HERTZ TECHNOLOGY GROUP, INC.
75 Varick Street
11th Floor
New York, New York 10013
Notice of Annual Meeting of Stockholders to be held February 16, 2000
--------------------------
The Annual Meeting of Stockholders of Hertz Technology Group, Inc. will be
held at the Company's offices, 75 Varick Street, 11th Floor, New York, New York
10013 on February 16, 2000 at 4:00 P.M., for the purpose of considering and
acting upon the following:
1. Election of five Directors
2. Confirmation of the appointment of Goldstein Golub Kessler LLP as
auditors for the fiscal year ending August 31, 2000.
3. To act on a proposal to amend the Company's Certificate of
Incorporation to increase the authorized Common Stock from 3,000,000
shares to 6,000,000, $.001 par value.
4. To act on a proposal to increase the stock options available under
the 1996 Stock Option Plan from 500,000 to 750,000 shares.
5. Any and all matters incident to the foregoing, and such other
business as may legally come before the meeting and any adjournments
or postponements thereof.
The Board of Directors has fixed the close of business on January 7, 2000
as the record date for determining the stockholders having the right to notice
of and to vote at the meeting.
By order of the Board of Directors
Eli E. Hertz
Chairman of the Board,
President and Chief Executive Officer
New York, New York
January 10, 2000
- --------------------------------------------------------------------------------
IMPORTANT: Every stockholder, whether or not he or she expects to attend the
annual meeting in person, is urged to execute the proxy and return
it promptly in the enclosed business reply envelope.
1
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
--------------------
PROXY STATEMENT
For Annual Meeting of Stockholders
to be Held February 16, 2000
---------------------
Proxies in the form enclosed with this Statement are solicited by
Management of Hertz Technology Group, Inc. (the "Company") to be used at the
Annual Meeting of Stockholders to be held at 4:00 P.M. on February 16, 2000, for
the purposes set forth in the Notice of Meeting and this Proxy Statement. The
Company's principal executive offices are at 75 Varick Street, 11th Floor, New
York, New York 10013. The approximate date on which this Statement and the
accompanying proxy will be mailed to Stockholders is January 10, 2000.
THE VOTING AND VOTE REQUIRED
On the record date for the meeting, January 7, 2000, there were
outstanding 2,129,083 Common Shares, each of which will be entitled to one vote.
The only persons known by the Company to be the beneficial owner of five percent
or more of the Company's Common Stock as of the Record Date are listed under
"Security Ownership of Certain Beneficial Owners" below.
Directors are elected by a plurality of the votes cast at the meeting.
Confirmation of the appointment of auditors is by the affirmative vote of a
majority of the votes cast at the meeting. All shares represented by valid
proxies will be voted in accordance with the instructions contained therein. In
the absence of instructions, proxies will be voted FOR each of the stated
matters being voted on at the meeting. A proxy may be revoked by the stockholder
giving the proxy at any time before it is voted, either by oral or written
notice, and a prior proxy is automatically revoked by a stockholder giving a
subsequent proxy or attending and voting at the meeting. Attendance at the
meeting in and of itself does not revoke a prior proxy. Shares represented by
proxies which are marked "ABSTAIN" with respect to any proposal will not be
counted in determining whether the requisite vote has been received for such
proposal. In instances where brokers are prohibited from exercising
discretionary authority for beneficial owners who have not returned proxies (so
called "broker non-votes"), those shares will be disregarded and, therefore,
have no effect on the outcome of the vote.
2
<PAGE>
ELECTION OF DIRECTORS
Five Directors are to be elected at the Annual Meeting, each for a term of
one year and until the election and qualification of a successor.
It is intended that votes pursuant to the enclosed proxy will be cast for
the election of the five nominees named below. In the event that any such
nominee should become unable or unwilling to serve as a Director, the Proxy will
be voted for the election of such person, if any, as shall be designated by the
Board of Directors. The five nominees are currently members of the Board of
Directors. Management has no reason to believe these nominees will not be
available for election.
The nominees for election and certain information about them are shown in
the following table:
Name Age Position Director Since
---- --- -------- --------------
Eli E. Hertz 50 Chairman, President and Chief 1996
Executive Officer; Director
I. Marilyn Hertz 48 Vice Chairperson, Secretary 1996
and Director
Barry J. Goldsammler 46 Senior Vice President, Chief 1997
Financial and Accounting Officer
And Director
Beryl Ackerman 53 Director 1996
Bruce Borner 48 Director 1996
Certain information about the five nominees are set forth below:
Eli E. Hertz was a co-founder of the Company in 1982. He has a B.S. degree
in Management Science and Economics and an MBA in Accounting and Management from
Long Island University. Mr. Hertz is the husband of I. Marilyn Hertz.
I. Marilyn Hertz was a co-founder of the Company. She has been a principal
officer of the Company since its formation in 1982. Before becoming a full-time
employee of the Company, Mrs. Hertz was an officer of Citibank in its computer
systems department. Mrs. Hertz is a graduate of Queens College, and for over 12
years, has lectured on micro and mainframe computer programming at Queens
College. Mrs. Hertz is the wife of Eli E. Hertz.
Barry J. Goldsammler joined the Company in 1990 and has served in various
executive positions since then. Before joining the Company he was vice president
for a sheet metal fabricator and treasurer and principal financial officer for a
public manufacturing company. Mr. Goldsammler received a B.S. degree in
Accounting from Brooklyn College.
Bruce Borner has, for more than five years, been president of Computer
Projections, a company which is a consultant to, and developer of, a wide range
of information/database systems for diverse industries. Mr. Borner has an MBA
from the Management Development Institute (IMD) in Lausanne, Switzerland founded
by the Harvard Business School.
Beryl Ackerman has, since June 1994, been a consultant to Justified
Computer Systems, a computer consulting firm. Prior thereto, he was a computer
specialist for the New York City Department of Sanitation. He is also a
Coordinator for Computer Systems in the Continuing Education Program at Queens
College, and a lecturer at Baruch College.
3
<PAGE>
Board of Directors and Committees
The Board of Directors of the Company (the "Board") held three meetings,
the Audit Committee had one meeting and the Compensation Committee had no
meetings during the fiscal 1999 year. The Audit and Compensation Committees are
comprised of Messrs. Ackerman and Borner. The Compensation Committee, though not
having met as a separate body during the past fiscal year, did meet and
discussed with the full Board matters relating to stock options and other
compensation matters. There is no nominating committee. All directors attended
more than 75 percent of the aggregate number of meetings of the Board.
The Compensation Committee's function is to review and recommend to the
Board the compensation and benefits of all officers of the Company, review
general policy matters relating to compensation and benefits of employees of the
Company and administer the issuance of stock options and discretionary cash
bonuses to the Company's officers, employees, directors and consultants. The
Audit Committee meets with management and the Company's independent auditors to
determine the adequacy of internal controls and other financial reporting
matters. It is the intention of the Company to appoint only independent
directors to the Audit and Compensation Committees.
The Board of Directors unanimously recommends a vote FOR the election of
each of the nominees.
Remuneration
The following table sets forth the combined remuneration earned during the
last three fiscal years by its Chief Executive Officer and the only other
executive officer that received compensation in excess of $100,000 for services
rendered in all capacities to the Company for its fiscal year ended August 31,
1999.
Summary Compensation Table
Annual Compensation Long Term Compensation Awards
------------------- -----------------------------
Restricted Securities
Name and Principal Stock Underlying
Position Year Salary Bonus Awards($) Options(#)
-------- ---- ------ ----- --------- ----------
Eli E. Hertz 1999 $ 226,731 -- -- 566,667
Chairman, President and 1998 $ 225,000 -- -- 166,666 (2)
Chief Executive Officer 1997 $ 210,674 -- -- 600,000 (2)
Barry J. Goldsammler 1999 $ 125,710 -- -- 86,667
Senior Vice President 1998 $ 122,274 -- $ 79,725 (1) 16,666 (2)
1997 $ 106,680 -- --
- ----------
(1) Represents market value of 50,000 shares at date of grant
(2) Options canceled without having been exercised
4
<PAGE>
Stock Options
The following table shows certain information with respect to the stock
options granted in 1999 to named executive officers. No Options granted have
been exercised.
Option Grants in 1999
- --------------------------------------------------------------------------------
Individual Grants of Options
<TABLE>
<CAPTION>
Percent Of Total Options Exercise
Number of Securities Granted To Employees Price Expiration
Name Underlying Option # in Fiscal 1999 ($/Sh) Date
- ---- ------------------- -------------- ------ ----
<S> <C> <C> <C> <C>
Eli E. Hertz 566,667 51% .85 12/02/03
Barry J. Goldsammler 86,667 8% .85 12/02/03
</TABLE>
All the above options become exercisable as to 1/3 of each grant on
December 3rd of each of three successive years beginning with 1999.
Employment Agreement
The Company has entered into an employment agreement ("Agreement")
effective as of November 12, 1996 with Eli E. Hertz. The term of his employment
will expire on November 11, 2001. The annual salary under the Agreement with Mr.
Hertz is $225,000. His salary can be increased only with the approval of a
disinterested majority of the Board of Directors.
The Agreement provides, among other things, for participation in an
equitable manner in any profit-sharing or retirement, separation and disability
plans for employees or executives and for participation in other employee
benefits applicable to employees and executives of the Company. The Agreement
further provides for the use of an automobile and other fringe benefits
commensurate with his duties and responsibilities. The Agreement with Mr. Hertz
also provides for benefits in the event of retirement, separation and
disability.
Under the Agreement, employment may be terminated by the Company with
cause or by Mr. Hertz with good reason. Termination by the Company without
cause, or by Mr. Hertz for good reason, would subject the Company to liability
for liquidated damages in an amount equal to Mr. Hertz's base salary for the
remaining term of his employment agreement or 12 months, whichever is higher.
Directors' Compensation
Non-Employee Directors are compensated at the rate of $500 per meeting. In
addition, each Non-Employee Director received options to purchase 6,000 shares
of the Company's Common Stock at a price of $.85 per share exercisable as to
one-third of the options granted on the same date in each of three successive
years beginning on the expiration of one year from the granting date. All
options expire on December 2, 2003.
5
<PAGE>
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
The following table sets forth certain information with respect to
beneficial ownership of the Company's Common Stock on December 10, 1999 by (i)
each person who is known by the Company to own beneficially more than five
percent (5%) of the Company's Common Stock; (ii) each of the Company's officers
and directors; and (iii) all officers and directors as a group:
<TABLE>
<CAPTION>
Name and Address (1) Position with Company Number of Shares Percent of Shares
- -------------------- --------------------- ---------------- -----------------
<S> <C> <C> <C>
Eli E. Hertz Chairman, President and
Chief Executive Officer;
Director 708,652 (2) 30.57% (7)
I. Marilyn Hertz Vice Chairperson, Secretary
Director 576,944 (3) 26.54% (7)
Barry J. Goldsammler Senior Vice President,
Principal Financial Officer,
Chief Accounting Officer
Director 78,889 (4) 3.66% (7)
Beryl Ackerman Director 3,667 (5) (8)
Bruce Borner Director 3,800 (6) (8)
--------- -----
All Officers and Directors
as a Group (5 persons) 1,371,952 (10) 57.20% (9)
</TABLE>
- ------------------------------------
(1) The address of all the persons listed above is c/o Hertz Technology Group,
Inc., 75 Varick Street, 11th Floor, New York, New York 10013.
(2) Includes 188,890 shares issuable upon exercise of currently exercisable
options at $.85 per share.
(3) Includes 44,444 shares issuable upon exercise of currently exercisable
options at $.85 per share.
(4) Includes 28,889 shares issuable upon exercise of currently exercisable
options at $.85 per share.
(5) Includes 3,667 shares issuable upon exercise of currently exercisable
options at $.85 per share.
(6) Includes 3,667 shares issuable upon exercise of currently exercisable
options at $.85 per share.
(7) Assumes that all currently exercisable options by such person have been
exercised.
(8) Less than 1%
(9) Assumes all currently exercisable options by officers and directors are
exercised.
(10) Includes options that are currently exercisable.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934 requires the
Company's officers and directors, and persons who own more than ten percent of a
registered class of the Company's equity securities, to file reports of
ownership and changes in ownership with the Securities and Exchange Commission
("SEC"). Officers, directors and greater than ten-percent stockholders are
required by SEC regulation to furnish the Company with copies of all Section
16(a) forms they file.
To the best of the Company's knowledge, based solely on review of the
copies of such forms furnished to the Company, or written representations that
no other forms were required, the Company believes that all Section 16(a) filing
requirements applicable to its officers and directors were complied with during
1999.
6
<PAGE>
AMENDMENT TO INCREASE AUTHORIZED COMMON STOCK
The authorized capital stock of the Company currently consists of
3,000,000 shares of Common Stock, $.001 par value of which 1,065,117 shares were
issued prior to November 2, 1998, after giving effect of the one for three
reverse stock split. On May 19, 1999, the Company authorized a two for one stock
dividend which increased the number of issued shares to 2,306,949, thereby
reducing the number of shares available for issuance to less than 700,000
shares. The reason for the proposed amendment is to allow sufficient shares
available for issuance for acquisition and incentive options purposes in the
future. By reason of this two for one stock dividend that occurred on May 18,
1999 the 3,000,000 shares are now considerably fewer shares than needed for the
Company's present and projected needs. An authorized capitalization of 6,000,000
shares should give the Company about 3,693,000 shares for issuance for
acquisitions and incentive options. This should be sufficient to meet the
anticipated needs of the Company.
Adoption of the proposed amendment requires the affirmative vote of the
holders of not less than a majority of the shares of Common Stock outstanding
and entitled to vote at the Annual Meeting.
The Board of Directors recommends a vote FOR the approval of the proposed
amendment reducing the authorized Common Stock.
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board proposes that the stockholders ratify the appointment of
Goldstein Golub Kessler LLP as the Company's independent auditors for its fiscal
year ending on August 31, 2000. Arthur Andersen LLP was the previous independent
auditors for the fiscal year ending on August 31, 1998. However, a mutual
decision to change independent auditors occurred in January, 1999 and the
Company secured the services of Goldstein Golub Kessler, LLP to act as the
Company's independent auditors for fiscal year 1999. The report of Goldstein
Golub Kessler LLP with respect to the Company's financial statements appears in
the Company's Annual Report for the 1999 fiscal year. A representative of
Goldstein Golub Kessler LLP will be at the annual meeting and will have an
opportunity to make a statement if he desires to do so and will be available to
respond to appropriate questions. In the event the stockholders fail to ratify
the appointment, the Board will consider it a directive to consider other
auditors for a subsequent year.
Approval of the foregoing proposal requires the affirmative vote of a
majority of the votes cast.
The Board of Directors recommends a vote FOR this proposal.
INCREASE THE NUMBER OF OPTIONS AVAILABLE
UNDER THE STOCK OPTION PLAN FROM 500,000 to 750,000
The Board of Directors recommends that the shareholders ratify an increase
in the number of stock options available for issuance under the Stock Option
Plan from 500,000 to 750,000. The Plan which is currently authorized to issue
500,000 options has 181,452 options issued to date. Only 318,548 options are
remaining for issuance. The Company believes that in the future for incentive
options to be issued for key employees, consultants and acquisitions, the number
of options should be increased to allow for these incentives.
The Board of Directors recommends a vote FOR this proposal.
7
<PAGE>
MISCELLANEOUS
Other Matters
Management knows of no matter other than the foregoing to be brought
before the Annual Meeting of Stockholders, but if such other matters properly
come before the meeting, or any adjournment thereof, the persons named in the
accompanying form of proxy will vote such proxy on such matters in accordance
with their best judgment.
Reports and Financial Statements
The Company's Annual Report for the year ended August 31, 1999 including
Audited Financial Statements, accompanies this Proxy Statement.
A copy of the Company's Annual Report to the Securities and Exchange
Commission on Form 10-KSB is incorporated in the Annual Report.
Solicitation of Proxies
The entire cost of the solicitation of proxies will be borne by the
Company. In addition, proxies may be solicited by directors, officers and
regular employees of the Company, without extra compensation, by telephone,
telegraph, mail or personal interview. The Company will also reimburse brokerage
houses and other custodians, nominees and fiduciaries for their reasonable
expenses for sending proxies and proxy material to the beneficial owners of its
Common Shares.
Stockholder Proposals
Stockholder proposals intended to be presented at the Company's 2000
Annual Meeting must be received by the Company for inclusion in the Company's
proxy statement relating to that meeting not later than August 15, 2000. Such
proposals should be addressed to I. Marilyn Hertz, Secretary, Hertz Technology
Group, Inc., 75 Varick Street, 11th Floor, New York, New York 10013.
EVERY STOCKHOLDER, WHETHER OR NOT HE OR SHE EXPECTS TO ATTEND THE ANNUAL
MEETING IN PERSON, IS URGED TO EXECUTE THE PROXY AND RETURN IT PROMPTLY IN THE
ENCLOSED BUSINESS REPLY ENVELOPE.
- --------------------------------------------------------------------------------
THE COMPANY SHALL PROVIDE EACH STOCKHOLDER WITHOUT CHARGE, UPON WRITTEN
REQUEST, A COPY OF THE COMPANY'S ANNUAL REPORT ON FORM 10-KSB FOR THE COMPANY'S
MOST RECENT FISCAL YEAR. REQUEST FOR SUCH REPORT SHOULD BE MADE TO BARRY
GOLDSAMMLER, CFO AT THE COMPANY AT 75 VARICK ST., NY, NY 10013 OR BY PHONE AT
212-634-4000.
By order of the Board of Directors
Eli E. Hertz
Chairman of the Board,
President and Chief Executive Officer
New York, New York
January 10, 2000
8
<PAGE>
HERTZ TECHNOLOGY GROUP, INC.
This proxy solicited by the Board of Directors for the
Annual Meeting on February 16, 2000
The undersigned hereby appoints I. Marilyn Hertz and Barry J. Goldsammler,
and each of them, with full power of substitution, the attorneys and proxies of
the undersigned to attend the Annual Meeting of Stockholders of Hertz Technology
Group, Inc. to be held February 16, 2000 at 4:00 P.M., and at any adjournment or
adjournments thereof, hereby revoking any proxies heretofore given, to vote all
shares of stock of the Company held or owned by the undersigned as indicated on
the proposals as more fully set forth in the Proxy Statement, and in their
discretion upon such other matters as may come before the meeting.
1. Election of the following Directors -- Eli E. Hertz, I. Marilyn Hertz,
Barry J. Goldsammler, Beryl Ackerman and Bruce Borner.
FOR all nominees |_| WITHHOLD authority to vote for all nominees |_| FOR
all nominees, EXCEPT nominee(s) written below.
--------------------------------------------------------------------------
The Board of Directors recommends a vote FOR all nominees and FOR
Proposals 2, 3 and 4.
2. Proposal to amend the Company's Certificate of Incorporation to increase
its authorized Common Stock from 3,000,000 shares to 6,000,000 shares.
FOR |_| AGAINST |_| ABSTAIN |_|
3. Proposal to ratify the appointment of Goldstein Golub Kessler LLP as the
Company's independent auditors for 2000.
FOR |_| AGAINST |_| ABSTAIN |_|
4. Proposal to ratify the increase of options available under the current
Stock Option Plan from 500,000 to 750,000.
FOR |_| AGAINST |_| ABSTAIN |_|
9
<PAGE>
The shares represented by this proxy will be voted as directed or if no
direction is indicated, will be voted FOR the election of each of the nominees
and FOR Proposals 2, 3 and 4. As to any other matter, said proxies shall vote in
accordance with their best judgment.
The undersigned hereby acknowledges receipt of the Notice of and Proxy
Statement for the aforesaid Annual Meeting.
Date and sign exactly as name appears
hereon. Each Joint Tenant must sign.
When signed as Attorney, Executor,
Trustee, etc. give full title. If
signer is corporation, sign in full
corporate name by authorized officer.
_____________________________________
(Date)
_____________________________________
(Signature of Stockholder)
_____________________________________
(Signature of Stockholder)
10
