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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES EXCHANGE ACT OF 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[ ] Preliminary Proxy Statement [X] Definitive Proxy Statement
[ ] Definitive Additional Materials [ ] Soliciting Materials
[ ] Confidential, for use of the Commission Pursuant to Rule 14a-12
Only (as permitted by Rule 14a-6(e)(2))
5B TECHNOLOGIES CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No:
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(4) Date Filed:
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5B TECHNOLOGIES CORPORATION
ONE JERICHO PLAZA
JERICHO, NEW YORK 11753
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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AUGUST 18, 2000
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To the Stockholders of 5B TECHNOLOGIES CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of 5B
Technologies Corporation (the "Corporation") will be held at 10:00 a.m., local
time, on August 18, 2000, at The Melville Marriott at 1350 Old Walt Whitman
Road, Melville, New York 11747, for the following purposes:
1. To elect four directors of the Corporation to serve until the
next annual meeting of stockholders and until the election and
qualification of their respective successors.
2. To vote upon a proposal to adopt the Corporation's 2000 Stock
Incentive Plan.
3. To ratify the appointment of BDO Seidman, LLP as independent
auditors of the Corporation for fiscal 2000.
4. To transact such other business as may properly come before
the Annual Meeting.
Only stockholders of record of the Corporation's Common Stock at the
close of business on June 29, 2000 are entitled to notice of, and to vote at,
the Annual Meeting and any adjournments thereof. All stockholders are cordially
invited to attend the Annual Meeting in person.
A copy of the Corporation's Annual Report for the fiscal year ended
December 31, 1999 is enclosed.
YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING
FORM OF PROXY IN THE ENCLOSED ENVELOP PROVIDED FOR THAT PURPOSE (TO WHICH NO
POSTAGE NEED BE AFFIXED IF MAILED IN THE UNITED STATES) WHETHER OR NOT YOU
EXPECT TO ATTEND THE ANNUAL MEETING IN PERSON. THE PROXY IS REVOCABLE BY YOU AT
ANY TIME PRIOR TO ITS EXERCISE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON
IN THE EVENT YOU ATTEND THE ANNUAL MEETING. THE PROMPT RETURN OF THE PROXY WILL
BE OF ASSISTANCE IN PREPARING FOR THE ANNUAL MEETING AND YOUR COOPERATION IN
THIS RESPECT WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
GLENN NORTMAN,
July 14, 2000 SECRETARY
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YOUR VOTE IS IMPORTANT. TO VOTE YOUR SHARES,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE.
================================================================================
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5B TECHNOLOGIES CORPORATION
ONE JERICHO PLAZA
JERICHO, NEW YORK 11753
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF
STOCKHOLDERS TO BE HELD
ON AUGUST 18, 2000
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This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of 5B Technologies Corporation (the "Corporation") of
proxies to be used at the Annual Meeting of Stockholders (the "Annual Meeting")
of the Corporation to be held at 10:00 a.m., local time, on August 18, 2000, at
The Melville Marriott at 1350 Old Walt Whitman Road, Melville, New York 11747,
and any adjournment thereof. This Proxy Statement and the accompanying proxy,
together with a copy of the Annual Report of the Corporation for the fiscal year
ended December 31, 1999, including financial statements, are first being mailed
or delivered to stockholders on or about July 18, 2000.
If proxy cards in the accompanying form are properly executed and
returned, the shares of Common Stock represented thereby will be voted as
instructed on the proxy. If no instructions are given, such shares will be voted
(1) for the election as directors of the nominees of the Board of Directors
named below, (2) in favor of the proposal to adopt the Corporation's 2000 Stock
Incentive Plan, (3) to ratify the appointment of BDO Seidman, LLP as the
Corporation's independent auditors for fiscal 2000, and (4) in the discretion of
the proxies named in the proxy card, on any other proposals to properly come
before the Annual Meeting or any adjournment thereof. Any proxy may be revoked
by a stockholder prior to its exercise upon written notice to the Secretary of
the Corporation, or by the vote of a stockholder cast in person at the Annual
Meeting.
Holders of record of the Corporation's Common Stock on June 29, 2000
(the "Record Date") will be entitled to notice of, and to vote at, the Annual
Meeting or any adjournment thereof. As of that date, there were 2,135,500 shares
of Common Stock outstanding and entitled to vote, and a majority of these shares
will constitute a quorum for the transaction of business at the Annual Meeting.
Each share of Common Stock entitles the holder thereof to one vote on all
matters to come before the Annual Meeting, including election of directors. Only
votes cast "for" a motion constitute affirmative votes. Votes "withheld" or
abstentions (including broker non-votes) are included in determining the
existence of a quorum, but since they are not votes "for" a motion, they will
have the same effect as negative votes or votes "against" such matters.
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SECURITY OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of
Common Stock beneficially owned, as of the Record Date, by (i) all persons known
by the Corporation to be the beneficial owner of more than 5% of the outstanding
Common Stock, (ii) each of the current directors, executive officers and
nominees to serve as directors of the Corporation, and (iii) all directors and
executive officers of the Corporation as a group.
<TABLE>
<CAPTION>
NAME AND ADDRESS AMOUNT OF
OF BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP PERCENT OF COMMON STOCK(2)
---------------------- -------------------- --------------------------
<S> <C> <C>
Glenn Nortman....................... 378,986 (3) 17.72%
Jeffrey Nortman..................... 378,986 (3) 17.72
William H. Kelly.................... 12,088 (4) *
Larry Austin........................ 500 (5) *
Stuart Belloff...................... 13,333 (5) *
Anthony Fernandez................... 2,333 (5) *
Rocco C. Passafuime................. 34,376 (5) 1.58
James E. Hillman.................... - -
All directors and executive
officers as a group
(7 persons)........................ 820,602(3)(4)(5) 37.40%
</TABLE>
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* Less than 1%
(1) The address of each listed person is c/o 5B Technologies Corporation, One
Jericho Plaza, Jericho, New York 11753.
(2) Shares beneficially owned, as recorded in this table, are expressed as a
percentage of the shares of Common Stock outstanding, net of treasury
shares. For purposes of computing the percentage of outstanding shares held
by each person or group of persons named in this table, any securities
which such person or group of persons has the right to acquire within 60
days from July 3, 2000 are deemed to be outstanding for purposes of
computing the percentage ownership of such person or persons but are not
deemed to be outstanding for the purposes of computing the percentage
ownership of any other person.
(3) Includes options which are currently exercisable (or exercisable within 60
days) to purchase 3,750 shares of Common Stock for each of Glenn Nortman
and Jeffrey Nortman.
(4) Includes options which are currently exercisable (or exercisable within 60
days) to purchase 500 shares of Common Stock for Mr. Kelly.
(5) Represents only options which are currently exercisable (or exercisable
within 60 days) to purchase shares of Common Stock for each of Messrs.
Austin, Belloff, Fernandez and Passafuime.
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PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
A board of four (4) directors is to be elected at the Annual Meeting.
Unless otherwise instructed, the persons named in the enclosed proxy will vote
the proxies received by them FOR management's four (4) nominees named below, all
of whom, except for James E. Hillman, are presently directors of the
Corporation. In the event that any management nominee is unable or declines to
serve as a director at the time of the Annual Meeting, the proxies will be voted
for any nominee who shall be designated by the present Board of Directors to
fill the vacancy. The Corporation is not aware of any nominee who will be unable
or will decline to serve as a director. The term of office for each person
elected as a director will continue until the Corporation's next annual meeting
of Stockholders and until his successor has been elected and qualified.
VOTE REQUIRED
The four (4) nominees for director receiving a plurality of the votes
cast at the Annual Meeting in person or by proxy shall be elected. Shares
present in person at the Annual Meeting that are not voted for a particular
nominee, and shares represented by proxies as to which authority to vote for
such nominee is properly "withheld," will not be counted either "for" or
"against" in determining a plurality for such nominee.
NOMINEES
The following information is supplied with respect to the nominees for
election as directors of the Corporation:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE CORPORATION
---- --- ---------------------------------------------------------------
<S> <C>
Glenn Nortman 42 Chief Executive Officer, Secretary and a Director
Jeffrey Nortman 41 Chief Operating Officer and a Director
James E. Hillman 43 Director
William H. Kelly 59 Director
</TABLE>
Certain biographical information regarding each nominee for election as
a director of the Corporation is set forth below:
GLENN NORTMAN is the Chief Executive Officer, Secretary and a director
of the Corporation. Prior to becoming Chief Executive Officer in 1997, Mr.
Nortman had served as the Corporation's Co-Chief Executive Officer beginning in
1996 and as the Executive Vice President from June 1992. Mr. Nortman runs the
day-to-day operations of the Corporation's Internet solutions and systems
integration and consulting business. From 1987 to 1992, Mr. Nortman served as
the National Accounts Manager for Pacificorp Capital, a wholly-owned computer
leasing subsidiary of PacifiCorp, the public utility in Portland, Oregon. Mr.
Nortman is the brother of Jeffrey Nortman.
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JEFFREY NORTMAN is the Chief Operating Officer and a director of the
Corporation. Mr. Nortman has been the Chief Executive Officer of the
Corporation's subsidiary, DeltaForce Personnel Services, Inc., since the
Corporation acquired DeltaForce in 1999. Prior to becoming Chief Operating
Officer in 1997, Mr. Nortman served as the Corporation's Co-Chief Executive
Officer beginning in 1996 and as the President from the Corporation's
inception in July 1991. Mr. Nortman runs the day-to-day operations of the
Corporation's staffing services business. From 1987 to 1991, Mr. Nortman was
the Manager of Peripheral Trading for Pacificorp Capital. Mr. Nortman is the
brother of Glenn Nortman.
WILLIAM H. KELLY has been a director of the Corporation since 1998. The
Honorable William H. Kelly is a prominent member of the Long Island community
serving as Mayor of Asharoken since 1982. In addition, since 1976 Mr. Kelly has
been the owner of WHK Leasing, a high technology equipment leasing company.
Mr. Kelly has served as past President of the New York State Conference of
Mayors and as Chairman of the Tri-County Village Officials Association.
JAMES E. HILLMAN has been a Senior Vice-President of the Bank of New
York since May 1999. From January 1999 to May 1999, Mr. Hillman served as a
consultant for KATJEN Associates, a consulting firm specializing in financial
and tax matters concerning the asset management industry. From March 1998 to
December 1998, Mr. Hillman served as Executive Vice-President of BISYS Funds
Services, a financial and accounting consulting firm. From September 1991 to
March 1998, Mr. Hillman was a tax partner at PriceWaterhouseCoopers L.L.P.
EXECUTIVE OFFICERS OF THE REGISTRANT
The following information is supplied with respect to the executive
officers of the Corporation who are not also directors:
<TABLE>
<CAPTION>
NAME AGE POSITION WITH THE CORPORATION
---- --- ---------------------------------------------------------------
<S> <C>
Stuart A. Belloff 42 Chief Technology Officer and Executive Vice President of
Paratech Resources, Inc.
Anthony Fernandez 33 Director of Finance
Rocco C. Passafuime 42 Vice President of Sales of Paratech Resources, Inc.
</TABLE>
STUART A. BELLOFF is the Executive Vice President and Chief Technology
Officer of the Corporation's subsidiary, Paratech Resources, Inc., a position he
has held since October 1998. In October 1998, Paratech Recources acquired
Comptech Resources, Inc., a systems consulting, software applications and
internet development firm, from Mr. Belloff and the other shareholders of
Comptech Resources. Mr. Belloff joined Comptech Resources in 1994 as Executive
Vice President and was appointed President of Comptech Resources in 1996. Prior
thereto, Mr. Belloff was the Vice President of Microconnections, Inc., a
software applications development firm, from 1991 to 1993. Prior thereto, Mr.
Belloff founded Datatech Inc., an application development organization, in 1983
and served as its Senior Vice President from 1983 until Datatech was merged into
Microconnections in 1991.
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ANTHONY FERNANDEZ is the Director of Finance of the Corporation, a
position he has held since January 1999. Prior to becoming Director of Finance
in 1999, Mr. Fernandez served as Controller of the Corporation beginning in
1998. Prior to his employment with the Corporation, Mr. Fernandez was the Chief
Financial Officer of DSO Fluid Handling, Inc., a manufacturer of replacement
parts for machinery used in the food and pharmaceutical industry. Prior thereto,
Mr. Fernandez was a Senior Accountant with the accounting firm of Shanholt
Glassman Hoffman & Klein, P.C. from 1995 to 1997. Prior thereto, from 1993 to
1995, Mr. Fernandez was a Senior Associate at the accounting firm of BDO
Seidman, LLP.
ROCCO C. PASSAFUIME is the Vice President of Sales of the Corporation's
subsidiary, Paratech Resources, Inc., a position he has held since 1997. Prior
to his employment with Paratech Resources, Mr. Passafuime was the Director of
Sales of The Lande Group, a networking integration firm, from 1996 to 1997.
Prior thereto, from 1992 to 1997, Mr. Passafuime was a Vice President of Sales
and Network Service of Pride Technologies, a networking integration firm. Prior
thereto, from 1987 to 1992, Mr. Passafuime was a Branch Sales Manager of JWP
Information Systems, a systems integration firm.
MEETINGS OF THE BOARD
During the last fiscal year, the Corporation's Board of Directors met
one time, but the members of the Board had regular contact with the
Corporation's senior management in order to remain fully apprised of the
Corporation's activities. In addition to these meetings of the Board of
Directors, the Board of Directors acted by unanimous written consent in lieu of
meeting on five occasions in 1999. There is one standing committee of the Board
of Directors as described below.
AUDIT COMMITTEE
The Board of Directors formed an Audit Committee on January 22, 1998.
In 1999, the Audit Committee consisted of Larry Austin and William H. Kelly. The
Audit Committee met one time in 1999 in connection with its review of the
Corporation's 1998 audited financial statements. The Audit Committee reviews the
scope and results of the Corporation's annual audit, receives reports of the
Corporation's independent public accountants and chief internal auditor, and
prepares a report of the committee's findings and recommendations to the Board
of Directors. It is expected that James E. Hillman will be appointed to the
Audit Committee if elected to the Board of Directors at the Annual Meeting.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Corporation does not currently have a compensation committee, and
instead the entire Board of Directors of the Corporation determined the levels
of executive officer compensation during 1999. No executive officer of the
Corporation had any relationship reportable under the Compensation Committee
Interlock regulations during 1999.
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PROPOSAL TWO
APPROVAL TO ADOPT 2000 STOCK INCENTIVE PLAN
The Corporation's board of directors (the "Board") recommends that the
stockholders approve the adoption of the 2000 Stock Incentive Plan. The
following is a fair and complete summary of the plan as proposed. This summary
is qualified in its entirety by reference to the full text of the plan, which
appears as ANNEX A to this Proxy Statement.
GENERAL
PURPOSE: The purpose of the plan as proposed is to promote the
Corporation's long-term growth and profitability by providing key people with
incentives to improve stockholder value and contribute to the Corporation's
growth and financial success and by enabling it to attract, retain and reward
the best available people.
SHARES AVAILABLE UNDER THE PLAN: The number of shares of Common Stock
that the Corporation may issue with respect to awards available for grant under
the proposed plan will not exceed an aggregate of 500,000 shares. These limits
will be adjusted to reflect any stock dividends, split-ups, recapitalizations,
mergers, consolidations, business combinations or exchanges of shares and the
like. If any award, or portion of an award, under the plan expires or terminates
unexercised, becomes unexercisable or is forfeited or otherwise terminated,
surrendered or canceled as to any shares, or if any shares of Common Stock are
surrendered to us in connection with any award (whether or not such surrendered
shares were acquired pursuant to any award), the shares subject to such award
and the surrendered shares will thereafter be available for further awards under
the plan.
ADMINISTRATION: The proposed plan shall be administered by the Board or
by a committee or committees as the Board may appoint from time to time (whether
by the Board or any such committee, the "Administrator"). The Administrator has
full power and authority to take all actions necessary to carry out the purpose
and intent of the plan, including, but not limited to, the authority to: (i)
determine who is eligible for awards, and the time or times at which such awards
will be granted; (ii) determine the types of awards to be granted; (iii)
determine the number of shares covered by or used for reference purposes for
each award; (iv) impose such terms, limitations, restrictions and conditions
upon any such award as the Administrator deems appropriate; (v) modify, amend,
extend or renew outstanding awards, or accept the surrender of outstanding
awards and substitute new awards (provided however, that, except as noted below,
any modification that would materially adversely affect any outstanding award
may not be made without the consent of the holder); (vi) accelerate or otherwise
change the time in which an award may be exercised or become payable and to
waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such award, including, but not limited to, any
restriction or condition with respect to the vesting or exercisability of an
award following termination of any grantee's employment or consulting
relationship; and (vii) establish objectives and conditions, if any, for earning
awards and determining whether awards will be paid after the end of a
performance period.
Except with respect to a stock dividend, stock split or reverse stock
split, in the event of any change affecting the Common Stock, the Corporation or
its capitalization by reason of any stock dividend, split-up, recapitalization,
merger, consolidation, business combination or exchange of shares, other than
any such change that is part of a transaction resulting in a Change in Control
(as defined in the Plan), the Administrator, in its discretion and without the
consent of the holders of the awards, shall make (A) appropriate adjustments to
the maximum number and kind of shares reserved for issuance or with respect to
which awards may be granted under the Plan, in the aggregate and with respect to
any individual during any one fiscal year of the Corporation, and (B) any
adjustments in outstanding awards, including, but not limited to, reducing the
number, kind and
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price of securities subject to outstanding awards, and may, without the consent
of holders of awards, make any other adjustments in outstanding awards.
Without the consent of holders of awards, the Administrator, in its
sole discretion, may make any modifications to any awards, including, but not
limited to, cancellation, forfeiture, surrender or other termination of the
awards, in whole or in part, regardless of the vested status of the award, but
solely to the extent necessary to facilitate the compliance of such transaction
with requirements for treatment as a pooling of interests transaction for
accounting purposes under generally accepted accounting principles.
Without the consent of holders of awards, the Administrator in its
discretion is authorized to make adjustments in the terms and conditions of, and
the criteria included in, awards in recognition of unusual or nonrecurring
events affecting the Corporation, or its financial statements or those of any of
its affiliates, or of changes in applicable laws, regulations or accounting
principles, whenever the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the plan.
PARTICIPATION: Participation in the plan will be open to all of the
Corporation's employees, officers, directors and other individuals providing
bona fide services to the Corporation or any of its affiliates, as the
Administrator may select from time to time.
TYPE OF AWARDS
The plan as proposed would allow for the grant of stock options, stock
appreciation rights, stock awards, phantom stock awards, performance awards and
other stock-based awards. The Administrator, in its sole discretion, shall
establish the terms of all awards granted under the Plan. The Administrator may
grant these awards individually or in tandem with other awards. The
Administrator may permit or require a recipient of an award to defer such
individual's receipt of the payment of cash or the delivery of Common Stock that
would otherwise be due to such individual by virtue of the exercise of, payment
of, or lapse or waiver of restrictions respecting, any Award. If any such
payment deferral is required or permitted, the Administrator shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
STOCK OPTIONS: The proposed plan allows the Administrator to grant
either awards of incentive stock options, as that term is defined in Section 422
of the Internal Revenue Code, or nonqualified stock options, except that awards
of incentive stock options shall be limited to employees of the Corporation or
of any current or hereafter existing "parent corporation" or "subsidiary
corporation," as defined in Sections 424(e) and (f) of the Internal Revenue
Code, respectively, of the Corporation. Options intended to qualify as incentive
stock must have an exercise price at least equal to fair market value on the
date of grant, but nonqualified stock options may be granted with an exercise
price less than fair market value. No stock option shall be an incentive stock
option unless so designated by the Administrator at the time of grant or in the
grant agreement evidencing such stock option.
STOCK APPRECIATION RIGHTS: The proposed plan allows the Administrator
to grant awards of stock appreciation rights which entitle the holder to receive
a payment in cash, in shares of Common Stock, or in a combination of both,
having an aggregate value equal to the spread on the date of exercise between
the fair market value of the underlying shares on that date and the base price
of the shares specified in the grant agreement.
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STOCK AND PHANTOM STOCK AWARDS: The proposed plan allows the
Administrator to grant restricted or unrestricted stock awards, or awards
denominated in stock-equivalent units, to eligible participants with or without
payment of consideration by the grantee. Stock awards and phantom stock awards
may be paid in cash, in shares of Common Stock, or in a combination of both.
PERFORMANCE AWARDS: The proposed plan allows the Administrator to grant
performance awards which become payable in cash, in shares of Common Stock, or
in a combination of both, on account of attainment of one or more performance
goals established by the Administrator. The Administrator may establish
performance goals based on operating income, or that of the Corporation's
affiliates, or one or more other business criteria the Administrator may select
that applies to an individual or group of individuals, a business unit, or the
Corporation or its affiliate as a whole, over such performance period as the
Administrator may designate.
OTHER STOCK-BASED AWARDS: The proposed plan allows the Administrator to
grant other stock-based awards to eligible participants which may be denominated
in cash, Common Stock, other securities, stock equivalent units, stock
appreciation units, securities or debentures convertible into Common Stock, or
any combination of the foregoing. These awards may be paid in Common Stock or
other securities, in cash, or in a combination of Common Stock, other securities
and cash.
AWARDS UNDER THE PLAN
Because participation and the types of awards available for grant under
the plan as proposed are subject to the discretion of the Administrator, the
benefits or amounts that any participant or groups of participants may receive
if the plan is approved are not currently determinable. To date, no awards have
been granted under the proposed plan.
AMENDMENT AND TERMINATION
The Board may terminate, amend or modify the plan or any portion
thereof at any time.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the current federal income tax
treatment of stock options, which would be authorized for grants under the plan
as proposed, based upon the current provisions of the Internal Revenue Code and
regulations promulgated thereunder.
INCENTIVE STOCK OPTIONS: Incentive stock options under the plan are
intended to meet the requirements of section 422 of the Internal Revenue Code.
No tax consequences result from the grant of an incentive stock option. If an
option holder acquires stock upon exercise, the option holder will not recognize
income for ordinary income tax purposes (although the difference between the
option exercise price and the fair market value of the stock subject to the
option may result in alternative minimum tax liability to the option holder) and
the Corporation will not be allowed a deduction as a result of such exercise,
provided that the following conditions are met: (a) at all times during the
period beginning with the date of the granting of the option and ending on the
day three months before the date of such exercise, the option holder is an
employee of the Corporation or one of its subsidiaries, and (b) the option
holder makes no disposition of the stock within two years from the date of the
option grant nor within one year after the transfer of the stock to the option
holder. The three-month period extends to one year in the event of disability
and is waived in the event of death of the employee. If the option holder sells
the stock after complying with these conditions, any gain realized over the
price paid for the stock ordinarily will be treated as capital gain, and any
loss will be treated as capital loss, in the year of the sale.
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If the option holder fails to comply with the employment requirement
discussed above, the tax consequences will be substantially the same as for a
nonqualified option, discussed below. If the option holder fails to comply with
the holding period requirements discussed above, the option holder will
recognize ordinary income in an amount equal to the lesser of (i) the excess of
the fair market value of the stock on the date of the exercise of the option
over the exercise price, or (ii) the excess of the amount realized upon such
disposition over the adjusted tax basis of the stock. Any additional gain
ordinarily will be recognized by the option holder as capital gain, either
long-term or short-term, depending on the holding period of the shares. If the
option holder is treated as having received ordinary income because of his or
her failure to comply with either condition above, we will be allowed an
equivalent deduction in the same year.
NONQUALIFIED STOCK OPTIONS: No tax consequences result from the grant
of a nonqualified stock option. An option holder who exercises a nonqualified
stock option with cash generally will realize compensation taxable as ordinary
income in an amount equal to the difference between the exercise price and the
fair market value of the shares on the date of exercise, and the Corporation
will be entitled to a deduction from income in the same amount in the fiscal
year in which the exercise occurred. The option holder's basis in these shares
will be the fair market value on the date income is realized, and when the
holder disposes of the shares he or she will recognize capital gain or loss,
either long-term or short-term, depending on the holding period of the shares.
DISALLOWANCE OF DEDUCTIONS: The Internal Revenue Code disallows
deductions for publicly held corporations with respect to compensation in excess
of $1,000,000 paid to the corporation's chief executive officer and its four
other most highly compensated officers. However, compensation payable solely on
account of attainment of one or more performance goals is not subject to this
deduction limitation if the performance goals are objective, pre-established and
determined by a compensation committee comprised solely of two or more outside
directors, the material terms under which the compensation is to be paid are
disclosed to the stockholders and approved by a majority vote, and the
compensation committee certifies that the performance goals and other material
terms were in fact satisfied before the compensation is paid. Under this
exception, the deduction limitation does not apply with respect to compensation
otherwise deductible on account of stock options and stock appreciation rights
granted with the approval of the outside directors at fair market value under a
plan, such as the proposed plan, that limits the number of shares that may be
issued to any individual and which is approved by the corporation's
stockholders.
A copy of the plan is set forth in Annex A to this Proxy Statement.
REQUIRED AFFIRMATIVE VOTE
This proposal to approve the plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting.
RECOMMENDATION
THE CORPORATION'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THE ADOPTION OF THE PLAN.
9
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PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
GENERAL
The Board of Directors has selected BDO Seidman, LLP, independent
auditors, to audit the consolidated financial statements of the Corporation for
the fiscal year ending December 31, 2000 and recommends that stockholders vote
for ratification of such appointment. Notwithstanding the selection, the Board,
in its discretion, may direct the appointment of new independent auditors at any
time during the year, if the Board feels that such a change would be in the best
interests of the Corporation and its stockholders. In the event of a negative
vote on ratification, the Board of Directors will reconsider its selection.
Representatives of BDO Seidman, LLP are expected to be present at the
Annual Meeting with the opportunity to make a statement if they desire to do so
and are expected to be available to respond to appropriate questions.
Prior to the Board of Directors' selection of BDO Seidman, LLP on June
18, 1999 to audit the consolidated financial statements of the Corporation for
the fiscal year ending December 31, 1999, Arthur Andersen LLP audited the
Corporation's financial statements since 1994. Arthur Andersen LLP was dismissed
as the Corporation's accounting firm based on the decision by the Board of
Directors to involve new accountants in the Corporation's affairs and thereby
obtain a newly invigorated level of services. The decision was approved by the
audit committee of the Board of Directors. None of Arthur Andersen LLP's reports
on the Corporation's financial statements for any year contained an adverse
opinion or a disclaimer of opinion, or was qualified or modified as to
uncertainty, audit scope or accounting principles. In connection with its audit
of the Corporation's financial statements for the two fiscal years ended
December 31, 1998 there were no disagreements between the Corporation and Arthur
Andersen LLP 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 Arthur Andersen LLP, would have caused it to
make reference to the subject matter of the disagreements in connection with its
reports.
REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the majority of votes cast at the Annual
Meeting in person or represented by proxy at the meeting and entitled to vote is
required to ratify the appointment of independent auditors. Abstentions and
broker non-votes do not count as an affirmative vote cast, and therefore have
the same effect as a vote "against" this proposal.
RECOMMENDATION
THE CORPORATION'S BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS A VOTE
"FOR" THE RATIFICATION OF THE APPOINTMENT OF BDO SEIDMAN, LLP AS INDEPENDENT
AUDITORS.
10
<PAGE>
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table summarizes all compensation earned by or paid to
the Corporation's Chief Executive Officer and each of the Corporation's other
executive officers whose total annual salary and bonus exceeded $100,000 in 1999
(collectively, the "named executive officers"), for services rendered in all
capacities to the Corporation during the fiscal years ended December 31, 1999,
1998 and 1997.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
<TABLE>
<CAPTION>
LONG TERM
COMPENSATION
------------
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
------------------ ---- ------ ----- ------------ -------
<S> <C> <C> <C> <C> <C>
Glenn Nortman........................ 1999 $380,000 - $ 36,273(1) -
Chief Executive Officer 1998 340,182 $ 73,000 45,541(2) -
1997 332,717 100,000 39,580(3) 6,250
Jeffrey Nortman...................... 1999 $280,317 - $ 41,439(1) -
Chief Operating Officer 1998 365,112 - 45,258(2) -
1997 332,924 - 39,290(3) 6,250
Stuart A. Belloff.................... 1999 $175,000 - $4,800(4) -
Chief Technology Officer 1998 31,827 $50,000 800(4) 40,000(5)
of Paratech Resources, Inc.
Anthony Fernandez.................... 1999 $97,763 - $3,375(4) 7,000(5)
Director of Finance 1998 20,840 - - -
Rocco C. Passafuime.................. 1999 $174,567 - $9,000(4) 28,750(5)
Vice President of Sales 1998 153,523 - 9,000(4) 18,750(5)
of Paratech Resources, Inc. 1997 120,076 $25,000 6,750(4) 18,750(5)
==================================================================================================================
</TABLE>
(1) Represents payments of approximately $18,000 for automobile expenses
and $18,273 for country club dues for Mr. Glenn Nortman, and
approximately $16,267 for automobile expenses and $25,172 for country
club dues for Mr. Jeffrey Nortman.
(2) Represents payments of approximately $18,700 for automobile expenses
and $26,841 for country club dues for Mr. Glenn Nortman, and
approximately $18,400 for automobile expenses and $26,858 for country
club dues for Mr. Jeffrey Nortman.
(3) Represents payments of approximately $18,700 for automobile expenses
and $20,880 for country club dues and personal use for Mr. Glenn
Nortman, and approximately $18,400 for automobile expenses and $20,890
for country club dues and personal use for Mr. Jeffrey Nortman.
(4) Represents automobile expenses.
(5) Reflects the number of shares of the Corporation's Common Stock
underlying such option.
All directors of the Corporation are reimbursed for all reasonable
expenses incurred by them in acting as a director or as a member of any
committee of the Board of Directors.
11
<PAGE>
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on stock options granted in
1999 to each of the named executive officers:
<TABLE>
<CAPTION>
Individual Grants Potential Realizable Value
------------------------------------------------------------------------------------- At Assumed Annual Rates
Percent of Of Stock Price
Number of Total Appreciation For Option
Securities Options Term (1)
Underlying Granted To ---------------------------
Options Employees Exercise of
Granted In Fiscal Base Price Expiration
Name (#) Year ($/Sh) (2) Date 5% ($) 10% ($)
------------------- ---------- ----------- ----------- ---------- ---------- ----------
<S> <C> <C> <C> <C> <C> <C>
Anthony
Fernandez 7,000 7.31 % $1.08 1/29/09 $ 4,754 $12,049(3)
Rocco C.
Passafuime 18,750 19.58% $2.06 3/14/09 $24,326 $61,648(4)
Rocco C.
Passafuime 10,000 10.44% $2.00 7/15/09 $12,578 $31,875(5)
</TABLE>
(1) Amounts represent hypothetical gains that could be achieved if the
option is exercised at the end of the option term. These gains are
disclosed as required under SEC rules, and are based on assumed rate of
stock appreciation of 5% and 10% compounded annually from the option's
date of grant to its date of expiration. Actual gain upon exercise, if
any, will depend on the future performance of the Corporation's Common
Stock, the optionholder's continued employment with the Corporation and
the date on which the option is exercised.
(2) Exercise price is equal to or greater than the fair market value of the
Corporation's Common Stock on the date of grant.
(3) The options vest in three annual installments beginning on January 29,
2000.
(4) The options vest in three annual installments beginning on March 14,
2000.
(5) The options vest in three annual installments beginning on July 15,
2000.
12
<PAGE>
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table provides information on stock options exercised in
1999 by each of the named executive officers and the value of each officer's
unexercised options at December 31, 1999:
<TABLE>
<CAPTION>
Number of
Securities Value Of
Underlying Unexercised In-
Unexercised The-Money
Options at Fiscal Options At Fiscal
Year-End Year End
(#) ($)(1)
Shares Acquired Exercisable/ Exercisable/
Name On Exercise (#) Value Realized($) Unexercisable Unexercisable
-------------------------- ----------------------- ----------------------- ----------------------- -----------------------
<S> <C> <C> <C> <C>
Glenn Nortman -- -- 2,500/3,750 0/0
Jeffrey Nortman -- -- 2,500/3,750 0/0
Rocco Passafuime -- -- 23,438/42,812 0/0
Stuart Belloff -- -- 13,333/26,667 19,173/38,347
Anthony Fernandez -- -- 0/7,000 0/10,066
</TABLE>
(1) Amounts shown are based on $1.438 per share, the closing price of the
Corporation's Common Stock (as reported on the Nasdaq SmallCap Market) on
December 31, 1999.
EMPLOYMENT AGREEMENTS
Messrs. Glenn and Jeffrey Nortman have employment agreements with the
Corporation described below. The initial term of Mr. Glenn Nortman's employment
agreement concludes on June 1, 2003, and the initial term of Mr. Jeffrey
Nortman's employment agreement concludes on June 1, 2002. Each of these
employment agreements automatically renews for successive one year terms unless
either the Corporation or the employee notifies the other of its intention not
to renew the employment agreement within 90 days of each anniversary date of the
agreements (I.E., by March 2 of each year such notice must be given).
Under these employment agreements, during 2000 Messrs. Glenn and
Jeffrey Nortman will receive base salaries of $360,000 and $275,000,
respectively. As part of their compensation package, Messrs. Nortman also
receive the use of an automobile and certain other fringe benefits commensurate
with their duties and responsibilities. In addition, Messrs. Nortman will be
entitled to receive a severance payment equal to 2.99 times their current annual
base salary if, among other things, without their consent, their duties,
responsibilities or position are materially diminished, if there is any material
breach of their employment agreements by the Corporation at any time during the
term thereof or if the Corporation experiences a "Change of Control" (as defined
therein).
13
<PAGE>
Mr. Stuart Belloff has an employment agreement with Paratech Resources,
Inc., a wholly owned subsidiary of the Corporation. Mr. Belloff's employment
agreement automatically renews for successive one year terms unless either
Paratech Resources or Mr. Belloff notifies the other of its intention not to
renew the employment agreement within 120 days of each anniversary date of the
agreement (i.e., by June 25 of each year such notice must be given). During 2000
Mr. Belloff will receive a base salary of $175,000, and he will be eligible to
receive an annual bonus to be set by the Board of Directors of Paratech
Resources based upon target goals established in good faith by the Board and Mr.
Belloff; provided, that each such annual bonus shall be no less than 20% of the
amount in excess of such targets established for such given year. As part of his
compensation package, Mr. Belloff also receives an automobile allowance and
certain other fringe benefits commensurate with his duties and responsibilities.
In addition, in the event that Mr. Belloff is terminated voluntarily by Paratech
Resources or Mr. Belloff terminates his employment for Good Reason (as defined
in his employment agreement), he will be entitled to receive his base salary and
medical benefits for the remainder of the term of his employment agreement as
well as the annual bonus due for the year in which such termination occurs.
KEY-MAN AND SPLIT-DOLLAR LIFE INSURANCE
The Corporation maintains key-man/split-dollar life insurance policies
on the lives of each of Glenn and Jeffrey Nortman. The death benefits under
these policies are allocated $1,000,000 towards the key-man component and
$4,000,000 towards the split-dollar component.
DIRECTOR OPTION PLAN
On October 1, 1995, the Board of Directors adopted, and the
stockholders approved, the 5B Technologies 1995 Director Option Plan (the
"Director Plan"), pursuant to which 12,500 shares of the Corporation's Common
Stock were reserved for issuance upon the exercise of options granted to the
Corporation's non-employee directors. The purpose of the Director Plan is to
encourage ownership of Common Stock by the Corporation's non-employee directors
whose initial retention and then continued services are considered essential to
the Corporation's future and to provide them with a further incentive to remain
as directors of the Corporation. To date, 1,000 such options have been granted
under the Director Plan.
The Directors Plan is administered by the Board of Directors. Directors
who are not employees of the Corporation or any of its subsidiaries are eligible
to participate in the Director Plan. The Director Plan expires in August 2005.
The Board of Directors may award, alter or discontinue the Director Plan,
subject to certain limitations.
Under the Director Plan, an eligible director will, after having served
as a director for one year, receive a formula grant of a non-qualified stock
option to purchase 500 shares of Common Stock at an exercise price equal to the
fair market value of such shares at the time of grant of such option. Each such
option is immediately exercisable for a period of 10 years from the date of
grant but generally may not be exercised more than 90 days after the date an
optionee ceases to serve as a director of the Corporation. Options granted under
the Director Plan are not transferable by the optionee other than by will, laws
of descent and distribution or as required by law.
Common Stock may be purchased upon the exercise of an option by payment
in cash or cash equivalent, through the delivery of shares of Common Stock
having a fair market value equal to the cash exercise price of the option, or
any combination of the above, subject to the discretion of the Board of
Directors.
14
<PAGE>
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Corporation does not currently have a compensation committee,
and instead, during fiscal year 1999 the entire Board of Directors of the
Corporation made determinations regarding the levels of executive
compensation. Currently, Messrs. Glenn and Jeffrey Nortman and Anthony
Fernandez are the only executive officers of the Corporation. Messrs. Glenn
and Jeffrey Nortman are the only executive officers of the Corporation with
employment agreements.
In 1999, the only compensation paid to Messrs. Glenn and Jeffrey
Nortman and Mr. Belloff was as set forth in their respective employment
agreements, and the only compensation paid to Mr. Passafuime and Mr. Fernandez
was as set forth in their respective letter agreements with the Corporation.
Insofar as the 1999 levels of compensation for all of the Corporation's
executive officers were limited to base salaries (and other compensation)
falling within the respective salary ranges established in the executives'
respective employment agreements and letter agreements, the Board of Directors
in 1999 determined the levels of such executives' compensation in accordance
with the respective terms and provisions of their agreements. The Board of
Directors continues to believe, however, that the base salaries set forth in the
respective employment agreements are appropriate in light of each executive's
level of responsibilities, individual performance and time in position, as well
as in relation to the Corporation's overall financial circumstances and
performance during 1999.
With respect to 2000, the Board of Directors has determined to
potentially award both commission-based and stock option-based compensation to
its executives, in both cases in conformity with the policies and procedures set
forth below. The Board's determination to potentially award such additional
compensation is based upon its belief that it is in the Corporation's best
interests to provide incentives to its executives to realize the Corporation's
overall strategies and objectives and to compensate them to the extent that such
strategies and objectives are met.
POTENTIAL COMMISSION-BASED COMPENSATION. The Board of Directors
believes that, in appropriate instances, commission-based compensation can be an
effective means of providing incentive to its executives. The Board of Directors
intends to look at numerous factors in determining in which circumstances to
award commission-based compensation, which factors will include the extent of
the executive's role in bringing a transaction to the Corporation and in closing
the transaction, the profitability to the Corporation of the transaction and the
perceived long-term benefits of the transaction to the Corporation's overall
strategies and objectives. In this regard, the Board of Directors does not
currently intend to establish minimum performance levels or other pre-determined
benchmarks for the award of commission-based compensation, but instead plans to
review each circumstance on its own merits to determine the level, if any, of
commission-based compensation which the Corporation will pay.
POTENTIAL STOCK-OPTION BASED COMPENSATION. Consistent with the purposes
of the Corporation's existing 1995 Stock Option Plan and the 2000 Stock
Incentive Plan (if adopted by the Corporation's shareholders at the Annual
Meeting) of ensuring the retention of existing executive personnel and providing
additional incentive to such personnel by permitting such individuals to
increase their ownership interest in the Corporation (among the other purposes
of such Plans), the Board of Directors has determined to continue, in
appropriate circumstances, issuing options to its executive officers. The Board
of Directors generally has established a flexible formula to determine the
number of stock options to be granted to its executive officers. Pursuant to
this formula, an executive officer would receive a base number of options equal
to one share of Common Stock for every $100.00 of such officer's annual base
salary. In order to permit the Board of Directors to
15
<PAGE>
most accurately reward stock options, the formula then requires that the base
number of options be subject to a "merit multiplier," the size of which will
depend upon the overall performance of the Corporation during the year in
question, the executive's performance in that year and other factors.
BOARD OF DIRECTORS
------------------
Glenn Nortman
Jeffrey Nortman
Larry Austin
William H. Kelly
PERFORMANCE GRAPH
Displayed below is a graph which compares the cumulative total
stockholder returns (including reinvestment of dividends) from the period from
January 23, 1996 (the date the Corporation became a public company) through
December 31, 1999 on an investment of $100 in (i) the Corporation's Common
Stock, (ii) the Russell 2000 Index (an index of small capitalization companies),
and (iii) the Nasdaq Non-Financial Index (an index of all Nasdaq-traded
companies, excluding financial companies). Stockholders are advised that
historical results are not necessarily indicative of future performance.
PARAMOUNT FINL CORP
COMPARISON OF 47 MONTH CUMULATIVE TOTAL RETURN*
AMONG PARAMOUNT FINANCIAL CORPORATION
THE RUSSELL 2000 INDEX AND THE NASDAQ STOCK
MARKET (U.S.) INDEX
<TABLE>
<CAPTION>
Cumulative Total Return
--------------------------------------------
1/23/96 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C>
PARAMOUNT FINANCIAL CORPORATION 100.00 60.71 71.43 15.18 41.09
RUSSELL 2000 100.00 123.08 162.20 151.73 149.48
NASDAQ NON-FINANCIAL 100.00 124.45 145.74 213.59 411.52
</TABLE>
*$100 INVESTED ON 1/23/96 IN STOCK OR INDEX-
INCLUDING REINVESTMENT OF DIVIDENDS.
FISCAL YEAR ENDING DECEMBER 31.
Research Data Group Total Return Worksheet
Begin: 1/23/96
Period End: 12/31/99
PARAMOUNT FINL CORP End: 12/31/99
<TABLE>
<CAPTION>
BEGINNING
TRANSACTION CLOSING NO. OF DIVIDEND DIVIDEND SHARES ENDING CUM. TOT.
DATE* TYPE PRICE** SHARES*** PER SHARE PAID REINVESTED SHARES RETURN
------ ----------- --------- ---------- --------- -------- ---------- ------- ---------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
23-Jan-96 Begin 3.500 28.57 28.571 100.00
31-Dec-96 Year End 2.125 28.57 28.571 60.71
31-Dec-97 Year End 2.500 28.57 28.571 71.43
31-Dec-98 Year End 0.531 28.57 28.571 15.18
31-Dec-99 End 1.438 28.57 28.571 41.09
</TABLE>
* Specified ending dates or ex-dividends dates.
** All Closing Prices and Dividends are adjusted for stock splits and
stock dividends.
*** "Begin Shares" based on $100 investment.
16
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS OF THE CORPORATION WITH
MANAGEMENT
Since the beginning of the Corporation's fiscal year ending December
31, 1999, there were no relationships or transactions to be disclosed.
COMPLIANCE WITH SECTION 16(A) OF THE SECURITIES EXCHANGE ACT
Section 16(a) of the Securities Exchange Act of 1934, as amended,
requires the Corporation's directors and executive officers, and persons who own
more than 10% of a registered class of the Corporation's equity securities, to
file with the Securities and Exchange Commission reports of ownership and
reports of changes in ownership of Common Stock and other equity securities of
the Corporation and to furnish the Corporation with copies of all Section 16(a)
forms they file. Based solely on a review of the copies of such reports
furnished to the Corporation, the Corporation believes that, during the 1999
fiscal year, all filing requirements applicable to its executive officers,
directors and greater than 10% stockholders were complied with in a timely
fashion during the fiscal year ended December 31, 1999.
2000 STOCKHOLDER PROPOSALS
In order for stockholder proposals for the 2001 Annual Meeting of
Stockholders to be eligible for inclusion in the Corporation's 2000 Proxy
Statement, they must be received by the Corporation at its principal executive
offices of One Jericho Plaza, Jericho, New York 11753 (Attn: Secretary), prior
to March 7, 2001. The Board of Directors will review any stockholder proposals
that are filed as required and will determine whether such proposals meet
applicable criteria for inclusion in the Corporation's 2001 Proxy Statement for
the Annual Meeting.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to
be presented for consideration at the Annual Meeting. Should any other matters
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy on behalf of the stockholders
they represent in accordance with their best judgment.
SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the Board of Directors.
The Corporation will bear the costs of preparing and mailing the proxy materials
to its stockholders in connection with the Annual Meeting. The Corporation will
solicit proxies by mail and the directors and certain officers and employees of
the Corporation may solicit proxies personally or by telephone or telegraph.
These persons will receive no additional compensation for such services but will
be reimbursed for reasonable out-of-pocket expenses. The Corporation also will
request brokers, dealers, banks and their nominees to solicit proxies from their
clients, where appropriate, and will reimburse them for reasonable out-of-pocket
expenses related thereto.
THE CORPORATION SHALL PROVIDE, WITHOUT CHARGE, TO ANY STOCKHOLDER, UPON
THE WRITTEN REQUEST THEREFOR, ADDITIONAL COPIES OF THE CORPORATION'S ANNUAL
REPORT ON FORM 10-K FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999. ANY SUCH
REQUEST SHALL BE DIRECTED TO 5B TECHNOLOGIES CORPORATION, ATTENTION: ANTHONY
FERNANDEZ, THE CORPORATION'S DIRECTOR OF FINANCE AT THE FOLLOWING ADDRESS: ONE
JERICHO PLAZA, JERICHO, NEW YORK 11753.
July 14, 2000 GLENN NORTMAN,
SECRETARY
17
<PAGE>
ANNEX A
-------
5B TECHNOLOGIES CORPORATION
2000 STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
5B Technologies Corporation, a Delaware corporation (the "COMPANY"),
hereby establishes the 5B TECHNOLOGIES CORPORATION 2000 STOCK INCENTIVE PLAN
(the "PLAN"). The purpose of the Plan is to promote the long-term growth and
profitability of the Company by (i) providing key people with incentives to
improve stockholder value and to contribute to the growth and financial success
of the Company, and (ii) enabling the Company to attract, retain and reward the
best-available persons.
The Plan permits the granting of stock options (including incentive
stock options qualifying under Section 422 of the Code and nonqualified stock
options), stock appreciation rights, restricted or unrestricted stock awards,
phantom stock, performance awards, other stock-based awards, or any combination
of the foregoing.
2. DEFINITIONS
Under the Plan, except where the context otherwise indicates, the
following definitions apply:
(a) "AFFILIATE" means any entity, whether now or hereafter existing,
which controls, is controlled by, or is under common control with, the Company
(including, but not limited to, joint ventures, limited liability companies and
partnerships). For this purpose, "CONTROL" means ownership of 50% or more of the
total combined voting power or value of all classes of stock or interests of the
entity.
(b) "AWARD" means any stock option, stock appreciation right, stock
award, phantom stock award, performance award or other stock-based award.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CHANGE IN CONTROL" means: (i) the acquisition (other than from the
Company) by any Person, as defined in this Section 2(d), of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of 50% or more of (A) the
then outstanding securities of the Company, or (B) the combined voting power of
the then outstanding securities of the Company entitled to vote generally in the
election of directors (the "COMPANY VOTING STOCK"); (ii) the closing of a sale
or other conveyance of all or substantially all of the assets of the Company; or
(iii) the effective time of any merger, share exchange, consolidation or other
business combination of the Company if immediately after such transaction
persons who hold a majority of the outstanding voting securities entitled to
vote generally in the election of directors of the surviving entity (or the
entity owning 100% of such surviving entity) are not persons who, immediately
prior to such transaction, held the Company Voting Stock. For purposes of this
SECTION 2(d), a "PERSON" means any individual, entity or group within the
meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act other than: employee
benefit plans sponsored or maintained by the Company and corporations controlled
by the Company.
1
<PAGE>
(e) "CODE" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
(f) "COMMON STOCK" means shares of common stock of the Company, $0.04
par value per share.
(g) "FAIR MARKET VALUE" means, with respect to a share of the Company's
Common Stock for any purpose on a particular date, the value determined by the
Administrator in good faith. However, if the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act and listed for trading on a national
securities exchange or Nasdaq market or traded in the over-the-counter market,
"FAIR MARKET VALUE" means, as applicable, (i) either the closing sale price
quoted on the New York Stock Exchange, the American Stock Exchange, the Nasdaq
National Market or the Nasdaq SmallCap Market; (ii) the average of the high bid
and low asked prices on the relevant date quoted on the Nasdaq OTC Bulletin
Board Service or by the National Quotation Bureau, Inc. or a comparable service
as determined in the Administrator's discretion; or (iii) if the Common Stock is
not quoted by any of the above, the average of the closing bid and asked prices
on the relevant date furnished by a professional market maker for the Common
Stock, or by such other source, selected by the Administrator. If no public
trading of the Common Stock occurs on the relevant date, then Fair Market Value
shall be determined as of the next preceding date on which trading of the Common
Stock does occur. For all purposes under this Plan, the term "RELEVANT DATE" as
used in this SECTION 2.1(G) means either the date as of which Fair Market Value
is to be determined or the next preceding date on which public trading of the
Common Stock occurs, as determined in the Administrator's discretion.
(h) "GRANT AGREEMENT" means a written document memorializing the terms
and conditions of an Award granted pursuant to the Plan and shall incorporate
the terms of the Plan.
3. ADMINISTRATION
(a) ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board or by such committee or committees as may be appointed by the Board from
time to time (the Board, committee or committees hereinafter referred to as the
"ADMINISTRATOR").
(b) POWERS OF THE ADMINISTRATOR. The Administrator shall have all the
powers vested in it by the terms of the Plan, such powers to include authority,
in its sole and absolute discretion, to grant Awards under the Plan, prescribe
Grant Agreements evidencing such Awards and establish programs for granting
Awards.
The Administrator shall have full power and authority to take
all other actions necessary to carry out the purpose and intent of the Plan,
including, but not limited to, the authority to: (i) determine the eligible
persons to whom, and the time or times at which Awards, shall be granted; (ii)
determine the types of Awards to be granted; (iii) determine the number of
shares to be covered by or used for reference purposes for each Award; (iv)
impose such terms, limitations, restrictions and conditions upon any such Award
as the Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards and substitute
new Awards (provided, however, that, except as provided in SECTION 7(d) of the
Plan, any modification that would materially adversely affect any outstanding
Award shall not be made without the consent of the holder); (vi) accelerate or
otherwise change the time in which an Award may be exercised or becomes payable
and to waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such Award, including, but not limited to, any
restriction or condition with respect to the vesting or exercisability of an
Award following termination of any grantee's employment or other relationship
with the Company; and (vii) establish
2
<PAGE>
objectives and conditions, if any, for earning Awards and determining whether
Awards will be paid after the end of a performance period.
The Administrator shall have full power and authority, in its
sole and absolute discretion, to administer and interpret the Plan and to adopt
and interpret such rules, regulations, agreements, guidelines and instruments
for the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
(c) NON-UNIFORM DETERMINATIONS. The Administrator's determinations
under the Plan (including, without limitation, determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Grant Agreements evidencing such Awards) need
not be uniform and may be made by the Administrator selectively among persons
who receive, or are eligible to receive, Awards under the Plan, whether or not
such persons are similarly situated.
(d) LIMITED LIABILITY. To the maximum extent permitted by law, no
member of the Administrator shall be liable for any action taken or decision
made in good faith relating to the Plan or any Award thereunder.
(e) INDEMNIFICATION. To the maximum extent permitted by law and by the
Company's charter and by-laws, the members of the Administrator shall be
indemnified by the Company in respect of all their activities under the Plan.
(f) EFFECT OF ADMINISTRATOR'S DECISION. All actions taken and decisions
and determinations made by the Administrator on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Administrator's
sole and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Company, its stockholders, any participants in the Plan
and any other employee, consultant, or director of the Company, and their
respective successors in interest.
4. SHARES AVAILABLE FOR THE PLAN
Subject to adjustments as provided in SECTION 7(d) of the Plan, the
shares of Common Stock that may be issued with respect to Awards granted under
the Plan shall not exceed an aggregate of 500,000 shares of Common Stock. The
Company shall reserve such number of shares for Awards under the Plan, subject
to adjustments as provided in SECTION 7(d) of the Plan. If any Award, or portion
of an Award, under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited or otherwise terminated, surrendered or canceled
as to any shares, or if any shares of Common Stock are surrendered to the
Company in connection with any Award (whether or not such surrendered shares
were acquired pursuant to any Award), or if any shares are withheld by the
Company, the shares subject to such Award and the surrendered and withheld
shares shall thereafter be available for further Awards under the Plan;
provided, however, that any such shares that are surrendered to or withheld by
the Company in connection with any Award or that are otherwise forfeited after
issuance shall not be available for purchase pursuant to incentive stock options
intended to qualify under Code section 422.
Subject to adjustments as provided in Section 7(d) of the Plan, the
maximum number of shares of Common Stock subject to Awards of any combination
that may be granted during any one fiscal year of the Company to any one
individual under this Plan shall be limited to 50,000 shares. Such
per-individual limit shall not be adjusted to effect a restoration of shares of
Common Stock with respect to which the related Award is terminated, surrendered
or canceled.
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5. PARTICIPATION
Participation in the Plan shall be open to all employees, officers, and
directors of, and other individuals providing bona fide services to or for, the
Company, or of any Affiliate of the Company, as may be selected by the
Administrator from time to time. The Administrator may also grant Awards to
individuals in connection with hiring, retention or otherwise, prior to the date
the individual first performs services for the Company or an Affiliate, provided
that such Awards shall not become vested prior to the date the individual first
performs such services.
6. AWARDS
The Administrator, in its sole discretion, shall establish the terms of
all Awards granted under the Plan. Awards may be granted individually or in
tandem with other types of Awards. All Awards are subject to the terms and
conditions provided in the Grant Agreement. The Administrator may permit or
require a recipient of an Award to defer such individual's receipt of the
payment of cash or the delivery of Common Stock that would otherwise be due to
such individual by virtue of the exercise of, payment of, or lapse or waiver of
restrictions respecting, any Award. If any such payment deferral is required or
permitted, the Administrator shall, in its sole discretion, establish rules and
procedures for such payment deferrals.
(a) STOCK OPTIONS. The Administrator may from time to time grant to
eligible participants Awards of incentive stock options, as that term is defined
in Section 422 of the Code, or nonqualified stock options; provided, however,
that Awards of incentive stock options shall be limited to employees of the
Company or of any current or hereafter existing "parent corporation" or
"subsidiary corporation," as defined in Sections 424(e) and (f) of the Code,
respectively, of the Company. Options intended to qualify as incentive stock
options under Section 422 of the Code must have an exercise price at least equal
to Fair Market Value as of the date of grant, but nonqualified stock options may
be granted with an exercise price less than Fair Market Value. No stock option
shall be an incentive stock option unless so designated by the Administrator at
the time of grant or in the Grant Agreement evidencing such stock option.
(b) STOCK APPRECIATION RIGHTS. The Administrator may from time to time
grant to eligible participants Awards of stock appreciation rights ("SAR"). An
SAR entitles the grantee to receive, subject to the provisions of the Plan and
the Grant Agreement, a payment having an aggregate value equal to the product of
(i) the excess of (A) the Fair Market Value on the exercise date of one share of
Common Stock over (B) the base price per share specified in the Grant Agreement,
times (ii) the number of shares specified by the SAR, or portion thereof, which
is exercised. Payment by the Company of the amount receivable upon any exercise
of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator. If upon settlement of the exercise of an SAR a grantee is to
receive a portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair Market Value of
a share of Common Stock on the exercise date. No fractional shares shall be used
for such payment and the Administrator shall determine whether cash shall be
given in lieu of such fractional shares or whether such fractional shares shall
be eliminated.
(c) STOCK AWARDS. The Administrator may from time to time grant
restricted or unrestricted stock Awards to eligible participants in such
amounts, on such terms and conditions, and for such consideration, including no
consideration or such minimum consideration as may be required by law, as it
shall determine. A stock Award may be paid in Common Stock, in cash, or in a
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator.
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(d) PHANTOM STOCK. The Administrator may from time to time grant Awards
to eligible participants denominated in stock-equivalent units ("PHANTOM STOCK")
in such amounts and on such terms and conditions as it shall determine. Phantom
stock units granted to a participant shall be credited to a bookkeeping reserve
account solely for accounting purposes and shall not require a segregation of
any of the Company's assets. An Award of phantom stock may be settled in Common
Stock, in cash, or in a combination of Common Stock and cash, as determined in
the sole discretion of the Administrator. Except as otherwise provided in the
applicable Grant Agreement, the grantee shall not have the rights of a
stockholder with respect to any shares of Common Stock represented by a phantom
stock unit solely as a result of the grant of a phantom stock unit to the
grantee.
(e) PERFORMANCE AWARDS. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or more
performance goals established by the Administrator. Performance awards may be
paid by the delivery of Common Stock or cash, or any combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Performance
goals established by the Administrator may be based on the Company's or an
Affiliate's operating income or one or more other business criteria selected by
the Administrator that apply to an individual or group of individuals, a
business unit, or the Company or an Affiliate as a whole, over such performance
period as the Administrator may designate.
(f) OTHER STOCK-BASED AWARDS. The Administrator may from time to time
grant other stock-based awards to eligible participants in such amounts, on such
terms and conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall determine.
Other stock-based awards may be denominated in cash, in Common Stock or other
securities, in stock-equivalent units, in stock appreciation units, in
securities or debentures convertible into Common Stock, or in any combination of
the foregoing, and may be paid in Common Stock or other securities, in cash, or
in a combination of Common Stock or other securities and cash, all as determined
in the sole discretion of the Administrator.
7. MISCELLANEOUS
(a) WITHHOLDING OF TAXES. Grantees and holders of Awards shall pay to
the Company or its Affiliate, or make provision satisfactory to the
Administrator for payment of, any taxes required to be withheld in respect of
Awards under the Plan no later than the date of the event creating the tax
liability. The Company or its Affiliate may, to the extent permitted by law,
deduct any such tax obligations from any payment of any kind otherwise due to
the grantee or holder of an Award. In the event that payment to the Company or
its Affiliate of such tax obligations is made in shares of Common Stock, such
shares shall be valued at Fair Market Value on the applicable date for such
purposes.
(b) LOANS. The Company or its Affiliate may make or guarantee loans to
grantees to assist grantees in exercising Awards and satisfying any withholding
tax obligations.
(c) TRANSFERABILITY. Except as otherwise determined by the
Administrator, and in any event in the case of an incentive stock option or a
stock appreciation right granted with respect to an incentive stock option, no
Award granted under the Plan shall be transferable by a grantee otherwise than
by will or the laws of descent and distribution. Unless otherwise determined by
the Administrator in accord with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by
the grantee's guardian or legal representative.
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(d) ADJUSTMENTS FOR CORPORATE TRANSACTIONS AND OTHER EVENTS.
(i) STOCK DIVIDEND, STOCK SPLIT AND REVERSE STOCK SPLIT. In
the event of a stock dividend of, or stock split or reverse stock split
affecting, the Common Stock, (A) the maximum number of shares of such Common
Stock as to which Awards may be granted under this Plan and the maximum number
of shares with respect to which Awards may be granted during any one fiscal year
of the Company to any individual, as provided in SECTION 4 of the Plan, and (B)
the number of shares covered by and the exercise price and other terms of
outstanding Awards, shall, without further action of the Board, be adjusted to
reflect such event unless the Board determines, at the time it approves such
stock dividend, stock split or reverse stock split, that no such adjustment
shall be made. The Administrator may make adjustments, in its discretion, to
address the treatment of fractional shares and fractional cents that arise with
respect to outstanding Awards as a result of the stock dividend, stock split or
reverse stock split.
(ii) NON-CHANGE IN CONTROL TRANSACTIONS. Except with respect
to the transactions set forth in SECTION 7(d)(i), in the event of any change
affecting the Common Stock, the Company or its capitalization, by reason of a
spin-off, split-up, dividend, recapitalization, merger, consolidation or share
exchange, other than any such change that is part of a transaction resulting in
a Change in Control, the Administrator, in its discretion and without the
consent of the holders of the Awards, shall make (A) appropriate adjustments to
the maximum number and kind of shares reserved for issuance or with respect to
which Awards may be granted under the Plan, in the aggregate and with respect to
any individual during any one fiscal year of the Company, as provided in SECTION
4 of the Plan, and (B) any adjustments in outstanding Awards, including, but not
limited to, reducing the number, kind and price of securities subject to Awards.
(iii) CHANGE IN CONTROL TRANSACTIONS. In the event of any
transaction resulting in a Change in Control, outstanding stock options and
SAR's under this Plan will terminate upon the effective time of such Change in
Control unless provision is made in connection with the transaction for the
continuation or assumption of such Awards by, or for the substitution of the
equivalent awards of, the surviving or successor entity or a parent thereof. In
the event of such termination, the holders of stock options and SAR's under the
Plan will be permitted, for a period of at least twenty days prior to the
effective time of the Change in Control, to exercise all portions of such Awards
that are then exercisable or which become exercisable upon or prior to the
effective time of the Change in Control; provided, however, that any such
exercise of any portion of such an Award which becomes exercisable as a result
of such Change in Control shall be deemed to occur immediately prior to the
effective time of such Change in Control.
(iv) POOLING OF INTERESTS TRANSACTIONS. In connection with any
business combination authorized by the Board, the Administrator, in its sole
discretion and without the consent of the holders of the Awards, may make any
modifications to any Awards, including, but not limited to, cancellation,
forfeiture, surrender or other termination of the Awards, in whole or in part,
regardless of the vested status of the Award, but solely to the extent necessary
to facilitate the compliance of such transaction with requirements for treatment
as a pooling of interests transaction for accounting purposes under generally
accepted accounting principles.
(v) UNUSUAL OR NONRECURRING EVENTS. The Administrator is
authorized to make, in its discretion and without the consent of holders of
Awards, adjustments in the terms and conditions of, and the criteria included
in, Awards in recognition of unusual or nonrecurring events affecting the
Company, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations or accounting principles, whenever the
Administrator determines that such adjustments are appropriate in order to
prevent dilution or enlargement of the benefits or potential benefits intended
to be made available under the Plan.
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<PAGE>
(e) SUBSTITUTION OF AWARDS IN MERGERS AND ACQUISITIONS. Awards may be
granted under the Plan from time to time in substitution for Awards held by
employees, officers, consultants or directors of entities who become or are
about to become employees, officers, consultants or directors of the Company or
an Affiliate as the result of a merger or consolidation of the employing entity
with the Company or an Affiliate, or the acquisition by the Company or an
Affiliate of the assets or stock of the employing entity. The terms and
conditions of any substitute Awards so granted may vary from the terms and
conditions set forth herein to the extent that the Administrator deems
appropriate at the time of grant to conform the substitute Awards to the
provisions of the awards for which they are substituted.
(f) TERMINATION, AMENDMENT AND MODIFICATION OF THE PLAN. The Board may
terminate, amend or modify the Plan or any portion thereof at any time.
(g) NON-GUARANTEE OF EMPLOYMENT OR SERVICE. Nothing in the Plan or in
any Grant Agreement thereunder shall confer any right on an individual to
continue in the service of the Company or shall interfere in any way with the
right of the Company to terminate such service at any time with or without cause
or notice and whether or not such termination results in (i) the failure of any
Award to vest, (ii) the forfeiture of any unvested or vested portion of any
Award, and/or (iii) any other adverse effect on the individual's interests under
the Plan.
(h) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall
create or be construed to create a trust or separate fund of any kind or a
fiduciary relationship between the Company and a grantee or any other person. To
the extent that any grantee or other person acquires a right to receive payments
from the Company pursuant to an Award, such right shall be no greater than the
right of any unsecured general creditor of the Company.
(i) GOVERNING LAW. The validity, construction and effect of the Plan,
of Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating to
the Plan or such Grant Agreements, and the rights of any and all persons having
or claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State
New York, without regard to its conflict of laws principles.
(j) EFFECTIVE DATE; TERMINATION DATE. The Plan is effective as of the
date on which the Plan is adopted by the Board, subject to approval of the
stockholders within twelve months before or after such date. No Award shall be
granted under the Plan after the close of business on the day immediately
preceding the tenth anniversary of the effective date of the Plan, or if
earlier, the tenth anniversary of the date this Plan is approved by the
stockholders. Subject to other applicable provisions of the Plan, all Awards
made under the Plan prior to such termination of the Plan shall remain in effect
until such Awards have been satisfied or terminated in accordance with the Plan
and the terms of such Awards.
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5B TECHNOLOGIES CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
AUGUST 4, 2000
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of 5B Technologies Corporation, a Delaware
corporation (the "Company"), acknowledges receipt of the Notice of Annual
Meeting of Stockholders, Proxy Statement, dated July 10, 2000, and 1999 Annual
Report, and hereby constitutes and appoints Glenn Nortman and Jeffrey Nortman as
proxies, with power to act without the other and with power of substitution and
re-substitution, and hereby authorizes them to represent and vote, as designated
on the other side, all the shares of stock of 5B Technologies Corporation
standing in the name of the undersigned with all powers which the undersigned
would possess if present at the Annual Meeting of Stockholders of the Company to
be held August 4, 2000 or any adjournment thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS WHICH RECOMMENDS A
VOTE "FOR" PROPOSALS NO. 1, 2, AND 3.
1. The election of four (4) directors nominated by the Board of
Directors:
|_| FOR all nominees listed below |_| WITHHOLD AUTHORITY to vote for
(except as indicated) all nominees listed below
Glenn Nortman, Jeffrey Nortman,
James E. Hillman, William H. Kelly
(Instruction: To withhold authority to vote for any individual
nominee or nominees write such nominee's or nominees' names in
the space provided below)
2. The adoption of the Corporation's 2000 Stock Incentive Plan:
|_| FOR |_| AGAINST |_| ABSTAIN
3. The ratification of the appointment of BDO Seidman, LLP as the
Corporation's independent auditors for fiscal 2000:
|_| FOR |_| AGAINST |_| ABSTAIN
4. Other matters as may properly come before the Meeting or any
adjournment or adjournments thereof.
This Proxy, when properly executed, will be voted as directed. If no
direction is indicated, the Proxy will be voted FOR each of the above proposals.
Dated: , 2000
----------------
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Please sign your name exactly as it appears
hereon. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title as it appears hereon.
When signing as joint tenants, all parties
in the joint tenancy must sign. When a proxy
is given by a corporation, it should be
signed by an authorized officer and the
corporate seal affixed. No postage is
required if returned in the enclosed
envelope and mailed in the United States.
8
