FORM 8-K
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.
CURRENT REPORT
Pursuant to Section 13 or 15 (d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 9, 2000
PARAMARK ENTERPRISES, INC.
(Exact name of registrant as specified in charter)
Delaware 0-23026 22-3261564
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(State or other jurisdiction of (Commission File Number) (I.R.S. Employer
incorporation or organization) Identification Number)
One Harmon Plaza
Secaucus, New Jersey 07094
(Address of principal executive offices, including zip code)
Registrant's telephone number, including area code: (201) 422-0910
(Former name or former address, if changed since last report)
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Item 5. Other Events.
On October 9, 2000, Paramark Enterprises, Inc. (the "Company") entered
into an asset purchase agreement (the "Rich Products Agreement") with Rich
Products Manufacturing Corporation ("Rich Products"), pursuant to which the
Company will sell its bakery operations located in El Cajon, California which
represents a majority of the Company's operating assets. On October 9, 2000, the
Company also entered into a license agreement with Rich Products through which
the Company granted Rich Products a license to assume full operational control
of the El Cajon bakery facility as of October 9, 2000.
The Rich Products Agreement provides for a purchase price aggregating
$2,182,750 inclusive of a payment for inventory. The aggregate purchase price
will be paid as follows: $182,750 by October 20, 2000, $1,000,000 upon the
closing of the Rich Products Agreement, $1,000,000 payable in semiannual
installments over a period of four (4) years. Rich Products is also assuming
approximately $285,000 in equipment lease related debt. In addition, pursuant to
the terms of the Rich Products Agreement, Rich Products will enter into
consulting agreements with Charles Loccisano, Alan Gottlich and Wayne Sorensen,
the Company's Chairman and CEO, President and CFO, and Bakery General Manager,
respectively. These consulting agreements provide for compensation to Messrs.
Loccisano, Gottlich and Sorensen over a four year term in an annual amount of
$50,000, $30,000 and $20,000, respectively.
On October 9, 2000, the Company entered into an asset purchase and sale
agreement (the "Brooks Street Agreement") with Brooks Street Companies, Inc.
("Brooks Street"), pursuant to which the Company sold the remainder of its
bakery operations to Brooks Street.
The Brooks Street Agreement provided for a purchase price in the form
of the assumption by Brooks Street of approximately $75,000 in equipment lease
related debt, the purchase of inventory by Brooks Street in the amount of
$12,500 and the agreement by Brooks Street to make royalty payments to the
Company, over a period of four (4) years, equal to 5% of net sales of pull-apart
cakes to existing customers of the Company plus 1 1/2% of net sales of
pull-apart cakes to new customers of Brooks Street. The closing of both
transactions are subject to certain conditions precedent including the approval
of the Company's shareholders, although both Rich Products and Brooks Street
have been given immediate conditional control over the assets they are
respectively acquiring from the Company.
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Following the closings of these transactions outlined above, the
Company currently intends to liquidate pursuant to a plan of liquidation. The
Company intends to use the net proceeds received from the Rich products and the
Brooks Street transactions as follows: $1,332,750 towards the reduction of
outstanding indebtedness, $125,000 towards the expenses of the transactions and
$225,000 towards working capital. The Company currently intends to distribute
the remaining net proceeds to it's shareholders over a period of four (4) years
pursuant to the plan of liquidation. Following completion of the Rich Products
and Brooks Street transactions and prior to implementing the plan of
liquidation, the Company intends to explore various options available to the
Company. The Board of Directors reserves the right to terminate the plan of
liquidation following shareholder approval to the extent any of the options
explored by the Company are financially beneficial to the Company's
shareholders.
The foregoing summaries of the Rich Products Agreement and the Brooks
Street Agreement are only a brief description of the agreements and are
qualified in their entirety by the detailed provisions of the agreements which
are filed as exhibits hereto and are incorporated herein by reference.
Certain statements contained in this Current Report regarding matters
that are not historical facts are forward-looking statements. These statements
relate to future events or the Company's future performance. These statements
are only predictions. Because such forward-looking statements include risks and
uncertainties, actual results may differ materially from those expressed or
implied by such forward-looking statements. Factors that could cause actual
results to differ materially include, but are not limited to, the risk factors
listed in the Company's Annual Report on Form 10-KSB for the fiscal year ended
December 31, 1999. Any of these risks and uncertainties could cause the
Company's actual results to differ materially from historical earnings and those
presently anticipated or projected. As a result, potential investors are
cautioned not to place undue reliance on any such forward-looking statements,
which speak only as of the date made.
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Item 7. Financial Statements and Exhibits.
(c) Exhibits.
Number Title
10.20 Asset Purchase Agreement dated as of October 9, 2000 by between
Rich Products Manufacturing Corporation, Paramark Enterprises,
Inc. and Starbake, Inc., a wholly owned subsidiary of Paramark
Enterprises, Inc.
10.21 License Agreement dated as of October 9, 2000 by between Rich
Products Manufacturing Corporation, Paramark Enterprises, Inc.
and Starbake, Inc., a wholly owned subsidiary of Paramark
Enterprises, Inc.
10.22 Consulting Agreement between Rich Products Manufacturing
Corporation and Charles Loccisano.
10.23 Consulting Agreement between Rich Products Manufacturing
Corporation and Alan Gottlich.
10.24 Consulting Agreement between Rich Products Manufacturing
Corporation and Wayne Sorensen.
10.25 Assets Purchase and Sale Agreement dated as of October 9, 2000
by between Brooks Street Companies, Inc., Paramark Enterprises,
Inc. and Starbake, Inc., a wholly owned subsidiary of Paramark
Enterprises, Inc.
99.5 Press release dated October 18, 2000.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Paramark Enterprises, Inc.
(Registrant)
By: /s/ Alan S. Gottlich
Alan S. Gottlich
President
Dated: October 18, 2000
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Exhibit Index
Number Title
10.20 Asset Purchase Agreement dated as of October 9, 2000 by between
Rich Products Manufacturing Corporation, Paramark Enterprises,
Inc. and Starbake, Inc., a wholly owned subsidiary of Paramark
Enterprises, Inc.
10.21 License Agreement dated as of October 9, 2000 by between Rich
Products Manufacturing Corporation, Paramark Enterprises, Inc.
and Starbake, Inc., a wholly owned subsidiary of Paramark
Enterprises, Inc.
10.22 Consulting Agreement between Rich Products Manufacturing
Corporation and Charles Loccisano.
10.23 Consulting Agreement between Rich Products Manufacturing
Corporation and Alan Gottlich.
10.24 Consulting Agreement between Rich Products Manufacturing
Corporation and Wayne Sorensen.
10.25 Assets Purchase and Sale Agreement dated as of October 9, 2000
by between Brooks Street Companies, Inc., Paramark Enterprises,
Inc. and Starbake, Inc., a wholly owned subsidiary of Paramark
Enterprises, Inc.
99.5 Press release dated October 18, 2000.
