<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [x]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[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 Pursuant to Section 240.14a-11(c) or Section
240.14a-12
e-Net, Inc.
------------------------------------------------
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[x] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or Item
22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
1) Title of each class of securities to which transaction applies:
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:
<PAGE>
November __, 1998
Dear Shareholder:
You are invited to attend the Annual Meeting of Shareholders of e-Net, Inc.
(the "Company"), which will be held on Tuesday, December 15, 1998 at 10:00 a.m.,
at the offices of Williams & Connolly, located at 725 12th Street, N.W.,
Washington, D.C.
The proposals before the meeting for the election of five directors,
ratification of the e-Net, Inc. 1998 Stock Compensation Plan, approval of a
Restated Certificate of Incorporation and ratification of the Company's
appointment of independent auditors are described more fully in the Proxy
Statement and are deemed by management and the Board of Directors to be in the
best interests of the Company. We believe they deserve your support.
We ask that you complete, sign and date the accompanying proxy card and
return it as soon as possible in the postage-paid envelope provided. Please do
so even if you intend to be at the meeting.
Thank you very much for your loyal support of our past efforts. We look
forward to sharing the benefits with you as a shareholder of the Company.
ALONZO E. SHORT
Chairman of the Board
ROBERT A. VESCHI
President and Chief Executive Officer
<PAGE>
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
To the Shareholders of e-Net, Inc.:
The Annual Meeting of Shareholders of e-Net, Inc., a Delaware corporation
(the "Company"), will be held on Tuesday, December 15, 1998, at 10:00 a.m., at
the offices of Williams & Connolly, located at 725 12th Street, N.W.,
Washington, D.C., for the following purposes:
1. To elect five directors of the Company, each to serve until the
next Annual Meeting of Shareholders and his or her successor has been
elected and qualified or until his or her earlier resignation or
removal;
2. To approve a Restated Certificate of Incorporation;
3. To approve the e-Net, Inc. 1998 Stock Compensation Plan, which
provides for the issuance of up to 1,000,000 shares of the Company's
common stock, par value $0.01 per share;
4. To ratify the appointment of Grant Thornton LLP as the Company's
independent auditors for fiscal year 1999; and
5. To transact such other business as may properly come before the
meeting or any adjournments thereof.
Your attention is directed to the accompanying Proxy Statement for further
information with respect to the matters to be acted upon at the meeting.
The record date for determining shareholders entitled to notice of, and to
vote at, the Annual Meeting has been fixed by the Board of Directors as the
close of business on November 5, 1998.
This notice and the accompanying Proxy Statement and proxy card are sent to
you by order of the Board of Directors.
CHRISTINA L. SWISHER
Vice President of Operations
and Secretary
November __, 1998
You are cordially invited to attend the Annual Meeting. It is important that
your shares be represented regardless of the number you own. Even if you
plan to be present, you are urged to complete, sign, date and return the
enclosed proxy promptly in the envelope provided. If you attend this
meeting, you may vote either in person or by your proxy. Any proxy given may
be revoked by you in writing or in person at any time prior to the exercise
thereof.
<PAGE>
e-NET, INC.
12800 Middlebrook Road, Suite 200
Germantown, Maryland 20874
PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
TO BE HELD DECEMBER 15, 1998
GENERAL INFORMATION
The following information is being furnished in connection with the Annual
Meeting of Shareholders of e-Net, Inc., a Delaware corporation (the "Company"),
to be held at 10:00 A.M. on Tuesday, December 15, 1998 at the offices of
Williams & Connolly, located at 725 12th Street, N.W., Washington, D.C. (the
"Annual Meeting"). It is contemplated that this Proxy Statement and the
enclosed form of proxy will be first sent to shareholders on or about November
12, 1998.
Only holders of record of the Company's common stock, par value $0.01
per share ("Common Stock") at the close of business on November 5, 1998 (the
"Record Date") are entitled to notice of and to vote at the meeting or any
adjournment thereof. On such date, there were _________ shares of Common
Stock outstanding. The holders of a majority of the Company's outstanding
shares of Common Stock, present in person or by proxy, are required for a
quorum at the meeting. If a share is represented for any purpose at the
meeting, it is deemed to be present for quorum purposes for all other matters
as well. Abstentions and shares held of record by a broker or its nominee
("Broker Shares") that are voted in any matter are included in determining
the number of votes present or represented at the meeting. Broker Shares
that are not voted on any matter at the meeting will not be included in
determining whether a quorum is present. Each share of Common Stock is
entitled to one vote on all matters to come before the meeting. The election
of directors requires the affirmative vote of holders of a plurality of the
shares of Common Stock present in person or represented by proxy at the
Annual Meeting and entitled to vote. The approval of the Restated
Certificate of Incorporation and the e-Net, Inc. 1998 Stock Compensation Plan
requires the affirmative vote of holders of a majority of the shares of
Common Stock present in person or represented by proxy at the Annual Meeting
and entitled to vote. Votes that are withheld and Broker Shares that are not
voted as to any such matter will not be included in determining the number of
votes cast.
The enclosed proxy for the Annual Meeting is being solicited by the
Board of Directors of the Company and is revocable at any time before it is
exercised. All properly executed proxies delivered pursuant to this
solicitation will be voted at the meeting in accordance with instructions, if
any. In the absence of instructions, properly executed proxies will be voted
for the nominees to the Board set forth below and for the other proposals
described below. If any other matters are properly brought before the Annual
Meeting the proxies will be voted in the discretion of the proxy holders.
The cost of this solicitation will be borne by the Company. In
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addition to the use of the mail, directors, officers and employees of the
Company may solicit proxies by telephone, fax, or personal interview. Such
persons will receive no additional compensation for any solicitation
activities. The Company also has retained the services of D.F. King & Co.,
Inc. to aid in the solicitation of proxies in person, by mail, telephone or
telegram at a fee of approximately $____ plus expenses. Banks, brokerage
houses and other institutions, nominees and fiduciaries will be requested to
forward the soliciting materials to beneficial owners and to obtain
authorization for the execution of proxies. The Company will, upon request,
reimburse such parties for their reasonable expenses in forwarding proxy
material to beneficial owners.
ELECTION OF DIRECTORS
Directors
Five directors are to be elected at the 1998 Annual Meeting, each for a
term running until the 1999 Annual Meeting of Shareholders and his or her
successor has been elected and qualified, or his or her earlier resignation or
removal. It is the intention of the persons named as proxies in the
accompanying form of proxy to vote for the election of the five named nominees
of the Board of Directors unless authorization is withheld. Each nominee has
agreed to serve if elected. In the event any nominee shall unexpectedly be
unable to serve, the Board may reduce its size or nominate an alternative
candidate for whom the proxies may vote.
The name, principal occupation and selected biographical information of
each nominee are set forth below. All nominees currently are directors of the
Company.
ALONZO E. SHORT, JR., Lt. Gen., USA (ret.), 58 has been chairman of the
board of the Company since January 1996. General Short has more than 30 years
experience in executive management, operations and the engineering, design and
development of large-scale telecommunications and data systems. General Short
retired from the service in 1994 following a career that included serving as
deputy commanding general (1988-1990) and commanding general (1990-1991) of the
U.S. Army Information Systems Command, a major information technology
organization, which was responsible for all telecommunications during the Desert
Shield/Desert Storm operation, among other responsibilities. From 1991 to 1994,
General Short was director of the Defense Information Systems Agency, a major
information technology organization which is responsible for telecommunications
and related services to the President of the United States, Secret Service,
Joint Chiefs of Staff, Secretary of Defense, among other high level federal
entities. From 1994-1997, General Short was president and chief executive
officer of MICAH Systems, Inc., a Washington, D.C. metropolitan area based
information, technologies management and consulting firm. In September 1997,
General Short joined Lockheed Martin, an aerospace, defense, and information
technology company, as a Vice-President. Since January 1996, General Short has
been instrumental in the organization and development of the business of the
Company.
ROBERT A. VESCHI, 37, has been president, chief executive officer, and a
director of the Company since January 1995. Mr. Veschi is the founder of the
Company, which began its operations in June 1995. Mr. Veschi has significant
experience in executive management,
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operations and the engineering, design and development of telecommunications and
computer products and systems. From 1986 to 1990, Mr. Veschi was manager of
systems engineering for International Telemanagement, Inc., a Washington, D.C.
metropolitan area based information, data and network systems firm. From 1990 to
1994, Mr. Veschi was a group president of I-NET, Inc., a Washington, D.C.
metropolitan area based information, data and network systems firm. From
December 1994 to May 1995, for approximately six months, Mr. Veschi was
president and chief executive officer of Octacom, Inc., a Washington, D.C.
metropolitan area based information, data and network systems firm, and a
wholly-owned subsidiary of Octagon, Inc., an Orlando, Florida metropolitan area
based publicly held technical services firm. From July 1994 to May 1995, for
approximately nine months, Mr. Veschi was a vice president of telecommunications
for Octagon, Inc., and from January 1995 to May 1995, for approximately four
months, Mr. Veschi was a member of the board of directors of such company. Since
June 1995, Mr. Veschi has been instrumental in the organization, development and
promotion of the Company.
WILLIAM W. ROGERS, JR., 57, has been a director of the Company since
January 1997. Mr. Rogers has substantial senior management, operations and
technical and engineering services experience. From 1972 to 1987, Mr. Rogers
was a general manager engaged in operations, technical and engineering services
for Boeing Computer Services, Inc. From 1987 to 1989, Mr. Rogers was president
and chief executive officer of International Telemanagement , Inc., a McLean,
Virginia based telecommunications and systems engineering and services company.
From 1989 to 1991, Mr. Rogers was a vice president of Fluor-Daniel, where he was
responsible for telecommunications and systems integration services. From 1991
through March 1998, Mr. Rogers was a vice president with Computer Sciences
Corporation, a McLean, Virginia based technology products, systems and services
company, where he is responsible for systems integration and related technical
services. Since April 1998, Mr. Rogers has been a senior vice president of
CACI, Inc., a Washington, D.C. based information technology company. Since
January 1997, Mr. Rogers has been instrumental in the organization and
development of the Company. Mr. Rogers holds a B.A. degree from West Virginia
University.
WILLIAM L. HOOTON, 47, has been a director of the Company since
January 1996. Mr. Hooton has substantial experience in the management, design,
operation, marketing and sales of image conversion systems, electronic imaging
system integration, data automation and high performance data storage
subsystems. From 1990 to 1993, Mr. Hooton was vice president of operations and
technical and business development of the Electronic Information Systems Group
of I-NET, Inc., a Washington, D.C. metropolitan area based information, data and
network systems firm. Since 1993, Mr. Hooton has been president and chief
executive officer of Q Corp., a Washington, D.C. metropolitan area high
technology consulting firm specializing in digital imaging systems and other
complex imagery in media. Since January 1996, Mr. Hooton has been a director of
the Company and has been instrumental in the organization and development of the
Company. Mr. Hooton holds a B.B.A. degree from the University of Texas.
CLIVE G. WHITTENBURY, Ph.D., 64, has been a director of the Company since
June 1996. Dr. Whittenbury has substantial senior management, operations and
technical advisory experience. From 1972 to 1979, Dr. Whittenbury was a senior
vice president and, from
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1976 to 1986, a director of Science Applications International Corporation
("SAIC"), a La Jolla, California based major international systems engineering
firm with current annual revenues of approximately $2 billion. Since 1979,
Dr. Whittenbury has been executive vice president and a director of the Erickson
Group, Inc., a major international diversified products firm. Since 1994,
Dr. Whittenbury has been a director of MVSI, Inc., a publicly held (NASDAQ:
"MVSI") McLean, Virginia based laser vision robotics company. Dr. Whittenbury is
a member of the International Advisory Board for the British Columbia Advanced
Systems Institute, which manages commercialization programs in technology at the
three major Vancouver/Victoria universities, a member of the Advisory Board of
Compass Technology Partners, an investment fund, and is chairman of the Advisory
Board (Laser Directorate) for the Lawrence Livermore National Laboratory.
Dr. Whittenbury has also served as a technical advisor to three U.S.
Congressional Committees, the Grace Commission and numerous major U.S. and
foreign companies. Since June 1996, Dr. Whittenbury has been instrumental in the
organization and development of the Company. Dr. Whittenbury holds a B.S. degree
(physics) from Manchester University (England) and a Ph.D. degree (aeronautical
engineering) from the University of Illinois.
The Board of Directors recommends a vote "FOR" the election to the Board of
Directors of the nominees set forth above.
EXECUTIVE OFFICERS
The name, principal occupation and selected biographical information of
each of the executive officers of the Company (other than Mr. Veschi) are set
forth below:
DONALD J. SHOFF, CPA, 44, has been vice president of finance and chief
financial officer since November 1997. Prior to that, Mr. Shoff was director of
finance and assisted the Company as a consultant prior to employment. Mr. Shoff
has 21 years of significant experience in both public accounting firms and with
high technology companies, both public and private. From 1977 to 1981, Mr.
Shoff was a staff accountant and senior accountant on the staff of local
Washington, D.C. public accounting firms. From 1982 to 1986, Mr. Shoff was the
corporate cost accounting manager and a group controller for Science
Applications International Corporation, a high technology products and
professional services public corporation, where he was responsible for the
corporate cost accounting functions and controllership of a high technology
services operation group. From 1987 to 1992 and from 1993 to 1996, Mr. Shoff
consulted independently and as a Senior Manager of Grant Thornton LLP, a major
accounting and management consulting firm, with public and privately held high
technology companies doing business with the Federal government. From 1992 to
1993 Mr. Shoff was vice president of finance and administration for Comsis
Corporation, a Washington, D.C. based privately held engineering and technology
company doing business with the Federal and various state governments. Mr.
Shoff holds a B.B.A. degree from the Pennsylvania State University and is a
certified public accountant.
CHRISTINA L. SWISHER, 34, has been vice president of operations since
December 1996 and secretary of the Company since February 1997. Ms. Swisher has
significant experience
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in the computer networking management, systems and operations. From 1991 to
1993, Ms. Swisher was a technical and graphics specialist with the Air Force
Association, a Washington, DC area based national services organization, where
she was responsible for technical and statistical analyses. From 1993 to 1995,
Ms. Swisher was the manager for computer networks for computer network systems
and operations for I-NET, Inc., a Washington, DC metropolitan area based
information, data and network systems firm. Since 1995, Ms. Swisher has been
director of technical services with the Company, becoming vice president of
operations in December 1996. Since June 1995, Ms. Swisher has been instrumental
in the organization and development of the business of the company.
INDEBTEDNESS AND OTHER TRANSACTIONS
During the past two years, none of the Company's directors or executive
officers, or any member of their immediate families, has or had any material
interest in any transaction to which the Company is or was a party outside of
the ordinary course of the Company's business, except as follows.
In August 1996, the Company entered into a letter of intent with MVSI, Inc.
("MVSI"), a Washington, D.C. area based Nasdaq-listed technology products and
services company, in which the Company agreed to be acquired and become a
wholly-owned subsidiary of MVSI in an exchange of securities. To the Company's
knowledge, Edward Ratkovich is a significant shareholder and the chairman and
chief executive officer of MVSI, Thomas T. Prousalis, Jr. is a significant
shareholder of MVSI and Clive Whittenbury is a director of MVSI. Pursuant to the
letter of intent, MVSI loaned the Company $500,000 for working capital. In
October 1996, the Company entered into an agreement to be acquired by MVSI,
subject to shareholder approval. MVSI loaned an additional $500,000 to the
Company in November 1996. However, in January 1997, the parties mutually agreed
to terminate the acquisition, primarily due to market conditions that involved a
significant decrease in the bid price of MVSI's common stock and, thereby, the
value of the purchase price.
As part of a mutual cooperation agreement, in January 1997 MVSI loaned the
Company an additional $250,000 under a convertible debenture. The aggregate
principal amount of the convertible debenture at that time was $1,275,081,
reflecting the total amount of loan advances made to the Company by MVSI. The
terms provided for outstanding principal to bear annual interest of nine
percent, and for principal to be convertible into Common Stock upon the
completion of the Company's initial public offering at a ratio calculated using
the offering price per share. In March 1997, MVSI converted the convertible
debenture into 250,000 shares of Common Stock.
In March 1996, the Company acquired all right, title and interest in the
353 Patent from Arthur Henley and Scott Grau in consideration of a five percent
overriding royalty interest against gross profits involving the use of the 353
Patent. The Company agreed to allocate $1,000,000 of its capital to develop and
exploit the market opportunities of the 353 Patent by December 31, 1996, or the
353 Patent would be subject to repurchase by its inventors. The Company
satisfied this commitment timely.
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The Company paid legal fees of approximately $380,000 during the year ended
March 31, 1997, to Thomas T. Prousalis, Jr., an attorney who is a significant
stockholder of the Company, relating to the Company's initial public offering.
The Company also paid $100,000 during the year ended March 31, 1997, to Mr.
Prousalis for services relating to an offering that was abandoned in September
1996.
The Company rents an aircraft for business purposes from an entity owned by
Robert A. Veschi, the Company's President and Chief Executive Officer. For the
years ended March 31, 1998 and 1997, the Company paid $62,936 and $27,796,
respectively for the rental of the aircraft.
On April 16, 1997, the Company entered into a consulting agreement
with Alonzo E. Short, Jr., Lt. Gen., USA (ret.), the Chairman of the Board, to
provide services for a fixed monthly amount of $1,000. The amounts paid to the
stockholder under that agreement totaled $12,000 for the fiscal year ending
March 31, 1998.
All ongoing and future transactions between the Company and any affiliate
will be entered into on terms at least as favorable as could be obtained from
unaffiliated, independent third parties.
MEETINGS AND COMMITTEES
During the Company's fiscal year ended March 31, 1998, the Board of
Directors held eleven meetings and acted two times by unanimous written
consent. Each director of the Company attended 75% or more of all meetings of
the Board of Directors. The Board has a standing audit committee composed of
Gen. Short, Mr. Rogers and Dr. Whittenbury, a standing compensation committee
composed of Messrs. Hooton, Rogers and Veschi, and a standing executive
committee composed of Gen. Short and Messrs. Hooton and Veschi. During the
Company's fiscal year ended March 21, 1998, the audit committee held one
meeting, the compensation committee held no meetings and the executive
committee held no meetings. The Board has no standing nominating committee
at this time.
STOCK OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS
The table below sets forth the beneficial ownership of Common Stock as
of September 29, 1998 by all directors, the Chief Executive Officer and the
other executive officer of the Company (determined at the end of the last
fiscal year) whose annual salary and bonus as so determined was at least
$100,000 (such officers, the "Named Officers"), and all directors and
executive officers of the Company as a group, and each person who is known by
the Company to beneficially own more than five percent of the issued and
outstanding shares of Common Stock. With regard to five percent beneficial
owners who are not also directors or officers of the Company, the information
set forth below reflects the most recent reliable information available to
the Company. Unless otherwise indicated and subject to applicable community
property and
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similar statutes, all persons listed below have sole voting and investment power
over all shares of Common Stock beneficially owned. Share ownership has been
computed in accordance with the Securities and Exchange Commission ("SEC") rules
and does not necessarily indicate beneficial ownership for any other purpose.
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<TABLE>
<CAPTION>
Name and Address Position with Company Number of Shares Percentage of Shares
- ------------------------------- --------------------------- ---------------- --------------------
<S> <C> <C>
Alonzo E. Short, Jr., Lt. Gen., Chairman of the Board 90,000 1.03
USA (ret.) (1)
Robert A. Veschi (2) President, Chief Executive
Officer, Director 1,375,000 15.78
Christina L. Swisher (2) Vice President, Secretary 120,000 1.38
William L. Hooton (3) Director 50,000 .57
Clive W. Whittenbury, Ph.D. (4) Director 50,000 .57
William W. Rogers, Jr. (5) Director 5,000 .06
Edward Ratkovich, Maj. Gen. Stockholder 970,000 11.13
USA (ret.) (6)
Arthur Henley (7)(10) Stockholder 527,500 6.05
Thomas T. Prousalis (8) Stockholder 450,000 5.16
MVSI, Inc. (9) Stockholder 450,000 5.16
All Officers and Directors as a
Group (6 persons) 1,640,000 19.40
</TABLE>
(1) c/o Lockheed Martin, 5203 Leesburg Pike, Suite 1501, Falls Church, Virginia
22041.
(2) c/o e-Net, Inc., 12800 Middlebrook Road, Suite 200, Germantown, Maryland
20874.c/o e-Net, Inc., 12800 Middlebrook Road, Suite 200, Germantown,
Maryland 20874. The Company has agreed to grant to Mr. Veschi options
to purchase 100,000 shares of Common Stock in consideration of services
during fiscal year 1999, and to grant to Ms. Swisher options to
purchase 60,000 shares of Common Stock respectively in consideration of
services during fiscal year 1998 . However, such options have not yet
been granted by the Company and the terms thereof have not yet been set.
(3) 13333 Glen Taylor Lane, Herndon, Virginia 22071.
(4) 511 Trinity Avenue, Yuba City, California 95991. Does not include
shares beneficially owned by MVSI, Inc. Dr. Whittenbury is, to the
Company's knowledge, a director of MVSI, Inc.
(5) c/o CACI, 14200 Park Meadow Drive, Suite 200, Chantilly, Virginia 20151.
(6) 1030 Delf Drive, McLean, Virginia 22101. Does not include shares
beneficially owned by MVSI, Inc. Gen. Ratkovich is, to the Company's
knowledge, a significant shareholder, chairman and chief executive
officer of MVSI, Inc.
(7) 10705 Bay Laurel Trail, Austin, Texas 78750. Includes vested options to
purchase 50,000 shares of Common Stock. Also includes 487,500 shares
owned by The Arthur Henley Family Trust.
(8) 1919 Pennsylvania Avenue, N.W., Suite 800, Washington, D.C. 20006.
Does not include shares beneficially owned by MVSI, Inc. Mr. Prousalis
is, to the Company's knowledge, a significant shareholder of MVSI, Inc.
(9) 1030 Delf Drive, McLean, Virginia 22101. Does not include shares
beneficially owned by Dr. Whittenbury, Gen. Ratkovitch or Mr. Prousalis.
To the Company's knowledge, Dr. Whittenbury is a director of, Gen.
Ratkovitch is a significant shareholder, chairman and chief executive
officer of, and Mr. Prousalis is a significant shareholder of, MVSI, Inc.
(10) Includes vested options to purchase 40,000 shares of Common Stock.
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EXECUTIVE COMPENSATION
SUMMARY COMPENSATION TABLE
The following table sets forth certain compensation information for the
fiscal years ended March 31, 1996, 1997 and 1998 with regard to the Named
Officers:
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Other
Annual
Name of Individual Position with Company Year Salary Bonus Compensation(1)
- ------------------ -------------------------- ---- ------- ------ ---------------
<S> <C> <C> <C> <C> <C>
Robert A. Veschi President, Chief Executive 1998 175,000 87,500 ---
Officer, Director 1997 175,000 87,500 ---
1996 --- 25,000 ---
Christina L. Swisher Vice President, Operations 1998 88,333 21,000 ---
and Secretary 1997 57,917 5,607 ---
1996 6,250 4,167 ---
</TABLE>
(1) The officers of the Company may receive remuneration as part of an overall
group insurance plan providing health, life and disability insurance
benefits for employees of the Company. The amount allocable to each Named
Officer cannot be specifically ascertained, but, in any event, did not in
any reported fiscal year exceed the lesser of $50,000 and such Named
Officer's combined salary and bonus. The Company has purchased key-man
term life insurance on Mr. Veschi in the amount of $2 million, which
designates the Company as the owner and beneficiary of the policy. The
Company has agreed to grant to Ms. Swisher options to purchase 60,000
shares of Common Stock, in consideration of services during fiscal year
1998. However, such options have not yet been granted by the Company and
the terms thereof have not yet been set.
DIRECTOR COMPENSATION
The directors of the Company, with the exception of Mr. Veschi, are
entitled to annual remuneration of $24,000 pursuant to oral agreements between
such directors and the Company. The Company also has agreed to grant to each of
these directors options to purchase 7500 shares of Common Stock for services
during fiscal year 1998 and 7500 shares of Common Stock for services during
fiscal year 1999. However, such options have not yet been granted by the
Company and the terms thereof have not been set. In addition, General Short
receives $1,000 per month under a consulting services agreement for his
additional specific business services on behalf of the Company.
Each outside director of the Company is entitled to receive reasonable
expenses incurred in attending meetings of the Board of Directors of the
Company. The members of the Board of Directors intend to meet at least quarterly
during the Company's fiscal year, and at such other
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times as duly called. The Company presently has four outside directors.
EMPLOYMENT AGREEMENT
The Company has entered into an employment agreement (the "Agreement") with
Robert A. Veschi, the president and chief executive officer of the Company,
dated as of April 1, 1996. The Agreement will expire on March 31, 2001. The
current annual salary under the Agreement is $175,000, which salary may be
increased to reflect annual cost of living increases and may be supplemented by
discretionary merit and performance increases as determined by the Board of
Directors of the Company. Mr. Veschi is entitled to an annual bonus equal to
50 percent of the salary provided under this Agreement, which bonus is not
subject to any performance criteria.
The Agreement provides, among other things, for participation in an
equitable manner in any profit-sharing or retirement plan for employees or
executives and for participation in other employee benefits applicable to
employees and executives of the Company. The Agreement provides for the use of
an automobile, payment of club dues and other fringe benefits commensurate with
his duties and responsibilities. The Agreement also provides for benefits in
the event of disability. The Agreement also contains non-compete provisions
which are limited in geographical scope to the Washington, D.C. metropolitan
area.
Pursuant to the Agreement, Mr. Veschi's employment may be terminated by the
Company with cause or by Mr. Veschi with or without good reason. Termination by
the Company without cause, or by Mr. Veschi for good reason, would subject the
Company to liability for liquidated damages in an amount equal to Mr. Veschi's
current salary and a pro rata portion of his bonus for the remaining term of the
Agreement, payable in a lump sum cash payment, without any set-off for
compensation received from any new employment. In addition, Mr. Veschi would be
entitled to continue to participate in and accrue benefits under all employee
benefit plans and to receive supplemental retirement benefits to replace
benefits under any qualified plan for the remaining term of the Agreement to the
extent permitted by law.
RESTATED CERTIFICATE OF INCORPORATION
The Board of Directors has unanimously approved, subject to approval by the
stockholders at the Annual Meeting, a Restated Certificate of Incorporation (the
"Restated Certificate") that includes, among other things: broadened corporate
purposes; ratification of the effectiveness of a 600:1 stock split in March 1996
and a 1:2 reverse stock split in March 1997, both of which occurred before the
Company's initial public offering; and a modification of the existing
indemnification obligations of the Company.
The purposes of the Company, as contained in Article Third of its existing
Certificate of Incorporation, as amended (the "Certificate"), are broad enough
to cover all activities undertaken by the Company to date. However, they are
specific. Under Section 102 of the General Corporation Law of the State of
Delaware (the "GCL"), a corporation's express purposes may be so broad as to
include engaging in any lawful act or activity available to corporations under
the
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GCL. Article Third of the Restated Certificate Board believes it is in the best
interests of the Company that its purposes be so expanded, so as to minimize the
possibility that questions may arise in the future as to whether any act or
activity deemed advisable within the Board is within the Company's specific
corporate purposes.
The Board of Directors voted to approve an increase in the Company's
authorized share capital from 10,000 shares of common stock to 50,000,000 shares
of common stock together with a 600:1 stock split, in January 1996; these
actions were approved by the Company's shareholders in March 1996. A
Certificate of Amendment that reflected only the increase in share capital was
filed, prior to shareholder approval, in January 1996. Therefore, a Certificate
of Correction (the "Split Correction") was filed in April 1998 to correct the
date of the original Certificate of Amendment to March 1996 and to add the stock
split effective as of March 1996. The Board of Directors voted to approve a 1:2
reverse stock split in February 1997, which was approved by the shareholders in
March 1997; a Certificate of Amendment (the "Reverse Split Amendment")
reflecting reverse stock split effective as of March 1997 was not filed until
April 1998. By approving the Restated Certificate, which contains in clauses
(b) and (c) of Article Fourth the provisions added by the Split Correction and
the Reverse Split Amendment, the shareholders will also be ratifying the
contents of the Split Correction and the Reverse Split Amendment. While the
Board believes that the Split Correction and the Reverse Split Amendment were
effective when filed in accordance with their terms, the Board believes that
further clarifying the capital structure of the Company is in the Company's best
interests.
If adopted, the amended indemnification provisions in the Article Eighth of
the Restated Certificate will replace the provision contained in Article Eighth
of the current Certificate of Incorporation. These new provision are intended
to clarify the Company's obligation to indemnify directors and officers to the
fullest extent permitted under applicable law, to provide greater flexibility
regarding indemnification in actions initiated by directors and officers by
requiring that the Board have approved the initiation of such actions, and also
to provide greater flexibility regarding indemnification of employees and agents
by eliminating mandatory indemnification as to those persons. If the
shareholders approve the Restated Certificate, the Board intends to amend the
Company's Bylaws to include text parallel to the provisions of Article Sixth
thereof and, within the limits imposed by the GCL, to further clarify the
procedures applicable to those provisions.
The Board believes that the amended indemnification provisions are
advisable because they should maintain the Company's ability to attract
qualified officers and directors, while affording the directors greater leeway
in exercising their fiduciary duties to determining whether to expend the
Company's resources in indemnifying directors and officers in actions brought by
them and in indemnifying employees and agents in any matters. In addition,
reserving to the Bylaws any more detailed provisions regarding indemnification
procedures will enable the Board to amend these provisions from time to time,
subject to the constraints of applicable law and the Restated Certificate, as
amended, without shareholder approval.
There is not presently pending or, to the Company's knowledge,
threatened any litigation or other proceeding involving a director, officer,
employee or agent of the Company in which
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indemnification would be required by the current Certificate of Incorporation or
the Restated Certificate. In addition to any indemnity provided by the
Company's Certificate of Incorporation and Bylaws, the Company maintains
liability insurance which, subject to certain exceptions and limitations,
insures directors and officers against any claim or claims made against them for
any actual or alleged error, misstatement or misleading statement, act or
omission, neglect or breach of duty while acting in those capacities.
Each member of the Board may have a personal interest in the adoption of
the amended indemnification provisions in the Restated Certificate, although
(because mandatory indemnification actually is proposed to be more limited in
the case of actions brought by directors and officers) that personal interest
likely would be against the proposed amendment. Nevertheless, the Board
believes that approval of the Restated Certificate, including the amended
indemnification provisions, is in the best interests of the Company and its
shareholders.
In addition to the foregoing matters, the Restated Certificate also
would amend the current Certificate of Incorporation in several other less
material respects.
Article Fourth would be amended to eliminate certain unnecessary provisions
regarding the issuance of authorized securities, the lack of preemptive rights
for shareholders and share transfer restrictions for restricted securities under
the Securities Act of 1933, which merely restate applicable provisions of the
GCL and federal securities laws and are not required to be included in a
Certificate of Incorporation. Article Fourth, as amended, also will eliminate a
provision requiring that the price to be paid for certain unspecified shares in
certain unspecified "written offers and notices prescribed above" (which in fact
are not described), be the higher of fair market value (or, if none, book value)
or a bona fide offer to purchase those shares, and to eliminate a provision that
certain unspecified "officers and notices" to shareholders are deemed effective
upon mailing and certain unspecified shares are transferable other than to
shareholder in the manner required therein (which in fact is not described).
Because the transactions to which these provisions purport to apply are not
specified in the current Certificate of Incorporation, the Board believes that
they are inoperative and that their deletion, and concomitant clarification of
the Certificate, is in the best interests of the Company.
Article Seventh would be amended to eliminate a provision purporting to
validate any action approved by the shareholders even if it otherwise would be
subject to attack because of a director's interest or other reason. The Board
believes that the effectiveness of shareholder ratification on an interested
party transaction likely will be governed by applicable law irrespective of the
terms of the Company's Certificate of Incorporation, and therefore recommends
the elimination of this provision as unnecessary. Article Seventh, as amended,
also would eliminate a provision specifying that interested party transactions
are not void or voidable merely because the interested party participates or
votes at a board or committee meeting which authorizes the transaction, if the
transaction is fair to the Company or it is approved as required by the GCL, and
a provision authorizing the Board to exercise powers and perform other acts
permissible under Delaware law, the Certificate of Incorporation and Bylaws made
by the shareholders. In general, the Board believes that these provisions
merely restate applicable provisions of the GCL and are unnecessary. Further,
the reference to Bylaws approved by the
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shareholders may be deemed to conflict with the provision of Article Seventh
which specifically permits the Board to make, alter, amend, change, add to or
repeal bylaws, and the Board believes that the deletion of this potential
conflict is in the best interests of the Company.
Finally, Article Ninth of the current Certificate of Incorporation would
be eliminated. This provision purports to provide that a compromise or
arrangement with a class of creditors, or resulting reorganization, that is
approved by a majority in number, representing three-fourths in value, of any
class of creditors or stockholders, summoned by a court on the application of
a duly appointed receiver or trustee in dissolution, will be binding on all
such creditors, stockholders and the Company. The Board believes that this
provision likely would not be enforceable and therefore recommends its
deletion as in the best interests of the Company.
If approved by the shareholders, the Restated Certificate, including
each of the foregoing provisions, will be effective upon its filing with the
Secretary of State of the State of Delaware.
The foregoing summary of the proposed changes to the Company's
Certificate of Incorporation is not intended to be complete and is qualified
in its entirety by reference to the Restated Certificate, a copy of which
attached to this Proxy Statement as Exhibit A.
e-NET, INC. 1998 STOCK COMPENSATION PLAN
On June 30, 1998, the Company's Board of Directors voted to adopt the
e-Net, Inc. 1998 Stock Compensation Plan (the "Plan"), effective as of June 30,
1998. Under the Plan, directors, employees and independent contractors of the
Company and its subsidiaries are participants and may be granted options to
purchase in the aggregate up to 1,000,000 shares of Common Stock. On September
29, 1998 bid and asked prices for Common Stock were reported on Nasdaq at $3.5
and $3.6563 per share, respectively. The effectiveness of the Plan is subject
to approval by the holders of a majority of the shares of Common Stock present
in person or represented by proxy at a meeting of the stockholders of the
Company held within twelve (12) months of June 30, 1998.
GENERALLY
The following is a summary of the material provisions of the Plan. This
summary is qualified in its entirety by reference to the complete text of the
Plan. The Company will provide promptly, upon request and without charge, a
copy of the full text of the Plan to each person to whom a copy of this proxy
statement is delivered. Requests should be directed to David W. Wells, the
General Counsel of the Company, 12800 Middlebrook Road, Suite 200, Germantown,
Maryland 20874.
Management believes that the Plan will advance the interests of the Company
by providing eligible individuals an opportunity to acquire or increase their
proprietary interest in the Company, which thereby will create a stronger
incentive to expend maximum effort for the growth and success of the Company and
its subsidiaries and will encourage such eligible
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individuals to continue to serve the Company.
Options granted under the Plan are intended to be non-qualified stock
options, not incentive stock options ("ISOs") within the meaning of Section 422
of the Internal Revenue Code of 1986, as amended (the "Code"). The Plan is not
a qualified deferred compensation plan within the meaning of Section 401(a) of
the Code nor is it subject to the provisions of the Employee Retirement Income
Security Act of 1964, as amended.
ADMINISTRATION OF THE PLAN
With respect to Insiders (officers, directors and beneficial owners of ten
percent (10%) or more of the Company's Common Stock), the Plan is administered
by, and awards to Insiders are authorized by, members of the Board of Directors
of the Company who are not officers or employees of the Company or a subsidiary
(the "Outside Board"). With respect to all other participants, the Plan is
administered by, and awards are authorized by, the Board of Directors of the
Company (the "Board"). No director may participate in a decision to grant an
award to himself or herself.
TOTAL NUMBER OF OPTIONS AND TERMS OF OPTIONS
As noted above, the total number of shares of Common Stock which may be
issued under the Plan from time to time is 1,000,000 in the aggregate, as may be
adjusted in accordance with the terms of the Plan. Shares may be issued under
the Plan out of authorized but unissued Common Stock, shares of Common Stock
held as treasury shares, and shares of Common Stock purchased by the Company on
the open market. In the event that an option expires or is terminated before it
is exercised, the shares subject to the portion of option not exercised may
again be subject to an option.
The option price is as set forth in the option agreement with the
participant. The exercise price for each option granted under the Plan is
determined by the Board or the Outside Board, as the case may be.
Each option will have a ten year term from its grant date, subject to
certain limitations.
TRANSFERABILITY AND TERMINATION OF OPTIONS
No option is assignable or transferable by the participant to whom it is
granted, other than by will or the laws of descent and distribution, by a
qualified domestic relations order, or by other exception to transfer
restrictions under Rule 16b-3. Unless otherwise provided by the Board or
Outside Board, options will expire at the earliest of (1) the end of a
specified award period, which will not exceed ten years, (2) twelve months
after an employee or director's termination of employment or service due to
retirement, total disability or death, (3) three months after an employee or
director's termination of employment or service for any other reason, and (4)
three months after the termination of an independent contractor's contract
with the Company for any reason. The vesting schedule will be determined by
the Board or Outside
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Board at the time of the award and may be accelerated by the Board or Outside
Board. Unless otherwise provided by the Board or Outside Board, options will
become immediately exercisable and fully vested upon the termination of the
participant's employment, service or contract due to retirement, total
disability or death. Options will also become immediately exercisable and fully
vested in the event of certain changes in control of the Company. Options that
have not fully vested will be forfeited upon the termination of the
participant's employment, service or contract for any other reason.
OPTION EXERCISE
Upon the approval of the Plan by the shareholders and subject to certain
limitations on exercise, pursuant to the terms of each participant's option
agreement with the Company, any portion of an option may be exercised during the
option term (subject to the vesting schedule set forth in the option agreement)
by completing, executing and delivering to the Company a notice of exercise in
the form supplied by the Company. Payment to the Company of the exercise price
must be made at the time of exercise by cash, good check, the delivery of shares
of Common Stock already owned by the participant, or as otherwise provided in
the stock option agreement, which may permit payment of the exercise price by a
loan from the Company.
The Board may offer to buy out options previously granted for a payment in
cash or Common Stock, and also may accept the surrender of options in
satisfaction of specified obligations of the participant.
EXPIRATION OF PLAN AND AMENDMENTS
No option may be granted pursuant to the Plan after June 30, 2008. The
Board may at any time amend, suspend or terminate the Plan in whole or in part,
except as follows. First, any amendment, suspension or termination that (i)
materially changes the eligibility requirements; (ii) materially increases the
number of shares of Common Stock available under the plan; or (iii) materially
increases the benefits accruing under the Plan, must be approved by the
Company's shareholders. Second, no amendment, suspension or termination of the
Plan shall adversely affect any option previously granted without the written
consent of the participant.
COMPETITION BY PARTICIPANT
If a participant, within a period of time specified in the option
agreement, engages in certain acts of competition with the Company (i.e., (i)
recruiting, hiring, assisting in the recruiting or hiring, discussing employment
with, or referring to others an employee, or anyone who within the past 12
months was an employee, of the Company or a subsidiary; (ii) competes with the
Company or subsidiary in a business and territory of the Company or a subsidiary
specified in the option agreement; (iii) uses methods, information or systems
developed by the Company or a subsidiary in competition with the Company, a
subsidiary, or customer of the Company within such specified business and
territory; or (iv) calls upon, solicits, accepts employment with, sells or
endeavors to sell to, within such specified business and territory, any
customer, prospective customer or former customer of the Company or a
subsidiary) then the
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following shall occur: (a) any outstanding options will expire and no longer be
exercisable, and (b) the participant will be required to sell to the Company all
shares of stock awarded under the Plan and still held by the participant at the
price per share paid by the participant, and the participant will be required to
pay to the Company a cash amount with respect to each share of stock awarded
under the Plan but not still held by the participant equal to the fair market
value of such share on the first date on which such share is not still held by
the participant less the price paid by the participant for the share.
FEDERAL INCOME TAX CONSEQUENCES
The following is only a summary of the more significant federal income tax
considerations, and does not purport to be a complete description of all
applicable rules regarding the federal income tax treatment of options. In
particular, the summary does not apply to dispositions by participants of Common
Stock other than through sales (such as through gifts), and does not discuss in
detail any potential consequences of alternative minimum tax, state, local and
foreign taxes and the effect of gift, estate and inheritance taxes. For more
detailed information, reference should be made to the Code and the regulations
relating thereto (the "Regulations").
As noted above, options granted under the Plan will be nonqualified stock
options. A participant who receives a nonqualified option which does not have a
readily ascertainable value at the time of grant will recognize no income for
federal income tax purposes upon the grant of such an option. Ordinarily, an
option which is not publicly traded will not be considered to have a readily
ascertainable value on the date of grant.
A participant who receives shares of stock upon exercise of a nonqualified
option will be required to recognize ordinary income equal to the excess of the
fair market value of the shares received over the exercise price. The taxable
year in which this income is reportable, and the date for determining the value
of the shares received, depends on whether the shares received upon exercise of
the option are subject to a substantial risk of forfeiture (or are transferable
free of such risk of forfeiture), as described below. Generally, only shares
received by directors, executive officers or holders of more than 10% of the
Common Stock upon the exercise of a nonqualified option within six months of the
grant of such option will be subject to a substantial risk of forfeiture as a
result of the applicability of Section 16 of the Securities Exchange Act of
1934.
If the shares received upon exercise of a nonqualified option are not
subject to a substantial risk of forfeiture or are transferable free of any
existing restrictions which would impose a substantial risk of forfeiture, the
participant will recognize ordinary income in the year of exercise. The amount
of income recognized on exercise of the option will be the excess of the fair
market value of the shares as of the date of exercise over the amount paid for
the shares.
If the shares received upon exercise of a nonqualified option are subject
to restrictions which create a substantial risk of forfeiture, and may not be
transferred to another person free of such restrictions, a participant will not
recognize income solely by reason of such exercise,
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unless the participant voluntarily elects under Section 83(b) of the Code to
recognize income as if the stock were not subject to such restrictions. If
"restricted" shares are received on the exercise of a nonqualified option and an
election is not made under Section 83(b) of the Code, a participant will
recognize ordinary income only upon the earlier of (i) the date of lapse of the
restrictions which cause the stock to be considered to be subject to a
substantial risk of forfeiture when received (restrictions on resale pursuant to
Section 16 of the Securities Exchange Act of 1934 would generally lapse six
months after the grant of the option), or (ii) the date on which such stock is
sold to a third party. The amount of ordinary income recognized upon the lapse
of restrictions will be the excess of the value of the shares at the time such
restrictions lapse over the amount paid for the shares upon exercise of the
option. In the event of a sale of shares prior to the lapse of the restrictions
causing the risk of forfeiture, the entire amount of gain on such sale would be
treated as ordinary income to the participant in the year of sale.
If an election under Section 83(b) is made with respect to shares which are
subject to a substantial risk of forfeiture, a participant will recognize
ordinary income in the year of the exercise of the option equal to the excess of
the value of the shares received over the exercise price paid. The value of the
shares will be determined as of the date of exercise and without regard to the
effect of any restrictions other than restrictions which by their terms will
never lapse. An election under Section 83(b) can only be made within 30 days of
the exercise of the option.
Upon the sale of shares acquired upon exercise of a nonqualified option, a
participant would recognize capital gain or loss equal to the difference between
the sales proceeds and his basis in the shares. The basis in shares acquired
under a nonqualified option would be the amount paid for the shares, plus any
amount required to be reported as ordinary income prior to or as a result of the
sale (as described above). If income has been reported by a participant
pursuant to an election under Section 83(b), however, under certain
circumstances the amount of such income may not be included in the basis of the
shares for purposes of computing any loss on the sale. Any capital gain or loss
recognized upon a sale of shares acquired upon exercise of a nonqualified option
would be long or short-term gain or loss depending on the time period elapsed
since the exercise of the option (if the shares purchased were unrestricted or a
Section 83(b) election were made) or the date that income became reportable by
reason of lapse of restrictions. Under current law, the required holding period
to cause a gain to qualify as a long term capital gain is one year.
Ordinary income currently is subject to a federal tax rate ranging from 15
to 39.6 percent. The federal tax rate on most long-term capital gains is 20
percent, subject to certain adjustments. The marginal tax rates for ordinary
income and long-term capital gains may be higher than 39.6 percent and 20
percent, respectively, since under current law, at certain levels of adjusted
gross income, certain itemized deductions may be limited and certain personal
exemptions may be phased out. Federal tax rates on ordinary income and
long-term capital gains may change in the future.
The Company generally will receive a compensation deduction equal to the
amount reportable as ordinary income by the participant under the rules
described above. This deduction
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may be subject to certain limitations imposed by the Code and the Regulations,
such as a $1 million annual deductibility cap and certain capitalization rules.
To secure a deduction, the Company will need to comply with applicable reporting
requirements.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Board of Directors has reappointed Grant Thornton LLP as independent
auditors to audit the consolidated financial statements of the Company and its
subsidiaries for fiscal year 1998. This appointment is subject to ratification
by the shareholders. Grant Thornton LLP has served as independent auditors for
the Company since its incorporation in 1995.
Representatives of Grant Thornton LLP are expected to be present at the
Annual Meeting, where they will have the opportunity to make a statement, if
they desire to do so, and be available to respond to appropriate questions.
The Board of Directors recommends a vote "FOR" ratification of the
appointment of Grant Thornton, L.L.P. as independent auditors for 1999.
OTHER BUSINESS
The Board of Directors does not know of any matters to be presented for
action at the meeting other than those listed in the Notice of Meeting and
referred to in this Proxy Statement. The enclosed proxy confers discretionary
authority, however, with respect to the transaction of any other matters that
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 any such matter.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely upon a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company pursuant to Rule 16a-3(e) under the Securities Exchange
Act of 1934, as amended, with respect to the Company's most recent fiscal year,
to the best of the Company's knowledge and information: Alonzo E. Short, Jr.,
Robert A. Veschi, Christina Swisher, Walter L. Hooton, Clive W. Whittenbury and
William W. Rogers, Jr. failed to file Forms 3 at the time of the Company's
initial public offering in April 1997, [but those reports have been completed].
SHAREHOLDER PROPOSALS
Proposals of shareholders intended to be presented at the 1999 Annual
Meeting and included in the Company's 1999 Notice of Meeting and Proxy Statement
must be received by the Company no later than July 15, 1999. Director-nominees
and shareholder proposals should be directed to the Secretary of the Company at
its principal office located at 12800 Middlebrook Road, Suite 200, Germantown,
Maryland 20874. Shareholder proposals must comply with the proxy rules of the
Securities and Exchange Commission in order to be included in the Proxy
Statement.
ANNUAL REPORT ON FORM 10-K
Copies of the Company's Annual Report on Form 10-KSB, without exhibits, as
filed with the Securities and Exchange Commission on June 30, 1998, are
available to any
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shareholder without charge upon request in writing directly to Donald J. Shoff,
Vice President of Finance and Chief Financial Officer of the Company, at 12800
Middlebrook Road, Suite 200, Germantown, Maryland 20874.
By order of the Board of Directors.
CHRISTINA L. SWISHER
Vice President of Operations
and Secretary
November __, 1998
23
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Exhibit A To
Proxy Statement
RESTATED CERTIFICATE OF INCORPORATION
OF
e-NET, INC.
e-Net, Inc., a corporation organized and existing under the laws of the
State of Delaware (the "Corporation"), hereby certifies as follows:
1. The name of the Corporation is e-Net, Inc. e-Net, Inc. was originally
incorporated under the name Nightware Technologies, Inc. and its original
Certificate of Incorporation was filed with the Secretary of State of the State
of Delaware on January 9, 1995.
2. Pursuant to Sections 242 and 245 of the General Corporation Law of the
State of Delaware, this Restated Certificate of Incorporation restates and
integrates and further amends the provisions of the Certificate of Incorporation
of this Corporation.
3. The text of the Restated Certificate of Incorporation as heretofore
amended or supplemented is hereby restated and further amended to read in its
entirety as follows:
FIRST: The name of the corporation is
e-NET, INC.
SECOND: The registered office of the corporation is to be located at 1209
Orange Street, County of New Castle, Wilmington, DE 19801. The name of its
registered agent at that address is The Corporation Trust Company.
THIRD: The purposes of the corporation are to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: (a) The total number of shares of common stock which this
corporation is authorized to issue is fifty million (50,000,000) shares, $.01
par value.
(b) Effective as of the close of business on March 15, 1996,
each issued and outstanding share of common stock with a par value of $.01 per
share is subdivided and reclassified into 600 shares of common stock with a par
value of $.01 per share.
(c) Effective as of March 18, 1997, each issued and outstanding
share
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<PAGE>
of common stock with a par value of $.01 is combined and reclassified, on a
one-for-two basis, into one-half of one share of common stock with a par value
of $.01 per share. This amendment, which originally was contained in a
Certificate of Amendment filed on April 14, 1997, shall affect, as of March 18,
1997, only the shares of common stock issued and outstanding as of such date
and, except with respect to those shares affected as of such date, shall have no
effect as of the date of the Certificate of Amendment on shares of common stock
issued and outstanding on the date of the Certificate of Amendment.
FIFTH: The corporation is to have perpetual existence.
SIXTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever, and they shall not be
personally liable for the payment of the corporation's debts except as they may
be liable by reason of their own conduct or acts.
SEVENTH: The following provisions are inserted for the management of the
business and the conduct of affairs of the corporation, and for further
definition, limitation and regulation of the powers of the corporation and of
its directors and stockholders:
(a) The number of directors comprising the Board of Directors of
the corporation shall be such as from time to time shall be fixed by or in the
manner provided in the By-Laws, but shall not be less than one. Election of
directors need not be by ballot unless the By-Laws so provide.
(b) The Board of Directors shall have the power, unless and to
the extent that the Board may from time to time by resolution relinquish or
modify the power, without the asset or vote of the shareholders: to make, alter,
amend, change, add to or repeal the By-Laws of the corporation; to fix and vary
the amount of capital of the corporation to be reserved for any proper purpose;
to authorize and cause to be executed mortgages and liens upon all or any part
of the property of the corporation; to determine the use and disposition of any
surplus or net profits, and to fix the times for the declaration and payment of
dividends.
EIGHTH: The corporation shall, to the fullest extent permitted by
applicable law as it presently exists or may be amended from time to time,
indemnify, defend and hold harmless any person who was or is made or is
threatened to be made a party or is otherwise involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative (a
"Proceeding") by reason of the fact that he, or a person for whom he is a legal
representative, is or was a director or officer of the corporation or is or was
serving at the request of the corporation as a director or officer of another
corporation or of a partnership, joint venture, trust enterprise or nonprofit
entity, including services with respect to employee benefit plans, against all
liability and loss suffered and expenses (including attorney's fees) reasonably
incurred by such person. The corporation shall be required to indemnify a
person in connection with a Proceeding (or part thereof) initiated by such
person only if the proceeding (or part thereof) was authorized by the Board of
Directors of the corporation.
NINTH: To the fullest extent permitted by the General Corporation Law of
the State of
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Delaware the same exists or may hereafter be amended, a director of the
corporation shall not be liable to the corporation or its stockholders for
monetary damages for the breach of fiduciary duty as a director.
TENTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
ELEVENTH: The name and address of the incorporator is:
Robert A. Veschi
13605 Hopkins Road
Germantown, MD 20874
TWELFTH: The name and address of each person who is to serve as a director
until the first annual meeting of stockholders or until his or their successors
are elected and qualified shall be as follows:
Robert A. Veschi
13605 Hopkins Road
Germantown, MD 20874
IN WITNESS WHEREOF, this Restated Certificate of Incorporation has been
signed by Robert A. Veschi, its authorized officer, this ____ day of __________,
1998.
e-NET, INC.
By:
Robert A. Veschi, President
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e-NET, INC.
This Proxy Is Solicited on Behalf of the Board of Directors.
The undersigned hereby appoints Robert A. Veschi, Donald J. Shoff and
Christina L. Swisher, and each of them, with full power of substitution, the
proxies of the undersigned to vote all shares of common stock, par value
$0.01 per share ("Common Stock") of e-Net, Inc. (the "Company") which the
undersigned is entitled to vote at the Annual Meeting of Stockholders of the
Company to be held at the offices of Williams & Connolly, 725 12th St., N.W.,
Washington, D.C. 20005, on December 15, 1998, at 10:00 A.M. and at any
adjournments or postponements thereof, with the same force and effect as the
undersigned might or could do if personally present thereat:
1. ELECTION OF DIRECTORS.
[ ] FOR all nominees listed below
(except as marked to the contrary below)
[ ] WITHHOLD AUTHORITY
to vote for all nominees listed below
(The Board of Directors recommends a vote FOR.)
A. Short, R. Veschi, W. Rogers, Jr., W. Hooton, C. Whittenbury
(INSTRUCTION: To withhold authority to vote for one or more individual
nominees, strike a line through the nominee's name in the list above.)
2. PROPOSAL TO APPROVE A RESTATED CERTIFICATE OF INCORPORATION. (The
Board of Directors recommends a vote FOR.)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
3. PROPOSAL TO APPROVE THE e-NET, INC. 1998 STOCK COMPENSATION PLAN,
which provides for the issuance of up to 1,000,000 shares of Common
Stock. (The Board of Directors recommends a vote FOR.)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
<PAGE>
4. PROPOSAL TO RATIFY THE SELECTION OF GRANT THORNTON LLP as the Company's
independent auditors for fiscal year 1999. (The Board of Directors
recommends a vote FOR.)
[ ] FOR
[ ] AGAINST
[ ] ABSTAIN
5. In their discretion, the proxies are authorized to vote upon such
other business as may properly come before the meeting.
This proxy, when properly executed, will be voted in the manner
directed herein by the undersigned stockholder. If no direction is made,
this proxy will be voted FOR Proposals 1, 2, 3 and 4.
Please sign exactly as name appears below. When shares are held by
joint tenants, both should sign. When signing as attorney, executor,
administrator, trustee or guardian please give full title as such. If a
corporation, please sign in full corporate name by president or other
authorized person. If a partnership, please sign in full partnership name by
authorized person.
DATED: __________ ____, 1998 ________________________
Signature
_________________________
Signature if held jointly
PLEASE MARK, SIGN, DATE AND RETURN THE PROXY CARD PROMPTLY USING THE
ENCLOSED ENVELOPE.
