<PAGE>
As filed with the Securities and Exchange Commission on July 22, 1998
Registration No. ________
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM S-8
REGISTRATION STATEMENT
Under
THE SECURITIES ACT OF 1933
e-NET, INC.
(Exact name of registrant as specified in its charter)
Delaware 52-1929282
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
12800 Middlebrook Road, Suite 200 20874
Germantown, Maryland (Zip Code)
(Address of Principal
Executive Offices)
e-NET, INC. 1997 NON-QUALIFIED STOCK OPTION PLAN
(Full title of the plan)
Robert A. Veschi Charles A. Sweet, Esq.
President Williams & Connolly
e-Net, Inc. 725 - 12th Street, N.W.
12800 Middlebrook Road, Suite 200 Washington, D.C. 20005
Germantown, Maryland 20874 (202) 434-5000
(Name and address of agent (Copy to)
for service)
(301) 601-8700
(Telephone number, including area
Calculation of Registration Fee
<TABLE>
<CAPTION>
Proposed Proposed
Amount maximum maximum
Title of securities to be offering price aggregate Amount of
to be registered registered per share offering price registration fee
------------------- ---------- -------------- -------------- ----------------
<S> <C> <C> <C> <C>
Common Stock
$0.01 per value 500,000(1) $ 10.79(2) $5,395,510(2) $1591.68(3)
</TABLE>
(1) The e-Net, Inc. 1997 Non-Qualified Stock Option Plan, as amended (the
"Plan") authorizes the issuance of a maximum of 500,000 shares of common stock,
$0.01 par value ("Common Stock"), all of which are being registered hereunder.
271,000 shares of Common Stock authorized to be issued under the Plan are
subject to outstanding options granted under the Plan and 229,000 are available
for future grants thereunder.
(2) Estimated pursuant to Rule 457(c) and (h) solely for the purposes of
calculating the amount of the registration fee. The proposed maximum offering
price per share was determined by calculating the weighted average exercise
price of (i) the 271,000 shares of Common Stock being offered under outstanding
options at a weighted average exercise price of $4.75, and (ii) the 229,000
shares of Common Stock being offered at an exercise price of $17.94, based on
the average of the high and low price per share of the Common Stock on July 17,
1998, as reported in the Nasdaq SmallCap Market.
(3) Calculated by dividing the proposed maximum aggregate offering price
by the amount to be registered.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
The following documents filed with the Securities and Exchange Commission
(the "Commission") by e-Net, Inc. (the "Company"), Commission File No.
000-20865, are incorporated by reference in this Registration Statement:
(a) The Company's Annual Report on Form 10-KSB for the fiscal
year ended March 31, 1998, filed with the Commission on June 30, 1998.
(b) The description of the Common Stock contained in the
Company's Form 8-A Registration Statement, as amended, filed with the
Commission on February 11, 1997, and all amendments and reports
subsequently filed for the purpose of updating that description.
In addition to the foregoing documents, all documents subsequently
filed by the Company pursuant to Sections 13(a), 13(c), 14 and 15(d) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), prior to the
filing of a post-effective amendment which indicates that all securities offered
hereby have been sold or which deregisters all securities then remaining unsold,
shall be deemed to be incorporated by reference in this Registration Statement
and to be a part hereof from the date of the filing of such documents. Any
statement contained in a document incorporated or deemed to be incorporated by
reference in this Registration Statement shall be deemed to be modified or
superseded for purposes of this Registration Statement to the extent that a
statement contained herein or in any other subsequently filed document which
also is or is deemed to be incorporated by reference herein modifies or
supersedes such statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute a part of this
Registration Statement.
Item 4. Description of Securities.
Not applicable.
Item 5. Interests of Named Experts and Counsel.
Not applicable.
Item 6. Indemnification of Directors and Officers.
As permitted by Delaware law, the Company's Certificate of
Incorporation includes a provision that provides that the Company will, to the
fullest extent permitted by Section 145 of the Delaware General Corporation Law,
as amended from time to time ("DGCL"), indemnify all
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<PAGE>
persons whom it may indemnify pursuant thereto. To the fullest extent permitted
by the DGCL, a director of the Company shall not be personally liable to the
Company or its stockholders for monetary damages for a breach of fiduciary duty
as a director. The provisions are intended to afford directors protection
against, and to limit their potential liability for, monetary damages resulting
from suits alleging a breach of the duty of care by a director; they also
diminish the potential rights of action which might otherwise be available to
shareholders by limiting the liability of officers and directors to the maximum
extent allowable under Delaware law and by affording indemnification against
most damages and settlement amounts paid by a director of the Company in
connection with any shareholders derivative action. As a consequence of these
provisions, stockholders of the Company will be unable to recover monetary
damages against directors for action taken by them that may constitute
negligence or gross negligence in performance of their duties unless such
conduct falls within an exception under DGCL or under Delaware case law. The
provision, however, does not alter the applicable standards governing a
director's fiduciary duty and does not eliminate or limit the right of the
Company or any stockholder to obtain an injunction or any other type of
equitable relief in the event of a breach of fiduciary duty. Management of the
Company believes these provisions will assist the Company in securing and
retaining qualified persons to serve as directors. The Company is unaware of any
pending or threatened litigation against the Company or its directors that would
result in any liability for which such director would seek indemnification or
similar protection.
The Company believes that the substantial increase in the number of
lawsuits being threatened or filed against corporations and their directors has
resulted in a growing reluctance on the part of capable persons to serve as
members of boards of directors of public companies. The Company also believes
that the increased risk of personal liability without adequate insurance or
other indemnity protection for its directors could result in overcautious and
less effective direction and management of the Company. The limitation on
liability and indemnification provisions are intended to increase the protection
provided directors and, thus, increase the Company's ability to attract and
retain qualified persons to serve as directors. Additionally, the Company has
procured directors liability insurance coverage, but there is no assurance that
it will provide coverage to the extent of the director's claims for
indemnification. In such event, the Company may be forced to bear a portion or
all of the cost of the director's claims for indemnification and, the value of
the Company stock may be adversely affected as a result. There is also no
assurance that the Company will be able to continue to procure directors
liability insurance. It is uncertain whether the Company's directors would
continue to serve in such capacities if improved protection from liability were
not provided.
Insofar as indemnification for liabilities arising under the Act may be
permitted to directors, officers and controlling persons of the small business
issuer pursuant to the foregoing provisions, or otherwise, the small business
issuer has been advised that in the opinion of the Commission such
indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable.
Item 7. Exemption from Registration.
Not applicable.
-3-
<PAGE>
Item 8. Exhibits.
4.1 -- e-Net, Inc. 1997 Nonqualified Stock Option Plan, as amended
4.2 -- Certificate of Incorporation of e-Net, Inc., as
corrected and amended (incorporated by reference from
Exhibit 3.0 to the Company's Registration Statement on
Form SB-2, Reg. No. 333-3860, as amended and declared
effective on April 7, 1997) (the "IPO Registration
Statement") and Exhibits 3.1 and 3.2 to Post-Effective
Amendment No. 1 to the IPO Registration Statement, as
declared effective on May 8, 1998
4.3 -- Bylaws of e-Net, Inc, as amended (incorporated by
reference from Exhibit 3.3 to the IPO Registration
Statement)
5.1 -- Opinion of Williams & Connolly regarding legality of
securities being registered
24.1 -- Consent of Grant Thornton LLP
24.2 -- Consent of Williams & Connolly (included in Exhibit 5.1)
25.1 -- Power of Attorney (included on page 6)
Item 9. Undertakings.
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which,
individually or in the aggregate, represent a fundamental
change in the information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not previously disclosed
in the registration statement or any material change to such
information in the registration statement;
provided, however, that paragraphs (a)(1)(i) and (a)(1)(ii) shall not
apply to information required to be included in a post-effective
amendment by those paragraphs and which is contained in periodic
reports filed by the registrant pursuant to section 13 or section 15(d)
of the Securities Exchange Act of 1934 that are incorporated by
reference in the registration statement.
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<PAGE>
(2) That, for the purpose of determining any liability under
the Securities Act of 1933, each such post-effective amendment shall be
deemed to be a new registration statement relating to the securities
offered therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at
the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to section 13(a) or section 15(d) of the
Securities Exchange Act of 1934 that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(c) Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Securities Act
of 1933 and is, therefore, unenforceable. In the event that a claim for
indemnification against such liabilities (other than the payment by the
registrant of expenses incurred or paid by a director, officer or controlling
person of the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling person in
connection with the securities being registered, the registrant will, unless in
the opinion of its counsel the matter has been settled by controlling precedent,
submit to a court of appropriate jurisdiction the question whether such
indemnification by it is against public policy as expressed in the Securities
Act of 1933 and will be governed by the final adjudication of such issue.
-5-
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the
registrant certifies that it has reasonable grounds to believe that it meets all
of the requirements for filing on Form S-8 and has duly caused this registration
statement to be signed on its behalf by the undersigned, duly thereunto
authorized, in the County of Montgomery, State of Maryland, on July 21, 1998.
e-NET, INC.
By: /s/ Robert A. Veschi
---------------------------
Robert A. Veschi
President
In accordance with the requirements of the Securities Act of 1933, as
amended, this Registration Statement on Form S-8 has been signed by the
following persons in the capacities and on the dates stated. Each person whose
signature appears below hereby constitutes and appoints each of Robert A. Veschi
and Donald J. Shoff as such person's true and lawful attorney-in-fact and agent
with full power of substitution for such person and in such person's name, place
and stead, in any and all capacities, to sign and to file with the Securities
and Exchange Commission, any and all amendments and post-effective amendments to
this Registration Statement, with exhibits thereto and other documents in
connection therewith, granting unto said attorney-in-fact and agent full power
and authority to do and perform each and every act and thing requisite and
necessary to be done in and about the premises, as fully to all intents and
purposes as such person might or could do in person, hereby ratifying and
confirming all that said attorney-in-fact and agent, or any substitute therefor,
may lawfully do or cause to be done by virtue thereof.
<TABLE>
<CAPTION>
Name Title Date
- ----- ----- ----
<S> <C> <C>
/s/Alonzo E. Short, Jr. Chairman of the Board July 21, 1998
- -----------------------------------------------------
Alonzo E. Short, Jr., Lt. Gen., USA (ret.)
/s/Robert A. Veschi President, Chief Executive July 21, 1998
- ----------------------------------------------------- Officer, Director
Robert A. Veschi
/s/Donald J. Shoff Chief Financial Officer July 21, 1998
- ----------------------------------------------------- (Chief Accounting Officer)
Donald J. Shoff
/s/William L. Hooton Director July 21, 1998
- -----------------------------------------------------
William L. Hooton
/s/Clive Whittenbury Director July 21, 1998
- -----------------------------------------------------
Clive Whittenbury, Ph.D.
/s/William W. Rogers, Jr. Director July 21, 1998
- --------------------------------------------
William W. Rogers, Jr.
</TABLE>
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<PAGE>
Exhibit Index
4.1 -- e-Net, Inc. Nonqualified Stock Option Plan, as amended
4.2 -- Certificate of Incorporation of e-Net, Inc. as corrected and
amended (incorporated by reference from Exhibit 3.0 to the
Company's Registration Statement on Form SB-2, Reg. No.
333-3860, as amended and declared effective on April 7, 1997)
(the "IPO Registration Statement") and Exhibits 3.1 and 3.2
to Post-Effective Amendment No. 1 to the IPO Registration
Statement, as declared effective on May 8, 1998
4.3 -- Bylaws of e-Net, Inc., as amended (incorporated by reference
from Exhibit 3.3 to the IPO Registration Statement)
5.1 -- Opinion of Williams & Connolly regarding legality of
securities being registered
24.1 -- Consent of Grant Thornton LLP
24.2 -- Consent of Williams & Connolly (included in Exhibit 5.1)
25.1 -- Power of Attorney (included on page 6)
<PAGE>
Exhibit 4.1
e-NET, INC. 1997 NONQUALIFIED STOCK OPTION PLAN
(as amended)
1. Purpose
The e-Net, Inc. 1997 Nonqualified Stock Option Plan (the "Plan") of e-Net, Inc.
("the Company") is designed to enable key employees and directors of the Company
and its Subsidiaries to acquire or increase a proprietary interest in the
Company, and thus to share in the future success of the Company's business.
Accordingly, the Plan is intended as a further means not only of attracting and
retaining outstanding management personnel but also of promoting a closer
identity of interests between executives and stockholders. Since the executives
eligible to receive Options under the Plan will be those who are in positions to
make important and direct contributions to the success of the Company, the
directors believe that the grant of Options under the Plan will be in the
Company's interest.
2. Definitions
Unless the context clearly indicates otherwise, the following terms, when used
in the Plan, shall have the meanings set forth in this Section 2.
(a) "Beneficiary" means the person or persons designated in
writing by the Grantee or, in the absence of such a
designation or if the designated person or persons predecease
the Grantee, the Grantee's Beneficiary shall be the person or
persons who acquire the right to exercise the Option by
bequest or inheritance. In order to be effective, a Grantee's
designation of a Beneficiary must be on file with the
Committee before the Grantee's death. Any Such designation may
be revoked and a new designation substituted therefore at any
time before the Grantee's death.
(b) "Board of Directors" or "Board" means the Board of Directors of the
Company.
(c) "Code" means the Internal Revenue Code of 1986, as amended from
time to time.
(d) "Committee" means the Board of Directors of the Company.
(e) "Disability" means a disability as defined in the Company's
Long-Term Disability Plan, as amended from time to time.
(f) "Grantee" means a person to whom an Option has been granted under
the Plan.
(g) "Option" means an option to purchase a share or shares of the
Company's par value common stock.
(h) "Option Agreement" means the written agreement to be entered
into by the Company and the Grantee, as provided in Section 7
hereof.
<PAGE>
(i) "Quota" means the portion of the total number of Shares
subject to an Option which the Grantee may purchase during
each of the several periods of the Term of the Option (if the
Option is subject to Quotas), as provided in Section 10(b)
hereof.
(j) "Retirement" means retirement pursuant to the Company's
Retirement Pension Plan, as amended from time to time.
(k) "Shares" means shares of the Company's par value common stock.
(l) "Subsidiary" means a subsidiary corporation as defined in
Section 424(f) of the Code (or a successor provision of
similar import).
(m) "Term" means the period during which a particular Option may
be exercised in accordance with Section 10(a) hereof.
(n) Whenever used herein, unless the context indicates otherwise,
words in the masculine form shall be deemed to refer to
females as well as to males.
3. Effective Date of Plan
This Plan shall become effective when adopted by the Board of Directors.
4. Number and Source of Shares Subject to the Plan
(a) The Company may grant Options under the Plan for not more than
Five Hundred Thousand (500,000) Shares, together with the
Shares for which Options were previously authorized under the
Plan prior to its amendment and extension (subject, however,
to adjustment as provided in Section 15 hereof) Which shall be
provided from Shares in the treasury or by the issuance of
Shares authorized but unissued.
(b) In the event that an Option shall for any reason lapse or be
terminated without being exercised in whole or in part, the
Shares subject to the Option shall be restored to the total
number of Shares with respect to which Options may be granted
under the Plan, but only to the extent that the Option has not
previously been exercised.
5. Administration of the Plan
(a) The Plan shall be administered by the Committee, except that
non-Committee members of the Board shall approve awards of
options, if any, to any Committee members.
(b) The Committee shall adopt such rules or procedures as it may
deem proper; provided, however, that it may take action upon
the agreement of a majority of its
2
<PAGE>
members then in office. Any action that the Committee may
take through a written instrument signed by a majority of its
members then in office shall be as effective as though taken
as a meeting duly called and held.
(c) The powers of the committee shall include plenary authority to
interpret the Plan, and, subject to the provisions hereof, the
Committee may determine (1) the persons to whom Options shall
be granted, (2) the number of Shares subject to each Option,
and (3) the Term of each Option, the date on which each Option
shall be granted, and (5) the provisions of each Option
Agreement.
6. Employees Eligible to Receive Options
(a) Options may be granted under the Plan to key employees or
Directors of the Company or any Subsidiary (including
employees who are directors). All determinations by the
Committee as to the identity of the persons to whom Options
shall be granted hereunder shall be conclusive.
(b) An individual employee may receive more than one Option.
7. Option Agreement
(a) No Option shall be exercised by a Grantee unless he shall have
executed and delivered an Option Agreement.
(b) Appropriate officers of the company are hereby authorized to
execute and deliver Option Agreements in the name of the
company as directed from time to time by the Committee.
8. Nonqualified Options
It is intended that the Options granted hereunder will not be "incentive stock
options" within the meaning of Section 422(b) of the Code.
9. Option Price
The option price to be paid by the Grantee to the company for each Share
purchased upon the exercise of the Option shall be equal to the fair market
value of the Share on the date the Option is granted. In no event may an Option
be granted under the Plan if the Option price per share is less than the par
value of a Share.
10. Term and Quotas of Options; Exercise of Option During life of Grantee
(a) Each Option granted under the Plan shall be exercisable only
during a Term to be determined by the Committee. The Term of
each Option shall end (unless the Option shall have terminated
earlier under any other provision of the Plan) on a date fixed
by the Committee and set forth in the applicable Option
Agreement. In
3
<PAGE>
no event shall the Term of the Option extend beyond ten years
from the date of grant of the Option.
(b) The Committee shall have authority to grant both Options
exercisable in full at any time during their Term and/or
Options exercisable in Quotas. Quotas or portions thereof not
purchased in earlier periods shall be cumulative and shall be
available for purchase in later periods within the Term of the
Option. In exercising an Option, the Grantee may purchase less
than the full Quota available under the Option.
(c) Options shall be exercised by delivering or mailing to the
Committee:
(1) a notice, in the form and in the manner prescribed by
the Committee, specifying the number of Shares to be
purchased, and
(2) payment in full of the Option price for the Shares by
money order, cashier's check, or certified check,
and/or by the tender of Shares to the Company; provided
that Shares tendered in exchange for Shares issued
under the Plan must be held by grantee for at least one
year prior to their tender to the company; and provided
further, that the committee shall determine acceptable
methods for tendering Shares to exercise an Option
under the Plan, and may impose such limitations and
prohibitions on the use of Shares to exercise an Option
as it deems appropriate. The Committee shall determine
the fair market value of any shares used to exercise an
Option. The date of exercise shall be deemed to be the
date that the notice of exercise and payment of the
Option Price are received by the Committee.
(d) Subject to Section 12(a) below, upon receipt of the notice of
exercise and upon payment of the Option price, the Company
shall promptly deliver to the Grantee a certificate or
certificates for the Shares purchased, without charge to him
for issue or transfer tax.
11. Conditions on Exercise
(a) The exercise of each Option granted under the Plan shall be
subject to the condition that if at any time the Company
shall determine in its discretion that the satisfaction of
withholding tax or other withholding liabilities, or that the
listing, registration or qualification of any Shares otherwise
deliverable upon such exercise upon any securities exchange or
under any State or federal law, or the consent or approval of
any regulatory body, is necessary or desirable as a condition
of, or in connection with, such exercise or the delivery or
purchase of Shares thereunder, then in any such event such
exercise shall not be effective unless such withholding,
listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions
not acceptable to the Company. Any such postponement shall not
extend the time within which the Option may be exercised; and
neither the Company nor its directors or officers shall have
any obligations or liability to the Grantee or to a
Beneficiary with
4
<PAGE>
respect to any Shares as to which the Option shall lapse
because of such postponement.
(b) All Options granted under the Plan shall be nontransferable
other than by will or by the laws of descent and distribution
in accordance with Section 12(a) hereof, and an Option may be
exercised during the lifetime of the Grantee only by him.
(c) Upon the purchase of Shares under an Option, the stock
certification or certificates may, at the request of the
Grantee or his Beneficiary, be issued in his name and the name
of another person as joint tenants with right of survivorship.
12. Exercise of Options After Death, Disability, Retirement, or Other
Termination of Employment
(a) Death. If a Grantee's employment with the Company or a
Subsidiary shall cease due to the Grantee's death, or if the
Grantee shall die within twelve months after cessation of
employment while the Option is exercisable pursuant to
paragraph (b) below, or if the Grantee shall die within three
months after cessation of employment while the Option is
exercisable pursuant to paragraph (c) below, any Option held
by the Grantee on the date of his death may be exercised only
within twelve months after the Grantee's death, and only by
the Grantee's Beneficiary, to the extent that such Option have
been exercised by such deceased Grantee immediately before the
Grantee's death. In no event shall the Option be exercisable
after the expiration date thereof specified in the Option
Agreement.
(b) Disability. If a Grantee's employment with the company or a
Subsidiary ceases due to his disability, after at least one
year of continuous employment with the Company and/or such
Subsidiary immediately following the date on which an Option,
to the extent that the Option could be exercised at the
cessation of employment, then the Option may be exercised at
any time within twelve months after the Grantee shall cease to
be an employee. In no event shall the Option be exercisable
after the expiration date thereof specified in the Option
Agreement.
(c) Retirement. If a Grantee's employment with the Company or a
Subsidiary ceases due to his retirement, after at least one
year of continuous employment with the Company and/or such
Subsidiary immediately following the date on which an Option
was granted, the Grantee may exercise the Option to the extent
the Option could be exercised at the cessation of employment,
at any time within three months after the Grantee shall so
cease to be an employee. In no event shall the Option be
exercisable after the expiration date thereof specified in the
Option Agreement.
(d) Termination for Other Reasons. Upon termination of a Grantee's
employment with the Company and its Subsidiaries for any
reason other than those specified in subsections (a) through
(c) above, the Grantee's outstanding Options shall be
immediately canceled.
5
<PAGE>
13. Stockholder Rights.
No person shall have any rights of a stockholder by virtue of an Option except
with respect to Shares actually issued to him, and the issuance of Shares shall
confer no retroactive right to dividends.
14. Adjustment for Changes in Capitalization
In the event that there is any change in the Shares through merger,
consolidation, reorganization, recapitalization or otherwise, or if there shall
be any dividend on the Company's Shares, payable in such Shares, or if there
shall be a stock split or a combination of Shares, the aggregate number of
Shares available for Options, the number of Shares subject to outstanding
Options, and the Option price per Share of each outstanding Option shall be
proportionately adjusted by the Board of Directors as it deems equitable in its
absolute discretion, to prevent dilution or enlargement of the rights of the
Grantees; provided, that any fractional Shares resulting from such adjustments
shall be eliminated. The Board's determination with respect to any such
adjustments shall be conclusive.
15. Effect of Merger or Other Reorganization
If the Company shall be the surviving corporation in a merger or other
reorganization, Options shall extend to stock and securities of the Company to
the same extent that a holder of that number of Shares immediately before the
merger or consolidation corresponding to the number of Shares covered by the
Option would be entitled to have or obtain stock and securities of the Company
under the terms of the merger or consolidation. If the Company dissolves, sells
substantially all of its assets, is acquired in a stock for stock or securities
exchange, or is a party to a merger or other reorganization in which it is not
the surviving corporation, then each Option shall be exercisable in full within
the period 60 days commencing upon the date the action of the shareholders (or
of the Board if shareholders' action is not required) is taken to approve the
transaction, and upon the expiration of that period all Options shall
automatically terminate.
16. Termination, Suspension or Modification of Plan
The Board of Directors may at any time terminate, suspend, or modify the Plan,
except that the Board of Directors shall not, without the authorization of the
holders of a majority of the Company's outstanding Shares at a shareholders'
meeting duly called and held, change (other than through adjustment for changes
in capitalization as provided in Section 14 hereof (a) the aggregate number of
Shares with respect to which Options may be granted; (b) the class of persons
eligible for Options, (c) the Option price; or (d) the maximum duration of the
Plan. No termination, suspension or modification of the Plan shall adversely
affect any right acquired by any Grantee, or by any Beneficiary, under the terms
of an Option granted before the date of such termination, suspension or
modification, unless such Grantee or Beneficiary shall consent; but it shall be
conclusively presumed that any adjustment for changes in capitalization in
accordance with Section 14 hereof does not adversely affect any such right.
6
<PAGE>
17. Application of Proceeds
The proceeds received by the company from the sale of Shares under the Plan
shall be used for general corporate purposes.
18. Duration of the Plan
Unless sooner terminated in accordance with Section 16 hereof, the amended and
extended Plan shall remain in effect for a period of ten years from the date of
its amendment and extension by the Board of Directors.
19. Competition by Participant
In the event a participant, within such period of time as shall be specified in
the related Option Agreement, directly or indirectly, individually or as an
employee, partner, officer, director, or stockholder or in any other capacity
whatsoever of any person, firm, partnership or corporation: (i) recruits, hires,
assists others in recruiting or hiring, discusses employment with or refers to
others any person who is, or within the preceding 12 months was, an employee of
the Company or any subsidiary thereof or any present, prospective of former
subsidiary thereof; (ii) competes with the Company or any subsidiary thereof in
such segments of the business of the Company and within such territory as shall
be specified in such related Agreements; (iii) uses in competition with the
Company or any subsidiary thereof, customer, prospective customer or former
customer, within such segments and specified territory, any of the methods,
information or systems developed by the Company or any subsidiary thereof for
its customers, prospective customers or former customers where the Company or
any subsidiary thereof or such customer, prospective customer or former customer
does business; or (iv) calls upon, solicits, accepts employment with, sells or
endeavors to sell to, within such segments and specified territory, any
customer, prospective customer or former customer of the Company or any
subsidiary thereof; the following provisions shall apply with respect to any
shares of Option Stock received and options granted under this Plan as of the
date of the first occurrence prohibited under this provision:
A. Such participant: (i) shall immediately sell and deliver to the Company (as
designated by the Committee), upon demand, all shares of Option Stock sold
or awarded to the participant under the Plan as to which the participant is
still the direct or indirect beneficial owner at the cash price per share,
if any, paid by the participant; and (ii) shall pay to the Company (as
designated by the Committee) an amount in cash with respect to each share
of Option Stock, not still so held equal to the Fair Market Value of each
such share on the first date on which such share is no longer held less the
price paid by him for such share.
B. Any option outstanding under the Plan shall automatically terminate and
shall no longer be execrable and all Restricted Stock Units then held shall
automatically terminate.
C. The provisions of this Section shall not limit or restrict in any manner
any rights or remedies which the Company and its subsidiaries may have
under any separate employment agreement with a participant and or otherwise
with respect to competition by a participant.
7
<PAGE>
If any provisions of this Section 19 should be found by any court of
competent jurisdiction to be unreasonable by reason of its being too broad as to
the period of time, territory, aspects of business or customers covered or
otherwise, then, and in that event, such provision shall nevertheless remain
valid and fully effective, but shall be considered to be amended so that the
period of time, territory, aspects of business of customers covered or otherwise
set forth shall be changed to be the maximum period of time, the largest
territory, the most aspects of business and customers covered and/or the
broadest other limitations, as the case may be, which would be found reasonable
and enforceable by such court and similarly, if any remedy is so found to be
unenforceable in whole or in part, or to any extent, such provision shall remain
in effect only to the extent the remedies would be enforceable by such court.
20. Related Agreements.
In order to enforce the restrictions imposed upon shares issued and options
granted hereunder and to comply with Federal and state securities laws and the
Code, the Company shall enter into a Option Stock Agreements with each
participant containing such terms and conditions, including additional
restrictions as the Committee shall determine, and the Committee may require
that the certificates representing shares of Unvested Stock shall remain in the
physical custody of the Company. The Committee shall have full authority upon
the consent of a participant to amend the terms and provisions of any such
agreement relating to the participant or the terms of any options relating to
the participant or other terms of any options relating to the participant which
are outstanding under the Plan.
21. No Effect on Employment.
Nothing herein, contained, including the sale or award of any shares and the
grant of any options, shall affect the right of Company to terminate any
participant's employment at any time for any reason.
22. General Provisions
The grant of an Option in any year shall not give the Grantee any right to
similar grants in future years or any right to be retained in the employ of the
Company or its Subsidiaries.
23. Governing Law
The Plan shall be construed and its provisions enforced and administered in
accordance with the laws of Delaware except to the extent that such laws may be
superseded by any Federal law.
8
<PAGE>
EXHIBIT 5.1
WILLIAMS & CONNOLLY
725 Twelfth Street, N.W.
Washington, D.C. 20005
202-434-5000
July 22, 1998
e-Net, Inc.
12800 Middlebrook Road, Suite 200
Germantown, Maryland 20787
Re: Shares of Common Stock, par value $0.01, of e-Net, Inc. (the
"Company") to be offered and sold pursuant to the Company's
Registration Statement on Form S-8, as filed on July 22, 1998
(such shares of Common Stock, the "Common Stock" and such
Registration Statement, as it may be amended from time to
time, the "Registration Statement")
Ladies & Gentlemen:
We have acted as counsel to the Company in connection with the
proposed issuance of the Common Stock pursuant to the Registration Statement.
We are members of the Bar of the District of Columbia. We do
not hold ourselves out as experts on, nor do we express any opinion as to or
with respect to the applicability of, the laws of any jurisdiction other than
the laws of the District of Columbia, the federal laws of the United States, and
the General Corporation Law of the State of Delaware (the "Opining
Jurisdictions").
We express no opinion with respect to any of the following
legal issues: (a) state or federal securities laws or regulations; (b)
fraudulent transfer and fraudulent conveyance laws; or (c) federal and state tax
laws and regulations.
In connection with this Opinion, we have examined the
Registration Statement, the prospectus related thereto (the "Prospectus") and
the Company's 1997 Nonqualified Stock Option Plan, as amended (the "Plan"). In
addition to the Registration Statement, we have reviewed such documents and
given consideration to such matters of law and fact as we have deemed
appropriate, in our professional judgment, to render this Opinion. We have also
relied, without further independent investigation, as to certain matters of
fact, on information
<PAGE>
e-Net, Inc.
July 22, 1998
Page 2
obtained from public officials, from officers of the Company and from other
sources believed by us to be responsible.
The assumptions, opinions and conclusions stated below are
subject to: (a) bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws affecting the rights and remedies of creditors generally;
and (b) general principles of equity and the exercise of judicial discretion.
We have assumed, without further investigation, the following:
(a) all natural persons who are involved have sufficient legal capacity to enter
into and perform the offer, issuance, sale and delivery by the Company of the
shares of Common Stock and the purchase of such shares by the purchasers
thereof, all as contemplated by the Registration Statement, the Prospectus and
the Plan (the "Transactions") or to carry out their respective roles in the
Transactions; (b) each party to the Transactions has satisfied those legal
requirements that are applicable to it to the extent necessary to make the
agreements contemplated by the Registration Statement, the Prospectus and the
Plan (the "Agreements") to which it is a party enforceable against it; (c) each
party to the Transactions has complied with all legal requirements pertaining to
its status as such status relates to its rights to enforce the Agreements
against the other parties to the Transactions; (d) each document submitted to us
for review is accurate and complete, each such document that is an original is
authentic, each such document that is a copy conforms to an authentic original,
and all signatures on each such document are genuine; (e) each certificate
issued by a government official concerning a person or entity's property or
status is accurate, complete and authentic and all official public records
(including their proper indexing and filing) are accurate and complete; (f) the
conduct of the parties to the Transactions has complied with any requirement of
good faith, fair dealing and unconscionability; (g) the parties have acted in
good faith and without notice of any defense against the enforcement of any
rights created by the Transactions; (h) there are no agreements or
understandings among the parties, written or oral, and there is no usage of
trade or course of prior dealing among the parties that would, in either case,
define, supplement or qualify the terms of the Agreements; (i) all statutes,
judicial and administrative decisions, and rules and regulations of governmental
agencies constituting the law of the Opining Jurisdictions are generally
available (i.e., in terms of access and distribution following publication or
other release) to lawyers practicing in the Opining Jurisdictions, and are in a
format which makes legal research reasonably feasible; (j) the constitutionality
or validity of a relevant statute, rule, regulation or agency action is not in
issue unless a reported decision in the Opining Jurisdiction has specifically
addressed but not resolved, or has established, its unconstitutionality or
validity; (k) the parties will obtain all permits and governmental approvals
required in the future, and take all actions similarly required, relevant to
subsequent consummation of the Transactions or performance of the Agreements;
(l) all parties to the Transactions will act in accordance with, and will
refrain from taking any action that is forbidden by, the terms and conditions of
the Agreements; and (m) the Transactions and the execution, delivery and
performance of the Agreements will not (i) breach, or result in a default under,
any existing obligation of a party to the Transactions to a contract to which
such party is a party or by which its property is bound, or (ii) breach or
otherwise violate any existing obligation of any court and administrative order,
writ, judgment or decree that names any such party and is specifically directed
to it or its property. Each assumption specifically described in this Opinion
<PAGE>
e-Net, Inc.
July 22, 1998
Page 3
is made with the express consent and approval of the Company. However, we have
not relied on information (including certificates or other documentation) or
assumptions, otherwise appropriate in the circumstances, if we have knowledge
that the information or assumptions are false or if we have knowledge of facts
that under the circumstances would make the reliance unreasonable.
This Opinion speaks only as of its date. We have no obligation
to advise the Company (or any third party) of changes in law or fact that occur
after the date of this Opinion, even though the change may affect the legal
analysis, a legal conclusion or an informational confirmation in this Opinion.
Based upon the foregoing and subject to the qualifications
contained in the next paragraph, we are of the opinion that the shares of Common
Stock are validly authorized and, when (a) the pertinent provisions of the
Securities Act of 1933 and such "blue sky" and other securities laws as may be
applicable have been complied with and (b) such shares have been duly delivered
against payment therefor as contemplated by the Registration Statement, the
Prospectus and the Plan, such shares will be validly issued, fully paid, and
nonassessable.
We note that the Company intended to increase the number of
its authorized shares of Common Stock from 10,000 to 50,000,000 (the "Increase")
by mean of a Certificate of Amendment to its Certificate of Incorporation, which
amendment was filed with the Delaware Secretary of State on January 25, 1996
(the "Prior Amendment"). However, the Increase was not formally ratified by the
shareholders of the Company until a special meeting held on March 15, 1996. On
April 14, 1998, the Company filed a Certificate of Correction (the "Correction")
correcting the effective date of the Increase from January 25, 1996 to March 15,
1996. While the matter is not entirely free from doubt, in our opinion it is
very unlikely that the Correction was not effective to cause the Increase. Also
in our opinion, the Correction should be effective to correct the effective date
of the Increase to March 15, 1996.
This Opinion deals only with the specific legal issues it
explicitly addresses. Accordingly, the express opinions set forth above
concerning a particular legal issue do not address any other matters.
We consent to the filing of this opinion as an Exhibit to the
Registration Statement. In giving this consent, we do not admit that we are in
the category of persons whose consent is required under Section 7 of the
Securities Act of 1933 or the rules and regulations thereunder.
Very truly yours,
/s/ Williams & Connolly
WILLIAMS & CONNOLLY
<PAGE>
Consent of Independent Certified Public Accountants
We have issued our report dated May 27, 1998, accompanying the financial
statements incorporated by reference in the Annual Report of e-Net, Inc. on Form
10-KSB for the year ended March 31, 1998. We hereby consent to the incorporation
by reference of said report in the Registration Statement of e-Net, Inc., on
Form S-8, to be filed on or about July 22, 1998.
/s/ GRANT THORNTON LLP
Vienna, Virginia
July 20, 1998
