<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 16, 2000
REGISTRATION NO. 333-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
PREMIER CONCEPTS, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
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COLORADO 5699 84-1186026
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER)
</TABLE>
3033 SOUTH PARKER ROAD, SUITE 120
AURORA, COLORADO 80014
(303) 338-1800
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
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SISSEL ECKENHAUSEN, PRESIDENT
3033 SOUTH PARKER ROAD, SUITE 120
AURORA, COLORADO 80014
(303) 338-1800
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
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THOMAS F. HURLEY CHRISTOPHER S. AUGUSTE
HANGLEY ARONCHICK SEGAL & PUDLIN PARKER CHAPIN, LLP
ONE LOGAN SQUARE -- 27TH FLOOR 405 LEXINGTON AVENUE
PHILADELPHIA, PA 19103 NEW YORK, NEW YORK 10174
TEL.: (215) 568-6200 TEL.: (212) 704-6000
FAX: (215) 568-0300 FAX: (212) 704-6288
E-MAIL: [email protected] E-MAIL: [email protected]
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: as soon as
practicable after the effective date of the registration statement and the
effective time of the merger of AmazeMerger Co., a wholly-owned subsidiary of
the Registrant ("Mergersub"), with and into AmazeScape.com Inc. ("AmazeScape").
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
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If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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TITLE OF EACH AMOUNT PROPOSED MAXIMUM PROPOSED AMOUNT OF
CLASS OF SECURITIES TO BE OFFERING PRICE MAXIMUM AGGREGATE REGISTRATION
TO BE REGISTERED REGISTERED PER SHARE OFFERING PRICE FEE
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Common Stock, $.002 Par Value........ 12,712,851(1) 0.$2238 $2,845,000(3)
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Series B Convertible Preferred Stock,
$.0005 Par Value..................... 120(2) 10$,000 $1,200,000(3)
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Total................................ 12,712,971 $4,045,000(3) $ 1,068.00
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</TABLE>
(1) Represents the estimated maximum number of shares of the Registrant's common
stock, $0.002 par value per share ("Common Stock") issuable in connection
with the merger in exchange for shares of AmazeScape.com Inc. common stock,
par value $.002 per share ("AmazeScape Common Stock") based on (i) the
number of currently outstanding shares of AmazeScape Common Stock and
changes therein contemplated by the Agreement and Plan of Merger among the
Registrant, Mergersub and AmazeScape (the "Merger Agreement") to occur at or
before the effective time of the merger, and (ii) the 1:1 exchange ratio at
which the Common Stock is to be issued in exchange for AmazeScape Common
Stock under the Merger Agreement.
(2) Represents the estimated maximum number of shares of Registrant's Series B
Convertible Preferred Stock ("Convertible Preferred Stock") issuable in
connection with the merger in exchange for shares of the Series A
Convertible Preferred Stock of AmazeScape ("AmazeScape Series A Preferred
Stock") based on (i) the number of currently outstanding shares of
AmazeScape Series A Preferred Stock (no changes therein are contemplated by
the Merger Agreement or otherwise expected to occur at or before the
effective time of the merger), and (ii) the 1:1 exchange ratio at which the
Convertible Preferred Stock is to be issued in exchange for the AmazeScape
Series A Preferred Stock under the Merger Agreement.
(3) Estimated solely for the purpose of calculating the registration fee
pursuant to Rule 457(f)(1) promulgated under the Securities Act. The amount
reflected for the Common Stock is the book value of the AmazeScape Common
Stock to be exchanged for Common Stock or canceled in the merger based on
the net book value of AmazeScape at December 31, 1999, which was $0.2238 per
share. The amount reflected for the Convertible Preferred Stock is the book
value of the AmazeScape Series A Preferred Stock to be exchanged for
Convertible Preferred Stock in the merger based on the net book value of
AmazeScape at December 31, 1999, which was $10,000.00 per share.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a),
MAY DETERMINE.
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<PAGE> 2
SUBJECT TO COMPLETION, DATED , 2000
PREMIER CONCEPTS, INC.
SPECIAL MEETING OF SHAREHOLDERS
AMAZESCAPE.COM INC.
SOLICITATION OF SHAREHOLDER CONSENTS
PROXY STATEMENT/PROSPECTUS
MERGER PROPOSED -- YOUR
VOTE IS VERY IMPORTANT
The boards of directors of Premier Concepts, Inc., a Colorado corporation
("Premier Concepts"), and AmazeScape.com Inc., a Nevada corporation
("AmazeScape"), have approved the merger of a wholly-owned subsidiary of Premier
Concepts with and into AmazeScape. Under the merger agreement, Premier Concepts
shall be renamed "AmazeScape.com Inc." and become a holding company with two
wholly-owned, operating subsidiaries: one of which shall continue to operate the
existing faux jewelry business of Premier Concepts under the new name "Premier
Commerce, Inc." and the other of which, as a result of the merger, shall be
AmazeScape. After the merger, AmazeScape will continue to develop and operate
its existing Internet business under the new name "AmazeScape Operations, Inc."
At the effective time of the merger, the following will occur:
- Premier Concepts shareholders will continue to own their existing shares
of Premier Concepts common stock.
- Holders of AmazeScape common stock not dissenting to the merger (and
perfecting their dissenters' rights) will receive one share of Premier
Concepts common stock for each share of AmazeScape common stock held.
- Holders of AmazeScape Series A Preferred Stock will receive one share of
Premier Concepts Series B Convertible Preferred Stock for each share of
AmazeScape Series A Preferred Stock held.
- Holders of AmazeScape Series B Preferred Stock will receive one share of
Premier Concepts common stock for each share of AmazeScape common stock
issued to them immediately prior to the merger. (The terms of the Series B
Preferred Stock call for the automatic conversion of the preferred stock
to AmazeScape common stock in the event of the merger.)
Holders of AmazeScape common stock who dissent from the merger and perfect
their dissenters' rights will be entitled to receive fair value for their shares
of common stock of AmazeScape in accordance with the provisions of Nevada law.
In connection with the merger, the shareholders of Premier Concepts are
being asked to approve the following proposals, which are referred to
collectively as the merger-related proposals:
- a proposal to amend Premier Concepts' Articles of Incorporation to
increase its authorized capital to include 120 shares of Series B
Convertible Preferred Stock (to be issued in the merger);
- a proposal that Premier Concepts issue 12,712,851 shares of common stock
and 120 shares of Series B Convertible Preferred Stock as contemplated in
the merger agreement;
- a proposal to amend Premier Concepts' Articles of Incorporation to change
the name of the corporation from "Premier Concepts, Inc." to
"AmazeScape.com Inc.";
- a proposal to adopt the Premier Concepts, Inc. 2000 Stock Option Plan, as
contemplated by the merger agreement.
These merger-related proposals, if approved by the shareholders of Premier
Concepts, will become effective only if the merger is completed.
Separately, the shareholders of Premier Concepts are also being asked to
approve a proposal to amend the Premier Concepts, Inc. Incentive Stock Option
Plan to increase from 165,000 to 272,500 the number of shares of Premier
Concepts common stock for which options may be issued thereunder.
The board of directors of Premier Concepts has determined that the merger is
advisable and in the best interests of its shareholders and that the amendment
of the Premier Concepts Incentive Stock Option Plan is in the best interests of
Premier Concepts. Accordingly, it unanimously recommends voting FOR each of the
foregoing proposals.
In connection with the merger, the shareholders of AmazeScape are being
asked to approve the merger agreement and the merger by written consent in
accordance with Nevada law. The board of directors of AmazeScape has determined
that the merger is advisable and in the best interests of its shareholders and
unanimously recommends that shareholders of AmazeScape consent to the merger.
Premier Concepts and AmazeScape cannot complete the merger unless the
shareholders of Premier Concepts approve each of the merger-related proposals
and the shareholders of AmazeScape approve the merger and the merger agreement.
PREMIER CONCEPTS SHAREHOLDERS: Premier Concepts has scheduled a special
meeting of its shareholders to vote on the proposals described above. Your vote
is very important. Whether or not you plan to attend the Premier Concepts
special meeting, please take the time to vote by completing and mailing the
enclosed proxy card to us. If you sign, date and mail your proxy card without
indicating how you want to vote, your proxy will be counted as a vote FOR each
proposal identified above. If your shares are held in "street name," you must
instruct your broker in order to vote on your behalf.
THE DATE, TIME AND PLACE OF THE PREMIER CONCEPTS SPECIAL MEETING ARE:
[ , 2000] AT 11:00 A.M.
LOCAL TIME, AT 3033 SOUTH PARKER ROAD, SUITE 120, AURORA, CO 80014.
AMAZESCAPE SHAREHOLDERS: AmazeScape is soliciting its shareholders to
furnish their written consent to approve the merger and the merger agreement
without a shareholders' meeting. Please sign and date the enclosed form of
written consent and mail it to AmazeScape on or before , 2000. The
written consent of greater than 50% of the AmazeScape shareholders is needed to
approve the merger.
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED THE PREMIER CONCEPTS COMMON STOCK AND CONVERTIBLE
PREFERRED STOCK TO BE ISSUED IN THE MERGER DESCRIBED IN THIS PROXY
STATEMENT/PROSPECTUS OR DETERMINED IF THIS PROXY STATEMENT/PROSPECTUS IS
ACCURATE OR ADEQUATE. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
THIS PROXY STATEMENT/PROSPECTUS IS DATED , 2000 AND IS FIRST
BEING MAILED TO SHAREHOLDERS ON , 2000.
<PAGE> 3
PREMIER CONCEPTS, INC.
NOTICE OF SPECIAL MEETING
TO BE HELD ON , 2000
TO THE SHAREHOLDERS OF PREMIER CONCEPTS, INC.
You are cordially invited to attend the special meeting of shareholders of
Premier Concepts, Inc. ("Premier Concepts") that will be held on [ ,
2000] at 11:00 a.m. local time, at 3033 South Parker Road, Suite 120, Aurora, CO
80014 on , 2000. At the special meeting, you will be asked to vote
on the following proposals:
1. A proposal to amend Premier Concepts' Articles of Incorporation to
increase its authorized capital to include 120 shares of Series B
Convertible Preferred Stock;
2. Subject to the shareholders' approval of Proposal No. 1, above, a
proposal that Premier Concepts issue 12,712,851 shares of common stock and
120 shares of Series B Convertible Preferred Stock pursuant to the
Agreement and Plan of Merger, dated as of February 7, 2000, among Premier
Concepts, AmazeMerger Co., a recently-formed, wholly-owned subsidiary of
Premier Concepts, and AmazeScape.com Inc. as described in the Proxy
Statement/Prospectus accompanying this Notice of Special Meeting. The
Agreement and Plan of Merger provides, in part, for:
- the existing business of Premier Concepts to be transferred to a
newly-formed subsidiary known as "Premier Commerce, Inc.," which
will continue to operate the Premier Concepts business;
- AmazeMerger Co. to be merged with and into AmazeScape.com Inc.;
- AmazeScape.com Inc., as the surviving corporation after the merger,
to become a wholly-owned subsidiary of Premier Concepts and to
continue to develop and operate its Internet business under the new
name "AmazeScape Operations, Inc.";
- Premier Concepts to change its name to "AmazeScape.com Inc.," and
thereafter to serve as a holding company; and
- at the effective time of the merger: (A) each holder of AmazeScape
common stock to receive one share of Premier Concepts common stock
for each such share held; (B) each holder of Series A Preferred
Stock of AmazeScape to receive one share of Premier Concepts Series
B Convertible Preferred Stock for each such share held; and (C)
each holder of Premier Concepts common stock will continue to own
such common stock;
3. Subject to the shareholders' approval of Proposals Nos. 1 and 2
above, a proposal to amend Premier Concepts' Articles of Incorporation to
change the corporation's name to "AmazeScape.com Inc.";
4. Subject to the shareholders' approval of Proposals Nos. 1, 2 and 3
above, a proposal to adopt the Premier Concepts, Inc. 2000 Stock Option
Plan;
5. A proposal to amend the Incentive Stock Option Plan of Premier
Concepts to increase the number of shares of Premier Concepts common stock
for which options may be issued thereunder from 165,000 to 272,500; and
6. To transact such other business as may properly come before the
special meeting, including any adjournment or postponement thereof.
Only shareholders of record at the close of business on , 2000
are entitled to notice of and to vote at the special meeting and at any
adjournment and postponement thereof. Your vote as a shareholder of Premier
Concepts is important. You may vote your shares by (1) completing, signing,
dating and returning the enclosed proxy card as promptly as possible; (2)
dialing 1-800- and casting your vote in
<PAGE> 4
accordance with the instructions given to you on the telephone; or (3) casting
your vote via the Internet in accordance with the instructions given to you at
www.eproxy.com. A postage prepaid envelope is enclosed. You may also vote in
person at the special meeting even if you voted your shares before such meeting.
By Order of the Board of Directors
Todd Huss, Secretary
<PAGE> 5
AMAZESCAPE.COM INC.
NOTICE OF SOLICITATION
OF CONSENTS
TO THE STOCKHOLDERS OF AMAZESCAPE.COM INC.:
This Notice of Solicitation of Consents and accompanying Proxy
Statement/Prospectus are furnished to you by AmazeScape.com Inc., a Nevada
corporation ("AmazeScape") in connection with its solicitation of written
consents from the holders of its common stock to take action without a
stockholders' meeting.
Specifically, we are asking holders of our common stock to consent to the
following proposal:
To approve and adopt the Agreement and Plan of Merger, dated as of
February 7, 2000 between AmazeScape; Premier Concepts, Inc. ("Premier
Concepts"); and AmazeMerger Co., a wholly-owned subsidiary of Premier
Concepts; as described in the Proxy Statement/Prospectus accompanying
this Notice of Solicitation of Consents.
The merger agreement provides, in part, for:
- AmazeMerger Co. to be merged with and into AmazeScape and AmazeScape, as
the surviving corporation after the merger, to become a wholly-owned
subsidiary of Premier Concepts which subsidiary will continue to develop
and operate AmazeScape's Internet business under the new name "AmazeScape
Operations, Inc.";
- the existing business of Premier Concepts to be transferred to a
newly-formed subsidiary known as "Premier Commerce, Inc.," which will
continue to operate the Premier Concepts business;
- Premier Concepts to change its name to "AmazeScape.com Inc." and
thereafter to serve as a holding company; and
- at the effective time of the merger: (A) each holder of AmazeScape common
stock to receive one share of Premier Concepts common stock for each such
share held; (B) each holder of Series A Preferred Stock of AmazeScape to
receive one share of Premier Concepts Series B Convertible Preferred
Stock for each such share held; and (C) each holder of Premier Concepts
common stock to continue to own such common stock.
The board of directors of AmazeScape requests that you indicate your
written consent to the proposed corporate action by marking, signing and dating
the enclosed consent card, and promptly mailing it in the enclosed envelope
(which needs no postage if mailed in the United States) so that it will be
received by us on or before , 2000. Our board of directors has
established the close of business on 2000 as the record date for
determining stockholders entitled to submit consents (the "Record Date").
The proposed corporate action may be taken only if holders of record on the
Record Date of shares representing at least a majority of the votes represented
by all outstanding shares of common stock submit to AmazeScape a written consent
to such action on or before , 2000, the date on which Consents will
be finally tabulated. AmazeScape retains the right to extend such date.
The Board of Directors of AmazeScape unanimously recommends that you
consent to the proposed merger.
By Order of the Board of Directors
Anton Nicaj, Secretary
Dated: , 2000
<PAGE> 6
TABLE OF CONTENTS
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PAGE
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QUESTIONS AND ANSWERS ABOUT THE MERGER...................... iii
WHO CAN HELP ANSWER YOUR QUESTIONS.......................... v
SUMMARY..................................................... 1
SELECTED FINANCIAL DATA..................................... 8
MARKET FOR PREMIER CONCEPTS COMMON STOCK AND RELATED
MATTERS................................................... 10
RISK FACTORS................................................ 11
Risks Relating to Premier Concepts' Business.............. 11
Risks Relating to AmazeScape's Business................... 12
Risks Relating to the Merger.............................. 17
Risks Relating to the Business, Finances and Operations of
the Combined Companies................................. 20
CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING
STATEMENTS................................................ 21
THE MERGER.................................................. 23
General................................................... 23
Background of the Merger.................................. 23
Premier Concepts' Reasons for the Merger.................. 24
Recommendations of Premier Concepts' Board of Directors... 25
AmazeScape's Reasons for the Merger....................... 25
Recommendations of AmazeScape's Board of Directors........ 26
Countervailing Considerations by Both Companies........... 27
Accounting Treatment...................................... 27
Material U.S. Federal Income Tax Consequences of the
Merger................................................. 27
Federal Securities Laws Consequences; Stock Transfer
Restrictions........................................... 29
Opinion of Financial Advisor.............................. 29
DISSENTER'S RIGHTS OF AMAZESCAPE'S SHAREHOLDERS............. 32
INTERESTS OF RELATED PERSONS IN THE MERGER.................. 35
THE MERGER AGREEMENT........................................ 36
General................................................... 36
Timing of Closing......................................... 36
Conversion of Shares of AmazeScape Common Stock........... 36
Conversion of Shares of Mergersub Common Stock............ 36
Conversion of Shares of AmazeScape Series A Preferred
Stock.................................................. 36
Treatment of Options and Warrants......................... 37
Exchange of Certificates, Options and Warrants............ 37
The Board of Directors and Officers of Premier Concepts... 37
Representations and Warranties............................ 37
Certain Covenants......................................... 38
Conditions to the Completion of the Merger................ 40
Directors' and Officers' Liability........................ 41
Termination............................................... 41
Amendment or Waiver of the Merger Agreement............... 42
ADOPTION OF PREMIER CONCEPTS, INC. 2000 STOCK OPTION PLAN... 43
AMENDMENT OF PREMIER CONCEPTS, INC. INCENTIVE STOCK OPTION
PLAN TO INCREASE THE NUMBER OF SHARES AVAILABLE FOR OPTION
THEREUNDER................................................ 46
THE PREMIER CONCEPTS SHAREHOLDERS MEETING................... 49
</TABLE>
i
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SOLICITATION OF CONSENTS OF AMAZESCAPE SHAREHOLDERS......... 51
COMPARISON OF SHAREHOLDERS' RIGHTS.......................... 53
DESCRIPTION OF PREMIER CONCEPTS' CAPITAL STOCK.............. 55
SHARES ELIGIBLE FOR FUTURE SALE............................. 56
BUSINESS OF PREMIER CONCEPTS................................ 57
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF PREMIER CONCEPTS............. 62
BUSINESS OF AMAZESCAPE...................................... 72
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION
AND RESULTS OF OPERATIONS OF AMAZESCAPE................... 80
AMAZESCAPE RELATED PARTY TRANSACTIONS....................... 81
PRINCIPAL SHAREHOLDERS OF AMAZESCAPE........................ 83
MANAGEMENT OF THE COMBINED COMPANIES........................ 84
LEGAL MATTERS............................................... 86
EXPERTS..................................................... 86
WHERE YOU CAN FIND MORE INFORMATION......................... 86
INDEX TO FINANCIAL STATEMENTS............................... F-1
Historical Financial Statements of Premier Concepts,
Inc. .................................................. F-2
Historical Financial Statements of AmazeScape.com,
Inc. .................................................. F-16
Pro Forma Condensed Consolidated Financial Statements of
the Combined Companies................................. F-26
</TABLE>
LIST OF APPENDICES
Appendix A -- Articles of Amendment to Articles of Incorporation of Premier
Concepts authorizing Series B Convertible Preferred Stock
Appendix B -- Agreement and Plan of Merger
Appendix C -- Premier Concepts 2000 Stock Option Plan
Appendix D -- Opinion of Financial Advisor
Appendix E -- Form of Opinion of Counsel to Premier Concepts
Appendix F -- Form of Opinion of Counsel to AmazeScape
Appendix G -- Excerpts from Nevada Revised Statutes -- Dissenter's Rights
Appendix H -- Form of Dissenter's Notice/Request for Payment
ii
<PAGE> 8
QUESTIONS AND ANSWERS ABOUT THE MERGER
Q: WHEN AND WHERE IS THE PREMIER CONCEPTS SHAREHOLDER MEETING?
A: Premier Concepts' meeting will be held at 3033 South Parker Road, Suite 120,
Aurora, Colorado 80014 on , 2000 starting at 11:00 a.m. local time.
Q: WHY HASN'T A MEETING OF SHAREHOLDERS OF AMAZESCAPE BEEN SCHEDULED?
A. Under Nevada law, the shareholders of AmazeScape may take action on the
merger proposal without the need for a meeting by providing their written
consents. A shareholder of AmazeScape may vote by completing, signing and dating
the enclosed written consent form and returning the form to AmazeScape by
, 2000.
Q: WHAT AM I BEING ASKED TO VOTE UPON OR CONSENT TO? WHAT VOTE IS REQUIRED?
A: Premier Concepts shareholders: In connection with the merger, Premier
Concepts shareholders are being asked to vote to approve:
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PROPOSAL REQUIRED VOTE
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a proposal to amend Premier Concepts' a majority of the outstanding shares of
Articles of Incorporation to increase Premier Concepts common stock
its authorized capital to include 120
shares of Series B Convertible Preferred
Stock (to be issued in the merger)
a proposal that Premier Concepts issue a majority of the outstanding shares of
12,712,851 shares of common stock and Premier Concepts common stock present or
120 shares of Series B Convertible represented and voting at the special
Preferred Stock as contemplated by the meeting of shareholders
merger agreement
a proposal to amend Premier Concepts' a majority of the outstanding shares of
Articles of Incorporation to change its Premier Concepts common stock
corporate name to "AmazeScape.com Inc."
upon completion of the merger
a proposal to adopt the Premier a majority of the outstanding shares of
Concepts, Inc. 2000 Stock Option Plan, Premier Concepts common stock present or
as contemplated by the merger agreement represented and voting at the special
meeting of shareholders
</TABLE>
Separately, the shareholders of Premier Concepts are also being asked to
approve:
<TABLE>
<CAPTION>
PROPOSAL REQUIRED VOTE
-------- -------------
<S> <C>
a proposal to amend the Premier a majority of the outstanding shares of
Concepts, Inc. Stock Option Plan to Premier Concepts common stock present or
increase the number of shares of common represented and voting at the special
stock for which options may be issued meeting of shareholders
thereunder from 165,000 to 272,500
</TABLE>
A: AmazeScape shareholders: AmazeScape shareholders are being asked to approve
the merger agreement and the merger by written consent instead of by voting at a
shareholders' meeting. This proposal will require approval by the holders of a
majority of the outstanding shares of AmazeScape common stock.
Q: WHAT WILL I RECEIVE IN THE MERGER?
A: Premier Concepts shareholders: Premier Concepts shareholders will continue to
hold their shares of Premier Concepts common stock after the merger.
A: AmazeScape shareholders: At the effective time of the merger, holders of
AmazeScape common stock will receive one share of Premier Concepts common stock
for each share of AmazeScape common stock they hold. Holders of AmazeScape
Series A Preferred Stock will receive one share of Premier Concepts Series B
Convertible Preferred Stock for each share of AmazeScape Series A Preferred
Stock they hold. Outstanding
iii
<PAGE> 9
shares of AmazeScape Series B Preferred Stock shall have been converted into
shares of AmazeScape common stock prior to the merger and will be treated as
shares of AmazeScape common stock under the merger agreement.
The number of shares of each of the common stock and convertible preferred stock
of Premier Concepts to be issued in connection with the merger is fixed and will
not be adjusted based upon changes in the value of these shares.
AS A RESULT, THE MARKET VALUE OF THE SECURITIES AMAZESCAPE SHAREHOLDERS RECEIVE
IN THE MERGER WILL NOT BE KNOWN AT THE TIME THEY VOTE ON THE MERGER AND MAY
INCREASE OR DECREASE AS THE MARKET PRICE OF PREMIER CONCEPTS COMMON STOCK GOES
UP OR DOWN.
Q: WILL THE MERGER HAVE ANY EFFECT ON THE CURRENTLY OUTSTANDING SHARES OF
PREMIER CONCEPTS?
A: Although the merger will not have any effect on the rights attributable to
the shares of Premier Concepts common stock currently owned by the shareholders
of Premier Concepts, there will be an overall dilution of such holders' interest
in Premier Concepts. The number of outstanding shares of Premier Concepts common
stock will increase from approximately 1.6 million shares to approximately 14.3
million shares following the merger.
Q: HOW DOES MY BOARD OF DIRECTORS RECOMMEND THAT I VOTE ON THE PROPOSALS?
A: Premier Concepts shareholders: The Premier Concepts board of directors
unanimously recommends that Premier Concepts' shareholders vote FOR the
amendment to Premier Concepts' Articles of Incorporation to increase its
capitalization to include 120 shares of Series B Convertible Preferred Stock;
FOR the issuance of 12,712,851 shares of Premier Concepts common stock and 120
shares of Series B Convertible Preferred Stock pursuant to the merger; FOR the
amendment to the Premier Concepts' Articles of Incorporation to change the
corporation's name to "AmazeScape.com Inc."; FOR the adoption of the Premier
Concepts, Inc. 2000 Stock Option Plan; and FOR the amendment of the Premier
Concepts, Inc. Incentive Stock Option Plan to increase the number of shares of
common stock for which options may be issued thereunder from 165,000 to 272,500.
A: AmazeScape shareholders: The AmazeScape board of directors unanimously
recommends that AmazeScape shareholders consent to the merger agreement and the
merger.
Q: HOW DO I CAST MY VOTE?
A: Premier Concepts shareholders: Each Premier Concepts shareholder should
indicate on his proxy card how he wants to vote, sign it and mail it in the
enclosed return envelope, or vote via telephone or the Internet, as soon as
possible, so that his shares may be represented at the Premier Concepts special
meeting. A Premier Concepts shareholder may also attend the special meeting and
vote his shares in person.
A: AmazeScape shareholders: An AmazeScape shareholder who wishes to vote in
favor of the merger proposal may do so by completing and returning the enclosed
consent form on or before , 2000. A shareholder wishing to vote
against the proposal need not do anything: failure to return the enclosed
consent form will be treated as a vote against the merger proposal.
Q: WHAT DO I DO IF I WANT TO CHANGE MY VOTE?
A: Premier Concepts shareholders: Premier Concepts shareholder who wishes to
change his vote may simply (i) send in a later-dated, signed proxy card to the
Premier Concepts secretary or assistant secretary, as set forth above in the
notice of special meeting, (ii) vote again by telephone or the Internet before
the special meeting, or (iii) attend the special meeting and vote in person. A
Premier Concepts shareholder may also revoke his proxy by sending a notice of
revocation to Premier Concepts' secretary or assistant secretary, by telephone
or over the Internet before the meeting.
A: AmazeScape shareholders: An AmazeScape shareholder who wishes to withdraw his
consent may do so by sending a notice of revocation to AmazeScape's secretary on
or before , 2000.
iv
<PAGE> 10
Q: IF MY SHARES ARE HELD IN "STREET NAME" BY MY BROKER, WILL MY BROKER VOTE MY
SHARES FOR ME?
A: Premier Concepts shareholders: No, a shareholder's shares held in street name
will not be voted on any matter if the shareholder does not provide his broker
with instructions on how to vote such "street name" shares. A Premier Concepts
shareholder whose shares are held in street name should instruct his broker how
to vote such shares, following the directions provided by such broker. Please
check the voting form used by the broker to see if the broker will permit a vote
by telephone or over the Internet.
If you are a Premier Concepts shareholder and fail to instruct your broker, you
will, in effect, be voting against the proposal to amend Premier Concepts'
Articles of Incorporation to increase its capital to include 120 shares of
Series B Convertible Preferred Stock and the proposal to change the
corporation's name to "AmazeScape.com Inc.," and these proposals must be
approved in order for the merger to be effectuated. Your failure to provide your
broker with instructions does not have the same effect on the proposal to
approve the issuance of Premier Concepts' shares in connection with the merger,
since this proposal requires for passage only the votes of the holders of a
majority of the shares of Premier Concepts common stock present and voting on
the proposal.
A: AmazeScape shareholders: AmazeScape shareholders do not hold stock in street
name.
Q: SHOULD I SEND IN MY STOCK CERTIFICATES NOW?
A: No. If the merger is completed, AmazeScape shareholders will be sent written
instructions for exchanging their stock certificates. Premier Concepts
shareholders will keep their existing certificates.
Q: WHEN IS THE MERGER GOING TO BE COMPLETED?
A: We hope to complete the merger as soon as possible after each company's
shareholders approve the transaction.
WHO CAN HELP ANSWER YOUR QUESTIONS
If you are a Premier Concepts shareholder and have more questions about the
merger, you should contact
Premier Concepts, Inc.,
3033 South Parker Road, Suite 120
Aurora, Colorado 80014
Attention: Sissel B. Eckenhausen, President and Chief Executive Officer
Tel. No. (303) 338-1800.
If you are an AmazeScape shareholder with more questions about the merger,
please contact
AmazeScape.com Inc.
264 Airmont Avenue
Mahwah, New Jersey 07430
Attention: Harrichand Persaud, Chief Executive Officer
Tel. No. (212) 643-0023.
v
<PAGE> 11
SUMMARY
This summary contains selected information from this Proxy
Statement/Prospectus and may not contain all of the information that is
important to you. To understand the merger fully and to obtain a more complete
description of the legal terms of the merger, you should carefully read this
entire document, including the Appendices, and the documents to which we refer
you. See "Where You Can Find More Information" on page .
THE COMPANIES
PREMIER CONCEPTS, INC. (SEE PAGE 57)
Premier Concepts, a Colorado corporation, markets and sells high end
reproduction jewelry, also known as "faux jewelry," through its national chain
of 33 retail stores which operate under the names "Impostors(R)" and "Elegant
Pretenders(R)." Premier Concepts' jewelry emulates fine classic jewelry, and
includes designs inspired by famous jewelers such as Tiffany(TM), Cartier(TM)
and Bulgari(TM), and also includes replicas of jewelry owned by celebrities.
Premier Concepts purchases its products from suppliers in both the United States
and overseas.
The executive offices of Premier Concepts are located at 3033 South Parker
Road, Suite 120, Aurora, Colorado 80014. Premier Concepts' telephone number is
(303) 338-1800.
AMAZEMERGER CO.
AmazeMerger Co., a Delaware corporation ("Mergersub"), is a wholly-owned
subsidiary of Premier Concepts formed solely in connection with the proposed
merger. Upon successful completion of the merger, this subsidiary shall be
merged with and into AmazeScape and will cease to exist as a separate
corporation.
Mergersub's principal executive offices are located c/o Premier Concepts,
3033 South Parker Road, Suite 120, Aurora, Colorado 80014. Mergersub's telephone
number is (303) 338-1800.
AMAZESCAPE.COM INC. (SEE PAGE 72)
AmazeScape, a Nevada corporation formed in August, 1999 and headquartered
in Mahwah, New Jersey, operates a multi-lingual Internet web site community and
portal with links to content currently focused on the following six languages:
English, French, Italian, Portuguese, Spanish and Mandarin. The links are
available to all users of the Internet free of charge. Access to other services
offered by AmazeScape is contingent upon a user registering his name and
furnishing certain additional information to AmazeScape. AmazeScape offers
registered users access to free e-mail, chat facilities, web site hosting,
personals advertisements and discussion message boards. AmazeScape also plans to
offer subscribers dial-up and high speed Internet access.
The executive offices of AmazeScape are located at 264 Airmont Avenue,
Mahwah, New Jersey 07430, and AmazeScape's telephone number is (212) 643-0023.
THE SPECIAL MEETING AND THE CONSENT SOLICITATION
TIME, DATE AND PLACE OF THE PREMIER CONCEPTS SPECIAL MEETING (SEE PAGE 49)
The special meeting of shareholders of Premier Concepts will be held on
[ , 2000] at 11:00 a.m. local time, at 3033 South Parker Road, Suite
120, Aurora, CO 80014.
THE AMAZESCAPE CONSENT SOLICITATION (SEE PAGE 51)
The AmazeScape consent solicitation will commence on the date of mailing of
this Proxy Statement/ Prospectus and will continue until , 2000.
<PAGE> 12
RECORD DATES AND VOTES REQUIRED (SEE PAGES 49-52)
As a Premier Concepts' shareholder, you can vote at the special meeting if
you owned Premier Concepts common stock at the close of business on [Record
Date], 2000, the record date for the meeting. You can cast one vote for each
share of Premier Concepts common stock you owned at that time.
The proposals to be voted upon by the Premier Concepts shareholders will
require the following votes: (i) the proposals (a) to amend Premier Concepts'
Articles of Incorporation to increase the authorized capital of Premier Concepts
to include 120 shares of Series B Convertible Preferred Stock and (b) to amend
Premier Concepts' Articles of Incorporation to change the corporate name to
"AmazeScape.com Inc." each will require approval by the holders of a majority of
the outstanding shares of common stock of Premier Concepts; and (ii) the
proposals (a) to approve the issuance of Premier Concepts common stock and
Series A Convertible Preferred Stock pursuant to the merger agreement, (b) to
adopt the Premier Concepts, Inc. 2000 Stock Option Plan and (c) to amend the
Premier Concepts, Inc. Incentive Stock Option Plan each will require approval by
the holders of a majority of the shares of common stock of Premier Concepts
present or represented at the special meeting and voting on such proposal.
On [Record Date], 2000, 1,559,278 shares of Premier Concepts common stock
were outstanding and entitled to vote.
As an AmazeScape shareholder, you can vote in the consent solicitation if
you owned AmazeScape common stock at the close of business on [Record Date],
2000, the record date for the consent solicitation. You can cast one vote for
each share of AmazeScape common stock you owned at that time.
The merger proposal to be voted upon by the AmazeScape shareholders will
require approval by the holders of a majority of the outstanding shares of
AmazeScape common stock.
On [Record Date], 2000, 12,034,280 shares of AmazeScape common stock were
outstanding and entitled to vote.
VOTING PROCEDURE (SEE PAGES 49-52)
As a holder of shares of Premier Concepts common stock on
2000, you may vote your shares in person by attending the meeting or by mailing
to Premier Concepts a proxy if you are unable to or do not wish to attend. You
may revoke your proxy at any time before a vote is taken at the meeting by
sending a written notice revoking the proxy or a later-dated proxy to the
Secretary of Premier Concepts or by attending the special meeting and voting in
person.
As a holder of shares of AmazeScape common stock on 2000,
you may vote your shares by completing, signing and mailing to AmazeScape the
written consent included with this Proxy Statement/ Prospectus on or before
, 2000. You may revoke your consent at any time before ,
2000 by sending a written notice revoking your consent to the Secretary of
AmazeScape.
AFFILIATED VOTING
On [record date], directors and executive officers of Premier Concepts and
their affiliates beneficially owned and were entitled to vote 619,622 shares of
Premier Concepts common stock, or approximately 39.7% of the Premier Concepts
common stock outstanding on that date.
On [record date], directors, executive officers of AmazeScape and their
affiliates beneficially owned and were entitled to vote 291,250 shares of
AmazeScape common stock constituting 2.42% of the outstanding shares of
AmazeScape common stock.
Except as described below, none of the directors, executive officers and
affiliates of AmazeScape owned any shares of Premier Concepts common stock as of
the record date for the Premier Concepts special meeting, and none of the
directors, executive officers and affiliates of Premier Concepts owned any
shares of AmazeScape common stock as of the record date for the AmazeScape
consent solicitation.
2
<PAGE> 13
EACH OF THE DIRECTORS AND EXECUTIVE OFFICERS OF PREMIER CONCEPTS AND
AMAZESCAPE AND THEIR RESPECTIVE AFFILIATES INTEND TO VOTE THEIR SHARES IN FAVOR
OF ALL OF THE PROPOSALS IN THIS PROXY STATEMENT/PROSPECTUS.
INTERESTS OF THE DIRECTORS AND OFFICERS OF PREMIER CONCEPTS AND AMAZESCAPE IN
THE MERGER (SEE PAGE 35)
Directors and officers of AmazeScape and Premier Concepts have interests in
the merger that are different from, or in addition to, your interests as a
shareholder of AmazeScape or Premier Concepts. Specifically, if the merger is
completed, the existing directors and executive officers of AmazeScape will be
designated as the initial board of directors and senior management of the
holding company that will own Premier Commerce, Inc. and AmazeScape Operations,
Inc. after the merger.
Certain directors serving on the board of directors of Premier Concepts
will serve on the board of directors of Premier Commerce, Inc. and each of the
five directors serving on the Premier Commerce, Inc. board of directors will
receive options to purchase an additional 10,000 shares of Premier Concepts
common stock.
Each of the five directors serving on the board of directors of AmazeScape,
who will become directors of Premier Concepts after the merger, will receive
options to purchase an additional 25,000 shares of Premier Concepts common
stock.
DISSENTER'S RIGHTS (SEE PAGE 32)
If the merger is completed, shareholders of AmazeScape who do not consent
to the merger may, under certain circumstances, be entitled to dissenter's
rights under the applicable laws of the State of Nevada. Such rights may entitle
these shareholders to receive cash in an amount equal to the fair value of their
AmazeScape common stock rather than shares of Premier Concepts common stock in
the merger.
Shareholders of Premier Concepts do not have dissenter's rights in
connection with the proposals to be voted on at the Premier Concepts special
meeting.
THE MERGER
THE MERGER AGREEMENT IS ATTACHED TO THIS PROXY STATEMENT/PROSPECTUS AS
APPENDIX B. PLEASE READ THE MERGER AGREEMENT. IT IS THE LEGAL DOCUMENT THAT
GOVERNS THE TRANSACTION.
GENERAL (SEE PAGE 23)
If the merger is completed:
- Premier Concepts will become a holding company and be known as
"AmazeScape.com Inc.";
- the existing business of Premier Concepts will be transferred to a
newly-formed subsidiary of Premier Concepts to be known as "Premier
Commerce, Inc." which will continue to operate Premier Concepts' retail
faux jewelry business; and
- Mergersub, a newly-formed subsidiary of Premier Concepts, will merge with
and into AmazeScape which, as the surviving corporation after the merger,
will continue to develop and operate its Internet business as a
wholly-owned subsidiary of Premier Concepts.
WHAT AMAZESCAPE SHAREHOLDERS WILL RECEIVE IN THE MERGER (SEE PAGE 23)
As a result of the merger, holders of AmazeScape common stock will receive
one share of Premier Concepts common stock for each AmazeScape common share that
they own, and holders of AmazeScape Series A Preferred Stock will receive one
share of Premier Concepts Series B Convertible Preferred Stock for each
AmazeScape preferred share they own.
The value of the Premier Concepts securities that AmazeScape shareholders
will receive will fluctuate as the market price for Premier Concepts common
stock changes. On February 1, 2000, the last reported per
3
<PAGE> 14
share sales price of Premier Concepts common stock on the Nasdaq SmallCap Market
was $12.625. The actual market value of the Premier Concepts securities to be
issued in the merger, however, will depend on the market price of Premier
Concepts common stock at the effective date of the merger, which may be more or
less than the sale price stated above.
After the merger, holders of AmazeScape common stock (including persons who
will receive 250,000 shares of AmazeScape common stock immediately prior to the
merger as arrangers' fees in connection with the Merger) will own approximately
12,712,851 shares (representing approximately 89% percent of all outstanding
shares) of Premier Concepts common stock, and holders of AmazeScape Series A
Preferred Stock will own Premier Concepts Series B Convertible Preferred Stock
convertible into an additional 369,230 shares of Premier Concepts common stock.
WHAT PREMIER CONCEPTS SHAREHOLDERS WILL HOLD AFTER THE MERGER (SEE PAGE 23)
Premier Concepts shareholders will continue to own their existing Premier
Concepts common stock after the merger. Accordingly, Premier Concepts
shareholders should not send in their stock certificates in connection with the
merger.
After the merger, existing Premier Concepts shareholders will own
approximately 1.5 million shares (representing approximately 11% of all
outstanding shares) of Premier Concepts common stock.
REASONS FOR THE MERGER (SEE PAGES 24-26)
The management of Premier Concepts believes that the merger will be
beneficial for Premier Concepts and its shareholders because Amazescape's
Internet presence will assist Premier Concepts in exploiting the Internet as a
distribution channel for its products and because the shareholders of Premier
Concepts should benefit from the application to the merged companies of the
valuation practices accorded to Internet related stocks.
Management of AmazeScape believes that merging with Premier Concepts is the
most efficient way for its shareholders to benefit from the physical presence
that Premier Concepts offers via its 33 store locations across the United
States. AmazeScape believes that this enhances the value of AmazeScape by
allowing it to pursue both a physical and virtual location strategy.
RECOMMENDATIONS TO SHAREHOLDERS (SEE PAGES 25-26)
TO PREMIER CONCEPTS SHAREHOLDERS: The board of directors of Premier
Concepts believes that the merger is fair to Premier Concepts and in the best
interests of its shareholders and unanimously recommends that the shareholders
of Premier Concepts vote FOR the merger-related proposals (proposals 1 through
4) set forth in this Proxy Statement/Prospectus. The board of directors of
Premier Concepts also believes that the amendment of Premier Concepts Incentive
Stock Option Plan to increase from 165,000 to 272,500 the number of shares of
common stock for which options may be granted thereunder is in the best
interests of Premier Concepts and recommends that shareholders of Premier
Concepts vote FOR the proposal to adopt such amendment.
TO AMAZESCAPE SHAREHOLDERS: The board of directors of AmazeScape believes
that the merger is fair to AmazeScape and in the best interests of its
shareholders and unanimously recommends that shareholders of AmazeScape give
their written consent to approve the merger agreement and the merger.
OPINION OF FINANCIAL ADVISOR (SEE PAGE 29)
In deciding to approve the merger, Premier Concepts' board of directors
considered the opinion of a financial advisor, JWGenesis Capital Markets, Inc.,
that the consideration to be received by Premier Concepts under and pursuant to
the February 1, 2000 draft merger agreement furnished to JWGenesis is fair, from
a financial point of view, to Premier Concepts as of the date of the opinion.
4
<PAGE> 15
U.S. FEDERAL INCOME TAX CONSEQUENCES (SEE PAGE 27)
It is intended that the merger qualify as a "tax-free reorganization" for
U.S. federal income tax purposes. As such, holders of AmazeScape common stock
will generally not recognize any gain or loss for U.S. federal income tax
purposes on the exchange of their AmazeScape common stock for Premier Concepts
common stock in the merger. The holders of Premier Concepts common stock also
will generally not recognize any gain or loss as a result of the merger.
THE U.S. FEDERAL INCOME TAX CONSEQUENCES DESCRIBED ABOVE MAY NOT APPLY TO
ALL SHAREHOLDERS. YOUR TAX CONSEQUENCES WILL DEPEND ON YOUR OWN SITUATION. YOU
SHOULD CONSULT YOUR TAX ADVISOR SO AS TO FULLY UNDERSTAND THE TAX CONSEQUENCES
OF THE MERGER TO YOU.
ACCOUNTING TREATMENT (SEE PAGE 27)
For financial statement purposes, AmazeScape is considered the acquiring
company and this transaction has been treated as a purchase by AmazeScape of
Premier Concepts.
MARKET PRICE INFORMATION (SEE PAGE 10)
Premier Concepts common stock is reported on the Nasdaq SmallCap Market
under the symbol "FAUX." On November 16, 1999, the last full trading day before
the public announcement of the proposed merger, the last reported per share
sales price of Premier Concepts common stock on the Nasdaq SmallCap Market was
$2.50. On February 1, 2000, the most recent practicable date prior to the filing
of this Proxy Statement/Prospectus, the last reported per share sales price for
Premier Concepts common stock was $12.625.
Neither the common stock of AmazeScape nor its convertible preferred stock
is publicly held or traded on any recognized securities market.
LISTING OF PREMIER CONCEPTS COMMON STOCK (SEE PAGE 39)
Premier Concepts has applied to include the shares of its common stock
issued in connection with the merger (including common stock underlying the
convertible preferred stock issued in the merger) on the Nasdaq SmallCap Market
under the new name AmazeScape.com Inc. and new symbol [AMAS].
OWNERSHIP OF PREMIER CONCEPTS AFTER THE MERGER (SEE PAGE 23)
In the merger, Premier Concepts will issue 12,712,851 shares of common
stock to holders of AmazeScape common stock (including persons acquiring common
stock upon the conversion of outstanding shares of AmazeScape Series B
convertible preferred stock immediately prior to the merger and as fees for
arranging the merger transaction) and 120 shares of Series B Convertible
Preferred Stock (initially convertible into 369,230 shares of Premier Concepts
common stock) to holders of AmazeScape Series A convertible preferred stock.
After the merger, AmazeScape shareholders will own approximately 89% of the
outstanding Premier Concepts common stock (or approximately 91% assuming the
conversion of all shares of Premier Concepts convertible preferred stock to be
issued in the merger).
This information is based on the number of shares of Premier Concepts
common stock, the number of shares of AmazeScape common stock and the number of
shares of AmazeScape preferred stock outstanding on February 1, 2000 and changes
contemplated by the merger agreement to occur prior to the effective date, and
does not take into account stock options or warrants of AmazeScape or Premier
Concepts.
DIRECTORS AND MANAGEMENT OF THE COMBINED COMPANIES (SEE PAGE 85)
Following the merger, each of the businesses currently conducted by Premier
Concepts and by AmazeScape will be conducted by a wholly-owned subsidiary of
Premier Concepts, which will thereafter serve as a holding company under the
name "AmazeScape.com Inc."
5
<PAGE> 16
The board of directors and the executive officers of the holding company
and AmazeScape Operations, Inc. (the subsidiary operating the business of
AmazeScape) shall be the current members of AmazeScape board of directors and
executive officers.
Four of the five directors presently serving on the board of directors of
Premier Concepts and the current executive officers of Premier Concepts will
serve as directors and executive officers of Premier Commerce, Inc. following
the merger. The president of AmazeScape will also serve as a director of Premier
Commerce, Inc. following the merger.
CONDITIONS TO COMPLETING THE MERGER (SEE PAGE 40)
The respective obligations of Premier Concepts and AmazeScape to complete
the merger are subject to the satisfaction or waiver of certain conditions.
These conditions include, among others:
- approval of the merger by the parties' shareholders;
- that there is no law or court order prohibiting the merger;
- that the representations and warranties of the respective parties made in
the merger agreement remain accurate in all material respects, with
permitted exceptions; and
- that each of Premier Concepts and AmazeScape has performed in all
material respects all of its respective obligations under the merger
agreement.
TERMINATION OF THE MERGER AGREEMENT (SEE PAGE 41)
Premier Concepts and AmazeScape can jointly agree to terminate the merger
agreement at any time before completing the merger. In addition, either Premier
Concepts or AmazeScape can terminate the merger agreement if the merger is not
completed by May 15, 2000 for any reason. Premier Concepts may terminate the
merger agreement if AmazeScape commits a material breach of the merger agreement
or if any of AmazeScape's representations and warranties should be untrue on the
closing date. AmazeScape may terminate the merger agreement if Premier Concepts
or Mergersub commits a material breach of the merger agreement or if any of
their representations and warranties should be untrue on the closing date.
6
<PAGE> 17
OTHER MATTERS
RISK FACTORS (SEE PAGE 11)
The merger involves a number of risks to the shareholders of each company.
The shareholders of Premier Concepts and AmazeScape should carefully consider
these risks, certain of which are described under the heading "Risk Factors"
before voting on or consenting to the proposals contained in this Proxy
Statement/ Prospectus.
WHO CAN HELP ANSWER YOUR QUESTIONS
Premier Concepts shareholders who have questions about the merger or any
related transactions should contact:
Premier Concepts, Inc.
3033 South Parker Road, Suite 120
Aurora, Colorado 80014
Tel. (303) 338-1800
Attn: Sissel B. Eckenhausen, President and Chief Executive Officer
AmazeScape shareholders who have questions about the merger or any related
transactions should contact:
AmazeScape.com Inc.
264 Airmont Avenue
Mahwah, NJ 07430
Tel. (212) 643-0023.
Attn: Harrichand Persaud, Chief Executive Officer
7
<PAGE> 18
SELECTED FINANCIAL DATA
The following selected historical financial data of Premier Concepts as of
January 31, 1999 and January 25, 1998 and for the each of the years then ended
and of AmazeScape as of December 31, 1999 and for the period from inception
August 9, 1999 through December 31, 1999 has been derived from audited
historical financial statements appearing elsewhere in this Proxy
Statement/Prospectus and should be read in conjunction with such financial
statements and its related notes. The following selected historical financial
data of Premier Concepts as of October 31, 1999 and October 25, 1998 and for the
nine months then ended has been derived from unaudited historical financial
statements appearing elsewhere in this Proxy Statement/ Prospectus and should be
read in conjunction with such financial statements and its related notes. All
adjustments, consisting only of normal recurring adjustments considered
necessary for a fair presentation, have been included in such unaudited
financial statements.
This information is only a summary and you should read it together with the
financial information included elsewhere in this Proxy Statement/Prospectus. See
"Where You Can Find More Information" on page .
SELECTED HISTORICAL FINANCIAL DATA OF PREMIER CONCEPTS
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED YEAR ENDED YEAR ENDED
OCTOBER 31, 1999 OCTOBER 25, 1998 JANUARY 31, 1999 JANUARY 25, 1998
----------------- ----------------- ---------------- ----------------
<S> <C> <C> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenues..................... $8,548,000 $ 8,579,500 $12,705,600 $12,578,700
Operating loss............... (759,300) (1,326,300) (1,051,600) (484,000)
Store closing costs.......... 102,000 114,400 27,900
Net loss..................... (786,000) (1,341,400) (1,059,700) (587,200)
Net loss available to common
shareholders............... (953,100) (1,341,400) (1,059,700) (587,200)
Net loss per common share.... $ (0.95) $ (1.51) $ (1.19) $ (0.80)
Weighted average number of
common shares
outstanding................ 1,007,500 887,500 887,500 735,700
STATISTICAL DATA:
Store revenues............... $8,528,800 $ 8,480,800 $12,525,400 $12,513,100
Store gross margin........... 5,976,000 5,760,200 8,505,500 8,746,100
Store operating expenses..... 5,459,800 5,922,300 7,843,400 7,560,900
Store operating profit
(loss)..................... 516,200 (162,100) 662,100 1,185,200
Corporate overhead operating
expenses................... 1,276,500 1,161,800 1,616,800 1,644,900
Gross margin percentage...... 69.9% 67.3% 67.3% 69.7%
Comparable same store
sales...................... 7,672,800 7,459,100 10,873,300 11,515,700
Comparable same store sales
growth..................... 2.9% n/a -5.6% n/a
</TABLE>
<TABLE>
<CAPTION>
OCTOBER 31, 1999 OCTOBER 25, 1998 JANUARY 31, 1999 JANUARY 31, 1998
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
BALANCE SHEET DATA:
Total assets...................... $5,025,100 $ 5,207,500 $ 5,136,700 $ 5,981,800
Total liabilities................. 2,649,000 2,835,600 2,483,000 2,268,400
Working capital................... (30,300) (337,900) 61,400 1,279,300
Stockholders' equity.............. $2,376,100 $ 2,372,000 $ 2,653,700 $ 3,713,400
</TABLE>
8
<PAGE> 19
SELECTED HISTORICAL FINANCIAL DATA OF AMAZESCAPE
<TABLE>
<CAPTION>
FROM INCEPTION
(AUGUST 9, 1999)
THROUGH
DECEMBER 31, 1999
-----------------
<S> <C>
STATEMENT OF OPERATIONS DATA:
Revenues.................................................... $ 0
Operating costs and expenses................................ 220,000
-----------
Net loss/comprehensive loss................................. $ (220,000)
Weighted shares outstanding................................. 11,737,576
Basic and diluted loss per share............................ (0.02)
</TABLE>
<TABLE>
<CAPTION>
DECEMBER 31, 1999
-----------------
<S> <C>
BALANCE SHEET DATA:
Cash........................................................ $ 821,000
Other current assets........................................ 2,169,000
Other assets................................................ 1,204,000
-----------
Total assets................................................ 4,194,000
Total liabilities........................................... 149,000
-----------
Total stockholders' equity.................................. $ 4,045,000
</TABLE>
9
<PAGE> 20
MARKET FOR PREMIER CONCEPTS COMMON STOCK
AND RELATED MATTERS
PRICE RANGE OF COMMON STOCK
Since April 23, 1997, the common stock, $.002 par value of Premier Concepts
(the "Premier Concepts Common Stock" or the "Common Stock") has traded on the
Nasdaq SmallCap Market under the symbol "FAUX." The following table sets forth
the reported high and low trade information for the Premier Concepts Common
Stock for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Fiscal Year 1999
First Quarter............................................. $ 5.50 $ 3.25
Second Quarter............................................ $ 4.75 $ 2.63
Third Quarter............................................. $ 3.50 $ 0.63
Fourth Quarter............................................ $1.125 $ 0.88
Fiscal Year 2000
First Quarter............................................. $2.375 $0.875
Second Quarter............................................ $ 2.00 $1.375
Third Quarter............................................. $ 1.25 $0.938
Fourth Quarter............................................ $21.25 $0.875
</TABLE>
- ---------------
(1) All prices have been adjusted to give retroactive effect to a one-for-two
reverse stock split that was effective on April 24, 1999.
The high and low sales prices of Premier Concepts Common Stock on February
1, 2000 were $13.25 and $12.25, respectively, as reported on the Nasdaq SmallCap
Market. As of February 1, 2000, there were approximately 540 shareholders of
record of Premier Concepts Common Stock.
The AmazeScape common stock is not traded on any recognized securities
market.
10
<PAGE> 21
RISK FACTORS
The merger (the "Merger") proposed in the Agreement and Plan of Merger,
dated February 7, 2000 by and among Premier Concepts, Mergersub and AmazeScape
(the "Merger Agreement") poses a high degree of risk for both the shareholders
of Premier Concepts and the shareholders of AmazeScape. Before deciding how to
vote on the proposals set forth in this Proxy Statement/Prospectus, shareholders
are urged to carefully consider the following.
RISKS RELATING TO PREMIER CONCEPTS' BUSINESS
The following risks pertain to Premier Concepts and its business and are
applicable without regard to whether the Merger occurs.
PREMIER CONCEPTS HAS A HISTORY OF OPERATING LOSSES. Premier Concepts
purchased the Impostors business from a company that was in bankruptcy in 1994.
In the last two years, Premier Concepts has suffered operating losses: for the
fiscal year ended January 31, 1999, Premier Concepts lost $1,059,688, and for
the fiscal year ended January 25, 1998, Premier Concepts lost $587,175. There
are no assurances that Premier Concepts will ever enjoy profitable operations in
the future.
PREMIER CONCEPTS HAS LONG TERM LEASE COMMITMENTS FOR MOST OF ITS RETAIL
STORES. In most instances, Premier Concepts must sign long term leases for the
commercial space in which it operates its retail stores. These leases have terms
ranging from three to ten years and require an unconditional commitment of
Premier Concepts' capital. Even if a store suffers operating losses, Premier
Concepts remains committed under the long term lease for the store's space.
PREMIER CONCEPTS WILL REQUIRE ADDITIONAL CAPITAL. Premier Concepts will
require substantial additional funds for capital expenditures and related
expenses, including the further development of its web site and the opening of
additional retail stores. The timing and amount of this spending is difficult to
predict accurately and will depend upon many factors. At this time, Premier
Concepts has no commitments for any additional financing and there are no
assurances that any commitments for additional financing can be obtained at all,
or on terms acceptable to Premier Concepts. Premier Concepts may seek additional
funds through public offerings or private placements of equity securities. These
public offerings or private placements may not require prior shareholder
approval. Such offerings may result in further dilution to existing
shareholders. Debt financing, if it can be obtained, may involve pledging some
or all of Premier Concepts' assets. If adequate funds are not available, Premier
Concepts may be required to delay, scale back or eliminate one or more of its
development programs or to enter into arrangements that would require it to
relinquish certain rights that it would not otherwise want to relinquish.
PREMIER CONCEPTS HAS LIMITED WORKING CAPITAL. Because of its history of
operating losses, Premier Concepts has limited working capital and, as a result,
suffers from some financial uncertainty.
PREMIER CONCEPTS IS DEPENDENT UPON ITS EMPLOYEES. Premier Concepts relies
on key employees whose absence could adversely affect its ability to
successfully complete its business strategy. The future success of Premier
Concepts will depend in large part on its ability to attract, motivate and
retain highly qualified employees. The loss of the services of any of Premier
Concept's key personnel could have a material adverse effect upon Premier
Concepts' operations and marketing efforts. While Premier Concepts has written
employment agreements with its President and Chief Executive Officer, Sissel
Eckenhausen, its Chief Financial Officer, Todd Huss, and its Chief Operating
Officer, Kevin O'Brien, there are no assurances that they will continue to serve
Premier Concepts.
THE ASSETS OF PREMIER CONCEPTS ARE ALREADY LEVERAGED. A substantial
portion of the assets of Premier Concepts is encumbered by debt. While Premier
Concepts is current in the payment of this debt, future losses from its
operations may impair its ability to service the debt. If Premier Concepts
defaults on its secured debt, a creditor could foreclose against its assets and
effectively force a termination of its business. In addition, its leveraged
position impairs the ability of Premier Concepts to obtain additional financing
to fund working capital requirements, capital expenditures or other purposes,
and therefore renders Premier Concepts more
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vulnerable to extended economic downturns, restricts its ability to make
acquisitions or otherwise exploit business opportunities and limits its
flexibility to respond to changing economic conditions.
THE BUSINESS OF PREMIER CONCEPTS IS HIGHLY COMPETITIVE. Premier Concepts
faces significant competition from many companies throughout the country and
worldwide which offer fashion and reproduction jewelry. Many of these
competitors have significantly greater resources than Premier Concepts and in
many cases more retailing experience. Indirectly, Premier Concepts competes with
retailers of fashion jewelry on the low end and fine jewelry on the upper end of
the jewelry market. Within the faux jewelry industry, it competes against
department stores, some of whom have significantly greater resources and
retailing experience.
SOME JEWELRY MAY BE SUBJECT TO INFRINGEMENT CLAIMS. A significant portion
of Premier Concepts' products represents jewelry designs or concepts which have
been inspired by fine jewelry developed or sold by famous designers. While most
jewelry designs are not protected by copyright or trademark law, on occasion a
particular design may be subject to a design copyright or trademark registration
obtained by the original designer. Because Premier Concepts has so many
products, it is difficult for it to research each jewelry design that it
purchases for resale to determine whether or not the design is the subject of an
existing copyright or trademark registration. While Premier Concepts has
developed certain methods of merchandising and purchasing to minimize the risk,
it cannot assure investors that from time to time it will not inadvertently
infringe upon the intellectual property rights of third parties. Under these
circumstances, it may be subject to liability to the owner of the design,
copyright or trademark to disgorge the profits earned from sales of the
particular product or, alternatively, it may have liability for statutory
damages under copyright laws.
PREMIER CONCEPTS HAS NO PROPRIETARY ADVANTAGE WITH RESPECT TO ITS JEWELRY
DESIGNS. Neither the design nor concept of any of Premier Concepts' jewelry is
subject to protection under the copyright, trademark or trade secret laws. As a
result, Premier Concepts has no proprietary advantage over others competing in
its markets.
PREMIER CONCEPTS DOES NOT HAVE FIRM CONTRACTS WITH ITS SUPPLIERS. There is
a risk that any of Premier Concepts' suppliers or manufacturers may discontinue
selling their products to it for any reason. Although Premier Concepts believes
that it can establish alternative sources for most of its products, any delay in
locating or establishing new relationships with other sources could result in
product shortages and back orders for the product with resulting loss of
revenues.
THE BUSINESS OF PREMIER CONCEPTS IS HIGHLY SEASONAL. Premier Concepts'
mall locations generate nearly 20% of their business during the December holiday
season. Its twelve tourist locations are less sensitive to seasonal
fluctuations; however, on a store-by-store basis, they do experience
fluctuations based upon such factors as seasonal economic conditions,
transportation costs and other factors affecting tourism in their particular
locations. This seasonality results in higher demand for working capital at
certain times of the year.
PREMIER CONCEPTS' FUTURE SUCCESS DEPENDS ON INCREASING SALES THROUGH NEW
MARKETS. While Premier Concepts has maintained a web site for several years,
until recently it has not made significant efforts to develop e-commerce over
the web site and otherwise exploit the marketing opportunities of the Internet.
The future success of Premier Concepts will be affected by its ability to
significantly expand Internet sales since its profit margin on these sales is
much higher than sales from its traditional "brick and mortar" retail stores.
Failure of the Internet market to further develop or an unexpectedly slow
development of the Internet market, or Premier Concepts' inability to
successfully exploit the Internet opportunity, may have a material adverse
effect on its business, financial condition or results of operations.
RISKS RELATING TO AMAZESCAPE'S BUSINESS
The following risks pertain to AmazeScape and its business and are
applicable without regard to whether the Merger is completed.
AMAZESCAPE'S BUSINESS IS DIFFICULT TO EVALUATE BECAUSE OF ITS LIMITED
OPERATING HISTORY AS AN INTERNET COMPANY. AmazeScape was incorporated on August
9, 1999 under the General Corporation Laws of the State of Nevada and is a
development stage company with no material revenues to date. Accordingly,
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AmazeScape's business has only a very limited operating history on which you can
base your evaluation of the business. As a result, you will find it difficult to
predict AmazeScape's future revenues or results. In addition, you must consider
AmazeScape's prospects in light of the risks and uncertainties encountered by
companies in an early stage of development in a new and rapidly evolving market
such as the market for Internet-based services.
AMAZESCAPE HAS NEVER BEEN PROFITABLE AND MAY NOT BE PROFITABLE IN THE
FUTURE. AmazeScape has not made a profit to date and may not be able to do so
in the future. It has continued to incur losses in AmazeScape.com business and
its other businesses. AmazeScape has incurred net losses of $220,000 from August
9, 1999 (inception) through December 31, 1999. AmazeScape expects to continue to
experience losses for the foreseeable future, and cannot be certain when it will
become profitable, if at all. AmazeScape's failure to achieve and maintain
profitability could adversely affect the market price of AmazeScape common
stock.
AMAZESCAPE FACES COMPETITION FROM COMPANIES OPERATING BUSINESSES SIMILAR TO
ITS OWN, AND AMAZESCAPE'S FAILURE TO COMPETE SUCCESSFULLY WITH ITS CURRENT OR
FUTURE COMPETITORS COULD MATERIALLY ADVERSELY AFFECT ITS BUSINESS. The market
in which AmazeScape operates is very competitive. Its chief competitors in the
portal arena are Yahoo, Starmedia, Quepasa.com and China.com. AmazeScape seeks
to grow by adding other languages, services and content as it implements its
business plan. Other portals and web sites could provide substantially similar
content and services. This may prevent AmazeScape from differentiating itself
from other sites, making subscriber growth very difficult. These sites also have
a substantially greater number of users, making their online communities better
populated. AmazeScape may be unable to convince users of other portals to use or
visit AmazeScape's site, making its available pool of potential online community
users smaller.
The market for digital subscriber line (DSL) access is growing rapidly,
with firms like Covad Communications, Rhythm NetConnections, NorthPoint
Communications, Copper Mountain Networks Inc., and High Speed Access Corp.
providing DSL access. Most major phone companies are starting to deploy DSL
service to businesses and to retail consumers. Due to the inherent difficulty of
establishing a DSL network and infrastructure, AmazeScape will use a
"private-label" approach. AmazeScape will establish relationships with DSL
providers and create its own brand with payment to the DSL access provider for
access to its infrastructure. Although this segment of the Internet access
business is growing, AmazeScape may be unable to have enough subscribers to
justify expenditures and resources to continue pursuing this business.
Technological advances in other forms of Internet access may make this type of
access obsolete, cumbersome, complicated or cost-ineffective relative to other
methods and forms of Internet access.
Currently, most home users of the Internet utilize so-called "dial-up"
services, accessing the Internet via their home personal computer using a modem
for access. Large, national dial-up Internet Service Providers include, America
Online, CompuServe, Earthlink and Prodigy. These companies are established, have
existing infrastructure, comprehensive customer support and software, a very
large customer base and the ability to negotiate with phone companies to provide
very cost-effective access. AmazeScape currently are under contract with Ziplink
to provide private-label dial-up access for users who sign up for such service.
If AmazeScape cannot develop the critical mass of users or if AmazeScape cannot
attain profitability in a meaningful period of time, AmazeScape may have to
cease operations in that area of business. Customer's unwillingness to try
AmazeScape's dial-up service, dissatisfaction with service or customer support
and non-competitive pricing could hinder its growth in this segment of its
business.
AMAZESCAPE'S FAILURE TO ESTABLISH RELATIONSHIPS WITH ADDITIONAL INTERNET
CONTENT PROVIDERS OR TO MAINTAIN EXISTING RELATIONSHIPS WITH SUCH PROVIDERS MAY
AFFECT ITS ABILITY TO COMPETE. AmazeScape's ability to successfully compete in
the online portal market is dependent upon its ability to enter into new
relationships with companies not already in alliance with AmazeScape and to
maintain these relationships on a continued basis. If AmazeScape is unable to
continue to enter into new business relationships with companies that provide
data and support services for portals and ISPs, the growth of AmazeScape's
business could be inhibited. AmazeScape's failure to maintain its existing
relationships with its business partners for any reason could cause it to lose
existing and potential customers. A loss of customers or restrictions on
AmazeScape's
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ability to grow its business could have a material adverse effect on
AmazeScape's results of operations and financial condition.
AMAZESCAPE'S FAILURE TO MANAGE ITS EXPANDING OPERATIONS SUCCESSFULLY COULD
ADVERSELY AFFECT ITS BUSINESS. AmazeScape must expand its operations to be
successful. AmazeScape expects significant growth in its expenses and employee
base as a result of expanding operations. This growth creates new and increased
management and training responsibilities for its employees. This growth also
increases the demands on its internal systems, procedures and controls, and on
its managerial, administrative, financial, marketing and other resources.
AmazeScape depends heavily upon the managerial, operational and administrative
skills of its officers to manage this growth. Nonetheless, new responsibilities
and demands may adversely affect the overall quality of its work. Any failure on
AmazeScape's part to improve its internal systems, procedures and controls, to
attract, train, motivate, supervise and retain additional professional,
managerial, administrative, financial, marketing and other personnel, or
otherwise to manage growth successfully could have a material adverse effect on
AmazeScape's business, financial condition and results of operations.
AMAZESCAPE MAY HAVE DIFFICULTY INTEGRATING ITS PORTAL, ISP AND OTHER
BUSINESSES WHICH IT MAY WANT TO ACQUIRE. AmazeScape may not be able to absorb
and effectively manage the multi-lingual portal and Internet Service Provider.
There can be no assurance that it will be able to develop, market and sell its
products and services and the products and services of any acquisitions. The
difficulty and management distraction inherent in integrating each acquired
business, the substantial charges expected to be incurred in connection with
each acquisition, including costs of integrating each business and transaction
expenses arising from each acquisition, the risks of entering markets in which
AmazeScape has no or limited direct prior experience, the potential loss of key
employees of each acquired company and the risk that the benefits sought in each
acquisition will not be fully achieved, could have a material adverse effect on
AmazeScape's business, operating results and financial condition.
AMAZESCAPE IS DEPENDENT UPON CERTAIN KEY PERSONNEL WHOSE SERVICES COULD BE
DIFFICULT TO REPLACE. AmazeScape's future success depends to a significant
degree on the skills, experience and efforts of its key executive officers and
key marketing and management personnel. AmazeScape's Chairman, Harrichand
Persaud, and its President, Anton Nicaj, who have run the operations of
AmazeScape since August 1999, and who currently devote their full time to its
business and would be difficult to replace if they left its employment. While
AmazeScape has employment agreements with the foregoing individuals, such
agreements do not guarantee their continued employment. While AmazeScape also
has non-competition agreements with these individuals, there is no assurance
that the non-competition agreements will be enforceable. The loss of the
services of any of the foregoing individuals could have a material adverse
effect on AmazeScape's business, operating results and financial condition.
AmazeScape does not currently maintain a key person life insurance policy
covering any of its officers.
AMAZESCAPE'S INABILITY TO HIRE AND RETAIN SKILLED PERSONNEL COULD HARM ITS
BUSINESS. Qualified personnel are in great demand throughout the software and
Internet start-up industries. AmazeScape's success depends in large part upon
its ability to attract, train, motivate and retain highly skilled sales and
marketing personnel, web designers, software engineers and other senior
personnel. AmazeScape's inability to attract and retain the highly trained
technical personnel that are integral to its direct sales, product development,
service and support teams may limit the rate at which AmazeScape can generate
sales and develop new products and services or product and service enhancements.
This could have a material adverse effect on AmazeScape's business, operating
results and financial condition.
AMAZESCAPE'S BUSINESS PLAN DEPENDS ON THIRD-PARTY TECHNOLOGY AND CONTENT
PROVIDERS; LOSS OF THESE RELATIONSHIPS COULD IMPAIR ITS WEB SITE. AmazeScape
depends on establishing and maintaining relationships with leading content
providers, electronic commerce merchants, technology providers and
infrastructure providers. Specifically, AmazeScape depends on third parties for
both its static and real-time translation capabilities. Most of AmazeScape's
agreements with these third parties are not exclusive and its competitors are
free to compete for these same providers and merchants, potentially impacting
AmazeScape's relationships. There is no assurance that AmazeScape will be able
to maintain these relationships or replace them on financially attractive terms.
If the providers and merchants with which AmazeScape has these relationships do
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not adequately perform their obligations, curtail their activities with
AmazeScape, or provide their services to a competitor, AmazeScape's business,
financial condition and results of operations could be materially and adversely
affected.
IF AMAZESCAPE'S ONLINE SERVERS BECAME UNAVAILABLE, IT COULD LOSE
CUSTOMERS. AmazeScape could lose existing or potential users and customers for
its online portal and ISP business if they do not have ready access to its
online servers, or if its online servers and computer systems do not perform
reliably and to its customers' satisfaction. Network interruptions or other
computer system shortcomings, such as inadequate capacity, could reduce customer
satisfaction with AmazeScape's services or prevent customers from accessing its
services and seriously damage its reputation.
As the number of users AmazeScape online increases, it will need to expand
and upgrade the technology underlying its services. AmazeScape may be unable to
predict accurately changes in the volume of user traffic and therefore may be
unable to expand and upgrade its systems and infrastructure in time to avoid
system interruptions. System interruptions will affect the quality of
AmazeScape's services it provides to its existing customers and may cause
AmazeScape to lose users. In addition, AmazeScape may need to divert significant
resources to expand and upgrade its existing systems and infrastructure to meet
any increase in user demand. This could have a material adverse effect on
AmazeScape's business, results of operations and financial condition.
Although AmazeScape is planning to provide a redundant server capability in
another geographic area, all of AmazeScape's computer and communications
equipment is currently located in New York City, NY. This equipment is
vulnerable to interruption or damage from fire, flood, power loss,
telecommunications failure and earthquake. Some of the components of
AmazeScape's computer and communication systems do not have immediate automatic
backup equipment. The failure of any of these components could result in down
time for AmazeScape's server and could seriously harm its business. AmazeScape's
property damage and business interruption insurance may not protect it from any
loss that it may suffer.
AmazeScape's computer and communications systems are also vulnerable to
computer viruses, physical or electronic break-in and other disruptions. These
problems could lead to interruptions, delays, loss of data or the ineffective
operation of AmazeScape's server. Any of these outcomes could seriously harm
AmazeScape's business.
AMAZESCAPE MAY BE UNABLE TO PROTECT ADEQUATELY ITS INTELLECTUAL PROPERTY
RIGHTS, AND ASSERTING ITS INTELLECTUAL PROPERTY RIGHTS MAY SUBJECT AMAZESCAPE TO
LITIGATION WHICH COULD HARM ITS OPERATING RESULTS. The unauthorized reproduction
or other misappropriation of AmazeScape's proprietary technology or use of its
other intellectual property rights could enable third parties to benefit from
AmazeScape's technology and other intellectual property rights without
compensating AmazeScape. Such activities could have a material adverse effect on
AmazeScape's competitive position, business, operating results and financial
condition. Although AmazeScape has taken steps to protect its proprietary
technology and other intellectual property, such steps may be inadequate.
AmazeScape does not know whether it will be able adequately to defend its
proprietary rights because the validity, enforceability and scope of protection
of proprietary rights in Internet-related industries are uncertain and still
evolving. Moreover, the laws of some foreign countries are uncertain and may not
protect intellectual property rights to the same extent as the laws of the
United States. If AmazeScape resorts to legal proceedings to enforce its
intellectual property rights, the proceedings could be burdensome and expensive
and could involve a high degree of risk.
AMAZESCAPE MAY FACE INTELLECTUAL PROPERTY INFRINGEMENT AND OTHER CLAIMS
FROM THIRD PARTIES IN CONNECTION WITH THE USE OF AMAZESCAPE'S TECHNOLOGY WHICH
COULD REQUIRE IT TO INCUR SUBSTANTIAL COSTS AND DIVERT ITS RESOURCES FROM ITS
BUSINESS. Although AmazeScape attempts to avoid infringing known proprietary
rights of third parties, it is subject to the risk of claims alleging
infringement of third party proprietary rights. If AmazeScape were to discover
that any of its products violated third party proprietary rights, there can be
no assurance that it would be able to obtain licenses on commercially reasonable
terms to continue offering the product without substantial reengineering or that
any effort to undertake such reengineering would be successful. AmazeScape does
not conduct comprehensive patent searches to determine whether the technology
used in its products infringes patents held by third parties. In addition,
product development is inherently
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uncertain in a rapidly evolving technological environment in which there may be
numerous patent applications pending, many of which are confidential when filed,
with regard to similar technologies.
Users of AmazeScape will have access to post webpages, send email and
utilize other services provided by AmazeScape. Users that post information that
may be an infringement of any of AmazeScape's terms of service could involve
AmazeScape in litigation, lawsuits and injunctions. If AmazeScape is found to be
held liable for any incident caused by one of its users, it could materially and
adversely affect its ability to conduct its business and distract management to
defend itself and AmazeScape, reducing the time AmazeScape can commit to its
business.
Any claim of infringement could cause AmazeScape to incur substantial costs
defending against the claim, even if the claim is invalid, and could distract
its management from its business for periods of time. Furthermore, a party
making such a claim could secure a judgment that requires AmazeScape to pay
substantial damages. A judgment could also include an injunction or other court
order that could prevent it from selling its products or services. Any of these
events could have a material adverse effect on AmazeScape's business, operating
results and financial condition.
AMAZESCAPE DEPENDS ON THE CONTINUED GROWTH OF THE INTERNET AND ANY DECREASE
IN CONSUMER USE OF THE INTERNET OR THE GROWTH OF THE INTERNET COULD HARM ITS
BUSINESS. AmazeScape's ability to generate revenues is substantially dependent
upon continued growth in the acceptance and use of the Internet and the
infrastructure for providing Internet access and carrying Internet traffic.
AmazeScape cannot be certain that the necessary infrastructure or complementary
products or services will be developed or that the Internet will prove to be a
viable commercial marketplace. To the extent that the Internet continues to
experience significant growth in the level of use and the number of users, there
can be no assurance that the infrastructure will continue to be able to support
the demands placed upon it by such potential growth. In addition, delays in the
development or adoption of new standards or protocols required to handle
increased levels of Internet activity, increased governmental regulation or
taxation of Internet commerce may restrict the growth of the Internet. If the
necessary infrastructure or complementary products and services are not
developed or if the Internet does not become a viable commercial marketplace, it
would have a material adverse effect on AmazeScape's business, operating results
and financial condition.
AMAZESCAPE'S BUSINESS MAY BE HARMED BY THE SECURITY RISKS RELATED TO
INTERNET COMMERCE. A significant barrier to submission of personal data of
users over the Internet is the secure transmission of confidential information
over public networks. Internet companies rely on encryption and authentication
technology to provide the security and authentication necessary to effect secure
transmission of confidential information. There can be no assurance that
advances in computer capabilities, new discoveries in the field of cryptography
or other developments will not result in a compromise or breach of the
algorithms used by companies to protect consumer transaction data. If any such
compromise of this security were to occur, it could have a material adverse
effect on AmazeScape's potential clients, business, prospects, financial
condition and results of operations. A party who is able to circumvent security
measures could misappropriate proprietary information or cause interruptions in
operations. AmazeScape may be required to expend significant capital and other
resources to protect against such security breaches or to alleviate problems
caused by such breaches.
Concerns over the security of transactions conducted on the Internet and
the privacy of users may also hinder the growth of online services generally. To
the extent that its activities or third-party contractors involve the storage
and transmission of proprietary information, such as credit card numbers, or
personal data information, security breaches could damage AmazeScape's
reputation and expose it to a risk of loss or litigation and possible liability.
AmazeScape cannot be sure that its security measures will not prevent security
breaches or that failure to prevent such security breaches will not have a
material adverse effect on its business.
GROWTH RATES OF THE INTERNET MAY AFFECT AMAZESCAPE'S ABILITY TO GROW WITH
RESPECT TO USERS, WEB SITE TRAFFIC AND ADVERTISING REVENUE. AmazeScape cannot
assure investors that users will find the content and services of the site to be
useful to their needs and wants. Decreased usage of the Internet and implied
growth rates may slow AmazeScape's growth or even decrease its number of
registered users. This in turn significantly reduces or halts AmazeScape's
ability to generate revenue by allowing advertising on its site.
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Advertising revenue is proportional to the page-serving activity that its
site handles on an ongoing basis. Any decrease in traffic on AmazeScape's site
will adversely affect its advertising model for revenue. Moreover, advertising
distributors may either halt or revoke advertising contracts if its site does
not generate the minimum Web site traffic that is required by many of these
vendors.
The model of Internet advertising is still a relatively new phenomenon
compared to most other forms of advertising media, such as print, television,
billboards and radio. Due to intense competition from traditional advertising
media as well as intense competition from and among sellers of advertising on
the Internet, utilizing an advertising revenue model may be unprofitable.
Pricing models change at a rapid pace, which may reduce the profitability of the
advertising model that AmazeScape projects for growth. If, following the Merger,
AmazeScape's web site advertising impressions or page hits decline, or the
number of users does not grow or declines, the value of AmazeScape will likely
decline.
AMAZESCAPE WILL NEED TO RAISE FURTHER FUNDING TO CONTINUE
OPERATIONS. Since AmazeScape's current revenues are insufficient to pay for
current and future operating expenses, following the Merger, AmazeScape will
depend on additional investments to fund AmazeScape's existing and future
operations as well as to execute it's acquisition and business plan, modifying
and improving its Web site, deploying dial-up and high-speed Internet access
services, sales, marketing and other operations. Management believes that
AmazeScape's available cash, together with the proceeds from the sale of
AmazeScape's Series A Convertible Preferred Stock (the "Series A Preferred
Stock") and Series B Convertible Preferred Stock (the "Series B Preferred
Stock") prior to the Merger, will be sufficient to support AmazeScape through
June 2001. Notwithstanding, AmazeScape will need to raise additional funds to
develop and maintain its business. It may be difficult or impossible for
AmazeScape to obtain financing on favorable terms. Raising funds by issuing
equity securities or convertible debt securities will dilute the percentage
ownership of AmazeScape's current shareholders. Also, if AmazeScape issues new
securities, they may have rights senior to the rights of its common stock. If
AmazeScape cannot obtain needed financing, it will be unable to execute its
business plans and may be forced to liquidate its assets or file for bankruptcy.
AMAZESCAPE'S ONLINE COMMUNITY MODEL MAY NOT WORK. AmazeScape's primary
source of revenue is anticipated to be through advertising provided on its web
site. Its plan to generate revenue through the sale of advertising is based on
the assumption that users will find its plan and execution of offering links to
web sites as well as services to registered users to be attractive enough for
repeated visits to its web site. This assumption may not be correct.
For AmazeScape to be profitable, it must provide goods, services, content
partners and vendors which users will find attractive enough to visit on a
frequent and ongoing basis. There are no assurances that users of the Internet
will continue to find this type of online community attractive. If users do not
find AmazeScape's online community attractive, AmazeScape may be unable to
generate significant web site traffic and the resulting advertising revenues.
Users may feel that AmazeScape's Terms of Use and or Privacy policies are
not in accordance to their preferences. AmazeScape posts on the site the rules
and regulations that users agree to abide by while visiting and utilizing the
site. If visitors, users and subscribers find these rules to be too restrictive,
they may not patronize its site, which may decrease site traffic and related
revenues.
RISKS RELATING TO THE MERGER
In addition to the risks relating to the businesses of Premier Concepts and
AmazeScape which are described above, you should carefully consider the
following risk factors relating to the Merger in determining whether to vote in
favor of the proposals contained in this Proxy Statement/Prospectus.
HOLDERS OF AMAZESCAPE COMMON STOCK WILL RECEIVE PREMIER CONCEPTS COMMON
STOCK IN THE MERGER AND HOLDERS OF AMAZESCAPE SERIES A PREFERRED STOCK WILL
RECEIVE PREMIER CONCEPTS CONVERTIBLE PREFERRED STOCK IN THE MERGER, EACH OF
WHICH WILL FLUCTUATE IN VALUE. In the Merger, AmazeScape common shareholders
will receive one share of Premier Concepts Common Stock for each share of
AmazeScape common stock held by them, and holders of AmazeScape Series A
Preferred Stock will receive one share of Premier Concepts
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Series B Convertible Preferred Stock (the "Premier Concepts Convertible
Preferred Stock" or the "Convertible Preferred Stock") for each share of
AmazeScape Series A Preferred Stock held by them. The market price of the
Premier Concepts Common Stock to be issued in the Merger will fluctuate as a
result of changes in the business, operations or prospects of Premier Concepts
or AmazeScape or market assessments of the impact of the Merger. Because the
market price of Premier Concepts Common Stock fluctuates, the value of the
Premier Concepts Common Stock that AmazeScape shareholders will receive will
depend upon the market price of those shares at the time of the Merger. There
can be no assurance as to this value. For historical and current market prices
of Premier Concepts Common Stock see "Market for Premier Concepts Common Stock
and Related Matters."
During the period from January 31, 1999 to February 1, 2000, the most
recent practicable date prior to the filing of this Proxy Statement/Prospectus,
the high of the Nasdaq National Market Index was approximately 191.1% greater
than its low, whereas the highest closing price of the Premier Concepts Common
Stock was 2328% greater than its lowest closing price. You should not view these
facts, however, as necessarily indicating the future market performance or
volatility of Premier Concepts Common Stock. The actual performance and
volatility of Premier Concepts Common Stock and/or the financial markets could
be significantly more or less than that indicated by the above facts.
OFFICERS AND DIRECTORS HAVE POTENTIAL CONFLICTS OF INTEREST IN THE
MERGER. In considering the recommendations of the Premier Concepts and
AmazeScape boards of directors that the shareholders approve the Merger, you
should be aware that some of the directors and officers of each company may have
interests in the Merger different from, or in addition to yours. For example,
the current members of the board of directors of AmazeScape will become members
of the board of directors of the holding company, which will own Premier
Commerce, Inc. (the new subsidiary which will operate Premier Concepts' existing
business -- hereafter referred to as "Premier Commerce") and AmazeScape (which
will continue to operate its business as a subsidiary of the holding Company
known as "AmazeScape Operations, Inc.") See "Interests of Related Persons in the
Merger."
AMAZESCAPE'S EXISTING SHAREHOLDERS WILL CONTINUE TO EXERCISE SIGNIFICANT
CONTROL OVER THE COMBINED COMPANY. Currently AmazeScape's founding
shareholders, officers and directors beneficially own approximately 92% of the
common stock of AmazeScape and, after the Merger, will continue to own
approximately 81% of the outstanding Common Stock of Premier Concepts. In
addition, AmazeScape's directors will receive options to purchase an additional
125,000 shares of AmazeScape common stock. As a result, the founders of
AmazeScape will have the ability to control and direct its affairs and business.
Such concentration of ownership may also have the effect of delaying, deferring
or preventing a change in control in AmazeScape.
SHAREHOLDERS MAY BE ENTITLED TO APPRAISAL AND DISSENTERS'
RIGHTS. Shareholders of AmazeScape who do not consent to the Merger agreement
and Merger may, under certain circumstances and by following procedures
prescribed by Chapter 92A "Mergers and Exchanges of Interest" of the Nevada
Revised Statutes, exercise dissenter's rights and receive cash for their shares
of AmazeScape common stock ("Dissenter's Rights").
A dissenting shareholder of AmazeScape must follow the appropriate
procedures under Nevada law or suffer the termination or waiver of such rights.
In the event a dissenting shareholder relinquishes or loses his Dissenter's
Rights, the shareholder will receive from Premier Concepts the same number of
shares of Premier Concepts Common Stock that the shareholder would have received
in the Merger had such shareholder not attempted to exercise his Dissenter's
Rights. Premier Concepts has no obligation to complete the Merger if holders of
more than 2% of the outstanding shares of AmazeScape common stock request or
continue to have the right to exercise Dissenter's Rights. See "Dissenter's
Rights of AmazeScape Shareholders."
THE PUBLIC TRADING MARKET FOR PREMIER CONCEPTS COMMON STOCK HAS BEEN
ILLIQUID AND HIGHLY SPORADIC, AND THERE HAS BEEN NO PREVIOUS PUBLIC MARKET FOR
AMAZESCAPE COMMON STOCK; THEREFORE, TO THE EXTENT A MARKET DEVELOPS FOR THE
HOLDING COMPANY'S COMMON STOCK AFTER THE MERGER, IT IS LIKELY TO BE
VOLATILE. There historically has been only a limited and sporadic public
trading market for Premier Concepts Common Stock. There is no assurance that the
current market will continue to exist or will improve in the future. As a
result, holders of the Common Stock following the Merger may not be able to
liquidate their investment without
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considerable delay, if at all. If a more active market does develop, the price
of the Common Stock may be highly volatile. Broad market fluctuations and other
factors, such as new product developments and trends in the industry and the
investment markets generally, as well as economic conditions and quarterly
variations in the results of operations of Premier Concepts, may also adversely
affect the market price of the Common Stock.
AmazeScape common stock is currently not quoted on any quotation system,
nor has there been any public market for such common stock. As a result of the
Merger, provided that the Nasdaq Stock Market, Inc. approves the continued
listing of the holding company's Common Stock, the market price of the shares of
Common Stock is likely to be highly volatile and may be significantly affected
by factors such as fluctuations in AmazeScape's operating results, announcements
of technological innovations or new products and/or services by us or its
competitors, governmental regulatory action, developments with respect to
proprietary rights and general market conditions.
FUTURE ISSUANCES OF COMMON STOCK COULD DILUTE CURRENT SHAREHOLDERS OR
ADVERSELY AFFECT THE MARKET. Premier Concepts has the authority to issue up to
850,000,000 shares of Common Stock and to issue options and warrants to purchase
shares of Common Stock without shareholder approval. These future issuances
could be at values substantially below the price paid for Common Stock by
current shareholders. In addition, large blocks of Common Stock could be issued
to fend off unwanted tender offers or hostile takeovers without further
shareholder approval. Future sales of Premier Concepts Common Stock, whether
upon original issuance or by current shareholders or persons acquiring Common
Stock upon the exercise of warrants or stock options or the conversion of
convertible preferred stock, may depress the market price for the Common Stock.
Sales of substantial amounts of the Common Stock in the public market, or
the prospect of such sales, could depress the prevailing market price of the
holding company's Common Stock and its ability to raise equity capital in the
future. Upon completion of this Merger, the holding company will have
outstanding 14,272,129 shares of Common Stock, warrants and options to purchase
up to an additional 2,016,615 shares as well as 369,230 shares issuable upon
conversion of AmazeScape preferred stock (assuming the maximum number of shares
to be issued upon conversion). It is anticipated that all outstanding shares of
Common Stock and all Common Stock issuable upon the exercise of outstanding
warrants and options or the conversion of outstanding Convertible Preferred
Stock will be immediately eligible for sale in the public market following the
merger.
Under the Nasdaq Stock Market Marketplace Rules, Nasdaq requires Nasdaq
SmallCap Market issuers to comply with applicable requirements for initial
inclusion (versus continued inclusion) where such issuer merges with a
non-Nasdaq entity which results in a change of control and a change in the
business of such issuer. After the Merger, for the Common Stock to be listed on
the Nasdaq SmallCap Market, the holding company must satisfy the following
requirements for initial inclusion:
- net tangible assets (total assets, excluding goodwill, minus total
liabilities) must be at least $4 million, or market capitalization must
be at least $50 million, or net income (in the latest fiscal year or two
of the last three fiscal years) must be at least $750,000;
- public float must be at least 1 million shares (not including shares held
directly or indirectly by officers or directors or by any other person
who beneficially owns more than ten percent of the holding company's
total outstanding shares);
- the market value of the holding company's public float is at least $5
million;
- the minimum bid price of the holding company's Common Stock must be at
least $4 per share;
- there must be at least three market makers for the holding company's
Common Stock;
- there must be at least 300 shareholders of the holding company's Common
Stock (each of which hold at least 100 shares of Common Stock);
- the holding company must have an operating history of at least one year;
and
- the holding company must meet certain corporate governance tests
promulgated by Nasdaq.
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There are no assurances that the holding company will meet all of these
requirements following the completion of the Merger. Moreover, even if it does,
Nasdaq may, in its sole discretion, still deny inclusion of any of its
securities on the Nasdaq SmallCap Market or apply additional or more stringent
criteria for the inclusion of any such securities on the Nasdaq SmallCap Market.
Accordingly, there are no assurances that the Common Stock will continue to be
reported on the Nasdaq SmallCap Market after the Merger. Even if the listing is
maintained, there is no assurance that any trading market for the Common Stock
will exist. Consequently, you may not be able to liquidate your investment in
the future, if at all, and as a result may lose a significant portion, or all,
of your investment.
NO DIVIDENDS WILL BE PAID IN THE NEAR FUTURE. Neither Premier Concepts nor
AmazeScape has ever paid dividends on its common stock. Following the Merger, it
is not anticipated that the holding company will pay dividends in the
foreseeable future. The holding company intends to reinvest any funds that might
otherwise be available for the payment of dividends in further development of
its businesses following the Merger.
RISKS RELATING TO THE BUSINESS, FINANCES AND OPERATIONS OF THE COMBINED
COMPANIES
THE FUTURE PROFITABILITY OF THE COMBINED COMPANIES IS UNCERTAIN AND
FLUCTUATING QUARTERLY RESULTS COULD CAUSE THE PRICE OF THE COMMON STOCK TO
DROP. Premier Concepts and AmazeScape believe that their quarterly operating
results could vary significantly in the future and that quarter-to-quarter
comparisons should not be relied upon as indications of future performance. In
some future quarterly periods, the operating results may fall below the
expectations of securities analysts and investors, which could significantly
harm or depress the trading price of the Common Stock. Among the factors which
could significantly affect future performance are: the rate at which the
combined company can recruit, train and integrate employees; cyclical economic
swings that could decrease demand for the services and products of Premier
Concepts, AmazeScape or both; the introduction of new or enhanced products and
services or changes in pricing policies by the combined company or its
competitors; management's ability to manage multiple relationships among various
customers, suppliers and strategic partners; the uncertainty of market
acceptance of AmazeScape's products, services and brands; its ability to expand
sales, marketing and customer service operations; its ability to maintain its
research and development activities; and economic conditions specific to the
Internet or all or a portion of the technology sector.
PREMIER CONCEPTS AND AMAZESCAPE HAVE BOTH INCURRED SUBSTANTIAL LOSSES, AND
THE COMBINED COMPANIES MAY NEVER BECOME PROFITABLE. Both Premier Concepts and
AmazeScape have incurred net losses and experienced negative cash flow, and it
is expected that the combined companies will continue to experience operating
losses and negative cash flow for the foreseeable future. Although Premier
Concepts' revenues have increased in the past year, it may not be able to
sustain future revenue growth. Accordingly, there can be no assurance that the
combined company's revenues will ever exceed its expenses or that it will become
profitable.
THE COMBINED COMPANIES MAY REQUIRE ADDITIONAL FUNDING WHICH MAY NOT BE
AVAILABLE ON FAVORABLE TERMS OR AT ALL. Although Premier Concepts and
AmazeScape each believe that, following the Merger, the cash balances, cash
equivalents and cash generated from operations will be adequate to fund the
combined company's operations for at least the next twelve months, these sources
may prove to be inadequate. After these twelve months, the combined company may
require additional funds to support its working capital requirements or for
other purposes and may seek to raise additional funds through public or private
equity financing, bank debt financing or from other sources. Adequate funds may
not be available when needed or may not be available on favorable terms. If the
combined company raises additional funds by issuing equity securities, existing
shareholders may be diluted. If funding is insufficient at any time in the
future, the combined company may not be able to develop or enhance its products
or services, take advantage of business opportunities or respond to competitive
pressures, any of which could harm its business. The future capital requirements
of the combined company depend upon many factors, including the following: the
occurrence, timing, size and success of any future acquisitions; the cost of
building brand awareness for a new company; the cost of developing necessary
technologies; and the rate at which the combined company expands its operations
both domestically and internationally.
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FOLLOWING THE MERGER, THE COMBINED COMPANIES WILL NOT RECEIVE ALL OF THE
TAX BENEFITS ASSOCIATED WITH THEIR ACCUMULATED NET OPERATING LOSSES. Both
Premier Concepts and AmazeScape have accumulated net operating losses which, if
the Merger does not occur, may be available to reduce their respective taxable
incomes and liability for income taxes in future years. The provisions of the
Internal Revenue Code governing the use of net operating losses contain
limitations on the use of combined net operating loss carryforwards following a
change in control. The Merger will result in a change in control of both Premier
Concepts and AmazeScape. As a result, following the Merger the combined
companies may be unable to receive the tax benefits of the accumulated net
operating losses of Premier Concepts and AmazeScape, in whole or in part.
THE INTERNET MAY NOT BE A VIABLE, PROFITABLE COMMERCIAL VEHICLE FOR THE
COMBINED COMPANIES. While the Internet is used for data retrieval,
entertainment, advertising, commerce, retail transactions and correspondence, it
may not be a viable commercial marketplace. Users and entities may be unwilling
to advertise, market and sell their goods and services online. Development of
the Internet may be inadequate to support further growth, stifling or delaying
response times to sites, degrading a user's total online experience. Security
and privacy issues may prevent or discourage the use of the Internet. All these
factors can prove to be detrimental to the implementation of the combined
company's business plan and have an adverse effect on the ability for AmazeScape
to generate and direct traffic to its site.
THE TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT WILL RESULT IN
GOODWILL THAT WILL REDUCE THE EARNINGS OF THE COMBINED COMPANIES. Because the
Merger will be treated as a purchase for accounting and financial reporting
purposes, goodwill will be recorded on the books of the combined companies. As a
result, the combined companies' earnings will be reduced by amortization of such
goodwill over five years.
One component of the goodwill to be recorded on the books of the combined
companies as a result of the Merger is the fair market value, at the effective
time of the Merger, of 250,000 shares of Common Stock to be issued in payment of
arrangers' fees incurred in connection with the Merger. If the value of such
shares at the effective time of the Merger is $14.00 per share (representing the
approximate market price of the Common Stock at February 11, 2000), the amount
of the goodwill resulting from the issuances of such shares would be $3,500,000,
and such amount would be amortized at a rate of $700,000 per year over five
years. There are no assurances that the value of Premier Concepts Common Stock,
and thus the amount of goodwill to be recorded on account of the arrangers' fees
and amortized, will not increase prior to the effective time of the Merger.
THERE MAY BE UNANTICIPATED PROBLEMS IN INTEGRATING THE BOARD OF DIRECTORS,
MANAGEMENT AND EMPLOYEES OF PREMIER CONCEPTS AND AMAZESCAPE. The combined
company will retain the management, employees and board of directors of both
companies. The board and management of AmazeScape will become the board and
management of the holding company and the AmazeScape Operations subsidiary. The
board and management of the Premier Commerce subsidiary will be comprised of
certain persons who have served as directors and officers of Premier Concepts
and others. It is expected that these groups will work together for the benefit
of all shareholders. However, there can be no guarantees that all individuals
will remain with the combined company. Departures may affect the day to day
operations of the combined companies and as a result the stock price may drop
resulting in loss of part or all of your investment.
THE EXPECTED SYNERGIES OF THE COMBINED COMPANIES MAY NOT BE REALIZED OR MAY
NOT PRODUCE THE EXPECTED RESULTS. Premier Concepts expects to generate
additional sales by advertising its products on AmazeScape's web site directly
to AmazeScape's community and visitors. AmazeScape expects to generate
additional membership by advertising on Premier Concepts' web site and in their
stores. AmazeScape also expects to generate additional advertising revenues by
establishing an Internet presence in Premier Concepts' stores. There are no
guarantees that these results will materialize, and if they do not, the price of
Common Stock may drop, resulting in loss of part or all of your investment.
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CAUTIONARY STATEMENT CONCERNING FORWARD-LOOKING STATEMENTS
Each of Premier Concepts and AmazeScape has made forward-looking statements
in this Proxy Statement/Prospectus and in other documents to which you are
referred that are subject to risks and uncertainties. These forward-looking
statements include information about possible or assumed future results of
operations or the performance of the companies after the Merger is completed.
When any of the words "believes," "expects," "anticipates," "intends,"
"estimates" or similar expressions are used, forward-looking statements are
being made. Many possible events or factors could affect the actual financial
results and performance of each of the companies before the Merger and of the
combined company after the Merger, and these factors or events could cause those
results or performance to differ significantly from those expressed in these
forward-looking statements. Many of these risks and uncertainties are not within
either company's control and are set forth under "Risk Factors" at page 11.
Possible events or factors include the following:
- revenues after the Merger may be lower than currently expected for a
variety of reasons including loss of personnel, changes in market
conditions and responses by competitors;
- integrating the businesses and products or any businesses acquired in the
future may be more time consuming, costly and difficult than anticipated;
- competition in AmazeScape's industry is extremely intense and may
increase;
- third parties may infringe AmazeScape's proprietary intellectual property
rights;
- issues and difficulties that are faced in connection with rapid growth;
- litigation involving matters such as intellectual property, securities,
antitrust, employees and customer issues may adversely affect the
business;
- general economic conditions in the U.S. or abroad may change or be worse
than currently expected; and
- changes may occur with respect to Premier Concepts' stock price or in the
securities markets in general.
Neither Premier Concepts nor AmazeScape is undertaking any responsibility
to release publicly any revisions to these forward-looking statements to take
into account events or circumstances that occur after the date of this Proxy
Statement/Prospectus. Additionally, neither Premier Concepts nor AmazeScape is
undertaking any responsibility to update you on the occurrence of any
unanticipated events which may cause actual results to differ from those
expressed or implied by the forward-looking statements contained in this Proxy
Statement/Prospectus. You are cautioned not to place undue reliance on these
statements, which speak only as of the date of this Proxy Statement/Prospectus.
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THE MERGER
GENERAL
This Proxy Statement/Prospectus is being furnished to shareholders of
Premier Concepts in connection with the solicitation of proxies by its board of
directors for use at Premier Concepts' special shareholders' meeting to be held
on , 2000, and to shareholders of AmazeScape in connection with the
solicitation of written consents during the period commencing on the date of
this Proxy Statement/Prospectus and ending on , 2000. This Proxy
Statement/Prospectus also constitutes a prospectus, which is part of a
registration statement on Form S-4 Premier Concepts filed with the Securities
and Exchange Commission under the Securities Act of 1933, as amended (the
"Securities Act"), in order to register the shares of Premier Concepts Common
Stock to be issued to the holders of shares of AmazeScape common stock in the
Merger.
If the Merger is completed:
- Premier Concepts will become a holding company and be known as
"AmazeScape.com Inc.";
- the existing business of Premier Concepts will be transferred to Premier
Commerce, a newly-formed subsidiary of Premier Concepts which will
continue to operate Premier Concepts' retail faux jewelry business; and
- Mergersub, a newly-formed subsidiary of Premier Concepts, will merge with
and into AmazeScape which, as the surviving corporation after the Merger,
will continue to develop and operate its Internet business as a
wholly-owned subsidiary of Premier Concepts, to be known as "AmazeScape
Operations, Inc.".
At the effective time of the Merger, holders of AmazeScape common stock
will receive one share of Premier Concepts Common Stock for each share of
AmazeScape common stock, holders of AmazeScape Series A Preferred Stock will
receive one share of Premier Concepts Convertible Preferred Stock for each share
of AmazeScape Series A Preferred Stock, and holders of outstanding warrants
exercisable for AmazeScape common stock will receive warrants exercisable on
substantially the same terms and conditions for Premier Concepts Common Stock.
Holders of Premier Concepts Common Stock will continue to own Premier Concepts
Common Stock.
In addition, at the time of the Merger, options to purchase an aggregate of
280,000 shares of Premier Concepts Common Stock will be issued to directors and
executive officers of the combined company under the Premier Concepts, Inc. 2000
Stock Option Plan (the "2000 Plan"). See "Adoption of Premier Concepts, Inc.
2000 Stock Option Plan."
Following the Merger, the shareholders of AmazeScape on the record date
will own approximately eighty-seven percent (87%) of the outstanding shares of
Premier Concepts Common Stock and all of the outstanding shares of Premier
Concepts Convertible Preferred Stock. Persons receiving stock as arrangers' fees
will own approximately two percent (2%) of the outstanding shares of Premier
Concepts Common Stock following the Merger. Shareholders of Premier Concepts on
the record date will own approximately eleven percent (11%) of the outstanding
shares of Premier Concepts Common Stock following the Merger.
BACKGROUND OF THE MERGER
In early 1999, the board of directors of Premier Concepts began to consider
alternatives to its existing business strategy. Premier Concepts had experienced
continuing net losses ($0.59 million in 1998 and $1.06 million in 1999), and its
cash position had diminished considerably. Moreover, its stock price had
deteriorated, such that even after a one-for-two reverse stock split Premier
Concepts remained in danger of being removed from the Nasdaq SmallCap Market
because its stock price had fallen dangerously close to the minimum $1 bid price
necessary for continued inclusion on that market.
To address its need for capital, Premier Concepts obtained investments from
Equisition Capital, LLC ("Equisition") for an aggregate of $500,000 in March and
July of 1999 and issued an aggregate of
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411,034 shares of Common Stock to Equisition. Infusion Capital Partners, LLC
("Infusion"), an affiliate of Equisition, acted as investment banker on behalf
of Premier Concepts in these transactions. Premier Concepts also engaged
Infusion to provide financial advisory services.
The Premier Concepts board of directors sought an opportunity for Premier
Concepts shareholders to realize both short and long-term value greater than its
existing share value. The board was interested in those situations which might
enhance Premier Concepts' e-commerce potential, improve its ability to raise
working capital and leverage its network of stores.
In October 1999, the board of directors was notified by Infusion that it
had been engaged by AmazeScape to find a merger partner. AmazeScape was
developing its business as a multi-lingual portal, an online community, and a
reseller of Internet access services. After examination of the potential merits
of a business combination with AmazeScape, Premier Concepts instructed Infusion
to pursue discussions with AmazeScape regarding a combination.
AmazeScape was organized in August 1999 to develop and operate a
multi-lingual Internet portal and to resell high speed Internet access.
AmazeScape's board of directors determined that it would benefit from a business
combination with Premier Concepts.
The parties engaged in negotiations, leading to the adoption of a Term
Sheet dated November 10, 1999 contemplating a merger and the execution of the
Agreement and Plan of Merger, dated February 7, 2000.
PREMIER CONCEPTS' REASONS FOR THE MERGER
The board believes that the completion of the Merger presents an
opportunity for Premier Concepts' shareholders to participate in the fastest
growing sector of commerce and the economy -- the Internet.
In reaching its decision to approve the Merger Agreement and recommend its
approval of the transactions contemplated by the Merger Agreement to Premier
Concepts' shareholders, the Premier Concepts board consulted with management, as
well as with its financial and legal advisors, and considered a variety of
factors, including the following:
- AmazeScape provides Premier Concepts with a vehicle to advertise its
products to a diverse population of Internet users, together with an
ability to target advertising to specific language and national groups.
- One of Premier Concepts' target markets is the international tourist
trade. AmazeScape's multi-lingual orientation should enhance Premier
Concepts' ability to develop its brand with foreigners likely to visit
tourist destinations served by Premier Concepts' stores.
- The ability of AmazeScape to add more languages to its existing web site
may facilitate Premier Concepts' expansion domestically and
internationally into previously untapped markets.
- The negotiated valuation for AmazeScape is modest relative to other
online companies offering similar services and products.
- JWGenesis Capital Markets, Inc. ("JWGenesis") has rendered its written
opinion to the Premier Concepts board that, as of the date of such
opinion and based upon and subject to certain matters stated in such
opinion, the consideration to be received by Premier Concepts under and
pursuant to the February 1, 2000 draft merger agreement furnished to it
(which Premier Concepts believes does not differ materially from the
Merger Agreement as executed) is fair, from a financial point of view, to
Premier Concepts. A copy of such opinion, which sets forth a summary of
the assumptions made, matters considered and limitations on the review
undertaken, is attached as Appendix D to this Proxy Statement/Prospectus
and is incorporated herein by reference.
- To the extent investors value the combined company as an Internet
company, Premier Concepts' combination with AmazeScape may offer the
shareholders of Premier Concepts an opportunity to realize increased
value for their shares.
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- AmazeScape plans to leverage Premier Concepts' 33 locations to co-brand
both companies' products and services as well as to introduce new ways to
utilize both a physical and virtual location strategy to expand both
companies' operations.
- The Premier Concepts board of directors' belief that, as a result of the
combination with AmazeScape, Premier Concepts will have access to
financing on terms that otherwise would not be available to Premier
Concepts on its own.
- The Premier Concepts board of directors' belief that the participation by
AmazeScape in the management of Premier Concepts' business will enhance
its performance.
The above discussion of the information and factors considered by the board
of directors of Premier Concepts is not intended to be exhaustive, but includes
all material factors considered by the board. In reaching its determination to
approve and recommend the Merger, the Premier Concepts board did not assign any
relative or specific weights to the foregoing factors, and individual directors
may have given differing weights to different factors.
RECOMMENDATIONS OF PREMIER CONCEPTS' BOARD OF DIRECTORS
THE BOARD OF DIRECTORS OF PREMIER CONCEPTS BELIEVES THAT THE CONSIDERATION
RETAINED BY THE PREMIER CONCEPTS SHAREHOLDERS IN CONNECTION WITH THE
TRANSACTIONS CONTEMPLATED BY THE MERGER AGREEMENT IS FAIR TO, AND IN THE BEST
INTERESTS OF, PREMIER CONCEPTS SHAREHOLDERS. ACCORDINGLY, THE PREMIER CONCEPTS
BOARD HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND RECOMMENDS THAT PREMIER
CONCEPTS SHAREHOLDERS VOTE FOR THE AMENDMENT OF PREMIER CONCEPTS' ARTICLES OF
INCORPORATION TO AUTHORIZE THE CONVERTIBLE PREFERRED STOCK, FOR THE ISSUANCE OF
COMMON STOCK AND CONVERTIBLE PREFERRED STOCK AS PROVIDED IN THE MERGER
AGREEMENT, FOR THE CHANGE OF CORPORATE NAME TO "AMAZESCAPE.COM INC." AND FOR THE
ADOPTION OF THE PREMIER CONCEPTS, INC. 2000 STOCK OPTION PLAN AS CONTEMPLATED BY
THE MERGER AGREEMENT.
AMAZESCAPE'S REASONS FOR THE MERGER
The decision of AmazeScape's board of directors to approve the Merger
Agreement was based primarily on factors resulting from the rapid expansion of
the Internet industry in recent months and AmazeScape's business prospects
within that industry. In particular, the AmazeScape board of directors noted the
opportunities for co-branding, co-locating and cross-advertising which arise
from a combined Premier Concepts and AmazeScape. AmazeScape's board of directors
concluded that the best means for AmazeScape to capitalize on these
opportunities was to enter into a strategic combination with Premier Concepts.
AmazeScape's board of directors also believed that increasing competition
in the expanding Internet market would make it more difficult for AmazeScape to
succeed as a relatively small independent company. AmazeScape board of directors
believed that it would be increasingly important for AmazeScape to grow and gain
critical mass in order to compete against larger companies with substantially
greater resources and broader, more integrated site offerings. In order to
enhance its competitive position, AmazeScape's board of directors has considered
a number of alternatives, including growth through the acquisition of smaller
companies or merger with a larger company.
AmazeScape's board of directors identified a number of benefits for
AmazeScape's shareholders, employees and customers that could result from the
Merger. These potential benefits include:
- opportunities for AmazeScape, as part of the combined company, to compete
more effectively in the increasingly competitive and rapidly changing
Internet industry;
- the access to working capital resulting in the ability to dedicate
greater resources to both current and emerging product development
efforts and to fund the future growth of AmazeScape's business;
- the opportunity for AmazeScape's shareholders to participate in the
potential for growth of the combined company after the Merger;
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- the greater liquidity to AmazeScape's shareholders offered by Premier
Concepts Common Stock relative to AmazeScape common stock;
- the tax-free aspects of the Merger to AmazeScape's shareholders;
- current financial market conditions and historical market prices,
volatility and trading information with respect to AmazeScape and Premier
Concepts Common Stock;
- the success of AmazeScape's business depends on its ability to develop a
significant brand name. Premier Concepts has successfully built a number
of brands over the several years that it has pursued its business across
the US.
- Premier Concepts' 33 physical locations provide AmazeScape with
promotional outlets for its brand;
- Premier Concepts' 33 locations provide AmazeScape with a competitive
advantage over its competitors who currently exist only in cyberspace.
The physical outlet for AmazeScape's services, which Premier Concepts
provides, complements its presence on the Internet especially well.
Premier Concepts' locations across the country provide AmazeScape with
facilities where its users may seek information and assistance regarding
its services;
- Premier Concepts' 33 locations provide AmazeScape with outlet facilities
for selling its ISP services;
- the opportunity to leverage these physical premises in developing
relationships with other Internet businesses;
- By cross advertising -- Premier Concepts on AmazeScape's web site and
AmazeScape on Premier Concepts' web site -- the value of both companies
is enhanced; and
- A significant portion of Premier Concepts' clientele consists of
tourists. AmazeScape is particularly interested in attracting these
clients to become members of its online community. By establishing a
presence alongside Premier Concepts, AmazeScape enhances its ability to
achieve this objective.
The foregoing discussion of the information and factors considered by
AmazeScape's board is not intended to be exhaustive but is believed to include
all material factors considered by AmazeScape's board. In view of the variety of
factors considered in connection with its evaluation of the Merger, AmazeScape
board did not find it practicable to and did not quantify or otherwise assign
relative weight to the specific factors considered in reaching its
determination. In addition, individual members of AmazeScape's board may have
given different weight to different factors.
In light of the size and diversity of the marketplace and the competitive
positions of both Premier Concepts and AmazeScape, AmazeScape's board has
concluded that the Merger represents the best current and long-term strategy for
AmazeScape.
In considering the recommendation of AmazeScape's board of directors with
respect to the Merger Agreement, you should also be aware that certain directors
and officers of AmazeScape have certain interests in the Merger that are
different from, or are in addition to, the interests of AmazeScape's
shareholders generally. See "Interests of Related Persons in the Merger" at page
.
RECOMMENDATIONS OF THE AMAZESCAPE BOARD OF DIRECTORS
THE AMAZESCAPE BOARD OF DIRECTORS BELIEVES THAT THE MERGER IS FAIR TO, AND
IN THE BEST INTERESTS OF, AMAZESCAPE AND ITS SHAREHOLDERS. ACCORDINGLY, THE
AMAZESCAPE BOARD OF DIRECTORS HAS UNANIMOUSLY APPROVED THE MERGER AGREEMENT AND
RECOMMENDS THAT AMAZESCAPE'S SHAREHOLDERS EXECUTE THE WRITTEN CONSENT FOR
APPROVAL AND ADOPTION OF THE MERGER AGREEMENT AND THE TRANSACTIONS CONTEMPLATED
THEREBY, INCLUDING THE MERGER.
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COUNTERVAILING CONSIDERATIONS BY BOTH COMPANIES
The respective boards of directors of Premier Concepts and AmazeScape also
identified and considered a number of potentially negative factors in their
deliberations concerning the Merger, including, but not limited to:
- the risk that, despite the efforts of AmazeScape and Premier Concepts,
key technical marketing and management personnel might choose not to
remain employed by the combined company after the Merger;
- the risk that the potential benefits sought in the Merger might not be
realized fully, or within the time frame contemplated, if at all;
- the possibility that the Merger would not be completed and the effect of
the public announcement of the Merger on (a) the combined company's sales
and operating results and (b) the combined company's ability to attract
and retain key management, sales, marketing and technical personnel;
- the substantial charges to be incurred, primarily in the quarter in which
the Merger is completed, including costs of integrating the business and
transaction expenses arising from the Merger; and
- the other risks associated with each company's business, the Merger and
the combination of the companies described under the section entitled
"Risk Factors" beginning on page .
The respective boards of directors of Premier Concepts and AmazeScape each
believes that the potential benefits of the Merger outweigh these risks.
ACCOUNTING TREATMENT
The Merger will be accounted for as a "purchase" as such term is used under
generally accepted accounting principles, for accounting and financial reporting
purposes. It is expected that the Merger will constitute a tax-free
reorganization under Section 368(a) of the Internal Revenue Code of 1986, as
amended (the "Code"). It is anticipated that this transaction will be recorded
as a purchase business combination whereby AmazeScape is treated as the
accounting acquirer.
MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER
We have received the opinion of Parker Chapin, LLP, counsel to AmazeScape,
that, subject to the assumptions, exceptions, limitations and qualifications set
forth in their opinion, the material United States federal income tax
considerations relevant to the exchange of shares of AmazeScape common stock for
Premier Concepts common stock in the Merger that are generally applicable to
holders of AmazeScape common stock are as follows:
A. The Merger will constitute a reorganization within the meaning of the
Code.
B. A holder of AmazeScape common stock will not recognize any gain or loss
upon such holder's receipt of Premier Concepts common stock in exchange
for such holder's AmazeScape common stock in the Merger.
C. The aggregate tax basis of the Premier Concepts common stock that a
holder of AmazeScape common stock receives in the Merger will be the
same as the aggregate tax basis of the AmazeScape common stock
surrendered by such holder in exchange for Premier Concepts common
stock.
D. The holding period of the Premier Concepts common stock that each
holder receives in the Merger will include the period for which the
AmazeScape common stock surrendered in exchange for Premier Concepts
common stock was considered to be held, if the surrendered AmazeScape
common stock is held as a capital asset at the time of the Merger.
The opinion of Parker Chapin, LLP and this discussion are based on
currently existing provisions of the Code, existing and proposed treasury
regulations thereunder and current administrative rulings and court
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decisions, all of which are subject to change. Any change, which may or may not
be retroactive, could alter the tax consequences to AmazeScape shareholders as
described above.
This discussion does not address all United States federal income tax
considerations that may be relevant to a particular AmazeScape shareholder in
light of the AmazeScape shareholder's specific particular circumstances, such as
an AmazeScape shareholder who or that:
- is a dealer in securities;
- is subject to the alternative minimum tax provisions of the Code;
- is a foreign person;
- does not hold AmazeScape common stock as a capital asset;
- owns AmazeScape stock other than common stock; or
- acquired AmazeScape stock in connection with stock option or stock
purchase plans or in other compensatory transactions.
In addition, the following discussion does not address:
- the tax consequences of the Merger under foreign, state or local tax
laws, or
- the tax consequences of the assumption by Premier Concepts of AmazeScape
stock warrants or the tax consequences of the receipt of rights to
acquire Premier Concepts common stock.
AmazeScape shareholders are urged to consult their own tax advisors as to
the specific tax consequences to them of the Merger, including the applicable
federal, state, local and foreign tax consequences.
The parties are not requesting and will not request a ruling from the
Internal Revenue Service ("IRS") as to the tax consequences of the Merger. The
consummation of the Merger is conditioned on Premier Concepts' receiving an
opinion from Hangley Aronchick Segal & Pudlin and AmazeScape's receiving an
opinion from Parker Chapin, LLP in each case dated on the date of the closing to
the effect that the Merger will constitute a reorganization within the meaning
of the Code and the tax consequences to the AmazeScape shareholders are as
described above. AmazeScape shareholders should be aware that the tax opinions
do not bind the IRS. The IRS may therefore successfully assert a contrary
opinion. The tax opinions will be subject to assumptions, exceptions,
limitations and qualifications, including but not limited to the truth and
accuracy of representations made by Premier Concepts and AmazeScape.
A successful IRS challenge to the reorganization status of the Merger would
result in an AmazeScape shareholder's recognizing taxable gain or loss with
respect to each share of AmazeScape common stock surrendered equal to the
difference between (a) each shareholder's basis in the share and (b) the fair
market value, as of the effective time, of the Premier Concepts common stock
received in exchange. In this event, a shareholder's aggregate basis in the
Premier Concepts common stock received would equal its fair market value as of
the closing date of the Merger, and the shareholder's holding period for Premier
Concepts common stock would begin the day after the Merger.
LOSS LIMITATIONS. Pursuant to the Merger, the stock ownership of Premier
Concepts will change to such an extent as to cause a reduction in the amount of
its net operating loss ("NOL") carryforward. In addition, because AmazeScape
will become a member of a new affiliated group, the consolidated return
regulations will limit the ability of the group to utilize any of AmazeScape's
separate return limitation year NOL's. AmazeScape has incurred such NOL's.
DROP DOWN OF PREMIER CONCEPTS' BUSINESS. Premier Concepts will not
recognize gain or loss on the drop-down of its business assets to a wholly-owned
subsidiary prior to the Merger.
THE ABOVE SUMMARY OF MATERIAL U.S. FEDERAL INCOME TAX CONSEQUENCES TO
HOLDERS OF AMAZESCAPE COMMON STOCK IS NOT A COMPLETE ANALYSIS OR DESCRIPTION OF
ALL POTENTIAL U.S. FEDERAL INCOME TAX CONSEQUENCES OF THE MERGER. THIS
DISCUSSION DOES NOT ADDRESS TAX CONSEQUENCES THAT MAY VARY WITH, OR ARE
CONTINGENT ON, INDIVIDUAL CIRCUMSTANCES. IN ADDITION, IT DOES NOT ADDRESS ANY
NON-INCOME TAX OR ANY FOREIGN,
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STATE OR LOCAL TAX CONSEQUENCES OF THE MERGER. ACCORDINGLY, EACH AMAZESCAPE
SHAREHOLDER IS STRONGLY ENCOURAGED TO CONSULT HIS, HER OR ITS OWN TAX ADVISOR TO
DETERMINE THE PARTICULAR U.S. FEDERAL, STATE, LOCAL OR FOREIGN INCOME OR OTHER
TAX CONSEQUENCES TO THE SHAREHOLDER OF THE MERGER.
FEDERAL SECURITIES LAWS CONSEQUENCES; STOCK TRANSFER RESTRICTIONS
This Proxy Statement/Prospectus does not cover any resales of Premier
Concepts securities that Amazescape's shareholders will receive upon completion
of the Merger. No person is authorized to make any use of this document in
connection with a resale of that type. All Premier Concepts securities issued in
the Merger will be freely transferable. However, Premier Concepts securities
received by persons who are deemed to be "affiliates" of AmazeScape under the
Securities Act and the related SEC rules and regulations at the time of the
AmazeScape shareholders' meeting will be subject to restrictions on resale.
These affiliates may resell their Premier Concepts Common Stock only in
transactions permitted by Rule 144 or in other transactions exempt from
registration under other provisions under the Securities Act. Persons who may be
deemed to be affiliates of AmazeScape for these purposes generally include
individuals or entities that control, are controlled by, or are under common
control with AmazeScape and may include officers, directors and principal
shareholders of AmazeScape.
OPINION OF FINANCIAL ADVISOR
Pursuant to an engagement letter dated December 3, 1999, Premier Concepts
engaged JWGenesis Capital Markets, Inc. ("JWGenesis") to render an opinion (the
"JWGenesis Opinion") as to the fairness to Premier Concepts, from a financial
point of view, of the consideration to be received by Premier Concepts under and
pursuant to the February 1, 2000 draft merger agreement furnished to JWGenesis
(the "Draft Merger Agreement"), which Premier Concepts believes is not
materially different than the Merger Agreement as executed. On February 1, 2000,
JWGenesis delivered to the Premier Concepts board of directors its written
opinion that, as of that date and based on the assumptions made, the matters
considered and the limitations on the review undertaken summarized in the
opinion, the consideration to be received by Premier Concepts under and pursuant
to the Draft Merger Agreement was fair, from a financial point of view, to
Premier Concepts as of the date of the JWGenesis Opinion. The full text of the
JWGenesis Opinion, which sets forth, among other things, a summary of the
assumptions made, matters considered and limitations on the review undertaken,
is attached as Appendix D and is incorporated in this Proxy Statement/Prospectus
by reference. Premier Concepts shareholders are urged to read the JWGenesis
Opinion in its entirety.
The JWGenesis Opinion was prepared for the benefit and use of the Premier
Concepts board of directors in connection with its evaluation of the
transactions contemplated by the Merger Agreement and does not constitute a
recommendation to shareholders of Premier Concepts or AmazeScape on any matter
whatsoever, including as to how they should vote, or take any other action, with
respect to the proposals being submitted to them. The JWGenesis Opinion does not
address the relative merits of the Merger and the other business strategies that
the Premier Concepts board of directors has considered or may be considering or
the underlying business decision of the Premier Concepts board of directors to
proceed with the Merger.
JWGenesis was not authorized to, and did not, solicit third-party
indications of interest in acquiring all or part of Premier Concepts or
AmazeScape, and JWGenesis was not asked to consider, and its opinion does not
address, the consideration Premier Concepts or AmazeScape might receive from
third-party purchasers, the relative merits of the Merger as compared to any
alternative business strategies that might exist for Premier Concepts or
AmazeScape or the effect of any other transaction in which Premier Concepts or
AmazeScape might engage. The summary of the JWGenesis Opinion set forth in this
Proxy Statement/Prospectus is qualified in its entirety by reference to the full
text of the JWGenesis Opinion.
In connection with the preparation of the JWGenesis Opinion, JWGenesis has,
among other things:
- reviewed the financial terms of the Draft Merger Agreement;
- reviewed and analyzed certain business and financial information with
respect to Premier Concepts, including financial forecasts prepared by
Premier Concepts (Premier Concepts' management has
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advised JWGenesis that such information provided to JWGenesis is the most
recent information developed or reviewed by Premier Concepts and that
management has not changed its position with respect to such
information);
- held discussions with certain members of management of Premier Concepts
and AmazeScape concerning their business, operations and prospects and
visited certain facilities of both companies;
- reviewed Premier Concepts' Annual Reports on Form 10-KSB for the four
fiscal years ended January 31, 1999 and its Quarterly Report on Form
10-QSB for the period ended October 31, 1999;
- reviewed certain financial statistics of publicly-traded companies
JWGenesis deemed reasonably comparable to Premier Concepts and compared
the financial terms of the Merger with those of similar transactions
JWGenesis deemed reasonably comparable;
- reviewed the price and public trading history of the Premier Concepts
Common Stock; and
- reviewed AmazeScape's business plan dated December 1999 and financial
forecasts for and as developed by AmazeScape (AmazeScape's management has
advised JWGenesis that such information provided to JWGenesis is the most
recent information developed or reviewed by AmazeScape and that
management has not changed its position with respect to such
information).
In its review and analysis, and in arriving at its opinion, JWGenesis
assumed and relied upon the accuracy and completeness of all of the financial
and other information provided to it (including information furnished to it
orally or otherwise discussed with it by the managements of AmazeScape and
Premier Concepts) or publicly available and neither attempted to verify, nor
assumed responsibility for verifying, any of such information. JWGenesis relied
upon the assurances of managements of AmazeScape and Premier Concepts that they
were not aware of any facts that would make such information inaccurate or
misleading. Furthermore, JWGenesis did not obtain or make, or assume any
responsibility for obtaining or making, any independent evaluation or appraisal
of the properties, assets or liabilities (contingent or otherwise) of AmazeScape
or Premier Concepts, nor was JWGenesis furnished with any such evaluation or
appraisal.
With respect to the forward looking information (and the assumptions and
bases therefor) for each of AmazeScape and Premier Concepts that JWGenesis
reviewed, upon the confirmation of the managements of AmazeScape and Premier
Concepts, JWGenesis assumed that such forward looking information had been
prepared in good faith on the basis of reasonable assumptions and reflected the
best available estimates and judgments as to the future financial condition and
performance of Premier Concepts and AmazeScape, respectively.
In addition, JWGenesis assumed:
- that the Merger will be completed upon the terms set forth in the Draft
Merger Agreement without material alteration thereof;
- that the Merger will be treated as a tax-free reorganization pursuant to
the Internal Revenue Code of 1986, as amended; and
- the historical financial statements of each of AmazeScape and Premier
Concepts reviewed by it had been prepared and fairly presented in
accordance with U.S. generally accepted accounting principles
consistently applied.
JWGenesis relied as to all legal matters relevant to rendering its opinion
on the advice of counsel. The JWGenesis Opinion is necessarily based upon
market, economic and other conditions as in effect on, and information made
available to JWGenesis as of, the date of the JWGenesis Opinion.
It should be understood that subsequent developments may affect the
conclusion expressed in the JWGenesis Opinion. JWGenesis has agreed that, if,
after the date of this Proxy Statement/Prospectus (and within twelve weeks after
the date of the JWGenesis Opinion), the Premier Concepts board of directors
becomes aware of facts or information not previously presented to JWGenesis
which the board believes may be material to the conclusion reached in JWGenesis'
opinion, it may ask JWGenesis to consider whether
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<PAGE> 41
JWGenesis would change the conclusion reached in the opinion based on such
additional facts or information brought to its attention by the Board. JWGenesis
has agreed to respond to such an inquiry within a reasonable time. Although
developments following the date of the JWGenesis Opinion may affect the opinion,
JWGenesis is not required to conduct any investigation to bring new facts or
information to light after rendering its opinion.
The JWGenesis Opinion is limited to the fairness, from a financial point of
view and as of the date thereof, of the consideration to be received by Premier
Concepts pursuant to the Draft Merger Agreement. JWGenesis expresses no
additional opinions, including as to the value of any employee agreement, any
other arrangement entered into in connection with the Merger Agreement, any tax
or other consequences that might result from the Merger or what the value of
Premier Concepts Common Stock will be when issued to Amazescape's shareholders
pursuant to the Merger or the price at which the shares of Premier Concepts
Common Stock that are issued in connection with the Merger may be traded in the
future.
While the foregoing summary describes certain analyses and factors that
JWGenesis deemed material in its presentation to the Premier Concepts board of
directors, it is not a comprehensive description of all analyses and factors
considered by JWGenesis. The preparation of a fairness opinion is a complex
process that involves various determinations as to the appropriate and relevant
methods of financial analysis and the application of these methods to the
particular circumstances and, therefore, such an opinion is not readily
susceptible to summary description. JWGenesis believes that its analyses must be
considered as a whole and that selecting portions of its analyses and of the
factors considered by it, without considering all analyses and factors, would
create an incomplete view of the evaluation process underlying the JWGenesis
Opinion.
The conclusions reached by JWGenesis are based on all analyses and factors
taken as a whole and also on application of JWGenesis' own experience and
judgment. Such conclusions may involve significant elements of subjective
judgment and qualitative analysis. JWGenesis therefore gives no opinion as to
the value or merit standing alone of any one or more parts of the analyses that
it performed. In performing its analyses, JWGenesis considered general economic,
market and financial conditions and other matters, many of which are beyond the
control of Premier Concepts and AmazeScape. The analyses performed by JWGenesis
are not necessarily indicative of actual values or future results, which may be
significantly more or less favorable than those suggested by such analyses.
Accordingly, analyses relating to the value of a business do not purport to be
appraisals or to reflect the prices at which the business may actually be
purchased. Furthermore, no opinion is being expressed as to the prices at which
shares of Premier Concepts Common Stock may be traded at any future time.
The engagement letter between JWGenesis and Premier Concepts provides that,
for its services, JWGenesis is entitled to receive a transaction fee equal to
$50,000, which has been paid. Premier Concepts has also agreed to reimburse
JWGenesis for certain of its out-of-pocket expenses, including legal fees, and
to indemnify and hold harmless JWGenesis and its affiliates and any director,
employee or agent of JWGenesis or any of its affiliates, or any person
controlling JWGenesis or its affiliates for certain losses, costs, claims,
damages, expenses and liabilities relating to or arising out of services
provided by JWGenesis to Premier Concepts. The terms of the fee arrangement with
JWGenesis, which Premier Concepts and JWGenesis believe are customary for
transactions of this nature, were negotiated at arm's length between Premier
Concepts and JWGenesis, and the Premier Concepts board of directors was aware of
such fee arrangements.
JWGenesis was retained based on its experience as a financial advisor in
connection with mergers and acquisitions and in securities valuations generally.
JWGenesis, as part of its investment banking business, is engaged in the
valuation of businesses and securities in connection with mergers and
acquisitions, negotiated underwritings, secondary distributions of securities,
private placements and valuations for corporate and other purposes. JWGenesis
and its affiliates together are a full-service securities firm engaged in
securities and brokerage activities, as well as in the provision of investment
banking and financial advisory services. In the ordinary course of its trading
and brokerage activities, JWGenesis or its affiliates may at any time hold long
or short positions, and may trade or otherwise effect transactions, for its own
account or the accounts of customers, in securities of Premier Concepts.
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DISSENTER'S RIGHTS OF AMAZESCAPE'S SHAREHOLDERS
GENERAL
Holders of shares of AmazeScape common stock who do not consent to the
Merger may, under certain circumstances and by following the procedure
prescribed by Sections 92A.300 to 92A.500, inclusive, of Chapter 92A of the
Nevada Revised Statutes (the "Nevada Dissenters Statute"), exercise their
respective rights to dissent from the corporate action authorizing the Merger
and receive cash for their shares of AmazeScape common stock (the "Dissenter's
Rights").
Any AmazeScape dissenting shareholder must follow the appropriate
procedures under the Nevada Dissenters Statute or suffer the termination or
waiver of such rights. A person having a beneficial interest in shares of
AmazeScape common stock held of record in the name of another person, such as a
broker or nominee, must act promptly to cause the record holder to follow the
steps summarized below properly and in a timely manner to perfect the
Dissenter's Rights.
THE FOLLOWING DISCUSSION IS NOT A COMPLETE STATEMENT OF THE NEVADA
DISSENTERS RIGHTS STATUTE AND IS QUALIFIED IN ITS ENTIRETY BY THE FULL TEXT OF
SECTIONS 92A.300 TO 92A.500, WHICH IS REPRINTED IN ITS ENTIRETY AS APPENDIX G.
NOTICE, DEMAND FOR PAYMENT AND PAYMENT
Under Sections 92A.410 and 92A.430 of the Nevada Dissenters Statute,
AmazeScape is obligated, within ten (10) days of authorization by its
shareholders of the Merger, to notify in writing (the "Dissenters' Notice") all
of the beneficial holders of shares of AmazeScape common stock that: (1) the
Merger has been authorized by the written consent of a majority of the
shareholders entitled to vote and (2) they are entitled to assert their
Dissenter's Rights. The Dissenters' Notice shall state where and by when the
dissenting shareholder shall make demand for payment and shall surrender his
stock certificates. A form for use by the dissenting shareholders to demand
payment shall be also included in the Dissenters' Notice, which is annexed in
its entirety as Appendix H.
Upon receipt of the Dissenters' Notice, Section 92A.440 of the Nevada
Dissenters Statute provides that any eligible AmazeScape shareholder wishing to
dissent must, on or prior to the date set forth in the Dissenters' Notice:
(1) Demand payment;
(2) Certify as to his beneficial ownership of the shares of AmazeScape
common stock on or before the date required by the Dissenters' Notice;
and
(3) Deposit his stock certificate(s) in accordance with the terms of the
Dissenters' Notice.
Failure by any dissenting shareholder to demand payment or to deposit his,
her or its stock certificate, each by the date set forth in the Dissenters'
Notice, shall result in the loss of that shareholder's Dissenter's Rights.
AmazeScape may also elect to withhold making payment until after the Merger is
completed with respect to any AmazeScape shareholder that is not the beneficial
owner of shares of AmazeScape common stock as of [ , 2000].
Accordingly, holders of shares of AmazeScape common stock who follow the
procedures set forth in Section 92A.440 of the Nevada Dissenters Statute and in
the Dissenters' Notice will be entitled, within 30 days after receipt by
AmazeScape of the shareholder's demand for payment, to receive payment in cash
of the "fair value" of such shares (plus accrued interest), as determined by
AmazeScape. Pursuant to the terms of the Merger Agreement, Premier Concepts has
no obligation to complete the Merger unless holders of at least 98% of the
outstanding AmazeScape common stock have given either (a) a written consent to
the Merger and the other transactions contemplated by the Merger Agreement, or
(b) a valid and enforceable waiver of Dissenter's Rights. If the Merger is not
completed, no AmazeScape shareholder will be entitled to Dissenter's Rights.
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Under Section 92A.460 of the Nevada Dissenters Statute, payment by
AmazeScape to the dissenting shareholders must be accompanied by the following:
- AmazeScape's financial statements for the fiscal year ended not more than
16 months prior to payment;
- interim financial statements of AmazeScape;
- a statement of the "fair value" estimated by AmazeScape for the shares;
- the interest calculation;
- a statement of the dissenting shareholder's rights under Section 92A.480
of the Nevada Dissenters Statutes to demand payment based upon his own
estimate of the "fair value" of his shares of AmazeScape common stock;
and
- a copy of the Sections 92A.300 to 92A.500, inclusive, of the Nevada
Dissenters Statute.
DETERMINATION OF "FAIR VALUE"
Unless demand is made otherwise by the dissenting shareholder, AmazeScape
shall determine the "fair value" of its shares of common stock for purposes of
making payment to the dissenting shareholders.
Section 92A.480 permits the dissenting shareholder to demand payment based
upon his own estimate of the "fair value" of the shares and the accrued
interest. Such demand must be made within 30 days after AmazeScape has either
paid or offered payment for such shares. Within 60 days after receipt of such a
demand for payment, AmazeScape may petition a court of competent jurisdiction in
the State of Nevada for a determination of the "fair value" of the shares and
accrued interest. Failure to petition the court timely shall result in
AmazeScape paying to each dissenting shareholder whose demand remains unsettled
the amount demanded.
The costs of the petition as determined by the court shall be imposed upon
AmazeScape. The court may also order that all or a portion of the costs be
charged against any or all of the dissenting shareholders should it find that
such dissenting shareholders acted arbitrarily, vexatiously or not in good faith
in demanding payment.
DISSENTING SHAREHOLDERS SHOULD BE AWARE THAT THE FAIR VALUE OF THEIR SHARES
OF AMAZESCAPE COMMON STOCK AS DETERMINED UNDER THE NEVADA DISSENTERS STATUTE
COULD BE MORE THAN, THE SAME AS, OR LESS THAN THE VALUE OF THE CONSIDERATION
THEY WOULD RECEIVE PURSUANT TO THE MERGER AGREEMENT IF THEY DID NOT SEEK
DISSENTER'S RIGHTS. Investment banking opinions as to fairness from a financial
point of view are not necessarily opinions as to fair value under the Nevada
Dissenters Statutes.
NOTICE TO AMAZESCAPE SHAREHOLDERS
Sections 92A.300 to 92A.500, inclusive, of the Nevada Dissenters Statute
and the form of Dissenters' Notice to be sent to each beneficial holder of
AmazeScape common stock at [ , 2000] are attached to this Proxy
Statement/Prospectus as Appendices G and H, respectively. Any eligible
AmazeScape's shareholder who wishes to exercise his, her or its Dissenter's
Rights, or who wishes to preserve his right to do so, should review the
following discussion and Appendices G and H carefully. Failure to comply timely
and properly with the procedures specified in the Dissenters' Notice and Nevada
Dissenters Statute will result in the loss of Dissenter's Rights.
A HOLDER OF SHARES OF AMAZESCAPE COMMON STOCK WISHING TO EXERCISE SUCH
HOLDER'S DISSENTER'S RIGHTS MUST (1) NOT CONSENT TO THE MERGER AND (2) ON OR
BEFORE [ ] 2000 DELIVER TO AMAZESCAPE A WRITTEN DEMAND FOR
PAYMENT. A HOLDER OF SHARES OF AMAZESCAPE COMMON STOCK WISHING TO EXERCISE SUCH
HOLDER'S DISSENTER'S RIGHTS MUST BE THE BENEFICIAL OWNER OF SUCH SHARES ON THE
DATE OF THE DISSENTERS' NOTICE AND MUST CONTINUE TO HOLD SUCH SHARES OF RECORD
UNTIL THE COMPLETION OF THE MERGER. Accordingly, a holder of shares who is the
beneficial owner of Appraisal Shares on the date the written demand for
appraisal is made, but who thereafter transfers such shares prior to the
completion of the Merger, will lose any Dissenter's Rights
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in respect of such shares. FAILURE TO CONSENT TO THE MERGER DOES NOT IN ITSELF
CONSTITUTE A DEMAND FOR DISSENTER'S RIGHTS.
Only a holder of record of shares of AmazeScape common stock is entitled to
assert Dissenter's Rights for such shares registered in that holder's name. A
demand for payment should be executed by or on behalf of the holder of record,
fully and correctly, as such holder's name appears on such holder's stock
certificate. If the shares of AmazeScape common stock are owned of record in a
fiduciary capacity, such as by a trustee, guardian or custodian, execution of
the demand should be made in that capacity, and if the shares are owned of
record by more than one person as in a joint tenancy or tenancy in common, the
demand should be executed by or on behalf of all joint owners. An authorized
agent, including one or more joint owners, may execute a demand for payment on
behalf of a holder of record; however, the agent must identify the record owner
or owners and expressly disclose the fact that, in executing the demand, the
agent is agent for such owner or owners.
A record holder, such as a broker who holds shares of AmazeScape common
stock as a nominee for several beneficial owners, may exercise Dissenter's
Rights with respect to such shares held for one or more beneficial owners while
not exercising such rights with respect to the shares held for other beneficial
owners; in such case, the written demand should set forth the number of shares
as to which Dissenter's Rights is sought. When no number of shares is expressly
mentioned, the demand for payment will be presumed to cover all shares held in
the name of the record owner. AmazeScape shareholders who hold their shares in
brokerage accounts or other nominee forms and who wish to exercise Dissenter's
Rights are urged to consult with their brokers to determine the appropriate
procedures for the making of a demand for appraisal by such a nominee.
ALL WRITTEN DEMANDS FOR PAYMENT, WHICH MAY BE IN THE FORM OF EXHIBIT A TO
THE DISSENTERS' NOTICE ATTACHED AS APPENDIX H, TOGETHER WITH THE STOCK
CERTIFICATE(S) IN RESPECT OF THE DISSENTING SHAREHOLDERS' SHARES, SHOULD BE SENT
OR DELIVERED ON OR BEFORE 2000 TO:
AMAZESCAPE.COM INC.
264 AIRMONT AVENUE
MAHWAH, NEW JERSEY 07430
ATTN: HARRICHAND PERSAUD, CHIEF EXECUTIVE OFFICER
Any holder of AmazeScape common stock who has duly demanded payment in
compliance with the Nevada Dissenters Statute will not, after the completion of
the Merger, be entitled to vote such shares subject to such demand for any
purpose or be entitled to the payment of dividends or other distributions on
those shares (except dividends or other distributions payable to holders of
record of shares as of a record date prior to the completion of the Merger).
FAILURE TO FOLLOW THE STEPS REQUIRED BY THE NEVADA DISSENTERS STATUTE FOR
ASSERTING DISSENTER'S RIGHTS MAY RESULT IN THE LOSS OF SUCH RIGHTS (IN WHICH
EVENT A SHAREHOLDER WILL BE ENTITLED TO RECEIVE THE CONSIDERATION RECEIVABLE IN
RESPECT TO SUCH SHARES IN ACCORDANCE WITH THE MERGER AGREEMENT). IN VIEW OF THE
COMPLEXITY OF THE PROVISIONS OF THE NEVADA DISSENTERS STATUTES, AMAZESCAPE'S
SHAREHOLDERS WHO ARE CONSIDERING WITHHOLDING THEIR CONSENT TO THE MERGER AND
DISSENTING SHOULD CONSULT THEIR OWN LEGAL ADVISORS.
See "Comparison of Shareholder Rights."
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INTERESTS OF RELATED PERSONS IN THE MERGER
In considering the recommendations of the respective boards of directors of
Premier Concepts and AmazeScape with respect to the Merger Agreement and the
transactions contemplated thereby, shareholders should be aware that the
directors and executive officers of Premier Concepts and AmazeScape have
interests that are different from, or in addition to, the interests of
shareholders generally. Each company's board of directors was aware of these
interests and considered them, among other matters, in approving the Merger
Agreement and the transactions contemplated thereby.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Premier Concepts has agreed that, as of the closing, the directors of
AmazeScape will be elected to, and will comprise in full, the holding company's
board of directors. The current directors of AmazeScape are Harrichand Persaud,
Anton Nicaj, Brian Watts, James Dwight and John Gerber. Mr. Gerber also serves
on the board of directors of Premier Concepts. After the Merger, the board of
directors of Premier Commerce will be comprised of Sissel Eckenhausen, John
Gerber, Anton Nicaj, Gary Wolf and Geraldine Magalnick. See "Management of the
Combined Companies."
AmazeScape has issued to each of its five directors, for their initial
service on the AmazeScape board, a warrant to purchase up to 25,000 shares of
AmazeScape common stock at an exercise price of $1.00 per share. In addition, at
the time of the Merger, each member of the board of directors of the holding
company will receive an option under the 2000 Plan to purchase up to 25,000
shares of Premier Concepts Common Stock at an exercise price equal to the market
price at the time of grant.
For each year of service, Premier Concepts granted each of its five
directors an option to purchase up to 5,000 shares of its Common Stock at an
exercise price equal to the market price at the time of grant. In connection
with the closing of the Merger, Premier Concepts will grant each of the
directors serving on the Premier Commerce board of directors an option under the
2000 Plan to purchase 10,000 shares of the Premier Concepts Common Stock at an
exercise price equal to the market price at the time of grant.
In connection with the Merger, the employment agreements of Sissel
Eckenhausen, President and Chief Executive Officer of Premier Concepts, Todd
Huss, its Chief Financial Officer, and Kevin O'Brien, its Chief Operating
Officer, have been amended to waive certain rights each officer otherwise might
have had under "change of control" provisions in such agreements by reason of
the Merger. In consideration for such waiver, Ms. Eckenhausen, Mr. Huss and Mr.
O'Brien were granted options, conditioned upon the completion of the Merger, to
purchase an additional 57,000, 28,000 and 20,000 shares of Common Stock,
respectively, at an exercise price equal to the market price at the time of
grant.
INDEMNIFICATION AND INSURANCE
For a period of six (6) years after the effective date of the Merger,
Premier Concepts will maintain policies of directors' and officers' liability
insurance providing broad coverage with per occurrence and aggregate limits that
are favorable to the directors and officers by comparison with such policies
customarily maintained by corporations of comparable size within the same
industries, and such policies also shall cover directors and officers of
subsidiaries of Premier Concepts.
During such six (6) year period, Premier Concepts will not amend the
Articles of Incorporation or by-laws of Premier Commerce, Inc. or AmazeScape so
as to reduce the scope of liability indemnification provided to directors or
officers.
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THE MERGER AGREEMENT
The following is a summary of the Merger Agreement, a copy of which is
attached as Appendix B and is incorporated into this Proxy Statement/Prospectus
by reference. Shareholders of Premier Concepts and AmazeScape are urged to read
the Merger Agreement in its entirety for a more complete description of the
terms and conditions of the Merger.
GENERAL
The Merger Agreement provides that Mergerstab, a wholly-owned subsidiary of
Premier Concepts newly formed under the laws of the State of Delaware for
purposes of effecting the transactions contemplated by the Merger Agreement,
will merge with and into AmazeScape, with AmazeScape surviving the Merger as a
wholly-owned subsidiary of Premier Concepts. Upon completion of the Merger,
Premier Concepts will change its name to "AmazeScape.com Inc."
TIMING OF CLOSING
The Merger will occur within three business days after the shareholders of
Premier Concepts and the shareholders of AmazeScape have approved the Merger
Agreement, the Merger and other transactions contemplated by the Merger
Agreement and after certain other conditions to closing set forth in the Merger
Agreement have been satisfied or waived. At the closing, AmazeScape expects to
file articles of Merger with the Secretary of State of the States of Delaware
and Nevada, at which time the Merger will become effective.
CONVERSION OF SHARES OF AMAZESCAPE COMMON STOCK
At the effective time of the Merger, each share of AmazeScape common stock
issued and outstanding immediately prior to the effective time will be converted
into the right to receive one share of Premier Concepts Common Stock. Based upon
the number of outstanding shares of AmazeScape common stock expected to be
outstanding at the effective time (which includes all AmazeScape common stock
issuable upon conversion of the Amazescape Series A Preferred Stock immediately
before the effective time, as described below), the shareholders of AmazeScape
immediately prior to the completion of the Merger will own approximately eighty
seven percent (87%) of the outstanding shares of Premier Concepts Common Stock
immediately following completion of the Merger.
CONVERSION OF SHARES OF MERGERSUB COMMON STOCK
At the effective time of the Merger, Premier Concepts' ownership interest
in the outstanding shares of Mergersub common stock issued and outstanding
immediately prior to the effective time will be converted into one share of
AmazeScape common stock. Because all shares of AmazeScape common stock issued
and outstanding immediately prior to the effective time are being converted into
shares of Premier Concepts Common Stock, the only shares of AmazeScape common
stock that will remain issued and outstanding after giving effect to the Merger
are those being issued to the holder of Mergersub Common Stock. Premier Concepts
holds presently, and until the effective time will continue to hold, all shares
of Mergersub common stock. Thus, AmazeScape will become a wholly-owned
subsidiary of Premier Concepts as a result of the Merger.
CONVERSION OF SHARES OF AMAZESCAPE SERIES A PREFERRED STOCK
There are two classes of AmazeScape preferred stock issued and outstanding:
Series A Preferred Stock and Series B Preferred Stock.
At the effective time of the Merger, each share of Amazescape Series A
Preferred Stock issued and outstanding immediately prior to the effective time
will be converted into one share of Premier Concepts Convertible Preferred
Stock. Before the closing, Premier Concepts shall, subject to approval of the
shareholders of Premier Concepts, authorize the Convertible Preferred Stock as a
new class of capital stock, having substantially the same rights, privileges and
duties with respect to Premier Concepts as the Series A
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Preferred Stock has with respect to AmazeScape, except that the holders of
Premier Concepts Convertible Preferred Stock shall having voting rights whereas
holders of AmazeScape Series A Preferred Stock do not.
Immediately prior to the effective time of the Merger, the 1,500 shares of
Amazescape Series B Preferred Stock then issued and outstanding automatically
will be converted into 428,571 shares of AmazeScape common stock, which, at the
effective time, will be converted into shares of Premier Concepts Common Stock
on a one-for-one basis as described above.
TREATMENT OF OPTIONS AND WARRANTS
At the effective time of the Merger, each option and warrant to purchase
shares of AmazeScape common stock, whether or not then vested or exercisable,
shall be assumed by Premier Concepts and amended to provide the holder thereof
with the right to purchase, on the same terms and subject to the same conditions
as are set forth in the option or warrant being exchanged, the same number of
shares of Premier Concepts Common Stock as the number of shares of AmazeScape
common stock for which the option or warrant could have been exercised or become
exercisable immediately prior to the effective time.
EXCHANGE OF CERTIFICATES, OPTIONS AND WARRANTS
Premier Concepts will take all necessary action to implement the above,
including the reservation and issuance of a sufficient number of shares of
Premier Concepts Common Stock for delivery upon conversion of the AmazeScape
common stock, conversion of Premier Concepts Convertible Preferred Stock
issuable in exchange for Amazescape Series A Preferred Stock, and exercise of
all options and warrants to purchase Premier Concepts Common Stock. Prior to the
effective time, Premier Concepts will deposit with an exchange agent the
certificates representing the appropriate number of shares of Premier Concepts
Common Stock that will be issued in connection with the Merger. As soon as
practicable after the effective time, the exchange agent will mail a letter of
transmittal that contains instructions for the surrender of the certificates to
each holder of a certificate or certificates representing AmazeScape common
stock that will be exchanged for Premier Concepts Common Stock. Upon surrender
of a certificate and other required documents, the holder of a certificate or
certificates of AmazeScape common stock or Amazescape's Series A Preferred Stock
will receive a certificate representing the same number of shares of Premier
Concepts Common Stock or Premier Concepts Convertible Preferred Stock,
respectively.
THE BOARD OF DIRECTORS AND OFFICERS OF PREMIER CONCEPTS
The board of directors of Premier Concepts will take the necessary
corporate action so that, at or prior to the effective time of the Merger,
Premier Concepts' board of directors will consist of the same five persons who
serve on the Amazescape board of directors, and the officers of AmazeScape
immediately prior to the effective time of the Merger will become the officers
of Premier Concepts. As of this date, the five directors of AmazeScape are:
Harrichand Persaud, Anton Nicaj, Brian Watts, James Dwight and John Gerber.
The directors and officers of AmazeScape immediately prior to the effective
time of the Merger will continue to serve in such capacity, subject to the
Articles of Incorporation and By-Laws of AmazeScape and applicable law.
REPRESENTATIONS AND WARRANTIES
The Merger Agreement contains customary, mutual representations and
warranties of Premier Concepts and AmazeScape, relating to, among other things:
- corporate organization, power and authority;
- corporate authorization;
- non-contravention;
- third party consents;
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- authorized and issued capital stock, options and warrants;
- subsidiaries and investments;
- SEC filings and Nasdaq listing (in the case of Premier Concepts only);
- financial statements;
- no undisclosed liabilities;
- absence of certain changes;
- inventory (in the case of Premier Concepts only);
- personal property, including title to and condition of personal property;
- real property, including title to or leaseholder interests in real
property as well as condition of real property and environmental matters;
- owned and licensed software, including year 2000 compliance;
- intellectual property;
- licenses, permits and other authorizations;
- contracts;
- insurance;
- customers (in the case of Premier Concepts) or members/subscribers (in
the case of AmazeScape);
- suppliers;
- related persons;
- accounts payable;
- investigation and litigation;
- brokerage;
- compliance with applicable laws;
- tax matters;
- personnel information;
- employee benefits;
- labor and employment law matters; and
- adequacy of disclosure.
CERTAIN COVENANTS
DROP-DOWN OF PREMIER CONCEPTS BUSINESS. Before the closing, Premier
Concepts will form Premier Commerce as a wholly-owned subsidiary of Premier
Concepts. The directors of Premier Commerce will be: Sissel Eckenhausen, John
Gerber, Anton Nicaj, Gary Wolf and Geraldine Magalnick. The initial officers of
Premier Commerce are expected to be: Sissel Eckenhausen, Chief Executive Officer
and President; Todd Huss, Chief Financial Officer and Treasurer; and Kevin
O'Brien, Chief Operating Officer. At the closing, Premier Concepts will transfer
and assign to Premier Commerce, as a capital contribution, substantially all
businesses, rights, warranties, privileges, properties and assets used or useful
in Premier Concepts' business as presently conducted; however, Premier Concepts
will not transfer and assign to Premier Commerce the following assets:
- Premier Concepts' agreement with the Nasdaq Stock Market, Inc.;
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- 80% of the cash proceeds from the exercise of options or warrants
received by Premier Concepts after November 10, 1999 (which presently are
being held in an escrow account by counsel to AmazeScape); and
- any contract that is not assignable without a third party's consent that
has not been obtained as of the closing.
Premier Concepts will use all commercially reasonable efforts to obtain whatever
third party consents may be necessary to effect the transfer and assignment of
the businesses and assets of Premier Concepts to Premier Commerce as described
above.
PREPARATION AND FILING OF REGISTRATION STATEMENT. Premier Concepts will
prepare and file a registration statement on an appropriate form with respect to
the shares of Premier Concepts Common Stock to be issued in connection with the
Merger. Premier Concepts will use its reasonable best efforts to have the
registration statement declared effective and to maintain such effectiveness.
NASDAQ SMALLCAP MARKET. Premier Concepts shall use all reasonable efforts
to cause the shares of Premier Concepts Common Stock to be issued in connection
with the Merger to be approved for inclusion on the Nasdaq SmallCap Market,
subject to official notice of issuance, prior to the effective time of the
Merger. The continued inclusion of Premier Concepts Common Stock on the Nasdaq
SmallCap Market is not a condition to the obligation of any party to complete
the closing.
STOCK OPTIONS. Premier Concepts will adopt, and shall submit to its
stockholders for approval, the Premier Concepts, Inc. 2000 Stock Option Plan
described elsewhere in this Proxy Statement/Prospectus.
ADDITIONAL INVESTMENT IN AMAZESCAPE. If Premier Concepts' net cash
position, as of the effective time of the Merger, would not be sufficient to
obtain Nasdaq approval of the Merger and the other transactions contemplated
hereby (including for Premier Concepts to satisfy the initial listing
qualifications of The Nasdaq SmallCap Market), the AmazeScape board of directors
shall authorize one or more new series of preferred stock having rights,
preferences and duties no more favorable to holder thereof in any respect than
the rights, preferences and duties applicable to the AmazeScape Series B
Preferred Stock (including a conversion price to AmazeScape common stock of not
less than $3.50 per share and a mandatory conversion to AmazeScape common stock
immediately prior to the Merger) and sell shares of such newly-authorized
preferred stock for not less than the face value per share so that AmazeScape
receives aggregate net proceeds from such sale sufficient for Premier Concepts
to obtain such approval.
CONDUCT PENDING THE CLOSING. Each of Premier Concepts and AmazeScape has
agreed to conduct its business only in the ordinary course, consistent with past
practice, and to use all commercially reasonable efforts to preserve intact its
business and keep available the services of its material employees and other
personnel, preserve its goodwill and relationships with material suppliers,
customers or members/subscribers (as applicable) and other persons with whom
such party has a material business relationship. To accomplish the foregoing,
each party has agreed to maintain and keep its personal property in good
operating condition, perform all of its material obligations under contracts,
timely file all tax returns and, absent the written consent of the other parties
authorizing such action, refrain from taking certain actions, such as:
- amending its Articles of Incorporation or by-laws;
- amending or waiving rights under any contract;
- increasing compensation of employees and other personnel, other than
annual raises in the ordinary course of business consistent with past
practice;
- changing its methods, policies, practices or procedures relating to
bookkeeping, accounting, billing, collection, marketing,
member/subscriber or customer relations, management of accounts
receivable or accounts payable, ordering supplies or inventory, research
and development, protection of trade secrets or other intellectual
property;
- acquiring the business, operations or assets of a third party (other than
the purchase of supplies or inventory in the ordinary course of business
consistent with past practice);
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- issuing any equity or debt securities, or splitting, combining or
reclassifying its capital stock or changing the rights, privileges or
duties of any class of capital stock;
- incurring indebtedness for borrowed money, or providing a guarantee or
suretyship for indebtedness of any third party;
- assuming or permitting any material adverse lien or other encumbrance on
its assets;
- authorizing, declaring, making, paying or setting aside funds for any
dividend or other distribution in respect of its capital stock or other
securities; or
- taking any action that could reasonably be expected to have a material
adverse effect on a party's business as presently or proposed to be
conducted or that could reasonably be expected to cause any
representation or warranty of a party to untrue as of the closing.
NO SOLICITATION. Premier Concepts and AmazeScape have agreed that neither
of them shall, directly or indirectly (including through any affiliate,
shareholder, director, officer, employee, broker, finder, agent, representative,
financial advisor, attorney or other intermediary) seek any person, other than
the other parties to the Merger Agreement, to purchase or acquire all or any
substantial part of the assets of a party outside the ordinary course of
business, to purchase or acquire any securities of a party or to effect any
consolidation, Merger or other business combination, recapitalization,
liquidation or similar transaction, or any transaction inconsistent with the
transactions contemplated by the Merger Agreement, or make, negotiate, accept,
solicit or entertain any offer to engage in, or take part in discussions or
provide information concerning, any such transaction.
CONDITIONS TO THE COMPLETION OF THE MERGER
Premier Concepts and AmazeScape will complete the Merger only if the
conditions specified in the Merger Agreement are either satisfied or waived. The
conditions include the following:
- Premier Concepts' registration statement on Form S-4, which includes this
proxy statement and prospectus, has been declared effective by the SEC,
and approval and adoption of the Merger Agreement, the Merger and the
other transactions contemplated by the Merger Agreement requiring
shareholder approval shall have been solicited pursuant to said
registration statement;
- Premier Concepts' shareholders and Amazescape's shareholders approve and
adopt the Merger Agreement, the Merger and/or any other transactions
contemplated by the Merger Agreement that require shareholder approval or
adoption under the Articles of Incorporation or by-laws of a party or
under applicable law;
- holders of at least 98% of AmazeScape common stock shall have consented
to the Merger and the other transactions contemplated by the Merger
Agreement or waived their dissenter's rights under applicable provisions
of Nevada law;
- there is no injunction or other court or legal restraint or prohibition
preventing completion of the Merger and the other transactions
contemplated by the Merger Agreement; and
- Premier Concepts shall have issued certain additional shares of Premier
Concepts Common Stock and certain options and warrants to purchase shares
of Premier Concepts Common Stock.
- the statements made by Premier Concepts and AmazeScape in their
respective representations and warranties were true and correct when made
and are true and correct in all material respects or, if any such
statements were false when made or would be false if made as of the
closing, the aggregate effect of such false statements would not deprive
the other parties to the Merger Agreement of a material benefit of their
respective bargains;
- all covenants to be performed by the parties on or before the date of
closing have been performed in all material respects;
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- all third party consents necessary for the completion of the Merger and
the other transactions contemplated by the Merger Agreement have been
obtained; and
- Premier Concepts has completed the transfer and assignment of its
business and assets to its wholly-owned subsidiary, Premier Commerce, as
contemplated by the Merger Agreement and provided reasonably satisfactory
evidence of such transactions to AmazeScape; and
- since the date of the Merger Agreement, there has not been a material
adverse change in the business, assets, liabilities, financial condition
or prospects of any party.
DIRECTORS' AND OFFICERS' LIABILITY
LIMITED LIABILITY. No director or officer of a party shall have any
personal liability in respect of or relating to the representations, warranties
or covenants of a party or in respect of any certificate delivered on behalf of
a party.
DIRECTORS' AND OFFICERS' LIABILITY INSURANCE. For a period of six years
beginning at the effective time, Premier Concepts shall maintain policies of
directors' and officers' liability insurance providing coverage to the directors
and officers of Premier Concepts and its subsidiaries. During such time, Premier
Concepts shall not amend its Articles of Incorporation or by-laws or those of
its subsidiaries so as to reduce the scope of liability indemnification provided
to directors or officers therein. See "Interests of Related Persons in the
Merger."
TERMINATION
The Merger Agreement may be terminated at any time prior to the effective
time of the Merger, whether before or after approval of the matters presented in
connection with the Merger by the Premier Concepts shareholders or the
AmazeScape shareholders, in any of the following ways:
(a) by mutual written consent of Premier Concepts and AmazeScape;
(b) by Premier Concepts or Mergersub in the event that either
- any statements made by AmazeScape were false when made or false as of
the date of closing and the aggregate effect of such false statements
deprives Premier Concepts or Mergersub of a material benefit of its
bargain; or
- AmazeScape breaches a covenant in the Merger Agreement or fails to
execute or deliver any agreement, instrument or document to be
executed or delivered by AmazeScape as a condition to Premier
Concepts' or Mergersub's obligation to complete the closing, provided
such breach or failure has not been waived or caused by a material
breach by Premier Concepts or Mergersub;
(c) by AmazeScape in the event that either
- any statements made by Premier Concepts or Mergersub were false when
made or false as of the date of closing and the aggregate effect of
such false statements deprives AmazeScape of a material benefit of its
bargain; or
- Premier Concepts or Mergersub breaches a covenant in the Merger
Agreement or fails to execute or deliver any agreement, instrument or
document to be executed or delivered by it as a condition to
Amazescape's obligation to complete the closing, provided such breach
or failure has not been waived or caused by a material breach by
AmazeScape; or
(d) by either party at any time after May 15, 2000 if the Merger has not
been completed for any reason other than a breach of the Merger
Agreement by the party seeking to terminate the Merger Agreement.
Upon termination, neither party shall have any further liability or
obligation to the other parties under the Merger Agreement; except, however,
termination shall be without prejudice to any rights or claims a party may have
arising from a misrepresentation, breach of warranty or breach of covenant
occurring prior to the termination of the Merger Agreement.
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AmazeScape has agreed to pay all of Premier Concepts' and Mergersub's
reasonable counsel fees and costs incurred in connection with the negotiation,
documentation and completion of the Merger and the other transactions
contemplated by the Merger Agreement; provided, however, Premier Concepts and
Mergersub shall be solely responsible for any such fees and costs incurred by
them in the event the Merger Agreement is terminated by AmazeScape in accordance
with (c) above.
AMENDMENT OR WAIVER OF THE MERGER AGREEMENT
The parties may amend the Merger Agreement only by a written instrument
signed by all parties, and the rights of a party may be waived only in a written
instrument signed by such party.
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ADOPTION OF PREMIER CONCEPTS, INC.
2000 STOCK OPTION PLAN
At a meeting held on February 3, 2000, the board of directors of Premier
Concepts adopted the Premier Concepts, Inc. 2000 Stock Option Plan (the "2000
Plan"), subject to the approval of the shareholders of Premier Concepts and to
certain other conditions described below.
The purpose of the 2000 Plan is to enable Premier Concepts to afford
certain of its directors, executive officers and key employees and the
directors, executive officers and key employees of any subsidiary corporation or
parent corporation of Premier Concepts who are responsible for its continued
growth an opportunity to acquire a proprietary interest in Premier Concepts and
thus to create in such directors, executive officers and key employees an
increased interest in, and a greater concern for, its welfare. The Plan is
intended to promote a close identity of interests between Premier Concepts and
its directors and employees as well as a means to attract and retain outstanding
management.
The 2000 Plan became effective upon its adoption by the board of directors
but shall be null and void unless, on or before February 2, 2001, the following
conditions have been satisfied: (i) the 2000 Plan shall have been approved by
the shareholders of Premier Concepts; and (ii) the Merger shall have been
completed.
The primary terms of the 2000 Plan are as follows:
1. NUMBER OF SHARES. The aggregate number of shares of Common Stock
for which options may be granted under the 2000 Plan is 1,750,000. Of the
options available under the 2000 Plan, options for 250,000 shares of Common
Stock are reserved for award to directors, officers and key employees of
Premier Commerce from time to time following the completion of the Merger.
With respect to the 250,000 shares of Common Stock reserved for directors,
officers and key employees of Premier Commerce, options to purchase an
aggregate of 50,000 shares of Common Stock shall be issued in equal number
to the five directors of Premier Commerce upon completion of the Merger,
and options to purchase an additional 57,000 shares, 28,000 shares and
20,000 shares shall be issued to Sissel Eckenhausen, President and Chief
Executive Officer of Premier Commerce, Todd Huss, Chief Financial Officer
of Premier Commerce and Kevin O'Brien, Chief Operating Officer of Premier
Commerce, respectively. In addition, upon completion of the Merger, options
for an aggregate of 125,000 shares of Common Stock shall be issued in equal
number to the five directors of the holding company, who shall be the
directors serving on AmazeScape's board of directors immediately before the
Merger. All other options available under the 2000 Plan may be awarded to
any eligible persons as described below. Other than as stated in this
paragraph, no options have been granted under the Plan, and no commitment
has been made regarding the granting of options under the Plan.
2. ELIGIBILITY. Options intended to be non-qualified options may be
granted only to directors, officers and other salaried key employees of
Premier Concepts, or any subsidiary corporation or parent corporation of
Premier Concepts now existing or hereafter formed or acquired. Options
intended to be incentive options may be granted only to salaried key
employees of Premier Concepts or any subsidiary corporation or parent
corporation now existing or hereafter formed or acquired, and not to any
director or officer who is not also an employee. At February 1, 2000,
approximately 13 persons would be eligible to participate in the 2000 Plan
(assuming that the merger had been completed on such date).
3. ADMINISTRATION. The 2000 Plan will be administered by a committee
composed of not less than two directors appointed by the board of
directors.
Subject to the terms of the 2000 Plan, the committee has the
authority: (i) to determine the eligible persons to whom options shall be
granted, the time when such options shall be granted, the number of shares
which shall be subject to each option, the purchase price or exercise price
of each share which shall be subject to each option, the periods during
which such options shall be exercisable (whether in whole or in part) and
the other terms and provisions with respect to the options (which need not
be identical); (ii) to determine, in accordance with standards set forth in
the 2000 Plan, the fair market value of the Common Stock underlying the
options; (iii) to construe the 2000 Plan and options granted thereunder;
(iv) to accelerate or defer (with the consent of the optionee) the exercise
of any option,
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consistent with the provisions of the 2000 Plan; (v) to authorize any
person to execute on behalf of Premier Concepts any instrument required to
effectuate the grant of an option; and (vi) to prescribe rules and
regulations relating to the 2000 Plan; (vii) to make all other
determinations deemed necessary or advisable for the administration of the
2000 Plan.
4. TERM. The 2000 Plan will become effective as described above and
will remain in effect, unless sooner terminated by the board of directors,
until December 31, 2009. Options may be granted under the 2000 Plan at any
time while the 2000 Plan shall remain in effect.
5. TERM OF OPTIONS. The term of an option granted under the 2000 Plan
shall be determined by the committee but may not exceed ten years from the
date of grant (or five years in the case of an option intended to be an
incentive option to a participant who owns more than ten percent of the
voting stock of Premier Concepts). An option may not be assigned except by
will, by the laws of descent and distribution and may not be exercised more
than one year following an optionee's death. Except as the committee
otherwise determines in a particular case, options held by a participant
whose employment with Premier Concepts or a subsidiary terminates for
reasons other than (i) retirement at the normal retirement date then in
effect for employees of Premier Concepts or such subsidiary, (ii)
termination by Premier Concepts without cause, (iii) disability, or (iv)
death shall terminate upon such participant's termination of employment. An
optionee whose employment is terminated by Premier Concepts without cause
or due to retirement may exercise the option for a period of three months
after the termination of his service to Premier Concepts and an optionee
whose employment ends due to his disability may exercise the option for a
period of one year after the termination of his service.
6. EXERCISE PRICE. The exercise price of options granted under the
2000 Plan is determined by the committee administering the 2000 Plan,
provided that, in the case of options intended to constitute incentive
stock options under Section 422 of the Code, the exercise price may not be
less than the fair market value of the Common Stock on the day of grant
(or, in the case of options intended to be incentive options granted to a
participant who owns more than ten percent of the outstanding Common Stock
of Premier Concepts, the exercise price may not be less than 110% of such
fair market value).
7. EXERCISE; PAYMENT. Options granted under the 2000 Plan may be
immediately exercisable, except for options granted to officers, directors
and other persons subject to Section 16 of the Securities Exchange Act of
1934, as amended, which may not become exercisable until the expiration of
six months after issuance. The aggregate exercise price due upon the
exercise of an option granted under the 2000 Plan may be paid in cash or by
the tender of such other consideration (including Common Stock of Premier
Concepts) having a fair market value on the date of exercise, equal to the
cash exercise price otherwise payable as the committee may determine.
8. OPTION DOCUMENT. All options granted under the 2000 Plan shall be
evidenced by a written option document consistent with the terms of the
2000 Plan.
9. AMENDMENT. The 2000 Plan may be amended from time to time by the
board of directors, provided that shareholder approval is required for any
change which would (i) materially increase the benefits available to
participants in the 2000 Plan; (ii) materially increase the number of
shares for which options may be granted under the 2000 Plan; or (iii)
materially modify the requirements for participation in the 2000 Plan.
10. TAX CONSEQUENCES. Options granted under the 2000 Plan to
employees of Premier Concepts or its subsidiaries may be, in the discretion
of the committee, either incentive options or non-incentive options for
federal income tax purposes. A recipient of an incentive option will not
recognize taxable income upon the grant or exercise of the incentive
option. However, the amount by which the fair market value of the
underlying Common Stock exceeds the exercise price on the date of exercise
will be treated as an item of tax preference and included in the
computation of the optionee's alternative minimum taxable income in the
year he exercises the incentive option. An optionee will recognize long
term capital gain or loss upon the disposition of Common Stock acquired
upon the exercise of an incentive option provided that the optionee does
not dispose of such Common Stock within two years after the granting of
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such incentive option, or within one year after the exercise of such
incentive option. If such holding periods are satisfied, Premier Concepts
will not be allowed a deduction by reason of the grant or exercise of an
incentive option.
Generally, a recipient of a non-incentive option granted under the
2000 Plan will not recognize taxable income at the time of grant but will
recognize ordinary income upon exercise in an amount equal to the
difference between the fair market value of the Common Stock acquired (on
the date of exercise) and the aggregate exercise price. Premier Concepts
will receive a deduction at that time in like amount. Upon the disposition
of Common Stock acquired upon the exercise of a non-incentive option, the
optionee will recognize long term or short term capital gain or loss in an
amount equal to the difference between the amount realized and such
optionee's basis in the Common Stock sold. Such basis will generally be the
fair market value of the Common Stock sold on the date it was acquired
through option exercise.
The foregoing description of the 2000 Plan is qualified in its
entirety by reference to the 2000 Plan attached as Appendix C to this Proxy
Statement/Prospectus, which is incorporated herein by reference.
The market price of Premier Concepts' Common Stock at February 1,
2000, determined by reference to the closing sale price of the Common Stock
on such date on the Nasdaq SmallCap Market, was $12.625.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE PROPOSAL TO APPROVE THE
ADOPTION OF THE 2000 PLAN.
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AMENDMENT OF PREMIER CONCEPTS, INC.
INCENTIVE STOCK OPTION PLAN TO INCREASE THE
NUMBER OF SHARES AVAILABLE FOR OPTION THEREUNDER
At a meeting held on February 3, 2000, the board of directors of Premier
Concepts amended the Premier Concepts, Inc. Incentive Stock Option Plan (the
"Incentive Plan"), subject to the approval of the shareholders of Premier
Concepts and to certain other conditions described below, to increase from
165,000 to 272,500 the number of shares of Common Stock for which options may be
granted thereunder.
The purpose of the Incentive Plan is to enable Premier Concepts to afford
certain of its directors, executive officers and key employees and the
directors, executive officers and key employees of any subsidiary corporation or
parent corporation of Premier Concepts who are responsible for its continued
growth an opportunity to acquire a proprietary interest in Premier Concepts and
thus to create in such directors, executive officers and key employees an
increased interest in, and a greater concern for, its welfare. The Incentive
Plan is intended to promote a close identity of interests between Premier
Concepts and its directors and employees as well as a means to attract and
retain outstanding management.
The Incentive Plan became effective on and was approved by the
shareholders of Premier Concepts on .
The primary terms of the Incentive Plan (as proposed to be amended) are as
follows:
1. NUMBER OF SHARES. The aggregate number of shares of Common Stock
for which options may be granted under the Incentive Plan is 272,500, an
increase from 165,000.
2. ELIGIBILITY. Options intended to be non-qualified options may be
granted only to directors, officers and other salaried key employees of
Premier Concepts, or any subsidiary corporation or parent corporation of
Premier Concepts now existing or hereafter formed or acquired. Options
intended to be incentive options may be granted only to salaried key
employees of Premier Concepts or any subsidiary corporation or parent
corporation now existing or hereafter formed or acquired, and not to any
director or officer who is not also an employee. At February 1, 2000,
approximately 9 persons were eligible to participate in the Incentive Plan
and approximately 9 persons were participating in the Incentive Plan.
3. ADMINISTRATION. Although the Incentive Plan contemplates
administration by a committee composed of not less than two directors
appointed by the board of directors, no such committee has been
constituted. Accordingly, the date the Incentive Plan has been administered
by the full Premier Concepts board of directors.
Subject to the terms of the Incentive Plan, the board of directors (or
the committee, if constituted) has the authority: (i) to determine the
eligible persons to whom options shall be granted, the time when such
options shall be granted, the number of shares which shall be subject to
each option, the purchase price or exercise price of each share which shall
be subject to each option, the periods during which such options shall be
exercisable (whether in whole or in part) and the other terms and
provisions with respect to the options (which need not be identical); (ii)
to determine, in accordance with standards set forth in the Incentive Plan,
the fair market value of the Common Stock underlying the options; (iii) to
construe the Incentive Plan and options granted thereunder; (iv) to
accelerate or defer (with the consent of the optionee) the exercise of any
option, consistent with the provisions of the Incentive Plan; (v) to
authorize any person to execute on behalf of Premier Concepts any
instrument required to effectuate the grant of an option; and (vi) to
prescribe rules and regulations relating to the Incentive Plan; (vii) to
make all other determinations deemed necessary or advisable for the
administration of the Incentive Plan.
4. TERM. The Incentive Plan became effective on November 9, 1992 and
will remain in effect, unless sooner terminated by the board of directors,
until December 31, 2003. Options may be granted under the Incentive Plan at
any time while the Plan shall remain in effect.
5. TERM OF OPTIONS. The term of an option granted under the Incentive
Plan shall be determined by the committee but may not exceed ten years from
the date of grant (or five years in the case of an option intended to be an
incentive option to a participant who owns more than ten percent of the
voting
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stock of Premier Concepts). An option may not be assigned except by will,
by the laws of descent and distribution and may not be exercised more than
one year following an optionee's death. Except as the committee otherwise
determines in a particular case, options held by a participant whose
employment with Premier Concepts or a subsidiary terminates for reasons
other than (i) retirement at the normal retirement date then in effect for
employees of Premier Concepts or such subsidiary, (ii) termination by
Premier Concepts without cause, (iii) disability, or (iv) death shall
terminate upon such participant's termination of employment. An optioned
whose employment is terminated by Premier Concepts without cause or due to
retirement may exercise the option for a period of three months after the
termination of his service to Premier Concepts and an optioned whose
employment ends due to his death or disability may exercise the option for
a period of one year after the termination of his service.
6. EXERCISE PRICE. The exercise price of options granted under the
Incentive Plan is determined by the committee administering the Incentive
Plan, provided that, in the case of options intended to constitute
incentive stock options under Section 422 of the Code, the exercise price
may not be less than the fair market value of the Common Stock on the day
of grant (or, in the case of options intended to be incentive options
granted to a participant who owns more than ten percent of the outstanding
Common Stock of Premier Concepts, the exercise price may not be less than
110% of such fair market value).
7. EXERCISE; PAYMENT. Options granted under the Incentive Plan may be
immediately exercisable, except for options granted to officers, directors
and other persons subject to Section 16 of the Securities Exchange Act of
1934, as amended, which may not become exercisable until the expiration of
six months after issuance. The aggregate exercise price due upon the
exercise of an option granted under the Incentive Plan may be paid in cash
or by the tender of such other consideration (including Common Stock of
Premier Concepts) having a fair market value on the date of exercise, equal
to the cash exercise price otherwise payable as the committee may
determine.
8. OPTION DOCUMENT. All options granted under the Incentive Plan
shall be evidenced by a written option document consistent with the terms
of the Incentive Plan.
9. AMENDMENT. The Incentive Plan may be amended from time to time by
the board of directors, provided that shareholder approval is required for
any change which would (i) materially increase the benefits available to
participants in the Incentive Plan; (ii) materially increase the number of
shares for which options may be granted under the Incentive Plan; or (iii)
materially modify the requirements for participation in the Incentive Plan.
10. TAX CONSEQUENCES. Options granted under the 2000 Plan to
employees of Premier Concepts or its subsidiaries may be, in the discretion
of the committee, either incentive options or non-incentive options for
federal income tax purposes. A recipient of an incentive option will not
recognize taxable income upon the grant or exercise of the incentive
option. However, the amount by which the fair market value of the
underlying Common Stock exceeds the exercise price on the date of exercise
will be treated as an item of tax preference and included in the
computation of the optionee's alternative minimum taxable income in the
year he exercises the incentive option. An optionee will recognize long
term capital gain or loss upon the disposition of Common Stock acquired
upon the exercise of an incentive option provided that the optionee does
not dispose of such Common Stock within two years after the granting of
such incentive option, or within one year after the exercise of such
incentive option. If such holding periods are satisfied, Premier Concepts
will not be allowed a deduction by reason of the grant or exercise of an
incentive option.
Generally, a recipient of a non-incentive option granted under the
2000 Plan will not recognize taxable income at the time of grant but will
recognize ordinary income upon exercise in an amount equal to the
difference between the fair market value of the Common Stock acquired (on
the date of exercise) and the aggregate exercise price. Premier Concepts
will receive a deduction at that time in like amount. Upon the disposition
of Common Stock acquired upon the exercise of a non-incentive option, the
optionee will recognize long term or short term capital gain or loss in an
amount equal to the difference between the amount realized and such
optionee's basis in the Common Stock sold. Such basis will
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generally be the fair market value of the Common Stock sold on the date it
was acquired through option exercise.
Currently, there are no options available for grant under the
Incentive Plan. It is proposed that the Incentive Plan be amended to
increase from 165,000 to 272,500 the number of shares of Common Stock for
which options may be granted thereunder. If the amendment is approved,
there will be available 107,500 shares of Common Stock which Premier
Concepts may issue upon exercise of options which Premier Concepts has
granted or committed to grant under the Incentive Plan.
THE BOARD OF DIRECTORS RECOMMENDS VOTING FOR THE PROPOSAL TO APPROVE
THE ADOPTION OF THE 2000 PLAN.
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THE PREMIER CONCEPTS SHAREHOLDERS MEETING
This Proxy Statement/Prospectus is being furnished to the shareholders of
Premier Concepts in connection with the solicitation of proxies on behalf of the
Premier Concepts board of directors for use at the Premier Concepts Special
Meeting to be held on at the time and place specified in the
accompanying notice of special meeting of shareholders, and at any adjournment
or postponement thereof. The purpose of the Premier Concepts Special Meeting is
to consider and vote upon the following proposals:
- to amend Premier Concepts' Articles of Incorporation to increase its
authorized capital to include 120 shares of Convertible Preferred Stock
(to be issued in the Merger);
- to issue 12,712,851 shares of common stock and 120 shares of Convertible
Preferred Stock as contemplated in the Merger Agreement;
- to amend Premier Concepts' Articles of Incorporation to change the name
of the corporation from "Premier Concepts, Inc." to "AmazeScape.com
Inc.";
- to adopt the 2000 Plan, as contemplated by the Merger Agreement;
- to amend the Incentive Plan to increase from 165,000 to 272,500 the
number of shares of Premier Concepts Common Stock for which options may
be issued thereunder; and
- to transact such other business as may properly come before the Premier
Concepts Special Meeting.
Each copy of this Proxy Statement/Prospectus mailed to holders of Premier
Concepts Common Stock is accompanied by a form of proxy for use at the Premier
Concepts Special Meeting.
THE BOARD RECOMMENDS A VOTE FOR APPROVAL AND ADOPTION OF ALL OF THE
FOREGOING PROPOSALS.
RECORD DATE; QUORUM
The Premier Concepts board of directors has fixed the close of business on
, 2000 as the record date for the determination of the holders of
Premier Concepts Common Stock entitled to receive notice of and to vote at the
Premier Concepts Special Meeting. The presence, in person or by proxy, of the
holders of a majority of the outstanding shares of Premier Concepts Common Stock
entitled to vote at the special meeting is necessary to constitute a quorum.
Shares of Premier Concepts Common Stock represented at the Premier Concepts
Special Meeting by a properly executed, dated and returned proxy will be treated
as present at the special meeting for purposes of determining a quorum, without
regard to whether the proxy is marked as casting a vote or abstaining.
VOTE REQUIRED
As of the record date for the special meeting, there were 1,559,278 shares
of Premier Concepts Common Stock outstanding, each of which is entitled to one
vote on each matter properly submitted at the Premier Concepts Special Meeting.
Approval of the amendment of Premier Concepts' Articles of Incorporation by
the shareholders of Premier Concepts requires the affirmative vote of the
holders of a majority of all outstanding shares of Premier Concepts Common
Stock. Approval of the issuance of shares of Common Stock and Convertible
Preferred Stock pursuant to the Merger Agreement, the adoption of the 2000 Plan
and the amendment of the Incentive Plan each require the affirmative vote of a
majority of the shares of Premier Concepts Common Stock present or represented
and voting at the Premier Concepts Special Meeting.
For voting purposes at the special meeting, only shares affirmatively voted
in favor of approval of the proposals presented at the special meeting will be
counted as favorable votes for such approval. Any broker non-votes and
abstaining votes will not be counted in favor of approval of the proposals
presented at the special meeting. With regard to the proposal to amend Premier
Concepts' Articles of Incorporation, since applicable law requires approval of a
majority of all outstanding shares of Common Stock, broker non-votes and
abstentions will have the same effect as votes cast against the proposals.
Because the proposal to approve the
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issuance of Premier Concepts Common Stock and Convertible Preferred Stock
pursuant to the Merger Agreement requires only approval of a majority of the
shares of Common Stock present or represented and voting at the Premier Concepts
Special Meeting, broker non-votes and abstentions will have no effect on the
results of the voting as long as a quorum is present.
VOTING OF PROXIES
Shares of Premier Concepts Common Stock represented by a proxy properly
signed and received at or prior to the Premier Concepts Special Meeting, unless
subsequently revoked, will be voted in accordance with the instructions thereon.
The persons named as proxies by a shareholder may propose and vote for one or
more adjournments of the special meeting to permit further solicitations of
proxies in favor of approval of the proposals presented at the special meeting;
however, no proxy that is voted against the approval of the proposals will be
voted in favor of any such adjournment. An adjournment proposal requires the
affirmative vote of a majority of the votes cast by holders of Premier Concepts
Common Stock and, therefore, broker non-votes and abstentions will have no
effect.
REVOCABILITY OF PROXIES
The grant of a proxy on the enclosed form does not preclude a shareholder
from voting in person. A shareholder may revoke a proxy at any time prior to its
exercise by submitting a signed written revocation to the assistant secretary of
Premier Concepts , by submitting a signed proxy bearing a later date or by
appearing at the special meeting and voting in person at the special meeting. No
special form of revocation is required. Attendance at the special meeting will
not, in and of itself, constitute revocation of a proxy.
SOLICITATION OF PROXIES
Premier Concepts will bear the cost of the solicitation of proxies from its
shareholders, including the costs of preparing, filing, printing and
distributing this Proxy Statement/Prospectus and any other solicitation
materials that are used. In addition to solicitation by mail, the directors,
officers and employees of Premier Concepts may solicit proxies from shareholders
of Premier Concepts by telephone, the Internet or by other means of
communication. Such directors, officers and employees will not be additionally
compensated but may be reimbursed for reasonable out-of-pocket expenses in
connection with such solicitation. Arrangements will also be made with brokerage
houses and other custodians, nominees and fiduciaries for the forwarding of
solicitation material to the beneficial owners of stock held of record by such
persons, and Premier Concepts will reimburse such custodians, nominees and
fiduciaries for their reasonable out-of-pocket expenses in connection therewith.
THE MATTERS TO BE CONSIDERED AT THE SPECIAL MEETING ARE OF GREAT IMPORTANCE
TO THE PREMIER CONCEPTS SHAREHOLDERS. ACCORDINGLY, PREMIER CONCEPTS SHAREHOLDERS
ARE URGED TO READ AND CAREFULLY CONSIDER THE INFORMATION PRESENTED IN THIS PROXY
STATEMENT/PROSPECTUS, AND TO COMPLETE, DATE, SIGN AND PROMPTLY RETURN THE
ENCLOSED PROXY IN THE ENCLOSED POSTAGE PRE-PAID ENVELOPE.
SHAREHOLDERS SHOULD NOT SEND PREMIER CONCEPTS COMMON STOCK CERTIFICATES
WITH THEIR PROXY CARDS. IF THE PROPOSALS PRESENTED AT THE SHAREHOLDER MEETING
ARE APPROVED BY THE SHAREHOLDERS AND THE MERGER IS COMPLETED, CURRENT
SHAREHOLDERS WILL CONTINUE TO HOLD THEIR EXISTING SHARES OF PREMIER CONCEPTS
COMMON STOCK.
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SOLICITATION OF CONSENTS OF AMAZESCAPE SHAREHOLDERS
GENERAL
The AmazeScape board of directors has unanimously adopted resolutions
proposing, declaring advisable and recommending that the shareholders of
AmazeScape authorize the Merger of a wholly-owned subsidiary of Premier Concepts
into AmazeScape pursuant to which AmazeScape, as the surviving corporation
following the Merger, would continue to operate the existing Internet business
as a subsidiary of Premier Concepts.
At this time, AmazeScape is asking holders of its common stock to consent
to the following proposal:
To approve and adopt the Agreement and Plan of Merger, dated as of February
7, 2000 between AmazeScape, Premier Concepts and Mergersub.
If adopted by the shareholders, the Merger Agreement provides, in part,
for:
- Mergersub to be merged with and into AmazeScape and AmazeScape, as the
surviving corporation after the Merger, to become a wholly-owned
subsidiary of Premier Concepts which subsidiary will continue to develop
and operate AmazeScape's Internet business under the new name "AmazeScape
Operations, Inc.";
- the existing business of Premier Concepts to be transferred to a
newly-formed subsidiary known as "Premier Commerce, Inc.," which will
continue to operate the Premier Concepts business;
- Premier Concepts to change its name to "AmazeScape.com Inc." and
thereafter to operate as a holding company; and
At the effective date of the Merger, if authorized by the shareholders,
holders of the outstanding shares of AmazeScape common stock and holders of its
shares of Series A Preferred Stock shall receive shares of the Common Stock and
the Convertible Preferred Stock of Premier Concepts, respectively, for each such
share held. Each holder of Premier Concepts Common Stock will continue to own
such common stock.
CONSENT PROCEDURE; EFFECTIVENESS; RECORD DATE
Section 78.320 of the General Corporation Law of the State of Nevada states
that, unless otherwise provided in a corporation's articles of incorporation,
any action that may be taken at any annual or special meeting of shareholders,
may be taken without a meeting, without prior notice and without a vote, if
consents in writing, setting forth the action so taken, shall be signed and
dated by the holders of outstanding stock having not less than the minimum
number of votes that would be necessary to authorize or take such action at a
meeting at which all shares entitled to vote thereon were present and voted, and
those consents are delivered to the corporation by delivery to its registered
offices in the State of Nevada, its principal place of business, or an officer
or agent of the corporation having custody of the books in which proceedings of
meetings of shareholders are recorded. AmazeScape's Articles of Incorporation do
not prohibit the use of such consents.
The board of directors of AmazeScape has established the close of business
on , 2000 as the record date for determining shareholders of record
entitled to submit consents.
The proposed Merger will, subject to approval by the shareholders of
Premier Concepts at their special meeting of shareholders to be held
2000, be adopted if properly completed, dated and unrevoked consents approving
the Merger from the holders of record on the record date of shares of common
stock representing at least a majority of the votes represented by all then
outstanding shares of common stock have been delivered to the Secretary of
AmazeScape at its principal place of business, 264 Airmont Avenue, Mahwah, New
Jersey 07430 as of , 2000, the date that consents will be tabulated.
AmazeScape retains the right to extend such date.
If the Merger is adopted by less than unanimous consent of AmazeScape
shareholders, AmazeScape will give prompt notice of the approval of the Merger
to those shareholders who have not returned executed consents to the Merger
proposal to AmazeScape and who, if the action had been taken at a meeting, would
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have been entitled to notice of such meeting if the record date for such meeting
had been the date that written consents signed by a sufficient number of holders
to take the action were delivered to AmazeScape.
VOTING RIGHTS
The unrevoked, signed and dated consents representing at least a majority
of the votes of all outstanding shares of AmazeScape common stock on the Record
Date, are necessary to effect the Merger. On the Record Date, AmazeScape had
outstanding and entitled to vote 12,034,280 shares of common stock, each
entitled to vote upon matters to be acted upon by shareholder vote.
SOLICITATIONS OF CONSENTS
Solicitations of Consents will be made by AmazeScape. AmazeScape will bear
all expenses of this solicitation. Consents will be solicited by mail, telephone
or telecopy and in person. No employee of AmazeScape will receive any additional
compensation for such solicitation.
REVOCATION OF CONSENTS
An executed consent may be revoked by a properly signed and dated written
revocation delivered to AmazeScape at any time before sufficient consents have
been delivered to AmazeScape to authorize the Merger. A revocation may be in any
written form signed by the record holder as long as it clearly states that the
consent previously given is no longer effective. The delivery of a subsequently
dated consent which is properly completed and timely delivered will also
constitute a revocation of any earlier consent. The revocation should be
delivered to the Secretary of AmazeScape at 264 Airmont Avenue, Mahwah, New
Jersey 07430.
DISSENTER'S RIGHTS
Under Nevada law, shareholders are entitled to appraisal rights with
respect to the proposed Merger. See "Dissenter's Rights of AmazeScape
Shareholders."
VOTING INSTRUCTIONS
If you wish to consent to the Merger and were a record holder of AmazeScape
common stock on the record date, please mark the "Consent" box on the
accompanying consent card and sign, date and mail it promptly to the Secretary
of AmazeScape in the enclosed envelope.
If you do not wish to consent to the Merger and were a record holder of
AmazeScape common stock on the record date, you may mark the "Consent Withheld"
box on the accompanying consent card, and sign, date and mail the card in the
enclosed envelope. In addition, by not returning a consent card, a holder of
common stock will be deemed not to have consented to the Merger.
When a shareholder whose consent is solicited specifies a choice with
respect to the Merger, the consent card will be voted in accordance with the
specification so made. If the shareholder has failed to check a box, such
shareholder shall be deemed to be a "Consent" to the Merger.
Since the holders of record on the Record Date of shares representing at
least a majority of the votes represented by all outstanding shares of
AmazeScape common stock must consent to the proposed Merger in order for such
proposal to be adopted, a direction to withhold consent, an abstention or a
broker non-vote has the same effect as a "Consent Withheld" vote with respect to
the proposed Merger.
If a shareholder's shares of AmazeScape common stock are held in the name
of a brokerage firm, bank nominee or other institution, only it can sign a
consent with respect to such shareholder's shares. Accordingly, please contact
the person responsible for your account and give instructions for a consent to
be delivered representing your shares.
THE AMAZESCAPE BOARD OF DIRECTORS RECOMMENDS THAT YOU CONSENT TO THE
PROPOSED MERGER.
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COMPARISON OF SHAREHOLDERS' RIGHTS
AmazeScape is incorporated in the State of Nevada. Shareholders of
AmazeScape, whose rights as shareholders are currently governed by Nevada law
and Amazescape's Articles of Incorporation and By-Laws, will upon effectiveness
of the Merger become shareholders of a Colorado corporation, and their rights
will be governed by Colorado law and Premier Concepts' Articles of Incorporation
and By-Laws. Although it is impractical to note all of the changes in the rights
of the shareholders of AmazeScape resulting from the Merger, the following is a
summary of the more significant of such changes.
SHAREHOLDER VOTING
For a Nevada corporation, only a simple majority (greater than 50%)
shareholder vote is required for any fundamental corporate change, including
mergers and sales of substantially all of the assets. For a Colorado corporation
"existing" before , 1994, such as Premier Concepts, such
fundamental changes require a vote of 2/3rds of the shareholders entitled to
vote unless the articles of incorporation provide otherwise, but Premier
Concepts' Articles of Incorporation require only a single majority (50% plus
one) shareholder vote whenever a 2/3rds vote would otherwise be required under
Colorado corporate law.
A second difference in shareholder voting arises in taking action without a
meeting. In Nevada, a corporate action requiring shareholder approval may be
taken without a meeting, if a majority of the shareholders entitled to vote
thereon consent to such action in writing. In Colorado, a corporate action
requiring shareholder approval may be taken without a meeting only if all
shareholders entitled to vote thereon consent to such action in writing.
DIVIDEND POLICIES
In Nevada and Colorado, the laws pertaining to dividends are the same. The
board has the authority to declare dividends on common stock only if:
(a) dividends on preferred classes of stock, if required, have been paid in
full;
(b) the corporation remains able to pay its debts as they become due in the
usual course of business after the effect of the dividend; and
(c) the corporation's total assets would be less than the sum of its total
liabilities plus the amount needed to satisfy the preferential rights
or preferred shareholders in the event of dissolution.
DISSENTER'S RIGHTS
In Nevada and Colorado, dissenter's rights are basically the same. Most
importantly, if: (i) the securities of the class entitled to vote are listed on
a national securities exchange or are included on the Nasdaq National Market
System or (ii) there are more than 2,000 shareholders of record, there is no
dissenter's right where the merger is (x) with another company listed on a
national securities exchange or the Nasdaq National Market System or (y) where
such company has 2,000 shareholders of record and (z) nothing other than cash or
stock or a combination is being tendered in the merger.
In Nevada, but not in Colorado, if a corporate action creating dissenter's
rights is taken without a meeting of the shareholders, the corporation shall
notify in writing all shareholders entitled to dissent that the action was taken
and shall send them a written dissenter's notice ten (10) days after
effectuation of the corporate action, setting forth the procedure for the
dissenting shareholders to follow to make demand for payment. The corporation
shall pay the fair value of the dissenting shareholder's shares, as determined
by the corporation, within thirty (30) days after receipt of demand for payment.
In Colorado, a dissenting shareholder has a similar right to submit an assertion
of fair value, and if there is no agreement, the court may determine fair value.
CORPORATE GOVERNANCE
Except as noted below, corporate governance laws and procedures in Nevada
and Colorado are similar.
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In Nevada, directors may be removed by a vote of 2/3rds of the shareholders
entitled to vote, whereas in Colorado directors may be removed by majority vote
of the shareholders at a meeting called for such purpose. In both states, vacant
director positions may be filled by appointment by the remaining board.
In Nevada, the board of directors, without a vote of the shareholders, may
approve and effectuate a reverse split or recapitalization of the outstanding
shares -- pro rata. In Colorado, the law requires a shareholder vote to
accomplish a reverse split of shares.
In Nevada, a person holding or representing 15% or more of the outstanding
shares may, on at least 5 days' notice, inspect the books and financial records
of the corporation. In Colorado, any shareholder may, during reasonable business
hours and upon 5 days' written notice, inspect the books and financial records
of the corporation.
TAKEOVER BIDS
In Nevada, unless the Articles of Incorporation provide that the
anti-takeover sections of the Nevada Revised Statutes (NRS 78.378 to 78.3793) do
not apply, any person or group acting together who acquire one fifth (1/5) or
more of the outstanding shares of a company (the "Control Shares") must submit a
takeover statement to the other shareholders. The Control Shares may not be
voted in any takeover attempt, unless a resolution authorizing the Control
Shares to so vote is passed by a majority of the non-Control Shares at a special
meeting of shareholders.
Colorado law has no such anti-takeover provisions.
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DESCRIPTION OF PREMIER CONCEPTS CAPITAL STOCK
Premier Concepts is authorized to issue up to 850,000,000 shares of $.002
par value Common Stock and up to 20,000,000 shares of $.10 par value Preferred
Stock ("Existing Preferred Stock"). As of February 1, 2000, 1,559,278 shares of
Common Stock and no shares of Existing Preferred Stock were issued and
outstanding. In connection with the Merger, the shareholders of Premier Concepts
have been asked to approve an amendment of Premier Concepts' Articles of
Incorporation to authorize 120 shares of Convertible Preferred Stock (in
addition to the Existing Preferred Stock which is already authorized).
COMMON STOCK
Each holder of Premier Concepts Common Stock is entitled to one vote for
each share held of record. There is no right to cumulative votes for the
election of directors. The shares of Common Stock are not entitled to
pre-emptive rights and are not subject to redemption or assessment. Each share
of Common Stock is entitled to share ratably in distributions to shareholders
and to receive ratably such dividends as may be declared by the board of
directors out of funds legally available therefor. Upon liquidation, dissolution
or winding up of Premier Concepts, the holders of Common Stock are entitled to
receive, pro rata, the assets which are legally available for distribution to
shareholders. The issued and outstanding shares of Common Stock are validly
issued, fully paid and non-assessable.
EXISTING PREFERRED STOCK
Premier Concepts is authorized to issue up to 20,000,000 shares of Existing
Preferred Stock (exclusive of the Convertible Preferred Stock for which
authorization is sought pursuant to this Proxy Statement/ Prospectus, the terms
for which are described below). The Existing Preferred Stock can be issued in
one or more series as may be determined from time to time by the board of
directors without further shareholder approval. In establishing a series, the
Premier Concepts board of directors shall give to it a distinctive designation
so as to distinguish it from the shares of all other series and classes, shall
fix the number of shares in such series, and the preferences, rights and
restrictions thereof. All shares of any one series shall be alike in every
particular. All series shall be alike except that there may be variation as to
the following: (1) the rate of distribution, (2) the price at and the terms and
conditions on which shares shall be redeemed, (3) the amount payable upon shares
for distributions of any kind, (4) sinking fund provisions for the redemption of
shares, and (5) the terms and conditions on which shares may be converted if the
shares of any series are issued with the privilege of conversion, and (6) voting
rights except as limited by law.
Although there currently are no plans to designate a series of Existing
Preferred Stock, there can be no assurance that a designation will not occur in
the future. As a result, the board of directors could authorize the issuance of
a series of Existing Preferred Stock which would grant to holders preferred
rights to Premier Concepts' assets upon liquidation, the right to receive
dividend coupons before dividends would be declared to Common shareholders, and
the right to the redemption to such shares, together with a premium, prior to
the redemption of Common Stock. Common shareholders have no redemption rights.
In addition, the board of directors could issue large blocks of voting stock to
fend against unwanted tender offers or hostile takeovers without further
shareholder approval.
CONVERTIBLE PREFERRED STOCK
Premier Concepts is seeking shareholder approval for the amendment of its
Articles of Incorporation to provide for the authorization of 120 shares of
Convertible Preferred Stock (to be known as Series B Convertible Preferred
Stock) which is to be issued in connection with Merger.
The proposed terms of the Convertible Preferred Stock are as follows:
STATED VALUE. The stated value of the Convertible Preferred Stock is
$10,000 per share.
LIQUIDATION PREFERENCE. Upon a liquidation or dissolution of Premier
Concepts, the Convertible Preferred Stock is entitled to receive a distribution
before distribution is made on any other class of stock of
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Premier Concepts in an amount equal to $10,000 per share. Holders of Convertible
Preferred Stock are not otherwise entitled to receive any distribution in the
liquidation or dissolution of Premier Concepts.
DIVIDENDS. The Convertible Preferred Stock is entitled to receive
dividends at an annual rate equal to three percent of the stated value of the
Convertible Preferred Stock. Such dividends are cumulative and are payable in
cash or in Common Stock of Premier Concepts, valued at its current market value
on the day prior to the date on which the dividend is declared, provided that no
fractional shares of Common Stock will be issued and cash will be provided in
lieu of any fractional share.
CONVERSION RIGHTS. Each share of Convertible Preferred Stock is
convertible at the holder's option at any time into Common Stock at a conversion
ratio, subject to anti-dilution adjustment, initially equal to the stated value
of the Convertible Preferred Stock divided by $3.25. Thus, one share of
Convertible Preferred Stock initially may be converted into 3,076 shares of
Common Stock (and $2.99 cash in lieu of a fractional share).
VOTING RIGHTS. Each share of Convertible Preferred Stock is entitled to a
number of votes, in any matter coming to a vote of the stockholders generally,
equal to the number of shares of Common Stock into which the Convertible
Preferred Stock is then convertible.
MANDATORY REDEMPTION. The Convertible Preferred Stock is subject to
redemption at any time at the option of Premier Concepts for a redemption price
equal to the sum of its stated value and all accrued, unpaid dividends. If fewer
than all shares of Convertible Preferred Stock are called for redemption,
redemption must be pro-rata among all holders of the Convertible Preferred
Stock.
TRANSFER AGENT AND REGISTRAR
The transfer agent and registrar for the Common Stock is Corporate Stock
Transfer, Inc., Denver, Colorado. Premier Concepts will act as its own transfer
agent and registrar with respect to the Convertible Preferred Stock.
SHARES ELIGIBLE FOR FUTURE SALE
Upon completion of the Merger, 14,272,129 shares of Common Stock will be
outstanding. These shares will be freely tradable without restriction under the
Securities Act, except for the shares held by persons who are then "affiliates"
of Premier Concepts (within the meaning of Rule 144 or Rule 145 promulgated
under the Securities Act). The resale of those shares will be subject to the
limitations of Rule 144 or Rule 145, as applicable. In general, under Rule 144
as currently in effect, persons who may be deemed affiliates would be entitled
to sell within any three-month period a number of shares that does not exceed
the greater of 1% of the then outstanding shares of Common Stock or the average
weekly trading volume of the Common Stock during the four calendar weeks
preceding a sale by such person. Sales under Rule 144 are also subject to
certain provisions relating to the manner and notice of sale and availability of
current public information about Premier Concepts. In general, under Rule 145,
affiliates of would also be subject to the above restrictions on sales of Common
Stock. In addition, a person who has not been an affiliate at any time during
the 90 days immediately preceding a sale, and who has beneficially owned Common
Stock for at least two years, would be entitled to sell such Common Stock under
Rule 144(k) without regard to the volume limitation and other conditions
described above.
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BUSINESS OF PREMIER CONCEPTS
OVERVIEW
Operating under the names "Impostors" and "Elegant Pretenders," Premier
Concepts specializes in the marketing and retailing of high-end reproduction
jewelry ("faux jewelry"), 14-karat gold jewelry with cubic zirconia and other
synthetic stones and sterling silver jewelry with semi-precious and synthetic
stones. Through a national chain of 33 operating retail stores, Premier Concepts
sells jewelry that emulates classic fine jewelry as well as pieces designed by
famous jewelers such as Tiffany & Co.(TM), Cartier(TM), Bulgari(TM) and Harry
Winston(TM). The product line also includes replicas of jewelry owned by
celebrities. Faux jewelry is created with layered gold, cubic zirconia and
Austrian crystal to simulate the look of fine jewelry. Premier Concepts also
sells a collection of genuine sterling silver jewelry featuring semi-precious
and synthetic stones. The products are purchased from several domestic vendors
and from vendors in China, Hong Kong, Italy, Korea, Spain, Taiwan and Thailand.
The Impostors and Elegant Pretenders stores are designed to match the
elegant look of Premier Concepts' products and to provide customers with the
feeling of shopping in an upscale, fine jewelry environment. The stores are
located in shopping malls and tourist locations, currently in Southern
California, Northern California, the states of Arizona, Colorado, Florida,
Louisiana, Maryland, Nevada, New Jersey, Pennsylvania, Virginia, Washington and
in the Washington, D.C. area. The largest and most visible store is located in
the prime retail area of San Francisco's Union Square. Since January 27, 1997,
Premier Concepts has opened thirteen (13) additional retail locations. During
the same period, twelve (12) retail stores were closed due to lease expirations
and unprofitable operations, bringing the total number of stores currently
operating to thirty-three (33).
BUSINESS STRATEGY
In March 1994, Premier Concepts acquired out of bankruptcy substantially
all of the assets and assumed certain liabilities associated with the operation
of a nationwide chain of 27 faux jewelry stores which were then operating under
the trademark "Impostors." In the months following Premier Concepts' entry into
the faux jewelry industry, results of operations continued to deteriorate
principally due to the continuing burden of excessive operating and overhead
expenses, pre-petition and post-petition bankruptcy liabilities, the
unprofitability of certain stores, as well as the continuation of ineffective
marketing and merchandising strategies.
Premier Concepts' business strategy the past four years has included
growing the retail chain in profitable markets, closing unprofitable stores,
remodeling existing stores, development of new marketing channels including
direct mail and Internet sales. Although record revenues of $12,705,602 were
achieved in its fiscal 1999 year, loss from operations increased from $484,030
for the year ended January 25, 1998, to $1,051,573 for the year ended January
31, 1999. Premier Concepts' strategies continue to focus on the leveraging on
its name and goodwill to achieve additional distribution for its products as
well as seeking new retail locations that offer potential for above average
return on investment.
PRINCIPAL PRODUCTS
Premier Concepts' products are comprised of approximately 50% fine jewelry
reproductions and emulations of merchandise inspired by classic designers such
as Cartier(TM), Tiffany & Co.(TM), Bulgari(TM) and Harry Winston(TM), and
approximately 40% of 14-karat gold featuring cubic zirconia and other synthetic
stones and 10% sterling silver with semi-precious stones and cubic zirconia. The
jewelry ranges from solitaire rings and faux pearl necklaces to earrings,
pendants and bracelets. Since the products are set in layered 18-karat gold over
jewelers' bronze or 18-karat gold over sterling silver, the jewelry can be
offered at substantially less cost than the original pieces. The use of cubic
zirconia and other laboratory grown stones offers a more affordable product by
emulating the look and feel of expensive gemstone jewelry.
Approximately 2,500 different jewelry items are offered, with none
representing more than 10% of the total annual sales. As a group, 14-karat gold
items constitute the largest classification, representing 40% of
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total inventory. Throughout the year, individual stores offer between 1,000 and
2,000 different pieces, with certain specialty items being added from time to
time for seasonal or other marketing purposes.
Most of the products are selected from existing inventory offered by
vendors. However, from time to time, purchases are made of exclusive items that
are manufactured under special order for Premier Concepts. Because the products
are high-quality emulations of classic fine jewelry designs that change little
from year to year, no significant problems associated with inventory
obsolescence have been experienced.
REMODELING AND EXPANSION STRATEGY
During the past three years, nine existing stores have been remodeled at an
average cost of $30,000 per store. Further remodeling of existing locations will
depend upon the availability of working capital from future operations, or
additional capital infusion, of which there can be no assurance. Further
remodeling of existing locations will also depend on the lease terms, as well as
the expected return on such leasehold improvements. Since January 26, 1998,
Premier Concepts has opened five additional retail stores and closed six
locations due to unprofitable operations and lease expirations. Further
expansion of the retail chain beyond the current 33 locations will require
additional capital infusion.
In selecting and evaluating new sites, Premier Concepts has developed
criteria that consider local population demographics, customer base, sales per
square foot of other retailers in the area and, most significantly, location. Of
particular focus are centers and malls with a heavy tourist trade. Absent a high
tourist component, a regional mall would be considered only if the location
offered is in a high traffic area with a mix of other fashion tenants. Premier
Concepts also continues to pursue opportunities in casinos and high-profile
hotels. Financial projections for any new proposed site are prepared and any
location where management believes break-even operations cannot be achieved
within a six to twelve month period are rejected. The opening of a new retail
location represents an aggregate capital requirement of approximately $100,000
to $200,000, depending on location and size, which includes initial leasehold
expenses and improvements, purchases of furniture, fixtures and equipment and
initial inventory costs.
OTHER MARKETING AND DISTRIBUTION CHANNELS
Currently, nearly 98% of total revenues are derived from retail store
sales, while the remainder is derived from Internet and catalogue sales. In
October 1996, Premier Concepts developed and completed its web site
"www.impostors.com." In July 1999, it started the process of developing a broad
new e-commerce platform "www.premierjewelry.com" from which to showcase existing
and new concepts. While Premier Concepts' first web site simply established its
Internet presence, the new site is intended to serve as a platform from which it
can increase market share and penetrate new markets. The new site will also
replace Premier Concepts' print catalogue which was developed in November 1997.
Premier Concepts expects to launch its new e-commerce platform in the first
quarter 2000.
MARKET AND CUSTOMERS
The Impostors' niche bridges the markets between costume and fine jewelry
by offering high-quality reproductions of classic and designer fine jewelry and
also a collection of 14-karat gold and sterling silver with cubic zirconia,
semi-precious and synthetic stones. Faux jewelry distinguishes itself from
traditional fashion jewelry by the quality of the metals, stones and
craftsmanship utilized in the design and manufacturing process. While costume
jewelry is typically price-pointed in the $5 to $30 range, the majority of
Premier's faux jewelry is priced in the $30 to $100 range. The 14-karat gold
collection has price points between $45 to $1,000, with the majority in the $100
to $400 range.
The market for Premier Concepts' products is to a large extent defined by a
knowledgeable customer's desire to have the look, feel and design of classic
fine jewelry and expensive diamond and gemstone jewelry, without the cost. The
target market is women between the ages of 30 and 60 who are either purchasing
jewelry reproductions in place of, or to complement expensive fine jewelry, or
professional women who want the look of fine jewelry but are unwilling or unable
to pay the fine jewelry price tag. This target market is expected to continue to
grow in accordance with the continued increases in the number of women entering
the professional
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workplace. Premier Concepts also expects to benefit from the maturation of the
baby boomer generation that, according to the United States Census Bureau, will
have reached the average age of 45 by the year 2000. It has been Premier
Concepts' experience that the vast majority of its retail customers are women
purchasing for themselves rather than men purchasing for others.
SUPPLIERS AND VENDORS
Premier Concepts purchases its products from vendors who have an
established history of manufacturing high-quality jewelry products. These
vendors offer a standard product line through catalogues and trade shows and
also manufacture certain products specifically for Premier Concepts, for which
Premier Concepts will typically be given a 12 to 18 month exclusivity for that
item by the vendor. Premier Concepts' relationships with its vendors of
high-quality product are considered a component of its strategic advantage over
other competitors. Premier Concepts works closely with its vendors to constantly
upgrade the quality of its products.
Premier Concepts' products are currently being purchased 60% from domestic
vendors and 40% from vendors in Hong Kong, Italy, Korea, Spain, Taiwan and
Thailand. Most of the inventory is purchased from vendors' existing inventory
and designs, while some is manufactured under special order. Orders from foreign
vendors take 6 to 8 weeks to fill, with U.S. vendors delivering in approximately
3 to 4 weeks. Most domestic vendors offer terms of payment of between 30 and 60
days and some offer up to 90 days, while many international vendors require
either prepayment or payment prior to shipment. Premier Concepts continually
investigates new sources of merchandise in order to maximize profit margins.
Premier Concepts considers the identity of its sources of supply to be
proprietary to the extent that a product's quality, source and price bear
directly upon Premier Concepts' competitive advantage. Premier Concepts does not
rely on any single source of supply and could readily obtain product from new
suppliers should any given source become unavailable. Premier Concepts has not
experienced any difficulty in obtaining merchandise and does not anticipate any
future problems or restriction of availability.
COMPETITION
Because Premier Concepts' products address a market niche for the look and
feel of fine jewelry without the cost, it experiences both indirect and direct
competition from others. Indirect competition comes from costume and fashion
jewelry at the low end and fine jewelry on the upper end, with Premier Concepts'
faux jewelry and 14 karat gold with synthetic stones bridging the gap. Premier
Concepts believes its products are superior both in design and quality to
jewelry offered by traditional fashion jewelry retailers. Conversely, Premier
Concepts' advantage over expensive fine gemstone and diamond jewelry is one of
cost without a commensurate sacrifice in appearance or durability.
Premier Concepts competes directly with department stores and other
retailers of faux jewelry, including home shopping channels, and indirectly with
specialty retailers of accessories and related items. Department stores
typically offer lower-end costume and fashion jewelry, or on occasion will offer
higher-end faux jewelry designed by their own exclusive designers. Premier
Concepts' exclusive emphasis on the faux jewelry specialty market niche is
designed to attract the customer who has already decided to purchase designer
inspired jewelry rather than either costume jewelry or the high-cost piece of
genuine fine jewelry. However, Premier Concepts is not alone in this marketing
approach, as there exist a few other chains of retailers offering faux jewelry
in a directly competitive manner. Premier Concepts is aware of only one other
business, N. Landau Hyman, which has a comparable number of specialty retail
stores that focus on the sale of faux jewelry. Other specialty retailers who
focus on the sale of faux jewelry include Elegant Illusions, which has
approximately 25 faux jewelry stores, Mystique which has 4 stores in Florida,
and Diamond Essence which has a retail store in New York and another in Chicago,
and a direct marketing catalogue concentrating exclusively on 14-karat gold
jewelry with faux gemstones. Premier Concepts' advantage, if any, over these
other retailers lies in its relationships with its vendors, some of which it
considers to be highly proprietary, economies of scale offered by Premier
Concepts' ability to purchase large quantities of inventory from vendors who
have certain minimum quantity requirements, and in its store locations.
Nevertheless, in order for Premier Concepts to continue to be competitive, it
must maintain and expand its desirable store locations and distribution channels
and continue to develop strong vendor relations, none of which can be assured.
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INTELLECTUAL PROPERTY
Copyrights, trademarks and trade secrets are the principal protection for
Premier Concepts' products, services and reputation. Premier Concepts owns
federally registered trademarks for the following names: Impostors(R), Impostors
De Classique Copy Jewels(R), Impostors Copy Jewels(R), Elegant Pretenders(R) and
The Latest In Faux(R). All of the trademarks are considered by Premier Concepts
to be valuable property rights. The protection afforded by these intellectual
property rights and the law of trade secrets is believed by Premier Concepts to
be adequate protection for its products and/or services.
As a reseller of emulations and copies of fine designer jewelry, Premier
Concepts must avoid infringing any copyrights or trademarks claimed by the
original designer. A copyright protects the manner of expression of a piece of a
jewelry rather than the idea or concept behind making it. As Premier Concepts'
products do not purport to be exact copies, but rather emulations inspired by
other designs, it believes that the sale of faux jewelry does not, per se,
violate the copyright interest of others. Nevertheless, if a particular jewelry
design is subject to copyright protection, that copyright expires after 75
years, if owned by a corporation, or after 50 years after the creator's death,
if an individual. Prior to 1988, in order for a designer to claim copyright
protection to a piece of jewelry, a copyright notice would have to have been
affixed to the original piece. Thus, any jewelry sold in the United States
before 1988 without a copyright notice is considered to be in the public domain.
However, fine jewelry designed and sold in the United States after 1988 could be
subject to copyright protection without the necessity of a copyright notice on
the original piece. As a result, there is no effective way of determining if a
particular piece of fine jewelry is subject to copyright protection claimed by
its original designer. It is, therefore, important for Premier Concepts to
ensure that its products do not purport to be exact copies of an original, but
only inspired by the original designs.
Although infrequent, it is possible for a designer to claim trademark
protection if it can establish that the customer realizes that a particular
piece of jewelry comes from a particular manufacturer. In order to be claimed,
however, a registered trademark indication must usually be placed on the
original piece. Premier Concepts takes meticulous precaution to avoid
advertising and marketing strategies that might lead to confusion in the minds
of its customers as to the source or origins of its emulation jewelry.
Premier Concepts has developed and adopted methodologies designed to
prevent its infringement of the intellectual property rights of third parties;
however, there can be no assurance that it will not be subject to claims for
inadvertent infringement from time to time. While there have been only four
instances of claimed infringement in the past, when Premier Concepts has
received notice of inadvertent infringement, it has been its policy to
voluntarily cease and desist selling the particular product. As an average store
has more than 1,000 different items of jewelry on display and offered for sale,
Premier Concepts has not experienced, and does not expect to experience, any
material adverse effects on its revenues in these instances.
LICENSE ARRANGEMENTS
Premier Concepts has granted a total of four licenses to former Impostors
franchisees granting to them the right to use the Impostors(R) trademark in a
total of four retail locations for a period of one year. Each license requires
the payment of $5,000 per store per year, and is renewable annually at the
discretion of Premier Concepts. It is not expected that these license
arrangements will represent a material portion of Premier Concepts' future
activity. Premier Concepts has also licensed the use of the Impostors(R) name to
individuals in Brazil who markets Premier Concepts' products on a retail and
wholesale basis.
EMPLOYEES AND CONSULTANTS
Premier Concepts currently has approximately 85 full-time and 110 part-time
employees, of which 19 are employed in Premier Concepts' corporate offices.
Additional part-time employees are typically hired during the peak holiday
season. A manager and assistant manager, as well as one or more sales personnel,
staff each retail store. Premier Concepts also has two regional store managers
(East and West Coasts). Store managers are hired and supervised by the regional
managers. All management and staff personnel are employed directly by Premier
Concepts.
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In February 1999, Premier Concepts entered into Employment Agreements with
its President, Sissel Eckenhausen, its Chief Financial Officer, Todd Huss, and
its Chief Operating Officer, Kevin O'Brien. Each Employment Agreement has a term
of three years.
In March 1999, Premier Concepts entered into a Management Services
Agreement with Infusion Capital Partners, LLC ("Infusion") for the provision of
financial advisory services. Such agreement was extended in November 1999, for a
2-year term commencing January 1, 2000. Premier Concepts is also party to an
E-Commerce Services Agreement with MeridianTelesis, LLC, an Internet services
company that is an affiliate of Infusion.
SEASONALITY
Premier Concepts' business is highly seasonal with its mall locations
generating approximately 20% of revenues during the December holiday season.
Premier Concepts' 15 tourist locations experience fluctuations, based upon such
factors as seasonality, economic conditions and other factors affecting tourism
in their particular locations.
PROPERTIES
Premier Concepts currently maintains executive offices at 3033 S. Parker
Road, Suite 120, Aurora, Colorado 80014. The offices consist of 6,890 square
feet, which Premier Concepts holds under a 5-year lease expiring in the year
2003, for a rental of $7,464 per month. Premier Concepts' executive offices
represented the culmination of a strategic plan to close its executive offices
in San Francisco, California to reduce operating expenses. Premier Concepts
expects the move to represent substantial savings over the next several years.
Premier Concepts' 33 current retail locations are operated under commercial
leases with expiration dates ranging from 1999 to 2012. Store size varies from
310 to 1,200 square feet with annual sales ranging from $200,000 to $1,600,000.
Each lease requires the payment of a minimum base rent and additional payments
for operating expenses, taxes, insurance and, in some cases, an additional rent
based upon a percent of gross sales. On a daily basis, sales, margin and
inventory turnover for each store location are monitored. This information is
used not only to develop criteria for additional store expansions but also to
determine acceptable parameters for lease renewals as they arise. In the
ordinary course of business, Premier Concepts is continually engaged in
discussions with its various commercial landlords over issues that arise from
time to time under the leases. All of the existing commercial retail leases are
in full force and effect as of the date of this Proxy Statement/ Prospectus.
LEGAL PROCEEDINGS
Premier Concepts from time to time is involved in commercial disputes in
the ordinary course of business with vendors, landlords and other parties, which
on occasion become the subject matter of litigation. At the present time, except
as set forth below, Premier Concepts is not a party to any legal proceedings
outside of the ordinary course of business or which would have a material
adverse impact upon Premier Concepts' operations or properties.
Premier Concepts has been named as a defendant in a civil action filed in
the Supreme Court of the State of New York, County of Onondaga on May 21, 1999.
The lawsuit was brought by EkleCo, as plaintiff, against Premier Concepts, and
asserts claims against Premier Concepts for rent and other sums due under the
commercial lease for its retail store located in the Palisades Center in West
Nyack, New York. Premier Concepts has denied liability and on July 27, 1999
Premier Concepts filed a counter claim against the landlord asserting breach of
contract, false representation and fraud in the inducement in Premier Concepts
to enter into the lease. Premier Concepts intends to vigorously defend the
action and prosecute its counterclaims. Based upon its assessment of the facts
and consultations with legal counsel, management of Premier Concepts believes
that the likelihood of a material adverse outcome in the matter is remote.
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS OF PREMIER CONCEPTS
The following discussion and analysis should be read in conjunction with
the Financial Statements and Notes thereto appearing elsewhere in this Proxy
Statement/Prospectus.
RETAIL FISCAL YEAR
The method of financial reporting is a fifty-two to fifty-three (52-53)
week fiscal year ending on the last Sunday in January of each year. Likewise,
reporting quarters end on the Sunday closest to the calendar end of April, July
and October. Each reporting quarter contains 13 weeks of operations. Fiscal year
ended January 31, 1999 contained fifty-three weeks of operations.
LIQUIDITY AND CAPITAL RESOURCES
October 31, 1999 Compared to January 31, 1999
At October 31, 1999, the cash balance of $137,703 was approximately 38%
less than the cash balance of $221,273 at January 31, 1999.
On March 11, 1999, Premier Concepts received approximately $221,000 in
proceeds from the sale of 176,615 shares of Common Stock. On June 30, 1999,
approximately $279,000 was received from the sale of 223,385 shares of Series A
Preferred Stock, $.10 par value per share. All of such shares of Series A
Preferred Stock were converted to shares of Common Stock at a conversion price
of $1.25 per share. (See detail discussion above in the Notes to Financial
Statements.) These funds are being used for the development of Premier Concepts'
e-commerce business and for the reduction of the principal balance of the Bank
Note as discussed below, as well as for general working capital.
On April 1, 1999, Premier Concepts made a principal reduction of $112,000
on the note payable (Bank Note) with a Colorado financial institution. Upon
maturity on May 28, 1999, the Bank Note was renewed. The renewed note bears
interest at the bank's prime lending rate plus 1.5% and requires monthly
payments of $1,000 plus accrued interest, beginning in June, 1999 and continuing
until the maturity date of June 20, 2000. A one-time principal payment of
$37,000 is due on December 20, 1999. All fees and financial covenants have been
waived until maturity on June 20, 2000. The Bank Note principal balance of
$443,000 is classified as short-term debt at October 31, 1999.
On January 31, 1999, $122,000 of accounts payable relating to the spring
1998 construction of the store at Palisades Center in West Nyack, New York was
converted to a long-term note. The note requires monthly installments of $5,000
including principal and interest at 10%, with a single payment of $35,000 due
January 1, 2000. The principal balance of $89,154 at October 31, 1999 is
classified as current debt.
During the nine months ended October 31, 1999, merchandise inventories
increased $100,172, or approximately 5%, from $1,975,595 at January 31, 1999 to
$2,075,767 at October 31, 1999. This increase reflects seasonal purchasing in
preparation of the 1999 holiday shopping season.
Prepaid expenses and other current assets increased $67,781, from $97,295
at January 31, 1999 to $165,076 at October 31, 1999. The increase is primarily
the result of costs accrued and paid with respect to a Management Services
Agreement executed on March 11, 1999. The agreement provides for certain
consulting services including arrangement of the first and second equity
fundings as discussed above, as well as strategic, operational and investment
banking advice. The total cash amount of the consulting agreement is $50,000,
and an additional $27,000 has been capitalized as the imputed value of the
warrant to purchase 25,000 shares of common stock at $1.25 per share as
discussed above in the Notes to Financial Statements. The costs of the agreement
are being amortized over one year and, at October 31, 1999, had an amortized
book value of approximately $28,000. On November 1, 1999, the Management
Services Agreement was extended for an additional two years through December
2002.
Also included in prepaid expenses and other current assets is approximately
$24,000 of costs associated with the replacement of Premier Concepts' point of
sale computer systems at all retail stores, and a point of
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sale and inventory control software conversion completed in September 1999.
These costs are being amortized over three years.
As a result of the foregoing, current assets increased by $84,383, from
$2,294,163 at January 31, 1999, to $2,378,546 at October 31, 1999.
As of October 31, 1999, approximately $95,000 had been invested to design
and construct a new e-commerce web site, which is expected to be launched in
December 1999. Also, during the nine months ended October 31, 1999,
approximately $40,000 was invested in computer equipment and fixture
improvements at the Premier Concepts' corporate offices in Aurora, Colorado.
Other asset additions include $11,500 invested to develop additional design
concepts for future retail expansion, approximately $20,000 in minor
improvements in existing retail locations, and $13,750 associated with securing
the lease for a retail store location in the new Aladdin Hotel and Casino in Las
Vegas, Nevada. This store is expected to open in the summer of 2000. The total
investments made during the nine months ended October 31, 1999 of $186,395, as
compared to the $760,194 invested in property and equipment for the nine months
ended October 25, 1998. These investments consisted of leasehold improvements in
connection with the remodeling of the stores in Palm Desert and Pleasanton,
California, and in Menlo Park, New Jersey, as well as four new locations at the
Riverwalk in New Orleans, Louisiana, Franklin Mills in Philadelphia,
Pennsylvania, Palisades Center in West Nyack, New York, and the Fashion Outlet
in Primm, Nevada.
Based on the foregoing, property and equipment, net of accumulated
depreciation, decreased approximately $178,000, from $2,699,376 at January 31,
1999, to $2,521,702 at October 31, 1999.
Premier Concepts' trademark assets, representing the goodwill of the
Impostors(R) trademark and other intellectual property, was acquired as part of
Premier Concepts' acquisition of the Impostors retail chain in 1994. This asset
is being amortized over a 10-year period and had an amortized book value of
$53,733 at October 31, 1999.
As of October 31, 1999, Premier Concepts had total outstanding liabilities
of $2,649,023, compared to $2,483,036 at January 31, 1999, representing an
increase of $165,987. Current liabilities increased $176,135, from $2,232,760 at
January 31, 1999 to $2,408,895 at October 31, 1999, primarily reflecting normal
increases in accounts payable and accrued liabilities associated with
merchandise buying and other costs incurred in preparation for the holiday
shopping season, and the reductions of the Bank Note and construction note
payable as discussed above.
In addition to the Bank Note and the store construction note payable, both
as discussed above, the current portion of long-term debt includes notes that
were part of the Impostors retail chain acquisition in February 1994. The total
debt related to these notes was reduced by $7,213 as the result of normal
scheduled payments from $50,142 at January 31, 1999, to $42,929 at October 31,
1999.
Subsequent to October 31, 1999, a settlement was reached on a note payable
that was due for legal services relating to the acquisition of the retail chain
in 1994. On November 3, 1999, $6,000 was paid, and the $30,000 balance of the
note was paid on December 28, 1999.
Accounts payable increased by $209,829, from $965,189 at January 31, 1999
to $1,175,018 at October 31, 1999. Other accrued liabilities increased by
$66,235, from $584,461 at January 31, 1999 to $650,696 at October 31, 1999.
Accounts payable and accrued liabilities represent expenses incurred in the
ordinary course of business in connection with the operation of the Impostors(R)
retail chain.
Working capital (deficit) decreased by $91,752, from $61,403 at January 31,
1999, to $(30,349) at October 31, 1999, primarily as the result of the increase
in merchandise inventories of approximately $100,200, and the increase in
accounts payable and accrued liabilities of approximately $276,000.
Other liabilities increased $38,884, from $201,244 at January 31, 1999, to
$240,128 at October 31, 1999, resulting from the recognition of rental expense
on a straight-line basis on leases that contain predetermined fixed escalations
of the minimum rents during the initial term of the lease.
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<PAGE> 74
The increase in preferred stock of $22,339, the increase in common stock of
$358 from $1,775 at January 31, 1999 to $2,133 at October 31, 1999, and the net
increase in additional paid-in capital of $485,763 from $5,660,263 to $6,146,026
at January 31, 1999 and October 31, 1999, respectively, reflect the proceeds
received from the March and June 1999 equity fundings as discussed above, net of
$14,000 of direct costs of the offerings, and the preferred stock dividend of
$9,540.
As a result of the net loss for the nine months ended October 31, 1999 of
$786,038, the accumulated deficit increased from $3,008,370 at January 31, 1999
to a deficit of $3,794,408 at October 31, 1999. As a result of the loss and
considering the equity funding as discussed above, total shareholders' equity
decreased $277,578, from $2,653,668 at January 31, 1999 to $2,376,090 at October
31, 1999.
Net cash used by operating activities for the nine months ended October 31,
1999 was $234,214, compared with cash provided by operating activities of
$98,476 for the nine months ended October 25, 1998. This change of approximately
$333,000 primarily reflects the effect of the increase in merchandise
inventories of approximately $100,200 for the nine months ended October 31,
1999, compared to the decrease in merchandise inventories of approximately
$289,000 during the comparable nine months ended October 25, 1998, as well as
the reduction of accounts payable and accrued liabilities of approximately
$276,000 for the nine months ended October 31, 1999, as compared to the increase
in accounts payable and accrued liabilities of approximately $572,000 for the
comparable nine months ended October 25, 1998.
Cash used in investing activities of $186,395 primarily represents the
investment in the new e-commerce web site and improvements in computer equipment
at the corporate offices in Aurora, Colorado, as discussed above. This amount
compares with net cash used by investing activities of $760,194 during the nine
months ended October 25, 1998, which primarily represents investments in new
retail stores and remodeling efforts as discussed above.
Net cash provided by financing activities for the nine months ended October
31, 1999 was $337,039, which represents the net proceeds of the equity funding
and payments on notes payable, both as discussed above. This amount compares to
net cash used by financing activities of $44,941 for the nine months ended
October 25, 1998, representing payments on notes payable.
The foregoing resulted in a decrease in the cash position of $83,570, from
$221,273 at January 31, 1999 to $137,703 at October 31, 1999.
On August 20, 1999, a lease was executed to open a retail store in the new
Aladdin Hotel and Casino in Las Vegas, Nevada. This store is expected to open in
the summer of 2000. No additional leases to open retail locations have been
executed. However, possible new locations are currently being evaluated.
Depending on location and size, the opening of a new retail location represents
an aggregate capital requirement of approximately $75,000-$200,000, including
the lease build-outs, fixtures, equipment and inventory. As discussed above, the
funds received in the March and June 1999 equity financing provided new capital
to meet current obligations and provided capital to further Premier Concepts'
business plan.
On November 12, 1999, 228,571 shares of Common Stock were sold to an
investor for $200,000. The proceeds from the equity sale are being held in
escrow and will be used as partial collateral to obtain additional debt
financing of up to $500,000 to provide capital for retail expansion, further
development of e-commerce and general working capital. Additional sources of
capital are currently being evaluated to meet plans for future capital
investment and working capital needs. However, there can be no assurance that
such financing will be secured.
January 31, 1999 Compared to January 31, 1998
On April 25, 1997, a secondary public offering was successfully completed
in which 550,000 units were sold, each unit consisting of one share of Common
Stock and one Class A Common Stock Purchase Warrant (Warrant). Two Warrants
entitle the holder to purchase one share of Common Stock at a price of $10.00
during the three-year period ending April 21, 2000. The net proceeds of
approximately $3.3 million was used to retire $1,120,000 Convertible Promissory
Notes (Convertible Notes). The Convertible Notes were issued on December 27,
1997 as part of a bridge financing, which was used to repurchase shares of
Common Stock
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<PAGE> 75
from certain shareholders and to provide working capital. An additional $273,887
of the net proceeds was used to retire various other short-term notes. Of the
remaining $1.9 million, approximately $1.6 million was used to complete payments
for four stores opened in the fourth quarter of fiscal year ending January 26,
1997, and to pay for the construction of eight new retail stores and four stores
remodeled during the fiscal year ending January 25, 1998.
At January 31, 1999 the cash balance of $221,273 was $584,776, or
approximately 73%, less than the cash balance of $806,049 at January 25, 1998.
The reduction in the cash balance is mainly attributable to approximately
$629,000 in payments to construction vendors for projects completed in the
fourth quarter of fiscal year ended January 25, 1998 and in connection with the
construction and opening of five new locations and three stores remodeled during
the year ended January 31, 1999, as discussed below.
The reduction in the cash balance also reflects a $75,000 principal
reduction on a bank note payable. On May 28, 1998, the original lender was paid
in full and a new Bank Note was executed with a Colorado financial institution.
The Bank Note bore interest at the bank's prime lending rate plus 0.75%. A
principal payment due on December 30, 1998 in the amount of $112,000 was
deferred until April 1, 1999 and paid on that date. The Bank Note matured on May
28, 1999, and discussions are ongoing with the lender regarding renewal terms.
As of January 31, 1999 the entire principal balance of $560,000 is classified as
a current liability. On September 11, 1998 a $50,000 short-term working capital
loan was obtained to provide funds for holiday inventory purchases. The Bank
Note bore interest at 12% and matured on November 11, 1998. The Note was retired
in November 1998.
During the year ended January 31, 1999, merchandise inventories decreased
$332,244, or approximately 14%, from $2,307,839 at January 25, 1998 to
$1,975,595 at January 31, 1999. The decrease reflects tighter inventory controls
and a more focused merchandising effort put forth in the fourth quarter of
fiscal 1999.
Prepaid expenses and other current assets decreased $160,134, from $257,429
at January 25, 1998 to $97,295 at January 31, 1999. The decrease is primarily
attributed to approximately $63,000 of federal and state income tax payments
made in fiscal 1998 that were refunded in fiscal 1999 and approximately $70,000
of insurance claims collected in fiscal 1999 that related to separate incidents
involving a theft of merchandise from a retail location and a random firebombing
incident. In addition, approximately $48,000 of prepaid expenses associated with
the openings of stores in late fiscal 1998 and early fiscal 1999 were expensed
during the year ended January 31, 1999. Included in prepaid expenses and other
current assets at January 31, 1999 is a $25,000 leasehold improvement receivable
from a landlord for the new store located in West Nyack, New York.
As a result of the foregoing, current assets decreased by $1,077,154, from
$3,371,317 at January 25, 1998 to $2,294,163 at January 31, 1999.
During the year ended January 31, 1999, $835,347 was invested in property
and equipment, primarily associated with five new stores, and remodeling of the
existing Impostors locations at the Palm Desert Town Center in Palm Desert,
California, the Stoneridge Mall in Pleasonton, California, and at Menlo Park in
Edison, New Jersey. The following table represents new stores opened during
fiscal year ended January 31, 1999:
<TABLE>
<CAPTION>
STORE LOCATION DATE OPENED
- ----- ------------------- ------------------
<S> <C> <C>
Elegant Pretenders The Riverwalk March, 8, 1998
New Orleans, LA
Impostors Franklin Mills March 19, 1998
Philadelphia, PA
Impostors Palisades Center April 3, 1998
West Nyack, NY
Impostors Fashion Outlet July 15, 1998
Las Vegas, NV
Impostors The Block at Orange November, 19, 1998
Orange, CA
</TABLE>
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<PAGE> 76
In fiscal 1999, management increased its efforts to focus resources on the
retail locations that show positive performance trends. As part of this
strategy, management has adopted an aggressive posture in regard to lease
re-negotiations to facilitate rent relief or lease terminations where a
turnaround in the sales performance appears unlikely. To this end, the kiosk at
Washington National Airport, Washington, D.C., and the stores located in the
Miami International Mall, Miami, Florida and the St. Louis Galleria in St.
Louis, Missouri were closed due to continued poor sales performance. As a result
of these store closures, approximately $77,600 of leasehold improvements was
charged off during the year ended January 31, 1999. Also during the year ended
January 31, 1999, the stores located at Jackson Brewery in New Orleans,
Louisiana, the Dallas Galleria in Dallas, Texas and the Brea Mall in Brea,
California were closed upon expiration of the lease terms.
As a result of the foregoing store openings and closings, property and
equipment, net of accumulated depreciation, increased $265,061, from $2,434,315
at January 25, 1998 to $2,699,376 at January 31, 1999.
Trademark assets, representing the goodwill of the Impostors(R) trademark
and other intellectual property, was acquired as part of the acquisition of
Impostors retail chain in 1994. The asset is being amortized over a 10-year
period and had an amortized book value was $63,033 at January 31, 1999.
Deferred offering costs of $425,423 at January 26, 1997 increased by
$186,717 prior to completion of the secondary public offering on April 25, 1997,
as noted above. These costs, totaling $612,140, were netted against the offering
proceeds.
On January 26, 1997, Premier Concepts recorded a $39,000 deferred tax asset
which resulted from certain net operating loss carryforwards used to offset
taxable book income for the year ended January 26, 1997. The net loss recorded
for the year ended January 25, 1998 resulted in a reversal of the deferred tax
asset due to the uncertainty of future benefits that may result from the asset.
No deferred tax assets have been recorded for the year ended January 31, 1999.
As of January 31, 1999, total outstanding liabilities were $2,483,036,
compared to $2,268,432 at January 25, 1998, requesting an increase of $214,604.
Total current liabilities increased $140,774, from $2,091,986 at January
25, 1998 to $2,232,760 at January 31, 1999. The increase is attributable to the
approximately $155,000 increase in accounts payable and other accrued
liabilities representing expenses incurred in the ordinary course of business.
On January 31, 1999, $122,000 of accounts payable relating to the spring
1998 construction of the store at Palisades Center in West Nyack, New York was
converted to a long-term note. The note requires monthly installments of $5,000,
including principal and interest at 10%, with a single payment of $35,000 due
January 1, 2000. Approximately $79,000 of this note is due in fiscal 2000 and is
classified as a current liability, with the remaining $43,000 classified as long
term debt.
As a result of the foregoing, working capital decreased by $1,217,928, from
$1,279,331 at January 25, 1998 to $61,403 at January 31, 1999.
Long-term debt, net of the current portion, was $49,032 at January 31,
1999, as compared to $14,600 at January 25, 1998. The increase reflects the
installment note discussed above.
As a result of the net loss for the year of $1,059,688, the accumulated
deficit increased from $1,948,682 at January 25, 1998 to $3,008,370 at January
31, 1999. Also as a result of the net loss, total shareholders' equity decreased
from $3,713,356 at January 25, 1998 to $2,653,668 at January 31, 1999.
Net cash provided by operating activities for the year ended January 31,
1999 was $352,329, compared with net cash used in operating activities of
$829,530 for the year ended January 25, 1998. The change was primarily the
result of the decreases in merchandise inventories and other assets and the
increases in accounts payable and other accrued liabilities.
Cash used in investing activities of $835,347 represents investments in
stores, as discussed above. This amount compares with net cash used by investing
activities of $864,520 during the year ended January 25, 1998, which also
represents investments in new stores and remodeled retail locations.
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<PAGE> 77
Net cash used in financing activities for the year ended January 31, 1999
was $101,788, primarily representing the $75,000 principal reduction and
refinancing of the Bank Note, as discussed above, and payments on other notes
payable that were part of the acquisition of the Impostors retail chain in 1994.
The $101,788 used in financing activities compares to net cash provided by
financing activities of $2,288,524 for the year ended January 25, 1998, which
reflects the completion of the secondary offering in April, 1997 and the
retirement of the convertible notes and other long term debt as discussed above.
The foregoing resulted in a decrease in cash and cash equivalents of
$584,776, from $806,049 at January 25, 1998, to $221,273 at January 31, 1999.
At January 31, 1999, Premier Concepts had a net operating loss carryforward
("NOL") for federal tax purposes of approximately $995,000 that may be utilized
to offset future profits; except, however, as a result of the Merger, the NOL
will be lost.
RESULTS OF OPERATIONS
Nine Months Ended October 31, 1999 Compared to Nine Months Ended October 25,
1998
Set forth below is selected summary financial data derived from the
financial statements and financial records.
<TABLE>
<CAPTION>
NINE MONTHS ENDED NINE MONTHS ENDED
OCTOBER 31, 1999 OCTOBER 25, 1998
----------------- -----------------
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total Revenues............................ $8,547,921 $ 8,579,492
Operating income (loss)................... (759,281) (1,362,264)
Net income (loss)......................... (786,038) (1,341,401)
Net income (loss) available to common
shareholders............................ (953,138) (1,341,401)
Net income (loss) per common share........ (.95) (1.51)
Weighted average shares outstanding....... 1,007,509 887,513
STATISTICAL DATA:
Store revenues............................ $8,528,814 $ 8,480,783
Store gross margin........................ 5,976,003 5,760,214
Store operating expenses.................. 5,459,811 5,922,348
Store operating profit (loss)............. 516,192 (162,134)
Corporate overhead operating expenses..... 1,276,467 1,161,802
Gross margin percentage................... 69.9% 67.3%
Comparable same store sales (31 stores)... 7,672,785 7,459,148
Comparable same store sales growth........ 2.9% N/A
</TABLE>
Total revenues for the nine months ended October 31, 1999 were $8,547,921
(36 stores), as compared to $8,579,492 (40 stores) for the comparable period
ended October 25, 1998, a decrease of approximately $31,600, or 0.4 %.
Comparable same store sales were $7,672,785 for the nine months ended October
31, 1999 as compared to $7,459,148 for the comparable period ended October 25,
1998, an increase of approximately $213,600, or 2.9%. The increase was
attributable to increased traffic, merchandise and promotional improvements, as
well as operational changes initiated during the first quarter of 1999.
Sales from wholesale and non-store retail operations were $8,263 and
$89,739, and are included in total revenues for the nine months ended October
31, 1999 and October 25, 1998, respectively.
For the nine months ended October 31, 1999, cost of goods sold was
$2,568,863 and the gross margin was $5,979,058, or 69.9%. For the nine months
ended October 25, 1998, cost of goods sold was $2,803,024 and the gross margin
was $5,776,468, or 67.3%. The 2.6% improvement in gross margin is attributed to
a more focused merchandise mix, and more effective promotional activity during
the nine months ended October 31, 1999 as compared to the same period during
1998.
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<PAGE> 78
Total operating expenses were $6,738,339 for the nine months ended October
31, 1999, compared to $7,102,732 for the period ended October 25, 1998, or 78.8%
and 82.8% of revenues, respectively, representing a decrease of approximately
$364,400 for the comparable period. The majority of these expenses were
comprised of personnel expenses, which amounted to $2,871,354 and $3,018,994 for
the nine months ended October 31, 1999, and October 25, 1998, respectively, a
decrease of approximately $147,600. Occupancy costs of $2,181,903, and
$2,203,926, and general administrative costs of $1,306,713 and $1,400,314 are
included in total operating expenses for the nine months ended October 31, 1999
and October 25, 1998, respectively.
Included in operating expenses are corporate overhead expenses of
$1,276,467, or 14.9% of total revenues, for the nine months ended October 31,
1999, as compared to $1,161,802, or 13.5% of total revenues, for the nine months
ended October 25, 1998, representing an increase of approximately $114,700 for
the comparable period. The increase is primarily attributable to the hiring of a
Chief Operating Officer in November 1998 and to the expenses associated with the
Management Services Agreement as discussed above. It is expected that corporate
overhead will decrease as a percentage of sales as new retail stores and
additional distribution is added. Efforts to continue to improve and utilize
technological resources and control administrative costs are ongoing.
Also included in total operating expenses are depreciation and amortization
expenses that were $378,369 and $377,540 for the nine months ended October 31,
1999 and October 25, 1998, respectively.
During the nine months ended October 25, 1998, three non-performing stores
were closed. Store closing costs of $101,958 included approximately $67,000 of
leasehold write-offs, $30,000 of lease termination fees, and $5,000 of
professional fees associated with the lease termination negotiations. No stores
were closed during the nine months ended October 31, 1999.
As a result of the foregoing, the loss from operations for the nine months
ended October 31, 1999 was $759,281, as compared with a loss from operations for
the nine months ended October 25, 1998 of $1,326,264, an improvement of
approximately $567,000.
Interest expense was $48,991 and $48,485 for the nine months ended October
31, 1999 and October 25, 1998, respectively, and is comprised primarily of
interest charged on the Bank Note discussed above. Interest income was $7,419
and $14,660 for the nine months ended October 31, 1999 and October 25, 1998,
respectively, and results from the daily investing of available cash balances.
Other income was $14,815 and $18,688 for the nine months ended October 31,
1999 and October 25, 1998, respectively, and consists almost entirely of license
fees associated with extension agreements that will allow certain former
franchisees to use the Impostors(R) trademark. The license agreements have a
one-year term expiring in January 2000 and are renewable at Premier Concepts'
option.
Based on the foregoing, the net loss for the nine months ended October 31,
1999 was $786,038, which translates to a net loss per share of $(0.78) before
taking into effect the $167,100 of preferred stock dividends as discussed above,
based on 1,007,509 weighted average shares outstanding, or $(0.95) after
consideration of the preferred stock dividends. This amount compares with a net
loss for the nine months ended October 25, 1998 of $1,341,401, or $(1.51) per
share, based on 887,513 weighted average shares outstanding as of that date.
Based on the foregoing, the net loss available to common shareholders for
the year ended January 31, 1999 was $1,059,688, which translates to a net loss
per common share (basic) of $(1.19) based on 887,513 weighted average common
shares outstanding (basic). This compares with a net loss available to common
shareholders for year ended January 25, 1998 of $587,175, or $(.80) per common
share (basic), based on 735,745 weighted average common shares outstanding
(basic), as of that date.
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<PAGE> 79
Year Ended January 31, 1999 Compared to Year Ended January 31, 1998
Set forth below is selected summary financial data derived from the
financial statements and financial records:
<TABLE>
<CAPTION>
FISCAL YEAR ENDED FISCAL YEAR ENDED
JANUARY 31, 1999 JANUARY 25, 1998
----------------- -----------------
<S> <C> <C>
STATEMENTS OF OPERATIONS DATA:
Total Revenues.............................. $12,705,602 $12,578,683
Operating income (loss)..................... (1,051,573) (484,030)
Net income (loss)........................... (1,059,688) (587,175)
Net income (loss) available to common
shareholders.............................. (1,059,688) (587,175)
Net income (loss) per common share
(basic)................................... (1.19) (.80)
Weighted average shares outstanding
(basic)................................... 887,513 735,745
Net income (loss) per common share
(diluted)................................. (1.19) (.80)
Weighted average shares outstanding
(diluted)................................. 887,513 735,745
STATISTICAL DATA:
Store revenues.............................. $12,525,435 $12,513,058
Store gross margin.......................... 8,505,483 8,746,130
Store operating expenses.................... 7,843,427 7,560,923
Store operating profit...................... 662,056 1,185,207
Corporate overhead operating expenses....... 1,616,834 1,644,877
Gross margin percentage..................... 67.3% 69.7%
Comparable same store sales (36 stores)..... 10,873,262 11,515,725
Comparable same store sales growth.......... (5.6)% N/A
</TABLE>
Total revenues for the year ended January 31, 1999 were $12,705,602, as
compared to $12,578,683 for the year ended January 25, 1998, representing an
increase of $126,919. The increase is primarily due to an increase in wholesale
sales of $108,408, from $56,152 for the year ending January 25, 1998 to $164,560
for the year ended January 31, 1999. Comparable same-store sales were
$10,873,262 for the year ended January 31, 1999, as compared to $11,515,725, a
decrease of approximately $642,463 or 5.6%. Approximately $495,000 of this
decrease occurred during the four months of July through October 1998 and was
primarily attributed to a decrease in traffic in Premier Concepts' seasonal and
tourist locations in California and Florida.
For the year ended January 25, 1998, cost of goods sold was $3,816,330, and
the gross margin was $8,762,353, or approximately 69.7%. For the year ended
January 31, 1999, cost of goods sold was $4,158,271, and the gross margin was
$8,547,331, or approximately 67.3%. The 2.4% decrease in gross margin is
attributed to increased promotional activity to stimulate sales during the first
and second quarters of fiscal 1999.
For the year ended January 31, 1999, total selling, general and
administrative expenses were $8,982,837, compared to $8,769,879 for the year
ended January 25, 1998, or 70.7% and 69.7% of revenues, respectively. A
significant portion of these expenses were comprised of personnel expenses,
which amounted to $4,110,433, or 32.4% of revenues for the year ended January
31, 1999, as compared to $3,999,162, or 31.8% of revenues for the years ended
January 25, 1998. Occupancy costs were $2,935,159 for the year ended January 31,
1999 and $2,832,770 for the year ended January 25, 1998, or 23.1% and 22.5% of
revenues, respectively. Other selling, general and administrative expenses were
$1,937,245, or 15.2% of revenues for the year ended January 31, 1999, as
compared to $1,937,947 for the year ended January 25, 1998 or 15.4% of revenues.
Included in total selling, general and administrative expenses are
corporate overhead expenses of $1,616,834, or 12.7% of total revenues for the
year ended January 31, 1999, as compared to $1,644,877, or 13.1% of total
revenues, for year ended January 25, 1998. It is expected that corporate
overhead will continue to decrease as a percentage of sales as new retail stores
and additional product distribution are added. Efforts to continue to improve
and utilize technological resources and control administrative costs are
ongoing.
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<PAGE> 80
Depreciation and amortization expense was $501,607 for the year ended
January 31, 1999 and $448,620 for the year ended January 25, 1998. The increase
is due to the five new stores opened in fiscal 1999. Store closing costs of
$114,370 and $27,884 for the years ended January 31, 1999 and January 25, 1998,
respectively, include the write-off of leasehold improvements and other fees
associated with the closing of the six retail locations during fiscal 1999 and
the three locations in fiscal 1998, as discussed above.
As a result of the foregoing, the loss from operations for the year ended
January 31, 1999 was $1,051,573, as compared with the loss from operations for
the year ended January 31, 1998 of $484,030.
Interest expense was approximately $62,600 and $143,300 for the years ended
January 31, 1999 and January 25, 1998, respectively. Interest expense for the
year ended January 31, 1999 is comprised primarily of interest related to the
$560,000 Bank Note as discussed above and was partially offset with
approximately $18,000 of interest income earned from the daily investing of
available cash balances. Included in interest expense for the year ended January
25, 1998 was approximately $66,500 attributed to non-recurring interest paid and
deferred financing costs written off upon retirement of the Convertible Notes on
April 25, 1997. Interest expense for the year ended January 25, 1998 was
partially offset by approximately $41,000 of interest income realized from the
short-term investment of cash proceeds from the public offering completed on
April 25, 1997.
For the year ended January 31, 1999, other income was $36,312. Included in
other income is approximately $25,000 of license fees associated with an annual
renewal of license agreements that allows certain former franchisees to use the
Impostors(R) trademark. The license agreements have a one-year term expiring in
January 1999 and are renewable at Premier Concepts' option. Also included in
other income is approximately $13,000 receivable from the U.S. government for
the overpayment of taxes for fiscal 1997 resulting from the carryback of
available net operating losses.
For the year ended January 25, 1998, other income was $37,738.
Approximately $45,600 represents a refund from the State of California for an
adjustment to sales taxes paid in 1994. In addition, other income also included
license fees of $28,500 associated with license agreements that allows certain
former franchisees to use the Impostors(R) trademark.
In the third quarter of fiscal 1998, Premier Concepts was named as a
defendant in a civil action brought in the District Court of the Southern
District of New York. While Premier Concepts believes that it would have been
successful in its defense of this civil action, management's efforts and costs
of such defense could have been significant and may have represented a material
commitment of Premier Concepts' limited working capital. In May 1998, the
litigation was therefore settled by mutual agreement of the parties. Included in
other expenses is $35,000, representing the settlement consummated in May 1998.
Deferred income tax expense of $39,000 for the year ended January 25, 1998
represents the reversal of a deferred tax asset recorded on January 26, 1997, as
discussed above. Because of the uncertainty that future benefits may result from
current operating losses no tax assets have been recorded for the years ended
January 31, 1999 or January 25, 1998.
Based on the foregoing, the net loss available to common shareholders for
the year ended January 31, 1999 was $1,059,688, which translates to a net loss
per common share (basic) of $(1.19) based on 887,513 weighted average common
shares outstanding (basic). This compares with a net loss available to common
shareholders for year ended January 25, 1998 of $587,175, or $(.80) per common
share (basic), based on 735,745 weighted average common shares outstanding
(basic), as of that date.
Future profitability will depend on the ability to further expand the
number of retail locations in profitable markets, the ability to generate
favorable lease cost/sales ratios, the ability to continue to control overhead
expenses and the capability to take advantage of other distribution
opportunities.
In February 2000, the board of directors of Premier Concepts approved the
Merger. The Merger is subject to stockholder approval. At the completion of the
transaction, stockholders of AmazeScape will own approximately 89% of the
combined entity. It is anticipated that this transaction will be accounted for
as a
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purchase business combination. The transaction will be treated as a reverse
merger, with AmazeScape being the surviving company for financial statement
purposes.
Other than the foregoing, management knows of no trends, or other demands,
commitments, events or uncertainties that will result in, or that are reasonably
likely to result in a material impact on the income and expenses of the Company.
YEAR 2000
The Year 2000 problem exists because many computer programs, embedded
systems and components were designed to refer to a year by the last two digits
of the year, such as "99" for "1999." Premier Concepts believes that its
activities to mitigate potential Year 2000 problems have been successful.
However, there are no assurances that the Year 2000 problems incurred by our
vendors will not have a material adverse effect on Premier Concepts' business,
financial condition or results of operations.
IMPACT OF RECENTLY ISSUED ACCOUNTING STANDARDS
In 1998, SFAS No. 133, Accounting for Derivative Instruments and Hedging
Activities, and No. 134, Accounting for Mortgage-Backed Securities Retained
After the Securitization of Mortgage Loans held for Sale by a mortgage Banking
Enterprises were issued. These pronouncements are not expected to impact Premier
Concepts.
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BUSINESS OF AMAZESCAPE
OVERVIEW
Since its incorporation on August 9, 1999, AmazeScape.com Inc., a Nevada
corporation, has developed and operated:
- a multi-lingual Internet portal and online international community web
site and,
- a private label dial-up and high-speed digital subscriber line (DSL)
Internet service provider (ISP).
AmazeScape intends to derive its revenues from selling advertising space on
its portal web site, and from monthly subscription fees received from users of
its ISP services.
Internet Portal
AmazeScape's portal is structured along three dimensions: languages,
services, and content.
- Languages. Currently, AmazeScape provides access via its portal in six
languages: Spanish, French, Italian, Portuguese, Mandarin, and English.
AmazeScape intends to add languages to its portal to enable all its users
to access the Internet in his or her native language. AmazeScape will
also enable its users to access cross-cultural services in his or her
native language. For example, real-time translation in AmazeScape's
multi-lingual chat service permits an Italian to converse with a
Portuguese member of AmazeScape's online community in such a fashion that
each user both sends and receives the conversation in his or her native
language. AmazeScape's long-term goal is to provide users with multi-
language and cross-language interaction with real-time translation.
- Services. The services offered on the portal shall focus on providing
AmazeScape's registered user community with the ability to communicate
freely and effectively with each other. Each user will be offered free
e-mail, free personalized web pages, bulletin and message boards,
classified and personal ads, pen pal and dating interaction. AmazeScape's
short-term plan calls for it to offer full search engine capability to
its users. Long term, AmazeScape intends to offer search engine
capability in each user's native language, multi-language business to
business services, wireless access to its portal, and a multi-language
auction site.
- Content. The content offered on the portal will be focused in providing
AmazeScape's user community with high entertainment value. Initially,
users will be provided with high quality audio and video access to radio,
television, music, sports, fashion, and magazines in the six languages
listed above. Over time, AmazeScape expects to add cooking and recipes,
online interactive games, movies, books, news, finance, technology to its
content package.
Internet Service Provider
The ISP expects to take advantage of the synergies offered by being
integrated with a multi-cultural and multi-language portal by offering dial-up
and high-speed DSL access to the user community. By teaming up with a number of
partners who provide AmazeScape with the ability to effectively outsource the
hardware and infrastructure aspects of being an ISP, AmazeScape can become a
truly national and international ISP. AmazeScape expects to be a private label
reseller of Internet access provided by a number such companies. AmazeScape
expects its online community asset to give it the opportunity to solicit a large
number of potential users of AmazeScape's ISP services. The hardware and
infrastructure provider might otherwise not have access to this client base.
AmazeScape believes that the Internet portal and the ISP together provides
it with an advantage over other companies like America Online Inc. and Yahoo
Inc. because AmazeScape is combining a multi-language portal site with a
low-cost ISP that is currently not available from these other companies.
Additionally, unlike companies such as StarMedia Inc., which offers access in
Spanish and Portuguese and Quepasa.com Inc., which offers access in English and
Spanish. AmazeScape's multi-language portal provides
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its users access in six languages currently, with an intention to expand the
number of languages offered in the future.
AmazeScape's long-term goal is to become a truly global marketer of
Internet access services by forming alliances with a number of providers of
Internet access in countries across the globe. AmazeScape anticipates its
multi-lingual web portal to become a primary destination for Internet users
globally. AmazeScape believes that its business model provides it with
opportunities for future growth.
COMMERCIAL RELATIONSHIPS
AmazeScape has entered into agreements and developed relationships with the
following Internet information providers and service companies:
- License with Netscape Communications Corporation, providing free-use on
AmazeScape's portal of their Open Directory which currently has
approximately 1.3 million links listed.
- License with Universe Corporation, providing multi-lingual chat to its
users utilizing their Java chat client.
- License with e-lingo.com, providing AmazeScape with the ability to offer
its users translated text, translated web pages, translated e-mail, and
translated queries and results.
- A one year contract with New York Internet Center, a provider of
high-speed Internet connectivity, providing hosting, development, and
maintenance services for its web site.
- A one year contract with Meglyn Enterprises Inc., a provider of
translation services, web site design, and web site development services.
- Agreement with Teknosurf.com Inc, providing for the sale of advertising
space on AmazeScape's web site.
- Agreement with Ziplink Inc., providing dial-up and high speed Internet
access services for resale by AmazeScape.
THE INTERNET MARKET
General
The Internet has grown from a few million users who were mostly academics
and military personnel to its current incarnation: a maze of business, personal,
academic and government users that can interact on a global scale in an
efficient manner. The Internet is the fastest growing industry sector in the
world, both in terms of the number of users and the amount of commerce
conducted.
IDC estimates that 95% of US Households will be online by 2002, up from 55%
in 1998. The number of households with access to online services they estimate
will increase from 26 million to 67 million, and the number of users of the
World Wide Web will increase from 97 million users in 1998 to 319 million users
in 2002. In the retailing category alone, Forrester Research sees commerce
increasing from $4.8 billion in 1998 to over $17 billion in 2001.
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AmazeScape seeks to capture the growing number of non-English speaking
Internet users in the world. According to a survey compiled by Nua Internet
Surveys, an online compiler of Internet-related statistics, there are currently
179 million Internet users, as follows:
<TABLE>
<S> <C>
World Total 179.00 million
Africa 1.14 million
Asia/Pacific 26.97 million
Europe 42.69 million
Middle East 0.88 million
Canada & USA 102.00 million
Latin
America 5.29 million
</TABLE>
- ---------------
Source: Nua Internet Surveys
AmazeScape sees this kind of growth as an opportunity to offer this
burgeoning group of users a number of technological advances that will make it
more efficient to communicate, to engage in commerce and market items as well as
to enjoy the increasing amount of time spent online. AmazeScape intends to
target users of five (5) foreign languages initially. Below is a table of
mother-tongue speakers of each respective language that AmazeScape will target:
<TABLE>
<S> <C>
Chinese: 1 billion people
Spanish: 250 million people
Portuguese: 135 million people
French: 70 million people
Italian: 60 million people
</TABLE>
- ---------------
Source: The Cambridge Factfinder
The growth of online communities and other free Internet services
Traditional use of the Web has consisted largely of one-way communications
in which users select and view different Web sites containing
professionally-created content on topics of general interest such as news,
sports and weather. However, there is a growing demand for online community
sites where users can publish content and engage in community activities,
including home page building, and interactive discussion or "chat" forums. In
addition, many users are interested in gaining access to other free services for
entertainment, such as interactive games or video, or for their utility to the
end user, such as e-mail. Online communities provide a medium for such access
and interaction. These communities generate significant volumes of traffic, as
"visitors" tend to return to those sites where they have established an online
presence or have become familiar with the services. According to statistics
published by Media Metrix, a compiler of Internet usage statistics and patterns,
online community sites have recently been one of the fastest growing sectors of
the Web.
Internet Advertising
Growth in the Web has created an important new advertising channel. Tools
not available in traditional advertising media, such as real-time measurement of
"click-throughs" on advertising banners further increase the attractiveness of
Web advertising by giving advertisers instant feedback on campaigns. Jupiter
Communications projects that the dollar value of advertising on the Web is
expected to increase from approximately $3.0 billion in 1999 to approximately
$7.7 billion in 2002. To date, businesses and advertisers have typically used
traditional navigational sites and professionally-created content sites for the
sale and marketing of their products and services online. Online community
sites, however, provide more detailed demographic data provided by its members.
Advertisers can more easily deliver targeted messages in a cost-effective manner
on online community sites.
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MARKETING STRATEGY
AmazeScape expects to target the burgeoning but underserved market of
non-English speaking users of the Internet. The specific need of this target
market is to access Internet services, products and content in the native
language of the user. This market is expected to grow faster than the English
speaking market over the next three to five years. Initially, AmazeScape will
target groups speaking Spanish, Portuguese, French, Italian and Mandarin.
AmazeScape will also make its services and content available in English. In the
long-term, AmazeScape intends to provide its services and content in a large
number of widely spoken languages.
AmazeScape's Internet portal and ISP provides a synergistic, vertically
integrated product line which addresses the target market's needs, providing it
at the lowest cost while generating revenues for AmazeScape.
Most of AmazeScape's competitors in this target market (see those
identified above) provide access in one or two non-English languages only,
without the cross-language access and without the low-cost access (both dial-up
and high speed). AmazeScape provides access in five languages, provides
cross-language access, and is vertically integrated with an ISP. Moreover,
AmazeScape's portal content focuses on entertainment and user interaction which
AmazeScape believes is likely to attract and keep users.
AmazeScape's intends to provide a quality service at a low cost to the
user. AmazeScape's revenue model is geared to capturing advertising revenues
from companies wishing to reach a multi-lingual, multi-cultural user base.
AmazeScape believes that its target market is underserved and expects to provide
companies seeking access to this market with an effective mechanism to reach it.
AmazeScape's portal currently is provided to users free of charge and will
likely be priced at a premium to the advertiser. It is AmazeScape's intention to
price its ISP at the lower end of the pricing spectrum.
AmazeScape's promotion strategy is four-pronged:
- Web advertising
- "Opt-in" and targeted e-mail
- Standard advertising media
- Loyalty factor generates high word-of-mouth promotion.
AmazeScape is developing its portal to deliver its product over a variety
of media, including the following:
- New Internet browsers incorporating state-of-the-art audio/video
technology
- Older browsers
- Cable modems and other high speed delivery methods
- Wireless
AmazeScape also intends to reach a large number of potential users by
partnering with as many ISP wholesalers as is feasible. In this way, AmazeScape
expects to be able to reach a very large percentage of its target market.
Not only is AmazeScape's focus on delivering its product to the user but
also in being able to attract advertisers by providing them with a premium
product. AmazeScape also expects to partner with a number of web advertising
agencies in order to reach as large a number of advertisers as possible.
BUSINESS STRATEGY
AmazeScape intends to target a large number of different cultural groups,
to emphasize the development of a targeted advertising model, and to benefit
from the synergies offered by a combined portal and ISP product line.
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AmazeScape's strategy is broken down into two synergistic products:
Internet Portal and ISP. The tactics and programs being implemented to drive the
success of AmazeScape's business strategy are outlined here:
<TABLE>
<CAPTION>
STRATEGY TACTIC PROGRAM
- -------- ------ -------
<S> <C> <C>
Portal............. Drive a large number of visitors to - Traditional Media
the portal on a daily basis - Web Banner Ads
- Free Stuff
- Promotions
- Contests
- Many Languages
- Multi-language
- Cross-language
- Many Services
- Free E-Mail
- Personal Webpages
- Entertaining Content
- Music/Videos/Fashion
Register a large number of users - Must register in order to use
services
Retain users and cultivate customer - Create online friendships
loyalty - Penpals and personals
- Chat
- Personal web pages create a
sense of ownership and belonging.
- E-Mail provides an identity on
the worldwide web.
Generate a high number of repeat - Daily changes in content in
visits radio/television etc. will
generate
- E-mail will generate repeat
visits as users check their e-mail
- Giveaways, Chat, Personals
ISP................ Generate a large number of - Broad subscriber base by
subscribers appealing to individuals from a
diverse set of cultures.
- Portal Home Page will be the
home page of the ISP.
- Advertising jointly with Portal.
Minimize turnover by creating - Develop services in underserved
customer loyalty regions and groups.
- Be a low-cost provider.
- Focus on customer service.
- Create online friendships.
- Penpals and personals
- Chat rooms
- Personal web pages create a
sense of ownership and belonging.
- E-Mail provides an identity on
the worldwide web.
</TABLE>
FREE E-MAIL SERVICES
AmazeScape offers its registered members the ability to utilize
AmazeScape's proprietary e-mail service. Users choose an e-mail username, with
the domain "@AmazeScape.com" added. E-mail can be read, composed and managed
from the AmazeScape site by a user at any location. It is intended for e-mail
users to be allocated five megabytes of storage. Users also will have the
ability to e-mail attachments. All users will be
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subject to AmazeScape's anti-spam policy instituted in order to prevent or
minimize the use of its e-mail system to distribute unsolicited commercial
e-mail (UCE.)
FREE WEB SITES
Registered members shall be assigned free web space on AmazeScape's server
to host their own site. AmazeScape developed and owns the web hosting
application. Users can utilize a simple fill-in form to create web pages or can
upload files directly to their assigned web space. Users web addresses are
uniformly created with http://www.AmazeScape.com/(-) followed by their username.
Currently, up to five megabytes of space are allocated to each username. It is
AmazeScape's intention to allocate, upon request, up to 100 megabytes of disk
storage for a user's personal web site.
ONLINE BULLETIN BOARDS, FORUMS, AND DISCUSSION BOARDS
Discussion boards allow members to exchange information on a variety of
subjects with each other. AmazeScape uses WebBoard, a product of O'Reilly and
Associates, to provide this service. Accordingly, users will have the ability to
post and read messages for others in the particular group they have accessed.
Discussion boards will also allow users to upload files as well as page other
members who are logged on at the same time. Members are allowed unlimited
posting subject to a Terms of Services Agreement to which they agree upon
registration with AmazeScape.
CHAT SERVICES
AmazeScape members have access to a multi-lingual chat program that allows
a member to converse across the language barrier with another member in
real-time. AmazeScape currently licenses this program from Universe Inc. The
program allows for a user in a language to converse to a member who does not
necessarily speak the same language. For example, an English-speaking user can
chat in real-time with a user who speaks Spanish. The program is written in
Java, allowing almost universal browser compatibility. At this time, the
languages supported are English, Spanish, German, Italian, Portuguese and
French.
PERSONALS ADVERTISING
Registered AmazeScape members may also utilize its web site to enter
personal advertisements. AmazeScape have developed a program that allows users
to post data about themselves in a database that can be sorted by other members
seeking a person who satisfies certain criteria (by age, location, language
spoken, etc.)
REVENUE SOURCES
AmazeScape does not currently generate significant revenues. AmazeScape's
current advertising relationship with Teknosurf has been in place for less than
two months. AmazeScape expects to begin generating revenues in the very near
term, although there can be no assurances whether or when revenues will be
generated.
AmazeScape's management believes that its online communities have an
advertising advantage over other general web sites in that AmazeScape's target
audiences can be clearly defined. This allows AmazeScape's advertisers to
deliver highly targeted advertising. Current advertising prices on AmazeScape's
web site range from $10 to $25 cost-per-thousand page views ("CPM") depending on
the size and length of the impression.
Having executed an ISP re-seller's agreement with Ziplink in January 2000,
AmazeScape expects to begin offering this service to its members and visitors in
February 2000.
REGISTERED USERS
As of December 31, 1999, there were approximately 15,000 registered members
in AmazeScape's online community. These users were accumulated as a result of a
free PC giveaway which was implemented in
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November 1999. Using the proceeds of AmazeScape's recent private placement,
AmazeScape intends to conduct similar such giveaways and other advertising
programs to accumulate other registered users. Management of AmazeScape has
developed highly targeted advertising programming and other Internet oriented
strategies in order to attract additional users.
PROPRIETARY RIGHTS
AmazeScape relies primarily on a combination of copyright, trademarks,
licenses, trade secret laws and restrictions on disclosure to protect its
intellectual property and trade secrets. AmazeScape also enters into
confidentiality agreements with its employees and consultants, and generally
control access to and distribution of its documentation and other proprietary
information. Despite these precautions, it may be possible for a third party to
copy or otherwise obtain and use AmazeScape's intellectual property or trade
secrets without authorization.
AmazeScape is pursuing the registration of certain of its trademarks in the
United States, although AmazeScape has not secured registration of all of its
marks. AmazeScape has registered a United States trademark for AmazeScape(TM).
AmazeScape does not currently hold any patent rights.
AmazeScape believes that AmazeScape own all rights in its intellectual
property, and has not received any notices from any third party claiming
ownership in its intellectual property. AmazeScape also has not received any
notice that its products or services infringe the intellectual property rights
of any other person.
EMPLOYEES
As of January 31, 2000 AmazeScape employed 2 persons full-time and two
additional persons on a part-time basis. None of AmazeScape's employees are
represented by a union and AmazeScape have never experienced a work stoppage.
AmazeScape's management considers its relations with its employees to be good.
DESCRIPTION OF PROPERTY
AmazeScape's registered office in the State of Nevada is 1971 California
Street, Carson City, Nevada 89701.
AmazeScape's headquarters are located in 264 Airmont Ave, Mahwah, New
Jersey 07430. AmazeScape intends to occupy new office space in February, 2000.
AmazeScape also conducts operations at 158 West 29th Street, 10th Fl, New
York, New York 10001, where AmazeScape occupies approximately 500 square feet of
space as a tenant at will. AmazeScape's Internet servers are hosted by the New
York Internet Center which is also located at this facility.
AmazeScape believes that these existing facilities are adequate to meet its
current and foreseeable requirements or that suitable additional or substitute
space will be available on commercially reasonable terms.
COMPETITION
The main competitors of AmazeScape in the portal arena are Yahoo,
Starmedia, Quepasa.com and China.com. Except for Yahoo, all the other portals
listed focus on one or two languages, thereby limiting growth once that market
is fully matured. In order to maintain its growth, AmazeScape intends to add
other languages, services, and content as it implements its business plan.
The market for DSL is growing rapidly, with firms like Covad Communications
Group, Inc., Rhythm NetConnections, Inc., NorthPoint Communications Group, Inc.,
Copper Mountain Networks Inc., and High Speed Access Corp. providing DSL access.
Most major phone companies are starting to deploy DSL service to businesses and
to retail consumers. Due to the inherent difficulty of establishing a DSL
network and infrastructure, AmazeScape will use a "private-label" approach.
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AmazeScape will establish relationships with DSL providers and create its
own brand with payment to the DSL access provider for access to their
infrastructure. AmazeScape will provide sales, customer support and personalized
software. Since AmazeScape will be a reseller, the growing number of DSL access
providers will be a pricing advantage for AmazeScape, allowing AmazeScape to
"shop around" for the best price offered by wholesale DSL providers. By forming
a DSL reseller on a rapid timetable, coupled with the strong support and sales
staff, AmazeScape feels the DSL market will provide it with a stable cash flow
and allow it to establish a presence within a short timeframe.
AmazeScape believes that its relationships with its partners, together with
its strategy of building on its existing position, growing its brands, and
reaching into the non-English speaking population, provide it with competitive
advantages.
LEGAL PROCEEDINGS
AmazeScape is not a party to any material legal proceedings.
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MANAGEMENT'S DISCUSSION AND PLAN OF OPERATIONS OF AMAZESCAPE
You should read the following discussion and analysis of AmazeScape's
financial condition and results of operations in conjunction with "Selected
Financial Data" and AmazeScape's financial statements and related notes
appearing elsewhere in this Proxy Statement/Prospectus.
CORPORATE BACKGROUND
On August 9, 1999 AmazeScape.com Inc. was organized under the General
Corporation Laws of the State of Nevada with its principal office in the State
of Nevada located at 1971 California Street, Carson City, Nevada, 89701. Our
headquarters are located at 264 Airmont Ave., Mahwah NJ 07430.
PLAN OF OPERATIONS
AmazeScape is a development stage company. AmazeScape began operations on
August 9, 1999. Since the inception of operations, AmazeScape has focused its
efforts on developing its Internet presence and securing funding for its future
operations. All expenditures to date have been funded entirely by its founders.
AmazeScape currently has no revenues. AmazeScape currently has no outstanding
long term debts.
The first phase of development of AmazeScape's multi-lingual Internet
portal and online community has been completed. AmazeScape currently provides
its members and visitors with the ability to browse the Internet in six
languages: Chinese, Portuguese, French, Spanish, Italian, and English.
AmazeScape also offers several services free of cost to its members: personal
web site utilizing up to 100 megabytes of storage, e-mail, multi-lingual chat,
discussion boards, and personals advertising. AmazeScape also offers its
visitors and members the ability to translate webpages. AmazeScape's members can
also access over 700 books on its web site and play over 50 different
interactive games.
AmazeScape has also prepaid a portion of its ongoing web site development
by issuing common stock to its largest providers of design, development,
hosting, programming, and maintenance services.
In January, AmazeScape also commenced sales of advertising space on its
Internet web site by contracting with Teknosurf Inc, a major Internet
advertising company. AmazeScape expects to derive future revenues from selling
targeted advertising space on its Internet web site via other Internet
advertising companies.
In February, AmazeScape also commenced operations as a re-seller of dial-up
and DSL high speed internet access. AmazeScape entered into a contract to be a
re-seller of these services from Ziplink Inc. AmazeScape expects to begin
producing revenues from these operations in the very near term.
In fiscal 2000, AmazeScape plans to focus its efforts in several areas:
wireless access to its portal, e-mail, and discussion boards, wireless access to
translated e-mail facilities, multi-lingual business to business applications of
its portal, expanded ISP subscribers, expanded portal membership, and the
addition of other languages to its offerings. AmazeScape also expects to make
significant expenditures in developing its brand both in the US and abroad.
AmazeScape intends to develop additional strategic relationships and expects to
make acquisitions in those areas where it believes the acquisition accelerates
its strategic plans.
LIQUIDITY AND CAPITAL RESOURCES
Since the inception of operations, all expenditures have been funded
entirely by its founders. AmazeScape currently has no revenues. AmazeScape
currently has no outstanding long-term debt.
Common Stock. AmazeScape has prepaid a portion of its ongoing web site
development by issuing common stock to its largest providers of design,
development, hosting, programming, and maintenance services. In September,
AmazeScape issued 375,000 shares of common stock, valued at $375,000, to Meglyn
Enterprises Inc. in exchange for services and 200,000 shares, valued at $200,000
to New York Internet Center in exchange for services. AmazeScape has consumed
$285,000 of these services leaving $290,000 as pre-paid. AmazeScape expects to
use its common stock in similar transactions in the future.
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Preferred Stock. AmazeScape has raised a total of $2.7 million, $1.2
million by issuing 120 shares of Series A Preferred stock and $1.5 million by
issuing 1500 shares of Series B Preferred stock. During the fiscal year 1999,
AmazeScape agreed to pay Infusion Capital Partners, LLC $120,000 and 34,280
shares of its common shares in connection with consulting and financial advisory
services rendered to it.
Warrants. In October 1999, AmazeScape engaged Infusion Capital Partners
LLC for a one year period to provide advisory services in AmazeScape's strategic
and financing activities. AmazeScape has issued Infusion warrants to purchase a
total of 950,000 shares of its common stock at $1 per share in compensation for
these services.
In January 2000, AmazeScape canceled warrants issued to Infusion to
purchase 355,000 shares of common stock at an exercise price of $1.00 per share.
The warrant exercise was conditional upon AmazeScape's common stock reaching
certain market price levels. In connection with canceling the warrants,
AmazeScape issued to Infusion warrants to purchase 355,000 shares of common
stock at an exercise price of $1.00. Such warrants are exercisable immediately
on a cashless basis. In the event a merger is not consummated by June 30, 2000,
AmazeScape has the right to purchase the warrant at a price of $1.00. As a
result of this transaction, AmazeScape will record the value of these warrants,
which approximate $4,123,000, as deferred merger costs. The fair value of these
warrants has been estimated on the date of grant using the Black-Scholes pricing
model with the following assumptions: zero dividend yield; expected volatility
of 130%; risk free interest rate of approximately 5.3%; and expected lives of
three years.
Sufficiency of Cash Flows. AmazeScape believes that the current cash
balances and any cash generated from operations will be sufficient to meet its
cash needs for working capital and capital expenditures for at least the next
twelve months. A portion of AmazeScape's cash may be used to acquire or invest
in complementary businesses or products or to obtain the right to use
complementary technologies from time to time, in the ordinary course of
business, to expand its web site offerings. There can be no assurance, however,
that AmazeScape will be able to generate sufficient cash, in which event
AmazeScape may need to forego such investments, curtail the combined operations
of the holding company or sell or exchange additional common or preferred
shares, or any combination of the foregoing.
RECENT ACCOUNTING PRONOUNCEMENTS
In June 1998, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 133, "Accounting for Derivatives and Hedging
Activities," which establishes accounting and reporting standards for derivative
instruments, including derivative instruments embedded in other contracts, and
for hedging activities. AmazeScape does not expect the adoption of this
statement to have an impact on its results of operations, financial position or
cash flows.
QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS
AmazeScape considered the provisions of Financial Reporting Release No. 48
"Disclosures of Accounting Policies for Derivative Financial Instruments and
Derivative Commodity Instruments, and Disclosures of Quantitative and
Qualitative Information about Market Risk Inherent in Derivative Commodity
Instruments." AmazeScape has no holdings of derivative financial or commodity
instruments.
AMAZESCAPE RELATED PARTY TRANSACTIONS
On September 9, 1999, AmazeScape entered into a Services Provider Contract
with New York Internet Center (NYIC), an Internet web site hosting and
consulting company in New York City, NY. The President, Dr. Brian Watts, is a
founding shareholder and is currently Chief Technical Officer of AmazeScape.
NYIC has a twelve (12) month hosting and consulting agreement with AmazeScape to
provide (i) design consultation for its web site, (ii) programming, (iii)
graphics and (iv) other mutually agreed upon tasks to ensure AmazeScape's portal
is operating properly. The agreement provides for minimum monthly payments of
$10,000 to NYIC for a minimum of 100 man-hours of services. NYIC holds 200,000
shares of AmazeScape common stock.
81
<PAGE> 92
On September 1, 1999, AmazeScape entered into a Services Provider Contract
with Meglyn Enterprises Inc., a privately held New Jersey Corporation
("Meglyn"), which is an Internet development services provider and vendor of
computer systems. Meglyn also provides translation services to various
businesses. Mr. Persaud, Chief Executive Officer and Chairman of AmazeScape,
owns fifty percent (50%) of the issued and outstanding shares of Meglyn's
capital stock. In prepayment for all services to be rendered under this
agreement, Meglyn received shares of the common stock of AmazeScape, in the
aggregate amount of 375,000 shares.
In the past, AmazeScape has borrowed money from certain of its officers. At
no time did any amounts borrowed exceed $25,000. At the date of this Proxy
Statement/Prospectus, all such loans had been repaid in full.
On October 12, 1999, AmazeScape entered into a Management Services
Agreement with Infusion for the provision of financial advisory services to
assist it with identifying, structuring and implementing merger opportunities.
In consideration for such services, AmazeScape issued Infusion warrants to
purchase an aggregate of 950,000 shares of AmazeScape common stock at an
exercise price of $1.00 per share of which the exercise of warrants to purchase
355,000 shares of common stock was conditioned upon the AmazeScape common stock
attaining specific market price levels. In January 2000, these warrants to
purchase 355,000 shares of common stock were canceled and AmazeScape issued
replacement warrants to purchase 355,000 shares of AmazeScape common stock at an
exercise price of $1.00, which warrants were immediately exercisable on a
cashless basis. AmazeScape has the right to redeem the warrants issued to
Infusion at a price of $1.00 per warrant in the event a merger is not completed
by June 30, 2000.
John Gerber, a director of AmazeScape and Premier Concepts, formerly served
as outside legal counsel to Infusion and to Equisition, whose relationships with
Premier Concepts and AmazeScape are described elsewhere in this Proxy
Statement/Prospectus. Mr. Gerber holds a 2.367% interest in Equisition.
82
<PAGE> 93
PRINCIPAL SHAREHOLDERS OF AMAZESCAPE
The following table sets forth as of the date of this Proxy
Statement/Prospectus certain information regarding the ownership of voting
securities of AmazeScape by each shareholder known to the management of
AmazeScape to be (i) the beneficial owner of more than 5% of AmazeScape's
outstanding common stock, (ii) each of the directors and nominees for director
of AmazeScape, (iii) the executive officers named in the Summary Compensation
Table herein under "Executive Compensation" and (iv) all named executive
officers and directors as a group. Except as otherwise noted, AmazeScape
believes that the beneficial owners of the common stock listed below, based on
information furnished by such owners, have sole investment and voting power with
respect to such shares.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF PERCENTAGE OF
NAME++ COMMON STOCK COMMON STOCK
- ------ ------------------- -------------
<S> <C> <C>
Lee Thye Ang(1)............................................. 813,750 6.76%
Ngaw Chee Ang(1)............................................ 680,000 5.65
Koh Hwa Ang(1).............................................. 680,000 5.65
Guozhao Ang(1).............................................. 680,000 5.65
Lee Ang(1).................................................. 977,700(2) 7.92
Yong Sai Ang(1)............................................. 670,000 5.57
Kim Lai Ang(1).............................................. 670,000 5.57
Plasma Fund LP(3)........................................... 670,000 5.57
Pooranchand Pritipal(4)..................................... 655,000 5.44
Nika Nicaj(5)(6)............................................ 650,000 5.40
Dokica Kaljevic(7).......................................... 650,000 5.40
Haripaul Pritipal(4)........................................ 640,000 5.32
Poonerbassie Persaud(8)(9).................................. 625,000 5.1
Harrichand Persaud(10)...................................... 58,625 *
Anton Nicaj(10)............................................. 50,125 *
James Dwight(10)............................................ - 0 - *
John M. Gerber(10).......................................... - 0 - *
Brian Watts(10)............................................. 182,500 1.52
Total: All Directors and Named Executive Officers (5
Persons).................................................. 291,250 2.42%
</TABLE>
- ---------------
* Less than 1%.
++ Except as otherwise noted, the persons named in the above table have
sole voting and investment power with respect to all shares shown as
beneficially owned by them, subject to community property laws where
applicable.
(1) The address of the person named is in care of William Ang, 3327 29th
Street, 2nd Fl, Long Island City, NY 11006.
(2) Includes up to 307,692 shares of AmazeScape common stock issuable upon the
conversion of currently convertible shares of Series A Preferred Stock
held by Mr. Lee Ang.
(3) The address of the person named is 200 E 82nd Street, Suite 4F, New York,
NY 10028
(4) The address of the person named is 2115 Newbold Ave, Bronx NY 10462
(5) The address of the person named is 2034 Muliner Ave, Bronx, NY 10462
(6) The named person is the brother of Anton Nicaj, a director and the
President of AmazeScape. The named person, however, retains sole voting
power with respect to, and is the beneficial owner of, the shares of common
stock set forth opposite his name.
(7) The address of the person named is 3750 Hudson Manor 3G East, Bronx, NY
10463
(8) The address of the person named is 15 Tweed Crescent, Scarborough, Ontario,
Canada N1R 2B5
(9) The named person is the mother of Harrichard Persaud, a director and the
Chief Executive Officer of AmazeScape. The named person, however, retains
sole voting power with respect to, and is the beneficial owner of, the
shares of common stock set forth opposite her name.
(10) The address of the person named is in care of AmazeScape.com Inc., 264
Airmont Avenue, Mahwah, New Jersey 07430.
83
<PAGE> 94
MANAGEMENT OF THE COMBINED COMPANIES
At the effective date of the Merger, the directors and executive officers
of AmazeScape.com Inc., as the parent corporation of the Combined Companies,
shall be as follows:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Harrichand Persaud 39 Chief Executive Officer, Assistant Secretary and
Chairman of the Board
Anton Nicaj 28 President, Secretary and Director
Dr. Brian Watts 48 Chief Technology Officer and Director
James Dwight 49 Vice President -- Marketing and Director
John Gerber 34 Director
</TABLE>
HARRICHAND PERSAUD, 39, is a founder of AmazeScape and will be its Chief
Executive Officer, Assistant Secretary and Chairman of the Board of Directors.
Mr. Persaud holds a Bachelor of Arts (Magna Cum Laude) degree in Economics from
Princeton University, 1983. Mr. Persaud was employed by Morgan Stanley Group,
Inc. from 1983 to 1988 in its Information Systems and Proprietary Analytical
Trading groups. Mr. Persaud directed equities trading activities at several
hedge funds from 1989 to 1993 including Windsor IBC Inc., Millenium Partners,
New Windsor Associates, L.P., and Spectrum Trading Partners L.P. From 1994 to
1997, Mr. Persaud held senior positions in the International Equities Arbitrage
Group at Bear Stearns and Company, Inc. In 1997, Mr. Persaud started a
structured finance group at SLS Securities Company where he advised clients on
corporate finance activities in the Internet sector. Mr. Persaud moved this
group to Carlin Equities Corp. in 1998. Mr. Persaud brings several years of
experience in analysing internet investments to AmazeScape. These skills will
provide AmazeScape with an analytical framework within which to develop its
Internet portfolio.
ANTON NICAJ, 28, is a founder of AmazeScape. Mr. Nicaj graduated from
Baruch College, CUNY with a Bachelor of Arts in Economics. 1993. Mr. Nicaj spent
three years in the lodging and hospitality industry before joining Electronic
Trading Group LLC as an equity trader. Mr. Nicaj is currently a limited partner
in Generic Trading of Philadelphia LLC. Mr. Nicaj also acts a consultant to
several Internet startup ventures in the e-commerce and financial services
sectors.
BRIAN WATTS, 48, has twenty-seven years of experience in the field of
computing and computer science. He has developed the database search engine for
a full-text information retrieval system called BiB/Search and the engine behind
an international trade retrieval database system. In 1994, he founded the New
York Internet Center, a company dedicated to the development of new Internet
technologies. Dr. Watts holds degrees in Computer Science, Mathematical
Statistics, and Psychology with a Masters in Psychology and a Doctorate in
Experimental Psychology from New York University.
JAMES DWIGHT, 49, is a venture capitalist and is currently vice-president
of marketing for Filmblast.com, an Internet entertainment company. He is also
board member of HoorayAsia.com, a global Internet portal focusing on the
Asia-Pacific region. Between 1987 and 1995, Mr. Dwight was the venture
capitalist for the Texas Independent Exploration Corporation. He worked with the
ex-chairman of the South Carolina Judiciary Committee between 1984 and 1990.
Between 1980 and 1983, he was responsible for residential sales in excess of
$100 million. Mr. Dwight majored in History at the University of South Carolina,
graduating in 1973.
JOHN M. GERBER, 34, is a licensed attorney with nine years of practical
experience documenting, negotiating and structuring debt and equity transactions
and acquisitions in various industries. Since March 1999, he has been a board
member of Premier Concepts, Inc. He is also the Chief Operating Officer and
General Counsel for Meridian Telesis, LLC, an Internet services company, which
positions he has held since August 1999.
84
<PAGE> 95
EXECUTIVE COMPENSATION SUMMARY INFORMATION
Except for the grant of stock options described below under "Director
Compensation," neither Mr. Persaud, AmazeScape's Chief Executive Officer nor any
other executive officer of AmazeScape received any compensation during the
fiscal year ended December 31, 1999.
Employment Agreements
AmazeScape have entered into employment agreements with Mr. Persaud, its
Chairman and Chief Executive Officer, and Mr. Nicaj, its President. Each
employment agreement provides for three years of employment commencing October
15, 1999 at an annual salary of $100,000, health, dental and eyecare insurance
and an annual expense allowance of $10,000.
Mr. Persaud will also receive a bonus based on increases in annual sales
and increases in earnings. Mr. Persaud will also receive incentive bonuses for
growth in AmazeScape generated by acquisitions arranged and implemented during
the term of his employment.
If either Mr. Persaud or Mr. Nicaj is terminated by AmazeScape without
cause, the terminated employee will receive from AmazeScape his then applicable
base salary and continuation of benefits until the expiration of the term of his
employment agreement.
Director Compensation
On October 15, 1999, each director of AmazeScape was granted warrants to
purchase an aggregate of 25,000 shares of AmazeScape common stock, at an
exercise price of $1 per share. As of October 15, 1999, AmazeScape had 125,000
such warrants outstanding.
Further, each director will receive compensation of $1,000 for each meeting
attended. All directors will receive reimbursement for out-of-pocket expenses
incurred in attending meetings of the board. To date, no cash payments have been
paid to AmazeScape's directors.
85
<PAGE> 96
LEGAL MATTERS
Neuman & Drennan, P.C., special counsel to Premier Concepts, will pass on
the validity of the Premier Concepts Common Stock and the Premier Concepts
Convertible Preferred Stock to be issued to AmazeScape shareholders in the
Merger. It is a condition to the completion of the Merger that Premier Concepts
and AmazeScape receive opinions from Hangley Aronchick Segal & Pudlin, special
counsel to Premier Concepts, and from Parker Chapin Flattau & Kimpl, LLP,
special counsel to AmazeScape, respectively, to the effect that the Merger will
be a tax-free reorganization for federal income tax purposes. See "The Merger
Agreement -- Conditions to the Completion of the Merger" and "The
Merger -- Material Federal Income Tax Consequences of the Merger."
EXPERTS
The financial statements of Premier Concepts as of January 31, 1999 and for
each of the years in the two year period ended January 31, 1999 included within
this Proxy Statement/Prospectus have been so included in reliance on the report
of Hein + Associates LLP independent auditors, given on the authority of said
firm as experts in auditing and accounting.
The financial statements of AmazeScape as of December 31, 1999 and for the
period from August 9, 1999 (Inception) through December 31, 1999 included within
this Proxy Statement/Prospectus have been so included in reliance on the report
of Richard A. Eisner & Company, LLP, independent auditors, given on the
authority of said firm as experts in auditing and accounting.
WHERE YOU CAN FIND MORE INFORMATION
Premier Concepts files annual, quarterly and special reports, proxy
statements and other information with the SEC. You may read and copy any
reports, statements or other information that Premier Concepts files at the
SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800-SEC-0330 for further information
on the public reference rooms. Premier Concepts' SEC filings are also available
to the public from commercial document retrieval services and at the web site
maintained by the SEC at "http://www.sec.gov."
Premier Concepts filed a registration statement on Form S-4 to register
with the SEC the Premier Concepts Common Stock and Convertible Preferred Stock
to be issued to AmazeScape shareholders in the Merger. This Proxy
Statement/Prospectus is a part of that registration statement and constitutes a
prospectus of Premier Concepts in addition to being a proxy statement of Premier
Concepts and AmazeScape for each company's special meeting. As permitted by SEC
rules, this Proxy Statement/Prospectus does not contain all the information that
you can find in the registration statement or the exhibits to that statement. No
person is authorized to give any information or to make any representation with
respect to the matters described in this document other than those contained
herein and, if given or made, such information or representation must not be
relied upon as having been authorized by Premier Concepts or AmazeScape. This
document does not constitute an offer to sell, or a solicitation of an offer to
purchase, the securities offered hereby, nor does it constitute the solicitation
of a proxy, in any jurisdiction on which, or to any person to whom, it is
unlawful to make such offer or solicitation. Neither the delivery of this
document nor any sale made hereby, under any circumstances, shall create any
implication that there has been no change in the affairs of Premier Concepts or
AmazeScape since the date hereof, or that the information herein is correct as
of any time subsequent to its date.
86
<PAGE> 97
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C> <C>
I. Historical Financial Statements of Premier Concepts, Inc.
INDEPENDENT AUDITOR'S REPORT................................ F-2
BALANCE SHEETS -- October 31, 1999 (Unaudited) and January F-3
31, 1999..................................................
STATEMENTS OF OPERATIONS -- For the Nine Months Ended F-4
October 31, 1999 and 1998 (Unaudited) and For the Fiscal
Years Ended January 31, 1999 and January 25, 1998.........
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY -- For the Nine F-5
Months Ended October 31, 1999 (Unaudited) and For the
Fiscal Years Ended January 31, 1999 and January 25,
1998......................................................
STATEMENTS OF CASH FLOWS -- For the Nine Months Ended F-6
October 31, 1999 and 1998 (Unaudited) and For the Fiscal
Years Ended January 31, 1999 and January 25, 1998.........
NOTES TO FINANCIAL STATEMENTS............................... F-7
II. Historical Financial Statements of Amazescape.com, Inc.
INDEPENDENT AUDITOR'S REPORT................................ F-16
BALANCE SHEET -- December 31, 1999.......................... F-17
STATEMENT OF OPERATIONS -- For the Period From August 9, F-18
1999 (Inception) Through December 31, 1999................
STATEMENT OF SHAREHOLDERS' EQUITY -- For the Cumulative F-19
Period From August 9, 1999 (Inception) Through December
31, 1999..................................................
STATEMENT OF CASH FLOWS -- For the Period From August 9, F-20
1999 (Inception) Through December 31, 1999................
NOTES TO FINANCIAL STATEMENTS............................... F-21
III. Pro Forma Condensed Consolidated Financial Statements of the
Combined Companies (Unaudited)
INTRODUCTION................................................ F-26
PRO FORMA CONDENSED CONSOLIDATED BALANCE SHEET.............. F-27
PRO FORMA CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS.... F-28
NOTES TO PRO FORMA FINANCIAL STATEMENTS..................... F-29
</TABLE>
F-1
<PAGE> 98
INDEPENDENT AUDITOR'S REPORT
Board of Directors and Stockholders
Premier Concepts, Inc.
Denver, Colorado
We have audited the accompanying balance sheet of Premier Concepts, Inc. as
of January 31, 1999, and the related statements of operations, changes in
stockholders' equity, and cash flows for the fiscal years ended January 31, 1999
and January 25, 1998. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the financial position of Premier Concepts, Inc., as
of January 31, 1999, and the results of its operations and its cash flows for
the fiscal years ended January 31, 1999 and January 25, 1998, in conformity with
generally accepted accounting principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
April 2, 1999
F-2
<PAGE> 99
PREMIER CONCEPTS, INC.
BALANCE SHEETS
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31,
1999 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
CURRENT ASSETS:
Cash and cash equivalents................................. $ 137,703 $ 221,273
Merchandise inventories................................... 2,075,767 1,975,595
Prepaid expenses and other................................ 165,076 97,295
----------- -----------
Total current assets.............................. 2,378,546 2,294,163
PROPERTY AND EQUIPMENT, net................................. 2,521,702 2,699,376
OTHER ASSETS:
Trademarks, net of accumulated amortization of $90,266
(unaudited) and $80,967, respectively.................. 53,733 63,033
Other..................................................... 71,132 80,132
----------- -----------
TOTAL ASSETS................................................ $ 5,025,113 $ 5,136,704
=========== ===========
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES:
Notes payable and current portion of long-term debt....... $ 583,181 $ 683,110
Accounts payable.......................................... 1,175,018 965,189
Accrued liabilities....................................... 650,696 584,461
----------- -----------
Total current liabilities......................... 2,408,895 2,232,760
LONG-TERM DEBT, less current portion........................ -- 49,032
DEFERRED RENT............................................... 240,128 201,244
----------- -----------
Total liabilities................................. 2,649,023 2,483,036
----------- -----------
COMMITMENTS (NOTE 5)
STOCKHOLDERS' EQUITY:
Preferred stock, $.10 par value, 20,000,000 shares
authorized; 223,385 (liquidation preference of
$279,231) (unaudited) and no shares of Series A
preferred stock issued and outstanding, respectively... 22,339 --
Common stock, $.002 par value; 850,000,000 shares
authorized; 1,069,128 (unaudited) and 887,513 shares
issued and outstanding, respectively................... 2,133 1,775
Additional paid-in capital................................ 6,146,026 5,660,263
Accumulated deficit....................................... (3,794,408) (3,008,370)
----------- -----------
Total stockholders' equity........................ 2,376,090 2,653,668
----------- -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY.................. $ 5,025,113 $ 5,136,704
=========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-3
<PAGE> 100
PREMIER CONCEPTS, INC.
STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
FOR THE NINE FOR THE FISCAL
MONTHS ENDED YEARS ENDED
-------------------------- --------------------------
OCTOBER 31, OCTOBER 25, JANUARY 31, JANUARY 25,
1999 1998 1999 1998
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
NET REVENUES:
Retail............................... $8,539,658 $ 8,489,753 $12,541,042 $12,522,531
Wholesale............................ 8,263 89,739 164,560 56,152
---------- ----------- ----------- -----------
Total revenues............... 8,547,921 8,579,492 12,705,602 12,578,683
COST OF GOODS SOLD..................... 2,568,863 2,803,024 4,158,271 3,816,330
---------- ----------- ----------- -----------
Gross margin......................... 5,979,058 5,776,468 8,547,331 8,762,353
OPERATING EXPENSES:
Personnel............................ 2,871,354 3,018,994 4,110,433 3,999,162
Occupancy............................ 2,181,903 2,203,926 2,935,159 2,832,770
Other selling, general and
administrative.................... 1,306,713 1,400,314 1,937,245 1,937,947
Depreciation and amortization........ 378,369 377,540 501,697 448,620
Store closing costs.................. -- 101,958 114,370 27,884
---------- ----------- ----------- -----------
Total operating expenses..... 6,738,339 7,102,732 9,598,904 9,246,383
---------- ----------- ----------- -----------
OPERATING LOSS......................... (759,281) (1,326,264) (1,051,573) (484,030)
OTHER INCOME (EXPENSE):
Interest expense, net................ (41,572) (33,825) (44,427) (101,883)
Other................................ 14,815 18,688 36,312 37,738
---------- ----------- ----------- -----------
Other income (expense),
net........................ (26,757) (15,137) (8,115) (64,145)
---------- ----------- ----------- -----------
INCOME (LOSS) BEFORE INCOME TAX
EXPENSE.............................. (786,038) (1,341,401) (1,059,688) (548,175)
Deferred income tax expense.......... -- -- -- (39,000)
---------- ----------- ----------- -----------
NET LOSS............................... (786,038) (1,341,401) (1,059,688) (587,175)
Preferred stock dividends............ (9,540) -- -- --
Preferred stock
dividends -- imputed.............. (157,560) -- -- --
---------- ----------- ----------- -----------
NET LOSS AVAILABLE TO COMMON
STOCKHOLDERS......................... $ (953,138) $(1,341,401) $(1,059,688) $ (587,175)
========== =========== =========== ===========
NET LOSS PER COMMON SHARE (BASIC AND
DILUTED)............................. $ (.95) $ (1.51) $ (1.19) $ (.80)
========== =========== =========== ===========
WEIGHTED AVERAGE COMMON SHARES
OUTSTANDING (BASIC AND DILUTED)...... 1,007,509 887,513 887,513 735,745
========== =========== =========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-4
<PAGE> 101
PREMIER CONCEPTS, INC.
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY
FOR THE FISCAL YEARS ENDED JANUARY 25, 1998 AND JANUARY 31, 1999
AND FOR THE NINE MONTHS ENDED OCTOBER 31, 1999 (UNAUDITED)
<TABLE>
<CAPTION>
SERIES A
PREFERRED STOCK COMMON STOCK ADDITIONAL
------------------- ------------------ PAID-IN ACCUMULATED
SHARES AMOUNT SHARES AMOUNT CAPITAL DEFICIT TOTAL
-------- -------- --------- ------ ---------- ----------- -----------
<S> <C> <C> <C> <C> <C> <C> <C>
BALANCES, January 26, 1997... 416,670 $ 41,667 280,084 $ 560 $2,316,683 $(1,361,507) $ 997,403
Proceeds from sale of units
in public offering,
net...................... -- -- 550,000 1,100 3,269,393 -- 3,270,493
Conversion of preferred
stock.................... (416,670) (41,667) 51,020 102 41,565 -- --
Shares issued to
employees................ -- -- 6,325 12 32,125 -- 32,137
Shares issued under
employee stock purchase
plan..................... -- -- 84 1 497 -- 498
Net loss..................... -- -- -- -- -- (587,175) (587,175)
-------- -------- --------- ------ ---------- ----------- -----------
BALANCES, January 25, 1998... -- -- 887,513 1,775 5,660,263 (1,948,682) 3,713,356
Net loss................... -- -- -- -- -- (1,059,688) (1,059,688)
-------- -------- --------- ------ ---------- ----------- -----------
BALANCES, January 31, 1999... -- -- 887,513 1,775 5,660,263 3,008,370 2,653,668
Common stock issued in
private placement
(unaudited).............. -- -- 176,615 353 211,191 -- 211,544
Preferred stock issued in
private placement
(unaudited).............. 223,385 22,339 -- -- 252,117 -- 274,456
Exercise of stock options
(unaudited).............. -- -- 5,000 5 4,995 -- 5,000
Warrants issued for
services (unaudited)..... -- -- -- -- 27,000 -- 27,000
Preferred stock dividend... -- -- -- -- (9,540) -- (9,540)
Net loss (unaudited)....... -- -- -- -- -- (786,038) (786,038)
-------- -------- --------- ------ ---------- ----------- -----------
BALANCES, October 31, 1999
(Unaudited)................ 223,385 $ 22,339 1,069,128 $2,133 $6,146,026 $(3,794,408) $ 2,376,090
======== ======== ========= ====== ========== =========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-5
<PAGE> 102
PREMIER CONCEPTS, INC.
STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
FOR THE NINE FOR THE FISCAL
MONTHS ENDED YEARS ENDED
-------------------------- --------------------------
OCTOBER 31, OCTOBER 25, JANUARY 31, JANUARY 25,
1999 1998 1999 1998
----------- ----------- ----------- -----------
(UNAUDITED)
<S> <C> <C> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss....................................... $(786,038) $(1,341,401) $(1,059,688) $ (587,175)
Adjustments to reconcile net loss to net cash
from operating activities:
Amortization of warrants issued for
services................................... 16,200 -- -- --
Depreciation and amortization................ 378,369 377,540 501,697 448,620
Store closing costs.......................... -- 67,627 77,586 27,884
Stock compensation to employees.............. -- -- -- 32,137
Gain on settlements of debt.................. -- -- -- (3,420)
Deferred tax asset........................... -- -- -- 39,000
Other, net................................... -- -- -- 38,026
Changes in operating assets and liabilities:
(Increase) decrease in:
Merchandise inventories.................... (100,172) 289,415 332,244 (558,196)
Other assets............................... (47,981) 93,220 184,128 (138,891)
Increase (decrease) in:
Accounts payable and accrued liabilities... 266,524 572,418 276,994 (186,122)
Other liabilities.......................... 38,884 39,657 39,398 58,607
--------- ----------- ----------- -----------
Net cash provided by (used in) operating
activities................................. (234,214) 98,476 352,359 (829,530)
CASH FLOWS FROM INVESTING ACTIVITIES:
Capital expenditures for property and
equipment.................................... (186,395) (760,194) (835,347) (864,520)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from sales of marketable securities... -- -- -- 7,116
Deferred offering costs........................ (14,000) -- -- (186,717)
Proceeds from issuance of common stock......... 220,769 -- -- 3,883,131
Proceeds from issuance of preferred stock...... 279,231 -- -- --
Proceeds from issuance of notes payable........ 12,000 610,000 610,000 --
Payment on notes payable....................... (160,961) (654,941) (711,788) (1,415,006)
--------- ----------- ----------- -----------
Net cash provided by (used in) financing
activities................................. 337,039 (44,941) (101,788) 2,288,524
--------- ----------- ----------- -----------
INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS.................................... (83,570) (706,659) (584,776) 594,474
CASH AND CASH EQUIVALENTS, beginning of period... 221,273 806,049 806,049 211,575
--------- ----------- ----------- -----------
CASH AND CASH EQUIVALENTS, end of period......... $ 137,703 $ 99,390 $ 221,273 $ 806,049
========= =========== =========== ===========
SUPPLEMENTAL SCHEDULE OF CASH FLOW INFORMATION:
Cash paid for interest......................... $ 35,077 $ 53,882 $ 72,203 $ 147,614
========= =========== =========== ===========
SUPPLEMENTAL NON-CASH FINANCING ACTIVITY:
Conversion of accounts payable to note
payable...................................... $ -- $ -- $ 122,000 $ --
========= =========== =========== ===========
Preferred stock dividend -- non-cash........... $ 9,540 $ -- $ -- $ --
========= =========== =========== ===========
</TABLE>
See accompanying notes to these financial statements.
F-6
<PAGE> 103
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS
(INFORMATION SUBSEQUENT TO JANUARY 31, 1999 IS UNAUDITED)
1. NATURE OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES:
Nature of Operations -- Premier Concepts, Inc. (the "Company") was
incorporated in the state of Colorado in 1988. During 1993, the Company acquired
certain real estate located in a limited stakes gaming city in Colorado, which
were exchanged during 1993 for common stock of Global Casinos, Inc. (Global), a
company which had two common directors (see Note 2). During 1994, the Company
purchased out of bankruptcy certain assets and liabilities of American Fashion
Jewels, Inc. (Impostors) and, in a separate transaction, Mirage Concepts, Inc.
(Mirage), both of which are retail chains of reproduction jewelry stores. As of
January 31, 1999, the Company operated 36 retail stores with a geographic
concentration of stores in California, including one store in San Francisco,
California that accounted for approximately 11% total revenues during the fiscal
years ended January 31, 1999 and January 25, 1998. During the nine months ended
October 31, 1999, no new stores were opened and no stores were closed.
Liquidity -- The Company's business strategy has been to grow the retail
chain in profitable markets as to leverage its name and goodwill to achieve
additional distribution for its products. Although at October 31, 1999, the
Company had approximately $30,000 in working capital deficit and has incurred
over $2.0 million in operating losses over the last two years and nine months,
measures are being taken to return the Company to profitability. Those measures
include closing unprofitable stores and restructuring store operations through
the enhancement of executive and senior management. During the nine months ended
October 31, 1999, the Company raised approximately $500,000 in private equity
fundings through sales of the Company's common and preferred stock.
Although management cannot assure that future operations will be profitable
nor that additional debt and/or equity capital will be raised, it believes that
its capital resources will be adequate to maintain and realize its business
strategy. Should, however, losses continue it could adversely affect future
operations.
Fiscal Year -- The Company's year is a 52/53-week period ending on the last
Sunday in January. Fiscal years ended January 31, 1999 (fiscal 1999) and January
25, 1998 (fiscal 1998) contained 371 and 364 days of activity, respectively.
Cash Equivalents -- For purposes of the statement of cash flows, the
Company considers all highly liquid debt instruments with original maturities of
three months or less to be cash equivalents.
Inventories -- Inventories consist primarily of merchandise which is held
for resale. Inventories are stated at the lower of cost or market, as calculated
using the average-cost method.
Property and Equipment -- Property and equipment is stated at cost.
Depreciation is computed over the lesser of the lease term on each location that
the assets reside or the estimated useful lives of the assets using the
straight-line method generally over a 5 to 10-year period. Leasehold
improvements are amortized on the straight-line method over the lesser of the
lease term or the useful life. Expenditures for ordinary maintenance and repairs
are charged to expense as incurred. Upon retirement or disposal of assets, the
cost and accumulated depreciation are eliminated from the account and any gain
or loss is reflected in the statement of operations.
Trademarks -- A portion of the Impostors purchase price was allocated to
trademarks. This cost is being amortized over 10 years.
Deferred Rent -- Many of the Company's store leases contain predetermined
fixed escalations of the minimum rentals during the initial term. For these
leases, the Company recognizes the related rental expense on a straight-line
basis and records the difference as deferred rent.
Fair Value of Financial Instruments -- The estimated fair values for
financial instruments are determined at discrete points in time based on
relevant market information. These estimates involve uncertainties
F-7
<PAGE> 104
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
and cannot be determined with precision. The carrying amounts of accounts
payable and accrued liabilities approximate fair value. The fair value of
certain notes payable is less than their carrying value as generally their
interest rates are lower than the Company's current effective annual borrowing
rate, however, the difference is not considered significant.
License Agreements -- The Company grants license agreements to entities for
the use of the Impostors' name. License fees are recognized as income on a
straight-line basis over the term of the agreement.
Income Taxes -- The Company accounts for income taxes under Statement of
Financial Accounting Standards (SFAS) No. 109 which requires recognition of
deferred tax assets and liabilities for the expected future tax consequences of
events that have been included in the financial statements or tax returns. Under
this method, deferred tax assets and liabilities are determined, based on the
difference between the financial statements and tax bases of asset and
liabilities using enacted tax rates in effect for the year in which the
differences are expected to reverse.
Use of Estimates -- The preparation of the Company's financial statements
in conformity with generally accepted accounting principles requires the
Company's management to make estimates and assumptions that affect the amounts
reported in these financial statements and accompanying notes. Actual results
could differ from those estimates.
Impairment of Long-Lived Assets and Trademarks -- In the event that facts
and circumstances indicate that the cost of assets or other assets may be
impaired, an evaluation of recoverability would be performed. If an evaluation
is required, the estimated future undiscounted cash flows associated with the
asset would be compared to the asset's carrying amount to determine if a
write-down to market value or discounted cash flow value is required. No
impairment has been taken for the year ended January 31, 1999 or January 25,
1998.
Comprehensive Loss -- Comprehensive loss is defined as all changes in
stockholders' equity, exclusive of transactions with owners, such as capital
investments. Comprehensive loss includes net loss, changes in certain assets and
liabilities that are reported directly in equity such as translation adjustments
on investments in foreign subsidiaries, and certain changes in minimum pension
liabilities. The Company's comprehensive loss was equal to its net loss for all
periods presented in these financial statements.
Stock-Based Compensation -- As permitted under the SFAS No. 123, Accounting
for Stock-Based Compensation, the Company accounts for its stock-based
compensation in accordance with the provisions of Accounting Principles Board
(APB) Opinion No. 25, Accounting for Stock Issued to Employees. As such,
compensation expense is recorded on the date of grant only if the current market
price of the underlying stock exceeded the exercise price. Certain pro forma net
income and EPS disclosures for employee stock option grants are also included in
the notes to the financial statements as if the fair value method as defined in
SFAS No. 123 had been applied. Transactions in equity instruments with
non-employees for goods or services are accounted for by the fair value method.
Impact of Recently Issued Accounting Standards -- In 1998, SFAS Nos. 133,
Accounting for Derivative Instruments and Hedging Activities and No. 134,
Accounting for Mortgage-Backed Securities Retained After the Securitization of
Mortgage Loans Held for Sale by a Mortgage Banking Enterprises were issued.
These pronouncements are not expected to impact the Company.
Reclassification -- Certain reclassifications have been made to conform
fiscal 1998 financial statements to the presentation in fiscal 1999. The
reclassification had no effect on net income.
Unaudited Information -- The balance sheet as of October 31, 1999 and the
statements of operations for the nine-month periods ended October 31, 1999 and
October 25, 1998 were taken from the Company's books and records without audit.
However, in the opinion of management, such information includes all adjustments
(consisting only of normal accruals), which are necessary to properly reflect
the Company's financial position as of October 31, 1999 and the results of
operations for the nine months ended October 31, 1999 and
F-8
<PAGE> 105
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
October 25, 1998. The results of operations for the interim periods presented
are not necessarily indicative of those expected for the year.
2. DISPOSITIONS:
In 1993, the Company exchanged its ownership in certain real estate and a
note receivable for 2,500,000 and 200,000 shares of common stock, respectively,
in Global, of which 2,409,700 shares of Global's common stock were distributed
to stockholders' of the Company during 1993. The remaining 290,300 shares were
held by the Company, which represents less than 5% of Global's outstanding
common stock. After distributing the Global common stock to the Company's
stockholders, there remained substantial liabilities to uncollateralized
creditors related to prior activities of the Company. As of January 31, 1999 and
January 25, 1998, the Company had accounts payable of approximately $40,000 that
related to the prior activities of the Company.
3. PROPERTY AND EQUIPMENT:
At January 31, 1999, property and equipment consists of the following:
<TABLE>
<S> <C>
Furniture, fixtures and equipment........................ $1,725,840
Leasehold improvements................................... 2,449,160
----------
4,175,000
Less accumulated depreciation and amortization........... (1,475,624)
----------
$2,699,376
==========
</TABLE>
Related depreciation and amortization expense for the years ended January
31, 1999 and January 25, 1998 was $489,298 and $436,180, respectively.
F-9
<PAGE> 106
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
4. NOTES PAYABLE AND LONG-TERM DEBT:
Notes payable and long-term debt consist of the following:
<TABLE>
<CAPTION>
OCTOBER 31, JANUARY 31,
1999 1999
----------- -----------
(UNAUDITED)
<S> <C> <C>
Note payable to a bank, interest payable monthly at
prime rate plus 1.5%, (9.75% at October 31, 1999),
$1,000 monthly principal payments, and one
principal payment of $37,000 due December 1999 and
the remaining balance due June 2000, collateralized
by substantially all the assets of the Company..... $ 443,000 $ 560,000
Note payable to an entity for services rendered in
connection with the build-out of the Company's
store in West Nyack, New York Payable in monthly
installments of $5,000 (single payment of $35,000
due January 1, 2000) including interest at 10%,
maturing in November 2000.......................... 89,154 122,000
Notes payable to creditors of Impostors from
bankruptcy settlement, payable in monthly
installments plus accrued interest at 6% to 8%,
over variable terms through December 1999. A note
totaling $35,000 is guaranteed by former
stockholders of the Company........................ 42,930 50,142
Other................................................ 8,097 --
--------- ---------
583,181 732,142
Less current portion................................. (583,181) (683,110)
--------- ---------
$ -- $ 49,032
========= =========
</TABLE>
Principal payments on the above obligations at January 31, 1999 are due as
follows:
<TABLE>
<S> <C>
2000...................................................... $683,110
2001...................................................... 49,032
--------
$732,142
========
</TABLE>
On December 27, 1996, the Company completed the sale of $1,120,000 in
Convertible Notes and 100,000 Class B Warrants, realizing net proceeds of
$1,041,600. From the net proceeds, the Company utilized $624,325 to redeem an
aggregate of 94,590 shares of Common Stock and 16,250 Class C Warrants from
certain former security holders. The Company retired the Convertible Notes from
the proceeds of the public offering which occurred April 25, 1997.
Each Class B warrant entitled the holder to purchase one share of common
stock at a price or $10. Upon completion of the public offering (see Note 6),
each Class B warrant was automatically exchanged for two Class A warrants.
5. COMMITMENTS:
Lease Commitments -- The Company leases its offices and retail facilities
under operating leases for terms expiring at various dates from 1999 to 2012.
The corporate office lease has been guaranteed by a director
F-10
<PAGE> 107
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
and certain former directors of the Company. The aggregate minimum annual lease
payments under leases for the fiscal years are as follows:
<TABLE>
<S> <C>
2000.................................................... $ 2,289,844
2001.................................................... 2,126,167
2002.................................................... 1,992,637
2003.................................................... 1,449,303
Thereafter.............................................. 4,112,785
-----------
Total minimum lease payments............................ $11,970,736
===========
</TABLE>
Most leases also provide for payment of operating expenses, real estate
taxes and in some cases for additional rent based on a percentage of sales.
Rental expense was $2,935,159 and $2,832,770 for the years ended January 31,
1999 and January 25, 1998, respectively.
Management Services Agreement -- In March 1999, the Company entered into a
Management Services Agreement (MSA) with Infusion Capital Partners, LLC
(Infusion). The agreement provides for certain consulting services including
arrangements of the March 1999 private placement of common stock, and the June
1999 private placement of preferred stock, as discussed in Note 6, as well as
strategic, operational and investment banking advice. Infusion received cash
compensation of $50,000 and a warrant to purchase 25,000 shares of common stock
at $1.25 per share, which expires in March 2002. The warrant was valued at
$27,000. The cash compensation and value of the warrant are being amortized over
the term of the agreement which expires December 31, 1999.
On November 1, 1999, the MSA was extended an additional two years to
December 31, 2001. Infusion received an additional warrant to purchase 25,000
shares of the Company's common stock at $.875 per share which expires in
November 2002. This warrant is valued at $17,800, and is being amortized over
the term of the extension agreement.
6. STOCKHOLDERS' EQUITY:
Common Shares -- In January 1999, the Company's stockholders approved a 1
for 2 reverse stock split at a future date at the discretion of the Company. In
April 1999, the Company's Board of Directors approved the reverse split
effective immediately. Accordingly, all common stock reflected in the
accompanying financial statements and notes reflect this reverse split for all
periods presented.
Public Offering -- In April 1997, the Company completed a secondary public
offering of 550,000 units and received net proceeds of $3,270,493. Each unit
sold for $7.80 and consisted of one share of common stock and one redeemable
warrant. The common stock and redeemable warrants began trading separately after
the offering. Two redeemable warrants entitle the holder to purchase one share
of common stock at a price of $10.00 through April 21, 2000, unless extended by
the Company. The warrants are redeemable under certain circumstances by the
Company. In connection with this offering, the underwriter received an option to
purchase 55,000 shares of common stock and 55,000 warrants at $9.00 per share
and $.36 per share, respectively. This option is exercisable through April 2001.
Also in connection with this offering, the underwriter received and exercised an
over-allotment option to purchase 82,500 warrants at $.30 per warrant on the
same terms as described above. No redeemable warrants have been exercised as of
October 31, 1999.
Private Placement of Common Stock -- In March 1999, the Company received
$220,769 from an entity for 176,615 shares of the Company's common stock.
Concurrent with this transaction, the entity also received the right to elect
one member to the Company's Board of Directors.
F-11
<PAGE> 108
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Preferred Stock -- The Board of Directors has authority to divide the class
of the preferred stock into series and to fix and determine the relative rights
and preferences of the shares of any such series as permitted by the Company's
articles of incorporation at the time of designation.
During June 1996, the Company sold 208,335 units at $1.20 per unit in a
private offering. Each unit included two shares of Series A Convertible
Preferred Stock and one warrant. Ten warrants entitled the holder to purchase
one share of common stock at $10 per share and were exercisable through June
1998. Each share of Series A Preferred Stock was entitled to $.051 per annum
cumulative dividends and was convertible commencing in June 1997 at a rate of 10
shares of preferred stock for one share of common stock. Upon completion of the
public offering in April 1997, the preferred shares were automatically converted
into 51,020 shares of common stock and five warrants were automatically
exchanged for one redeemable warrant offered in the public offering.
Private Placement of Preferred Stock and Additional Warrant -- In June
1999, the Company sold 223,385 shares of its Series A Convertible Preferred
Stock in a private placement to Ecquisition Capital L.L.C. ("Ecquisition") for
$279,231. The Series A Preferred Stock is convertible by the holder at any time
into shares of common stock at $1.25 per share. It may also be converted at the
Company's option if the shares of the common stock underlying the conversion are
subject to an effective registration statement and have traded for a period of
20 consecutive trading days at a price in excess of 150% of the conversion
price.
The holders of the Series A Preferred Stock are entitled to receive
dividends at the annual rate of 10% per year. The dividend is payable only upon
conversion of the Series A Preferred Stock (dividend payment date). The dividend
is payable only by the issuance of shares of the Company's $.002 par value
common stock valued at fair market value on the dividend payment date. Each
share of Series A Preferred Stock is entitled to one vote.
In addition to the Series A Preferred Stock, Ecquisition also received a
warrant to purchase 80,000 shares of the Company's $.002 par value common stock
at an exercise price of $4.10 per share of common stock. The warrant has a term
of three years and expires on June 30, 2002. For purposes of the net loss per
common share calculation, the imputed value of this warrant was treated as a
dividend during the quarter ended August 1, 1999.
On November 11, 1999, Ecquisition converted the Series A Preferred Stock to
common stock. A total of 234,419 shares of common stock were issued in the
conversion which included 11,034 shares issued attributable to the dividend
feature.
Employee Stock Purchase Plan -- In June 1995, the Company adopted a
qualified Employee Stock Purchase Plan (ESPP). The Company has been authorized
through the ESPP to offer up to 10,000 shares per year over a three-year term
which expired in fiscal 1999, or a total of 30,000 shares, to the Company's
employees. The ESPP includes certain restrictions which preclude participation
by part-time employees and employees owning 5% or more of the Company's common
stock. The purchase price for the shares may not be less than 85% of the market
value of the stock on either the enrollment date or the exercise date as those
terms are defined in the ESPP. For the years ended January 31, 1999 and January
25, 1998, -0- and 84 shares, respectively, of common stock have been issued
under the ESPP. The ESPP expired in June 1998.
Stock Options -- In 1993, the Company adopted the 1993 Incentive Stock
Option Plan (the "Plan") which provides for the Company to grant options to
purchase up to 115,000 shares of the Company's common stock to officers,
employees, and directors of the Company. In fiscal 1999, the Company increased
the number of authorized shares to 165,000. Pursuant to the Plan, the Company
may grant incentive stock options (intended to qualify under Section 422 of the
Internal Revenue Code of 1986, as amended) and non-qualified stock options.
F-12
<PAGE> 109
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Incentive and non-qualified stock options may not be granted at an exercise
price of less than the fair market value of the common stock on the date of
grant (except for holders of more than 10% of common stock, whereby the exercise
price must be at least 110% of the fair market value at the date of grant for
incentive stock options). The term of the options may not exceed 10 years. Under
a formula approved by the Board of Directors, each outside director is
automatically granted stock options on their anniversary date for each full year
of service for the purchase of 5,000 shares of common stock at a price equal to
100% of the fair market value of the Company's common stock at the date of
grant. Each option is exercisable one year after the date of grant and expires
two years thereafter. At January 31, 1999, the Company had granted options under
the Plan to purchase 125,000 shares of which 107,500 options are vested and the
balance will vest over the next year. Options outstanding for the Plan at
January 31, 1999 have exercise prices that range from $1.00 to $7.00. As of
October 31, 1999, options granted under the Plan were 165,000, of which 155,000
are vested. From November 1, 1999 through January 24, 2000, options for the
purchase of 21,500 shares of common stock have been exercised for total proceeds
of approximately $78,300.
During fiscal 1996, the Company granted to directors of the Company 6,000
options to purchase common stock in return for guaranteeing the Company's
corporate office lease. These options have an exercise price of $5.00 per share
and expire in fiscal 2001. During January 2000, 2,160 shares of common stock
were issued for options representing 3,000 shares in cashless exercise of
options. The remaining options expired unexercised.
The following is a table of activity of the Plan:
<TABLE>
<CAPTION>
FISCAL 1999 FISCAL 1998
--------------------- ---------------------
WEIGHTED WEIGHTED
AVERAGE AVERAGE
NUMBER EXERCISE NUMBER EXERCISE
OF SHARES PRICE OF SHARES PRICE
--------- -------- --------- --------
<S> <C> <C> <C> <C>
Outstanding, beginning of year.............. 115,500 $5.528 66,500 $4.672
Granted to:
Employees.............................. -- -- 39,000 6.680
Directors.............................. 15,000 1.166 15,000 6.334
Forfeited................................. (5,500) 5.068 (5,000) 6.636
------- ------ ------- ------
Outstanding, end of year.................... 125,000 $5.026 115,500 $5.528
======= ====== ======= ======
</TABLE>
For all options granted during fiscal 1999 and 1998, the weighted average
market price of the Company's common stock on the grant date was approximately
equal to the weighted average exercise price. The fair market value of the
Company's common stock is determined by the quoted closing price on the date of
grant. The weighted average contractual life for all options as of January 31,
1999 was approximately 2.2 years, with the exercise prices ranging from $1.00 to
$7.00. At January 31, 1999, options for 126,000 shares were exercisable and
options for the remaining shares become exercisable pro rata through fiscal
2000. If not previously exercised, all options outstanding at January 31, 1999,
will expire as follows:
<TABLE>
<CAPTION>
WEIGHTED
AVERAGE
NUMBER EXERCISE
FISCAL YEARS OF SHARES PRICE
- ------------ --------- --------
<S> <C> <C>
2000................................................... 12,500 $6.700
2001................................................... 26,000 4.880
2001................................................... 15,000 5.000
2002................................................... 50,000 4.500
2002................................................... 15,000 1.166
2003................................................... 25,000 6.500
------- ------
143,500 $5.022
======= ======
</TABLE>
F-13
<PAGE> 110
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
Pro Forma Stock-Based Compensation Disclosures -- The Company applies APB
Opinion 25 and related interpretations in accounting for its stock options which
are granted to employees. Accordingly, no compensation cost has been recognized
for grants of options to employees since the exercise prices were not less than
the fair value of the Company's common stock on the grant dates. Had
compensation cost been determined based on the fair value at the grant dates for
awards under those plans consistent with the method of SFAS No. 123, the
Company's net loss and loss per share would have been increased to the pro forma
amount indicated below.
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------
JANUARY 31, JANUARY 25,
1999 1998
----------- -----------
<S> <C> <C>
Net loss applicable to common shareholders:
As reported...................................... $(1,059,688) $(587,175)
Pro forma........................................ $(1,111,468) $(772,750)
Net loss per common share (basic) and diluted:
As reported...................................... $ (1.19) $ (.80)
Pro forma........................................ $ (1.25) $ (1.05)
</TABLE>
For purposes of this disclosure, the weighted average fair value of the
options granted in fiscal 1999 and fiscal 1998 was $.900 and $4.086,
respectively. The fair value of each employee option granted in fiscal years
1999 and 1998, was estimated on the date of grant using the Black-Scholes option
pricing model with the following weighted average assumptions:
<TABLE>
<CAPTION>
FISCAL YEARS ENDED
--------------------------
JANUARY 31, JANUARY 25,
1999 1998
----------- -----------
<S> <C> <C>
Expected volatility................................... 133% 81%
Risk-Free interest rate............................... 4.2% 6.1%
Expected dividends.................................... -- --
Expected terms (in years)............................. 3 3.5
</TABLE>
7. INCOME TAXES:
The Company's actual effective tax rate differs from U.S. Federal corporate
income tax rate of 34% as follows for the fiscal years ended:
<TABLE>
<CAPTION>
JANUARY 31, JANUARY 26,
1999 1998
----------- -----------
<S> <C> <C>
Statutory rate........................................ (34.0%) (34.0%)
State income taxes, net of Federal income tax
benefit............................................. (3.3%) (3.3%)
Increase (reduction) in valuation allowance related to
of net operating loss carryforwards and change in
temporary differences............................... 37.3% 37.3%
----- -----
0% 0%
===== =====
</TABLE>
F-14
<PAGE> 111
PREMIER CONCEPTS, INC.
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The components of the net deferred tax asset recognized as of January 31,
1999 are as follows:
<TABLE>
<S> <C>
Deferred tax assets (liabilities):
Current --
Capitalized inventory............................... $ 86,000
Non-current --
Net operating loss carryforwards.................... 371,000
Other............................................... 37,000
Valuation allowance.................................... (494,000)
---------
Net deferred tax asset.............................. $ --
=========
</TABLE>
The valuation allowance was $236,000 at January 25, 1998 increased by
$258,000 for the year ended January 31, 1999.
At January 31, 1999, the Company had net operating loss carryforwards for
Federal tax purposes of approximately $995,000. Certain of the loss
carryforwards are subject to restrictions due to a greater than 50% change in
ownership in prior years. The loss carryforwards, unless utilized, will expire
from 2009 through 2019.
8. SUBSEQUENT EVENT (UNAUDITED):
In November 1999, the Board of Directors of the Company approved a plan for
a merger with AmazeScape.com, Inc. ("AmazeScape"). The pending merger is subject
to stockholder approval as well as execution of definitive agreements. At the
completion of this transaction, stockholders of AmazeScape will own
approximately 87% of the combined entity. It is anticipated that this
transaction will be accounted for as a purchase business combination. The
transaction will be treated as a reverse merger, with AmazeScape being the
surviving Company for financial statement purposes.
On November 12, 1999, the Company sold 228,571 shares of its common stock
in a private placement to International Monetary Group, Inc. (IMG). The $200,000
proceeds from the sale and the 228,571 shares of common stock are being held in
escrow. The escrowed funds are to be used as partial collateral to facilitate a
proposed sale leaseback financing of certain of the Company's property and
equipment. The funds and the shares of common stock will be released from the
escrow account upon certain terms and conditions, including the approval of the
Company's Board of Directors and consent of the lender in the proposed debt
financing. In the event the merger transaction described above is not
consummated prior to March 17, 2000 at IMG's option, the $200,000 will be
released from escrow and disbursed to IMG and the Company's common stock will be
returned and canceled. IMG also received a warrant to purchase 32,000 shares of
the Company's common stock for $4.10 per share, expiring in November 2001. The
stock purchase agreement also entitled IMG to elect one member to the Company's
Board of Directors.
F-15
<PAGE> 112
INDEPENDENT AUDITORS' REPORT
To the Board of Directors and Stockholders
AmazeScape.com Inc.
We have audited the accompanying balance sheet of AmazeScape.com Inc. (a
development stage enterprise) as of December 31, 1999 and the related statements
of operations, stockholders' equity and cash flows for the period from August 9,
1999 (inception) through December 31, 1999. These financial statements are the
responsibility of the Company's management. Our responsibility is to express an
opinion on these financial statements based on our audit.
We conducted our audit in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements enumerated above present fairly,
in all material respects, the financial position of AmazeScape.com Inc. as of
December 31, 1999, and the results of its operations and its cash flows for the
period from August 9, 1999 (inception) through December 31, 1999, in conformity
with generally accepted accounting principles.
Richard A. Eisner & Company, LLP
Florham Park, New Jersey
January 10, 2000
With respect to the third paragraph of Note A, February 7, 2000
F-16
<PAGE> 113
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
BALANCE SHEET
DECEMBER 31, 1999
<TABLE>
<S> <C>
ASSETS
Current assets:
Cash...................................................... $ 821,000
Subscriptions receivable (collected in January 2000)...... 1,775,000
Prepaid expenses.......................................... 394,000
----------
Total current assets.............................. 2,990,000
Website development costs, net.............................. 263,000
Equipment, net.............................................. 30,000
Deferred acquisition costs.................................. 911,000
----------
$4,194,000
==========
LIABILITIES
Current liabilities:
Notes payable -- affiliate................................ $ 26,000
Accounts payable and accrued expenses..................... 111,000
Current portion of capital lease obligation............... 4,000
----------
Total current liabilities......................... 141,000
----------
Obligation under capital lease, less current portion........ 8,000
----------
Total liabilities................................. 149,000
----------
Commitments
STOCKHOLDERS' EQUITY
Capital stock $.0005 par value
Preferred, authorized 10,000,000 shares
Series A, 3% cumulative, convertible, redeemable, 120
shares Authorized, issued and outstanding, liquidation
value $1,200,000.......................................
Series B, 3% cumulative, convertible, 1,500 shares
authorized, issued and outstanding, liquidation value
$1,500,000.............................................
Common, authorized 50,000,000 shares; 12,034,000 shares
issued and outstanding.................................... 6,000
Additional paid-in capital.................................. 4,259,000
Deficit accumulated during the development stage............ (220,000)
----------
Total stockholders' equity........................ 4,045,000
----------
$4,194,000
==========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-17
<PAGE> 114
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF OPERATIONS
PERIOD FROM AUGUST 9, 1999 (INCEPTION) THROUGH DECEMBER 31, 1999
<TABLE>
<S> <C>
Revenues.................................................... $ 0
---------
Operating costs and expenses:
General and administrative ($80,000 from equity
issuances)............................................. 220,000
---------
NET LOSS/COMPREHENSIVE LOSS................................. $(220,000)
=========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-18
<PAGE> 115
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF STOCKHOLDERS' EQUITY
(NOTES A AND F)
FOR THE PERIOD FROM AUGUST 9, 1999 (INCEPTION)
THROUGH DECEMBER 31, 1999
<TABLE>
<CAPTION>
DEFICIT
PREFERRED STOCK ACCUMULATED
------------------- COMMON STOCK ADDITIONAL DURING THE
SERIES A SERIES B ------------------- PAID-IN DEVELOPMENT
SHARES SHARES SHARES AMOUNT CAPITAL STAGE TOTAL
-------- -------- ---------- ------ ---------- ----------- ----------
<S> <C> <C> <C> <C> <C> <C> <C>
Equipment contributed by founders... $ 21,000 $ 21,000
Expenditures incurred by founders on
behalf of the Company............. 111,000 111,000
Issuance of shares to founders at
par value......................... 11,075,000 $6,000 6,000
Issuance of shares at $1.00 per
share for website development in
September 1999, at fair value..... 375,000 375,000 375,000
Issuance of shares at $1.00 per
share for website development and
hosting in September 1999, at fair
value............................. 200,000 200,000 200,000
Issuance of shares at $1.00 per
share in connection with the
merger transaction in October
1999, at fair value............... 350,000 350,000 350,000
Issuance of warrants to purchase
595,000 shares of common stock
exercisable at $1.00 per share for
fair value of services in October
1999.............................. 452,000 452,000
Issuance of shares, net of issuance
costs in December 1999............ 120 1,180,000 1,180,000
Issuance of shares, net of issuance
costs in December 1999............ 1,500 1,485,000 1,485,000
Issuance of shares at $2.50 per
share for consulting services in
December
1999.............................. 34,000 85,000 85,000
Net loss/comprehensive loss......... $(220,000) (220,000)
--- ----- ---------- ------ ---------- --------- ----------
120 1,500 12,034,000 $6,000 $4,259,000 $(220,000) $4,045,000
=== ===== ========== ====== ========== ========= ==========
</TABLE>
The accompanying notes are an integral part of these financial statements
F-19
<PAGE> 116
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
STATEMENT OF CASH FLOWS
<TABLE>
<CAPTION>
PERIOD FROM
AUGUST 9,
1999
(INCEPTION)
THROUGH
DECEMBER 31,
1999
------------
<S> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss.................................................. $(220,000)
Adjustments to reconcile net loss to net cash used in
operating activities:
Expenses paid by founders treated as capital
contributed........................................... 36,000
Common stock issued for services....................... 55,000
Notes payable issued for services...................... 26,000
Depreciation and amortization.......................... 42,000
Changes in:
Prepaid expenses..................................... (61,000)
Accounts payable and accrued expenses................ 111,000
---------
Net cash used in operating activities............. (11,000)
---------
CASH FLOWS FROM INVESTING ACTIVITY:
Website development costs................................. (19,000)
---------
Net cash used in investing activity............... (19,000)
---------
CASH FLOWS FROM FINANCING ACTIVITIES:
Net proceeds from issuance of Series B preferred stock.... 908,000
Deferred acquisition costs................................ (56,000)
Capital lease payments.................................... (1,000)
---------
Net cash provided by financing activities......... 851,000
---------
Net increase in cash........................................ 821,000
---------
Cash, beginning of period
CASH, END OF PERIOD......................................... $ 821,000
=========
SUPPLEMENTAL DISCLOSURES OF NONCASH INVESTING AND FINANCING
ACTIVITIES:
Issuance of 563,000 common shares to affiliates for
Website development.................................... $ 563,000
Equipment acquired under capital lease.................... 13,000
Founder's contribution of equipment....................... 21,000
Issuance of warrants to consultant for merger
transaction............................................ 452,000
Costs paid by founders for website development and raising
capital................................................ 75,000
Issuance of 350,000 common shares in connection with the
merger transaction..................................... 350,000
</TABLE>
The accompanying notes are an integral part of these financial statements
F-20
<PAGE> 117
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS
DECEMBER 31, 1999
NOTE A -- ORGANIZATION AND OPERATIONS
AmazeScape.Com, Inc. (the "Company") was organized as a Nevada corporation
in August 1999. The Company is in the development stage and intends to market
and maintain a multi-lingual Internet portal and community website and to
conduct business as an internet service provider. Through December 31, 1999, the
Company has not received any revenues.
There is no assurance that the Company's developmental and marketing
efforts will be successful, that the Company will ever have commercially
accepted products, or that the Company will achieve significant revenues from
any such products. The Company has incurred a net loss since inception. In
addition, the Company operates in an environment of rapid change in technology
and is dependent upon the services of its employees and its consultants. If the
Company is unable to successfully commercialize its technologies, it is unlikely
that the Company could continue its business.
In November 1999, the Boards of Directors of Premier Concepts, Inc.
("Premier"), a public company, and the Company approved a plan for a merger of
the two entities. The pending merger is subject to Premier stockholder approval.
A definitive agreement was executed on February 7, 2000. Premier is a specialty
retailer of faux jewelry. Premier's 33 store locations operate nationally.
The proposed terms of the merger include an exchange of the Company's
outstanding common stock for common stock of Premier. The Company will merge
into a newly-formed wholly-owned subsidiary of Premier with the Company
surviving the merger. Holders of the Company's Series A preferred stock will
receive one share of Premier's Series B convertible preferred stock. Holders of
the Company's Series B preferred stock will be required to convert their shares
into common stock of the Company, which will be included in the proposed common
stock exchange (Note F). The common stockholders of the Company will receive
approximately 12,463,000 newly issued common shares of Premier. At the
consummation of this transaction, stockholders of the Company will own a
substantial majority of the combined entity. It is anticipated that this
transaction will be recorded as a purchase business combination whereby the
Company is treated as the accounting acquirer. The total purchase price relating
to this transaction is approximately $13,000,000.
NOTE B -- SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
[1] Equipment:
Equipment acquired under capital lease is recorded at cost. Equipment
contributed is recorded at fair value which approximates historical cost. The
cost of maintenance and repairs is charged against results of operations as
incurred. Depreciation is charged against results of operations using the
straight-line method over the estimated economic useful life.
[2] Website development costs:
The Company accounts for its website development costs in a manner
consistent with the American Institute of Certified Public Accountants Statement
of Position 98-1, "Accounting for the Costs of Computer Software Developed or
Obtained for Internal Use" ("SOP 98-1"). SOP 98-1 requires all costs related to
the development of internal use software other than those incurred during the
application development stage to be expensed as incurred. Costs incurred during
the application development stage are required to be capitalized and amortized
over the estimated useful life of the software. The Company is amortizing its
capitalized website development costs over 24 months.
F-21
<PAGE> 118
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
[3] Income taxes:
The Company recognizes deferred tax liabilities and assets for the expected
future tax consequences of events that have been included in the financial
statements or tax returns. Under this method, deferred tax liabilities and
assets are determined on the basis of the differences between the tax basis of
assets and liabilities, and their respective financial reporting amounts
("temporary differences") at enacted tax rates in effect for the years in which
the differences are expected to reverse.
[4] Use of estimates:
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the amount of assets and liabilities, disclosures of
contingent assets and liabilities at the date of the financial statements, and
the reported amounts of revenue and expenses during the reporting period.
[5] Stock-based compensation:
Statement of Financial Accounting Standards No. 123, "Accounting for
Stock-Based Compensation" ("FAS 123") allows companies to either expense the
estimated fair value of stock options and warrants, or to continue following the
intrinsic value method set forth in Accounting Principles Board Opinion 25,
"Accounting for Stock Issued to Employees" ("APB 25") but disclose the pro forma
effects on net income had the fair value of the options and warrants been
expensed. The Company has elected to apply APB 25 in accounting for its stock
based incentive plans. Equity instruments issued to non-employees are measured
based on their fair values.
[6] Cash:
As of December 31, 1999, the Company maintained one account with a
financial institution. The cash balance exceeded the FDIC insured limit at that
date.
[7] Merger costs:
Merger costs represent direct incremental external costs incurred in
connection with the acquisition/merger transaction. Such costs will be included
as part of the purchase price of Premier Concepts, Inc. If such merger is not
consummated, the costs will be expensed.
NOTE C -- EQUIPMENT
Equipment as of December 31, 1999 consists of the following:
<TABLE>
<CAPTION>
USEFUL LIVES
IN YEARS
------------
<S> <C> <C>
Computers...................................... 5 $16,000
Computers subject to capital lease............. 5 13,000
Software....................................... 3 5,000
-------
34,000
Less accumulated depreciation.................. 4,000
-------
$30,000
=======
</TABLE>
Included in depreciation expense for the period August 9, 1999 (inception)
through December 31, 1999 is amortization on equipment under capital lease of
$2,000.
F-22
<PAGE> 119
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
NOTE D -- OBLIGATION UNDER CAPITAL LEASE
As of December 31, 1999, the future minimum lease payments under a capital
lease are as follows:
<TABLE>
<CAPTION>
YEAR ENDING
DECEMBER 31,
- ------------
<S> <C>
2000..................................................... $ 6,000
2001..................................................... 6,000
2002..................................................... 3,000
-------
15,000
Less amount representing interest.......................... 3,000
-------
Capital lease payable...................................... 12,000
Less current portion....................................... 4,000
-------
Long-term capital lease payable............................ $ 8,000
=======
</TABLE>
NOTE E -- NOTES PAYABLE -- AFFILIATE
An entity, controlled by a stockholder of the Company, advanced funds on
behalf of the Company. These borrowings are due no later than June 30, 2000 and
accrue interest at 10% per annum.
NOTE F -- CAPITAL TRANSACTIONS
Common Stock:
In August 1999, the Company issued 11,075,000 shares of common stock to the
founding stockholders at par value. The purchase price of such shares amounted
to approximately $6,000. The Company received the proceeds subsequent to
December 31, 1999 and such amount is included in subscriptions receivable as of
December 31, 1999.
From August 9, 1999 (inception) through December 31, 1999, the Company
issued 959,000 common shares in exchange for services rendered to the Company.
925,000 of such shares were valued at $1.00 per share and 34,000 shares were
valued at $2.50 per share. 575,000 shares were issued in September 1999, 350,000
shares were issued in October 1999 and 34,000 shares were issued in December
1999. 575,000 of such shares were issued to entities controlled by certain
stockholders of the Company for services related to website development
activities. 563,000 shares valued at $1.00 per share were capitalized as website
development costs, including $290,000 as prepaid expenses, 12,000 shares valued
at $1.00 per share were expensed, 34,000 shares valued at $2.50 per share were
capitalized as prepaid consulting fees, and 350,000 shares valued at $1.00 per
share were capitalized as deferred merger costs.
Preferred stock:
During the period August 9, 1999 (inception) through December 31, 1999, the
Company issued 120 shares of Series A preferred stock for $1,200,000 and issued
1,500 shares of its Series B preferred stock for $1,500,000. The Company
received $931,000 prior to December 31, 1999. The balance of $1,769,000 is
included in subscriptions receivable as of December 31, 1999 and was
subsequently collected.
The Company's Series A preferred stock is redeemable at the option of the
Company, in whole or in part, at a liquidation value of $10,000 per share plus
accrued and unpaid dividends. The Series A preferred stock has an annual
dividend rate of 3% and such dividends are cumulative. Each share of Series A
preferred stock is convertible, at the option of the holder, into approximately
3,077 shares of common stock subject to
F-23
<PAGE> 120
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
adjustment for stock splits and other similar changes in equity as defined in
the Preferred Stock Certificate of Designation. All Series A preferred stock
automatically convert into common stock upon the 2nd anniversary of the date of
issuance.
Each share of the Company's Series B preferred stock is convertible, at the
option of the holder, into approximately 286 shares of common stock subject to
adjustment for stock splits and other similar changes in equity as defined in
the Preferred Stock Certificate of Designation. All Series B preferred stock
automatically convert into common stock upon either a) the 2nd anniversary of
the date of issuance or b) a merger transaction whereby the common stock is
exchanged for securities registered under the Securities Act of 1933. The Series
B preferred stock has an annual dividend of 3% and such dividends are
cumulative. Each share of Series B preferred stock has a liquidation value of
$1,000 plus accrued and unpaid dividends.
Warrants:
In October 1999, the Company issued directors warrants to purchase 125,000
shares of common stock. Had compensation cost been determined based upon the
fair value at the grant date consistent with the methodology prescribed under
FAS 123, the Company's net loss would have been $308,000.
Also in October 1999, the Company issued warrants to purchase 950,000
shares of common stock in connection with professional services rendered (Note
I). In January 2000, 355,000 of such warrants were canceled and 355,000 new
warrants were issued (Note J).
The fair value of each warrant granted has been estimated on the date of
grant using the Black-Scholes pricing model with the following assumptions: zero
dividend yield, expected volatility of 130%, risk free interest rate of
approximately 5.3% and expected lives of 3 years. The fair value of 595,000
immediately exercisable warrants which approximated $452,000 has been recorded
as deferred merger costs.
As of December 31, 1999, the Company had outstanding warrants to purchase
1,075,000 shares of common stock at an exercise price of $1.00. These warrants
expire October 2002. As of December 31, 1999, 1,872,801 shares have been
reserved for the exercise of warrants and conversion of preferred stock.
NOTE G -- INCOME TAXES
There is no provision for federal, state or local income taxes for the
period ended December 31, 1999, since the Company has incurred a net operating
loss for the period.
The Company's deferred tax asset as of December 31, 1999 represents a
benefit from net operating loss carryforwards of approximately $75,000, which is
reduced by a valuation allowance of approximately $75,000 since the future
realization of such tax benefit is not presently determinable.
As of December 31, 1999, the Company has a net operating loss carryforward
of $220,000 expiring in 2019 for federal income tax purposes. In the event of
potential future ownership changes (Note A), Internal Revenue Code Section 382
may limit the amount of such net operating loss carry forward available to
offset future taxable income.
NOTE H -- COMMITMENTS
During 1999, the Company entered into employment agreements with two key
executives expiring in October 2002. Under the terms of the agreements, the base
annual compensation is $100,000 per executive. Additionally, one of the
agreements, among other things, includes provisions for a bonus based on 2.5% of
the Company's increase in sales and 5% of the Company's increase in earnings
before interest, taxes, depreciation and amortization.
F-24
<PAGE> 121
AMAZESCAPE.COM INC.
(A DEVELOPMENT STAGE ENTERPRISE)
NOTES TO FINANCIAL STATEMENTS -- (CONTINUED)
The Company is obligated to pay an entity controlled by a stockholder of
the Company a minimum of $10,000 per month for web hosting and maintenance
services through September 2000.
NOTE I -- CONSULTING AGREEMENTS
In October 1999, the Company entered into a management services agreement
(the "Agreement") with Infusion Capital Partners ("Infusion"). Infusion is to
provide financial advisory services to the Company. As compensation, Infusion
received warrants to purchase 950,000 shares of the Company's common stock at an
exercise price of $1.00 per share. 595,000 of such warrants are exercisable
immediately on a cashless basis and expire in October 2002. In the event a
merger is not consummated by June 30, 2000, the Company has the right to
purchase the warrants at a price of $1.00 per warrant. The Agreement expires in
October 2000 and may be canceled by either party as defined in the Agreement. In
January 2000, the remaining warrants to purchase 355,000 shares of common stock
were canceled (Note J).
In December 1999, the Company entered into a second management services
agreement with Infusion in which Infusion is to locate, structure and implement
an equity investment in the Company. As compensation, Infusion is to receive
$120,000 plus 34,280 common shares valued at $85,000. The Agreement expires in
February 2000.
NOTE J -- SUBSEQUENT EVENTS
WARRANTS:
In January 2000, the Company canceled warrants issued to Infusion to
purchase 355,000 shares of common stock at an exercise price of $1.00 per share.
The warrant exercise was conditional upon the Company's common stock reaching
certain market price levels. In connection with canceling the warrants, the
Company issued to Infusion warrants to purchase 355,000 shares of common stock
at an exercise price of $1.00. Such warrants are exercisable immediately on a
cashless basis. In the event a merger is not consummated by June 30, 2000, the
Company has the right to purchase the warrant at a price of $1.00. As a result
of this transaction, the Company will record the value of these warrants, which
approximate $4,123,000, as deferred merger costs. The fair value of these
warrants has been estimated on the date of grant using the Black-Scholes pricing
model with the following assumptions: zero dividend yield; expected volatility
of 130%; risk free interest rate of approximately 5.3%; and expected lives of
three years.
CONTRACTS:
In January 2000, the Company entered into an agreement with a third party
in which the third party will provide translation services in connection with
the Company's website. The agreement will continue for one year periods unless
terminated by either party as defined in the agreement. Fees to be paid by the
Company will be based upon volume of translations per month. There is no minimum
monthly fee associated with this agreement.
In January 2000, the Company entered into an agreement with a third party
in which the Company will become a reseller of the third party's dial up network
services. The initial term of the agreement is for three years with automatic
one year renewal options unless terminated by either party as defined in the
agreement. The fees to be paid by the Company will generally be based upon the
volume of subscribers provided by the Company. The Company is obligated to a
minimum monthly usage commitment of $500 with additional incremental charges to
be assessed to the Company if the minimum usage commitment is not met.
F-25
<PAGE> 122
PREMIER CONCEPTS, INC. AND AMAZESCAPE.COM
PRO FORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (UNAUDITED)
INTRODUCTION
AmazeScape.com (AmazeScape), and Premier Concepts, Inc. (Premier), entered
into a merger agreement, whereas AmazeScape shareholders will retain
approximately 89% of the common stock of the combined entity. Therefore, for
financial statement purposes, AmazeScape is considered the acquiring company,
and the transaction has been treated as a purchase by AmazeScape of Premier. For
legal purposes, however, Premier remained the surviving entity. The net assets
of Premier acquired in the merger are recorded at their historical recorded
value which approximates their fair market value.
The accompanying unaudited pro forma combining, condensed balance sheet
combines the balance sheet of Premier as of October 31, 1999 with the balance
sheet of AmazeScape as of December 31, 1999.
The accompanying unaudited pro forma combining, condensed statement of
operations combine the operations of Premier for the nine months ended October
31, 1999 with the operations of Amazescape for the period from inception (August
9, 1999) to December 31, 1999, as if the merger was completed as of the
beginning of Premier's fiscal year.
AmazeScape is a development stage enterprise which began operations on
August 9, 1999. As such, combined, condensed pro forma operating results for
Premier's year ended January 31, 1999 are not presented. For the year ended
January 31, 1999, Premier Concepts, Inc. had a net loss of approximately
$1,060,000, or $1.19 per share. Assuming the goodwill associated with the merger
had been recorded by Premier on January 26, 1998, the resulting amortization of
goodwill would have increased the loss to $3,197,000, or $3.60 per share for the
year ended January 31, 1999.
These statements are not necessarily indicative of future operations or the
actual results that would have occurred had the merger been consummated at the
beginning of the periods indicated.
The unaudited pro forma combined, condensed financial statements should be
read in conjunction with the historical financial statements and notes thereto,
included elsewhere in this document.
F-26
<PAGE> 123
PREMIER CONCEPTS, INC. AND AMAZESCAPE.COM
COMBINING, CONDENSED BALANCE SHEET (UNAUDITED)
<TABLE>
<CAPTION>
(A)
PRO FORMA
ADJUSTMENTS
PREMIER -----------
CONCEPTS, INC. AMAZESCAPE.COM PRO FORMA
10/31/1999 12/31/1999 MERGER COMBINED
-------------- -------------- ----------- -----------
<S> <C> <C> <C> <C>
CURRENT ASSETS:
Cash and cash equivalents............ $ 138,000 $2,596,000 $ -- $ 2,734,000
Inventories.......................... 2,076,000 -- 2,076,000
Other current assets................. 165,000 394,000 -- 559,000
---------- ---------- ----------- -----------
Total Current Assets......... 2,379,000 2,990,000 -- 5,369,000
Property and equipment, net............ 2,522,000 293,000 -- 2,815,000
Intangible assets...................... 54,000 -- 10,685,000 10,739,000
Other assets........................... 71,000 911,000 (911,000) 71,000
---------- ---------- ----------- -----------
Total Assets................. $5,026,000 $4,194,000 $ 9,774,000 $18,994,000
========== ========== =========== ===========
CURRENT LIABILITIES:
Leases and Notes
payable -- current................ $ 583,000 $ 30,000 $ -- $ 613,000
Account payable and accrued
expenses.......................... 1,827,000 111,000 500,000 2,438,000
---------- ---------- ----------- -----------
Total current liabilities.... 2,410,000 141,000 500,000 3,051,000
Other liabilities...................... 240,000 8,000 -- 248,000
---------- ---------- ----------- -----------
Total Liabilities............ 2,650,000 149,000 500,000 3,299,000
---------- ---------- ----------- -----------
Shareholders' Equity................... 2,376,000 4,045,000 9,274,000 15,695,000
---------- ---------- ----------- -----------
Total Liabilities and
Equity..................... $5,026,000 $4,194,000 $ 9,774,000 $18,994,000
========== ========== =========== ===========
</TABLE>
F-27
<PAGE> 124
PREMIER CONCEPTS, INC. AND AMAZESCAPE.COM
COMBINING, CONDENSED STATEMENT OF OPERATIONS (UNAUDITED)
<TABLE>
<CAPTION>
PREMIER AMAZESCAPE.COM
CONCEPTS, INC. INCEPTION
NINE MONTHS (AUGUST 9, 1999) (B)
ENDED THROUGH PRO FORMA
10/31/1999 12/31/1999 ADJUSTMENTS PRO FORMA
-------------- ---------------- ----------- -----------
<S> <C> <C> <C> <C>
Total Revenues............................... $8,548,000 $ -- $ -- $ 8,548,000
Cost of Goods Sold........................... 2,569,000 -- -- 2,569,000
---------- --------- ----------- -----------
Gross Margin................................. 5,979,000 -- -- 5,979,000
Operating Expenses........................... 6,738,000 220,000 1,603,000 8,561,000
---------- --------- ----------- -----------
Operating Loss............................... (759,000) (220,000) (1,603,000) (2,582,000)
Other income (expense), net............. (27,000) (27,000)
---------- --------- ----------- -----------
Net Loss..................................... (786,000) (220,000) (1,603,000) (2,609,000)
Preferred Stock dividends............... (167,000) (167,000)
---------- --------- ----------- -----------
Net Loss available to common shareholders.... $ (953,000) $(220,000) $(1,603,000) $(2,776,000)
========== ========= =========== ===========
Net Loss per Share (basic and diluted)....... $ (0.95) $ (.021)
========== ===========
Weighted Average Shares...................... 1,008,000 11,988,000 12,996,000
========== =========== ===========
</TABLE>
F-28
<PAGE> 125
FOOTNOTES
(A) To reflect the acquisition of Premier Concepts, Inc. (Premier), in a
purchase transaction with AmazeScape.com Inc. (AmazeScape), accounted for as a
reverse merger. The acquisition price was determined as follows:
- The fair market value of Premier's common stock and outstanding
options and warrants at and around the date the merger was publicly
announced (November 17, 1999) was $4,330,000. Premier's book value at
October 31, 1999 (after taking into effect the exercise of options
totalling $103,000, and the sale of common stock totalling $200,000
subsequent to October 31, 1999) was $2,679,000.
- Estimated costs of the merger including (i)(A) cash (approximately
$609,000), and (B) common stock and warrants (valued at approximately
$4,925,000), issued for services in connection with the merger, and
(ii) 250,000 shares to be issued to certain individuals immediately
prior to the merger as arrangers' fees. For the purposes of the pro
forma financial statements, these shares have been valued at $14.00
per share, representing the approximate quoted market price of
Premier's common stock on February 11, 2000 (approximately
$3,500,000).
- No pro forma effect has been given to Premier's "Series A" warrants
issued as part of its initial public offering as the warrants'
expiration date precedes the anticipated merger date.
(B) Goodwill associated with the merger will be amortized over its
estimated life of five years.
F-29
<PAGE> 126
APPENDIX A
MAIL TO: SECRETARY OF STATE
CORPORATIONS SECTION
1560 BROADWAY, SUITE 200
DENVER, CO 80202
(303) 894-2251
FAX (303) 894-2242
MUST BE TYPED
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ARTICLES OF AMENDMENT
TO THE
ARTICLES OF INCORPORATION
Pursuant to the provisions of the Colorado Business Corporation Act, the
undersigned corporation adopts the following Articles of Amendment to its
Articles of Incorporation:
FIRST: The name of the corporation is Premier Concepts, Inc.
SECOND: The following amendment to the Articles of Incorporation was
adopted on , 2000, as prescribed by the Colorado Business
Corporation Act, in the manner marked with an X below:
[ ] No shares have been issued or Directors Elected -- Action by
Incorporators
[ ] No shares have been issued but Directors Elected -- Action by
Directors
[ ] Such amendment was adopted by the board of directors where shares
have been issued and shareholder action was not required.
[X] Such amendment was adopted by a vote of the shareholders. The number
of shares voted for the amendment was sufficient for approval.
THIRD: If changing corporate name, the new name of the corporation is
AmazeScape.com Inc.
FOURTH: The manner, if not set forth in such amendment, in which any
exchange, reclassification, or cancellation of issued shares provided for in the
amendment shall be effected, is as follows:
See Exhibit A (attached)
If these amendments are to have a delayed effective date, please list that date:
N/A
(NOT TO EXCEED NINETY (90) DAYS FROM THE DATE OF FILING)
PREMIER CONCEPTS, INC.
Signature:
--------------------------------------
Title: President and Chief Executive
Officer
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EXHIBIT A
PREMIER CONCEPTS, INC.
AMENDMENT TO ARTICLES OF INCORPORATION
The Articles of Incorporation of Premier Concepts, Inc., a Colorado
corporation (the "Corporation") are hereby further amended by the addition
thereto of a new Section 3 of Article IV thereof, to read in full as follows:
"Section 3. Of the shares of preferred stock authorized in Section 1 of
this Article IV, there is hereby designated a series of Preferred Stock of the
Corporation, consisting of one hundred twenty (120) shares, which series shall
have the following powers, designations, preferences and relative,
participating, optional and other rights, and the following qualifications,
limitations and restrictions:
a. Designation and Amount. This series of Preferred Stock shall be
designated "Series B Convertible Preferred Stock" and the authorized number of
shares constituting such series shall be one hundred and twenty (120).
b. Dividend Rights of Series B Convertible Preferred Stock. The holders of
the shares of Series B Convertible Preferred Stock shall be entitled to regular
dividends equal to three percent (3%) of the Series B Preference Amount (as
defined in subparagraph c(i)(A) per annum, payable either (i) in cash, from the
surplus profits of the Corporation, to the extent there are such surplus profits
or, at the sole option of the Corporation, (ii) in common stock, $.002 par
value, of the Corporation (the "Common Stock") equal to that number of shares of
Common Stock determined by dividing the accrued dividend amount by the Current
Market Value (as defined below); provided, that in no case shall fractional
shares of Common Stock be distributed but, rather, in lieu thereof, the
Corporation shall pay cash equal to such fraction multiplied by such closing bid
price. Such dividends shall be cumulative.
For purposes hereof, "Current Market Value" shall mean the average "closing
price" of the Corporation's Common Stock on the trading days immediately prior
to the date the dividend is declared (the "Declaration Date"). The "closing
price" for each day shall be the last quoted sale price or, if not so quoted,
the average of the high bid and low asked prices in the over-the-counter market,
as reported by the National Association of Securities Dealers, Inc. Automated
Quotation System or such other system then in use, or, on any such date the
Common Stock or such other securities are not quoted by any such organization,
the average of the closing bid and asked prices as furnished by a professional
market maker making a market in the Common Stock or such other securities
selected by the Board. If the Common Stock is listed or admitted to trading on a
national securities exchange, the closing price shall be the last sale price,
or, in case no such sale takes place on such day, the average of the closing bid
and asked prices, in either case as reported in the principal consolidated
transaction reporting system with respect to securities listed or admitted to
trading on the New York Stock Exchange or, if the Common Stock on such other
securities are not listed or admitted to trading on the New York Stock Exchange,
as reported in the principal consolidated transaction reporting system with
respect to securities listed on the principal national securities exchange on
which the Common Stock or such other securities are listed or admitted to
trading. If the Common Stock or such other securities are not publicly held or
so listed or publicly traded, "Current Market Price" shall mean the fair market
value per share of Common Stock or of such other securities as determined in
good faith by the Board based on such assumptions as the Board shall deem to be
necessary and appropriate.
c. Preference on Liquidation.
(i) In the event of any liquidation, dissolution, or winding up of the
Corporation, either voluntary or involuntary, distributions to the shareholders
of the Corporation shall be made in the following manner:
(A) The holders of Series B Convertible Preferred Stock shall be
entitled to receive, prior and in preference to any distribution of any of
the assets or surplus funds to the holders of the Common Stock or
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any other class or series of stock of this Corporation which by its terms
ranks junior to the Series B Convertible Preferred Stock by reason of their
ownership of such stock, an amount for each share of Series B Convertible
Preferred Stock then held by them, equal to $10,000, appropriately adjusted
for any combinations, consolidations, stock distributions or stock
dividends with respect to such shares (hereinafter such amount shall be
referred to as the "Series B Preference Amount"). If upon occurrence of
such event of liquidation, dissolution or winding up, the assets and
property legally available to be distributed among the holders of the
Series B Convertible Preferred Stock (after satisfaction of the liquidation
preference of any class or series of stock of this Corporation which by its
terms ranks senior to the Series B Convertible Preferred Stock) shall be
insufficient to permit the payment to such holders of the Series B
Preference Amount, then the entire assets and property of the Corporation
legally available for distribution shall be distributed ratably among the
holders of the Series B Convertible Preferred Stock together with the
holders of any other series of Preferred Stock ranking on parity with the
Series B Convertible Preferred Stock.
(B) After payment has been made to the holders of the Series B
Convertible Preferred Stock of the full amounts to which they shall be
entitled pursuant to subparagraph c(i)(A) above, all remaining assets
available for distribution, if any, shall be distributed, ratably among the
holders of the Common Stock based upon the number of shares of Common Stock
then held.
(ii) The holders of Series B Convertible Preferred Stock shall have no
priority or preference with respect to distributions made by the Corporation in
connection with the repurchase of shares of Common Stock issued to or held by
employees, directors or consultants upon termination of their employment or
services pursuant to agreements providing for the right of said repurchase
between the Corporation and such persons.
d. Voting Rights. With respect to any matter upon which the shareholders
have a right to vote, each holder of the Series B Convertible Preferred Stock
shall be entitled to one vote for each share of Common Stock into which such
holders Series B Convertible Preferred Stock may be converted pursuant to
paragraph 5 below. The votes of the holders of Series B Convertible Preferred
Stock shall be counted together with those of the holders of Common Stock, and
not separately as a class or group, except as otherwise provided by applicable
law, by the Articles of Incorporation or by a resolution of the Board of
Directors.
e. Conversion Rights. The holders of Series B Convertible Preferred Stock
shall have conversion rights as follows:
(i) The holders shall deliver to the Corporation a notice of
conversion (a "Notice of Conversion") and the original shares of Series B
Convertible Preferred Stock to be converted within five (5) business days
from the Conversion Date (as hereinafter defined). A Notice of Conversion
may only be served on a business day between the hours of 9:00 a.m. and
5:00 p.m., local time at the principal business offices of the Corporation,
and shall be deemed delivered upon facsimile receipt by the Corporation
with such time period or the next business day if served after 5:00 p.m.,
local time at the principal business offices of the Corporation. The
Corporation shall then deliver to the holders within five (5) business days
of facsimile receipt (provided that the original shares of Series B
Convertible Preferred Stock were delivered to the Corporation within five
(5) business days of the Conversion Date) of the holder's Notice of
Conversion the appropriate number of shares of Common Stock. For purposes
hereof, "Conversion Date" shall mean the date on which the holders give
notice of conversion by facsimile to the Corporation.
(ii) Each share of Series B Convertible Preferred Stock shall be
convertible, at the option of the holder thereof, at any time after the
date of issuance of such share, at the office of the Corporation or any
transfer agent for the Series B Convertible Preferred Stock, into Common
Stock as more fully described below; except, however, a holder of shares of
Series B Convertible Preferred Stock shall not be entitled to convert any
such shares once they are the subject of a Redemption Notice (as defined in
paragraph h). The number of shares of fully paid and nonassessable Common
Stock into which each share of Series B Convertible Preferred Stock may be
converted shall be determined by dividing the Series B Preference Amount by
a price per share equal to $3.25 (the "Conversion Price"), subject to
adjustment, if any, as provided in paragraph f below.
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(iii) Notwithstanding anything in the foregoing to the contrary, each
share of Series B Convertible Preferred Stock shall automatically be
converted into shares of Common Stock at the Conversion Price, as adjusted,
for each such share upon the second (2nd) anniversary of the date of
issuance of the shares of Series B Convertible Preferred Stock (in such
case the second anniversary shall be deemed a Conversion Date).
(iv) No fractional shares of Common Stock shall be issued upon
conversion of Series B Convertible Preferred Stock. In lieu of any
fractional shares to which the holder would otherwise be entitled, the
Corporation shall pay cash equal to such fraction multiplied by the closing
bid price of the Common Stock on the Conversion Date. In the event of an
automatic conversion pursuant to subparagraph c(iii), the outstanding
shares of all Series B Convertible Preferred Stock shall be converted
automatically and the original shares of Series B Convertible Preferred
Stock and the shares of Common Stock shall be delivered in accordance with
subparagraph e(i). In the event that a holder notifies the Corporation that
its certificates evidencing its shares of Series B Convertible Preferred
Stock have been lost, stolen or destroyed, the holder shall execute an
agreement satisfactory to the Corporation to indemnify the Corporation from
any loss incurred in connection with such certificates.
(v) The Corporation shall, within five (5) business days after a
Conversion Date issue and deliver at such office to such holder of Series B
Convertible Preferred Stock, a certificate or certificates for the number
of shares of Common Stock to which the holder shall be entitled as
aforesaid and a check payable to the holder, or order, in the amount of any
cash amounts payable as the result of a conversion into fractional shares
of Common Stock, and a certificate for any shares of Series B Convertible
Preferred Stock not so converted. Such conversion shall be deemed to have
been made immediately prior to the close of business on the Conversion
Date, and the person or persons entitled to receive the shares of Common
Stock issuable upon such conversion shall be treated for all purposes as
the record holder or holders of such shares of Common Stock on such date.
(vi) In the event of any taking by the Corporation of a record of the
holders of any class of shares of securities for the purpose of determining
the holders thereof who are entitled to receive any dividend (other than a
cash dividend) or other distribution, any right to subscribe for, purchase
or otherwise acquire any shares of stock of any class or any other
securities or property, or to receive any other right, the Corporation
shall mail to each holder of Series B Convertible Preferred Stock, at least
twenty (20) days prior to the date specified therein, a notice specifying
the date on which any such record is to be taken for the purpose of such
dividend, distribution or right, and the amount and character of such
dividend, distribution or right.
(vii) Upon any conversion of Series B Convertible Preferred Stock
pursuant to this paragraph 5, the shares of Series B Convertible Preferred
Stock which are converted shall not be reissued. Upon conversion of all of
the then outstanding Series B Convertible Preferred Stock pursuant to this
paragraph c and upon the taking of any action required by law, all matters
set forth herein shall be eliminated from the Articles of Incorporation,
shares of Series B Convertible Preferred Stock shall not be deemed
outstanding for any purpose whatsoever and all such shares shall revert to
the status of authorized and unissued shares of preferred stock.
(viii) Unless otherwise set forth herein, any notices required by the
provisions of this paragraph e to be given to the holders of shares of
Series B Convertible Preferred Stock shall be deemed given if deposited in
the United States mail, first class, postage prepaid and addressed to each
holder of record at its address appearing on the books of the Corporation.
f. Adjustments to Conversion Price.
(i) In the event the Corporation at any time or from time to time effects a
subdivision or combination of its outstanding Common Stock into a greater or
lesser number of shares without a proportionate and corresponding subdivision or
combination of its outstanding Series B Convertible Preferred Stock, then and in
each such event the Conversion Price shall be decreased or increased
proportionately.
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(ii) In the event the Corporation at any time or from time to time shall
make or issue, or fix a record date for the determination of holders of Common
Stock entitled to receive, a dividend or other distribution payable in
additional shares of Common Stock or other securities or rights (hereinafter
referred to as "Common Stock Equivalents") convertible into or entitling the
holder thereof to receive additional shares of Common Stock without payment of
any consideration by such holder for such Common Stock Equivalents or the
additional shares of Common Stock, then and in each such event the maximum
number of shares (as set forth in the instrument relating thereto without regard
to any provisions contained therein for a subsequent adjustment of such number)
of Common Stock issuable in payment of such dividend or distribution or upon
conversion or exercise of such Common Stock Equivalents shall be deemed to be
issued and outstanding as of the time of such issuance or, in the event such a
record date shall have been fixed, as of the close of business on such record
date. In each such event, the Conversion Price shall be proportionately
decreased as of the time of such issuance or, in the event such a record date
shall have been fixed, as of the close of business on such record date.
(iii) In case of any merger (other than a merger in which the Corporation
is not the continuing or surviving entity) or any reclassification of the Common
Stock of the Corporation, each share of the Series B Convertible Preferred Stock
shall thereafter be entitled to receive such additional number of shares of
stock or other securities or property to which a holder of the number of shares
of Common Stock issuable upon conversion of a share of Series B Convertible
Preferred Stock immediately prior to such merger or reclassification would have
been entitled upon such merger or reclassification. In any such case, either (i)
appropriate adjustment (as determined by the Board in good faith) shall be made
in the application of the provisions herein set forth with respect to the rights
and interests thereafter of the holders of Series B Convertible Preferred Stock,
such that the provisions set forth herein shall thereafter be applicable, as
nearly as reasonably may be, in relation to any share of stock or other property
thereafter issuable upon conversion or (ii) new shares or series of preferred
stock shall be issued to the holders of Series B Convertible Preferred Stock,
which new shares or series of preferred stock shall be in substantially the same
form and have substantially identical powers, designations, preferences,
qualifications, limitations and other rights and restrictions as provided for
the benefit of the holders of Series B Convertible Preferred Stock.
(iv) The Corporation shall at all times reserve and keep available out of
its authorized but unissued Common Stock, solely for the purpose of effecting
the conversion of Series B Convertible Preferred Stock, the full number of
shares of Common Stock deliverable upon the conversion of all Series B
Convertible Preferred Stock from time to time outstanding. The Corporation shall
from time to time (subject to obtaining necessary director and stockholder
authorizations), in accordance with the laws of the State of Colorado, increase
the authorized amount of its Common Stock if at any time the authorized number
of shares of Common Stock remaining unissued shall not be sufficient to permit
the conversion of all of the shares of Series B Convertible Preferred Stock at
the time outstanding.
g. Ranking. The Series B Convertible Preferred Stock shall, with respect
to rights on liquidation, winding up and dissolution, (i) rank senior to any of
the Common Stock and any other class or series of stock of the Corporation which
by its terms shall rank junior to the Series B Convertible Preferred Stock, (ii)
rank junior to any other class or series of stock of the Corporation which by
its terms shall rank senior to the Series B Convertible Preferred Stock, and
(iii) rank on a parity with any other class or series of stock of the
Corporation which by its terms shall rank on a parity with the Series B
Convertible Preferred Stock. No approval of the holders of Series B Convertible
Preferred Stock shall be required for the authorization or issuance of any
shares of any class or series of stock of the Corporation, whether ranking
senior to, junior to or on a parity with the Series B Convertible Preferred
Stock.
h. Corporation's Redemption Option. The Corporation may, at its sole
option, redeem all or a portion of the Series B Convertible Preferred Stock upon
five (5) business days prior written notice to the holders of the Series B
Convertible Preferred Stock (the "Redemption Notice") at a price per share of
Series B Convertible Preferred Stock (the "Redemption Price") equal to sum of
the Series B Preference Amount plus accrued cumulative dividends as of the date
immediately preceding the date of the Redemption Notice. The Corporation shall
deliver the Redemption Price in immediately available funds to the holder(s)
within five (5) business days after the Corporation has delivered the Redemption
Notice. The Redemption Notice may
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only be served on a business day between the hours of 9:00 a.m. and 5:00 p.m.,
local time at the principal business office of the Corporation, and shall be
deemed delivered upon facsimile receipt by the holders of the Series B
Convertible Preferred Stock within such time period or such immediately
subsequent business day if served after such hours. Redemptions must be pro rata
among the holders of Series B Convertible Preferred Stock, if fewer than all of
the outstanding shares of Series B Convertible Preferred Stock are being
redeemed. The Redemption Notice shall set forth (i) the Redemption Price
(including calculations) and (ii) the number of shares of Series B Convertible
Preferred Stock being redeemed.
PREMIER CONCEPTS, INC.
By:
------------------------------------
President
By:
------------------------------------
Secretary
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APPENDIX B
AGREEMENT AND PLAN OF MERGER
This AGREEMENT AND PLAN OF MERGER (this "Agreement") is entered into as of
February , 2000 by and among Premier Concepts, Inc., a Colorado corporation
("Parent"), AmazeMerger Co., a Delaware corporation ("Merger Subsidiary"), and
AmazeScape.com Inc., a Nevada corporation ("Amaze").
BACKGROUND
Parent has formed Merger Subsidiary as a wholly owned subsidiary of Parent
for the purpose of merging Merger Subsidiary with and into Amaze. The respective
boards of directors of Parent, Merger Subsidiary and Amaze have determined that
it is in the best interests of their respective corporations for Merger
Subsidiary to merge with and into Amaze, which, as the surviving corporation,
would become a wholly owned subsidiary of Parent, pursuant to the terms and
subject to the conditions set forth in this Agreement and the applicable
provisions of General Corporation Law of the State of Delaware (the "GCL"), the
Business Corporation Act of the State of Colorado (the "BCA"), and each of
Chapter 92A of Nevada Revised Statutes and the General Corporation Law of the
State of Nevada (collectively, the "Nevada Law").
Subject to the terms and conditions set forth herein, the parties hereto
desire to enter into and adopt this Agreement as a plan of "reorganization" with
the meaning of Section 368 of the Internal Revenue Code of 1986, as amended (the
"Code").
NOW THEREFORE, in consideration of the mutual representations, warranties,
covenants and agreements contained herein, the parties hereby agree as follows:
1. The Merger.
1.1 Merger of the Constituent Corporations. In accordance with the
provisions of this Agreement, the GCL and the Nevada Law, at the "Effective
Time" (as defined in Section 1.2), Merger Subsidiary shall merge with and into
Amaze (the "Merger"), and Amaze shall be the surviving corporation. Amaze, at
and after the Effective Time, is also referred to herein sometimes as the
"Surviving Corporation." The name, identity, existence, rights, privileges,
powers, franchises, properties, assets, liabilities and obligations of Amaze
shall continue unaffected and unimpaired by the Merger. At the Effective Time,
the identity and separate corporate existence of Merger Subsidiary shall cease,
and the Surviving Corporation shall succeed to all rights, privileges, powers,
franchises, properties, assets, liabilities and obligations of Merger Subsidiary
in accordance with the GCL and the Nevada Law.
1.2 Closing; Effective Time.
(a) Closing. Subject to the conditions contained herein, the consummation
of the transactions contemplated by this Agreement (the "Closing") shall take
place at the offices of Parker Chapin Flattau & Klimpl, LLC, counsel to Amaze,
at 12:00 noon, eastern standard time, on the third business day after the
conditions set forth in Sections 7.3, 7.4, 8.3 and 9 have been satisfied and/or
waived, as the case may be, or at such other date and time as the parties may
agree in writing. The time of the Closing is referred to herein as the "Closing
Date."
(b) Effective Time. At the Closing, Merger Subsidiary and Amaze shall
execute the Certificate of Merger in the form attached hereto as Exhibit
1.2(b)(i) (the "Certificate of Merger") and file it with the Secretary of State
of Delaware, shall execute the Articles of Merger in the form attached hereto as
Exhibit 1.2(b)(ii)(the "Articles of Merger") and file it with the Secretary of
State of Nevada, and the parties shall make all other filings and recordings
required by applicable law in connection with the Merger. The "effective time"
of the Merger as stated in the Certificate of Merger and Articles of Merger is
referred herein to as the "Effective Time."
1.3 Articles of Incorporation. The Articles of Incorporation of Amaze, as
in effect immediately prior to the Effective Time and as amended by the Articles
of Merger, shall continue in full force and effect as the
<PAGE> 133
Articles of Incorporation of the Surviving Corporation, until thereafter amended
as provided therein in accordance with applicable law.
1.4 By-Laws. The By-Laws of Amaze, as in effect immediately prior to the
Effective Time, shall continue in full force and effect as the By-Laws of the
Surviving Corporation, until thereafter amended or repealed as provided therein
in accordance with applicable law.
1.5 Directors and Officers of Parent.
(a) Parent's Board. At the Effective Time, the board of directors of
Parent shall consist of five (5) directors, who shall be the same five (5)
persons serving as the directors of Amaze at the Effective Time, and they shall
serve on the board of directors of Parent in accordance with and subject to the
applicable provisions of the Articles of Incorporation and By-Laws of the
Parent, the BCA and this Agreement. All directors who have served on the
Parent's board but are not included in said five (5) designees shall have
resigned, on or before the Effective Time.
(b) Officers of Parent. The officers of Amaze immediately prior to the
Effective Time shall become the officers of Parent and shall serve in such
capacity in accordance with and subject to the applicable provisions of the
Articles of Incorporation and By-Laws of the Parent, the BCA and this Agreement.
1.6 Directors and Officers of Surviving Corporation.
(a) Surviving Corporation's Board. The directors of Amaze immediately
prior to the Effective Time shall serve continue to serve as the directors of
Surviving Corporation, and said five directors of the Surviving Corporation
shall serve on its board of directors in accordance with and subject to the
applicable provisions of the Articles of Incorporation and By-Laws of the
Surviving Corporation, the Nevada Law and this Agreement.
(b) Officers of Surviving Corporation. The officers of Amaze immediately
prior to the Effective Time shall be the officers of the Surviving Corporation
and shall serve in such capacity in accordance with and subject to the
applicable provisions of the Articles of Incorporation and By-Laws of the
Surviving Corporation, the Nevada Law and this Agreement.
1.7 Conversion of Amaze Stock into Parent Stock. At the Effective Time,
each share of common stock of Amaze issued and outstanding immediately prior to
the Effective Time ("Old Amaze Stock"), by virtue of the Merger and without any
action by the holder thereof or any party hereto, shall be converted into one
validly issued, fully paid and non-assessable share of Common Stock. "Common
Stock" means the common stock, $0.002 par value per share, of Parent. After the
Effective Date, until so surrendered and exchanged, each certificate which
immediately prior to the Effective Date represented outstanding shares of the
Old Amaze Stock shall represent solely the right to receive the Common Stock as
provided in this Section 1.7.
1.8 Conversion of Convertible Preferred Stock.
(a) Series A Preferred. At the Effective Time, each share of the Series A
Convertible Preferred Stock of Amaze ("Amaze Preferred Stock") issued and
outstanding immediately prior to the Effective Time, by virtue of the Merger and
without any action by the holder thereof or any party hereto, shall be converted
into one validly issued, fully paid and nonassessable share of Parent's "Series
B Convertible Preferred Stock" (as defined in Section 4.6).
(b) Series B Preferred. Immediately prior to the Effective Time, each
share of Series B Preferred Stock of Amaze issued and outstanding at such time
shall, by virtue of the Merger and without any action by any party hereto or the
holder thereof, be converted into the number of validly issued, fully paid and
nonassessable shares of Old Amaze Stock as provided for upon conversion of said
Series B Preferred Stock pursuant to section 5(d) of the applicable Certificate
of Designation of Amaze on file with the State of Nevada. Accordingly, the
shares of Old Amaze Stock resulting from the conversion of said Series B
Preferred Stock shall be subject to conversion into Common Stock at the
Effective Time in accordance with Section 1.7.
1.9 Exchange of Options and Warrants to Purchase Amaze Stock. At the
Effective Time, each holder of an option or warrant to purchase shares of Old
Amaze Stock, whether or not then vested or exercisable, shall be entitled to
receive in exchange therefore, upon surrender for cancellation thereof, an
option or warrant
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to purchase, on the same terms and subject to the same conditions as are set
forth in the option or warrant being replaced, the number of shares of Common
Stock equal to the number of shares of Old Amaze Stock for which such option or
warrant being exchanged otherwise could have been exercised or become
exercisable.
1.10 Exchange of Certificates, Options and Warrants. At the Closing, each
holder of a certificate evidencing Old Amaze Stock, a certificate evidencing
Amaze Preferred Stock or an option or warrant to purchase Old Amaze Stock shall
be entitled to surrender to Parent for cancellation all such certificates,
options and warrants, in each case duly executed for transfer or accompanied by
a duly executed instrument of assignment, with evidence that all applicable
stock transfer taxes (if any) have been paid. Against receipt of such
certificates, options and warrants, Parent shall issue and deliver certificates
evidencing Common Stock, Parent's Convertible Preferred Stock and options and
warrants to purchase Common Stock, as the case may be, to the persons who became
entitled thereto upon conversion of the Old Amaze Stock, conversion of the Amaze
Preferred Stock and exchange of the options and warrants to purchase Old Amaze
Stock pursuant to Sections 1.7, 1.8 and 1.9, respectively. The issuance and
delivery of certificates, options and warrants as provided herein shall be
subject to applicable state escheat laws, and if a person entitled to receive a
certificate, option or warrant has not made a claim therefor within the time
provided under the applicable escheat laws of a state, the certificates, options
and warrants may be delivered to such state, in which case such person shall
have no claim against a party hereto but may pursue its rights to such
certificates, options and warrants from such state. As of the Effective Date,
Parent shall have reserved sufficient shares of Common Stock for issuance of the
required number of shares of Common Stock pursuant to the conversion of the
Parent's Convertible Preferred Stock and the exercise of such options and
warrants.
1.11 Conversion of Merger Subsidiary Stock. At the Effective Time, each
share of capital stock of Merger Subsidiary issued and outstanding immediately
prior to the Effective Time, by virtue of the Merger and without any action by
the holder thereof or any party hereto, shall be converted into one validly
issued, fully paid and nonassessable share of stock in the Surviving
Corporation, which at the Effective Time shall become a wholly owned subsidiary
of Parent. Any shares of the capital stock of Merger Subsidiary held in the
treasury of Merger Subsidiary shall be canceled and extinguished without any
conversion thereof and no payment shall be made with respect thereto.
1.12 Dissenting Shares. Notwithstanding anything in Section 1.7 to the
contrary, if any holder of Old Amaze Stock exercises in accordance with the
Nevada Law his, her or its right to dissent from, and obtain payment of the fair
value of his shares of Old Amaze Stock as a result of, the Merger and other
transactions contemplated hereby, the shares of Old Amaze Stock outstanding at
the Effective Time and held by such holder shall not be converted into Common
Stock, unless such holder withdraws or forfeits his, her or its dissenter's
rights under the Nevada Law. Promptly following its receipt thereof, Amaze shall
give the Parent and Merger Subsidiary a copy of any notice that dissenter's
rights are being exercised or any demand for payment for shares of Old Amaze
Stock.
2. Representations and Warranties of Parent and Merger Subsidiary. As a
material inducement to Amaze to enter into this Agreement and to consummate the
transactions contemplated hereby, Parent and Merger Subsidiary, jointly and
severally, represent and warrant to Amaze that (A) all of the statements in
Section 2.1, Section 2.2(a), clause (i) of Section 2.2(b), the first and third
sentences of Section 2.3, Section 2.4, Section 2.5(b) and Section 2.6(f) are
true and correct and (B) all of the other statements in this Section 2 set forth
below are, to the knowledge of Parent and Merger Subsidiary, true and correct:
2.1 Corporate Status and Organization.
(a) Organization. Parent is a corporation duly organized, validly existing
and in good standing under the laws of the State of Colorado and is duly
qualified to do business as a foreign corporation and is in good standing in all
jurisdictions in which its ownership of assets or conduct of business requires
it to be so qualified. Merger Subsidiary is a corporation duly organized,
validly existing and in good standing under the laws of the State of Delaware,
but Merger Subsidiary is not engaged in any active trade or business.
(b) Power and Authority. Parent has all requisite corporate power and
authority to own, lease and use its assets, to conduct its business as
heretofore conducted and to enter into and perform its obligations under
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this Agreement. Parent has all requisite corporate power and authority to enter
into and perform its obligations under this Agreement. Merger Subsidiary was
formed for the sole purpose of merging with and into Amaze pursuant to this
Agreement and has no business and only nominal assets, is not bound by and has
no rights under any Contract (other than this Agreement) and has no employees or
"Personnel" (as hereinafter defined), other than directors and officers.
For purposes of this Agreement, "Personnel" of a party means, collectively,
(i) all Persons who are employed or engaged by such party (including independent
contractors, outside consultants and professionals) and (ii) all other Persons
whose employment or engagement has terminated but whose obligations to such
party or whose obligations owed by such party have not been completely
satisfied.
(c) Articles/Certificate of Incorporation and By-Laws. Parent and Merger
Subsidiary have delivered to Amaze complete and correct copies of their
respective Articles of Incorporation (in the case of Parent) or Certificates of
Incorporation (in the case of Amaze) and By-Laws, each as in effect on the date
hereof. The respective minute books of each of Parent and Merger Subsidiary
heretofore made available to Amaze contain accurate records of all meetings and
other corporate actions of their respective shareholders and board of directors
(including committees of their respective boards of directors) customarily
maintained in a minute book.
2.2 Authority for Agreement; Consents.
(a) Authority and Approval; Enforceability. Parent's and Merger
Subsidiary's execution and delivery of this Agreement and the other agreements,
instruments and documents to be executed and delivered by either of them
pursuant hereto (the "Premier Documents"), the consummation of the Merger and
the other transactions contemplated hereby and thereby and the performance of
the obligations of Parent and Merger Subsidiary hereunder and thereunder have
been duly authorized by their respective boards of directors and approved by
Parent, as the sole stockholder of Merger Subsidiary. No other corporate act or
proceeding is necessary to authorize Parent's or Merger Subsidiary's execution,
delivery or performance of this Agreement and the Premier Documents, except for
approval and adoption by Parent's shareholders as contemplated by Section 4.3.
As of the date hereof, Parent's board of directors has (i) determined that the
Merger is fair to and in the best interests of its shareholders, (ii) approved
the Merger and (iii) subject to the fiduciary duties of such directors, resolved
to recommend to Parent's shareholders that they approve the transactions
contemplated by this Agreement that require approval by Parent's shareholders
under the BCA or Parent's Articles of Incorporation or By-Laws, with such
recommendation to be set forth in the proxy statement to be contained in the S-4
Registration Statement (as defined in Section 4.2) and used to solicit such
approval of Parent's shareholders. This Agreement does, and each of the Premier
Documents when executed and delivered shall, constitute a valid and binding
agreement of Parent and Merger Subsidiary, enforceable against them in
accordance with their respective terms, subject to the effect of applicable
bankruptcy, reorganization, insolvency, moratorium and other similar laws of
general application relating to, limiting or affecting the enforcement of
creditors' rights generally and general principles of equity that may limit the
enforceability of the remedies, covenants or other provisions of this Agreement
or the Premier Documents and the availability of injunctive relief or other
equitable remedies.
(b) Non-Contravention. Parent's and Merger Subsidiary's execution and
delivery of this Agreement and the Merger Documents, and, subject to obtaining
the approval of Parent's shareholders, the performance by Parent and Merger
Subsidiary of their respective obligations under this Agreement and the Premier
Documents, shall not (i) violate any provision of the Articles of Incorporation
or By-Laws of Parent or the Certificate of Incorporation or By-Laws of Merger
Subsidiary, (ii) violate or conflict with any "Legal Requirement" (as
hereinafter defined) resulting in a material adverse effect on Parent's
business, assets, liabilities, financial condition or prospects, (iii) violate,
conflict with, constitute a default (or an event which, with notice or lapse of
time, or both, would constitute a default) under, result in the termination,
cancellation or acceleration of, material modification of the effect of, or the
loss of any benefits under, any "Contract" (as hereinafter defined) to which
Parent or any of its assets or business is subject or under which Parent has
rights resulting in a material adverse effect on Parent's business, assets,
liabilities, financial condition or prospects or
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(iv) result in the creation of any "Lien" (as hereinafter defined) upon any of
Parent's assets or restriction resulting in a material adverse effect on
Parent's business, assets, liabilities, financial condition or prospects.
For purposes of this Agreement:
"Legal Requirement" means any federal, state, local or foreign law,
statute, ordinance, code, constitution, rule, regulation, ruling,
requirement, order or other promulgation of any government or subdivision,
department or agency thereof or any judgment, writ, injunction, order,
award, decision or decree of any court, arbitrator or other tribunal or any
judicial, regulatory, administrative or other authority of competent
jurisdiction.
"Contract" means an agreement, contract, commitment, guaranty,
suretyship, warranty, lease, license and other arrangement, whether oral or
written, formal or informal.
"Lien" means any lien, security interest, mortgage, pledge, charge,
transfer or use restriction, adverse claim or encumbrance of any kind,
other than liens for "Taxes" (as defined in Section 2.8(f)) that are not
yet due or that are being contested in good faith by appropriate
"Proceedings" (as defined in Section 2.5(d)).
(c) Third Party Consents. Except for obtaining the consents of third
parties identified on Schedule 2.2(c) (collectively, "Drop-Down Consents"), no
consent, approval, authorization or action by, or filing, registration or
declaration with or notice to, any Person is necessary in connection with the
execution and delivery of this Agreement and the Premier Documents by Parent and
Merger Subsidiary or the performance of any of their respective obligations
hereunder.
For purposes of this Agreement, "Person" means an individual, a
proprietorship, partnership, joint venture, corporation, limited liability
company, association, trust, estate, unincorporated organization or any other
entity, or a governmental entity or any subdivision, department or agency
thereof.
2.3 Authorized and Issued Capital Stock, Options and Warrants. Schedule
2.3 discloses, as of the execution hereof, the aggregate number of issued and
outstanding shares of capital stock of Parent and all options, warrants and
other rights to acquire capital stock of Parent, and Schedule 2.3 identifies all
Persons who own of record or beneficially, based solely on Schedules 13D and 13G
filed with respect to Parent, more than ten percent (10%) of the outstanding
capital stock on a fully-diluted basis, assuming the exercise of all options,
warrants and other rights to acquire capital stock of Parent. All outstanding
shares of capital stock of Parent have been duly and validly issued in full
compliance with applicable federal and state securities laws, are fully paid and
nonassessable with no personal liability attaching thereto. Except as disclosed
on Schedule 2.3, there are no (i) preemptive rights (statutory or contractual),
rights of first refusal or first offer or other similar rights on the part of
any holder of any class of securities of Parent, (ii) options, warrants,
conversion or other rights, agreements or commitments of any kind obligating
Parent or any of the Persons listed on Schedule 2.3, contingently or otherwise,
to issue, purchase, redeem, register, vote, sell or transfer any capital stock
or other equity interests in Parent or any securities or rights convertible into
or exchangeable for any such capital stock or equity or (iii) no stock
appreciation rights, "phantom stock" 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 Parent or
any "Affiliate" (as hereinafter defined) of Parent, and Parent has not
authorized any of the foregoing.
For purposes of this Agreement, "Affiliate" of a given Person means any
other Person directly or indirectly (including through one or more
intermediaries) controlling, controlled by or under common control with the
given Person.
2.4 Subsidiaries; Investments. Parent does not own, directly or
indirectly, any shares of capital stock or other equity or ownership interests
of any kind in any corporation, partnership, limited liability company, business
trust, association or other entity or business enterprise of any kind, other
than Merger Subsidiary, nor has Parent entered into any Contract to acquire all
or any substantial part of the assets of, to acquire any equity or ownership
interests in, to contribute to the capital of, to guarantee or act as a surety
for the obligations of or share or participate in the profits or losses of any
Person.
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2.5 SEC Documents; Financial Information.
(a) SEC Documents. Parent has furnished Amaze with a true and complete
copy of each report, schedule, registration statement and definitive proxy
statement filed by Parent with the Securities and Exchange Commission (the
"SEC") in the last three (3) years (collectively, the "SEC Documents"), which
constitute all of the documents (other than preliminary material) that Parent
was required to file with the SEC since such date. At the time filed, each of
the SEC Documents (including any financial statements or schedules included or
incorporated by reference therein) complied in all material respects with the
applicable requirements of the Securities Act of 1933, as amended, and the rules
and regulations promulgated thereunder (the "Securities Act") and the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), as the case may be, and
did not (or if amended or superseded by a subsequent filing prior to the date of
this Agreement, then on the date of such filing) contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(b) Nasdaq. As of the date hereof, all of the issued and outstanding
shares of Common Stock are listed for trading on the Nasdaq SmallCap Market
under the ticker symbol "FAUX." As of the date of this Agreement, Parent is in
full compliance with the requirements for inclusion in The Nasdaq SmallCap
Market as set forth in the Nasdaq MarketPlace Rules, as presently in effect.
(c) Financial Statements. The financial statements of Parent included in
the SEC Documents (the "Parent Financial Statements") complied as to form in all
material respects with applicable accounting requirements and the published
rules and regulations of the SEC with respect thereto, were prepared in
accordance with generally accepted accounting principles ("GAAP") applied on a
consistent basis during the periods involved (except as may be indicated in the
notes thereto or, in the case of the unaudited statements, as permitted by Form
10-Q and 10-QSB of the SEC) and fairly present in all material respects
(subject, in the case of the unaudited statements, to normal, recurring audit
adjustments) the financial position of Parent as at the dates thereof and the
results of operations and changes in financial position for the periods then
ended. The Parent Financial Statements were prepared from the books and records
of Parent, which fairly reflect all material transactions by Parent, have been
maintained in accordance with sound business practices and all applicable Legal
Requirements and accurately reflect the basis for all information presented in
the Parent Financial Statements, the SEC Documents and the disclosures made by
Parent pursuant to this Agreement.
(d) No Undisclosed Liabilities. Except as set forth on Schedule 2.5(d),
Parent has no material liabilities or obligations of any kind (absolute or
contingent, choate or inchoate, whether due or to become due) except: (i)
liabilities and obligations that are fully reflected, reserved against or
disclosed in the latest audited balance sheet included in the SEC Documents and
(ii) liabilities and obligations incurred since the date of said audited balance
sheet in the ordinary course of Parent's business. Except as set forth on
Schedule 2.5(d) or in the SEC Documents, no liability or obligation of Parent
results from a breach of Contract, tort, infringement, claim or Proceeding.
For purposes of this Agreement, "Proceeding" means any claim, action, suit,
investigation or other proceeding of any kind, whether judicial, arbitral,
regulatory or otherwise.
(e) Absence of Certain Changes. Except as set forth on Schedule 2.5(e),
since the date of the latest audited balance sheet included in the SEC
Documents: (i) Parent has deployed its assets and conducted its business only in
the ordinary course of business, consistent with its past practice; (ii) Parent
has not changed any of its methods, policies, practices or procedures relating
to its business, including with respect to bookkeeping, accounting, billing,
collection, marketing, customer relations, management of accounts payable,
research and development, protection of trade secrets, proprietary software or
information or other intangible assets; (iii) Parent has maintained and kept its
Personal Property (as defined in Section 2.6(b)), in good operating condition
(except for ordinary wear and tear), and there has not been any material damage
or destruction to or material loss of any Personal Property, whether or not
covered by insurance; (iv) Parent has performed all of its material obligations
under all Contracts, and no other party to a Contract with Parent has failed to
perform timely any of its material obligations thereunder; (v) Parent has not
allowed any rights under
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any Contract to which it is a party which are renewable at no cost or on
favorable terms to expire, and Parent has not waived any material rights under
Contracts with Parent or any material claims against third parties; (vi) there
has been no voluntary or involuntary termination of the employment or engagement
of any "Management Personnel" (as hereinafter defined), and no notice of any
such termination has been given; and (vii) no other event has occurred which has
had or could reasonably be expected to have a material adverse effect on the
business, assets, liabilities, financial condition or prospects of Parent or
"Premier" (as defined in Section 4.1) through the Closing or as proposed to be
conducted by Premier thereafter.
For purposes of this Agreement, "Management Personnel" means the officers,
department managers, district managers and regional managers employed by Parent
(or by Premier after the consummation of transactions contemplated by Section
4.1).
2.6 The Assets.
(a) Inventory. All inventory held by Parent as of the date hereof is of
the same type and quality as heretofore used by Parent and all finished goods
inventory of Parent is saleable in the ordinary course of Parent's business,
except for merchandise that is damaged or that Parent determines to discontinue
selling for reasons explained on Schedule 2.6(e). The present quantities of all
inventory are reasonable and appropriate for Parent's business as presently
conducted.
(b) Personal Property. Schedule 2.6(b) contains a depreciation schedule
that, as of November 28, 1999, includes all personal property (including
machinery, servers, computer hardware and other equipment, vehicles, furniture,
parts, supplies, furnishings, accessories, fixtures, leasehold improvements and
all other tangible property of any kind (collectively, "Personal Property"))
owned by Parent and reflected in the latest audited balance sheet included in
the SEC Documents. All Personal Property owned, leased or licensed by Parent is
located at Parent's office or other places of business listed on Schedule 2.6(c)
(collectively, "Premier Premises"). All tangible items located at the Premier
Premises (other than improvements and fixtures thereto) are the sole property of
Parent, except for incidental personal belongings of Parent's employees. All
Personal Property included in the depreciation schedule provided on Schedule
2.6(b) is in good operating condition except for normal wear and tear, and each
such item is free of any structural, mechanical or other defect or dangerous
condition, is fit for its intended purpose and is not in violation of any
building, zoning, health, safety or other applicable Legal Requirement, except
as otherwise specified on Schedule 2.6(b). Except as disclosed on Schedule
2.6(b), Parent has good title to all Personal Property owned or purported to be
owned by it, including the Personal Property reflected on the latest balance
sheet included in the SEC Documents and the Personal Property acquired after the
date thereof in the ordinary course of Parent's business, free and clear of all
Liens.
(c) Real Property. Schedule 2.6(c) identifies all real property leased by
Parent. Parent does not own or use any real property other than Premier
Premises. The Premier Premises do not violate any applicable Legal Requirement
and are not the subject of any pending or threatened condemnation or eminent
domain Proceedings. Parent has, or has the benefit of, all licenses, permits,
easements, rights-of-way and other authorizations and all utilities and access
rights (including ingress to and egress from the Premier Premises) necessary to
conduct business on the Premier Premises as presently and proposed to be
conducted. There is no Hazardous Material (defined as any chemical, pollutant,
contaminant, waste, hazardous or toxic substance, asbestos, polychlorinated
biphenyls, petroleum and petroleum product or other substances, whether solid,
liquid or gaseous, the emission, discharge, release or threatened release,
manufacture, processing, distribution, migration, use, treatment, storage,
disposal, transport or handling of which is regulated by any applicable Legal
Requirement for the protection of health, safety or the environment, including
those Legal Requirements relating to the use, storage, handling, transport or
disposal of Hazardous Materials causing or posing a threat to cause
contamination or adverse effect to the environment (e.g., the Resource
Conservation and Recovery Act of 1976, the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, the Toxic Substances Control Act, the
Clean Water Act and the Clean Air Act, all as amended from time to time, state
and federal superlien and environmental cleanup programs and the regulations of
the U.S. Department of Transportation (with respect to transport of Hazardous
Materials) and the Nuclear Regulatory
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Commission)) contained in, stored or used at, or forming part of, any component
of any of the Premier Premises.
(d) Software.
(i) Parent does not own any software.
(ii) All software used by Parent (collectively, the "Premier Licensed
Software") is licensed software readily available "off the shelf."
(iii) Parent's date sensitive systems and embedded technology used to
support Parent's business, are capable of accurately processing, providing
and/or receiving data from, in, into and between the twentieth and twenty-first
centuries, including the years 1999 and 2000.
(iv) None of the Premier Licensed Software contains any program routine,
device or other undisclosed feature (including any time bomb, virus, lock,
drop-dead device, malicious logic, worm, trojan horse or trap door) that is
designed to delete, disable, deactivate, interfere with or otherwise harm any
software, hardware, data or other programs, or that is intended to provide
access or produce modifications without authorization.
(e) Intellectual Property. Schedule 2.6(e) contains an accurate and
complete list of all patents, copyrights, trademarks, service marks, trade
names, web sites, URLs, domain names, fictitious names, slogans, logos and other
trade dress and commercial symbols and other intellectual property of any kind
(collectively, "Intellectual Property") owned, licensed or used by Parent and
material to Parent's business. Parent owns all right, title and interest in and
to, or has the right to use pursuant to a valid and enforceable Contract listed
on Schedule 2.7(a), all Intellectual Property necessary for the conduct of
Parent's business as heretofore conducted, and no loss or expiration of any
rights to any such Intellectual Property is pending or threatened or reasonably
foreseeable. Except as indicated on Schedule 2.6(e), (i) there has been no claim
made against Parent asserting the invalidity, misuse or unenforceability of any
such Intellectual Property or challenging Parent's rights in, or otherwise
opposing any such Intellectual Property, and there is no reasonable basis for
such a claim, (ii) Parent has not received notice of any claim of infringement
or other conflict with the asserted rights of any third party with respect to
any such Intellectual Property, (iii) the conduct of Parent's business and its
use of such Intellectual Property has not infringed upon or misappropriated and
does not infringe upon or misappropriate the rights of any third party and (iv)
none of such Intellectual Property has been infringed upon or misappropriated by
any third party. No information of Parent regarded as confidential or
proprietary has been disclosed to a third party, other than pursuant to a
confidentiality agreement identified on Schedule 2.7(a). Schedule 2.6(e) lists
all applications, registrations and other filings made by Parent with respect to
Intellectual Property. All marks that Parent has registered with the United
States Patent and Trademark Office and all copyrights that Parent has registered
with the United States Copyright Office are currently in compliance with all
applicable Legal Requirements, are valid and enforceable.
(f) Authorizations. Parent has all licenses, permits, franchises,
certificates, registrations, approvals, consents and authorizations of any kind
(collectively, "Authorizations") necessary for the ownership and use of Parent's
assets, use of the Premier Premises and the conduct of Parent's business as
heretofore conducted.
2.7 Contractual Matters.
(a) Contracts. All written Contracts by which Parent or any of its assets
are bound or under which Parent has rights or obligations are listed on Schedule
2.7(a). Parent has delivered to Amaze true and complete copies of all written
Contracts to which Parent is a party, each of which is in full force and effect
(except as otherwise provided in the next sentence). Except for obtaining the
Drop-Down Consents, none of such Contracts require consent from or notice to
another Person before or upon consummation of the transactions contemplated by
this Agreement. Neither Parent nor any other party to any such Contract is in
breach thereof or default thereunder or has any present intention or expectation
of not fully performing all obligations thereunder, and there does not exist any
event which, with the giving of notice or the lapse of time, or both, would
constitute such a breach or default, except for such breaches, defaults and
events as to which requisite waivers or consents already have been obtained, as
set forth in Schedule 2.7(a).
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(b) Insurance. All insurance contracts, policies and binders maintained by
Parent are listed on Schedule 2.7(a). Parent has delivered to Amaze a
description of each such insurance policy (specifying the insurer and the amount
of any deductible, describing any pending claims and the alleged amounts
thereof, whether or not in excess of applicable policy limits), whether for
errors and omissions, general liability, fire, product liability, worker's
compensation, vehicle, unemployment or other insurance.
(c) Customers. No individual customer of Parent has accounted for more
than two percent (2%) of Parent's gross revenue in any fiscal year.
(d) Suppliers. Except as set forth on Schedule 2.7(d), Parent does not
rely on any supplier of significant materials or services with respect to which
practical alternate sources of supply are not available on comparable terms and
conditions. Schedule 2.7(d) identifies the ten suppliers from which Parent has
purchased the goods having the greatest dollar value (based on the price paid by
Parent) during the nine-month period ending October 31, 1999.
(e) Related Persons. Except as set forth on Schedule 2.7(e), no "Related
Person" (as hereinafter defined) of Parent (i) is a creditor of Parent, supplier
to Parent or party to a Contract with Parent; (ii) has any right, title or
interest (whether as a licensor, licensee, joint owner or user) in, to or under
any assets, tangible or intangible, owned, leased, licensed or used by Parent;
or (iii) has or has plans to acquire any rights or interests of any kind in a
competitor of Parent's business (other than a passive investment in less than
two percent (2%) of the publicly-traded stock of a competitor).
For purposes of this Agreement, "Related Person" of a given party means
any: (i) Affiliates of such party, (ii) any holder of more than five percent
(5%) of the outstanding capital stock of such party, (iii) any director or
officer of such party or any of its Affiliates, (iv) any family member within a
third degree relationship of any natural person described in clause (i), (ii) or
(iii) of this sentence and (v) any trust for the benefit of any of the
foregoing.
2.8 Liabilities; Compliance with Laws.
(a) Accounts Payable. All of Parent's accounts payable and accrued expenses
arose from bona fide transactions in the ordinary course of Parent's business
and, except as disclosed on Schedule 2.6(b), are unsecured, and none of the
obligees thereof are Related Persons.
(b) Investigation and Litigation. There is no Proceeding pending or
threatened, which, if successful, could reasonably be expected to prevent Parent
from performing its obligations under this Agreement and the Premier Documents.
Except as set forth on Schedule 2.8(b), there is no Proceeding pending or
threatened that involves Parent's business, operations or assets. Except as set
forth on Schedule 2.8(b), Parent is not the subject of any judgment, writ,
injunction, order, award, decision or decree issued by a court, arbitrator,
tribunal or any judicial, regulatory, administrative or other governmental
authority.
(c) Brokerage. Except as disclosed on Schedule 2.8(c), neither Parent nor
any director, officer, employee or agent acting or purporting to act on behalf
of Parent has entered into any Contract with any broker or finder, and there are
no claims for brokerage commissions, finders' fees or similar compensation, in
connection with the transactions contemplated by this Agreement nor has any
Person claimed entitlement to any brokerage commission, finder's fee or similar
compensation, nor is there any basis for such a claim.
(d) Compliance with Applicable Laws. Parent's assets and the Premier
Premises are, and the conduct of Parent's business has been and remains, in
material compliance with all applicable Legal Requirements. There exists no
condition or event relating to its business, any of its assets or the Premier
Premises which, after notice or lapse of time, or both, would give rise to a
violation or default of any applicable Legal Requirement.
(e) Questionable Conduct. Neither Parent nor any director, officer,
employee, agent or other Person acting or purporting to act on behalf of Parent
has directly or indirectly (i) given or agreed to give any bribe, kickback,
political contribution or other illegal payment from corporate funds, (ii)
established or maintained any unrecorded fund or asset, (iii) concealed or
mischaracterized an illegal or unauthorized payment or receipt, (iv) knowingly
made a false entry in any books or records of Parent or (v) committed or
participated in any act which is illegal or could subject Parent to fines,
penalties or other sanctions.
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(f) Taxes. Except as set forth in Schedule 2.8(f):
(i) Parent has (A) duly and timely filed or caused to be filed with
the appropriate branch, office, department, agency or other instrumentality
engaged in the monitoring, collection and enforcement of Taxes (as defined
below) (the "Tax Authority") each return, declaration, statement or any
amendment thereto ("Tax Return") that is required to be filed by or on
behalf of Parent or that includes or relates to Parent's income, sales,
assets or business, which Tax Return is true, correct and complete in all
material respects, and (B) duly and timely paid in full, or caused to be
paid in full, all Taxes due and payable by Parent on or before the date of
this Agreement;
(ii) Parent has complied in all material respects with all applicable
laws relating to the payment, collection or withholding of any Tax, and the
remittance thereof to any Tax Authority, including Code sections 1441,
1442, 1445 and 3402;
(iii) no Tax Return filed by or on behalf of Parent or that includes
or relates to Parent's income, sales, assets or business has been examined,
audited or reviewed by any Tax Authority in the last three years;
(iv) no audit, examination, investigation, reassessment or other
administrative or court proceeding is pending, proposed or threatened
against Parent with regard to any Taxes or Tax Return or the payment,
collection or withholding of any Taxes due or claimed to be due by Parent;
(v) Parent has not requested or received a private letter or other
ruling from any Tax Authority or an agreement with any Tax Authority
(including any closing agreement within the meaning of Code section 7121 or
any analogous provision of applicable law), and there is no outstanding
subpoena or request for information or documents from any Tax Authority,
with respect to any Taxes for which Parent is or may be liable or with
respect to Parent's income, sales, assets or business;
(vi) Parent has not requested an extension of time within which to
file any Tax Return in respect of any Tax period which has not since been
filed, and the statute of limitations for the assessment or collection of
any Taxes for which Parent is liable with respect to Parent's income,
sales, assets or business has never been extended or waived;
(vii) Parent has not requested an extension of time within which to
file any Tax Return in respect of any material Taxes which have not since
been paid;
(viii) all material Taxes due with respect to Parent's income, sales,
assets or business or for which Parent is liable have been paid;
(ix) no election under Code section 338 or any similar provision of
applicable law has been made or required to be made by or with respect to
Parent;
(x) Parent is not a "consenting corporation" with the meaning of Code
section 431(f) or any similar provision of applicable law and has not
agreed to have Code section 341(f)(2) apply to any disposition of a
subsection (f) asset (as such term is defined in Code section 341(f)(4))
owned by Parent;
(xi) Parent is not, and Parent has not been at any time during the
applicable period referred to in Code Section 897(c)(1)(A)(ii), a "United
States real property holding corporation" within the meaning of Code
section 897(c)(2);
(xii) Parent does not have any "tax-exempt use property" within the
meaning of Code section 168(g) or any similar provision of applicable law
with respect to Parent's income, sales, assets or business;
(xiii) Parent does not have any material liability in respect of any
Tax as a transferee or successor of any third party, and Parent is not a
party to any Tax allocation, Tax indemnification or Tax sharing Contract;
(xiv) there is no power of attorney for Parent in effect relating to
any Tax for which Parent is or may be liable;
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(xv) no jurisdiction where Parent does not file a Tax Return has made
or threatened to make a claim that Parent is required to file a Tax Return
for such jurisdiction;
(xvi) Parent (A) is not required to include in income any adjustment
pursuant to Code section 481(a) (or any similar provision of applicable
law) by reason of a change in accounting method, and no Tax Authority has
proposed any such adjustment or change of accounting method, and (B) has
not deferred any material income to a period after the Effective Time that
has economically accrued or is otherwise attributable to a period prior to
the Effective Time or has accelerated any material deductions into a period
ending on or before the Effective Time that will or may economically accrue
after the Effective Time; and
(xvii) Schedule 2.8(f) sets forth a list of all states in which any
Tax Returns have been filed by or on behalf of Parent or with respect to
Parent's income, sales, assets or business since the latest balance sheet
included in the SEC Documents; and Parent has provided to Amaze (A) a copy
of all federal income Tax Returns filed by or on behalf of Parent for the
last three (3) years, and (B) all audit reports, closing agreements, letter
rulings or technical advice memoranda relating to any Taxes for which
Parent is or may be liable with respect to Parent's income, sales, assets
or business.
For purposes of this Agreement, "Taxes" shall mean any tax, charge, fee,
levy, deficiency or other assessment of whatever kind, including any net income,
gross income, profits, gross receipts, excise, real or personal property, sales,
ad valorem, withholding, social security, retirement, employment, unemployment,
minimum, estimated, severance, stamp, property, occupation, environmental,
windfall profits, use, service, net worth, payroll, franchise, license, gains,
customs, transfer, recording and other tax, customs duty, fee, assessment or
charge of any kind whatsoever, imposed by any Tax Authority, including any
liability therefor as a transferee (including under section 6901 of the Code or
any similar provision of applicable law) as a result of Treasury Regulation
sec.1.1502-6 or any similar provision of applicable law, or as a result of any
tax sharing or similar agreement, together with any interest, penalties or
additions to tax relating thereto.
2.9 Personnel Matters.
(a) Personnel Information. Parent has provided Amaze with the following
information for all Management Personnel: (i) the name; (ii) current title;
(iii) current level of base salary, bonus, perquisites, benefits and other
compensation; and (iv) to the extent existing, all employment agreements with
respect to Management Personnel. Except as disclosed on Schedule 2.9(a), Parent
is not a party to any Contract which provides (i) benefits that are contingent,
or that contains terms that would be materially altered, upon the occurrence of
a transaction involving Parent of the nature of any of the transactions
contemplated by this Agreement, (ii) severance benefits or other benefits after
the termination of employment or engagement regardless of the reason for such
termination of employment or engagement or (iii) any benefits that will be
increased or that will become vested or accelerated by the occurrence of any of
the transactions contemplated by this Agreement or that will be calculated on
the basis of any of the transactions contemplated by this Agreement.
(b) Employee Benefit Plans. Except for those "Benefits Plans" (as
hereinafter defined) described on Schedule 2.9(b), at no time has any Benefit
Plan been sponsored, maintained, contributed to or been required to be
contributed to by Parent or any trade or business, whether or not incorporated,
which together with Parent would be deemed a "single employer" within the
meaning of section 4001 of ERISA, for the benefit of current or former employees
or directors of Parent.
For purposes of this Agreement:
"Benefit Plan" means any "employee pension benefit plan," "employee
benefit plan," or "employee welfare benefit plan" as such terms are defined
in Sections 3(2), (3) and 3(1) of ERISA, respectively, including any
"multiemployer plans" as defined in Section 3(37) of ERISA, and any other
pension, profit sharing, retirement, deferred compensation, incentive
compensation, stock purchase, stock option, bonus, vacation, severance,
termination pay, hospitalization or other medical, life or other insurance,
supplemental unemployment benefits, profit-sharing, pension, retirement or
other employee benefit or welfare plan, program, practice, agreement or
arrangement.
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"ERISA" means the Employee Retirement Income Security Act or 1974, as
amended, and all regulations, rulings, procedures and pronouncements
promulgated thereunder.
(c) Restrictions and Conflicts. Except as set forth on Schedule 2.9(c),
none of Parent's Personnel are subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or other agreement or arrangement that
would restrict or affecting the right of any of such Personnel to continue to
faithfully and diligently perform any services requested by Parent on a
full-time basis.
(d) No Organizing Efforts. Parent is not a party to, and is not presently
negotiating, any collective bargaining agreement or other agreement with any
labor organization or any other Person or group claiming to represent or bargain
collectively for any Personnel of Parent, and Parent has no obligation to
recognize any labor organization or collective bargaining unit with respect to
any such Personnel. There have not been within the last five years and there are
not presently any organizing efforts by any union or other group or Person
seeking to represent any unorganized Personnel of Parent as their bargaining
agent.
(e) Labor and Employment Law. No unfair labor practice charges,
grievances, administrative charges or other Proceedings have been brought or
threatened questioning whether Parent's business has been in compliance with any
applicable Legal Requirement with respect to employment, employee compensation
or benefits, employment practices or terms and conditions of employment,
including provisions relating to wages, hours, equal opportunity, disability,
leave of absence, occupational safety or health, collective bargaining, ERISA or
the withholding or payment of social security or other Taxes. The consummation
of transactions contemplated by this Agreement shall not create or give rise to
any requirements of notice or other rights of any kind in favor of any current
or former Personnel of Parent.
2.10 Disclosure. No statement made by Parent in this Agreement, including
any Exhibits or Schedules hereto, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein, in light of the circumstances, not misleading. Parent has not
concealed or omitted to disclose to Amaze any fact which could reasonably be
expected to have a material adverse effect on Parent's business, assets,
liabilities, financial condition or prospects.
2.11 Registration Statements; Blue Sky Filings; Other Information. The
information supplied or to be supplied by Parent or Merger Subsidiary for
inclusion in a Registration Statement (as defined in Section 4.5) and any other
documents to be filed with the SEC or any other regulatory agency in connection
with the transactions contemplated hereby will not, at the respective times such
documents are filed or declared effected by the SEC, as applicable, and at the
Effective Time, and when first published, sent or given to shareholders of
Parent, be false or misleading with respect to any material fact, or omit to
state any material fact necessary in order to make the statements therein not
misleading or, at the time of the meeting of shareholders of Parent provided for
in Section 4.2, be false or misleading with respect to any material fact, or
omit to state any material fact necessary to correct any statement in any
earlier communication with respect to the solicitation of any proxy for such
meeting. All documents which Parent or Merger Subsidiary files or is responsible
for filing with the SEC and any other regulatory agency in connection with the
Merger (including the S-4 Registration Statement) will comply as to form and
content in all material respects with the provisions of applicable Legal
Requirements. Notwithstanding anything in this Agreement to the contrary,
neither Parent nor Merger Subsidiary makes any representation or warranty with
respect to any information that has been or shall be supplied by Amaze, or its
auditors, attorneys or financial advisors specifically for use in a Registration
Statement, or in any other documents to be filed with the SEC or any other
regulatory agency in connection with the transactions contemplated hereby.
3. Amaze's Representations and Warranties. As a material inducement to
Parent and Merger Subsidiary to enter into this Agreement and consummate the
transactions contemplated hereby, Amaze represents and warrants to Parent and
Merger Subsidiary that (A) all of the statements in Section 3.1, Section 3.2(a),
clause (i) of Section 3.2(b), the first and third sentences of Section 3.3,
Section 3.4 and
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Section 3.6(f) are true and correct and (B) all of the other statements in this
Section 3 set forth below are, to Amaze's knowledge, true and correct:
3.1 Corporate Status and Organization.
(a) Organization. Amaze is a corporation duly organized, validly existing
and in good standing under the laws of the State of Nevada and is duly qualified
to do business as a foreign corporation and is in good standing in all
jurisdictions in which its ownership of assets or conduct of business requires
it to be so qualified.
(b) Power and Authority. Amaze has all requisite corporate power and
authority to own, lease and use its assets, to conduct its business as
heretofore conducted and as proposed to be conducted pursuant to the "Business
Plan" (as defined in Section 3.5(b)) and to enter into and perform its
obligations under this Agreement.
(c) Articles of Incorporation and By-Laws. Amaze has delivered to Parent
and Merger Subsidiary complete and correct copies of the Articles of
Incorporation and By-Laws of Amaze, each as in effect on the date hereof. The
minute book of Amaze heretofore made available to Parent and Merger Subsidiary
contain accurate records of all meetings and other corporate actions of Amaze's
stockholders and board of directors (including committees of their respective
boards of directors) customarily maintained in a minute book.
3.2 Authority for Agreement; Consents.
(a) Authority and Approval; Enforceability. Amaze's execution and delivery
of this Agreement and the other agreements, instruments and documents to be
executed and delivered by Amaze pursuant hereto (the "Amaze Documents"), the
consummation of the Merger and the other transactions contemplated hereby and
thereby, and the performance of the obligations of Amaze hereunder and
thereunder have been duly authorized by its board of directors. No other
corporate act or proceeding is necessary to authorize Amaze's execution,
delivery or performance of this Agreement and the Amaze Documents, except for
approval and adoption by Amaze's stockholders as contemplated by Section 5.3. As
of the date hereof, Amaze's board of directors has (i) determined that the
Merger is fair to and in the best interests of its stockholders, (ii) approved
the Merger and (iii) subject to the fiduciary duties of such directors, resolved
to recommend to Amaze's stockholders that they approve the Merger and the other
transactions contemplated by this Agreement that require approval by Amaze's
stockholders under the Nevada Law or Amaze's Articles of Incorporation or
By-Laws, with such recommendation to be set forth in the proxy statement to be
contained in the S-4 Registration Statement (as defined in Section 4.2) and used
to solicit such approval of Amaze's stockholders. This Agreement does, and each
of the Amaze Documents when executed and delivered shall, constitute a valid and
binding agreement of Amaze, enforceable against Amaze in accordance with its
terms, subject to the effect of applicable bankruptcy, reorganization,
insolvency, moratorium and other similar laws of general application relating
to, limiting or affecting the enforcement of creditors' rights generally and
general principles of equity that may limit the enforceability of the remedies,
covenants or other provisions of this Agreement or the Amaze Documents and the
availability of injunctive relief or other equitable remedies.
(b) Non-Contravention. Amaze's execution and delivery of this Agreement
and the Amaze Documents and, subject to obtaining the "Merger Consents" (as
defined in Section 3.2(c)), the performance by Amaze of its obligations under
this Agreement do not and shall not (i) violate any provision of the Articles of
Incorporation or By-Laws of Amaze, (ii) violate or conflict with any Legal
Requirement resulting in a material adverse effect on Amaze's business, assets,
liabilities, financial condition or prospects, (iii) violate, conflict with,
constitute a default (or an event which, with notice or lapse of time, or both,
would constitute a default) under, result in the termination, cancellation or
acceleration of, or material modification of, the effect of or the loss of any
benefits under, any Contract to which Amaze or any of its assets or business is
subject or under which Amaze has rights resulting in a material adverse effect
on Parent's business, assets, liabilities, financial condition or prospects or
(iv) result in the creation of any Lien upon any of Amaze's assets or
restriction resulting in a material adverse effect on Amaze's business, assets,
liabilities, financial condition or prospects
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(c) Third Party Consents. Except for obtaining the consents of third
parties identified on Schedule 3.2(c) (collectively, "Merger Consents"), no
consent, approval, authorization or action by, or filing, registration or
declaration with or notice to, any Person is necessary in connection with the
execution and delivery of this Agreement and the Amaze Documents by Amaze or the
performance of any of its obligations hereunder.
3.3 Authorized and Issued Capital Stock, Options and Warrants. All of the
issued and outstanding shares of capital stock of Amaze, including Amaze
Preferred Stock, and all options, warrants and other rights to acquire capital
stock of Amaze are owned of record and beneficially by the persons listed on
Schedule 3.3 in the respective amounts set forth on Schedule 3.3, and no other
Person has any direct or indirect right or interest with respect to any capital
stock or other equity of Amaze. All outstanding shares of capital stock of Amaze
have been duly authorized and validly issued in full compliance with all
applicable federal and state securities laws and are fully paid and
non-assessable with no personal liability attaching thereto. Except as disclosed
on Schedule 3.3, there are no (i) preemptive rights (statutory or contractual),
rights of first refusal or first offer or other similar rights on the part of
any holder of any class of securities of Amaze, (ii) options, warrants,
conversion or other rights, agreements or commitments of any kind obligating
Amaze or any of the persons listed on Schedule 3.3, contingently or otherwise,
to issue, purchase, redeem, register, vote, sell or transfer any capital stock
or other equity interests in Amaze or any securities or rights convertible into
or exchangeable for any such capital stock or equity or (iii) no stock
appreciation rights, phantom stock 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 Amaze or
any of its Affiliates, and Amaze has not authorized any of the foregoing.
3.4 Subsidiaries; Investments. Amaze does not own, directly or indirectly,
any shares of capital stock or other equity or ownership interests of any kind
in any corporation, partnership, limited liability company, business trust,
association or other entity or business enterprise of any kind, nor has Amaze
entered into any Contract to acquire all or any substantial part of the assets
of, to acquire any equity or ownership interests in, to contribute to the
capital of, to guarantee or act as a surety for any obligation of or share or
participate in the profits or losses of any Person.
3.5 Financial Information.
(a) Financial Statements. Amaze has delivered to Parent and Merger
Subsidiary copies of the audited balance sheet of Amaze as at October 31, 1999
and the statement of income and cash flows for the two (2)-month period then
ended (collectively, the "Amaze Financial Statements"). The Amaze Financial
Statements have been prepared in accordance with GAAP consistently applied and
fairly present in all material respects (subject to normal, recurring audit
adjustments) the financial condition of Amaze as of October 31, 1999 and the
results of its operations for the period then ended. The Amaze Financial
Statements were prepared from the books and records of Amaze, which fairly
reflect all material transactions by Amaze, have been maintained in accordance
with sound business practices and all applicable Legal Requirements and
accurately reflect the basis for all information presented in the Amaze
Financial Statements and the disclosures made by Amaze pursuant to this
Agreement.
(b) Business Plan. Amaze has delivered to Parent and Merger Subsidiary the
latest version of Amaze's complete Business Plan (the "Business Plan"). The
Business Plan correctly describes, as of the date hereof, Amaze's business and
the plans, goals and reasonable expectations of Amaze's management. The
projections and other forward-looking statements contained in the Business Plan
were prepared in good faith by the management of Amaze and are based upon
reasonable assumptions.
(c) No Undisclosed Liabilities. Except as set forth on Schedule 3.5(c),
Amaze has no material liabilities or obligations of any kind (absolute or
contingent, choate or inchoate, whether due or to become due) except: (i)
liabilities and obligations that are fully reflected, reserved against or
disclosed in the balance sheet included in the Amaze Financial Statements and
(ii) liabilities and obligations incurred since the date of said balance sheet
in the ordinary course of Amaze's business. Except as set forth on Schedule
3.5(c), no liability or obligation of Amaze results from a breach of Contract,
tort, infringement, claim or Proceeding.
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(d) Absence of Certain Changes. Except as set forth on Schedule 3.5(d),
since the date of the balance sheet included in the Amaze Financial Statements:
(i) Amaze has deployed its assets and conducted its business only in the
ordinary course of business, consistent with its past practice; (ii) Amaze has
not changed any of its methods, policies, practices or procedures relating to
its business, including with respect to bookkeeping, accounting, billing,
collection, marketing, subscriber relations, management of accounts receivable
or accounts payable, research and development, protection of trade secrets,
proprietary software or information or other intangible assets; (iii) Amaze has
maintained and kept its Personal Property in good repair, working order and
condition (except for ordinary wear and tear), and there has not been any
material damage or destruction to or material loss of any Personal Property,
whether or not covered by insurance; (iv) Amaze has performed all of its
material obligations under all Contracts, and no other party to a Contract with
Amaze has failed to perform timely any of its obligations thereunder; (v) Amaze
has not allowed any rights which are renewable at no cost or on favorable terms
under any Contract to which it is a party to expire, and Amaze has not waived
any material rights under any Contract with Amaze or any material claims against
third parties; (vi) there has been no voluntary or involuntary termination of
the employment or engagement of any material Personnel, and no notice of any
such termination has been given; and (vii) no other event has occurred which has
had or could reasonably be expected to have material adverse effect on the
business, assets, liabilities, financial condition or prospects of Amaze through
the Closing or as proposed to be conducted by Amaze thereafter.
3.6 The Assets.
(a) Accounts Receivable. Schedule 3.6(a) sets forth a true and complete
list of Amaze's accounts receivable as of a date not more than five (5) business
days prior to the date hereof. All such accounts receivable have arisen from
bona fide transactions in the ordinary course of Amaze's business consistent
with past practice, and Amaze anticipates that its allowance for doubtful or
uncollectible accounts receivable as indicated on Schedule 3.6(a) will be
adequate.
(b) Personal Property. Schedule 3.6(b) contains a complete and accurate
list of all Personal Property owned, leased, licensed or otherwise used by Amaze
having an initial cost or replacement value in excess of $1,000. All Personal
Property owned, leased or licensed by Amaze is located at Amaze's office at
AmazeScape.com Inc. c/o 264 Airmont Avenue, Mahwah, NJ 07430 (the "Amaze
Premises"). All tangible items located at the Amaze Premises (other than
improvements and fixtures thereto) are the sole property of Amaze, except for
incidental personal belongings of Amaze's employees. Each item of Personal
Property listed on Schedule 3.6(b) is in good operating condition (normal wear
and tear excepted), and each such item is free of any structural, mechanical or
other defect or dangerous condition, is fit for its intended purpose and is not
in violation of any building, zoning, health, safety or other applicable Legal
Requirement, except as otherwise specified on Schedule 3.6(b). Except as
disclosed on Schedule 3.6(b), Amaze has good title to all Personal Property
owned or purported to be owned by it, including the Personal Property reflected
on the balance sheet included in the Amaze Financial Statements and the Personal
Property acquired after the date thereof in the ordinary course of Amaze's
business, free and clear of all Liens.
(c) Real Property. Amaze has a valid leasehold interest in the Amaze
Premises. Amaze does not own, lease or use any real property, other than the
Amaze Premises. The Amaze Premises do not violate any applicable Legal
Requirement and are not the subject of any pending or threatened condemnation or
eminent domain Proceedings. Amaze has, or has the benefit of, all licenses,
permits, easements, rights-of-way and other authorizations and all utilities and
access rights (including ingress to and egress from the Amaze Premises)
necessary to conduct business on the Amaze Premises as presently and proposed to
be conducted. There is no Hazardous Material contained in, stored or used at, or
forming part of, any component of the Amaze Premises.
(d) Software.
(i) Schedule 3.6(d)(i) specifically identifies all software (including
source code and object code) owned by Amaze (collectively, "Amaze Owned
Software"). Amaze has clear title to all Amaze Owned Software (including the
right to use, license, sell, publish, display, distribute, modify and copy all
Amaze Owned Software), free and clear of all Liens (such as claims or rights of
employees, independent contractors, agents,
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consultants, customers and other third parties, whether or not involved in the
development, creation, conception, marketing, maintenance, enhancement,
modification or licensing of such software). All Amaze Owned Software was
written, developed, conceived and created solely by either (A) third parties who
assigned all of their rights and interests with respect thereto to Amaze by
means of a valid and enforceable Contract or (B) employees of Amaze on a
work-for-hire basis without the assistance of any third party, other than a
third party described in clause (A) of this sentence. Amaze has not disclosed
information regarding any Amaze Owned Software to a third party in a manner that
would restrict or limit the ability of Amaze to protect, or that would prevent
Amaze from protecting, its ownership interests in or rights to preserve the
confidentiality of any Amaze Owned Software. All Amaze Owned Software functions
in material compliance with the specifications according to which it was
designed and developed and performs in a manner sufficient for Amaze to conduct
business as contemplated by the Business Plan.
(ii) Schedule 3.6(d)(ii) specifically identifies all software (including
source code and object code) licensed or used by Amaze other than Amaze Owned
Software (collectively, "Amaze Licensed Software"). Except as specifically
disclosed on Schedule 3.6(d)(ii), no Amaze Owned Software or Amaze Licensed
Software is dependent on or contains any software that is not included in the
Amaze Owned Software or Amaze Licensed Software in order to fully operate in the
manner in which such Amaze Owned Software or Amaze Licensed Software is
intended.
(iii) Amaze's date sensitive systems, including the Amaze Owned Software
and Amaze Licensed Software, and embedded technology used to support Amaze's
business, are capable of accurately processing, providing and/or receiving data
from, in, into and between the twentieth and twenty-first centuries, including
the years 1999 and 2000.
(iv) None of the Amaze Owned Software or Amaze Licensed Software contains
any program routine, device or other undisclosed feature (including any time
bomb, virus, lock, drop-dead device, malicious logic, worm, trojan horse or trap
door) that is designed to delete, disable, deactivate, interfere with or
otherwise harm any software, hardware, data or other programs, or that is
intended to provide access or produce modifications without authorization.
(e) Intellectual Property. Schedule 3.6(e) contains an accurate and
complete list of all Intellectual Property owned, licensed or used by Amaze and
are material to Amaze's business. Amaze owns all right, title and interest in
and to, or has the right to use pursuant to a valid and enforceable Contract
listed on Schedule 3.7(a), all Intellectual Property necessary for the conduct
of Amaze's business as heretofore conducted and as proposed to be conducted in
accordance with the Business Plan, and no loss or expiration of any rights to
any such Intellectual Property is pending or threatened or reasonably
foreseeable. Except as indicated on Schedule 3.6(e), (i) there has been no claim
made against Amaze asserting the invalidity, misuse or unenforceability of any
such Intellectual Property or challenging Amaze's rights in, or otherwise
opposing any such Intellectual Property, and there is no reasonable basis for
such a claim, (ii) Amaze has not received notice of any conflict with the
asserted rights of any third party with respect to any such Intellectual
Property, (iii) the conduct of Amaze's business and its use of such Intellectual
Property has not infringed upon or misappropriated and does not infringe upon or
misappropriate the rights of any third party and (iv) none of such Intellectual
Property has been infringed upon or misappropriated by any third party. No
information of Amaze regarded as confidential or proprietary has been disclosed
to a third party, other than pursuant to a confidentiality agreement identified
on Schedule 3.7(a). Schedule 3.6(e) lists all applications, registrations and
other filings made by Amaze with respect to Intellectual Property. All marks
that Amaze has registered with the United States Patent and Trademark Office and
all copyrights that Amaze has registered with the United States Copyright Office
are currently in compliance with all applicable Legal Requirements, are valid
and enforceable.
(f) Authorizations. Amaze has all Authorizations necessary for the
ownership and use of Amaze's assets, use of the Amaze Premises and the conduct
of Amaze's business as heretofore conducted and as proposed to be conducted in
accordance with the Business Plan.
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3.7 Contractual Matters.
(a) Contracts. All written Contracts by which Amaze or any of its assets
are bound or under which Amaze has rights or obligations are listed on Schedule
3.7(a). Amaze has delivered to Parent and Merger Subsidiary true and complete
copies of all written Contracts to which Amaze is a party, each of which is in
full force and effect (except as otherwise provided in the next sentence).
Except for obtaining the Merger Consents, none of such Contracts require consent
from or notice to another Person before or upon consummation of the transactions
contemplated by this Agreement. Neither Amaze nor any other party to any such
Contract is in breach thereof or default thereunder or has any present intention
or expectation of not fully performing all obligations thereunder, and there
does not exist any event which, with the giving of notice or the lapse of time,
or both, would constitute such a breach or default, except for such breaches,
defaults and events as to which requisite waivers or consents already have been
obtained, as set forth on Schedule 3.7(a).
(b) Insurance. All insurance contracts, policies and binders maintained by
Amaze are listed on Schedule 3.7(a). Amaze has delivered to Parent and Merger
Subsidiary a description of each such insurance policy (specifying the insurer
and the amount of any deductible, describing any pending claims and the alleged
amounts thereof, whether or not in excess of applicable policy limits), whether
for errors and omissions, general liability, fire, product liability, worker's
compensation, vehicle, unemployment or other insurance.
(c) Members/Subscribers. Amaze has delivered to Parent and Merger
Subsidiary a complete list of its members and subscribers as of a date not more
than [five] business days prior to the date hereof. Amaze has delivered to
Parent and Merger Subsidiary a complete and accurate list of Amaze's prices for
services and a complete and accurate description of all material terms of
Amaze's pricing, billing and collection practices.
(d) Suppliers. Except as set forth on Schedule 3.7(d), Amaze does not rely
on any supplier of significant materials or services with respect to which
practical alternate sources of supply are not available on comparable terms and
conditions.
(e) Related Persons. Except as set forth on Schedule 3.7(e), no Related
Person of Amaze (i) is a creditor of Amaze, supplier to Amaze or party to a
Contract with Amaze; (ii) has any right, title or interest (whether as a
licensor, licensee, joint owner or user) in, to or under any assets, tangible or
intangible, owned, leased, licensed or used by Amaze; or (iii) has or has plans
to acquire any rights or interests of any kind in a competitor of Amaze's
business (other than a passive investment in less than two percent (2%) of the
publicly-traded stock of a competitor).
3.8 Liabilities; Compliance with Laws.
(a) Accounts Payable. All of Amaze's accounts payable and accrued expenses
are unsecured and arose from bona fide transactions in the ordinary course of
Amaze's business, and none of the obligees thereof are Related Persons.
(b) Investigation and Litigation. There is no Proceeding pending or
threatened, which, if successful, could reasonably be expected to prevent Amaze
from performing its obligations under this Agreement and the Amaze Documents.
Except as set forth on Schedule 3.8(b), there is no Proceeding pending or
threatened that involves Amaze's business, operations or assets. Except as set
forth on Schedule 3.8(b), Amaze is not the subject of any judgment, writ,
injunction, order, award, decision or decree issued by a court, arbitrator,
tribunal or any judicial, regulatory, administrative or other governmental
authority.
(c) Taxes. Except as set forth in Schedule 2.8(c):
(i) Amaze has (A) duly and timely filed or caused to be filed with the
appropriate Tax Authority each Tax Return that is required to be filed by
or on behalf of Amaze or that includes or relates to Amaze's income, sales,
assets or business, which Tax Return is true, correct and complete in all
material respects, (B) duly and timely paid in full, or caused to be paid
in full, all Taxes due and payable by Amaze on or before the date of this
Agreement; and (C) all Taxes shown by such Tax Returns to be due and
payable have been paid or reflected as a liability on Amaze's books and
records;
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(ii) Amaze has complied in all material respects with all applicable
laws relating to the payment, collection or withholding of any Tax, and the
remittance thereof to any Tax Authority, including Code sections 1441,
1442, 1445 and 3402;
(iii) no Tax Return filed by or on behalf of Amaze or that includes or
relates to Amaze's income, sales, assets or business has been examined,
audited or reviewed by any Tax Authority;
(iv) no audit, examination, investigation, reassessment or other
administrative or court proceeding is pending, proposed or threatened
against Amaze with regard to any Taxes or Tax Return or the payment,
collection or withholding of any Taxes due or claimed to be due by Amaze;
(v) Amaze has not requested or received a private letter or other
ruling from any Tax Authority or an agreement with any Tax Authority
(including any closing agreement within the meaning of Code section 7121 or
any analogous provision of applicable law), and there is no outstanding
subpoena or request for information or documents from any Tax Authority,
with respect to any Taxes for which Amaze is or may be liable or with
respect to Amaze's income, sales, assets or business;
(vi) Amaze has not requested an extension of time within which to file
any Tax Return in respect of any Tax period which has not since been filed,
and the statute of limitations for the assessment or collection of any
Taxes for which Amaze is or may be liable or with respect to Amaze's
income, sales, assets or business has never been extended or waived;
(vii) Amaze has not requested an extension of time within which to
file any material Tax Return in respect of any Taxes which have not since
been paid;
(viii) all Taxes due with respect to Amaze's income, sales, assets or
business or for which Amaze is or may be liable have been paid;
(ix) no election under Code section 338 or any similar provision of
applicable law has been made or required to be made by or with respect to
Amaze;
(x) Amaze is not a "consenting corporation" with the meaning of Code
section 431(f) or any similar provision of applicable law and has not
agreed to have Code section 341(f)(2) apply to any disposition of a
subsection (f) asset (as such term is defined in Code section 341(f)(4))
owned by Amaze;
(xi) Amaze is not, and Amaze has not been at any time during the
applicable period referred to in Code Section 897(c)(1)(A)(ii), a "United
States real property holding corporation" within the meaning of Code
section 897(c)(2);
(xii) Amaze does not have any "tax-exempt use property" within the
meaning of Code section 168(g) or any similar provision of applicable law
with respect to Amaze's income, sales, assets or business;
(xiii) Amaze does not have any material liability in respect of any
Tax as a transferee or successor of any third party, and Amaze is not a
party to any Tax allocation, Tax indemnification or Tax sharing Contract;
(xiv) there is no power of attorney for Amaze in effect relating to
any Tax for which Amaze is or may be liable;
(xv) no jurisdiction where Amaze does not file a Tax Return has made
or threatened to make a claim that Amaze is required to file a Tax Return
for such jurisdiction;
(xvi) Amaze (A) is not required to include in income any adjustment
pursuant to Code section 481(a) (or any similar provision of applicable
law) by reason of a change in accounting method, and no Tax Authority has
proposed any such adjustment or change of accounting method, and (B) has
not deferred any income to a period after the Effective Time that has
economically accrued or is otherwise attributable to a period prior to the
Effective Time or has accelerated any deductions into a
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period ending on or before the Effective Time that will or may economically
accrue after the Effective Time; and
(xvii) Schedule 3.8(c) sets forth a list of all states in which any
Tax Returns have been filed by or on behalf of Amaze or with respect to
Amaze's income, sales, assets or business and a description of each such
Tax Return and the period for which it was filed; and Amaze has provided to
Parent (A) a copy of all Tax Returns filed by or on behalf of Amaze and (B)
all audit reports, closing agreements, letter rulings or technical advice
memoranda relating to any Taxes for which Amaze is or may be liable with
respect to Amaze's income, sales, assets or business.
(d) Brokerage. Except as disclosed on Schedule 3.8(d), neither Amaze nor
any director, officer, employee or agent acting or purporting to act on behalf
of Amaze has entered into any Contract with any broker or finder, and there are
no claims for brokerage commissions, finders' fees or similar compensation, in
connection with the transactions contemplated by this Agreement nor has any
Person claimed entitlement to any brokerage commission, finder's fee or similar
compensation, nor is there any basis for such a claim.
(e) Compliance with Applicable Laws. Amaze's assets and the Amaze Premises
are, and the conduct of Amaze's business has been and remains, in material
compliance with all applicable Legal Requirements. There exists no condition or
event relating to its business, any of its assets or the Amaze Premises which,
after notice or lapse of time, or both, would give rise to a violation or
default of any applicable Legal Requirement.
(f) Questionable Conduct. Neither Amaze nor any director, officer,
employee, agent or other Person acting or purporting to act on behalf of Amaze
has directly or indirectly (i) given or agreed to give any bribe, kickback,
political contribution or other illegal payment from corporate funds, (ii)
established or maintained any unrecorded fund or asset, (iii) concealed or
mischaracterized an illegal or unauthorized payment or receipt, (iv) knowingly
made a false entry in any books or records of Amaze or (v) committed or
participated in any act which is illegal or could subject Amaze to fines,
penalties or other sanctions.
3.9 Personnel Matters.
(a) Personnel Information. Amaze has provided Parent and Merger Subsidiary
with the following information for all Personnel of Amaze who receive an annual
salary in excess of $35,000: (i) the name; (ii) current title; (iii) current
level of base salary, bonus, perquisites, benefits and other compensation; and
(iv) to the extent existing, all employment agreements with respect to such
Personnel. Except as disclosed on Schedule 3.9(a), Amaze is not a party to any
Contract which provides (i) benefits that are contingent, or that contain terms
that would be materially altered, upon the occurrence of a transaction involving
Amaze of the nature of any of the transactions contemplated by this Agreement,
(ii) severance benefits or other benefits after the termination of employment or
engagement regardless of the reason for such termination of employment or
engagement or (iii) any benefits that will be increased or that will become
vested or accelerated by the occurrence of any of the transactions contemplated
by this Agreement or that will be calculated on the basis of any of the
transactions contemplated by this Agreement.
(b) Employee Benefit Plans. At no time has any Benefit Plan been
sponsored, maintained, contributed to or been required to be contributed to by
Amaze or any trade or business, whether or not incorporated, which together with
Amaze would be deemed a "single employer" within the meaning of section 4001 of
ERISA, for the benefit of current or former employees or directors of Amaze.
(c) Restrictions and Conflicts. Except as set forth on Schedule 3.9(c),
none of Amaze's Personnel are subject to any noncompete, nondisclosure,
confidentiality, employment, consulting or other agreement or arrangement that
would restrict or affecting the right of any of such Personnel to continue to
faithfully and diligently perform any services requested by Amaze on a full-time
basis.
(d) No Organizing Efforts. Amaze is not a party to, and is not presently
negotiating, any collective bargaining agreement or other agreement with any
labor organization or any other Person or group claiming to represent or bargain
collectively for any Personnel of Amaze, and Amaze has no obligation to
recognize any labor organization or collective bargaining unit with respect to
any such Personnel. There have not been within
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the last five years and there are not presently any organizing efforts by any
union or other group or Person seeking to represent any unorganized Personnel of
Amaze as their bargaining agent.
(e) Labor and Employment Law. No unfair labor practice charges,
grievances, administrative charges or other Proceedings have been brought or
threatened questioning whether Amaze's business has been in compliance with any
applicable Legal Requirement with respect to employment, employee compensation
or benefits, employment practices or terms and conditions of employment,
including provisions relating to wages, hours, equal opportunity, disability,
leave of absence, occupational safety or health, collective bargaining, ERISA or
the withholding or payment of social security or other Taxes. The consummation
of transactions contemplated by this Agreement shall not create or give rise to
any requirements of notice or other rights of any kind in favor of any current
or former Personnel of Amaze.
3.10 Disclosure. No statement made by Amaze in this Agreement, including
any Exhibits or Schedules hereto, contains any untrue statement of a material
fact or omits to state a material fact necessary to make the statements
contained herein, in light of the circumstances, not misleading. Amaze has not
concealed or omitted to disclose to Parent and Merger Subsidiary any fact which
could reasonably be expected to have a material adverse effect on Amaze's
business, assets, liabilities, financial condition or prospects.
3.11 Registration Statements; Blue Sky Filings; Other Information. The
information supplied or to be supplied by Amaze for inclusion in a Registration
Statement (as defined in Section 4.5) and any other documents to be filed with
the SEC or any other regulatory agency in connection with the transactions
contemplated hereby will not, at the respective times such documents are filed
or declared effected by the SEC, as applicable, and at the Effective Time, and
when first published, sent or given to stockholders of Amaze, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary in order to make the statements therein not misleading or, at the time
of the meeting of stockholders of Amaze provided for in Section 4.2, be false or
misleading with respect to any material fact, or omit to state any material fact
necessary to correct any statement in any earlier communication with respect to
the solicitation of any proxy for such meeting.
4. Certain Covenants to be Performed by Parent Before or At the Closing.
4.1 Drop-Down of Premier Business. Before the Closing, Parent shall form a
new corporation under the laws of the State of Delaware ("Premier"), which shall
be a wholly owned subsidiary of Parent.
(a) Certificate of Incorporation; By-Laws. The Certificate of
Incorporation and By-Laws of Premier shall be in the forms attached as Exhibit
4.1(a)(i) and Exhibit 4.1(a)(ii), respectively.
(b) Directors and Officers. The initial directors and officers of Premier
shall be as set forth on Exhibit 4.1(b).
(c) Contribution of Assets and Business. At the Closing, Parent shall
transfer and assign to Premier, as a capital contribution pursuant to Section
351 of the Code, all businesses, rights, warranties, privileges, properties and
assets (of every kind, nature and description whatsoever, real, personal or
mixed, tangible or intangible and wherever situated), used or useful in the
business of Parent as presently conducted or proposed to be conducted, including
all cash, cash equivalents and all bank accounts, marketable securities,
accounts receivable and other claims against third parties, inventory, Personal
Property, rights under Contracts (including leases of real property, insurance
contracts, policies and binders all agreements with employees serving the
business) relating to the conduct of Parent's business and marked with an
asterisk (*) on Schedule 3.7(a), security deposits and advances, prepaid items
(including payments with respect to purchase orders for supplies, inventory and
other goods which have not been accepted by Parent), Intellectual Property
(including rights in the name "Premier Concepts" and any other trademarks, trade
names, trade dress, fictitious names, slogans, logos and commercial symbols used
in Parent's business), Authorizations and all business records; except, however,
Parent shall not transfer and assign to Premier (i) Parent's rights and
privileges that related to its separate corporate existence and identity rather
than to the conduct of Parent's business, (ii) Parent's rights and obligations
under this Agreement, (iii) Parent's agreement with The Nasdaq Stock Market,
Inc. ("Nasdaq"), (iii) cash proceeds from the exercise of options and warrants
received after November 10, 1999 but prior to the Closing ("Option/Warrant
Proceeds"), except as provided in the last
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sentence of this paragraph, (iv) any Contract that is not assignable without a
Drop-Down Consent that has not been obtained as of the Closing, (v) any
information or other asset that Parent is prohibited from transferring or
assigning to Premier pursuant to a Legal Requirement, (vi) any rights with
respect to correspondence or other communications (written or oral), attorney
work product or other documents which, if transferred or assigned to Premier,
would jeopardize an attorney-client, work-product or other similar privilege
that Parent otherwise could assert or (vii) any books or records relating
primarily to items referred to in clauses (i) through (vi) of this sentence,
such as minute books, stock ledgers, stock transfer books, Returns, accountant's
work-papers and correspondence and other documents relating primarily to
Contracts, information or assets that are not being transferred or assigned. In
addition to the contributions of assets required by the preceding sentence, on
or before the last day of each of the first six calendar quarters (i.e., January
1 - March 31, April 1 - June 30, July 1 - September 30 and October 1 - December
31) following the Closing, Parent shall be required to contribute to Premier
cash of an amount that is at least ten percent (10%) of the Option/Warrant
Proceeds received during the calendar quarter then ended, up to a maximum cash
contribution of $125,000 for a calendar quarter; provided, however, at the end
of such six calendar quarters, Parent shall make whatever additional cash
contribution is necessary so that the aggregate cash contributions by Parent to
Premier pursuant to this sentence is at least the lesser of $700,000 and ten
percent (10%) of the total Option/Warrant Proceeds received during such six
calendar quarters.
(d) Drop-Down Consents. Parent shall use all commercially reasonable
efforts to obtain, at or before the Closing, all Drop-Down Consents.
(e) Qualification as a Foreign Corporation. Premier shall qualify to do
business as a foreign corporation in each jurisdiction in which its ownership of
assets or conduct of business, after giving effect to Section 4.1(c), requires
Premier to be so qualified. After the transfer and assignment effected pursuant
to Section 4.1(c), Premier shall continue to operate the business theretofore
conducted by Parent in accordance with the terms of this Agreement, including
the covenants in Section 6, which shall apply to Premier as if Parent and
Premier were one entity.
4.2 Preparation and Filing of Form S-4 Registration Statement. As promptly
as practicable, Parent shall prepare and file with the SEC pursuant to the
Securities Act a registration statement on Form S-4 with respect to (a) all
Common Stock to be issued at the Effective Time upon conversion of the Old Amaze
Stock and (b) all Common Stock that may be issued upon the conversion of
Parent's Convertible Preferred Stock (the "S-4 Registration Statement"). The S-4
Registration Statement shall contain (i) a proxy statement for use in soliciting
Parent's shareholders to approve any transactions contemplated hereby that
require approval of Parent's shareholders under the BCA or Parent's Articles of
Incorporation or By-Laws, (ii) a statement for use in soliciting Amaze's
stockholders to approve by written consent the Merger and any other transactions
contemplated hereby that require approval of Amaze's stockholders under the
Nevada Law or Amaze's Articles of Incorporation or By-Laws and (iii) a
prospectus. Parent shall use its reasonable best efforts to respond to any
comments of the SEC with respect to the S-4 Registration Statement and to cause
the S-4 Registration Statement to become effective under the Securities Act at
the earliest practicable date and to remain in effect in order to permit the
solicitation of Parent's shareholders and Amaze's stockholders to approve the
Merger and the other transactions contemplated hereby with respect to which
stockholder approval is sought. Parent shall obtain an opinion of counsel,
substantially in the form of the draft attached hereto as Exhibit 4.2, for
inclusion in the S-4 Registration Statement.
4.3 Solicitation of Shareholder Approval. As promptly as practicable
following the time at which the S-4 Registration Statement shall become
effective, Parent shall call a special meeting of its shareholders to be held at
the earliest practicable date for the purpose of voting on the transactions
contemplated by this Agreement that require approval or adoption by Parent's
shareholders under any applicable provision of the BCA or Parent's Articles of
Incorporation or By-Laws. Parent's board of directors shall, subject to its
fiduciary duties, recommend to Parent's shareholders approval and adoption of
such transactions.
4.4 Preparation and Filing of Form S-3 Registration Statement. Before the
Closing, Parent shall prepare and file with the SEC pursuant to the Securities
Act a registration statement on Form S-3 with respect to the resale by Parent's
shareholders after the Effective Time of all Common Stock that may be
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issued in connection with the transactions contemplated by this Agreement or
upon the exercise of options and warrants outstanding as of the Closing Date
(including options and warrants issued by Amaze before the Closing Date which
shall become exercisable for Common Stock pursuant to Section 1.9) or options
issued in connection with the transactions contemplated by this Agreement
(including the Common Stock, options and warrants identified on Exhibit 9.5),
whether or not vested or exercisable (the "S-3 Registration Statement"). Parent
shall use its reasonable best efforts to respond to any comments of the SEC with
respect to the S-3 Registration Statement and to cause the S-3 Registration
Statement to become effective under the Securities Act at the earliest
practicable date and remain in effect for a period of at least five (5) years
following the Closing. Parent's covenant in this Section 4.4 shall survive the
Merger, notwithstanding any other provision herein to the contrary, and each
holder of Common Stock or options or warrants exercisable for Common Stock
intended to be covered by the S-3 Registration Statement is intended to be a
third-party beneficiary of this Section 4.4 and shall be entitled to rely on and
enforce this Section 4.4, in his, her or its own name, notwithstanding any
action or inaction by any party hereto or other third-party beneficiary hereof,
free of any claim, defense, set-off or other right against any party or other
third-party beneficiary hereof.
4.5 Cooperation and Consultation. In the process of its preparation of the
S-4 Registration Statement, the S-3 Registration Statement and the S-8
Registration Statement contemplated by Section 4.7(c) (each, a "Registration
Statement"), Parent shall provide Amaze and its advisors (including its legal
counsel) drafts of the Registration Statement and shall provide Amaze and its
advisors a reasonable opportunity to participate in such drafting process.
Parent shall notify Amaze promptly of the receipt of any comments from the SEC
or its staff and of any request by the SEC or its staff for amendments or
supplements to a Registration Statement or for additional information, and shall
supply Amaze and its advisors with copies of all correspondence between Parent
or any of its representatives, on the one hand, and the SEC or its staff, on the
other hand, with respect to a Registration Statement. Parent, after consultation
with Amaze and its legal counsel, shall respond promptly to any comments made by
the SEC with respect to a Registration Statement. Although Parent shall consult
with Amaze while preparing the Registration Statements and in considering and
responding to any comments received by the SEC with respect thereto, all
determinations as to the content of a Registration Statement, except for those
disclosures the completeness and accuracy of which are warranted by Amaze
pursuant to Section 5.1, shall be made by Parent in accordance with applicable
Legal Requirements.
4.6 Amendments to Parent's Articles of Incorporation. At or before the
Closing, Parent's board of directors shall, subject to it fiduciary duties and
obtaining approval of Parent's shareholders, cause that Parent's Articles of
Incorporation to be amended to authorize a new class of capital stock of Parent,
called "Series B Convertible Preferred Stock," having the rights, privileges and
duties set forth on Exhibit 4.6.
4.7 Stock Option Plan. At or before the Closing, the board of directors of
Parent shall, subject to its fiduciary duties and obtaining approval of Parent's
shareholders, (a) adopt the Stock Option Plan in the form attached as Exhibit
4.7 (the "Stock Option Plan") and recommend to Parent's shareholders approval
and adoption of said Stock Option Plan, conditioned on the consummation of the
Merger and (b) prepare and file with the SEC pursuant to the Securities Act a
registration statement on Form S-8 covering all Common Stock that may be issued
upon the exercise of options to be issued under the Stock Option Plan, whether
or not vested or exercisable.
4.8 Option/Warrant Proceeds Escrow. Pursuant to the Escrow Agreement dated
as of November 10, 1999, by and among Parent, Amaze and Amaze's counsel, a copy
of which is attached as Exhibit 4.8 (the "Escrow Agreement"), Parent shall
direct payment of all Option/Warrant Proceeds to Amaze's counsel, as escrow
holder, to hold and disperse said Option/Warrant Proceeds and any interest
earned thereon in accordance with the Escrow Agreement. Under no circumstances
shall Amaze assert any claim or initiate any Proceeding to prevent or delay the
disposition of the Option/Warrant Proceeds or any interest earned thereon in
accordance with the terms of the Escrow Agreement.
4.9 Nasdaq Application Amendment. Before the Closing Date, Parent shall
file and diligently prosecute an appropriate Addendum: The Nasdaq SmallCap
Market Application Amendment covering (a) all Common Stock to be issued at the
Effective Time upon conversion of the Old Amaze Stock, (b) all Common Stock that
may be issued upon the conversion of Parent's Convertible Preferred Stock to be
issued at Closing
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and (c) all Common Stock that may be issued upon the exercise of options and
warrants outstanding as of the Closing Date or issued in connection with the
transactions contemplated by this Agreement (including the Common Stock, options
and warrants identified on Exhibit 9.5), whether or not vested or exercisable.
4.10 Blue Sky Filings. If as of two (2) days before the Closing Parent has
not received from Nasdaq assurances reasonably acceptable to the parties hereto
that all Common Stock issued and outstanding as of the Closing Date and all
Common Stock that may be issued upon the exercise of options and warrants
outstanding as of the date hereof or issued in connection with the transactions
contemplated by this Agreement (including those options and warrants identified
on Exhibit 9.5), whether or not vested or exercisable, shall continue to be
included on The Nasdaq SmallCap Market through the Closing, without any
Proceeding pending or threatened to remove the Common Stock from by The Nasdaq
SmallCap Market, Parent shall prepare and file with state securities
administrators such registration statements or other documents as may be
required under applicable blue sky laws to qualify or register for resale all
such Common Stock in the states listed on Exhibit 4.10 (the "Blue Sky Filings").
The Parent shall use its reasonable best efforts to respond to any comments of
the applicable state securities administrators with respect to such Blue Sky
Filings and to cause the qualification or registration of such Common Stock for
resale in such states at the earliest practicable date. In the process of its
preparation of the Blue Sky Filings, Parent shall provide Amaze and its advisors
(including its legal counsel) drafts of the Blue Sky Filings and shall provide
Amaze and its advisors a reasonable opportunity to participate in such drafting
process. Parent shall notify Amaze promptly of the receipt of any comments from
applicable state securities administrators and of any request by such
administrators for additional information, and shall supply Amaze and its
advisors with copies of all correspondence between Parent or any of its
representatives, on the one hand, and applicable state securities
administrators, on the other hand, with respect to Blue Sky Filings. Parent,
after consultation with Amaze and its legal counsel, shall respond promptly to
any comments made by applicable state securities administrators with respect to
Blue Sky Filings. Although Parent shall consult with Amaze while preparing the
Blue Sky Filings and in considering and responding to any comments received by
applicable state securities administrators with respect thereto, all
determinations as to the content of the Blue Sky Filings, except for those
disclosures the completeness and accuracy of which are warranted by Amaze
pursuant to Section 5.1, shall be made by Parent.
4.11 Fairness Opinion and Valuation. Parent has engaged JWGenesis Capital
Markets, Inc. ("JWGenesis"), an investment banking and financial advisory firm,
to consider and opine upon (in an opinion to be addressed to Parent's board of
directors) the fairness, from a financial point of view, of the consideration to
be received by Parent in connection with the Merger and the other transactions
contemplated hereby, collectively. All parties shall furnish to JWGenesis such
information concerning the Merger, the other transactions contemplated hereby,
each party hereto and its shareholders, directors, officers, affiliates,
business, assets, liabilities, financial conditions and prospects as JWGenesis
may request in connection with the consideration or rendition of such opinion.
Amaze has approved the selection and engagement of JWGenesis for such purposes
and shall reimburse Parent for the fees and expenses of JWGenesis incurred by
Parent in accordance with the terms of such engagement.
4.12 Reservation of Trading Symbol. Promptly after the execution of this
Agreement, Parent shall, subject to and in accordance with the Nasdaq
MarketPlace Rules, seek to reserve the trading symbol "AMZE," or such other
appropriate trading symbol as Amaze may determine, for trading of Common Stock
on The NASDAQ SmallCap Market after the Effective Time.
5. Certain Covenants to be Performed by Amaze Before or At Closing.
5.1 Information to be Supplied. Amaze shall provide Parent and its counsel
with all information relating to Amaze, its stockholders, directors, officers,
affiliates, business, assets, liabilities, financial condition and prospects, as
Parent shall reasonably request in connection with the preparation of the
Registration Statements and any amendments or supplements thereto, the Addendum:
Nasdaq SmallCap Market Application Amendment referred to in Section 4.9, any
Blue Sky Filings referred to in Section 4.10 and any other documents that
Parent, on the advice of counsel, may determine necessary or advisable to
prepare and file in connection with the transactions contemplated hereby. No
information supplied by Amaze pursuant to
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this Section 5.1 will contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they are
made, not misleading. Amaze shall obtain an opinion of counsel, substantially in
the form of the draft attached hereto as Exhibit 5.1, for inclusion in the S-4
Registration Statement.
5.2 Solicitation of Stockholder Approval. As promptly as practicable
following the time at which the S-4 Registration Statement shall become
effective, Amaze shall seek the written consent of its stockholders to approve
and adopt this Agreement, the Merger and the transactions contemplated by this
Agreement that require approval or adoption by Amaze's stockholders under any
applicable provision of the Nevada Law or Amaze's Articles of Incorporation or
By-Laws. Amaze's board of directors shall, subject to its fiduciary duties,
recommend to Amaze's stockholders approval and adoption of this Agreement, the
Merger and such transactions.
5.3 Merger Consents. Amaze shall use all commercially reasonable efforts
to obtain, at or before the Closing, all Merger Consents.
5.4 Additional Investment in Amaze. If Parent's net cash position, as of
the Effective Time, would not be sufficient to obtain Nasdaq approval of the
Merger and the other transactions contemplated hereby (including for Parent to
satisfy the initial listing qualifications of The Nasdaq SmallCap Market),
Amaze's board of directors shall authorize one or more new series of preferred
stock having rights, preferences and duties no more favorable to holder thereof
in any respect than the rights, preferences and duties applicable to Amaze's
existing Series B Preferred Stock (including a conversion price to Amaze common
stock of not less than $3.50 per share and a mandatory conversion to Amaze
common stock immediately prior to the Merger) and sell shares of such
newly-authorized preferred stock for not less than the face value per share so
that Amaze receives aggregate net proceeds from such sale sufficient for Parent
to obtain such approval.
5.5 Counsel Fees and Costs. Amaze shall pay all of Parent's and Merger
Subsidiary's reasonable counsel fees and costs incurred in connection with the
negotiation, documentation and consummation of the Merger and the other
transactions contemplated by this Agreement; provided, however, notwithstanding
anything contained herein to the contrary, Parent and Merger Subsidiary shall be
solely responsible for any such fees and costs incurred by them in the event
that this Agreement is terminated pursuant to Section 12.3.
6. Certain Covenants to be Performed by All Parties Before or At Closing.
6.1 Conduct Pending the Closing. From the date of this Agreement until
either the Closing has been consummated or this Agreement has been terminated in
accordance with Section 12, each party shall conduct its business only in the
ordinary course, consistent with past practice, and shall use all commercially
reasonable efforts to preserve intact its business and keep available the
services of its material Personnel (which, in the case of Parent, refers to its
Management Personnel), preserve its goodwill and relationships with material
suppliers, subscribers/customers and other Persons with which such party has a
material business relationship. Without limiting the generality of the
foregoing, except for actions and changes expressly required, permitted or
contemplated by this Agreement or as otherwise consented to in writing by the
other parties hereto, each party shall:
(a) maintain and keep its Personal Property in good operating
condition (except for ordinary wear and tear, and damage due to casualty or
theft occurring notwithstanding such party's prudence), including by making
all appropriate repairs, renewals, replacements, additions and improvements
thereto;
(b) perform all of its material obligations under all Contracts to
which it is a party or by which it is bound;
(c) duly and timely file all Tax Returns required to be filed by it
under any applicable Legal Requirement;
(d) refrain from:
(i) modifying, amending or repealing any provision of its Articles
of Incorporation or Certificate of Incorporation, as applicable, or
By-Laws;
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(ii) authorizing or issuing any capital stock or other securities,
whether debt or equity, splitting or reclassifying any class of capital
stock or other securities, or modifying the rights, privileges or duties
incident to holding any class of capital stock or other securities;
(iii) authorizing, declaring, making or paying, or set aside funds
or property for making or paying, any dividend or other distribution of
any kind, whether in cash, securities or other property, in respect of
the capital stock or other securities issued by a party hereto; and
(iv) acquiring the capital stock or other securities, whether debt
or equity, or the business, operations or assets of any third party,
other than the purchase of supplies or inventory in the ordinary course
of business consistent with past practice;
(v) selling, leasing, licensing, assigning, transferring or
otherwise disposing in any manner of any assets, other than in the
ordinary course of business, consistent with past practice;
(vi) modifying, amending or waiving rights under any material
Contract to which it is a party or by which it is bound, or committing
any act or omitting any act, or permitting any act or omission, which
could reasonably be expected to cause a material breach by a party under
this Agreement or any material Contract to which it is a party or by
which it is bound;
(vii) increasing in any manner the compensation or benefits of any
Personnel, other than annual raises in the ordinary course of business
consistent with past practice;
(viii) becoming liable for money borrowed, whether as a primary
obligor or as a guarantor or surety for liabilities or obligations of
others, or assuming or permitting any material Lien upon its assets;
(ix) changing any of its methods, policies, practices or procedures
relating to its business, including with respect to bookkeeping,
accounting, billing, collection, marketing, member/ subscriber or
customer relations (as applicable), handling of complaints, managing and
collecting accounts receivable, managing and paying accounts payable,
ordering supplies and inventory, research and development and the
protection of trade secrets, proprietary software or information or
other Intellectual Property (including by accelerating billings to or
payments from members/ subscribers or customers (as applicable) or
orders from suppliers or adjusting the level of office supplies or
inventory, except in the ordinary course of business consistent with
past practice);
(x) failing to act in accordance with any applicable Legal
Requirement, the failure of which would have a material adverse effect
on the business, assets, liabilities, financial condition or prospects
of a party hereto;
(xi) taking any other action that could reasonably be expected to
have a material adverse effect on such party's business as heretofore
conducted or as proposed to be conducted thereafter or the premises or
any material assets used therein, or that could reasonably be expected
to cause any representation or warranty set forth in Section 2 or 3 to
be untrue as of the Closing Date or any condition to Closing in Section
7, 8 or 9 not to be satisfied; or
(x) agreeing or otherwise creating any obligation to take any of
the foregoing actions; and
(f) give written notice to the other parties hereto immediately upon
obtaining knowledge of:
(i) any Proceeding (including any citation, order to show cause, or
other legal process or order) which affects any asset or Contract, which
directs any party hereto to become a party to or appear at any
Proceeding or which, if adversely determined, could reasonably be
expected to have, either individually or in the aggregate with other
matters, a material adverse effect on the business, assets, liabilities,
financial condition or prospects of a party hereto and include with such
written notice a copy of any such citation, order to show cause or other
legal process or order; or
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(ii) the occurrence of any other event which shall or is likely to
(A) have a material adverse effect on the business, assets, liabilities,
financial condition or prospects of a party hereto or (B) to the extent
not waived, cause any condition set forth in Section 7, 8 or 9 to be
unsatisfied.
6.2 Access to Information. Subject to the Confidentiality Agreement (as
defined in Section 6.4), applicable fiduciary, privacy and other Legal
Requirements, each party shall afford the other parties and their respective
representatives, upon reasonable notice and in a manner that shall not
unreasonably interfere with the conduct of business, with reasonable access to,
and copies of, all books, records, accounts, correspondence, files, invoices,
Personnel records, subscriber/customer lists and information, supplier lists and
information, sales and marketing studies and plans, business forecasts,
procurement requirements, appraisals, reports, surveys, analyses and similar
information and all other documents, information, agreements and arrangements
relating to a party's business, assets, liabilities, financial condition and
prospects. Each party and its representatives and agents shall also be afforded
reasonable access to the premises of the other parties and the right to discuss
operating and financial matters with appropriate Personnel of the other parties.
6.3 No Shop. Until the Closing has been consummated or this Agreement has
been terminated in accordance with Section 13, no party shall, directly or
indirectly, including through any Related Person, employee, broker, finder,
agent, representative, financial advisor, attorney or other intermediary, (a)
seek any Person or Persons, other than the parties hereto, to purchase or
acquire all or any substantial part of the assets of a party hereto outside the
ordinary course of business, to purchase or acquire any securities of a party
hereto, or to effect a consolidation, merger or other business combination,
recapitalization, liquidation or similar transaction, or any other transactions
inconsistent with consummation of the transactions contemplated by this
Agreement or (b) make, negotiate, accept, solicit or entertain any offer (even
if conditional upon the termination of this Agreement without a Closing) to
engage in, or take part in discussions or provide information concerning, any
transaction referred to in clause (a) of this Section 6.3.
6.4 Covenant to Maintain Confidentiality. Each party acknowledges that the
success of its business depends to a great degree upon the continued
preservation of the confidentiality of certain proprietary software and other
information. Accordingly, each party shall comply with that certain Mutual
Confidentiality Agreement dated December 9, 1999 (the "Confidentiality
Agreement"), which shall survive the execution and delivery of this Agreement
and the termination of this Agreement for any reason whatsoever.
6.5 Public Announcements. Parent and Merger Subsidiary, on the one hand,
and Amaze, on the other hand, shall use all reasonable efforts to consult with
each other before issuing any press release or making any public statement with
respect to this Agreement or any of the transactions contemplated hereby and,
except as may be required by an applicable Legal Requirement or Parent's
agreement with Nasdaq, each party shall use all reasonable efforts not to issue
any such press release or make any such public statement prior to such
consultation.
6.6 Efforts to Achieve Closing. Upon the terms and subject to the
conditions of this Agreement, each party agrees, subject to applicable Legal
Requirements and the fiduciary duties of such party's directors, to take all
necessary corporate and other action and use all commercially reasonable efforts
to (a) obtain all necessary third party consents, (b) make all necessary filings
required to carry out the transactions contemplated by this Agreement, (c)
satisfy or caused to be satisfied all conditions to the other parties'
obligation to consummate the Closing at the earliest practicable date and (d)
otherwise to perform its obligations under this Agreement.
7. Conditions Precedent to Obligations of Parent and Merger
Subsidiary. The obligations of Parent and Merger Subsidiary under this
Agreement to be performed at the Closing are subject to and conditioned upon the
satisfaction, or waiver (in whole or in part) by Parent and Merger Subsidiary,
at or prior to the Closing of each of the following conditions:
7.1 Representations and Warranties. The statements made by Amaze in
Sections 3.1 through 3.10 (inclusive) were true and correct when made and are
true and correct in all material respects on and as of the Closing Date (as if
such statements were made on and as of the Closing Date, except insofar as the
statements relate solely to a particular specified date or period other than the
Closing Date and except for the effects of
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actions or changes required, permitted or contemplated by this Agreement), in
each case without regard to Amaze's knowledge, or, if any such statements were
false when made or would be false if made on and as of the Closing Date, the
aggregate effect of such false statements does not and would not deprive Parent
or Merger Subsidiary of a material benefit of its bargain.
7.2 Covenants Performed. All covenants to be performed by Amaze on or
before the Closing Date shall have been performed, including the execution and
filing of the Articles of Merger with the Secretary of State of the State of
Nevada and the execution and filing of the Certificate of Merger with the
Secretary of State of the State of Delaware.
7.3 Third Party Consents. Amaze shall have obtained and delivered to
Parent and Merger Subsidiary all Merger Consents, which shall be in form and
substance reasonably satisfactory to Parent and Merger Subsidiary.
7.4 No Material Adverse Change. Since the date hereof, there shall have
been no material adverse change (whether or not covered by insurance) in Amaze's
business, assets, liabilities, financial condition or prospects.
7.5 Officer's Certificate. Amaze shall have delivered to Parent an
officer's certificate, certifying that (a) attached thereto are true, correct
and complete copies of resolutions duly adopted by unanimous consent in writing
of Amaze's board of directors and stockholders, authorizing and approving the
execution, delivery and performance of this Agreement and the Amaze Documents
and the consummation by Amaze of the transactions contemplated hereby, and such
resolutions are in full force and effect as of the Closing Date, (b) attached
thereto are good standing certificates for Amaze issued by the Secretary of
State of the State of Nevada and of each state in which Amaze is qualified to do
business as a foreign corporation; (c) the representations and warranties made
by Amaze in Section 3 were true and correct when made and true and correct in
all material respects on and as of the Closing Date (as if such representations
and warranties were made on and as of the Closing Date, except insofar as the
representations and warranties relate solely to a particular specified date or
period other than the Closing Date and except for the effects of actions or
changes required, permitted or contemplated by this Agreement) or, if any such
representations or warranties were false when made or would be false if made on
and as of the Closing Date, the aggregate effect of such false representations
and warranties does not and would not deprive Parent or Merger Subsidiary of a
material benefit of its bargain; and (d) all conditions to the obligations of
Amaze to consummate the Closing in this Section 7 have been completely
satisfied. Such officer's certificate shall also include a certificate of
incumbency, signed by the Secretary of Amaze, certifying the names, titles and
signatures of all persons executing this Agreement and the other instruments,
certificates and documents to be executed on behalf of Amaze.
7.6 Opinions of Counsel to Amaze. On the Closing Date, Parent and Merger
Subsidiary shall have received from counsel to Amaze a written opinion
substantially in the form attached as Exhibit 7.6. In addition, on the Closing
Date, Amaze shall have received confirmation from counsel to Amaze that no
information has been brought to such counsel's attention that would cause such
counsel to withdraw or change the conclusion reached in its opinion rendered
pursuant to Section 5.1.
7.7 Fairness Opinion. On or prior to the Closing Date, Parent's board of
directors shall have received an opinion from JWGenesis that the consideration
to be received by the Parent in connection with the Merger and the other
transactions contemplated hereby, collectively, is fair to Parent from a
financial point of view, and such opinion shall not have been withdrawn,
retracted or contradicted by JWGenesis.
7.9 Other Documents. On the Closing Date, Amaze shall have delivered to
Parent and Merger Subsidiary such other agreements, instruments and documents
relating to the Merger and the transactions contemplated by this Agreement as
Parent, Merger Subsidiary or their respective counsel shall have reasonably
requested, in each case duly executed and, if so requested, acknowledged by
Amaze.
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8. Conditions Precedent to Obligations of Amaze. The obligations of Amaze
under this Agreement to be performed at the Closing are subject to and
conditioned upon the satisfaction, or waiver (in whole or in part) by Amaze, at
or prior to the Closing of each of the following conditions:
8.1 Representations and Warranties. The statements made by Parent and
Merger Subsidiary in Sections 2.1 through 2.10 (inclusive) were true and correct
when made and are true and correct in all material respects on and as of the
Closing Date (as if such statements were made on and as of the Closing Date,
except insofar as the statements relate solely to a particular specified date or
period other than the Closing Date and except for the effects of actions or
changes required, permitted or contemplated by this Agreement), in each case
without regard to Parent's or Merger Subsidiary's knowledge, or, if any such
statements were false when made or would be false if made on and as of the
Closing Date, the aggregate effect of such false statements does not and would
not deprive Amaze of a material benefit of its bargain.
8.2 Covenants Performed. All covenants to be performed by Parent and
Merger Subsidiary on or before the Closing Date shall have been performed,
including the execution and filing of the Articles of Merger with the Secretary
of State of the State of Nevada and the execution and filing of the Certificate
of Merger with the Secretary of State of the State of Delaware.
8.3 No Material Adverse Change. Since the date hereof, there shall have
been no material adverse change (whether or not covered by insurance) in the
business, assets, liabilities, financial condition or prospects of Parent and
its subsidiaries, taken as a whole.
8.4 Officer's Certificate. Each of Parent and Merger Subsidiary shall have
delivered to Amaze an officer's certificate, certifying that (a) attached
thereto are true, correct and complete copies of resolutions duly adopted by
unanimous consent in writing of their respective board of directors, authorizing
and approving the execution, delivery and performance of this Agreement and the
Premier Documents and the consummation by Parent or Merger Subsidiary, as the
case may be, of the transactions contemplated hereby, subject to approval of
Parent's shareholders, and such resolutions are in full force and effect as of
the Closing Date, (b) attached thereto are true, correct and complete copies of
resolutions duly adopted by Parent's shareholders at a duly convened meeting of
Parent's shareholders at which a quorum was present and voting, approving the
transactions contemplated by this Agreement and the Premier Documents that
require shareholder approval under any applicable provision of the BCA, Parent's
Articles of Incorporation or Parent's By-Laws, (d) attached thereto are good
standing certificates for Parent and Merger Subsidiary issued by the Secretary
of State of the States of Colorado and Delaware, respectively, (e) the
representations and warranties made by Parent and Merger Subsidiary in Section 2
were true and correct in all material respects when made and true and correct on
and as of the Closing Date (as if such representations and warranties were made
on and as of the Closing Date, except insofar as the representations and
warranties relate solely to a particular specified date or period other than the
Closing Date and except for the effects of actions or changes required,
permitted or contemplated by this Agreement) or, if any such representations or
warranties were false when made or would be false if made on and as of the
Closing Date, the aggregate effect of such false representations and warranties
does not and would not deprive Amaze of a material benefit of its bargain; and
(f) all conditions to the obligations of Parent and Merger Subsidiary to
consummate the Closing in this Section 8 have been completely satisfied. Such
officer's certificate shall also include a certificate of incumbency, signed by
the Secretary of Parent or the Merger Subsidiary as the case may be, certifying
the names, titles and signatures of all persons executing this Agreement and the
other instruments, certificates and documents to be executed on behalf of Parent
and Merger Subsidiary.
8.5 Drop-Down Documents. Parent shall have delivered to Amaze copies of
all agreements, instruments and documents evidencing that the transactions
contemplated by Section 4.1 have been consummated, including true, correct and
complete copies of (a) the Certificate of Incorporation and By-Laws of Premier,
(b) all Drop-Down Consents that have been obtained, (c) the executed instruments
of assignment that effected the transfer and assignment of Parent's assets and
business to Premier in accordance with Section 4.1(c) and (d) a good standing
certificate from the State of Colorado and each other jurisdiction in which
Premier has qualified to do business as a foreign corporation.
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8.6 Opinions of Counsel to Parent and Merger Subsidiary. On the Closing
Date, Amaze shall have received from counsel to Parent and Merger Subsidiary a
written opinion substantially in the form attached as Exhibit 8.6. In addition,
on the Closing Date, Amaze shall have received confirmation from counsel to
Parent that no information has been brought to such counsel's attention that
would cause such counsel to withdraw or change the conclusion reached in its
opinion rendered pursuant to Section 4.2.
8.7 Other Documents. On the Closing Date, Parent and Merger Subsidiary
shall have delivered to Amaze such other agreements, instruments and documents
relating to the Merger and the transactions contemplated by this Agreement as
Amaze or its counsel shall have reasonably requested, in each case duly executed
and, if so requested, acknowledged by Parent and Merger Subsidiary.
9. Conditions Precedent to Obligations of Parent, Merger Subsidiary and
Amaze. The obligations of Parent, Merger Subsidiary and Amaze under this
Agreement to be performed at the Closing are subject to and conditioned upon the
satisfaction, or waiver (in whole or in part) by each of the parties hereto, at
or prior to the Closing of each of the following conditions:
9.1 Effective Registration Statements. The S-4 Registration Statement
shall have been declared effective by the SEC, and then approval and adoption of
this Agreement, the Merger and/or any other transactions contemplated by the
Merger Agreement requiring approval of the shareholders of Parent or Amaze shall
have been solicited pursuant to the S-4 Registration Statement. The S-3
Registration Statement shall have been declared effective by the SEC, and the
S-8 Registration Statement shall have been filed.
9.2 Shareholder Approval. The shareholders of Parent shall have voted on
and approved the transactions contemplated by this Agreement that require
shareholder approval or adoption under any applicable provision of the BCA,
Parent's Articles of Incorporation or Parent's By-Laws.
9.3 Stockholder Approval. The stockholders of Amaze shall have approved
and adopted by written consent this Agreement, the Merger and the transactions
contemplated by this Agreement that require stockholder approval or adoption
under any applicable provision of the Nevada Law, Amaze's Articles of
Incorporation or Amaze's By-Laws.
9.4 Limited Dissenters. Holders of at least ninety-eight percent (98%) of
Old Amaze Stock shall have either (a) executed and delivered to Amaze a written
consent to approve and adopt this Agreement, the Merger and the transactions
contemplated by this Agreement that require approval or adoption by Amaze's
stockholders under any applicable provision of the Nevada Law or Amaze's
Articles of Incorporation or By-Laws or (b) executed and delivered to Amaze a
valid and effective waiver of such holder's rights to dissent from and obtain
payment of the fair value of his shares of Old Amaze Stock under the Nevada Law.
9.5 Issuance of Common Stock, Options and Warrants. Parent shall have
issued the additional Common Stock and options or warrants to purchase Common
Stock set forth on Exhibit 9.5.
9.6 No Injunctions or Restraints. No temporary restraining order,
preliminary or permanent injunction or other order issued by any court of
competent jurisdiction or other legal restraint or prohibition preventing the
consummation of the Merger and the other transactions contemplated by this
Agreement shall have been issued, decreed or enacted.
10. Non-Survival of Representations, Warranties and Covenants. Except as
otherwise expressly set forth in this Agreement, the representations, warranties
and covenants of the parties in this Agreement or in any agreement or instrument
delivered by a party pursuant to this Agreement shall not survive the Merger.
11. Director's and Officers' Liability. This Section 11 shall survive the
Merger or the termination of this Agreement for any reason whatsoever.
11.1 Limited Liability. Notwithstanding any of the terms or provisions of
the Agreement, no director or officer of a party hereto shall have any personal
liability in respect of or relating to the representations, warranties or
covenants of a party hereunder or in respect of any certificate delivered with
respect thereto.
11.2 Directors' and Officers' Liability Insurance. Notwithstanding
anything to the contrary contained in this Agreement, Parent (including the
surviving corporation after giving effect to the Reincorporation Plan)
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shall, during the six-year period commencing at the Effective Time, (a) maintain
appropriate directors' and officers' liability insurance policies providing
broad coverage with per occurrence and aggregate liability limits that are
favorable to the directors and officers by comparison with such policies
customarily maintained by corporations of comparable size within the same
industries, which policy also shall cover directors and officer of any
subsidiary of Parent, and (b) not amend the Certificate of Incorporation or
Articles of Incorporation, as applicable, or By-Laws of Parent, Merger
Subsidiary, Premier or Amaze so as to reduce the scope of directors' and
officers' liability indemnification provided for therein. The parties
specifically acknowledge and agree that each person serving as a director or
officer of Parent, Merger Subsidiary, Premier or Amaze is intended to be a
third-party beneficiary of this Section 11.2 and is entitled to rely on and
enforce this Section 11.2 Agreement, in his or her own name, notwithstanding any
action or inaction by any party hereto or other third-party beneficiary hereof,
free of any claim, defense, set-off or other right of any party against any
party or other third-party beneficiary hereof.
12. Termination. This Agreement may be terminated at any time prior to
consummation of the Closing as follows:
12.1 Mutual Consent. Amaze and Parent may terminate this Agreement at any
time prior to the Closing by their mutual written consent, in which case, unless
otherwise agreed between Amaze and Parent, no party hereto shall have any
liability to any others hereunder.
12.2 Amaze's Breach. Without prejudice to any rights or claims a party may
have arising from a misrepresentation, breach of warranty or breach of covenant
occurring prior to the termination of this Agreement, Parent or Merger
Subsidiary may terminate this Agreement at any time prior to Closing by giving
written notice to Amaze in the event that:
(a) any statements made by Amaze in Sections 3.1 through 3.10
(inclusive) were false when made or false on and as of the Closing Date (as
if such statements were made on and as of the Closing Date, except insofar
as the statements relate solely to a particular specified date or period
other than the Closing Date and except for the effects of actions and
changes required, permitted or contemplated by this Agreement), in each
case without regard to Amaze's knowledge, and the aggregate effect of such
false statements deprives Parent or Merger Subsidiary of a material benefit
of its bargain; or
(b) Amaze breaches a covenant in this Agreement or fails to execute
and/or deliver any agreement, instrument or document to be executed or
delivered by Amaze as a condition to Parent's or Merger Subsidiary's
obligation to consummate the Closing, provided that such breach or failure
has not been waived or caused by a material breach by either Parent or
Merger Subsidiary. Parent's and Merger Subsidiary's respective rights of
termination pursuant to this Section 12.2 are in addition to and cumulative
with any and all other legal or equitable rights and remedies, as may be
available as a result of such or any other breach or default by Amaze.
12.3 Parent's or Merger Subsidiary's Breach. Without prejudice to any
rights or claims a party may have arising from a misrepresentation, breach of
warranty or breach of covenant occurring prior to the termination of this
Agreement, Amaze may terminate this Agreement at any time prior to Closing by
giving written notice to Parent and Merger Subsidiary in the event that:
(a) any statements made by Parent or Merger Subsidiary in Sections 2.1
through 2.10 (inclusive) were false when made or false on and as of the
Closing Date (as if such statements were made on and as of the Closing
Date, except insofar as the statements relate solely to a particular
specified date or period other than the Closing Date and except for the
effects of actions and changes required, permitted or contemplated by this
Agreement), in each case without regard to Parent's or Merger Subsidiary's
knowledge, and the aggregate effect of such false statements deprives Amaze
of a material benefit of its bargain; or
(b) Parent or Merger Subsidiary breaches a covenant in this Agreement
or fails to execute and/or deliver any agreement, instrument or document to
be executed or delivered by Parent or Merger Subsidiary as a condition to
Amaze's obligation to consummate the Closing, provided that such breach or
failure has not been waived or caused by material breach by Amaze.
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Amaze's right of termination pursuant to this Section 12.3 is in addition to and
cumulative with any and all other legal or equitable rights and remedies that
may be available as a result of such or any other breach or default by Parent or
Merger Subsidiary.
12.4 Expiration Date. Without prejudice to any rights or claims a party
may have arising from a misrepresentation, breach of warranty or breach of
covenant occurring prior to the termination of this Agreement, any party hereto
may terminate this Agreement at any time after May 15, 2000 (the "Expiration
Date") if Closing has not occurred as of such date other than as the result of a
material breach by such party seeking to terminate this Agreement, in which case
no party hereto shall have any liability to any others hereunder, except for any
misrepresentation, breach of warranty or breach of covenant occurring prior to
such termination.
13. Waiver of Jury Trial. IRREVOCABLY AND UNCONDITIONALLY, EACH OF THE
PARTIES HERETO HEREBY KNOWINGLY, INTELLIGENTLY AND VOLUNTARILY WAIVES ALL RIGHTS
IT MAY HAVE HAD, BUT FOR THIS AGREEMENT, TO TRIAL BY JURY IN ANY PROCEEDING,
DISPUTE OR CONTROVERSY ARISING FROM OR RELATING IN ANY WAY TO THIS AGREEMENT OR
ANY AGREEMENT, INSTRUMENT OR DOCUMENT OR OTHER MATTER CONTEMPLATED BY THIS
AGREEMENT.
14. Notices and Other Communications. All notices, demands or other
communications to be given or delivered under or by reason of the provisions of
this Agreement shall be in writing and shall be delivered personally to the
recipient, sent to the recipient by reputable overnight courier service with
charges prepaid or mailed to the recipient by United States certified or
registered mail with return receipt requested and postage prepaid. Such notices,
demands and other communications shall be sent to the parties hereto at their
respective addresses indicated below:
(a) to Parent or Merger Subsidiary:
Premier Concepts, Inc.
3033 South Parker Road, Suite 120
Aurora, CO 80014
Attention: Sissel B. Eckenhausen, President and CEO
with a copy to:
Hangley Aronchick Segal & Pudlin
One Logan Square, 27th Floor
Philadelphia, PA 19103
Attention: Curtis L. Golkow, Esq.
(b) to Amaze:
264 Airmont Avenue
Mahwah, NJ 07430
Attention: Harry Persaud
with a copy to:
Parker Chapin Flattau & Klimpl, LLP
1211 Avenue of the Americas
New York, New York 10036
Attention: Martin Eric Weisberg, Esq.
Christopher Stewart Auguste, Esq.
Each party may change its address or the Person designated to receive
communications on such party's behalf by giving the other party written notice
of such change at least ten (10) days in advance. All notices, demands and other
communications shall be deemed to have been given hereunder when delivered
personally, one business day after deposit with a reputable courier service that
has guaranteed overnight delivery, or on the date shown on the return receipt,
whether or not delivery is accepted by the addressee.
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15. General Provisions.
15.1 Entire Agreement. This Agreement, including the Exhibits and
Schedules hereto, embodies the entire agreement and understanding among the
parties with respect to the subject matter hereof and supersede all prior
agreements or understandings made by and among such parties, whether written or
oral, which may have related to the subject matter hereof in any way whatsoever,
other than the Confidentiality Agreement and Escrow Agreement, both of which
remain in full force and effect.
15.2 Amendment; Waiver. This Agreement may be amended only in a written
instrument signed by all parties hereto, and the rights of a party may be waived
only in a written instrument signed by such party. Except as otherwise expressly
provided herein, no delay or failure of any party to enforce at any one or more
times, or for any periods of time, any or all provisions this Agreement shall be
construed as a waiver of any such provisions or shall diminish or affect the
right of such party thereafter to enforce the same or any other provision.
15.3 Severability. Whenever possible, each provision of this Agreement and
the agreements, instruments and other documents to be executed pursuant to this
Agreement shall be interpreted in such manner as to be effective and valid under
applicable Legal Requirements, but if any provision of this Agreement or any
other agreement, instrument or document is held to be invalid or unenforceable
under an applicable Legal Requirement, the remainder of this Agreement and the
agreements, instruments and documents executed in connection with this Agreement
shall be unaffected thereby, and such illegal, invalid or unenforceable
provision shall be deemed modified to the minimum extent necessary to render
such provision legal, valid and enforceable (including, in the case of a
covenant that is held to be illegal, invalid or unenforceable by reason of its
stated duration or scope, by reducing the duration or scope).
15.4 Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of Delaware, regardless of the
laws that might otherwise govern under applicable principles of law.
15.5 Parties in Interest. This Agreement and all of the provisions hereof
shall be binding upon and inure to the benefit of the parties hereto and their
respective successors and permitted assigns. Neither this Agreement nor any of
the rights, interests or obligations hereunder is otherwise assignable, or shall
be assigned, by either of the parties without the prior written consent of the
other party, and any such attempted or purported assignment shall be null and
void ab initio. Except as expressly provided in this Agreement, no provision
hereof is intended to or shall create or provide any rights to or in favor of
any third party, it being specifically agreed that no third party shall have any
right to rely upon or enforce any provision of this Agreement or to assert any
right or claim or initiate any Proceeding under this Agreement except as
expressly provided herein.
15.6 Counting Days. For purposes of this Agreement, in computing the
number of days, other than "business days," all days shall be counted, including
Saturdays, Sundays and holidays; provided, however, if the final day of any time
period falls on a Saturday, Sunday or legal holiday in the State of Delaware,
the final day shall be deemed to be the immediately following business day. A
"business day" means a day that is not a Saturday, Sunday or legal holiday in
the State of Delaware.
15.7 Knowledge. For purposes of this Agreement, a party shall be deemed to
have "knowledge" or "to know" of a particular fact or other matter only if at
least one of the executive officers of such party is actually aware of such fact
or other matter, provided that one or more of the executive officers have made
an inquiry as to such fact or matter with management personnel who are or would
be responsible therefor.
15.8 Construction. Unless otherwise expressly provided, all references
herein to "Sections" shall refer to the sections of this Agreement, and all
references to "Exhibits" and "Schedules" shall refer to the exhibits and
schedules to this Agreement, respectively. The Exhibits and Schedules are an
integral part of this Agreement and shall be deemed to be incorporated herein by
reference. All references herein to the masculine gender shall also include the
feminine and neuter, and vice versa, and all references to the singular form
shall also include the plural, and vice versa, as the context may require.
References in this Agreement to particular firms, agencies, departments or other
Persons, or to statutes, regulations and the like shall be considered as
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including references to any successors thereto. The word "include" (and
correlative words, 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." The word "indirect" (and correlative words, such as
"indirectly") shall be construed broadly for the protection of the party to
which the representation, warranty or covenant containing such word has been
made. The captions of the Sections are inserted for convenience of reference
only, do not constitute a part of this Agreement and shall not limit or
otherwise affect the interpretation of any provision herein. No provision herein
shall be construed against a party merely because of such party's role in the
drafting thereof.
15.9 Facsimile Signatures. This Agreement shall be deemed executed and
delivered by a party when its signature hereto has been delivered by facsimile
transmission. A facsimile signature shall be treated in all respects as having
the same force and effect as an original signature.
15.10 Counterparts. This Agreement may be executed in counterparts, each
of which shall be deemed an original, but all of which together shall constitute
one and the same agreement.
IN WITNESS WHEREOF, each party hereto has caused this Agreement to be
executed by a duly authorized officer as of the date first above written.
PREMIER CONCEPTS, INC.
By:
------------------------------------
Name:
Title:
AMAZEMERGER CO.
By:
------------------------------------
Name:
Title:
AMAZESCAPE.COM. INC.
By:
------------------------------------
Name:
Title:
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APPENDIX C
PREMIER CONCEPTS, INC.
2000 STOCK OPTION PLAN
I. Purpose.
A. This Stock Option Plan (this "Plan") is adopted by the Board of
Directors of Premier Concepts, Inc., a Colorado corporation (the "Company"), on
February 3, 2000, to enable the Company to afford certain of its directors,
executive officers and key employees and the directors, executive officers and
key employees of any subsidiary corporation or parent corporation of the Company
who are responsible for the continued growth of the Company, an opportunity to
acquire a proprietary interest in the Company and thus to create in such
directors, executive officers and key employees an increased interest in, and a
greater concern for, the welfare of the Company.
B. The stock options ("Options") offered pursuant to this Plan are a matter
of separate inducement and are not in lieu of any salary or other compensation
for the services of such directors, executive officers or key employees.
C. The Options granted under this Plan are intended to be either incentive
stock options ("Incentive Options") within the meaning of Section 422A of the
Internal Revenue Code of 1986, as amended (the "Code"), or Options that do not
meet the requirements for Incentive Options ("Non-Qualified Options"), but the
Company makes no warranty as to the qualification of any Option as an Incentive
Option.
II. Administration of this Plan.
A. Procedure.
This Plan shall be administered by a Committee of the Board of Directors of
the Company.
1. Subject to subparagraph (2), the Board of Directors shall appoint a
Committee consisting of not less than two members of the Board of Directors
to administer this Plan on behalf of the Board of Directors, subject to
such terms and conditions as the Board of Directors may prescribe. Once
appointed, the Committee shall continue to serve until otherwise directed
by the Board of Directors. A majority of the members of the Committee shall
constitute a quorum, and the act of a majority of the members of the
Committee shall be the act of the Committee. Any member of the Committee
may be removed at any time, either with or without cause, by resolution
adopted by the Board of Directors, and any vacancy on the Committee may at
any time be filled by resolution adopted by the Board of Directors.
2. Any or all powers and functions of the Committee may at any time,
and from time to time, be exercised by the Board of Directors. Any
reference in this Plan to the Committee shall be deemed also to refer to
the Board of Directors, to the extent that the Board of Directors is
exercising any of the powers and functions of the Committee.
3. Subject to the foregoing subparagraphs (1) and (2), from time to
time the Board of Directors may increase the size of the Committee and
appoint additional members thereof, remove members (with or without cause)
and appoint new members in substitution therefor, fill vacancies however
caused, or remove all members of the Committee and thereafter directly
administer this Plan.
B. Powers of the Committee.
Subject to the provisions of this Plan, the Committee shall have the
authority, in its discretion:
1. to determine the directors, executive officers and key employees to
whom Options shall be granted, the time when such Options shall be granted,
the number of shares which shall be subject to each Option, the purchase
price or exercise price of each share which shall be subject to each
Option, the periods during which such Options shall be exercisable (whether
in whole or in part) and the other terms and provisions with respect to the
Options (which need not be identical);
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2. to determine, upon review of relevant information and in accordance
with Article IX hereof, the fair market value of the Common Stock
underlying the Options;
3. to construe this Plan and Options granted thereunder;
4. to accelerate or defer (with the consent of the Optionee) the
exercise of any Option, consistent with the provisions of this Plan;
5. to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option;
6. to prescribe, amend and rescind rules and regulations relating to
this Plan;
7. to make all other determinations deemed necessary or advisable for
the administration of this Plan.
C. Agreements With Optionee.
Without limiting the foregoing, the Committee shall also have the authority
to require, in its discretion, as a condition to the granting of any Option,
that the Participant agree not to sell or otherwise dispose of shares acquired
pursuant to the Option for a prescribed period following the date of acquisition
of such shares and that, in the event of termination of a directorship or
employment of such Participant, other than as a result of dismissal without
cause, the Participant will not, for a period to be fixed at the time of the
grant of the Option, enter into any employment or participate directly or
indirectly in any business or enterprise which is competitive with the business
of the Company or any subsidiary corporation or parent corporation of the
Company, or enter into any employment in which such employee or director will be
called upon to utilize special knowledge obtained through his or her
directorship or employment with the Company or any subsidiary corporation or
parent corporation thereof.
D. Effect of Committee's Decision.
All decisions, determinations and interpretations of the Committee shall be
final and binding on all Optionees and any other holders of any Options granted
under this Plan.
III. Eligibility.
A. Options intended to be Non-Qualified Options may be granted only to
directors, officers and other salaried key employees of the Company, or any
subsidiary corporation or parent corporation of the Company now existing or
hereafter formed or acquired, except as hereafter provided.
B. Options intended to be Incentive Options may be granted only to salaried
key employees of the Company or any subsidiary corporation or parent corporation
of the Company now existing or hereafter formed or acquired, and not to any
director or officer who is not also an employee.
IV. Amount of Stock.
A. The total number of shares of Common Stock of the Company which may be
purchased pursuant to the exercise of Options granted under this Plan shall not
exceed, in the aggregate, 1,750,000 shares of the authorized Common Stock,
$.0002 par value per share, of the Company (the "Shares"), of which 250,000
Shares shall be reserved for issuance to the directors, officers and key
employees of Premier Commerce, Inc., a Delaware corporation and wholly-owned
subsidiary of the Company. Shares which are subject to Options shall be counted
only once in determining whether the maximum number of shares which may be
purchased or acquired under this Plan has been exceeded.
B. Shares which may be acquired under this Plan may either be authorized
but unissued Shares, Shares of issued stock held in the Company's treasury, or
both, at the discretion of the Company. If and to the extent that Options
granted under this Plan expire or terminate without having been exercised, new
Options may be granted with respect to the Shares covered by such expired or
terminated Options, provided that the grant and the terms of such new Options
shall in all respects comply with the provisions of this Plan.
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V. Effective Date and Term of this Plan.
A. This Plan shall become effective on the date (the "Effective Date") on
which it is adopted by the Board of Directors of the Company; provided, however,
the Plan and any Options granted thereunder shall terminate if the Plan is not
approved by a vote of the Shareholders of the Company within twelve (12) months
before or after the Effective Date.
B. The Company may, from time to time during the period beginning on the
Effective Date and ending on December 31, 2009 (the "Termination Date"), grant
to persons eligible to participate in this Plan, Options under the terms of this
Plan. Options granted prior to the Termination Date may extend beyond that date,
in accordance with the terms thereof.
C. As used in this Plan, the terms "subsidiary corporation" and "parent
corporation" shall have the meanings ascribed to such terms, respectively, in
Sections 425(f) and 425(e) of the Code.
D. An employee, executive officer or director to whom Options are granted
hereunder may be referred to herein as a "Participant".
VI. Terms of Options.
Stock Options granted pursuant to this Plan shall be evidenced by written
agreements which shall comply with the following terms and conditions:
A. Time of Exercise.
Any Option may be exercised by the Participant holding such Option for such
period or periods as the Committee shall determine at the date of grant of such
Option. In no event shall any Incentive Option granted to a Participant owning
more than ten percent (10%) of the voting power of all classes of the Company's
stock, or the stock of any subsidiary corporation or parent corporation, be
exercisable by its terms after the expiration of five (5) years from the date it
is granted, nor shall any other Incentive Option granted under this Plan be
exercisable by its terms after ten (10) years from the date it is granted. The
Committee shall have the right to accelerate, in whole or in part, the
expiration date of any Option; and to the extent that an Option is not exercised
within the period of exercisability specified therein, it shall expire as to the
then unexercised portion.
B. Transferability.
Any Option granted under this Plan shall not be transferrable by the
director, executive officer or key employee holding same and may be exercised by
the director, executive officer or key employee only during his lifetime, except
that the Option may be exercisable for up to one year after the death of such
director, executive officer or key employee in accordance with the laws of
descent and distribution.
C. Option Price.
1. The purchase price for each Share purchasable under any Non-Qualified
Option granted hereunder shall be such amount as the Committee shall deem
appropriate.
2. The purchase price for shares of stock subject to any Option intended to
be an Incentive Option under this Plan shall not be less than the fair market
value of the stock on the date of the grant of the Incentive Option, which fair
market value shall be determined in good faith at the time of the grant of the
Incentive Option by the Committee administering this Plan. In the event that any
Option intended to be an Incentive Option is granted to an employee owning more
than ten percent (10%) of the voting power of all classes of the Company's
stock, the purchase price per share of the stock subject to such an Incentive
Option shall not be less than 110% of the fair market value of the stock on the
date of the grant of such Incentive Option determined in good faith by the
Committee.
D. Consideration for Shares.
The consideration to be paid for the Shares to be issued upon exercise of
an Option, including the method of payment, shall be determined by the Committee
and may consist entirely of cash, check, other shares of
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common stock of the Company which have a fair market value on the date of
surrender equal to the aggregate exercise price of the shares as to which said
Option shall be exercised, or the assignment of the proceeds of a sale or loan
with respect to some or all of the Shares being acquired upon the exercise of
the Option (including, without limitation, through an exercise complying with
the provisions of Regulation T as promulgated from time to time by the Board of
Governors of the Federal Reserve System), or any combination of such methods of
payment, or such other consideration and method of payment for issuance of
shares to the extent permitted under applicable provisions of the Colorado
Business Corporation Act and the Company's Articles of Incorporation and
By-laws.
E. Vesting.
Any Options granted pursuant to this Plan may be made subject to vesting by
the Committee in its discretion.
VII. Special Provisions Applicable to Insiders.
No Option shall be granted to any person who is an Insider (as hereinafter
defined) at the time of the grant thereof unless either (i) the granting of such
Option and the specific terms thereof have been approved by the Company's Board
of Directors (and not merely by the Committee, as such) or (ii) such Option
shall not become exercisable as to any Shares subject to purchase thereunder
until at least six months shall have elapsed from the date on which such Option
was granted. For the purposes of this Article VII, "Insider" means any person
who is an executive officer or director of the Company or is otherwise subject
to the provisions of Section 16 of the Exchange Act and the rules and
regulations promulgated thereunder with respect to the Shares.
VIII. Method of Determination of Fair Market Value.
A. If the Shares are listed on a national securities exchange in the United
States on any date as of which the fair market value per Share is to be
determined, the fair market value per Share shall be deemed to be the average of
the high and low quotations at which such Shares are sold on such national
securities exchange on such date. If the Shares are listed on a national
securities exchange in the United States on such date but the Shares are not
traded on such date, or such national securities exchange is not open for
business on such date, the fair market value per Share shall be determined as of
the closest preceding date on which such exchange shall have been open for
business and the Shares were traded. If the Shares are listed on more than one
national securities exchange in the United States on the date any such Option is
granted, the Committee shall determine which national securities exchange shall
be used for the purpose of determining the fair market value per Share.
B. If a public market exists for the Shares on any date as of which the
fair market value per Share is to be determined but the Shares are not listed on
a national securities exchange in the United States, the fair market value per
Share shall be deemed to be the mean between the closing bid and asked
quotations in the over-the-counter market for the Shares on such date. If there
are no bid and asked quotations for the Shares on such date, the fair market
value per Share shall be deemed to be the mean between the closing bid and asked
quotations in the over-the-counter market for the Shares on the closest date
preceding such date for which such quotations are available.
C. If no public market exists for the Shares on any date on which the fair
market value per Share is to be determined, the Committee shall, in its sole
discretion and best judgment, determine the fair market value of a Share.
For purposes of this Plan, the determination by the Committee of the fair
market value of a Share shall be conclusive.
IX. Termination of Directorship or Employment.
A. Upon termination of the directorship or employment of any Participant
with the Company and all subsidiary corporations and parent corporations of the
Company, any Option previously granted to the
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Participant, unless otherwise specified by the Committee in the Option, shall,
to the extent not theretofore exercised, terminate and become null and void,
provided that:
1. if the Participant shall die while serving as a director or while
in the employ of such corporation or during either the three (3) month or
one (1) year period, whichever is applicable, specified in clause A.2 below
and at a time when such Participant was entitled to exercise an Option as
herein provided, the legal representative of such Participant, or such
person who acquired such Option by bequest or inheritance or by reason of
the death of the Participant, may, not later than one (1) year from the
date of death, exercise such Option, to the extent not theretofore
exercised and to the extent such Option has not yet terminated or expired,
in respect of any or all of such number of Shares as specified by the
Committee in such Option; and
2. if the directorship or employment of any Participant to whom such
Option shall have been granted shall terminate by reason of the
Participant's retirement (at such age or upon such conditions as shall be
specified by the Committee), disability (as described in Section 22(e)(3)
of the Code) or dismissal by the employer other than for cause (as defined
below), and while such Participant is entitled to exercise such Option as
herein provided, such Participant shall have the right to exercise such
Option, to the extent not theretofore exercised, in respect of any or all
of such number of Shares as specified by the Committee in such Option, at
any time up to and including (i) three (3) months after the date of such
termination of directorship or employment in the case of termination by
reason of retirement or dismissal other than for cause, and (ii) one (1)
year after the date of termination of directorship or employment in the
case of termination by reason of disability.
In no event, however, shall any person be entitled to exercise any
Option after the expiration of the period of exercisability of such Option
as specified therein.
B. If a Participant voluntarily terminates his directorship or employment,
or is discharged for cause, any Option granted hereunder shall, unless otherwise
specified by the Committee in the Option, forthwith terminate with respect to
any unexercised portion thereof.
C. If an Option shall be exercised by the legal representative of a
deceased Participant, or by a person who acquired an Option or by bequest or
inheritance or by reason of the death of any Participant, written notice of such
exercise shall be accompanied by a certified copy of letter testamentary or
equivalent proof of the right of such legal representative or other person to
exercise such Option.
D. For the purposes of this Plan, the term "for cause" shall mean:
1. with respect to an employee who is a party to a written agreement
with, or, alternatively, participates in a compensation or benefit plan of
the Company or a subsidiary corporation or parent corporation of the
Company, which agreement or plan contains a definition of "for cause" or
"cause" (or words of like import) for purposes of termination of employment
thereunder by the Company or such subsidiary corporation or parent
corporation of the Company, "for cause" or "cause" as defined in the most
recent of such agreements or plans; or
2. in all other cases, as determined by the Board of Directors, in its
sole discretion, (i) the willful commission by an employee of a criminal or
other act that causes or probably will cause substantial economic damage to
the Company or a subsidiary corporation or parent corporation of the
Company or substantial injury to the business reputation of the Company or
a subsidiary corporation or parent corporation of the Company; (ii) the
commission by an employee of an act of fraud in the performance of such
employee's duties on behalf of the Company or a subsidiary corporation or
parent corporation of the Company; (iii) the continuing willful failure of
an employee to perform the duties of such employee to the Company or a
subsidiary corporation or parent corporation of the Company (other than
such failure resulting from the employee's incapacity due to physical or
mental illness) after written notice thereof (specifying the particulars
thereof in reasonable detail) and a reasonable opportunity to be heard and
cure such failure are given to the employee by the Board of Directors; or
(iv) the order of a court of competent jurisdiction requiring the
termination of the employee's employment. For purposes of this Plan, no
act, or failure to act, on the employee's part shall be considered
"willful" unless done or omitted
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to be done by the employee not in good faith and without reasonable belief
that the employee's action or omission was in the best interest of the
Company or a subsidiary corporation or parent corporation of the Company.
E. For the purposes of this Plan, an employment relationship shall be
deemed to exist between an individual and a corporation if, at the time of the
determination, the individual was an "employee" of such corporation for purposes
of Section 422(a) of the Code. If an individual is on maternity, military or
sick leave or other bona fide leave of absence, such individual shall be
considered an "employee" for purposes of the exercise of an Option and shall be
entitled to exercise such Option during such leave if the period of such leave
does not exceed ninety (90) days, or if longer, so long as the individual's
right to reemployment with his employer is guaranteed either by statute or by
contract. If the period of leave exceeds ninety (90) days, the employment
relationship shall be deemed to have terminated on the ninety-first (91st ) day
of such leave, unless the individual's right to reemployment is guaranteed by
statute or contract.
F. A termination of employment shall not be deemed to occur by reason of
(i) the transfer of a Participant from employment by the Company to employment
by a subsidiary corporation or a parent corporation of the Company, or (ii) the
transfer of a Participant from employment by a subsidiary corporation or a
parent corporation of the Company to employment by the Company or by another
subsidiary corporation or parent corporation of the Company.
X. Right to Terminate Employment.
This Plan shall not impose any obligation on the Company or on any
subsidiary corporation or parent corporation thereof to continue the employment
of any Participant; and it shall not impose any obligation on the part of any
Participant to remain in the employ of the Company or of any subsidiary
corporation or parent corporation thereof.
XI. Purchase for Investment.
Except as hereafter provided, a Participant shall, upon any exercise of an
Option or Right, execute and deliver to the Company a written statement, in form
satisfactory to the Company, in which such Participant represents and warrants
that such Participant is purchasing or acquiring the Shares acquired thereunder
for such Participant's own account, for investment only and not with a view to
the resale or distribution thereof, and agrees that any subsequent offer for
sale or sale or distribution of any of such Shares shall be made only pursuant
to either (a) a Registration Statement on an appropriate form under the
Securities Act of 1933, as amended (the "Securities Act"), which Registration
Statement has become effective and is current with regard to the Shares being
offered or sold; or (b) a specific exemption from the registration requirements
of the Securities Act, but in claiming such exemption the holder shall, if so
requested by the Company, prior to any offer for sale or sale of such Shares,
obtain a prior favorable written opinion, in form and substance satisfactory to
the Company, from counsel for or approved by the Company, as to the
applicability of such exemption thereto. The foregoing restriction shall not
apply to (i) issuances by the Company so long as the Shares being issued are
registered under the Securities Act and a prospectus in respect thereof is
current, or (ii) reofferings of Shares by affiliates of the Company (as defined
in Rule 405 or any successor rule or regulation promulgated under the Securities
Act) if the Shares being reoffered are registered under the Securities Act and a
prospectus in respect thereof is current.
XII. Exchange, S.E.C. or Other Governmental Requirements.
If any law or regulation of the Securities and Exchange Commission, any
stock exchange, The Nasdaq Stock Market, Inc. or any governmental body having
jurisdiction shall require any action to be take in connection with the issuance
of shares pursuant to an Option under this Plan before shares can be delivered
to an Optionee, then the date for issuance of these shares shall be postponed
until such action can be taken.
XIII. Adjustments upon Changes in Capitalization or Merger.
Subject to any required action by the shareholders of the Company, the
number of Shares covered by each outstanding Option, and the number of Shares
which have been authorized for issuance under this Plan but as to which no
Options have yet been granted or which have been returned to this Plan upon
cancellation
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or expiration of an Option, as well as the price per Share covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares resulting from a stock split, reverse
stock split, stock dividend, combination or reclassification of the Shares, or
any other increase or decrease in the number of issued Shares effected without
receipt of consideration by the Company; provided, however, that conversion of
any convertible securities of the Company shall not be deemed to have been
"effected without receipt of consideration." Such adjustment shall be made by
the Board, whose determination in that respect shall be final, binding and
conclusive. Except as expressly provided herein, no issuance by the Company of
shares of any class, or securities convertible into shares of stock of any
class, shall affect, and no adjustment by reason thereof shall be made with
respect to, the number or price of Shares subject to an Option.
In the event of the proposed dissolution or liquidation of the Company, the
Option will terminate immediately prior to the consummation of such proposed
action, unless otherwise provided by the Board. The Board may, in the exercise
of its sole discretion in such instances, declare that any Option shall
terminate as of a date fixed by the Board and give each Optionee the right to
exercise his or her Option as to all or any part of the Optioned Stock,
including Shares as to which the Option would not otherwise be exercisable. In
the event of a proposed sale of all or substantially all of the assets of the
Company, or the merger of the Company with or into another corporation, the
Option shall be assumed or an equivalent option shall be substituted by such
successor corporation or a parent or subsidiary of such successor corporation,
unless such successor corporation does not agree to assume the Option or to
substitute an equivalent option, in which case the Board shall, in lieu of such
assumption or substitution provide for the Optionee to have the right to
exercise the Option as to all of the Optioned Stock, including Shares as to
which the Option would not otherwise be exercisable. If the Board makes an
Option fully exercisable in lieu of assumption or substitution in the event of a
merger or sale of assets, the Board shall notify the Optionee that the Option
shall be fully exercisable for a period of fifteen (15) days from the date of
such notice, and the Option will terminate upon the expiration of such period.
If, as a result of accelerating the time period during which all Options
are exercisable in full in the event of a merger or asset transaction, any
Optionee would incur liability under Section 16(b) of the Exchange Act as a
result of the exercise of an accelerated Option, such Optionee may request the
Company to, and the Company shall be obligated to repurchase such Option for
cash equal to the excess of the fair market value on the advanced termination
date of the shares subject to the Option over the Option exercise price.
XIV. Change in Control.
A. For purposes of this Plan, a "change in control" of the Company occurs
if (i) any "person" (defined as such term is used in Sections 13(d) and 14(d)(2)
of the Exchange Act, as amended) is or becomes the beneficial owner, directly or
indirectly, of securities of the Company representing fifty percent (50%) or
more of the combined voting power of the Company's outstanding securities than
entitled to vote for the election of directors; or (ii) during any period of two
(2) consecutive years, individuals who at the beginning of such period
constitute the Board of Directors cease for any reason to constitute at least a
majority thereof; or (iii) the Board of Directors shall approve the sale of all
or substantially all of the assets of the Company or any merger, consolidation,
issuance of securities or purchase of assets, the result of which would be the
occurrence of any event described in clause (i) or (ii) above; provided,
however, no "change in control" shall be deemed to have occurred merely by
virtue of the consummation of any transaction contemplated by that certain
Agreement and Plan of Merger, dated February 7, 2000, by and among the Company;
AmazeMerger Co., a Delaware corporation and wholly-owned subsidiary of the
Company; and AmazeScape.com, Inc., a Nevada corporation.
B. In the event of a change in control of the Company (defined above), the
Committee, in its discretion, may determine that, upon the occurrence of a
transaction described in the preceding paragraph, each Option outstanding
hereunder shall terminate within a specified number of days after notice to the
holder, and such holder shall receive, with respect to each Share subject to
such Option, an amount of cash equal to the excess of the fair market value of
such Share immediately prior to the occurrence of such transaction over the
exercise price per Share of such Option. The provisions contained in the
preceding sentence shall be
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inapplicable to an Option granted within six (6) months before the occurrence of
a transaction described above if the holder of such Option is a director or
officer of the Company or a beneficial owner of the Company who is described in
Section 16(a) of the Exchange Act, unless such holder dies or becomes disabled
(within the meaning of Section 22(e)(3) of the Code) prior to the expiration of
such six-month period.)
C. Alternatively, the Committee may determine, in its discretion, that all
then outstanding Options shall immediately become exercisable upon a change of
control of the Company.
XV. Withholding Taxes.
The Company may require an employee exercising a Non-Qualified Option
granted hereunder, or disposing of Shares acquired pursuant to the exercise of
an Incentive Option in a disqualifying disposition (within the meaning of
Section 421(b) of the Code), to reimburse the corporation that employs such
employee for any taxes required by any government to be withheld or otherwise
deducted and paid by such corporation in respect of the issuance or disposition
of such Shares. In lieu thereof, the employer corporation shall have the right
to withhold the amount of such taxes from any other sums due or to become due
from such corporation to the employee upon such terms and conditions as the
Committee shall prescribe. The employer corporation may, in its discretion, hold
the stock certificate to which such employee is entitled upon the exercise of an
Option as security for the payment of such withholding tax liability, until cash
sufficient to pay that liability has been accumulated.
XVI. Amendment of this Plan.
The Board of Directors or the Committee may, from time to time, amend this
Plan, provided that, notwithstanding anything to the contrary herein, no
amendment shall be made, without the approval of the Shareholders of the
Company, that will (i) increase the total number of Shares reserved for Options
under this Plan (other than an increase resulting from an adjustment provided
for in Article VIII, Termination of Directorship or Employment), (ii) reduce the
exercise price of any Incentive Option granted hereunder below the price
required by Article VII, Method of Determination of Fair Market Value; (ii)
modify the provisions of this Plan relating to eligibility, or (iv) materially
increase the benefits accruing to participants under this Plan. The Board of
Directors or the Committee shall be authorized to amend this Plan and the
Options granted thereunder to permit the Incentive Options granted thereunder to
qualify as "incentive stock options" within the meaning of Section 422A of the
Code. The rights and obligations under any Option granted before amendment of
this Plan or any unexercised portion of such Option shall not be adversely
affected by amendment of this Plan or the Option without the consent of the
holder of the Option.
XVII. Termination or Suspension of this Plan.
The Board of Directors or the Committee may at any time and for any or no
reason suspend or terminate this Plan. This Plan, unless sooner terminated under
Article V, Effective Date and Term of this Plan, or by action of the Board of
Directors, shall terminate at the close of business on the Termination Date. An
Option may not be granted while this Plan is suspended or after it is
terminated. Options granted while this Plan is in effect shall not be altered or
impaired by suspension or termination of this Plan, except upon the consent of
the person to whom the Option was granted. The power of the Committee under
Article 11 to construe and administer any Options granted prior to the
termination or suspension of this Plan shall continue after such termination or
during such suspension.
XVIII. Governing Law.
This Plan, such Options as may be granted thereunder, and all related
matters shall be governed by, and construed and enforced in accordance with, the
laws of the State of Colorado from time to time obtaining.
XIX. Partial Invalidity.
The invalidity or illegality of any provision herein shall not be deemed to
affect the validity of any other provision.
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XX. The foregoing Stock Option Plan was approved by the Board of Directors
of the Company at a special meeting of the Board of Directors on February 3,
2000.
PREMIER CONCEPTS, INC.
By:
--------------------------------------
Corporate Officer
The foregoing Stock Option Plan was approved by the Shareholders of the
Company at a Special Meeting of the Shareholders on , 2000.
PREMIER CONCEPTS, INC.
By:
--------------------------------------
Corporate Officer
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THE SECURITIES IN THE FORM OF INCENTIVE STOCK OPTIONS OF PREMIER CONCEPTS,
INC. HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR
UNDER ANY STATE SECURITIES LAWS. SUCH SECURITIES CANNOT BE SOLD, TRANSFERRED,
ASSIGNED OR OTHERWISE DEPOSED OF EXCEPT IN ACCORDANCE WITH THE SECURITIES ACT OF
1933, AS AMENDED, AND APPLICABLE STATE SECURITIES LAWS.
PREMIER CONCEPTS, INC.
STOCK OPTION
THIS AGREEMENT is made effective as of this day of , , by
PREMIER CONCEPTS, INC., a Colorado corporation, 3033 S. Parker Road, Suite 120,
Denver, Colorado 80014 (the "Company") and
--------------------------------------
(Employee's Name)
--------------------------------------
(Employee's Address)
The above-named employee ("Employee") is an employee of the Company. The
Company considers it in its best interests for the Employee be given an
inducement to acquire an ownership interest in the Company and an added
incentive to advance the interests of the Company by possessing an option to
purchase shares of the Company's common stock, $.0002 par value per share
("Common Stock"), in accordance with the Stock Option Plan adopted by the Board
of Directors of the Company on February 3, 2000 and approved by the shareholders
of the Company on , 2000.
IN CONSIDERATION of these premises and the foregoing mutual promises and
covenants, the parties agree as follows:
1. Grant of Option.
The Company hereby grants to Employee the option to purchase
shares of Common Stock at the purchase price of $. per share, which is
the fair market value of the shares as determined in good faith by the Board of
Directors, or, for employees owning more than ten percent (10%) of said stock,
is 110% of said fair market value, in the manner and subject to the conditions
provided in this Agreement.
2. Time of Exercise of Option.
This option may be exercised at any time and from time to time until the
termination of this option as provided in paragraph 6 below; except that this
option granted to Employee shall in no event be exercised while there is
outstanding any option previously granted to the same employee to purchase stock
in the Company; and provided that any such previously granted option not having
been exercised in full shall be deemed to remain outstanding until the
expiration of the period during which under its initial terms it could have been
exercised.
3. Method of Exercise.
The option shall be exercised by written notice by Employee to the Board of
Directors of the Company at the Company's principal place of business
accompanied by delivering to the Company an executed Notice of Exercise of
Incentive Stock Option in the form attached hereto as Exhibit A, and Employee's
check in payment of the option price for the number of shares for which the
option is exercised, or in the form of delivery of other shares of common stock
of the Company having a fair market value equal to the option price. The Company
shall then issue a certificate or certificates for such shares; provided that if
any law or regulation of any government agency, stock exchange or stock
quotation service requires the Company to take any action with the respect to
the shares specified in such notice before the issuance thereof, then the date
of delivery of such shares shall be extended for the period necessary to take
such action. In the event the shares purchasable pursuant to the exercise of
this Option have not been registered under the Securities Act of 1933, as
amended,
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at the time this Option is exercised, Employee shall, concurrently with the
exercise of all or any portion of this Option, deliver to the Company her
Investment Representation Statement in the form attached hereto as Exhibit B.
4. Manner of Payment.
The exercise price of each option shall be paid, to the extent permitted by
applicable statutes and regulations, either (i) in cash at the time the option
is exercised, (ii) by delivery to the Company of other Common Stock of the
Company valued at its then established fair market value, (iii) by delivery to
the Company of either options or warrants of the Company, including, without
limitation, this option, valued at the difference between their exercise price
and the then established fair market value of the Company's Common Stock, (iv)
according to a deferred payment or other arrangement (which may include, without
limiting the generality of the foregoing, the use of other Common Stock of the
Company) with the holder hereof, or (v) any other form of legal consideration
that may be acceptable to the Board of Directors, in its discretion. For the
purposes of this paragraph 6, the fair market value of the Company's Common
Stock shall be (i) the closing sale price for the Common Stock on the primary
exchange upon which the shares are listed and traded on the date the option is
exercised, or (ii) if the shares are not traded on any national exchange, the
closing sale price for the Common Stock on the The Nasdaq National Market System
on the date the option is exercised, or (iii) if the shares or neither traded on
a national exchange nor listed on The Nasdaq National Market System, then the
average of the bid and ask prices for the Common Stock as quoted on The Nasdaq
SmallCap Market or (iv) if the shares of Common Stock are neither traded on a
national exchange or The Nasdaq National Market System nor quoted on The Nasdaq
SmallCap Market, the average of the bid and ask prices for the Common Stock as
quoted by any recognized securities quotation service such as the National
Quotation Bureau, Inc. or the OTC Electronic Bulletin Board on the date the
option is exercised. In the case of any deferred payment arrangement, any
interest shall be payable at least annually and shall be charged at the minimum
rate of interest necessary to avoid the treatment as interest, under any
applicable provisions of the Internal Revenue Code, of any amounts other than
amounts stated to be interest under the deferred payment arrangement.
5. Termination of Option.
This option shall terminate on the first to occur of the following dates:
a. The expiration of three (3) months after the date on which
Employee's employment by the Company is terminated;
b. The expiration of twelve (12) months after the date on which
Employee's employment is terminated if by reason of Employee's permanent
and total disability.
c. In the event of Employee's death while employed by the Company, her
executors and administrators may exercise the option within two (2) years
following the date of her death, as to any of the shares not previously
exercised during the Employee's lifetime.
d. Notwithstanding the provisions of paragraph 6.a, 6.b and 6.c of
this paragraph:
(1) In the event Employee's employment with the Company is
terminated by the Company without cause prior to the vesting of the
options described in paragraph 3.b above, then and in such event the
options shall be deemed automatically vested and exercisable by Employee
within the period set forth in paragraph 6.a above.
(2) In the event Employee's employment with the Company is
terminated voluntarily by the Employee without cause after vesting but
prior to the exercise of the options, then and in such event options
exercisable to purchase 100,000 shares of the Company's Common Stock
described in paragraph 3.b above shall automatically be deemed
terminated and of no further legal force or effect; and Employee agrees
to surrender to the Company for cancellation the certificates
representing the options so terminated.
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(3) The options described in paragraphs 3.a and 3.b above shall
terminate and be of no further legal force or effect if, after they have
vested but prior to their exercise, Employee's employment with the
Company is terminated by the Company with cause.
e. Seven years after the grant of this option.
6. Reclassification, Consolidation and Merger.
If and to the extent that the number of shares of the Company's par common
stock shall be increased or reduced by change of par value, split up,
reclassification, distribution of a dividend payable in stock, or the like, the
number of shares subject to option and the option price per share shall be
proportionately adjusted. Notwithstanding any provision of paragraph I to the
contrary, this option shall be exercisable by Employee immediately prior to any
merger, consolidation, or sale of substantially all of the assets of the
Company.
7. Right of Exercise of Option.
This option is nontransferable by Employee except in the event of his or
her death as provided in paragraph 6.c above and during Employee's lifetime is
exercisable only by Employee. Employee shall have no rights as a shareholder
with respect to shares subject to this option until payment of the option price
and issuance of share certificates for such shares as provided in this
Agreement.
8. Early Disposition of Stock.
Employee understands that if he or she disposes of any shares received
under this option within two (2) years after the date of this Agreement or
within one (1) year after purchase of such shares upon exercise of this option,
he or she will be treated for federal income tax purposes as having received
ordinary income at the time of such disposition in an amount generally measured
by the difference between the price paid for the shares and the lower of (i) the
fair market value of the shares at the date of the exercise or (ii) the fair
market value of the shares at the date of disposition. The amount of such
ordinary income may be measured differently if Employee is an officer, director
or 10% shareholder of the Company, or if the shares were subject to a
substantial risk of forfeiture at the time they were transferred to Employee.
Employee hereby agrees to notify the Company in writing within thirty (30) days
after the date of any such disposition. Employee understands that if he or she
disposes of such shares at any time after the expiration of such two-year and
one-year holding periods, any gain on such sale will be taxed as long-term
capital gain.
9. Restriction on Transfer.
All shares acquired by Employee pursuant to this Agreement shall be subject
to the restrictions on transfer or encumbrance contained in this Agreement and
the Plan, and, in addition, to the restrictions on transfer of securities not
registered under federal or applicable state securities laws. No transfer in
violation of this Agreement shall be recognizable in the records of the Company.
Employee agrees that restrictive legends will be placed on any certificates for
shares of the Company issued in the name of Employee to provide notice of these
restrictions, for as long as they apply.
10. Notices.
Whenever notice is called for by this Agreement, notice shall be in
writing, and shall be effective when deposited in the United States mails, first
class postage prepaid, addressed to the other party at the address first set
forth above. Either party may change her address by notice to the other party as
provided herein.
11. Miscellaneous.
The option granted pursuant to this Agreement is subject to all of the
terms, conditions and provisions of the Plan, which is incorporated herein by
reference. Except as provided in the preceding sentence, this Agreement contains
a complete expression of its terms and shall not be subject to modification by
any prior or contemporaneous evidence. Employee may not assign any of her rights
pursuant to this Agreement without the written consent of the Company. This
Agreement shall not be modified except in a writing signed by both parties.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
first above written.
PREMIER CONCEPTS, INC.
By:
--------------------------------------
Corporate Officer
EMPLOYEE ACKNOWLEDGES AND AGREES THAT THE VESTING OF SHARES PURSUANT TO SECTION
3 HEREOF IS EARNED ONLY BY CONTINUING EMPLOYMENT AT THE WILL OF THE COMPANY (NOT
THROUGH THE ACT OF BEING HIRED, BEING GRANTED THIS OPTION OR ACQUIRING SHARES
HEREUNDER). EMPLOYEE FURTHER ACKNOWLEDGES AND AGREES THAT NOTHING IN THIS
AGREEMENT, NOR IN THE COMPANY'S STOCK OPTION PLAN WHICH IS INCORPORATED HEREIN
BY REFERENCE, SHALL CONFER UPON EMPLOYEE ANY RIGHT WITH RESPECT TO CONTINUATION
OF EMPLOYMENT BY THE COMPANY, NOR SHALL IT INTERFERE IN ANY WAY WITH HER RIGHT
OR THE COMPANY'S RIGHT TO TERMINATE HER EMPLOYMENT AT ANY TIME, WITH OR WITHOUT
CAUSE.
Employee acknowledges receipt of a copy of the Plan and certain information
related thereto and represents that he is familiar with the terms and provisions
thereof, and hereby accepts this option subject to all of the terms and
provisions thereof. Employee has reviewed the Plan and this option in their
entirety, has had an opportunity to obtain the advice of counsel prior to
executing this option and fully understands all provisions of the option.
Employee hereby agrees to accept as binding, conclusive and final all decisions
or interpretations of the Board upon any questions arising under the Plan.
Employee further agrees to notify the Company upon any change in the residence
address indicated below.
Dated:
- --------------------------------------
EMPLOYEE
--------------------------------------
RESIDENCE ADDRESS:
--------------------------------------
--------------------------------------
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EXHIBIT A
NOTICE OF EXERCISE OF
STOCK OPTION
Premier Concepts, Inc.
3033 S. Parker Road, Suite 120
Denver, Colorado 80014
Date of Exercise:
------------------------
Re: Stock Option Grant Dated
--------------------------------------------------
This constitutes notice under my Stock Option Agreement that I elect to purchase
the following number of shares of Common Stock of PREMIER CONCEPTS, INC.:
Stock Option Agreement dated:
-----------------------------------------
Number of shares exercised:
-----------------------------------------
Total exercise price:
-----------------------------------------
Cash payment delivered herewith:
-----------------------------------------
I represent that I have signed, and am delivering to you herewith, the
Investment Representation Statement attached as Exhibit B to my Stock Option
Agreement.
My address of record is:
-----------------------------------------
-----------------------------------------
and my Social Security Number is:
- ------------------------------------
- ------------------------------------------------
Name as should appear on certificate
Very truly yours,
--------------------------------------
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<PAGE> 179
EXHIBIT B
INVESTMENT REPRESENTATION STATEMENT
PURCHASER:
SELLER:
COMPANY:
SECURITY:
AMOUNT:
DATE :
PREMIER CONCEPTS, INC.
COMMON STOCK
In connection with the purchase of the above-listed Securities, I, the
Purchaser, represent to the Seller and to the Company the following:
(a) I am aware of the Company's business affairs and financial
condition, and have acquired sufficient information about the Company to
reach an informed and knowledgeable decision to acquire the Securities. I
am purchasing these Securities for my own account for investment purposes
only and not with a view to, or for the resale in connection with, any
"distribution" thereof for purposes of the Securities Act of 1933, as
amended (the "Securities Act").
(b) I understand that the Securities have not been registered under
the Securities Act in reliance upon a specific exemption therefrom, which
exemption depends upon, among other things, the bonafide nature of my
investment intent as expressed herein. In this connection, I understand
that, in the view of the Securities and Exchange Commission (the "SEC"),
the statutory basis for such exemption may be unavailable if my
representation was predicated solely upon a present intention to hold these
Securities for the minimum capital gains period specified under tax
statutes, for a deferred sale, for or until an increase or decrease in the
market price of the Securities, or for a period of one year or any other
fixed period in the future.
(c) I further understand that the Securities must be held indefinitely
unless subsequently registered under the Securities Act or unless an
exemption from registration is otherwise available. Moreover, I understand
that the Company is under no obligation to register the Securities. In
addition, I understand that the certificate evidencing the Securities will
be imprinted with a legend which prohibits the transfer of the Securities
unless they are registered or such registration is not required in the
opinion of counsel for the Company.
(d) I am familiar with the provisions of Rule 701 and Rule 144, each
promulgated under the Securities Act, which, in substance, permit limited
public resale of "restricted securities" acquired, directly or indirectly,
from the issuer thereof, in a non-public offering subject to the
satisfaction of certain conditions. Rule 701 provides that if the issuer
qualifies under Rule 701 at the time of issuance of the Securities, such
issuance will be exempt from registration under the Securities Act. In the
event the Company later becomes subject to the reporting requirements of
Section 13 or 15(d) of the Securities Exchange Act of 1934, ninety (90)
days thereafter the securities exempt under Rule 701 may be resold, subject
to the satisfaction of certain of the conditions specified by Rule 144,
including among other things: (1) the sale being made through a broker in
an unsolicited "broker's transaction" or in transactions directly with a
market maker (as said term is defined under the Securities Exchange Act of
1934); and, in the case of an affiliate, (2) the availability of certain
public information about the Company, and the amount of securities being
sold during any three month period not exceeding the limitations specified
in Rule 144(e), if applicable. Notwithstanding this paragraph (d), I
acknowledge and agree to the restrictions set forth in paragraph (e)
hereof.
In the event that the Company does not qualify under Rule 701 at the
time of issuance of the Securities, then the Securities may be resold in
certain limited circumstances subject to the provisions of Rule 144, which
requires among other things: (1) the availability of certain public
information about the Company; (2) the resale occurring not less than two
years after the party has purchased, and made full payment for, within the
meaning of Rule 144, the securities to be sold; and, in the case of an
affiliate, or of
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<PAGE> 180
a non-affiliate who has held the securities less than three years; (3) the
sale being made through a broker in an unsolicited "broker's transaction"
or in transactions directly with a market maker (as said term is defined
under the Securities Exchange Act of 1934); and (4) the amount of
securities being sold during any three month period not exceeding the
specified limitations stated therein, if applicable.
(e) I agree, in connection with the Company's initial underwritten
public offering of the Company's securities, (1) not to sell, make short
sale of, loan, grant any options for the purchase of, or otherwise dispose
of any shares of Common Stock of the Company held by me (other than those
shares included in the registration) without the prior written consent of
the Company or the underwriters managing such initial underwritten public
offering of the Company's securities for one hundred eight (180) days from
the effective date of such registration, and (2) I further agree to execute
any agreement reflecting (1) above as may be requested by the underwriters
at the time of the public offering; provided, however, that the officers
and directors of the Company who own the stock of the Company also agree to
such restrictions.
(f) I further understand that in the event all of the applicable
requirements of Rule 144 or Rule 701 are not satisfied, registration under
the Securities Act, compliance with Regulation A, or some other
registration exemption will be required; and that, notwithstanding the fact
that Rule 144 and Rule 701 are not exclusive, the Staff of the SEC has
expressed its opinion that persons proposing to sell private placement
securities other than in a registered offering and otherwise pursuant to
Rule 144 or Rule 701 will have a substantial burden of proof in
establishing that an exemption from registration is available for such
offers or sales, and that such persons and their respective brokers who
participate in such transactions do so at their own risk.
Signature of Purchaser:
--------------------------------------
Date: -------------------------,
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APPENDIX D
[JWGENESIS LETTERHEAD]
February 1, 2000
Board of Directors
Premier Concepts, Inc.
3033 South Parker Road, Suite 120
Aurora, CO 80014
Ladies and Gentlemen:
We understand that Premier Concepts, Inc., a Colorado corporation
("Premier" or the "Company"), and AmazeScape.com, Inc., a Nevada corporation
("AmazeScape"), propose to enter into an Agreement and Plan of Merger by and
between Premier and AmazeScape (the "Agreement"), pursuant to which Premier will
issue a certain number of its capital shares in exchange for the outstanding
equity interests of AmazeScape (the "Transaction"). For the purposes of this
letter, the Agreement will constitute only the draft delivered to us dated
February 1, 2000, which draft the Company's legal counsel has advised us will be
furnished to Premier's Board of Directors for approval, and will include only
the schedules and exhibits that were attached thereto. The terms of the
Transaction are more fully described in the Agreement.
You have requested our opinion with respect to the fairness as to whether
or not the consideration to be received by the Company in the Transaction (the
"Consideration") is fair, from a financial point of view, to the Company as of
the date hereof and according to the Agreement. In arriving at the opinion set
forth herein, we have, among other things:
a) reviewed the financial terms of the Agreement;
b) reviewed and analyzed certain business and financial information with
respect to Premier, including financial forecasts prepared by the
Company (Premier's management has advised us that such information
provided to us is the most recent information developed or reviewed by
Premier and that management has not changed its position with respect to
such information);
c) held discussions with certain members of the management of the Company
and AmazeScape concerning their business, operations and prospects and
visited certain facilities of both companies;
d) reviewed the Company's Annual Reports on Forms 10-K for the four fiscal
years ended January 31, 1999 and the Company's Quarterly Report on Forms
10-Q for the period ended October 31, 1999;
e) reviewed certain financial statistics of publicly-traded companies we
deemed reasonably comparable to Premier and compared the financial terms
of the Transaction with those of similar transactions we deemed
reasonably comparable;
f) reviewed the price and public trading history of the Company's common
stock; and
g) reviewed AmazeScape's business plan dated December 1999 and financial
forecasts for and as developed by AmazeScape (AmazeScape's management
has advised us that such information provided to us is the most recent
information developed or reviewed by AmazeScape and that management has
not changed its position with respect to such information).
In connection with our opinion, we have assumed and relied upon the
accuracy and completeness of all financial and other information supplied or
otherwise made available by the Company and AmazeScape and we have neither
attempted independently to verify nor have we assumed any responsibility for
verification of such information. We have not made or obtained or assumed any
responsibility for making or obtaining independent evaluations or appraisals of
Premier or AmazeScape, nor have we been furnished with any such evaluations or
appraisals. With respect to the financial forecasts referred to above, we have
assumed that they
<PAGE> 182
Board of Directors
Premier Concepts, Inc.
February 1, 2000
Page 2
have been reasonably prepared on bases reflecting the best available good faith
estimate and judgment of the management of the Company and AmazeScape,
respectively, as to the future financial performance of the two respective
companies, and that the two respective companies will perform substantially in
accordance with such forecasts. We assume no responsibility for and express no
view as to such forecasts or the assumptions on which they are based. We have
assumed that the Transaction will be consummated on the terms described in the
Agreement without any waiver or modification to any of the material terms and
conditions relating to Premier. We have not made or been provided with an
independent evaluation or appraisal of the assets or liabilities (contingent or
otherwise) of Premier or AmazeScape. We were not authorized to, and did not,
solicit third party indications of interest in acquiring all or part of Premier
or AmazeScape, and we were not asked to consider, and our opinion does not
address, the consideration the Company or AmazeScape might receive from third
party purchasers, the relative merits of the Transaction as compared to any
alternative business strategies that might exist for the Company or AmazeScape
or the effect of any other transaction in which Premier or AmazeScape might
engage. Our conclusions are based solely on information available to us on or
before the date hereof and reflect economic, market and other conditions as of
such date.
This opinion has been prepared solely for the benefit and use of the Board
of Directors of Premier in connection with its consideration of the Transaction.
This opinion does not constitute a recommendation to any shareholder as to
whether or not such investor should vote for or against the Transaction. Premier
has agreed to indemnify JWGenesis Capital Markets, Inc. for certain liabilities
that may arise out of the rendering of this opinion.
In rendering this opinion, we have not been engaged to act as an agent or
fiduciary of, and the Board of Directors has expressly waived to the fullest
extent permitted by law any duties or liabilities we may otherwise be deemed to
have had to, the Company's equity holders or any other third party.
This opinion speaks as of its date only, and we have no obligation to
update this opinion to take into account new facts and circumstances, except as
provided in the letter agreement dated December 3, 1999 between Premier and us.
This opinion is intended for distribution only to the Board of Directors of
Premier and may not be distributed or disclosed in whole or part to any other
party without our express written consent, except as provided in the December 3,
1999 letter agreement.
On the basis of, and subject to, the foregoing, and based upon such other
matters as we consider relevant, it is our opinion that the Consideration is
fair, from a financial point of view, to the Company as of the date hereof and
according to the Agreement.
Very truly yours,
/s/ JWGENESIS CAPITAL MARKETS, INC.
--------------------------------------
JWGenesis Capital Markets, Inc.
D-2
<PAGE> 183
APPENDIX E
FORM OF OPINION OF HANGLEY ARONCHICK SEGAL & PUDLIN
, 2000
Premier Concepts, Inc.
3033 South Parker Rd. -- Suite 120
Aurora, CO 80014
Ladies and Gentlemen:
We have acted as counsel with respect to U.S. federal income tax matters
for Premier Concepts, Inc., a Colorado corporation ("Premier Concepts"), in
connection with the Agreement and Plan of Merger dated as of February 7, 2000
(the "Merger Agreement") by and among Premier Concepts, AmazeScape.com, Inc., a
Nevada corporation ("AmazeScape") and AmazeMerger Co., a Delaware corporation
wholly owned by Premier Concepts ("Mergersub"). Pursuant to the Merger
Agreement, Mergersub will merge with and into AmazeScape (the "Merger"), and
AmazeScape will become a wholly-owned subsidiary of Premier Concepts. Except as
otherwise provided, capitalized terms referred to herein have the meanings set
forth in the Merger Agreement and Registration Statement (as defined below). All
section references, unless otherwise indicated, are to the Internal Revenue Code
of 1986, as amended (the "Code").
You have requested our opinion regarding certain material U.S. federal
income tax consequences of the Merger. In delivering this opinion, we have
reviewed and are relying (or will rely) upon (without any independent
investigation) the truth and accuracy, at all relevant times, of the statements,
descriptions, representations and warranties contained in the Merger Agreement
(including all schedules and exhibits thereto), the registration statement on
Form S-4 filed with the Securities and Exchange Commission (which includes a
proxy statement-prospectus relating to the Merger) (the "Registration
Statement"), and certain representations and warranties set forth in
certificates provided to us by AmazeScape and by Premier Concepts and Mergersub
(the "Officer's Certificates"), copies of which are attached hereto.
In addition, we have assumed or obtained representations and are relying
thereon (without any independent investigation or review thereof) that:
1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has
been (or will be by the Effective Time) due execution and delivery of all
documents where due execution and delivery are prerequisites to
effectiveness thereof.
2. The Merger will be consummated in accordance with the Merger
Agreement (without any waiver, breach or amendment of any of the provisions
thereof) and will be effective under the laws of the State of Delaware and
State of Nevada. The representations and warranties set forth in the Merger
Agreement and the Officer's Certificates are and will be true, correct and
complete as if made at the Effective Time.
3. All statements, descriptions and representations contained in any
of the documents referred to herein or otherwise made to us were true,
correct and complete when made and are and will continue to be true,
correct and complete through the Effective Time, including, but not limited
to, the facts relating to the merger of Mergersub with and into AmazeScape
as described in the Registration Statement, the representations set forth
and documents described in the Registration Statement, and the business
reasons for the Merger as set forth in the Registration Statement. No
actions have been (or will be) taken which are inconsistent with the
foregoing sentence.
4. Premier Concepts, Mergersub and AmazeScape will report the Merger
on their respective U.S. federal income tax returns in a manner consistent
with the opinions set forth below.
5. Any statement or representation made "to the knowledge of" or
otherwise similarly qualified is correct without such qualification. As to
all matters in which a person or entity making a representation has
represented that such person or entity either is not a party to, does not
have, or is not aware of any plan, intention, understanding or agreement to
take an action, there is in fact no plan, intent, understanding or
agreement and such action will not be taken.
<PAGE> 184
6. The terms of the Merger Agreement and all other agreements entered
into in connection therewith are the product of negotiations between
unrelated parties negotiating at arms-length without duress or hardship.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein and in
the Registration Statement, we are of the opinion that the Merger will
constitute a reorganization within the meaning of the Code.
No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement or to any transaction whatsoever (including
the Merger) if all the transactions described in the Merger Agreement are not
consummated in accordance with the terms of the Merger Agreement and without
amendment, waiver or breach of any material provision thereof, or if any of the
descriptions, representations, warranties, statements and assumptions upon which
we relied are not true and accurate at all relevant times. In the event any one
of the descriptions, statements, representations, warranties or assumptions upon
which we have relied to issue this opinion is incorrect, our opinion might be
adversely affected and may not be relied upon.
This opinion letter addresses only the status of the Merger under U.S.
federal income tax laws. This opinion letter does not address any other U.S.
federal, state, local or foreign tax consequences that may result from the
Merger or any other transaction (including any other transaction undertaken in
connection with the Merger or in contemplation of the Merger). In particular, we
express no opinion regarding (1) whether and the extent to which any holder of
AmazeScape Stock that has provided or will provide services to AmazeScape,
Premier Concepts or Mergersub will have compensation income under any provision
of the Code; (2) the effects of any such compensation income, including but not
limited to the effect upon the basis and holding period of the Common Stock
received by any such holder in the Merger; (3) other than the fact that the
Merger will be a reorganization within the meaning of Code Section 368(a), the
corporate level tax consequences of the Merger to Premier Concepts, Mergersub or
AmazeScape, including without limitation the survival and/or availability, after
the Merger, of any of the U.S. federal income tax attributes or elections of
Premier Concepts, Mergersub or AmazeScape or the application of the "golden
parachute" rules under Code Section 280G, after application of any provision of
the Code, as well as the regulations promulgated thereunder and judicial
interpretations thereof; (4) the tax consequences of the Merger to holders of
options, warrants or other rights to acquire AmazeScape stock; and (5) the tax
consequences of the Merger as applied or that may be relevant to specific
shareholders of AmazeScape, such as dealers in securities, corporate
shareholders subject to the alternative minimum tax, foreign persons, tax-exempt
organizations, banks, insurance companies or holders of shares acquired upon
exercise of stock options or in other compensatory transactions.
This opinion letter represents and is based upon our best judgment
regarding the application of U.S. federal income tax statutes, existing judicial
decisions, administrative regulations and published rulings and procedures in
effect on the date hereof. Our opinion is not binding upon the Internal Revenue
Service or the courts, and there is no assurance that the Internal Revenue
Service will not successfully assert a contrary position. Furthermore, no
assurance can be given that future legislative, judicial or administrative
changes, on either a prospective or retroactive basis, would not adversely
affect the accuracy of the conclusions stated herein. Nevertheless, we undertake
no responsibility to advise you of any new developments in the application or
interpretation of the U.S. federal income tax laws.
This opinion may be relied upon by you, only in connection with the
transaction described herein, and may not be used or relied upon by you for any
other purpose or by any other person for any purpose whatsoever without our
prior written consent.
We consent to the use of this opinion as an exhibit to the Registration
Statement, to references to this opinion in the Registration Statement and to
the use of our name in the Registration Statement under the heading "Material
U.S. Federal Income Tax Consequences." In giving this consent we do not admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules or regulations
promulgated thereunder.
Very truly yours,
E-2
<PAGE> 185
APPENDIX F
FORM OF OPINION OF PARKER CHAPIN, LLP
FEBRUARY , 2000
AmazeScape.com Inc.
264 Fairmont Avenue
Mahwah, New Jersey 07430
Ladies and Gentlemen:
We have acted as counsel with respect to U.S. federal income tax matters
for AmazeScape.com Inc., a Nevada corporation ("AmazeScape"), in connection with
the Agreement and Plan of Merger dated as of February 7, 2000 (the "Merger
Agreement") by and among Premier Concepts, Inc., a Colorado corporation
("Premier Concepts"), AmazeMerger Co., a Delaware corporation wholly owned by
Premier Concepts ("Mergersub"), and AmazeScape. Pursuant to the Merger
Agreement, Mergersub will merge with and into AmazeScape (the "Merger"), and
AmazeScape will become a wholly owned subsidiary of Premier Concepts. Except as
otherwise provided, capitalized terms referred to herein have the meanings set
forth in the Merger Agreement and Registration Statement (as defined below). All
section references, unless otherwise indicated, are to the Internal Revenue Code
of 1986, as amended (the "Code").
You have requested our opinion regarding certain material U.S. federal
income tax consequences of the Merger with respect to the holders of AmazeScape
common stock ("AmazeScape Common Stock"). In delivering this opinion, we have
reviewed and are relying (or will rely) upon (without any independent
investigation) the truth and accuracy, at all relevant times, of the statements,
descriptions, representations and warranties contained in the Merger Agreement
(including all schedules and exhibits thereto), the registration statement on
Form S-4 filed with the Securities and Exchange Commission (which includes a
proxy statement-prospectus relating to the Merger) (the "Registration
Statement"), and certain representations and warranties set forth in
certificates provided to us by AmazeScape and by Premier Concepts and Mergersub
(the "Officer's Certificates"), copies of which are attached hereto.
In addition, we have assumed or obtained representations and are relying
thereon (without any independent investigation or review thereof) that:
1. Original documents (including signatures) are authentic, documents
submitted to us as copies conform to the original documents, and there has
been (or will be by the Effective Time) due execution and delivery of all
documents where due execution and delivery are prerequisites to
effectiveness thereof.
2. The Merger will be consummated in accordance with the Merger
Agreement (without any waiver, breach or amendment of any of the provisions
thereof) and will be effective under the laws of the State of Delaware and
State of Nevada. The representations and warranties set forth in the Merger
Agreement and the Officer's Certificates are and will be true, correct and
complete as if made at the Effective Time.
3. All statements, descriptions and representations and warranties
contained in any of the documents referred to herein or otherwise made to
us were true, correct and complete when made and are and will continue to
be true, correct and complete through the Effective Time, including, but
not limited to, the facts relating to the Merger of Mergersub with and into
AmazeScape as described in the Registration Statement, the representations
set forth and documents described in the Registration Statement, and the
business reasons for the Merger as set forth in the Registration Statement.
No actions have been (or will be) taken which are inconsistent with the
foregoing sentence.
4. Premier Concepts, Mergersub and AmazeScape will report the Merger
on their respective U.S. federal income tax returns in a manner consistent
with the opinions set forth below.
5. Any statement or representation made "to the knowledge of" or
otherwise similarly qualified is correct without such qualification. As to
all matters in which a person or entity making a representation
<PAGE> 186
has represented that such person or entity either is not a party to, does
not have, or is not aware of any plan, intention, understanding or
agreement to take an action, there is in fact no plan, intent,
understanding or agreement and such action will not be taken.
6. The terms of the Merger Agreement and all other agreements entered
into in connection therewith are the product of negotiations between
unrelated parties negotiating at arms-length without duress or hardship.
Based on our examination of the foregoing items and subject to the
assumptions, exceptions, limitations and qualifications set forth herein and in
the Registration Statement, we are of the opinion that:
A. The Merger will constitute a reorganization within the meaning of
the Code;
B. No gain or loss will be recognized by holders of AmazeScape Common
Stock who exchange their shares of AmazeScape Common Stock for shares of
Common Stock pursuant to the Merger;
C. The tax basis of the shares of Common Stock received by each
AmazeScape stockholder will equal the tax basis of the shares of AmazeScape
Common Stock exchanged therefor by such stockholder in the Merger; and
D. The holding period for the shares of Common Stock received by each
AmazeScape stockholder will include the holding period for the shares of
AmazeScape Common Stock exchanged by such stockholder in the Merger.
No opinion is expressed as to any transaction other than the Merger as
described in the Merger Agreement or to any transaction whatsoever (including
the Merger) if all the transactions described in the Merger Agreement are not
consummated in accordance with the terms of the Merger Agreement and without
amendment, waiver or breach of any material provision thereof, or if any of the
descriptions, representations, warranties, statements and assumptions upon which
we relied are not true and accurate at all relevant times. In the event any one
of the descriptions, statements, representations, warranties or assumptions upon
which we have relied to issue this opinion is incorrect, our opinion might be
adversely affected and may not be relied upon.
This opinion letter addresses only the U.S. federal income tax consequences
to U.S. holders owning AmazeScape Common Stock as a capital asset within the
meaning of Code Section 1221. This opinion letter does not address any other
U.S. federal, state, local or foreign tax consequences that may result from the
Merger or any other transaction (including any other transaction undertaken in
connection with the Merger or in contemplation of the Merger). In particular, we
express no opinion regarding (1) whether and the extent to which any holder of
AmazeScape Stock that has provided or will provide services to AmazeScape,
Premier Concepts or Mergersub will have compensation income under any provision
of the Code; (2) the effects of any such compensation income, including but not
limited to the effect upon the basis and holding period of the Common Stock
received by any such holder in the Merger; (3) other than the fact that the
Merger will be a reorganization within the meaning of Code Section 368(a), the
corporate level tax consequences of the Merger to Premier Concepts, Mergersub or
AmazeScape, including without limitation the survival and/or availability, after
the Merger, of any of the U.S. federal income tax attributes or elections of
Premier Concepts, Mergersub or AmazeScape or the application of the "golden
parachute" rules under Code Section 280G, after application of any provision of
the Code, as well as the regulations promulgated thereunder and judicial
interpretations thereof; (4) the tax consequences of the Merger to a holder
owning, separately or in conjuction with AmazeScape Common Stock, any share of
any other class of AmazeScape stock other than AmazeScape Common Stock, options,
warrants or other rights to acquire AmazeScape stock and (5) the tax
consequences of the Merger as applied or that may be relevant to specific
shareholders of AmazeScape, such as dealers in securities, corporate
shareholders subject to the alternative minimum tax, foreign persons, tax-exempt
organizations, banks, insurance companies or holders of shares acquired upon
exercise of stock options or in other compensatory transactions.
This opinion letter represents and is based upon our best judgment
regarding the application of U.S. federal income tax statutes, existing judicial
decisions, administrative regulations and published rulings and
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procedures in effect on the date hereof. Our opinion is not binding upon the
Internal Revenue Service or the courts, and there is no assurance that the
Internal Revenue Service will not successfully assert a contrary position.
Furthermore, no assurance can be given that future legislative, judicial or
administrative changes, on either a prospective or retroactive basis, would not
adversely affect the accuracy of the conclusions stated herein. Nevertheless, we
undertake no responsibility to advise you of any new developments in the
application or interpretation of the U.S. federal income tax laws.
This opinion may be relied upon by you, only in connection with the
transaction described herein, and may not be used or relied upon by you for any
other purpose or by any other person for any purpose whatsoever without our
prior written consent.
We consent to the use of this opinion as an exhibit to the Registration
Statement, to references to this opinion in the Registration Statement and to
the use of our name in the Registration Statement under the heading "Material
U.S. Federal Income Tax Consequences." In giving this consent we do not admit
that we are within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules or regulations
promulgated thereunder.
Very truly yours,
PARKER CHAPIN, LLP
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APPENDIX G
EXCERPTS FROM NEVADA REVISED STATUTES -- DISSENTER'S RIGHTS
RIGHTS OF DISSENTING OWNERS
92A.300 DEFINITIONS. -- As used in NRS 92A.300 to 92A.500, inclusive,
unless context otherwise requires, the words and terms defined in NRS 92A.305 to
92A.335, inclusive, have the meanings ascribed to them in those sections.
92A.305 "BENEFICIAL STOCKHOLDER" DEFINED. -- "Beneficial stockholder"
means a person who is a beneficial owner of shares held in a voting trust or by
a nominee as the stockholder of record.
92A.310 "CORPORATE ACTION" DEFINED. -- "Corporate action" means the action
of a domestic corporation.
92A.315 "DISSENTER" DEFINED. -- "Dissenter" means a stockholder who is
entitled to dissent from a domestic corporation's action under NRS 92A.380 and
who exercises that right when and in the manner required by NRS 92A.410 to
92A.480, inclusive.
92A.320 "FAIR VALUE" DEFINED. -- "Fair value," with respect to a
dissenter's shares, means the value of the shares immediately before the
effectuation of the corporate action to which he objects, excluding any
appreciation or depreciation in anticipation of the corporate action unless
exclusion would be inequitable.
92A.325 "STOCKHOLDER" DEFINED. -- "Stockholder" means a stockholder of
record or a beneficial stockholder of a domestic corporation.
92A.330 "STOCKHOLDER OF RECORD" DEFINED. -- "Stockholder of record" means
the person in whose name shares are registered in the records of a domestic
corporation or the beneficial owner of shares to the extent of the rights
granted by a nominee's certificate on file with the domestic corporation.
92A.335 "SUBJECT CORPORATION" DEFINED. -- "Subject corporation" means the
domestic corporation which is the issuer of the shares held by a dissenter
before the corporate action creating the dissenter's rights becomes effective or
the surviving or acquiring entity of that issuer after the corporate action
becomes effective.
92A.340 COMPUTATION OF INTEREST. -- Interest payable pursuant to NRS
92A.300 to 92A.500, inclusive, must be computed from the effective date of the
action until the date of payment, at the average rate currently paid by the
entity on its principal bank loans or, if it has no bank loans, at a rate that
is fair and equitable under all of the circumstances.
92A.350 RIGHTS OF DISSENTING PARTNER OF DOMESTIC LIMITED PARTNERSHIP. -- A
partnership agreement of a domestic limited partnership or, unless otherwise
provided in the partnership agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the partnership interest of a
dissenting general or limited partner of a domestic limited partnership are
available for any class or group of partnership interests in connection with any
merger or exchange in which the domestic limited partnership is a constituent
entity.
92A.360 RIGHTS OF DISSENTING MEMBER OF DOMESTIC LIMITED LIABILITY
COMPANY. -- The articles of organization or operating agreement of a domestic
limited-liability company or, unless otherwise provided in the articles of
organization or operating agreement, an agreement of merger or exchange, may
provide that contractual rights with respect to the interest of a dissenting
member are available in connection with any merger or exchange in which the
domestic limited-liability company is a constituent entity.
92A.370 RIGHTS OF DISSENTING MEMBER OF DOMESTIC NONPROFIT
CORPORATION. -- 1. Except as otherwise provided in subsection 2 and unless
otherwise provided in the articles or bylaws, any member of any constituent
domestic nonprofit corporation who voted against the merger may, without prior
notice, but within 30 days after the effective date of the merger, resign from
membership and is
<PAGE> 189
thereby excused from all contractual obligations to the constituent or surviving
corporations which did not occur before his resignation and is thereby entitled
to those rights, if any, which would have existed if there had been no merger
and the membership had been terminated or the member had been expelled.
2. Unless otherwise provided in its articles of incorporation or bylaws, no
member of a domestic nonprofit corporation, including, but not limited to, a
cooperative corporation, which supplies services described in chapter 704 of NRS
to its members only, and no person who is a member of a domestic nonprofit
corporation as a condition of or by reason of the ownership of an interest in
real property, may resign and dissent pursuant to subsection 1.
92A.380 RIGHT OF STOCKHOLDER TO DISSENT FROM CERTAIN CORPORATE ACTIONS AND
TO OBTAIN PAYMENT FOR SHARES. -- 1. Except as otherwise provided in NRS 92A.370
to 92A.390, a stockholder is entitled to dissent from, and obtain payment of the
fair value of his shares in the event of any of the following corporate actions:
(a) Consummation of a plan of merger to which the domestic corporation
is a party:
(1) If approval by the stockholders is required for the merger by
NRS 92A.120 to 92A.160, inclusive, or the articles of incorporation and
he is entitled to vote on the merger; or
(2) If the domestic corporation is a subsidiary and is merged with
its parent under NRS 92A.180.
(b) Consummation of a plan of exchange to which the domestic
corporation is a party as the corporation whose subject owner's interests
will be acquired, if he is entitled to vote on the plan.
(c) Any corporate action taken pursuant to a vote of the stockholders
to the event that the articles of incorporation, bylaws or a resolution of
the board of directors provides that voting or nonvoting stockholders are
entitled to dissent and obtain payment for their shares.
2. A stockholder who is entitled to dissent and obtain payment under NRS
92A.300 to 92A.500, inclusive, may not challenge the corporate action creating
his entitlement unless the action is unlawful or fraudulent with respect to him
or the domestic corporation.
92A.390 LIMITATIONS ON RIGHT OF DISSENT: STOCKHOLDERS OF CERTAIN CLASSES
OR SERIES; ACTION OF STOCKHOLDERS NOT REQUIRED FOR PLAN OF MERGER. -- 1. There
is no right of dissent with respect to a plan of merger or exchange in favor of
stockholders of any class or series which, at the record date fixed to determine
the stockholders entitled to receive notice of and to vote at the meeting at
which the plan of merger or exchange is to be acted on, were either listed on a
national securities exchange, included in the national market system by the
National Association of Securities Dealers, Inc., or held by at least 2,000
stockholders of record, unless:
(a) The articles of incorporation of the corporation issuing the
shares provide otherwise; or
(b) The holders of the class or series are required under the plan of
merger or exchange to accept for the shares anything except:
(1) Cash, owner's interests or owner's interests and cash in lieu
of fractional owner's interests of:
(I) The surviving or acquiring entity; or
(II) Any other entity which, at the effective date of the plan
of merger or exchange, were either listed on a national securities
exchange, included in the national market system by the National
Association of Securities Dealers, Inc., or held of record by a least
2,000 holders of owner's interests of record; or
(2) A combination of cash and owner's interests of the kind
described in sub-subparagraphs (I) and (II) of subparagraph (1) of
paragraph (b).
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2. There is no right of dissent for any holders of stock of the surviving
domestic corporation if the plan of merger does not require action of the
stockholders of the surviving domestic corporation under NRS 92A.130.
92A.400 LIMITATIONS ON RIGHT OF DISSENT: ASSERTION AS TO PORTIONS ONLY TO
SHARES REGISTERED TO STOCKHOLDER; ASSERTION BY BENEFICIAL STOCKHOLDER. -- 1. A
stockholder of record may assert dissenter's rights as to fewer than all of the
shares registered in his name only if he dissents with respect to all shares
beneficially owned by any one person and notifies the subject corporation in
writing of the name and address of each person on whose behalf he asserts
dissenter's rights. The rights of a partial dissenter under this subsection are
determined as if the shares as to which he dissents and his other shares were
registered in the names of different stockholders.
2. A beneficial stockholder may assert dissenter's rights as to shares held
on his behalf only if:
(a) He submits to the subject corporation the written consent of the
stockholder of record to the dissent not later than the time the beneficial
stockholder asserts dissenter's rights; and
(b) He does so with respect to all shares of which he is the
beneficial stockholder or over which he has power to direct the vote.
92A.410 NOTIFICATION OF STOCKHOLDERS REGARDING RIGHT OF DISSENT. -- 1. If
a proposed corporate action creating dissenters' rights is submitted to a vote
at a stockholders' meeting, the notice of the meeting must state that
stockholders are or may be entitled to assert dissenters' rights under NRS
92A.300 to 92A.500, inclusive, and be accompanied by a copy of those sections.
2. If the corporate action creating dissenters' rights is taken by written
consent of the stockholders or without a vote of the stockholders, the domestic
corporation shall notify in writing all stockholders entitled to assert
dissenters' rights that the action was taken and send them the dissenter's
notice described in NRS 92A.430. (Last amended by Ch. 208, L. '97, eff.
10-l-97.)
92A.420 PREREQUISITES TO DEMAND FOR PAYMENT FOR SHARES. -- 1. If a
proposed corporate action creating dissenters' rights is submitted to a vote at
a stockholders' meeting, a stockholder who wishes to assert dissenter's rights:
(a) Must deliver to the subject corporation, before the vote is taken,
written notice of his intent to demand payment for his shares if the
proposed action is effectuated; and
(b) Must not vote his shares in favor of the proposed action.
2. A stockholder who does not satisfy the requirements of subsection 1 is
not entitled to payment for his shares under this chapter.
92A.430 DISSENTER'S NOTICE: DELIVERY TO STOCKHOLDERS ENTITLED TO ASSERT
RIGHTS; CONTENTS. -- 1. If a proposed corporate action creating dissenters'
rights is authorized at a stockholders' meeting, the subject corporation shall
deliver a written dissenter's notice to all stockholders who satisfied the
requirements to assert those rights.
2. The dissenter's notice must be sent no later than 10 days after the
effectuation of the corporate action, and must:
(a) State where the demand for payment must be sent and where and when
certificates, if any, for shares must be deposited;
(b) Inform the holders of shares not represented by certificates to
what extent the transfer of the shares will be restricted after the demand
for payment is received;
(c) Supply a form for demanding payment that includes the date of the
first announcement to the news media or to the stockholders of the terms of
the proposed action and requires that the person asserting dissenter's
rights certify whether or not he acquired beneficial ownership of the
shares before that date;
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(d) Set a date by which the subject corporation must receive the
demand for payment, which may not be less than 30 nor more than 60 days
after the date the notice is delivered; and
(e) Be accompanied by a copy of NRS 92A.300 to 92A.500, inclusive.
92A.440 DEMAND FOR PAYMENT AND DEPOSIT OF CERTIFICATES; RETENTION OF
RIGHTS OF STOCKHOLDER. -- 1. A stockholder to whom a dissenter's notice is sent
must:
(a) Demand payment;
(b) Certify whether he acquired beneficial ownership of the shares
before the date required to be set forth in the dissenter's notice for this
certification; and
(c) Deposit his certificates, if any, in accordance with the terms of
the notice.
2. The stockholder who demands payment and deposits his certificates, if
any, before the proposed corporate action is taken retains all other rights of a
stockholder until those rights are canceled or modified by the taking of the
proposed corporate action.
3. The stockholder who does not demand payment or deposit his certificates
where required, each by the date set forth in the dissenter's notice, is not
entitled to payment for his shares under this chapter. (Last amended by Ch. 208,
L. '97, eff. 10-1-97.)
92A.450 UNCERTIFICATED SHARES: AUTHORITY TO RESTRICT TRANSFER AFTER DEMAND
FOR PAYMENT; RETENTION OF RIGHTS OF STOCKHOLDER. -- 1. The subject corporation
may restrict the transfer of shares not represented by a certificate from the
date the demand for their payment is received.
2. The person for whom dissenter's rights are asserted as to shares not
represented by a certificate retains all other rights of a stockholder until
those rights are canceled or modified by the taking of the proposed corporate
action.
92A.460 PAYMENT FOR SHARES: GENERAL REQUIREMENTS. -- 1. Except as
otherwise provided in NRS 92A.470, within 30 days after receipt of a demand for
payment, the subject corporation shall pay each dissenter who complied with NRS
92A.440 the amount the subject corporation estimates to be the fair value of his
shares, plus accrued interest. The obligation of the subject corporation under
this subsection may be enforced by the district court:
(a) Of the county where the corporation's registered office is
located; or
(b) At the election of any dissenter residing or having its registered
office in this state, of the county where the dissenter resides or has its
registered office. The court shall dispose of the complaint promptly.
2. The payment must be accompanied by:
(a) The subject corporation's balance sheet as of the end of a fiscal
year ending not more than 16 months before the date of payment, a statement
of income for that year, a statement of changes in the stockholders' equity
for that year and the latest available interim financial statements, if
any;
(b) A statement of the subject corporation's estimate of the fair
value of the shares;
(c) An explanation of how the interest was calculated;
(d) A statement of the dissenter's rights to demand payment under NRS
92A.480; and
(e) A copy of NRS 92A.300 to 92A.500, inclusive.
92A.470 PAYMENT FOR SHARES: SHARES ACQUIRED ON OR AFTER DATE OF
DISSENTER'S NOTICE. -- 1. A subject corporation may elect to withhold payment
from a dissenter unless he was the beneficial owner of the shares before the
date set forth in the dissenter's notice as the date of the first announcement
to the news media or to the stockholders of the terms of the proposed action.
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2. To the extent the subject corporation elects to withhold payment, after
taking the proposed action, it shall estimate the fair value of the shares, plus
accrued interest, and shall offer to pay this amount to each dissenter who
agrees to accept it in full satisfaction of his demand. The subject corporation
shall send with its offer a statement of its estimate of the fair value of the
shares, an explanation of how the interest was calculated, and a statement of
the dissenters' right to demand payment pursuant to NRS 92A.480.
92A.480 DISSENTER'S ESTIMATE OF FAIR VALUE: NOTIFICATION OF SUBJECT
CORPORATION; DEMAND FOR PAYMENT OF ESTIMATE. -- 1. A dissenter may notify the
subject corporation in writing of his own estimate of the fair value of his
shares and the amount of interest due, and demand payment of his estimate, less
any payment pursuant to NRS 92A.460, or reject the offer pursuant to NRS 92A.470
and demand payment of the fair value of his shares and interest due, if he
believes that the amount paid pursuant to NRS 92A.460 or offered pursuant to NRS
92A.470 is less than the fair value of his shares or that the interest due is
incorrectly calculated.
2. A dissenter waives his right to demand payment pursuant to this section
unless he notifies the subject corporation of his demand in writing within 30
days after the subject corporation made or offered payment for his shares.
92A.490 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: DUTIES OF SUBJECT
CORPORATION; POWERS OF COURT; RIGHTS OF DISSENTER. -- 1. If a demand for payment
remains unsettled, the subject corporation shall commence a proceeding within 60
days after receiving the demand and petition the court to determine the fair
value of the shares and accrued interest. If the subject corporation does not
commence the proceeding within the 60-day period, it shall pay each dissenter
whose demand remains unsettled the amount demanded.
2. A subject corporation shall commence the proceeding in the district
court of the county where its registered office is located. If the subject
corporation is a foreign entity without a resident agent in the state, it shall
commence the proceeding in the county where the registered office of the
domestic corporation merged with or whose shares were acquired by the foreign
entity was located.
3. The subject corporation shall make all dissenters, whether or not
residents of Nevada, whose demands remain unsettled, parties to the proceeding
as in an action against their shares. All parties must be served with a copy of
the petition. Nonresidents may be served by registered or certified mail or by
publication as provided by law.
4. The jurisdiction of the court in which the proceeding is commenced under
subsection 2 is plenary and exclusive. The court may appoint one or more persons
as appraisers to receive evidence and recommend a decision on the question of
fair value. The appraisers have the powers described in the order appointing
them, or any amendment thereto. The dissenters am entitled to the same discovery
rights as parties in other civil proceedings.
5. Each dissenter who is made a party to the proceeding is entitled to a
judgment:
(a) For the amount, if any, by which the court finds the fair value of
his shares, plus interest, exceeds the amount paid by the subject
corporation; or
(b) For the fair value, plus accrued interest, of his after-acquired
shares for which the subject corporation elected to withhold payment
pursuant to NRS 92A.470.
92A.500 LEGAL PROCEEDING TO DETERMINE FAIR VALUE: ASSESSMENT OF COSTS AND
FEES. -- 1. The court in a proceeding to determine fair value shall determine
all of the costs of the proceeding, including the reasonable compensation and
expenses of any appraisers appointed by the court. The court shall assess the
costs against the subject corporation, except that the court may assess costs
against all or some of the dissenters, in amounts the court finds equitable, to
the extent the court finds the dissenters acted arbitrarily, vexatiously or not
in good faith in demanding payment.
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2. The court may also assess the fees and expenses of the counsel and
experts for the respective parties, in amounts the court finds equitable:
(a) Against the subject corporation and in favor of all dissenters if
the court finds the subject corporation did not substantially comply with
the requirements of NRS 92A.300 to 92A.500, inclusive; or
(b) Against either the subject corporation or a dissenter in favor of
any other party, if the court finds that the party against whom the fees
and expenses are assessed acted arbitrarily, vexatiously or not in good
faith with respect to the rights provided by NRS 92A.300 to 92A.500.
inclusive.
3. If the court finds that the services of counsel for any dissenter were
of substantial benefit to other dissenters similarly situated, and that the fees
for those services should not be assessed against the subject corporation, the
court may award to those counsel reasonable fees to be paid out of the amounts
awarded to the dissenters who were benefited.
4. In a proceeding commenced pursuant to NRS 92A.460, the court may assess
the costs against the subject corporation, except that the court may assess
costs against all or some of the dissenters who are parties to the proceeding,
in amounts the court finds equitable, to the extent the court finds that such
parties did not act in good faith in instituting the proceeding.
5. This section does not preclude any party in a proceeding commenced
pursuant to NRS 92A.460 or 92A.490 from applying the provisions of N.R.C.P. 68
or NRS 17.115.
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APPENDIX H
AMAZESCAPE.COM INC.
------------------------
NOTICE OF MERGER
AND
AVAILABILITY OF DISSENTERS RIGHTS
------------------------
To the Holders of Common Stock of
AmazeScape.com Inc. (a Nevada corporation) ("AmazeScape")
THE MERGER. In accordance with sections 92A.300 to 92A.500, inclusive, of
Chapter 92A of the Nevada Revised Statutes (the "Nevada Dissenters Statute"),
notice is hereby given that stockholders owning a majority of the outstanding
shares of voting common stock of AmazeScape have authorized a merger with
Premier Concepts, Inc. (the "Merger") by written consent without a meeting.
Accordingly, under the Nevada Dissenters Statute, no meeting or other action is
required by the stockholders of AmazeScape for the Merger to become effective.
DISSENTERS RIGHTS. Any holder of AmazeScape common stock who does not wish
to accept the shares of Premier Concepts, Inc. to which he would be entitled
pursuant to the terms of the Merger (the "Premier Shares") may assert dissenters
rights under the Nevada Dissenters Statute and seek payment in cash of the "fair
value" of his shares of AmazeScape common stock (inclusive of interest) in
accordance with the Nevada Dissenters Statute, instead of receiving the Premier
Shares. AmazeScape may elect to withhold payment from a dissenting stockholder
unless he was the beneficial owner of his shares of common stock before [the
Prospectus Date].
ANY HOLDER OF AMAZESCAPE COMMON STOCK WHO WISHES TO EXERCISE HIS RIGHTS AS
A DISSENTING STOCKHOLDER MUST DO SO WITHIN 60 DAYS AFTER THIS NOTICE IS
DELIVERED, BY EXECUTING A DEMAND FOR PAYMENT IN ACCORDANCE WITH THE NEVADA
DISSENTERS STATUTE. A FORM OF DEMAND FOR PAYMENT IS ATTACHED AS APPENDIX A. TO
EXERCISE DISSENTERS RIGHTS, A STOCKHOLDER MUST SEND OR DELIVER A DEMAND FOR
PAYMENT, TOGETHER WITH THE STOCK CERTIFICATE(S) REPRESENTING HIS SHARES OF
AMAZESCAPE COMMON STOCK, ON OR BEFORE , 2000 TO:
AMAZESCAPE.COM INC.
264 AIRMONT AVENUE
MAHWAH, NEW JERSEY 07430
ATTN: HARRICHAND PERSAUD, CHIEF EXECUTIVE OFFICER
Holders of shares of common stock not represented by certificates will be
restricted from transferring these shares once a demand for payment is received
by Amazescape.
Holders of shares of AmazeScape common stock who follow the procedures set
forth in Section 92A.440 of the Nevada Dissenters Statute and in this Notice of
Merger and Availability of Dissenters Rights will be entitled, within 30 days
after receipt by AmazeScape of the dissenting stockholder's demand for payment,
to receive payment in cash of the "fair value" of such shares of AmazeScape
common stock (plus accrued interest), as determined by AmazeScape.
Pursuant to the terms of the Agreement and Plan of Merger, Premier
Concepts, Inc. has no obligation to complete the Merger if dissenters rights are
asserted and demand for "fair value" is made in accordance with the Nevada
Dissenters Statute with respect to more than two percent (2%) of the outstanding
shares of AmazeScape common stock. If the Merger is not completed, no
stockholder of AmazeScape will be entitled to assert dissenters rights.
FAILURE TO FOLLOW THE STEPS REQUIRED BY THE NEVADA DISSENTERS STATUTE FOR
ASSERTING DISSENTERS RIGHTS TIMELY MAY RESULT IN THE LOSS OF SUCH RIGHTS (IN
WHICH EVENT A STOCKHOLDER WILL BE ENTITLED TO RECEIVE THE
<PAGE> 195
CONSIDERATION RECEIVABLE IN RESPECT TO SUCH SHARES IN ACCORDANCE WITH THE
AGREEMENT AND PLAN OF MERGER). IN VIEW OF THE COMPLEXITY OF THE PROVISIONS OF
THE NEVADA DISSENTERS STATUTE, AMAZESCAPE'S STOCKHOLDERS WHO ARE CONSIDERING
DISSENTING ARE ADVISED TO CONSULT THEIR OWN LEGAL COUNSEL.
The preceding discussion is not a complete statement of the Nevada
Dissenters Rights Statute and is qualified in its entirety by the full text of
Sections 92A.300 to 92A.500, which is reprinted in its entirety and attached as
Appendix B.
AMAZESCAPE.COM INC.
Harrichand Persaud
Chief Executive Officer
Dated: , 2000.
H-2
<PAGE> 196
APPENDIX A
AMAZESCAPE.COM INC.
DEMAND FOR PAYMENT
The undersigned hereby:
(i) acknowledges that the date of the first announcement to the
stockholders of AmazeScape.com Inc. of the terms of the Agreement and Plan
of Merger by and among Premier Concepts, Inc., AmazeMerger Co. and
AmazeScape.com Inc. (the "Merger Agreement") was , 2000;
(ii) certifies that he acquired beneficial ownership of his shares of
common stock of AmazeScape.com Inc. before , 2000;
(iii) elects to assert dissenters rights and demand payment in cash of
the "fair value" of his shares in accordance with the provisions of 92A.300
to 92A.500, inclusive, of Chapter 92A of the Nevada Revised Statutes rather
than receive the consideration to which he otherwise would have been
entitled as a result of the transactions contemplated by the Merger
Agreement; and
(iv) certifies that stock certificate(s) representing his shares of
common stock of AmazeScape.com Inc. are enclosed with this Demand for
Payment, which has been signed and dated as set forth below.
--------------------------------------
(Signature of Stockholder)
Dated: , 2000
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APPENDIX B
EXCERPTS FROM NEVADA REVISED STATUTES -- DISSENTER'S RIGHTS
(SEE APPENDIX G TO PROXY STATEMENT/PROSPECTUS)
H-4
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PART II INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The only statute, charter provision, bylaw, contract, or other arrangement
under which any controlling person, director or officers of the Registrant is
insured or indemnified in any manner against any liability which he may incur in
his capacity as such, is as follows:
Sections 7-109-101 through 7-109-110 of the Colorado Corporation Code
provide as follows:
7-109-101. Definitions. As used in this article:
(1) "Corporation" includes any domestic or foreign entity that is a
predecessor of a corporation by reason of a merger or other transaction
in which the predecessor's existence ceased upon completion of the
transaction.
(2) "Director" means an individual who is or was a director of a
corporation or an individual who, while a director of a corporation, is
or was serving at the corporation's request as a director, officer,
partner, trustee, employee, fiduciary, or agent of another domestic or
foreign corporation or other person or of an employee benefit plan. A
director is considered to be serving an employee benefit plan at the
corporation's request if his or her duties to the corporation also
impose duties on, or otherwise involve services by, the director to the
plan or to participants in or beneficiaries of the plan. "Director"
includes, unless the context requires otherwise, the estate or personal
representative of a director.
(3) "Expenses" includes counsel fees.
(4) "Liability" means the obligation incurred with respect to a
proceeding to pay a judgment, settlement, penalty, fine, including an
excise tax assessed with respect to an employee benefit plan, or
reasonable expenses.
(5) "Official capacity" means, when used with respect to a
director, the office of director in a corporation and, when used with
respect to a person other than a director as contemplated in section
7-109-107, the office in a corporation held by the officer or the
employment, fiduciary, or agency relationship undertaken by the
employee, fiduciary, or agent on behalf of the corporation. "Official
capacity" does not include service for any other domestic or foreign
corporation or other person or employee benefit plan.
(6) "Party" includes a person who was, is, or is threatened to be
made a named defendant or respondent in a proceeding.
(7) "Proceeding" means any threatened, pending, or completed
action, suit, or proceeding, whether civil, criminal, administrative, or
investigative and whether formal or informal.
7-109-102. Authority to indemnify directors.
(1) Except as provided in subsection (4) of this section, a
corporation may indemnify a person made a party to a proceeding because
the person is or was a director against liability incurred in the
proceeding if:
(a) The person conducted himself or herself in good faith; and
(b) The person reasonable believed:
(I) In the case of conduct in an official capacity with the
corporation, that his or her conduct was in the corporation's
best interests; and
(II) In all other cases, that his or her conduct was at
least not opposed to the corporation's best interests; and
(c) In the case of any criminal proceeding, the person had no
reasonable cause to believe his or her conduct was unlawful.
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(2) A director's conduct with respect to an employee benefit plan
for a purpose the director reasonably believed to be in the interests of
the participants in or beneficiaries of the plan is conduct that
satisfies the requirement of subparagraph (II) of paragraph (b) of
subsection (1) of this section. A director's conduct with respect to an
employee benefit plan for a purpose that the director did not reasonably
believe to be in the interests of the participants in or beneficiaries
of the plan shall be deemed not to satisfy the requirements of paragraph
(a) of subsection (1) of this section.
(3) The termination of a proceeding by judgment, order, settlement,
conviction, or upon a plea of nolo contendere or its equivalent is not,
of itself, determinative that the director did not meet the standard of
conduct described in this section.
(4) A corporation may not indemnify a director under this section:
(a) In connection with a proceeding by or in the right of the
corporation in which the director was adjudged liable to the
corporation; or
(b) In connection with any other proceeding charging that the
director derived an improper personal benefit, whether or not
involving action in an official capacity, in which proceeding the
director was adjudged liable on the basis that he or she derived an
improper personal benefit.
(5) Indemnification permitted under this section in connection with
a proceeding by or in the right of the corporation is limited to
reasonable expenses incurred in connection with the proceeding.
7-109-103. Mandatory indemnification of directors. Unless limited by
its articles of incorporation, a corporation shall indemnify a person who
was wholly successful, on the merits or otherwise, in the defense of any
proceeding to which the person was a party because the person is or was a
director, against reasonable expenses incurred by him or her in connection
with the proceeding.
7-109-104. Advance of expenses to directors.
(1) A corporation may pay for or reimburse the reasonable expenses
incurred by a director who is a party to a proceeding in advance of
final disposition of the proceeding if:
(a) The director furnishes to the corporation a written
affirmation of the director's good faith belief that he or she has
met the standard of conduct described in section 7-109-102;
(b) The director furnishes to the corporation a written
undertaking, executed personally or on the director's behalf, to
repay the advance if it is ultimately determined that he or she did
not meet the standard of conduct; and
(c) A determination is made that the facts then known to those
making the determination would not preclude indemnification under
this article.
(2) The undertaking required by paragraph (b) of subsection (1) of
this section shall be an unlimited general obligation of the director
but need not be secured and may be accepted without reference to
financial ability to make repayment.
(3) Determinations and authorizations of payments under this
section shall be made in the manner specified in section 7-109-106.
7-109-105. Court-ordered indemnification of directors.
(1) Unless otherwise provided in the articles of incorporation, a
director who is or was a party to a proceeding may apply for
indemnification to the court conducting the proceeding or to another
court of competent jurisdiction. On receipt of an application, the
court, after giving any notice the court considers necessary, may order
indemnification in the following manner:
(a) If it determines that the director is entitled to mandatory
indemnification under section 7-109-103, the court shall order
indemnification, in which case the court shall also order
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<PAGE> 200
the corporation to pay the director's reasonable expenses incurred to
obtain court-ordered indemnification.
(b) If it determines that the director is fairly and reasonable
entitled to indemnification in view of all the relevant
circumstances, whether or not the director met the standard of
conduct set forth in section 7-109-102 (1) or was adjudged liable in
the circumstances described in section 7-109-102 (4), the court may
order such indemnification as the court deems proper; except that the
indemnification with respect to any proceeding in which liability
shall have been adjudged in the circumstances described in section
7-109-102 (4) is limited to reasonable expenses incurred in
connection with the proceeding and reasonable expenses incurred to
obtain court-ordered indemnification.
7-109-106. Determination and authorization of indemnification of
directors.
(1) A corporation may not indemnify a director under section
7-109-102 unless authorized in the specific case after a determination
has been made that indemnification of the director is permissible in the
circumstances because the director has met the standard of conduct set
forth in section 7-109-102. A corporation shall not advance expenses to
a director under section 7-109-104 unless authorized in the specific
case after the written affirmation and undertaking required by section
7-109-104 (1) (a) and (1) (b) are received and the determination
required by section 7-109-104 (1) (c) has been made.
(2) The determinations required by subsection (1) of this section
shall be made:
(a) By the board of directors by a majority vote of those
present at a meeting at which a quorum is present, and only those
directors not parties to the proceeding shall be counted in
satisfying the quorum; or
(b) If a quorum cannot be obtained, by a majority vote of a
committee of the board of directors designated by the board of
directors, which committee shall consist of two or more directors not
parties to the proceeding; except that directors who are parties to
the proceeding may participate in the designation of directors for
the committee.
(3) If a quorum cannot be obtained as contemplated in paragraph (a)
of subsection (2) of this section, and a committee cannot be established
under paragraph (b) of subsection (2) of this section, or, even if a
quorum is obtained or a committee is designated, if a majority of the
directors constituting such quorum or such committee so directs, the
determination required to be made by subsection (1) of this section
shall be made:
(a) By independent legal counsel selected by a vote of the board
of directors or the committee in the manner specified in paragraph
(a) or (b) of subsection (2) of this section or, if a quorum of the
full board cannot be obtained and a committee cannot be established,
by independent legal counsel selected by a majority vote of the full
board of directors; or
(b) By the shareholders.
(4) Authorization of indemnification and advance of expenses shall
be made in the same manner as the determination that indemnification or
advance of expenses is permissible; except that, if the determination
that indemnification or advance of expenses is permissible is made by
independent legal counsel, authorization of indemnification and advance
of expenses shall be made by the body that selected such counsel.
7-109-107. Indemnification of officers, employees, fiduciaries, and
agents.
(1) Unless otherwise provided in the articles of incorporation:
(a) An officer is entitled to mandatory indemnification under
section 7-109-103, and is entitled to apply for court-ordered
indemnification under section 7-109-105, in each case to the same
extent as a director;
(b) A corporation may indemnify and advance expenses to an
officer, employee, fiduciary, or agent of the corporation to the same
extent as to a director; and
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<PAGE> 201
(c) A corporation may also indemnify and advance expenses to an
officer, employee, fiduciary, or agent who is not a director to a
greater extent, if not inconsistent with public policy, and if
provided for by its bylaws, general or specific action of its board
of directors or shareholders, or contract.
7-109-108. Insurance. A corporation may purchase and maintain
insurance on behalf of a person who is or was a director, officer,
employee, fiduciary, or agent of the corporation, or who, while a director,
officer, employee, fiduciary, or agent of the corporation, is or was
serving at the request of the corporation as a director, officer, partner,
trustee, employee, fiduciary, or agent of another domestic or foreign
corporation or other person or of an employee benefit plan, against
liability asserted against or incurred by the person in that capacity or
arising from his or her status as a director, officer, employee, fiduciary,
or agent, whether or not the corporation would have power to indemnify the
person against the same liability under section 7-109-102, 7-109-103, or
7-109-107. Any such insurance may be procured from any insurance company
designated by the board of directors, whether such insurance company is
formed under the laws of this state or any other jurisdiction of the United
States or elsewhere, including any insurance company in which the
corporation has an equity or any other interest through stock ownership or
otherwise.
7-109-109. Limitation of indemnification of directors.
(1) A provision treating a corporation's indemnification of, or
advance of expenses to, directors that is contained in its articles of
incorporation or bylaws, in a resolution of its shareholders or board of
directors, or in a contract, except an insurance policy, or otherwise,
is valid only to the extent the provision is not inconsistent with
sections 7-109-101 to 7-109-108. If the article of incorporation limit
indemnification or advance of expenses, indemnification and advance of
expenses are valid only to the extent not inconsistent with the articles
of incorporation.
(2) Sections 7-109-101 to 7-109-108 do not limit a corporation's
power to pay or reimburse expenses incurred by a director in connection
with an appearance as a witness in a proceeding at a time when he or she
has not been made a named defendant or respondent in the proceeding.
7-109-110. Notice to shareholder of indemnification of director. If a
corporation indemnifies or advances expenses to a director under this
article in connection with a proceeding by or in the right of the
corporation, the corporation shall give written notice of the
indemnification or advance to the shareholders with or before the notice of
the next shareholders' meeting. If the next shareholder action is taken
without a meeting at the instigation of the board of directors, such notice
shall be given to the shareholders at or before the time the first
shareholder signs a writing consenting to such action.
* * *
Article XIII of the Amended and Restated Articles of Incorporation of
Premier Concepts provides, in pertinent part:
Section 1. A director of this Corporation shall not be liable to the
Corporation or its shareholders for monetary damages for breach of
fiduciary duty as a director, except to the extent that such exemption from
liability or limitation thereof is not permitted under the Colorado
Corporation Code as the same exists or may hereafter be amended.
Section 2. Any repeal or modification of the foregoing Section 1 by
the shareholders of the Corporation shall not adversely affect any right or
protection of a director of the Corporation existing at the time of such
repeal or modification.
Article XII of the Amended and Restated Articles of Incorporation of
Premier Concepts provides, in pertinent part:
Section 2. Indemnification of Officers, Directors and Others.
(a) All officers and directors of the Corporation shall be entitled
to indemnification to the maximum extent permitted by law or by public
policy.
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<PAGE> 202
(b) Any mandate for indemnification, whether by statute or order of
Court, is to be expressly subject to the Corporation's reasonable
capability of paying.
(c) No person will be entitled to be reimbursed for expenses
incurred in connection with a Court proceeding to obtain Court ordered
indemnification unless such person first made reasonable application to
the Corporation and the Corporation either unreasonably denied such
application or through no fault of the applicant was unable to consider
such application within a reasonable time.
(d) A director who is or was made a party to a proceeding because
he is or was an officer, employee, or agent of the Corporation is
entitled to the same rights as if he were or had been made a party
because he was a director.
(e) To the maximum extent permitted by law or by public policy,
directors of this Corporation are to have no personal liability for
monetary damages for breach of fiduciary duty as a director.
ITEM 21. EXHIBITS
(A) LIST OF EXHIBITS
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
<C> <S> <C>
2.1 Agreement and Plan of Merger dated as of February 7, 2000
among Premier Concepts, AmazeScape and Mergersub (included
as Appendix B to the Proxy Statement/Prospectus contained in
this Registration Statement). ..............................
3.1 Articles of Incorporation of Premier Concepts (incorporated
herein by reference to Premier Concepts' Registration
Statement on Form S-1 (File No. 33-42701)). ................
3.2 Amendment to Articles of Incorporation of Premier Concepts
authorizing Series A Convertible Preferred Stock and
changing corporate name to "AmazeScape.com, Inc." (included
as Appendix A to the Proxy Statement/Prospectus contained in
this Registration Statement). ..............................
3.3 Bylaws of Premier Concepts (incorporated herein by reference
to Premier Concepts Registration Statement on Form S-1 (File
No. 33-42701)). ............................................
3.4 Amendment to Bylaws of Premier Concepts.....................
4.1 Specimen Common Stock Certificate of Premier Concepts
(incorporated herein by reference to Premier Concepts
Registration Statement on Form S-1 (File No. 33-42701)).....
4.2 Specimen Convertible Preferred Stock Certificate of Premier
Concepts*...................................................
4.3 Article IV of Premier Concepts' Articles of Incorporation,
as amended (included in Exhibits 3.1 and 3.2 to this
Registration Statement).....................................
5.1 Opinion of Neuman & Drennan, P.C. regarding the validity of
the securities being registered.*...........................
8.1 Opinion of Hangley, Aronchick, Segal & Pudlin regarding
certain federal income tax consequences relating to the
Merger.*....................................................
8.2 Opinion of Parker Chapin, LLP regarding certain federal
income tax consequences relating to the Merger.*............
10.1 Employment Agreement dated October 15, 1999 between
AmazeScape.com, Inc. and Harrichand Persaud.................
10.2 Employment Agreement dated October 15, 1999 between
AmazeScape.com, Inc. and Anton Nicaj........................
10.3 Service Provider Agreement dated September 1, 1999 between
AmazeScape.com, Inc. and Meglyn Enterprises, Inc. ..........
10.4 Service Provider Agreement dated September 9, 1999 between
AmazeScape.com, Inc. and New York Internet Center...........
</TABLE>
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<PAGE> 203
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
<C> <S> <C>
10.5 Management Services Agreement dated October 12, 1999 between
AmazeScape.com, Inc. and Infusion Capital Partners, LLC.....
10.6 Amendment dated January 28, 2000 to Management Services
Agreement dated December 2, 1999 between AmazeScape.com,
Inc. and Infusion Capital Partners, LLC.....................
10.7 Warrant to Purchase Shares of AmazeScape common stock dated
October 12, 1999 in favor of Infusion Capital Partners,
LLC.........................................................
10.8 Warrant to Purchase Shares of AmazeScape common stock dated
January 28, 2000 in favor of Infusion Capital Partners,
LLC.........................................................
10.9 Translation Services Agreement between AmazeScape.com, Inc.
and E-Lingo Corporation.....................................
10.10 Form of Warrants to AmazeScape Directors....................
10.11 Employment Agreement between Registrant and Sissel
Eckenhausen (incorporated by reference to Registrant's
Annual Report on Form 10-KSB for the Year Ended January 31,
1999).......................................................
10.12 Employment Agreement between Registrant and Todd Huss
(incorporated by reference to Registrant's Annual Report on
Form 10-KSB for the Year Ended January 31, 1999)............
10.13 Employment Agreement between Registrant and Kevin O'Brien
(incorporated by reference to Registrant's Annual Report on
Form 10-KSB for the Year Ended January 31, 1999)............
10.14 Amendment to Employment Agreement between Registrant and
Sissel Eckenhausen..........................................
10.15 Amendment to Employment Agreement between Registrant and
Todd Huss...................................................
10.16 Amendment to Employment Agreement between Registrant and
Kevin O'Brien...............................................
10.17 Registrant's Consulting Agreement with Cohig & Associates,
Inc. (incorporated by reference to Registrant's Registration
Statement on Form S-1 (File No 33-42701)....................
10.18 Registrant's Agreement Regarding Basic Terms with Infusion
Capital Partners, LLC (incorporated by reference to
Registrant's Annual Report on Form 10-KSB for the Year Ended
January 31, 1999)...........................................
10.19 Registrant's First Stock Purchase Agreement with Equisition
Capital, LLC (incorporated by reference to Registrant's
Annual Report on Form 10-KSB for the Year Ended January 31,
1999).......................................................
10.20 Registrant's Second Stock Purchase Agreement with Infusion
Capital Partners, LLC (incorporated by reference to
Registrant's Annual Report on Form 10-KSB for the Year Ended
January 31, 1999)...........................................
10.21 Registrant's Management Services Agreement with Infusion
Capital Partners, LLC (incorporated by reference to
Registrant's Annual Report on Form 10-KSB for the Year Ended
January 31, 1999)...........................................
10.22 Voting Agreement dated February 3, 2000 among Premier
Concepts, Sissel Eckenhausen, Ecquisition Capital, LLC and
International Monetary Group................................
23.1 Consent of Hein + Associates, LLP, independent auditors of
Premier Concepts............................................
23.2 Consent of Richard A. Eisner & Company, LLP, independent
auditors of AmazeScape......................................
23.3 Consent of Neuman & Drennan, P.C., (to be included in the
opinion to be filed as Exhibit 5.1 to this Registration
Statement)..................................................
</TABLE>
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<PAGE> 204
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
<C> <S> <C>
23.4 Consent of Hangley Aronchick Segal & Pudlin (included in the
opinion filed as Exhibit 8.1 to this Registration
Statement). ................................................
23.4 Consent of Parker Chapin, LLP (included in the opinion filed
as Exhibit 8.2 to this Registration Statement)..............
24.1 Powers of Attorney.*........................................
99.1 Form of Premier Concepts Proxy Card. .......................
99.2 Form of AmazeScape Written Consent. ........................
</TABLE>
- ---------------
* To be filed by amendment
ITEM 22. UNDERTAKINGS
(a) The undersigned Registrant hereby undertakes: (1) That prior to any
public reoffering of the securities registered hereunder through use of a
prospectus which is a part of this registration statement, by any person or
party who is deemed to be an underwriter within the meaning of Rule 145(c), such
reoffering prospectus will contain the information called for by the applicable
registration form with respect to reofferings by persons who may be deemed
underwriters, in addition to the information called for by the other items of
the applicable form. (2) That every prospectus (i) that is filed pursuant to
paragraph (1) immediately preceding, or (ii) that purports to meet the
requirements of Section 10(a)(3) of the Securities Act of 1933 and is used in
connection with an offering of securities subject to Rule 415, will be filed as
a part of an amendment to the registration statement and will not be used until
such amendment is effective, and that, for purposes of determining any liability
under the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities offered
therein, and the offering of such securities at that time shall deemed to be the
initial bona fide offering thereof. (3) That, for purposes of determining any
liability under the Securities Act of 1933, each filing of the Registrant's
annual report pursuant to Section 13(a) or 15(d) of the Securities Exchange Act
of 1934 (and, where applicable, each filing of an employee benefit plan's annual
report pursuant to Section 15(d) of the Securities Exchange Act of 1934) that is
incorporated by reference in the registration statement shall be deemed to be a
new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof. (4) To respond to requests for information that is
incorporated by reference into the Proxy Statement/ Prospectus pursuant to Item
4, 10(b), 11 or 13 of this form, within one business day of receipt of such
request, and to send the incorporated documents by first class mail or other
equally prompt means. This includes information contained in documents filed
subsequent to the effective date of the registration statement through the date
of responding to the request. (5) To supply by means of a post-effective
amendment all information concerning a transaction, and Premier Concepts being
acquired involved therein, that was not the subject of and included in the
registration statement when it became effective.
(b) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrant of expenses
incurred or paid by a director, officer or controlling person of the registrant
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
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<PAGE> 205
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant
has duly caused this Registration Statement to be signed on its behalf by the
undersigned, thereunto duly authorized, in the City of Aurora, State of
Colorado, on February 15, 2000
PREMIER CONCEPTS, INC.,
a Colorado corporation
By: /s/ SISSEL ECKENHAUSEN
------------------------------------
Sissel Eckenhausen, President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities with Premier Concepts, Inc. and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
- --------- ----- ----
<S> <C> <C>
/s/ SISSEL ECKENHAUSEN President/Director February 15, 2000
- ---------------------------------------------------
Sissel Eckenhausen
/s/ TODD HUSS Chief Financial Officer February 15, 2000
- --------------------------------------------------- and Principal Accounting Officer
Todd Huss
/s/ GERALDINE MAGALNICK Director February 15, 2000
- ---------------------------------------------------
Geraldine Magalnick
/s/ WILLIAM NANDOR Director February 15, 2000
- ---------------------------------------------------
William Nandor
/s/ JOHN GERBER Director February 15, 2000
- ---------------------------------------------------
John Gerber
/s/ GARY WOLF Director February 15, 2000
- ---------------------------------------------------
Gary Wolf
</TABLE>
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<PAGE> 206
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
- -------------- ----------- ----
<C> <S> <C>
2.1 Agreement and Plan of Merger dated as of February 7, 2000
among Premier Concepts, AmazeScape and Mergersub (included
as Appendix B to the Proxy Statement/Prospectus contained in
this Registration Statement). ..............................
3.1 Articles of Incorporation of Premier Concepts (incorporated
herein by reference to Premier Concepts' Registration
Statement on Form S-1 (File No. 33-42701)). ................
3.2 Amendment to Articles of Incorporation of Premier Concepts
authorizing Series A Convertible Preferred Stock and
changing corporate name to "AmazeScape.com, Inc." (included
as Appendix A to the Proxy Statement/Prospectus contained in
this Registration Statement). ..............................
3.3 Bylaws of Premier Concepts (incorporated herein by reference
to Premier Concepts Registration Statement on Form S-1 (File
No. 33-42701)). ............................................
3.4 Amendment to Bylaws of Premier Concepts.....................
4.1 Specimen Common Stock Certificate of Premier Concepts
(incorporated herein by reference to Premier Concepts
Registration Statement on Form S-1 (File No. 33-42701)).....
4.2 Specimen Convertible Preferred Stock Certificate of Premier
Concepts*...................................................
4.3 Article IV of Premier Concepts' Articles of Incorporation,
as amended (included in Exhibits 3.1 and 3.2 to this
Registration Statement).....................................
5.1 Opinion of Neuman & Drennan, P.C. regarding the validity of
the securities being registered.*...........................
8.1 Opinion of Hangley, Aronchick, Segal & Pudlin regarding
certain federal income tax consequences relating to the
Merger.*....................................................
8.2 Opinion of Parker Chapin, LLP regarding certain federal
income tax consequences relating to the Merger.*............
10.1 Employment Agreement dated October 15, 1999 between
AmazeScape.com, Inc. and Harrichand Persaud.................
10.2 Employment Agreement dated October 15, 1999 between
AmazeScape.com, Inc. and Anton Nicaj........................
10.3 Service Provider Agreement dated September 1, 1999 between
AmazeScape.com, Inc. and Meglyn Enterprises, Inc. ..........
10.4 Service Provider Agreement dated September 9, 1999 between
AmazeScape.com, Inc. and New York Internet Center...........
10.5 Management Services Agreement dated October 12, 1999 between
AmazeScape.com, Inc. and Infusion Capital Partners, LLC.....
10.6 Amendment dated January 28, 2000 to Management Services
Agreement dated December 2, 1999 between AmazeScape.com,
Inc. and Infusion Capital Partners, LLC.....................
10.7 Warrant to Purchase Shares of AmazeScape common stock dated
October 12, 1999 in favor of Infusion Capital Partners,
LLC.........................................................
10.8 Warrant to Purchase Shares of AmazeScape common stock dated
January 28, 2000 in favor of Infusion Capital Partners,
LLC.........................................................
10.9 Translation Services Agreement between AmazeScape.com, Inc.
and E-Lingo Corporation.....................................
10.10 Form of Warrants to AmazeScape Directors....................
</TABLE>
<PAGE> 207
<TABLE>
<CAPTION>
EXHIBIT NUMBER DESCRIPTION PAGE
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<C> <S> <C>
10.11 Employment Agreement between Registrant and Sissel
Eckenhausen (incorporated by reference to Registrant's
Annual Report on Form 10-KSB for the Year Ended January 31,
1999).......................................................
10.12 Employment Agreement between Registrant and Todd Huss
(incorporated by reference to Registrant's Annual Report on
Form 10-KSB for the Year Ended January 31, 1999)............
10.13 Employment Agreement between Registrant and Kevin O'Brien
(incorporated by reference to Registrant's Annual Report on
Form 10-KSB for the Year Ended January 31, 1999)............
10.14 Amendment to Employment Agreement between Registrant and
Sissel Eckenhausen..........................................
10.15 Amendment to Employment Agreement between Registrant and
Todd Huss...................................................
10.16 Amendment to Employment Agreement between Registrant and
Kevin O'Brien...............................................
10.17 Registrant's Consulting Agreement with Cohig & Associates,
Inc. (incorporated by reference to Registrant's Registration
Statement on Form S-1 (File No 33-42701)....................
10.18 Registrant's Agreement Regarding Basic Terms with Infusion
Capital Partners, LLC (incorporated by reference to
Registrant's Annual Report on Form 10-KSB for the Year Ended
January 31, 1999)...........................................
10.19 Registrant's First Stock Purchase Agreement with Equisition
Capital, LLC (incorporated by reference to Registrant's
Annual Report on Form 10-KSB for the Year Ended January 31,
1999).......................................................
10.20 Registrant's Second Stock Purchase Agreement with Infusion
Capital Partners, LLC (incorporated by reference to
Registrant's Annual Report on Form 10-KSB for the Year Ended
January 31, 1999)...........................................
10.21 Registrant's Management Services Agreement with Infusion
Capital Partners, LLC (incorporated by reference to
Registrant's Annual Report on Form 10-KSB for the Year Ended
January 31, 1999)...........................................
10.22 Voting Agreement dated February 3, 2000 among Premier
Concepts, Sissel Eckenhausen, Ecquisition Capital, LLC and
International Monetary Group................................
23.1 Consent of Hein + Associates, LLP, independent auditors of
Premier Concepts............................................
23.2 Consent of Richard A. Eisner & Company, LLP, independent
auditors of AmazeScape......................................
23.3 Consent of Neuman & Drennan, P.C., to be included in the
opinion to be filed as Exhibit 5.1 to this Registration
Statement)..................................................
23.4 Consent of Hangley Aronchick Segal & Pudlin (included in the
opinion filed as Exhibit 8.1 to this Registration
Statement). ................................................
23.4 Consent of Parker Chapin, LLP (included in the opinion filed
as Exhibit 8.2 to this Registration Statement...............
24.1 Powers of Attorney.*........................................
99.1 Form of Premier Concepts Proxy Card. .......................
99.2 Form of AmazeScape Written Consent. ........................
</TABLE>
- ---------------
* To be filed by amendment
<PAGE> 1
Exhibit 3.4
PREMIER CONCEPTS, INC.
AMENDMENTS TO BY-LAWS
RESOLVED, That, conditioned upon the completion of the proposed merger of
AmazeMerger Co., a wholly-owned subsidiary of the Corporation, with and into
AmazeScape.com Inc., the By-Laws of the Corporation be amended at the effective
time of said merger as follows:
1) Article III shall be amended to insert new Sections 7 and 8 that
state as follows:
Section 7. Dilutive Issuances. Without the unanimous vote or
consent of the Directors serving on the Board, no transaction
will be effected involving the capital of the Corporation that
results in dilution (book value per share prior to the
effective time of the Merger (the "Per Share Book Value"), as
opposed to percentage of shareholdings) of the shares
outstanding immediately before the effective time of the
Merger. ("Merger" means the merger of AmazeMerger Co., a
wholly-owned subsidiary of the Corporation, with and into
AmazeScape.com Inc.). This Section 7 does not prohibit the
Corporation from issuing stock in an offering, acquisition or
other transaction in which it receives value on a per share
basis at least equal to the Per Share Book Value.
Section 8. Reverse Stock Split. Without the unanimous vote or
consent of the Directors serving on the Board, the Corporation
will not effect any reverse split or other transaction of
similar substantive effect in the Corporation's common stock
within the six-month period following the completion of the
Merger.
2) Article VII shall be amended to insert before the period at the end
of the sentence the words:
"; provided, however, no provision of these By-Laws requiring
unanimous vote or consent of the Directors may be amended, or
recommended to the Shareholders for amendment, except by
unanimous vote or consent of the Board of Directors."
<PAGE> 2
3) Article VII shall be further amended to add at the end thereof the
following sentence:
"Without the unanimous vote or consent of the Directors
serving on the Board: (a) no amendment to the Articles of
Incorporation of the Corporation will be effected that
supersedes, eliminates or circumvents, or that has the effect
of superseding, eliminating or circumventing, any requirement
of action by unanimous vote or consent of the Directors as
provided for in these By-Laws, and (b) the Board of Directors
will not approve or recommend that the Shareholders of the
Corporation approve any merger, consolidation or other
transaction as a result of which neither the articles or
certificate of incorporation nor the by-laws of the surviving
entity or other successor to substantially all of the assets
and business of the Corporation provide the same requirements
for unanimous vote or consent of the directors of such
successor as are provided for in these By-Laws with respect to
the Corporation."
2
<PAGE> 1
Exhibit 10.1
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of this
15th day of October 1999 (the "Effective Date"), by and between, AmazeScape.com
Inc., a Nevada corporation (the "Company") and Harry Persand, an individual with
a mailing address at
____________________________________________________ ("Executive")
INTRODUCTION
Executive possesses skills and knowledge advantageous to the Company.
The Company desires to employ Executive and Executive desires to accept such
employment on the terms and conditions set forth herein.
AGREEMENT
In consideration of the premises and mutual promises hereinbelow set
forth, the parties hereby agree as follows:
1. EMPLOYMENT; DUTIES. Subject to the terms and conditions set
forth herein, the Company hereby employs Executive during the Employment Period
(as defined below), and Executive hereby accepts such employment. Executive
agrees to be a full-time employee of the Company and devote his full and
exclusive time, energy, skill and best efforts to the business of the Company
and to the fulfillment of Executive's duties hereunder. Executive's duties
include, but are not limited to, (i) serving as Chairman and Chief Executive
Officer of the Company; (ii) sales of the Company's and its affiliates products
and services; (iii) assisting in the internal growth of the Company's business;
and (iv) other duties assigned to Executive by the Company from time to time
consistent with Executive's position.
2. EMPLOYMENT PERIOD. The term of this Agreement (the
"Employment Period") shall commence on the Effective Date and shall be
guaranteed for a period of three (3) years thereafter. If Company desires to
terminate Executive earlier pursuant to SECTION 4 or SECTION 5 below, all
amounts due to or accrued on behalf of Executive, in accordance with the terms
of SECTION 3 becomes due immediately upon the effectiveness of such termination.
3. COMPENSATION AND BENEFITS
3.1 SALARY. During the Employment Period, the Company
agrees to pay Executive at the rate of $100,000 per year ("Base Salary").
Executive's salary shall be subject to customary withholdings and is payable to
Executive on the regularly occurring pay period established by the Company. Base
Salary is guaranteed by the Company to the Executive for the Employment Period.
3.2 HEALTH BENEFITS. During the Employment Period,
the Company shall provide Executive with individual and/or family healthcare,
dental, disability, and eyecare coverage, as provided by health care provider(s)
selected by the Company from time to time.
3.3 BONUS. During the Employment Period, Executive
shall be paid a bonus at the end of each fiscal year equal to the sum of (i)
2.5% of the Company's increase in "annual sales" and (ii) 5.0% of the Company's
increase in "EBITDA" (i.e., earnings before interest and taxes, less
depreciation and amortization). Such bonus (if any) shall be payable at the
discretion of the Company in either (A) cash or (B) common stock, options or
other awards from Company's incentive stock plan, subject to applicable
securities law and tax withholding payments by Executive. The calculation for
such bonus shall (w) be based on the unconsolidated financial statements of the
Company as certified by the Company's certified public accountants; (x) be
subject to allocation of overhead provisions from time to time adopted by the
Company and its subsidiaries; (y) include sales and earnings from new services
offered; and (z) include sales and earnings from new services offered resulting
from an expansion approved by the Company, or as a result of additional services
made available by the Company; and shall exclude, without limitation, any
earnings or sales generated by way of merger, acquisition or other similar
event.
3.4 RETIREMENT PLAN. During the Employment Period,
Executive shall
<PAGE> 2
be entitled to participate in any 401(k) or similar plan adopted by the Company
for the benefit of its Executives. The Company reserves the right to modify,
terminate or withdraw any such plan (if so adopted) at any time in its sole
discretion.
3.5 INCENTIVE BONUS. Executive will be paid an
incentive bonus equal to 2.0% of the total purchase price for each company that
Executive introduces to the Company and is subsequently acquired by the Company,
payable at the Company's discretion in either (i) cash or (ii) common stock,
stock options or other awards from the Company's incentive stock option plan,
subject to applicable securities law and tax withholding payments by Executive.
Executive will be required to submit any referral in writing for acknowledgment
by the Company prior to any negotiations between the Company and the referral.
Executive acknowledges that other persons or entities, (including other
employees, officers, and directors of the Company and its affiliates), have been
or may be offered a similar "incentive bonus" and that any incentive bonus which
Executive may be entitled to hereunder is subject to a percentage reduction to
the extent that other persons or entities participated in or were responsible
for the referral. Any dispute regarding apportionment of an incentive bonus
shall be resolved by binding arbitration in accordance with Section 13 hereof.
In no event shall the Company pay more than a total of 2% for any single
acquisition transaction.
3.6 OTHER BENEFITS. During the Employment Period,
Executive shall be entitled to an annual expense account to be used for
reimbursement of reasonable and necessary business expenses. Such expense
account shall not exceed $10,000 annually.
4. TERMINATION BY THE COMPANY FOR CAUSE. Upon written notice
to Executive, the Company may terminate this Agreement for cause if any of the
following events shall occur: (i) any breach of this Agreement by Executive;
(ii) the commission of a felony by Executive; (iii) the commission of an act by
Executive involving fraud, theft or dishonesty; or (iv) the Company's bona fide
decision to terminate its business and liquidate its assets. In the event of a
termination pursuant to this Section 4, all non-financial obligations of the
Company under this Agreement shall cease.
5. TERMINATION WITHOUT CAUSE.
5.1 BY EMPLOYER. The Company may terminate this
Agreement at any time without cause upon thirty (30) days written notice to
Executive. In such event, the Company shall pay Executive during regular payroll
periods (less customary withholding taxes) the Base Salary for up to the greater
of twelve (12) months or the remainder of the Employment Period. All other
obligations of the Company shall be prorated to the date of termination.
5.2 BY EXECUTIVE. Executive may terminate this
Agreement at any time upon ninety (90) days prior written notice to the Company.
In such event, all financial and non-financial obligations of the Company to the
Executive shall cease.
6. CONFIDENTIALITY AND NON-DISCLOSURE. Executive recognizes
and acknowledges that he has had in the past, currently has and in the future
may have access to certain confidential information relating to the Company and
its affiliates, including, but not limited to, operational policies, financial
information, marketing information, personnel information, trade secrets,
customer information (including customer lists), and pricing and cost policies,
that are valuable, special and unique assets of the Company (collectively,
"Confidential Information"). Executive agrees that he will not use or disclose
such Confidential Information to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except as is required in the
course of performing his duties hereunder unless (i) such information becomes
known to the public generally through no breach by Executive of this covenant or
(ii) disclosure is required by law or any governmental authority or is required
in connection with the defense of a lawsuit against the disclosing party,
provided, that prior to disclosing any information pursuant to this clause (ii),
Executive shall give prior written notice thereof to the Company and provide the
Company with the opportunity to contest such disclosure. Executive agrees that,
both during the Employment Period and after the termination of this Agreement,
Executive will hold in a fiduciary capacity for the benefit of the Company, and
shall not directly or indirectly use or disclose, except as authorized by the
Company in connection with the performance of Executive's duties, any
Confidential Information, that Executive may have or may acquire (whether or not
developed or compiled by Executive and whether or not Executive has been
authorized to have access to such Confidential Information) during
<PAGE> 3
the term of this Agreement. The covenants contained in this SECTION 6 shall
survive for the Employment Period and for a period of one (1) year thereafter;
provided, however, that with respect to those items of Confidential Information
which constitute trade secrets under applicable law, Executive's obligations of
confidentiality and non-disclosure as set forth in this SECTION 6 shall continue
to survive after the applicable period above to the greatest extent permitted by
applicable law. These rights of the Company are in addition to those rights the
Company has under the common law or applicable statutes for the protection of
trade secrets.
7. NON-COMPETITION. Executive expressly covenants and agrees
that for the Employment Period and for a period of one (1) year thereafter, he
shall not, directly or indirectly, seek, obtain or accept a "Competitive
Position" in the "Restricted Territory" with a "Competitor" of the Company (as
such terms are hereafter defined) . For purposes of this Agreement, a
"Competitor" of the Company means any business, individual, partnership, joint
venture, association, firm, corporation or other entity engaged, wholly or
partly, in the business of selling internet access service, creating
multi-lingual online communities or multi-lingual internet portals. "Restricted
Territory" means each state of the United States of America; a "Competitive
Position" means any employment with any Competitor of the Company. Nothing
contained in this SECTION 7 is intended to prevent Executive from investing in
stock or other securities listed on a national securities exchange or actively
traded on the over the counter market or any corporation engaged, wholly or
partly, in the sale of products or services on the internet.
8. NON-SOLICITATION OF CUSTOMERS. Executive agrees that he
will not take any customer lists of the Company after leaving his employ and
that he will, for the Employment Period and for a period of one (1) year
thereafter, refrain from soliciting or attempting to solicit directly or by
assisting others, any business from any of the Company's customers, including
actively sought prospective customers, with whom Executive had "material contact
during the employment for purposes of providing products or services.
9. TOLLING OF PERIOD OF RESTRAINT. Executive hereby expressly
acknowledges and agrees that in the event the enforceability of any of the terms
of this Agreement shall be challenged in court and Executive is not enjoined
from breaching any of the restraints set forth in SECTION 6 through SECTION 9,
then if a court of competent jurisdiction finds that the challenged restraint is
enforceable, the time period of the restraint shall be deemed tolled upon the
filing of the lawsuit challenging the enforceability of the restraint until the
dispute is finally resolved and all periods of appeal have expired.
10. ACKNOWLEDGEMENTS. Executive hereby acknowledges and agrees
that the restrictions contained in SECTION 6 through SECTION 9 are fair and
reasonable and necessary for the protection of the legitimate business interests
of the Company. Executive acknowledges that in the event Executive's employment
with the Company terminates for any reason, Executive will be able to earn a
livelihood without violating the restrictions contained in SECTION 6 through
SECTION 9 and that Executive's ability to earn a livelihood without violating
such restrictions is a material condition to Executive's employment and
continued employment with the Company. Executive expressly agrees that the
character, duration and geographical scope of the covenants contained in this
SECTION 6 through SECTION 9 are reasonable in light of the circumstances as they
exist at the date upon which this Agreement has been executed. However, should a
determination nonetheless be made by a court of competent jurisdiction at a
later date that the character, duration or geographical scope of the covenants
contained herein are unreasonable in light of the circumstances as they then
exist, then it is the intention of both Executive and the Company that these
covenants shall be construed by the court in such a manner as to impose only
those restrictions on the conduct of Executive which are reasonable in light of
the circumstances as they then exist and necessary to assure the Company of the
intended benefit of these covenants.
11. RIGHTS TO MATERIALS; WORK FOR HIRE. All records, files,
memoranda, reports, price lists, customer lists, drawings, plans, sketches,
documents and the like (together with all copies thereof) relating to the
business of the Company, which Executive shall use or prepare or come in contact
with in the course of, or as a result of, his employment shall, as between the
parties hereto, remain the sole property of the Company. Upon the termination of
Employment or upon the prior demand of the Company, Executive shall immediately
return all such materials and shall not thereafter cause removal
<PAGE> 4
thereof from the premises of the Company. Executive agrees to disclose and
assign to the Company as its exclusive property, all ideas, writings,
inventions, discoveries, improvements and technical or business innovations made
or conceived by Executive, whether or not patentable or copyrightable, either
solely or jointly with others during the Employment Period and for a period of
six months (6) thereafter whether or not made or conceived during regular hours
of work or otherwise, which are along the lines of the business, work or
investigations of the Company or its affiliates. Executive agrees to execute any
and all documents hereafter requested by the Company necessary to further
effectuate the foregoing.
12. REMEDIES. Without limiting the Company's right to claim
damages, Executive acknowledges that the Company will be irreparably harmed by a
breach of any provision of this Agreement and Executive agrees that the Company
shall be entitled to injunctive relief in the event of such breach.
13. GOVERNING LAW; ARBITRATION; JURISDICTION; VENUE;
ATTORNEY'S FEES. This Agreement is made and entered into in and shall be
governed by and interpreted in accordance with the laws of, the State of Nevada.
The Company and Executive agree that any dispute regarding this Agreement shall
be submitted to arbitration to and shall be resolved in accordance with the
rules of the JAMS/Endispute for expedited cases then in effect. The
arbitrator(s) shall be mutually selected by the parties or in the event the
parties cannot mutually agree, then appointed by JAMS/Endispute. Any arbitration
shall be held within a thirty (30) mile radius of Mahwah, NJ and the
arbitrator(s) shall apply Nevada law. Judgment upon any award rendered by the
arbitrator(s) shall be final and may be entered in any court of competent
jurisdiction. Notwithstanding the foregoing, the Company shall have the absolute
right to obtain equitable remedies in any state court of competent jurisdiction
in the State of Nevada. By his execution and delivery of this agreement,
Executive irrevocably submits to and accepts the exclusive jurisdiction of each
of such courts and waives any objection (including any objection to venue or any
objection based upon the grounds of forum non conveniens) which might be
asserted against the bringing of any such action, suit or other legal proceeding
in such courts. The court and/or arbitrator(s) shall award costs and expenses
(including reasonable attorney's fees) to the prevailing party in any litigation
or arbitration.
14. MISCELLANEOUS
14.1. ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes any and all previous agreements, written and oral,
regarding the subject matter hereof between the parties hereto. This Agreement
shall not be changed, altered, modified or amended, except by a written
agreement signed by both parties hereto.
14.2. ASSIGNMENT. The Company may assign this
Agreement to (i) any entity controlling, controlled by or under common control
with the Company or (ii) to any purchaser of the Company's assets provided that
such purchaser agrees to assume the Company's obligations hereunder.
14.3. WAIVER. The failure of any party to insist in
any one instance or more upon strict performance of any of the terms and
conditions hereof, or to exercise any right or privilege herein conferred, shall
not be construed as a waiver of such terms, conditions, rights or privileges,
but same shall continue to remain in full force and effect. Any waiver by any
party of any violation of, breach of or default under any provision of this
Agreement by the other party shall not be construed as, or constitute, a
continuing waiver of such provision, or waiver of any other violation of, breach
of or default under any other provision of this Agreement.
14.4. TITLES; GENDER. Section and subsection titles
are for convenience of reference only and are not to be considered in the
interpretation or construction of any of the provisions hereof. All pronouns or
any variations thereof contained in this Agreement refer to the masculine,
feminine or neuter as the identity of the person may require.
14.8. SURVIVAL. SECTION 6 through SECTION 14 hereof
shall survive any termination of this Agreement.
<PAGE> 5
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
COMPANY:
ATTEST: AmazeScape.com, Inc.
By:_________________________________
Anton Nicaj, President
WITNESS EXECUTIVE:
By:_________________________________
Name: ______________________________
<PAGE> 1
Exhibit 10.2
EMPLOYMENT AGREEMENT
THIS EMPLOYMENT AGREEMENT (the "Agreement") is entered into as of this
15th day of October 1999 (the "Effective Date"), by and between, AmazeScape.com
Inc., a Nevada corporation (the "Company") and Anton Nicaj, an individual with a
mailing address at
__________________________________________________________ ("Executive")
INTRODUCTION
Executive possesses skills and knowledge advantageous to the Company.
The Company desires to employ Executive and Executive desires to accept such
employment on the terms and conditions set forth herein.
AGREEMENT
In consideration of the premises and mutual promises hereinbelow set
forth, the parties hereby agree as follows:
1. EMPLOYMENT; DUTIES. Subject to the terms and conditions set
forth herein, the Company hereby employs Executive during the Employment Period
(as defined below), and Executive hereby accepts such employment. Executive
agrees to be a full-time employee of the Company and devote his full and
exclusive time, energy, skill and best efforts to the business of the Company
and to the fulfillment of Executive's duties hereunder. Executive's duties
include, but are not limited to, (i) serving as President of the Company; (ii)
sales of the Company's and its affiliates products and services; (iii) assisting
in the internal growth of the Company's business; and (iv) other duties assigned
to Executive by the Company from time to time consistent with Executive's
position.
2. EMPLOYMENT PERIOD. The term of this Agreement (the
"Employment Period") shall commence on the Effective Date and shall be
guaranteed for a period of three (3) years thereafter. If Company desires to
terminate Executive earlier pursuant to SECTION 4 or SECTION 5 below, all
amounts due to or accrued on behalf of Executive, in accordance with the terms
of SECTION 3 becomes due immediately upon the effectiveness of such termination.
3. COMPENSATION AND BENEFITS
3.1 SALARY. During the Employment Period, the Company
agrees to pay Executive at the rate of $100,000 per year ("Base Salary").
Executive's salary shall be subject to customary withholdings and is payable to
Executive on the regularly occurring pay period established by the Company. Base
Salary is guaranteed by the Company to the Executive for the Employment Period.
3.2 HEALTH BENEFITS. During the Employment Period,
the Company shall provide Executive with individual and/or family healthcare,
dental, disability, and eyecare coverage, as provided by health care provider(s)
selected by the Company from time to time.
3.3 RETIREMENT PLAN. During the Employment Period,
Executive shall be entitled to participate in any 401(k) or similar plan adopted
by the Company for the benefit of its Executives. The Company reserves the right
to modify, terminate or withdraw any such plan (if so adopted) at any time in
its sole discretion.
3.4 OTHER BENEFITS. During the Employment Period,
Executive shall be entitled to an annual expense account to be used for
reimbursement of reasonable and necessary business expenses. Such expense
account shall not exceed $10,000 annually.
4. TERMINATION BY THE COMPANY FOR CAUSE. Upon written notice
to Executive, the Company may terminate this Agreement for cause if any of the
following events shall occur: (i) any breach of this Agreement by Executive;
(ii) the commission of a felony by Executive; (iii) the commission of an act by
Executive involving fraud, theft or dishonesty; or (iv) the Company's bona fide
decision to terminate its business and liquidate its assets. In the event of a
termination pursuant to this Section 4, all non-financial obligations of the
Company under this Agreement shall cease.
<PAGE> 2
5. TERMINATION WITHOUT CAUSE.
5.1 BY EMPLOYER. The Company may terminate this
Agreement at any time without cause upon thirty (30) days written notice to
Executive. In such event, the Company shall pay Executive during regular payroll
periods (less customary withholding taxes) the Base Salary for up to the greater
of twelve (12) months or the remainder of the Employment Period. All other
obligations of the Company shall be prorated to the date of termination.
5.2 BY EXECUTIVE. Executive may terminate this
Agreement at any time upon ninety (90) days prior written notice to the Company.
In such event, all financial and non-financial obligations of the Company to the
Executive shall cease.
6. CONFIDENTIALITY AND NON-DISCLOSURE. Executive recognizes
and acknowledges that he has had in the past, currently has and in the future
may have access to certain confidential information relating to the Company and
its affiliates, including, but not limited to, operational policies, financial
information, marketing information, personnel information, trade secrets,
customer information (including customer lists), and pricing and cost policies,
that are valuable, special and unique assets of the Company (collectively,
"Confidential Information"). Executive agrees that he will not use or disclose
such Confidential Information to any person, firm, corporation, association or
other entity for any purpose or reason whatsoever, except as is required in the
course of performing his duties hereunder unless (i) such information becomes
known to the public generally through no breach by Executive of this covenant or
(ii) disclosure is required by law or any governmental authority or is required
in connection with the defense of a lawsuit against the disclosing party,
provided, that prior to disclosing any information pursuant to this clause (ii),
Executive shall give prior written notice thereof to the Company and provide the
Company with the opportunity to contest such disclosure. Executive agrees that,
both during the Employment Period and after the termination of this Agreement,
Executive will hold in a fiduciary capacity for the benefit of the Company, and
shall not directly or indirectly use or disclose, except as authorized by the
Company in connection with the performance of Executive's duties, any
Confidential Information, that Executive may have or may acquire (whether or not
developed or compiled by Executive and whether or not Executive has been
authorized to have access to such Confidential Information) during the term of
this Agreement. The covenants contained in this SECTION 6 shall survive for the
Employment Period and for a period of one (1) year thereafter; provided,
however, that with respect to those items of Confidential Information which
constitute trade secrets under applicable law, Executive's obligations of
confidentiality and non-disclosure as set forth in this SECTION 6 shall continue
to survive after the applicable period above to the greatest extent permitted by
applicable law. These rights of the Company are in addition to those rights the
Company has under the common law or applicable statutes for the protection of
trade secrets.
7. NON-COMPETITION. Executive expressly covenants and agrees
that for the Employment Period and for a period of one (1) year thereafter, he
shall not, directly or indirectly, seek, obtain or accept a "Competitive
Position" in the "Restricted Territory" with a "Competitor" of the Company (as
such terms are hereafter defined) . For purposes of this Agreement, a
"Competitor" of the Company means any business, individual, partnership, joint
venture, association, firm, corporation or other entity engaged, wholly or
partly, in the business of selling internet access service, creating
multi-lingual online communities or multi-lingual internet portals. The
"Restricted Territory" means each state of the United States of America; a
"Competitive Position" means any employment with any Competitor of the Company
whereby Executive will use or is likely to use any Confidential Information.
Nothing contained in this SECTION 7 is intended to prevent Executive from
investing in stock or other securities listed on a national securities exchange
or actively traded on the over the counter market or any corporation engaged,
wholly or partly, in the sale of products or services on the internet.
8. NON-SOLICITATION OF CUSTOMERS. Executive agrees that he
will not take any customer lists of the Company after leaving his employ and
that he will, for the Employment Period and for a period of one (1) year
thereafter, refrain from soliciting or attempting to solicit directly or by
assisting others, any business from any of the Company's customers, including
actively sought prospective customers, with whom Executive had "material contact
during the employment for purposes of providing products or services."
<PAGE> 3
9. TOLLING OF PERIOD OF RESTRAINT. Executive hereby expressly
acknowledges and agrees that in the event the enforceability of any of the terms
of this Agreement shall be challenged in court and Executive is not enjoined
from breaching any of the restraints set forth in SECTION 6 through SECTION 9,
then if a court of competent jurisdiction finds that the challenged restraint is
enforceable, the time period of the restraint shall be deemed tolled upon the
filing of the lawsuit challenging the enforceability of the restraint until the
dispute is finally resolved and all periods of appeal have expired.
10. ACKNOWLEDGEMENTS. Executive hereby acknowledges and agrees
that the restrictions contained in SECTION 6 through SECTION 9 are fair and
reasonable and necessary for the protection of the legitimate business interests
of the Company. Executive acknowledges that in the event Executive's employment
with the Company terminates for any reason, Executive will be able to earn a
livelihood without violating the restrictions contained in SECTION 6 through
SECTION 9 and that Executive's ability to earn a livelihood without violating
such restrictions is a material condition to Executive's employment and
continued employment with the Company. Executive expressly agrees that the
character, duration and geographical scope of the covenants contained in this
SECTION 6 through SECTION 9 are reasonable in light of the circumstances as they
exist at the date upon which this Agreement has been executed. However, should a
determination nonetheless be made by a court of competent jurisdiction at a
later date that the character, duration or geographical scope of the covenants
contained herein are unreasonable in light of the circumstances as they then
exist, then it is the intention of both Executive and the Company that these
covenants shall be construed by the court in such a manner as to impose only
those restrictions on the conduct of Executive which are reasonable in light of
the circumstances as they then exist and necessary to assure the Company of the
intended benefit of these covenants.
11. RIGHTS TO MATERIALS; WORK FOR HIRE. All records, files,
memoranda, reports, price lists, customer lists, drawings, plans, sketches,
documents and the like (together with all copies thereof) relating to the
business of the Company, which Executive shall use or prepare or come in contact
with in the course of, or as a result of, his employment shall, as between the
parties hereto, remain the sole property of the Company. Upon the termination of
Employment or upon the prior demand of the Company, Executive shall immediately
return all such materials and shall not thereafter cause removal thereof from
the premises of the Company. Executive agrees to disclose and assign to the
Company as its exclusive property, all ideas, writings, inventions, discoveries,
improvements and technical or business innovations made or conceived by
Executive, whether or not patentable or copyrightable, either solely or jointly
with others during the Employment Period and for a period of six months (6)
thereafter whether or not made or conceived during regular hours of work or
otherwise, which are along the lines of the business, work or investigations of
the Company or its affiliates. Executive agrees to execute any and all documents
hereafter requested by the Company necessary to further effectuate the
foregoing.
12. REMEDIES. Without limiting the Company's right to claim
damages, Executive acknowledges that the Company will be irreparably harmed by a
breach of any provision of this Agreement and Executive agrees that the Company
shall be entitled to injunctive relief in the event of such breach.
13. GOVERNING LAW; ARBITRATION; JURISDICTION; VENUE;
ATTORNEY'S FEES.
This Agreement is made and entered into in and shall be governed by and
interpreted in accordance with the laws of, the State of Nevada. The Company and
Executive agree that any dispute regarding this Agreement shall be submitted to
arbitration to and shall be resolved in accordance with the rules of the
JAMS/Endispute for expedited cases then in effect. The arbitrator(s) shall be
mutually selected by the parties or in the event the parties cannot mutually
agree, then appointed by JAMS/Endispute. Any arbitration shall be held within a
thirty (30) mile radius of Mahwah, NJ and the arbitrator(s) shall apply Nevada
law. Judgment upon any award rendered by the arbitrator(s) shall be final and
may be entered in any court of competent jurisdiction. Notwithstanding the
foregoing, the Company shall have the absolute right to obtain equitable
remedies in any state court of competent jurisdiction in the State of Nevada. By
his execution and delivery of this agreement, Executive irrevocably submits to
and accepts the exclusive jurisdiction of each of such courts and waives any
objection (including any objection to venue or any objection based upon the
grounds of forum non conveniens) which might be asserted against the bringing
<PAGE> 4
of any such action, suit or other legal proceeding in such courts. The court
and/or arbitrator(s) shall award costs and expenses (including reasonable
attorney's fees) to the prevailing party in any litigation or arbitration.
14. MISCELLANEOUS
14.1. ENTIRE AGREEMENT. This Agreement constitutes
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersedes any and all previous agreements, written and oral,
regarding the subject matter hereof between the parties hereto. This Agreement
shall not be changed, altered, modified or amended, except by a written
agreement signed by both parties hereto.
14.2. NOTICES. All notices, requests, demands and
other communications required or permitted to be given or made under this
Agreement shall be in writing and shall be deemed to have been given if
delivered by hand, sent by generally recognized overnight courier service, telex
or telecopy, or mail,
(a) to the Company care of:
AmazeScape.com, Inc.
264 Airmont Avenue
Mahwah, NJ 07430
Attention: Harry Persaud, Chairman
Telephone: (201) 684-9397
Fax: (201) 684-9398
(b) to the Executive at:
419 East 64th St
New York, NJ 10021
Telephone: (917) 324-0477
14.3. ASSIGNMENT. The Company may assign this
Agreement to (i) any entity controlling, controlled by or under common control
with the Company or (ii) to any purchaser of the Company's assets provided that
such purchaser agrees to assume the Company's obligations hereunder.
14.4. SEVERABILITY. If any term or provision of this
Agreement, or the application thereof to any person or under any circumstance,
shall to any extent be invalid or unenforceable, the remainder of this
Agreement, or the application of such terms to the persons or under
circumstances other than those as to which it is invalid or unenforceable, shall
be considered severable and shall not be affected thereby, and each term of this
Agreement shall be valid and enforceable to the fullest extent permitted by law.
The invalid or unenforceable provisions shall, to the extent permitted by law,
be deemed amended and given such interpretation as to achieve the economic
intent of this Agreement.
14.5. WAIVER. The failure of any party to insist in
any one instance or more upon strict performance of any of the terms and
conditions hereof, or to exercise any right or privilege herein conferred, shall
not be construed as a waiver of such terms, conditions, rights or privileges,
but same shall continue to remain in full force and effect. Any waiver by any
party of any violation of, breach of or default under any provision of this
Agreement by the other party shall not be construed as, or constitute, a
continuing waiver of such provision, or waiver of any other violation of, breach
of or default under any other provision of this Agreement.
14.6. RIGHT OF SETOFF. Notwithstanding anything to
the contrary set forth herein, and in addition to any and all remedies at law or
in equity which the Company may have, the Company shall have the absolute and
unconditional right to setoff its payment obligations hereunder against the
amount of any claims for indemnification it may have against Executive.
14.7. TITLES; GENDER. Section and subsection titles
are for convenience of reference only and are not to be considered in the
interpretation or construction of any of the provisions hereof. All pronouns or
any variations thereof contained in this Agreement refer to the masculine,
feminine or neuter as the identity of the person may require.
<PAGE> 5
14.8 SURVIVAL. SECTION 6 through SECTION 14 hereof
shall survive any termination of this Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement
as of the date first written above.
COMPANY:
ATTEST: AmazeScape.com, Inc.
By:____________________________________
Harry Persaud, Chief Executive Officer
WITNESS EXECUTIVE:
By:____________________________________
Name: _________________________________
<PAGE> 1
Exhibit 10.3
SERVICES PROVIDER AGREEMENT
This Agreement is made and entered into this __________________________ by and
between
AmazeScape.com Inc. ("Client")
located at 264 Airmont Avenue
Mahwah NJ 07430
and Meglyn Enterprises Inc. ("Provider")
located at 309 Pleasant Pl
Teaneck, NJ 07666
RECITALS
WHEREAS, Provider is engaged in providing software development and consulting
services for Internet businesses.
WHEREAS, Provider is engaged in selling computer hardware and peripherals.
WHEREAS, Provider is engaged in providing translation services for businesses.
WHEREAS, Provider is engaged in providing streaming content for Internet
websites.
WHEREAS, Client is in the business of developing a multilingual Internet
Portal, Online Community and Internet Services Provider.
WHEREAS, Client is in need of the services which Provider provides and wishes
to enter into a business arrangement with Provider to provide such services.
IN CONSIDERATION of the promises and mutual covenants hereby contained, it is
hereby agreed as follows and will confirm the arrangements, terms, and
conditions pursuant to which Provider has been retained to serve as provider,
consultant, and advisor to Client, on a non-exclusive basis. The undersigned
hereby agrees to the following terms and conditions:
1. TERM OF CONTRACT
This Agreement will become effective on _____________________, and will
continue in effect for a period of twelve (12) months unless earlier terminated
pursuant to Section 5 of this Agreement.
2. SERVICES TO BE PERFORMED BY PROVIDER
Provider shall at the request of Client, upon reasonable notice, render the
following services to Client from time to time.
2.1 Duties of Provider. Provider agrees to:
a. Provide design consultation in the creation of the Amazescape.com
website for Client.
b. Provide streaming content for the amazefilms.com website which is
to be developed by client.
c. Provide translation services for the various help, descriptive, and
other content appearing on the amazescape.com website, such
translations to be in French, Spanish, Italian, Portuguese, and
Mandarin
d. Provide consultation in the installation of chinese language
operating systems and software.
2.2 Independent Contractor Status. It is the express intention of the parties
that Provider be an independent contractor and not an employee, agent, joint
venture, or partner of Client. Client shall not have
<PAGE> 2
the right to and shall not control the manner or prescribe the method by which
Provider performs the above-described services. Provider shall be entirely and
solely responsible for its own actions and the actions of its agents, employees,
or partners while engaged in the performance of services required by the
Agreement.
2.4 Use of Employees of Provider. Provider may, at its own expense, use any
employee or subcontractors as he deems necessary to perform the services
required of Provider by this Agreement. Client may not control, direct, or
supervise Provider's employees or subcontractors in the performance of those
services except as might hereinafter be agreed by both parties.
2.5 Available Time. Provider agrees to provide a minimum of one hundred (100)
man-hours per month in executing the requirements of the Agreement. Such
man-hours to be cumulative for the duration of this contract. In any given
month, Client may require Provider to deliver no more than 20 man-hours out of
any accumulated, pre-paid time.
2.6 Ownership of work product. Provider relinquishes all rights to the
results of work completed on behalf of Client. The results of work completed
under this Agreement is the sole property of Client. Provider relinquishes all
rights of use or ownership of such product developed expressly for Client.
Client acknowledges that there may be elements of the work product which is the
property of Provider, however Provider agrees to assign complete and
unrestricted rights of ownership of those elements to Client without further
obligation on the part of the Client.
3. COMPENSATION
3.1 Monthly Fee. None, except for re-imbursement for out-of-pocket expenses;
and
3.2 Client Stock. Provider agrees to accept shares of Client's common stock
in compensation for services. Client common stock is hereby used to pre-pay for
services to be provided in the following amounts.
<TABLE>
<CAPTION>
Price per
Share Shares
<S> <C> <C> <C>
i. Design and Development $160,000 $1 160,000
ii. Streaming Content $175,000 $1 175,000
iii. Translation Services $ 40,000 $1 40,000
Total $375,000 375,000
</TABLE>
4. OBLIGATIONS OF CLIENT
4.1 Cooperation Client shall comply with all reasonable requirements of
Provider and provide access to all documents necessary for the performance of
Provider's duties under this Agreement.
4.2 Confidentiality Except in the course of the performance of its duties
hereunder, Provider agrees that it shall not disclose any trade secrets,
know-how, or other proprietary information not in the public domain, learned as
a result of this Agreement, unless and until such information becomes generally
known.
4.3 Indemnification Client agrees to indemnify and hold harmless Provider
from and against any and all claims, actions, losses, or damages, including
legal fees, arising from the usage by Client and its customers of its services.
4.4 No Warranties With respect to the services to be provided hereunder,
Client, acknowledges that Provider makes no warranties, express or implied. As a
result, Client, agrees that Provider shall not be liable for any claims or
damages which may be suffered by Client, including but not limited to, loss of
data as a result of delays, non-deliveries, or service interruptions caused by
the fault or negligence of Provider.
4.5 Domain Name: Client hereby waves any and all claims which it may have
against Provider for any loss,
<PAGE> 3
damage, claim, or expense arising out of or in relation to the registration of
the Domain Name in any on-line or off-line network directories, membership lists
or registration lists, or the release of the Domain Name from such directories
or lists following the termination of this Agreement.
5. TERMINATION OF AGREEMENT
5.1 Termination on Notice Notwithstanding any other provision of this
Agreement, either party may terminate this Agreement at any time by giving
thirty (30) days written notice to the other party. Unless otherwise terminated
as provided in this Agreement, this Agreement will continue in force for a
period of twelve (12) months.
5.2 Termination on Occurrence of Stated Even This Agreement will terminate
automatically and immediately on the occurrence of any of the following events:
a. bankruptcy or insolvency of either party
b. non-payment or performance as stated in this Agreement by
Client
6. GENERAL PROVISIONS
6.1 Further Acts Each party agrees to perform any further acts and execute
and deliver any further documents that may be reasonably necessary to carry out
the provisions and intent of this Agreement.
6.2 Entire Agreement This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained herein and may be
amended only by a written instrument signed by the parties affected thereby, or
their respective successors or assigns. This Agreement cancels and supersedes
all prior agreements, if any, oral or written, among Client and Provider.
6.3 Severability If any provision of this Agreement shall be held invalid,
such invalidity shall not affect the other provision hereof, and to this extent
the provisions of this Agreement are intended to be and shall be deemed
severable.
6.4 Counterparts This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
6.5 Notices Any notice or other communication required or permitted under
this Agreement shall be sufficiently given if delivered personally or sent by
registered or certified mail, postage prepaid and return receipt requested, to
the address of the parties set forth in the first paragraph of this Agreement or
at such address as may have been provided in like manner in writing to both
parties to this Agreement. Any notice that is sent by mail under this Agreement
shall be considered received on the date on which it is actually delivered to
the premises of the party of whom it is properly addressed, such date to be
conclusively evidenced by the date of the return receipt.
6.6 Governing Law This Agreement shall be construed in accordance with, and
governed by the laws of the State of New Jersey.
6.7 Assignment No party to this Agreement may assign this Agreement or its
right or obligations hereunder without the written consent of the other.
6.8 Headings The headings of this Agreement are inserted solely for the
convenience of reverence and are not part of, and are not intended to govern,
limit or aid in the construction of any term or provision hereof.
6.9 Pronouns All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine, or neuter, singular or plural, as the identity of
the person, persons, entity or entities may require.
6.10 Waiver No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute a waiver of any other provision, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
<PAGE> 4
6.11 Acknowledgment Concerning Counsel Each party acknowledges that it had the
opportunity to employ separate and independent counsel of its own choosing in
connection to this Agreement.
6.12 Arbitration Any controversy, claim, misunderstanding, course of action,
matter in question, breach, disagreement, dispute, or other related matter
arising out of, or relating to this Agreement, or the relationship between the
parties, shall be decided by mandatory binding arbitration before the American
Arbitration Association, State of New Jersey. In such arbitration, the parties
shall be entitled to full discovery rights accorded to litigants under the laws
of the State of New Jersey. The prevailing party shall be entitled to recover
costs and expenses incurred expenses incurred, including reasonable attorney's
fees, related costs, and any advanced arbitration expenses.
6.13 Indemnification Provider will indemnify and hold harmless, Client and its
officers, directors, agents, and employees against any expenses, which may be
incurred by Client as result of statements made by Provider which are inaccurate
or misleading or the failure by Provider to state facts, which are necessary to
be stated in order to make statements made not misleading.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
CLIENT: AmazeScape.com Inc.
BY: _____________________________
Harrichand Persaud, CEO
Accepted by: Meglyn Enterprises Inc.
BY: _____________________________
Haripaul Pritipal, Controller.
<PAGE> 1
Exhibit 10.4
SERVICES PROVIDER AGREEMENT
This Agreement is made and entered into this __________________________ by and
between
AmazeScape.com Inc. ("Client")
located at 264 Airmont Avenue
Mahwah NJ 07430
and New York Internet Center ("Provider")
located at 158 West 29th Street, 10th Fl
New York, NY 10001
RECITALS
WHEREAS, Provider is engaged in providing software development and consulting
services for Internet businesses.
WHEREAS, Provider is engaged in hosting websites and servers.
WHEREAS, Provider is engaged in providing high speed connectivity to the
Internet for servers and websites hosted at its facilities.
WHEREAS, Client is in the business of developing a multilingual Internet
Portal, Online Community and Internet Services Provider.
WHEREAS, Client is in need of the services which Provider provides and wishes
to enter into a business arrangement with Provider to provide such services.
IN CONSIDERATION of the promises and mutual covenants hereby contained, it is
hereby agreed as follows and will confirm the arrangements, terms, and
conditions pursuant to which Provider has been retained to serve as provider,
consultant, and advisor to Client, on a non-exclusive basis. The undersigned
hereby agrees to the following terms and conditions:
1. TERM OF CONTRACT
This Agreement will become effective on _____________________, and will
continue in effect for a period of twelve (12) months unless earlier terminated
pursuant to Section 5 of this Agreement.
2. SERVICES TO BE PERFORMED BY PROVIDER
Provider shall at the request of Client, upon reasonable notice, render the
following services to Client from time to time.
2.1 Duties of Provider. Provider agrees to:
a. Provide design consultation in the creation and maintenance
of websites for Client.
b. Provide programming services involved in the development of
the websites owned by the Client.
c. Provide graphics, content and other website maintenance
services as instructed by Client.
d. Provide website and server hosting for Client.
e. Provide and maintain a high speed connection to the Internet
for the Client's website.
Initials_________ Page 1/5
<PAGE> 2
2.2 Independent Contractor Status. It is the express intention of the parties
that Provider be an independent contractor and not an employee, agent, joint
venture, or partner of Client. Client shall not have the right to and shall not
control the manner or prescribe the method by which Provider performs the
above-described services. Provider shall be entirely and solely responsible for
its own actions and the actions of its agents, employees, or partners while
engaged in the performance of services required by the Agreement.
2.4 Use of Employees of Provider. Provider may, at its own expense, use any
employee or subcontractors as he deems necessary to perform the services
required of Provider by this Agreement. Client may not control, direct, or
supervise Provider's employees or subcontractors in the performance of those
services except as might hereinafter be agreed by both parties.
2.5 Available Time. Provider agrees to provide a minimum of one hundred (100)
man-hours per month in executing the requirements of the Agreement. Such
man-hours to be cumulative for the duration of this contract. In any given
month, Client may require Provider to deliver no more than 20 man-hours out of
any accumulated, pre-paid time.
2.6 Ownership of work product. Provider relinquishes all rights to the
results of work completed on behalf of Client. The results of work completed
under this Agreement is the sole property of Client. Provider relinquishes all
rights of use or ownership of such product developed expressly for Client.
Client acknowledges that there may be elements of the work product which is the
property of Provider, however Provider agrees to assign complete and
unrestricted rights of ownership of those elements to Client without further
obligation on the part of the Client.
3. COMPENSATION
3.1 Monthly Fee. Client agrees to pay the Provider no less than $10,000 per
month; and
3.2 Client Stock. Provider agrees to accept shares of Client's common stock
in compensation for services. Client common stock is hereby used to pre-pay for
services to be provided in the following amounts.
<TABLE>
<CAPTION>
Price per
AmazeScape.com Website: Share Shares
<S> <C> <C> <C>
Website Hosting $ 12,500 $1 12,500
Website Design $ 37,500 $1 37,500
Website Development $ 75,000 $1 75,000
AmazeFilms.com Website:
Website Hosting $ 12,500 $1 12,500
Website Design $ 37,500 $1 37,500
Website Development $ 25,000 $1 25,000
Total $200,000 200,000; and
</TABLE>
3.3 Maintenance Fees
Client acknowledges that that maintenance and connectivity costs will
escalate as its membership grows. Provider and Client will negotiate an
acceptable maintenance and connectivity fee as membership in the Client's online
community grows.
Initials _________ Page 2/5
<PAGE> 3
4. OBLIGATIONS OF CLIENT
4.1 Cooperation Client shall comply with all reasonable requirements of
Provider and provide access to all documents necessary for the performance of
Provider's duties under this Agreement.
4.2 Confidentiality Except in the course of the performance of its duties
hereunder, Provider agrees that it shall not disclose any trade secrets,
know-how, or other proprietary information not in the public domain, learned as
a result of this Agreement, unless and until such information becomes generally
known.
4.3 Indemnification Client agrees to indemnify and hold harmless Provider
from and against any and all claims, actions, losses, or damages, including
legal fees, arising from the usage by Client and its customers of its services.
4.4 No Warranties With respect to the services to be provided hereunder,
Client, acknowledges that Provider makes no warranties, express or implied. As a
result, Client, agrees that Provider shall not be liable for any claims or
damages which may be suffered by Client, including but not limited to, loss of
data as a result of delays, non-deliveries, or service interruptions caused by
the fault or negligence of Provider.
4.5 Domain Name: Client hereby waves any and all claims which it may have
against Provider for any loss, damage, claim, or expense arising out of or in
relation to the registration of the Domain Name in any on-line or off-line
network directories, membership lists or registration lists, or the release of
the Domain Name from such directories or lists following the termination of this
Agreement.
5. TERMINATION OF AGREEMENT
5.1 Termination on Notice Notwithstanding any other provision of this
Agreement, either party may terminate this Agreement at any time by giving
thirty (30) days written notice to the other party. Unless otherwise terminated
as provided in this Agreement, this Agreement will continue in force for a
period of twelve (12) months.
5.2 Termination on Occurrence of Stated Even This Agreement will terminate
automatically and immediately on the occurrence of any of the following events:
a. bankruptcy or insolvency of either party
b. non-payment or performance as stated in this Agreement by
Client
6. GENERAL PROVISIONS
6.1 Further Acts Each party agrees to perform any further acts and execute
and deliver any further documents that may be reasonably necessary to carry out
the provisions and intent of this Agreement.
6.2 Entire Agreement This Agreement contains the entire understanding of the
parties hereto with respect to the subject matter contained herein and may be
amended only by a written instrument signed by the parties affected thereby, or
their respective successors or assigns. This Agreement cancels and supersedes
all prior agreements, if any, oral or written, among Client and Provider.
Initials _________ Page 3/5
<PAGE> 4
6.3 Severability If any provision of this Agreement shall be held invalid,
such invalidity shall not affect the other provision hereof, and to this extent
the provisions of this Agreement are intended to be and shall be deemed
severable.
6.4 Counterparts This Agreement may be executed simultaneously in two or more
counterparts, each of which shall be deemed an original but all of which
together shall constitute one and the same instrument.
6.5 Notices Any notice or other communication required or permitted under
this Agreement shall be sufficiently given if delivered personally or sent by
registered or certified mail, postage prepaid and return receipt requested, to
the address of the parties set forth in the first paragraph of this Agreement or
at such address as may have been provided in like manner in writing to both
parties to this Agreement. Any notice that is sent by mail under this Agreement
shall be considered received on the date on which it is actually delivered to
the premises of the party of whom it is properly addressed, such date to be
conclusively evidenced by the date of the return receipt.
6.6 Governing Law This Agreement shall be construed in accordance with, and
governed by the laws of the State of New Jersey.
6.7 Assignment No party to this Agreement may assign this Agreement or its
right or obligations hereunder without the written consent of the other.
6.8 Headings The headings of this Agreement are inserted solely for the
convenience of reverence and are not part of, and are not intended to govern,
limit or aid in the construction of any term or provision hereof.
6.9 Pronouns All pronouns and any variations thereof shall be deemed to refer
to the masculine, feminine, or neuter, singular or plural, as the identity of
the person, persons, entity or entities may require.
6.10 Waiver No waiver of any of the provisions of this Agreement shall be
deemed, or shall constitute a waiver of any other provision, nor shall any
waiver constitute a continuing waiver. No waiver shall be binding unless
executed in writing by the party making the waiver.
6.11 Acknowledgment Concerning Counsel Each party acknowledges that it had the
opportunity to employ separate and independent counsel of its own choosing in
connection to this Agreement.
6.12 Arbitration Any controversy, claim, misunderstanding, course of action,
matter in question, breach, disagreement, dispute, or other related matter
arising out of, or relating to this Agreement, or the relationship between the
parties, shall be decided by mandatory binding arbitration before the American
Arbitration Association, State of New Jersey. In such arbitration, the parties
shall be entitled to full discovery rights accorded to litigants under the laws
of the State of New Jersey. The prevailing party shall be entitled to recover
costs and expenses incurred expenses incurred, including reasonable attorney's
fees, related costs, and any advanced arbitration expenses.
Initials _________ Page 4/5
<PAGE> 5
6.13 Indemnification Provider will indemnify and hold harmless, Client and its
officers, directors, agents, and employees against any expenses, which may be
incurred by Client as result of statements made by Provider which are inaccurate
or misleading or the failure by Provider to state facts, which are necessary to
be stated in order to make statements made not misleading.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the
date first written above.
CLIENT: AmazeScape.com Inc.
BY: _____________________________
Harrichand Persaud, CEO
Accepted by: New York Internet Center
_____________________________
Brian Watts, CEO
<PAGE> 1
Exhibit 10.5
MANAGEMENT SERVICES AGREEMENT
This Management Services Agreement, dated October 12, 1999 (this
"Agreement"), is entered into by and between AmazeScape.com, Inc., a Nevada
corporation (the "Company"), and Infusion Capital Partners, L.L.C., a Delaware
limited liability company (the "Consultant").
In consideration of the mutual covenants of the parties set forth in
this Agreement, the parties, intending to be legally bound, agree as follows:
1. Purpose. The Company hereby engages the Consultant, as an
independent contractor of the Company, to provide the services required pursuant
to Section 3 throughout the Term (as defined in Section 2), on the terms and
subject to the conditions set forth herein.
2. Term. The period during which the Consultant shall provide services
to the Company hereunder (the "Term") shall commence on the date hereof and
continue for a period of one year; provided, however, (a) either party may
terminate this Agreement prior to the end of the Term by delivering written
notice of termination to the other party at least twenty (20) days prior to the
effective date of termination, (b) the Consultant may terminate the Term in
accordance with Section 10 and (c) the Company may terminate the Term in
accordance with Section 11.
3. Duties of the Consultant. Throughout the Term, the Consultant's
duties shall be to provide financial advisory services to the Company by
assisting the Company in (a) identifying possible merger or acquisition
opportunities and (b) structuring and implementing the terms of any such merger
or acquisition opportunity that the Company desires to pursue. It is understood
and acknowledged by the parties that the value of the Consultant's advice is not
readily quantifiable and not necessarily in proportion to the amount of time
devoted to performing services, that the Consultant shall not be obligated to
spend any specific amount of time to the rendition of any services hereunder and
that the Company's obligation to deliver that Consultant's compensation
hereunder shall not be contingent on its providing any services other than as
expressly stated above. Nothing in this Agreement shall require the Company to
request that the Consultant perform any particular service at any particular
time or require the Consultant to undertake any duties beyond the scope of the
services required by this Section 3. The Company specifically acknowledges that
the Consultant shall not be providing legal, tax or accounting services.
4. Compensation. In consideration for the services rendered by the
Consultant pursuant to Section 3, the Company shall issue the Consultant a
warrant, in form and substance satisfactory to the Consultant, to purchase
950,000 shares of the Company's common stock at the exercise price of $1.00 per
share (the "Warrant"). Warrant shall be exercisable with respect to (i) 595,000
shares of the Company without regard to the market price of the common stock,
(ii) 177,500 shares of the Company at such time that the market price of the
common stock equals or exceeds 400% of the exercise price for a period of 20
consecutive days prior to exercise and (iii) 177,500 shares of the Company at
such time as the market price of the common stock equals or exceeds 1000% of the
exercise price for a period of 20 consecutive days prior to exercise. For
purposes hereof, "market price" means the average of the closing bid price of
the Company's common stock (or the common stock of any company for which the
Company's common stock may be converted or exchanged). Warrant shall be
exercisable on a cashless basis and may be assigned by the Consultant, in whole
or in part, to any of its members, managers, employees, other persons or
entities who have provided services to or for the Consultant in connection with
its performance hereunder and any family members thereof. The Consultant shall
furnish the Company with prior written notice of any proposed assignment of
Warrant. Warrant shall be issued upon the execution of this Agreement and shall
expire 3 years from the expiration or termination of this Agreement. In the
event that the Company shall not have consummated a merger or acquisition
transaction prior to June 30, 2000 with an opportunity identified by the
Consultant (the parties acknowledge that for purposes of this Agreement that the
Consultant has identified Premier Concepts, Inc. ("Premier") as a possible
merger opportunity for the Company), on such date, the Company shall purchase
from the Consultant, and the Consultant shall sell to the Company, the Warrant
referred to herein for the purchase price of $1.00. The Company shall effect the
registration of the shares of common stock underlying the Warrant pursuant to
the terms and conditions set forth on Exhibit A, hereby incorporated into and
made a part of this Agreement.
<PAGE> 2
Representations, Warranties and Covenants
5.1 The Company makes the following representations,
warranties and covenants to the Consultant:
(a) The Company has the corporate power and authority to
execute and deliver this Agreement and to perform all of the Company's
obligations as set forth in this Agreement, and the Company has obtained any and
all necessary approvals relating to such execution, delivery or performance.
(b) This Agreement has been duly executed and delivered
by the Company and constitutes a valid and binding obligation, enforceable
against the Company in accordance with its terms. The execution, delivery and
performance of this Agreement by the Company does not violate, breach or
contravene the provisions of (i) any charter document, agreement or other
document, by which the Company or any of its assets is bound, (ii) any judgment,
decree, order, ruling of any judicial or arbitral body or any regulatory or
other governmental commission, agency or body having jurisdiction over the
Company or any of its assets or (iii) any applicable law.
(c) All information provided or made available to the
Consultant by or on behalf of the Company will, to the best of the Company's
knowledge at the time the information is provided, not contain any untrue
statement of a material fact or omit to state a material fact necessary in order
to make the statements therein not misleading in light of the circumstances
under which such statements are made. If during or after the Term the Company
becomes aware of any fact or circumstance which gives the Company a reasonable
basis for believing that information previously provided or made available to
the Consultant contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein not
misleading in light of the circumstances under which such statements were made,
the Company shall make prompt written disclosure to the Consultant of such fact
or circumstance.
5.2 The Consultant makes the following representations and
warranties to the Company:
(a) The Consultant has the corporate power and authority
to execute and deliver this Agreement and to perform all of the Consultant's
obligations as set forth in this Agreement, and the Consultant has obtained any
and all necessary approvals relating to such execution, delivery or performance.
(b) This Agreement has been duly executed and delivered
by the Consultant and constitutes a valid and binding obligation, enforceable
against the Consultant in accordance with its terms. The execution, delivery and
performance of this Agreement by the Consultant does not violate, breach or
contravene the provisions of (i) any charter document, agreement or other
document, by which the Consultant or any of its assets is bound, (ii) any
judgment, decree, order, ruling of any judicial or arbitral body or any
regulatory or other governmental commission, agency or body having jurisdiction
over the Consultant or any of its assets or (iii) any applicable law.
6. Confidentiality. The Consultant acknowledges that it has and
throughout the Term will continue to have a relationship of trust and confidence
with the Company. Based on such relationship, the Consultant has and throughout
the Term will continue to be given access to Confidential Information (as
hereinafter defined). The Consultant may disclose Confidential Information to
its managers, officers, employees and counsel to the extent they need to know
such information for the purpose of providing the services required by this
Agreement and provided that as a condition to disclosure they agree to be bound
by the terms and provisions of this Section 6. The Company and its managers,
officers, employees and counsel shall maintain in strict confidence, protect and
safeguard the Confidential Information, and, except as expressly provided in the
preceding sentence, shall not, directly or indirectly, disclose, reveal or make
available to any third party any Confidential Information or use or exploit any
Confidential Information for any purpose whatsoever. In the event that the
Consultant or any of its managers, officers, employees or counsel is requested
or required by law (including by request for information or documents through
proper discovery requests, subpoena or other similar legal process) to disclose
any Confidential Information, such party shall provide the Company with prompt
written notice of any such request or requirement to afford the Company with a
reasonable opportunity to seek a protective order or other appropriate remedy
and shall cooperate
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with the efforts of the Company to obtain an appropriate protective order or
other reliable assurance that confidential treatment will be accorded to its
Confidential Information, unless the Company elects to waive compliance with the
provisions of this Agreement, in the Company's sole discretion. In the absence
of a protective order, other reliable assurance of confidential treatment or
waiver by the Company, if the Consultant or any of its managers, officers,
employees or counsel is nonetheless, in the opinion of counsel, legally
compelled to disclose Confidential Information, the Consultant or its managers,
officers, employees and counsel may, without liability hereunder, disclose only
that portion of the Confidential Information that such counsel advises is
legally required to be disclosed and only to such court, arbitrator, tribunal,
judicial or governmental body or agency or other person that such counsel
advises disclosure is legally required to be made. Any out-of-pocket expenses
that the Consultant would incur in complying with this Section 6 shall be paid
by the Company as a condition to such compliance. "Confidential Information"
means any information, data or facts concerning the business, operations,
finances, assets, affairs or prospects of the Company, including all information
relating to the financial condition, sales or marketing plans or strategies,
pricing policies, condition of assets, methods of doing business, computer
systems, software products (including all programming and source code
information), techniques, know-how and other technical information, financial
projections, budgets, business plans, labor or employment matters,
vendor/supplier lists, subcontractor lists, customer lists, solicitation lists,
contractual arrangements and prospective transactions or relationships with
third parties and all other information which the Company regards as
confidential or proprietary and may wish to keep confidential; provided,
however, Confidential Information will not include information (a) after it
becomes generally available to the public, other than as a result of a breach
hereof or wrongful conduct of the Consultant or any of its managers, officers,
employees or counsel, (b) available to the Consultant on a non-confidential
basis prior to disclosure to the Consultant or any of its managers, officers,
employees or counsel, as demonstrated by the written records of the Consultant,
or (c) after it becomes available to the Consultant on a non-confidential basis
from a source other than the Company or any of its representatives, which source
was not itself bound by a confidentiality agreement or other duty of
confidentiality and did not receive such information, directly or indirectly,
from a person or entity so bound.
7. Other Engagements. Nothing in this Agreement shall restrict or limit
the Consultant's acceptance of other engagements or performance of services for
any third parties, including competitors of the Company, subject at all times to
the Consultant's obligations under Section 6. If the Consultant believes that
any task it is required to perform for a third party is in conflict with the
best interests of the Company, the Consultant shall disclose such conflict to
the Company and, if requested by the Company, shall terminate the Consultant's
engagement with either the Company or the third party, as the Consultant may
choose. The Company acknowledges that the Consultant provides consulting and
other services for Premier and waives all conflicts with the Company's interests
arising out of the Consultant's engagement by Premier and services performed for
Premier.
8. Independent Consultant Status. The relationship of the Consultant to
the Company is and shall remain solely that of an independent contractor. The
Consultant shall not be considered for any purpose, and shall not represent
itself as being, a member, manager, officer, employee, partner, joint venturer,
agent or representative of the Company. The Consultant's authority to act for
the Company shall be limited strictly to such authority as may be granted to the
Consultant in writing from time to time by the Board of Directors of the
Company, and the Consultant shall have no authority, and shall not represent
itself as having authority, to enter into contracts for or otherwise bind the
Company or to take any other action beyond what is expressly permitted pursuant
to this Agreement.
9. Public Announcements. Following the closing of any merger or
acquisition identified by the Consultant involving the Company, the Consultant
shall have the right to place advertisements or make other public announcements
in financial and other newspapers, journals and periodicals, at the Consultant's
own expense, describing the Consultant's services to the Company hereunder,
provided that Consultant has provided a copy of any such advertisement or
announcement to the Company prior to publication thereof and the Company has
consented to such advertisement or announcement.
10. Termination by the Consultant. The Consultant may terminate the
Term at any time, by giving written notice setting forth the effective date of
termination (which may be immediate), after any of the following: (i) the
Company's failure to issue and deliver completely and timely the Warrant due to
the Consultant pursuant to Section 4; (ii) a material misrepresentation by the
Company in or pursuant to this Agreement; (iii) a material
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<PAGE> 4
breach of a warranty or covenant made by the Company in or pursuant to this
Agreement, (iv) conduct on the part of the Company intended to, or reasonably
expected to, cause material damage to the business, assets, operations,
condition, affairs or prospects of the Consultant, or (v) the indictment of the
Company or any of its directors or officers for a crime involving moral
turpitude, whether relating to this Agreement, a merger or acquisition or
otherwise.
11. Termination by the Company. The Company may terminate the Term at
any time, by giving written notice setting forth the effective date of
termination (which may be immediate), after: (i) a material misrepresentation by
the Consultant in or pursuant to this Agreement; (ii) a material breach of a
warranty or covenant made by the Consultant in or pursuant to this Agreement;
(iii) conduct on the part of the Consultant intended to, or reasonably expected
to, cause material damage to the business, assets, operations, condition,
affairs or prospects of the Company, (iv) the indictment of the Consultant or
any of its managers or officers for a crime involving moral turpitude, whether
relating to the Consultant's engagement hereunder or otherwise; or (v) the
Consultant's repeated failure to render advice requested by the Company within
the scope of the Consultant's duties as set forth in Section 3, which failure
persists after written notice to the Consultant.
12. Effect of Termination. Termination of the Term of this Agreement by
the Consultant pursuant to Section 10 or the Company pursuant to Section 11, as
the case may be, shall be the exclusive remedy of the applicable party, and the
non-terminating party shall have no liability to the other party hereunder
except for a breach of Section 6 hereof, for which the Company shall have all of
its other rights and remedies at law, in equity or otherwise. Notwithstanding
any termination of this Agreement, in the event the Company consummates a merger
or acquisition with an opportunity identified by the Consultant (including,
without limitation, Premier Concepts, Inc.) prior to June 30, 2000, termination
of this Agreement shall not affect the Consultant's ownership or other rights
(including, without limitation, cashless exercise, assignability and
registration, as provided herein) in the Warrant issued to it hereunder.
Sections 6, 13 - 25 and this Section 12 shall survive the termination of the
Term for any reason whatsoever and remain in full force and effect indefinitely.
13. 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 Southern District of New York or the Courts of the State
of New York located in New York County for all claims, disputes or controversies
involving the parties hereto and relating to this Agreement. 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.
14. Waiver of Jury Trial. IRREVOCABLY AND UNCONDITIONALLY, EACH OF THE
PARTIES HERETO HEREBY KNOWINGLY, INTELLIGENTLY, VOLUNTARILY, IRREVOCABLY, AND
UNCONDITIONALLY 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.
15. 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 on a business day
between the hours of 9:00 a.m. and 6:00 p.m. (and shall be deemed given upon
confirmation of receipt, which shall be an automatic machine generated
confirmation in the case of facsimile transmission), (b) mailed by first class
registered or certified mail, return receipt requested, postage prepaid (and
shall be deemed delivered six (6) business 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 in the preamble to
this Agreement, marked in each case to the attention of the President 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.
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16. 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, with respect to such subject matter, all of which
are merged herein.
17. 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.
18. 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.
19. 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.
20. 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 State of New
York, without regard to principles of conflict of laws.
21. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective representatives,
successors and permitted assigns. Either party may assign its rights and
obligations under this Agreement (a) as part of a merger, consolidation or other
transaction effecting an assignment by operation of law or (b) as part of a sale
or transfer of substantially all of its assets, including its business and
goodwill, in which case the successor entity shall confirm in writing at the
time of such sale or transfer that such successor remains bound by this
Agreement. Except as provided in the preceding sentence, 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.
Further, in connection with any merger or acquisition involving the Company, the
Warrant issued to the Consultant hereunder shall be exchanged for a warrant to
purchase, shares of common stock of the corporation in the merger or acquisition
with respect to which the shares of common stock of the Company shall be
converted or exchanged, with the same terms and provisions as the Warrant.
22. 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. The services rendered by the Consultant to the Company are
intended for the sole benefit of the Company. Accordingly, unless otherwise
expressly agreed in writing by the Consultant, no one other than the Company is
authorized to rely upon any statement, opinion or advice of the Consultant, and
no statement, opinion or advice of the Consultant shall be reproduced,
disseminated, quoted or referred to at any time in any manner or otherwise used
for any purpose, other than as contemplated by this Agreement.
23. 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.
24. 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 or the State of New
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York (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 or the State of New
York.
25. 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 have executed this Agreement as of the
date and year first above written.
AMAZESCAPE.COM, INC.
By: _________________________________
Harry Persaud, President
INFUSION CAPITAL PARTNERS, L.L.C.
By: _________________________________
David M. M. Taffet, President
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EXHIBIT A
1. Registration Rights. The Company shall cause all Registrable
Securities (defined below) of the Holders (defined below) to be registered, at
its expense, for sale or resale under the Securities Act (defined below)
pursuant to an appropriate registration statement, as a condition to the closing
of any merger or acquisition involving the Company that results in the Company's
stockholders holding shares of publicly-traded stock and either (a) in
connection with the shares to be registered in connection with any such the
merger or acquisition (i.e. piggyback registration) or (b) pursuant to a
separate registration of the Registrable Securities. The Company shall use its
best diligent efforts to cause such registration statement to become effective
as soon as possible after filing and, in the event of the Merger, concurrently
with the closing. After registration, the Company shall use its best efforts to
maintain a continuously effective registration statement covering such
Registrable Securities until all such Registrable Securities have been sold (or
with respect to Warrant shares, the expiration of the Warrant without exercise).
2. Restrictions. Holders shall not be subject to any agreement
restricting Holders from effecting any public sale or distribution of equity
securities of the Company, or any securities convertible into or exchangeable or
exercisable for such securities.
3. Registration Procedures. Unless otherwise required in connection
with the Merger:
3.1 Before filing a registration statement or any amendments
or supplements thereto, the Company shall furnish to the counsel selected by the
Holders copies of all such documents proposed to be filed, and any documents
incorporated therein by reference, and shall cooperate fully with the Holders
and their counsel in drafting or revising any such documents.
3.2 The Company shall furnish to each seller of Registrable
Securities such number of copies of the registration statement, each amendment
and supplement thereto, the prospectus constituting a part of such registration
statement (including each preliminary prospectus), all exhibits to such
registration statement and such other documents as such seller may reasonably
request in writing in order to facilitate the disposition of the Registrable
Securities owned by such seller in compliance with applicable law.
3.3 The Company shall use its best efforts to register or
qualify the Registrable Securities under the securities or blue sky laws of such
jurisdictions as any seller reasonably requests, and to cause the Registrable
Securities to be registered with or approved by necessary governmental agencies
or authorities, and shall do any and all other acts and things which may be
reasonably necessary or advisable to enable such seller to consummate the
disposition in such jurisdictions of the Registrable Securities owned by such
seller.
3.4 The Company shall notify each seller of Registrable
Securities, at any time when a prospectus relating thereto is required to be
delivered under the Securities Act, of the happening of any event as a result of
which the prospectus included in such registration statement contains an untrue
statement of a material fact or omits any fact necessary to make the statements
therein not misleading, and shall prepare all necessary supplements or
amendments to such prospectus to comply with all legal requirements pertaining
thereto.
3.5 The Company shall cause all Registrable Securities to be
listed on each securities exchange on which similar securities issued by the
Company are then listed and shall provide a transfer agent and registrar for all
such Registrable Securities not later than the effective date of such
registration statement.
3.6 After the effectiveness of the registration statement, the
Company shall otherwise use its best efforts to comply with all applicable rules
and regulations of the SEC and the provisions of the Securities Act.
3.7 The Company shall otherwise take all other actions
necessary from time to time as, in the reasonable opinion of the Holders and
their counsel, may reasonably be necessary or desirable to allow Holders to
effectuate the public sale or resale of their Registrable Securities.
4. Registration Expenses. All expenses incident to the Company's
performance of or compliance with
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this Agreement, including, without limitation, all registration and filing fees,
fees and expenses of compliance with securities or blue sky laws, printing
expenses, messenger and delivery expenses, counsel for the Company and all
independent certified public accountants, underwriters and other Persons
retained by the Company (all such expenses being herein called "Registration
Expenses"), shall be borne by the Company. The Consultant shall be responsible
for the fees and disbursements of its own counsel and its pro rata amount of any
fees paid to any underwriter of the Registrable Securities.
5. Indemnification
5.1 The Company shall indemnify, to the extent permitted by
law, each Holder of Registrable Securities, its members, managers, officers and
employees and each Person who controls such Holder (within the meaning of the
Securities Act) against all losses, claims, damages, liabilities and expenses
caused by or arising out of (i) any untrue or alleged untrue statement of
material fact contained in any registration statement, prospectus or preliminary
prospectus or any amendment thereof or supplement thereto or any document
incorporated into any of the foregoing by reference prepared by the Company;
(ii) any omission or alleged omission of a material fact required to be stated
therein or necessary to make the statements therein not misleading; (iii)
written information which contains any material misstatement or omission
furnished by the Company to register the Registrable Securities in any
jurisdiction; (iv) the failure of the Company to file any amendment or
supplement to any registration statement or prospectus as required by the
Securities Act, the Securities Exchange Act or any other applicable law; and (v)
any and all Registration Expenses. The Company shall reimburse each such Holder
and other person entitled to indemnification hereunder for any reasonable legal
fees or other expenses incurred in investigating or defending any such loss,
claim, liability, action or proceeding; provided that the Company shall not be
liable to any such indemnified person hereunder if and to the extent that any
such loss, claim, damage, liability or expense is caused by or contained in any
information furnished in writing to the Company by such Holder expressly for use
therein or by such Holder's failure to deliver a copy of the registration
statement or prospectus or any amendments or supplements thereto after The
Company has furnished such Holder with a sufficient number of copies of the
same.
5.2 In connection with any registration statement in which a
Holder is participating, each such Holder will furnish to the Company in writing
such information and affidavits as the Company reasonably requests for use in
connection with any such registration statement or prospectus and, to the extent
permitted by law, will indemnify the Company, its directors and officers and
each Person who controls the Company (within the meaning of the Securities Act)
against any losses, claims, damages, liabilities and expenses resulting from or
arising out of any untrue or alleged untrue statement of material fact contained
in the registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged omission of a
material fact required to be stated therein or necessary to make the statements
therein not misleading, but only to the extent that such untrue statement or
omission is contained in any information or affidavit so furnished in writing by
such Holder for the specific purpose of including the same in the registration
statement; provided that the obligation to indemnify will be individual to each
Holder and will be limited to the net amount of proceeds received by such Holder
from the sale of Registrable Securities pursuant to such registration statement.
5.3 The indemnification provided for under this Section 5 is
cumulative with and in addition to, not exclusive or in lieu of, all other
rights and remedies which may be available hereunder, under any other agreement
between the Company and a Holder, at law or in equity, and such right of
indemnification and other rights and remedies will remain in full force and
effect regardless of any investigation made by or on behalf of, or knowledge of
or attributable to, the indemnified party or any officer, director or
controlling Person of such indemnified party, and will survive the transfer of
securities and will be equally applicable to any other federal or state law or
regulation requiring registration or qualification of the Registrable Securities
other than the Securities Act and the Securities Exchange Act.
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6. Definitions.
6.1 "Person" means an individual, proprietorship, partnership,
joint venture, corporation, limited liability company, association, trust,
unincorporated organization or other entity or enterprise in any form or a
government or any department, agency or political subdivision thereof.
6.2 "Holder(s)" means the Consultant and any other Person who
at any time holds Registrable Securities (including, without limitation, by
assignment from the Consultant).
6.3 "Registrable Securities" means all shares of the Company's
common stock issued or issuable upon the exercise of the Warrant issued or to be
issued by the Company to the Consultant pursuant to this Agreement. As to any
particular Registrable Securities, such securities will cease to be Registrable
Securities when they have been distributed to the public pursuant to an offering
registered under the Securities Act or available to be sold to the public
through a broker, dealer or market maker in compliance with Rule 144 under the
Securities Act (or any similar rule then in force).
6.4 "Securities Act" means the Securities Act of 1933, as
amended, or any similar federal law then in force, or any successor legislation
thereto.
6.5 "SEC" means the United States Securities and Exchange
Commission and any governmental body or agency succeeding to the functions
thereof.
6.6 "Securities Exchange Act" means the Securities Exchange
Act of 1934, as amended, or any similar federal law then in force, or any
successor legislation thereto.
7. No Inconsistent Agreements. The Company will not hereafter enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Holders in this Agreement.
8. Adjustments Affecting Registrable Securities. The Company will not
cause or permit any stock split, combination of shares or other transaction
resulting in an adjustment or similar effect on Registrable Securities which
could reasonably be expected to adversely affect the ability of the Holders to
include Registrable Securities in a registration undertaken pursuant to this
Agreement or which could reasonably be expected to adversely affect the
marketability of such Registrable Securities in any such registration.
9. Remedies. Any Person having rights under any provision of this
Agreement will be entitled to enforce such rights specifically, to recover
damages caused by reason of any breach of any provision of this Agreement and to
exercise all other rights granted by law or in equity. The parties hereto agree
and acknowledge that money damages will not be an adequate remedy for any breach
of the provisions of this Agreement by the Company and that, in addition to the
recovery of damages or the pursuit of any other right or remedy available at
law, under the Purchase Agreement or otherwise, any Holder may in its sole
discretion apply to any court of law or equity of competent jurisdiction
(without posting any bond or other security) and obtain specific performance and
other injunctive relief in order to enforce or prevent violation of the
provisions of this Agreement.
10. Successors and Assigns. All covenants and agreements set forth in
this Exhibit A by or on behalf of any of the parties hereto will bind and inure
to the benefit of the respective successors, assigns, heirs and legal
representatives of the parties hereto, whether so expressed or not. Without
limiting the foregoing, the obligations of the Company hereunder shall be
binding upon the corporation that survives the Merger and the rights of the
Consultant shall be applicable with respect to shares of common stock of such
corporation. In addition, whether or not any express assignment has been made,
the provisions of this Agreement which are for the benefit of Holders or
purchasers of Registrable Securities are also for the benefit of, and
enforceable by, any subsequent Holder.
9
<PAGE> 1
Exhibit 10.6
FIRST AMENDMENT TO MANAGEMENT SERVICES AGREEMENT
This First Amendment, dated January 28, 2000 (this "Amendment"), is
entered into by and between AmazeScape.com Inc., a Nevada corporation (the
"Company"), and Infusion Capital Partners, L.L.C., a Delaware limited liability
company (the "Consultant").
Company and Consultant are parties to a certain Management Services
Agreement dated October 12, 1999 (the "MSA") and are entering into this
Amendment to amend the MSA on the terms and conditions herein. Capitalized terms
used but not otherwise defined herein have the meanings given to such terms in
the MSA.
In consideration of the mutual covenants of the parties set forth in
this Amendment and in the MSA, the parties, intending to be legally bound, agree
as follows:
1. Section 4 of the MSA is hereby amended to delete the second and
third sentences thereof, such that the Warrant shall be exercisable with respect
to all 950,000 shares of the Company's common stock thereunder at an exercise
price of $1.00 per share without regard to the market price of the common stock.
2. Concurrently with the execution of this Amendment, the warrants
dated October 12, 1999, issued by Company to Consultant (consisting of 3
warrants for the purchase, respectively, of 595,000 shares of Company common
stock, 177,500 shares of Company common stock and 177,500 shares of Company
common stock) shall be canceled and a new warrant for the purchase of 355,000,
as contemplated by this Amendment, shall be issued by Company in substitution
for such warrants. Such new warrant, together with the warrant dated October 12,
1999 for the purchase of 595,000 shares, shall constitute the Warrant.
3. Sections 13 through 25 of the MSA are hereby incorporated into and
made a part of this Amendment as though written in full herein. This First
Amendment has been duly authorized by each of the parties. Except as expressly
provided herein, the terms and conditions of the MSA shall continue in full
force and effect and shall not be affected hereby.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date and year first written above.
AMAZESCAPE.COM, INC.
By: _________________________________
Harrichand Persaud, CEO
INFUSION CAPITAL PARTNERS, L.L.C.
By: _________________________________
David M. M. Taffet, President
<PAGE> 1
Exhibit 10.7
WARRANT TO PURCHASE SHARES OF COMMON STOCK
AMAZESCAPE.COM INC.
THE WARRANTS AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND THE WARRANTS AND COMMON STOCK ISSUABLE ON EXERCISE OF WARRANT MAY NOT BE
SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS
AND COMMON STOCK OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
Void after 5:00 P.M., New York City time, on October 12, 2002
For the purchase of up to 595,000 shares of Common Stock
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
AMAZESCAPE.COM, INC.
This is to certify that, for value received, Infusion Capital Partners, LLC
whose address is 1601 Market Street, Suite 2450, Philadelphia PA 19103 or its
assigns (the "Holder" or "Holders") is entitled to purchase, subject to the
provisions of this Warrant, (this "Warrant"), from AmazeScape.com, Inc., a
Nevada corporation (the "Company"), having a principal place of business located
at 264 Airmont Ave., Mahwah, NJ 07430, a total of five hundred and ninety-five
thousand (595,000) shares (the "Warrant Shares") of Common Stock, $.0005 par
value per share, of the Company (the "Common Stock"), at any time commencing
from the date of issuance (the "Exercise Commencement Date") until 5:00 P.M.,
New York City time, October 12, 2002 (which shall be referred to herein as the
"Exercise Term"), at an exercise price of $1.00 per share of Common Stock,
subject to adjustment as set forth hereinafter (the "Purchase Price"). This
Warrant and any warrant resulting from a transfer or subdivision of this Warrant
shall sometimes hereinafter be referred to as a "Warrant." The number of shares
of Common Stock to be received upon the exercise of this Warrant and the price
to be paid per share of Common Stock may be adjusted from time to time as set
forth in Section 8 below.
This Warrant is being issued in consideration for the services delivered to
the Company by the Holder in fulfillment of its obligations under the Management
Services Agreement between Company and Holder dated October 12, 1999.
1. Exercise of Warrant. This Warrant shall entitle the Holder thereof to
purchase the Warrant Shares at an exercise price equal to $1.00 per share. This
Warrant may also be exercised in whole or in part at any time or from time to
time during the period commencing on the Exercise Commencement Date through the
last day of the Exercise Term, or if such day is a day on which banking
institutions in the State of New York are authorized by law to close, then on
the next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company at its principal office, or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Purchase Price for the number of
shares specified in such form. If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder.
(a) Normal Exercise: Upon receipt by the Company of this Warrant
at its office, or by the stock transfer agent of the Company
at its office, in proper form for exercise and accompanied by
the appropriate payment of the Purchase Price for the Warrant
Shares issuable upon such exercise, the Holder shall be deemed
to be the holder of record of such Warrant Shares,
notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such
Warrant Shares shall not then be actually delivered to the
Holder. Certificates for the Warrant Shares shall be delivered
to the Holder within a reasonable time, not to exceed five (5)
business days following the exercise of this Warrant (the
"Delivery Date").
<PAGE> 2
(b) Cashless Exercise: Upon receipt by the Company of this Warrant
at its office in proper form for exercise and accompanied by
an instruction to the Company from the Holder to effect a
cashless exercise of the Warrant, the Holder shall be sent on
the Delivery Date an amount equal to the product of:
(i) the Warrant Shares issuable upon such exercise,
and
(ii) the Market Price (as defined below) on the
Delivery Date reduced by $1.00 and any reasonable per share
expenses incurred in executing sales of Warrant Shares
issuable upon such exercise.
2. Redemption by the Company. The Company shall have the right to
repurchase from the holder and the Holder shall be obligated to sell to the
Company, the Warrant in its entirety for the total price of $1.00 if the Company
does not complete a merger with a publicly traded company on or before June 30,
2000.
3. Registration Rights. The Company shall cause all Warrant Shares to be
registered, at its expense, for sale or resale under the Securities Act (defined
below) pursuant to an appropriate registration statement, as a condition to the
closing of any merger or acquisition involving the Company that results in the
Company's stockholders holding shares of publicly-traded stock and either (a) in
connection with the shares to be registered in connection with any such the
merger or acquisition (i.e. piggyback registration) or (b) pursuant to a
separate registration of the Warrant Shares. The Company shall use its best
diligent efforts to cause such registration statement to become effective as
soon as possible after filing and, in the event of the Merger, concurrently with
the closing. After registration, the Company shall use its best efforts to
maintain a continuously effective registration statement covering such Warrant
until all such Warrant Shares have been sold (or with respect to Warrant shares,
the expiration of the Warrant without exercise).
4. Reservation and Listing of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant, such number of shares of Common Stock as shall be required for issuance
and delivery upon exercise of this Warrant.
5. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. Subject to Section
8(h) hereof, any fraction of a share called for upon any exercise hereof shall
be cancelled and the Company shall pay to the Holder an amount of cash equal to
the fair market value of such fractional share, based upon the then fair market
value per share of Common Stock.
6. Exchange; Transfer; Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company at its office or at the office of its stock
transfer agent, if any, for other Warrants of different denominations entitling
the Holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Subject to Section 10 hereof, upon surrender
of this Warrant to the Company at its principal office or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay the applicable transfer tax, if any, the
Company shall, without charge, execute and deliver a new Warrant in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation thereof at the office of
the Company or at the office of its stock transfer agent, if any, together with
a written notice signed by the Holder hereof specifying the names and
denominations in which new Warrants are to be issued. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
7. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company until exercise hereof.
<PAGE> 3
8. Adjustments of Purchase Price and Number of Shares.
(a) Subdivision and Combination. In case the Company shall at any time
subdivide the outstanding shares of Common Stock, the Purchase Price shall
forthwith be proportionately increased or decreased.
(b) Adjustment in Number of Shares.
(i) Upon each adjustment of the Purchase Price pursuant to the
provisions of this Section 8, the number of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted to the nearest full Share by
multiplying a number equal to the Purchase Price in effect immediately prior to
such adjustment by the number of Warrant Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Purchase Price.
(c) Reclassification, Consolidation, Merger, Etc. In case of any
reclassification or change of the outstanding Common Stock (other than a change
in par value to no par value, or from no par value to par value, or as a result
of a subdivision or combination), or in the case of any consolidation of the
Company with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
Common Stock, except a change as a result of a subdivision or combination of
such shares or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation of all or a substantial part of the property
of the Company, the Holder shall thereafter have the right to purchase the kind
and number of shares of Common Stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holder were the owner of the Warrant Shares immediately
prior to any such events at a price equal to the product of (x) the number of
Warrant Shares and (y) the Purchase Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holder had exercised the Warrants; provided, however, that
nothing contained herein shall cause the number of Warrant Shares to be
decreased in the event of a combination of shares upon any such
reclassification, change, consolidation, merger, sale or conveyance.
(d) Adjustment of Purchase Price in Certain Cases. No adjustment of
the Purchase Price shall be made: (i) upon the issuance or sale of Common Stock
upon the exercise of warrants and options outstanding as of the date hereof, or
(ii) upon the issuance of options granted pursuant to the Company's Stock Option
Plans (the "Plans"); or (iii) upon the issuance of warrants to purchase Common
Stock, with an exercise price not less than the fair market value of the Common
Stock subsequent to the date hereof, or the sale of any shares of Common Stock
pursuant to the exercise of any such warrants.
(e) Dividends and Other Distributions with Respect to Securities. The
Warrants are not entitled to any dividends, or other distributions which the
Company may make.
(f) Fractional Shares. As to any fraction of a share which the Holder
Warrant would be entitled to purchase upon exercise of this Warrant, the Company
shall pay, in lieu of such fractional interest, an amount in cash equal to the
fair market value of such fractional interest, to the nearest one-hundredth of a
share, computed on the basis of the Market Price, as set forth below. The
Holder, by his acceptance hereof, expressly waives any right to receive any
fractional share of stock or fractional Warrant upon exercise of this Warrant.
As used herein, the phrase "Market Price" at any date shall be deemed
to be the average of the last reported sale prices for the last three (3)
trading days prior to such date, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or as reported by the NASDAQ Stock Market, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the NASDAQ Stock Market, the average of the closing bid prices for the last
three (3) trading days prior to such date as furnished by the NASDAQ Stock
Market or similar organization if the NASDAQ Stock Market is not reporting such
information, or if the Common Stock is not quoted on the NASDAQ Stock Market, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
<PAGE> 4
(g) Warrant Certificate After Adjustment. Irrespective of any change
pursuant to this Section 8 in the Purchase Price or in the number, kind or class
of shares or other securities or other property obtainable upon exercise of this
Warrant, this Warrant may continue to express as the Purchase Price and as the
number of shares obtainable upon exercise, the same price and number of shares
as are stated herein.
(h) Statement of Calculation. Whenever the Purchase Price shall be
adjusted pursuant to the provisions of this Section 8, the Company shall
forthwith file at its principal office, a statement signed by an executive
officer of the Company specifying the adjusted Purchase Price determined as
above provided in such section and a certificate of the independent public
accountants regularly retained by the Company. Such statement shall show in
reasonable detail the method of calculation of such adjustment and the facts
requiring the adjustment and upon which the calculation is based. The Company
shall forthwith cause a notice setting forth the adjusted Purchase Price to be
sent by certified mail, return receipt requested, postage prepaid, to the
Holder.
9. Definition of "Common Stock". For the purpose of this Warrant, the term
"Common Stock" shall mean, in addition to the class of stock designated as the
Common Stock, $.0005 par value per share, of the Company on the date hereof, any
class of stock resulting from successive changes or reclassifications of the
Common Stock consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. If at any time, as a result of an
adjustment made pursuant to one or more of the provisions of Section 8 hereof,
the shares of stock or other securities or property obtainable upon exercise of
this Warrant shall include securities of the Company other than Common Stock or
securities of another corporation, then thereafter the amount of such other
securities so obtainable shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in Section 8 hereof and all other provisions
of this Warrant with respect to Common Stock shall apply on like terms to any
such other shares or other securities.
10. Transfer. This Warrant or the Warrant Shares or any other security
issued or issuable upon exercise of this Warrant may not be sold or otherwise
disposed of except as follows:
(a) to a person who, in the opinion of counsel for the Company, is a
person to whom this Warrant or Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus under the
Securities Act of 1933, as amended (the "Securities Act") with respect thereto
and then only against receipt of a letter from such person in which such person
represents that he is acquiring the Warrants or Warrant Shares for his own
account for investment purposes and not with a view to distribution, and in
which such person agrees to comply with the provisions of this Section 8 with
respect to any resale or other disposition of such securities; or
(b) to any person upon delivery of a prospectus then meeting the
requirements of the Securities Act relating to such securities and the offering
thereof for such sale or disposition; or
(c) in whole or in part, to any of Holder's members, managers,
employees, other persons or entities who have provided services to or for the
Holder in connection with its performance hereunder and any family members
thereof. The Holder shall furnish the Company with prior written notice of any
proposed assignment of Warrant.
11. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holder or Holders the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) The Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
treatment of
<PAGE> 5
such dividend or distribution on the books of the Company; or
(b) The Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any warrant,
right or option to subscribe therefor; or
(c) A dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business shall be proposed; or
(d) There shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company with
another entity; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, warrants or options, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable securities or subscription rights, warrants or options, or any
proposed dissolution, liquidation, winding up or sale.
12. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the Holder, to him at the address set forth in the preamble
of this Warrant; or
(b) If to the Company, to the address set forth in the preamble of
this Agreement; or
(c) In each case to such other address as either party may designate
by notice to the other party.
13. Successors. All the covenants and provisions of this Warrant by or for
the benefit of the Holder shall inure to the benefit of his successors and
assigns hereunder.
14. Termination. This Warrant will terminate on any earlier date when it
has been entirely exercised and all the Shares issuable upon exercise of this
Warrant have been resold to the public.
15. Governing Law. This Warrant shall be deemed to be made under the laws
of the State of New York and for all purposes shall be construed in accordance
with the laws of said State.
16. Entire Agreement; Amendment; Waiver. This Warrant and all attachments
hereto and all incorporation by references set forth herein, set forth the
entire agreement and understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them. This Warrant may be amended,
the Company may take any action herein prohibited or omit to take any action
herein required to be performed by it, and any breach of any covenant,
agreement, warranty or representation may be waived, only if the Company has
obtained the written consent or waiver of the Holder. No course of dealing
between or among any persons having any interest in this Warrant will be deemed
effective to modify, amend or discharge any part of this Warrant or any rights
or obligations of any person under or by reason of this Warrant.
AMAZESCAPE.COM, INC.
By:
<PAGE> 6
Name: Harrichand Persaud
Title: President
Dated: October 12, 1999
Attest:____________________________
AMAZESCAPE.COM, INC.
ASSIGNMENT FORM
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
------------------------------------------------------------------.
(Please print name, address and social security number)
the rights of the undersigned represented by this Warrant, to the extent of
_______________________________ (_____________) shares of Common Stock, $.0005
par value per share, of AmazeScape.com, Inc. (the "Company") hereby irrevocably
constituting and appointing _________________________________ Attorney to make
such
<PAGE> 7
transfer on the books of the Company, with full power of substitution in the
premises.
Dated: __________________________
- ----------------------------------
Signature of Registered Holder
Signature Guaranteed: ________________
Note: The above signature must correspond with the name as it appears upon the
front page of this Warrant in every particular, without alteration or
enlargement or any change whatever.
AMAZESCAPE.COM, INC.
PURCHASE FORM
AMAZESCAPE.COM, Inc.
264 Airmont Ave,
Mahwah, NJ 07430
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by this Warrant for, and to purchase hereunder, shares of Common
Stock, $.0005 par value per share, of AmazeScape.com, Inc. (the
"Shares")provided for herein, and requests that certificates for the Shares be
issued in the name of
------------------------------------------------------------------.
(Please print name, address and social security number)
and, if said number of Shares shall not be all the Share purchasable hereunder,
that a new Warrant for the balance of the Shares purchasable under this Warrant
be registered in the name of the undersigned Warrant holder or his Assignee as
below indicated and delivered to the address stated below.
<PAGE> 8
Dated: _________________________, __________
Name of Warrant holder or Assignee:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address: ____________________________________________
Signature: ___________________________________________
(Please print)
Signature Guaranteed: __________________________________
Note: The above signature must correspond with the name as it appears upon the
front page of this Warrant in every particular, without alteration or
enlargement or any change whatever, unless this Warrant has been assigned.
<PAGE> 1
Exhibit 10.8
WARRANT TO PURCHASE SHARES OF COMMON STOCK
AMAZESCAPE.COM INC.
THE WARRANTS AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND THE WARRANTS AND COMMON STOCK ISSUABLE ON EXERCISE OF WARRANT MAY NOT BE
SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS
AND COMMON STOCK OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
Void after 5:00 P.M., New York City time, on January 28, 2003
For the purchase of up to 355,000 shares of Common Stock
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
AMAZESCAPE.COM INC.
This is to certify that, for value received, Infusion Capital Partners, LLC
whose address is 1601 Market Street, Suite 2450, Philadelphia PA 19103 or its
assigns (the "Holder" or "Holders") is entitled to purchase, subject to the
provisions of this Warrant, (this "Warrant"), from AmazeScape.com Inc., a
Nevada corporation (the "Company"), having a principal place of business located
at 264 Airmont Ave., Mahwah, NJ 07430, a total of three hundred and fifty-five
thousand (355,000) shares (the "Warrant Shares") of Common Stock, $.0005 par
value per share, of the Company (the "Common Stock"), at any time commencing
from the date of issuance (the "Exercise Commencement Date") until 5:00 P.M.,
New York City time, January 28, 2003 (which shall be referred to herein as the
"Exercise Term"), at an exercise price of $1.00 per share of Common Stock,
subject to adjustment as set forth hereinafter (the "Purchase Price"). This
Warrant and any warrant resulting from a transfer or subdivision of this Warrant
shall sometimes hereinafter be referred to as a "Warrant." The number of shares
of Common Stock to be received upon the exercise of this Warrant and the price
to be paid per share of Common Stock may be adjusted from time to time as set
forth in Section 8 below.
This Warrant is being issued in consideration for the services delivered to
the Company by the Holder in fulfillment of its obligations under the Management
Services Agreement between Company and Holder dated October 12, 1999.
1. Exercise of Warrant. This Warrant shall entitle the Holder thereof to
purchase the Warrant Shares at an exercise price equal to $1.00 per share. This
Warrant may also be exercised in whole or in part at any time or from time to
time during the period commencing on the Exercise Commencement Date through the
last day of the Exercise Term, or if such day is a day on which banking
institutions in the State of New York are authorized by law to close, then on
the next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company at its principal office, or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Purchase Price for the number of
shares specified in such form. If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder.
(a) Normal Exercise: Upon receipt by the Company of this Warrant
at its office, or by the stock transfer agent of the Company
at its office, in proper form for exercise and accompanied by
the appropriate payment of the Purchase Price for the Warrant
Shares issuable upon such exercise, the Holder shall be deemed
to be the holder of record of such Warrant Shares,
notwithstanding that the stock transfer books of the Company
shall then be closed or that certificates representing such
Warrant Shares shall not then be actually delivered to the
Holder. Certificates for the Warrant Shares shall be delivered
to the Holder within a reasonable time, not to exceed five (5)
business days following the exercise of this Warrant (the
"Delivery Date").
<PAGE> 2
(b) Cashless Exercise: Upon receipt by the Company of this Warrant
at its office in proper form for exercise and accompanied by
an instruction to the Company from the Holder to effect a
cashless exercise of the Warrant, the Holder shall be sent on
the Delivery Date an amount equal to the product of:
(i) the Warrant Shares issuable upon such exercise,
and
(ii) the Market Price (as defined below) on the
Delivery Date reduced by $1.00 and any reasonable per share
expenses incurred in executing sales of Warrant Shares
issuable upon such exercise.
2. Redemption by the Company. The Company shall have the right to
repurchase from the holder and the Holder shall be obligated to sell to the
Company, the Warrant in its entirety for the total price of $1.00 if the Company
does not complete a merger with a publicly traded company on or before June 30,
2000.
3. Registration Rights. The Company shall cause all Warrant Shares to be
registered, at its expense, for sale or resale under the Securities Act (defined
below) pursuant to an appropriate registration statement, as a condition to the
closing of any merger or acquisition involving the Company that results in the
Company's stockholders holding shares of publicly-traded stock and either (a) in
connection with the shares to be registered in connection with any such the
merger or acquisition (i.e. piggyback registration) or (b) pursuant to a
separate registration of the Warrant Shares. The Company shall use its best
diligent efforts to cause such registration statement to become effective as
soon as possible after filing and, in the event of the Merger, concurrently with
the closing. After registration, the Company shall use its best efforts to
maintain a continuously effective registration statement covering such Warrant
until all such Warrant Shares have been sold (or with respect to Warrant shares,
the expiration of the Warrant without exercise).
4. Reservation and Listing of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant, such number of shares of Common Stock as shall be required for issuance
and delivery upon exercise of this Warrant.
5. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. Subject to Section
8(h) hereof, any fraction of a share called for upon any exercise hereof shall
be cancelled and the Company shall pay to the Holder an amount of cash equal to
the fair market value of such fractional share, based upon the then fair market
value per share of Common Stock.
6. Exchange; Transfer; Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company at its office or at the office of its stock
transfer agent, if any, for other Warrants of different denominations entitling
the Holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Subject to Section 10 hereof, upon surrender
of this Warrant to the Company at its principal office or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay the applicable transfer tax, if any, the
Company shall, without charge, execute and deliver a new Warrant in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation thereof at the office of
the Company or at the office of its stock transfer agent, if any, together with
a written notice signed by the Holder hereof specifying the names and
denominations in which new Warrants are to be issued. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
7. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company until exercise hereof.
<PAGE> 3
8. Adjustments of Purchase Price and Number of Shares.
(a) Subdivision and Combination. In case the Company shall at any time
subdivide the outstanding shares of Common Stock, the Purchase Price shall
forthwith be proportionately increased or decreased.
(b) Adjustment in Number of Shares.
(i) Upon each adjustment of the Purchase Price pursuant to the
provisions of this Section 8, the number of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted to the nearest full Share by
multiplying a number equal to the Purchase Price in effect immediately prior to
such adjustment by the number of Warrant Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Purchase Price.
(c) Reclassification, Consolidation, Merger, Etc. In case of any
reclassification or change of the outstanding Common Stock (other than a change
in par value to no par value, or from no par value to par value, or as a result
of a subdivision or combination), or in the case of any consolidation of the
Company with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
Common Stock, except a change as a result of a subdivision or combination of
such shares or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation of all or a substantial part of the property
of the Company, the Holder shall thereafter have the right to purchase the kind
and number of shares of Common Stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holder were the owner of the Warrant Shares immediately
prior to any such events at a price equal to the product of (x) the number of
Warrant Shares and (y) the Purchase Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holder had exercised the Warrants; provided, however, that
nothing contained herein shall cause the number of Warrant Shares to be
decreased in the event of a combination of shares upon any such
reclassification, change, consolidation, merger, sale or conveyance.
(d) Adjustment of Purchase Price in Certain Cases. No adjustment of
the Purchase Price shall be made: (i) upon the issuance or sale of Common Stock
upon the exercise of warrants and options outstanding as of the date hereof, or
(ii) upon the issuance of options granted pursuant to the Company's Stock Option
Plans (the "Plans"); or (iii) upon the issuance of warrants to purchase Common
Stock, with an exercise price not less than the fair market value of the Common
Stock subsequent to the date hereof, or the sale of any shares of Common Stock
pursuant to the exercise of any such warrants.
(e) Dividends and Other Distributions with Respect to Securities. The
Warrants are not entitled to any dividends, or other distributions which the
Company may make.
(f) Fractional Shares. As to any fraction of a share which the Holder
Warrant would be entitled to purchase upon exercise of this Warrant, the Company
shall pay, in lieu of such fractional interest, an amount in cash equal to the
fair market value of such fractional interest, to the nearest one-hundredth of a
share, computed on the basis of the Market Price, as set forth below. The
Holder, by his acceptance hereof, expressly waives any right to receive any
fractional share of stock or fractional Warrant upon exercise of this Warrant.
As used herein, the phrase "Market Price" at any date shall be deemed
to be the average of the last reported sale prices for the last three (3)
trading days prior to such date, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or as reported by the NASDAQ Stock Market, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the NASDAQ Stock Market, the average of the closing bid prices for the last
three (3) trading days prior to such date as furnished by the NASDAQ Stock
Market or similar organization if the NASDAQ Stock Market is not reporting such
information, or if the Common Stock is not quoted on the NASDAQ Stock Market, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
<PAGE> 4
(g) Warrant Certificate After Adjustment. Irrespective of any change
pursuant to this Section 8 in the Purchase Price or in the number, kind or class
of shares or other securities or other property obtainable upon exercise of this
Warrant, this Warrant may continue to express as the Purchase Price and as the
number of shares obtainable upon exercise, the same price and number of shares
as are stated herein.
(h) Statement of Calculation. Whenever the Purchase Price shall be
adjusted pursuant to the provisions of this Section 8, the Company shall
forthwith file at its principal office, a statement signed by an executive
officer of the Company specifying the adjusted Purchase Price determined as
above provided in such section and a certificate of the independent public
accountants regularly retained by the Company. Such statement shall show in
reasonable detail the method of calculation of such adjustment and the facts
requiring the adjustment and upon which the calculation is based. The Company
shall forthwith cause a notice setting forth the adjusted Purchase Price to be
sent by certified mail, return receipt requested, postage prepaid, to the
Holder.
9. Definition of "Common Stock". For the purpose of this Warrant, the term
"Common Stock" shall mean, in addition to the class of stock designated as the
Common Stock, $.0005 par value per share, of the Company on the date hereof, any
class of stock resulting from successive changes or reclassifications of the
Common Stock consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. If at any time, as a result of an
adjustment made pursuant to one or more of the provisions of Section 8 hereof,
the shares of stock or other securities or property obtainable upon exercise of
this Warrant shall include securities of the Company other than Common Stock or
securities of another corporation, then thereafter the amount of such other
securities so obtainable shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in Section 8 hereof and all other provisions
of this Warrant with respect to Common Stock shall apply on like terms to any
such other shares or other securities.
10. Transfer. This Warrant or the Warrant Shares or any other security
issued or issuable upon exercise of this Warrant may not be sold or otherwise
disposed of except as follows:
(a) to a person who, in the opinion of counsel for the Company, is a
person to whom this Warrant or Warrant Shares may legally be transferred without
registration and without the delivery of a current prospectus under the
Securities Act of 1933, as amended (the "Securities Act") with respect thereto
and then only against receipt of a letter from such person in which such person
represents that he is acquiring the Warrants or Warrant Shares for his own
account for investment purposes and not with a view to distribution, and in
which such person agrees to comply with the provisions of this Section 8 with
respect to any resale or other disposition of such securities; or
(b) to any person upon delivery of a prospectus then meeting the
requirements of the Securities Act relating to such securities and the offering
thereof for such sale or disposition; or
(c) in whole or in part, to any of Holder's members, managers,
employees, other persons or entities who have provided services to or for the
Holder in connection with its performance hereunder and any family members
thereof. The Holder shall furnish the Company with prior written notice of any
proposed assignment of Warrant.
11. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holder or Holders the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) The Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
treatment of
<PAGE> 5
such dividend or distribution on the books of the Company; or
(b) The Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any warrant,
right or option to subscribe therefor; or
(c) A dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business shall be proposed; or
(d) There shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company with
another entity; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, warrants or options, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable securities or subscription rights, warrants or options, or any
proposed dissolution, liquidation, winding up or sale.
12. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the Holder, to him at the address set forth in the preamble
of this Warrant; or
(b) If to the Company, to the address set forth in the preamble of
this Agreement; or
(c) In each case to such other address as either party may designate
by notice to the other party.
13. Successors. All the covenants and provisions of this Warrant by or for
the benefit of the Holder shall inure to the benefit of his successors and
assigns hereunder.
14. Termination. This Warrant will terminate on any earlier date when it
has been entirely exercised and all the Shares issuable upon exercise of this
Warrant have been resold to the public.
15. Governing Law. This Warrant shall be deemed to be made under the laws
of the State of New York and for all purposes shall be construed in accordance
with the laws of said State.
16. Entire Agreement; Amendment; Waiver. This Warrant and all attachments
hereto and all incorporation by references set forth herein, set forth the
entire agreement and understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them. This Warrant may be amended,
the Company may take any action herein prohibited or omit to take any action
herein required to be performed by it, and any breach of any covenant,
agreement, warranty or representation may be waived, only if the Company has
obtained the written consent or waiver of the Holder. No course of dealing
between or among any persons having any interest in this Warrant will be deemed
effective to modify, amend or discharge any part of this Warrant or any rights
or obligations of any person under or by reason of this Warrant.
AMAZESCAPE.COM, INC.
By:
<PAGE> 6
Name: Harrichand Persaud
Title: President
Dated: January 28, 2000
Attest:____________________________
AMAZESCAPE.COM, INC.
ASSIGNMENT FORM
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
------------------------------------------------------------------.
(Please print name, address and social security number)
the rights of the undersigned represented by this Warrant, to the extent of
_______________________________ (_____________) shares of Common Stock, $.0005
par value per share, of AmazeScape.com, Inc. (the "Company") hereby irrevocably
constituting and appointing _________________________________ Attorney to make
such
<PAGE> 7
transfer on the books of the Company, with full power of substitution in the
premises.
Dated: __________________________
- ----------------------------------
Signature of Registered Holder
Signature Guaranteed: ________________
Note: The above signature must correspond with the name as it appears upon the
front page of this Warrant in every particular, without alteration or
enlargement or any change whatever.
AMAZESCAPE.COM, INC.
PURCHASE FORM
AMAZESCAPE.COM, Inc.
264 Airmont Ave,
Mahwah, NJ 07430
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by this Warrant for, and to purchase hereunder, shares of Common
Stock, $.0005 par value per share, of AmazeScape.com, Inc. (the
"Shares")provided for herein, and requests that certificates for the Shares be
issued in the name of
------------------------------------------------------------------.
(Please print name, address and social security number)
and, if said number of Shares shall not be all the Share purchasable hereunder,
that a new Warrant for the balance of the Shares purchasable under this Warrant
be registered in the name of the undersigned Warrant holder or his Assignee as
below indicated and delivered to the address stated below.
<PAGE> 8
Dated: _________________________, __________
Name of Warrant holder or Assignee:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address: ____________________________________________
Signature: ___________________________________________
(Please print)
Signature Guaranteed: __________________________________
Note: The above signature must correspond with the name as it appears upon the
front page of this Warrant in every particular, without alteration or
enlargement or any change whatever, unless this Warrant has been assigned.
<PAGE> 1
EXHIBIT 10.9
TRANSLATION SERVICES AGREEMENT
THIS TRANSLATION SERVICES AGREEMENT ("AGREEMENT") IS ENTERED INTO AS OF JANUARY
11, 2000 (THE "EFFECTIVE DATE") BY AND BETWEEN E-LINGO CORPORATION, WITH ITS
PRINCIPAL PLACE OF BUSINESS AT 2600 SOUTH EL CAMINO REAL, SAN MATEO, CALIFORNIA,
94403 ("E-LINGO") AND AMAZESCAPE.COM, A NEVADA CORPORATION, WITH ITS PRINCIPAL
PLACE OF BUSINESS AT 264 AIRMONT AVE., MAHWAH NJ, 07430 (THE "CUSTOMER").
RECITALS
A. e-lingo owns or is duly licensed to use certain technology that
translates digital text on the internet from one language to another language.
B. Customer provides Digital Content to its end users.
C. e-lingo wishes to provide translation services to Customer so as to
enable Customer's end users to translate Digital Content from one language to
another language, and Customer desires to use such services.
AGREEMENT
In consideration of the foregoing and the mutual promises contained
herein, the parties agree as follows:
1. DEFINITIONS. For purposes of this Agreement, unless otherwise defined
herein, capitalized terms used in this Agreement shall have the meanings set
forth in Exhibit A attached hereto.
2. SERVICE OBLIGATIONS; SITE INSTALLATION, ETC.
2.1. TRANSLATION SERVICES. Subject to the terms and conditions of this
Agreement, e-lingo shall provide the language translation Services of Digital
Content to the Customer for use in the Site, such Services to be provided
substantially in accordance with the functionality specifications, language
pairs, performance criteria, and limitations set forth on Exhibit B. e-lingo
shall also provide the technical support services substantially in accordance
with the provisions set forth in Exhibit C.
2.2. INTERFACE. Promptly after execution of this Agreement, e-lingo shall
provide the e-lingo Data Protocol and the Interface Construction Tools to
Customer. e-lingo grants to Customer, a non-transferable, nonexclusive license
during the Term to use the e-lingo Data Protocol and the Interface Construction
Tools solely to create and maintain the Interface to the e-lingo Translation
Engine to the Site. Customer, at its own expense, shall create the Interface to
the e-lingo Translation Engine for the Site and shall provide all disk storage,
server capacity and other hardware and software required to run and maintain the
Site and the Interface and to serve the advertisements on the Interface. e-lingo
shall provide reasonable assistance (through telephone, email, the Web or fax)
to Customer during regular business hours regarding development of the Interface
and integration of the same with the e-lingo Translation Engine.
3. MARKETING, PUBLICITY AND ATTRIBUTION.
3.1. ATTRIBUTION. All Web pages containing translated Digital Content shall
conspicuously display an icon to be provided by e-lingo (the "e-lingo Icon")
that indicates that e-lingo's technology is being used. The e-lingo Icon shall
measure at least 88 x 31 pixels and shall provide a link to a page of e-lingo's
choice on e-lingo's Web site located at www.e-lingo.com. The e-lingo Icon shall
be visible "above the fold" (that is, visible when the applicable Web page is
loaded by a browser displaying an active region of 650x320 pixels). In addition,
Customer will use e-lingo's standard disclaimer with respect to the use of the
e-lingo Translation Engine.
3.2. MARKETING OBLIGATIONS. Customer will use reasonable commercial efforts
to promote and market the language translation services provided by e-lingo
hereunder. Customer agrees to be a referenceable customer for press and analyst
inquiries and quotes. Customer agrees to participate in co-marketing efforts to
promote the e-lingo translation services. Details of the co-marketing efforts to
be determined by marketing officers at e-lingo and Customer.
3.3. TRADEMARK LICENSE. e-lingo hereby grants Customer a nontransferable,
nonexclusive license under e-lingo's trademarks during the Term to display the
e-lingo Icon on the Site. Customer hereby grants to e-lingo a nontransferable,
nonexclusive license under Customer's trademarks during the Term to advertise
that Customer is using e-lingo's services. Except a set forth in this Section,
nothing in this Agreement shall grant or shall be deemed to grant to one party
any right, title or interest in or to the other party's trademarks. All use of
Customer trademarks by e-lingo shall inure to the benefit of Customer, and all
use of e-lingo
<PAGE> 2
trademarks by Customer shall inure to the benefit of e-lingo.
4. REPRESENTATIONS AND WARRANTIES.
4.1. BY E-LINGO. e-lingo represents and warrants that (a) it has full power
and authority to enter into this Agreement and to grant the rights and perform
the translation services set forth herein, and (b) the Intellectual Property
Rights incorporated by the e-lingo Translation Engine does not infringe in any
material respect any copyright, patent, trade secret, or other proprietary right
held by any third party. E-LINGO MAKES NO OTHER WARRANTIES OF ANY KIND, WHETHER
EXPRESS, IMPLIED, STATUTORY OR OTHERWISE, INCLUDING WITHOUT LIMITATION
WARRANTIES OF MERCHANTABILITY, FITNESS FOR A PARTICULAR USE, AND
NONINFRINGEMENT.
4.2. BY CUSTOMER. As between Customer and e-lingo, Customer acknowledges
that e-lingo owns all right, title and interest in and to the e-lingo Technology
(except for any software licensed by third parties to e-lingo), and that
Customer shall not acquire any right, title, and interest in or to the e-lingo
Technology. Customer shall not modify, adapt, translate, prepare derivative
works from, decompile, reverse engineer, disassemble or otherwise attempt to
derive source code from any e-lingo Technology software or documentation.
Customer will not remove, obscure, or alter e-lingo's copyright notice,
trademarks, or other proprietary rights notices affixed to or contained within
any e-lingo software or documentation.
5. PAYMENTS.
5.1. FEES Customer shall pay to e-lingo the fees described in Exhibit D.
5.2. RECORDS. e-lingo and Customer agree to keep all proper records and
books of account and all proper entries therein relating to the fee calculations
made under Section 5. Such records and books of account shall be maintained for
a one-year period following the year in which any payments pertaining to such
revenue were due. e-lingo and Customer shall have the right to examine each
others records and books of account from time to time but no more than once
every six (6) months to verify statements rendered under Section 5.1. If any
such examination indicates that Customer has underpaid or overpaid e-lingo, or
that e-lingo has underbilled or overbilled Customer for any particular period,
then e-lingo or Customer, as the case may be, shall promptly remit the
difference to the other party.
5.3. TAXES. All amounts to be paid by Customer to e-lingo herein are
exclusive of any federal, state, municipal or other governmental taxes,
including franchise, sales, use, value added, property or similar tax, now or
hereafter imposed on e-lingo (excluding taxes on the net income of e-lingo).
Such charges shall be the responsibility of Customer and may not be passed on to
e-lingo. Customer takes full responsibility for all such taxes, including
penalties, interest and other additions thereon and agrees to indemnify, defend
and hold e-lingo harmless from any claims, causes of action, costs (including
without limitation reasonable attorneys fees), penalties, interest charges and
other liabilities of any nature whatsoever.
6. CONFIDENTIALITY.
6.1. DEFINITION OF CONFIDENTIAL INFORMATION. All information and documents
disclosed or produced by either party in the course of this Agreement which are
disclosed in written form and identified by a marking thereon as proprietary, or
oral information which is defined at the time of disclosure and confirmed in
writing within ten (10) business days of its disclosure, shall be deemed the
"Confidential Information" of the disclosing party.
6.2. TREATMENT OF CONFIDENTIAL INFORMATION. Each party agrees to protect
the other party's Confidential Information in the same manner as such party
protects its own Confidential Information of substantially similar proprietary
value, but in no case less than reasonable care. Each party agrees that it will
use the Confidential Information of the other party only for the purposes of
this Agreement and that, except as required by law, it will not divulge,
transfer, sell, license, lease, or otherwise disclose or release any such
information or documents to third parties, with the exception of (i) its
employees or subcontractors who require access to such for purposes of carrying
out such party's obligation hereunder, (ii) attorneys and accountants for such
party, and (iii) federal or state agencies.
6.3. NO OTHER CONFIDENTIAL INFORMATION. Neither party shall have any
obligation under this Section 6 for information of the other party which the
receiving party can substantiate with documentary evidence that has been or is
(i) developed by the receiving party independently and without the benefit of
information disclosed hereunder by the disclosing party; (ii) lawfully obtained
by the receiving party
2
<PAGE> 3
from a third party without restriction and without breach of this Agreement;
(iii) publicly available without breach of this Agreement; (iv) disclosed
without restriction by the disclosing party to a third party; or (v) known to
the receiving party prior to its receipt from the disclosing party.
7. INDEMNIFICATION.
7.1. BY E-LINGO. e-lingo shall, at its expense and Customer's request,
defend any third party claim or action brought against Customer, and Customer's
subsidiaries, affiliates, directors, officers, employees, agents and independent
contractors, which, if true, would constitute a breach of any warranty,
representation or covenant made by e-lingo under this Agreement, and e-lingo
will hold Customer harmless from and against any costs, damages and
out-of-pocket fees reasonably incurred by Customer, including but not limited to
fees of attorneys and other professionals, that are attributable to such claim.
Customer shall: (a) provide e-lingo reasonably prompt notice in writing of any
such claim or action and permit e-lingo, through counsel mutually acceptable to
Customer and e-lingo, to answer and defend such claim or action; and (b) provide
e-lingo information, assistance and authority, at e-lingo's expense, to help
e-lingo to defend such claim or action. e-lingo will not be responsible for any
settlement made by Customer without e-lingo's written permission, which
permission will not be unreasonably withheld.
7.2. BY CUSTOMER. Customer shall, at its expense and e-lingo's request,
defend any third party claim or action brought against e-lingo, and e-lingo
subsidiaries, affiliates, directors, officers, employees, agents and independent
contractors, which, if true, would constitute a breach of any warranty,
representation or covenant made by Customer under this Agreement, and Customer
will hold e-lingo harmless from and against any costs, damages and fees
reasonably incurred by e-lingo, including but not limited to fees of attorneys
and other professionals, that are attributable to such claim. e-lingo shall: (a)
provide Customer reasonably prompt notice in writing of any such claim or action
and permit Customer, through counsel mutually acceptable to e-lingo and
Customer, to answer and defend such claim or action; and (b) provide Customer
information, assistance and authority, at Customer's expense, to help Customer
to defend such claim or action. Customer will not be responsible for any
settlement made by e-lingo without Customer's written permission, which
permission will not be unreasonably withheld.
7.3. REIMBURSEMENT. The indemnifying party shall reimburse the indemnified
party upon demand for any payments made or loss suffered by it at any time after
the date hereof, based upon the judgment of any court of competent jurisdiction
or pursuant to a bona fide compromise or settlement of claims, demands, or
actions, in respect to any damages related to any claim or action under this
Section 7.
7.4. SETTLEMENT. The indemnifying party may not settle any claim or action
under this Section 7 without first obtaining the indemnified party's written
permission, which permission will not be unreasonably withheld.
8. TERM AND TERMINATION.
8.1. TERM. The term of this Agreement (the "Term") shall commence on the
Effective Date and shall continue in force for a period of __1__ year(s)
thereafter, unless earlier terminated as provided herein.
8.2. TERMINATION BY PARTIES. In addition to any other rights and/or
remedies that Customer or e-lingo may have under the circumstances, all of which
are expressly reserved, either party may suspend performance and/or terminate
this Agreement immediately upon written notice at any time if the other party is
in breach of any material warranty, term, condition or covenant of this
Agreement and fails to cure that breach within thirty (30) days after written
notice thereof.
8.3. SURVIVAL. In the event of termination of this Agreement for any
reason, Sections 1, 5, 6, 7, 8, 9 and 10 shall survive termination. Neither
party shall be liable to the other party for damages of any sort resulting
solely from terminating this Agreement in accordance with its terms.
9. LIMITATION OF LIABILITY. IN NO EVENT WILL THE LIABILITY OF E-LINGO AND ITS
LICENSORS AND SUPPLIERS ARISING OUT OF THIS AGREEMENT EXCEED THE NET AMOUNT
E-LINGO HAS ACTUALLY RECEIVED FROM CUSTOMER UNDER THIS AGREEMENT. E-LINGO AND
ITS LICENSORS AND SUPPLIERS SHALL NOT BE LIABLE FOR ANY LOST PROFITS OR COSTS OF
PROCUREMENT OF SUBSTITUTE GOODS OR SERVICES, OR FOR ANY INDIRECT, SPECIAL,
INCIDENTAL, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING DAMAGES FOR LOST DATA,
HOWEVER CAUSED AND UNDER ANY THEORY OF LIABILITY, INCLUDING BUT NOT
3
<PAGE> 4
LIMITED TO CONTRACT, PRODUCTS LIABILITY, STRICT LIABILITY AND NEGLIGENCE, AND
WHETHER OR NOT IT WAS OR SHOULD HAVE BEEN AWARE OR ADVISED OF THE POSSIBILITY OF
SUCH DAMAGE.
10. MISCELLANEOUS.
10.1. NOTICE. Any notice required for or permitted by this Agreement shall
be in writing and shall be delivered as follows with notice deemed given as
indicated: (i) by personal delivery when delivered personally, (ii) by overnight
courier upon written verification of receipt, (iii) by telecopy or facsimile
transmission when confirmed by telecopier or facsimile transmission report, or
(iv) by certified or registered mail, return receipt requested, upon
verification of receipt. All notices must be sent to the addresses first
described above or to such other address that the receiving party may have
provided for the purpose of notice in accordance with this Section.
10.2. ASSIGNMENT. Neither party may assign its rights or delegate its
obligations under this Agreement without the other party's prior written
consent, except to the surviving entity in a merger or consolidation in which it
participates or to a purchaser of all or substantially all of its assets.
10.3. GOVERNING LAW. This Agreement will be governed and construed, to the
extent applicable, in accordance with United States law, and otherwise, in
accordance with California law, without regard to conflict of law principles.
Any dispute or claim arising out of or in connection with this Agreement shall
be finally settled by binding arbitration in San Mateo County, California under
the Commercial Rules of the American Arbitration Association by one arbitrator
appointed in accordance with said rules. Judgment on the award rendered by the
arbitrator may be entered in any court having jurisdiction thereof.
10.4. INDEPENDENT CONTRACTORS. The parties are independent contractors.
Neither party shall be deemed to be an employee, agent, partner or legal
representative of the other for any purpose and neither shall have any right,
power or authority to create any obligation or responsibility on behalf of the
other.
10.5. FORCE MAJEURE. Neither party shall be liable hereunder by reason of
any failure or delay in the performance of its obligations hereunder during any
event of force majeure.
10.6. COUNTERPARTS. This Agreement may be executed simultaneously in two or
more counterparts, each of which will be considered an original, but all of
which together will constitute one and the same instrument.
10.7. ENTIRE AGREEMENT. This Agreement, and the Exhibits hereto, constitute
the entire agreement between the parties with respect to the subject matter
hereof. This Agreement supersedes, and the terms of this Agreement govern, any
other prior or collateral agreements with respect to the subject matter hereof.
Any amendments to this Agreement must be in writing and executed by an officer
of the parties.
IN WITNESS WHEREOF, the parties have caused this Translation Services
Agreement to be signed by their duly authorized representatives.
E-LINGO CORPORATION
By: _________________________________________________
Name: _______________________________________________
Title: ______________________________________________
AmazeScape.com CORPORATION
Name of Customer
By: _________________________________________________
Name: _______________________________________________
Title: ______________________________________________
4
<PAGE> 5
EXHIBIT A
DEFINITIONS
The capitalized terms used in the Translation Services Agreement shall
have the following meanings:
1. "Digital Content" means digital text, including text email, text
displayed on a Web pages, and text on Internet search results.
2. "e-lingo Data Protocol" means the written specification on how an
Interface communicates and interacts with the e-lingo Translation Engine.
3. "e-lingo Technology" means the e-lingo Translation Engine and all
other computer software, technology and/or documentation supplied by e-lingo in
connection with this Agreement, including without limitation all source code and
object code therefor and all algorithms, ideas and Intellectual Property Rights
therein.
4. "e-lingo Translation Engine" means the system of computer hardware
and software operated by e-lingo that translates Digital Content from one human
language to another human language.
5. "Intellectual Property Rights" means any and all rights existing
from time to time under patent law, copyright law, semiconductor chip protection
law, moral rights law, trade secret law, trademark law, unfair competition law,
publicity rights law, privacy rights law, and any and all other proprietary
rights, and any and all applications, renewals, extensions and restorations
thereof, now or hereafter in force and effect worldwide.
6. "Interface" means the editorial and graphical content and design of
the Web pages served to end users of the Site, including without limitation all
Digital Content of the Site.
7. "Interface Construction Tools" means all software tools, if any, in
object code form, provided by e-lingo to assist Customer to build the Interface
to the e-lingo Translation Engine, including without limitation e-lingo
application server.
8 "Services" means the translation services of Digital Content from one
human language to another human language provided by e-lingo through the e-lingo
Translation Engine, as more fully described in Exhibit B.
9. "Site" means a Single Web site established and maintained by
Customer through which end-users may access the e-lingo Translation Engine to
translate Digital Content from one language to another language.
The Site's URL address is _____________________.
10. "Term" shall have the meaning set forth in Section 8.1.
11. "Web" means the so-called World Wide Web, containing, inter alia,
pages written in hypertext markup language (HTML) and/or any similar successor
technology.
12. "Web page" means a document on the Web which may be viewed in its
entirety without leaving the applicable distinct URL address.
13. "Web site" means a collection of inter-related Web pages. 13.
A-1
<PAGE> 6
EXHIBIT B
TRANSLATION SERVICES SPECIFICATIONS
e-lingo shall provide translation services using the e-lingo
Translation Engine under the Agreement in conformity with the following
functionality specifications and performance criteria:
1. Language Pairs. e-lingo shall provide machine language translation
of Digital Content for the following language pairs:
(a) Current pairs: Between English and each of the
following:
French, German, Spanish, Italian, Portuguese
(b) Future pairs: all language pairs that are made
commercially available by e-lingo.
The parties understand that the e-lingo translation service is computer
translation and that the translation shall be subject to the limitations
inherent in such translation as further described in e-lingo's standard
disclaimer.
2. Uptime. Uptime reliability of e-lingo language translation services
must be 99.0% over any 30-day rolling period. Uptime is defined as the ability
for a e-lingo to respond to a translation request of Digital Content (meeting
the size limitations provided below) from the Customer within 30 seconds from
receipt of such request. In addition, e-lingo is only responsible for
maintaining uptime of the translation service.
3. Response Time. The average time to return a translation of Digital
Content must be equal to or less than ten seconds, which such time period does
not include the retrieval of such Digital Content. This time is measured
starting from when e-lingo has fully received the requested Digital Content from
the Customer's server, and ending when e-lingo transmits the translated Digital
Content to Customer.
4. Size of Digital Content Requested to be Translated. Web page
translations are limited to 8K of text per translation. Email and text
translations are limited to 2K of text per translation.
B-1
<PAGE> 7
EXHIBIT C
SUPPORT GUIDELINES
1. Definitions.
(a) Hours of Operation. e-lingo will provide Customer with 7 x 24
support as set forth herein.
(b) Problem. Any error, bug, or malfunction of the e-lingo Service
that makes any feature of the e-lingo Translation Engine
perform unpredictably or to otherwise become intermittently
unavailable, or that causes the e-lingo Translation Engine to
have a material degradation in response time performance.
(c) Severe Problem. Any error, bug, or malfunction of the e-lingo
Service that causes the e-lingo Translation Engine to become
inaccessible to Customer and its Site end users, or that
causes any feature of the e-lingo Translation Engine to become
continuously unavailable.
(d) Enhancement Request. A request by Customer to incorporate a
new feature or enhance an existing feature of the e-lingo
Translation Engine.
(e) Fix. A correction, fix, alteration or workaround that solves a
Problem or a Severe Problem.
2. Contact points.
(a) Customer Technical Support Personnel. Customer will designate
no more than three Customer employees as qualified to contact
e-lingo for technical support. Additional support contacts may
be purchased on an annual basis at a rate of $5,000 each.
(b) e-lingo Technical Support Personnel. e-lingo will ensure that
its Technical Support Personnel are adequately trained to
provide technical support to Customer. e-lingo will provide
Customer with a web interface or an email address (the
"Support Address"), as well as an email pager address (the
"Support Pager") for contacting the e-lingo Technical Support
Personnel no later than one week prior to initial availability
of the translation services (the "Launch Date"). e-lingo will
also provide Customer with contact information for executive
escalation personnel no later than one week prior to the
Launch Date. e-lingo may change its designated Technical
Support Personnel and executive escalation personnel at its
discretion with reasonable notice to Customer.
3. Support procedures.
(a) All Problems reported by Customer Technical Support Personnel
to e-lingo must be submitted via web site or email to the
Support Address.
(b) If Customer believes it is reporting a Severe Problem,
Customer will accompany its email request with a page via the
Support Pager.
(c) Upon receiving a report from Customer, e-lingo will determine
whether the request is a Problem, a Severe Problem, or an
Enhancement Request. e-lingo will respond to the request and
use reasonable commercial efforts to provide a Fix as
described in the support table set forth below.
(d) e-lingo will use commercially reasonable efforts to inform
Customer Technical Support Personnel of Fixes.
4. Support levels.
(a) e-lingo will provide the following technical support to
Customer Technical Support Personnel:
C-1
6
<PAGE> 8
<TABLE>
<CAPTION>
- ---------------------------------------------------------------------------------------------------------------------
RECEIPT OF EMAIL REQUEST TYPE OF EMAIL TARGET RESPONSE TIME TARGET FIX TIME AND REPORTING
REQUEST FROM EMAIL RECEIPT
- ---------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
During business hours or Problem Within 6 hours Commercially reasonable best efforts with
other times weekly status reports to Customer
- ---------------------------------------------------------------------------------------------------------------------
During the hours Severe Problem Within one hour Commercially reasonable best efforts with
between 6:00 a.m and daily status reports to Customer
9:00 p.m. Pacific time
- ---------------------------------------------------------------------------------------------------------------------
During other times Severe Problem Within two hours Commercially reasonable best efforts with
daily status reports to Customer
- ---------------------------------------------------------------------------------------------------------------------
During business hours or Enhancement Within three business At e-lingo's discretion
other times Requests days
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
(c) In the event e-lingo does not respond to Customer within the
target response time from email receipt set forth above, then
Customer may contact the following e-lingo executive
escalation personnel in order. Customer must allow one hour
for response for each step in the escalation path.
<TABLE>
<S> <C> <C>
Grace Zhang (650) 638-2505 [email protected]
Charlie Slater (650) 638-2505 [email protected]
Bret Levy (650) 638-2505 [email protected]
</TABLE>
C-2
<PAGE> 9
EXHIBIT D
FEES
All fees below are quoted in U.S. Dollars and all payments shall be
made in U.S. Dollars. Customer shall pay all amounts due under this Agreement to
e-lingo at the address indicated at the beginning of this Agreement or such
other location as designated by e-lingo in writing
For this service, AmazeScape.com will:
- - Pay e-lingo in accordance with the pricing scale below. AmazeScape.com will
not be charged a setup fee, or a monthly minimum for e-lingo services.
<TABLE>
<CAPTION>
Number of Translations per Month CPM
- -------------------------------------------------------------------------------------------------------------
<S> <C>
0 - 5K 12.00 CPM
- -------------------------------------------------------------------------------------------------------------
5K - 25K 10.00 CPM
- -------------------------------------------------------------------------------------------------------------
25K - 50K 9.00 CPM
- -------------------------------------------------------------------------------------------------------------
50K - 100K + 8.00 CPM
- -------------------------------------------------------------------------------------------------------------
</TABLE>
- - Payment of fees are due monthly. Payment will be due Net 15 days from
the end of each month.
- Marketing
Agree to be a referenceable customer for press and analyst inquiries,
quotes and press releases.
Agree to implement and launch the Browse and Text Translation Services
within 60 days of signing the contract with e-lingo.
Agree to allow e-lingo to do a customer win announcement regarding
signing a contract with AmazeScape.com.
In exchange e-lingo will:
- - Provide Translated Text and Translated Browse (urls or Web pages) Services
to AmazeScape.com. The translations provided will be up to 2K in text size
for text blocks and up to 8K in text size for translated Web pages.
- - Provide an invoice to AmazeScape.com monthly that will be based on the
number of translations provided by e-lingo to AmazeScape.com for that
month.
Agree to be a referenceable customer for press and analyst inquiries, quotes and
press releases.
D-1
<PAGE> 1
Exhibit 10.10
FORM OF DIRECTOR'S WARRANT TO PURCHASE SHARES OF COMMON STOCK
AMAZESCAPE.COM INC.
THE WARRANTS AND COMMON STOCK ISSUABLE UPON EXERCISE OF THE WARRANTS HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"),
AND THE WARRANTS AND COMMON STOCK ISSUABLE ON EXERCISE OF WARRANT MAY NOT BE
SOLD UNLESS THERE IS A REGISTRATION STATEMENT IN EFFECT COVERING THE WARRANTS
AND COMMON STOCK OR THERE IS AVAILABLE AN EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE ACT.
Void after 5:00 P.M., New York City time, on October 15, 2002
For the purchase of up to 25,000 shares of Common Stock
WARRANT TO PURCHASE SHARES OF COMMON STOCK
OF
AMAZESCAPE.COM INC.
This is to certify that, for value received, whose address is
or its assigns (the "Holder" or
"Holders") is entitled to purchase, subject to the provisions of this Warrant,
(this "Warrant"), from AmazeScape.com Inc., a Nevada corporation (the
"Company"), having a principal place of business located at 264 Airmont Ave.,
Mahwah, NJ 07430, a total of ( ) shares
(the "Warrant Shares") of Common Stock, $.0005 par value per share, of the
Company (the "Common Stock"), at any time commencing from the date of issuance
(the "Exercise Commencement Date") until 5:00 P.M., New York City time, October
15, 2002 (which shall be referred to herein as the "Exercise Term"), at an
exercise price of $1.00 per share of Common Stock, subject to adjustment as set
forth hereinafter (the "Purchase Price"). This Warrant and any warrant resulting
from a transfer or subdivision of this Warrant shall sometimes hereinafter be
referred to as a "Warrant." The number of shares of Common Stock to be received
upon the exercise of this Warrant and the price to be paid per share of Common
Stock may be adjusted from time to time as set forth in Section 8 below.
This Warrant is being issued in consideration for the Holder serving as
Director of the Company as elected on October 15, 1999 for a period of one (1)
year.
1. Exercise of Warrant. This Warrant shall entitle the Holder thereof to
purchase the Warrant Shares at an exercise price equal to $1.00 per share. This
Warrant may also be exercised in whole or in part at any time or from time to
time during the period commencing on the Exercise Commencement Date through the
last day of the Exercise Term, or if such day is a day on which banking
institutions in the State of New York are authorized by law to close, then on
the next succeeding day which shall not be such a day, by presentation and
surrender hereof to the Company at its principal office, or at the office of its
stock transfer agent, if any, with the Purchase Form annexed hereto duly
executed and accompanied by payment of the Purchase Price for the number of
shares specified in such form. If this Warrant should be exercised in part only,
the Company shall, upon surrender of this Warrant for cancellation, execute and
deliver a new Warrant evidencing the rights of the Holder thereof to purchase
the balance of the shares purchasable hereunder.
(a) Normal Exercise: Upon receipt by the Company of this Warrant
at its office, or by the stock transfer agent of the Company
at its office, in proper form for exercise and accompanied by
the appropriate payment for the Warrant Shares issuable upon
such exercise, the Holder shall be deemed to be the holder of
record of such Warrant Shares, notwithstanding that the stock
transfer books of the Company shall then be closed or that
certificates representing such Warrant Shares shall not then
be actually delivered to the Holder. Certificates for the
Warrant Shares shall be delivered to the Holder within a
reasonable time, not to exceed five (5) business days
following the exercise of this Warrant (the "Delivery Date").
(b) Cashless Exercise: Upon receipt by the Company of this Warrant
at
<PAGE> 2
its office in proper form for exercise and accompanied by an
instruction to the Company from the Holder to effect a
cashless exercise of the Warrant, the Holder shall be sent
on the Delivery Date an amount equal to the product of:
(i) the Warrant Shares issuable upon such exercise, and
(ii) the Market Price (as defined below) on the
Delivery Date reduced by $1.00 and any per share expenses
incurred in executing sales of Warrant Shares issuable upon
such exercise.
2. Redemption by the Company. The Company shall have the right to
repurchase from the holder and the Holder shall be obligated to sell to the
Company, the Warrant in its entirety for the total price of $1.00 if the Company
does not complete a merger with a publicly traded company on or before June 30,
2000.
3. Registration Rights. The Company shall cause all Warrant Shares to be
registered, at its expense, for sale or resale under the Securities Act (defined
below) pursuant to an appropriate registration statement, as a condition to the
closing of any merger or acquisition involving the Company that results in the
Company's stockholders holding shares of publicly-traded stock and either (a) in
connection with the shares to be registered in connection with any such the
merger or acquisition (i.e. piggyback registration) or (b) pursuant to a
separate registration of the Warrant Shares. The Company shall use its best
diligent efforts to cause such registration statement to become effective as
soon as possible after filing and, in the event of the Merger, concurrently with
the closing. After registration, the Company shall use its best efforts to
maintain a continuously effective registration statement covering such Warrant
until all such Warrant Shares have been sold (or with respect to Warrant shares,
the expiration of the Warrant without exercise).
4. Reservation and Listing of Shares. The Company hereby agrees that at all
times there shall be reserved for issuance and delivery upon exercise of this
Warrant, such number of shares of Common Stock as shall be required for issuance
and delivery upon exercise of this Warrant.
5. Fractional Shares. No fractional shares or scrip representing fractional
shares shall be issued upon the exercise of this Warrant. Subject to Section
8(h) hereof, any fraction of a share called for upon any exercise hereof shall
be cancelled and the Company shall pay to the Holder an amount of cash equal to
the fair market value of such fractional share, based upon the then fair market
value per share of Common Stock.
6. Exchange; Transfer; Assignment or Loss of Warrant. This Warrant is
exchangeable, without expense, at the option of the Holder, upon presentation
and surrender hereof to the Company at its office or at the office of its stock
transfer agent, if any, for other Warrants of different denominations entitling
the Holder thereof to purchase in the aggregate the same number of shares of
Common Stock purchasable hereunder. Subject to Section 10 hereof, upon surrender
of this Warrant to the Company at its principal office or at the office of its
stock transfer agent, if any, with the Assignment Form annexed hereto duly
executed and funds sufficient to pay the applicable transfer tax, if any, the
Company shall, without charge, execute and deliver a new Warrant in the name of
the assignee named in such instrument of assignment and this Warrant shall
promptly be canceled. This Warrant may be divided or combined with other
Warrants which carry the same rights upon presentation thereof at the office of
the Company or at the office of its stock transfer agent, if any, together with
a written notice signed by the Holder hereof specifying the names and
denominations in which new Warrants are to be issued. Upon receipt by the
Company of evidence satisfactory to it of the loss, theft, destruction or
mutilation of this Warrant, and, in the case of loss, theft or destruction, of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Warrant, if mutilated, the Company will execute and deliver a new Warrant
of like tenor and date.
7. Rights of the Holder. The Holder shall not, by virtue hereof, be
entitled to any rights of a shareholder of the Company until exercise hereof.
8. Adjustments of Purchase Price and Number of Shares.
(a) Subdivision and Combination. In case the Company shall at any time
subdivide the outstanding shares of Common Stock, the Purchase Price shall
forthwith be proportionately increased or decreased.
<PAGE> 3
(b) Adjustment in Number of Shares.
(i) Upon each adjustment of the Purchase Price pursuant to the
provisions of this Section 8, the number of Warrant Shares issuable upon the
exercise of each Warrant shall be adjusted to the nearest full Share by
multiplying a number equal to the Purchase Price in effect immediately prior to
such adjustment by the number of Warrant Shares issuable upon exercise of the
Warrants immediately prior to such adjustment and dividing the product so
obtained by the adjusted Purchase Price.
(c) Reclassification, Consolidation, Merger, Etc. In case of any
reclassification or change of the outstanding Common Stock (other than a change
in par value to no par value, or from no par value to par value, or as a result
of a subdivision or combination), or in the case of any consolidation of the
Company with, or merger of the Company into, another corporation (other than a
consolidation or merger in which the Company is the surviving corporation and
which does not result in any reclassification or change of the outstanding
Common Stock, except a change as a result of a subdivision or combination of
such shares or a change in par value, as aforesaid), or in the case of a sale or
conveyance to another corporation of all or a substantial part of the property
of the Company, the Holder shall thereafter have the right to purchase the kind
and number of shares of Common Stock and other securities and property
receivable upon such reclassification, change, consolidation, merger, sale or
conveyance as if the Holder were the owner of the Warrant Shares immediately
prior to any such events at a price equal to the product of (x) the number of
Warrant Shares and (y) the Purchase Price in effect immediately prior to the
record date for such reclassification, change, consolidation, merger, sale or
conveyance as if such Holder had exercised the Warrants; provided, however, that
nothing contained herein shall cause the number of Warrant Shares to be
decreased in the event of a combination of shares upon any such
reclassification, change, consolidation, merger, sale or conveyance.
(d) Adjustment of Purchase Price in Certain Cases. No adjustment of the
Purchase Price shall be made: (i) upon the issuance or sale of Common Stock upon
the exercise of warrants and options outstanding as of the date hereof, or (ii)
upon the issuance of options granted pursuant to the Company's Stock Option
Plans (the "Plans"); or (iii) upon the issuance of warrants to purchase Common
Stock, with an exercise price not less than the fair market value of the Common
Stock subsequent to the date hereof, or the sale of any shares of Common Stock
pursuant to the exercise of any such warrants.
(e) Dividends and Other Distributions with Respect to Securities. The
Warrants are not entitled to any dividends, or other distributions which the
Company may make.
(f) Fractional Shares. As to any fraction of a share which the Holder
Warrant would be entitled to purchase upon exercise of this Warrant, the Company
shall pay, in lieu of such fractional interest, an amount in cash equal to the
fair market value of such fractional interest, to the nearest one-hundredth of a
share, computed on the basis of the Market Price, as set forth below. The
Holder, by his acceptance hereof, expressly waives any right to receive any
fractional share of stock or fractional Warrant upon exercise of this Warrant.
As used herein, the phrase "Market Price" at any date shall be deemed
to be the average of the last reported sale prices for the last three (3)
trading days prior to such date, in either case as officially reported by the
principal securities exchange on which the Common Stock is listed or admitted to
trading or as reported by the NASDAQ Stock Market, or, if the Common Stock is
not listed or admitted to trading on any national securities exchange or quoted
on the NASDAQ Stock Market, the average of the closing bid prices for the last
three (3) trading days prior to such date as furnished by the NASDAQ Stock
Market or similar organization if the NASDAQ Stock Market is not reporting such
information, or if the Common Stock is not quoted on the NASDAQ Stock Market, as
determined in good faith by resolution of the Board of Directors of the Company,
based on the best information available to it.
(g) Warrant Certificate After Adjustment. Irrespective of any change
pursuant to this Section 8 in the Purchase Price or in the number, kind or class
of shares or other securities or other property obtainable upon exercise of this
Warrant, this Warrant may continue to express as the Purchase Price and as the
number of shares obtainable upon exercise, the same price and number of shares
as
<PAGE> 4
are stated herein.
(h) Statement of Calculation. Whenever the Purchase Price shall be
adjusted pursuant to the provisions of this Section 8, the Company shall
forthwith file at its principal office, a statement signed by an executive
officer of the Company specifying the adjusted Purchase Price determined as
above provided in such section and a certificate of the independent public
accountants regularly retained by the Company. Such statement shall show in
reasonable detail the method of calculation of such adjustment and the facts
requiring the adjustment and upon which the calculation is based. The Company
shall forthwith cause a notice setting forth the adjusted Purchase Price to be
sent by certified mail, return receipt requested, postage prepaid, to the
Holder.
9. Definition of "Common Stock". For the purpose of this Warrant, the term
"Common Stock" shall mean, in addition to the class of stock designated as the
Common Stock, $.0005 par value per share, of the Company on the date hereof, any
class of stock resulting from successive changes or reclassifications of the
Common Stock consisting solely of changes in par value, or from par value to no
par value, or from no par value to par value. If at any time, as a result of an
adjustment made pursuant to one or more of the provisions of Section 8 hereof,
the shares of stock or other securities or property obtainable upon exercise of
this Warrant shall include securities of the Company other than Common Stock or
securities of another corporation, then thereafter the amount of such other
securities so obtainable shall be subject to adjustment from time to time in a
manner and upon terms as nearly equivalent as practicable to the provisions with
respect to Common Stock contained in Section 8 hereof and all other provisions
of this Warrant with respect to Common Stock shall apply on like terms to any
such other shares or other securities.
10. Transfer. Warrant may be assigned by the Holder, in whole or in part,
to any of its members, managers, employees, other persons or entities who have
provided services to or for the Holder in connection with its performance
hereunder and any family members thereof. The Holder shall furnish the Company
with prior written notice of any proposed assignment of Warrant.
11. Notices to Warrant Holders. Nothing contained in this Agreement shall
be construed as conferring upon the Holder or Holders the right to vote or to
consent or to receive notice as a shareholder in respect of any meetings of
shareholders for the election of directors or any other matter, or as having any
rights whatsoever as a shareholder of the Company. If, however, at any time
prior to the expiration of the Warrants and their exercise, any of the following
events shall occur:
(a) The Company shall take a record of the holders of its Common Stock
for the purpose of entitling them to receive a dividend or distribution payable
otherwise than in cash, or a cash dividend or distribution payable otherwise
than out of current or retained earnings, as indicated by the accounting
treatment of such dividend or distribution on the books of the Company; or
(b) The Company shall offer to all the holders of its Common Stock any
additional shares of capital stock of the Company or securities convertible into
or exchangeable for shares of capital stock of the Company, or any warrant,
right or option to subscribe therefor; or
(c) A dissolution, liquidation or winding up of the Company (other
than in connection with a consolidation or merger) or a sale of all or
substantially all of its property, assets and business shall be proposed; or
(d) There shall be any capital reorganization or reclassification of
the capital stock of the Company, or consolidation or merger of the Company with
another entity; then, in any one or more of said events, the Company shall give
written notice of such event at least fifteen (15) days prior to the date fixed
as a record date or the date of closing the transfer books for the determination
of the shareholders entitled to such dividend, distribution, convertible or
exchangeable securities or subscription rights, warrants or options, or entitled
to vote on such proposed dissolution, liquidation, winding up or sale. Such
notice shall specify such record date or the date of closing the transfer books,
as the case may be. Failure to give such notice or any defect therein shall not
affect the validity of any action taken in connection with the declaration or
payment of any such dividend or distribution, or the issuance of any convertible
or exchangeable
<PAGE> 5
securities or subscription rights, warrants or options, or any proposed
dissolution, liquidation, winding up or sale.
12. Notices. All notices, requests, consents and other communications
hereunder shall be in writing and shall be deemed to have been duly made when
delivered, or mailed by registered or certified mail, return receipt requested:
(a) If to the Holder, to him at the address set forth in the preamble
of this Warrant; or
(b) If to the Company, to the address set forth in the preamble of this
Agreement; or
(c) In each case to such other address as either party may designate by
notice to the other party.
13. Successors. All the covenants and provisions of this Warrant by or for
the benefit of the Holder shall inure to the benefit of his successors and
assigns hereunder.
14. Termination. This Warrant will terminate on any earlier date when it
has been entirely exercised and all the Shares issuable upon exercise of this
Warrant have been resold to the public.
15. Governing Law. This Warrant shall be deemed to be made under the laws
of the State of New York and for all purposes shall be construed in accordance
with the laws of said State.
16. Entire Agreement; Amendment; Waiver. This Warrant and all attachments
hereto and all incorporation by references set forth herein, set forth the
entire agreement and understanding between the parties as to the subject matter
hereof and merges and supersedes all prior discussions, agreements and
understandings of any and every nature among them. This Warrant may be amended,
the Company may take any action herein prohibited or omit to take any action
herein required to be performed by it, and any breach of any covenant,
agreement, warranty or representation may be waived, only if the Company has
obtained the written consent or waiver of the Holder. No course of dealing
between or among any persons having any interest in this Warrant will be deemed
effective to modify, amend or discharge any part of this Warrant or any rights
or obligations of any person under or by reason of this Warrant.
AMAZESCAPE.COM INC.
By:
Name: Anton Nicaj
Title: President
Dated: October 15, 1999
Attest:____________________________
<PAGE> 6
AMAZESCAPE.COM, INC.
ASSIGNMENT FORM
(To be signed only upon assignment of Warrant)
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers unto
------------------------------------------------------------------.
(Please print name, address and social security number)
the rights of the undersigned represented by this Warrant, to the extent of
_______________________________ (_____________) shares of Common Stock, $.0005
par value per share, of AmazeScape.com, Inc. (the "Company") hereby irrevocably
constituting and appointing _________________________________ Attorney to make
such transfer on the books of the Company, with full power of substitution in
the premises.
Dated: __________________________
______________________________________
Signature of Registered Holder
Signature Guaranteed: ________________
Note: The above signature must correspond with the name as it appears upon the
front page of this Warrant in every particular, without alteration or
enlargement or any change whatever.
<PAGE> 7
AMAZESCAPE.COM, INC.
PURCHASE FORM
AMAZESCAPE.COM, Inc.
264 Airmont Ave,
Mahwah, NJ 07430
The undersigned hereby irrevocably elects to exercise the right of purchase
represented by this Warrant for, and to purchase hereunder, shares of Common
Stock, $.0005 par value per share, of AmazeScape.com, Inc. (the
"Shares")provided for herein, and requests that certificates for the Shares be
issued in the name of
------------------------------------------------------------------.
(Please print name, address and social security number)
and, if said number of Shares shall not be all the Share purchasable hereunder,
that a new Warrant for the balance of the Shares purchasable under this Warrant
be registered in the name of the undersigned Warrant holder or his Assignee as
below indicated and delivered to the address stated below.
Dated: _________________________, __________
Name of Warrant holder or Assignee:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address: ____________________________________________
Signature: ___________________________________________
(Please print)
Signature Guaranteed: __________________________________
Note: The above signature must correspond with the name as it appears upon the
front page of this Warrant in every particular, without alteration or
enlargement or any change whatever, unless this Warrant has been assigned.
<PAGE> 1
Exhibit 10.14
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT, dated as of February 3, 2000, is made and entered into by
and between PREMIER CONCEPTS, INC., a Colorado corporation ("Company"), and
SISSEL B. ECKENHAUSEN ("Employee").
WITNESSETH
WHEREAS, Company and Employee are parties to a certain Employment
Agreement dated February 26, 1999 (the "Original Employment Agreement"),
pursuant to which Employee currently serves as President and Chief Executive
Officer of Company.
WHEREAS, Company is contemplating entering into an Agreement and Plan of
Merger ("Merger Agreement") with AmazeScape.com Inc. ("AMZE"), pursuant to which
Company would be required, among other things, to (a) form a new corporation
under the laws of the State of Delaware ("Premier"), which would be a wholly
owned subsidiary of Company, (b) transfer and assign to Premier substantially
all businesses, rights, warranties, privileges, properties and assets (of every
kind, nature and description whatsoever, real, personal or mixed, tangible or
intangible and wherever situated), used or useful in the business of Parent as
then conducted or proposed to be conducted (such transfer and assignment, the
"Drop-Down") and (c) issue additional shares of Company's common stock and a new
class of preferred stock as part of the consideration for the merger of
AmazeMerger Co., a Delaware corporation and wholly-owned subsidiary of Company,
with and into AMZE (such merger, the "Merger").
WHEREAS, subject to the terms and conditions set forth in this Amendment,
the parties have agreed that, as part of the Drop-Down, Company shall assign all
of its rights and interests in and to the Original Employment Agreement to
Premier and that Employee shall continue to serve as the President and Chief
Executive Officer of Premier in accordance with the terms set forth in the
Original Employment Agreement, as amended by this Amendment (the "Employment
Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinbelow set forth, the parties agree as follows:
1. GRANT AND ISSUANCE OF ADDITIONAL STOCK OPTIONS. The Merger Agreement
contemplates the adoption by Company of a certain Stock Option Plan, conditioned
on the consummation of the Merger. As consideration for entering into this
Amendment, Company agrees that, if the Merger is consummated, Company will grant
and issue to Employee on the date of the Merger incentive stock options pursuant
to said Stock Option Plan to purchase, exercisable at any time after the vesting
of such options but prior to fifth (5th) anniversary of such vesting, an
aggregate of 57,000 shares of Company's common stock, par value $.002 per share
("Common Stock"), at a price per share equal to the closing price of Common
Stock on The Nasdaq SmallCap Market on the last trading day immediately
preceding the date of issuance of said options. The options granted to Employee
under this Amendment shall vest as follows:
<PAGE> 2
(a) If before February 25, 2001 Premier makes an "Extension" (as
defined in paragraph 2 below), the option to purchase fifty percent (50%) of
said shares of Common Stock shall vest on February 25, 2001 and Employee's
option to purchase the remaining fifty percent (50%) of said shares of Common
Stock shall vest on February 25, 2002.
(b) If as of February 25, 2001 Premier has not made an "Extension"
(as defined in paragraph 2 below), the option to purchase all shares of Common
Stock shall vest on February 25, 2001.
In the event Employee's employment with Premier is terminated by Premier without
"Cause" (as defined in the Original Employment Agreement) prior to the vesting
of the options described in this paragraph 1, then and in such event those
options shall be deemed automatically to have vested and become exercisable by
Employee in accordance with their respective terms and conditions. Said options,
to the extent vested, may be exercised in whole or in any one or more parts, at
any time prior to their expiration as set forth in said Stock Option Plan.
The options to be granted and issued to Employee pursuant to this paragraph 1
are in addition to, not in replacement of, any other options granted or other
benefits accorded to Employee by Company, whether pursuant to the Original
Employment Agreement or otherwise.
2. EXTENSION OF THE TERM. Employee hereby grants Premier the right to
extend the "Term" (as defined in the Original Employment Agreement) for an
additional period of one year (i.e., through February 25, 2003), but with a
cost-of-living adjustment in Employee's salary in proportion to the change in
the Denver Metropolitan Area Consumer Price Index (all items) for All Urban
Consumers as published from time to time by the United Sates Department of
Labor, Bureau of Labor Statistics (or, if at the relevant time such index has
been discontinued or replaced, such other governmental index or computation with
which it has been replaced that would yield substantially the same result as
would have been obtained had such index not been discontinued or replaced) from
February 25, 2001 to February 25, 2002. An extension of the Term pursuant to
this paragraph 2 is referred to herein as an "Extension."
3. SEVERANCE PAYMENTS. Employee shall be entitled to receive, as
severance, continued payment of salary for the six-month period immediately
following Employee's termination of employment with Premier (at the rate in
effect at the time of termination) if and only if such termination occurs,
without "Cause" (as defined in the Original Employment Agreement):
(a) on February 25, 2002, if Premier has not made an Extension;
(b) on February 25, 2003, if Premier has not made Employee a
reasonable offer to extend Employee's employment with Premier after such date
pursuant to a written employment agreement; or
2
<PAGE> 3
(c) within six months before the expiration of the Term on February
25, 2002 (if Premier does not exercise its right to make an Extension pursuant
to paragraph 2) or February 25, 2003 (if Premier does exercise its right to make
an Extension pursuant to paragraph 2).
Notwithstanding the foregoing, any severance payments due pursuant to this
paragraph 3 shall be reduced, if applicable, by any "Termination Payments"
received by Employee pursuant to Section 3.11 of the Original Employment
Agreement.
4. WAIVER OF RIGHTS PURSUANT TO "CHANGE OF CONTROL" PROVISIONS. Section
8.4 of the Original Employment Agreement (which states the definition of the
term "Change of Control") is hereby amended to insert the following before the
period at the end of such section:
; provided, however, no "Change of Control" shall be deemed to have
occurred by virtue of the consummation of any transaction
contemplated by the Agreement and Plan of Merger to which Company
and AmazeScape.com, Inc. are or may become parties.
Employee acknowledges that the intent and effect of this paragraph 4 is for
Employee to waive any and all rights under the Original Employment Agreement
arising upon the occurrence of a "Change of Control" (including, without
limitation, the right to voluntarily terminate employment pursuant to Section
3.8 of the Original Employment Agreement) by virtue of the consummation of
transactions contemplated by the Merger Agreement. Employee represents and
warrants that Employee's waiver in this paragraph 4 has been made knowingly,
intelligently and voluntarily and that Company's covenant to issue additional
options as set forth in paragraph 1 and to pay severance upon certain events as
set forth in paragraph 3 of this Amendment constitutes adequate consideration
for Employee's waiver pursuant to this paragraph 4.
5. ASSIGNMENT OF COMPANY'S RIGHTS UNDER ORIGINAL EMPLOYMENT AGREEMENT.
Company intends, as part of the Drop-Down, to transfer and assign to Premier all
of Company's rights and interests in and to the Employment Agreement. Employee
acknowledges that Company has the right to effect such transfer and assignment
without Employee's consent. Upon and after such transfer and assignment, all
references to "Company" under the Original Employment Agreement shall mean and
refer to Premier, rather than Company, and Premier shall be substituted for
Company as a party to the Original Employment Agreement; provided, however, all
references to "Company" in Section 2.4 of the Original Employment Agreement
(i.e., the provisions relating to Company's Incentive Stock Option Plan and
common stock) shall continue to refer to Company.
6. EFFECT OF THIS AMENDMENT ON ORIGINAL EMPLOYMENT AGREEMENT. This
Amendment is intended to amend the Original Employment Agreement and, therefore,
to the extent of any inconsistency between the terms of the Original Employment
Agreement and the terms of this Amendment, the terms of this Amendment shall
control. The Original Employment Agreement, as amended by this Amendment, shall
remain in full force and effect.
3
<PAGE> 4
7. EMPLOYEE'S INDEPENDENT COUNSEL. Employee acknowledges that counsel to
Company has advised Employee to seek the advice of her own separate counsel in
connection with entering into this Amendment. Employee represents that Employee
is entering into this Amendment after obtaining or having the opportunity to
obtain such advice.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
Company: PREMIER CONCEPTS, INC., a Colorado
corporation
By:_________________________________
Employee: ____________________________________
SISSEL B. ECKENHAUSEN
4
<PAGE> 1
Exhibit 10.15
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT, dated as of February 3, 2000, is made and entered into by
and between PREMIER CONCEPTS, INC., a Colorado corporation ("Company"), and TODD
HUSS ("Employee").
WITNESSETH
WHEREAS, Company and Employee are parties to a certain Employment
Agreement dated February 26, 1999 (the "Original Employment Agreement"),
pursuant to which Employee currently serves as Chief Financial Officer and
Principal Accounting Officer of Company.
WHEREAS, Company is contemplating entering into an Agreement and Plan of
Merger ("Merger Agreement") with AmazeScape.com Inc. ("AMZE"), pursuant to which
Company would be required, among other things, to (a) form a new corporation
under the laws of the State of Delaware ("Premier"), which would be a wholly
owned subsidiary of Company, (b) transfer and assign to Premier substantially
all businesses, rights, warranties, privileges, properties and assets (of every
kind, nature and description whatsoever, real, personal or mixed, tangible or
intangible and wherever situated), used or useful in the business of Parent as
then conducted or proposed to be conducted (such transfer and assignment, the
"Drop-Down") and (c) issue additional shares of Company's common stock and a new
class of preferred stock as part of the consideration for the merger of
AmazeMerger Co., a Delaware corporation and wholly-owned subsidiary of Company,
with and into AMZE (such merger, the "Merger").
WHEREAS, subject to the terms and conditions set forth in this Amendment,
the parties have agreed that, as part of the Drop-Down, Company shall assign all
of its rights and interests in and to the Original Employment Agreement to
Premier and that Employee shall continue to serve as the Chief Financial Officer
and Principal Accounting Officer of Premier in accordance with the terms set
forth in the Original Employment Agreement, as amended by this Amendment (the
"Employment Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual covenants
and agreements hereinbelow set forth, the parties agree as follows:
1. GRANT AND ISSUANCE OF ADDITIONAL STOCK OPTIONS. The Merger Agreement
contemplates the adoption by Company of a certain Stock Option Plan, conditioned
on the consummation of the Merger. As consideration for entering into this
Amendment, Company agrees that, if the Merger is consummated, Company will grant
and issue to Employee on the date of the Merger incentive stock options pursuant
to said Stock Option Plan to purchase, exercisable at any time after the vesting
of such options but prior to fifth (5th) anniversary of such vesting, an
aggregate of 28,000 shares of Company's common stock, par value $.002 per share
("Common Stock"), at a price per share equal to the closing price of Common
Stock on The Nasdaq SmallCap Market on the last trading day immediately
preceding the date of issuance of said options. The options granted to Employee
under this Amendment shall vest as follows:
<PAGE> 2
(a) If before February 25, 2001 Premier makes an "Extension" (as
defined in paragraph 2 below), the option to purchase fifty percent (50%) of
said shares of Common Stock shall vest on February 25, 2001 and Employee's
option to purchase the remaining fifty percent (50%) of said shares of Common
Stock shall vest on February 25, 2002.
(b) If as of February 25, 2001 Premier has not made an "Extension"
(as defined in paragraph 2 below), the option to purchase all shares of Common
Stock shall vest on February 25, 2001.
In the event Employee's employment with Premier is terminated by Premier without
"Cause" (as defined in the Original Employment Agreement) prior to the vesting
of the options described in this paragraph 1, then and in such event those
options shall be deemed automatically to have vested and become exercisable by
Employee in accordance with their respective terms and conditions. Said options,
to the extent vested, may be exercised in whole or in any one or more parts, at
any time prior to their expiration as set forth in said Stock Option Plan.
The options to be granted and issued to Employee pursuant to this paragraph 1
are in addition to, not in replacement of, any other options granted or other
benefits accorded to Employee by Company, whether pursuant to the Original
Employment Agreement or otherwise.
2. EXTENSION OF THE TERM. Employee hereby grants Premier the right to
extend the "Term" (as defined in the Original Employment Agreement) for an
additional period of one year (i.e., through February 25, 2003), but with a
cost-of-living adjustment in Employee's salary in proportion to the change in
the Denver Metropolitan Area Consumer Price Index (all items) for All Urban
Consumers as published from time to time by the United Sates Department of
Labor, Bureau of Labor Statistics (or, if at the relevant time such index has
been discontinued or replaced, such other governmental index or computation with
which it has been replaced that would yield substantially the same result as
would have been obtained had such index not been discontinued or replaced) from
February 25, 2001 to February 25, 2002. An extension of the Term pursuant to
this paragraph 2 is referred to herein as an "Extension."
3. SEVERANCE PAYMENTS. Employee shall be entitled to receive, as
severance, continued payment of salary for the six-month period immediately
following Employee's termination of employment with Premier (at the rate in
effect at the time of termination) if and only if such termination occurs,
without "Cause" (as defined in the Original Employment Agreement):
(a) on February 25, 2002, if Premier has not made an Extension;
(b) on February 25, 2003, if Premier has not made Employee a
reasonable offer to extend Employee's employment with Premier after such date
pursuant to a written employment agreement; or
2
<PAGE> 3
(c) within six months before the expiration of the Term on February
25, 2002 (if Premier does not exercise its right to make an Extension pursuant
to paragraph 2) or February 25, 2003 (if Premier does exercise its right to make
an Extension pursuant to paragraph 2).
Notwithstanding the foregoing, any severance payments due pursuant to this
paragraph 3 shall be reduced, if applicable, by any "Termination Payments"
received by Employee pursuant to Section 3.11 of the Original Employment
Agreement.
4. WAIVER OF RIGHTS PURSUANT TO "CHANGE OF CONTROL" PROVISIONS. Section
8.4 of the Original Employment Agreement (which states the definition of the
term "Change of Control") is hereby amended to insert the following before the
period at the end of such section:
; provided, however, no "Change of Control" shall be deemed to have
occurred by virtue of the consummation of any transaction
contemplated by the Agreement and Plan of Merger to which Company
and AmazeScape.com, Inc. are or may become parties.
Employee acknowledges that the intent and effect of this paragraph 4 is for
Employee to waive any and all rights under the Original Employment Agreement
arising upon the occurrence of a "Change of Control" (including, without
limitation, the right to voluntarily terminate employment pursuant to Section
3.8 of the Original Employment Agreement) by virtue of the consummation of
transactions contemplated by the Merger Agreement. Employee represents and
warrants that Employee's waiver in this paragraph 4 has been made knowingly,
intelligently and voluntarily and that Company's covenant to issue additional
options as set forth in paragraph 1 and to pay severance upon certain events as
set forth in paragraph 3 of this Amendment constitutes adequate consideration
for Employee's waiver pursuant to this paragraph 4.
5. ASSIGNMENT OF COMPANY'S RIGHTS UNDER ORIGINAL EMPLOYMENT AGREEMENT.
Company intends, as part of the Drop-Down, to transfer and assign to Premier all
of Company's rights and interests in and to the Employment Agreement. Employee
acknowledges that Company has the right to effect such transfer and assignment
without Employee's consent. Upon and after such transfer and assignment, all
references to "Company" under the Original Employment Agreement shall mean and
refer to Premier, rather than Company, and Premier shall be substituted for
Company as a party to the Original Employment Agreement; provided, however, all
references to "Company" in Section 2.4 of the Original Employment Agreement
(i.e., the provisions relating to Company's Incentive Stock Option Plan and
common stock) shall continue to refer to Company.
6. EFFECT OF THIS AMENDMENT ON ORIGINAL EMPLOYMENT AGREEMENT. This
Amendment is intended to amend the Original Employment Agreement and, therefore,
to the extent of any inconsistency between the terms of the Original Employment
Agreement and the terms of this Amendment, the terms of this Amendment shall
control. The Original Employment Agreement, as amended by this Amendment, shall
remain in full force and effect.
3
<PAGE> 4
7. EMPLOYEE'S INDEPENDENT COUNSEL. Employee acknowledges that counsel to
Company has advised Employee to seek the advice of her own separate counsel in
connection with entering into this Amendment. Employee represents that Employee
is entering into this Amendment after obtaining or having the opportunity to
obtain such advice.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
Company: PREMIER CONCEPTS, INC., a Colorado
corporation
By:_________________________________
Employee: ____________________________________
TODD HUSS
4
<PAGE> 1
Exhibit 10.16
AMENDMENT TO EMPLOYMENT AGREEMENT
THIS AMENDMENT, dated as of February 3, 2000, is made and entered into
by and between PREMIER CONCEPTS, INC., a Colorado corporation ("Company"), and
KEVIN O'BRIEN ("Employee").
WITNESSETH
WHEREAS, Company and Employee are parties to a certain Employment
Agreement dated February 26, 1999 (the "Original Employment Agreement"),
pursuant to which Employee currently serves as Chief Operating Officer of
Company.
WHEREAS, Company is contemplating entering into an Agreement and Plan
of Merger ("Merger Agreement") with AmazeScape.com Inc. ("AMZE"), pursuant to
which Company would be required, among other things, to (a) form a new
corporation under the laws of the State of Delaware ("Premier"), which would be
a wholly owned subsidiary of Company, (b) transfer and assign to Premier
substantially all businesses, rights, warranties, privileges, properties and
assets (of every kind, nature and description whatsoever, real, personal or
mixed, tangible or intangible and wherever situated), used or useful in the
business of Parent as then conducted or proposed to be conducted (such transfer
and assignment, the "Drop-Down") and (c) issue additional shares of Company's
common stock and a new class of preferred stock as part of the consideration for
the merger of AmazeMerger Co., a Delaware corporation and wholly-owned
subsidiary of Company, with and into AMZE (such merger, the "Merger").
WHEREAS, subject to the terms and conditions set forth in this
Amendment, the parties have agreed that, as part of the Drop-Down, Company shall
assign all of its rights and interests in and to the Original Employment
Agreement to Premier and that Employee shall continue to serve as the Chief
Operating Officer of Premier in accordance with the terms set forth in the
Original Employment Agreement, as amended by this Amendment (the "Employment
Agreement").
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants and agreements hereinbelow set forth, the parties agree as follows:
1. GRANT AND ISSUANCE OF ADDITIONAL STOCK OPTIONS. The Merger Agreement
contemplates the adoption by Company of a certain Stock Option Plan, conditioned
on the consummation of the Merger. As consideration for entering into this
Amendment, Company agrees that, if the Merger is consummated, Company will grant
and issue to Employee on the date of the Merger incentive stock options pursuant
to said Stock Option Plan to purchase, exercisable at any time after the vesting
of such options but prior to fifth (5th) anniversary of such vesting, an
aggregate of 20,000 shares of Company's common stock, par value $.002 per share
("Common Stock"), at a price per share equal to the closing price of Common
Stock on The Nasdaq SmallCap Market on the last trading day immediately
preceding the date of issuance of said options. The options granted to Employee
under this Amendment shall vest as follows:
<PAGE> 2
(a) If before February 25, 2001 Premier makes an "Extension"
(as defined in paragraph 2 below), the option to purchase fifty percent (50%) of
said shares of Common Stock shall vest on February 25, 2001 and Employee's
option to purchase the remaining fifty percent (50%) of said shares of Common
Stock shall vest on February 25, 2002.
(b) If as of February 25, 2001 Premier has not made an
"Extension" (as defined in paragraph 2 below), the option to purchase all shares
of Common Stock shall vest on February 25, 2001.
In the event Employee's employment with Premier is terminated by Premier without
"Cause" (as defined in the Original Employment Agreement) prior to the vesting
of the options described in this paragraph 1, then and in such event those
options shall be deemed automatically to have vested and become exercisable by
Employee in accordance with their respective terms and conditions. Said options,
to the extent vested, may be exercised in whole or in any one or more parts, at
any time prior to their expiration as set forth in said Stock Option Plan.
The options to be granted and issued to Employee pursuant to this paragraph 1
are in addition to, not in replacement of, any other options granted or other
benefits accorded to Employee by Company, whether pursuant to the Original
Employment Agreement or otherwise.
2. EXTENSION OF THE TERM. Employee hereby grants Premier the right to
extend the "Term" (as defined in the Original Employment Agreement) for an
additional period of one year (i.e., through February 25, 2003), but with a
cost-of-living adjustment in Employee's salary in proportion to the change in
the Denver Metropolitan Area Consumer Price Index (all items) for All Urban
Consumers as published from time to time by the United Sates Department of
Labor, Bureau of Labor Statistics (or, if at the relevant time such index has
been discontinued or replaced, such other governmental index or computation with
which it has been replaced that would yield substantially the same result as
would have been obtained had such index not been discontinued or replaced) from
February 25, 2001 to February 25, 2002. An extension of the Term pursuant to
this paragraph 2 is referred to herein as an "Extension."
3. SEVERANCE PAYMENTS. Employee shall be entitled to receive, as
severance, continued payment of salary for the six-month period immediately
following Employee's termination of employment with Premier (at the rate in
effect at the time of termination) if and only if such termination occurs,
without "Cause" (as defined in the Original Employment Agreement):
(a) on February 25, 2002, if Premier has not made an
Extension;
(b) on February 25, 2003, if Premier has not made Employee a
reasonable offer to extend Employee's employment with Premier after such date
pursuant to a written employment agreement; or
2
<PAGE> 3
(c) within six months before the expiration of the Term on
February 25, 2002 (if Premier does not exercise its right to make an Extension
pursuant to paragraph 2) or February 25, 2003 (if Premier does exercise its
right to make an Extension pursuant to paragraph 2).
Notwithstanding the foregoing, any severance payments due pursuant to this
paragraph 3 shall be reduced, if applicable, by any "Termination Payments"
received by Employee pursuant to Section 3.11 of the Original Employment
Agreement.
4. WAIVER OF RIGHTS PURSUANT TO "CHANGE OF CONTROL" PROVISIONS. Section
8.4 of the Original Employment Agreement (which states the definition of the
term "Change of Control") is hereby amended to insert the following before the
period at the end of such section:
; provided, however, no "Change of Control" shall be deemed to
have occurred by virtue of the consummation of any transaction
contemplated by the Agreement and Plan of Merger to which
Company and AmazeScape.com, Inc. are or may become parties.
Employee acknowledges that the intent and effect of this paragraph 4 is for
Employee to waive any and all rights under the Original Employment Agreement
arising upon the occurrence of a "Change of Control" (including, without
limitation, the right to voluntarily terminate employment pursuant to Section
3.8 of the Original Employment Agreement) by virtue of the consummation of
transactions contemplated by the Merger Agreement. Employee represents and
warrants that Employee's waiver in this paragraph 4 has been made knowingly,
intelligently and voluntarily and that Company's covenant to issue additional
options as set forth in paragraph 1 and to pay severance upon certain events as
set forth in paragraph 3 of this Amendment constitutes adequate consideration
for Employee's waiver pursuant to this paragraph 4.
5. ASSIGNMENT OF COMPANY'S RIGHTS UNDER ORIGINAL EMPLOYMENT AGREEMENT.
Company intends, as part of the Drop-Down, to transfer and assign to Premier all
of Company's rights and interests in and to the Employment Agreement. Employee
acknowledges that Company has the right to effect such transfer and assignment
without Employee's consent. Upon and after such transfer and assignment, all
references to "Company" under the Original Employment Agreement shall mean and
refer to Premier, rather than Company, and Premier shall be substituted for
Company as a party to the Original Employment Agreement; provided, however, all
references to "Company" in Section 2.4 of the Original Employment Agreement
(i.e., the provisions relating to Company's Incentive Stock Option Plan and
common stock) shall continue to refer to Company.
6. EFFECT OF THIS AMENDMENT ON ORIGINAL EMPLOYMENT AGREEMENT. This
Amendment is intended to amend the Original Employment Agreement and, therefore,
to the extent of any inconsistency between the terms of the Original Employment
Agreement and the terms of this Amendment, the terms of this Amendment shall
control. The Original Employment Agreement, as amended by this Amendment, shall
remain in full force and effect.
3
<PAGE> 4
7. EMPLOYEE'S INDEPENDENT COUNSEL. Employee acknowledges that counsel
to Company has advised Employee to seek the advice of her own separate counsel
in connection with entering into this Amendment. Employee represents that
Employee is entering into this Amendment after obtaining or having the
opportunity to obtain such advice.
IN WITNESS WHEREOF, this Amendment is executed as of the date first
above written.
Company: PREMIER CONCEPTS, INC., a Colorado
corporation
By:_________________________________
Employee: ____________________________________
KEVIN O'BRIEN
4
<PAGE> 1
Exhibit 10.22
VOTING AGREEMENT
RE: PREMIER COMMERCE
This VOTING AGREEMENT (this "Agreement") is entered into as of February 3,
2000 by and among Premier Concepts, Inc., a Colorado corporation ("Company"),
Sissel B. Eckenhausen ("Eckenhausen"), Equisition Capital, LLC, a Delaware
limited liability company ("Equisition"), and International Monetary Group, Inc.
("IMG").
Background
Company contemplates entering into an Agreement and Plan of Merger
("Merger Agreement") with AmazeScape.com Inc. ("AMZE"), pursuant to which
Company would agree, among other things, to (a) form a new Delaware corporation
("Premier") as a wholly owned subsidiary of Company and then transfer and assign
to Premier substantially all businesses, rights, warranties, privileges,
properties and assets (of every kind, nature and description whatsoever, real,
personal or mixed, tangible or intangible and wherever situated), used or useful
in the business of Company as then conducted or proposed to be conducted, and
(b) cause AmazeMerger Co., a Delaware corporation and wholly owned subsidiary of
Company, to merge with and into AMZE, which will become a wholly owned
subsidiary of Company as the surviving corporation of such merger (such merger,
the "Merger").
Eckenhausen, as President and Chief Executive Officer of Company, and
Equisition and IMG, as investors in the Company, have made substantial
contributions to Company's business, which in anticipation of the Merger will be
transferred and assigned to Premier as aforesaid. To enable Company and Premier
to benefit from continued participation of Eckenhausen, Equisition and IMG in
management of Premier through serving, or designating someone to serve, on the
board of directors of Premier (the "Premier Board") after the Merger, the
parties are entering into this Agreement.
NOW, THEREFORE, in consideration of the foregoing and the representations,
warranties, covenants and agreements contained herein, the parties hereby agree
as follows:
1. Eckenhausen as a Director. Throughout the two-year period beginning on
the date of the consummation of the Merger, or for such shorter period during
which Eckenhausen continues to serve as President and Chief Executive Officer of
Premier, Company shall vote or cause to be voted all shares of Premier
(including, without limitation, all proxies for any shares of Premier) and shall
take any and all action (including, without limitation, the signing of any
consent presented for purposes of electing one or more directors to serve on the
Premier Board) so that Eckenhausen continues to serve as a director on the
Premier Board at all times during such period.
2. Designation of a Director by Equisition. Throughout the two-year period
beginning on the date of the consummation of the Merger, Company shall vote or
cause to be voted all shares of Premier (including, without limitation, all
proxies for any shares of Premier)
<PAGE> 2
and shall take any and all action (including, without limitation, the signing of
any consent presented for purposes of electing one or more directors to serve on
the Premier Board, or removing and/or replacing a director serving on the
Premier Board, with or without cause) so that at all times during said two-year
period at least one of the directors serving on the Premier Board is a director
that Equisition has designated , it being specifically agreed that Equisition
may change such designation at any one or more times by written notice to
Company and thereupon require the removal and replacement of any designee of
Equisition serving on the Premier Board. In the event of any vacancy on the
Premier Board resulting from the death, incapacity, resignation or removal of a
designee of Equisition, or if Equisition desires for any reason whatsoever to
remove and replace a director that Equisition previously designated to serve on
the Premier Board, Company shall hold a special meeting or sign a written
consent as promptly as practicable in order to fill such vacancy, or effect such
removal and replacement, so that at least one director serving on the Premier
Board is a then-current designee of Equisition.
3. Designation of a Director by IMG. Throughout the two-year period
beginning on the date of the consummation of the Merger, Company shall vote or
cause to be voted all shares of Premier (including, without limitation, all
proxies for any shares of Premier) and shall take any and all action (including,
without limitation, the signing of any consent presented for purposes of
electing one or more directors to serve on the Premier Board, or removing and/or
replacing a director serving on the Premier Board, with or without cause) so
that at all times during said two-year period at least one of the directors
serving on the Premier Board is a director that IMG has designated, it being
specifically agreed that IMG may change such designation at any one or more
times by written notice to Company and thereupon require the removal and
replacement of any designee of IMG serving on the Premier Board. In the event of
any vacancy on the Premier Board resulting from the death, incapacity,
resignation or removal of a designee of IMG, or if IMG desires for any reason
whatsoever to remove and replace a director that IMG previously designated to
serve on the Premier Board, Company shall hold a special meeting or sign a
written consent as promptly as practicable in order to fill such vacancy, or
effect such removal and replacement, so that at least one director serving on
the Premier Board is a then-current designee of IMG.
4. Indemnification of Premier Directors. For as long as Company has
control directly or indirectly (including, without limitation, through any one
or more subsidiaries of Company or other intermediaries of any kind) over
Premier and Eckenhausen or a designee of Equisition or IMG continues to serve on
the Premier Board, Company agrees that the terms of indemnification provided to
each director serving on the Premier Board shall be no less favorable in any
respect to such director than the terms of indemnification provided to any
director of any other subsidiary of Company. For purposes of this Section 4,
"terms of indemnification" include, without limitation, the provisions of
directors' and officers' liability insurance, if applicable.
5. Binding Effect. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns, it
being expressly agreed that, for as long as Company has control directly or
indirectly (including, without limitation, through any one
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<PAGE> 3
or more subsidiaries of Company or other intermediaries of any kind) over
Premier, Company's successors and assigns include, without limitation, all
holders of shares of Premier. Furthermore, all references herein to Premier
shall include its successors or assigns with respect to all or any substantial
portion of Premier's assets or business, if Company has control directly or
indirectly (including, without limitation, through any one or more subsidiaries
of Company or other intermediaries of any kind) over such successor or assign.
6. Governing Law. This Agreement shall be governed by and construed and
enforced in accordance with the laws of the state of incorporation of Premier,
which as of the date hereof is the State of Delaware, without regard to
principles of conflicts of laws.
7. Entire Agreement. This Agreement constitutes the complete and exclusive
statement of the terms and conditions between the parties, and supersedes and
merges all prior proposals, understandings and all other agreements, oral and
written, between the parties relating to this Agreement. Without limiting the
generality of the preceding sentence, neither party hereto has made any
representation, warranty, covenant or other agreement relating to the subject
matter of this Agreement, except as expressly set forth in this Agreement.
8. Amendment, Modification. This Agreement can be amended or modified only
by a subsequent written agreement duly executed by all parties hereto.
9. Severability. Whenever possible, each provision of this Agreement shall
be interpreted in such manner as to be effective, valid and enforceable under
applicable law; however, if any provision of this Agreement shall be determined
by a court of competent jurisdiction to be illegal, invalid or unenforceable for
any reason, such determination shall not affect the remaining provisions of this
Agreement, which shall continue in full force and effect, and the parties
expressly agree that the court making such determination shall have the power
to, and the parties hereby request such court to, reduce or otherwise modify
such provision to the minimum extent necessary to render such provision legal,
valid, binding and enforceable, or, if necessary, delete such provision.
10. No Implied Waiver. Except as otherwise expressly provided herein, no
forbearance or leniency or other delay or failure of a party to enforce at any
one or more times, or for any periods of time, any or all provisions this
Agreement shall be construed as a waiver of any such provisions or shall
diminish or affect the right of such party thereafter to enforce the same or any
other provision absolutely in accordance with the terms hereof. No waiver of any
breach of this Agreement shall be a waiver of any other breach, and no waiver
shall be effective unless made in writing and signed by an authorized
representative of the waiving party.
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<PAGE> 4
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first written above.
PREMIER CONCEPTS, INC.
By:_____________________________
Name:
Title:
________________________________
SISSEL B. ECKENHAUSEN
EQUISITION CAPITAL, LLC
By:_____________________________
Name:
Title:
INTERNATIONAL MONETARY GROUP, INC.
By:_____________________________
Name:
Title:
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<PAGE> 1
EXHIBIT 23.1
INDEPENDENT AUDITOR'S CONSENT
We consent to the incorporation by reference of our report dated April 2,
1999, accompanying the financial statements of Premier Concepts, Inc. in the
Form S-4 Registration Statement of Premier Concepts, Inc. and the use of our
name and the statements with respect to us, as appearing under the heading
"Experts" in the Registration Statement.
Hein & Associates, LLP
Denver, Colorado
February 11, 2000
<PAGE> 1
EXHIBIT 23.2
CONSENT OF INDEPENDENT AUDITORS
We consent to the use in this Registration Statement on Form S-4 of our report
dated January 10, 2000 (February 7, 2000, with respect to the 3rd paragraph of
Note A) on our audit of the financial statements of AmazeScape.com Inc., as of
December 31, 1999 and for the period from August 9, 1999 (inception) through
December 31, 1999, and to the reference to our firm under the caption "Experts"
in the prospectus.
RICHARD A. EISNER & COMPANY, LLP
Florham Park, New Jersey
February 15, 2000
<PAGE> 1
Exhibit 99.1
EXHIBIT 99.1
REVOCABLE PROXY
PREMIER CONCEPTS, INC.
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR THE , 2000 SPECIAL MEETING OF THE SHAREHOLDERS
The undersigned hereby appoints __________and ________, or either of them, as
proxies, each with full power of substitution, to represent the undersigned and
vote for and on behalf of the undersigned the number of shares of Common Stock
of Premier Concepts, Inc. ("Premier Concepts ") held of record on _______, 2000
and which the undersigned would be entitled to vote if personally present at the
Special Meeting of Shareholders to be held on ____________, 2000 at 11:00 a.m.,
local time, at 3033 South Parker Road, Suite 120, Aurora, CO 80014, and at any
adjournments or postponements thereof.
The undersigned directs that this proxy be voted as follows:
1. A proposal to amend Premier Concepts' Articles of Incorporation to increase
its authorized capital to include 120 shares of Series B Convertible Preferred
Stock.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
2. A proposal that Premier Concepts issue 12,712,851 shares of common stock and
120 shares of Series B Convertible Preferred Stock pursuant to the Agreement and
Plan of Merger, dated as of February 7, 2000, among Premier Concepts,
AmazeMerger Co. and AmazeScape.com Inc.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
3. A proposal to amend Premier Concepts' Articles of Incorporation to change the
corporation's name to "AmazeScape.com Inc."
FOR [ ] AGAINST [ ] ABSTAIN [ ]
4. A proposal to adopt the Premier Concepts, Inc. 2000 Stock Option Plan.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
5. A proposal to amend the Incentive Stock Option Plan of Premier Concepts to
increase the number of shares of Premier Concepts common stock for which options
may be issued thereunder from 165,000 to 272,500.
FOR [ ] AGAINST [ ] ABSTAIN [ ]
(CONTINUED AND TO BE SIGNED ON THE OTHER SIDE)
<PAGE> 2
In their discretion, the holders of this proxy are authorized to vote upon such
other business as may properly come before the meeting. The shares of stock
represented by this proxy will be voted as specified above, unless otherwise
directed. The undersigned hereby revokes any proxy or proxies heretofore given
for such stock and ratifies and confirms all that the above-named proxies or
their substitutes may lawfully do by virtue hereof. THIS PROXY WILL BE VOTED AS
DIRECTED, BUT IF NO INSTRUCTIONS ARE SPECIFIED, THIS PROXY WILL BE VOTED "FOR"
APPROVAL OF EACH PROPOSAL SET FORTH ON THE REVERSE SIDE HEREOF. PLEASE SIGN,
DATE AND RETURN PROMPTLY USE THE ENCLOSED RETURN ENVELOPE.
Please sign and date this proxy exactly as your name appears on your stock
certificate. When shares are held by joint tenants, both should sign. When
signing as attorney, executor, administrator, trustee or guardian, please give
full title as such. If a corporation, please sign in full corporate name by
President or other authorized officer. If a partnership, please sign in
partnership name by authorized person.
________________________________
(Signature)
________________________________
(Date)
<PAGE> 1
Exhibit 99.2
AMAZESCAPE.COM INC.
CONSENT
THIS CONSENT IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby (i) acknowledges receipt of the Notice of
Solicitation of Consents dated ___________ 2000 to the stockholders of
AmazeScape.com Inc., a Nevada corporation (the "Company"), and the Proxy
Statement/Prospectus related thereto and (ii) votes all shares of the capital
stock of the Company held of record by the undersigned on ____________ 2000 in
the manner designated below.
THIS CONSENT WHEN PROPERLY EXECUTED WILL BE VOTED IN ACCORDANCE WITH THE
SPECIFICATION MADE ON THE REVERSE SIDE HEREOF. IF NO SPECIFICATION IS MADE, THIS
CONSENT WILL BE VOTED FOR THE PROPOSAL.
THE BOARD OF DIRECTORS RECOMMENDS THAT THE STOCKHOLDERS VOTE FOR THE
PROPOSAL. PLEASE REVIEW CAREFULLY THE CONSENT SOLICITATION STATEMENT DELIVERED
WITH THIS CONSENT.
1. To approve and adopt the Agreement and Plan of Merger, dated
as of _______________, 2000 between AmazeScape.com Inc.,
Premier Concepts, Inc. and a wholly-owned subsidiary of
Premier Concepts, Inc., pursuant to which the Company's
outstanding shares of common stock and Series A Preferred
Stock would be exchanged for shares of Premier Concepts,
Inc.'s common stock and Series B Convertible Preferred Stock,
respectively, all as more fully described in the Proxy
Statement/Prospectus accompanying this Consent Statement.
CONSENT CONSENT WITHHELD
(continued and to be signed on reverse side)
<PAGE> 2
(continued from other side)
PLEASE DATE AND SIGN THIS CONSENT AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE.
NO POSTAGE IS REQUIRED IF MAILED IN THE UNITED STATES.
Dated: , 2000
(SIGNATURE OF STOCKHOLDER)
(SIGNATURE OF STOCKHOLDER)
NOTE: Please date this Consent and
sign your name or names exactly as
set forth hereon. For jointly owned
shares, each owner should sign. If
signing as attorney, executor,
administrator, trustee or guardian,
please indicate the capacity in which
you are acting. Consents executed by
corporations should be signed by a
duly authorized officer and should
bear the corporate seal.
