SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant /X/
Filed by a Party other than the Registrant / /
Check the appropriate box:
/ / Preliminary Proxy Statement
/X/ Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Materials Pursuant to Rule 14a-12
/ / Confidential, for use of the Commission Only (as permitted
by Rule 14a-6(e)(2)):
5B TECHNOLOGIES CORPORATION
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(Name of Registrant as Specified in its Charter)
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(Name of Person(s) Filing Proxy Statement
if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1)
and 0-11.
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computed pursuant to Exchange Act Rule 0-11 (Set forth
amount on which the filing fee is calculated and state how
it was determined):
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Exchange Act Rule 0-11(a)(2) and identify the filing for which
the offsetting fee was paid previously. Identify the previous
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5B TECHNOLOGIES CORPORATION
100 SUNNYSIDE BOULEVARD
WOODBURY, NEW YORK 11797
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
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DECEMBER 18, 2001
To the Stockholders of
5B TECHNOLOGIES CORPORATION:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Stockholders of 5B
Technologies Corporation (the "Company") will be held at 10:00 a.m., local time,
on December 18, 2001, at The Melville Marriott at 1350 Old Walt Whitman Road,
Melville, New York 11747, for the following purposes:
1. To elect five directors of the Company to serve until the next annual
meeting of stockholders and until the election and qualification of their
respective successors.
2. To vote upon a proposal to increase the number of shares available to be
granted under the Company's 2000 Stock Incentive Plan.
3. To ratify the appointment of BDO Seidman, LLP as independent auditors of
the Company for fiscal 2001.
4. To transact such other business as may properly come before the Annual
Meeting.
Only stockholders of record of the Company's Common Stock at the close of
business on November 5, 2001 are entitled to notice of, and to vote at, the
Annual Meeting and any adjournments thereof. All stockholders are cordially
invited to attend the Annual Meeting in person.
A copy of the Company's Annual Report for the fiscal year ended
December 31, 2000 is enclosed.
YOU ARE REQUESTED TO COMPLETE, SIGN, DATE AND RETURN THE ACCOMPANYING FORM
OF PROXY IN THE ENCLOSED ENVELOPE PROVIDED FOR THAT PURPOSE (TO WHICH NO POSTAGE
NEED BE AFFIXED IF MAILED IN THE UNITED STATES) WHETHER OR NOT YOU EXPECT TO
ATTEND THE ANNUAL MEETING IN PERSON. THE PROXY IS REVOCABLE BY YOU AT ANY TIME
PRIOR TO ITS EXERCISE AND WILL NOT AFFECT YOUR RIGHT TO VOTE IN PERSON IN THE
EVENT YOU ATTEND THE ANNUAL MEETING. THE PROMPT RETURN OF THE PROXY WILL BE OF
ASSISTANCE IN PREPARING FOR THE ANNUAL MEETING AND YOUR COOPERATION IN THIS
RESPECT WILL BE GREATLY APPRECIATED.
By Order of the Board of Directors
GLENN NORTMAN,
SECRETARY
November 15, 2001
YOUR VOTE IS IMPORTANT. TO VOTE YOUR SHARES,
PLEASE COMPLETE, SIGN AND DATE THE ENCLOSED
PROXY AND MAIL IT PROMPTLY IN THE
ENCLOSED RETURN ENVELOPE.
5B TECHNOLOGIES CORPORATION
100 SUNNYSIDE BOULEVARD
WOODBURY, NEW YORK 11797
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PROXY STATEMENT
FOR THE ANNUAL MEETING OF
STOCKHOLDERS
TO BE HELD
ON DECEMBER 18, 2001
------------------------
This Proxy Statement is furnished in connection with the solicitation by the
Board of Directors of 5B Technologies Corporation (the "Company") of proxies to
be used at the Annual Meeting of Stockholders (the "Annual Meeting") of the
Company to be held at 10:00 a.m., local time, on December 18, 2001, at The
Melville Marriott at 1350 Old Walt Whitman Road, Melville, New York 11747, and
any adjournment thereof. This Proxy Statement and the accompanying proxy,
together with a copy of the Annual Report of the Company for the fiscal year
ended December 31, 2000, including financial statements, are first being mailed
or delivered to stockholders on or about November 19, 2001.
If proxy cards in the accompanying form are properly executed and returned,
the shares of common stock of the Company, par value $.04 per share (the "Common
Stock") represented thereby will be voted as instructed on the proxy. If no
instructions are given, such shares will be voted (1) for the election as
directors of the nominees of the Board of Directors named below, (2) in favor of
the proposal to increase the number of shares available to be granted under the
Company's 2000 Stock Incentive Plan, (3) for the proposal to appoint BDO
Seidman, LLP as the Company's independent auditors for fiscal 2001, and (4) in
the discretion of the proxies named in the proxy card, on any other proposals to
properly come before the Annual Meeting or any adjournment thereof. Any proxy
may be revoked by a stockholder prior to its exercise upon written notice to the
Secretary of the Company, or by the vote of a stockholder cast in person at the
Annual Meeting.
Holders of record of all Common Stock on November 5, 2001 (the "Record
Date") will be entitled to notice of, and to vote at, the Annual Meeting or any
adjournment thereof. As of that date, there were approximately 2,530,258 shares
of Common Stock outstanding and entitled to vote, and a majority of these shares
will constitute a quorum for the transaction of business at the Annual Meeting.
Each share of Common Stock entitles the holder thereof to one vote on all
matters to come before the Annual Meeting, including election of directors. Only
votes cast "for" a motion constitute affirmative votes. Votes "withheld" or
abstentions (including broker non-votes) are included in determining the
existence of a quorum, but since they are not votes "for" a motion, they will
have the same effect as negative votes or votes "against" such matters.
Under applicable law, our certificate of incorporation and our by-laws, and
assuming that a quorum is present, in the election of directors, the persons
elected will be the persons receiving the greatest number of votes. At the 2001
Annual Meeting, the affirmative vote of the holders of a majority of the shares
of common stock cast in person or by proxy at the meeting is required to:
increase the number of shares available to be granted under the Company's 2000
Stock Incentive Plan and to ratify the appointment of BDO Seidman, LLP as
independent auditors of the Company.
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SECURITY OWNERSHIP BY PRINCIPAL STOCKHOLDERS AND MANAGEMENT
The following table sets forth the number and percentage of shares of Common
Stock beneficially owned, as of the Record Date, by (i) all persons known by the
Company to be the beneficial owner of more than 5% of the outstanding Common
Stock, (ii) each of the current directors, executive officers and nominees to
serve as directors of the Company, and (iii) all directors and executive
officers of the Company as a group.
NAME AND ADDRESS OF AMOUNT OF PERCENT OF
BENEFICIAL OWNER(1) BENEFICIAL OWNERSHIP COMMON STOCK(2)
------------------- -------------------- ---------------
Glenn Nortman................................. 436,901(3) 16.92%
Jeffrey Nortman............................... 407,235(3) 15.91
Steven Schneider.............................. 14,033(5) *
William H. Kelly.............................. 13,588(4) *
Stuart Belloff................................ 53,322(5) 2.06
Anthony Fernandez............................. 14,665(5) *
Leonard S. Teiber............................. 3,333 *
Gary Rubin.................................... 10,600 *
Connecticut Bank of Commerce.................. 838,679(6) 25.98
Galt Corporation.............................. 300,000(7) 10.60
All directors and executive officers as a
group (8 persons)........................... 643,086(3)(4)(5) 37.14%
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* Less than 1%
(1) Except for the Connecticut Bank of Commerce with an address at 90 Broad
Street, New York, NY 1004, the address of each listed person is c/o 5B
Technologies Corporation, 100 Sunnyside Boulevard, Woodbury, New York 11797.
(2) Except as indicated in the footnotes to this table, the persons named in the
table have sole voting and investment power with respect to all shares of
Common Stock. The number of shares beneficially owned by each person or
group as of the Record Date includes shares of Common Stock that such person
or group had the right to acquire on or within 60 days after the Record
Date, including, but not limited to, upon the exercise of options. For each
individual and group included in the table, percentage ownership is
calculated by dividing the number of shares benefically owned by such person
or group as described above by the sum of the number of shares of Common
Stock outstanding on the Record Date and the number of shares of Common
Stock that such person or group had the right to acquire on or within
60 days of the Record Date, including, but not limited to, upon the exercise
of options.
(3) Includes options which are currently exercisable (or exercisable within
60 days of the Record Date) to purchase 51,665 shares of Common Stock for
Glenn Nortman and 29,999 shares of Common Stock for Jeffrey Nortman.
(4) Includes options which are currently exercisable (or exercisable within
60 days of the Record Date) to purchase 2,000 shares of Common Stock for
Mr. Kelly.
(5) Represents only options which are currently exercisable (or exercisable
within 60 days of the Record Date) to purchase shares of Common Stock for
each of Messrs. Schneider, Belloff, and Fernandez.
(6) Represents (i) 140,193 shares of Common Stock, (ii) shares of Preferred
Stock currently convertible into 648,485 shares of Common Stock, and
(iii) warrants exercisable into 50,000 shares of Common Stock, with the
conversion of the Preferred Stock and exercise of the warrants subject to
approval by the Company's stockholders for any amount of Common Stock issued
to the holder in excess of 19.9% of the Company's issued and outstanding
Common Stock (calculated as of the date of issuance of the Preferred Stock).
(7) Represents warrants exercisable into 300,000 shares of Common Stock subject
to approval by the Company's stock holders for any amount of Common Stock
issued to the holder in excess of
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19.9% of the Company's issued and outstanding Common Stock (calculated as of
the date of issuance of the warrants).
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Transactions with Mr. Teiber: Mr. Teiber, a Director of the Company, is an
attorney in private practice who provides legal services to the Company. The
Company incurred expenses aggregating approximately $72,000 during fiscal 2000
for the services provided by Mr. Teiber. The Company believes that the fees for
services provided by the law firm were at least as favorable to the Company as
the fees for such services from unaffiliated third parties.
Transactions with Mr. Nortman: Jeffrey Nortman, a Director of the Company,
is a consultant to the Company. The Company has paid Mr. Nortman $10,000 per
month since May 14, 2001 which shall continue until December 31, 2001. The
Company may elect to retain Mr. Nortman as a consultant after such time.
PROPOSAL ONE
ELECTION OF DIRECTORS
GENERAL
A board of five (5) directors is to be elected at the Annual Meeting. Unless
otherwise instructed, the persons named in the enclosed proxy will vote the
proxies received by them FOR management's five (5) nominees named below, all of
whom are presently directors of the Company. In the event that any management
nominee is unable or declines to serve as a director at the time of the Annual
Meeting, the proxies will be voted for any nominee who shall be designated by
the present Board of Directors to fill the vacancy. The Company is not aware of
any nominee who will be unable or will decline to serve as a director. The term
of office for each person elected as a director will continue until the
Company's next annual meeting of stockholders and until his successor has been
elected and qualified.
VOTE REQUIRED
The five (5) nominees for director receiving a plurality of the votes cast
at the Annual Meeting in person or by proxy shall be elected. Shares present in
person at the Annual Meeting that are not voted for a particular nominee, and
shares represented by proxies as to which authority to vote for such nominee is
properly "withheld," will not be counted either "for" or "against" in
determining a plurality for such nominee.
NOMINEES
The following information is supplied with respect to the nominees for
election as directors of the Company:
NAME AGE POSITION WITH THE COMPANY
---- -------- --------------------------------------------------
Glenn Nortman..................... 43 Chief Executive Officer, Secretary and a Director
Jeffrey Nortman................... 42 Director
Leonard S. Teiber................. 47 Director
William H. Kelly.................. 60 Director
Gary Rubin........................ 46 Director
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Certain biographical information regarding each nominee for election as a
director of the Company is set forth below:
GLENN NORTMAN is the Chief Executive Officer, Secretary and a director of
the Company. Prior to becoming Chief Executive Officer in 1997, Mr. Nortman had
served as the Company's Co-Chief Executive Officer beginning in 1996 and as the
Executive Vice President from June 1992. Mr. Nortman runs the day-to-day
operations of the Company's Internet solutions and systems integration and
consulting business. From 1987 to 1992, Mr. Nortman served as the National
Accounts Manager for Pacificorp Capital, a wholly-owned computer leasing
subsidiary of PacifiCorp, the public utility in Portland, Oregon. Mr. Nortman is
the brother of Jeffrey Nortman.
JEFFREY NORTMAN has been a director of the Company since the Company's
inception in 1991. Mr. Nortman was the Chief Executive Officer of DeltaForce
Personnel Services, Inc., from 1999 until its sale in 2001. Mr. Nortman was the
Chief Operating Officer of the Company from 1997 to May of 2001 and currently
serves as a consultant to the Company. Prior to becoming Chief Operating
Officer, Mr. Nortman served as the Company's Co-Chief Executive Officer
beginning in 1996 and as the President from the Company's inception in 1991.
From 1987 to 1991, Mr. Nortman was the Manager of Peripheral Trading for
Pacificorp Capital. Mr. Nortman is the brother of Glenn Nortman.
WILLIAM H. KELLY has been a director of the Company since 1998. The
Honorable William H. Kelly is a prominent member of the Long Island community
serving as Mayor of Asharoken since 1982. In addition, since 1976 Mr. Kelly has
been the owner of WHK Leasing, a high technology equipment leasing company.
Mr. Kelly has served as past President of the New York State Conference of
Mayors and as Chairman of the Tri-County Village Officials Association.
LEONARD S. TEIBER has been a Director of the Company since June of 2001 and
has served on the Company's audit committee since June of 2001. Mr. Teiber is a
practicing attorney and has been in private practice for more than ten years and
represents the Company in general commercial and corporate matters. Mr. Teiber
is a member of the Bar of New York and the Bar of Arizona.
GARY RUBIN has been a director of the Company since June of 2001. In 1998
Mr. Rubin founded and is currently a Managing Director of Masters Research
Partners LLC. From 1996 to 1998, Mr. Rubin served as Chief Financial Officer and
a member of the Executive Committee of Tutor Time Learning Systems, Inc. and
currently serves on its board of directors. From 1993 to 1996, he was a Director
with Strategica Capital, a merchant-banking firm.
EXECUTIVE OFFICERS OF THE REGISTRANT OR ITS SUBSIDIARIES
The following information is supplied with respect to the executive officers
of the Company who are not also directors:
NAME AGE POSITION WITH THE COMPANY
---- -------- -------------------------------------------
Steven Schneider.......................... 48 Chief Operating Officer
Stuart A. Belloff......................... 43 Chief Technology Officer and Executive Vice
President of 5B Technologies Group, Inc.
Anthony Fernandez......................... 34 Director of Finance
STUART A. BELLOFF is the Executive Vice President and Chief Technology
Officer of the Company's subsidiary, 5B Technologies Group, Inc., a position he
has held since October 1998. In October 1998, Paratech Resources acquired
Comptech Resources, Inc., a systems consulting, software applications and
internet development firm, from Mr. Belloff and the other shareholders of
Comptech Resources. Paratech Resources was subsequently renamed to 5B
Technologies Group, Inc. Mr. Belloff joined Comptech Resources in 1994 as
Executive Vice President and was appointed President of Comptech Resources in
1996. Prior thereto, Mr. Belloff was the Vice President of
Microconnections, Inc., a software applications development firm, from 1991 to
1993. Prior thereto, Mr. Belloff founded
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Datatech Inc., an application development organization, in 1983 and served as
its Senior Vice President from 1983 until Datatech was merged into
Microconnections in 1991.
ANTHONY FERNANDEZ is the Director of Finance of the Company, a position he
has held since January 1999. Prior to becoming Director of Finance in 1999,
Mr. Fernandez served as Controller of the Company beginning in 1998. Prior to
his employment with the Company, Mr. Fernandez was the Chief Financial Officer
of DSO Fluid Handling, Inc., a manufacturer of replacement parts for machinery
used in the food and pharmaceutical industry. Prior thereto, Mr. Fernandez was a
Senior Accountant with the accounting firm of Shanholt Glassman Hoffman & Klein,
P.C. from 1995 to 1997. Prior thereto, from 1993 to 1995, Mr. Fernandez was a
Senior Associate at the accounting firm of BDO Seidman, LLP.
ROCCO C. PASSAFUIME was the Vice President of Sales of the Company's
subsidiary, 5B Technologies Group, Inc., a position he held since 1997 and
resigned from the Company in March of 2001.
STEVEN SCHNEIDER is the Chief Operating Officer of the Company, a position
he has held since May, 2001. Mr. Schneider joined the Company in September, 2000
as Vice President of Corporate Development. Prior to his employment with the
Company, he was a managing director with National Financial Companies, LLC from
March 1998 to September 2000. From 1996 to March 1998 he was Executive Vice
President and Chief Finanical Officer of Waters, Pelton, Ostroff & Associates.
MEETINGS OF THE BOARD
During the last fiscal year, the Company's Board of Directors met one time,
but the members of the Board had regular contact with the Company's senior
management in order to remain fully apprised of the Company's activities. In
addition to these meetings of the Board of Directors, the Board of Directors
acted by unanimous written consent in lieu of meeting on four occasions in 2000.
There is one standing committee of the Board of Directors as described below.
DIRECTOR'S COMPENSATION
The members of the Board of Directors do not receive cash compensation for
their services but are eligible to participate in the Director Option Plan as
described below.
AUDIT COMMITTEE
The Audit Committee is responsible for reviewing the accounting principles,
policies and practices followed by the Company in accounting for, and reporting,
its financial results of operations and for selecting and meeting with the
Company's independent accountants. This Committee meets from time to time with
members of the Company's internal audit staff and also, among other things,
reviews (i) the financial, investment and risk management policies followed by
the Company in conducting its business activities; (ii) the Company's annual
financial statements; (iii) the Company's internal financial controls and
(iv) the performance of the Company's independent accountants. The Audit
Committee operates under a written Audit Committee Charter adopted by the Board
of Directors, a copy of which is attached hereto as Annex A. This Committee held
two meetings during the last fiscal year. During the fiscal year ended
December 31, 2000, the committee consisted of William H. Kelly and Larry Austin,
and, from April 2000 through the end of the year 2000, James E. Hillman. The
Audit Committee currently consists of Messrs. Kelly, Rubin and Teiber. The Board
of Directors has determined that each of Messrs. Kelly and Rubin of the Audit
Committee is an "independent director" as defined in Rule 4200 of the listing
standards of the National Association of Securities Dealers, Inc. and
Mr. Teiber is qualified to serve by reason of an exemption to
Rule 4200(a)14(B).
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
The Company does not currently have a compensation committee, and instead
the entire Board of Directors of the Company determined the levels of executive
officer compensation during 2000. No executive officer of the Company had any
relationship reportable under the Compensation Committee Interlock regulations
during 2000.
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PROPOSAL TWO: APPROVAL OF AN INCREASE IN THE NUMBER OF SHARES
AVAILABLE TO BE GRANTED UNDER THE 2000 STOCK INCENTIVE PLAN
The Company's Board of Directors recommends that the stockholders approve
the Amendment to the 5B Technologies Corporation 2000 Stock Incentive Plan (the
"2000 Plan"). The amendment authorizes the issuance of up to 500,000 additional
shares of our Common Stock and was approved by the Board of Directors at a
meeting held on October 17, 2001, subject to stockholder approval. Under the
2000 Plan, the Company originally authorized 500,000 shares of our Common Stock
to be issued in connection with grants awarded under the 2000 Plan. If the
amendment is approved, the 500,000 additional shares being authorized may be
granted to employees, officers, directors and other individuals providing bona
fide services to the Company.
The Board of Directors believes that stock options play an important role in
providing eligible employees and qualifying third parties with an incentive and
inducement to contribute fully and to further the growth and development of the
Company and its subsidiaries because there is an opportunity to acquire a
proprietary interest in the Company. As of November 5, 2001, 302,500 awards have
been granted.
Since the approval of the 2000 Plan, the Company has experienced a
significant increase in the number of employees eligible for awards due to
recent acquisitions and internal business development. The number of employees
has increased from approximately 43 at December 31, 2000 to approximately 71 at
November 5, 2001. In addition, the number of outstanding shares has increased to
approximately 6,365,540, on a fully diluted basis, at November 5, 2001, from
approximately 2,162,041, on a fully diluted basis, at December 31, 2000, thereby
reducing the percentage of awards from 23% to 7.8% of our outstanding common
stock, on a fully diluted basis. The Company also will need to grant additional
awards to meet the needs of new employees it expects to acquire under future
acquisition activities. The Board of Directors evaluated all of the foregoing
factors in reaching a determination to increase the number of shares available
for awards under the 2000 Plan.
The offer and sale of the additional underlying shares of our common stock
under the 2000 Plan will be registered pursuant to a registration statement on
Form S-8 as soon as reasonably practicable after it has been amended pursuant to
Proposal 2.
A summary of the 2000 Plan, as amended, is set forth below. This summary is
qualified in its entirety by reference to the full text of the 2000 Plan, as
amended, which appears as Annex B to this Proxy Statement. We urge you to
carefully review the test of the 2000 Plan as proposed to be amended.
GENERAL
PURPOSE: The purpose of the 2000 Plan is to promote the Company's long-term
growth and profitability by providing key people with incentives to improve
stockholder value and contribute to the Company's growth and financial success
and by enabling it to attract, retain and reward the best available people.
SHARES AVAILABLE UNDER THE PLAN: The number of shares of Common Stock that
the Company may issue with respect to awards available for grant under the
proposed plan will not exceed an aggregate of 1,000,000 shares. These limits
will be adjusted to reflect any stock dividends, split-ups, recapitalizations,
mergers, consolidations, business combinations or exchanges of shares and the
like. If any award, or portion of an award, under the plan expires or terminates
unexercised, becomes unexercisable or is forfeited or otherwise terminated,
surrendered or canceled as to any shares, or if any shares of Common Stock are
surrendered to us in connection with any award (whether or not such surrendered
shares were acquired pursuant to any award), the shares subject to such award
and the surrendered shares will thereafter be available for further awards under
the plan.
ADMINISTRATION: The proposed plan shall be administered by the Board of
Directors or by a committee or committees as the Board may appoint from time to
time (whether by the Board of Directors or any such committee, the
"Administrator"). The Administrator has full power and authority to take all
actions necessary to carry out the purpose and intent of the plan, including,
but not limited
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to, the authority to: (i) determine who is eligible for awards, and the time or
times at which such awards will be granted; (ii) determine the types of awards
to be granted; (iii) determine the number of shares covered by or used for
reference purposes for each award; (iv) impose such terms, limitations,
restrictions and conditions upon any such award as the Administrator deems
appropriate; (v) modify, amend, extend or renew outstanding awards, or accept
the surrender of outstanding awards and substitute new awards (provided however,
that, except as noted below, any modification that would materially adversely
affect any outstanding award may not be made without the consent of the holder);
(vi) accelerate or otherwise change the time in which an award may be exercised
or become payable and to waive or accelerate the lapse, in whole or in part, of
any restriction or condition with respect to such award, including, but not
limited to, any restriction or condition with respect to the vesting or
exercisability of an award following termination of any grantee's employment or
consulting relationship; and (vii) establish objectives and conditions, if any,
for earning awards and determining whether awards will be paid after the end of
a performance period.
Except with respect to a stock dividend, stock split or reverse stock split,
in the event of any change affecting the Common Stock, the Company or its
capitalization by reason of any stock dividend, split-up, recapitalization,
merger, consolidation, business combination or exchange of shares, other than
any such change that is part of a transaction resulting in a Change in Control
(as defined in the 2000 Plan), the Administrator, in its discretion and without
the consent of the holders of the awards, shall make (A) appropriate adjustments
to the maximum number and kind of shares reserved for issuance or with respect
to which awards may be granted under the 2000 Plan, in the aggregate and with
respect to any individual during any one fiscal year of the Company, and
(B) any adjustments in outstanding awards, including, but not limited to,
reducing the number, kind and price of securities subject to outstanding awards,
and may, without the consent of holders of awards, make any other adjustments in
outstanding awards.
Without the consent of holders of awards, the Administrator, in its sole
discretion, may make any modifications to any awards, including, but not limited
to, cancellation, forfeiture, surrender or other termination of the awards, in
whole or in part, regardless of the vested status of the award, but solely to
the extent necessary to facilitate the compliance of such transaction with
requirements for treatment as a pooling of interests transaction for accounting
purposes under generally accepted accounting principles.
Without the consent of holders of awards, the Administrator, in its
discretion, is authorized to make adjustments in the terms and conditions of,
and the criteria included in, awards in recognition of unusual or nonrecurring
events affecting the Company, or its financial statements or those of any of its
affiliates, or of changes in applicable laws, regulations or accounting
principles, whenever the Administrator determines that such adjustments are
appropriate in order to prevent dilution or enlargement of the benefits or
potential benefits intended to be made available under the plan.
PARTICIPATION: Participation in the plan will be open to all of the
Company's employees, officers, directors and other individuals providing bona
fide services to the Company or any of its affiliates, as the Administrator may
select from time to time.
TYPE OF AWARDS
The plan as proposed would allow for the grant of stock options, stock
appreciation rights, stock awards, phantom stock awards, performance awards and
other stock-based awards. The Administrator, in its sole discretion, shall
establish the terms of all awards granted under the 2000 Plan. The Administrator
may grant these awards individually or in tandem with other awards. The
Administrator may permit or require a recipient of an award to defer such
individual's receipt of the payment of cash or the delivery of Common Stock that
would otherwise be due to such individual by virtue of the exercise of, payment
of, or lapse or waiver of restrictions respecting, any award. If any such
payment deferral is required or permitted, the Administrator shall, in its sole
discretion, establish rules and procedures for such payment deferrals.
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STOCK OPTIONS: The proposed 2000 Plan allows the Administrator to grant
either awards of incentive stock options, as that term is defined in
Section 422 of the Internal Revenue Code, or nonqualified stock options, except
that awards of incentive stock options shall be limited to employees of the
Company or of any current or hereafter existing "parent corporation" or
"subsidiary corporation," as defined in Sections 424(e) and (f) of the Internal
Revenue Code, respectively, of the Company. Options intended to qualify as
incentive stock must have an exercise price at least equal to fair market value
on the date of grant, but nonqualified stock options may be granted with an
exercise price less than fair market value. No stock option shall be an
incentive stock option unless so designated by the Administrator at the time of
grant or in the grant agreement evidencing such stock option.
STOCK APPRECIATION RIGHTS: The 2000 Plan allows the Administrator to grant
awards of stock appreciation rights which entitle the holder to receive a
payment in cash, in shares of Common Stock, or in a combination of both, having
an aggregate value equal to the spread on the date of exercise between the fair
market value of the underlying shares on that date and the base price of the
shares specified in the grant agreement.
STOCK AND PHANTOM STOCK AWARDS: The 2000 Plan allows the Administrator to
grant restricted or unrestricted stock awards, or awards denominated in
stock-equivalent units, to eligible participants with or without payment of
consideration by the grantee. Stock awards and phantom stock awards may be paid
in cash, in shares of Common Stock, or in a combination of both.
PERFORMANCE AWARDS: The 2000 Plan allows the Administrator to grant
performance awards which become payable in cash, in shares of Common Stock, or
in a combination of both, on account of attainment of one or more performance
goals established by the Administrator. The Administrator may establish
performance goals based on operating income, or that of the Company's
affiliates, or one or more other business criteria the Administrator may select
that applies to an individual or group of individuals, a business unit, or the
Company or its affiliate as a whole, over such performance period as the
Administrator may designate.
OTHER STOCK-BASED AWARDS: The 2000 Plan allows the Administrator to grant
other stock-based awards to eligible participants which may be denominated in
cash, Common Stock, other securities, stock equivalent units, stock appreciation
units, securities or debentures convertible into Common Stock, or any
combination of the foregoing. These awards may be paid in Common Stock or other
securities, in cash, or in a combination of Common Stock, other securities and
cash.
AWARDS UNDER THE PLAN
Because participation and the types of awards available for grant under the
plan as proposed are subject to the discretion of the Administrator, the
benefits or amounts that any participant or groups of participants may receive
if the amendment to the 2000 Plan is approved are not currently determinable. As
of the Record Date awards for 302,500 options have been granted under the 2000
Plan.
AMENDMENT AND TERMINATION
The Board of Directors may terminate, amend or modify the plan or any
portion thereof at any time.
FEDERAL INCOME TAX CONSEQUENCES
The following is a general summary of the current federal income tax
treatment of stock options, which would be authorized for grants under the plan
as proposed, based upon the current provisions of the Internal Revenue Code and
regulations promulgated thereunder.
INCENTIVE STOCK OPTIONS: Incentive stock options under the 2000 Plan are
intended to meet the requirements of section 422 of the Internal Revenue Code.
No tax consequences result from the grant of an incentive stock option. If an
option holder acquires stock upon exercise, the option holder will not recognize
income for ordinary income tax purposes (although the difference between the
option
8
exercise price and the fair market value of the stock subject to the option may
result in alternative minimum tax liability to the option holder) and the
Company will not be allowed a deduction as a result of such exercise, provided
that the following conditions are met: (a) at all times during the period
beginning with the date of the granting of the option and ending on the day
three months before the date of such exercise, the option holder is an employee
of the Company or one of its subsidiaries, and (b) the option holder makes no
disposition of the stock within two years from the date of the option grant nor
within one year after the transfer of the stock to the option holder. The three-
month period extends to one year in the event of disability and is waived in the
event of death of the employee. If the option holder sells the stock after
complying with these conditions, any gain realized over the price paid for the
stock ordinarily will be treated as capital gain, and any loss will be treated
as capital loss, in the year of the sale.
If the option holder fails to be employed by the Company for the required
period, the tax consequences will be substantially the same as for a
nonqualified option, discussed below. If the option holder fails to hold the
stock received pursuant to exercise of the incentive stock options for the
period requirements discussed above, the option holder will recognize ordinary
income in an amount equal to the lesser of (i) the excess of the fair market
value of the stock on the date of the exercise of the option over the exercise
price, or (ii) the excess of the amount realized upon such disposition over the
adjusted tax basis of the stock. Any additional gain ordinarily will be
recognized by the option holder as capital gain, either long-term or short-term,
depending on the holding period of the shares. If the option holder is treated
as having received ordinary income because of his or her failure to comply with
either condition above, the Company will be allowed an equivalent deduction in
the same year.
NONQUALIFIED STOCK OPTIONS: No tax consequences result from the grant of a
nonqualified stock option. An option holder who exercises a nonqualified stock
option generally will realize compensation taxable as ordinary income in an
amount equal to the difference between the exercise price and the fair market
value of the shares on the date of exercise, and the Company will be entitled to
a deduction from income in the same amount in the fiscal year in which the
exercise occurred. The option holder's basis in these shares will be the fair
market value on the date income is realized, and when the holder disposes of the
shares he or she will recognize capital gain or loss, either long-term or
short-term, depending on the holding period of the shares.
DISALLOWANCE OF DEDUCTIONS: The Internal Revenue Code disallows deductions
for publicly held corporations with respect to compensation in excess of
$1,000,000 paid to the corporation's chief executive officer and its four other
most highly compensated officers. However, compensation payable solely on
account of attainment of one or more performance goals is not subject to this
deduction limitation if the performance goals are objective, pre-established and
determined by a compensation committee comprised solely of two or more outside
directors, the material terms under which the compensation is to be paid are
disclosed to the stockholders and approved by a majority vote, and the
compensation committee certifies that the performance goals and other material
terms were in fact satisfied before the compensation is paid. Under this
exception, the deduction limitation does not apply with respect to compensation
otherwise deductible on account of stock options and stock appreciation rights
granted with the approval of the outside directors at fair market value under a
plan, such as the proposed plan, that limits the number of shares that may be
issued to any individual and which is approved by the corporation's
stockholders.
A copy of the amended and restated 2000 Plan is set forth in Annex A to this
Proxy Statement.
REQUIRED AFFIRMATIVE VOTE
This proposal to approve the plan requires the affirmative vote of the
holders of a majority of the shares of Common Stock present in person or
represented by proxy and entitled to vote at the Annual Meeting.
RECOMMENDATION
The Company's Board of Directors unanimously recommends a vote "For" the
adoption of the plan.
9
PROPOSAL THREE
RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
GENERAL
The Board of Directors has selected BDO Seidman, LLP, independent auditors,
to audit the consolidated financial statements of the Company for the fiscal
year ending December 31, 2001 and recommends that stockholders vote for
ratification of such appointment. Notwithstanding the selection, the Board of
Directors, in its discretion, may direct the appointment of new independent
auditors at any time during the year, if the Board of Directors feels that such
a change would be in the best interests of the Company and its stockholders. In
the event of a negative vote on ratification, the Board of Directors will
reconsider its selection.
Representatives of BDO Seidman, LLP are expected to be present at the Annual
Meeting with the opportunity to make a statement if they desire to do so and are
expected to be available to respond to appropriate questions.
AUDIT FEES
BDO Seidman, LLP has billed the Company $111,000, in the aggregate, for
professional services rendered by them for the audit of the Company's annual
financial statements for the Company's 2000 fiscal year and the reviews of the
interim financial statements included in the Company's Quarterly Reports on
Form 10-Q for the Company's 2000 fiscal year.
FINANCIAL INFORMATION SYSTEMS DESIGN AND IMPLEMENTATION FEES
BDO Seidman, LLP has not billed the Company for any professional services
related to financial information systems design and implementation as described
in Paragraph (c)(4)(ii) of Rule 2-01 of Regulation S-X.
ALL OTHER FEES
BDO Seidman, LLP has billed the Company $58,000, in the aggregate, for
professional services rendered by it for all services other than those services
covered in the sections captioned "Audit Fees" and "Financial Information
Systems Design and Implementation Fees" for the Company's 2000 fiscal year.
These other services include (i) services rendered in connection with
acquisitions made by the Company, (ii) assistance with regulatory filings, and
(iii) consultations on the effects of various accounting issues and changes in
professional standards.
In making its recommendation to ratify the appointment of BDO Seidman, LLP
as the Company's independent accountants for the fiscal year ending
December 31, 2001, the Audit Committee has considered whether the non-audit
services provided by BDO Seidman, LLP are compatible with maintaining the
independence of BDO Seidman, LLP.
REQUIRED AFFIRMATIVE VOTE
The affirmative vote of the majority of votes cast at the Annual Meeting in
person or represented by proxy at the meeting and entitled to vote is required
to ratify the appointment of independent auditors. Abstentions and broker
non-votes do not count as an affirmative vote cast, and therefore have the same
effect as a vote "against" this proposal.
RECOMMENDATION
The Company's Board of Directors unanimously recommends a vote "For" the
ratification of the appointment of BDO Seidman, LLP as independent auditors.
10
EXECUTIVE COMPENSATION AND OTHER MATTERS
The following table summarizes all compensation earned by or paid to the
Company's Chief Executive Officer and each of the Company's (and Subsidiaries')
other executive officers whose total annual salary and bonus exceeded $100,000
in 2000 (collectively, the "named executive officers"), for services rendered in
all capacities to the Company during the fiscal years ended December 31, 2000,
1999 and 1998.
SUMMARY COMPENSATION TABLE
ANNUAL COMPENSATION
LONG TERM
COMPENSATION
SECURITIES
NAME AND FISCAL OTHER ANNUAL UNDERLYING
PRINCIPAL POSITION YEAR SALARY BONUS COMPENSATION OPTIONS
------------------ -------- -------- -------- ------------ ------------
Glenn Nortman............................. 2000 $380,000 -- $26,097(1) 50,000(5)
Chief Executive Officer 1999 380,000 -- 36,273(2)
1998 340,182 $73,000 45,541(3) --
Jeffrey Nortman........................... 2000 $275,028 -- $40,013(1) 25,000(5)
Chief Operating Officer 1999 280,317 -- 41,439(2) --
1998 365,112 -- 45,258(3) --
Stuart A. Belloff......................... 2000 $210,000 -- $ 4,800(4) 40,000(5)
Chief Technology Officer 1999 175,000 -- 4,800(4) --
of 5B Technologies Group, Inc. 1998 31,827 $50,000 800(4) 40,000(5)
Anthony Fernandez......................... 2000 $109,968 -- $ 4,500(4) 10,000
Director of Finance 1999 97,763 -- 3,375(4) 7,000(5)
1998 20,840 -- -- --
Rocco C. Passafuime....................... 2000 $180,336 -- $ 9,000(4) 18,750(5)
Vice President of Sales 1999 174,567 -- 9,000(4) 28,750(5)
of 5B Technologies Group, Inc. 1998 153,523 -- 9,000(4) 18,750(5)
------------------------
(1) Represents payments of approximately $15,500 for automobile expenses and
$10,557 for country club dues and personal use for Mr. Glenn Nortman, and
approximately $14,239 for automobile expenses and $25,774 for country club
dues and personal use for Mr. Jeffrey Nortman.
(2) Represents payments of approximately $18,000 for automobile expenses and
$18,273 for country club dues for Mr. Glenn Nortman, and approximately
$16,267 for automobile expenses and $25,172 for country club dues for
Mr. Jeffrey Nortman.
(3) Represents payments of approximately $18,700 for automobile expenses and
$26,841 for country club dues for Mr. Glenn Nortman, and approximately
$18,400 for automobile expenses and $26,858 for country club dues for
Mr. Jeffrey Nortman.
(4) Represents automobile expenses.
(5) Reflects the number of shares of the Company's Common Stock underlying such
option.
All directors of the Company are reimbursed for all reasonable expenses
incurred by them in acting as a director or as a member of any committee of the
Board of Directors.
11
OPTION GRANTS IN LAST FISCAL YEAR
The following table provides information on stock options granted in 2000 to
each of the named executive officers:
INDIVIDUAL GRANTS POTENTIAL REALIZABLE
---------------------------------------------------------------------------------------- VALUE AT ASSUMED ANNUAL
NUMBER OF PERCENT OF RATES OF STOCK
SHARES TOTAL APPRECIATION FOR OPTIONS(2)
UNDERLYING OPTIONS EXERCISE EXPIRATION DATE ---------------------------
NAME OPTIONS GRANTED PRICE DATE 5% 10%
---- ---------- ---------- -------- --------------- ------------ ------------
Anthony Fernandez................. 10,000(3) 2.61% $ 1.63 1/20/10 10,220 25,898
Stuart Belloff.................... 40,000(3) 10.42% $ 1.79 1/20/10 44,966 113,953
Jeffrey Nortman................... 25,000(3) 6.51% $ 1.79 1/20/10 28,104 71,220
Glenn Nortman..................... 50,000(3) 13.03% $ 1.79 1/20/10 56,207 142,441
Rocco C. Passafuime............... 18,750(4) $13.25 1/20/10 156,241 395,945
------------------------
(1) Amounts represent hypothetical gains that could be achieved if the option is
exercised at the end of the option term. These gains are disclosed as
required under SEC rules, and are based on assumed rate of stock
appreciation of 5% and 10% compounded annually from the option's date of
grant to its date of expiration. Actual gain upon exercise, if any, will
depend on the future performance of the Company's Common Stock, the option
holder's continued employment with the Company and the date on which the
option is exercised.
(2) Exercise price is equal to or greater than the fair market value of the
Company's Common Stock on the date of grant.
(3) The options vest in three annual installments beginning on January 20, 2001.
(4) The options vest in three annual installments beginning on March 16, 2001.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FY-END OPTION VALUES
The following table provides information on stock options exercised in 2000
by each of the named executive officers and the value of each officer's
unexercised options at December 31, 2000:
NUMBER OF
SHARES VALUE OF
UNDERLYING UNEXERCISED IN-
UNEXERCISED THE-MONEY
OPTIONS AT FISCAL OPTIONS AT
YEAR-END FISCAL YEAR END
(#) ($)(1)
SHARES ACQUIRED VALUE EXERCISABLE/ EXERCISABLE/
NAME ON EXERCISE (#) REALIZED($) UNEXERCISED UNEXERCISED
---- --------------- ----------- ----------------- ---------------
Glenn Nortman....................... -- -- 3750/52,500 3750/52,500
Jeffrey Nortman..................... -- -- 3,750/27,500 3,750/27,500
Rocco Passafuime.................... -- -- 37,709/47,291 37,709/47,291
Stuart Belloff...................... -- -- 26,666/53,334 26,666/53,334
Anthony Fernandez................... -- -- 2,333/14,667 2,333/14,667
------------------------
(1) Amounts shown are based on $1.00 per share, the closing price of the
Company's Common Stock (as reported on the NASDAQ SmallCap Market) on
December 31, 2000.
12
EMPLOYMENT AGREEMENTS
Glenn Nortman has an employment agreement with the Company as described
below. The initial term of Mr. Nortman's employment agreement concludes on
June 1, 2003 and automatically renews for successive one year terms unless
either the Company or Mr. Nortman notifies the other of its or his intention not
to renew the employment agreement within 90 days of each anniversary date of the
agreement.
Under his employment agreement, during 2001 Mr. Nortman will receive base
salary of $380,000. As part of his compensation package, Mr. Nortman will also
receive the use of an automobile and certain other fringe benefits commensurate
with his duties and responsibilities. In addition, Mr. Nortman will be entitled
to receive a severance payment equal to 2.99 times his current annual base
salary if, among other things, without his consent, his duties, responsibilities
or position is materially diminished, if there is any material breach of his
employment agreements by the Company at any time during the term thereof or if
the Company experiences a "Change of Control" (as defined therein).
In May of 2001, Mr. Jeffrey Nortman voluntarily resigned from his position
as Chief Operating Officer and continues as a consultant to the Company.
Mr. Stuart Belloff has an employment agreement with 5B Technologies
Group, Inc., a wholly owned subsidiary of the Company ("5B Technologies Group").
Mr. Belloff's employment agreement automatically renews for successive one year
terms unless either 5B Technologies Group or Mr. Belloff notifies the other of
its intention not to renew the employment agreement within 120 days of each
anniversary date of the agreement. During 2001 Mr. Belloff will receive a base
salary of $175,000, and he will be eligible to receive an annual bonus to be set
by the Board of Directors of 5B Technologies Group based upon target goals
established in good faith by its Board of Directors and Mr. Belloff; provided,
that each such annual bonus shall be no less than 20% of the amount in excess of
such targets established for such given year. As part of his compensation
package, Mr. Belloff also receives an automobile allowance and certain other
fringe benefits commensurate with his duties and responsibilities. In addition,
in the event that Mr. Belloff is terminated voluntarily by 5B Technologies Group
or Mr. Belloff terminates his employment for Good Reason (as defined in his
employment agreement), he will be entitled to receive his base salary and
medical benefits for the remainder of the term of his employment agreement as
well as the annual bonus due for the year in which such termination occurs.
KEY-MAN AND SPLIT-DOLLAR LIFE INSURANCE
The Company maintains key-man/split-dollar life insurance policies on the
life of Glenn Nortman. The death benefits under these policies are allocated
$1,000,000 towards the key-man component and $4,000,000 towards the split-dollar
component.
DIRECTOR OPTION PLAN
On October 1, 1995, the Board of Directors adopted, and the stockholders
approved, the 5B Technologies 1995 Director Option Plan (the "Director Plan"),
pursuant to which 12,500 shares of the Company's Common Stock were reserved for
issuance upon the exercise of options granted to the Company's non-employee
directors. The purpose of the Director Plan is to encourage ownership of Common
Stock by the Company's non-employee directors whose initial retention and then
continued services are considered essential to the Company's future and to
provide them with a further incentive to remain as directors of the Company. To
date, 3,000 such options have been granted under the Director Plan.
13
The Directors Plan is administered by the Board of Directors. Directors who
are not employees of the Company or any of its subsidiaries are eligible to
participate in the Director Plan. The Director Plan expires in August 2005. The
Board of Directors may award, alter or discontinue the Director Plan, subject to
certain limitations.
Under the Director Plan, an eligible director will, after having served as a
director for one year, receive a formula grant of a non-qualified stock option
to purchase 500 shares of Common Stock at an exercise price equal to the fair
market value of such shares at the time of grant of such option. Each such
option is immediately exercisable for a period of 10 years from the date of
grant but generally may not be exercised more than 90 days after the date an
optionee ceases to serve as a director of the Company. Options granted under the
Director Plan are not transferable by the optionee other than by will, laws of
descent and distribution or as required by law.
Common Stock may be purchased upon the exercise of an option by payment in
cash or cash equivalent, through the delivery of shares of Common Stock having a
fair market value equal to the cash exercise price of the option, or any
combination of the above, subject to the discretion of the Board of Directors.
BOARD OF DIRECTORS REPORT ON EXECUTIVE COMPENSATION
The Company does not currently have a compensation committee, and instead,
during fiscal year 2000 the entire Board of Directors of the Company made
determinations regarding the levels of executive compensation. Currently, Glenn
Nortman, Steven Schneider and Anthony Fernandez are the only executive officers
of the Company. Glenn Nortman is the only executive officer of the Company with
an employment agreement.
In 2000, the only compensation paid to Messrs. Glenn and Jeffrey Nortman and
Mr. Belloff was as set forth in their respective employment agreements, and the
only compensation paid to Mr. Passafuime and Mr. Fernandez was as set forth in
their respective letter agreements with the Company. Insofar as the 2000 levels
of compensation for all of the Company's executive officers were limited to base
salaries (and other compensation) falling within the respective salary ranges
established in the executives' respective employment agreements and letter
agreements, the Board of Directors in 2000 determined the levels of such
executives' compensation in accordance with the respective terms and provisions
of their agreements. The Board of Directors continues to believe, however, that
the base salaries set forth in the respective employment agreements are
appropriate in light of each executive's level of responsibilities, individual
performance and time in position, as well as in relation to the Company's
overall financial circumstances and performance during 2000.
With respect to 2001, the Board of Directors has determined to potentially
award both commission-based and stock option-based compensation to its
executives, in both cases in conformity with the policies and procedures set
forth below. The Board's determination to potentially award such additional
compensation is based upon its belief that it is in the Company's best interests
to provide incentives to its executives to realize the Company's overall
strategies and objectives and to compensate them to the extent that such
strategies and objectives are met.
POTENTIAL COMMISSION-BASED COMPENSATION. The Board of Directors believes
that, in appropriate instances, commission-based compensation can be an
effective means of providing incentive to its executives. The Board of Directors
intends to look at numerous factors in determining in which circumstances to
award commission-based compensation, which factors will include the extent of
the executive's role in bringing a transaction to the Company and in closing the
transaction, the profitability to the Company of the transaction and the
perceived long-term benefits of the transaction to the Company's overall
strategies and objectives. In this regard, the Board of Directors does not
currently intend to establish minimum performance levels or other pre-determined
benchmarks for the
14
award of commission-based compensation, but instead plans to review each
circumstance on its own merits to determine the level, if any, of
commission-based compensation which the Company will pay.
POTENTIAL STOCK-OPTION BASED COMPENSATION. Consistent with the purposes of
the Company's existing 1995 Stock Option Plan and the 2000 Stock Incentive Plan
of ensuring the retention of existing executive personnel and providing
additional incentive to such personnel by permitting such individuals to
increase their ownership interest in the Company (among the other purposes of
such Plans), the Board of Directors has determined to continue, in appropriate
circumstances, issuing options to its executive officers. The Board of Directors
generally has established a flexible formula to determine the number of stock
options to be granted to its executive officers. Pursuant to this formula, an
executive officer would receive a base number of options equal to one share of
Common Stock for every $100.00 of such officer's annual base salary. In order to
permit the Board of Directors to most accurately reward stock options, the
formula then requires that the base number of options be subject to a "merit
multiplier," the size of which will depend upon the overall performance of the
Company during the year in question, the executive's performance in that year
and other factors.
BOARD OF DIRECTORS
Glenn Nortman
Jeffrey Nortman
William H. Kelly
Leonard S. Teiber
Gary Rubin
AUDIT COMMITTEE REPORT
The information contained in this report shall not be deemed to be
"soliciting material" or "filed" or incorporated by reference in future filings
with the SEC, or subject to the liabilities of Section 18 of the Exchange Act,
except to the extent that the Company specifically incorporates it by reference
into a document filed under the Securities Act of 1933, as amended, or the
Securities Exchange Act, as amended (the "Exchange Act").
The Audit Committee has reviewed and discussed with the Company's management
and BDO Seidman, LLP the audited consolidated financial statements of the
Company contained in the Company's Annual Report on Form 10-K for the Company's
2000 fiscal year.
The Audit Committee also discussed with BDO Seidman, LLP any matters
required to be discussed by Statement on Auditing Standards No. 61, as amended,
Communications with Audit Committees.
15
The Audit Committee has received and reviewed the written disclosures and
the letter from BDO Seidman, LLP required by Independence Standards Board
Standard No. 1 (Independence Discussions with Audit Committees), and has
discussed with BDO Seidman, LLP its independence from the Company. Based on the
review and discussions referred to above, the Audit Committee recommended to the
Board of Directors that the audited consolidated financial statements be
included in the Company's Annual Report on Form 10-K for its 2000 fiscal year
for filing with the SEC.
SUBMITTED BY THE AUDIT COMMITTEE
William H. Kelly, Chairman
Gary Rubin
Leonard S. Teiber
PERFORMANCE GRAPH
Displayed below is a graph which compares the cumulative total stockholder
returns (including reinvestment of dividends) from the period from January 23,
1996 (the date the Company became a public company) through December 31, 2000 on
an investment of $100 in (i) the Company's Common Stock, (ii) the Russell 2000
Index (an index of small capitalization companies), and (iii) the NASDAQ
Non-Financial Index (an index of all NASDAQ-traded companies, excluding
financial companies). Stockholders are advised that historical results are not
necessarily indicative of future performance.
COMPARISON OF 59 MONTH CUMULATIVE TOTAL RETURN*
AMONG 5B TECHNOLOGIES CORPORATION, THE RUSSELL 2000 INDEX
AND THE NASDAQ NON-FINANCIAL INDEX
EDGAR REPRESENTATION OF DATA POINTS USED IN PRINTED GRAPHIC
Dollars
1/23/96 DEC-96 DEC-97 DEC-98 DEC-99 DEC-00
5B TECHNOLOGIES CORPORATION $100.00 $60.71 $71.43 $15.18 $41.09 $28.57
RUSSELL 2000 $100.00 $119.05 $145.68 $141.97 $172.14 $150.48
NASDAQ NON-FINANCIAL $100.00 $124.46 $145.68 $213.85 $418.74 $244.32
16
COMPLIANCE WITH SECTION 16(A) OF THE EXCHANGE ACT
Section 16(a) of the Exchange Act requires the Company's directors and
executive officers, and persons who own more than 10% of a registered class of
the Company's equity securities, to file with the Securities and Exchange
Commission reports of ownership and reports of changes in ownership of Common
Stock and other equity securities of the Company and to furnish the Company with
copies of all Section 16(a) forms they file. Based solely on a review of the
copies of such reports furnished to the Company, the Company believes that,
during the 2000 fiscal year, all filing requirements applicable to its executive
officers, directors and greater than 10% stockholders were complied with in a
timely fashion during the fiscal year ended December 31, 2000.
2000 STOCKHOLDER PROPOSALS
Shareholders of the Company may submit proposals on matters appropriate for
shareholder action at meetings of the Company's shareholders in accordance with
Rule 14a-8 promulgated under the Exchange Act ("Rule 14a-8"). For such proposals
to be included in the Company's proxy materials relating to its Annual Meeting
of Shareholders to be held in 2002, all applicable requirements of Rule 14a-8
must be satisfied and such proposals must be received by the Company no later
than April 22, 2002. Such proposals should be delivered to the Company's
principal executive offices located at 100 Sunnyside Boulevard, Woodbury, New
York 11797, Attn: Secretary.
In addition, the proxy solicited by the Board of Directors for the 2002
Annual Meeting of Shareholders will confer discretionary authority to vote on
any shareholder proposal presented at that meeting, if the Company is not
provided with notice of such proposal on or prior to June 24, 2002.
OTHER MATTERS
The Board of Directors does not know of any other matters that are to be
presented for consideration at the Annual Meeting. Should any other matters
properly come before the Annual Meeting, it is the intention of the persons
named in the accompanying proxy to vote such proxy on behalf of the stockholders
they represent in accordance with their best judgment.
SOLICITATION OF PROXIES
Proxies are being solicited by and on behalf of the Board of Directors. The
Company will bear the costs of preparing and mailing the proxy materials to its
stockholders in connection with the Annual Meeting. The Company will solicit
proxies by mail and the directors and certain officers and employees of the
Company may solicit proxies personally or by telephone or telegraph. These
persons will receive no additional compensation for such services but will be
reimbursed for reasonable out-of-pocket expenses. The Company also will request
brokers, dealers, banks and their nominees to solicit proxies from their
clients, where appropriate, and will reimburse them for reasonable out-of-pocket
expenses related thereto.
The Company shall provide, without charge, to any stockholder, upon the
written request therefor, additional copies of the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2000. Any such request shall be
directed to 5B Technologies Company, Attention: Anthony Fernandez, the Company's
Director of Finance at the following address: 100 Sunnyside Boulevard, Woodbury,
New York 11797.
GLENN NORTMAN,
SECRETARY
November 15, 2001
17
ANNEX A
5B TECHNOLOGIES CORPORATION
CHARTER FOR THE AUDIT COMMITTEE OF THE BOARD OF DIRECTORS
1. PURPOSE
The primary function of the Audit Committee is to assist the Board of
Directors in fulfilling its oversight responsibilities by reviewing the
financial information which will be provided to the shareholders and others, the
systems of internal controls which management and the Board of Directors have
established, and the Company's audit and financial reporting process.
The independent accountants' ultimate responsibility is to the Board of
Directors and the Audit Committee, as representatives of the shareholders. These
representatives have the ultimate authority to select, evaluate, and, where
appropriate, replace the independent accountants.
The Audit Committee will primarily fulfill these responsibilities by
carrying out the activities enumerated in Section 3 of the Charter. The
Committee shall be given full access to the Company's financial and accounting
groups, Board Chairman, Company executives and independent accountants as
necessary to carry out these responsibilities.
2. COMPOSITION OF THE AUDIT COMMITTEE
The Audit Committee shall be comprised of three or more directors, each of
whom will be independent as defined by the National Association of Securities
Dealers, Inc. (NASD) or exempt from such requirement.
All members of the Committee shall be able to read and understand
fundamental financial statements, including a balance sheet, income statement,
and cash flow statement.
At least one member of the Committee shall have past employment experience
in finance or accounting, requisite professional certification in accounting, or
any other comparable experience or background which results in the individual's
financial sophistication, including being or having been a chief executive
officer, chief financial officer or other senior officer with financial
oversight responsibilities.
3. RESPONSIBILITIES AND DUTIES
To fulfill its responsibilities and duties, the Audit Committee shall:
a. Review annually the Audit Committee Charter for adequacy and recommend
any changes to the Board.
b. Review the accounting principles, policies and practices followed by the
Company in accounting for and reporting its financial results of operations.
c. Review the financial, investment and risk management policies followed
by the Company in operating its business activities.
d. Review the Company's annual financial statements.
e. Review any management letter prepared by the independent accountants and
review the Company's internal financial controls, including the activities of
the Company's financial and accounting departments.
f. Recommend to the Board of Directors the selection of the independent
accountants.
A-1
g. Obtain on an annual basis a formal written statement from the
independent accountants delineating all relationships between the accountants
and the Company consistent with Independence Standards Board Standard No. 1,
review and discuss with the accountants all significant relationships the
accountants have with the Company to determine the accountants' independence.
h. Review the effectiveness of the independent audit effort, including
approval of the scope of, and fees charged in connection with, the annual audit,
quarterly reviews and any non-audit services being provided.
i. Review the performance of the independent accountants and approve any
proposed changes in accountants when circumstances warrant.
j. Following completion of the annual audit, review separately with the
independent accountants, the internal financial and accounting departments, and
management any significant difficulties encountered during the course of the
audit.
k. Report to the Board on the major items covered at each Audit Committee
meeting and make recommendations to the Board and management concerning these
matters.
l. Perform any other activities consistent with this charter, the
Corporation's Bylaws and governing law as the Committee or the Board deems
necessary or appropriate.
4. AUDIT COMMITTEE MEETINGS
The Committee will meet on a regular basis, approximately 3 to 4 times each
year, and will hold special meetings as circumstances require. The timing of the
meetings shall be determined by the Audit Committee.
At all Audit Committee meetings a majority of the total number of members
shall constitute a quorum.
5. COMMUNICATION BETWEEN AUDIT COMMITTEE MEETINGS
The Committee will meet at any time if the independent accountants believe
that certain communication to the committee (e.g., significant events,
transactions or changes to accounting principles affecting the quality of
financial statements) is required in connection with their review of quarterly
or annual reporting.
A-2
ANNEX B
5B TECHNOLOGIES CORPORATION
AMENDED AND RESTATED 2000 STOCK INCENTIVE PLAN
1. ESTABLISHMENT, PURPOSE AND TYPES OF AWARDS
5B Technologies Corporation, a Delaware corporation (the "COMPANY"), hereby
establishes the 5B TECHNOLOGIES CORPORATION 2000 STOCK INCENTIVE PLAN (the
"PLAN"). The purpose of the Plan is to promote the long-term growth and
profitability of the Company by (i) providing key people with incentives to
improve stockholder value and to contribute to the growth and financial success
of the Company, and (ii) enabling the Company to attract, retain and reward the
best-available persons.
The Plan permits the granting of stock options (including incentive stock
options qualifying under Section 422 of the Code and nonqualified stock
options), stock appreciation rights, restricted or unrestricted stock awards,
phantom stock, performance awards, other stock-based awards, or any combination
of the foregoing.
2. DEFINITIONS
Under the Plan, except where the context otherwise indicates, the following
definitions apply:
(a) "AFFILIATE" means any entity, whether now or hereafter existing, which
controls, is controlled by, or is under common control with, the Company
(including, but not limited to, joint ventures, limited liability companies and
partnerships). For this purpose, "CONTROL" means ownership of 50% or more of the
total combined voting power or value of all classes of stock or interests of the
entity.
(b) "AWARD" means any stock option, stock appreciation right, stock award,
phantom stock award, performance award or other stock-based award.
(c) "BOARD" means the Board of Directors of the Company.
(d) "CHANGE IN CONTROL" means: (i) the acquisition (other than from the
Company) by any Person, as defined in this Section 2(d), of the beneficial
ownership (within the meaning of Rule 13d-3 promulgated under the Securities
Exchange Act of 1934, as amended (the "EXCHANGE ACT")) of 50% or more of
(A) the then outstanding securities of the Company, or (B) the combined voting
power of the then outstanding securities of the Company entitled to vote
generally in the election of directors (the "COMPANY VOTING STOCK"); (ii) the
closing of a sale or other conveyance of all or substantially all of the assets
of the Company; or (iii) the effective time of any merger, share exchange,
consolidation or other business combination of the Company if immediately after
such transaction persons who hold a majority of the outstanding voting
securities entitled to vote generally in the election of directors of the
surviving entity (or the entity owning 100% of such surviving entity) are not
persons who, immediately prior to such transaction, held the Company Voting
Stock. For purposes of this Section 2(d), a "PERSON" means any individual,
entity or group within the meaning of Section 13(d)(3) or 14(d)(2) of the
Exchange Act other than: employee benefit plans sponsored or maintained by the
Company and corporations controlled by the Company.
(e) "CODE" means the Internal Revenue Code of 1986, as amended, and any
regulations promulgated thereunder.
(f) "COMMON STOCK" means shares of common stock of the Company, $0.04 par
value per share.
(g) "FAIR MARKET VALUE" means, with respect to a share of the Company's
Common Stock for any purpose on a particular date, the value determined by the
Administrator in good faith. However, if the Common Stock is registered under
Section 12(b) or 12(g) of the Exchange Act and listed for trading
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on a national securities exchange or NASDAQ market or traded in the
over-the-counter market, "FAIR MARKET VALUE" means, as applicable, (i) either
the closing sale price quoted on the New York Stock Exchange, the American Stock
Exchange, the NASDAQ National Market or the NASDAQ SmallCap Market; (ii) the
average of the high bid and low asked prices on the relevant date quoted on the
NASDAQ OTC Bulletin Board Service or by the National Quotation Bureau, Inc. or a
comparable service as determined in the Administrator's discretion; or (iii) if
the Common Stock is not quoted by any of the above, the average of the closing
bid and asked prices on the relevant date furnished by a professional market
maker for the Common Stock, or by such other source, selected by the
Administrator. If no public trading of the Common Stock occurs on the relevant
date, then Fair Market Value shall be determined as of the next preceding date
on which trading of the Common Stock does occur. For all purposes under this
Plan, the term "RELEVANT DATE" as used in this SECTION 2.1(G) means either the
date as of which Fair Market Value is to be determined or the next preceding
date on which public trading of the Common Stock occurs, as determined in the
Administrator's discretion.
(h) "GRANT AGREEMENT" means a written document memorializing the terms and
conditions of an Award granted pursuant to the Plan and shall incorporate the
terms of the Plan.
3. ADMINISTRATION
(a) ADMINISTRATION OF THE PLAN. The Plan shall be administered by the
Board or by such committee or committees as may be appointed by the Board from
time to time (the Board, committee or committees hereinafter referred to as the
"ADMINISTRATOR").
(b) POWERS OF THE ADMINISTRATOR. The Administrator shall have all the
powers vested in it by the terms of the Plan, such powers to include authority,
in its sole and absolute discretion, to grant Awards under the Plan, prescribe
Grant Agreements evidencing such Awards and establish programs for granting
Awards.
The Administrator shall have full power and authority to take all other
actions necessary to carry out the purpose and intent of the Plan, including,
but not limited to, the authority to: (i) determine the eligible persons to
whom, and the time or times at which Awards, shall be granted; (ii) determine
the types of Awards to be granted; (iii) determine the number of shares to be
covered by or used for reference purposes for each Award; (iv) impose such
terms, limitations, restrictions and conditions upon any such Award as the
Administrator shall deem appropriate; (v) modify, amend, extend or renew
outstanding Awards, or accept the surrender of outstanding Awards and substitute
new Awards (provided, however, that, except as provided in SECTION 7(D) of the
Plan, any modification that would materially adversely affect any outstanding
Award shall not be made without the consent of the holder); (vi) accelerate or
otherwise change the time in which an Award may be exercised or becomes payable
and to waive or accelerate the lapse, in whole or in part, of any restriction or
condition with respect to such Award, including, but not limited to, any
restriction or condition with respect to the vesting or exercisability of an
Award following termination of any grantee's employment or other relationship
with the Company; and (vii) establish objectives and conditions, if any, for
earning Awards and determining whether Awards will be paid after the end of a
performance period.
The Administrator shall have full power and authority, in its sole and
absolute discretion, to administer and interpret the Plan and to adopt and
interpret such rules, regulations, agreements, guidelines and instruments for
the administration of the Plan and for the conduct of its business as the
Administrator deems necessary or advisable.
(c) NON-UNIFORM DETERMINATIONS. The Administrator's determinations under
the Plan (including, without limitation, determinations of the persons to
receive Awards, the form, amount and timing of such Awards, the terms and
provisions of such Awards and the Grant Agreements evidencing such Awards) need
not be uniform and may be made by the Administrator selectively among persons
who
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receive, or are eligible to receive, Awards under the Plan, whether or not such
persons are similarly situated.
(d) LIMITED LIABILITY. To the maximum extent permitted by law, no member
of the Administrator shall be liable for any action taken or decision made in
good faith relating to the Plan or any Award thereunder.
(e) INDEMNIFICATION. To the maximum extent permitted by law and by the
Company's charter and by-laws, the members of the Administrator shall be
indemnified by the Company in respect of all their activities under the Plan.
(f) EFFECT OF ADMINISTRATOR'S DECISION. All actions taken and decisions
and determinations made by the Administrator on all matters relating to the Plan
pursuant to the powers vested in it hereunder shall be in the Administrator's
sole and absolute discretion and shall be conclusive and binding on all parties
concerned, including the Company, its stockholders, any participants in the Plan
and any other employee, consultant, or director of the Company, and their
respective successors in interest.
4. SHARES AVAILABLE FOR THE PLAN
Subject to adjustments as provided in SECTION 7(D) of the Plan, the shares
of Common Stock that may be issued with respect to Awards granted under the Plan
shall not exceed an aggregate of 1,000,000 shares of Common Stock. The Company
shall reserve such number of shares for Awards under the Plan, subject to
adjustments as provided in SECTION 7(D) of the Plan. If any Award, or portion of
an Award, under the Plan expires or terminates unexercised, becomes
unexercisable or is forfeited or otherwise terminated, surrendered or canceled
as to any shares, or if any shares of Common Stock are surrendered to the
Company in connection with any Award (whether or not such surrendered shares
were acquired pursuant to any Award), or if any shares are withheld by the
Company, the shares subject to such Award and the surrendered and withheld
shares shall thereafter be available for further Awards under the Plan;
provided, however, that any such shares that are surrendered to or withheld by
the Company in connection with any Award or that are otherwise forfeited after
issuance shall not be available for purchase pursuant to incentive stock options
intended to qualify under Code section 422.
Subject to adjustments as provided in Section 7(d) of the Plan, the maximum
number of shares of Common Stock subject to Awards of any combination that may
be granted during any one fiscal year of the Company to any one individual under
this Plan shall be limited to 50,000 shares. Such per-individual limit shall not
be adjusted to effect a restoration of shares of Common Stock with respect to
which the related Award is terminated, surrendered or canceled.
5. PARTICIPATION
Participation in the Plan shall be open to all employees, officers, and
directors of, and other individuals providing bona fide services to or for, the
Company, or of any Affiliate of the Company, as may be selected by the
Administrator from time to time. The Administrator may also grant Awards to
individuals in connection with hiring, retention or otherwise, prior to the date
the individual first performs services for the Company or an Affiliate, provided
that such Awards shall not become vested prior to the date the individual first
performs such services.
6. AWARDS
The Administrator, in its sole discretion, shall establish the terms of all
Awards granted under the Plan. Awards may be granted individually or in tandem
with other types of Awards. All Awards are subject to the terms and conditions
provided in the Grant Agreement. The Administrator may permit or require a
recipient of an Award to defer such individual's receipt of the payment of cash
or the delivery of Common Stock that would otherwise be due to such individual
by virtue of the exercise of,
B-3
payment of, or lapse or waiver of restrictions respecting, any Award. If any
such payment deferral is required or permitted, the Administrator shall, in its
sole discretion, establish rules and procedures for such payment deferrals.
(a) STOCK OPTIONS. The Administrator may from time to time grant to
eligible participants Awards of incentive stock options, as that term is defined
in Section 422 of the Code, or nonqualified stock options; provided, however,
that Awards of incentive stock options shall be limited to employees of the
Company or of any current or hereafter existing "parent corporation" or
"subsidiary corporation," as defined in Sections 424(e) and (f) of the Code,
respectively, of the Company. Options intended to qualify as incentive stock
options under Section 422 of the Code must have an exercise price at least equal
to Fair Market Value as of the date of grant, but nonqualified stock options may
be granted with an exercise price less than Fair Market Value. No stock option
shall be an incentive stock option unless so designated by the Administrator at
the time of grant or in the Grant Agreement evidencing such stock option.
(b) STOCK APPRECIATION RIGHTS. The Administrator may from time to time
grant to eligible participants Awards of stock appreciation rights ("SAR"). An
SAR entitles the grantee to receive, subject to the provisions of the Plan and
the Grant Agreement, a payment having an aggregate value equal to the product of
(i) the excess of (A) the Fair Market Value on the exercise date of one share of
Common Stock over (B) the base price per share specified in the Grant Agreement,
times (ii) the number of shares specified by the SAR, or portion thereof, which
is exercised. Payment by the Company of the amount receivable upon any exercise
of an SAR may be made by the delivery of Common Stock or cash, or any
combination of Common Stock and cash, as determined in the sole discretion of
the Administrator. If upon settlement of the exercise of an SAR a grantee is to
receive a portion of such payment in shares of Common Stock, the number of
shares shall be determined by dividing such portion by the Fair Market Value of
a share of Common Stock on the exercise date. No fractional shares shall be used
for such payment and the Administrator shall determine whether cash shall be
given in lieu of such fractional shares or whether such fractional shares shall
be eliminated.
(c) STOCK AWARDS. The Administrator may from time to time grant restricted
or unrestricted stock Awards to eligible participants in such amounts, on such
terms and conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall determine. A
stock Award may be paid in Common Stock, in cash, or in a combination of Common
Stock and cash, as determined in the sole discretion of the Administrator.
(d) PHANTOM STOCK. The Administrator may from time to time grant Awards to
eligible participants denominated in stock-equivalent units ("PHANTOM STOCK") in
such amounts and on such terms and conditions as it shall determine. Phantom
stock units granted to a participant shall be credited to a bookkeeping reserve
account solely for accounting purposes and shall not require a segregation of
any of the Company's assets. An Award of phantom stock may be settled in Common
Stock, in cash, or in a combination of Common Stock and cash, as determined in
the sole discretion of the Administrator. Except as otherwise provided in the
applicable Grant Agreement, the grantee shall not have the rights of a
stockholder with respect to any shares of Common Stock represented by a phantom
stock unit solely as a result of the grant of a phantom stock unit to the
grantee.
(e) PERFORMANCE AWARDS. The Administrator may, in its discretion, grant
performance awards which become payable on account of attainment of one or more
performance goals established by the Administrator. Performance awards may be
paid by the delivery of Common Stock or cash, or any combination of Common Stock
and cash, as determined in the sole discretion of the Administrator. Performance
goals established by the Administrator may be based on the Company's or an
Affiliate's operating income or one or more other business criteria selected by
the Administrator that apply to an individual or group of individuals, a
business unit, or the Company or an Affiliate as a whole, over such performance
period as the Administrator may designate.
B-4
(f) OTHER STOCK-BASED AWARDS. The Administrator may from time to time
grant other stock-based awards to eligible participants in such amounts, on such
terms and conditions, and for such consideration, including no consideration or
such minimum consideration as may be required by law, as it shall determine.
Other stock-based awards may be denominated in cash, in Common Stock or other
securities, in stock-equivalent units, in stock appreciation units, in
securities or debentures convertible into Common Stock, or in any combination of
the foregoing, and may be paid in Common Stock or other securities, in cash, or
in a combination of Common Stock or other securities and cash, all as determined
in the sole discretion of the Administrator.
7. MISCELLANEOUS
(a) WITHHOLDING OF TAXES. Grantees and holders of Awards shall pay to the
Company or its Affiliate, or make provision satisfactory to the Administrator
for payment of, any taxes required to be withheld in respect of Awards under the
Plan no later than the date of the event creating the tax liability. The Company
or its Affiliate may, to the extent permitted by law, deduct any such tax
obligations from any payment of any kind otherwise due to the grantee or holder
of an Award. In the event that payment to the Company or its Affiliate of such
tax obligations is made in shares of Common Stock, such shares shall be valued
at Fair Market Value on the applicable date for such purposes.
(b) LOANS. The Company or its Affiliate may make or guarantee loans to
grantees to assist grantees in exercising Awards and satisfying any withholding
tax obligations.
(c) TRANSFERABILITY. Except as otherwise determined by the Administrator,
and in any event in the case of an incentive stock option or a stock
appreciation right granted with respect to an incentive stock option, no Award
granted under the Plan shall be transferable by a grantee otherwise than by will
or the laws of descent and distribution. Unless otherwise determined by the
Administrator in accord with the provisions of the immediately preceding
sentence, an Award may be exercised during the lifetime of the grantee, only by
the grantee or, during the period the grantee is under a legal disability, by
the grantee's guardian or legal representative.
(d) ADJUSTMENTS FOR CORPORATE TRANSACTIONS AND OTHER EVENTS.
(i) STOCK DIVIDEND, STOCK SPLIT AND REVERSE STOCK SPLIT. In the event
of a stock dividend of, or stock split or reverse stock split affecting, the
Common Stock, (A) the maximum number of shares of such Common Stock as to
which Awards may be granted under this Plan and the maximum number of shares
with respect to which Awards may be granted during any one fiscal year of
the Company to any individual, as provided in SECTION 4 of the Plan, and
(B) the number of shares covered by and the exercise price and other terms
of outstanding Awards, shall, without further action of the Board, be
adjusted to reflect such event unless the Board determines, at the time it
approves such stock dividend, stock split or reverse stock split, that no
such adjustment shall be made. The Administrator may make adjustments, in
its discretion, to address the treatment of fractional shares and fractional
cents that arise with respect to outstanding Awards as a result of the stock
dividend, stock split or reverse stock split.
(ii) NON-CHANGE IN CONTROL TRANSACTIONS. Except with respect to the
transactions set forth in SECTION 7(D)(I), in the event of any change
affecting the Common Stock, the Company or its capitalization, by reason of
a spin-off, split-up, dividend, recapitalization, merger, consolidation or
share exchange, other than any such change that is part of a transaction
resulting in a Change in Control, the Administrator, in its discretion and
without the consent of the holders of the Awards, shall make
(A) appropriate adjustments to the maximum number and kind of shares
reserved for issuance or with respect to which Awards may be granted under
the Plan, in the aggregate and with respect to any individual during any one
fiscal year of the Company, as provided in SECTION 4
B-5
of the Plan, and (B) any adjustments in outstanding Awards, including, but
not limited to, reducing the number, kind and price of securities subject to
Awards.
(iii) CHANGE IN CONTROL TRANSACTIONS. In the event of any transaction
resulting in a Change in Control, outstanding stock options and SAR's under
this Plan will terminate upon the effective time of such Change in Control
unless provision is made in connection with the transaction for the
continuation or assumption of such Awards by, or for the substitution of the
equivalent awards of, the surviving or successor entity or a parent thereof.
In the event of such termination, the holders of stock options and SAR's
under the Plan will be permitted, for a period of at least twenty days prior
to the effective time of the Change in Control, to exercise all portions of
such Awards that are then exercisable or which become exercisable upon or
prior to the effective time of the Change in Control; provided, however,
that any such exercise of any portion of such an Award which becomes
exercisable as a result of such Change in Control shall be deemed to occur
immediately prior to the effective time of such Change in Control.
(iv) CERTAIN ACQUISITION TRANSACTIONS. In connection with any business
combination authorized by the Board, the Administrator, in its sole
discretion and without the consent of the holders of the Awards, may make
any modifications to any Awards, including, but not limited to,
cancellation, forfeiture, surrender or other termination of the Awards, in
whole or in part, regardless of the vested status of the Award, but solely
to the extent necessary to facilitate the compliance of such transaction
with requirements for treatment as a pooling of interests transaction for
accounting purposes under generally accepted accounting principles.
(v) UNUSUAL OR NONRECURRING EVENTS. The Administrator is authorized to
make, in its discretion and without the consent of holders of Awards,
adjustments in the terms and conditions of, and the criteria included in,
Awards in recognition of unusual or nonrecurring events affecting the
Company, or the financial statements of the Company or any Affiliate, or of
changes in applicable laws, regulations or accounting principles, whenever
the Administrator determines that such adjustments are appropriate in order
to prevent dilution or enlargement of the benefits or potential benefits
intended to be made available under the Plan.
(e) SUBSTITUTION OF AWARDS IN MERGERS AND ACQUISITIONS. Awards may be
granted under the Plan from time to time in substitution for Awards held by
employees, officers, consultants or directors of entities who become or are
about to become employees, officers, consultants or directors of the Company or
an Affiliate as the result of a merger or consolidation of the employing entity
with the Company or an Affiliate, or the acquisition by the Company or an
Affiliate of the assets or stock of the employing entity. The terms and
conditions of any substitute Awards so granted may vary from the terms and
conditions set forth herein to the extent that the Administrator deems
appropriate at the time of grant to conform the substitute Awards to the
provisions of the awards for which they are substituted.
(f) TERMINATION, AMENDMENT AND MODIFICATION OF THE PLAN. The Board may
terminate, amend or modify the Plan or any portion thereof at any time.
(g) NON-GUARANTEE OF EMPLOYMENT OR SERVICE. Nothing in the Plan or in any
Grant Agreement thereunder shall confer any right on an individual to continue
in the service of the Company or shall interfere in any way with the right of
the Company to terminate such service at any time with or without cause or
notice and whether or not such termination results in (i) the failure of any
Award to vest, (ii) the forfeiture of any unvested or vested portion of any
Award, and/or (iii) any other adverse effect on the individual's interests under
the Plan.
(h) NO TRUST OR FUND CREATED. Neither the Plan nor any Award shall create
or be construed to create a trust or separate fund of any kind or a fiduciary
relationship between the Company and a grantee or any other person. To the
extent that any grantee or other person acquires a right to receive
B-6
payments from the Company pursuant to an Award, such right shall be no greater
than the right of any unsecured general creditor of the Company.
(i) GOVERNING LAW. The validity, construction and effect of the Plan, of
Grant Agreements entered into pursuant to the Plan, and of any rules,
regulations, determinations or decisions made by the Administrator relating to
the Plan or such Grant Agreements, and the rights of any and all persons having
or claiming to have any interest therein or thereunder, shall be determined
exclusively in accordance with applicable federal laws and the laws of the State
New York, without regard to its conflict of laws principles.
(j) EFFECTIVE DATE; TERMINATION DATE. The Plan is effective as of the date
on which the Plan is adopted by the Board, subject to approval of the
stockholders within twelve months before or after such date. No Award shall be
granted under the Plan after the close of business on the day immediately
preceding the tenth anniversary of the effective date of the Plan, or if
earlier, the tenth anniversary of the date this Plan is approved by the
stockholders. Subject to other applicable provisions of the Plan, all Awards
made under the Plan prior to such termination of the Plan shall remain in effect
until such Awards have been satisfied or terminated in accordance with the Plan
and the terms of such Awards.
B-7
5B TECHNOLOGIES CORPORATION
ANNUAL MEETING OF STOCKHOLDERS
DECEMBER 18, 2001
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned stockholder of 5B Technologies Corporation, a Delaware
corporation (the "Company"), acknowledges receipt of the Notice of Annual
Meeting of Stockholders, Proxy Statement and 2000 Annual Report, and hereby
constitutes and appoints Glenn Nortman and Jeffrey Nortman as proxies, with
power to act without the other and with power of substitution and
re-substitution, and hereby authorizes them to represent and vote, as designated
on the other side, all the shares of stock of 5B Technologies Corporation
standing in the name of the undersigned with all powers which the undersigned
would possess if present at the Annual Meeting of Stockholders of the Company to
be held December 18, 2001 or any adjournment thereof.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS WHICH RECOMMENDS A
VOTE "FOR" PROPOSALS NO. 1, 2, AND 3.
1. The election of four (4) directors nominated by the Board of
Directors:
/_/ FOR all nominees listed below /_/ WITHHOLD AUTHORITY to vote for
(except as indicated) all nominees listed below
Glenn Nortman, Jeffrey Nortman,
William H. Kelly, Leonard S. Teiber, Gary Rubin
(Instruction: To withhold authority to vote for any individual nominee
or nominees write such nominee's or nominees' names in the space
provided below)
2. The amendment of the Company's 2000 Stock Incentive Plan:
/_/ FOR /_/ AGAINST /_/ ABSTAIN
3. The ratification of the appointment of BDO Seidman, LLP as the
Company's independent auditors for fiscal 2001:
/_/ FOR /_/ AGAINST /_/ ABSTAIN
4. Other matters as may properly come before the Meeting or any
adjournment or adjournments thereof.
This Proxy, when properly executed, will be voted as directed. If no
direction is indicated, the Proxy will be voted FOR each of the above proposals.
Dated: , 2001
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Please sign your name exactly as it
appears hereon. When signing as
attorney, executor, administrator,
trustee or guardian, please give your
full title as it appears hereon. When
signing as joint tenants, all parties in
the joint tenancy must sign. When a
proxy is given by a corporation, it
should be signed by an authorized
officer and the corporate seal affixed.
No postage is required if returned in
the enclosed envelope and mailed in the
United States.