<PAGE> 1
SCHEDULE 14A INFORMATION
PROXY STATEMENT PURSUANT TO SECTION 14(a) OF THE SECURITIES
EXCHANGE ACT OF 1934 (AMENDMENT NO. )
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
<TABLE>
<S> <C>
[ ] Preliminary Proxy Statement [ ] Confidential, for Use of the Commission
Only (as permitted by Rule 14a-6(e)(2))
[X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to sec.240.14a-11(c) or sec.240.14a-12
</TABLE>
NETWORK PLUS CORP.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
N/A
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
(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> 2
NETWORK PLUS CORP.
234 COPELAND STREET
QUINCY, MA 02169
May 9, 2000
Dear Network Plus Stockholder:
You are cordially invited to the annual meeting of stockholders of Network
Plus Corp. (the "Company"), which will be held at the Hyatt Harborside, 101
Harborside Drive, Boston, Massachusetts 02128, on Tuesday, June 6, 2000 at 2:00
p.m., local time. We look forward to greeting as many of our stockholders as
possible.
Details of the business to be conducted at the annual meeting are provided
in the attached Notice of Annual Meeting and Proxy Statement.
Whether or not you plan to attend, it is important that your shares be
represented and voted at the meeting. Therefore, we urge you to sign and
promptly return the enclosed proxy in the enclosed postage paid envelope. Please
refer to the enclosed proxy card for detailed instructions. If you decide to
attend the annual meeting, you will have the opportunity to vote in person.
Sincerely,
ROBERT T. HALE, JR.
President and Chief Executive Officer
<PAGE> 3
NETWORK PLUS CORP.
234 COPELAND STREET
QUINCY, MA 02169
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON TUESDAY, JUNE 6, 2000
The Annual Meeting of Stockholders of Network Plus Corp., a Delaware
corporation (the "Company"), will be held at the Hyatt Harborside, 101
Harborside Drive, Boston, Massachusetts 02128, on Tuesday, June 6, 2000 at 2:00
p.m., local time, to consider and act upon the following matters:
1. To elect one Class I director to serve for a three-year term.
2. To ratify the selection by the Board of Directors of
PricewaterhouseCoopers LLP as the Company's independent accountants for
the current fiscal year.
3. To transact such other business as may properly come before the meeting
or any adjournment thereof.
Stockholders of record at the close of business on April 11, 2000 will be
entitled to notice of and to vote at the meeting or any adjournment thereof. The
stock transfer books of the Company will remain open.
All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors,
JAMES J. CROWLEY
Secretary
Quincy, Massachusetts
May 9, 2000
WHETHER OR NOT YOU EXPECT TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND
SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ENCLOSED ENVELOPE IN ORDER
TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE NEED BE AFFIXED IF THE PROXY
IS MAILED IN THE UNITED STATES.
<PAGE> 4
NETWORK PLUS CORP.
234 COPELAND STREET
QUINCY, MA 02169
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation of
proxies by the Board of Directors of Network Plus Corp., a Delaware corporation
(the "Company"), for use at the Annual Meeting of Stockholders (the "Annual
Meeting") to be held on Tuesday, June 6, 2000 and at any adjournments of the
Annual Meeting. All proxies will be voted in accordance with the stockholders'
instructions, and if no choice is specified, the proxies will be voted in favor
of the matters set forth in the accompanying Notice of Meeting. Any proxy may be
revoked by a stockholder at any time before its exercise by delivery of written
revocation or a subsequently dated proxy to the Secretary of the Company or by
voting in person at the Annual Meeting.
At the close of business on April 11, 2000, the record date for the
determination of stockholders entitled to vote at the Annual Meeting, there were
outstanding and entitled to vote an aggregate of 55,334,087 shares of common
stock, par value $.01 per share, of the Company ("Common Stock"). Stockholders
are entitled to one vote per share.
The Company's Annual Report to Stockholders and Form 10-K for fiscal 1999
were mailed to stockholders, along with these proxy materials, on or about May
9, 2000.
VOTES REQUIRED
The holders of a majority of the number of shares of Common Stock issued,
outstanding and entitled to vote at the Annual Meeting shall constitute a quorum
at the Annual Meeting. Shares of Common Stock present in person or represented
by proxy (including shares which abstain or do not vote with respect to one or
more of the matters presented for stockholder approval) will be counted for
purposes of determining whether a quorum is present.
The director nominee must receive a plurality of the votes cast at the
Annual Meeting, which means that a vote withheld from the nominee will not
affect the outcome of the election. The selection of PricewaterhouseCoopers LLP
as the Company's independent accountants for the current fiscal year must be
approved by a majority of the votes cast on the matter.
Shares that abstain from voting as to a particular matter will not be
counted as votes in favor of such matter, but will be counted as shares voting
on such matter. Accordingly, an abstention from voting on a matter has the same
effect as a vote against the matter. Shares held in street name by brokers or
nominees who indicate on their proxy that they do not have discretionary
authority to vote such shares as to a particular matter (a "broker non-vote")
will not be counted as votes in favor of such matter and will also not be
counted as shares voting on such matter. Accordingly, a broker non-vote on a
matter that requires the affirmative vote of a certain percentage of the shares
present and voting on the matter, such as the election of the director and the
ratification of independent accountants, has no effect on the voting on such
matter.
Stockholders may vote by any one of the following means:
- by mail
- in person at the meeting
To vote by mail, sign, date and complete the enclosed proxy card and return
it in the enclosed self-addressed stamped envelope. No postage is necessary if
mailed in the United States. If you hold your shares through a bank, broker or
other nominee, they will give you separate instructions on voting your shares.
BENEFICIAL OWNERSHIP OF COMMON STOCK
The following table sets forth certain information, as of March 31, 2000,
with respect to the beneficial ownership of Common Stock by (i) each person
known by the Company to beneficially own more than 5% of
<PAGE> 5
the outstanding shares of Common Stock, (ii) each director of the Company, (iii)
each executive officer of the Company named in the Summary Compensation Table
set forth under the caption "Executive Compensation" below and (iv) all
directors and executive officers of the Company as of March 31, 2000 as a group.
Unless otherwise indicated, the address of each person listed below is c/o
Network Plus Corp., 234 Copeland Street, Quincy, Massachusetts 02169.
<TABLE>
<CAPTION>
NUMBER OF SHARES ISSUABLE
SHARES UPON EXERCISE OF PERCENTAGE OF
BENEFICIALLY STOCK OPTIONS OR COMMON STOCK
BENEFICIAL OWNER OWNED(1) WARRANTS(2) OUTSTANDING(3)
- ---------------- ------------ ---------------- --------------
<S> <C> <C> <C>
5% STOCKHOLDERS
Robert T. Hale.............................. 22,281,333(4) 0 40.3%
Robert T. Hale, Jr.......................... 23,324,000(5) 0 42.2%
OTHER DIRECTORS
James J. Crowley............................ 0 135,998 *
David D. Martin............................. 30,000 16,999 *
4352 San Carlos
Dallas, TX 75202
Joseph C. McNay............................. 0 16,999 *
c/o Essex Investment Management
Company, LLC
125 High Street, 29th Floor
Boston, MA 02110-2702
OTHER EXECUTIVE OFFICERS LISTED IN THE SUMMARY
COMPENSATION TABLE
George C. Alex.............................. 0 113,332 *
Richard Kendall............................. 300 39,665 *
ALL DIRECTORS AND EXECUTIVE OFFICERS AS A
GROUP (6 PERSONS)........................... 45,363,333(4)(5) 283,328 82.1%
</TABLE>
- ---------------
* Less than 1%
(1) The inclusion herein of any shares of Common Stock deemed beneficially owned
does not constitute an admission of beneficial ownership of those shares.
Unless otherwise indicated, each person listed above has sole voting and
investment power with respect to the shares listed.
(2) Shares of Common Stock issuable under stock options that are exercisable
within 60 days after March 31, 2000 are deemed outstanding for computing the
percentage ownership of the person holding the options but are not deemed
outstanding for computing the percentage ownership of any other person.
(3) Number of shares deemed outstanding includes 55,333,861 shares outstanding
as of March 31, 2000 plus, with respect to any director or officer, any
shares of Common Stock issuable to such director or officer under stock
options that are exercisable within 60 days after March 31, 2000.
(4) Includes 272,000 shares held by a trust for the benefit of Robert T. Hale,
Jr.'s children, over which shares Mr. Hale has sole voting and dispositive
power. Mr. Hale disclaims beneficial ownership of such shares.
(5) Includes 657,333 shares held by various trusts for the benefit of Robert T.
Hale's grandchildren and children, including Mr. Hale, Jr., over which
shares Mr. Hale, Jr. has shared voting and dispositive power, and the shares
described in (4) above. Mr. Hale, Jr. disclaims beneficial ownership of such
shares.
PROPOSAL NO. 1 -- ELECTION OF CLASS I DIRECTOR
The Company's certificate of incorporation divides its board of directors
into three classes (designated Class I directors, Class II directors and Class
III directors), with members of each class holding office for staggered
three-year terms. At the time of the Annual Meeting there will be one Class I
director, whose term
2
<PAGE> 6
expires at the Annual Meeting, two Class II directors, whose terms expire at the
2001 annual meeting, and two Class III directors, whose terms expire at the 2002
annual meeting.
The persons named in the proxy will vote to elect Robert T. Hale, Jr. as
the Class I director unless authority to vote for his election is withheld by
marking the proxy to that effect. If elected, Mr. Hale, Jr. will hold office
until the third annual meeting of stockholders following the Annual Meeting and
until his successor is elected and qualified. Mr. Hale, Jr. has indicated his
willingness to serve, if elected, but if he should be unable or unwilling to
serve, the proxies may vote for a substitute nominee designated by the Board of
Directors.
DIRECTORS AND NOMINEE
The following table sets forth, for each director of the Company (including
the nominee for Class I director), his name and age, his positions with the
Company (including the predecessor to the Company prior to its incorporation in
Delaware in 1998), his principal occupation and business experience during the
past five years, the names of the other public reporting corporations for which
he serves as director and the year during which he first became a director of
the Company:
<TABLE>
<CAPTION>
FIRST
BECAME A
NAME, OFFICES AND POSITIONS WITH THE COMPANY, PRINCIPAL OCCUPATION AND DIRECTORSHIPS AGE DIRECTOR
- ------------------------------------------------------------------------------------ --- --------
<S> <C> <C>
NOMINEE FOR CLASS I DIRECTOR
Robert T. Hale, Jr. .................................................... 33 1990
Mr. Hale, Jr. has served as President and Chief Executive Officer of the Company
since its inception in 1990. From 1989 to 1990, Mr. Hale, Jr. was employed by U.S.
Telecenters, a sales agent for NYNEX Corporation, and from 1988 to 1989 as a sales
representative at MCI.
CLASS II DIRECTORS (TERMS EXPIRE AT 2001 ANNUAL MEETING)
Robert T. Hale.......................................................... 61 1990
Mr. Hale has served as Chairman of the Board of the Company since its inception in
1990. Mr. Hale is a founding member of the Telecommunications Resellers
Association and has served as Chairman of its Carrier Committee since 1993 and
served as Chairman of its Board from May 1995 to May 1997. Mr. Hale was President
of Hampshire Imports from 1968 and 1992.
James J. Crowley........................................................ 35 1998
Mr. Crowley has served as Executive Vice President since 1994 and Chief Operating
Officer, Secretary and a director since July 1998. Mr. Crowley was an attorney at
Hale and Dorr LLP, a Boston law firm, from 1992 to 1994.
CLASS III DIRECTORS (TERMS EXPIRE AT 2002 ANNUAL MEETING)
David D. Martin......................................................... 60 1998
Mr. Martin has served as a director since August 1998. Mr. Martin was employed by
Texas Instruments from 1960 until June 1998, most recently as Executive Vice
President. Mr. Martin is a director of Mathsoft.
Joseph C. McNay......................................................... 66 1998
Mr. McNay has served as a director since August 1998. Mr. McNay serves as Chairman
and Chief Investment Officer of Essex Investment Management Company, a private
investment management company founded by Mr. McNay in 1976. Previously, he served
as Executive Vice President and a director of Endowment Management & Research
Corp. Mr. McNay serves as a trustee of Children's Hospital and Children's Hospital
Trust, Boston, trustee of Simmons College, trustee of the Dana Farber Cancer
Institute and trustee of National Public Radio.
</TABLE>
3
<PAGE> 7
BOARD AND COMMITTEE MEETINGS
The Company has a standing Audit Committee of the Board of Directors, which
reviews the Company's internal accounting control policies and procedures,
considers and recommends the selection of the Company's independent accountant,
reviews and approves any major accounting policy changes affecting the Company's
operating results and provides the opportunity for direct contact between the
Company's independent accountants and the Board. The Audit Committee met once
during fiscal 1999. The members of the Audit Committee are Messrs. Martin and
McNay.
The Company has a standing Compensation Committee of the Board of
Directors, which has the authority to provide recommendations to the Board
regarding compensation programs of the Company, administer the executive
compensation programs and, along with the full Board, to grant stock options
under the Company's 1998 Stock Incentive Plan (the "Stock Incentive Plan"). The
Compensation Committee met once during fiscal 1999. The members of the
Compensation Committee are Messrs. Martin and McNay.
The Company does not have a nominating committee or committee serving a
similar function. Nominations are made by and through the full Board of
Directors. A special Pricing Committee of the Board of Directors, whose members
were Messrs. Hale, Hale, Jr. and Crowley, met once during fiscal 1999 relating
to the pricing of the Company's initial public offering in June 1999.
The Board of Directors met five times and twice acted by written consent
during fiscal 1999. Each current director other than Mr. McNay attended at least
75% of the aggregate of the total number of Board meetings and the total number
of meetings held by all committees of the Board on which he then served.
DIRECTOR COMPENSATION
Under the Company's 1998 Director Stock Option Plan (the "Director Option
Plan"), each director who is not also an employee of the Company or any
subsidiary of the Company receives on the date of each annual meeting of the
stockholders, or on August 1 of each year if no annual meeting is held by such
date, a fully vested nonstatutory option to purchase 11,333 shares of Common
Stock at an exercise price which is equal to the fair market value of Common
Stock on the date of grant. Pursuant to the Director Option Plan, on August 1,
1999, Messrs. Martin and McNay each received an option to purchase 11,333 shares
of Common Stock at an exercise price of $18.25 per share. In addition, directors
are reimbursed for their out-of-pocket expenses incurred as a result of their
service as directors.
4
<PAGE> 8
EXECUTIVE COMPENSATION
Summary Compensation
The following table sets forth certain information concerning the
compensation earned in each of the last three fiscal years by (i) the Company's
Chief Executive Officer and (ii) the Company's four other most highly
compensated executive officers during fiscal 1999 who were serving as executive
officers at year-end 1999 (the "Named Executive Officers").
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
ANNUAL COMPENSATION(1) COMPENSATION AWARDS
------------------------------ --------------------------------
SECURITIES
UNDERLYING ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($)(2) OPTIONS (#)(3) COMPENSATION($)
- --------------------------- ---- --------- ----------- -------------- ---------------
<S> <C> <C> <C> <C> <C>
Robert T. Hale, Jr................. 1999 294,349 3,394 -- --
President and Chief Executive 1998 246,163 2,671 -- --
Officer 1997 355,431 2,770 -- --
Robert T. Hale..................... 1999 225,008 1,029
Chairman of the Board of
Directors 1998 187,708 1,484 -- --
1997 220,692 2,725 -- --
James J. Crowley................... 1999 197,504 30,000 40,000 --
Executive Vice President, Chief 1998 156,500 -- 543,998 --
Operating Officer and Secretary 1997 160,000 4,353 -- --
George C. Alex(4).................. 1999 181,161 25,000 463,332 8,895(5)
Executive Vice President, Chief 1998 -- -- -- --
Financial Officer and Treasurer 1997 -- -- -- --
Richard Kendall.................... 1999 315,766 40,227 45,000 --
Senior Vice President, Sales 1998 167,219 66,465 158,665 --
1997 118,843 39,559 -- --
</TABLE>
- ---------------
(1) In accordance with the rules of the Securities and Exchange Commission,
other compensation in the form of perquisites and other personal benefits
has been omitted in those instances where the aggregate amount of such
perquisites and other personal benefits constituted less than the lesser of
$50,000 or 10% of the total of annual salary and bonus for the Named
Executive Officer for such year.
(2) Represents amounts earned under the Company's incentive compensation
programs.
(3) Reflects the grant of stock options. The Company has never granted any stock
appreciation rights.
(4) Mr. Alex commenced employment with the Company in February 1999.
(5) Consisting of moving expenses.
5
<PAGE> 9
Option Grants, Exercises and Year-End Values
The following tables set forth certain information concerning option grants
and exercises by the Named Executive Officers during fiscal year ended December
31, 1999 and the number and value of the unexercised options held by such
persons on December 31, 1999.
OPTION GRANTS IN THE LAST FISCAL YEAR
<TABLE>
<CAPTION>
POTENTIAL REALIZABLE VALUE AT
ASSUMED ANNUAL RATE OF
STOCK PRICE APPRECIATION FOR
INDIVIDUAL GRANTS OPTION TERM(2)
-------------------------------------------------------- ------------------------------
NUMBER OF PERCENT OF TOTAL
SECURITIES OPTIONS EXERCISE
UNDERLYING GRANTED TO OR BASE
OPTIONS EMPLOYEES IN PRICE EXPIRATION
NAME GRANTED(#)(1) FISCAL YEAR(%) ($/SH) DATE 5%($) 10%($)
- ---- ------------- ---------------- -------- ---------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
Robert T. Hale, Jr....... -- -- -- -- -- --
Robert T. Hale........... -- -- -- -- -- --
James J. Crowley......... 40,000 2.1 18.4375 12/27/09 463,810 1,175,385
George C. Alex........... 10,000 24.9(3) 18.4375 12/27/09 115,952 293,846
63,466 11.03 02/04/09 440,245 1,115,668
145,067 6.62 02/04/09 603,985 1,530,540
240,266 4.41 02/04/09 666,360 1,688,687
4,533 3.31 02/04/09 9,436 23,219
Richard Kendall.......... 25,000 2.4(3) 18.4375 12/27/09 289,889 734,616
20,000 13.0625 10/12/09 164,299 416,365
</TABLE>
- ---------------
(1) One quarter of the options granted vested upon grant. The remainder vest in
three equal annual installments, subject to accelerated vesting in certain
circumstances.
(2) Amounts represent potential realizable values based on assumed rates of
appreciation. These assumed rates are based on Securities and Exchange
Commission requirements and do not reflect the Company's projections or
estimates of future stock price growth. Actual gains, if any, will depend on
the future performance of Common Stock. See "Certain Transactions" below.
(3) Cumulative percentage for all stock option grants to the individual.
AGGREGATED OPTION EXERCISES IN LAST FISCAL YEAR
AND FISCAL YEAR-END OPTION VALUES
<TABLE>
<CAPTION>
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED VALUE OF UNEXERCISED
OPTIONS AT IN-THE-MONEY OPTIONS
SHARES FISCAL YEAR-END(#) AT FISCAL YEAR-END($)(1)
ACQUIRED ---------------------- ------------------------
ON VALUE EXERCISABLE/ EXERCISABLE/
NAME EXERCISE(#) REALIZED($) UNEXERCISABLE UNEXERCISABLE
- ---- ----------- ----------- ---------------------- ------------------------
<S> <C> <C> <C> <C>
Robert T. Hale, Jr......... -- -- -- --
Robert T. Hale............. -- -- -- --
James J. Crowley........... -- -- 135,999/448,000 2,105,781/6,419,931
George C. Alex............. -- -- 113,332/330,00 1,696,241/5,114,405
Richard Kendall............ -- -- 39,665/164,000 520,424/1,784,153
</TABLE>
- ---------------
(1) Based on the fair market value of Common Stock on December 31, 1999
($21.00), less the option exercise price.
6
<PAGE> 10
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on its review of copies of reports filed by all officers of
the Company who are persons required to file reports ("Reporting Persons")
pursuant to Section 16(a) of the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), or written representations from certain Reporting Persons
that no Form 5 filing was required for such persons, the Company believes that
during fiscal 1999 all filings required to be made by its Reporting Persons were
timely made in accordance with the requirements of the Exchange Act, except that
Mr. Martin filed one Form 4 after its due date reporting a stock purchase.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Martin and McNay each served as a member of the Audit Committee and
Compensation Committee during fiscal 1999.
CERTAIN TRANSACTIONS
George C. Alex is employed under an employment agreement that expires on
February 1, 2002 under which he currently receives an annual base salary of
$200,000. Mr. Alex is eligible to receive a $50,000 annual bonus. Mr. Alex is
also eligible to participate in all of the Company's fringe benefit programs.
The Company agreed to reimburse his reasonable relocation expenses in moving to
the Boston, Massachusetts metropolitan area. In the event that the Company
terminates Mr. Alex's employment other than for cause, Mr. Alex will receive a
severance payment equal to his then-current annual base salary and accelerated
vesting of his stock options. Following the termination of his employment Mr.
Alex is subject to volume restrictions on trading his shares of Common Stock. In
addition, the options held by Messrs. Crowly and Alex will vest in full upon a
change in control of the Company.
Robert T. Hale, Jr. is the son of Robert T. Hale. Richard Kendall is the
brother-in-law of Robert T. Hale, Jr. and the son-in-law of Robert T. Hale.
There are no other familial relationships among the Company's executive officers
and directors.
The Company's corporate headquarters are located in a 39,500-square foot
facility in Quincy, Massachusetts. The Company leases the Quincy facility from a
realty trust whose beneficiaries are Robert T. Hale and Robert T. Hale, Jr. In
fiscal 1999 the Company paid this trust the aggregate amount of approximately
$849,000. The Company is currently negotiating a long-term lease for its
80,000-square foot Randolph, Massachusetts facility with a company wholly owned
by Messrs. Hale and Hale, Jr.
On September 2, 1998, the Company paid a dividend to its stockholders,
including $2.5 million to Robert T. Hale, Jr. Mr. Hale, Jr. reinvested
approximately $1.9 million (representing approximately the total distribution to
him, net of his estimated tax liability resulting from such dividend) in the
form of a loan. Interest on this loan accrues at Fleet's prime rate. The note
was originally due 10 days after the redemption of the Company's Series A
preferred stock in July 1999. Mr. Hale, Jr. agreed to extend the date of this
note until June 30, 2001. As of March 31, 2000, the outstanding balance on the
loan was approximately $2.1 million, including accrued interest.
REPORT OF COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company's executive compensation program is administered by the
Compensation Committee. The Company's executive compensation program, consisting
of base salaries, bonus awards and stock option grants, is designed to attract,
retain and reward executives who are responsible for leading the Company in
achieving its business objectives. The Compensation Committee establishes the
compensation of the Chief Executive Officer, subject to review by the full board
and subject to the terms of any applicable executive employment agreements.
7
<PAGE> 11
Compensation Philosophy
The Company's executive compensation philosophy is based on the belief that
competitive compensation is essential to attract, motivate and retain highly
qualified employees. The Company's policy is to provide total compensation that
is competitive for comparable work and comparable corporate performance. The
compensation program includes both motivational and retention-related
compensation components. Bonuses are included to encourage effective performance
relative to current plans and objectives. Stock options are included to help
retain productive people and to more closely align their interests with those of
stockholders.
In executing its compensation policy, the Company seeks to relate
compensation with the Company's financial performance and business objectives,
reward high levels of individual performance and tie a significant portion of
total executive compensation to the performance of the Company. While
compensation survey data are useful guides for comparative purposes, the Company
believes that a successful compensation program also requires the application of
judgment and subjective determinations of individual performance, and the
Compensation Committee applies subjective judgment in reconciling the program's
objectives with the realities of retaining valued employees.
Executive Compensation Program
Annual compensation for the Company's executives consists of three
principal elements -- base salary, cash bonus awards and stock options.
BASE SALARY
In setting the annual cash compensation for the Company's executives, the
Compensation Committee reviews compensation for comparable positions in a group
of telecommunications companies selected by the Committee for comparison
purposes. Telecommunications industry compensation surveys and outside
compensation consulting firms are used as well. The Committee also periodically
compares its pay practices with other telecommunications companies through
review of survey and proxy data.
Increases in annual base salary are based on a review and evaluation of the
performance of the operation or activity for which the executive has
responsibility, the impact of that operation or activity on the Company and the
skills and experience required for the job, coupled with a comparison of these
elements with similar elements for other executives both within and outside the
Company.
CASH BONUS AWARDS
The cash bonus awards for each executive are tied to financial and other
performance objectives and targets, fixed by the Board of Directors for the
Chief Executive Officer, and by the Chief Executive Officer for the other
executive officers. During fiscal 1999, bonus awards were based principally on
the Company's achievement of its financial and operating goals. In addition, the
Chief Executive Officer set personal objectives for the other executive
officers, except for the Chairman of the Board, and made a subjective
determination of the extent to which such personal objectives were achieved by
each executive during fiscal 1999.
EQUITY OWNERSHIP
Total compensation at the executive level also includes long-term
incentives afforded by stock options. The purpose of the Company's stock option
program is to (i) reinforce the mutuality of long-term interests between
employees and the stockholders and (ii) assist in the attraction and retention
of executives, key managers and individual contributors who are essential to the
Company's success. Existing levels of equity ownership are taken into account
when determining stock option awards.
The Company's stock option program includes multi-year vesting periods to
optimize the retention value of these options and to orient the Company's
executives and managers to longer-term success. In July 1998, the Board of
Directors adopted the Stock Incentive Plan. Generally, all stock options granted
under the plan vest over a four-year period following the date of grant. If
employees leave the Company before the options
8
<PAGE> 12
vest, they forfeit the unvested portions of these awards. The size of the stock
option awards is generally intended to reflect the significance of the
recipient's then current and anticipated contributions to the Company. Prior to
the Company's initial public offering in June 1999, the exercise price of
options was 100% or greater of the fair market value per share on the date of
grant. Since the Company's initial public offering, the exercise price of
options has been 100% of the fair market value per share on the date of grant.
The Company also has an employee stock purchase plan, which is available to
all of its full-time employees, including executives but exclusive of any
employee who owns, or would own after purchase under this plan, 5% or more of
the total combined voting power or value of the stock of the Company or of any
subsidiary. Such plan generally permits employees to purchase shares at a
discount of 15% from the lesser of the fair market value at the beginning or end
of an offering period.
CHIEF EXECUTIVE OFFICER FISCAL 1999 CASH COMPENSATION
Robert T. Hale, Jr. served as Chief Executive Officer of the Company during
fiscal 1999. The Compensation Committee set Mr. Hale, Jr.'s base salary for
fiscal 1999 at $285,000, which was considered to be a salary level competitive
with that of salaries for chief executive officers at comparable companies. Mr.
Hale, Jr. was also awarded a bonus of $3,395 for fiscal 1999 based upon the
achievement of certain objectives. These objectives generally related to the
Company achieving its targeted revenue and profit goals for the year, as well as
meeting investors' expectations regarding earnings per share. Because of Mr.
Hale, Jr.'s significant equity ownership of the Company, Mr. Hale, Jr. was not
granted any stock options in 1999.
Compliance with Internal Revenue Code Section 162(m)
Section 162(m) of the Internal Revenue Code generally disallows a tax
deduction to public companies for compensation over $1 million paid to its chief
executive officer and its four other most highly compensated executive officers.
Qualifying performance-based compensation will not be subject to the deduction
limit if certain requirements are met. The Company may structure its stock
options granted to executive officers in a manner that complies with the
performance-based requirements of the statute and does not intend to exceed the
annual limit for deductibility under Section 162(m) with respect to cash paid to
any executive.
DAVID D. MARTIN
JOSEPH C. MCNAY
9
<PAGE> 13
COMPARATIVE STOCK PERFORMANCE
The following graph compares the cumulative total stockholder return on the
Company's Common Stock with the cumulative return of (i) the CRSP Total Return
Index for the Nasdaq National Market (U.S. & Foreign Companies) (the "CRSP
Nasdaq Index") and (ii) the CRSP Nasdaq Total Return Industry Index for
Telecommunications Stocks (the "CRSP Telecommunications Index"). This graph
assumes the investment of $100 on the Company's Common Stock, the CRSP Nasdaq
Index and the CRSP Telecommunications Index and assumes dividends are
reinvested.
PERFORMANCE LINE GRAPH
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1999 1999
-------- ------------
<S> <C> <C>
Network Plus Corp........................................... $100.00 $100.60
CRSP Nasdaq Index........................................... 100.00 150.90
CRSP Telecommunications Index............................... 100.00 131.82
</TABLE>
PROPOSAL NO. 2 -- RATIFICATION OF SELECTION OF INDEPENDENT ACCOUNTANTS
The Board of Directors, at the recommendation of the Audit Committee, has
selected the firm of PricewaterhouseCoopers LLP as the Company's independent
accountants for the current fiscal year. PricewaterhouseCoopers LLP (previously
Coopers & Lybrand L.L.P.) has served as the Company's independent accountants
since 1996. Although stockholder approval of the Board of Directors' selection
of PricewaterhouseCoopers LLP is not required by law, the Board of Directors
believes that it is advisable to give stockholders an opportunity to ratify this
selection. If this proposal is not approved at the Annual Meeting, the Board of
Directors will reconsider its selection of PricewaterhouseCoopers LLP.
Representatives of PricewaterhouseCoopers LLP are expected to be present at the
Annual Meeting and will have the opportunity to make a statement if they desire
to do so and will also be available to answer appropriate questions from
stockholders.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF THE
APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT
ACCOUNTANTS.
10
<PAGE> 14
STOCKHOLDER PROPOSALS
Proposals of stockholders made in accordance with Rule 14a-8 of the
Exchange Act and intended to be presented at the 2001 Annual Meeting of
Stockholders (the "2001 Annual Meeting") must be received by the Company at its
principal office in Quincy, Massachusetts no later than January 10, 2001 for
inclusion in the proxy statement for that meeting. In addition, the Company's
by-laws require that the Company be given advance notice of stockholder
nominations for election to the Board of Directors and of other matters which
stockholders wish to present for action at an annual meeting of stockholders
(other than matters included in the Company's proxy statement in accordance with
Rule 14a-8). The required notice must be made in writing, include the
information required by the by-laws, be delivered or mailed by first class
United States mail, postage prepaid, to the Secretary of the Company at its
principal offices and be received not less than 60 days nor more than 90 days
prior to the 2001 Annual Meeting; provided, however, that if less than 70 days
notice or prior public disclosure of the date of the meeting is given to
stockholders, such nomination or other proposal shall have been mailed or
delivered to the Secretary not later than the close of business on the 10th day
following the date on which the notice of the meeting was mailed or such public
disclosure made, whichever occurs first. While the Company has not yet set the
date of the 2001 Annual Meeting, assuming it was held on June 6, 2001 (the same
day as this year's meeting), notice of a stockholder proposal or director
nomination would need to be made no earlier than March 7, 2001 and no later than
April 6, 2001. Any stockholder proposal must also comply with the other
applicable provisions of the Company's certificate of incorporation and by-laws
and the Exchange Act. No stockholder proposal is required to be considered
unless it is presented in accordance with the foregoing requirements.
OTHER MATTERS
The Board of Directors does not know of any other matters which may come
before the Annual Meeting. However, if any other matters are properly presented
to the Annual Meeting, it is the intention of the persons named in the
accompanying proxy to vote, or otherwise act, in accordance with their judgment
on such matters. All costs of solicitation of proxies will be borne by the
Company. In addition to solicitations by mail, the Company's directors, officers
and regular employees, without additional remuneration, may solicit proxies by
telephone, e-mail, telecopy and personal interviews, and the Company reserves
the right to use outside agencies for the purpose of soliciting proxies.
Brokers, custodians and fiduciaries will be requested to forward proxy
soliciting material to the owners of stock held in their names, and, as required
by law, the Company will reimburse them for their out-of-pocket expenses in this
regard.
By Order of the Board of Directors,
James J. Crowley
Secretary
May 9, 2000
THE BOARD OF DIRECTORS HOPES THAT STOCKHOLDERS WILL ATTEND THE MEETING.
WHETHER OR NOT YOU PLAN TO ATTEND, YOU ARE URGED TO COMPLETE, DATE, SIGN AND
RETURN THE ENCLOSED PROXY IN THE ACCOMPANYING ENVELOPE. YOUR PROMPT RESPONSE
WILL GREATLY FACILITATE ARRANGEMENTS FOR THE ANNUAL MEETING AND YOUR COOPERATION
WILL BE APPRECIATED. STOCKHOLDERS WHO ATTEND THE MEETING MAY VOTE THEIR STOCK
PERSONALLY EVEN THOUGH THEY HAVE SENT IN THEIR PROXIES.
11
<PAGE> 15
<TABLE>
<S> <C>
|X| PLEASE MARK VOTES 1. Election of one Class I Director to For Withhold
AS IN THIS EXAMPLE serve for the ensuing three years.
NETWORK PLUS CORP. ROBERT T. HALE, JR. [ ] [ ]
PLEASE READ THE REVERSE SIDE OF THIS CARD.
A VOTE FOR EACH PROPOSAL IS RECOMMENDED 2. Ratification of the selection by For Against Abstain
THE BOARD OF DIRECTORS. the Board of Directors of
PricewaterhouseCoopers LLP as the
Company's independent accountants [ ] [ ] [ ]
for the current fiscal year.
Mark box at right if an address change [ ]
or comment has been noted on the reverse
side of this card.
</TABLE>
-------------------
Please be sure to sign and date this Proxy. Date
- ----------------------------------------------------------------
- ----------------------------------------------------------------
Stockholder sign here Co-owner sign here
- ----------------------------------------------------------------
DETACH CARD DETACH CARD
NETWORK PLUS CORP.
Dear Stockholder:
Please take note of the important information enclosed with this Proxy. There
are a number of issues related to the management and operation of your Company
that require your immediate attention and approval. These are discussed in the
enclosed proxy materials.
Your vote counts, and you are strongly encouraged to exercise your right to vote
your shares.
Please mark the boxes on this proxy card to indicate how your shares will be
voted, then sign the card, detach it and return it in the enclosed postage-paid
envelope.
Your vote must be received prior to the Annual Meeting of Stockholders to be
held on June 6, 2000.
Thank you in advance for your prompt consideration of these matters.
Sincerely,
Network Plus Corp.
-1-
<PAGE> 16
NETWORK PLUS CORP.
PROXY SOLICITED BY THE BOARD OF DIRECTORS
ANNUAL MEETING OF STOCKHOLDERS
JUNE 6, 2000
The undersigned, revoking all prior proxies, hereby appoint(s) Robert T. Hale,
Jr., James J. Crowley and George C. Alex, and each or either of them, with full
power of substitution, as proxies for the undersigned to act and to vote at the
2000 Annual Meeting of Stockholders of Network Plus Corp. and at any adjournment
or adjournments thereof as designated herein upon all matters referred to on the
reverse side and as described in the Proxy Statement for the Meeting and, in
their discretion, upon any other matters that may properly come before the
Meeting.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED AS DIRECTED HEREIN BY THE
UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE, THE PROXIES WILL VOTE FOR
THE ELECTION OF THE DIRECTOR NOMINEE AND FOR PROPOSAL 2.
- --------------------------------------------------------------------------------
PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY
IN THE ENCLOSED ENVELOPE
- --------------------------------------------------------------------------------
Please sign exactly as name(s) appear(s) hereon. Joint owners should each sign.
When signing as attorney, executor, administrator, trustee or guardian, please
give full title as such. If a corporation or partnership, please sign by
authorizing person.
- --------------------------------------------------------------------------------
HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?
- ------------------------------------ ------------------------------
- ------------------------------------ ------------------------------
- ------------------------------------ ------------------------------
-2-
