
authorized capital stock of Premier shall consist of (i) twenty million
(20,000,000) shares of preferred stock, par value $.10 per share, of which
no shares other than the Stock shall be issued and outstanding and (ii)
eight hundred fifty million (850,000,000) shares of common stock, par value
$.0004 per share (referred to herein as Premier's common stock), of which
one million seven hundred seventy-five thousand twenty-five (1,775,025)
shares plus the shares issued to Equisition pursuant to the First Stock
Purchase Agreement shall be issued and outstanding. Upon the Closing, all
of the outstanding shares of the Company's capital stock (including the
Stock) shall be validly issued, fully paid and nonassessable.
(ii) Except for Premier's Class A Warrants, Incentive Stock
Options, Non-Plan Options (referred to in (iii) below) and agreements to
issue no more than twenty-five thousand (25,000) shares of common stock
(and except for the Investor Warrant, the Infusion Warrant and the
Equisition Warrant and the rights under the Registration Agreements
(defined on Exhibit C)), as of the Closing, (a) Premier shall not have
outstanding any stock, debt instrument or securities convertible or
exchangeable for any shares of its capital stock or containing any profit
participation features, (b) Premier shall not have outstanding any rights
or options to subscribe for or to purchase its capital stock or any stock
or securities convertible into or exchangeable for its capital stock, (c)
there shall be no anti-dilution or registration rights to which any holder
of securities of Premier is entitled and (d) Premier shall not be subject
to any obligation (contingent or otherwise) to repurchase or otherwise
acquire or retire any shares of its capital stock or any warrants, options
or other rights to acquire its capital stock.
(iii) As of the Closing and immediately thereafter
(including after giving effect to the Incentive Stock Options under the
Executive Employment Agreements (defined on Exhibit C), the number of
shares of common stock underlying the Class A Warrants shall be 1,858,334,
under the Incentive Stock Options shall be 350,000 and under the Non-Plan
Options shall be 37,000, and the average exercise price of the outstanding
Incentive Stock Options and the Non-Plan Options shall not exceed $2.05.
(iv) There are no statutory or contractual shareholders
preemptive rights or rights of refusal or similar rights with respect to
Premier's issuance and sale of the Stock hereunder or the issuance of
common stock upon exercise or conversion of the warrants and Stock to be
issued pursuant to this Agreement, the Management Services Agreement and
the First Stock Purchase Agreement.
(v) Premier has not violated, and has fully complied with,
any applicable federal or state securities laws in connection with the
offer, sale or issuance of any of its capital stock (including, without
limitation, the Stock, the Investor Warrant, the Infusion Warrant and the
Equisition Warrant). To the best of Premier's knowledge, there are no
agreements between its shareholders with respect to the voting or transfer
of Premier's capital stock or with respect to any other aspect of its
affairs.
(vi) Premier has not granted any appreciation rights,
phantom rights or other rights or interests having profit participation or
other equity features or providing economic incentives or benefits based
upon the income or other measure of performance of Premier or any
distribution on, transaction involving or valuation of any capital stock of
Premier.
7.6 Financial Statements. The books and records of Premier are
in all material respects complete and correct, have been prepared and
maintained in accordance with generally accepted accounting principles
("GAAP"), consistently applied, and in accordance with sound business
practices, and they accurately reflect the basis for all disclosures made
by Premier. The financial statements attached hereto as Exhibit F
("Financial Statements") include an audited balance sheet, statement of
income and statement of changes in financial position, all of which have
been prepared in accordance with GAAP, consistently applied, and fairly and
accurately present the financial condition and results of operations of
Premier, as of the dates and for the periods of time indicated.
7.7 Projections. All projections provided or made available to
Investor by or on behalf of Premier have been prepared in good faith by
Premier (or by a third party acting on behalf of Premier and reasonably
believed by Premier to be competent as to the tasks performed) and are
based upon assumptions that were reasonable in light of the circumstances
under which they are made.
7.8 Material Adverse Changes. Since the date of the most recent
balance sheet included in the Financial Statements, (a) there has occurred
no material adverse change in (i) the existing or prospective business,
operations, assets or condition (financial or otherwise) of Premier or (ii)
relations with any employees or other personnel, joint venturer, customer,
supplier or party to a material contract of Premier (including, without
limitation, its store leases), (b) the business and affairs of Premier have
been conducted and carried on only in the ordinary course of business
consistent with past practices (and Premier has not engaged in any
transaction outside such ordinary course) and (c) the physical properties,
inventory and facilities owned or leased by Premier have suffered
individually or in the aggregate any material depletion, destruction or
damage, regardless of whether or not any loss suffered was insured. To
Premier's knowledge, none of the foregoing could reasonably be expected to
occur, excluding changes in the economy generally.
7.9 Undisclosed Matters. Except as set forth on the Financial
Statements:
(i) Premier has no obligation or liability (whether
accrued, absolute, contingent, unliquidated or otherwise, known or unknown,
whether due or to become due and regardless of when asserted) arising out
of any transaction, act, omission or state of fact existing at or prior to
the Closing, other than liabilities and obligations which arise on or after
the date of the Closing in the ordinary course of business (none of which
is a liability resulting from breach of contract, breach of warranty, tort,
infringement or any claim, asserted or unasserted), which either alone or
in the aggregate would have a material adverse effect on Premier.
(ii) The properties (real and otherwise) and assets
(tangible or intangible) owned or used by Premier or located on its
premises are free and clear of all liens, security interests, mortgages,
pledges, assignments, charges, assessments, adverse claims, easements,
restrictions, title defects, covenants, burdens and legal or equitable
encumbrances of any kind.
(iii) There are no actions, suits, demands, proceedings,
orders, investigations, inquiries or claims pending or threatened against
or affecting Premier (or against or affecting any officer, director,
employee agents or other Person acting on behalf of Premier), at law or in
equity, or before or by any governmental department, commission, board,
bureau, agency or instrumentality (including, without limitation, any
actions, suits, proceedings or investigations with respect to the
transactions contemplated by this Agreement or any other agreement,
instrument or document contemplated hereby), and there is no judgment,
order, decree or other ruling of any court, arbitrator or governmental
agency affecting Premier, which either alone or in the aggregate would have
a material adverse effect on Premier.
(iv) Premier has duly filed in proper form (or timely and
properly obtained an extension with respect to) all required federal,
state, local or foreign income, franchise, sales, use, property, excise,
payroll and other tax returns and has paid all taxes, fees, interest,
penalties and assessments of whatever nature due on or before the date of
this Agreement, and no audits of Premier's tax returns by any governmental
authority are pending or, to the knowledge of Premier, threatened.
(v) There are no pending, threatened or potential
unasserted claims (other than routine claims for benefits) by, on behalf of
or against any of the bonus, deferred compensation, stock option, severance
and other medical, life, insurance, profit-sharing, pension, retirement or
other employee benefit or welfare plans of or relating to Premier
("Plans"), and none of the Plans provide benefits, including death or
medical benefits (whether or not insured), beyond retirement or other
termination of service.
(vi) All obligations of Premier to pay salary, wages,
benefits, withholding, social security, unemployment insurance, business
privilege or payroll taxes have been paid or satisfied in full and there
are outstanding no such obligations, except for obligations which either
alone or in the aggregate would not have a material adverse effect on
Premier or subject any director, officer or employee of Premier to any
liability.
(vii) There has been no loan, payment, transfer, assignment
or other disposition of assets or rights of any kind by Premier to, on
account of, or for the benefit of any Person affiliated with or otherwise
related to Premier, directly or indirectly, whether in the form of
compensation, dividends or other distributions in respect of shares of
stock or otherwise, and there is no outstanding offer or commitment to
make, or any reasonable expectation on the part of others that there will
be, such a payment, transfer, assignment or other disposition.
7.10 Premises. Premier has good and valid right, title or
interest in or to the real property, whether owned or leased, used for its
existing store locations. All such real property, buildings, equipment and
other tangible assets owned, leased or used by Premier (a) are in good
operating condition and are fit for use in the ordinary course of business,
(b) do not violate any present or proposed Applicable Laws, (c) are not
subject to any pending or threatened condemnation or eminent domain
proceedings and (d) have all Consents and all utilities and access rights
necessary for full use in the conduct of business as presently and proposed
to be conducted.
7.11 Contracts and Leases. Premier is not a party or otherwise
bound by or subject to any written or oral material contract, agreement,
lease (including real property leases), license or commitment outside the
ordinary course of business. Premier has no reason to believe that any
contract, agreement, lease, license or commitment to which it is a party or
otherwise bound is likely to be terminated, canceled, adversely modified
(including by significant rent increase) or breached or that Premier's
right, title and interest therein may be challenged.
7.12 Proprietary Rights. Premier owns all right, title and
interest in and to, or has the right to use pursuant to a valid and binding
license, all Proprietary Rights (defined below) necessary for the operation
of its business as presently conducted and as presently proposed to be
conducted. "Proprietary Rights" means (in whatever form or medium) all
patents and patent applications, trademarks, service marks, trade dress,
trade names and corporate names and registrations and applications for
registration thereof (including, without limitation, "Imposters" and
"Elegant Pretenders"), copyrights and registrations and applications for
registration thereof, computer software, data and documentation, trade
secrets and other confidential information and other intellectual property
rights and licenses. Premier has not granted a license or other right to
any third party with respect to any Proprietary Rights. No loss or
expiration of any Proprietary Right or related group of Proprietary Rights
is pending or, to Premier's knowledge, threatened or is reasonably
foreseeable, and Premier has made reasonable and prudent efforts to
maintain and protect the Proprietary Rights which it owns and uses. To
Premier's knowledge, no owners of any Proprietary Rights licensed to
Premier have failed to make reasonable and prudent efforts to maintain and
protect the Proprietary Rights which are subject to such licenses. Except
for those which arise in the ordinary course of Premier's business and
which either alone or in the aggregate would not have a material adverse
effect on Premier, there have been no claims made against Premier asserting
the invalidity, misuse or unenforceability of any of the Proprietary Rights
owned or used by Premier, and there are no reasonable grounds for any such
claim. Except for those which arise in the ordinary course of Premier's
business and which either alone or in the aggregate would not have a
material adverse effect on Premier, Premier has not received a notice of
conflict with the asserted rights of others, and the conduct of Premier's
business (including, without limitation, any particular product or product
line) has not infringed or misappropriated and does not infringe or
misappropriate any rights of other Persons, nor would any future conduct or
product as presently contemplated infringe any rights of other Persons and,
to Premier's knowledge, the Proprietary Rights owned or used by Premier
have not been infringed or misappropriated by other Persons.
7.13 Insurance. Premier maintains insurance policies with
respect to its assets and businesses against risks and liabilities to the
extent and in respect of amounts, types and risks insured, as are customary
in Premier's industries. All such policies are adequate to protect the
assets and business of Premier, and each policy is enforceable in
accordance with its terms and in full force and effect as of the date
hereof. Premier is not in default with respect to its obligations under
any insurance policy maintained by it.
7.14 Compliance with Laws. To the best of Premier's knowledge,
Premier has complied with all Applicable Laws and has not received notice
of, nor does Premier have any reason to know of, any claim of default or
violation with respect to any Applicable Law (including, without
limitation, laws respecting (i) licensing or franchising, (ii) employment
and employment practices, such as those relating to Plans, wages, hours,
collective bargaining, unemployment insurance, workers compensation, OSHA,
equal opportunity, age and handicapped discrimination, immigration control,
and the payment and withholding of social security and other taxes, (iii)
public company registration and reporting requirements and other securities
matters, (iv) the environment and hazardous substances and (v) matters
affecting Premier's business generally).
7.15 Disclosure. Neither this Agreement nor any of the exhibits,
schedules, attachments, written statements, documents, certificates,
securities filings or reports or other items delivered or made available to
Investor by or on behalf of Premier in connection with the transactions
contemplated hereby (including, without limitation, all publicly available
securities filings, forms and reports) contains any untrue statement of a
material fact or omits a material fact necessary to make each statement
contained herein or therein not misleading. There is no fact which
Premier has not disclosed to Investor in writing and of which any officers,
directors or executive employees of Premier is aware and which has had or
could reasonably be anticipated to have a material adverse effect on
Premier's business or prospects. Premier, through its directors, officers
and employees, has exerted best efforts to verify all representations,
warranties or other statements, whether in this Agreement or otherwise made
to Investor, and, to the knowledge of Premier, through such Persons, the
representations, warranties of Premier under this Agreement are true and
correct in all material aspects.
8. Representations and Warranties of Investor. As a material
inducement to Premier to enter into this Agreement, to issue and sell the
Stock and to consummate the Closing, Investor hereby represents and
warrants as follows:
8.1 Organization and Power. Investor is duly organized, validly
existing and in good standing under the laws of the State of Delaware, and
it has all requisite power and authority and all material Consents
necessary to own and operate its properties, to carry on its businesses as
now conducted and presently proposed to be conducted and to carry out the
transactions contemplated by this Agreement.
8.2 Authorization and Enforceability. The execution, delivery
and performance of this Agreement and the consummation of the transactions
contemplated hereby and thereby have been duly and validly authorized by
all requisite company action, and no other company act or proceedings on
its part is necessary to authorize the execution, delivery or performance
of this Agreement and the consummation of the transactions contemplated
hereby. This Agreement constitutes the valid and binding obligation of
Investor and is enforceable against it in accordance with its terms.
8.3 No Breach. The execution and delivery by Premier of this
Agreement and all other agreements contemplated hereby to which Investor is
a party, the purchase hereunder of the Stock, and the fulfillment of and
compliance with the respective terms hereof and thereof by Investor, do not
and shall not (a) conflict with or result in a breach of the terms,
conditions or provisions of, (b) constitute a default under, (c) result in
the creation of any lien, security interest, charge or encumbrance upon the
assets of Investor pursuant to, (d) give any third party the right to
accelerate any obligations under, (e) result in a violation of, or (f)
require any Consent or other action by or notice, pursuant to, the Limited
Liability Company Agreement of Investor or any agreement, instrument or
Applicable Law to which Investor is subject.
8.4 Investment Representation. Investor is acquiring the Stock
purchased hereunder for its own account with the present intention of
holding such securities for purposes of investment, and it has no intention
of selling such securities in a public distribution in violation of the
Securities Act or any applicable state securities laws; provided that
nothing contained in this Section 8.4 shall prevent Investor and subsequent
holders of the Stock or any other securities issued by Premier from
transferring such securities in any manner in compliance with, or pursuant
to the requirements of an exemption from registration contained in, the
Securities Act of 1933, as amended, applicable state securities laws and/or
the regulations adopted pursuant thereto (including, without limitation, a
distribution of the Stock to the members of Investor, which is hereby
approved in advance by Premier).
9. Indemnification.
9.1 Losses of Investor. In addition to all rights and remedies
available to Investor at law or in equity, Premier shall indemnify Investor
and its members, managers, officers, partners, agents, employees,
representatives and counsel and their respective successors, assigns, heirs
or legal representatives, and save and hold each of them harmless against
and pay on behalf of or reimburse such party as and when incurred for any
loss (including, without limitation, diminutions in value and consequential
damages), liability, demand, claim, action, cause of action, cost, damage,
deficiency, penalty, fine or expense, whether or not arising out of third
party claims (including, without limitation, interest, penalties,
reasonable attorneys' and other professionals' fees and expenses and all
amounts paid in the investigation, defense or settlement of any of the
foregoing) (collectively, "Losses"), which any such party may suffer,
sustain or become subject to as a result of, in connection with or arising
out of:
(i) any misrepresentation or breach of warranty by Premier
or omission of a material fact from any representation or warranty by
Premier in this Agreement (including all Exhibits to this Agreement, and
all certificates, instruments and documents presented to Investor by
Premier pursuant to the terms of this Agreement (including, without
limitation, all publicly available securities filings, forms and reports))
or any other agreement, instrument or document executed or delivered in
connection with this Agreement;
(ii) any nonfulfillment of a condition or breach of any
covenant or agreement on the part of Premier under this Agreement or any
agreement, instrument or document executed or delivered in connection
herewith;
(iii) any action, suit, demand, proceeding, order,
investigation, inquiry or claim by any third party (including, without
limitation, governmental agencies) against or affecting Investor or Premier
which, if successful, would give rise to or evidence the existence of or
relate to a breach of any of the representations, warranties or covenants
of Premier under this Agreement or any agreement, instrument or document
executed or delivered in connection herewith; and
(iv) any third party claim (whenever made) not disclosed on
any Exhibit hereto relating in any way to Premier, and any other third
party claim (whenever made) relating in any way to Premier, whether or not
disclosed on any Exhibit hereto, arising out of, relating to, resulting
from or caused by any transaction, status, event, condition, occurrence or
situation occurring or existing on or prior to the date of Closing or
otherwise related to this Agreement, the purchase or ownership of the Stock
or the Conditional Warrant by Investor and/or any use made by Premier of
all or any portion of the proceeds thereof.
9.2 Losses of Premier. In addition to all rights and remedies
available to Premier at law or in equity, Investor shall indemnify Premier
and its directors, officers, partners, agents, employees, representatives
and counsel and their respective successors, assigns, heirs or legal
representatives, and save and hold each of them harmless against and pay on
behalf of or reimburse such party as and when incurred for any Loss which
any such party may suffer, sustain or become subject to as a result of, in
connection with or arising out of:
(i) any misrepresentation or breach of warranty by Investor
or omission of a material fact from any representation or warranty by
Investor in this Agreement (including all Exhibits to this Agreement, and
all certificates, instruments and documents presented to Investor by
Premier pursuant to the terms of this Agreement (including, without
limitation, all publicly available securities filings, forms and reports))
or any other agreement, instrument or document executed or delivered in
connection with this Agreement;
(ii) any nonfulfillment of a condition or breach of any
covenant or agreement on the part of Investor under this Agreement or any
agreement, instrument or document executed or delivered in connection
herewith; and
(iii) any action, suit, demand, proceeding, order,
investigation, inquiry or claim by any third party (including, without
limitation, governmental agencies) against or affecting Premier which, if
successful, would give rise to or evidence the existence of or relate to a
breach of any of the representations, warranties or covenants of Investor
under this Agreement or any agreement, instrument or document executed or
delivered in connection herewith.
9.3 Survival. All representations, warranties, covenants and
other agreements in this Agreement and in all other agreements, instruments
and documents executed or delivered in connection with this Agreement, and
all rights and remedies provided under or otherwise available in connection
with any of the foregoing (including, without limitation, the
indemnification rights provided in this Section 9), at law or in equity,
shall survive the execution and delivery of this Agreement and the other
agreements, instruments and documents executed or delivered in connection
herewith and the consummation of the transactions contemplated hereby and
thereby, regardless of any investigation, inquiry or examination made for
or on behalf of, or any knowledge of either party or any of their
respective directors, officer, partners, agents, employees, representatives
or counsel thereof or the acceptance by a party of any certification or
opinion.
9.4 Defense of Claims. Any Person making a claim for
indemnification under this Section 9 (an "Indemnitee") shall notify the
party obligated to provide such indemnification (the "Indemnifier") of the
claim in writing promptly after receiving written notice of any action,
lawsuit, proceeding, investigation or other claim against it (if by a third
party) or discovering the liability, obligation or facts giving rise to
such claim for indemnification, describing the claim, the amount thereof
(if known and quantifiable), and the basis thereof; provided, that the
failure to so notify the Indemnifier shall not relieve the Indemnifier of
its obligations hereunder except to the extent such failure shall be proved
to have caused the Indemnifier to suffer a material loss. The Indemnifier
shall be entitled to participate in the defense of such action, lawsuit,
proceeding, investigation or other claim giving rise to the Indemnitee's
claim for indemnification, at the Indemnifier's expense, and at its option
(subject to the limitations set forth below), the Indemnifier shall be
entitled to appoint lead counsel of such defense, acceptable to the
Indemnitee; provided that prior to, and as a condition to, the
Indemnifier's appointing lead counsel of such defense the Indemnifier shall
first (a) verify to the Indemnitee in writing, in form and substance
satisfactory to the Indemnitee, that the Indemnifier shall be fully and
unconditionally responsible (with no reservation of any rights) for all
liabilities and obligations relating to such claim for indemnification and
that it will provide full indemnification as required hereunder, and (b)
provide the Indemnitee with assurance, in form and substance satisfactory
to the Indemnitee in its sole judgment, that the Indemnifier is and will
satisfy any such liability; provided further, that:
(i) The Indemnitee shall be entitled to participate in the
defense of such claim and to employ counsel of its choice, with fees and
expenses of such separate counsel borne by the Indemnitee. Notwithstanding
the foregoing, the reasonable fees and expenses of such separate counsel
incurred prior to the date the Indemnifier effectively assumes control of
such defense shall be borne by the Indemnifier.
(ii) The Indemnifier shall not be entitled to assume or
retain control of such defense if (A) the claim for indemnification relates
to or arises in connection with any criminal proceeding, action,
indictment, allegation or investigation; (B) the Indemnitee reasonably
believes an adverse determination with respect to the action, suit,
investigation, proceeding, inquiry or other claim giving rise to the claim
for indemnification could be detrimental to or injure Indemnitee's
reputation, an important relationship or future business prospects or
otherwise result in harm not readily calculable in monetary terms, (C) the
claim seeks an injunction or equitable relief against the Indemnitee, (D)
the Indemnitee reasonably believes that there is an actual or potential
conflict of interest involved in the representation of the Indemnitee by
the counsel selected by the Indemnifier, whether because of differing
interests between the Indemnifier and the Indemnitee or otherwise, or (E)
the Indemnitee reasonably believes that Premier has failed or is failing to
vigorously prosecute or defend such claim.
(iii) If the Indemnifier, with the consent of the
Indemnitee, shall control the defense of any such claim, the Indemnifier
shall obtain the prior written consent of the Indemnitee before entering
into any settlement of a claim or ceasing to defend such claim, if,
pursuant to or as a result of such settlement or cessation, an injunction
or other equitable relief is likely to be imposed against the Indemnitee or
if such settlement does not expressly and unconditionally release the
Indemnitee from all liabilities and obligations with respect to such claim,
with prejudice.
10. Miscellaneous
10.1 Rights and Remedies. Except as otherwise expressly provided
herein, the rights and remedies of the parties under this Agreement
(including the right to terminate this Agreement and the right to
indemnification) shall be cumulative with and in addition to, not exclusive
or in replacement of, any other rights or remedies that may be available
under any other agreement between the parties, at law or in equity.
10.2 Forum Selection for Disputes. Each of the parties to this
Agreement hereby submits to the exclusive, personal jurisdiction of either
the Federal District Court for the Eastern District of Pennsylvania or the
Court of Common Pleas of Philadelphia County, Pennsylvania for all claims,
disputes or controversies involving the parties hereto and relating to this
Agreement; provided, however, nothing herein shall prevent a party hereto
from asserting a claim for indemnification or any other claim hereunder
against the other party hereto in connection with a third party action in
the same jurisdiction where a third party action has been brought. Each
party hereby knowingly, intelligently and voluntarily waives its right to
contest the jurisdiction or venue of either such court, whether on the
grounds of inconvenience or otherwise, and each party hereto knowingly,
intelligently and voluntarily waives its right to initiate a suit or action
against the other party in any other court or forum, except as expressly
provided in Section 9.
10.3 Waiver of Jury Trial. IRREVOCABLY AND UNCONDITIONALLY, EACH
OF THE PARTIES HERETO HEREBY KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY
WAIVES ITS RIGHTS TO DEMAND TRIAL BY JURY IN ANY LITIGATION, SUIT OR OTHER
ACTION BROUGHT UNDER OR IN CONNECTION WITH THIS AGREEMENT OR UNDER ANY
OTHER AGREEMENT, INSTRUMENT OR DOCUMENT EXECUTED PURSUANT TO, OR IN
CONNECTION WITH, THIS AGREEMENT OR ANY PROVISION OF ANY OF THE FOREGOING OR
ANY OTHER MATTERS INVOLVING BOTH OF THE PARTIES HERETO.
10.4 Notices and Other Communications. Any notice, consent,
demand or other communication required or permitted under this Agreement
shall be made in writing and shall be deemed to have been duly given if (a)
sent by personal delivery or facsimile, telecopier or similar transmission
(and shall be deemed given upon confirmation of receipt), (b) mailed by
first class registered or certified mail, return receipt requested, postage
prepaid (and shall be deemed delivered three (3) days after the date
received for delivery by the United States Postal Service, whether or not
accepted by the addressee) or (c) sent by nationally recognized next-day
delivery courier that guaranties delivery within twenty-four (24) hours,
charges prepaid (and shall be deemed delivered one business day after
delivery to said courier), addressed to the parties hereto at their
respective addresses set forth under their names on the signature pages
hereto, marked in each case to the attention of the Chief Executive Officer
of the recipient; however, each party may change the person to be notified
on its behalf or the address of such person from time to time by giving
notice of such change at least ten (10) days in advance.
10.5 Entire Agreement. This Agreement embodies the entire
agreement and understanding between the parties hereto pertaining to the
subject matter hereof and supersedes all prior agreements and
understandings of the parties, oral or written, express or implied, in
connection therewith.
10.6 Amendments and Waivers. Any provision of this Agreement may
be amended or modified, in whole or in part, and the compliance with any
provision of this Agreement may be waived only with the written consent of
(a) both parties hereto, in the case of an amendment or modification and
(b) the party waiving compliance with a provision, in the case of a waiver.
10.7 No Waiver. No waiver by any party hereto of any condition,
or the breach of any term or covenant contained in this Agreement, whether
by conduct or otherwise, in any one or more instances, shall be deemed or
construed as a further or continuing waiver of any such condition or breach
or waiver of any other condition.
10.8 Severability. If any provision (or any part of any
provision) of this Agreement shall for any reason be determined by a court
of competent jurisdiction to be invalid, illegal or unenforceable in any
respect, such determination shall not invalidate, impair or affect the
remainder of this Agreement, which shall continue in full force and effect.
If such invalid, illegal or unenforceable provision would be valid, legal
and enforceable if modified in scope, duration or otherwise, such provision
shall be deemed modified to the minimum extent necessary to render the same
valid, legal and enforceable.
10.9 Governing Law. This Agreement, its interpretation,
performance and enforcement, and the rights and remedies of the parties
hereto, shall be governed and construed by and in accordance with the laws
of the Commonwealth of Pennsylvania, without regard to principles of
conflict of laws.
10.10 Binding Effect. Except as otherwise expressly provided,
all covenants and agreements contained in this Agreement or any other
agreement, instrument or document executed or delivered in connection
herewith by or on behalf of any of the parties hereto shall bind and inure
to the benefit of their respective successors, assigns, heirs and legal
representatives, whether so expressed or not. In addition, and whether or
not any express assignment has been made, the provisions of this Agreement
which are for the benefit of Investor as a purchaser or holder of the Stock
are also for the benefit of, and enforceable by, any subsequent holder of
such Stock.
10.11 Assignment. Except as contemplated by Section 1, neither
party may assign any of its rights or obligations under this Agreement
without the prior written consent of the other party, in such other party's
sole discretion.
10.12 No Third Party Rights. This Agreement is not intended to,
and it shall not, provide any rights whatsoever to any third party, and no
third party shall have any right to assert a claim under or enforce this
Agreement against any party hereto.
10.13 Construction. The masculine form, wherever used herein,
shall be construed to include the feminine and the neuter, and vice versa,
where appropriate. The singular form, wherever used herein, shall be
construed to include the plural, and vice versa, where appropriate. The
term "include" (and correlative terms, such as "includes" and "including")
shall not be construed as a term of limitation in any context but shall be
construed as if followed by the words "without limitation." All references
in this Agreement to a "Section" shall be to the applicable section of this
Agreement, unless otherwise specially provided. The captions of Sections
are for the convenience of the parties only; they form no part of this
Agreement and shall not affect its interpretation.
10.14 Determining Days. In computing the number of days for
purposes hereof, all days shall be counted, including Saturdays, Sundays
and legal holidays in the Commonwealth of Pennsylvania (unless only
business days are specified); provided, however, that if the final day of
any time period falls on a Saturday, Sunday or legal holiday, the final day
shall be deemed to be the following day which is not a Saturday, Sunday or
holiday. A "business day" shall mean any day which is not a Saturday,
Sunday or legal holiday in the Commonwealth of Pennsylvania.
[intentionally left blank]
10.15 Counterparts. This Agreement may be executed in counterparts,
each of which when so executed shall be deemed to be an original and all
counterparts together shall constitute one and the same instrument. The
transmission of a signature by telecopier will be treated as delivery of an
executed original.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the date first written above.
PREMIER CONCEPTS, INC.
By:
--------------------------------------
Sissel B. Greenberg, President and CEO
Address for Notices:
3033 S. Parker Road, Suite 120
Aurora, CO 80014
Facsimile: (303) 338-5780
INFUSION CAPITAL PARTNERS, LLC
By:
--------------------------------------
David M. M. Taffet, President
Address for Notices:
1601 Market Street, Suite 2450
Philadelphia, PA 19103
Facsimile: 215-988-9055
<PAGE>
<PAGE>
AGREEMENT REGARDING BASIC TERMS
Based upon information furnished to the parties as of the date of this
Agreement, Infusion Capital Partners, LLC ("Infusion") and Premier
Concepts, Inc. ("Premier") would be interested in pursuing the following
transactions with each other on the terms and conditions described herein:
1. Infusion Management Services
a. Management Services Agreement. Premier and Infusion will
enter into a mutually satisfactory Management Services Agreement (the
"Management Services Agreement"). Pursuant to the Management Services
Agreement, among other things, Premier will engage Infusion to (i) arrange
the First Funding (defined in Section 2 below) and the Second Funding
(defined in Section 3 below), (ii) coordinate the drafting of an analytical
document for distribution by Premier to broker-dealers, (iii) supervise
public relations relating to the distribution of such analytical document
and to the financing and use of proceeds contemplated hereby and (iv)
provide strategic, operational and investment banking advice.
b. Limited Conditions to Second Funding. Premier may request
the Second Funding at any time within the six (6) month period after the
First Funding, and Infusion will arrange the Second Funding as soon as is
reasonably practicable (but in no event more than thirty (30) days) after
such request. Infusion will have no obligation to arrange the Second
Funding, however, unless (i) Premier shall have obtained stockholder
approval for the Second Funding (and any related transactions) on the basic
terms described herein (and on such other terms as may be reasonably
requested by Infusion or Second Investor (defined in Section 3 below)) and
(ii) there shall have occurred no breach or misrepresentation by Premier
under any of its agreements with Infusion, First Investor (defined in
Section 2 below) or MeridianTelesis, LLC ("Meridian"). If Premier does not
request Infusion to arrange the Second Funding within such period, Infusion
will have the option nonetheless to require Premier to obtain such
stockholder approval and accept the Second Funding within thirty (30) days
thereafter (subject to satisfaction of the conditions contained in the
Second Stock Purchase Agreement (defined in Section 3 below)). Premier
will solicit and use its best efforts to obtain the required stockholder
approval prior to its filing of its report on Form 10-K for its fiscal year
ended January 31, 1999.
c. Compensation. Premier will pay Infusion the sum of $50,000
for such services. Infusion will be entitled to $25,000 of such sum upon
signing the Management Services Agreement ($10,000 of which will be paid
upon such signing and the balance of which will be paid in 3 consecutive
monthly installments of $5,000 each) and to the remaining $25,000 of such
sum upon the Second Funding (which shall be paid in the same manner). Upon
the Second Funding, Premier will also issue Infusion as a financing fee a
warrant to purchase 50,000 shares of its common stock at the price per
share equal to$5/8 ($.625), which warrant shall be exercisable on a
cashless basis for a period of 3 years from issuance. Infusion may assign
all or any portion of such warrant. Infusion will also be entitled to
preemptive rights on subsequent capital raises by Premier on terms and
conditions to be determined by the parties. In the event the Second
Funding does not occur, Infusion's cash compensation and the number of
shares under Infusion's warrant will be reduced in proportion to the amount
by which the First Funding is less than $500,000.
2. First Funding
a. Purchase of Common Stock. Premier will enter into a
mutually satisfactory Stock Purchase Agreement (the "First Stock Purchase
Agreement") with an entity determined by Infusion (the "First Investor").
Pursuant to the First Stock Purchase Agreement, among other things, First
Investor will invest $220,768.75 (the "First Funding") to purchase 353,230
shares of Premier's common stock, which shall constitute 19.9% of the then
issued and outstanding shares of Premier's common stock .(1) Such First
Funding shall occur before the close of business on March 11, 1999.
b. Governance Rights. First Investor will have the right to
elect a number of members of Premier's Board of Directors in proportion to
its stake in Premier (rounded down for partial members, but not less than
one). Premier will cause the election of such person(s) to be effective on
the date of the First Funding and will compensate such Board members as it
compensates its other Board members. First Investor will be entitled to
other rights commonly accorded minority shareholders in similar
transactions.
3. Second Funding
a. Purchase of Convertible Preferred Stock. Premier will also
enter into a mutually satisfactory Stock Purchase Agreement (the "Second
Stock Purchase Agreement") with an entity or individuals determined by
Infusion (which entity may be the First Investor or its assignee(s), the
"Second Investor"). Pursuant to the Second Stock Purchase Agreement, among
other things, if the Second Funding is requested or required as provided
above and subject to the conditions therein, Second Investor will invest
the difference between $500,000 and the amount of the First Funding to
purchase shares of a new series of convertible preferred stock (the "Second
Funding").
b. Preferred Return. The preferred stock will be entitled to
receive preferential cumulative distributions at an annual rate of ten
percent (10%), which will be paid in common stock upon conversion at the
average closing bid price for Premier's common stock for the fifteen (15)
trading days preceding the conversion date.
c. Conversion. The preferred stock will be converted into
shares of Premier's common stock at the conversion price of $5/8 ($.625)
per share of common stock. The preferred stock will convert any time after
six (6) months following the date of the Second Funding either (i) at
Second Investor's option or (ii) at Premier's option if the shares of
common stock underlying such conversion are subject to an effective
registration statement and have traded for a period of 20 consecutive days
at a price in excess of 150% of the conversion price.
d. Governance Rights. Second Investor will have the right to
elect a number of members of Premier's Board of Directors in proportion to
its stake in Premier (assuming conversion) (rounded down for partial
members, but not less than one). Premier will cause the election of such
person(s) to be effective on the date of the Second Funding and will
compensate such Board members as it compensates its other Board members.
Second Investor will be entitled to other rights commonly accorded minority
shareholders in similar transactions.
- --------------------------------
(1) Computed as follows: 1,775,025 shares of common stock outstanding
x 19.9% = 35,230 shares at $5/8 ($.625) per share = $220,768.75
e. Additional Warrant. Upon the Second Funding, Premier will
issue warrants to the First Investor and the Second Investor to purchase an
aggregate of 100,000 shares of its common stock at the price per share
equal to the average exercise price of Premier's Incentive Stock Options
and Non-Plan Stock Options outstanding as of the date of the Second Funding
(but not to exceed $ ), which warrants shall be
exercisable on a cashless basis for a period of 3 years from issuance. The
allocation of the 100,000 aggregate shares under such warrants will be
determined by First Investor, Second Investor and Infusion. In the event
the Second Funding does not occur, Premier will issue the warrant for
50,000 shares to the First Investor.
4. Registration Rights. Premier will file an appropriate
registration statement to register, at its expense, for sale or resale
under the Securities Act, the shares of common stock purchased by First
Investor, the shares of common stock underlying the preferred stock
purchased by Second Investor and the shares of common stock underlying the
additional warrants of First Investor and Second Investor and the warrant
issued to Infusion as soon as practicable after Premier files its report on
Form 10-K for its fiscal year ended January 31, 1999 (but not later than
May 31, 1999). Premier will use its best diligent efforts to cause such
registration statement to become effective as soon as possible after filing
and, in any event, not later than September 15, 1999. After registration,
Premier will maintain a continuously effective registration statement
covering such shares until all such shares of common stock have been sold
(or with respect to warrant shares, the expiration of the warrant without
exercise).
5. Use of Proceeds. Premier will use at least $175,000 of the
proceeds of the First Funding and Second Funding (in the aggregate) to
engage Meridian to establish and expand Premier's e-commerce capabilities.
As a condition to closing under the First Stock Purchase Agreement, Premier
and Meridian will enter into a mutually satisfactory Services Agreement
(the "Meridian Services Agreement") with respect to such matters. The
parties will determine a schedule for the expenditure of such funds based
on the strategic rollout of Premier's e-commerce platform. The remaining
proceeds will be used for expenses of the transactions, to pay Infusion, to
reduce the outstanding principal of Premier's bank debt, to acquire new
stores and renovate existing stores and for working capital (all in
accordance with a budget to be determined by the parties).
6. Definitive Agreements. Promptly after execution of this
Agreement by both parties, Infusion and Premier will work towards the
preparation and execution of a definitive Management Services Agreement,
First Stock Purchase Agreement, Second Stock Purchase Agreement and
Meridian Services Agreement (the "Definitive Agreements"), together with
ancillary documents necessary to accomplish the transactions and
appropriate schedules disclosing requested information, all of which must
be, as to form and substance, mutually satisfactory and acceptable to the
applicable parties.
7. Due Diligence. Premier will use reasonable efforts to cooperate
with and assist Infusion, First Investor, Meridian and Second Investor in
conducting a due diligence investigation between the date hereof and the
date of the First Funding. Without limiting the foregoing, Premier will
provide such parties and their authorized representatives, agents, auditors
and counsel with copies of, or complete and unrestricted access during
normal business hours to, all books, records, projections, financial
information, agreements, governmental filings and correspondence,
operations, properties, equipment and personnel of Premier, so long as the
request therefor is reasonable and will not disrupt Premier's business.
Such parties and persons will also have the right to discuss operating and
financial matters with the accountants, attorneys, consultants, employees
and former employees of Premier and others having an interest in Premier,
including, without limitation, creditors and direct or indirect
shareholders therein.
8. Representations and Covenants. The Definitive Agreements will
provide for Premier to make representations and warranties, and to agree to
covenants, concerning all matters which could reasonably affect Infusion's,
First Investor's, Meridian's or Second Investor's decision to consummate
the transactions contemplated hereby.
9. Conditions Precedent. The Definitive Agreements will not be
effective, and Premier, Infusion and the other parties will have no
obligations thereunder, unless and until, among other things, the following
conditions have been satisfied or waived:
a. Infusion and the other parties and persons entitled to
conduct due diligence shall have completed their due diligence with respect
to Premier and the transactions contemplated hereby, and the results of
such due diligence shall have been satisfactory to such parties in their
sole discretion.
b. There shall have occurred no event or action which could
result in a dilution in the percentage ownership in Premier to be acquired
by Infusion, First Investor or Second Investor (whether at the time of
issuance, conversion or exercise), except for the stock split referenced in
Premier's December 18, 1998 Form 14-A filing, in which event the amounts of
stock and warrants hereunder will be appropriately adjusted.(2) The
Definitive Agreements will contain appropriate anti-dilution terms covering
all shares of stock and warrants referred to herein.
c. Premier will have obtained all necessary consents,
authorizations and approvals (including, without limitation, those of its
Board of Directors and stockholders (as provided herein)) for it to enter
into and carry out these transactions and, if necessary, will have amended
its organizational documents in order to effectuate these transactions.
d. The representations and warranties of the parties contained
in the Definitive Agreements will be true and correct as of the closing
date thereunder and all covenants required to be performed by the parties
shall have been performed.
e. Premier shall have entered into Employment Agreements with
its CEO, CFO and COO on terms and conditions acceptable to the parties.
10. Indemnification and Remedies. Each party will indemnify and hold
harmless the other from and against any misrepresentation, breach of
warranty or failure to fulfill a covenant, condition or obligation
contained in the Definitive Agreements. The rights and remedies of the
parties will be cumulative.
11. Non-disclosure. Each of the parties agrees that the information
contained in this letter is confidential in nature and, except as may be
required by subpoena, civil investigative demand or other similar process,
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(2) Without limiting the foregoing, dilution will be deemed to have
occurred in respect of Premier's Class A Warrants if its common stock price
exceeds $5.00. Dilution will also be deemed to have occurred in the event
of any other capital investment being made in Premier.
each agrees not to disclose to any person (excluding its members,
shareholders, partners, managers, directors, officers, employees, agents,
representatives, consultants and counsel, all on a need-to-know basis) the
fact that discussions or negotiations are taking place between the parties,
any of the terms or conditions of this or any prior or subsequent letter or
document or any discussions or negotiations of transactions (including the
identity of any party referred to herein) or information furnished in
connection herewith or therewith without the prior written consent of such
party. Each of the parties shall use such information only for the purpose
of engaging in such negotiations with each other. Further, except to the
extent required otherwise by any governmental authority, subpoena, civil
investigative demand or other similar process, each of the parties shall
treat confidentially, and not disclose except as contemplated hereby, any
information provided to it by the other party and designated as
confidential. No information will be deemed confidential and subject to
this Section 11 if it is developed independently by a party, was available
to a party prior to the date hereof or becomes generally available to the
public other than as a result of a breach by a party of its obligations
hereunder. The provisions of this Section 11 will survive the termination
hereof and any negotiations and discussions between the parties hereto.
12. Termination Date. This Agreement may be terminated by either
party in writing without liability or obligation if Definitive Agreements
containing representations, covenants, conditions and other terms mutually
acceptable to the parties have not, for whatever reason, been executed and
become effective on or prior to the close of business on March 11, 1999,
unless extended in writing by the parties hereto (such original or extended
date, the "Termination Date"). The parties agree to proceed in good faith
and with reasonable diligence to execute and make effective Definitive
Agreements by such date.
13. Exclusivity. From the date hereof until the Termination Date,
Premier shall not directly or indirectly (including, without limitation,
through any director, officer, employee, agent, representative, broker or
affiliate, or any other intermediary whatsoever) solicit, engage in
negotiations with or provide information to any person or entity
whatsoever, other than as referred to herein, concerning any transaction(s)
regarding, or similar to, the subject matter hereof.
14. Entire Understanding. These terms supersede all prior
correspondence, agreements, understandings and discussions of the parties
relevant to the subject matter hereof. This is not intended to confer, nor
does it confer, any third-party beneficiary rights.
15. Expenses. Except as to be provided in the Management Services
Agreement, each party shall bear its own costs and expenses (including all
legal, accounting, investment banking and other costs) with respect to
these transactions, whether the transactions are consummated or not, and
the Definitive Agreements will so provide.
16. Binding Effect. Except for Sections 6,7 and 11- this Section 16,
this Agreement is subject to the proper execution and effectiveness of
Definitive Agreements not later than the Termination Date. The Definitive
Agreements will be prepared by counsel to Infusion and will include
additional terms and provisions not specified above which are customary for
similar transactions or required by any party based on information or
circumstances of which it becomes aware after the date hereof. These terms
are merely a guide to the preparation of mutually satisfactory Definitive
Agreements. Nothing herein shall be construed to preclude other provisions
consistent with the financial terms of these transactions from being
inserted in the Definitive Agreements at the request of any party provided
the other party agrees. Except to the extent of damages arising from a
breach by either of Sections 11 or 13 above, neither party shall have any
liability hereunder or in connection herewith.
IN WITNESS WHEREOF, the parties have executed this Agreement by their
duly authorized officers this 26th day of February, 1999.
INFUSION CAPITAL PARTNERS, LLC
By:
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David M. M. Taffet, President
PREMIER CONCEPTS, INC.
By:
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Sissel B. Greenberg, President and CEO
