SCHEDULE 14C
Information Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check appropriate box:
( ) Preliminary Information Statement
( ) Confidential, for Use of the Commission Only (as permitted by
Rule 14c-5(d)(2))
(X)Definitive Information Statement
PIRANHA, INC.
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Name of Registrant As Specified In Its Charter
Payment of Filing Fee (Check the appropriate box):
( x) No fee required
( ) Fee computed on table below per Exchange Act Rules 14c-5(g) 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:
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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.
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( ) 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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(3) Filing Party:
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(4) Date Filed:
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Appendex filed pursuant to instruction 3 of item 10 to Schedule 14A
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PIRANHA, INC.
1350 North Lake Shore Drive, Suite 315
Chicago, Illinois 60610
INFORMATION STATEMENT
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To the Stockholders of Piranha, Inc.
This Information Statement is being first sent on or about May 12,
2000, to the holders of record on April 28, 2000 (herein the "Record Date") of
shares of Common Stock, par value $.001 per share, of Piranha, Inc., a Delaware
corporation (herein the "Company"). It has been so sent in connection with the
previous receipt by the Company of written consents executed by Company
stockholders owning in excess of a majority of the issued and outstanding shares
of Company Common Stock adopting and approving resolutions providing for:
1. The Piranha, Inc. 2000 Stock Incentive Plan; and
2. The Piranha, Inc. Stock Option Plan for Non-Employee Directors.
THE BOARD OF DIRECTORS HAS APPROVED THE ADOPTION OF THE PIRANHA, INC. 2000 STOCK
INCENTIVE PLAN AND THE PIRANHA, INC. STOCK OPTION PLAN FOR NON-EMPLOYEE
DIRECTORS (TOGETHER THE "PLANS") AND HAS AUTHORIZED THE SENDING OF THIS
INFORMATION STATEMENT TO ALL STOCKHOLDERS OF THE COMPANY.
THE BOARD OF DIRECTORS OF THE COMPANY IS NOT SOLICITING PROXIES FROM
STOCKHOLDERS. WE ARE NOT ASKING YOU FOR A PROXY AND YOU ARE REQUESTED NOT TO
SEND US A PROXY.
The Board of Directors has fixed the close of business on April 28,
2000, as the record date for determination of the holders of shares of the
Company's outstanding Common Stock entitled to receipt of this Information
Statement.
By Order of the Board of Directors
/s/ Richard S. Berger
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Richard S. Berger, Secretary
May 12, 2000
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VOTING INFORMATION
The Company has one class of voting securities issued and
outstanding, shares of Common Stock, par value $.001 per share. As of the Record
Date there were 8,133,701 shares of Common Stock issued and outstanding. The
approval of a majority of the issued and outstanding shares are required to
approve of the Plans. As of the Record Date the Board of Directors has received
written consents from the holders of 4,094,044 approving of the Plans,
representing approximately 50.3% of the issued and outstanding shares.
The principal executive offices of the Company are located at 1350
N. Lake Shore Drive, Suite 315, Chicago, Illinois 60610. The last sales price
for shares of Common Stock on April 28, 2000 was $ 17.375. The Company's shares
are traded in the over-the-counter market under the symbol BYTE.
STOCK OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table sets forth certain information as of the Record
Date with respect to (1) each person known by the Company to be the beneficial
owner of more than five percent of its outstanding shares of Common Stock and
(2) of each director and executive officer and all directors and executive
officers as a group. The address for such person or group is the Company's
principal executive offices. All shares reflected below are owned of record and
beneficially by the named person or group and each such person or group has sole
investment power with respect to all such shares.
Name Amount Percent of Class
Richard S. Berger 1,472,347 18.1%
Edward W. Sample -0- -0-
Michael Steele 340,000 4.2
Joseph H. Sherrill, Jr.(1) 300,000 3.7
Arthur Tauder(1) -0- -0-
Barger Tygart(1) -0- -0-
Roe VanFossen(1) -0- -0-
R. Don Ashley -0- -0-
Carey Lotzer 660,000 8.1
All executive officers and
directors as a group
(nine persons) 2,772,347 34.1%
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(1) Non-employee director.
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EXECUTIVE COMPENSATION
The following table sets forth for the Company's executive officers
noted below all cash compensation received, being the total compensation
received, during the fiscal year ended December 31, 1999. No compensation was
paid or payable to any executive officer for the fiscal years ended December 31,
1997 or 1998 except for Mr. Berger who received $8,000 in 1998 and $32,000 in
1997.
Name and Title Compensation
Salary Other
Richard S. Berger $ -0- $ -0-
Chief Financial Officer
Edward W. Sample 11,667 22,378(1)
Chief Executive Officer
R. Don Ashley 10,000 10,646(1)
President
Carey Lotzer 27,500 -0-
Chief Scientist
Michael Steele 26,250 -0-
Chief Information Officer
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(1) Represents amounts received in connection with the Company's acquisition of
Zideo.com, Inc.
Mr. Sample has entered into a contract, dated January 7, 2000, with
the Company which provides for his employment as Chief Executive Officer for an
annual salary of $140,000. The contract provides for a two-year term which is
automatically extended for additional one-year periods unless either the Company
or Mr. Sample elects not to renew. Mr. Sample is entitled to participate in the
Company's insurance and benefit plans on terms available to other senior
executives and is reimbursed for expenses reasonably incurred in performance of
his duties under the contract. Under the contract the Company became committed
to issue Mr. Sample options to acquire 1,500,000 shares of Common Stock at an
exercise price of $.01 per share and additional options to acquire 1,000,000
shares of Common Stock at an exercise price of $1.35 per share. The contract
provides the Company with protection for its intellectual property rights and
Mr. Sample has agreed not to compete with the Company during his period of
employment and for a period of two years thereafter.
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Mr. Ashley has entered into a contract, dated January 7, 2000, with
the Company which provides for his employment as President and Chief Operating
Officer for an annual salary of $130,000. The contract provides for a two-year
term which is automatically extended for additional one-year periods unless
either the Company or Mr. Ashley elects not to renew. Mr. Ashley is entitled to
participate in the Company's insurance and benefit plans on terms available to
other senior executives and is reimbursed for expenses reasonably incurred in
performance of his duties under the contract. Under the contract the Company
became committed to issue Mr. Ashley options to acquire 350,000 shares of Common
Stock at an exercise price of $.01 per share and additional options to acquire
350,000 shares of Common Stock at an exercise price of $1.35 per share. The
contract provides the Company with protection for its intellectual property
rights and Mr. Ashley has agreed not to compete with the Company during his
period of employment and for a period of two years thereafter.
Mr. Lotzer has entered into a contract, dated November 16, 1999,
with the Company which provides for his employment as Chief Scientist for an
annual salary of $150,000 in the first year and $200,000 in the second year
during plus discretionary additional compensation if the Company reaches certain
levels of gross sales. The two-year contract is automatically extended for
additional one-year periods unless either the Company or Mr. Lotzer elects not
to renew. Mr. Lotzer is entitled to participate in the Company's insurance and
benefit plans on terms available to other senior executives and is reimbursed
for expenses reasonably incurred in performance of his duties under the
contract. The Company has agreed to purchase $2,500,000 worth of key man life
insurance on Mr. Lotzer's life with $700,000 payable on his death to his
surviving family members. Under the contract the Company became committed to
issue Mr. Lotzer options to acquire 200,000 shares of Common Stock at an
exercise price of $1.35 per share and 100,000 shares of Common Stock at an
exercise price of $5.00 per share if certain gross sales levels are met. The
contract provides the Company with protection for its intellectual property
rights and Mr. Lotzer has agreed not to compete with the Company during his
period of employment and for a period of two years thereafter.
Mr. Steele has entered into a contract, dated November 17, 1999,
with the Company which provides for his employment as Chief Information Officer
for an annual salary of $150,000. The contract provides for a two-year term
which is automatically extended for additional one-year periods unless either
the Company or Mr. Steele elects not to renew. Mr. Steele is entitled to
participate in the Company's insurance and benefit plans on terms available to
other senior executives and is reimbursed for expenses reasonably incurred in
performance of his duties under the contract. The Company has agreed to purchase
$2,500,000 worth of key man life insurance on Mr. Steele's life with $700,000
payable on his death to his surviving family members. Under the contract the
Company became committed to issue Mr. Steele options to acquire 200,000 shares
of Common Stock at an exercise price of $1.35 per share and 100,000 shares of
Common Stock at an exercise price of $5.00 per share if certain gross sales
levels are met. The contract provides the Company with protection for its
intellectual property rights and Mr. Steele has agreed not to compete with the
Company during his period of employment and for a period of two years
thereafter.
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For the year 2000 each outside Company director will receive $2,000
for each director's meeting attended in person and $ 300 for each director
meeting attended by telephone conference call as well as reasonable hotel,
airfare and miscellaneous expenses with a per diem meal allowance of $50. During
the fiscal years ended December 31, 1999, 1998 and 1997 no such fees were paid.
ADOPTION OF THE PIRANHA, INC. 2000 STOCK INCENTIVE PLAN AND
THE PIRANHA, INC. STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS.
INTRODUCTION
The Board of Directors and the holders of a majority of the issued
and outstanding shares of Company Common Stock have adopted and approved The
Piranha, Inc. 2000 Stock Incentive Plan ("2000 Plan") as well as The Piranha,
Inc. Stock Option Plan for Non-Employee Directors ("Director Plan"). The purpose
of the Plans is to enable the Company to offer Company officers, directors,
other key employees and Company consultants and advisors performance-based
incentives and other equity interests in the Company, thereby attracting,
retaining, and rewarding such personnel. The Company believes that increased
share ownership by such persons more closely aligns stockholder and employee
interests by encouraging a greater focus on the profitability of the Company.
There is reserved for issuance under the 2000 Plan an aggregate of 8,000,000
shares of Common Stock. All of such shares may, but need not, be issued pursuant
to the exercise of incentive stock options. There is reserved for issuance under
the Director Plan an aggregate of 500,000 shares of Common Stock.
THE PIRANHA, INC. 2000 STOCK INCENTIVE PLAN
Administration
The 2000 Plan provides for administration by a committee (the
"Committee") to be comprised of two or more non-employee directors of the
Company. Among the Committee's powers are the authority to interpret the 2000
Plan, establish rules and regulations for its operation, select officers and
other key employees of the Company and its subsidiaries to receive awards, and
determine the form, amount, and other terms and conditions of awards. The
Committee also has the power to modify or waive restrictions on awards, to amend
awards, and to grant extensions and accelerations of awards.
Eligibility of Participation
Officers and other key employees of the Company or any of its
subsidiaries and Company consultants and advisors are eligible to participate in
the 2000 Plan. The selection of participants is within the discretion of the
Committee. The estimated number of employees and others who are eligible to
participate in the 2000 Plan is thirty-five.
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Types of Awards
The 2000 Plan provides for the grant of any or all of the following
types of awards: (1) stock options, including incentive stock options and
non-qualified stock options; (2) stock appreciation rights; and (3) stock
awards, including restricted stock. Awards may be granted singly, in
combination, or in tandem, as determined by the Committee. If there is a lapse,
expiration, termination, or cancellation of any option or right prior to the
issuance of shares or the payment of the equivalent thereunder, or if shares are
issued and thereafter are reacquired by the Company pursuant to rights reserved
upon issuance thereof, those shares may again be used for new awards under the
2000 Plan.
Amendments
The Board of Directors may amend the 2000 Plan at any time, provided
that no such amendment shall be effective unless approved within twelve months
after the date of the adoption of such amendment by the affirmative vote of a
majority of the stockholders entitled to vote if such stockholder approval is
required for the 2000 Plan to continue to comply with the requirements of Rule
16b-3 promulgated by the Securities and Exchange Commission pursuant to the
provisions of the Securities Exchange Act of 1934, as amended. The Board may
suspend or discontinue the 2000 Plan at any time; provided, however, that no
such action shall adversely affect any outstanding benefit.
Federal Tax Treatment
Under current law, the following are U.S.federal income tax consequences
generally arising with respect to awards under the 2000 Plan.
A participant who is granted an incentive stock option does not
recognize any taxable income at the time of the grant or at the time of
exercise. Similarly, the Company is not entitled to any deduction at the time of
grant or at the time of exercise. If the participant makes no disposition of the
shares acquired pursuant to an incentive stock option before the later of two
years from the date of grant and one year from the date of exercise, any gain or
loss realized on a subsequent disposition of the shares will be treated as a
long-term capital gain or loss. Under such circumstances, the Company will not
be entitled to any deduction for federal income tax purposes.
A participant who is granted a non-qualified stock option will not
have taxable income at the time of grant, but will have taxable income at the
time of exercise equal to the difference between the exercise price of the
shares and the market value of the shares on the date of exercise. The Company
is entitled to a tax deduction for the same amount.
The grant of an SAR will produce no U.S. federal tax consequences
for the participant of the Company. The exercise of an SAR results in taxable
income to the participant, equal to the difference between the exercise price of
the shares and the market price of the shares on the date of exercise, and a
corresponding tax deduction to the Company.
A participant who has been granted an award of restricted shares of
Common Stock will generally not realize taxable income at the time of the grant,
and the Company will not be entitled to a tax deduction at the time of the
grant. When the restrictions lapse or the performance goals are met, the
participant will recognize taxable income in an amount equal to the excess of
the fair market value of the shares at such time over the amount, if any, paid
for such shares. The Company will be entitled to a corresponding tax deduction.
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THE PIRANHA, INC. STOCK OPTION PLAN FOR NON-EMPLOYEE DIRECTORS
Administration
The Director Plan provides for administration by a committee (the
"Committee") to be comprised of two or more non-employee directors of the
Company. Among the Committee's powers are the authority to interpret the
Director Plan, establish rules and regulations for its operation.
Eligibility of Participation
Only non-employee directors are eligible to participate in the
Director Plan. No director may participate in any decision relating exclusively
to an option granted to that director. It is anticipated that four directors
will be eligible to participate during the first year of the Director Plan.
Types of Awards
The Director Plan provides for the grant of two forms of options:
(1) election and annual stock options and (2) deferred compensation options. If
there is a lapse, expiration, termination, or cancellation of any option or
right prior to the issuance of shares or the payment of the equivalent
thereunder, or if shares are issued and thereafter are reacquired by the Company
pursuant to rights reserved upon issuance thereof, those shares may again be
used for new awards under the Director Plan.
ELECTION STOCK OPTIONS.
The Director Plan provides that each non-employee director of the
Company will be granted a non-qualified stock option to purchase 50,000 shares
of Common Stock upon election or appointment to the Board of Directors (the
"Election Options"). The exercise price and date of exercise for each Election
Option is determined by the Committee in its sole discretion. All Election
Option shall expire ten years from the Grant Date. Election Options become
immediately exercisable in full upon the director's death or withdrawal from the
Board due to disability or retirement (as those terms are defined in the
Director Plan). Payment of the exercise price may be made in cash, previously
acquired shares of Common Stock or a combination of cash and Common Stock.
ANNUAL STOCK OPTIONS.
The Director Plan provides that commencing June 30, 2000 and each
June 30th thereafter, each non-employee director of the Company will be granted
a non-qualified stock option to purchase 1,000 shares of Common Stock (the
"Annual Options"). The exercise price for each Annual Option will be the greater
of the fair market value of Company Common Stock on the date of grant or the par
value of the Common Stock on the date of exercise. Annual Options will be
exercisable in full following six months from their Grant Date (as that term is
defined in the Director Plan) and expire ten years from the Grant Date. However,
Annual Options become immediately exercisable in full upon the director's death
or withdrawal from the Board due to disability or retirement (as those terms are
defined in the Director Plan) or upon his removal or his failure to be nominated
or elected to serve as a member of the Board. In addition, Payment of the
exercise price may be made in cash, previously acquired shares of Common Stock
or a combination of cash and Common Stock.
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DEFERRED COMPENSATION OPTIONS.
The Director Plan also provides that each non-employee director of
the Company may elect to receive during any Plan Year (as that term is defined
in the Director Plan) or specified portion thereof non-qualified stock options
(the "Deferred Compensation Options") in lieu of all or part of the retainers
and fees payable on a Payment Date (as that term is defined in the Director
Plan) to the director for service on the Board and the board of any Company
subsidiary or any of their committees (herein, "Compensation"). Such deferral
elections must be made six months in advance of the Plan Year or portion thereof
covered by such election and shall be irrevocable. If a non-employee director
ceases to serve as a member of the Board for reasons specified in the Director
Plan, the Compensation payable to such director following the last Payment Date
such director served on the Board shall be paid to such director in cash instead
of Deferred Compensation Options. The exercise price for each Deferred
Compensation Option will be the greater of $1.00 or the par value of the Common
Stock on the date of exercise. The number of shares covered by a Deferred
Compensation Option will be the amount of the director's Compensation payable on
a Payment Date specified at the time of his or her election divided by the
difference between the fair market value of the Common Stock on the Payment Date
and $1.00. For example, if a director elected to receive a Deferred Compensation
Option in lieu of Compensation of $1,500 on a Payment Date and the fair market
value of the Common Stock was $31.00 per share on that Payment Date, the
director would receive a Deferred Compensation Option for 50 SHARES.
Deferred Compensation Options become exercisable in full six months
after the Grant Date or upon the director's death or withdrawal from the Board
due to disability, retirement, removal or the failure to be nominated or elected
to serve as a member of the Board. In addition, Deferred Compensation Options
expire ten years after the Grant Date unless terminated earlier in accordance
with the terms of the Director Plan due to withdrawal from service as a member
of the Board. Payment of the exercise price of a Deferred Compensation Option
may be made in cash, previously acquired shares of Common Stock or a combination
of cash and Common Stock.
Amendments
The Board of Directors may discontinue or amend the Director Plan at
any time. However, without stockholder approval, the Board may not amend the
Director Plan to increase the number of shares of Common Stock as to which
options may be granted annually, modify the requirements for participation,
extend the term of the Director Plan or the option periods provided therein, or
decrease the option price or otherwise materially increase the benefits under
the Director Plan. The Director Plan may not be amended more often than once
every six months except to comply with changes in tax laws.
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Federal Tax Treatment
Under current law, the U.S. federal income tax consequences
generally arising with respect to awards under the Director Plan are the same as
those for participants who receive non-qualified stock options under the 2000
Plan.
BENEFITS OF THE 2000 PLAN AND DIRECTOR PLAN
The following table sets forth certain information concerning the
options that the Company has issued under (a) the 2000 Plan to (i) Messrs.
Berger, Sample, Ashley, Lotzer and Steele and (ii) all other employees and
consultants as a group and (b) the Director Plan to all non-employee directors
as a group.
Name and Position Number of Options Exercise Price Market Value(1)
Richard S. Berger 1,000,000 (2) $1.35 $ 16,025,000
Chief Financial Officer
Edward W. Sample 1,500,000 (2) .01 26,047,500
Chief Executive Officer 1,000,000 (3) 1.35 16,025,000
200,000 (4) 5.00 2,475,000
R. Don Ashley 350,000 (2) .01 6,077,750
President 350,000 (3) 1.35 5,608,750
100,000 (4) 5.00 1,237,500
Carey Lotzer 200,000 (5) 1.35 3,205,000
Chief Scientist 100,000 (4) 5.00 1,237,500
Michael Steele 200,000 (5) 1.35 3,205,000
Chief Information Officer 100,000 (4) 5.00 1,237,500
All other employees and 450,000 (2) .01 7,814,250
consultants as a group 100,000 (3) 1.35 1,602,500
(including non-executive 342,000 (6) 5.00 4,232,250
officers)(17 persons) 120,000 (7) 7.50 1,185,000
125,000 (4) 5.00 1,546,875
25,000 (4) 7.50 246,875
100,000 10.00 737,500
All non-employee directors 200,000 5.00 2,400,000
as a group (4 persons)
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(1) Market Value is calculated based on the difference between the last sales
price of Company Common Stock on April 28, 2000 ($17.375) and the indicated
exercise price.
(2) Options expire December 7, 2009.
(3) 50,000 of these options vest 50% on January 8, 2001 and 100% on January 8,
2002.
(4) Options are contingent upon Company's gross sales for the year ended
December 31, 2000, vest 50% on December 31, 2000 and 100% on December 31, 2001
and expire April 25, 2010. (5) Options vest 50% on November 17, 2000 and 100% on
November 17, 2001. Options are contingent upon milestones set forth in
respective optionee's employment contracts and expire November 17, 2004. (6)
150,000 of these options vest 50% on March 1, 2001 and 100% on March 1, 2002;
150,000 of these options vest one-third on February 29, 2001, two-thirds on
February 29, 2002 and 100% on February 29, 2003; 22,000 of these options vest
one-third on February 22, 2001, two-thirds on February 22, 2002 and 100% on
February 22, 2003; and 20,000 of these options vest 50% on January 8, 2001 and
100% on January 8, 2002. (7) Options vest one-third on February 22, 2001,
two-thirds on February 22, 2002 and 100% on February 22, 2003.
Except as provided above, all options are 100% vested, expire in 2009 or
2010 and are not exercisable until October 25, 2000 at the earliest.
By Order of the Board of Directors
/s/ Richard S. Berger
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Richard S. Berger, Secretary
May 12, 2000
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