<PAGE>
As filed with the Securities and Exchange Commission on February 25, 1999
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. 1998 STOCK COMPENSATION 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 1,000,000(1) $ 4.063(2) $4,060,300(2) $1,129
- ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
</TABLE>
(1) The e-Net, Inc. 1998 Stock Compensation Plan, as amended (the "Plan")
authorizes the issuance of a maximum of 1,000,000 shares of common stock, $0.01
par value ("Common Stock"), all of which are being registered hereunder. 480,652
shares of Common Stock authorized to be issued under the Plan are subject to
outstanding options granted under the Plan and 519,348 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 480,652 shares of Common Stock being offered under outstanding
options at a weighted average exercise price of $ 4.7668, and (ii) the 519,348
shares of Common Stock being offered at an exercise price of $ 3.4065, based on
the average of the high and low price per share of the Common Stock on February
23, 1999, as reported in the Nasdaq SmallCap Market.
<PAGE>
PART II
INFORMATION REQUIRED IN THE REGISTRATION STATEMENT
Item 3. Incorporation of Documents by Reference.
We incorporate by reference the following documents that we filed with
the Securities and Exchange Commission (THE "SEC") under the Securities Exchange
Act of 1934 (THE "EXCHANGE ACT"):
- The Annual Report on Form 10-KSB of e-Net, Inc. (THE
"COMPANY"), SEC File No. 000-20865, for the fiscal year ended
March 31, 1998, filed with the SEC on June 30, 1998.
- Amendment No. 1 to Annual Report on Form 10-KSB/A for the
fiscal year ended March 31, 1998, filed with the SEC on August
4, 1998.
- Quarterly Report on Form 10-QSB for the fiscal quarter ended
June 30, 1998, filed with the SEC on August 14, 1998.
- Quarterly Report on Form 10-QSB for the fiscal quarter ended
September 30, 1998, filed with the SEC on October 26, 1998.
- Amendment No. 1 to Quarterly Report on Form 10-QSB/A for the
fiscal quarter ended September 30, 1998, filed with the SEC on
February 1, 1999.
- Quarterly Report on Form 10-QSB for the fiscal quarter ended
December 31, 1998, filed with the SEC on February 12, 1999.
- Current Report on Form 8-K, filed with the SEC on April 23,
1998.
- Current Report on Form 8-K, filed with the SEC on October 26,
1998.
- Current Report on Form 8-K, filed with the SEC on January 29,
1998.
- Preliminary Proxy Statement on Schedule 14A, filed with the
SEC on October 1, 1998.
- Definitive Proxy Statement on Schedule 14A, filed with the SEC
on November 12, 1998.
- Description of the Common Stock contained in Form 8-A
Registration Statement, as amended, filed with the SEC on
February 11, 1997, and all amendments and reports subsequently
filed for the purpose of updating that description.
-2-
<PAGE>
We also incorporate by reference all documents that we file with the
SEC under Sections 13(a), 13(c), 14 and 15(d) of the Exchange Act, before we
file a post-effective amendment indicating that all securities offered by this
registration statement have been sold or deregistering all securities remaining
unsold.
Any statement contained or 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 it is modified or superceded
by any other statement in this registration statement or in any subsequently
filed document that is incorporated by reference. Any statement modified in this
manner shall not be deemed to be a part of this registration statement, and any
statement superseded in this manner shall not be deemed 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 Restated Certificate of
Incorporation includes a provision that provides that the Company will, to the
fullest extent permitted by applicable law, 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
Company or is or was serving at the request of the Company 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 Company must indemnify
a person in connection with a Proceeding (or part thereof) he or she initiated
only if the proceeding (or part thereof) was authorized by the Board of
Directors of the Company. To the fullest extent permitted by the Delaware
General Corporation Law (THE "DGCL") as currently in effect or as it may be
amended, a director of the Company shall not be liable to the Company or its
stockholders for monetary damages for the 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 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
-3-
<PAGE>
negligence or gross negligence in performance of their duties unless such
conduct falls within an exception under the 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 an 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 Securities
Act of 1933, as amended (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 SEC such indemnification is against public policy as expressed in
the Act and is, therefore, unenforceable.
Item 7. Exemption from Registration.
Not applicable.
Item 8. Exhibits.
4.1 -- e-Net, Inc. 1998 Stock Compensation Plan, as amended
4.2 -- Restated Certificate of Incorporation, filed December 18, 1998
(incorporated by reference from Post-Effective Amendment No. 2
to the Company's Registration Statement on Form S-1, as filed
with the SEC on January 6, 1998, as further amended and
declared effective on January 27, 1999 ("POST-EFFECTIVE
AMENDMENT NO. 2"))
-4-
<PAGE>
4.3 -- Restated Bylaws of the Company (incorporated by reference from
Post-Effective Amendment No. 2)
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 7)
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.
(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
-5-
<PAGE>
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.
-6-
<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 February 25,
1999.
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 February 25, 1999
- -----------------------------------------------------
Alonzo E. Short, Jr., Lt. Gen., USA (ret.)
/S/ROBERT A. VESCHI President, Chief Executive February 25, 1999
- -----------------------------------------------------
Robert A. Veschi Officer, Director
/S/DONALD J. SHOFF Chief Financial Officer February 25, 1999
- -----------------------------------------------------
Donald J. Shoff (Chief Accounting Officer)
/S/WILLIAM L. HOOTON Director February 25, 1999
- -----------------------------------------------------
William L. Hooton
/S/CLIVE WHITTENBURY Director February 25, 1999
- -----------------------------------------------------
Clive Whittenbury, Ph.D.
/S/WILLIAM W. ROGERS, JR. Director February 25, 1999
- --------------------------------------------
William W. Rogers, Jr.
</TABLE>
-7-
<PAGE>
EXHIBIT INDEX
4.1 -- e-Net, Inc. 1998 Stock Compensation Plan, as amended
4.2 -- Restated Certificate of Incorporation, filed December 18, 1998
(incorporated by reference from Post-Effective Amendment No. 2
to the Company's Registration Statement on Form S-1, as filed
with the SEC on January 6, 1998, as further amended and
declared effective on January 27, 1999 ("POST-EFFECTIVE
AMENDMENT NO. 2"))
4.3 -- Restated Bylaws of the Company (incorporated by reference from
Post-Effective Amendment No. 2)
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 7)
<PAGE>
Exhibit 4.1
E-NET, INC.
1998 STOCK COMPENSATION PLAN
EFFECTIVE AS OF JUNE 30, 1998
AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
E-NET, INC.
1998 STOCK COMPENSATION PLAN
I. THE PLAN
1.1 PURPOSE. The purpose of the e-Net, Inc. 1998 Stock Compensation
Plan is to promote the success of the Corporation and its Subsidiaries by
providing an additional means through the grant of Awards to provide officers
and employees with stock compensation that is comparable with compensation for
employment with other similar companies in order to attract, motivate, retain
and reward officers and employees; to provide incentives for high levels of
individual performance and improved financial performance; to attract, motivate
and retain experienced and knowledgeable independent directors; to attract,
motivate and retain experienced and knowledgeable independent contractors; and
to promote a close identity of interests between directors, officers, employees,
independent contractors and stockholders.
1.2 DEFINITIONS.
The following terms shall have the meanings set forth below:
(1) "AWARD" shall mean an award of any Option authorized under
Section 1.6, that is authorized by and granted under this plan.
(2) "AWARD DATE" shall mean the date upon which the Outside
Board or the Board, as applicable as determined pursuant to Section
1.3, takes the action granting an Award or such later date as the
Outside Board or the Board designates as the Award Date at the time of
granting the Award.
(3) "AWARD DOCUMENT" shall mean any writing, which may be an
agreement, setting forth the terms of an Award that has been granted by
the Outside Board or the Board.
(4) "AWARD PERIOD" shall mean the period beginning on an Award
Date and ending on the expiration date of such Award.
(5) "BENEFICIARY" shall mean the person or persons designated
by a Participant in writing to the Board to receive the benefits
specified in an Award Document and under this Plan in the event of the
Participant's death, or, if the Participant has not designated such
person or persons, or such person or persons shall all have predeceased
the Participant, the executor or administrator of the Participant's
estate.
(6) "BOARD" shall mean the Board of Directors of the
Corporation.
-1-
AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
(7) "CODE" shall mean the Internal Revenue Code of 1986, as
amended from time to time. Any reference herein to a section of the
Code shall include any corresponding future provision of federal tax
law.
(8) "COMMON STOCK" shall mean the common stock of the
Corporation and, in the event such common stock is converted to another
security or property pursuant to Section 3.2, such other security or
property.
(9) "CORPORATION" shall mean e-Net, Inc. and its successors,
and, where the context requires, its Subsidiaries.
(10) "EMPLOYEE" shall mean any employee of the Corporation or
a Subsidiary, including a director who is also an employee.
(11) "ELIGIBLE PARTICIPANT" shall mean any Employee or
Independent Contractor.
(12) "ERISA" shall mean the Employee Retirement Income
Security Act of 1947, as amended.
(13) "EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended from time to time, and any successor provision.
(14) "FAIR MARKET VALUE" shall have such meaning as determined
by the Outside Board from time to time based upon its reasonable
judgement as indicated by its written approval.
(15) "INDEPENDENT CONTRACTOR" shall mean any individual who
engages in service for hire for the Corporation or a Subsidiary under a
written contract approved by the Board.
(16) "INSIDER" shall mean an officer of the Corporation, a
director of the Corporation, or a beneficial owner of ten percent (10%)
or more of the Corporation's issued and outstanding Common Stock or
other equity security registered pursuant to Section 12 of the Exchange
Act, as defined pursuant to Section 16 of the Exchange Act and the
rules and regulations thereunder.
(17) "NONMANAGEMENT DIRECTOR" shall mean a member of the Board
who is not an officer or employee of the Corporation or a Subsidiary.
(18) "OPTION" shall mean an option to purchase Common Stock
pursuant to an Award.
(19) "OUTSIDE BOARD" shall mean the Outside Directors, as a
group.
-2-
AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
(20) "OUTSIDE DIRECTOR" shall mean a member of the Board who
is a Non-management Director and who otherwise falls under the
definition of "Non-Employee Director" in Rule 16b-3.
(21) "PARTICIPANT" shall mean a Nonmanagement Director or an
Eligible Participant who has been granted an Award under this Plan.
(22) "PERSONAL REPRESENTATIVE" shall mean to person or persons
who, upon the incompetence of a Participant, shall have acquired on
behalf of the Participant, by legal proceeding, pursuant to a durable
power of attorney or otherwise, the power to exercise the rights or
receive benefits under this Plan and who shall have become the legal
representative of the Participant.
(23) "PLAN" shall mean this e-Net, Inc. 1998 Stock
Compensation Plan.
(24) "PLAN TERMINATION DATE" shall mean the tenth anniversary
of the effective date of the Plan, as determined pursuant to Section
3.7.
(25) "QDRO" shall mean a qualified domestic relations order as
defined in Section 414(p) of the Code or Section 206(d)(3) of ERISA (to
the same extent as if this Plan were subject thereto), or the
applicable rules thereunder.
(26) "RETIREMENT" shall mean, in the case of an Employee,
retirement as defined in the Corporation's Retirement Pension Plan, as
amended from time to time.
(27) "RULE 16B-3" shall mean Rule 16b-3 as promulgated by the
Securities and Exchange Commission pursuant to the Exchange Act.
(28) "SUBSIDIARY" shall mean any subsidiary of the Corporation
which meets the definition of a "subsidiary corporation" set forth in
Section 424(f) of the Code.
(29) "TOTAL DISABILITY" shall mean complete and permanent
inability by reason of illness or accident to perform the duties of the
occupation at which the Participant was employed when the illness
commenced or accident occurred, as determined by the Corporation's
independent medical consultant, and, in the case of Eligible
Participants who are Insiders, ratified by the Outside Board.
1.3 ADMINISTRATION AND AUTHORIZATION; POWER AND PROCEDURE.
(a) THE OUTSIDE BOARD AND THE BOARD. This Plan shall be administered
by, and all Awards to Eligible Participants shall be authorized by, the Outside
Board in the cases of Eligible Participants who are Insiders and of
Nonmanagement Directors, and the Board in the case of Eligible Participants who
are not Insiders. Action of the Outside Board or the Board with respect
-3-
AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
to the administration of this Plan shall be taken pursuant to a majority vote or
by unanimous written consent of the respective members, PROVIDED, HOWEVER, that
no director may participate in a decision to grant an Award to himself or
herself. All references in this Plan to actions or determinations in respect of
Awards by the Outside Board shall be references to Awards granted to Eligible
Participants who are Insiders and to Nonmanagement Directors. All references in
this Plan to action or determinations in respect of Awards by the Board shall be
references to Awards granted to Eligible Participants who are not Insiders. The
Outside Board shall administer this Plan with respect to all Awards held by
Eligible Participants who are Insiders and by Nonmanagement Directors, including
Awards granted prior to the time that any such Eligible Participant becomes an
Insider.
(b) PLAN AWARDS; INTERPRETATION; POWERS. Subject to the express
provisions of this Plan, the Outside Board or the Board shall have the
authority:
(i) to determine the Eligible Participants and Nonmanagement
Directors who will receive Awards; PROVIDED, HOWEVER, that no director
may participate in a decision to grant an Award to himself or herself;
(ii) to grant Awards to such Eligible Participants and
Nonmanagement Directors, to determine the amount of and the price at
which Common Stock will be offered or awarded thereto, to determine the
other specific terms and conditions of such Awards consistent with the
express limits of this Plan, to establish the installments (if any) in
which such Awards shall become exercisable or shall vest, and to
establish the expiration date and the events of termination of such
Awards; PROVIDED, HOWEVER, no director may participate in a decision to
grant an Award to himself of herself;
(iii) to construe and interpret this Plan and any Award
Documents, to further define the terms used in this Plan, and to
prescribe, amend and rescind rules and regulations relating to the
administration of this Plan;
(iv) to cancel, modify, or waive the Corporation's rights with
respect to, or modify, discontinue, suspend, or terminate any or all
outstanding Awards held by Eligible Participants and Nonmanagement
Directors, subject to any required consents under Section 3.5;
(v) to accelerate or extend the ability to exercise or extend
the term of any or all outstanding Awards (subject to the maximum term
of Awards under Section 1.7); and
(vi) to make all other determinations and take such other
actions as contemplated by this Plan or as may be necessary or
advisable for the administration of this Plan and effectuation of its
purposes.
(c) BINDING DETERMINATIONS. Any action taken by, or inaction of, the
Corporation, any Subsidiary, the Board or the Outside Board, relating or
pursuant to this Plan shall be within the
-4-
AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
absolute discretion of that entity or body and shall be conclusive and binding
upon all persons. Subject only to compliance with the express provisions hereof,
the Board and the Outside Board may act in their absolute discretion in matters
within their authority related to this Plan.
(d) RELIANCE ON EXPERTS. In making any determination or in taking or
not taking any action under this Plan, the Board and the Outside Board may
obtain and may rely upon the advice of experts, including professional advisors
to the Corporation.
(e) DELEGATION. The Board may delegate some or all of its authority
under the Plan to one or more members of the Board. The Outside Board and the
Board may delegate ministerial, non-discretionary functions to individuals who
are officers or employees of the Corporation.
(f) NO LIABILITY. No member of the Board, or director, officer or
employee of the Corporation or any Subsidiary, shall be liable, responsible or
accountable in damages or otherwise for any determination made or other action
taken or any failure to act by such person so long as such person is not
determined to be guilty by a final adjudication of willful misconduct with
respect to such determination, action or failure to act.
(g) INDEMNIFICATION. To the extent permitted by law, each of the
members of the Board, and each of the directors, officers and employees of the
Corporation and any Subsidiary, shall be held harmless and be indemnified by the
Corporation for any liability, loss (including amounts paid in settlement),
damages or expenses (including reasonable attorneys' fees) suffered by virtue of
any determinations, acts or failures to act, or alleged acts or failures to act,
in connection with the administration of this Plan so long as such person is not
determined by a final adjudication to be guilty of willful misconduct with
respect to such determination, action or failure to act.
1.4 PARTICIPATION. Awards may be granted by the Outside Board or the
Board only to Eligible Participants or to Nonmanagement Directors; PROVIDED
HOWEVER, that no director may participate in a decision to grant an Award to
himself or herself. An Eligible Participant or Nonmanagement Director who has
been granted an Award may, if otherwise eligible, be granted additional Awards
if the Outside Board or the Board shall so determine.
1.5 SHARES AVAILABLE FOR AWARDS.
(a) COMMON STOCK. Subject to the provisions of Section 3.2, the Common
Stock that may be delivered under this Plan shall be shares of the Corporation's
authorized but unissued Common Stock, any shares of Common Stock held as
treasury shares, and shares of Common Stock purchased by the Corporation on the
open market.
(b) NUMBER OF SHARES. Subject to adjustments in accordance with Section
3.2, the maximum number of shares of Common Stock that may be delivered pursuant
to Awards granted to Eligible Participants and Nonmanagement Directors under
this Plan shall not exceed one million (1,000,000) shares.
-5-
AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
(c) CALCULATION OF AVAILABLE SHARES AND REPLENISHMENT. A good faith
estimate of the number of shares of Common Stock subject to outstanding Awards
that will be satisfied by delivery of shares of Common Stock, plus the number of
shares of Common Stock referenced for purposes of determining other Awards,
shall be reserved from the number of shares of Common Stock available for Awards
under this Plan. The aggregate number of shares of Common Stock delivered under
this Plan plus the number of shares referenced with respect to Awards paid in
cash shall reduce the number of shares of Common Stock remaining available. If
any Award shall expire or be canceled or terminated without having been
exercised in full, or any Common Stock subject to an Award shall not vest or be
delivered, the unpurchased, nonvested or undelivered shares of Common Stock
subject thereto or the shares of Common Stock referenced with respect thereto
shall again be available under this Plan; PROVIDED, HOWEVER, that no such
unpurchased, nonvested or undelivered shares shall again be available if the
holder received dividends with respect to such shares or any other benefits of
ownership of such shares, other than voting rights or the accumulation of
dividends that are never paid to the holder. If the Corporation withholds shares
of Common Stock pursuant to Section 3.4, the number of shares that would have
been deliverable with respect to an Award but that are withheld pursuant to the
provisions of Section 3.4 shall be treated as issued and the aggregate number of
shares issuable with respect to the applicable Award and under this Plan shall
be reduced by the number of shares so withheld and such shares shall not be
available for additional Awards.
1.6 GRANT OF AWARDS. Subject to the express provisions of this Plan,
the Outside Board or the Board shall determine the number of shares of Common
Stock subject to each Award, the price (if any) to be paid for the shares or the
Award and other terms and conditions of the Award. Each Award to an Eligible
Participant or a Nonmanagement Director shall be evidenced by an Award Document
signed by the Corporation and, if required by the Outside Board or the Board, by
the Eligible Participant or Nonmanagement Director.
1.7 AWARD PERIOD. Each Award and all executory rights or obligations
under the related Award Document shall expire on such date (if any) as shall be
determined by the Outside Board or the Board, but in the case of Options or
other rights to acquire Common Stock, not later than ten (10) years after the
Award Date.
1.8 LIMITATIONS ON EXERCISE AND VESTING OF AWARDS.
(a) PROVISIONS FOR EXERCISE. An Award shall be exercisable or shall
vest as determined by the Outside Board or the Board.
(b) PROCEDURE. Any exercisable Award shall be exercised when the person
appointed by the Outside Board or the Board receives written notice of such
exercise from the Participant, together with satisfactory arrangements for any
required payment to be made in accordance with Sections 2.2. or 3.4 or the terms
of the Award Document, as the case may be.
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<PAGE>
(c) FRACTIONAL SHARES/MINIMUM ISSUE. Fractional share interests shall
be disregarded, but may be accumulated. However, the Outside Board or the Board
may determine that cash will be paid or transferred in lieu of any fractional
share interests.
(d) HOLDING PERIOD. Notwithstanding any provision of this Plan to the
contrary, except in the case of sales by an executor or administrator of the
estate of a deceased Participant, shares of Common Stock acquired by an Insider
through the exercise of an Award granted hereunder may not be sold until a date
six (6) months after the date of the grant of such Award as specified in the
Award Document.
1.9 ACCEPTANCE OF NOTES TO FINANCE EXERCISE. Where the Outside Board or
the Board deems it appropriate under the circumstances as indicated by its
written approval, the Corporation may accept one or more notes from any
Participant in connection with the exercise or receipt of any outstanding Award
or the payment of the amount of any taxes that the Corporation may be required
to withhold with respect to such exercise or receipt; PROVIDED, HOWEVER, that
any such note shall be subject to the following terms and conditions:
(1) The principal of the note shall not exceed the amount
required to be paid to the Corporation upon the exercise or receipt of
one or more Awards under the Plan, including the amount of any taxes
required to be withheld, and the note shall be delivered directly to
the Corporation in consideration of such exercise or receipt.
(2) The initial term of the note shall be determined by the
Outside Board or the Board; PROVIDED, HOWEVER, that the term of the
note, including extensions, shall not exceed ten (10) years.
(3) The note shall provide for full recourse of the
Participant, including a right of set-off against amounts otherwise
payable by the Corporation to the Participant, and shall bear interest
at a rate determined by the Outside Board or the Board, but not less
than the applicable federal rate determined under Section 1274.
(4) If the employment of the Participant terminates, the
unpaid principal balance of the note shall become due and payable on
the tenth business day after such termination.
(5) If required by the Outside Board or the Board or by
applicable law, the note shall be secured by a pledge of any shares or
rights financed thereby in compliance with applicable law.
(6) The terms, repayment provisions, and collateral release
provisions of the note and the pledge securing the note shall conform
with applicable rules and regulations of the Federal Reserve Board as
then in effect.
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<PAGE>
1.10 NO TRANSFERABILITY. Awards may be exercised only by the
Participant or the Participant's Personal Representative, if any, or, if the
Participant has died, the Participant's Beneficiary. Amounts payable or shares
of Common Stock issuable pursuant to an Award shall be paid to (or registered in
the name of) such person or persons as specified by the person exercising the
Award. Other than by will or the laws of descent and distribution or pursuant to
a QDRO or other exception to transfer restrictions under Rule 16b-3, no right or
benefit under this Plan or any Award, including, without limitation, any Option
that has not vested, shall be transferable by the Participant or shall be
subject in any manner to anticipation, alienation, sale, transfer, assignment,
pledge, encumbrance or charge (other than to the Corporation), and any such
attempted action shall be void. The Corporation shall disregard any attempt at
transfer, assignment or other alienation prohibited by the preceding sentences
and shall pay or deliver such cash or shares of Common Stock in accordance with
the provisions of this Plan. The designation of a Beneficiary hereunder shall
not constitute a transfer for these purposes.
1.11 SECTION 83(B) ELECTIONS. If a Participant shall file an election
with the Internal Revenue Service to include the value of any Award in the
Participant's gross income while such Award remains subject to restrictions, the
Participant shall promptly furnish the Corporation with a copy of such election.
II. OPTIONS
2.1 GRANTS. One or more Options may be granted under this Article to
any Eligible Participant or Nonmanagement Director.
2.2 OPTION PRICE.
(a) PRICING LIMITS. The exercise price for shares of Common Stock
covered by Options shall be determined by the Outside Board or the Board at the
time of the Award.
(b) PAYMENT PROVISIONS. The exercise price for any shares of Common
Stock purchased on exercise of an Option granted under this Article shall be
paid in full at the time of each purchase in one or a combination of the
following methods: (i) in cash or by electronic funds transfer; (ii) by good
check payable to the order of the Corporation; (iii) by the delivery of shares
of Common Stock already owned by the Participant; or (iv) if authorized by the
Outside Board or the Board or specified in the applicable Award Document, by a
promissory note of the Participant consistent with the requirements of Section
1.9; PROVIDED, HOWEVER, that the Outside Board or the Board may, in its absolute
discretion, limit the Participant's ability to exercise an Option by delivering
shares of Common Stock, including by imposing a requirement that the Participant
satisfy a minimum holding period with respect to the shares so delivered. Shares
of Common Stock used to satisfy the exercise price of an Option shall be valued
at their Fair Market Value on the date of exercise.
2.3 NOT INCENTIVE STOCK OPTIONS. It is not intended that any Option
granted under this Plan shall constitute an incentive stock option as defined in
Section 422 of the Code.
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AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
2.4. OPTION PERIOD.
(a) AWARD PERIOD. Each Option shall specify the Award Period for which
the Option is granted and shall provide that the Option shall expire at the end
of such Award Period. The Outside Board or the Board may extend the Award Period
by amendment of an Option. Notwithstanding the foregoing, the Award Period with
respect to an Option, including all extensions, shall not exceed ten (10) years.
(b) EFFECT OF TERMINATION OF EMPLOYMENT OR SERVICE. Notwithstanding the
provisions of Section 2.4(a), unless otherwise provided by the Outside Board or
the Board, an Option shall expire on the earliest to occur of (i) the end of the
Award Period, (ii) if the Participant is an Employee or Nonmanagement Director,
the date three (3) months following the Participant's termination of employment
or service for the Corporation for any reason other than Retirement, Total
Disability or death, (iii) if the Participant is an Employee or Nonmanagement
Director, the date twelve (12) months following the Participant's termination of
employment or service for the Corporation by reason of Retirement, Total
Disability or death, (iv) if the Participant is an Independent Contractor, the
date three (3) months following the termination of the Participant's contract
with the Corporation, and (v) the date of termination of the Option pursuant to
Section 3.14.
2.5. VESTING; FORFEITURE.
(a) An Option shall be exercisable or shall vest upon such terms and
conditions or pursuant to such schedule as the Outside Board or the Board shall
determine at the time of the Award. Notwithstanding the foregoing, unless
otherwise specified by the Outside Board or the Board, an Option shall become
immediately exercisable and fully vested upon the termination of the
Participant's employment by, service for or contract with the Corporation by
reason of Retirement, Total Disability or death. Unless otherwise specified by
the Outside Board or the Board, an Option that is not vested upon the
termination of the Participant's employment by, service for or contract with the
Corporation shall be forfeited.
(b) Notwithstanding the provisions of Section 2.5(a), an Option shall
become immediately exercisable and fully vested in the event of (i) a merger,
consolidation or reorganization to which the Corporation is a party other than
as the surviving entity, unless the surviving entity shall elect to continue the
Plan in its existing form and abide by the terms of all Awards granted
thereunder, (ii) a merger, consolidation or reorganization to which the
Corporation is a party as the surviving entity, other than any such merger,
consolidation or reorganization resulting in a change of ownership of less than
fifty percent (50%) of the then outstanding Common Stock; (iii) any transaction
or series of related transactions resulting in the acquisition of a majority of
the outstanding shares of Common Stock; (iv) any transfer of all or
substantially all of the assets of the Corporation; or (v) the liquidation or
dissolution of the Corporation. In such event, the Corporation may, but shall
not be required to, give the Participant prior written notice of the
effectiveness of any such event, and the Participant may
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AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
exercise the Option (to the extent it is still in effect) on or prior to the
last day specified by the Corporation; to the extent that the Option has not
been exercised, it will expire at 5:00 P.M. on the last day specified in such
notice by the Corporation.
2.6 OPTION REPRICING, CANCELLATION, SUBSTITUTION OR WAIVER OF
RESTRICTIONS. Subject to Sections 1.5 and 3.5 and the specific limitations on
Awards contained in this Plan, the Outside Board or the Board from time to time
may authorize, generally or in specific cases only, for the benefit of any
Participant who is an Employee or an Independent Contractor, any adjustment in
the exercise or purchase price, the vesting schedule, the number of shares
subject to, the restrictions upon or the term of, an Award granted under this
Article by cancellation of an outstanding Award and a subsequent granting of an
Award, by amendment, by substitution of an outstanding Award, by waiver or by
other legally valid means. Such amendment or other action may result, among
other changes, in an exercise or purchase price that is higher or lower than the
exercise or purchase price of the original or prior Award, provide for a greater
or lesser number of shares subject to the Award, or provide for a longer or
shorter vesting or exercise period.
III. OTHER PROVISIONS
3.1 RIGHTS OF ELIGIBLE PARTICIPANTS, PARTICIPANTS AND BENEFICIARIES.
(a) EMPLOYMENT STATUS. Status of an Eligible Participant or a
Nonmanagement Director shall not be construed as a commitment that any Award
will be made under this Plan to an Eligible Participant or a Nonmanagement
Director or to Eligible Participants or Nonmanagement Directors generally.
(b) NO EMPLOYMENT CONTRACT. Nothing contained in this Plan (or in any
other documents related to this Plan or to any Award) shall confer upon any
Participant any right to continue in the employ or other service of the
Corporation or constitute any contract or agreement of employment or other
service, nor shall this Plan interfere in any way with the right of the
Corporation to change such person's compensation or other benefits or to
terminate the employment of such person, with or without cause; PROVIDED,
HOWEVER, that nothing contained in this Plan or any document related hereto
shall adversely affect any independent contractual right of any Participant
without his or her consent.
(c) PLAN NOT FUNDED. Awards payable under this Plan shall be payable in
shares of Common Stock or from the general assets of the Corporation, and
(except as provided in Section 1.5(c)) no special or separate reserve, fund or
deposit shall be made to assure payment of such Awards. No Participant,
beneficiary or other person shall have any right, title or interest in any fund
or in any specific asset (including share of Common Stock, except as expressly
otherwise provided) of the corporation by reason of any Award hereunder. Neither
the provisions of this Plan (or of any related documents), nor the creation or
adoption of this Plan, nor any action taken pursuant to the provisions of this
Plan shall create, or be construed to create, a trust of any kind or a fiduciary
relationship between the Corporation and any Participant, Beneficiary or other
person. To the extent that a Participant, Beneficiary or other person acquires
right to receive
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AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
payment pursuant to any Award hereunder, such right shall be no greater than the
right of any unsecured general creditor of the Corporation.
3.2 ADJUSTMENTS.
(a) EVENTS REQUIRING ADJUSTMENTS. If any of the following events occur,
the Outside Board or the Board shall make the adjustments described in Section
3.2(b): (i) any extraordinary dividend or other extraordinary distribution in
respect of the Common Stock (whether in the form of cash, Common Stock, other
securities, or other property), (ii) any recapitalization, stock split
(including a stock split in the form of a stock dividend), reverse stock split,
reorganization, merger, combination, consolidation, split-up, spin-off,
combination, repurchase, or exchange of Common Stock or other securities of the
Corporation, (iii) any issuance of warrants or other rights to purchase shares
of Common Stock or other securities of the Corporation (other than to employees)
at less than eighty percent (80%) of fair value on the date of such issuance, or
(iv) any other like corporate transaction or event in respect of the Common
Stock or a sale of substantially all the assets of the Corporation.
(b) ADJUSTMENTS TO AWARDS. If any of the events described in Section
3.2(a) occurs, then the Outside Board or the Board shall, in such manner and to
such extent (if any) as it deems appropriate and equitable, (i) proportionately
adjust any or all of (1) the number and type of shares of Common Stock that
thereafter may be made the subject of Awards (including the specific maximum set
forth in Section 1.5), (2) the number, amount and type of shares of Common Stock
subject to any or all outstanding Awards, (3) the grant, purchase, or exercise
price of any or all outstanding Awards, (4) the Common Stock or cash deliverable
upon exercise of any or all outstanding Awards, or (5) the performance standards
appropriate to any or all outstanding Awards; or (ii) make provision for a cash
payment or for the substitution or exchange of any or all outstanding Awards
based upon the distribution or consideration payable to holders of Common Stock
upon or in respect of the event.
3.3 COMPLIANCE WITH LAWS. This Plan, the granting and vesting of Awards
under this Plan and the issuance and delivery of shares of Common Stock and the
payment of money under this Plan or under Awards granted hereunder are subject
to compliance with all applicable federal and state laws, rules and regulations
(including but not limited to state and federal securities law and federal
margin requirements) and to such approvals by any listing, regulatory or
governmental authority as may, in the opinion of counsel for the Corporation, be
necessary or advisable in connection therewith. Any securities delivered under
this Plan shall be subject to such restrictions, and the person acquiring such
securities shall, if requested by the Corporation, provide such assurances and
representations to the Corporation as the Corporation may deem necessary or
desirable to assure compliance with all applicable legal requirements.
3.4 TAX WITHHOLDING. Upon any exercise, vesting, or payment of any
Award, the Outside Board or the Board may make such provisions and take such
steps as it may deem necessary or appropriate for the withholding by the
Corporation of all federal, state, local and other taxes required by law to be
withheld, including without limitation, the right, at its option,
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<PAGE>
(i) to require the Participant (or Personal Representative or Beneficiary, as
the case may be) to pay or provide for payment of the amount of any taxes that
the Corporation may be required to withhold with respect to such transaction as
a condition to the release of Common Stock or the making of any payment or
distribution, (ii) to deduct from any amount payable in cash, (iii) to reduce
the number of shares of Common Stock otherwise deliverable (or otherwise
reacquire such shares), based upon their Fair Market Value on the date of
delivery, or to grant the Participant the right to elect such reduction in the
number of shares upon such terms and conditions as it may establish, or (iv) to
permit the Corporation to accept a note for the amount of any taxes that the
Corporation may be required to withhold with respect to such transaction in
accordance with Section 1.9.
3.5 PLAN AMENDMENT, TERMINATION AND SUSPENSION.
(a) BOARD AUTHORIZATION. Subject to this Section 3.5, the Board may, at
any time, terminate or, from time to time, amend, modify or suspend this Plan,
in whole or in part. No Awards may be granted during any suspension of this Plan
or after termination of this Plan, but the Outside Board or the Board shall
retain jurisdiction as to Awards then outstanding in accordance with the terms
of this Plan.
(b) STOCKHOLDER APPROVAL. If any amendment would (i) materially
increase the benefits accruing under this Plan, (ii) materially increase the
aggregate number of shares of Common Stock that may be issued under this Plan
(except as provided in Section 3.2), or (iii) materially modify the requirements
as to eligibility for participation in the Plan, such amendment shall be subject
to stockholder approval.
(c) AMENDMENTS TO AWARDS. Without limiting any other express authority
granted under this Plan, but subject to its express limits, the Outside Board or
the Board by agreement or resolution may waive conditions of or limitations on
Awards to Eligible Participants or Nonmanagement Directors that the Outside
Board or the Board in the prior exercise of its discretion has imposed, without
the consent of the Participant, and may make other changes to the terms and
conditions of Awards that do not affect the Participant's rights and benefits
under an Award in any materially adverse manner.
(d) LIMITATIONS ON AMENDMENTS TO PLAN AND AWARDS. No amendment,
suspension or termination of the Plan or any change affecting any outstanding
Award shall, without the written consent of the Participant, Beneficiary or
Personal Representative, as applicable, affect in any manner materially adverse
to such person any rights or benefits of any such person or any obligations of
the Corporation under any Award granted under this Plan prior to the effective
date of such change; however, any changes made pursuant to Section 3.2 shall not
be deemed to constitute changes or amendments for purposes of this Section 3.5.
3.6 PRIVILEGES OF STOCK OWNERSHIP. Except as otherwise expressly
authorized by the Outside Board or the Board or this Plan and expressly stated
in an Award Document, a Participant shall not be entitled to any privilege of
stock ownership as to any shares of Common
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AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
Stock not actually delivered to and held of record by the Participant. No
adjustment shall be made for dividends or other stockholder rights for which a
record date is prior to the date of delivery of such shares.
3.7 EFFECTIVE DATE OF THE PLAN. This Plan shall be effective as of the
date the Plan is approved by the Board, subject to approval by a vote of the
holders of a majority of the outstanding shares of Common Stock at a meeting of
stockholders of the Corporation held within twelve (12) months before or after
the date the Plan is approved by the Board. Awards may be granted hereunder on
or after the effective date and prior to the termination of the Plan.
3.8 TERM OF THE PLAN. No Award shall be granted after the Plan
Termination Date. Unless otherwise expressly provided in this Plan or in an
applicable Award Document, any Award may extend beyond such date, and all
authority of the Outside Board or the Board with respect to Awards hereunder
shall continue during any suspension of this Plan and in respect of Awards
outstanding on the Plan Termination Date.
3.9 GOVERNING LAW/SEVERABILITY.
(a) CHOICE OF LAW. This Plan, the Awards, all documents evidencing
Awards, and all other related documents shall be governed by, and construed in
accordance with the laws of the State of Delaware, without reference to any
otherwise applicable principles of conflicts of law.
(b) SEVERABILITY. If any provision shall be held by a court of
competent jurisdiction to be valid and unenforceable, the remaining provisions
of this Plan shall continue in effect.
3.10 CAPTIONS. Captions and headings are given to the sections and
subsections of this Plan solely as a convenience to facilitate reference. Such
headings shall not be deemed in any way material or relevant to the construction
or interpretation of the Plan or any provision thereof.
3.11 EFFECT OF CHANGE OF SUBSIDIARY STATUS. For purposes of this Plan
and any Award hereunder, if any entity ceases to be a Subsidiary, the
employment, service or contract of all Participants who are employed by, in the
service of or under contract with such entity shall be deemed to have
terminated, except any such Participant who continues as an employee, servant or
contractor of the Corporation or another Subsidiary.
3.12 NONEXCLUSIVITY OF PLAN. Nothing in this Plan shall limit or be
deemed to limit the authority of the Board to grant awards or authorize any
other compensation, with or without reference to the Common Stock, under any
other plan or authority.
3.13 PLAN BINDING ON SUCCESSORS. The obligations of the corporation
under the Plan shall be binding upon any successor corporation or organization
resulting from the merger, consolidation or other reorganization of the
corporation, or upon any successor corporation or organization succeeding to
substantially all of the assets and business of the Corporation. The Corporation
agrees that it will make appropriate provisions for the preservation of all
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AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
Participants' rights under the Plan in any agreement or plan that it may enter
into or adopt to effect any such merger, consolidation, reorganization or
transfer of assets.
3.14 COMPETITION BY PARTICIPANTS.
(a) In the event that the Outside Board or the Board determines that a
Participant, within such period of time as shall be specified in the related
Award Document, 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 twelve (12) months was, an employee of the
Corporation or any Subsidiary or any prospective or former Subsidiary; (ii)
competes with the Corporation or any Subsidiary in such segments of the business
of the Corporation and within such territory as shall be specified in such
related Award Documents; (iii) uses in competition with the Corporation or any
Subsidiary, customer, prospective customer or former customer, within such
segments and specified territory, any of the methods, information or systems
developed by the Corporation or any Subsidiary for its customers, prospective
customers or former customers where the Corporation or Subsidiary 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 Corporations or any Subsidiary; the following provision
shall apply with respect to any shares of Common Stock received and Awards
granted under this Plans as of the date of the first occurrence prohibited under
this provision:
(i) Such Participant: (x) shall immediately sell and deliver
to the Corporation, upon demand, all shares of Common 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 (y) shall pay to the
Corporation an amount in cash with respect to each share of Common
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 the Participant for such share.
(ii) Any Award outstanding under the Plan shall automatically
terminate and shall no longer be exercisable and all Shares of
Restricted Stock then held shall automatically terminate.
(b) The provisions of this Section 3.14 shall not limit or restrict in
any manner any rights or remedies which the Corporation and its Subsidiaries may
have under any separate employment agreement with a Participant and or otherwise
with respect to competition by a Participant.
(c) If any provisions of this Section 3.14 should be found by any court
of competent jurisdiction to be unreasonable by reason of 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
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AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
shall nevertheless remain valid and fully effective, but shall be considered to
be amended so that the period of time, territory, aspects of business or
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.
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AS AMENDED BY THE BOARD OF DIRECTORS ON FEBRUARY 8, 1999
<PAGE>
WILLIAMS & CONNOLLY
725 TWELFTH STREET, N.W.
WASHINGTON, D.C. 20005
202-434-5000
February 25, 1999
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 or about
February 25, 1999 (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
1998 Stock Compensaton 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
obtained from
<PAGE>
e-Net, Inc.
February 25, 1999
Page 2
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.
February 25, 1999
Page 2
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. On December 18, 1998, the shareholders of the Company approved a Restated
Certificate of Incorporation (THE "RESTATEMENT") that reiterated the contents of
the Correction, and thereby ratified the Correction.
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 February 25, 1999.
/s/ GRANT THORNTON LLP
Vienna, Virginia
February 25, 1999
