SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934
Filed by the Registrant |X|1
Filed by a Party other than the Registrant |_|2
Check the appropriate box:
|X| Preliminary Proxy Statement
|_| Confidential, for Use of the
Commission Only (as permitted
by Rule 14a-6(e) (2))
(2))
|_| Definitive Proxy Statement
|_| Definitive Additional Materials
|_| Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14a-12
AlphaNet Solutions, Inc.
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
- --------------------------------------------------------------------------------
Payment of Filing Fee (Check the appropriate box):
|X| No fee required.
|_| Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee
is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
|_| Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
|_| Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number, or
the form or schedule and the date of its filing.
- --------------------------------------------------------------------------------
(1) Amount Previously Paid:
- --------------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement no.:
- --------------------------------------------------------------------------------
(3) Filing Party:
- --------------------------------------------------------------------------------
(4) Date Filed:
- --------------------------------------------------------------------------------
<PAGE>
ALPHANET SOLUTIONS, INC.
7 Ridgedale Avenue
Cedar Knolls, New Jersey 07927
April 17, 2000
To Our Shareholders:
You are most cordially invited to attend the 2000 Annual Meeting of
Shareholders of AlphaNet Solutions, Inc. at 9:00 a.m., local time, on Friday,
May 19, 2000 (the "Meeting") at the offices of the Company, 7 Ridgedale Avenue,
Cedar Knolls, New Jersey.
The Notice of Meeting and Proxy Statement on the following pages
describe the matters to be presented at the Meeting.
It is important that your shares be represented at this Meeting to
assure the presence of a quorum. Whether or not you plan to attend the Meeting,
we hope that you will assure that your shares are represented at the Meeting by
signing, dating and returning your proxy as soon as possible in the enclosed
envelope, which requires no postage if mailed in the United States. Your shares
will be voted in accordance with the instructions on your proxy.
Thank you for your continued support.
Sincerely,
Stan Gang
Chairman of the Board
<PAGE>
ALPHANET SOLUTIONS, INC.
7 Ridgedale Avenue
Cedar Knolls, New Jersey 07927
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To Be Held May 19, 2000
The Annual Meeting of Shareholders (the "Meeting") of AlphaNet
Solutions, Inc., a New Jersey corporation (the "Company"), will be held at the
offices of the Company, 7 Ridgedale Avenue, Cedar Knolls, New Jersey, on Friday,
May 19, 2000, at 9:00 a.m., local time, for the following purposes:
(1) To elect five directors to serve until the next Annual Meeting of
Shareholders and until their respective successors shall have been duly elected
and qualified;
(2) To ratify an amendment to the 1995 Stock Plan;
(3) To approve the issuance of warrants to Fallen Angel Capital LLC;
(4) To ratify the appointment of PricewaterhouseCoopers LLP as independent
accountants for the year ending December 31, 2000; and
(5) To transact such other business as may properly come before the Meeting or
any adjournment or adjournments thereof.
Holders of Common Stock of record at the close of business on March
31, 2000 are entitled to notice of and to vote at the Meeting, or any
adjournment or adjournments thereof. A complete list of such shareholders will
be open to the examination of any shareholder at the Meeting. The Meeting may be
adjourned from time to time without notice other than by announcement at the
Meeting.
IT IS IMPORTANT THAT YOUR SHARES BE REPRESENTED REGARDLESS OF THE
NUMBER OF SHARES YOU MAY HOLD. WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING IN
PERSON, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY CARD AND MAIL IT
PROMPTLY IN THE ENCLOSED RETURN ENVELOPE. THE PROMPT RETURN OF PROXIES WILL
ENSURE A QUORUM AND SAVE THE COMPANY THE EXPENSE OF FURTHER SOLICITATION. EACH
PROXY GRANTED MAY BE REVOKED BY THE SHAREHOLDER APPOINTING SUCH PROXY AT ANYTIME
BEFORE IT IS VOTED. IF YOU RECEIVE MORE THAN ONE PROXY CARD BECAUSE YOUR SHARES
ARE REGISTERED IN DIFFERENT NAMES OR ADDRESSES, EACH SUCH PROXY CARD SHOULD BE
SIGNED AND RETURNED TO ENSURE THAT ALL OF YOUR SHARES WILL BE REPRESENTED.
By Order of the Board of Directors,
Jack P. Adler, Secretary
Cedar Knolls, New Jersey
April 17, 2000
<PAGE>
The Company's 1999 Annual Report to Shareholders accompanies this Proxy
Statement.
ALPHANET SOLUTIONS, INC.
7 Ridgedale Avenue
Cedar Knolls, New Jersey 07927
----------------------------
PROXY STATEMENT
----------------------------
This Proxy Statement is furnished in connection with the solicitation
by the Board of Directors of AlphaNet Solutions, Inc. (the "Company") of proxies
to be voted at the Annual Meeting of Shareholders of the Company to be held on
Friday, May 19, 2000 (the "Meeting"), at the offices of the Company, 7 Ridgedale
Avenue, Cedar Knolls, New Jersey at 9:00 a.m., local time, and at any
adjournment or adjournments thereof. Holders of record of common stock of the
Company, $0.01 par value ("Common Stock"), as of the close of business on March
31, 2000, will be entitled to notice of and to vote at the Meeting and any
adjournment or adjournments thereof. As of that date, there were 6,313,232
shares of Common Stock issued and outstanding and entitled to vote. Each share
of Common Stock is entitled to one vote on any matter presented at the Meeting.
If proxies in the accompanying form are properly executed and
returned, the shares of Common Stock represented thereby will be voted in the
manner specified therein. If not otherwise specified, the shares of Common Stock
represented by the proxies will be voted: (i) FOR the election of the five
nominees for director named in this Proxy Statement; (ii) FOR the proposal to
amend the 1995 Stock Plan (the "Plan"); (iii) FOR the issuance of warrants to
Fallen Angel Capital LLC; (iv) FOR the ratification of the appointment of
PricewaterhouseCoopers LLP as the Company's auditors for the year ending
December 31, 2000; and (v) in the discretion of the persons named in the
enclosed form of proxy, on any other matters which may properly come before the
Meeting or any adjournment or adjournments thereof. Any shareholder who has
submitted a proxy may revoke it at any time before it is voted, by giving notice
to the Secretary of the Company or by submitting a duly executed proxy bearing a
later date or by electing to vote in person at the Meeting. The mere presence at
the Meeting of the person appointing a proxy does not, however, revoke the
appointment.
The presence, in person or by proxy, of holders of shares of Common
Stock representing a majority of the shares of Common Stock outstanding
constitutes a quorum. The affirmative vote by the holders of a plurality of the
shares of Common Stock represented at the Meeting is required for the election
of directors, provided a quorum is present in person or by proxy. All actions
proposed herein other than the election of directors may be taken upon the
affirmative vote of a majority of the votes cast at the Meeting, provided a
quorum is present in person or by proxy.
Abstentions are included in the shares present at the Meeting for
purposes of determining whether a quorum is present, but are not counted as a
vote cast at the Meeting and thus have no effect on the outcome. Broker
non-votes (when shares are represented at the Meeting by a proxy specifically
conferring only limited authority to vote on certain matters and no authority to
vote on other matters) are included in the determination of the number of shares
represented at the Meeting for purposes of determining whether a quorum is
present but are not counted for purposes of determining whether a proposal has
been approved and thus have no effect on the outcome.
This Proxy Statement, together with the related proxy card, is being
mailed to the shareholders of the Company on or about April 17, 2000. The Annual
Report to Shareholders of the Company for the year ended December 31, 1999,
including financial statements (the "Annual Report") is being mailed together
with this Proxy Statement to all shareholders of record as of March 31, 2000. In
addition, the Company has provided brokers, dealers, banks, voting trustees and
their nominees, at the Company's expense, with additional copies of the Annual
Report so that such record holders could supply such materials to beneficial
owners determined as of March 31, 2000.
1
<PAGE>
ITEM I
ELECTION OF DIRECTORS
General. At the Meeting, five directors, constituting the entire
Board of Directors, are to be elected to hold office until the next annual
meeting of shareholders and until their successors are duly elected and
qualified. In the event any of the nominees should become unavailable or unable
to serve as a director, the persons named in the accompanying proxy intend to
vote for such other person or persons, as the Board of Directors may designate
as a substitute nominee. The Board of Directors has no reason to believe that
the nominees named will be unable to serve if elected. Each of the nominees has
consented to being named in this Proxy Statement and to serve if elected.
Set forth below is a brief description of each nominee for director,
including name, age and principal occupation or employment during the past five
years.
Nominees for Election at the Meeting
------------------------------------
STAN GANG
Stan Gang, 65, founded the Company and is currently Chairman of the
Board of the Company. From 1984 through June 1999, Mr. Gang served as Chairman
of the Board and Chief Executive Officer of the Company. Mr. Gang has nearly 40
years of experience in the computer sales and services industry. Prior to
joining the Company, Mr. Gang was employed in various management capacities by
IBM Corporation, MAI Equipment Corporation and Memorex Telex.
DONALD A. DEIESO
Donald A. Deieso, 50, has been President and Chief Executive Officer
of the Company since June 1999. From 1997 to 1999, Dr. Deieso was President and
Chief Executive Officer of EA Engineering, Science, and Technology, Inc., a
leading international energy and environmental management services firm. From
1989 to 1997, Dr. Deieso held several senior executive management positions at
Air & Water Technologies Corporation ("AWT"), where he was President and Chief
Executive Officer of AWT's two principal operating units. Dr. Deieso holds a
Ph.D. degree from Rutgers University. Dr. Deieso has been a Director of the
Company since May 1999.
MICHAEL GANG
Michael Gang, 33, joined the Company in April 1989 and, since then,
has been a National Account Manager/Sector Director of the Company. Mr. Gang has
been a Director of the Company since September 1995. From September 1995 through
October 1997, he also served as Secretary of the Company.
2
<PAGE>
IRA COHEN
Ira Cohen, 48, has, since 1988, served as a Managing Director of
Updata Capital, Inc., an investment banking firm focused on mergers and
acquisitions in the information technology industry. Mr. Cohen founded Updata
Software, Inc. and, from 1986 to 1988, served as that company's Chief Financial
Officer. Mr. Cohen is also a director of Computer Learning Centers, Inc. and
Datastream Systems, Inc. Mr. Cohen holds a Bachelor of Science degree in
Accounting from the City University of New York and is a registered Certified
Public Accountant in New York and New Jersey. Mr. Cohen has been a Director of
the Company since 1999.
THOMAS F. DORAZIO
Thomas F. Dorazio, 42, has, since 1995, been Vice President of
Information Services for the New York State Electric and Gas Corporation
("NYSE&G") and, since 1998, Chairman of the Board of Energy East
Telecommunications, Inc., a wholly-owned subsidiary of NYSE&G. From 1994 to
1995, Mr. Dorazio served as Executive Assistant to the Executive Vice President
of NYSE&G. Mr. Dorazio has been a Director of the Company since 1999.
The Board of Directors recommends that shareholders vote "FOR" each
of the nominees for the Board of Directors.
Committees and Meetings of the Board
- ------------------------------------
In fiscal 1999, the Board of Directors held six meetings, the Audit
Committee held two meetings, the Compensation Committee held one meeting, the
Options Committee held one meeting and the Planning Committee held no meetings.
There is no standing nominating committee. Each director attended 100% of the
meetings of the Board of Directors and of the committees of which he was a
member.
Audit Committee. The Audit Committee reviews the results and scope of
the audit and other services provided by the Company's independent accountants.
The current members of the Audit Committee are Messrs. Cohen (Chairperson) and
Dorazio.
Compensation Committee. The Compensation Committee approves salaries
and certain incentive compensation for management and key employees of the
Company and administers the Employee Stock Purchase Plan. The current members of
the Compensation Committee are Messrs. Dorazio (Chairperson), (Stanley) Gang and
Deieso.
Options Committee. The Options Committee administers the Company's
1995 Stock Plan. The current members of the Options Committee are Messrs. Cohen
(Chairperson) and Dorazio.
Planning Committee. Currently, Dr. Deieso is the only member of the
Planning Committee.
3
<PAGE>
Compensation of Directors
- -------------------------
The Company's non-employee directors currently receive compensation
of $1,500 per meeting for each regularly scheduled meeting attended. In
addition, each of the non-employee directors who serve on the Audit, Option
and/or Compensation Committees of the Board of Directors receives a $500 fee per
meeting attended for each regularly-scheduled committee meeting held on a day or
days other than the day of a regularly-scheduled Board of Directors meeting. The
Company also provides reimbursement to directors for reasonable and necessary
expenses incurred in connection with attendance at meetings of the Board of
Directors or its Committees.
Non-employee directors also receive options to purchase 5,000 shares
of Common Stock upon the date first elected a director, and an additional 5,000
shares of Common Stock upon the date of re-election at the annual meeting of
shareholders pursuant to the Company's 1995 Non-Employee Director Stock Option
Plan. Directors who are employees of the Company are eligible to participate in
the Company's 1995 Stock Plan.
EXECUTIVE OFFICERS
The following table identifies the current executive officers of the
Company:
<TABLE>
<CAPTION>
In Current
Age Capacities in Which Served Position Since
--- -------------------------- --------------
<S> <C> <C> <C>
Stan Gang 65 Chairman of the Board June 1984
Donald Deieso 50 President and Chief Executive Officer June 1999
John Centinaro 44 Chief Operating Officer November 1998
Dennis Samuelson 43 Senior Vice President - November 1997
Professional Development
Jack P. Adler 46 Senior Vice President, March 1999
Secretary and General Counsel
David M. Gordon 44 Vice President, Treasurer and May 1999
Chief Financial Officer
</TABLE>
4
<PAGE>
For biographical information concerning Messrs. Gang and Deieso, see
Item 1 "Election of Directors" beginning on page 2.
JOHN CENTINARO
John Centinaro joined the Company in February 1992 and has served as
the Company's Chief Operating Officer since November 1998. Prior thereto, from
1997 to 1998, Mr. Centinaro served as Senior Vice President - Operations and,
earlier, in various management capacities. Prior to joining the Company, from
1978 to 1992, Mr. Centinaro was Regional Business Operations Manager and
National Account Service Manager with Memorex Telex Corporation. Mr. Centinaro
is a member of the Association for Field Service Management.
DENNIS SAMUELSON
Dennis Samuelson joined the Company in October 1989 and, since 1997,
has served as Senior Vice President - Professional Development. Mr. Samuelson's
previous positions with the Company included Director, Education Services from
1995 to 1996, and Vice President, Education Services from 1996 to 1997. Prior to
joining the Company, Mr. Samuelson held various staff management positions with
AT&T and was Manager of the AT&T Information Center, which provided programming
and support to AT&T's General Business Systems Division. Mr. Samuelson is a
member of the Certification Advisory Board of Sylvan Prometric. In addition, he
is a former President and is currently a director of the Information Technology
Training Association.
JACK P. ADLER
Jack P. Adler has been Senior Vice President, Secretary and General
Counsel of the Company since March 1999. Prior thereto, from 1997 to 1999, Mr.
Adler was Senior Vice President, Secretary and General Counsel of EA
Engineering, Science and Technology, Inc. Previously, from 1983-1996, Mr. Adler
was in-house counsel for several leading corporations in the telecommunications,
computer, and environmental industries. Mr. Adler serves on the Client Advisory
Board of the American Law Firm Association and is a member of the New Jersey
General Counsels Group.
DAVID M. GORDON
David M. Gordon joined the Company in May 1999 and currently serves
as Vice President, Treasurer and Chief Financial Officer. Prior thereto, from
1997-1998, Mr. Gordon served as the Chief Financial Officer of Viva
International Group. Previously, from 1991-1997, Mr. Gordon was Chief Financial
Officer of Lantis Eyeware Corporation.
Executive officers of the Company are elected annually by the Board
of Directors and serve until their successors are duly elected and qualified.
5
<PAGE>
Section 16(a) Beneficial Ownership Reporting Compliance
- -------------------------------------------------------
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Company's directors, executive officers and
shareholders who beneficially own more than 10% of any class of equity
securities of the Company registered pursuant to Section 12 of the Exchange Act
(the "Reporting Persons") to file initial reports of ownership and reports of
changes in ownership with respect to the Company's equity securities with the
Securities and Exchange Commission (the "SEC"). All Reporting Persons are
required by SEC regulation to furnish the Company with copies of all reports
that such Reporting Persons file with the SEC pursuant to Section 16(a).
Based on a review of these filings, the Company believes that all
filings were timely other than a Form 5 which was inadvertently filed late on
behalf of Michael Gang in connection with prior stock option grants.
6
<PAGE>
EXECUTIVE COMPENSATION
Summary Compensation Table. The following table sets forth
compensation information for the Company's Chief Executive Officer and the four
other most highly compensated executive officers of the Company.
<TABLE>
<CAPTION>
SUMMARY COMPENSATION TABLE
Long-Term
Annual Compensation Compensation
Awards
- ------------------------------------------------------------------------------------------------------------------------------------
Other Annual Securities All Other
Name and Principal Fiscal Compensation Underlying Compensation
Position Year Salary Bonus ($) (3)($) Options (#) (4)($)
- ------------------------------------- ---------- ----------- ------------- ---------------------- -------------------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stan Gang, 1999 250,000 - - - 2,308
Chairman of the Board 1998 250,000 - - - 2,480
1997 250,000 - - - 3,000
Donald A. Deieso (1) 1999 128,307 96,000 - 105,000 -
President and Chief Executive
Officer
John Centinaro 1999 180,000 54,000 - 15,000 2,736
Chief Operating Officer 1998 148,590 - - - 3,200
1997 124,167 40,000 - 20,000 2,883
Dennis Samuelson 1999 165,000 23,100 - 20,000 3,200
Senior Vice President - 1998 153,846 - - - 2,967
Professional Development 1997 150,000 40,000 - 7,500 3,000
Jack P. Adler (2) 1999 122,308 45,000 - 20,000 2,529
Senior Vice President,
Secretary and General
Counsel
</TABLE>
(1) Dr. Deieso joined the Company in June 1999 as President and Chief Executive
Officer.
(2) Mr. Adler joined the Company in March 1999 as Senior Vice President,
Secretary and General Counsel.
(3) The costs of certain benefits are not included because they did not exceed
the lesser of $50,000 or 10% of the total annual salary and bonus as reported
above.
(4) Represents 401(k) contributions made by the Company on behalf of each named
executive officer.
7
<PAGE>
STOCK OPTION GRANTS IN LAST FISCAL YEAR
The following table sets forth information regarding stock options
granted during fiscal 1999 pursuant to the Company's 1995 Stock Plan to each of
the named executive officers.
<TABLE>
<CAPTION>
Potential
Realizable
Value At Assumed
Annual Rates of
Stock Price
Number of Appreciation
Securities % of Total Options for Option
Underlying Granted to Exercise or Term ($)(4)
Options Employees In Base Price Expiration ---------------
Name Granted (1)(#) Fiscal Year ($/Sh) Date 5%($) 10%($)
- ------------------- ----------------------- -------------------------- --------------- ------------- --------------- --------------
<S> <C> <C> <C> <C> <C> <C>
Stan Gang - - - - - -
Donald A. Deieso 5,000 (2) 3.94 5/28/09 12,389 31,397
100,000 20.1% 4.25 6/29/09 267,280 677,341
John Centinaro 15,000 3.0% 4.38 6/08/09 41,318 104,709
Dennis Samuelson 20,000 4.0% 4.38 6/08/09 55,091 139,612
Jack P. Adler 20,000 (3) 4.0% 4.38 6/08/09 55,091 139,612
</TABLE>
(1) Except for certain options granted in June 1999 (representing 100,000,
15,000, 20,000 and 10,000 option shares for Messrs. Deieso, Centinaro, Samuelson
and Adler, respectively), options are exercisable in 20% increments commencing
one year from date of grant. Options granted in June 1999 vested 25% immediately
upon grant, with the balance vesting in three equal annual installments.
(2) 5,000 fully vested options were granted to Dr. Deieso in May 1999 under the
Company's 1995 Non-Employee Director Stock Option Plan.
(3) The vesting of 5,000 of Mr. Adler's options was accelerated by the Company's
Board of Directors in May 1999.
(4) Represents the difference between (i) the market value of the Common Stock
for which the option may be exercised, assuming that the market value of the
Common Stock on the date of grant appreciates in value to the end of the
ten-year option term at rates of 5% and 10% per annum, respectively, and (ii)
the exercise price of the option.
8
<PAGE>
Option Exercises and Year-End Option Holdings. The following table
sets forth information regarding option exercises during fiscal 1999 as well as
fiscal 1999 year-end option holdings for each named executive officer.
<TABLE>
<CAPTION>
AGGREGATE OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
Shares Acquired Number of Securities
Acquired Underlying Unexercised Value of Unexercised In-The-
on Exercise Value Options At Fiscal Year-End Money Options At Fiscal
Name (#) Realized ($) (#)(1) Year-End ($)(2)
- ---------------------- ----------------- ---------------- ------------------------------------ ------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Stan Gang - - - - - -
Donald A. Deieso - - 30,000 75,000 615 -
John Centinaro - - 22,750 27,250 - -
Dennis Samuelson - - 25,500 24,500 - -
Jack P. Adler - - 7,500 12,500 - -
</TABLE>
(1) Except for certain options granted in June 1999 (representing 100,000,
15,000, 20,000 and 10,000 option shares for Messrs. Deieso, Centinaro, Samuelson
and Adler, respectively), options are exercisable in 20% increments commencing
one year from date of grant. Options granted in June 1999 vested 25% immediately
upon grant, with the balance vesting in three equal annual installments.
(2) Based on a year-end fair market value of the underlying securities equal to
$4.063 per share.
9
<PAGE>
Employment Contracts, Termination of Employment and Change-of-Control
Arrangements
- ------------
The following executive officers of the Company entered into
three-year employment agreements with the Company, which commenced October 1,
1995 and expired on September 30, 1998. The agreements were not renewed. Under
the terms of their respective agreements, Messrs. Gang, Centinaro and Samuelson
were entitled to an annual base salary of $250,000, $140,000 and $150,000,
respectively, and bonuses, the amounts and payment of which were within the
discretion of the Board of Directors or the Compensation Committee.
The agreements required each of the executives to maintain the
confidentiality of Company information and assign inventions to the Company.
These executive officers agreed that, during the term of their agreements and
for a period of 18 months thereafter, provided that such executive officers were
being compensated at one-half of their annual base salary, that they would not
compete with the Company by engaging in any capacity in any business which is
competitive with the business of the Company.
The Company has executed indemnification agreements with certain of
its executive officers, pursuant to which the Company has agreed, subject to
certain exceptions, to indemnify each such officer to the fullest extent
permitted by law if such officer becomes subject to an action arising out of the
discharge of his duties as an officer, employee, agent or fiduciary of the
Company.
Effective June 8, 1999, the Company entered into Change-of-Control
Agreements with certain of its executive officers, including Jack P. Adler,
Senior Vice President, Secretary and General Counsel; John Centinaro, Chief
Operating Officer; David M. Gordon, Vice President, Treasurer and Chief
Financial Officer; and Dennis Samuelson, Senior Vice President- Professional
Development. Pursuant to the agreements, the executives are entitled to
continuation of salary and all benefits for one year in the event that a
"change-of-control" results in either involuntary termination of employment with
the Company or the voluntary resignation of the executive due to a reduction in
salary or benefits. In the event of such "change-of-control," all stock options
issued to the executive shall immediately vest and become exercisable.
Under these agreements, a "change-of-control" is deemed to occur in
the event (i) of the acquisition (including as a result of a merger) by any
"person" (as such term is used in Section 13(d) of the Exchange Act) or persons,
"acting in concert," of beneficial ownership, directly or indirectly, of
securities of the Company representing more than 25% of the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors of the Company; and (ii) Stan Gang ceases
to be Chairman of the Board of Directors.
10
<PAGE>
Compensation Committee Interlocks and Insider Participation
- -----------------------------------------------------------
The Compensation Committee is comprised of Thomas F. Dorazio
(Chairperson), Stan Gang, and Donald A. Deieso. There are no Compensation
Committee interlocks between the Company and any other entities involving the
Company's executive officers and Board of Directors who serve as executive
officers of such entities.
Mr. Cohen, a director and member of the Audit and Options Committees,
is a member of Fallen Angel Capital LLC ("Fallen Angel"), a Delaware limited
liability company which is the general partner of Fallen Angel Equity Fund,
L.P., a Delaware limited partnership which owns more than 10% of the Common
Stock. In May 1999, the Company's Board of Directors authorized, subject to
agreement upon mutually satisfactory terms and conditions, the issuance to
Fallen Angel of a warrant (the "Warrant") to purchase an aggregate of 200,000
shares of Common Stock at an exercise price of $5.00 per share, exercisable for
a period of one year commencing on May 19, 2000 and ending on May 18, 2001. The
Warrant is being issued in consideration for investment banking advisory
services rendered by Fallen Angel in connection with the Company's preferred
stock investment in nex-i.com Inc., in which Fallen Angel Equity Fund, L.P. also
participated. For a more detailed description of the foregoing, see the
disclosure under Item 3, "Approval of the Issuance of Warrants to Fallen Angel
Capital LLC" beginning on page 23.
In February 2000, the Board of Directors authorized the Company, in
the event of a settlement or other final disposition of the litigation involving
two former employees of the Company, to return to Stan Gang $675,000 previously
advanced to the Company by Mr. Gang in connection with such litigation, in
consideration of which the Company will retain any related settlement proceeds.
For a more comprehensive discussion of the foregoing, see the disclosure under
the heading "Legal Proceedings" in the Company's Annual Report on Form 10-K for
the year ended December 31, 1999.
11
<PAGE>
Performance Graph
- -----------------
The following graph compares the cumulative total shareholder return
on the Company's Common Stock with the cumulative total return on the Nasdaq
Composite Index and the Peer Group Index (capitalization weighted) for the
period beginning on March 21, 1996, the date on which the SEC declared effective
the Company's Form S-1 Registration Statement pursuant to Section 12 of the
Exchange Act and ending on the last day of the Company's last completed fiscal
year. The stock performance shown on the graph below is not indicative of future
price performance.
[graphic omitted]
<TABLE>
<CAPTION>
COMPARISON OF CUMULATIVE TOTAL RETURN(1)(2)
Among the Company, the Nasdaq Composite Index
and the Peer Group Index(3)
(Capitalization Weighted)
Cumulative Total Return
------------------------------------------------------------------------
3/21/96 12/96 12/97 12/98 12/99
<S> <C> <C> <C> <C> <C>
ALPHANET SOLUTIONS, INC. 100.00 147.97 106.35 34.10 37.58
PEER GROUP 100.00 195.61 160.53 144.15 178.09
NASDAQ STOCK MARKET (U.S.) 100.00 117.82 144.36 203.55 376.69
</TABLE>
12
<PAGE>
(1) Graph assumes $100 invested on March 21, 1996 in the Company's Common Stock,
the Nasdaq Composite Index and the Peer Group Index (capitalization weighted).
(2) Cumulative total return assumes reinvestment of dividends, if any.
(3) The Company has constructed a Peer Group Index consisting of other computer
systems integrators that also provide information technology consulting services
to their clients, including CompuCom Systems, Inc., Datatec Systems, Inc.,
Government Technology Services, Inc., Micros-to-Mainframes, Inc., Pomeroy
Computer Resources, Inc., and TransNet Corporation. The Company believes that
these companies most closely resemble the Company's business mix and that their
performance is representative of the industry. Dataflex Corporation is not
included in this year's Peer Group as CompuCom Systems, Inc. acquired Dataflex
Corporation in June 1998. Vanstar Corporation is also not included in this
year's Peer Group as InaCom Corp. acquired Vanstar Corporation in February 1999.
13
<PAGE>
Compensation Committee Report on Executive Compensation
- -------------------------------------------------------
The Company's executive compensation policy is designed to attract
and retain highly qualified individuals for its executive positions and to
provide incentives for such executives to achieve maximum Company performance by
aligning the executives' interest with that of shareholders by basing a portion
of compensation on the Company's performance.
The Compensation Committee generally reviews and determines those
base salary levels for executive officers of the Company at or about the start
of the fiscal year and determines actual bonuses after the end of the fiscal
year based upon Company and individual performance.
The Company's executive officer compensation program is comprised of
base salary, discretionary annual cash bonuses, stock options, auto allowance,
and various other benefits, including medical insurance and a 401(k) Plan, which
are generally available to all employees of the Company.
Salaries are established in accordance with industry standards
through review of publicly available information concerning the compensation of
officers of comparable companies. Consideration is also given to relative
responsibility, seniority, individual experience and performance. Salary
increases are generally made based on increases in the industry for similar
companies with similar performance profiles and/or attainment of certain
division or Company goals.
Certain senior executives and key managers who have a direct and
measurable ability to impact the Company's financial results are eligible to
participate in the Company's Incentive Plan, subject to approval by the
Compensation Committee. The purpose of the plan is to motivate senior executives
through variable compensation toward the attainment of corporate and individual
goals. Each participant is assigned an incentive target expressed as a
percentage of base salary. The incentive target is based on two independent
categories: corporate earnings per share, and business unit financial
performance objectives.
During fiscal 1999, all executive officers, including the Chief
Executive Officer, and certain other corporate officers, were eligible to
receive a bonus equal to at least 30% of their base salary if the Company
achieved corporate earnings per share of $0.14. The Chairman of the Board
elected not to participate in the bonus plan. Business unit executives were
eligible to receive a bonus of up to 20% of their base salary, 70% of which was
based on the Company's ability to achieve corporate earnings per share of $0.14
and 30% of which was based on whether each executive attained certain individual
business unit financial performance objectives. Because the Company attained and
exceeded the corporate earnings per share target for 1999, bonuses based on the
Company's financial results were disbursed as described above. Of the three
business unit executives eligible for bonuses, one attained his performance
objectives and thus received 100% of his possible bonus amount. The other two
did not attain their business unit performance objectives and thus received only
70% of their possible bonus amounts.
The stock option program is designed to relate executives' and
certain middle managers' long-term interests to shareholders' long-term
interests. In general, stock option awards are granted on an annual basis if
warranted by the Company's growth and profitability. Stock options are awarded
on the basis of individual performance and/or the achievement of internal
strategic objectives.
14
<PAGE>
Based on review of available information, the Committee believes that
the current Chief Executive Officer's total annual compensation is reasonable
and appropriate given the size and historical performance of the Company's
business, the Company's position as compared to its peers in the industry, and
the specific challenges faced by the Company during 1999, such as the ongoing
transition of the Company from a computer systems integrator to a cutting-edge
network infrastructure services firm.
Compensation Committee
Thomas F. Dorazio (Chairperson)
Stan Gang
Donald A. Deieso
15
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
There are, as of March 31, 2000, approximately 283 holders of record
and approximately 3,394 beneficial owners of the Company's Common Stock. The
following table sets forth certain information, as of March 31, 2000, with
respect to holdings of the Common Stock by (i) each person known by the Company
to beneficially own more than 5% of the total number of shares of Common Stock
outstanding as of such date, (ii) each of the Company's directors, nominees, and
named executive officers, and (iii) all directors and executive officers as a
group.
<TABLE>
<CAPTION>
Name and Address Amount and Nature of Percent
of Beneficial Owner(1) Beneficial Ownership(1) of Class(2)
- ------------------- -------------------- --------
<S> <C> <C>
Certain Beneficial Owners:
- --------------------------
Stan Gang (3) 1,938,000 30.70
7 Ridgedale Avenue
Cedar Knolls, NJ 07927
Fallen Angel Equity Fund, L.P. (4) 634,900 10.06
c/o Fallen Angel Capital, LLC
960 Holmdel Road
Holmdel, NJ 07733
Dimensional Fund Advisors Inc. (5) 411,100 6.51
1299 Ocean Avenue, 11th Floor
Santa Monica, CA 90401
Royce & Associates, Inc. 317,200 5.03
1414 Avenue of the Americas, 9th Floor
New York, NY 10019
Directors, nominees, and named executive officers who are not set forth above:
- ------------------------------------------------------------------------------
Donald A. Deieso (6) 30,000 *
Michael Gang (7) 38,000 *
Ira Cohen (8) 5,000 *
Thomas F. Dorazio (9) 5,000 *
John Centinaro (10) 24,831 *
Dennis Samuelson (11) 35,875 *
Jack P. Adler (12) 8,500 *
All directors and executive officers as a group
(9 persons) 2,095,206 33.2
- -----------------------------------------------
</TABLE>
* Less than one percent
(1) Except as set forth in the footnotes to this table and subject to applicable
community property law, the persons named in the table have sole voting and sole
investment power with respect to all shares of Common Stock shown as
beneficially owned by such shareholder.
16
<PAGE>
(2) Applicable ownership percentage is based on 6,313,232 shares of Common Stock
outstanding on March 31, 2000, plus presently exercisable stock options held by
each such holder which will become exercisable within 60 days after March 31,
2000.
(3) Does not include 135,000 shares of Common Stock owned by The Gang Annuity
Trust dated January 3, 1994. Mr. Gang expressly disclaims beneficial ownership
of such shares.
(4) Pursuant to an amended Schedule 13D filed with the SEC on August 20, 1999.
(5) Pursuant to a Schedule 13G filed with the SEC on February 3, 2000.
(6) Represents 30,000 shares of Common Stock underlying options which are
exercisable as of March 31, 2000 or within 60 days after such date. Excludes
75,000 shares underlying options which become exercisable over time after such
period.
(7) Represents 38,000 shares of Common Stock underlying options which are
exercisable as of March 31, 2000 or within 60 days after such date. Excludes
27,000 shares underlying options which become exercisable over time after such
period. In addition, excludes 135,000 shares owned by The Gang Annuity Trust.
Mr. Gang expressly disclaims beneficial ownership of such shares.
(8) Represents 5,000 shares of Common Stock underlying options which are
exercisable as of March 31, 2000 or within 60 days after such date. Does not
include 634,900 shares of Common Stock owned by Fallen Angel Equity Fund, L.P.,
a Delaware limited partnership, in which Mr. Cohen is a limited partner. Mr.
Cohen expressly disclaims beneficial ownership of such shares of Common Stock.
(9) Represents 5,000 shares of Common Stock underlying options which are
exercisable as of March 31, 2000 or within 60 days after such date.
(10) Represents 22,750 shares of Common Stock underlying options which are
exercisable as of March 31, 2000 or within 60 days after such date and 2,081
shares owned by Mr. Centinaro. Excludes 27,250 shares underlying options which
become exercisable over time after such period.
(11) Represents 25,500 shares of Common Stock underlying options which are
exercisable as of March 31, 2000 or within 60 days after such date and 880
shares of Common Stock underlying options which are exercisable as of March 31,
2000 or within 60 days after such date held by his wife, an employee of the
Company. Also, 7,444 shares are owned by Mr. Samuelson, 200 shares are held as a
custodian for minor children, and 1,851 are owned by his wife. Excludes 24,500
shares underlying options which become exercisable over time after such period
and 920 shares underlying options which become exercisable over time after such
period owned by his wife, an employee of the Company.
(12) Represents 8,500 shares of Common Stock underlying options which are
exercisable as of March 31, 2000 or within 60 days after such date. Excludes
11,500 shares underlying options which become exercisable over time after such
period.
17
<PAGE>
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
In 1999, the Company paid, as compensation for services rendered to
the Company and for sales generated, an aggregate of $467,208 to Michael Gang,
the son of Stan Gang, the Company's Chairman of the Board. Michael Gang serves
as National Account Manager/Sector Director for the Company and has served as a
Director of the Company since September 1995 and as Secretary of the Company
from September 1995 to October 1997.
For transactions involving Stan Gang and Ira Cohen, directors of the
Company, see "Compensation Committee Interlocks and Insider Participation."
In 1995, the Board of Directors adopted a policy requiring that any
future transactions between the Company and its officers, directors, principal
shareholders and their affiliates be on terms no less favorable to the Company
than could be obtained from unrelated third parties and that any such
transactions be approved by a majority of the disinterested members of the
Company's Board of Directors.
18
<PAGE>
ITEM 2
RATIFICATION OF THE AMENDMENT TO THE 1995 STOCK PLAN
The Company's shareholders are being asked to ratify the action of
the Board of Directors in adopting an amendment to the Company's 1995 Stock Plan
(the "Plan"). A general discussion of the principal terms of the Plan and the
proposed amendment are set forth below. This discussion is qualified in its
entirety by the full text of the Plan, as amended, a copy of which has been
filed with the SEC.
General. The Plan provides for awards of incentive stock options
("ISOs"), non-statutory stock options, stock purchase rights and restricted
stock to officers and key employees of the Company. Under the Plan, an aggregate
of 1,000,000 shares of Common Stock is currently available for issuance, subject
to certain adjustments as set forth in the Plan. Such shares may be either
authorized but unissued shares or reacquired shares of Common Stock. Unless
earlier terminated by the Board of Directors, the Plan will terminate on August
25, 2005, ten (10) years after the effective date of the Plan.
Proposed Amendment. In May 1999, the Board of Directors amended the
Plan to increase the number of authorized shares of Common Stock available for
issuance under the Plan from 750,000 to 1,000,000 shares, subject to shareholder
approval at this Annual Meeting. Any options granted with respect to the 250,000
additional shares between the May 1999 Board action and the date on which
shareholders take action with respect to the amendment will be treated as ISOs
if they were intended to be ISOs at the time of grant, but only if shareholders
ratify the amendment. If the amendment increasing the number of available shares
is not ratified by the shareholders, then the 250,000 additional shares will
still be available for issuance under the Plan, but any options granted with
respect thereto must be non-statutory stock options, as opposed to ISOs.
Administration and Amendment. A "grant committee" consisting of no
less than two (2) non-employee directors appointed by the Board of Directors has
sole authority to administer the Plan. The responsibilities of the "grant
committee" include, among other things, interpreting terms of the Plan and
awards granted thereunder, determining the exercise price of shares awarded, and
establishing and rescinding any rules and regulations relating to the Plan. The
Plan may be amended or suspended in whole or in part at any time and from time
to time by the Board of Directors, provided such amendment or termination will
not impair the rights of any optionee, in which case, the Board of Directors
must obtain prior consent from all such impaired optionees. In addition, no
amendment shall be effective unless and until the same is approved by the
Company's shareholders if the failure to obtain shareholder approval would
adversely affect Plan compliance with Rule 16b-3 under the Securities Exchange
Act of 1934 and other applicable law.
Incentive Stock Options. ISOs may not be granted to any employee who,
at the time of the grant, owns greater than 10% of the voting power of all
classes of Common Stock (or the stock of any subsidiary) with an exercise price
less than 110% of the fair market value of the Common Stock on the grant date.
ISOs may not be granted to all other employees with an exercise price less than
100% of the fair market value of the Common Stock on the grant date.
19
<PAGE>
Non-statutory Stock Options. Non-statutory stock options may not be
granted to any person who, at the time of grant, owns greater than 10% of the
voting power of all classes of Common Stock (or the stock of any subsidiary)
with an exercise price less than 100% of the fair market value of the Common
Stock on the grant date. Non-statutory stock options may not be granted to any
other person with an exercise price less than 85% of the fair market value of
the Common Stock on the grant date.
The maximum terms for options granted under the Plan are provided in
the individual option agreements, except that the term for ISOs may not exceed
10 years from the grant date, and the term for options granted to a person who,
at the time the option is granted, owns stock representing greater than 10% of
the voting power of all classes of the Common Stock (or any parent company or
subsidiary) may not exceed five years from the grant date.
Stock Purchase Rights. The right to purchase shares of Common Stock
may not be granted with an exercise price less than 50% of the fair market value
of the Common Stock on the grant date. Stock purchase rights may be issued
either alone, in addition to, or together with other awards granted pursuant to
the Plan and/or cash awards made outside of the Plan. A purchaser must accept
the offer, by signing a restricted stock purchase agreement which provides the
Company with a repurchase option, within 30 days after the date the
determination was made to grant the stock purchase right. The Company has the
option to repurchase these shares for the original price paid by the purchaser
at such time as the employee's employment with the Company is either voluntarily
of involuntarily terminated. If the Company opts to repurchase shares of
restricted stock, the Company will pay the purchaser the original price the
purchaser paid for the shares, by either paying such amount or by canceling any
indebtedness the purchaser has to the Company. Upon exercise of the stock
purchase right, the purchaser will have the rights of any other holder of Common
Stock. The "grant committee" will determine, at the time of grant, the terms of
the grant of restricted stock, including the purchase price, if any, the
restrictions placed on the shares and the time or times at which the
restrictions lapse.
Eligibility. The "grant committee" determines which officers and key
employees are eligible to participate in the Plan. Non-statutory stock options
may be granted to the Company's employees and consultants, but ISOs may only be
granted to the Company's employees. The Company estimates that approximately 300
employees are currently eligible to participate in the Plan. As of March 1,
2000, awards granted under the Plan in fiscal 2000, subject to shareholder
ratification of this proposal, are set forth in the following table:
20
<PAGE>
<TABLE>
<CAPTION>
NEW PLAN BENEFITS
1995 Stock Plan
Number of
Number of Number of Non-statutory Number of Stock Purchase shares of
Name and Position ISOs stock options Rights restricted stock
- ----------------- ---- ------------- ------ ----------------
<S> <C> <C> <C> <C>
Stan Gang, - - - -
Chairman of the Board
Donald A. Deieso, - - - -
President and Chief
Executive Officer
John Centinaro, - - - -
Chief Operating Officer
Dennis Samuelson, - - - -
Senior Vice President -
Professional Development
Jack P. Adler, - - - -
Senior Vice President,
Secretary & General Counsel
Executive Group - - - -
Non-Executive Director - - - -
Group
Non-Executive Officer 27,000 5,000 - -
Employee Group
</TABLE>
Adjustment for Stock Dividends, Mergers, etc. The number of shares of
Common Stock covered by each outstanding option, and the number of shares of
Common Stock authorized for issuance under the Plan but as to which no options
have yet been granted or which have been returned upon the cancellation or
expiration of an option, as well as the price per share of Common Stock covered
by each such outstanding option, will be proportionately adjusted by the Board
for any increase or decrease in the number of issued shares of Common Stock
resulting from a stock split, reverse stock split, stock dividend, combination
or reclassification of the Common Stock, or any other increase or decrease in
the number of issued shares of Common Stock which are effected without the
receipt of consideration by the Company. The conversion of any of the Company's
convertible securities will not be considered to have been "effected without the
receipt of consideration."
If there is a proposed dissolution or liquidation of the Company, the
Board of Directors must notify optionees at least 15 days before dissolving or
liquidating the Company. All unexercised options will terminate immediately
before the dissolution or liquidation. If the Company mergers or consolidates
with or into another corporation or if the Company sells all or substantially
all of its assets, the options will be assumed (or an equivalent option will be
substituted) by the successor corporation or by a parent or subsidiary of the
successor corporation. However, if the successor corporation does not agree to
assume the option or to substitute an equivalent option, the Board of Directors
must instead provide the optionee the right to exercise the option as to all of
the optioned stock, including shares as to which the option would not otherwise
be exercisable. If the Board of Directors makes an option fully exercisable in
lieu of assumption or substitution if there is a merger or consolidation, the
Board of Directors must notify the optionee that the option can be fully
exercised for a period of 15 days from the date of the notice, and that the
option will terminate after 15 days. The option will be considered assumed if,
following the merger or consolidation, the option or right gives the right to
purchase, for each share of stock subject to the option immediately prior to the
merger or consolidation, the consideration (whether stock, cash, or other
securities or property) received in the merger or consolidation by holders of
Common Stock for each share held on the effective date of the transaction.
21
<PAGE>
However, if the consideration received in the merger or consolidation was not
only common stock of the successor corporation or its parent, the Board of
Directors may, with the consent of the successor corporation and the
participant, provide for the consideration to be received on the exercise of the
option, for each share of stock subject to the option, to be only common stock
of the successor corporation or its parent that is equal in fair market value to
the per share consideration that is received by holders of common stock in the
merger or sale of assets.
Certain Federal Tax Consequences. The following brief summary
reflects current interpretations of applicable federal income tax law relating
to awards under the Plan. The law is highly technical and complex, and the
following represents only a general summary of the applicable provisions.
A participant receiving a non-statutory stock option will not realize
any compensation income under the Internal Revenue Code (the "Code") upon the
grant of the option. However, a participant will realize compensation income at
the time of exercise in the amount of the difference between the option price
and the fair market value on the date of exercise. The Company is entitled to a
deduction at the time of exercise equal to the amount of compensation income
that is realized by the optionee.
A participant receiving an ISO will not realize any compensation
income under the Code upon the grant of the option. Upon exercise, the
participant will generally not recognize any compensation income, and the
Company will not be entitled to a deduction. If certain holding periods are met,
then upon a subsequent sale of the stock purchased pursuant to the exercise of
the ISO, the participant will recognize a capital gain or loss equal to the
difference between the amount realized upon the sale and the amount paid upon
exercise of the option. The difference between the option price and the fair
market value, however, may have an impact under the Alternative Minimum Tax
rules. In addition, if the participant sells or otherwise disposes of the stock
acquired in connection with the exercise of an ISO, before the earlier of the
date that is two years after the grant of the ISO or one year after exercise of
the ISO, then the favorable ISO tax treatment will be lost.
A recipient of restricted stock pursuant to the exercise of stock
purchase rights generally will not be subject to tax at the time of receipt of
the restricted stock, but will be subject to tax at ordinary income rates on the
amount by which the fair market value of the restricted stock at such time as
the stock is no longer subject to a substantial risk of forfeiture or is
transferable by the recipient exceeds the amount (if any) paid for the stock by
the recipient. However, a recipient may elect under Section 83(b) of the Code
within 30 days of the date of receipt of the restricted stock to include as
22
<PAGE>
ordinary income in the year of receipt of the shares an amount equal to the
excess of the fair market value of such shares of restricted stock at the time
of transfer (determined without regard to any restrictions which apply to the
shares) over the purchase price, if any, of such restricted stock. Upon the
subsequent sale or exchange of such restricted stock, the recipient will
recognize capital gain or loss measured by the difference between the amount
realized on the disposition and the basis of the restricted stock, which will
equal the sum of the purchase price, plus the amount included in gross income
under Section 83(b) of the Code.
Upon the sale or exchange of the shares after the forfeiture period
has expired, the Company will be entitled to a deduction equal to the amount
that is taxable as ordinary income to the recipient.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE AMENDMENT TO THE 1995 STOCK PLAN.
ITEM 3
APPROVAL OF THE ISSUANCE OF COMMON STOCK PURCHASE WARRANTS
TO FALLEN ANGEL CAPITAL LLC
The Company's shareholders are being asked to approve the Board of
Directors' grant of warrants to Fallen Angel Capital LLC ("Fallen Angel").
History. In May 1999, the Company's Board of Directors authorized,
subject to agreement upon mutually satisfactory terms and conditions, the
issuance to Fallen Angel of a Warrant (the "Warrant") to purchase an aggregate
of 200,000 shares of Common Stock at an exercise price of $5.00 per share,
exercisable for a period of one year commencing on May 19, 2000 and ending on
May 18, 2001. The Warrant is being issued in consideration for investment
banking advisory services rendered by Fallen Angel in connection with the
Company's preferred stock investment in nex-i.com Inc., in which Fallen Angel
Equity Fund, L.P., a Delaware limited liability company which owns more than 10%
of the Common Stock and of which Fallen Angel is the general partner, also
participated. Ira Cohen, a current director of the Company and nominee for
re-election as a director, is a principal of Fallen Angel.
Terms of the Warrants. For three years after delivery of tbe Warrant
to Fallen Angel or until such earlier time at which all shares issuable upon the
exercise of the Warrant (the `Warrant Shares") may be sold without registration
pursuant to Rule 144(k) of the Securities Actof 1933 without being subject to
volume limitations thereof, the Company will, at Fallen Angel's expense,
register the Warrant Shares for resale under the Securities Act of 1933 on
demand of the holders of 60% of the Warrant Shares.
Upon the exercise of the Warrant, the Company will list the Warrant
Shares on the Nasdaq National Market System or such other market or exchange on
which the Common Stock is listed at such time.
Fallen Angel will not be entitled to any rights, including voting
rights, as a shareholder of the Company prior to exercise of the Warrant. The
Warrant may not be transferred, sold or assigned at any time without the prior
written consent of the Company. The Company may modify the terms of the Warrant
to extend the exercise period, or to lower the exercise price, at any time prior
to expiration of the Warrant.
23
<PAGE>
Valuation of the Warrant. The Warrant will be valued as of the
closing price of the Common Stock on the date of the 2000 Annual Meeting, or any
adjournment thereof.
Certain Federal Income Tax Consequences to the Company. The Company
presently believes that the issuance of the Warrant will not result in any
material federal income tax consequences to the Company.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL
OF THE ISSUANCE OF WARRANTS TO FALLEN ANGEL CAPITAL LLC.
ITEM 4
RATIFICATION OF APPOINTMENT OF INDEPENDENT ACCOUNTANTS
The Board of Directors has, subject to shareholder approval, retained
PricewaterhouseCoopers LLP as independent accountants of the Company for the
year ending December 31, 2000. PricewaterhouseCoopers LLP also served as
independent accountants of the Company for 1999. Neither the accounting firm nor
any of its members has any direct or indirect financial interest in or any
connection with the Company in any capacity other than as independent
accountants.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF
THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE INDEPENDENT ACCOUNTANTS OF
THE COMPANY FOR THE YEAR ENDING DECEMBER 31, 2000.
One or more representatives of PricewaterhouseCoopers LLP is expected
to attend the Meeting and to have an opportunity to make a statement and/or
respond to appropriate questions from shareholders.
SHAREHOLDERS' PROPOSALS
Shareholders who wish to submit proposals for inclusion in the
Company's proxy statement and form of proxy relating to the 2001 Annual Meeting
of Shareholders must advise the Secretary of the Company of such proposals in
writing by December 19, 2000.
24
<PAGE>
OTHER MATTERS
The Board of Directors is not aware of any matter to be presented for
action at the Meeting other than the matters referred to above and does not
intend to bring any other matters before the Meeting. However, if other matters
should properly come before the Meeting, it is intended that holders of the
proxies will vote thereon in their discretion.
GENERAL
The accompanying proxy is solicited by and on behalf of the Board of
Directors, whose notice of meeting is attached to this Proxy Statement, and the
entire cost of such solicitation will be borne directly by the Company.
In addition to the use of the mails, proxies may be solicited by
personal interview, telephone, telegram, facsimile and e-mail by directors,
officers and other employees of the Company who will not be specially
compensated for these services. The Company will also request that brokers,
nominees, custodians and other fiduciaries forward soliciting materials to the
beneficial owners of shares held of record by such brokers, nominees, custodians
and other fiduciaries. The Company will reimburse such persons for their
reasonable expenses in connection therewith.
Certain information contained in this Proxy Statement relating to the
occupations and security holdings of directors and officers of the Company is
based upon information received from the individual directors and officers.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS REPORT ON
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 1999, INCLUDING FINANCIAL STATEMENTS
AND SCHEDULES THERETO BUT NOT INCLUDING EXHIBITS, TO EACH OF ITS SHAREHOLDERS OF
RECORD AS OF MARCH 31, 2000, AND TO EACH BENEFICIAL SHAREHOLDER AS OF THAT DATE
UPON WRITTEN REQUEST MADE TO JACK P. ADLER, SECRETARY OF THE COMPANY, 7
RIDGEDALE AVENUE, CEDAR KNOLLS, NEW JERSEY 07927, TELEPHONE NO. (973) 889-3813.
A REASONABLE FEE WILL BE CHARGED FOR COPIES OF REQUESTED EXHIBITS.
PLEASE DATE, SIGN AND RETURN THE PROXY CARD AT YOUR EARLIEST
CONVENIENCE IN THE ENCLOSED RETURN ENVELOPE. A PROMPT RETURN OF YOUR PROXY CARD
WILL BE APPRECIATED AS IT WILL SAVE THE EXPENSE OF FURTHER MAILINGS.
By Order of the Board of Directors,
Jack P. Adler
Secretary
Cedar Knolls, New Jersey
April 17, 2000
25
ALPHANET SOLUTIONS, INC.
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF THE
COMPANY FOR THE 2000 ANNUAL MEETING OF SHAREHOLDERS
The undersigned hereby constitutes and appoints Stanley Gang and Jack
P. Adler, and each of them, the true and lawful agent and proxy of the
undersigned with full power of substitution in each, to represent and to vote on
behalf of the undersigned all of the shares of AlphaNet Solutions, Inc. (the
"Company") which the undersigned is entitled to vote at the Annual Meeting of
Shareholders of the Company (the "Meeting") to be held at the offices of the
Company at 7 Ridgedale Avenue, Cedar Knolls, New Jersey at 9:00 a.m., local
time, on Friday, May 19, 2000, and at any adjournment or adjournments thereof,
upon the following matters more fully described in the Notice of Annual Meeting
of Shareholders and Proxy Statement for the Meeting (receipt of which is hereby
acknowledged).
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 the nominees for director as named in
the Proxy Statement and FOR Items 2, 3 and 4.
(continued and to be signed on reverse side)
<PAGE>
Please mark your votes as in this example
VOTE FOR all nominees listed at VOTE WITHHELD
right, except vote withheld from from all nominees
the following nominees (if any)
|_| |_|
1. ELECTION OF DIRECTORS
Nominees: Stan Gang
Donald A. Deieso
Michael Gang
Ira Cohen
Thomas F. Dorazio
VOTE FOR all the nominees listed above, vote withheld from the
following nominees (if any),
- ----------------------------------------------------------------------
2. APPROVAL OF PROPOSAL TO FOR AGAINST
RATIFY THE AMENDMENT TO THE
1995 STOCK PLAN. |_| |_|
3. APPROVAL OF ISSUANCE OF FOR AGAINST
WARRANTS TO FALLEN ANGEL
CAPITAL LLC. |_| |_|
4. APPROVAL OF PROPOSAL TO
RATIFY THE APPOINTMENT OF
PRICEWATERHOUSECOOPERS, LLP
AS THE INDEPENDENT FOR AGAINST
ACCOUNTANTS OF THE COMPANY
FOR THE YEAR ENDING DECEMBER 31, 2000. |_| |_|
5. In their discretion, the proxies are
authorized to vote upon other matters
as may properly come before the Meeting.
I Will |_| Will Not |_|
attend the Meeting
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY.
Signature of Shareholder ______________________________
Signature of Shareholder ______________________________
Dated:______________________
Note: This proxy must be signed exactly as the name appears hereon. When
shares are held by joint tenants, both should sign. If the signer is
a corporation, please sign in full corporate name by duly authorized
officer, giving full title as such. If signer is a partnership,
please sign in partnership name by authorized person.
