<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934
Filed by the Registrant [ ]
Filed by a Party other than the Registrant [ ]
<TABLE>
<CAPTION>
<S> <C>
Check the appropriate box:
[ ] Preliminary Proxy Statement [ ] Confidential, For Use of the Commission Only
[X] Definitive Proxy Statement (as permitted by Rule 14a-6(e)(2))
[ ] Definitive Additional Materials
[ ] Soliciting Materials Pursuant to Rule 14a-11(c) or Rule 14a-12
</TABLE>
E COM VENTURES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if Other Than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
(2) Aggregate number of securities to which transaction applies:
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
[ ] Fee paid previously with preliminary materials:
[ ] Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
(1) Amount Previously Paid:
(2) Form, Schedule or Registration No.:
(3) Filing Party:
(4) Date Filed:
<PAGE> 2
E COM VENTURES, INC.
11701 N.W. 101ST ROAD
MIAMI, FLORIDA 33178
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON OCTOBER 31, 2000
TO OUR SHAREHOLDERS:
The 2000 Annual Meeting of Shareholders of E Com Ventures, Inc. will be
held at 10:00 a.m. on Tuesday, October 31, 2000, at the E Com Ventures, Inc.
Corporate Office, 11701 N.W. 101st Road, Miami, Florida 33178, for the purpose
of considering and acting upon the following:
1. Election of six members to our Board of Directors to hold
office until our 2001 Annual Meeting or until their successors
are duly elected and qualified;
2. Approval of the 2000 Stock Option Plan;
3. Approval of the 2000 Directors Stock Option Plan;
4. Ratification of the appointment of Deloitte and Touche, LLP as
our independent public accountants; and
5. Any other matters that properly come before the meeting.
The Board of Directors is not aware of any other business scheduled for
the Annual Meeting. Any action may be taken on the foregoing proposals at the
Annual Meeting on the date specified above, or on any date or dates to which the
Annual Meeting may be adjourned.
Shareholders of record at the close of business on September 5, 2000
are entitled to notice of, and to vote at, the meeting or at any postponements
or adjournments of the meeting.
By Order of the Board of Directors,
/s/ Ilia Lekach
----------------------
Ilia Lekach
CHAIRMAN OF THE BOARD AND CHIEF EXECUTIVE OFFICER
Miami, Florida
October 2, 2000
--------------------------------------------------------------------------------
YOUR VOTE IS IMPORTANT
IT IS IMPORTANT THAT PROXIES BE RETURNED PROMPTLY. THEREFORE, WHETHER
OR NOT YOU EXPECT TO ATTEND THE MEETING IN PERSON, PLEASE SIGN, DATE AND RETURN
THE ENCLOSED PROXY AS SOON AS POSSIBLE IN THE ENCLOSED POSTAGE PRE-PAID
ENVELOPE.
--------------------------------------------------------------------------------
<PAGE> 3
TABLE OF CONTENTS
PAGE
----
About the Meeting...........................................................1
What is the purpose of the annual meeting?.........................1
Who is entitled to vote at the meeting?............................1
Who can attend the meeting?........................................1
What constitutes a quorum?.........................................1
How do I vote?.....................................................2
Can I change my vote after I return my proxy card?.................2
What are the board's recommendations?..............................2
What vote is required to approve each proposal?....................2
Who pays for the preparation of the proxy?.........................3
Proposal 1 -Election of Directors...........................................4
Directors Standing for Election....................................4
Security Ownership of Certain Beneficial Owners and Management..............7
Board of Directors Committees...............................................8
Compensation of Executive Officers and Directors............................9
Report on Executive Compensation...........................................12
Certain Relationships and Related Transactions.............................12
Performance Graph..........................................................14
Section 16(a) Beneficial Ownership Reporting Compliance....................14
Proposal 2 -Approval of 2000 Stock Option Plan.............................15
Proposal 3 -Approval of 2000 Directors Stock Option Plan...................20
Proposal 4 -Ratification of the Appointment of Independent Auditors........22
Other Business.............................................................23
Shareholder Proposals for the 2001 Annual Meeting..........................23
APPENDICES
Appendix A - E Com Ventures, Inc. 2000 Stock Option Plan
Appendix B - E Com Ventures, Inc. 2000 Directors Stock Option Plan
i
<PAGE> 4
E COM VENTURES, INC.
2000 ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------
PROXY STATEMENT
-----------------------------------
This proxy statement contains information related to our Annual Meeting
of Shareholders to be held on Tuesday, October 31, 2000, beginning at 10:00
a.m., at the E Com Ventures, Inc. Corporate Office, 11701 N.W. 101st Road,
Miami, Florida 33178, and at any adjournments or postponements thereof. The
approximate date that this Proxy Statement, the accompanying Notice of Annual
Meeting and the enclosed Form of Proxy are first being sent to shareholders is
October 2, 2000. You should review this information in conjunction with our 1999
Annual Report to Shareholders which accompanies this proxy statement.
ABOUT THE MEETING
WHAT IS THE PURPOSE OF THE ANNUAL MEETING?
At the Annual Meeting, shareholders will vote on the election of
directors, the approval of a new employee stock option plan and the approval of
a new director stock option plan and ratification of the appointment of our
independent public accountants. In addition, we will report on our performance
and respond to questions from our shareholders.
WHO IS ENTITLED TO VOTE AT THE MEETING?
Only shareholders of record at the close of business on the record
date, September 5, 2000, are entitled to receive notice of the Annual Meeting
and to vote shares of our common stock that they held on that date at the
meeting, or any postponements or adjournments of the meeting. Each outstanding
share of common stock entitles its holder to cast one vote on each matter to be
voted upon.
WHO CAN ATTEND THE MEETING?
All shareholders as of the record date, or their duly appointed
proxies, may attend. If your shares are held in the name of your broker or bank,
you will need to bring evidence of your stock ownership, such as your most
recent brokerage statement, and valid picture identification.
WHAT CONSTITUTES A QUORUM?
The presence at the meeting, in person or by proxy, of the holders of a
majority of all of the shares of common stock outstanding on the record date
will constitute a quorum, permitting the meeting to conduct its business. As of
the record date, 9,937,276 shares of our common stock were outstanding. Proxies
received but marked as abstentions and broker non-votes will be included in the
calculation of the number of shares considered to be present at the meeting but
will not be counted as votes cast "for" or "against" any given matter.
If less than a majority of outstanding shares entitled to vote are
represented at the meeting, a majority of the shares present at the meeting may
adjourn the meeting to another date, time or place, and
<PAGE> 5
notice need not be given of the new date, time or place if the new date, time or
place is announced at the meeting before an adjournment is taken.
HOW DO I VOTE?
If you complete and properly sign the accompanying proxy card and
return it to us, it will be voted as you direct. If you are a registered
shareholder and you attend the meeting, you may deliver your completed proxy
card in person. "Street name" shareholders who wish to vote at the meeting will
need to obtain a proxy from the institution that holds their shares.
CAN I CHANGE MY VOTE AFTER I RETURN MY PROXY CARD?
Yes. Even after you have submitted your proxy, you may change your vote
at any time before the proxy is exercised by filing with our Secretary either a
notice of revocation or a duly executed proxy bearing a later date. The powers
of the proxy holders will be suspended if you attend the meeting in person and
so request, although attendance at the meeting will not by itself revoke a
previously granted proxy.
WHAT ARE THE BOARD'S RECOMMENDATIONS?
Unless you give other instructions on your proxy card, the persons
named as proxy holders on the proxy card will vote in accordance with the
recommendations of our Board of Directors. The recommendation of the Board of
Directors is set forth with the description of each proposal in this proxy
statement. In summary, the Board of Directors recommends a vote:
o FOR the election of the nominated slate of directors;
o FOR the approval of the 2000 Stock Option Plan;
o FOR the approval of the 2000 Directors Stock Option Plan; and
o FOR the ratification of the appointment of Deloitte and
Touche, LLP as our independent public accountants.
The Board of Directors does not know of any other matters that may be
brought before the meeting nor does it foresee or have reason to believe that
the proxy holders will have to vote for substitute or alternate Board of
Directors nominees. In the event that any other matter should properly come
before the meeting or any Board of Directors nominee is not available for
election, the proxy holders will vote as recommended by the Board of Directors
or, if no recommendation is given, in accordance with their best judgment.
WHAT VOTE IS REQUIRED TO APPROVE EACH PROPOSAL?
ELECTION OF DIRECTORS. The affirmative vote (either in person or by
proxy) of a plurality of the votes cast at the meeting is required for the
election of directors. This means that candidates who receive the highest number
of votes are elected. Abstentions and broker non-votes are not votes cast and
are not counted in determining whether a nominee is elected. A properly executed
proxy marked "WITHHOLD AUTHORITY" with respect to the election of one or more
directors will not be voted with respect to the director or directors indicated,
although it will be counted for purposes of determining whether there is a
quorum. Shareholders do not have the right to cumulate their votes for
directors.
2
<PAGE> 6
OTHER PROPOSALS. For each other proposal, the affirmative vote of a
majority of the votes cast at the meeting (either in person or by proxy) will be
required for approval. Abstentions and broker non-votes are treated as shares
present or represented and entitled to vote on such matters and thus have the
same effect as negative votes. A properly marked "ABSTAIN" with respect to any
such matter will not be voted, although it will be counted for purposes of
determining whether there is a quorum.
If you hold your shares in "street name" through a broker or other
nominee, your broker or nominee may not be permitted to exercise voting
discretion with respect to some of the matters to be acted upon. Thus, if you do
not give your broker or nominee specific instructions, your shares may not be
voted on those matters and will not be counted in determining the number of
shares necessary for approval. Shares represented by such "broker non-votes"
will, however, be counted in determining whether there is a quorum.
WHO PAYS FOR THE PREPARATION OF THE PROXY?
We will pay the cost of preparing, assembling and mailing the proxy
statement, notice of meeting and enclosed proxy card. In addition to the use of
mail, our employees may solicit proxies personally and by telephone. Our
employees will receive no compensation for soliciting proxies other than their
regular salaries. We may request banks, brokers and other custodians, nominees
and fiduciaries to forward copies of the proxy material to the beneficial owners
of our common stock and to request authority for the execution of proxies and we
may reimburse such persons for their expenses incurred in connection with these
activities.
Our principal executive offices are located at 11701 N.W. 101st Road,
Miami, Florida 33178 and our telephone number is (305) 889-1600. A list of
shareholders entitled to vote at the Annual Meeting will be available at our
offices for a period of ten days prior to the meeting and at the meeting itself
for examination by any shareholder.
3
<PAGE> 7
PROPOSAL 1 - ELECTION OF DIRECTORS
DIRECTORS STANDING FOR ELECTION
At the Annual Meeting, the shareholders will elect six directors, each
of whom will serve for a term expiring at the 2001 Annual Meeting of
Shareholders, or until his successor has been duly elected and qualified. There
is one vacancy on the Board as a result of the recent death of Robert Pliskin.
This vacancy may be filled at a later date or the number of directors may be
reduced in accordance with our By-laws.
The Board of Directors has no reason to believe that any nominee will
refuse or be unable to serve if elected. However, if any of them should become
unavailable to serve as director, the Board of Directors may designate a
substitute nominee or the number of directors may be reduced in accordance with
our By-laws. If the Board of Directors designates a substitute nominee, the
persons named as proxies will vote for the substitute nominee designated by the
Board of Directors.
The directors standing for re-election are:
o Ilia Lekach
o Jerome Falic
o Donovan Chin
o Carole Ann Taylor
o Horacio Groisman, M.D.
o Zalman Lekach
All of our director nominees are currently serving as our directors.
EXECUTIVE OFFICERS AND DIRECTORS
The following are our executive officers and directors:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Ilia Lekach 51 Chairman of the Board and Chief Executive Officer
Jerome Falic 36 President and Vice Chairman of the Board
A. Mark Young 37 Chief Financial Officer
Donovan Chin 33 Chief Financial Officer of Perfumania, Inc., Secretary and
Director
Jeffrey Geller 26 President and Chief Operating Officer of the Retail
Division of Perfumania, Inc.
Claire Fair 41 Vice President of Human Resources
Carole Ann Taylor(1)(2)(3) 54 Director
Horacio Groisman, M.D. (2)(3) 47 Director
Zalman Lekach 33 Director
</TABLE>
---------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
4
<PAGE> 8
(3) Member of Stock Option Committee.
o ILIA LEKACH-- Ilia Lekach is one of our co-founders and was
our Chief Executive Officer and Chairman of the Board from
incorporation in 1988 until his resignation in April 1994. Mr.
Lekach was re-appointed Chief Executive Officer and Chairman
of the Board on October 28, 1998. He is also Chairman of the
Board and Chief Executive Officer of Parlux Fragrances, Inc.,
a publicly traded manufacturer of fragrance and related
products, and Chairman of the Board of Directors of Take To
Auction.Com, Inc., a publicly traded online auction site. In
August 1996, Mr. Lekach became an officer and director of L.
Luria & Son, Inc., a publicly traded specialty discount
retailer. On August 13, 1997, L. Luria & Son, Inc. filed for
relief under Chapter 11 of the Bankruptcy Code and has since
been liquidated. Messrs. Ilia Lekach and Zalman Lekach are
brothers.
o JEROME FALIC -- Jerome Falic has served as our President since
October 28, 1998, as a Director since August 1994 and as the
Vice Chairman of the Board since September 1994. Prior to his
appointment as President, Mr. Falic served as a Vice President
since our inception in 1988.
o A. MARK YOUNG -- A. Mark Young joined us in February 2000 and
was appointed our Chief Financial Officer in May 2000. Prior
to joining us, Mr. Young was employed for seven years in the
Business Assurance practice of the Middle Market Group of
PricewaterhouseCoopers LLP, South Florida.
o DONOVAN CHIN -- Donovan Chin currently serves as the Chief
Financial Officer of Perfumania and as our Secretary and a
member of our Board of Directors. He was appointed Chief
Financial Officer of Perfumania in May 2000, has served as our
Secretary since February 1999 and has served as a Director
since March 1999. He also served as our Chief Financial
Officer from February 1999 until May 2000. Prior to that time,
Mr. Chin served as our Corporate Controller from May 1995 to
February 1999 and Assistant Corporate Controller from May 1993
to May 1995. Previously, Mr. Chin was employed by Price
Waterhouse LLP in its Miami audit practice.
o JEFFREY GELLER -- Jeffrey Geller joined us in March 2000 and
was appointed the President and Chief Operating Officer of our
Retail Division in May 2000. Prior to joining us, Mr. Geller
was the General Manager of the Development Agent for an
international restaurant chain in Peru which operated company
owned and franchised locations.
o CLAIRE FAIR -- Claire Fair has served as Vice President of
Human Resources since August 1996. From November 1993 to
August 1996, she served as Director of Human Resources.
Previously, she was the Director of Employee Relations with
Sterling, Inc., a national jewelry specialty retailer company.
o CAROLE ANN TAYLOR -- Carole Ann Taylor has served as a
Director since June 1993. From 1987 to 1998, Ms. Taylor was
the owner and president of the Bayside Company Store, a retail
souvenir and logo store at Bayside Marketplace in Miami,
Florida. During this time she has also been a partner of the
Jardin Bresilien Restaurant also located at the Bayside
Marketplace. Currently, Ms. Taylor is the owner of Miami To
Go, Inc., a retail and wholesale logo and souvenir
merchandising and silkscreening company. She is also a partner
at Miami Airport Duty Free Joint Venture with Greyhound
Leisure Services which owns and operates the 19 duty free
stores at Miami International Airport. She serves as director
of the Miami-
5
<PAGE> 9
Dade Chamber of Commerce, the Greater Miami Convention &
Visitors Bureau and the Miami Film Festival. Ms. Taylor is a
member of our Audit, Compensation and Stock Option Committees.
o HORACIO GROISMAN, M.D. -- Horacio Groisman, M.D. has served as
a Director since March 1999. Dr. Groisman has been a
practicing physician since 1981, specializing in head and neck
surgery, and currently has offices in Miami, Aventura and
Hollywood, Florida. Dr. Groisman is a member of our
Compensation and Stock Option Committees. He also serves as
Vice-Chairman of the Board of Directors of Take To
Auction.Com, Inc.
o ZALMAN LEKACH-- Zalman Lekach has served as a Director since
November 1999. Mr. Lekach became a director and an executive
in Parlux, S.A., a subsidiary of Parlux Fragrances, Inc. in
May 1990. In May 1993, he resigned his executive position and
owned and operated a company exporting foods and health/beauty
aids to South America. In January of 1995, he rejoined Parlux
as its Chief Operating Officer and a Director. In June 1996,
Mr. Zalman Lekach also assumed the position of President of
Parlux. In January 1999, Mr. Zalman Lekach resigned his
position as President and Chief Operating Officer of Parlux to
pursue opportunities unrelated to the fragrance field. Messrs.
Ilia Lekach and Zalman Lekach are brothers.
Our officers are elected annually by our Board of Directors and serve
at the discretion of the Board. Our directors hold office until the next Annual
Meeting of shareholders and until their successors have been duly elected and
qualified.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF ALL NOMINEES
NAMED ABOVE.
6
<PAGE> 10
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of common stock beneficially owned
as of September 15, 2000 by (a) each of our directors and nominees for director,
(b) each of our executive officers named in the Executive Compensation Table,
(c) all of our directors and executive officers as a group and (d) each person
known by us to beneficially own more than 5% of our outstanding common stock.
Unless otherwise provided, the address of each holder is c/o E Com Ventures,
Inc., 11701 N.W. 101st Road, Miami, Florida 33178.
<TABLE>
<CAPTION>
COMMON STOCK BENEFICIALLY OWNED
-------------------------------
OUTSTANDING TOTAL NUMBER OF
SHARES ACQUIRABLE SHARES PERCENT OF
BENEFICIALLY WITHIN 60 BENEFICIALLY OWNED SHARES
NAME AND ADDRESS OF BENEFICIAL OWNER OWNED (A) DAYS (B) (COLUMNS (A)+(B)) OUTSTANDING
------------------------------------ --------- -------- ----------------- -----------
<S> <C> <C> <C> <C> <C>
Ilia Lekach 1,071,375 775,000 1,846,375(1)(2) 18.6%
Jerome Falic 365,832 334,500 700,332(2) 7.0%
A. Mark Young 0 50,000 50,000 *
Donovan Chin 0 109,500 109,500 1.1%
Claire Fair 0 77,000 77,000 *
Jeffrey Geller 5,000 60,000 65,000 *
Carole A. Taylor 0 12,000 12,000 *
Horacio Groisman, M.D. 0 6,000 6,000 *
Zalman Lekach 0 6,000 6,000 *
Rachmil Lekach 675,125 100,000 775,125(1) 7.8%
Parlux Fragrances, Inc. 1,512,406 0 1,512,406(3) 15.2%
Eisenberg Partners, LLC 911,946 0 911,946(4) 9.2%
Mark A. Rice 880,630 0 880,630(5) 8.9%
All directors and executive officers as a
group (9 persons) 2,409,827 24.3%
</TABLE>
------------------
* Less than 1%.
(1) Ilia Lekach and Rachmil Lekach jointly own with their spouses the
shares set forth opposite their respective names.
(2) Includes 21,000 shares of Common Stock owned by Pacific Investment
Group, a corporation wholly owned by Mr. Lekach.
(3) The address of Parlux Fragrances, Inc. is 3725 S.W. 30th Avenue, Ft.
Lauderdale, Florida 33154.
(4) Based on the Schedule 13D dated May 22, 2000 filed with the SEC by
Eisenberg Partners, L.L.C. ("Eisenberg"). Eisenberg is the manager or
investment manager and beneficially owns all shares of the following
entities: E.P. Opportunity Fund L.L.C. (352,023 shares), EP Opportunity
Fund International Ltd. (22,966 shares), EP.com Fund L.L.C. (466,919
shares) and EP.com Fund International, Ltd. (70,038 shares). The
address for each entity is 77 W. Wacker Drive, Chicago, Illinois 60601.
(5) Based on the Schedule 13D dated May 4, 2000 filed with the SEC by Mark
A. Rice. Mr. Rice is the sole member of the Managing Member which
controls both Namax Corporation (123,420 shares) and The dotCom Fund,
L.L.C. (757,2210 shares). The address for each entity is 666 Dundee
Road, Suite 1901, Northbrook, Illinois 60062.
7
<PAGE> 11
BOARD OF DIRECTORS COMMITTEES
Our Board of Directors has a standing Audit Committee, Compensation
Committee and Stock Option Committee. We do not have a nominating or similar
committee. Our Board of Directors performs the functions of a nominating or
similar committee.
For the fiscal year ended January 29, 2000, Robert Pliskin and Carole
Ann Taylor were the members of our Audit Committee. Carole Ann Taylor is the
current member of our Audit Committee and another director will be appointed to
this Committee at the next Board of Director's Meeting. The duties and
responsibilities of the Audit Committee include (a) recommending to the Board
the appointment of our auditors and any termination of engagement, (b) reviewing
the scope and results of audits and other services provided by our auditors, (c)
reviewing our significant accounting policies and internal controls and (d)
having general responsibility for all related auditing matters. The Audit
Committee held one meeting during the fiscal year ended January 29, 2000.
For the fiscal year ended January 29, 2000, Carole Ann Taylor and
Horacio Groisman, M.D. were the members of our Compensation Committee. Carole
Ann Taylor and Horacio Groisman, M.D. are the current members of our
Compensation Committee. The Compensation Committee reviews and approves the
compensation of our directors, officers and employees, including salaries,
bonuses, commission, and benefit plans. The Compensation Committee met one time
during the fiscal year ended January 29, 2000.
For the fiscal year ended January 29, 2000, Carole Ann Taylor and
Horacio Groisman, M.D. were the members of the Stock Option Committee. Carole
Ann Taylor and Horacio Groisman, M.D. are the current members of the Stock
Option Committee. The Stock Option Committee administers our Amended and
Restated 1991 Stock Option Plan and the Directors Stock Option Plan and will, if
the 2000 Stock Option Plan and the 2000 Directors Stock Option Plan are adopted,
administer these plans. The Stock Option Committee held one meeting during the
fiscal year ended January 29, 2000.
During the fiscal year ended January 29, 2000, our Board of Directors
took certain actions by unanimous written consent and held 7 meetings. During
the last fiscal year, no director attended fewer than 75 percent of (i) the
meetings of our Board of Directors held during the period he served on the
Board, and (ii) the meetings of committees of our Board of Directors held during
the period he served on such committee.
8
<PAGE> 12
COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following tables set forth certain information concerning
compensation for the fiscal years ended January 29, 2000 (Fiscal 1999), January
30, 1999 (Fiscal 1998) and January 31, 1998 (Fiscal 1997) of our executive
officers, including the Chief Executive Officer and all executive officers whose
total annual salary and bonus exceeded $100,000, for Fiscal 1999.
<TABLE>
<CAPTION>
RESTRICTED
FISCAL OTHER ANNUAL STOCK LTIP ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION($)(1) AWARDS($) OPTIONS(#) PAYOUTS($) COMPENSATION($)
--------------------------- ---- --------- -------- ------------------ --------- ---------- ----------- ---------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
Ilia Lekach (2) 1999 420,000 0 0 0 0 0 0
Chairman of the Board and 1998 0 0 500,000(3) 0 775,000(4) 0 0
Chief Executive Officer
Jerome Falic 1999 322,757 0 0 0 0 0 0
President and 1998 259,034 0 0 0 334,500(4) 0 0
Vice Chairman of the Board 1997 246,700 0 0 0 0 0 0
Marc Finer (5) 1999 225,571 0 0 0 150,000 0 0
President, Retail Division 1998 200,401 0 0 0 60,000(4) 0 0
1997 183,912 0 0 0 50,000 0 0
Claire Fair 1999 167,428 0 0 0 60,000 0 0
Vice President of Human 1998 116,980 0 0 0 26,500(4) 0 0
Resources 1997 114,980 0 0 0 15,000 0 0
Donovan Chin 1999 167,185 0 0 0 100,000 0 0
Chief Financial Officer, 1998 85,014 0 0 0 34,500(4) 0 0
Perfumania, Inc. and 1997 80,575 0 0 0 0 0 0
Secretary
</TABLE>
----------------------
(1) The column for "Other Annual Compensation" does not include any amounts
for executive perquisites and any other personal benefits, such as the
cost of automobiles, life insurance and disability insurance because
the aggregate dollar amount per executive is less than 10% of his
annual salary and bonus.
(2) Ilia Lekach was re-appointed as Chief Executive Officer and Chairman of
the Board on October 28, 1998.
(3) Amount reported represents consulting fees paid to Ilia Lekach during
Fiscal 1998 prior to his employment with us.
(4) Includes options repriced effective October 28, 1998 in the following
amounts: Ilia Lekach (375,000); Jerome Falic (100,000); Marc Finer
(60,000); Claire Fair (21,500); and Donovan Chin (14,500).
(5) Marc Finer's employment terminated June 2000. See "Employment and
Severance Agreements" on page 10 for a description of the termination
agreement between the Company and Mr. Finer.
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding option
grants to our executive officers during Fiscal 1999 and options held by such
executive officers on January 29, 2000.
9
<PAGE> 13
<TABLE>
<CAPTION>
INDIVIDUAL OPTION GRANTS IN FISCAL 1999
-------------------------------------------------------------------------------------
% OF TOTAL POTENTIAL REALIZABLE VALUE
OPTIONS AT ASSUMED ANNUAL RATES OF
GRANTED TO STOCK PRICE APPRECIATION
NUMBER OF EMPLOYEES IN EXERCISE FOR OPTION TERM
OPTIONS FISCAL PRICE PER EXPIRATION ---------------------------
NAME GRANTED 1999(1) SHARE DATE 5%(2) 10%(2)
---- ------- ------- ----- ---- ----- ------
<S> <C> <C> <C> <C> <C> <C>
Marc Finer 150,000 24% $3.13 2009 $295,266 $748,262
Claire Fair 60,000 10% $3.13 2009 $118,106 $299,305
Donovan Chin 100,000 16% $3.13 2009 $196,844 $498,841
</TABLE>
--------------
(1) Total stock option grants during Fiscal 1999 were 624,250.
(2) In accordance with the rules of the Securities and Exchange Commission,
the potential realizable values for such options shown in the table
presented above are based on assumed rates of stock price appreciation
of 5% and 10% compounded annually from the date the options were
granted to their expiration date. These assumed rates of appreciation
do not represent our estimate or projection of the appreciation of
shares of our common stock.
OPTIONS EXERCISED IN LAST FISCAL YEAR AND FISCAL YEAR-END OPTION VALUES
The following table sets forth certain information regarding option
exercises by our executive officers during Fiscal 1999 and options held by such
executive officers on January 29, 2000:
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED IN-THE-MONEY
SHARES OPTIONS AT FISCAL YEAR END OPTIONS AT FISCAL YEAR END (1)
ACQUIRED ON VALUE -------------------------- ---------------------------------
NAME EXERCISE REALIZED EXERCISABLE/UNEXERCISABLE EXERCISABLE/UNEXERCISABLE
---- ----------- ----- -------------------------- ------------------------------
<S> <C> <C> <C> <C>
Ilia Lekach - - 775,000/0 $3,475,063/0
Jerome Falic - - 334,500/0 $1,502,344/0
Marc Finer - - 177,000/0 $390,938/0
Claire Fair - - 77,000/0 $183,888/0
Donovan Chin - - 109,500/0 $222,906/0
</TABLE>
------------------
(1) Based on a per share price of $4.94, the closing price of the common
stock as reported on the Nasdaq on January 28, 2000, minus the exercise
price of the option, multiplied by the number of shares underlying the
option.
EMPLOYMENT AGREEMENTS AND SEVERANCE AGREEMENTS
Effective February 1, 1999, we entered into 3-year employment
agreements with Ilia Lekach and Jerome Falic pursuant to which they will receive
an annual salary of $400,000 and $318,347, respectively, subject to
cost-of-living increases, or 5% if higher. The employment agreements provide
that Mr. Lekach and Mr. Falic will continue to receive their annual salary until
the expiration of the term of their employment agreements if their employment is
terminated by us for any reason other than death, disability or cause (as
defined in the employment agreements). The agreements contain a performance
bonus plan which provides for additional compensation and grant of stock
options, if we meet certain net income levels. The employment agreements also
prohibit the employees from directly or indirectly competing with us during the
term of their employment and for one year after termination of employment except
in the case of our termination of employment without cause.
Effective December 1999, we entered into 3-year employment agreements
with Marc Finer, Claire Fair and Donovan Chin pursuant to which they will
receive an annual salary of $215,000,
10
<PAGE> 14
$160,000 and $160,000, respectively, subject to specified increases. The
employment agreements provide that Mr. Finer, Ms. Fair and Mr. Chin will
continue to receive their salary until the expiration of the term of the
employment agreements if their employment is terminated by us for any reason
other than death, disability or cause (as defined in the employment agreements),
as well as provisions for change in control.
Effective June 2000, Mr. Finer's employment with the Company was
terminated. Pursuant to the terms of his employment agreement, Mr. Finer will
continue to receive his salary until the expiration of the term of the
agreement.
Except as set forth in employment agreements and stock option
agreements of some of our employees and our subsidiaries, we have no
compensatory plans or arrangements which relate to the resignation, retirement
or any other termination of an executive officer or key employee or a change in
control, or a change in such executive officer's or key employee's
responsibilities following a change in control.
DIRECTOR COMPENSATION
We maintain a policy of compensating our outside directors with an
annual retainer of $6,500 for serving as our directors, and compensating all of
our directors using stock option grants pursuant to our stock option plans. Our
Directors Stock Option Plan provides for an automatic grant of an option to
purchase 2,000 shares of our common stock upon a person's election or
appointment as a director and an automatic grant of options to purchase 4,000
shares of our common stock upon such person's re-election as a director. We
reimburse our directors for all out-of-pocket expenses incurred in the
performance of their duties as directors. We currently do not pay fees to our
directors for attendance at meetings.
EMPLOYEE STOCK OPTION PLANS
Under our 1991 Stock Option Plan, we have reserved for issuance an
aggregate of 4,000,000 shares of our common stock. As of September 5, 2000, we
had granted options to purchase 3,430,683 shares of common stock pursuant to
this plan, of which 1,245,558 have been exercised and 2,088,875 are vested but
have not been exercised.
No new options shall be granted pursuant to the 1991 Stock Option Plan
upon receipt of shareholder approval of the 2000 Stock Option Plan.
11
<PAGE> 15
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and approves the compensation of our
directors, officers and employees, including salaries, bonuses, commission, and
benefit plans. The Compensation Committee met one time during the fiscal year
ended January 29, 2000.
The policy of the Board of Directors is to maintain executive
compensation at levels that will permit us to attract, motivate and retain
individuals with superior managerial abilities. The levels of compensation are
intended to reward individual initiative and achievement, while motivating our
executives to increase shareholder value by improving our performance and
profitability.
The Compensation Committee reviews the base salaries of our employees
(as well as our executive officers) annually, considering factors such as the
responsibilities of the position, corporate progress toward achieving objectives
and individual performance, experience and expertise. In determining our
employee's overall compensation, the Compensation Committee also reviews certain
compensation levels at other companies because the Compensation Committee
believes that we compete for executive talent with companies in addition to
those in our peer group. Additional criteria reviewed by the Compensation
Committee in determining appropriate compensation levels include subjective
factors related to corporate and individual performance.
Our Stock Option Committee reviews and approves the grant of options
pursuant to the Company's 1991 Stock Option Plan. In furtherance of our
executive compensation policies, stock options are considered an integral part
of our executives' overall compensation. The Compensation Committee believes
that as an executive's level of responsibility increases, a greater portion of
the total compensation opportunity should be based upon share ownership and
other incentives and less upon base salary. Our executives' compensation
pursuant to a stock option grant generally increases only to the extent the
value of common stock underlying the stock options increases, therefore aligning
the interest of our executive officers with our shareholders by tying long-term
compensation with our growth and appreciation of shares. During the fiscal year
ended January 29, 2000, we granted 150,000 stock options to Marc Finer, 100,000
stock options to Donovan Chin and 60,000 stock options to Claire Fair.
In addition to base salaries and option grants, the Compensation
Committee may elect to award incentive bonuses as part of total compensation to
executive officers who have rendered services during the year that substantially
exceed those normally required or anticipated. These bonuses are intended to
reflect the Compensation Committee's determination to reward any executive who,
through extraordinary effort, has substantially benefited us during the year. No
incentive bonuses were awarded during the fiscal year ended January 29, 2000.
This report is submitted by the Compensation Committee:
CAROLE ANN TAYLOR
HORACIO GROISMAN, M.D.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH PARLUX. Parlux Fragrances, Inc. is a public company
engaged in the manufacture of fragrances. Ilia Lekach, our Chairman of the Board
and Chief Executive Officer and one of our principal shareholders, is the
Chairman of the Board of Parlux. During fiscal year ended January 29, 2000, we
purchased approximately $30.1 million of merchandise from Parlux. We believe
that our purchases of merchandise from Parlux were, except for credit terms, on
terms no less favorable to us than
12
<PAGE> 16
could reasonably be obtained in arm's length transactions with independent third
parties. The amount due to Parlux at January 29, 2000, excluding amounts owed
under the subordinated note discussed below, was approximately $9,350,000.
Amounts due to Parlux are non-interest bearing.
On August 31, 1999, we entered into a stock purchase agreement with
Parlux. The agreement called for the transfer of 1,512,406 shares of our common
stock to Parlux in consideration for a partial reduction of our outstanding
trade indebtedness balance of approximately $4.5 million. The transfer price was
based on a per share price of $2.98, which approximated 90% of the closing price
on our common stock for the previous 20 business days. We filed a registration
statement to permit Parlux to resell these shares in April 2000; this
registration statement was declared effective in July 2000. As a result of the
transaction, we recorded a loss of approximately $314,000 which was charged to
cost of goods sold in the third quarter of fiscal year 1999. On October 4, 1999,
we signed an $8,000,000 subordinated note agreement with Parlux, in exchange for
an equal reduction in the amount of our outstanding trade indebtedness balance.
The note is due on May 31, 2000 with various periodic principal payments and
bears interest at prime plus 1%. The note is subordinate to all bank related
indebtedness. As of January 29, 2000, we had paid $4,500,000 pursuant to the
terms of the note. The outstanding amount of the indebtedness as of January 29,
2000 is included in our consolidated balance sheet as subordinated note payable,
affiliate.
RELATIONSHIP WITH TAKE TO AUCTION.COM, INC. In December 1999, we loaned
$1 million to Take To Auction.Com, Inc. ("Take To Auction") pursuant to the
terms of a convertible promissory note. Ilia Lekach, our Chairman and Chief
Executive Officer and Horacio Groisman, M.D., one of our Directors, are also the
Chairman and Vice Chairman, respectively, of Take To Auction. The principal
balance of the note is payable on December 20, 2001, and interest, which accrues
at a rate of six percent per annum is payable semi-annually on the 21st day of
each June and December commencing June 21, 2000. We had the right to convert,
for a period of 14 days after Take To Auction's initial public offering, all of
the principal amount of the note into shares of the Take to Auction's common
stock at a conversion price per share equal to the initial public offering price
of Take To Auction's common stock. Take To Auction effected its initial public
offering in June 2000, and we converted the December 1999 $1 million note into
138,889 shares of Take To Auction's common stock.
In March 2000, we loaned Take To Auction an additional $1 million
pursuant to the terms of a convertible promissory note. The terms of the note
are the same as the December 1999 note described above, except that the
principal balance is payable on March 8, 2002 and interest is payable
semi-annually on the 9th day of each September and March, commencing September
9, 2000. The note was repaid in full in June 2000. Take To Auction also granted
us warrants to purchase six hundred thousand shares of its common stock at its
initial public offering price. The warrants are exercisable in whole or in part
during the one year period following the initial public offering.
RELATED PARTY INDEBTEDNESS. As of January 29, 2000, Ilia Lekach, our
Chairman and Chief Executive Officer was indebted to us pursuant to unsecured
notes in the amount of $1,532,649. The notes are unsecured, mature December 31,
2001 and bear an interest rate of prime plus two percent per annum. Principal
and interest are payable in full at maturity. Total interest income recognized
during fiscal year 1999 was approximately $70,000.
In October 1999, Rachmil Lekach, one of our principal shareholders
issued us an unsecured promissory note in the principal amount of $756,000. As
of January 29, 2000, he was indebted to us in the amount of $779,594 including
interest. This note bears an interest rate of prime plus two percent per annum.
The note, including accrued interest, was repaid in April 2000.
13
<PAGE> 17
PERFORMANCE GRAPH
The following graph indicates our total return to our shareholders for
the period January 27, 1995 to January 28, 2000, as compared to the returns for
the NASDAQ (US Companies) Stock Index and the NASDAQ Retail Stock Index. The
information contained in this graph is not necessarily indicative of our future
performance.
[PERFORMANCE GRAPH OMITTED]
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
1/27/95 2/2/96 1/31/97 1/30/98 1/29/99 1/28/00
----------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
E Com Ventures, Inc. 100.00 138.46 104.00 88.46 342.46 152.00
----------------------------------------------------------------------------------------------------------
NASDAQ US Stock Market Index 100.00 142.08 184.36 217.60 340.39 513.37
----------------------------------------------------------------------------------------------------------
NASDAQ Retail Trade Stocks 100.00 112.18 137.78 160.76 196.56 161.07
----------------------------------------------------------------------------------------------------------
</TABLE>
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires our directors and executive officers and beneficial holders of more
than 10% of any class of our equity securities to file with the Securities and
Exchange Commission initial reports of ownership and reports of changes in
ownership of such equity securities. Based solely upon a review of such forms
furnished to us, filing deficiencies under Section 16(a) during the fiscal year
ended January 29, 2000 included three late reports filed by Jerome Falic
reflecting stock sales and one late report filed by Carole Ann Taylor reflecting
an exercise and sale of stock options. The following individuals were not timely
in meeting the filing requirements with respect to options issued under the
Company's 1991 Stock Option Plan: Marc Finer, Claire Fair, Donovan Chin, and
also the Directors Stock Option Plan: Robert Pliskin, Carole Ann Taylor, Horacio
Groisman, M.D. and Zalman Lekach. In additon, the following individuals were not
timely in meeting the filing requirements with respect to Form 3, Initial
Statement of Beneficial Ownership of Securities: Horacio Groisman, M.D. and
Zalman Lekach.
14
<PAGE> 18
PROPOSAL 2 - APPROVAL OF 2000 STOCK OPTION PLAN
BACKGROUND AND PURPOSE.
On August 23, 2000, the Board of Directors adopted the E Com Ventures,
Inc. 2000 Stock Option Plan, which we will refer to in this Proxy Statement as
the "Employee Plan", and recommended that it be submitted to our shareholders
for approval at the Annual Meeting. The purpose of the Employee Plan is to
provide an additional incentive to attract and retain qualified competent
persons who provide services and upon whose efforts and judgment our success is
largely dependent, through the encouragement of ownership of our stock by such
persons. In furtherance of this purpose, the Employee Plan authorizes, among
other things, (a) the granting of incentive or nonqualified stock options to
purchase our common stock (collectively, "Options") to persons selected by the
administrators of the Employee Plan from the class of all of our regular
employees, including officers who are regular employees and directors, (b) the
provision of loans for the purposes of financing the exercise of Options and the
amount of taxes payable in connection therewith, and (c) the use of already
owned common stock as payment of the exercise price for Options granted under
the Employee Plan.
Shareholder approval of the Employee Plan is required (i) for purposes
of compliance with certain exclusions from the limitations of Section 162(m) of
the Internal Revenue Code of 1986, as amended, which we refer to as the tax
code, (ii) in order for the employee plan to be eligible under the "plan lender"
exemption from the margin requirements of Regulation U promulgated under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and (iii) by
the rules of the National Association of Securities Dealers National Market
System.
The effective date of the Employee Plan is October 31, 2000 (the
"Effective Date"). No Options have been granted under the Employee Plan as of
the date of this Proxy Statement. Upon the effective date, no new options shall
be granted under the 1991 Employee Stock Option Plan, as amended.
The following is a summary of certain principal features of the
Employee Plan. This summary is qualified in its entirety by reference to the
complete text of the Employee Plan, which is attached to this Proxy Statement as
Appendix A. Shareholders are urged to read the actual text of the Employee Plan
in its entirety.
ADMINISTRATION OF THE EMPLOYEE PLAN.
The Employee Plan provides that it shall be administered by our Board
of Directors or by a committee appointed by the Board of Directors which shall
be composed of two or more directors all of whom shall be "outside directors"
(as defined in the Employee Plan) in compliance with Rule 16b-3 of the Exchange
Act and Section 162(m) of the tax code (although Rule 16b-3 also may be complied
with if the option grants are approved by the Board of Directors).
The committee or the Board of Directors, in its sole discretion,
determines the persons to be awarded the Options, the number of shares subject
thereto and the exercise price and other terms thereof. In addition, the
committee or the Board of Directors has full power and authority to construe and
interpret the employee plan, and the acts of the committee or the Board of
Directors are final, conclusive and binding on all interested parties, including
our company, shareholders, officers and employees, recipients of grants under
the Employee Plan, and all persons or entities claiming by or through such
persons.
An aggregate of 1,500,000 shares of common stock (subject to adjustment
described below) are reserved for issuance upon the exercise of Options granted
under the Employee Plan. This number of
15
<PAGE> 19
shares will automatically increase on the first trading day of each fiscal year,
beginning with the fiscal year ended February 2, 2002, by 3% of the shares of
Common Stock outstanding as of the last trading day of the immediately preceding
fiscal year. The maximum number of shares of common stock to which Options may
be granted to any one individual under the Employee Plan is 500,000 (subject to
adjustment described below). The shares acquired upon exercise of Options
granted under the Employee Plan will be authorized and issued shares of common
stock. Our shareholders will not have any preemptive rights to purchase or
subscribe for any common stock by reason of the reservation and issuance of
common stock under the Employee Plan. If any Option granted under the Employee
Plan should expire or terminate for any reason other than having been exercised
in full, the unpurchased shares subject to that Option will again be available
for purposes of the Employee Plan.
CERTAIN TERMS AND CONDITIONS.
All Options granted under the Employee Plan must be evidenced by a
written agreement between us and the grantee. The agreement will contain such
terms and conditions as the committee or the Board of Directors shall prescribe,
consistent with the Employee Plan, including, without limitation, the exercise
price, term and any restrictions on the exercisability of the Options granted.
For any Option granted under the Employee Plan, the exercise price per
share of common stock may be any price determined by the committee or the Board
of Directors; however, the exercise price per share of any Incentive Stock
Option may not be less than the Fair Market Value of the common stock on the
date such Incentive Stock Option is granted. For purposes of the Employee Plan,
the "Fair Market Value" on any date of reference is deemed to be the closing
price of common stock on the business day immediately preceding such date,
unless the committee or the Board of Directors in its sole discretion determines
otherwise in a fair and uniform manner. For this purpose, the closing price of
common stock on any business day is (i) if the common stock is listed or
admitted for trading on any United States national securities exchange, or if
actual transactions are otherwise reported on a consolidated transaction
reporting system, the last reported sale price of common stock on such exchange
or reporting system, as reported in any newspaper of general circulation; (ii)
if common stock is quoted on the National Association of Securities Dealers
Automated Quotations System ("NASDAQ"), or any similar system of automated
dissemination of quotations of securities prices in common use, the mean between
the closing high bid and low asked quotations for such day of common stock on
such system; or (iii) if neither clause (i) nor (ii) is applicable, the mean
between the high bid and low asked quotations for common stock as reported by
the National Quotation Bureau, Incorporated if at least two securities dealers
have inserted both bid and asked quotations for common stock on at least 5 of
the 10 preceding days.
The committee or the Board of Directors may permit the exercise price
of an Option to be paid for in cash, by certified or official bank check or
personal check, by money order, with already owned shares of common stock that
have been held by the Optionee for at least six (6) months (or such other shares
as we determine will not cause us to recognize for financial accounting purposes
a charge for compensation expense), the withholding of shares of common stock
issuable upon exercise of the Option, by delivery of a properly executed
exercise notice together with such documentation as shall be required by the
committee or the Board of Directors (or, if applicable, the broker) to effect a
cashless exercise, or a combination of the above. If paid in whole or in part
with shares of already owned common stock, the value of the shares surrendered
is deemed to be their Fair Market Value on the date the Option is exercised. The
Employee Plan also authorizes us to lend money to an Optionee, guarantee a loan
to an Optionee, or otherwise assist an Optionee to obtain the cash necessary to
exercise all or a portion of the Option granted thereunder or to pay any tax
liability of the Optionee attributable to such exercise. If the exercise price
is paid in whole or part with the Optionee's promissory note, such note shall
(i) provide for full recourse to the maker, (ii) be collateralized by the pledge
of the shares that the Optionee purchases
16
<PAGE> 20
upon exercise of such Option, (iii) bear interest at the prime rate of our
principal lender or such other rate as the committee or the Board of Directors,
as the case may be, shall determine, and (iv) contain such other terms as the
committee or the Board of Directors in its sole discretion shall reasonably
require.
The use of already owned shares of common stock applies to payment for
the exercise of an Option in a single transaction and to the "pyramiding" of
already owned shares in successive, simultaneous Option exercises. In general,
pyramiding permits an Option holder to start with as little as one share of
common stock and exercise an entire Option to the extent then exercisable (no
matter what the number of shares subject thereto). By utilizing already owned
shares of common stock, no cash (except for fractional share adjustments) is
needed to exercise an Option. Consequently, the Optionee would receive common
stock equal in value to the spread between the fair market value of the shares
subject to the Option and the exercise price of such Option.
No Incentive Stock Option, and unless the prior written consent of the
committee or the Board of Directors is obtained (which consent may be withheld
for any reason) and the transaction does not violate the requirements of Rule
16b-3 of the Exchange Act, no non-qualified stock option granted under the
Employee Plan is assignable or transferable, other than by will or by the laws
of descent and distribution. During the lifetime of an Optionee, an Option is
exercisable only by him or her, or in the case of a non-qualified stock option,
by his or her permitted assignee. The expiration date of an Option under the
Employee Plan will be determined by the committee or the Board of Directors at
the time of grant, but in no event may such an Option be exercisable after 10
years from the date of grant. An Option may be exercised at any time or from
time to time or only after a period of time in installments, as the committee or
the Board of Directors determines. The committee or the Board of Directors may,
in its sole discretion, accelerate the date on which any Option may be
exercised. Each outstanding Option granted under the Employee Plan may become
immediately fully exercisable in the event of certain transactions, including
certain changes in control, certain mergers and reorganizations, and certain
dispositions of substantially all of our assets.
Unless otherwise provided in the Option agreement, the unexercised
portion of any Option granted under the Employee Plan shall automatically be
terminated (a) three months after the date on which the Optionee's employment is
terminated for any reason other than (i) Cause (as defined in the employee
plan), (ii) mental or physical disability, or (iii) death; (b) immediately upon
the termination of the Optionee's employment for Cause; (c) one year after the
date on which the Optionee's employment is terminated by reason of mental or
physical disability; or (d) one year after the date on which the Optionee's
employment is terminated by reason of Optionee's death, or if later, three
months after the date of Optionee's death if death occurs during the one year
period following the termination of the Optionee's employment by reason of
mental or physical disability.
To prevent dilution of the rights of a holder of an Option, the
Employee Plan provides for appropriate adjustment of the number of shares for
which Options may be granted, the number of shares subject to outstanding
Options and the exercise price of outstanding Options, in the event of any
increase or decrease in the number of issued and outstanding shares of our
capital stock resulting from a stock dividend, a recapitalization or other
capital adjustment. The committee or the Board of Directors has discretion to
make appropriate antidilution adjustments to outstanding Options in the event of
a merger, consolidation or other reorganization of or a sale or other
disposition of substantially all of our assets.
The Employee Plan will expire on October 31, 2010, and any Option
outstanding on such date will remain outstanding until it expires or is
exercised. The committee or the Board of Directors may amend, suspend or
terminate the Employee Plan or any Option at any time, provided that such
amendment shall be subject to the approval of the our shareholders if such
shareholder approval is required by any federal or state law or regulation
(including, without limitation, Rule 16b-3 or to comply
17
<PAGE> 21
with Section 162(m) of the tax code) or the rules of any stock exchange or
automated quotation system on which the common stock may then be listed or
granted. In addition, no amendment, suspension or termination shall
substantially impair the rights or benefits of any Optionee, pursuant to any
Option previously granted, without the consent of the Optionee.
FEDERAL INCOME TAX CONSEQUENCES OF AWARDS OF OPTIONS.
The Employee Plan is not qualified under the provisions of Section
401(a) of the tax code, and is not subject to any of the provisions of the
Employee Retirement Income Security Act of 1974, as amended.
NONQUALIFIED STOCK OPTIONS. On exercise of a nonqualified stock option
granted under the Employee Plan, an Optionee will recognize ordinary income
equal to the excess, if any, of the fair market value on the date of exercise of
the shares of common stock acquired on exercise of the Option over the exercise
price. If the Optionee is one of our employees, that income will be subject to
the withholding of Federal income tax. The Optionee's tax basis in those shares
will be equal to their fair market value on the date of exercise of the Option,
and his holding period for those shares will begin on that date.
If an Optionee pays for shares of common stock on exercise of an Option
by delivering shares of our common stock, the Optionee will not recognize gain
or loss on the shares delivered, even if their fair market value at the time of
exercise differs from the Optionee's tax basis in them. The Optionee, however,
otherwise will be taxed on the exercise of the Option in the manner described
above as if he had paid the exercise price in cash. If a separate identifiable
stock certificate is issued for that number of shares equal to the number of
shares delivered on exercise of the Option, the Optionee's tax basis in the
shares represented by that certificate will be equal to his tax basis in the
shares delivered, and his holding period for those shares will include his
holding period for the shares delivered. The Optionee's tax basis and holding
period for the additional shares received on exercise of the Option will be the
same as if the Optionee had exercised the Option solely in exchange for cash.
We will be entitled to a deduction for Federal income tax purposes
equal to the amount of ordinary income taxable to the Optionee, provided that
amount constitutes an ordinary and necessary business expense for us and is
reasonable in amount, and either the employee includes that amount in income or
we timely satisfy our reporting requirements with respect to that amount.
INCENTIVE STOCK OPTIONS. The Employee Plan provides for the grant of
stock options that qualify as "incentive stock options" as defined in Section
422 of the tax code. Under the tax code, an Optionee generally is not subject to
tax upon the grant or exercise of an incentive stock option. In addition, if the
Optionee holds a share received on exercise of an incentive stock option for at
least two years from the date the Option was granted and at least one year from
the date the Option was exercised (the "Required Holding Period"), the
difference, if any, between the amount realized on a sale or other taxable
disposition of that share and the holder's tax basis in that share will be
long-term capital gain or loss.
If, however, an Optionee disposes of a share acquired on exercise of an
incentive stock option before the end of the Required Holding Period (a
"Disqualifying Disposition"), the Optionee generally will recognize ordinary
income in the year of the Disqualifying Disposition equal to the excess, if any,
of the fair market value of the share on the date the incentive stock option was
exercised over the exercise price. If, however, the Disqualifying Disposition is
a sale or exchange on which a loss, if realized, would be recognized for Federal
income tax purposes, and if the sales proceeds are less than the fair market
value of the share on the date of exercise of the Option, the amount of ordinary
income recognized by the Optionee will not exceed the gain, if any, realized on
the sale. If the amount realized on a Disqualifying
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<PAGE> 22
Disposition exceeds the fair market value of the share on the date of exercise
of the Option, that excess will be short-term or long-term capital gain,
depending on whether the holding period for the share exceeds one year.
An Optionee who exercises an incentive stock option by delivering
shares of common stock acquired previously pursuant to the exercise of an
incentive stock option before the expiration of the Required Holding Period for
those shares is treated as making a Disqualifying Disposition of those shares.
This rule prevents "pyramiding" the exercise of an incentive stock option (that
is, exercising an incentive stock option for one share and using that share, and
others so acquired, to exercise successive incentive stock options) without the
imposition of current income tax.
For purposes of the alternative minimum tax, the amount by which the
fair market value of a share of common stock acquired on exercise of an
incentive stock option exceeds the exercise price of that Option generally will
be an adjustment included in the Optionee's alternative minimum taxable income
for the year in which the Option is exercised. If, however, there is a
Disqualifying Disposition of the share in the year in which the Option is
exercised, there will be no adjustment with respect to that share. If there is a
Disqualifying Disposition in a later year, no income with respect to the
Disqualifying Disposition is included in the Optionee's alternative minimum
taxable income for that year. In computing alternative minimum taxable income,
the tax basis of a share acquired on exercise of an incentive stock option is
increased by the amount of the adjustment taken into account with respect to
that share for alternative minimum tax purposes in the year the Option is
exercised.
We are not allowed an income tax deduction with respect to the grant or
exercise of an incentive stock option or the disposition of a share acquired on
exercise of an incentive stock option after the Required Holding Period.
However, if there is a Disqualifying Disposition of a share, we are allowed a
deduction in an amount equal to the ordinary income included in income by the
Optionee, provided that amount constitutes an ordinary and necessary business
expense for us and is reasonable in amount, and either the employee includes
that amount in income or we timely satisfy our reporting requirements with
respect to that amount.
SECTION 162 LIMITATIONS. The Omnibus Budget Reconciliation Act of 2003
added Section 162(m) to the tax code, which generally disallows a public
company's tax deduction for compensation to covered employees in excess of $1
million in any tax year beginning on or after January 1, 2004. Compensation that
qualifies as "performance-based compensation" is excluded from the $1 million
deductibility cap, and therefore remains fully deductible by the company that
pays it. We intend that Options granted to employees whom the committee expects
to be covered employees at the time a deduction arises in connection with such
Options, will qualify as such "performance-based compensation," so that such
Options will not be subject to the Section 162(m) deductibility cap of $1
million. Future changes in Section 162(m) or the regulations thereunder may
adversely affect our ability to ensure that Options under the employee plan will
qualify as "performance-based compensation" that is fully deductible by us under
Section 162(m).
IMPORTANCE OF CONSULTING TAX ADVISER. The information set forth above
is a summary only and does not purport to be complete. In addition, the
information is based upon current Federal income tax rules and therefore is
subject to change when those rules change. Moreover, because the tax
consequences to any Optionee may depend on his particular situation, each
Optionee should consult his tax adviser as to the Federal, state, local and
other tax consequences of the grant or exercise of an Option or the disposition
of common stock acquired on exercise of an Option.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
2000 STOCK OPTION PLAN.
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PROPOSAL 3 - APPROVAL OF 2000 DIRECTORS STOCK OPTION PLAN
BACKGROUND AND PURPOSE.
On August 23, 2000, the Board of Directors adopted the E Com Ventures,
Inc. 2000 Directors Stock Option Plan, which we will refer to in this Proxy
Statement as the "Directors Plan", and recommended that it be submitted to our
shareholders for approval at the Annual Meeting. The purpose of the Directors
Plan is to provide an additional incentive to attract and retain qualified
competent directors upon whose efforts and judgment our success is largely
dependent, through the encouragement of the ownership of our stock by such
persons. In furtherance of this purpose, the Directors Plan authorizes, among
other things, (a) the granting of nonqualified stock options to purchase common
stock (collectively, "Director Options") to directors upon appointment to the
Board of Directors, (b) the provision of loans for the purposes of financing the
exercise of Director Options and the amount of taxes payable in connection
therewith, and (c) the use of already owned common stock as payment of the
exercise price for Director Options granted under the Board of Directors Plan.
Shareholder approval of the Directors Plan is required (i) in order for
the Directors Plan to be eligible under the "plan lender" exemption from the
margin requirements of Regulation U promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), and (ii) by the rules of the
National Association of Securities Dealers National Market System.
The effective date of the Directors Plan is October 31, 2000 (the
"Effective Date"). No Director Options have been granted under the Directors
Plan as of the date of this Proxy Statement. Upon approval of the Directors Plan
by the shareholders, no additional options shall be granted under the old
Directors Stock Option Plan.
The following is a summary of certain principal features of the
Directors Plan. This summary is qualified in its entirety by reference to the
complete text of the Directors Plan, which is attached to this Proxy Statement
as Appendix B. Shareholders are urged to read the actual text of the Directors
Plan in its entirety.
The principal features of the Directors Plan mirror the principal
features of the Employee Plan discussed in Proposal 2 of this Proxy Statement,
except for the following:
ADMINISTRATION OF THE DIRECTORS PLAN.
An aggregate of 120,000 shares of common stock (subject to adjustment
described below) are reserved for issuance upon the exercise of Director Options
granted under the Directors Plan. The shares acquired upon exercise of Director
Options granted under the directors plan will be authorized and issued shares of
common stock. Our shareholders will not have any preemptive rights to purchase
or subscribe for any common stock by reason of the reservation and issuance of
common stock under the Directors Plan. If any Option granted under the Directors
Plan should expire or terminate for any reason other than having been exercised
in full, the unpurchased shares subject to that Option will again be available
for purposes of the Board of Directors Plan.
CERTAIN TERMS AND CONDITIONS.
After the Effective Date of the Board of Directors Plan, each
individual who is appointed as one of our directors will receive an Option to
purchase 2,000 shares of our common stock (the "Automatic
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<PAGE> 24
Grant"). Each year thereafter, each then eligible director will receive an
option to purchase 4,000 shares of our common stock. Such options are
immediately exercisable.
Unless the prior written consent of the committee or the Board of
Directors is obtained (which consent may be withheld for any reason) and the
transaction does not violate the requirements of Rule 16b-3 of the Exchange Act,
no Option granted under the Directors Plan is assignable or transferable, other
than by will or by the laws of descent and distribution.
The Board of Directors Plan will expire on October 31, 2010, and any
Option outstanding on such date will remain outstanding until it expires or is
exercised.
FEDERAL INCOME TAX CONSEQUENCES OF AWARDS OF DIRECTOR OPTIONS.
The Board of Directors Plan is not qualified under the provisions of
Section 401(a) of the tax code, and is not subject to any of the provisions of
the Employee Retirement Income Security Act of 1974, as amended. The federal
income tax consequences applicable to the Director Options are the same as the
federal income tax consequences applicable to nonqualified stock options granted
under the employee plan as described in Item 2 of this Proxy Statement.
IMPORTANCE OF CONSULTING TAX ADVISER. The information set forth above
is a summary only and does not purport to be complete. In addition, the
information is based upon current Federal income tax rules and therefore is
subject to change when those rules change. Moreover, because the tax
consequences to any Optionee may depend on his particular situation, each
Optionee should consult his tax adviser as to the Federal, state, local and
other tax consequences of the grant or exercise of an Option or the disposition
of common stock acquired on exercise of an Option.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE 2000
DIRECTORS STOCK OPTION PLAN.
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<PAGE> 25
PROPOSAL 4 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The firm of PricewaterhouseCoopers LLP ("PwC") served as the Company's
independent public accountants for the fiscal year ended January 30, 1999. On
April 4, 2000, PwC notified the Company that upon completion of their audit of
the Company's consolidated financial statements for the fiscal year ended
January 29, 2000, they would resign as the Company's independent certified
public accountants. PwC has previously audited the Company's consolidated
financial statements for the fiscal years ended January 30, 1999 and January 31,
1998 ("Prior Fiscal Years"). Their reports on such consolidated financial
statements did not contain an adverse opinion or a disclaimer of opinion and
were not qualified or modified as to uncertainty, audit scope or accounting
principles, except for a modified opinion for the fiscal year ended January 30,
1999 relating to the Company's ability to continue as a "going concern".
Further, in connection with its audit of the Company's financial statements for
the Prior Fiscal Years and through April 4, 2000, the Company had no
disagreements with PwC on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of PwC, would have caused
them to make a reference to the subject matter of the disagreements in
connection with its report on the consolidated statements of the Company for
each of its Prior Fiscal Years. The Board of Directors, on the recommendation of
the Company's Audit Committee, has selected Deloitte and Touche LLP as the
Company's independent public accountants for the 2000 fiscal year. One or more
representatives of Deloitte and Touche LLP are expected to be present at the
Annual Meeting. Such representatives will have the opportunity to make a
statement if they desire to do so and are expected to be available to respond to
appropriate questions from shareholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE PROPOSAL TO
RATIFY THE APPOINTMENT OF DELOITTE AND TOUCHE, LLP AS OUR
INDEPENDENT AUDITORS FOR THE FISCAL YEAR ENDING
FEBRUARY 3, 2001.
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OTHER BUSINESS
We know of no other business to be brought before the Annual Meeting.
If, however, any other business should properly come before the Annual Meeting,
the persons named in the accompanying proxy will vote proxies as in their
discretion they may deem appropriate, unless they are directed by a proxy to do
otherwise.
SHAREHOLDER PROPOSALS FOR THE 2001 ANNUAL MEETING
Any shareholder who intends to present a proposal at our 2001 Annual
Meeting of Shareholders and who wishes to have their proposal included in our
Proxy Statement for that meeting, must deliver the proposal to our Corporate
Secretary in writing not later than June 4, 2001.
After the June 4, 2001 deadline, a shareholder may present a proposal
at our 2001 Annual Meeting of Shareholders if it is submitted to our Corporate
Secretary at the address below no later than August 18, 2001. If timely
submitted, the shareholder may present the proposal at the 2001 Annual Meeting
of Shareholders, but we are not obligated to present the matter in our proxy
materials.
A shareholder wishing to recommend a candidate for election to the
Board of Directors should send the recommendation and a description of the
person's qualifications to our Corporate Secretary at the address below. A
shareholder wishing to nominate a candidate for election to the Board of
Directors is required to give written notice to the Corporate Secretary of his
or her intention to make such a nomination. The notice of nomination must be
received by our Corporate Secretary at the address below no later than August
18, 2001. The notice of nomination is required to contain certain information
about both the nominee and the shareholder making the nomination as set forth in
our bylaws. A nomination which does not comply with the above requirements will
not be considered.
Send all proposals or nominations to Donovan Chin, Secretary, E Com
Ventures, Inc., 11701 N.W. 101st Road, Miami, Florida 33178.
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APPENDIX A
---------------------------------------
E COM VENTURES, INC.
2000 STOCK OPTION PLAN
---------------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of E
COM VENTURES, INC., a Florida corporation (the "Company"), and its Subsidiaries
by providing an additional incentive to attract and retain qualified and
competent persons who provide services to the Company and its Subsidiaries, and
upon whose efforts and judgment the success of the Company and its Subsidiaries
is largely dependent, through the encouragement of stock ownership in the
Company by such persons. As of the Effective Date of this Plan, no more stock
options shall be granted under the 1991 Stock Plan, as amended.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Board" shall mean the Board of Directors of the Company.
(b) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(c) "Committee" shall mean the committee appointed by the
Board pursuant to Section 13(a) hereof, or, if such committee is not appointed,
the Board.
(d) "Common Stock" shall mean the Company's Common Stock, par
value $0.01 per share.
(e) "Company" shall mean E COM VENTURES, INC., a Florida
corporation.
(f) "Director" shall mean a member of the Board.
(g) "Effective Date" shall mean October 31, 2000.
(h) "Fair Market Value" of a share on any date of reference
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding the date of reference, unless the Committee
or the Board in its sole discretion shall determine otherwise in a fair and
uniform manner. For the purpose of determining Fair Market Value, the "Closing
Price" of the Common Stock on any business day shall be (i) if the Common Stock
is listed or admitted for trading on any United States national securities
exchange, or if actual transactions are otherwise reported on a consolidated
transaction reporting system, the last reported sale price of Common Stock on
such exchange or reporting system, as reported in any newspaper of general
circulation, (ii) if the Common Stock is quoted on the National Association of
Securities Dealers Automated Quotations System ("NASDAQ"), or any similar system
of automated dissemination of quotations of securities prices in common use, the
last reported sale price of Common Stock on such system or, if sales prices are
not
<PAGE> 28
reported, the mean between the closing high bid and low asked quotations for
such day of Common Stock on such system, as reported in any newspaper of general
circulation or (iii) if neither clause (i) or (ii) is applicable, the mean
between the high bid and low asked quotations for the Common Stock as reported
by the National Quotation Bureau, Incorporated if at least two securities
dealers have inserted both bid and asked quotations for Common Stock on at least
five of the ten preceding days. If neither (i), (ii), or (iii) above is
applicable, then Fair Market Value shall be determined by the Committee or the
Board in a fair and uniform manner.
(i) "Incentive Stock Option" shall mean an incentive stock
option as defined in Section 422 of the Internal Revenue Code.
(j) "Non-Qualified Stock Option" shall mean an Option that is
not an Incentive Stock Option.
(k) "Officer" shall mean the Company's Chairman of the Board,
President, Chief Executive Officer, principal financial officer, principal
accounting officer, any vice-president of the Company in charge of a principal
business unit, division or function (such as sales, administration or finance),
any other officer who performs a policy-making function, or any other person who
performs similar policy-making functions for the Company. Officers of
Subsidiaries shall be deemed Officers of the Company if they perform such
policy-making functions for the Company. As used in this paragraph, the phrase
"policy-making function" does not include policy-making functions that are not
significant. If pursuant to Item 401(b) of Regulation S-K (17 C.F.R. ss.
229.401(b)) the Company identifies a person as an "executive officer," the
person so identified shall be deemed an "Officer" even though such person may
not otherwise be an "Officer" pursuant to the foregoing provisions of this
paragraph.
(l) "Option" (when capitalized) shall mean any option granted
under this Plan.
(m) "Option Agreement" means the agreement between the Company
and the Optionee for the grant of an option.
(n) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(o) "Outside Director" shall mean a member of the Board who
qualifies as an "outside director" under Section 162(m) of the Internal Revenue
Code and the regulations thereunder and as a "Non-Employee Director" under Rule
16b-3 promulgated under the Securities Exchange Act.
(p) "Plan" shall mean this 2000 Stock Option Plan for the
Company.
(q) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended from time to time.
(r) "Share" shall mean a share of Common Stock.
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(s) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AVAILABLE FOR OPTION GRANTS. The Committee or the Board may
grant to Optionees from time to time Options to purchase an aggregate of up to
1,500,000 shares from the Company's authorized and unissued Shares. In addition,
the number of Shares available for issuance under the Plan shall automatically
increase on the first trading day of each fiscal year of the Company during the
term of the Plan, beginning with the fiscal year ended February 2, 2002, by an
amount equal to three percent (3%) of the shares of Common Stock of the Company
outstanding as of the last trading day of the immediately preceding fiscal year.
No Incentive Stock Options may be granted on the basis of the additional shares
of Common Stock resulting from such annual increases. If any Option granted
under the Plan shall terminate, expire, or be canceled or surrendered as to any
Shares, new Options may thereafter be granted covering such Shares.
4. INCENTIVE AND NON-QUALIFIED OPTIONS.
(a) An Option granted hereunder shall be either an Incentive
Stock Option or a Non-Qualified Stock Option as determined by the Committee or
the Board at the time of grant of the Option and shall clearly state whether it
is an Incentive Stock Option or a Non-Qualified Stock Option. All Incentive
Stock Options shall be granted within 10 years from the effective date of this
Plan. Incentive Stock Options may not be granted to any person who is not an
employee of the Company or any Subsidiary.
(b) Options otherwise qualifying as Incentive Stock Options
hereunder will not be treated as Incentive Stock Options to the extent that the
aggregate fair market value (determined at the time the Option is granted) of
the Shares, with respect to which Options meeting the requirements of Section
422(b) of the Code are exercisable for the first time by any individual during
any calendar year (under all plans of the Company and its parent and subsidiary
corporations as defined in Section 424 of the Code), exceeds $100,000.
5. CONDITIONS FOR GRANT OF OPTIONS.
(a) Each Option shall be evidenced by an Option Agreement that
may contain any term deemed necessary or desirable by the Committee or the
Board, provided such terms are not inconsistent with this Plan or any applicable
law. Optionees shall be (i) those persons selected by the Committee or the Board
from the class of all regular employees of, or persons who provide consulting or
other services as independent contractors to, the Company or its Subsidiaries,
including Directors and Officers who are regular employees, and (ii) Directors
who are not employees of the Company or of any Subsidiaries.
(b) In granting Options, the Committee or the Board shall take
into consideration the contribution the person has made to the success of the
Company or its Subsidiaries and such other factors as the Committee or the Board
shall determine. The Committee or the Board shall also have the authority
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to consult with and receive recommendations from officers and other personnel of
the Company and its Subsidiaries with regard to these matters. The Committee or
the Board may from time to time in granting Options under the Plan prescribe
such other terms and conditions concerning such Options as it deems appropriate,
including, without limitation, (i) prescribing the date or dates on which the
Option becomes exercisable, (ii) providing that the Option rights accrue or
become exercisable in installments over a period of years, or upon the
attainment of stated goals or both, or (iii) relating an Option to the continued
employment of the Optionee for a specified period of time, provided that such
terms and conditions are not more favorable to an Optionee than those expressly
permitted herein.
(c) The Options granted to employees under this Plan shall be
in addition to regular salaries, pension, life insurance or other benefits
related to their employment with the Company or its Subsidiaries. Neither the
Plan nor any Option granted under the Plan shall confer upon any person any
right to employment or continuance of employment by the Company or its
Subsidiaries.
(d) Notwithstanding any other provision of this Plan, an
Incentive Stock Option shall not be granted to any person owning directly or
indirectly (through attribution under Section 424(d) of the Code) at the date of
grant, stock possessing more than 10% of the total combined voting power of all
classes of stock of the Company (or of its parent or subsidiary corporation (as
defined in Section 424 of the Code) at the date of grant) unless the option
price of such Option is at least 110% of the Fair Market Value of the Shares
subject to such Option on the date the Option is granted, and such Option by its
terms is not exercisable after the expiration of five years from the date such
Option is granted.
(e) Notwithstanding any other provision of this Plan, and in
addition to any other requirements of this Plan, the aggregate number of Options
granted to any one Optionee may not exceed 500,000, subject to adjustment as
provided in Section 10 hereof.
6. OPTION PRICE. The option price per Share of any Option shall be any
price determined by the Committee or the Board but shall not be less than the
par value per Share; provided, however, that in no event shall the option price
per Share of any Incentive Stock Option be less than the Fair Market Value of
the Shares underlying such Option on the date such Option is granted.
7. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made, and (iii) arrangements
that are satisfactory to the Committee or the Board in its sole discretion have
been made for the Optionee's payment to the Company of the amount that is
necessary for the Company or Subsidiary employing the Optionee to withhold in
accordance with applicable Federal or state tax withholding requirements. The
consideration to be paid for the Shares to be issued upon exercise of an Option
as well as the method of payment of the exercise price and of any withholding
and employment taxes applicable thereto, shall be determined by the Committee or
the Board and may in the discretion of the Committee or the Board consist of:
(1) cash, (2) certified or official bank check, (3) money order, (4) Shares that
have been held by the Optionee for at least six (6) months (or such other Shares
as the Company determines will not cause the Company to recognize for financial
accounting purposes a charge for compensation expense), (5) the withholding of
Shares issuable upon exercise of the Option, (6) pursuant to a "cashless
exercise" procedure, by delivery of a properly executed exercise notice together
with such other documentation, and subject to such guidelines, as the Board or
the Committee shall require to effect an
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exercise of the Option and delivery to the Company by a licensed broker
acceptable to the Company of proceeds from the sale of Shares or a margin loan
sufficient to pay the exercise price and any applicable income or employment
taxes, or (7) in such other consideration as the Committee or the Board deems
appropriate, or by a combination of the above. In the case of an Incentive Stock
Option, the permissible methods of payment shall be specified at the time the
Option is granted. The Committee or the Board in its sole discretion may accept
a personal check in full or partial payment of any Shares. If the exercise price
is paid, and/or the Optionee's tax withholding obligation is satisfied, in whole
or in part with Shares, or through the withholding of Shares issuable upon
exercise of the Option, the value of the Shares surrendered or withheld shall be
their Fair Market Value on the date the Option is exercised. The Committee or
the Board in its sole discretion may, on an individual basis or pursuant to a
general program established in connection with this Plan, cause the Company to
lend money to an Optionee, guarantee a loan to an Optionee, or otherwise assist
an Optionee to obtain the cash necessary to exercise all or a portion of an
Option granted hereunder or to pay any tax liability of the Optionee
attributable to such exercise. If the exercise price is paid in whole or part
with Optionee's promissory note, such note shall (i) provide for full recourse
to the maker, (ii) be collateralized by the pledge of the Shares that the
Optionee purchases upon exercise of the Option, (iii) bear interest at the prime
rate of the Company's principal lender, and (iv) contain such other terms as the
Committee or the Board in its sole discretion shall reasonably require. No
Optionee shall be deemed to be a holder of any Shares subject to an Option
unless and until a stock certificate or certificates for those Shares are issued
to that person(s) under the terms of this Plan. No adjustment shall be made for
dividends (ordinary or extraordinary, whether in cash, securities or other
property) or distributions or other rights for which the record date is prior to
the date the stock certificate is issued, except as expressly provided in
Section 10 hereof.
8. EXERCISABILITY OF OPTIONS. Any Option shall become exercisable in
such amounts, at such intervals and upon such terms as the Committee or the
Board shall provide in the Option Agreement for that Option, except as otherwise
provided in this Section 8:
(a) The expiration date of an Option shall be determined by
the Committee or the Board at the time of grant, but in no event shall an Option
be exercisable after the expiration of 10 years from the date of grant of the
Option.
(b) Unless otherwise provided in any Option, each outstanding
Option shall become immediately fully exercisable in the event of a "Change in
Control" or in the event that the Committee or the Board exercises its
discretion to provide a cancellation notice with respect to the Option pursuant
to Section 9(b) hereof. For this purpose, the term "Change in Control" shall
mean:
(i) Approval by the shareholders of the Company of a
reorganization, merger, consolidation or other form of corporate transaction or
series of transactions, in each case, with respect to which persons who were the
shareholders of the Company immediately prior to such reorganization, merger or
consolidation or other transaction do not, immediately thereafter, own more than
50% of the combined voting power entitled to vote generally in the election of
directors of the reorganized, merged or consolidated company's then outstanding
voting securities, in substantially the same proportions as their ownership
immediately prior to such reorganization, merger, consolidation or other
transaction, or a liquidation or dissolution of the Company or the sale of all
or substantially all of the assets of the Company (unless such reorganization,
merger, consolidation or other corporate transaction, liquidation, dissolution
or sale is subsequently abandoned); or
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(ii) Individuals who, as of the date on which the
Option is granted, hereof, constitute the Board (the "Incumbent Board") cease
for any reason to constitute at least a majority of the Board, provided that any
person becoming a director subsequent to the date on which the Option was
granted whose election, or nomination for election by the Company's
shareholders, was approved by a vote of at least a majority of the directors
then comprising the Incumbent Board (other than an election or nomination of an
individual whose initial assumption of office is in connection with an actual or
threatened election contest relating to the election of the Directors of the
Company) shall be, for purposes of this Agreement, considered as though such
person were a member of the Incumbent Board.; or
(iii) The acquisition (other than from the Company)
by any person, entity or "group", within the meaning of Section 13(d)(3) or
14(d)(2) of the Securities Exchange Act, of beneficial ownership (within the
meaning of Rule 13-d promulgated under the Securities Exchange Act) of 30% of
either the then outstanding shares of the Company's Common Stock or the combined
voting power of the Company's then outstanding voting securities entitled to
vote generally in the election of directors (hereinafter referred to as the
ownership of a "Controlling Interest") excluding, for this purpose, any
acquisitions by (1) the Company or its Subsidiaries, (2) any person, entity or
"group" that as of the date on which the Option is granted owns beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act) of a Controlling Interest or (3) any employee benefit plan of the
Company or its Subsidiaries.
(c) The Committee or the Board may in its sole discretion,
accelerate the date on which any Option may be exercised and may accelerate the
vesting of any Shares subject to any Option or previously acquired by the
exercise of any Option.
9. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option Agreement, the
unexercised portion of any Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:
(i) three months after the date on which the
Optionee's employment is terminated other than by reason of (A) Cause, which,
solely for purposes of this Plan, shall mean the termination of the Optionee's
employment by reason of the Optionee's willful misconduct or gross negligence,
(B) a mental or physical disability (within the meaning of Internal Revenue Code
Section 22(e)) of the Optionee as determined by a medical doctor satisfactory to
the Committee, or (C) death of the Optionee;
(ii) immediately upon the termination of the
Optionee's employment for Cause;
(iii) twelve months after the date on which the
Optionee's employment is terminated by reason of a mental or physical disability
(within the meaning of Section 22(e) of the Code) as determined by a medical
doctor satisfactory to the Committee or the Board;
(iv) (A) twelve months after the date of termination
of the Optionee's employment by reason of death of the Optionee, or, if later,
(B) three months after the date on which the
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Optionee shall die if such death shall occur during the one year period
specified in Subsection 9(a)(iii) hereof.
(v) immediately in the event that the Optionee shall
file any lawsuit or arbitration claim against the Company or any Subsidiary, or
any of their respective officers, directors or shareholders; or
All references herein to the termination of the Optionee's employment shall, in
the case of an Optionee who is not an employee of the Company or a Subsidiary,
refer to the termination of the Optionee's service with the Company.
(b) To the extent not previously exercised, (i) each Option
shall terminate immediately in the event of (1) the liquidation or dissolution
of the Company, or (2) any reorganization, merger, consolidation or other form
of corporate transaction in which the Company does not survive, unless the
successor corporation, or a parent or subsidiary of such successor corporation,
assumes the Option or substitutes an equivalent option or right pursuant to
Section 10(c) hereof, and (ii) the Committee or the Board in its sole discretion
may by written notice ("cancellation notice") cancel, effective upon the
consummation of any corporate transaction described in Subsection 8(b)(i) hereof
in which the Company does survive, any Option that remains unexercised on such
date. The Committee or the Board shall give written notice of any proposed
transaction referred to in this Section 9(b) a reasonable period of time prior
to the closing date for such transaction (which notice may be given either
before or after approval of such transaction), in order that Optionees may have
a reasonable period of time prior to the closing date of such transaction within
which to exercise any Options that then are exercisable (including any Options
that may become exercisable upon the closing date of such transaction). An
Optionee may condition his exercise of any Option upon the consummation of a
transaction referred to in this Section 9(b).
10. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the declaration of a stock dividend or
through any recapitalization resulting in a stock split-up, combination or
exchange of Shares, then and in that event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, or available for
grant to any person under the Plan, so that the same percentage of the Company's
issued and outstanding Shares shall continue to be subject to being so optioned;
and
(ii) the Board or the Committee may, in its
discretion, make any adjustments it deems appropriate in the number of Shares
and the exercise price per Share thereof then subject to any outstanding Option,
so that the same percentage of the Company's issued and outstanding Shares shall
remain subject to purchase at the same aggregate exercise price.
(b) Unless otherwise provided in any Option Agreement, the
Committee may change the terms of Options outstanding under this Plan, with
respect to the option price or the number of Shares
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subject to the Options, or both, when, in the Committee's sole discretion, such
adjustments become appropriate so as to preserve benefits under the Plan.
(c) In the event of a proposed sale of all or substantially
all of the Company's assets or any reorganization, merger, consolidation or
other form of corporate transaction in which the Company does not survive, where
the securities of the successor corporation, or its parent company, are issued
to the Company's shareholders, then the successor corporation or a parent of the
successor corporation may, with the consent of the Committee or the Board,
assume each outstanding Option or substitute an equivalent option or right. If
the successor corporation, or its parent, does not cause such an assumption or
substitution to occur, or the Committee or the Board does not consent to such an
assumption or substitution, then each Option shall terminate pursuant to Section
9(b) hereof upon the consummation of sale, merger, consolidation or other
corporate transaction.
(d) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with a direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made to, the number of or exercise price
for Shares then subject to outstanding Options granted under the Plan.
(e) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
11. TRANSFERABILITY OF OPTIONS AND SHARES.
(a) No Incentive Stock Option, and unless the prior written
consent of the Committee or the Board is obtained (which consent may be withheld
for any reason) and the transaction does not violate the requirements of Rule
16b-3 promulgated under the Securities Exchange Act, no Non-Qualified Stock
Option shall be subject to alienation, assignment, pledge, charge or other
transfer other than by the Optionee by will or the laws of descent and
distribution, and any attempt to make any such prohibited transfer shall be
void. Each Option shall be exercisable during the Optionee's lifetime only by
the Optionee, or in the case of a Non-Qualified Stock Option that has been
assigned or transferred with the prior written consent of the Committee or the
Board, only by the permitted assignee.
(b) No Shares acquired by an Officer or Director pursuant to
the exercise of an Option may be sold, assigned, pledged or otherwise
transferred prior to the expiration of the six-month period following the date
on which the Option was granted, unless the transaction does not violate the
requirements of Rule 16b-3 promulgated under the Securities Exchange Act.
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<PAGE> 35
12. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon
exercise of any Option, the Committee or the Board may require such agreements
or undertakings as the Committee or the Board may deem necessary or advisable to
facilitate compliance with any applicable law or regulation including, but not
limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends endorsed upon the certificate(s) for the Shares that
are, in the opinion of the Committee or the Board, necessary or appropriate to
facilitate compliance with the provisions of any securities laws deemed by the
Committee or the Board to be applicable to the issuance and transfer of those
Shares.
13. ADMINISTRATION OF THE PLAN.
(a) The Plan shall be administered by the Board or, at the
discretion of the Board, by a committee appointed by the Board (the "Committee")
which shall be composed of two or more Directors. The membership of the
Committee shall be constituted so as to comply at all times with the then
applicable requirements for Outside Directors of Rule 16b-3 promulgated under
the Securities Exchange Act and Section 162(m) of the Internal Revenue Code. The
Committee shall serve at the pleasure of the Board and shall have the powers
designated herein and such other powers as the Board may from time to time
confer upon it.
(b) The Committee or the Board may grant Options pursuant to
this Plan to any persons to whom Options may be granted under Section 5(a)
hereof.
(c) The Committee or the Board, from time to time, may adopt
rules and regulations for carrying out the purposes of the Plan. The
determinations of the Committee or the Board, and its interpretation and
construction of any provision of the Plan or any Option Agreement, shall be
final and conclusive.
(d) Any and all decisions or determinations of the Committee
shall be made either (i) by a majority vote of the members of the Committee at a
meeting or (ii) without a meeting by the unanimous written approval of the
members of the Committee.
14. WITHHOLDING OR DEDUCTION FOR TAXES. If at any time specified herein
for the making of any issuance or delivery of any Option or Common Stock to any
Optionee, any law or regulation of any
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<PAGE> 36
governmental authority having jurisdiction in the premises shall require the
Company to withhold, or to make any deduction for, any taxes or to take any
other action in connection with the issuance or delivery then to be made, the
issuance or delivery shall be deferred until the withholding or deduction shall
have been provided for by the Optionee or beneficiary, or other appropriate
action shall have been taken.
15. INTERPRETATION.
(a) As it is the intent of the Company that the Plan shall
comply in all respects with Rule 16b-3 promulgated under the Securities Exchange
Act ("Rule 16b-3"), any ambiguities or inconsistencies in construction of the
Plan shall be interpreted to give effect to such intention, and if any provision
of the Plan is found not to be in compliance with Rule 16b-3, such provision
shall be deemed null and void to the extent required to permit the Plan to
comply with Rule 16b-3. The Committee or the Board may from time to time adopt
rules and regulations under, and amend, the Plan in furtherance of the intent of
the foregoing.
(b) The Plan and any Option Agreements entered into pursuant
to the Plan shall be administered and interpreted so that all Incentive Stock
Options granted under the Plan will qualify as Incentive Stock Options under
Section 422 of the Code. If any provision of the Plan or any Option Agreement
relating to an Incentive Stock Option should be held invalid for the granting of
Incentive Stock Options or illegal for any reason, that determination shall not
affect the remaining provisions hereof, but instead the Plan and the Option
Agreement shall be construed and enforced as if such provision had never been
included in the Plan or the Option Agreement.
(c) This Plan shall be governed by the laws of the State of
Florida.
(d) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(e) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
16. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Committee or the
Board may from time to time amend, suspend or terminate the Plan or any Option;
provided, however, that, any amendment to the Plan shall be subject to the
approval of the Company's shareholders if such shareholder approval is required
by any federal or state law or regulation (including, without limitation, Rule
16b-3 or to comply with Section 162(m) of the Internal Revenue Code) or the
rules of any Stock exchange or automated quotation system on which the Common
Stock may then be listed or granted. Except to the extent provided in Sections 9
and 10 hereof, no amendment, suspension or termination of the Plan or any Option
issued hereunder shall substantially impair the rights or benefits of any
Optionee pursuant to any Option previously granted without the consent of the
Optionee.
17. EFFECTIVE DATE AND TERMINATION DATE. The effective date of the Plan
is October 31, 2000 and the Plan shall terminate on the 10th anniversary of the
Effective Date.
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APPENDIX B
---------------------------------------
E COM VENTURES, INC.
2000 DIRECTORS STOCK OPTION PLAN
---------------------------------------
1. PURPOSE. The purpose of this Plan is to advance the interests of E
COM VENTURES, INC., a Florida corporation (the "Company"), and its Subsidiaries
by providing an additional incentive to attract and retain qualified and
competent persons upon whose efforts and judgment the success of the Company and
its Subsidiaries is largely dependent, through the encouragement of stock
ownership in the Company by such persons. This Plan is intended to supersede the
Company's 1992 Directors Stock Option Plan, as amended (the "Preexisting Plan").
As of the Effective Date of this Plan, no more stock options shall be granted
under the Pre-existing Plan.
2. DEFINITIONS. As used herein, the following terms shall have the
meaning indicated:
(a) "Annual Meeting Date" shall mean the date of the annual
meeting of the Company's shareholders at which the Directors are elected.
(b) "Board" shall mean the Board of Directors of the Company.
(c) "Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time.
(d) "Common Stock" shall mean the Company's Common Stock, par
value $0.01 per share.
(e) "Company" shall mean E COM VENTURES, INC., a Florida
corporation.
(f) "Director" shall mean a member of the Board.
(g) "Effective Date" shall mean October 31, 2000.
(h) "Eligible Director" shall mean any person who is a member
of the Board and who is not an employee, full time or part time, of the Company.
(i) "Fair Market Value" of a Share on any date of reference
shall mean the "Closing Price" (as defined below) of the Common Stock on the
business day immediately preceding the date of reference. For the purpose of
determining Fair Market Value, the "Closing Price" of the Common Stock on any
business day shall be (i) if the common stock is listed or admitted for trading
on any United States national securities exchange, or if actual transactions are
otherwise reported on a consolidated transaction reporting system, the last
reported sale price of common stock on such exchange or reporting system, as
reported in any newspaper of general circulation; (ii) if common stock is quoted
on the National Association of Securities Dealers Automated Quotations System
("NASDAQ"), or any similar system of automated dissemination of quotations of
securities prices in common use, the mean between the closing
<PAGE> 38
high bid and low asked quotations for such day of common stock on such system;
or (iii) if neither clause (i) nor (ii) is applicable, the mean between the high
bid and low asked quotations for common stock as reported by the National
Quotation Bureau, Incorporated if at least two securities dealers have inserted
both bid and asked quotations for common stock on at least 5 of the 10 preceding
days.
(j) "Initial Election Date" shall mean, with respect to an
individual who becomes an Eligible Director on or after the Effective Date of
the Plan, the date on which such individual is elected as a member of the Board.
(k) "Option" (when capitalized) shall mean any option granted
under this Plan.
(l) "Option Agreement" means the agreement between the Company
and the Optionee for the grant of an option.
(m) "Optionee" shall mean a person to whom a stock option is
granted under this Plan or any person who succeeds to the rights of such person
under this Plan by reason of the death of such person.
(n) "Plan" shall mean this 2000 Directors Stock Option Plan
for the Company.
(o) "Pre-existing Plan" shall mean the Company's 1992
Directors Stock Option Plan, as amended.
(p) "Securities Exchange Act" shall mean the Securities
Exchange Act of 1934, as amended.
(q) "Share" shall mean a share of Common Stock.
(r) "Subsidiary" shall mean any corporation (other than the
Company) in any unbroken chain of corporations beginning with the Company if, at
the time of the granting of the Option, each of the corporations other than the
last corporation in the unbroken chain owns stock possessing 50 percent or more
of the total combined voting power of all classes of stock in one of the other
corporations in such chain.
3. SHARES AVAILABLE FOR OPTION GRANTS. The Committee or the Board may
grant to Optionees from time to time Options to purchase an aggregate of up to
120,000 Shares from the Company's authorized and unissued Shares. If any Option
granted under the Plan shall terminate, expire, or be canceled or surrendered as
to any Shares, new Options may thereafter be granted covering such Shares.
4. GRANTS OF OPTIONS.
(a) With respect to an individual who becomes an Eligible
Director on or after the Effective Date of the Plan, such Eligible Director
shall receive a grant of an Option to purchase 2,000 shares of the Common Stock
of the Company on his or her Initial Election Date.
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<PAGE> 39
(b) On each Annual Meeting Date while this Plan is in effect,
each then Eligible Director shall receive an annual grant of an Option to
purchase 4,000 shares of the Common Stock of the Company.
(c) Upon the grant of each Option under this Plan, the Company
and the Eligible Director shall enter into an Option Agreement, which shall
specify the grant date, the number of Shares subject to the Option, and the
exercise price and shall include or incorporate by reference the substance of
this Plan and such other terms and provisions consistent with this Plan as the
Board may determine.
5. EXERCISE PRICE. The exercise price per Share of any Option shall be
the Fair Market Value of a Share on the date such Option is granted.
6. EXERCISE OF OPTIONS. An Option shall be deemed exercised when (i)
the Company has received written notice of such exercise in accordance with the
terms of the Option, and (ii) full payment of the aggregate option price of the
Shares as to which the Option is exercised has been made. The consideration to
be paid for the Shares to be issued upon exercise of an Option, as well as the
method of payment of the exercise price, shall be determined by the Committee or
the Board and may, in the discretion of the Committee or the Board, consist of:
(1) cash, (2) certified or official bank check, (3) money order, (4) Shares that
have been held by the Optionee for at least six (6) months (or such other Shares
as the Company determines will not cause the Company to recognize for a
financial accounting purposes a change for compensation expense), (5) the
withholding of Shares issuable upon exercise of the Option, (6) pursuant to a
"cashless exercise" procedure, by delivery of a properly executed exercise
notice together with such other documentation, and subject to such guidelines,
as the Board or the Committee shall require to effect an exercise of the Option
and delivery to the Company by a licensed broker acceptable to the Company of
proceeds from the sale of Shares or a margin loan sufficient to pay the exercise
price and any applicable income or employment taxes, or (7) in such other
consideration as the Committee or the Board deems appropriate, or by a
combination of the above. The Committee or the Board in its sole discretion may
accept a personal check in full or partial payment of any Shares. If the
exercise price is paid in whole or in part with Shares, or through the
withholding of Shares issuable upon exercise of the Option, the value of the
Shares surrendered or withheld shall be their Fair Market Value on the date the
Option is exercised. The Company in its sole discretion may, on an individual
basis or pursuant to a general program established in connection with this Plan,
lend money to an Optionee, guarantee a loan to an Optionee, or otherwise assist
an Optionee to obtain the cash necessary to exercise all or a portion of an
Option granted hereunder or to pay any tax liability of the Optionee
attributable to such exercise. If the exercise price is paid in whole or part
with Optionee's promissory note, such note shall (i) provide for full recourse
to the maker, (ii) be collateralized by the pledge of the Shares that the
Optionee purchases upon exercise of such Option, (iii) bear interest at the
prime rate of the Company's principal lender, and (iv) contain such other terms
as the Board in its sole discretion shall reasonably require. No Optionee shall
be deemed to be a holder of any Shares subject to an Option unless and until a
stock certificate or certificates for such Shares are issued to such person(s)
under the terms of this Plan. No adjustment shall be made for dividends
(ordinary or extraordinary, whether in cash, securities or other property) or
distributions or other rights for which the record date is prior to the date
such stock certificate is issued, except as expressly provided in Section 10
hereof.
7. EXERCISABILITY OF OPTIONS. Each Option granted hereunder shall be
immediately exercisable. The expiration date of an Option shall be ten (10)
years from the date of grant of the Option.
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<PAGE> 40
8. TERMINATION OF OPTION PERIOD.
(a) Unless otherwise provided in any Option agreement, the
unexercised portion of any Option shall automatically and without notice
terminate and become null and void at the time of the earliest to occur of the
following:
(i) three (3) months after the date on which the
Optionee ceases to be a Director of the Company for any reason other than by
reason of (A) Cause, which, for purposes of this Plan, shall mean the removal of
the Optionee as a Director by reason of any act by the Optionee of (x) fraud or
intentional misrepresentation, (y) embezzlement, misappropriation, or conversion
of assets or opportunities of the Company or and Subsidiary, or (z) willful
misconduct or gross negligence, or (B) death;
(ii) immediately upon the removal of the Optionee as
a Director for Cause;
(iii) one year after the date the Optionee ceases to
be a Director by reason of the Optionee's death;
(iv) immediately in the event that the Optionee shall
file any lawsuit or arbitration claim against the Company or any Subsidiary, or
any of their respective officers, directors or shareholders, other than a claim
to enforce a right of indemnification, whether by contract or under applicable
law; or
(v) ten (10) years from the date of grant of the
Option.
(b) The Board in its sole discretion may by written notice
("Cancellation Notice") cancel any Option that remains unvested or unexercised
on the date of any of the following corporate transactions:
(i) if the shareholders of the Company shall approve
a plan of merger, consolidation, reorganization, liquidation or dissolution in
which the Company does not survive (unless the approved merger, consolidation,
reorganization, liquidation or dissolution is subsequently abandoned); or
(ii) if the shareholders of the Company shall approve
a plan for the sale, lease, exchange or other disposition of all or
substantially all the property and assets of the Company (unless such plan is
subsequently abandoned).
The Cancellation Notice shall be given to the Optionees a reasonable period of
time prior to the proposed date of such cancellation and may be given either
before or after shareholder approval of such corporate transaction.
9. ADJUSTMENT OF SHARES.
(a) If at any time while the Plan is in effect or unexercised
Options are outstanding, there shall be any increase or decrease in the number
of issued and outstanding Shares through the
B-4
<PAGE> 41
declaration of a stock dividend or through any recapitalization resulting in a
stock split-up, combination or exchange of Shares, then and in such event:
(i) appropriate adjustment shall be made in the
maximum number of Shares available for grant under the Plan, so that the same
percentage of the Company's issued and outstanding Shares shall continue to be
subject to being so optioned; and
(ii) appropriate adjustment shall be made in the
number of Shares and the exercise price per Share thereof then subject to any
outstanding Option, so that the same percentage of the Company's issued and
outstanding Shares shall remain subject to purchase at the same aggregate
exercise price.
(b) Unless otherwise provided in any Option, the Board may
change the terms of Options outstanding under this Plan, with respect to the
exercise price or the number of Shares subject to the Options, or both, when, in
the Board's sole discretion, such adjustments become appropriate so as to
preserve but not increase benefits under the Plan.
(c) In the event of a proposed sale of all or substantially
all of the Company's assets or any reorganization, merger, consolidation or
other form of corporate transaction in which the Company does not survive, where
the securities of the successor corporation, or its parent company, are issued
to the Company's shareholders, then the successor corporation or a parent of the
successor corporation may, with the consent of the Committee or the Board,
assume each outstanding Option or substitute an equivalent option or right. If
the successor corporation, or its parent, does not cause such an assumption or
substitution to occur, or the Committee or the Board does not consent to such an
assumption or substitution, then each Option shall terminate pursuant to Section
8(b) hereof upon the consummation of sale, merger, consolidation or other
corporate transaction.
(d) Except as otherwise expressly provided herein, the
issuance by the Company of shares of its capital stock of any class, or
securities convertible into shares of capital stock of any class, either in
connection with direct sale or upon the exercise of rights or warrants to
subscribe therefor, or upon conversion of shares or obligations of the Company
convertible into such shares or other securities, shall not affect, and no
adjustment by reason thereof shall be made to, the number of or exercise price
for Shares then subject to outstanding Options granted under the Plan.
(e) Without limiting the generality of the foregoing, the
existence of outstanding Options granted under the Plan shall not affect in any
manner the right or power of the Company to make, authorize or consummate (i)
any or all adjustments, recapitalizations, reorganizations or other changes in
the Company's capital structure or its business; (ii) any merger or
consolidation of the Company; (iii) any issue by the Company of debt securities,
or preferred or preference stock that would rank above the Shares subject to
outstanding Options; (iv) the dissolution or liquidation of the Company; (v) any
sale, transfer or assignment of all or any part of the assets or business of the
Company; or (vi) any other corporate act or proceeding, whether of a similar
character or otherwise.
10. TRANSFERABILITY OF OPTIONS. Unless the prior written consent of the
Board is obtained (which consent may be withheld for any reason) and the
transaction does not violate the requirements of Rule 16b-3 promulgated under
the Securities Exchange Act, no Option shall be subject to alienation,
B-5
<PAGE> 42
assignment, pledge, charge or other transfer other than by the Optionee by will
or the laws of descent and distribution, and any attempt to make any such
prohibited transfer shall be void. Each Option shall be exercisable during the
Optionee's lifetime only by the Optionee, or in the case of an Option that has
been assigned or transferred with the prior written consent of the Board, only
by the permitted assignee.
11. ISSUANCE OF SHARES.
(a) Notwithstanding any other provision of this Plan, the
Company shall not be obligated to issue any Shares unless it is advised by
counsel of its selection that it may do so without violation of the applicable
Federal and State laws pertaining to the issuance of securities, and may require
any stock so issued to bear a legend, may give its transfer agent instructions,
and may take such other steps, as in its judgment are reasonably required to
prevent any such violation.
(b) As a condition to any sale or issuance of Shares upon
exercise of any Option, the Board may require such agreements or undertakings as
the Board may deem necessary or advisable to facilitate compliance with any
applicable law or regulation including, but not limited to, the following:
(i) a representation and warranty by the Optionee to
the Company, at the time any Option is exercised, that he is acquiring the
Shares to be issued to him for investment and not with a view to, or for sale in
connection with, the distribution of any such Shares; and
(ii) a representation, warranty and/or agreement to
be bound by any legends endorsed upon the certificate(s) for such Shares that
are, in the opinion of the Board, necessary or appropriate to facilitate
compliance with the provisions of any securities laws deemed by the Board to be
applicable to the issuance and transfer of such Shares.
12. ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board, which shall have the authority to adopt such rules and regulations and to
make such determinations as are not inconsistent with the Plan and as are
necessary or desirable for the implementation and administration of the Plan.
Any and all decisions or determinations of the Board shall be made either (i) by
a majority vote of the members of the Board at a meeting or (ii) without a
meeting by the unanimous written approval of the members of the Board.
13. INTERPRETATION.
(a) As it is the intent of the Company that the Plan comply in
all respects with Rule 16b-3 promulgated under the Securities Exchange Act
("Rule 16b-3"), any ambiguities or inconsistencies in construction of the Plan
shall be interpreted to give effect to such intention, and if any provision of
the Plan is found not to be in compliance with Rule 16b-3, such provision shall
be deemed null and void to the extent required to permit the Plan to comply with
Rule 16b-3. The Committee or the Board may from time to time adopt rules and
regulations under, and amend, the Plan in furtherance of the intent of the
foregoing.
(b) This Plan shall be governed by the laws of the State of
Florida.
B-6
<PAGE> 43
(c) Headings contained in this Plan are for convenience only
and shall in no manner be construed as part of this Plan.
(d) Any reference to the masculine, feminine, or neuter gender
shall be a reference to such other gender as is appropriate.
14. AMENDMENT AND DISCONTINUATION OF THE PLAN. The Board may from time
to time amend, suspend or terminate the Plan or any Option; provided, however,
that, any amendment to the Plan shall be subject to the approval of the
Company's shareholders if such shareholder approval is required by any federal
or state law or regulation (including, without limitation, Rule 16b-3 or to
comply with Section 162(m) of the Internal Revenue Code) or the rules of any
Stock exchange or automated quotation system on which the Common Stock may then
be listed or granted. Except to the extent provided in Sections 8 and 9 hereof,
no amendment, suspension or termination of the Plan or any Option issued
hereunder shall substantially impair the rights or benefits of any Optionee
pursuant to any Option previously granted without the consent of the Optionee.
15. TERMINATION DATE. The Plan shall terminate on the 10th anniversary
of the Effective Date.
B-7
<PAGE> 44
Appendix C
E COM VENTURES, INC.
11701 N.W. 101ST ROAD
MIAMI, FLORIDA 33178
THIS PROXY IS SOLICITED ON BEHALF OF THE COMPANY'S BOARD OF DIRECTORS
The undersigned holder of common stock of E Com Ventures, Inc., a
Florida corporation (the "Company"), hereby appoints Ilia Lekach and Jerome
Falic, and each of them, as proxies for the undersigned, each with full power of
substitution, for and in the name of the undersigned to act for the undersigned
and to vote, as designated on the reverse side of this proxy card, all of the
shares of stock of the Company held of record by the undersigned at the close of
business on September 5, 2000 at the Company's 2000 Annual Meeting of
Shareholders, to be held on October 31, 2000, at 10:00 a.m. at the E Com
Ventures, Inc. Corporate Office, 11701 N.W. 101st Road, Miami, Florida 33178,
and at any adjournments or postponements thereof.
PLEASE DETACH AND MAIL IN THE ENVELOPE PROVIDED
[ ] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Election of Directors.
[ ] Vote for all Nominees Listed Below (except as written below)
[ ] Vote Withheld from all Nominees
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE
DIRECTOR NOMINEES LISTED IN THIS PROPOSAL NO. 1.
NOMINEES: Ilia Lekach
Jerome Falic
Donovan Chin
Carole Ann Taylor
Horacio Groisman, M.D.
Zalman Lekach
(Instruction: To withhold authority for an individual nominee, write
that nominee's name on the line provided below.)
-----------------------------------------------------------------------
<PAGE> 45
2. Approval of the E Com Ventures, Inc. 2000 Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
3. Approval of the E Com Ventures, Inc. 2000 Directors Stock Option Plan.
[ ] For [ ] Against [ ] Abstain
4. Ratification of the appointment of Deloitte and Touche, LLP as our
independent public accountants.
[ ] For [ ] Against [ ] Abstain
5. In their discretion, upon such other business as may properly come
before the Annual Meeting or any adjournment or postponement thereof.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED SHAREHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE ELECTION OF ALL DIRECTOR NOMINEES LISTED HEREIN, "FOR" THE
ADOPTION OF THE 2000 STOCK OPTION PLAN, "FOR" THE ADOPTION OF THE 2000 DIRECTORS
STOCK OPTION PLAN, AND FOR THE RATIFICATION OF THE APPOINTMENT OF DELOITTE AND
TOUCHE, LLP AS OUR INDEPENDENT PUBLIC ACCOUNTANTS.
PLEASE MARK, SIGN AND DATE THIS PROXY CARD AND PROMPTLY RETURN IT IN
THE ENVELOPE PROVIDED.
DATE
-----------------------------
SIGNATURE
----------------------------
SIGNATURE (If held jointly)
-----------------------------
Note: Please sign exactly as your name appears hereon and mail it promptly even
though you may plan to attend the meeting. 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
partnership, please sign in the partnership name by authorized person.
