SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
Filed by the Registrant [x] Filed by Party other than the Registrant [_]
[x] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)
(2))
[_] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Under Rule 14a-12
FIRST ECOM.COM, INC.
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(Name of Registrant as specified in its charter)
Payment of Filing Fee (Check the appropriate box):
[x] No fee required.
[_] Fee computed on table below per Exchange Act Rule 14a-6(i)(1) and 0-11.
1. Title of each class of securities to which transaction applied:
______________________________________________
2. Aggregate number of securities to which transaction applies:
_______________________________________________________.
3. Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which the
filing fee is calculated and state how it was determined):
_____________________
4. Proposed maximum aggregate value of transaction:
5. Total fee paid: _______________________________________
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
1. Amount previously paid: ________________________________
2. Form, Schedule or Registration Statement No.: __________
3. Filing Party: __________________________________________
4. Date Filed: ____________________________________________
FIRST ECOM.COM, INC.
19th Floor, 80 Gloucester Road
Wanchai, Hong Kong, SAR
(852) 2289-9561
Dear Stockholder:
We invite you to attend the annual meeting of stockholders on January 29,
2002 at Pacific Place Conference Centre, Annapurna Room, 88 Queensway, Hong
Kong, SAR. The meeting will begin promptly at 10:00 a.m. At the annual meeting,
you will be asked:
1. to elect seven directors to serve until the next annual meeting
of stockholders and until their successors have been elected and
qualify;
2. to ratify the appointment of Deloitte Touche Tohmatsu to serve as
independent public accountants for the 2001 fiscal year;
3. to approve the amendment of First Ecom.com's Articles of
Incorporation to change the name of First Ecom.com to "Brek
Energy Corporation";
4. to approve the amendment of First Ecom.com's Articles of
Incorporation to increase the number of authorized shares of
First Ecom.com common stock;
5. to approve the amendment of First Ecom.com's Articles of
Incorporation to authorize the issuance of preferred stock;
6. to approve the adoption of First Ecom.com's 2001 Stock
Option/Warrant Plan; and
7. to approve such other matters as may properly come before the
annual meeting or any adjournment of the annual meeting.
The accompanying formal notice of the meeting and proxy statement describe
more fully the matters to be presented at the annual meeting. The board of
directors recommends that you vote in favor of the specific proposals set forth
above.
Whether or not you expect to be present at the meeting, it is important
that you complete, sign and date the enclosed proxy card as promptly as possible
and return it in the enclosed envelope. This will ensure a quorum at the meeting
and avoid additional expense to First Ecom.com for further solicitation. In the
event you are able to attend the meeting, you may revoke your proxy and vote
your shares in person.
Ian Robinson
Chairman of the Board of Directors
December 24, 2001
Hong Kong, SAR
FIRST ECOM.COM, INC.
19th Floor, 80 Gloucester Road
Wanchai, Hong Kong, SAR
(852) 2289-9561
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JANUARY 29, 2002
To the Stockholders of First Ecom.Com, Inc.:
Time: 10:00 a.m.
Date: Tuesday, January 29, 2002
Place: Pacific Place Conference Centre, Annapurna Room, 88
Queensway, Hong Kong, SAR
Purpose: Elect directors
Ratify the appointment of independent auditors;
Approve amendment to Articles of Incorporation to change the
name of First Ecom.com;
Approve amendment to Articles of Incorporation to increase
the number of authorized shares of common stock;
Approve amendment to Articles of Incorporation to authorize
the issuance of preferred stock;
Approve adoption of the First Ecom.com 2001 Stock
Option/Warrant Plan; and
Conduct other business if properly raised.
All stockholders are cordially invited to attend the meeting, but only
stockholders of record on December 20, 2001 are entitled to notice of and to
vote at the meeting.
Whether or not you expect to be present at the meeting, it is important
that you complete, sign and date the enclosed proxy card and return it in the
enclosed envelope as promptly as possible. This will ensure a quorum at the
meeting and avoid additional expense to First Ecom.com for further solicitation.
In the event you are able to attend the meeting, you may revoke your proxy and
vote your shares in person should you wish to do so.
BY ORDER OF THE BOARD OF DIRECTORS
Kenneth G.C. Telford
Secretary
December 24, 2001
Hong Kong, SAR
FIRST ECOM.COM, INC.
19th Floor, 80 Gloucester Road
Wanchai, Hong Kong, SAR
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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS
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Approximate date proxy material first sent
to stockholders:
December 24, 2001
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GENERAL INFORMATION
Who May Vote
Stockholders of First Ecom.com, as recorded in our stock register on December
20, 2001, may vote at the meeting.
How to Vote
You may vote in person at the meeting or by proxy. We recommend you vote by
proxy even if you plan to attend the meeting. You can always change your vote at
the meeting.
How Proxies Work
First Ecom.com's board of directors is asking for your proxy. Giving us your
proxy means you authorize us to vote your shares at the meeting in the manner
you direct. You may vote for all, some, or none of our director candidates. You
may also vote for or against the other proposals or abstain from voting.
If you give us your proxy, but do not specify how to vote, we will vote your
shares in favor of our director candidates and in favor of each of the other
items indicated on the enclosed proxy card.
Revoking a Proxy
You may revoke your proxy before it is voted by:
- submitting a new proxy with a later date
- notifying First Ecom.com's Secretary in writing before the meeting; or
- voting in person at the meeting.
Quorum
In order to carry on the business of the meeting, we must have a quorum. This
means at least one-third of the outstanding shares of common stock must be
represented at the meeting, either by proxy or in person. Broker non-votes count
for purposes of a quorum. Broker non-votes occur when a broker returns a proxy
but does not have authority to vote on a particular proposal.
Votes Needed
Proposal 1 - Election of Directors
For a nominee to be elected a director, a plurality of the votes cast at the
election must be voted in favor of his election. Abstentions and broker
non-votes will have no effect on the election of directors.
Proposal 2 - Ratification of Auditors
To ratify the appointment of Deloitte Touche Tohmatsu to serve as independent
public accountants for the 2001 fiscal year, at least 10% of the shares of
common stock present in person or represented by proxy must vote in favor of
ratification. Abstentions and broker non-votes will have the same effect as a
vote against ratification.
Proposals 3, 4 and 5 - Amendments to Articles of Incorporation
To amend First Ecom.com's Articles of Incorporation, at least a majority of the
outstanding shares of common stock present in person or represented by proxy
must vote in favor of amendment. Abstentions and broker non-votes will have the
same effect as a vote against amendment.
Proposal 6 - Adoption of First Ecom.com 2001 Stock Option/Warrant Plan
To approve the adoption of the First Ecom.com 2001 Stock Option/Warrant Plan, at
least a majority of the shares of common stock present in person or represented
by proxy must vote in favor of adoption. Abstentions and broker non-votes will
have the same effect as a vote against adoption.
Attending in Person
Only stockholders and their proxy holders may attend the meeting.
Security Ownership Of Certain Beneficial Owners And Management
The following table and notes set forth as of the record date the number of
shares of First Ecom.com's common stock beneficially owned by (i) each person
who served as First Ecom.com's Chief Executive Officer during the 2000 fiscal
year, (ii) the highest compensated executive officers who were serving as
executive officers at the end of the 2000 fiscal year whose individual total
cash compensation for the 2000 fiscal year exceeded USD 100,000 (together with
each person who served as First Ecom.com's Chief Executive Officer during the
2000 fiscal year, the "named executive officers"), (iii) each director and
nominee for director of First Ecom.com, (iv) all executive officers and
directors of First Ecom.com as a group and (v)
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each person or group of persons known by First Ecom.com to beneficially own more
than five percent (5%) of the outstanding common stock. All information is taken
from or based upon information provided by such persons to First Ecom.com or
available through public filings by the beneficial owner.
3
Name and Address Amount and Nature Percentage of Class
of Beneficial Owner/1/ Of Beneficial Ownership/2/ Beneficially Owned
- ------------------- ----------------------- -------------------
Gregory Pek/3/ 1,572,500 8.2%
Power Technology Investment 1,333,333 6.9%
Corporation
751 Victoria Square
Montreal, Quebec, Canada/4/
Ravi Daswani/3/ 535,461 2.8%
Douglas Moore/5/ 346,667 1.8%
Ian Robinson/6/ 95,000 *
Harold L. Hutton/7/
James Pratt/8/ 75,000 *
32 Greenwich Road
Greenwich, Sydney, NSW
2065, Australia
Marc Bruner *
29 Blauenweg
Metzerlen 4116, Switzerland
Mart Bakal *
74 East 79/th/ Street
New York, NY 10021, USA
Executive Officers and Directors as a 2,624,628 13.7%
Group (8 Persons)/9/
_________________________
* Less than one percent.
/1/ Unless otherwise indicated, address of record is 19th Floor, 80 Gloucester
Road, Wanchai, Hong Kong.
/2/ Beneficial ownership is determined in accordance with the rules of the
Commission, and generally includes voting power and/or investment power
with respect to securities. Shares of common stock subject to options
exercisable within 60 days are deemed outstanding for computing the
percentage of beneficial ownership for each person but are not deemed
outstanding for computing the percentage of any other person. Except as
indicated by footnote, First Ecom.com understands that the persons named in
the table above have sole voting and investment power with respect to all
shares of common stock shown as beneficially owned by them.
/3/ Includes options to purchase 125,000 shares of common stock.
/4/ Includes warrants to purchase 333,333 shares of common stock.
/5/ Includes warrants to purchase 96,667 shares of common stock and options to
purchase 50,000 shares of common stock.
/6/ Includes warrants to purchase 50,000 shares of common stock and options to
purchase 25,000 shares of common stock.
/7/ Number of shares unknown.
/8/ Includes warrants to purchase 30,000 shares of common stock and options to
purchase 25,000 shares of common stock.
/9/ Includes warrants to purchase 176,667 shares of common stock and options to
purchase 350,000 shares of common stock.
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PROPOSAL #1 - ELECTION OF DIRECTORS
First Ecom.com's directors are to be elected at each annual meeting of
stockholders. The seven nominees for election as directors at this meeting are
set forth below. All are recommended by the board of directors of First
Ecom.com, and each is currently a director of First Ecom.com:
Gregory Pek
Ravi Daswani
Douglas Moore
Ian Robinson
James Pratt
Marc Bruner
Mart Bakal
In the event that any of the nominees for director should become unable
to serve if elected, it is intended that shares represented by proxies which are
executed and returned will be voted for such substitute nominee(s) as may be
recommended by First Ecom.com's existing board of directors.
The seven nominee-directors receiving a plurality of votes cast at the
meeting will be elected as First Ecom.com's directors to serve until the next
annual meeting of stockholders and until their successors are elected and
qualify.
The board of directors unanimously recommends that stockholders vote
for each nominee for the board of directors.
Directors And Executive Officers
The following table sets forth certain information concerning the
Directors and Executive Officers of First Ecom.com:
Nominee Principal Occupation Age
- ------- -------------------- ---
Gregory Pek Director, President and Chief Executive 46
Officer of First Ecom.com
Kenneth G.C. Telford Chief Financial Officer and Secretary of 52
First Ecom.com
Ravi Daswani Director of First Ecom.com 34
Douglas Moore Director of First Ecom.com and Chief 43
Executive Officer of Henderson Cyber
Limited (listed on Growth Enterprise
Market of the Stock Exchange of Hong
Kong)
5
Nominee Principal Occupation Age
- ------- -------------------- ---
Ian Robinson Chairman of the board of directors and 62
independent management consultant
James Pratt Director of First Ecom.com and Deputy-Chairman 52
of GSM Association
Marc Bruner Director of First Ecom.com and Chairman of the 52
Board of Gasco Energy, Inc.
Mart Bakal Director of First Ecom.com, Chairman of the 50
Board of Crimson Capital and founder of
Millenium China Inc.
Mr. Gregory Pek, 46, was a co-founder of First Ecom.com and has served
on First Ecom.com's board of directors since March 1999. He was appointed
Chairman of the Board in June 2000, relinquishing the role of CEO and President,
which he had held since March 1999. He resumed the position of President and CEO
in October 2000, and resigned as Chairman in November 2000. From March 1994 to
February 1999, Mr. Pek was an Executive Director of David Resources Company
Limited and Kong Tai International Holdings Company Limited, and from 1998 to
February 1999 he was a director of Singapore Hong Kong Properties Investment
Limited. Prior to taking residence in Hong Kong, Mr. Pek was a director and
officer of a number of public companies in Canada. Mr. Pek has broad business
experience in manufacturing, marketing, finance, regulatory issues (in the
United States, Canada, and Hong Kong), and acquisitions.
Mr. Ken Telford, 52, has been First Ecom.com's Chief Financial Officer
and Secretary since June 2000. Mr. Telford is both a Chartered Accountant
(Canada) and Certified Public Accountant (USA). Mr. Telford has been a partner
in Sadovnick Telford + Skov, Chartered Accountants in Canada and Telford
Sadovnick, PLLC, Certified Public Accountants in the United States since 1994.
Mr. Telford was previously also an audit partner in the international accounting
firm Touche Ross & Co. (now Deloitte & Touche LLP) as well as Chief Operating
Officer and Chief Financial Officer of an automotive rental company. Mr. Telford
has advised numerous companies, operating in both North America and the Asia
Pacific region, on a broad range of financial and business matters including the
financial management requirements of U.S. publicly listed companies.
Mr. Ravi Daswani, 34, was a co-founder of First Ecom.com and has served
as the Chief Operating Officer and member of the board of directors since March
1999. Mr. Daswani retired as Chief Operating Officer of First Ecom.com in August
2001 to pursue other business interests. From December 1997 to February 1999,
Mr. Daswani was the Managing Director of Asia Internet Limited, a Hong Kong ISP
and one of the reputable system integration companies in Hong Kong. On March 31,
2000, First Ecom.com purchased the entire issued share capital of Asia Internet.
During his tenure with Asia Internet, Mr. Daswani helped establish Sing Web Pte.
Ltd., a Singapore based IPP. For more than three years before December 1997, he
was the managing director of a wholesale and retail apparel business. He has
established international
6
operations trading in dry goods, consumer electronics, apparel, and internet
services in Africa, Latin America, and Asia.
Mr. Douglas Moore, 43, has been a member of the board of directors
since October 1999. Mr. Moore is the Chief Executive Officer and executive
director of Henderson Cyber Limited, the high technology subsidiary of the
Henderson Group, which comprises Henderson Land Development Company Limited and
its subsidiaries. Mr. Moore is also the Head of Strategic Planning of Henderson
Land. Mr. Moore is also a non-executive director of Blu Spa, a botanical beauty
product company. From 1994 until April 2000 Mr. Moore was the head of the Hong
Kong Market of Credit Suisse and a director of Credit Suisse Investment Advisory
(Hong Kong) Limited. Prior to 1994 Mr. Moore practiced international and
Canadian taxation law with the Hong Kong and Toronto offices of McMillan, Binch,
a major Canadian law firm.
Mr. Ian Robinson, 62, has served on First Ecom.com's board of directors
since February 2000 and was appointed Vice-Chairman of the Board on November 29,
2000 and Chairman in January 2001. Mr. Robinson has 45 years of experience as a
professional accountant and was a Senior Partner with Ernst and Young, one of
the largest international accounting firms. He has been based in Hong Kong with
Ernst and Young since 1980, servicing the Asian region, and has had experience
in major countries around the world. Mr. Robinson has specialized in corporate
rescue, restructuring, insolvency, investigation, business valuation and trouble
shooting generally. He also holds a number of directorships including being a
member of the Supervisory Board and member of the Executive Committee of the
Hong Kong Housing Society.
Mr. James Pratt, 52, was appointed to First Ecom.com's board of
directors in June 2000. Mr. Pratt is the Deputy Chairman of the GSM Association.
Mr. Pratt was previously Managing Director of Asia Wireless, a division of
Telstra International, Telstra Corporation of Australia where he oversaw all of
Telstra Group's wireless operations and investments throughout the Asia Pacific
Region. Mr. Pratt was formerly Chief Executive Officer of Peoples Phone in Hong
Kong since 1996. Prior to this he was general manager of the telecommunications
division of Mitsubishi Electric Australia. Mr. Pratt has more than 30 years of
international management experience in the Asia Pacific telecommunications
industry.
Mr. Marc Bruner, 52, was appointed to First Ecom.com's board of
directors in July 2001. Mr. Bruner is Chairman of the Board of Gasco Energy,
Inc., an OTCBB listed natural gas company in which First Ecom.com owns preferred
stock convertible into an approximately 26% interest in Gasco, and founder in
1998 of Pannonian Energy Inc. which merged with Gasco in 2001. Previously, from
1996 to 1998, Mr. Bruner was the founding Chairman of Ultra Petroleum, a TSE and
AMEX listed natural gas company. Mr. Bruner was a founder in 1998 of Pennaco
Energy, Inc., a coal bed methane company, and in 1996 of RIS Resources
International, a natural gas company.
Mr. Mart Bakal, 50, was appointed to First Ecom.com's board of
directors in October 2001. Mr. Bakal trained as a lawyer, practicing in Canada
from the late 1970's to 1983 before moving to the United States where he taught
at both Harvard Law School and Harvard Graduate School of Business. Since the
early 1980's Mr. Bakal has been in the investment banking business initially
with Bear Stearns and later as a partner at Drexel Burnham Lambert. Mr. Bakal
founded Crimson Capital in 1991 in order to help develop the business
opportunities in the transitional economies of communist countries and was
initially contracted by the U.S.
7
Government to assist the Government of the Czech Republic in privatizing its
state owned businesses. While at Crimson Capital, Mr. Bakal has assisted over
600 enterprises in eastern Europe. Recently Mr. Bakal founded Millenium China
Inc. to privatize PRC state owned enterprises.
Committees of The Board Of Directors
The Audit Committee
The board established an Audit Committee in February 2000. The Audit
Committee consists of Ian Robinson, Douglas Moore and James Pratt. The Audit
Committee is responsible for (i) reviewing the scope of and the fees for the
annual audit, (ii) reviewing with the independent auditors the corporate
accounting practices and policies, (iii) reviewing with the independent auditors
their final report, and (iv) being available to the independent auditors during
the year for consultation purposes. Each of the members of the Audit Committee
is independent within the meaning of Rule 4200(a)(15) of the NASD listing
standards. The board has adopted a written charter for the Audit Committee which
we refer to as "Terms of Reference," a copy of which is annexed to this proxy
statement as Annex A.
Report of Audit Committee
The Audit Committee reviewed and discussed First Ecom.com's audited
financial statements as of and for the year ended December 31, 2000 with
management, and discussed with First Ecom.com's independent auditors at that
time the matters required to be discussed by SAS 61. The Audit Committee also
received the written disclosures and the letter from the independent accountants
required by Independence Standards Board Standard No. 1 and discussed with them
their independence. Based upon the foregoing, the Audit Committee recommended to
the board of directors that the audited financial statements be included in
First Ecom.com's 2000 Annual Report on Form 10-K.
The Audit Committee
Ian Robinson
Douglas Moore
James Pratt
8
The Compensation Committee
First Ecom.com established a Compensation Committee in February 2000. The
Compensation Committee is responsible for (i) approving compensation of the
Chief Executive Officer and (ii) granting stock options to employees. The
Compensation Committee consists of Douglas Moore, James Pratt and Ian Robinson.
Compensation Committee Report on Executive Compensation
First Ecom.com offers compensation packages designed to attract and
retain outstanding employees and to encourage and reward the achievement of
corporate goals. Through broad-based employee ownership of First Ecom.com's
common stock, First Ecom.com seeks to align employee financial interests with
long-term stockholder value.
Executive officers receive total compensation packages in line with their
responsibilities and expertise. First Ecom.com believes that the majority of an
executive's compensation should be closely tied to overall performance of First
Ecom.com. Accordingly, base salaries for executive officers in most cases are
relatively competitive, but are accompanied by significant stock option grants.
Base Salaries.
Salaries for First Ecom.com's executive officers are based on the
executive's contribution to First Ecom.com performance, level of responsibility,
experience and breadth of knowledge. Base salaries for executive officers
generally are designed to be competitive with those paid by competitors in the
electronic commerce and internet industries. These base salaries are combined
with stock option grants, so that a good portion of the executive's pay is tied
to First Ecom.com performance. First Ecom.com did not utilize salary surveys for
executive officers in 2000.
Stock-Based Compensation.
First Ecom.com seeks to align the long-term interests of its executive officers
with those of its stockholders. As a result, each executive officer receives a
significant stock option grant when he or she joins First Ecom.com or is
promoted to executive officer. Grant sizes are determined based on various
subjective factors, primarily related to the individual's anticipated
contributions to First Ecom.com's success. First Ecom.com intends to grant
additional stock options to executive officers from time-to-time based on
performance and potential.
9
Replacement Option Grants
On August 29, 2000, the named executive officers set forth below rescinded
options to purchase First Ecom.com common stock, and First Ecom.com reissued a
like number of new options having five-year terms and exercise prices equal to
the then-fair value of the stock (which were lower than the exercise prices of
the options rescinded). The Compensation Committee felt replacing the options
for the named executive officers set forth in the table below with options
having a lower exercise price was warranted to provide the desirable long-term
incentive to such named executive officers and to align their interests with
those of the stockholders.
- ---------------------------------------------------------------------------------------------------------------
NUMBER OF
SHARES OF LENGTH OF
STOCK MARKET PRICE EXERCISE OPTION TERM
UNDERLYING OF STOCK AT PRICE AT NEW REMAINING AT
OPTIONS TIME OF TIME OF EXERCISE DATE OF
Name and Position REPLACED REPLACEMENT REPLACEMENT PRICE REPLACEMENT
- ---------------------------------------------------------------------------------------------------------------
Gregory M. Pek, 50,000 $5.91 $7.65 $5.05 46 months
President and Chief 100,000 $5.91 $9.90 $5.05 56 months
Executive Officer
- ---------------------------------------------------------------------------------------------------------------
Ravi Daswani, former 50,000 $5.91 $7.65 $5.05 46 months
Chief Operating Officer/1/ 100,000 $5.91 $9.90 $5.05 56 months
- ---------------------------------------------------------------------------------------------------------------
Harold Hutton, former 170,000 $5.91 $9.90 $5.05 56 months
Chief Executive Officer/2/
- ---------------------------------------------------------------------------------------------------------------
_____________________________________
/1/ Resigned August 2001.
/2/ Resigned November 2000.
Chief Executive Officer Compensation.
Mr. Pek received USD 238,172 in cash compensation from First Ecom.com
during 2000. Mr. Pek's compensation was competitive with what may have been paid
to an individual with similar responsibilities in a similar industry.
Ongoing Review.
The Compensation Committee will evaluate First Ecom.com's compensation
policies on an ongoing basis to determine whether they enable First Ecom.com to
attract, retain and motivate key personnel. To meet these objectives, First
Ecom.com may from time to time increase salaries, award additional stock options
or provide other short- and long-term incentive compensation to executive
officers.
10
Section 162(m).
Compensation payments in excess of USD 1 million to the Chief Executive
Officer or the other four most highly compensated executive officers are subject
to a limitation on deductibility for First Ecom.com under Section 162(m) of the
Internal Revenue Code of 1986. Certain performance-based compensation is not
subject to the limitation on deductibility. The Compensation Committee does not
expect cash compensation in 2002 to its Chief Executive Officer or any other
executive officer to be in excess of USD 1 million. First Ecom.com intends to
maintain qualification of its 1999 Stock Option Plan for the performance-based
exception to the USD 1 million limitation on deductibility of compensation
payments.
The Compensation Committee
Ian Robinson
Douglas Moore
James Pratt
The Nominating Committee
First Ecom.com does not have a nominating committee of the board of
directors. The nominees for election as directors at the meeting were selected
by the board of directors of First Ecom.com.
Director Compensation
Directors who are employees of First Ecom.com receive no additional
compensation for service on the board of directors or any committee of the
board. Commencing April 1, 2001, First Ecom.com remunerates its directors who
are not employees of First Ecom.com HK $20,000 (approximately USD 2,564) per
quarter and the Chairman HK $35,000 (approximately USD 4,487) per month. Eric
Pinkney, who served as a director of First Ecom.com from November 29, 2000 until
June 25, 2001, received consulting fees of USD 10,000 per month from December
2000 through February 2001. New directors who were not full-time employees
during the 2000 fiscal year, with the exception of Eric Pinkney who received no
stock options, each received 50,000 options, each of which is exercisable for
one share of First Ecom.com common stock at an exercise price of USD 5.05.
Vesting will occur with respect to 25,000 of such options after 12 months and
the remaining 25,000 of such options after 24 months.
Meetings of the Board and Committees
During the fiscal year ended December 31, 2000 the board held seven
meetings with the remaining board action taken by unanimous consent of the
directors. Each of the Audit Committee and Compensation Committee held three
meetings during the fiscal year ended December 31, 2000. During the fiscal year
ended December 31, 2000, all incumbent directors attended 75% or more of the
meetings of the board and the committees on which they served.
11
Summary Compensation Table
The following summary compensation table sets forth the cash compensation
earned for 2000, by each named executive officer. First Ecom.com paid no
compensation to any employee in 1997 or 1998.
- -------------------------------------------------------------------------------------------------------------
Long Term
Compensation Awards
-------------------
Salary Shares of Common Stock
Name and Principal Position Year (USD) Underlying Options
- -------------------------------------------------------------------------------------------------------------
Gregory Pek 2000 238,172 100,000
President & 1999 167,742 100,000
Chief Executive Officer
- -------------------------------------------------------------------------------------------------------------
Ravi Daswani 2000 238,172 100,000
Former Executive Vice President, 1999 167,742 100,000
co-Chief Executive Officer and Chief
Operating Officer/1/
- -------------------------------------------------------------------------------------------------------------
Harold Hutton
President & Chief Executive Officer/2/ 2000 201,718 170,000
- -------------------------------------------------------------------------------------------------------------
__________________________________
/1/ Resigned August 2001.
/2/ Resigned November 2000.
Employment Agreements
Gregory Pek. We entered into an employment agreement with Gregory Pek,
our President and Chief Executive Officer, the term of which commenced in
January 1999. This agreement provided that First Ecom.com would pay Mr. Pek a
monthly salary of HK $100,000 (approximately USD 12,820) plus an additional
month's salary per calendar year of service as a year-end payment. In January
2000 Mr. Pek's monthly salary was increased to HK $150,000 (approximately USD
19,230); however, in December 2000 Mr. Pek agreed to have his monthly salary
reduced to HK $100,000 (approximately USD 12,820). We entered into new six-month
employment agreements with Mr. Pek covering the period from March 1, 2001 to
August 31, 2001. During this period, Mr. Pek's aggregate monthly salary was HK
$165,000 (approximately USD 21,150) plus an additional lump-sum payment equal to
four months' salary was paid to Mr. Pek in August 2001. In August 2001 we
entered into new one-year employment agreements with Mr. Pek that provide for an
aggregate monthly salary of HK $165,000 (approximately USD 21,150) plus an
additional month's salary per calendar year of
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service as a year-end payment. These agreements will terminate on August 31,
2002 unless we choose to extend the terms of such agreements. If we do not
choose to extend the terms of such agreements, the agreements provide that we
must pay a termination payment to Mr. Pek in August 2002 equal to three months'
salary.
Ravi Daswani. We entered into an employment agreement with Ravi Daswani,
who served as our Senior Vice President and Chief Operating Officer until his
resignation in August 2001, the term of which commenced in January 1999. This
agreement provided that First Ecom.com would pay Mr. Daswani a monthly salary of
HK $100,000 (approximately USD 12,820) plus an additional month's salary per
calendar year of service as a year-end payment. In January 2000 Mr. Daswani's
monthly salary was increased to HK $150,000 (approximately USD 19,230); however,
in December 2000 Mr. Daswani agreed to have his monthly salary reduced to HK
$100,000 (approximately USD 12,820). We entered into a new six-month employment
agreement with Mr. Daswani covering the period from March 1, 2001 to August 31,
2001. Under this agreement, we paid Mr. Daswani (i) a monthly salary of HK
$150,000 (approximately USD 19,230), (ii) an additional lump-sum payment equal
to four months' salary on August 31, 2001 and (iii) a prorated portion of one
month's salary, equal to HK $100,000 (approximately USD 12,820), on August 31,
2001.
Kenneth Telford. We entered into employment agreements with Kenneth
Telford, our Chief Financial Officer, the terms of which commenced in March
2001. Pursuant to these agreements, First Ecom.com paid Mr. Telford an aggregate
monthly salary of HK $165,000 (approximately USD 21,250), for the period from
March 1, 2001 through September 30, 2001, issued Mr. Telford warrants to
purchase 50,000 shares of First Ecom.com common stock at an exercise price of
USD 1.25 per share and paid Mr. Telford an additional lump-sum payment in August
2001 equal to four months' salary. The agreements also provided for an
additional month's salary per calendar year of service as a year-end payment. In
August 2001 we entered into new one-year employment agreements with Mr. Telford
that provide for an aggregate monthly salary of HK $165,000 (approximately USD
21,250) plus an additional month's salary per calendar year of service as a
year-end payment. This agreement will terminate on August 31, 2002 unless we
choose to extend the term of the agreement. If we do not choose to extend the
term of the agreement, the agreement provides that we must pay a termination
payment to Mr. Telford in August 2002 equal to three months' salary.
13
Option Grants In Last Fiscal Year
The following table presents information concerning individual grants of
options to purchase common stock made during the fiscal year ended December 31,
2000 to each of the named executive officers.
- ------------------------------------------------------------------------------------------------------------------------
Number of
Shares of Percentage of Potential Realizable Value At
Common Stock Total Options Assumed Annual Rate of Stock
Underlying Granted to Exercise of Price Appreciation For Option
Options Employees in Base Price Term
Name Granted/1,2/ Fiscal Year (USD) Expiration Date (USD)
- ------------------------------------------------------------------------------------------------------------------------
5% 10%
-- ---
Gregory Pek/2/ 150,000 6.6% 5.05 August 29, 2005 373,924 670,217
Ravi Daswani/2/ 150,000 6.6% 5.05 August 29, 2005 373,924 670,217
Harold Hutton/3/ 170,000 9.4% 5.05 August 29, 2005 423,780 759,579
- ------------------------------------------------------------------------------------------------------------------------
_______________________________
/1/ All of the options granted are subject to the following vesting schedule:
50% at 12 months from grant; 50% at 24 months from grant.
/2/ 50,000 of these options represent options granted in 1999 which were
rescinded on August 29, 2000 and replaced with 50,000 new options with an
exercise price of USD 5.05.
/3/ Resigned November 29, 2000
14
Aggregated Option Exercises In Last Fiscal Year and Fiscal Year End Option
Values
The following table sets forth the value of unexercised options to purchase
common stock for each named executive officer on December 31, 2000. No options
were exercised by the named executive officers during 2000.
- -------------------------------------------------------------------------------
Number of Securities Value of Unexercised
Name Underlying Unexercised Options In-the-Money Options/1/
- ---- ------------------------------ -----------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Gregory Pek 50,000 150,000 0 0
Ravi Daswani 50,000 150,000 0 0
Harold Hutton/2/ 0 0 0 0
- -------------------------------------------------------------------------------
____________________
/1/ Based on a December 31, 2000 closing price of USD 0.75 share.
/2/ Resigned November 29, 2000
15
Stock Performance Graph
The following graph provides a comparison of the performance of First Ecom.com's
common stock for the 2000 year, against the performance of the Technology and
NASDAQ indices during the same period. The Stock Performance Graph shall not be
deemed incorporated by reference by any general statement incorporating by
reference this proxy statement into any filing under the Securities Act of 1933
or the Securities Exchange Act of 1934, except to the extent that First Ecom.com
specifically incorporates this information by reference, and shall not otherwise
be deemed filed under such Acts.
[GRAPHIC]
Date FECC Nasdaq IIX
7-Jan-00 9.06 3,966.11 549.73
14-Jan-00 8.75 4,064.27 555.27
21-Jan-00 8.31 4,235.40 587.23
28-Jan-00 9.75 3,887.07 520.99
4-Feb-00 14.00 4,572.83 575.85
11-Feb-00 14.88 3,429.02 595.60
18-Feb-00 29.00 4,411.74 587.22
25-Feb-00 30.00 4,590.50 618.57
3-Mar-00 29.18 4,914.79 658.96
10-Mar-00 26.75 3,455.83 674.77
17-Mar-00 26.00 4,798.13 645.93
24-Mar-00 26.22 4,963.03 680.97
31-Mar-00 25.09 4,572.83 621.48
7-Apr-00 20.00 3,991.93 605.71
14-Apr-00 13.50 3,321.29 435.52
21-Apr-00 13.25 3,643.88 486.60
28-Apr-00 13.38 3,860.66 512.27
5-May-00 16.25 3,816.82 501.89
12-May-00 14.03 2,889.80 458.87
19-May-00 13.38 3,390.40 433.53
26-May-00 12.00 3,205.11 398.21
2-Jun-00 13.50 4,244.14 490.27
9-Jun-00 11.50 4,013.34 495.61
16-Jun-00 11.48 3,860.56 481.50
23-Jun-00 10.44 3,845.34 476.19
30-Jun-00 9.84 3,966.11 495.32
7-Jul-00 9.13 4,023.20 496.24
14-Jul-00 8.94 4,246.18 542.95
21-Jul-00 8.50 4,094.45 531.22
28-Jul-00 8.00 3,663.00 472.23
4-Aug-00 6.72 3,787.36 497.17
11-Aug-00 5.25 3,789.47 490.79
18-Aug-00 5.09 3,930.34 515.92
25-Aug-00 5.06 4,042.68 544.86
1-Sep-00 8.38 4,234.33 559.73
8-Sep-00 7.19 3,978.41 526.52
15-Sep-00 6.38 3,835.23 518.70
22-Sep-00 5.50 3,803.76 526.53
29-Sep-00 4.34 3,672.82 502.55
6-Oct-00 3.28 3,361.01 467.54
13-Oct-00 3.00 3,316.77 452.38
20-Oct-00 2.63 3,483.14 464.33
27-Oct-00 3.25 3,278.36 426.22
3-Nov-00 3.03 3,451.58 462.81
10-Nov-00 2.88 3,028.99 391.19
17-Nov-00 2.03 3,027.19 385.32
24-Nov-00 1.50 2,904.38 353.32
1-Dec-00 1.38 2,645.29 323.07
8-Dec-00 1.44 2,917.43 373.46
15-Dec-00 1.31 2,653.27 333.91
22-Dec-00 1.00 2,517.02 292.92
29-Dec-00 0.75 2,470.52 279.60
Certain Relationships And Related Transactions
First Ecom.com had the following related party transactions during the 2000
fiscal year.
Asia Internet Limited, of which Mr. Daswani was a director and shareholder,
received USD 91,871 from First Ecom.com for providing technical support, system
maintenance and other professional services for First Ecom.com during the period
from January 1, 2000 to March 31, 2000. On March 31, 2000, First Ecom.com
purchased the entire issued share capital of Asia Internet Limited for
consideration consisting of USD 1.2 million cash and 24,870 shares of First
Ecom.com.
On March 6, 2000, Mr. Moore purchased 200,000 newly issued units from First
Ecom.com for USD 1,900,000, or USD 9.50 per unit. Each unit consisted of one
share of First Ecom.com common stock and a warrant to purchase one-third of a
share of common stock for USD 11.40. The last sale price of the common stock on
the date of purchase was USD 29.25
16
per share. Mr. Moore's purchases were part of an issuance of 3,228,500 units by
First Ecom.com to 15 investors at the same price on the same date.
Mr. Ermanno Pascutto, a director of First Ecom.com until January 2001, was,
until June 2000, a partner in a firm of solicitors to which First Ecom.com has
paid legal fees in the ordinary course of its business. The amount charged by
the firm during the year ended December 31, 2000 was USD 373,497. First Ecom.com
paid Mr. Pascutto fees totaling USD 106,153 for consulting services performed by
Mr. Pascutto during the period from June 15, 2000 through December 31, 2000.
PROPOSAL #2 - RATIFICATION OF APPOINTMENT OF AUDITORS
The board of directors of First Ecom.com has selected the firm of Deloitte
Touche Tohmatsu to serve as its independent auditors for the year ended December
31, 2001. While the ratification of the selection of Deloitte Touche Tohmatsu as
First Ecom.com's independent public accountants is not required to be submitted
for stockholder approval, the board has elected, as a matter of policy, to seek
ratification of its selection by the affirmative vote of at least 10% of the
shares represented and voting at the meeting. If the stockholders fail to ratify
the selection of Deloitte Touche Tohmatsu, the board will reconsider the matter.
Notwithstanding the ratification by the stockholders of the appointment of
Deloitte Touche Tohmatsu, the board of directors may, if the circumstances
dictate, appoint other independent accountants.
The board of directors unanimously recommends that the stockholders vote
for the ratification of Deloitte Touche Tohmatsu to serve as First Ecom.com's
independent auditors for the fiscal year ending December 31, 2001.
Representatives of Deloitte Touche Tohmatsu will attend the annual meeting,
will have the opportunity to make a statement should they wish to do so and will
be available to respond to appropriate questions.
Deloitte Touche Tohmatsu was confirmed as First Ecom.com's independent
accountants by the shareholders at the 2000 annual meeting held January 19,
2001. Deloitte Touche Tohmatsu expressed an unqualified opinion on First
Ecom.com's financial statements for the year ended December 31, 2000 and for the
period from September 16, 1998 (date of inception) to December 31, 2000 on March
9, 2001.
Audit Fees
The aggregate fees paid to Deloitte Touche Tohmatsu for professional
services rendered for the audit of our annual financial statements for the
fiscal year ended December 31, 2000, and for the reviews of the financial
statements included in our quarterly reports on Form 10-Q for that fiscal year,
are estimated to be USD 75,000.
Financial Information System Design and Implementation Fees
We did not pay any fees to Deloitte Touche Tohmatsu for financial
information systems design and implementaion services for the fiscal year ended
December 31, 2000.
All Other Fees
We did not pay any amount to Deloitte Touche Tohmatsu for any services for
the fiscal year ended December 31, 2000 other than the fees for the audit
services described under the caption "Audit Fees" above.
17
PROPOSAL #3
AMEND ARTICLES OF INCORPORATION TO CHANGE NAME
The board of directors has announced that First Ecom.com has entered the
oil and gas development and exploitation business and as such believes that
First Ecom.com should change its name to "Brek Energy Corporation" to better
reflect First Ecom.com's new business. The proposed name change is reflected in
Article One of the form of Amended and Restated Articles of Incorporation which
is annexed to this proxy statement as Annex B.
The board of directors unanimously recommends that the stockholders vote to
change the name of First Ecom.com to "Brek Energy Corporation".
PROPOSAL #4
AMEND ARTICLES OF INCORPORATION TO AUTHORIZE ADDITIONAL
SHARES OF COMMON STOCK
First Ecom.com's Articles of Incorporation currently authorize the issuance
of up to 200,000,000 shares of common stock. The board of directors has
approved, subject to approval by First Ecom.com's stockholders, an amendment to
the Articles of Incorporation to increase the authorized number of shares of
common stock to 300,000,000. The purpose of the proposed increase is to make
additional shares of common stock available for issuance from time to time as
and when the board of directors deems it advisable. The proposed increase is
reflected in Article Three of the form of Amended and Restated Articles of
Incorporation which is annexed to this proxy statement as Annex B.
The additional shares of common stock, if so authorized, could be issued at
the discretion of the board of directors without any further action by the
stockholders, except as required by applicable law or regulation, in connection
with acquisitions, future financings and other corporate purposes. The
additional shares of common stock could also be used to permit a stock split or
a stock dividend, or to render more difficult or prevent a merger, tender offer,
proxy contest or other change in control of First Ecom.com. Such shares will
only be issued upon a determination by the board of directors that a proposed
issuance is in the best interests of First Ecom.com and its stockholders.
First Ecom.com's common shares do not have preemptive rights. No change in
total stockholder equity would result from the proposed increase of the number
of authorized shares of common stock; however, any future issuance of such
additional shares of common stock could, depending on the circumstances, reduce
total stockholder equity, have a dilutive effect on earnings per share, reduce
the voting power of currently issued and outstanding shares of common stock, and
have other similar dilutive effects on the currently issued and outstanding
shares of common stock.
The board of directors unanimously recommends that the stockholders vote to
approve the amendment to the Articles of Incorporation to increase the number of
authorized shares of common stock from 200,000,000 to 300,000,000.
18
Proposal #5
APPROVAL OF AMENDMENT TO ARTICLES OF INCORPORATION TO
AUTHORIZE THE ISSUANCE OF SHARES OF PREFERRED STOCK
First Ecom.com's Articles of Incorporation currently authorizes only one
class of capital stock - shares of First Ecom.com common stock. The board of
directors has approved, subject to approval by First Ecom.com's stockholders, an
amendment to the Articles of Incorporation to create a class of preferred stock
initially consisting of 50,000,000 shares, which shares may be designated and
issued in one or more series with rights, preferences and privileges determined
by the board of directors. Such proposed class of preferred stock is reflected
in Article Three of the form of Amended and Restated Articles of Incorporation
which is annexed to this proxy statement as Annex B.
We cannot state or estimate at the present time the terms of the preferred
stock we propose be authorized because the First Ecom.com board does not
contemplate any offering of such preferred stock in the near future, although
the board will not seek further authorization by the stockholders in the event
there is any issuance of such preferred stock by the board.
The terms of the preferred stock to be authorized, including dividend
rates, conversion rights, voting rights, redemption prices, maturity dates,
designations, preferences, limitations, restrictions and other similar matters
will be determined by the board at a later date, without the vote or approval of
the stockholders. Any future issuance of the preferred stock to be authorized
could, depending on the circumstances, reduce total stockholder equity, have a
dilutive effect on earnings per share, reduce the voting power of currently
issued and outstanding shares of First Ecom.com common stock, and have other
similar dilutive effects on the currently issued and outstanding shares of
common stock. Such preferred stock will only be issued upon a determination by
the board that a proposed issuance is in the best interests of First Ecom.com
and its stockholders.
The purpose of authorizing the shares of preferred stock is to make an
additional class of shares apart from the shares of common stock available for
issuance should the board ever deem such an issuance to be advisable. The board
believes that the availability of authorized but unissued shares of preferred
stock can be of considerable value by providing an alternative form of
consideration in connection with the raising of capital or the acquisition of
other businesses through the issuance of securities by First Ecom.com, the terms
and characteristics of which can be determined by the board at the time of the
actual issuance based on market conditions and to meet other circumstances
existing at such time.
The shares of preferred stock to be authorized could also be used to
implement a stockholder rights plan, or issued in order to defeat a hostile
takeover attempt. Any such stockholder rights plan would likely contain
provisions that would allow First Ecom.com's stockholders (other than an
acquiring person who has not been approved by the First Ecom.com board) to
obtain either First Ecom.com shares or shares of the acquiring person at a
substantial discount from the market price of such shares. In addition, if First
Ecom.com were to become the target of a hostile takeover attempt, First Ecom.com
could try to prevent the takeover by issuing shares of preferred stock, the
effect of which would be to reduce the voting power of the then issued and
outstanding shares of common stock and increase the cost of the takeover. The
19
adoption of a stockholder rights plan or the issuance of shares of preferred
stock could make it more difficult for any person to obtain control of First
Ecom.com through a merger, tender offer, proxy contest or other means, which
could potentially inhibit stockholders from realizing a higher share price for
their stock than that which would be available in the public markets. However,
the board believes that such measures would have the effect of (i) deterring
those transactions in First Ecom.com's common stock that could lead to a
"creeping" takeover of First Ecom.com without the payment of a control premium,
(ii) encouraging prospective acquirors to negotiate with the board and (iii)
maximizing stockholder value in the event of a sale of First Ecom.com. The board
has no knowledge of any current, threatened or contemplated attempt to take over
the control of First Ecom.com.
The board of directors unanimously recommends that the stockholders vote to
approve the amendment to the Articles of Incorporation to authorize the issuance
of 50,000,000 shares of preferred stock in one or more series.
PROPOSAL #6
APPROVAL OF ADOPTION OF 2001 STOCK OPTION/WARRANT PLAN
The board of directors has approved, subject to approval by First
Ecom.com's stockholders, the First Ecom.com 2001 Stock Option/Warrant Plan the
form of which is annexed to this proxy statement as Annex C. Under the 2001
Stock Option/Warrant Plan First Ecom.com may grant to officers, key employees,
consultants and directors of First Ecom.com warrants and options, exercisable
for up to an aggregate of five million shares of First Ecom.com common stock,
with exercise prices, vesting terms and expiration dates to be determined by the
board of directors. The exercise price of an option or warrant granted under the
2001 Stock Option/Warrant Plan will not be less than the price of a share of
First Ecom.com common stock on the date such option or warrant is granted. If
the 2001 Stock Option/Warrant Plan receives stockholder approval, it will remain
effective until October 31, 2011. The purpose of the 2001 Stock Option/Warrant
Plan is to assist us in encouraging the continued employment or service of
officers, key employees, consultants and directors by offering them a greater
stake in First Ecom.com's success and a closer identity with First Ecom.com, and
to aid in attracting individuals whose employment or services would be helpful
to First Ecom.com and would contribute to its success.
The board of directors unanimously recommends that the stockholders vote to
approve the adoption of the First Ecom.com 2001 Stock Option/Warrant Plan.
OTHER MATTERS
The board of directors knows of no business other than the matters set
forth in this proxy statement which will be presented at the meeting. Inasmuch
as matters not known at this time may come before the meeting, the enclosed
proxy confers discretionary authority with respect to such matters as may
properly come before the meeting and it is the intention of the persons named in
the proxy to vote in accordance with their judgment on such matters.
20
STOCKHOLDER PROPOSALS FOR NEXT YEAR
Any stockholder proposal for the annual meeting to be held in 2003 must be
sent to the Secretary at First Ecom.com's principal executive office. The
deadline for receipt of a proposal to be considered for inclusion in the proxy
statement is August 10, 2002. The deadline for notice of a proposal for which a
shareholder will conduct his or her own solicitation is October 24, 2002.
DISSENTERS' RIGHTS
Stockholders of First Ecom.com will have no dissenters' or appraisal rights
with respect to any of the proposals to be voted upon at the annual meeting.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires that our
directors, executive officers and greater-than-ten-percent beneficial owners
file reports of their ownership and changes in ownership of First Ecom.com stock
on Forms 3, 4 and 5 with the Securities and Exchange Commission. To our
knowledge, based solely on a review of copies of reports furnished to us and
certain written representations, during the fiscal year ended December 31, 2000
all Section 16(a) filing requirements applicable to our directors, executive
officers and greater-than-ten-percent beneficial owners were complied with.
ADDITIONAL INFORMATION
All information contained in this proxy statement relating to the
occupations, affiliations and securities holdings of directors and officers of
First Ecom.com and their relationship and transactions with First Ecom.com is
based upon information received from the individual directors and officers. All
information relating to any beneficial owner of more than five percent of First
Ecom.com's common stock is based upon information contained in reports filed by
such owner with the Securities and Exchange Commission.
The annual report of First Ecom.com on Form 10-K for the year ended
December 31, 2000, which includes financial statements and accompanies this
proxy statement, is being mailed to the stockholders together with this proxy
statement, but such annual report is not incorporated in this proxy statement
and is not deemed to be part of the proxy solicitation material.
A copy of the exhibits to the annual report will be furnished to any
stockholder upon written request and payment of a nominal fee.
21
ANNEX A
Audit Committee - Terms Of Reference
I. Statement of Policy
The Audit Committee shall provide assistance to the Board of Directors in
fulfilling its responsibility to shareholders, potential shareholders, and
the investment community:
. Relating to corporate accounting, internal controls, reporting
practices of the Company, and the quality and integrity of the
financial reports of the Company.
. Helping to insure the independence of the Company's independent
auditors, the integrity of management and the adequacy of disclosure
to shareholders.
In so doing, it shall be the policy of the Audit Committee to maintain free and
open means of communication between the Board of Directors, the independent
auditors, the internal auditors and the financial management of the Company.
II. Organization
A. Members. The Audit Committee shall be composed of directors who are
independent of the management of the Company and are free of any
relationship that, in the opinion of the Board of Directors, would
interfere with their exercise of independent judgment as a committee
member. Audit Committee members shall be selected by majority vote of
the Board of Directors, and the Committee shall be composed of not
less than three independent directors. In addition, the Board of
Directors shall designate a Chairman and non-voting Secretary of the
Committee.
B. Meetings. The Audit Committee shall meet as required to discharge its
responsibilities. The Committee shall, when desirable, request that
members of management, internal auditors and representatives of the
independent auditors be present at the meeting of the Committee.
C. Minutes. The Secretary shall prepare minutes for all meetings of the
Audit Committee to document the Committee's discharge of its
responsibilities. The minutes shall be circulated in draft form to all
Committee members to ensure an accurate final record, and shall be
approved at a subsequent meeting of the Committee.
A-1
III. Delineation of Responsibilities
In fulfilling the responsibilities of the Audit Committee, the Audit Committee
shall periodically:
1. Review and recommend to the Board of Directors the independent
auditors to be selected to audit the financial statements of the
Company, its divisions, subsidiaries and employee benefit plans.
2. Review the fees charged by the independent auditors for both audit and
non-audit services.
3. Meet with the independent auditors and financial management of the
Company to review the scope of the proposed audit for the current year
and the audit strategy to be employed.
4. Review with the independent auditors, internal auditors and financial
management, the process utilized to manage those risks and exposures
which could have a material effect on the Company's financial
statements.
5. Review with the independent auditors, internal auditors and with the
Company's financial and accounting personnel the adequacy and
effectiveness of the internal controls of the Company, including the
adequacy and effectiveness of controls in the international markets.
Particular emphasis should be given to the adequacy of such internal
controls to prevent or expose any payments, transactions or procedures
which might be deemed illegal or otherwise improper.
6. Review the internal audit function of the Company, including the
proposed programs for the coming year, the coordination of such
programs with the independent auditors and the results of the internal
auditors' recent activities. Particular attention should be given to
maintaining the best possible effective balance between independent
and internal auditing resources.
7. Review a summarization of the Company's dealings with directors, firms
which employ directors, and relatives of directors.
8. On a timely basis, review with financial management and the
independent auditors the results of their analysis of significant
financial reporting issues and practices, including changes in, or new
adoptions of accounting principles and disclosure practices. Also
review with financial management and the independent auditors their
qualitative judgments about the appropriateness of accounting
principles and financial disclosure practices used or proposed to be
used, and particularly, the degree of aggressiveness or conservatism
of the organization's accounting principles and underlying estimates.
A-2
9. Review with management and the independent auditors the results of the
annual audit, including all matters required to be communicated by the
auditors under generally accepted auditing standards, as well as the
annual financial statements and Form 10-K for adequacy of disclosure
and content.
10. Report the results of the annual audit to the Board of Directors. If
requested by the Board, the Audit Committee or the independent
auditors, invite the independent auditors to attend the full Board of
Directors' meeting to assist in reporting the results of the annual
audit or to answer other Director's questions.
11. Review the independent auditors' management letter and
recommendations, and management's response.
12. Insure that sufficient opportunity exists for the members of the Audit
Committee to meet with the independent auditors without members of
management present and with members of management without the
independent auditors present.
13. Meet with the General Counsel of the Company and other appropriate
legal officers of the Company, to review legal affairs of the Company.
14. Review the Committee's charter and operations.
In carrying out its responsibilities, the Audit Committee believes that its
policies and procedures should remain flexible in order that it can best react
to changing conditions and environment and to assure to the directors and
shareholders that the corporate accounting and reporting practices of the
Company are in accordance with all requirements and are of the highest quality.
IV. Reporting
The Audit Committee shall report to the Board of Directors any significant
matters as promptly as possible, but in any event, no later than the next
following regularly scheduled meeting of the Board of Directors.
Approved by the Board of Directors on February 1, 2000
A-3
ANNEX B
FORM OF
AMENDED AND RESTATED ARTICLES OF INCORPORATION
OF
BREK ENERGY CORPORATION
The undersigned hereby adopts the following Restated Articles of
Incorporation:
ARTICLE ONE [NAME].
The name of the corporation is: BREK ENERGY COPORATION
ARTICLE TWO [PURPOSES].
The purposes for which the corporation is organized are to engage in
any activity or business not in conflict with the laws of the State of Nevada or
of the United States of America, and without limiting the generality of the
foregoing, specifically:
(B) [OMNIBUS]. To have to exercise all the powers now
or hereafter conferred by the laws of the State of Nevada upon corporations
organized pursuant to the laws under which the corporation is organized and any
and all acts amendatory thereof and supplemental thereto.
(C) [CARRYING ON BUSINESS OUTSIDE STATE]. To conduct
and carry on its business or any branch thereof in any state or territory of the
United States or in any foreign country in conformity with the laws of such
state, territory, or foreign country, and to have and maintain in any state,
territory, or foreign country a business office, plant, store or other facility.
(D) [PURPOSES TO BE CONSTRUED AS POWERS]. The purpose
specified herein shall be construed both as purposes and powers and shall be in
no way limited or restricted by reference to, or inference from, the terms of
any other clause in this or any other article, but the purposes and powers
specified in each of the clauses herein shall be regarded as independent
purposes and powers, and the enumeration of specific purposes and powers shall
not be construed to limit or restrict in any manner the meaning of general terms
or the general powers of the corporation; nor shall the expression of one thing
be deemed to exclude another, although it be of like nature not expressed.
B-1
ARTICLE THREE [CAPITAL STOCK].
The corporation shall have authority to issue an aggregate of Three
Hundred Million (300,000,000) shares of common stock, PAR VALUE ONE MILL
($0.001) per share (the "Common Stock"), and FIFTY Million (50,000,000) shares
of preferred stock (the "Preferred Stock", and together with the Common Stock,
the "Capital Stock")). The Board of Directors is authorized, subject to the
limitations prescribed by law, to provide for the issuance of Preferred Stock in
series, and by filing a certificate pursuant to the applicable law of the State
of Nevada, to establish from time to time the number of shares to be included in
each such series, to fix the designation, powers, preferences and rights of the
shares of each such series and the qualifications, limitations or restrictions
thereof.
The holders of shares of Capital Stock of the corporation shall not be
entitled to pre-emptive or preferential rights to subscribe to any unissued
stock or any other securities which the corporation may now or hereafter be
authorized to issue.
The corporation's Capital Stock may be issued and sold from time to
time for such consideration as may be fixed by the Board of Directors, provided
that the consideration so fixed is not less than par value.
The stockholders shall not possess cumulative voting rights at all
shareholders meetings called for the purpose of electing a Board of Directors.
ARTICLE FOUR [DIRECTORS].
The affairs of the corporation shall be governed by a Board of
Directors of no more than eight (8) nor less than one (1) person.
ARTICLE FIVE [ASSESSMENT OF STOCK]
The capital stock of the corporation, after the amount of the
subscription price or par value has been paid in, shall not be subject to pay
debts of the corporation, and no paid up stock and no stock issued as fully paid
up shall ever be assessable or assessed.
ARTICLE SIX [PERIOD OF EXISTENCE].
The period of existence of the corporation shall be perpetual.
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ARTICLE SEVEN [BY-LAWS].
The initial By-laws of the corporation shall be adopted by its Board of
Directors. The power to alter, amend, or repeal the By-laws, or to adopt new
By-laws, shall be vested in the Board of Directors, except as otherwise may be
specifically provided in the By-laws.
ARTICLE EIGHT [STOCKHOLDERS' MEETINGS].
Meetings of stockholders shall be held at such place within or without
the State of Nevada as may be provided by the By-laws of the corporation.
Special meetings of the stockholders may be called by the President or any other
executive officer of the corporation, the Board of Directors, or any member
thereof, or by the record holder or holders of at least ten percent (10%) of all
shares entitled to vote at the meeting. Any action otherwise required to be
taken at a meeting of the stockholders, except election of directors, may be
taken without a meeting if a consent in writing, setting forth the action so
taken, shall be signed by stockholders having at least a majority of the voting
power.
ARTICLE NINE [CONTRACTS OF CORPORATION].
No contract or other transaction between the corporation and any other
corporation, whether or not a majority of the shares of the capital stock of
such other corporation is owned by this corporation, and no act of this
corporation shall in any way be affected or invalidated by the fact that any of
the directors of this corporation are pecuniarily or otherwise interested in, or
are directors or officers of such other corporation. Any director of this
corporation, individually, or any firm of which such director may be a member,
may be a party to, or may be pecuniarily or otherwise interested in any contract
or transaction of the corporation; provided, however, that the fact that he or
such firm is so interested shall be disclosed or shall have been known to the
Board of Directors of this corporation, or a majority thereof; and any director
of this corporation who is also a director or officer of such other corporation,
or who is so interested, may be counted in determining the existence of a quorum
at any meeting of the Board of Directors of this corporation that shall
authorize such contract or transaction, and may vote thereat to authorize such
contract or transaction, with like force and effect as if he were not such
director or officer of such other corporation or not so interested.
ARTICLE TEN [LIABILITY OF DIRECTORS AND OFFICERS].
No director or officer shall have any personal liability to the
corporation or its stockholders for damages for breach of fiduciary duty as a
director or officer, except that this Article Ten shall not eliminate or limit
the liability of a director or officer for (i) acts or omissions which involve
intentional misconduct, fraud or a knowing violation of law, or (ii) the payment
of dividends in violation of the Nevada Revised Statutes.
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IN WITNESS WHEREOF, the undersigned, has executed these Amended and
Restated Articles of Incorporation this __ day of _________, 2002.
Name:_______________________________
Title: _____________________________
B-4
ANNEX C
FIRST ECOM.COM, INC.
2001 STOCK OPTION/WARRANT PLAN
1. PURPOSE OF PLAN
The purpose of this 2001 Stock Option/Warrant Plan (the "Plan") is to assist
First Ecom.com, Inc. (the "Company") and any subsidiaries established from time
to time (together with the Company, the "Companies") in encouraging the
continued employment or service of officers, key employees, consultants and
directors by offering them a greater stake in the Companies' success and a
closer identity with the Companies, and to aid in attracting individuals whose
employment or services would be helpful to the Companies and would contribute to
their success.
2. DEFINITIONS
(a) "Board" means the board of directors of the Company.
(b) "Committee" means the committee described in Paragraph 5.
(c) "Date of Grant" means the date on which an Option is granted.
(d) "Exercise Price" means the price per Share that an Optionee must pay in
order to exercise an Option.
(e) "Option" means any right granted under the Plan as described in Paragraph 3.
(f) "Option Agreement" shall have the meaning set forth in Paragraph 7.
(g) Optionee" means a person to whom an Option has been granted under the Plan,
which Option has not been exercised and has not expired or terminated.
(h) "Shares" means shares of Common Stock of the Company.
(i) "Value" means on any given date, the closing price of the Shares as reported
by NASDAQ, or if listed on a national exchange, the closing price of the Shares
on such exchange on such date, or, if not so reported or listed, the fair market
value of the Shares as determined by the Company in good faith.
3. RIGHTS TO BE GRANTED
Rights that may be granted under the Plan are Options or Warrants to purchase
Shares, which give the Optionee the right for a specified time period to
purchase a specified number of Shares at a specified Exercise Price.
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4. STOCK SUBJECT TO PLAN
The maximum number of Shares that may be issued upon exercise of Options granted
under the Plan is Five Million (5,000,000) Shares, subject to adjustment
pursuant to the provisions of Paragraph 9. If an Option terminates without
having been exercised in whole or part, other Options may be granted covering
the Shares as to which the Option was not exercised.
5. ADMINISTRATION OF PLAN
The grant of Options under this Plan shall be approved by the Board or a
committee designated by the Board for such purpose(the "Committee"), to be
composed solely of two or more Non-Employee Directors (as that term is defined
in Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the
"Rule")) who shall be appointed by and serve on such Committee at the pleasure
of the Board of Directors. Any determination regarding the terms of such Options
or any other determination regarding such Options shall be made by the Board or
the Committee.
6. GRANTING OF OPTIONS
Subject to Section 7 hereof, the Company may, from time to time, designate: the
officers, key employees, consultants and/or directors of any of the Companies to
whom Options are be granted; the number of Shares covered by an Option; the
relevant Exercise Price of an Option; the vesting provisions of an Option; and
the term of an Option.
7. OPTIONS AGREEMENTS AND TERMS
Each Option shall be evidenced by an option agreement that shall be executed on
behalf of the Company ("Option Agreement"). The terms of each Option Agreement
shall be consistent with the following:
(a) Exercise Price. The Exercise Price per Share shall not be less than the
Value of a Share on the Date of Grant.
(b) Restriction on Transferability. Unless otherwise provided in the Option
Agreement, (i) no Option granted hereunder shall be pledged, hypothecated,
charged, transferred, assigned or otherwise encumbered or disposed of by the
Optionee, whether voluntarily or by operation of law, otherwise than by will or
the laws of descent and distribution, and any attempt to do so will cause such
Option to be null and void, and (ii) during the lifetime of the Optionee, an
Option shall be exercisable only by him or her and upon the death of an
Optionee, the person to whom the rights shall have passed by will or by the laws
of descent and distribution may exercise any Option in accordance with the
provisions of Paragraph 7(e).
(c) Payment; Cashless Exercise. Unless the Optionee elects the cashless exercise
of an Option, full payment for Shares purchased upon the exercise of an Option
shall be made in cash or by certified check, cashier's check or personal check.
Any Option granted pursuant to this Plan may at the election of the Optionee at
the time of exercise be
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exercised in a cashless transaction unless otherwise provided in the Option
Agreement. If the Optionee elects a cashless exercise, then the Optionee shall
not be required to pay the Exercise Price and the number of Shares issuable upon
such exercise shall equal the excess of the aggregate Value on the date of
exercise of the number of Shares that would have been issuable upon exercise of
the Option if the Optionee had elected to pay the Exercise Price in cash over
the aggregate Exercise Price for such shares, divided by the Value of a single
Share on the date of exercise. Upon any exercise of an Option, the Company shall
have the right to require the Optionee to remit to the Company, in cash or by
certified check, cashier's check, personal check or through the Company's
retention of Shares acquired by the Optionee upon the exercise, an amount
sufficient to satisfy all federal, state and local withholding tax requirements
prior to the delivery by the Company of any certificate for Shares.
(d) Issuance of Certificates. Upon payment of the Exercise Price or cashless
exercise , a certificate for the number of Shares shall be delivered to the
Optionee by the Company. If listed on a national securities exchange, or
reported on NASDAQ, the Company shall not be obligated to deliver any
certificates for Shares until (A)(i) such Shares have been listed (or authorized
for listing upon official notice of issuance) on each securities exchange upon
which outstanding Shares of such class at the time are listed or (ii) if such
outstanding Shares are quoted on NASDAQ, such Shares have been approved for
quotation thereon and (B) there has been compliance with such laws or
regulations as the Company may deem applicable. Without limiting the generality
of the foregoing, the Company shall have no obligation to issue Shares upon any
exercise of Options unless there is an effective registration statement with the
Securities and Exchange Commission with respect to the Shares to be so issued,
provided that it may elect to so issue Shares in its sole discretion. The
Company shall use its reasonable efforts to effect such listing or reporting and
compliance as promptly as practical.
(e) Periods of Exercise of Options. An Option shall be exercisable in whole or
in part for such time as may be stated in the Option Agreement.
(f) Date of Exercise. The date of exercise of an Option shall be the date on
which written notice of exercise is hand delivered or telecopied to the Company,
attention: Secretary; provided that the Company shall not be obliged to deliver
any certificates for Shares pursuant to the exercise of an Option except in
accordance with Section 7(c) and 7(d). Each such exercise shall be irrevocable
when given. Each notice of exercise must state that cashless exercise is elected
or include a statement as to the manner in which payment to the Company shall be
made (cash, certified check, cashier's check or personal check).
8. RIGHTS AS STOCKHOLDERS
An Optionee shall have no rights as a stockholder with respect to any Shares
covered by an Option until the later of the date of valid exercise of such
Option an the date on which the conditions to issuance set forth in Sections
7(c) and 7(d) are satisfied.
C-3
9. CHANGES IN CAPITALIZATION
In the event of a stock dividend, stock split, recapitalization, combination,
subdivision, issuance of rights to all stockholders, or other similar corporate
change, the Company shall make such adjustment in the aggregate number of Shares
that may be issued under the Plan, and the number of Shares subject to, and the
Exercise Price of, each then-outstanding Option, as it, in its sole and absolute
discretion, deems appropriate.
10. MERGERS, DISPOSITIONS AND CERTAIN OTHER TRANSACTIONS
If during the term of any Options, the Company shall be merged into or
consolidated with or otherwise combined with another person or entity, or
substantially all of the property or stock of the Company is acquired by another
person or entity, or there is a divisive reorganization, spin-off or liquidation
or partial liquidation of the Company, the Company may choose to take no action
with regard to the Options outstanding or to take any of the following courses
of action:
(a) The Company may provide in any agreement with respect to any such merger,
consolidation, combination or acquisition that the surviving, new or acquiring
corporation shall grant Options to the Optionees to acquire shares in such
corporation with respect to which the excess of the fair market value of the
shares of such corporation immediately after the consummation of such merger,
consolidation, combination or acquisition over the Exercise Price shall not be
greater than the excess of the Value of the Shares over the Exercise Price of
the Options immediately prior to the consummation of such merger, consolidation,
combination or acquisition; or
(b) If the Board shall determine that such action is reasonable under the
circumstances, it may give each Optionee the right, immediately prior to the
consummation of such merger, consolidation, combination, acquisition, divisive
reorganization, spin-off, liquidation or partial liquidation, to exercise his or
her Options in whole or in part, without regard to any restrictions on the time
of exercise otherwise imposed by Paragraph 7(e) of the Plan pr by the Option
Agreement, or the Board may take such other action as it shall determine to be
reasonable under the circumstances in order to permit Optionees to realize the
value of rights granted to them under the Plan.
11. PLAN NOT TO AFFECT EMPLOYMENT
Neither the Plan nor any Option granted thereunder shall confer upon any
employee, officer, consultant or other agent, or director of any of the
Companies any right to continue in the employment or service of any of the
Companies.
12. INTERPRETATION
The Board or the Committee shall have the power to interpret the Plan and to
adopt, amend and rescind rules for putting the Plan into effect and
administering it. The administration, interpretation, construction and
application of the Plan and any provisions
C-4
thereof made by the Board or the Committee shall be final and binding on all
Optionees and on any other persons eligible under the provisions of the Plan to
participate therein. No member of the Board or Committee shall be liable for any
action taken or for any determination made in good faith in connection with the
administration, interpretation, construction or application of the Plan. It is
intended that the Plan shall qualify for the exemption available under the Rule.
The provisions of the Plan shall be interpreted and applied insofar as possible
to carry out such intent.
13. AMENDMENTS
The Board may amend the Plan from time to time. No outstanding Option shall be
affected by any such amendment without the written consent of the Optionee or
other person then entitled to exercise such Option.
14. SECURITIES LAWS
The Company shall have the power to make each grant under the Plan subject to
such conditions as it deems necessary or appropriate to comply with the then
existing rules and regulations of the Securities and Exchange Commission.
15. EFFECTIVE DATE AND TERM OF PLAN
The Plan shall become effective on the date the Plan is adopted by the Board,
and, unless sooner terminated by the Board, shall expire on the date that is ten
years after the date on which the Plan is adopted by the Board or the date the
Plan is approved by the Company's shareholders, whichever is earlier
("Expiration Date"). No Option may be granted under the Plan following the
Expiration Date.
16. GOVERNING LAW
The Plan and all matters to which reference is made herein shall be governed by
and interpreted in accordance with the laws of the State of Nevada and the
federal laws of the United States applicable herein, without regard for choice
of law principles.
By order of the Board of Directors of First Ecom.com, Inc.
C-5
First Ecom.com, Inc. Proxy
solicited by the board of directors for the annual
meeting of stockholders to be held January 29, 2002
The undersigned hereby constitutes, appoints, and authorizes Gregory Pek
and Ian Robinson, and each of them acting individually, as the true and lawful
attorney and proxy of the undersigned, with full power of substitution and
appointment, for and in the name, place and stead of the undersigned to act for
and vote as designated below, all of the undersigned's shares of the common
stock of First Ecom.com, Inc., a Nevada corporation, at the annual meeting of
the stockholders to be held January 29, 2002, at Pacific Place Conference
Centre, Annapurna Room, 88 Queensway, Hong Kong, SAR at 10:00 a.m. Hong Kong
time, and at any and all adjournments thereof, with respect to the matters set
forth below and described in the Notice of Annual Meeting dated December 24,
2001, receipt of which is hereby acknowledged.
1. Election of Directors (Page 5) For All Withold from all
[ ] [ ]
For all nominees except:
2. Ratification of Independent Auditors (page 17)
For Against Abstain
[ ] [ ] [ ]
3. Name Change (page 18) For Against Abstain
[ ] [ ] [ ]
4. Increase Authorized Common Stock (page 18) For Against Abstain
[ ] [ ] [ ]
5. Authorize Preferred Stock (page 19) For Against Abstain
[ ] [ ] [ ]
6. Approve Stock Option/Warrant Plan (page 20) For Against Abstain
[ ] [ ] [ ]
The proxy is authorized to vote upon any other business as may properly
come before the annual meeting or any adjournment thereof.
The undersigned hereby revokes any proxies as to said shares heretofore
given by the undersigned, and ratifies and confirms all that said attorney and
proxy may lawfully do by virtue hereof.
This proxy when properly executed will be voted in the manner directed herein by
the undersigned stockholder(s). If no direction is made, this proxy will be
voted "for" proposals 1, 2, 3, 4, 5 and 6. This proxy confers discretionary
authority in respect of matters not known or determined at the time of the
mailing of the notice of the annual meeting of stockholders to the undersigned.
DATED: ______________________, 200_ NUMBER OF SHARES _________
________________________________________________________________________________
Signature(s) of Stockholder(s)
________________________________________________________________________________
Signature(s) of Stockholder(s)
Signature(s) should agree with the name(s) shown hereon. Executors,
administrators, trustees, guardians and attorneys should indicate their capacity
when signing. Attorneys should submit powers of attorney. When shares are held
by joint-tenants, both should sign. If a corporation, please sign in full
corporate name by president or other authorized officer. If a partnership,
please sign in partnership name by authorized person.
This proxy is solicited on behalf of the board of directors
of First Ecom.com, Inc.
Please sign and return this proxy
using the enclosed pre-paid envelope.
or
Fax to (852) 2804-6291 (the fax number for our Hong Kong office)
The giving of a proxy will not affect your
right to vote in person if you attend the meeting.