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
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Rule 14a-11(c) or Rule 14a-12
E COM VENTURES, INC.
--------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
--------------------------------------------------------------------------------
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E COM VENTURES, INC.
11701 N.W. 101ST ROAD
MIAMI, FLORIDA 33178
-------------------------
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD ON DECEMBER 7, 2001
TO OUR SHAREHOLDERS:
The 2001 Annual Meeting of Shareholders of E Com Ventures, Inc. will be
held at 11:00 a.m. on Friday, December 7, 2001, 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 nine members to our Board of Directors to hold
office until our 2002 Annual Meeting or until their successors
are duly elected and qualified;
2. Ratification of the appointment of Deloitte and Touche LLP as
our independent public accountants; and
3. 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 October 17, 2001 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
November 7, 2001
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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.
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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
Report of Audit Committee.................................................13
Certain Relationships and Related Transactions............................14
Performance Graph.........................................................16
Section 16(a) Beneficial Ownership Reporting Compliance...................16
Proposal 2 - Ratification of the Appointment of Independent Auditors......17
Other Business............................................................18
Shareholder Proposals for the 2002 Annual Meeting.........................18
i
E COM VENTURES, INC.
2001 ANNUAL MEETING OF SHAREHOLDERS
-----------------------------------
PROXY STATEMENT
-----------------------------------
This proxy statement contains information related to our Annual Meeting
of Shareholders to be held on Friday, December 7, 2001, beginning at 11:00 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 November 7,
2001. You should review this information in conjunction with our 2000 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 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, October 17, 2001, 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, 9,492,412 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 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.
1
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 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.
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
2
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
PROPOSAL 1 - ELECTION OF DIRECTORS
DIRECTORS STANDING FOR ELECTION
At the Annual Meeting, the shareholders will elect nine directors, each
of whom will serve for a term expiring at the 2002 Annual Meeting of
Shareholders, or until his successor has been duly elected and qualified.
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 A. Mark Young
o Jeffrey Geller
o Donovan Chin
o Carole Ann Taylor
o Horacio Groisman, M.D.
o Zalman Lekach
o Ana Maria Fernandez Haar
o James Fellus
All of our director nominees are currently serving as our directors.
EXECUTIVE OFFICERS AND DIRECTORS
The following are our executive officers and directors:
Name Age Position
---- --- --------
Ilia Lekach 52 Chairman of the Board and Chief Executive Officer
A. Mark Young 40 Chief Financial Officer and Director
Jeffrey Geller 27 President and Chief Operating Officer of the Retail
Division of Perfumania, Inc., and Director
Donovan Chin 35 Chief Financial Officer of Perfumania, Inc., Secretary and
Director
Carole Ann Taylor(1)(2)(3) 55 Director
Horacio Groisman, M.D. (2)(3) 48 Director
Zalman Lekach 34 Director
Ana Maria Fernandez Haar(1) 50 Director
James Fellus(1) 36 Director
---------------
(1) Member of Audit Committee.
(2) Member of Compensation Committee.
(3) Member of Stock Option Committee.
4
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 Nimbus
Group, Inc., a publicly held company committed to the
development of a private jet air taxi network, formerly known
as Take To Auction.Com, Inc. 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 A. MARK YOUNG -- A. Mark Young joined us in February 2000,
became our Chief Financial Officer in May 2000 and was
appointed a Director in April 2001. Prior to joining us, Mr.
Young was employed for seven years in the Business Assurance
Group of PricewaterhouseCoopers LLP, South Florida.
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 and a Director in April 2001.
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 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 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-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 1984, and has been President of
Utolaryngology, Head and Neck Associates, in Miami, Florida
since 1994. Dr. Groisman is a member of our Compensation and
Stock Option Committees. He also served as Vice-Chairman of
the Board of Directors of Nimbus Group, Inc. from October 1999
until October 2001.
5
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 other opportunities. From May 1999 to June 2001, Mr.
Zalman Lekach served as Chief Operating Officer of IFX, Inc. a
Miami, Florida based Internet service provider. In June 2001,
Mr. Zalman Lekach co-founded Grupo Tulin, Inc. a privately
held distributor of fragrances. Messrs. Ilia Lekach and Zalman
Lekach are brothers.
o ANA MARIA FERNANDEZ HAAR -- Ana Maria Fernandez Haar was
appointed a Director in June 2001. Ms. Fernandez-Haar is the
CEO and President of The IAC Group, Inc., an international
advertising agency located in Miami, Florida. The IAC Group,
Inc. was founded by Ms. Fernandez-Haar in 1978. Ms.
Fernandez-Haar is a member of the Board of Directors of the
New American Alliance, SCORE, CAMACOL, the World Trade Center,
Hispanic Heritage Council and the Japan society.
o JAMES FELLUS -- James Fellus was appointed Director in October
2000. Mr. Fellus has been the Senior Managing Director Capital
Markets at Advest, Inc. since 1995. He is responsible for risk
management of all fixed income products and publishes trade
ideas and market commentary periodically. Mr. Fellus also
serves as a member of the Board of Directors of Advest, Inc.
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
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table shows the amount of common stock beneficially owned
as of October 22, 2001 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.
Common Stock Beneficially Owned
-----------------------------------------------------------------
Outstanding Exercisable Total Number of
Shares Currently or Shares Percent of
Beneficially Within 60 Beneficially Owned Shares
Name and Address of Beneficial Owner Owned (a) Days (b) (Columns (a)+(b)) Outstanding
------------------------------------ ------------ ------------ ------------------ -----------
Ilia Lekach 1,031,375 775,000 1,806,375(1)(2) 19.2%
A. Mark Young 2,100 100,000 102,100 1.1%
Jeffrey Geller 6,850 100,000 106,850 1.1%
Donovan Chin 0 109,500 109,500 1.2%
Carole A. Taylor 0 16,000 16,000 *
Horacio Groisman, M.D. 1,000 10,000 11,000 *
Zalman Lekach 0 10,000 10,000 *
Ana Maria Fernandez Haar 0 2,000 2,000 *
James Fellus 0 2,000 2,000 *
Claire Fair 0 0 0(4) *
Jerome Falic 365,832 334,500 700,332(5) 7.4%
Rachmil Lekach 675,125 100,000 775,125(1) 8.2%
Parlux Fragrances, Inc. 1,512,406 0 1,512,406(3) 16.0%
Eisenberg Partners, LLC 911,946 0 911,946(6)(8) 9.6%
Mark A. Rice 1,034,098 0 1,034,098(7)(8) 10.9%
All directors and executive officers as a
group (9 persons) 2,165,825 22.8%
------------------
* Less than 1%.
(1) Ilia Lekach and Rachmil Lekach jointly own with their spouses the
shares set forth opposite their respective names.
(2) Includes 16,000 shares of Common Stock owned by Pacific Investment
Group, a corporation wholly owned by Mr. Lekach.
(3) The address of Parlux Fragrances, Inc. ("Parlux") is 3725 S.W. 30th
Avenue, Ft. Lauderdale, Florida 33154. Ilia Lekach is the Chairman of
the Board and Chief Executive Officer of Parlux.
(4) The address of Claire Fair is 3330 North 37th Street, Hollywood,
Florida 33021.
(5) The address of Jerome Falic is 19495 Biscayne Blvd., Ste. 300,
Aventura, Florida 33180.
(6) 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.
(7) Based on the Schedule 13G dated December 31, 2000 filed with the SEC by
Mark A. Rice. Mr. Rice is the sole member of the managing member of The
dotCom Fund, L.L.C. (641,811 shares) and sole shareholder of Namax
Corporation (139,648 shares). In addition, the dotCom Fund owns the
following convertible notes: Series B in the principal amount of
$300,000; Series C in the principal amount of $1,184,000; and Series D
in the principal amount of $1,740,330. These notes are subject to
conversion limitations such that The dotCom Fund, LLC and its
affiliates, which would include Mark A. Rice, can never beneficially
own over 9.9%. Accordingly, the Series C and Series D notes are not
convertible at this time and only $105,266 of the Series B note is
convertible. It converts into 252,639 shares of common stock. Mark A.
Rice has sole power to vote or direct the vote of the entire holding
and has sole power to dispose of or direct the disposal of the
7
entire shareholding. The address for each entity is 666 Dundee Road,
Suite 1901, Northbrook, Illinois 60062.
(8) In February 2001, the Company entered into a Convertible Note Option
Repurchase Agreement (the "Agreement") with the holders of the
Company's outstanding Series A, B, C, and D Convertible Notes. The
Agreement provides that the Company has the option to repurchase the
total outstanding convertible notes over an eleven month period
beginning February 2001, at a price equal to the unpaid principal
balance plus a 20% premium. The portion of the notes redeemable in each
of the eleven months varies as per a specified redemption schedule. In
the event that the Company exercises its option, the note holders are
restricted from converting any part of the remaining outstanding and
unpaid principal balance of such holder's notes into the Company's
common stock.
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
committee.
For the fiscal year ended February 3, 2001, Carole Ann Taylor and James
Fellus were the members of our Audit Committee. Carole Ann Taylor, James Fellus
and Ana Maria Fernandez Haar are the current members of our Audit Committee.
Robert Pliskin served as a member of the Audit Committee until his death in
October 2000. James Fellus was appointed to the Committee in October 2000. Ana
Maria Fernandez Haar was appointed in June 2001. The Audit Committee is governed
by a written charter adopted by the Board of Directors, a copy of which is
attached to this Proxy Statement as Appendix A. Each of the members of the Audit
Committee is independent as defined under the National Association of Securities
Dealers' listing standards. 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 February 3, 2001.
For the fiscal year ended February 3, 2001, 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 executive officers, including salaries, bonuses and benefit
plans. The Compensation Committee met one time during the fiscal year ended
February 3, 2001.
For the fiscal year ended February 3, 2001, 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 2000 Stock Option
Plan and the 2000 Directors Stock Option Plan. The Stock Option Committee held
one meeting during the fiscal year ended February 3, 2001.
During the fiscal year ended February 3, 2001, our Board of Directors
took certain actions by unanimous written consent and held four 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.
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COMPENSATION OF EXECUTIVE OFFICERS AND DIRECTORS
EXECUTIVE COMPENSATION
The following tables set forth certain information concerning
compensation for the fiscal years ended February 3, 2001 (Fiscal 2000), January
29, 2000 (Fiscal 1999) and January 30, 1999 (Fiscal 1998) of (i) the Chief
Executive Officer, (ii) the most highly compensated executive officers who were
serving as executive officers at the end of the last fiscal year whose total
annual salary and bonus exceeded $100,000 for fiscal 2000 and (iii) one
individual for whom disclosure would have been provided but for the fact that
they were not serving as an executive officer at the end of the last fiscal year
(collectively, the "Named Executive Officers").
Other Restricted
Name and Fiscal Annual Stock LTIP All Other
Principal Position Year Salary($) Bonus($) Compensation($)(1) Awards($) Options(#) Payouts($) Compensation($)
------------------ ------ --------- -------- ------------------ ---------- ---------- ---------- ---------------
Ilia Lekach (2) 2000 433,846 80,000 0 0 0 0 0
Chairman of the Board and 1999 420,000 0 0 0 0 0 0
Chief Executive Officer 1998 0 0 500,000(3) 0 775,000(4) 0 0
Jeffrey Geller(5) 2000 114,104 0 0 0 60,000 0 0
President and
Chief Operating Officer,
Retail Division
A. Mark Young(6) 2000 122,079 0 0 0 50,000 0 0
Chief Financial Officer
Donovan Chin 2000 174,447 0 0 0 0 0 0
Chief Financial Officer, 1999 167,185 0 0 0 100,000 0 0
Perfumania, Inc. and 1998 85,014 0 0 0 34,500(4) 0 0
Secretary
Claire Fair (7) 2000 170,197 0 0 0 0 0 0
Former Vice President of 1999 167,428 0 0 0 60,000 0 0
Human Resources 1998 116,980 0 0 0 26,500(4) 0 0
Jerome Falic (8) 2000 329,000 0 372,000(8) 0 75,000(8) 0 0
Former President and 1999 322,757 0 0 0 0 0 0
Vice Chairman of the Board 1998 259,034 0 0 0 334,500(4) 0 0
--------------------
(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); Donovan Chin (14,500); Claire Fair
(21,500); and Jerome Falic (100,000).
(5) Jeffrey Geller joined the Company in March 2000, and was appointed
Chief Operating Officer in May 2000.
(6) A. Mark Young joined the Company in February 2000, and was appointed
our Chief Financial Officer in May 2000.
(7) Claire Fair resigned from the Company in March 2001.
(8) Jerome Falic's employment with the Company ended in December 2000. He
received a payout of $372,000 pursuant to the terms of a Separation
Agreement which amount represents the total salary due for the
remaining term of his employment. He was also granted 75,000 options to
purchase our common stock at an exercise price of $0.50. The stock
options vest on May 31, 2001 and expire on May 31, 2004.
9
OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth certain information regarding option
grants to Named Executive Officers during Fiscal 2000.
Individual Option Grants in Fiscal Year 2000
----------------------------------------------------------------------------------------------
Potential Realizable
$ of Total Value at Assumed
Options Annual Rates of
Granted to Stock Price Appreciation
Number of Employees Exercise for Option Term
Options in Fiscal Price Expiration --------------------------
Name Granted 2000 (1) Per Share Date 5% (2) 10% (2)
---- ------------- ------------ -------------- ------------- ------------- ----------
Jeffrey Geller 60,000 10% $2.81 2010 $0 $0
A. Mark Young 50,000 9% $1.94 2010 $0 $35,500
Jerome Falic 75,000 13% $0.50 2004 $93,750 $161,250
------------
(1) Total stock option grants during Fiscal 2000 were 590,000.
(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 the Named Executive Officers during Fiscal 2000 and options held by
such executive officers on February 3, 2001:
Value of
Number of Unexercised
Number of Unexercised In-the-Money
Shares Options at Fiscal Options at Fiscal
Acquired Year-End Year-End(1)
On Value Exercisable/ Exercisable/
Name Exercise Realized Unexercisable Unexercisable
---- -------- -------- ------------- -------------
Ilia Lekach -- -- 775,000/0 $ 520,375/0
Jeffrey Geller -- -- 0/60,000 $ 0/0
A. Mark Young -- -- 0/50,000 $ 0/0
Donovan Chin -- -- 109,500/0 $ 5,625/0
Claire Fair -- -- 77,000/0 $ 10,625/0
Jerome Falic -- -- 334,500/75,000 $ 227,063/46,875
------------------
(1) Based on a per share price of $1.125, the closing price of the common
stock as reported on the Nasdaq on February 2, 2001, minus the exercise
price of the option, multiplied by the number of shares underlying the
option.
10
EMPLOYMENT AGREEMENTS AND SEVERANCE AGREEMENTS
Effective February 1, 1999, we entered into a 3-year employment
agreement with Ilia Lekach pursuant to which he will receive an annual salary of
$400,000, subject to cost-of-living increases, or 5% if higher. The employment
agreement provides that Mr. Lekach will continue to receive his annual salary
until the expiration of the term of his employment agreement if his employment
is terminated by us for any reason other than death, disability or cause (as
defined in the employment agreement). The agreement contains a performance bonus
plan which provides for additional compensation and grant of stock options if we
meet certain net income levels. The employment agreement also prohibits Mr.
Lekach from directly or indirectly competing with us during the term of his
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, $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. Mr. Finer's employment with the Company was terminated in June 2000.
Pursuant to his employment agreement, he will continue to receive his salary
until November 2002. Ms. Fair resigned from the Company in March 2001.
Effective January 2000 and March 2000, we entered into 3-year
employment agreements with A. Mark Young and Jeffrey Geller pursuant to which
they will receive annual salaries of $120,000 and $155,000, respectively,
subject to specified increases. The employment agreements provide that Mr. Young
and Mr. Geller 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.
DIRECTOR COMPENSATION
We maintain a policy of compensating our outside directors with an
annual retainer of $10,000 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.
11
REPORT ON EXECUTIVE COMPENSATION
The Compensation Committee reviews and approves the compensation of our
executive officers, including salaries, bonuses and benefit plans. The
Compensation Committee met once during the fiscal year ended February 3, 2001.
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 base salaries of our Chief Executive Officer and all Named
Executive officers have been fixed in accordance with the terms of their
respective employment agreements which have been reviewed by the Compensation
Committee. In reviewing base salaries, the Compensation Committee considers
factors such as the responsibilities of the position, corporate progress toward
achieving objectives and individual performance, experience and expertise. In
determining our executive'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.
Pursuant to the terms of his employment agreement, Ilia Lekach received a bonus
of $80,000 for fiscal year 1999 which was paid during fiscal year 2000. This
bonus was earned because specified net income levels were exceeded for fiscal
year 1999.
Our Stock Option Committee reviews and approves the grant of options
pursuant to the Company's 2000 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 February 3, 2001, we granted 75,000 stock options to Jerome Falic, 60,000
stock options to Jeffrey Geller and 50,000 stock options to A. Mark Young.
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 February 3, 2001.
This report is submitted by the Compensation Committee:
Carole Ann Taylor
Horacio Groisman, M.D.
12
REPORT OF AUDIT COMMITTEE
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
February 3, 2001.
The Audit Committee has reviewed and discussed the Company's audited
financial statements for the fiscal year ended February 3, 2001 with the
Company's management and with Deloitte and Touche LLP, the Company's independent
public accountants. Deloitte and Touche LLP was appointed in July 2000 to
replace the Company's previous independent public accountants, in accordance
with recommendations of the Audit Committee. The Audit Committee has also
discussed with Deloitte and Touche LLP, the matters required to be discussed by
Statement on Auditing Standards No. 61 (Communication with Audit Committees).
The Audit Committee has also received the written disclosures and the
letter from Deloitte and Touche LLP required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees) and the Audit
Committee has discussed the independence of Deloitte and Touche LLP with that
firm.
Based on the Audit Committee's review and discussions noted above, the
Audit Committee recommended to the Board of Directors that the Company's audited
financial statements be included in the Company's Annual Report on Form 10-K for
the fiscal year ended February 3, 2001 for filing with the Securities and
Exchange Commission.
This report is submitted by the Audit Committee:
James Fellus
Ana Maria Fernandez Haar
Carole Ann Taylor
13
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
RELATIONSHIP WITH PARLUX. Parlux Fragrances, Inc. ("Parlux") 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 and beneficially owns
approximately 26% of the outstanding common stock of Parlux. During the fiscal
year ended February 3, 2001 we purchased approximately $22,200,000 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
could reasonably be obtained in arm's length transactions with independent third
parties. The amount due to Parlux at February 3, 2001 was approximately
$13,413,000.
On October 4, 1999, Perfumania signed an $8,000,000 subordinated note
agreement with Parlux in exchange for a reduction of an equal amount of trade
payables due to Parlux. During the remainder of fiscal year 1999 and for the
first four months of fiscal year 2000, Perfumania made principal payments
totaling $4,500,000 and $1,500,000, respectively. On June 1, 2000, Perfumania
signed a $5,000,000 subordinated note agreement with Parlux which included the
refinancing of the $2,000,000 balance due to Parlux remaining under the October
4, 1999 $8,000,000 subordinated secured note, and a reduction of $3,000,000 in
trade payables due to Parlux. The note was due on December 29, 2000 with various
periodic principal payments, bore interest at prime plus 1% and was subordinated
to all bank related indebtedness. The note was repaid in full in December 2000.
On June 30, 2001, Perfumania signed a $3,000,000 subordinated note
agreement with Parlux. The note represents the reduction of $3,000,000 in trade
payables due to Parlux. The note is due on March 31, 2002 with monthly principal
and interest payments beginning October 31, 2001, bears interest at prime plus
1% and is subordinated to all bank related indebtedness.
RELATIONSHIP WITH NIMBUS GROUP, INC. ("NIMBUS") FORMERLY TAKE TO
AUCTION.COM, INC. Ilia Lekach, Chairman and Chief Executive Officer is also the
Chairman of Nimbus, which reorganized its corporate structure and changed its
name from Take To Auction.Com, Inc. ("Take To Auction") in September 2001, and
beneficially owns 18% of the outstanding common stock of Nimbus. Horacio
Groisman, M.D., one of our Directors served as the Vice Chairman of Nimbus from
October 1999 until October 2001, and beneficially owns 8% of the outstanding
common stock of Nimbus.
In December 1999, we loaned $1,000,000 to Take To Auction.Com, Inc.
("Take To Auction") pursuant to the terms of a convertible note. Due to the
uncertainty of collectability of the Note, we wrote off the Note and the related
interest receivable which together totaled approximately $1.0 million as of
January 29, 2000. The related expense is included in the provision for
impairment of assets and store closings in the consolidated statements of
operations in fiscal year 1999. We converted the loan into 138,889 shares of
Take To Auction common stock and, as a result of Take To Auction's successful
initial public offering, the $1.0 million principal balance and related interest
previously expensed was reversed in the first quarter of fiscal 2000.
In March 2000, we loaned an additional $1,000,000 to Take To Auction.
The note was repaid in full in June 2000. In connection with both the December
1999 and March 2000 loans to Take To Auction, we were granted warrants (the
"Warrants") to purchase a total of 200,000 shares of the common stock of Take To
Auction at $8 per share. The Warrants were exercisable in whole or in part at
any time during the period June 13, 2000 through June 13, 2001 (the "exercise
period"). We did not exercise any Warrants during the exercise period.
In October 2000, we entered into a six-month service agreement with
Take To Auction to provide distribution and logistic functions for
perfumania.com, our wholly-owned subsidiary. This
14
agreement will automatically renew for successive one-year terms unless
otherwise terminated. This service agreement includes order processing,
inventory management, warehousing, fulfillment and shipping of product. The
service fee is variable based on volume of Take To Auction's sales, however, it
includes monthly minimum fees if specified volume levels are not reached. Such
fees range from $11,000 to $20,000 per month. Based on volume levels for fiscal
year 2000, service fees totaled approximately $72,000 and is included in
miscellaneous income (expense) net, in the consolidated statements of operations
in fiscal year 2000.
In October 2000, Take To Auction loaned us $500,000. The loan was
unsecured with interest at the rate charged by our major lender. The loan,
including interest, was repaid in December 2000.
During fiscal year 2000, we purchased 314,000 shares of Take To Auction
for approximately $2.5 million. In January 2001, we received 250,000 shares of
Take To Auction's common stock as partial payment on a loan receivable from Ilia
Lekach, our Chairman of the Board and Chief Executive Officer. The payment
amount was based on a per share price of $1.01 which represents 90% of the
closing price of Take To Auction's common stock for the 30 business days prior
to transfer to us. As of February 3, 2001, we own approximately 703,000 shares
of Take To Auction's common stock representing approximately 9.5% of their total
outstanding shares.
RELATIONSHIP WITH GRUPO TULIN, INC. Grupo Tulin, Inc. ("Tulin") is a
privately held company engaged in the distribution of fragrances. Zalman Lekach,
one of our Directors, co-founded Tulin in June 2001. During the period June
through October 2001, we purchased approximately $1,425,000 of merchandise from
Tulin. We believe that our purchases of merchandise from Tulin were on terms no
less favorable to us than could be obtained in arm's length transactions with
independent third parties. Amounts due to Tulin are non-interest bearing.
RELATIONSHIPS WITH CONVERTIBLE NOTE HOLDERS. In February 2001, we
entered into a Convertible Note Option Repurchase Agreement (the "Agreement")
with the holders of our outstanding Series A, B, C and D Convertible Notes. The
agreement provides that we have the option to repurchase the total outstanding
convertible notes over an eleven month period beginning February 2001, at a
price equal to the unpaid principal balance plus a 20% premium. The portion of
the notes redeemable in each of the eleven months varies as per a specified
redemption schedule. In the event we exercise our option, the note holders are
restricted from converting any part of the remaining outstanding and unpaid
principal balance of such holder's notes into our common stock. As of October
31, 2001, we made payments of $235,231 to Eisenberg Partners, L.L.C.
("Eisenberg") and $967,941 to Mark A. Rice in connection with the Agreement.
Eisenberg beneficially owns all the shares of several convertible notes which
collectively beneficially own 9.6% of our outstanding common stock. Mr. Rice
beneficially owns 10.9% of our outstanding common stock.
RELATED PARTY INDEBTEDNESS. Notes receivable from Ilia Lekach, our
Chairman of the Board and Chief Executive Officer, and Zalman Lekach, one of our
Directors, were $3,694,278 and $150,000, respectively, as of February 3, 2001.
The notes are unsecured, mature December 31, 2001 and bear interest at 8% per
annum. Principal and interest are payable in full at maturity. Total interest
income was approximately $247,000 during fiscal year 2000. Accrued interest
receivable at February 3, 2001 amounted to approximately $12,000. In January
2001, we received 250,000 shares of common stock of Nimbus valued at $252,500 as
partial payment on the note receivable from Ilia Lekach as discussed above. In
March 2001, we received a principal payment from Ilia Lekach of $500,000. In
June 2001 and August 2001, we received an interest payment of $15,856 and a
principal and interest payment of $71,000, respectively, from Zalman Lekach.
15
In October 1999, Rachmil Lekach, one of our principal shareholders
issued us an unsecured promissory note in the principal amount of $756,000. Such
note, including accrued interest, was repaid in April 2000. Rachmil Lekach is
the brother of Ilia Lekach.
PERFORMANCE GRAPH
The following graph indicates our total return to our shareholders for
the period February 2, 1996 to February 3, 2001, as compared to the returns for
the NASDAQ (US Companies) Stock Index and the NASDAQ Retail Trade Stock Index.
The information contained in this graph is based on historical data and is not
necessarily indicative of our future performance.
2/2/96 1/31/97 1/30/98 1/29/99 1/28/00 2/3/01
------ ------- ------- ------- ------- ------
E Com Ventures, Inc. 100.00 75.11 63.89 247.33 109.78 25.00
NASDAQ US Stock Market Index 100.00 129.74 153.08 240.42 369.66 251.37
NASDAQ Retail Trade Stocks 100.00 122.82 143.24 174.80 140.08 107.68
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 February 3, 2001 included one late report filed by Jeffrey Geller and two
late reports filed by A. Mark Young reflecting stock purchases. The following
individuals were not timely in meeting the filing requirements with respect to
options issued under the Company's 2000 and 1991 Stock Option Plans: A. Mark
Young and Jeffrey Geller, and also the 2000 Directors Stock Option Plan: Carole
Ann Taylor, Horacio Groisman, M.D., Zalman Lekach and James Fellus. In addition,
the following individuals were not timely in meeting the filing requirements
with respect to Form 3, Initial Statement of Beneficial Ownership of Securities:
A. Mark Young, Jeffrey Geller and James Fellus.
16
PROPOSAL 2 - RATIFICATION OF THE APPOINTMENT OF INDEPENDENT AUDITORS
The firm of PricewaterhouseCoopers LLP ("PwC") served as the Company's
independent certified 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, selected Deloitte and Touche LLP as the Company's
independent certified public accountants for both the fiscal years ended
February 3, 2001 and February 2, 2002. 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.
AUDIT FEES
The aggregate fees billed by Deloitte & Touche LLP for the audit of the
Company's annual financial statements for the fiscal year ended February 3, 2001
and for its reviews of the financial statements included in the Company's Form
10-Q's for the fiscal year ended February 3, 2001, were approximately $210,000.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
The Company was not billed by Deloitte & Touche LLP for financial
information systems design and implementation for the fiscal year ended February
3, 2001.
OTHER FEES
The aggregate of all other fees billed to the Company by Deloitte &
Touche LLP were approximately $28,000 for the fiscal year ended February 3,
2001. The audit committee has considered and determined that the fees paid to
Deloitte & Touche LLP for other audit-related services is compatible with
Deloitte & Touche LLP's independence.
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 2, 2002.
17
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 2002 ANNUAL MEETING
Any shareholder who intends to present a proposal at our 2002 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 July 10, 2002.
After the July 10, 2002 deadline, a shareholder may present a proposal
at our 2002 Annual Meeting of Shareholders if it is submitted to our Corporate
Secretary at the address below no later than September 23, 2002. If timely
submitted, the shareholder may present the proposal at the 2002 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 September
23, 2002. 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.
18
APPENDIX A
CHARTER OF THE AUDIT COMMITTEE OF
E COM VENTURES, INC.
PURPOSE AND SCOPE
This Charter governs the operations of the Audit Committee (the "Committee") of
the Board of Directors (the "Board") of E Com Ventures, Inc., a Florida
corporation (the "Company"). The purpose of the Committee is to assist the Board
in fulfilling its responsibilities to oversee:
o the financial reports and other financial information provided
by the Company to any governmental or regulatory body, the
public, or any other user of such financial statements;
o the Company's systems of internal accounting and financial
controls;
o the independence and performance of the Company's outside
auditors; and
o compliance by the Company with any legal compliance and ethics
programs as may be established by the Board and the Company's
management from time-to-time.
In fulfilling its obligations, the Committee shall maintain free and open
communications between the Committee and the Company's:
o independent auditors,
o internal accounting staff, and
o management.
In discharging its oversight role, the Committee is empowered to investigate any
matter brought to its attention with full access to all books, records,
facilities, and personnel of the Company. The Committee is authorized to retain
outside or special counsel, auditors, accounting or other consultants, experts,
and professionals for this purpose.
The Committee may request any officer or employee of the Company or the
Company's outside counsel or independent auditors to attend a meeting of the
Committee or to meet with any members of, or consultants or advisors to, the
Committee.
The Committee shall review and reassess the adequacy of this Charter annually
and recommend any proposed changes to the Board for approval. This Charter shall
be published as an appendix to the Company's Proxy Statement for the Company's
annual meeting of shareholders to the extent required by the rules and
regulations of the Securities and Exchange Commission.
MEMBERS OF THE COMMITTEE
The Committee shall be comprised of not less than three members of the Board.
The members of the Committee shall meet all "independence" and qualification
requirements of the rules and regulations of the NASDAQ Stock Market, as such
rules and regulations may be amended or supplemented from time-to-time.
Accordingly, each member of the Committee must be a director who:
o has no relationship to the Company that may interfere with the
exercise of his or her independent judgment in carrying out
the responsibilities of a director; and
1
o is able to read and understand fundamental financial
statements, including a company's balance sheet, income
statement, and cash flow statement, or will become able to do
so within a reasonable period of time after appointment to the
Committee.
In addition, at least one member of the Committee must have past employment
experience in finance or accounting, professional certification in accounting,
or other comparable experience or background that results in such individual's
financial sophistication including, but not limited to, being or having been a
chief executive officer, chief financial officer, or other senior officer with
financial oversight responsibilities.
Under exceptional and limited circumstances, however, one director who is not
independent as defined in the rules and regulations of the NASDAQ Stock Market
and who is not a current employee or an immediate family member of an employee
of the Company may serve as a member of the Committee, provided that:
o the Board determines that membership by the individual on the
Committee is required by the best interests of the Company and
its shareholders, and
o the Company complies with all other requirements of the rules
and regulations of the NASDAQ Stock Market with respect to
non-independent members of the Committee, as such rules and
regulations may be amended or supplemented from time-to-time.
KEY RESPONSIBILITIES AND PROCESSES
The primary responsibility of the Committee is to oversee the Company's
financial reporting process on behalf of the Board and to report the results of
the Committee's activities to the Board. The Committee recognizes that
management shall be responsible for preparing the Company's financial statements
and the independent certified public accountants shall be responsible for
auditing those financial statements. The functions set forth below shall be the
principal recurring activities of the Committee in carrying out its oversight
function. In carrying out its responsibilities, however, the Committee shall
remain flexible in order to best react to changing conditions and circumstances.
The following functions are set forth as a guide with the understanding that the
Committee may deviate from this guide and supplement these functions, as the
Committee deems appropriate under the circumstances.
1. The Committee shall have a clear understanding with management and the
independent certified public accountants that the independent certified
public accountants are ultimately accountable to the Board and the
Committee, as representatives of the Company's shareholders. The
Committee and the Board shall have the ultimate authority and
responsibility to select (or to nominate for shareholder approval) the
independent auditors, to approve the fees to be paid to the independent
auditors, to evaluate the performance of the independent auditors, and,
if appropriate, to replace the independent auditors.
2. The Committee shall discuss with management and the independent
auditors the overall scope and plans for the audit, including the
adequacy of staffing and the compensation to be paid to the independent
auditors. The Committee also shall discuss with management and the
independent auditors the adequacy and effectiveness of the Company's
accounting and financial controls, including the Company's system to
monitor and management business risk, as well as legal and ethical
compliance programs. To the extent the Committee deems it to be
necessary, the Committee shall meet separately with the internal
accounting staff and the independent auditors, with or without
management present, as well as the Company's Chief Financial Officer
and other management personnel, to discuss the results of the
Committee's examinations.
2
3. The Committee shall:
o ensure that the independent auditors submit annually a formal
written statement delineating all relationships between the
independent auditors and the Company, consistent with
Independence Standards Board Standard No. 1, as such standard
may be amended or supplemented from time to time;
o discuss with the independent auditors any such relationships
or services provided by the independent auditors and their
impact on the objectivity and independence of the independent
auditors; and
o recommend that the Board take appropriate action to oversee
the independence of the independent auditors.
4. The Committee shall review with management and the independent auditors
the financial statements to be included in the Company's Annual Report
on Form 10-K (or the Annual Report to Shareholders if distributed prior
to the filing of the Form 10-K), including the auditors' judgment about
the quality, not just acceptability, of the Company's accounting
principles, the consistency of the Company's accounting policies and
their application, and the clarity and completeness of the Company's
financial statements and related disclosures. The Committee also shall
discuss the results of the annual audit and any other matters required
to be communicated to the Committee by the independent auditors under
generally accepted auditing standards, including SAS No. 61, as such
might be amended or supplemented.
5. If so requested by the independent auditors or the Company's
management, prior to the filing of the Company's Quarterly Report on
Form 10-Q the Committee (as a whole or acting through the Committee
chair) shall:
o review the interim financial statements with management and
the independent auditors, and
o discuss the results of the quarterly review and any other
matters required to be communicated to the Committee by the
independent auditors under generally accepted auditing
standards, including Statement of Auditing Standards ("SAS")
No. 71, as such may be amended or supplemented from time to
time.
6. The Committee shall prepare the report required by the rules of the
Securities and Exchange Commission to be included in the Company's
Proxy Statement to be delivered to shareholders in connection with the
Company's annual meeting of shareholders.
7. The Committee shall review with the independent auditors any problems
or difficulties the auditors may have encountered and any management
letter provided by the independent auditors and the Company's response
to that letter. Such review should include:
o any difficulties encountered in the course of the audit work,
including any restrictions on the scope of activities or
access to required information; and
o any changes required in the planned scope of the audit.
8. The Committee shall meet periodically with management to review the
Company's major financial risk exposures and the steps management has
taken to monitor and control such exposures.
3
9. The Committee shall review with the Company's general counsel any legal
matters that may have a material impact on the financial statements,
the Company's compliance policies, and any material reports or
inquiries received from regulators or governmental agencies.
With respect to the foregoing responsibilities and processes, the Committee
recognizes that the Company's financial management, including its internal audit
staff, if any, as well as the independent auditors, have more time, knowledge,
and more detailed information regarding the Company than do Committee members.
Consequently, in discharging its oversight responsibilities, the Committee will
not provide or be deemed to provide any expertise or special assurance as to the
Company's financial statements or any professional certification as to the
independent auditors' work. While the Committee has the responsibilities and
powers set forth in this Charter, it is not the duty of the Committee to plan or
conduct audits or to determine that the Company's financial statements are
complete and accurate and are in accordance with generally accepted accounting
principles. This is the responsibility of management and the independent
auditors. Nor is it the duty of the Committee to conduct investigations, to
resolve disagreements, if any, between management and the independent auditors,
or to assure compliance with laws and regulations and the Company's internal
policies and procedures.
4
E COM VENTURES, INC.
11701 N.W. 101ST ROAD
MIAMI, FLORIDA 33178
PROXY FOR 2001 ANNUAL MEETING OF SHAREHOLDERS
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 A. Mark Young, 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 October 17, 2001 at the Company's 2001 Annual Meeting of
Shareholders, to be held on December 7, 2001, at 11:00 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
[X] PLEASE MARK YOUR VOTES AS IN THIS EXAMPLE.
1. Election of Directors.
[ ] Vote for all Nominees [ ] Vote Withheld from all
Listed Below (except as Nominees
written below)
THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE ELECTION OF ALL THE DIRECTOR
NOMINEES LISTED IN THIS PROPOSAL NO. 1.
NOMINEES: Ilia Lekach, A. Mark Young, Jeffrey Geller, Donovan Chin, Carole
Ann Taylor, Horacio Groisman, M.D., Zalman Lekach, Ana Maria
Fernandez Haar, James Fellus
(INSTRUCTION: TO WITHHOLD AUTHORITY FOR AN INDIVIDUAL NOMINEE, WRITE THAT
NOMINEE'S NAME ON THE LINE PROVIDED BELOW.)
--------------------------------------------------------------------------------
2. Ratification of the appointment of Deloitte and Touche LLP as our independent
public accountants.
[ ] FOR [ ] AGAINST [ ] ABSTAIN
3. 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, 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
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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.