SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
SCHEDULE 13D
(Rule 13d-101)
INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO 13d-1(a)
AND AMENDMENTS THERETO FILED PURSUANT TO 13d-2(a)
SWWT, INC.
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(Name of Issuer)
COMMON STOCK, PAR VALUE $.001 PER SHARE
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(Title of Class of Securities)
870534104
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(CUSIP Number)
Jon V. Diamond
1 West 67th St.
New York, New York 10023
(212) 721-9200
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
Copy to:
Mark C. Smith, Esq.
Skadden, Arps, Slate, Meagher & Flom LLP
Four Times Square
New York, New York 10036
(212) 735-3000
April 24, 2000
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this schedule because of Rule 13d-1(e), 13d- 1(f) or 13d-1(g), check
the following box [ ].
Note: Schedules filed in paper format shall include a signed original
and five copies of the schedule, including all exhibits. See Rule 13d-7(b)
for other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 7 Pages)
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CUSIP No. 870534104 13D Page 2 of 7 Pages
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1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Jon V. Diamond
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [ ]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
OO
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e)
[ ]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
United States
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NUMBER OF 7 SOLE VOTING POWER
SHARES 18,476,745 (1)
BENEFICIALLY --------------------------------------------------------
OWNED BY 8 SHARED VOTING POWER
EACH 0
REPORTING --------------------------------------------------------
PERSON 9 SOLE DISPOSITIVE POWER
WITH 18,476,745 (1)
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
18,476,745 (1)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN
SHARES [ ]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
85.5%
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14 TYPE OF REPORTING PERSON
IN
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(1) Represents shares of Common Stock, par value $0.001 per share. In
connection with the merger of E-Newco, Inc. into ENWC Acquisition,
Inc., a wholly owned subsidiary of SWWT, Inc., the reporting person
was issued shares of Series B Preferred Stock, par value $.001 per
share of SWWT, Inc. The shares of Series B Preferred Stock will
automatically convert into shares of Common Stock of SWWT, Inc.
following the approval by the stockholders of SWWT, Inc. of the
requisite increase to the amount of authorized Common Stock and the
receipt by SWWT, Inc. of additional equity financing of at least $15.0
million.
Item 1. SECURITY AND ISSUER.
The title of the class of equity securities to which this
Statement on Schedule 13D (this "Statement") relates is the common stock,
par value $0.001 per share (the "Common Stock"), of SWWT, Inc., a Delaware
corporation ("SWWT"). The principal executive offices of the Company are
located at 3492 W. 109th Circle, Westminster, Colorado 80030.
The shares of Common Stock that are subject to this Statement
are issuable upon conversion of the shares of SWWT's Series B Preferred
Stock, par value $.001 per share (the "Series B Preferred Stock"),
initially at a conversion rate of 100 shares of Common Stock for each share
of Series B Preferred Stock, subject to adjustment in certain
circumstances.
ITEM 2. IDENTITY AND BACKGROUND.
This Statement is being filed by Jon V. Diamond ("Mr. Diamond"),
whose principal occupation is President and Chief Executive Officer of SWWT.
The business address of Mr. Diamond is c/o Oscar Capital, Inc.,
900 Third Ave., 2nd Floor, New York, NY 10022.
Mr. Diamond is a United States citizen.
During the last five years, Mr. Diamond has not been convicted
of a criminal proceeding (excluding traffic violations or similar
misdemeanors), nor has he been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction resulting in a judgment,
decree or final order enjoining future violations of, or prohibiting or
mandating activities subject to, federal or state securities laws or
finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
In connection with the closing on April 24, 2000 of the
transactions contemplated by the Merger Agreement, dated April 14, 2000
(the "Merger Agreement"), between SWWT, its wholly-owned subsidiary, ENWC
Acquisition, Inc., a Delaware corporation, and E-Newco, Inc., a Delaware
corporation ("E-Newco"), the holders of common stock of E-Newco exchanged
such shares of common stock for shares of Series B Preferred Stock at an
exchange ratio of 757.772 shares of Series B Preferred Stock for every one
share of common stock of E-Newco.
- --------
The shares of common stock of E-Newco owned by Mr. Diamond
prior to the merger were acquired by Mr. Diamond in consideration of the
issuance by Mr. Diamond to E-Newco of a Demand Note, dated March 23, 2000
and a Partially-Recourse Promissory Note, dated March 27, 2000 (the
"Partially-Recourse Promissory Note").
ITEM 4. PURPOSE OF TRANSACTION.
The information set forth in Items 3, 5 and 6 of this Statement
is incorporated herein by reference.
In connection with the transactions contemplated by the Merger
Agreement, Clarke H. Bailey, Thomas Barnds and Thomas A. Barron resigned as
members of the board of directors of SWWT, and Mr. Diamond, Walter Carroza
and Anthony Scaramucci became members of the board. In addition, Mr.
Diamond became the President and Chief Executive Officer of SWWT.
SWWT expects that its stockholders (including Mr. Diamond) will
act by written consent to, among other things, change the name of SWWT,
increase the authorized capital stock of SWWT, make certain other
modifications to the certificate of incorporation and by- laws of SWWT,
make changes to the composition of the board of directors of SWWT, adopt an
equity incentive plan and change SWWT's public accountants.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) Mr. Diamond is the beneficial owner of an aggregate of
18,476,745 shares of Common Stock, consisting of shares of Common Stock
which he has the right to acquire upon conversion of the shares of Series B
Preferred Stock owned by Mr. Diamond, representing in the aggregate
approximately 85.5% of the issued and outstanding shares of Common Stock of
SWWT.
The percentage of outstanding shares of Common Stock of SWWT
set forth in the preceding paragraph is computed based on a total of
21,598,999 shares of Common Stock outstanding as of April 14, 2000, which
figure includes 18,476,745 shares of Common Stock issuable upon conversion
of the Series B Preferred Stock owned by Mr. Diamond (but does not include
any shares of Common Stock issuable upon conversion or exercise of other
equity instruments of SWWT, including, without limitation, shares of Series
B Preferred Stock owned by other former stockholders of E-Newco). Holders
of the Series B Preferred Stock vote together with holders of Common Stock
on the basis of one vote for each share of Common Stock into which the
Series B Preferred Stock is convertible.
The Series B Preferred Stock is convertible into shares of
Common Stock upon the approval by the stockholders of SWWT of the requisite
increase to the amount of authorized Common Stock and the receipt by SWWT
of additional equity financing of at least $15.0 million.
Of the 18,476,745 shares of Common Stock issuable upon the
conversion of Mr. Diamond's shares of Series B Preferred Stock, 8,335,488
shares will represent restricted stock issued pursuant to the terms of a
Restricted Stock Purchase Agreement between E-Newco and Mr. Diamond, dated
as of March 27, 2000 (the "Purchase Agreement"). The restricted shares will
vest in 36 equal monthly installments through March 31, 2003. In addition,
Mr. Diamond pledged an interest in the shares of restricted stock as
security for his obligations under the Purchase Agreement and the
Partially-Recourse Promissory Note under the terms of a Pledge Agreement,
dated as of March 27, 2000, between Mr. Diamond and E-Newco.
(b) Mr. Diamond has sole voting power and sole investment power
with respect to all of the shares of Common Stock referred to in paragraph
(a) above.
(c) No transactions in the Common Stock were effected by
Mr. Diamond in the past 60 days.
(d) Not applicable.
(e) Not applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER.
The information contained in Items 3, 4 and 5 of this Statement
are incorporated herein by reference.
Except for the agreements and understandings described in Items
3, 4 and 5, to the best knowledge of Mr. Diamond, there are no contracts,
arrangements, understandings or relationships (legal or otherwise) between
Mr. Diamond, and any other person, with respect to any securities of SWWT
including but not limited to transfer or voting of any of the securities,
finder's fees, joint ventures, loan or option arrangements, puts or calls,
guarantees of profits, division of profits or loss, or the giving or
withholding of proxies.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
1. Agreement and Plan of Merger, dated as of April
14, 2000, among E-Newco, Inc., a Delaware
corporation, SWWT, Inc., a Delaware corporation,
and ENWC Acquisition, Inc., a Delaware corporation
and wholly owned subsidiary of SWWT, Inc. (*)
2. Certificate of Designations of Series B Preferred
Stock, par value $.001 per share, of SWWT, Inc.
(*)
3. Restricted Stock Purchase Agreement, dated of
March 27, 2000, between Jon V. Diamond and
E-Newco, Inc.
4. Pledge Agreement, dated as of March 27, 2000,
between Jon V. Diamond and E-Newco, Inc.
5. Demand Note, dated March 23, 2000, between Jon V.
Diamond and E-Newco, Inc.
6. Partially-Recourse Promissory Note dated March 27,
2000 between Jon V. Diamond and E-Newco, Inc.
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(*) Incorporated by reference to the Annual Report on Form
10-K of SWWT for the fiscal year ended December 31, 1999.
SIGNATURE
After reasonable inquiry and to the best of his knowledge and
belief, the undersigned certifies that the information set forth in this
Statement is true, complete and correct.
Dated: May 3, 2000
/s/ Jon V. Diamond
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Jon V. Diamond
EXHIBIT 3
RESTRICTED STOCK PURCHASE AGREEMENT
Agreement between E-Newco, Inc., a Delaware corporation (the "Company")
and Jon V. Diamond (the "Purchaser") dated the 27th day of March, 2000.
SECTION 1. ACQUISITION OF SHARES.
(a) TRANSFER. On the terms and conditions set forth in the
Employment Agreement between parties of even date herewith (the "Employment
Agreement") and this Agreement, the Company agrees to transfer to the
Purchaser 110 shares of common stock of the Company (the "Purchased
Shares"). The transfer shall occur at the offices of the Company on the
date hereof or at such other place and time as the parties may agree.
(b) CONSIDERATION. The Purchaser agrees to pay a purchase price of
$3,735.955 for each Purchased Share (the "Purchase Price"). The Purchase
Price is agreed to be at least 100% of the fair market value of the
Purchased Shares. Payment shall be made in the form of a promissory note
(the "Note") substantially in the form of Exhibit I hereto.
SECTION 2. RIGHT OF REPURCHASE
(a) SCOPE OF REPURCHASE RIGHT. Unless they have become vested in
accordance with Subsection (c) below, the Shares acquired under this
Agreement initially shall be Restricted Shares and shall be subject to a
right (but not an obligation) of repurchase by the Company (the "Right of
Repurchase"). The Purchaser shall not transfer, assign, encumber or
otherwise dispose of any Restricted Shares, except as provided in the
following sentence. The Purchaser may transfer Restricted Shares (i) by
beneficiary designation, will or intestate succession or (ii) to the
Purchaser's spouse, children or grandchildren or to a trust established by
the Purchaser for the benefit of the Purchaser or the Purchaser's spouse,
children or grandchildren, provided in either case that the transferee
agrees in writing on a form prescribed by the Company to be bound by all
provisions of this Agreement. If the Purchaser transfers any Restricted
Shares, then this Section 2 shall apply to the transferee to the same
extent as to the Purchaser.
(b) CONDITION PRECEDENT TO EXERCISE. Unless otherwise provided in
the Employment Agreement of even date herewith between the Company and
Purchaser (the "Employment Agreement"), the Right of Repurchase shall be
exercisable with respect to any Restricted Shares only during the 90-day
period next following the later of:
(i) The date when the Purchaser's service terminates for any
reason other than death or Disability, a termination by the Company
without Cause or by the Purchaser for Good Reason (as such terms are
defined in the Employment Agreement); or
(ii) The date when such Restricted Shares were purchased by
the Purchaser, the executors or administrators of the Purchaser's
estate or any person who has acquired the Restricted Shares directly
from the Purchaser by bequest, inheritance or beneficiary
designation.
(c) LAPSE OF REPURCHASE RIGHT. The Right of Repurchase shall lapse
with respect to one-thirty-sixth of the number of the Shares purchased
hereunder at the end of each calendar month, commencing with April 30,
2000, so that shares shall be vested on March 31, 2003. The Right of
Repurchase shall also lapse in its entirety upon Purchaser's death or
Disability or in the event of his termination of employment by the Company
without Cause or by the Purchaser for Good Reason (as such terms are
defined in the Employment Agreement). The Right of Repurchase shall also
lapse in its entirety upon a Change of Control of the Company. "Change of
Control" means the first to occur of any one of the events set forth in the
following clauses (i) through (iv): (i) any Person (other than one or more
Excluded Persons) is or becomes the "Beneficial Owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act")), directly or indirectly, of securities of the Company (not including
in the securities Beneficially Owned by such Person any securities acquired
directly from the Company) representing 30% or more of the combined voting
power of the Company's then outstanding securities, excluding any Person
who becomes such a Beneficial Owner in connection with a transaction
described in clause (A) of clause (iii) hereof; or (ii) the following
individuals cease for any reason to constitute a majority of the number of
directors then serving: individuals who, on June 30, 2000, constitute the
Board of Directors and any new director (other than a director whose
initial assumption of office is in connection with an actual or threatened
election contest, including but not limited to a consent solicitation,
relating to the election of directors of the Company) whose appointment or
election by the Board of Directors or nomination for election by the
Company's stockholders was approved or recommended by a vote of at least
two-thirds (2/3) of the directors then still in office who either were
directors on June 30, 2000 or whose appointment, election or nomination for
election was previously so approved or recommended; or (iii) there is
consummated a merger or consolidation of the Company with any other
corporation other than (A) a merger or consolidation which results in the
directors of the Company immediately prior to such merger or consolidation
continuing to constitute at least a majority of the board of directors of
the Company, the surviving entity or any parent thereof, or (B) a merger or
consolidation effected to implement a recapitalization of the Company (or
similar transaction) in which no Person (other than one or more Excluded
Persons) is or becomes the Beneficial Owner, directly or indirectly, of
securities of the Company (not including in the securities Beneficially
Owned by such Person any securities acquired directly from the Company)
representing 30% or more of the combined voting power of the Company's then
outstanding securities; or (iv) the stockholders of the Company approve a
plan of complete liquidation or dissolution of the Company or there is
consummated an agreement for the sale or disposition by the Company of all
or substantially all of the Company's assets, other than a sale or
disposition by the Company of all or substantially all of the Company's
assets to an entity at least a majority of the board of directors of which
comprises individuals who were directors of the Company immediately prior
to such sale or disposition. "Excluded Person" shall mean any stockholder
of the Company as of the date hereof and any of their respective
affiliates. "Person" shall have the meaning given in Section 3(a)(9) of the
Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof,
except that such term shall not include (i) the Company or any of its
subsidiaries, (ii) a trustee or other fiduciary holding securities under an
employee benefit plan of the Company or any of its affiliates, (iii) an
underwriter temporarily holding securities pursuant to an offering of such
securities, or (iv) a corporation owned, directly or indirectly, by the
stockholders of the Company in substantially the same proportions as their
ownership of stock of the Company.
(d) REPURCHASE COST. If the Company exercises the Right of
Repurchase, it shall pay the Purchaser an amount equal to the Purchase
Price for each of the Restricted Shares being repurchased.
(e) EXERCISE OF REPURCHASE RIGHT. The Right of Repurchase shall be
exercisable only by written notice delivered to the Purchaser prior to the
expiration of the 90-day period specified in Subsection (b) above. The
notice shall set forth the date on which the repurchase is to be effected.
Such date shall not be more than 30 days after the date of the notice. The
certificate(s) representing the Restricted Shares to be repurchased shall,
prior to the close of business on the date specified for the repurchase, be
delivered to the Company properly endorsed for transfer. The Company shall,
concurrently with the receipt of such certificate(s), pay to the Purchaser
the purchase price determined according to Subsection (d) above. Payment
shall be made in cash or cash equivalents or by canceling indebtedness to
the Company incurred by the Purchaser in the Purchase of the Restricted
Shares. The Right of Repurchase shall terminate with respect to any
Restricted Shares for which it has not been timely exercised pursuant to
this Subsection (e).
(f) ADDITIONAL SHARES OR SUBSTITUTED SECURITIES. In the event of
the declaration of a stock dividend, the declaration of an extraordinary
dividend payable in a form other than stock, a spin-off, a stock split, an
adjustment in conversion ratio, a recapitalization or a similar transaction
affecting the Company's outstanding securities without receipt of
consideration, any new, substituted or additional securities or other
property (including money paid other than as an ordinary cash dividend)
which are by reason of such transaction distributed with respect to any
Restricted Shares or into which such Restricted Shares thereby become
convertible shall immediately be subject to the Right of Repurchase.
Appropriate adjustments to reflect the distribution of such securities or
property shall be made to the number and/or class of the Restricted Shares.
Appropriate adjustments shall also, after each such transaction, be made to
the price per share to be paid upon the exercise of the Right of Repurchase
in order to reflect any change in the Company's outstanding securities
effected without receipt of consideration therefor; provided, however, that
the aggregate purchase price payable for the Restricted Shares shall remain
the same.
(g) TERMINATION OF RIGHTS AS STOCKHOLDER. If the Company makes
available, at the time and place and in the amount and form provided in
this Agreement, the consideration for the Restricted Shares to be
repurchased in accordance with this Section 2, then after such time the
person from whom such Restricted Shares are to be repurchased shall no
longer have any rights as a holder of such Restricted Shares (other than
the right to receive payment of such consideration in accordance with this
Agreement). Such Restricted Shares shall be deemed to have been repurchased
in accordance with the applicable provisions hereof, whether or not the
certificate(s) therefor have been delivered as required by this Agreement.
(h) ESCROW. Upon issuance, the certificates for Restricted Shares
shall be deposited in escrow with the Company to be held in accordance with
the provisions of this Agreement and the Pledge Agreement attached as part
of Exhibit II hereto. Any new, substituted or additional securities or
other property described in Subsection (f) above shall immediately be
delivered to the Company to be held in escrow, but only to the extent the
Shares are at the time Restricted Shares. All regular cash dividends on
Restricted Shares (or other securities at the time held in escrow) shall be
paid directly to the Purchaser and shall not be held in escrow. Restricted
Shares, together with any other assets or securities held in escrow
hereunder, shall be (i) surrendered to the Company for repurchase and
cancellation upon the Company's exercise of its Right of Repurchase or (ii)
released to the Purchaser upon the Purchaser's request to the extent the
Shares are no longer Restricted Shares (but not more frequently than once
every six months). In any event, all Shares which have vested (and any
other vested assets and securities attributable thereto) shall be released
within 90 days after the Purchaser's cessation of service.
SECTION 3. OTHER RESTRICTIONS ON TRANSFER.
(a) PURCHASER REPRESENTATIONS. In connection with the issuance and
acquisition of Shares under this Agreement, the Purchaser hereby represents
and warrants to the Company as follows:
(i) The Purchaser is acquiring and will hold the Purchased
Shares for investment for his account only and not with a view to, or
for resale in connection with, any "distribution" thereof within the
meaning of the Securities Act of 1933, as amended (the "Securities
Act").
(ii) The Purchaser understands that the Purchased Shares have
not been registered under the Securities Act by reason of a specific
exemption therefrom and that the Purchased Shares must be held
indefinitely, unless they are subsequently registered under the
Securities Act or the Purchaser obtains an opinion of counsel, in
form and substance satisfactory to the Company and its counsel, that
such registration is not required. The Purchaser further acknowledges
and understands that the Company is under no obligation to register
the Purchased Shares.
(iii) The Purchaser is aware of the adoption of Rule 144 by the
Securities and Exchange Commission under the Securities Act, which
permits limited public resales of securities acquired in a non-public
offering, subject to the satisfaction of certain conditions,
including (without limitation) the availability of certain current
public information about the issuer, the resale occurring only after
the holding period required by Rule 144 has been satisfied, the sale
occurring through an unsolicited "broker's transaction," and the
amount of securities being sold during any three-month period not
exceeding specified limitations. The Purchaser acknowledges and
understands that the conditions for resale set forth in Rule 144 have
not been satisfied and that the Company has no plans to satisfy these
conditions in the foreseeable future.
(iv) The Purchaser will not sell, transfer or otherwise
dispose of the Purchased Shares in violation of the Securities Act,
the Securities Exchange Act of 1934, or the rules promulgated
thereunder, including Rule 144 under the Securities Act. The
Purchaser agrees that he will not dispose of the Purchased Shares
unless and until he has complied with all requirements of this
Agreement applicable to the disposition of Purchased Shares and he
has provided the Company with written assurances, in substance and
form satisfactory to the Company, that the proposed disposition does
not require registration of the Purchased Shares under the Securities
Act or all appropriate action necessary for compliance with the
registration requirements of the Securities Act or with any exemption
from registration available under the Securities Act (including Rule
144) has been taken.
(v) The Purchaser has been furnished with, and has had access to,
such information as he considers necessary or appropriate for deciding
whether to invest in the Purchased Shares, and the Purchaser has had
an opportunity to ask questions and receive answers from the Company
regarding the terms and conditions of the issuance of the Purchased
Shares.
(vi) The Purchaser is aware that his investment in the Company
is a speculative investment which has limited liquidity and is
subject to the risk of complete loss. The Purchaser is able, without
impairing his financial condition, to hold the Purchased Shares for
an indefinite period and to suffer a complete loss of his investment
in the Purchased Shares.
(b) SECURITIES LAW RESTRICTIONS. Regardless of whether the
offering and sale of Shares under the Plan have been registered under the
Securities Act or have been registered or qualified under the securities
laws of any state, the Company at its discretion may impose restrictions
upon the sale, pledge or other transfer of the Purchased Shares (including
the placement of appropriate legends on stock certificates or the
imposition of stop-transfer instructions) if, in the judgment of the
Company, such restrictions are necessary or desirable in order to achieve
compliance with the Securities Act, the securities laws of any state or any
other law.
(c) RIGHTS OF THE COMPANY. The Company shall not be required to
(i) transfer on its books any Purchased Shares that have been sold or
transferred in contravention of this Agreement or (ii) treat as the owner
of Purchased Shares, or otherwise to accord voting, dividend or liquidation
rights to, any transferee to whom Purchased Shares have been transferred in
contravention of this Agreement.
SECTION 4. SUCCESSORS AND ASSIGNS.
Except as otherwise expressly provided to the contrary, the
provisions of this Agreement shall inure to the benefit of, and be binding
upon, the Company and its successors and assigns and be binding upon the
Purchaser and the Purchaser's legal representatives, heirs, legatees,
distributes, assigns and transferees by operation of law, whether or not
any such person has become a party to this Agreement or has agreed in
writing to join herein and to be bound by the terms, conditions and
restrictions hereof. It is expressly understood by the parties that if the
Company engages in a transaction (whether pursuant to a merger or
otherwise) pursuant to which it becomes a wholly owned subsidiary of
another entity, such parent entity shall succeed to the Company's rights
and obligations hereunder and thereafter references to the "Company" shall
be to such parent entity.
SECTION 5. TAX ELECTION.
The acquisition of the Purchased Shares may result in adverse
tax consequences that may be avoided or mitigated by filing an election
under Section 83(b) of the Internal Revenue Code of 1986, as amended (the
"Code"). To be effective, the Code Section 83(b) election must be filed
within 30 days after the date of purchase. The form for making the Code
Section 83(b) election is attached to this Agreement as an Exhibit I. THE
PURCHASER SHOULD CONSULT WITH HIS TAX ADVISOR TO DETERMINE THE TAX
CONSEQUENCES OF ACQUIRING THE PURCHASED SHARES AND THE ADVANTAGES AND
DISADVANTAGES OF FILING THE CODE SECTION 83(B) ELECTION. THE PURCHASER
ACKNOWLEDGES THAT IT IS HIS SOLE RESPONSIBILITY, AND NOT THE COMPANY'S, TO
FILE A TIMELY ELECTION UNDER CODE SECTION 83(B), EVEN IF THE PURCHASER
REQUESTS THE COMPANY OR ITS REPRESENTATIVES TO MAKE THIS FILING ON HIS
BEHALF.
SECTION 6. LEGENDS.
All certificates evidencing Purchased Shares shall bear the
following legends:
"THE SHARES REPRESENTED HEREBY MAY NOT BE SOLD, ASSIGNED,
TRANSFERRED, ENCUMBERED OR IN ANY MANNER DISPOSED OF, EXCEPT IN
COMPLIANCE WITH THE TERMS OF A WRITTEN AGREEMENT BETWEEN THE COMPANY
AND THE REGISTERED HOLDER OF THE SHARES (OR THE PREDECESSOR IN
INTEREST TO THE SHARES). SUCH AGREEMENT GRANTS TO THE COMPANY CERTAIN
RIGHTS OF REPURCHASE UPON TERMINATION OF SERVICE WITH THE COMPANY.
THE SECRETARY OF THE COMPANY WILL UPON WRITTEN REQUEST FURNISH A COPY
OF SUCH AGREEMENT TO THE HOLDER HEREOF WITHOUT CHARGE."
"THE SHARES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED, AND MAY NOT BE SOLD, PLEDGED, OR
OTHERWISE TRANSFERRED WITHOUT AN EFFECTIVE REGISTRATION THEREOF UNDER
SUCH ACT OR AN OPINION OF COUNSEL, SATISFACTORY TO THE COMPANY AND
ITS COUNSEL, THAT SUCH REGISTRATION IS NOT REQUIRED."
If required by the authorities of any state in connection with the
issuance of the Purchased Shares, the legend or legends required by
such state authorities shall also be endorsed on all such
certificates.
SECTION 7. NOTICE.
Any notice required by the terms of this Agreement shall be
given in writing and shall be deemed effective upon personal delivery or
upon deposit with the United States Postal Service, by registered or
certified mail, with postage and fees prepaid. Notice shall be addressed to
the Company at its principal executive office and to the Purchaser at the
address that he most recently provided to the Company.
SECTION 8. ENTIRE AGREEMENT.
This Agreement, the Note and the Pledge Agreement attached as
Exhibit II hereto and the Employment Agreement constitute the entire
contract between the parties hereto with regard to the subject matter
hereof. They supersede any other agreements, representations or
understandings (whether oral or written and whether express or implied)
which relate to the subject matter hereof.
SECTION 9. CHOICE OF LAW.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York, as such laws are
applied to contracts entered into and performed in such State.
IN WITNESS WHEREOF, the parties have duly executed this
Agreement on the day and year first above written.
/s/ Jon V. Diamond
-----------------------------------------
JON V. DIAMOND
E-NEWCO, INC.
By: /s/ Jon V. Diamond
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EXHIBIT 4
PLEDGE AGREEMENT
THIS PLEDGE AGREEMENT, entered into as of March 27, 2000, between E-
NEWCO, INC., a Delaware corporation (the "Company"), and JON V. DIAMOND
(the "Purchaser").
W I T N E S S E T H:
WHEREAS, the Purchaser has purchased from the Company 110 shares of
the Company's Common Stock (the "Shares"); and
WHEREAS, the Company has loaned to the Purchaser the sum of $410,955.05
which the Purchaser has used to pay the purchase price of the Shares; and
WHEREAS, the Purchaser has executed and delivered to the Company a
partially- recourse promissory note evidencing such loan (the "Note") and
has agreed to pledge all of the Shares to the Company as security for the
payment of the Note:
NOW, THEREFORE, it is agreed as follows:
1. The Purchaser hereby delivers to the Company one or more certificates
representing the Shares, together with two Assignments Separate From
Certificate signed by the Purchaser. The Purchaser hereby pledges and
grants a security interest in the Shares, including any shares into which
the Shares may be converted and all proceeds of the Shares, as security for
the timely payment of all of the Purchaser's obligations under the Note and
for the Purchaser's performance of all of its obligations under this
Agreement. In the event of a default in payment of the Note, the Purchaser
hereby appoints the Company as his true and lawful attorney to take such
action as may be necessary or appropriate to cause the Shares to be
transferred into the name of the Company or any assignee of the Company and
to take any other action on behalf of the Purchaser permitted hereunder or
under applicable law.
2. The Company agrees to hold the Shares as security for the timely
payment of all of the Purchaser's obligations under the Note and for the
Purchaser's performance of all of its obligations under this Agreement, as
provided herein. At no time shall the Company dispose of or encumber the
Shares, except as otherwise provided in this Agreement or the Restricted
Stock Purchase Agreement dated as of the date hereof between the Company
and the Purchaser (the "Restricted Stock Purchase Agreement").
3. At all times while the Company is holding the Shares as security
under this Agreement, the Company shall:
(a) Collect any dividends that may be declared on the Shares and
credit such dividends against any accrued interest or unpaid
principal under the Note, as part payment;
(b) Collect and hold any shares that may be issued upon conversion
of the Shares; and
(c) Collect and hold any other securities or other property that
may be distributed with respect to the Shares.
Such shares and other securities or property shall be subject to the
security interest granted in Section 1 of this Agreement and shall be held
by the Company under this Agreement.
4. While the Company holds the Shares as security under this Agreement,
the Purchaser shall have the right to vote the Shares at all meetings of
the Company's stockholders; provided that the Purchaser is not in default
in the performance of any term of this Agreement, the Restricted Stock
Purchase Agreement or Employment Agreement or in any payment due under the
Note. In the event of such a default, the Company shall have the right to
the extent permitted by law to vote and to give consents, ratifications and
waivers and take any other action with respect to the Shares with the same
force and effect as if the Company were the absolute and sole owner of the
Shares.
5. Upon payment in full of the outstanding principal balance of the Note
and all interest and other charges due under the Note, subject to the terms
of the Restricted Stock Purchase Agreement, the Company shall release from
pledge and redeliver to the Purchaser the certificate(s) representing the
Shares and the Assignment Separate From Certificate forms.
6. In the event that the Purchaser fails to perform any term of this
Agreement or fails to make any payment when due under the Note and such
failure continues for 10 days after notice thereof (an "Event of Default"),
the Company shall have all of the rights and remedies of a creditor and
secured party at law and in equity, including (without limitation) the
rights and remedies provided under the Uniform Commercial Code.
Without limiting the foregoing, after an Event of Default, the
Company may, after giving ten (10) days' prior written notice to the
Purchaser by certified mail at his residence or business address, sell any
or all of the Shares in such manner and for such price as the Company may
determine, including (without limitation) through a public or private sale
or at any broker's board or on any securities exchange, for cash, upon
credit or for future delivery. The Company is authorized at any such sale,
if it deems it advisable to do so, to restrict the prospective bidders or
purchasers of any of the Shares to persons who will represent and agree
that they are purchasing for their own account for investment, and not with
a view to the distribution or sale of any of the Shares, to restrict the
prospective bidders or purchasers and the use any purchaser may make of the
Shares and impose any other restriction or condition that the Company deems
necessary or advisable under the federal and state securities laws.
Upon any such sale the Company shall have the right to deliver,
assign and transfer to the purchaser thereof the Shares so sold. Each
purchaser at any such sale shall hold the Shares so sold absolute, free
from any claim or right of any kind. In case of any sale of any or all of
the Shares on credit or for future delivery, the Shares so sold may be
retained by the Company until the selling price is paid by the purchaser
thereof, but the Company shall not incur any liability in case of the
failure of such purchaser to take up and pay for the Shares so sold and, in
case of any such failure, such Shares may again be sold under the terms of
this section.
The Purchaser hereby agrees that any disposition of any or all of
the Shares by way of a private placement or other method which in the
opinion of the Company is required or advisable under Federal and state
securities laws is commercially reasonable. At any public sale, the Company
may (if it is the highest bidder) purchase all or any part of the Shares at
such price as the Company deems proper. Out of the proceeds of any sale,
the Company may retain an amount sufficient to pay all amounts then due
under the Note, together with the expenses of the sale and reasonable
attorneys' fees. The Company shall pay the balance of such proceeds, if
any, to the Purchaser. The Purchaser shall be liable for any deficiency
that remains after the Company has exercised its rights under this
Agreement.
7. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York, without regard to New York choice of law
provisions.
8. This Agreement shall inure to the benefit of, and be binding upon,
the Company and its successors and assigns and be binding upon the
purchaser and the Purchaser's legal representative, heirs, legatees,
distributees, assigns and transferees by operation of law. It is expressly
understood by the parties that if the Company engages in a transaction
(whether pursuant to a merger or otherwise) pursuant to which it becomes a
wholly owned subsidiary of another entity, such parent entity shall succeed
to the Company's rights and obligations hereunder and thereafter references
to the "Company" shall be to such parent entity.
9. This Agreement contains the entire pledge agreement between the
Company and the Purchaser.
10. The Purchaser will execute any additional agreements, assignments or
documents or take any other actions reasonably required by the Company to
preserve and perfect the security interest in the Shares granted to the
Company herein and otherwise to effectuate this Agreement.
IN WITNESS WHEREOF, the Company has caused this Agreement to be
executed on its behalf by its duly authorized officer, and the Purchaser
has personally executed this Agreement.
E-NEWCO, INC.
By /s/ Jon V. Diamond
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Title President
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JON V. DIAMOND
/s/ Jon V. Diamond
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EXHIBIT 5
DEMAND NOTE
FOR VALUE RECEIVED, the undersigned, Jon V. Diamond, an
individual residing at 1 West 67th Street, New York, NY 10023, hereby
promises to pay on demand to the order of E-Newco, Inc. (the "COMPANY"), a
Delaware corporation, in lawful currency of the United States of America,
the principal amount of $500,000, plus all accrued and unpaid interest
thereon. Interest shall accrue on the unpaid principal amount of this Note
at the greater of (x) the rate of six percent (6%) per annum and (y) the
applicable Federal mid-term rate (appropriately compounded) in effect on
the date hereof, commencing on the date hereof. Interest shall accrue and
be calculated on the basis of a 360-day year of twelve 30-day months.
This Note is delivered in connection with a Subscription
Agreement between the Company, the undersigned and the other parties named
therein dated March 23, 2000, and is subject to the provisions thereof.
This Note may be prepaid, in whole or in part, at any time or
from time to time, without premium or penalty. Any such prepayment shall be
applied first to any interest due on this Note up to the date of
prepayment, and then to principal.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
The undersigned hereby waives presentment, notice of dishonor,
protest and notice of protest of this Note (other than demand for payment),
and agrees to pay all costs of collection when incurred, including
reasonable attorneys' fees.
Dated:March 23, 2000 By: /s/ Jon V. Diamond
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Name: Jon V. Diamond
EXHIBIT 6
PARTIALLY -RECOURSE PROMISSORY NOTE
$410,955.05 New York, New York
Dated as of March 27, 2000
FOR VALUE RECEIVED, the undersigned, JON V. DIAMOND ("Borrower"),
promises to pay to the order of E-NEWCO, INC., a Delaware corporation (the
"Company"), the principal sum of Four Hundred Ten Thousand Nine Hundred and
Fifty Five Dollars and Five Cents ($410,955.05) with interest from the date
hereof on the unpaid principal as specified herein. The entire unpaid
balance of principal and interest shall be immediately due and payable,
without notice, on the earlier to occur of (1) Seven (7) years from date of
Note, (2) termination of employment with the Company for any reason, or (3)
breach of the Pledge Agreement dated the date hereof between the Company
and Borrower.
The interest rate on this note shall be an annual rate of interest
equal to 6%. Interest shall be computed on the basis of a year of 365 days
and the actual number of days elapsed, except that interest shall not be
computed on the day of full repayment of this note. Interest not paid when
due shall earn interest at the rate specified above.
If payment is not made when due, and if action is instituted on this
note, the undersigned agrees to pay the Company reasonable attorneys' fees
and costs of suit, as fixed by court in connection with the collection of
the outstanding amounts due under this note.
The undersigned shall have the right to prepay all or any part of the
unpaid principal amount of this note, without premium, at any time prior to
the maturity hereof.
This note is a partially-recourse note originally secured by a pledge
of shares of Common Stock of the Company pursuant to a Pledge Agreement of
even date herewith, which is on file with the Secretary of the Company. The
Company will only have a recourse to the other assets of the Borrower to
the extent of $102,738.76.
The Borrower hereby waives demand, presentment, notice of dishonor,
protest and notice of protest of this Note (other than demand for payment).
If one or more of the provisions hereof shall be declared or held to
be invalid, illegal, or unenforceable in any respect in any jurisdiction,
the validity, legality and enforceability of the remaining provisions
hereof shall not in any way be affected or impaired thereby and any such
declaration or holding shall not invalidate or render unenforceable such
provision in any other jurisdiction.
In case the note shall become mutilated or defaced, or be destroyed,
lost or stolen, the Borrower shall execute and deliver a new note of like
principal amount in exchange and substitution for the mutilated or defaced
note, or in lieu of and in substitution for the destroyed, lost or stolen
note. In the case of a mutilated or defaced note, the Company shall
surrender such note to the Borrower. In the case of any destroyed, lost or
stolen note, the Company shall furnish to the Borrower evidence to its
satisfaction of the destruction, loss or theft of such note.
This note shall be governed by and construed in accordance with the
laws of the State of New York, without regard to New York choice of law
provisions.
IN WITNESS WHEREOF, the undersigned has signed, dated and
delivered this note as of the date and year first above written.
/s/ Jon V. Diamond
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