<PAGE> 1
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
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:
/ / 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 Rule 14a-11(c) or Rule 14a-12
COMNET CORPORATION
- --------------------------------------------------------------------------------
(Name of Registrant as Specified in Its Charter)
- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
/X/ $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), or 14a-6(i)(2)
or Item 22(a)(2) of Schedule 14A.
/ / $500 per each party to the controversy pursuant to Exchange Act Rule
14a-6(i)(3).
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and
0-11.
(1) Title of each class of securities to which transaction applies:
- --------------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
- --------------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
- --------------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
- --------------------------------------------------------------------------------
(5) Total fee paid:
- --------------------------------------------------------------------------------
/ / Fee paid previously with preliminary materials.
- --------------------------------------------------------------------------------
/ / Check box if any part of the fee is offset as provided by Exchange Act
Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration
statement number, or the form or schedule and the date of its filing.
(1) Amount previously paid:
- --------------------------------------------------------------------------------
(2) Form, schedule or registration statement no.:
- --------------------------------------------------------------------------------
(3) Filing party:
- --------------------------------------------------------------------------------
(4) Date filed:
- --------------------------------------------------------------------------------
<PAGE> 2
COMNET CORPORATION
4200 Parliament Place
Suite 600
Lanham, Maryland 20706-1860
------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
To be Held September 12, 1996
To the Stockholders of COMNET Corporation:
You are cordially invited to attend the Annual Meeting of stockholders
of COMNET Corporation (the "Company") to be held on September 12, 1996 at 9:30
a.m. at Prudential Securities, One Liberty Plaza, New York, New York 10292 (the
"Annual Meeting"), for the following purposes:
(1) To elect three (3) directors to hold office until the third
annual meeting of stockholders of the Company following their election and
until the election and qualification of their successors; and
(2) To transact such other business as may properly come before
the Annual Meeting and any adjournment or postponement thereof.
Only stockholders of record at the close of business on July 17, 1996
(the "Record Date"), are entitled to receive notice of, and to vote at, the
Annual Meeting.
We hope that you will be able to attend the Annual Meeting in person.
- --------------------------------------------------------------------------------
IN ORDER TO ASSURE A QUORUM AND TO AVOID THE EXPENSE AND DELAY
OF SENDING FOLLOW-UP LETTERS, PLEASE FILL IN, SIGN, DATE AND RETURN
YOUR PROXY IN THE ENCLOSED ENVELOPE WHICH REQUIRES NO POSTAGE IF
MAILED WITHIN THE UNITED STATES. IF YOU ARE PRESENT AT THE ANNUAL
MEETING, YOU MAY, IF YOU WISH, WITHDRAW YOUR PROXY AND VOTE YOUR
SHARES PERSONALLY.
- --------------------------------------------------------------------------------
By Order of the Board of Directors
/s/ EDWARD WEISS
---------------------------
Edward Weiss
Secretary
Lanham, Maryland
July 29, 1996
<PAGE> 3
COMNET CORPORATION
4200 Parliament Place
Suite 600
Lanham, Maryland 20706-1860
301/918-0400
------------------
PROXY STATEMENT
------------------
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 12, 1996
------------------
This Proxy Statement and the enclosed form of proxy are furnished to
stockholders of COMNET Corporation, a Delaware corporation (the "Company"), in
connection with the solicitation of proxies by the Board of Directors of the
Company from holders of outstanding shares of its common stock, $.50 par value
(the "Common Stock") and 6% Convertible Preferred Stock (the "6% Preferred
Stock"), (the Common Stock and 6% Preferred Stock, collectively constitute the
"Voting Securities"), for use at the annual meeting of stockholders to be held
on September 12, 1996 (the "Annual Meeting"), and at any adjournment thereof.
The approximate date on which this Proxy Statement and the related form of
proxy are first being sent to stockholders is July 29, 1996.
If the enclosed proxy is properly signed and returned, and if the
stockholder specifies a choice on the proxy, the shares of the Voting
Securities represented by the proxy will be voted (or withheld from voting) in
accordance with the stockholder's choice. If the proxy is signed and returned
but no specification is made, the proxy will be voted FOR the election of the
Board's nominees for directors listed below.
The Board of Directors of the Company knows of no business that will
be presented for consideration at the Annual Meeting other than the matters
described in this Proxy Statement. If any other matters are presented at the
Annual Meeting, the proxy holders will vote the proxies in accordance with
their judgment.
Any proxy may be revoked by the stockholder giving such proxy, at any
time prior to its being voted, by filing with the Secretary of the Company, at
its address set forth above, a notice of revocation or a duly executed proxy
bearing a later date. Any proxy may also be revoked by the stockholder's
attendance at the Annual Meeting and voting in person. A notice of revocation
need not be on any specific form.
The Company has fixed the close of business on July 17, 1996, as the
record date (the "Record Date") for the determination of the stockholders of
the Voting Securities of the Company entitled to notice of, and to vote at, the
Annual Meeting. On that date, there were outstanding 3,187,582 shares of
Common Stock and 147,500 shares of 6% Preferred Stock. The holders of the
Common Stock and the 6% Preferred Stock will be entitled to one vote per share
on each matter submitted to the Annual Meeting. No other voting securities of
the Company are outstanding.
The presence at the Annual Meeting, in person or by proxy, of the
holders of a majority of the shares of Voting Securities entitled to vote
constitutes a quorum for the transaction of business at the Annual Meeting. If
a quorum should not be present, the Annual Meeting may be adjourned from time
to time until a quorum is obtained.
There are no rights of appraisal or similar rights of dissenters
applicable to the matters to be voted upon at the Annual Meeting.
FINANCIAL INFORMATION
A copy of the Company's Annual Report to Stockholders for the fiscal
year ended March 31, 1996 accompanies this Proxy Statement. The Annual Report
is not a part of the proxy solicitation materials.
2
<PAGE> 4
BENEFICIAL OWNERSHIP
The following table sets forth certain information as of July 17,
1996, as to all persons who, to the knowledge of the Company, were beneficial
owners of five percent or more of the Common Stock or 6% Convertible Preferred
Stock of the Company, and all directors and officers of the Company as a group.
<TABLE>
<CAPTION>
NUMBER OF SHARES OF
COMMON STOCK NUMBER OF SHARES OF 6%
NAME AND ADDRESS OF BENEFICIAL OWNER AND PREFERRED STOCK AND
NUMBER OF PERSONS IN GROUP PERCENT OF CLASS PERCENT OF CLASS
---------------------------------------- ---------------- ----------------
<S> <C> <C>
Medco Containment Services, Inc. 543,345 100,000
100 Summit Avenue 17.0% 67.8%
Montvale, NJ 07645 (1)
Robert S. Bowen 355,533(2) 11,875
4200 Parliament Place 11.2% 8.1%
Suite 600
Lanham, MD 20706
John Spohler 235,525(3) 11,875
One Liberty Plaza 7.4% 8.1%
New York, NY 10292
Milton Kaplan * 11,875
1920 Ocean Avenue 8.1%
Brooklyn, New York 11230
Leonard J. Smith * 11,875
451 Ives Dairy Road, #A202 8.1%
North Miami Beach, FL 33179
All directors and officers as a group 626,471 11,875
(9 persons) 19.7% 8.1%
</TABLE>
* Less than 5%.
(1) Pursuant to an Agreement and Plan of Merger, dated as of July 27,
1993, as amended, by and among Merck & Co., Inc., a New Jersey corporation
("Merck"), M Acquisition Corp. ("Merger Sub") and Medco Containment Services,
Inc., a Delaware corporation ("Medco"), Medco was merged with and into Merger
Sub and Medco became a wholly owned subsidiary of Merck. Merck is a worldwide
organization engaged primarily in the business of discovering, developing,
producing and marketing products and services for the treatment of disease, and
the maintenance or restoration of health. The principal executive offices of
Merck are located at One Merck Drive, Whitehouse Station, New Jersey. As of
July 11, 1996, Merck may be deemed to be the indirect beneficial owner, through
its ownership of Medco, of 543,345 shares of Common Stock, representing
approximately 17.0% of the out-standing shares of Common Stock and Merck may
also be deemed to be the indirect beneficial owner, through its ownership of
Medco, of 100,000 shares of 6% Preferred Stock, which is convertible into
100,000 shares of Common Stock. Merck effectively has the sole power to vote
and direct the vote of such shares of Common Stock and 6% Preferred Stock, and
to dispose and direct the disposal of such shares.
(2) Includes Common Stock purchase options for 201,816 shares exercisable
within 60 days of the Record Date.
(3) Includes Common Stock purchase options for 18,750 shares exercisable
within 60 days of the Record Date, but does not include 10,000 shares of Common
Stock held by Mr. Spohler on behalf of his wife and as to which he disclaims
beneficial ownership.
Based solely on a review of Forms 3, 4 and 5 and amendments thereto
furnished to the Company, all directors, officers and beneficial owners of more
than ten percent of any class of stock have filed on a timely basis Forms 3,
Forms 4 and Forms 5 as required in
3
<PAGE> 5
the fiscal year ended March 31, 1996, except for the following persons who
inadvertently filed late Form 4's regarding stock options granted to them
pursuant to the Company's 1995 Incentive Stock Option, Non-Qualified Stock
Option and Stock Appreciation Rights Plan: Robert S. Bowen (12,500), Ronald F.
Friedman (10,000), Charles A. Crew, (7,500) and Edward Weiss (2,500).
PROPOSAL ONE
ELECTION OF DIRECTORS
Stockholders are being asked to elect three members to the Company's
Board of Directors. The three members who are so elected and the remaining
five directors whose terms continue after the Annual Meeting will constitute
the Board of Directors of the Company.
Pursuant to the terms of the Company's Certificate of Incorporation,
the directors of the Company are divided into three classes, and one class is
elected at each annual meeting of stockholders and serves for a term ending on
the third annual meeting of stockholders following their election and after
their respective successors have been elected and qualified. Under the
Company's Bylaws, the election of directors is determined by a vote of a
majority of the shares present in person or represented by proxy and voting on
the matter. And, under applicable Delaware law and the Company's Certificate
of Incorporation and Bylaws, abstentions and broker non-votes on proposals to
elect directors will effectively be treated as shares that are not present and
voting for that matter.
The Board has nominated Messrs. Robert S. Bowen, Ronald F. Friedman
and Charles A. Crew for election at the Annual Meeting, to serve until the
third annual meeting of stockholders of the Company following their election
and their successors have been elected and qualified. Unless otherwise
directed, the persons named as proxies in the proxy enclosed herewith will vote
the shares represented by such proxy for the election of such nominees as
directors.
If for any reason any nominee for director should become unavailable
for election, the proxies may be voted for the election of a substitute
designated by management, unless a contrary instruction is given on the proxy.
Management has no reason to believe that any of the nominees will be unable or
unwilling to serve if elected, and all nominees have expressed an intention to
serve the entire term for which election is sought.
The following table sets forth certain information at the Record Date
concerning the directors and their ownership of (i) the Voting Securities; and
(ii) shares of common stock, $.01 par value, of Group 1 Software, Inc.
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF VOTING
NAME OF DIRECTOR OF DIRECTOR PRINCIPAL OCCUPATION, BUSINESS SECURITIES AND PERCENT OF
THE COMPANY (AGE) SINCE EXPERIENCE AND DIRECTORSHIPS CLASS (AT RECORD DATE)
------------------- -------- ---------------------------- ---------------------------
COMNET Group 1
------ -------
Common Stock
------------
<S> <C> <C>
CLASS II DIRECTORS (WHOSE TERMS WILL EXPIRE AT THE THIRD ANNUAL
MEETING OF STOCKHOLDERS FOLLOWING THE ANNUAL
MEETING, AND THE ELECTION AND QUALIFICATION
OF THEIR SUCCESSORS)
Robert S. Bowen 1983 President and Chief Executive Officer of the 355,533(1) 30,750(2)
58 Company for more than five years and a director, 11.2% *
Chairman of the Board and Chief Executive Officer
of Group 1 Software, Inc. ("Group 1"), for more
than five years.
</TABLE>
4
<PAGE> 6
NOMINEES FOR ELECTION TO THE BOARD OF DIRECTORS
<TABLE>
<CAPTION>
NUMBER OF SHARES OF VOTING
NAME OF DIRECTOR OF DIRECTOR PRINCIPAL OCCUPATION, BUSINESS SECURITIES AND PERCENT OF
THE COMPANY (AGE) SINCE EXPERIENCE AND DIRECTORSHIPS CLASS (AT RECORD DATE)
------------------- -------- ---------------------------- ---------------------------
COMNET Group 1
------ -------
Common Stock
------------
<S> <C> <C>
Ronald F. Friedman 1987 Director, and Chief Operating Officer of Group 1 166,618(3) 16,287(4)
52 for more than five years. He is also a director 5.2% *
of Group 1.
Charles A. Crew 1990 Executive Vice President and Chief Financial 51,320(5) 0
53 Officer of the Company for more than five years. 1.6% *
He is also a director of Group 1.
MEMBERS OF THE BOARD CONTINUING IN OFFICE
CLASS III DIRECTORS (WHOSE TERMS WILL EXPIRE AT THE NEXT
ANNUAL MEETING OF STOCKHOLDERS FOLLOWING
THE ANNUAL MEETING, AND THE ELECTION AND
QUALIFICATION OF THEIR SUCCESSORS)
Charles J. Sindelar 1992 Vice President and previously Staff-Vice President 10,000(6) 0
59 of the Business Development Network Systems * *
Division of Zenith Electronics Corporation since
December, 1990 for more than five years. For more
than five years prior to that, he was Senior Vice
President of Zenith Sales Company Division of
Zenith Electronics Corp.
James P. Marden 1992 President of The Entertainment Connection, Inc., 10,000(7) 0
43 since January, 1995, and was Vice President - * *
Acquisitions of Medco and Vice President -
Acquisitions of Synetic from 1992 to 1994. He has
been a private investor for more than five years.
Charles A. Mele 1992 Executive Vice President - General Counsel and a 10,000(8) 6,000(9)
40 director of Synetic for more than five years. For * *
more than five years, up through July, 1994, he
was Executive Vice President and General Counsel
or Co-General Counsel of Medco. He is also a
director of
Group 1.
CLASS I DIRECTORS (WHOSE TERMS WILL EXPIRE AT THE SECOND ANNUAL
MEETING OF STOCKHOLDERS FOLLOWING THE ANNUAL MEETING,
AND THE ELECTION AND QUALIFICATION OF THEIR SUCCESSORS)
James V. Manning 1992 Chief Executive Officer of Synetic, Inc. 10,000(10) 0
49 ("Synetic") since September, 1994. Prior to * *
that, he was Senior Executive Vice President -
Finance and Administration and a director of
Medco for more than five years. He has also been
a director of Synetic for more than five years.
Richard H. Eisenberg 1994 Senior Vice President of Kaye Insurance 3,000(11) 0
58 Association, L.P., since September, 1992. He has * *
also been President of APCO Corporation, an
insurance brokerage firm, Vice President of
Amalgamated Programs Corporation and President of
Great Northern Brokerage Corporation for more
than five years.
</TABLE>
------------
* Less than 1%
5
<PAGE> 7
(1) Includes options to purchase 201,816 shares of Common Stock
exercisable within 60 days of the Record Date.
(2) Includes options to purchase 18,750 shares of Group 1 common stock
exercisable within 60 days of the Record Date.
(3) Includes options to purchase 153,998 shares of Common Stock
exercisable within 60 days of the Record Date.
(4) Includes options to purchase 15,000 shares of Group 1 common stock
exercisable within 60 days of the Record Date.
(5) Includes options to purchase 51,320 shares of Common Stock exercisable
within 60 days of the Record Date.
(6) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days of the Record Date.
(7) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days of the Record Date.
(8) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days of the Record Date.
(9) Includes options to purchase 6,000 shares of Group 1 common stock
exercisable within 60 days of the Record Date.
(10) Includes options to purchase 10,000 shares of Common Stock exercisable
within 60 days of the Record Date.
(11) Includes options to purchase 3,000 shares of Common Stock exercisable
within 60 days of the Record Date.
Mr. Carl I. Kanter resigned from the Board of Directors effective
December 8, 1995.
The business address of Messrs. Manning, and Mele is River Drive
Center 2, 669 River Drive, Elmwood, New Jersey 07407-1361. Mr. Marden's
business address is 100 Red Schoolhouse Road, Suite C5, Chestnut Ridge, NY
10799. Mr. Eisenberg's business address is 122 East 42nd Street, New York, New
York 10168. Mr. Sindelar's business address is 1000 Milwaukee Avenue,
Glenview, Illinois 60025. The business address of each of Messrs. Bowen,
Friedman and Crew is 4200 Parliament Place, Suite 600, Lanham, Maryland 20706.
FAMILY RELATIONSHIPS
There are no family relationships between any director or executive
officer of the Company.
COMPENSATION OF DIRECTORS
No cash payments have been made to directors for attendance at
meetings of the Board or any committee thereof since April, 1985. In
September, 1995, stockholders approved the 1995 Non-Employee Directors' Stock
Option Plan (the "1995 Directors' Plan"), which provides for the annual,
automatic grant of options to non-employee directors, and in January 1993,
stockholders approved Fee Agreements with certain directors. During the year
ended March 31, 1996, Messrs. Manning, Marden, Mele, Sindelar and Eisenberg
were each granted options under the 1995 Directors' Plan to purchase 5,000
shares of the Common Stock. For further details concerning the Fee Agreements,
see "Executive Officers and Compensation -- Fee Agreements with Messrs.
Manning, Bowen and Friedman".
6
<PAGE> 8
COMMITTEES AND MEETINGS
The Bylaws of the Company provide for the Board to appoint the Audit
and Compensation Committees. The Compensation Committee's functions include
establishing principles for setting executive compensation, and reviewing
management proposals pertaining to executive compensation, profit sharing and
stock options. The Compensation Committee recommends management bonuses to the
Board for the Company's officers and employees. The Committee has granted
options to employees under and in accordance with the Company's 1986 Incentive
Stock Option, Non-Qualified Stock Option and Stock Appreciation Unit Plan (the
"1986 Incentive Plan") and, since September 12, 1995, the Company's 1995
Incentive Stock Option, Non-Qualified Stock Option and Stock Appreciation Unit
Plan (the "1995 Incentive Plan"). The Compensation Committee is comprised of
Messrs. Manning, Marden and Mele. None of the members of the Compensation
Committee has ever been an employee of the Company.
The Audit Committee's functions include recommending to the Board the
selection of the Company's independent public accountants and reviewing with
such accountants the plan, scope and results of their audit of the financial
statements and the adequacy of the Company's system of internal accounting
controls. The Audit Committee is comprised of Messrs. Manning, Marden and
Sindelar.
During the fiscal year ended March 31, 1996, the Board of Directors of
the Company held 6 meetings, the Compensation Committee held 3 meetings and the
Audit Committee held 1 meeting. No director attended less than 75% of all
meetings of the Board and the committees on which such director served during
that fiscal year.
EXECUTIVE OFFICERS AND COMPENSATION
The Executive Officers of the Company are Robert S. Bowen, Ronald F.
Friedman, Charles A. Crew and Edward Weiss. The business experience during at
least the past five years for Messrs. Bowen, Friedman and Crew is set forth
under " -- Nominees For Election to the Board Of Directors". Mr. Weiss, 45,
has been General Counsel to the Company since January, 1990, and has been
Secretary since November, 1990.
REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION
The Company has established an executive compensation program based on
the following on-going principles and objectives: (i) provide compensation
opportunities that will help attract, motivate and retain highly qualified
managers and executives, (ii) link executive's total compensation to Company
performance and the individual performance of the executive and (iii) provide
an appropriate balance between incentives focused on achievement of annual
business plans and longer term incentives linked to increases in shareholder
value. To effectuate these principles and objectives, compensation for each of
the executives of the Company consists of base salary compensation, annual
incentive compensation (based in most cases on profit performance measured
against internal profit targets) and stock option grants.
For Fiscal Year 1996, the Compensation Committee did not review the
base salary nor incentive compensation program for Mr. Bowen since these
matters are fixed by the employment agreement between the Company and Mr.
Bowen. Grants of options to executive officers and the compensation programs
for executive officers other than Mr. Bowen are reviewed annually by the
Compensation Committee, including the review conducted for the most recent
fiscal year.
Compensation Committee
James V. Manning
James Marden
Charles A. Mele
7
<PAGE> 9
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Compensation Long-Term Compensation Awards
--------------------------- -----------------------------
Name and Principal Stock All other
Position Year Salary Bonus Options Compensation(2)
------------------ ---- ------ ----- -------- ----------------
<S> <C> <C> <C> <C> <C>
Robert S. Bowen, 1996 $309,193 $564,519(1) 12,500 $ 75,122(3)
CEO; Director 1995 $296,892 $489,192(1) --- $676,366(3)(4)
1994 $284,241 $ 67,112 --- $ 61,360(3)
Ronald F. Friedman 1996 $183,400 $123,740 10,000 $ 3,000
President - Group 1 1995 $173,088 $307,237 --- $ 3,000
Software; Director 1994 $166,892 --- 10,000 $ 4,448
Charles A. Crew 1996 $119,736 $ 37,383 7,500 $ 3,000
Chief Financial Officer; 1995 $111,404 $104,265 --- $ 2,083
Director 1994 $ 98,871 --- 3,300 $ 1,973
</TABLE>
(1) Mr. Bowen elected to defer $197,582 and $161,421 of bonus compensation
in 1996 and 1995, respectively, in accordance with the Company's deferred
compensation plan.
(2) Includes Company contributions to Defined Contribution Savings Plan
(401(k)).
(3) Includes Company contributions to Defined Contribution Savings Plan
(401(k)) and calculated debt forgiveness of Company loan to Mr. Bowen. See "
- -- Bowen Loan Agreement".
(4) Includes $602,242 gain on exchange of shares upon exercise of stock
options.
STOCK OPTION GRANTS IN FISCAL YEAR 1996
COMNET
<TABLE>
<CAPTION>
% OF TOTAL AT 0% AT 5% AT 10%
OPTIONS GRANTED TO EXERCISE OR ANNUAL ANNUAL ANNUAL
GRANTED EMPLOYEES BASE PRICE EXPIRATION GROWTH GROWTH GROWTH
NAME # IN 1996 ($/SHARE) DATE RATE RATE RATE
---- ------- -------- --------- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
ROBERT S. BOWEN 12,500 3.98% $10.00 12/20/2005 $0 $78,612 $217,218
RONALD F. FRIEDMAN 10,000 3.19% $10.00 12/20/2005 $0 $62,889 $159,374
CHARLES A. CREW 7,500 2.39% $10.00 12/20/2005 $0 $47,167 $119,531
EDWARD WEISS 2,500 0.80% $10.00 12/20/2005 $0 $15,722 $ 39,844
</TABLE>
OPTION/SAR EXERCISES AND YEAR-END
OPTION/SAR VALUES
04/01/95 TO 03/31/96
<TABLE>
<CAPTION>
Number of Unexercised Value of Unexercised
Options/SARs at FY-End Options/SARS at FY-End(1)
------------------------- ----------------------------
Name Shares
- ---- Acquired on Value
Exercise Realized Exercisable Unexercisable Exercisable Unexercisable
-------- -------- ----------- ------------- ----------- -------------
<S> <C> <C> <C> <C> <C> <C>
COMNET
- ------
Robert S. Bowen 35,053 $174,450 181,815 32,501 $224,093 ---
Charles A. Crew --- --- 46,319 14,481 $ 66,250 ---
Ronald F. Friedman 12,000 $ 79,250 140,997 29,003 $191,250 ---
GROUP 1
- -------
Robert S. Bowen None None 18,750 --- $ 37,500 ---
Ronald F. Friedman None None 15,000 --- $ 30,000 ---
Charles A. Crew None None --- --- --- ---
</TABLE>
(1) These values are based upon the difference between the exercise prices
of all options awarded and the average price of $10.00 per share for
COMNET common stock and $8.00 per share for Group 1 common stock at
March 31, 1996.
8
<PAGE> 10
THE GRAPH PRESENTED IN THE DEFINITIVE PROXY IS A COMPARISON OF THE 5 YEAR
CUMULATIVE TOTAL RETURN OF THE COMPANY VERSUS A PEER GROUP AND THE BROAD
MARKET.
COMPARE 5-YEAR CUMULATIVE TOTAL RETURN
AMONG COMNET CORPORATION,
NASDAQ MARKET INDEX AND PEER GROUP INDEX
<TABLE>
<CAPTION>
NASDAQ PEER
COMNET MARKET GROUP
CORPORATION INDEX INDEX
<S> <C> <C> <C>
1996 $60.61 $194.52 $224.06
1995 61.36 144.62 202.10
1994 53.03 136.32 124.71
1993 139.39 117.95 138.55
1992 230.30 105.40 129.97
</TABLE>
ASSUMES $100 INVESTED ON APR. 1, 1991
ASSUMES DIVIDENDS REINVESTED
FISCAL YEAR ENDING MAR. 31, 1996
The chart displayed directly above is presented in accordance with
requirements of the Securities and Exchange Commission. The industry peer
group consisted of BGS Systems, Inc., Hathaway Corp., Hyperion Software, Inc.
and Timberline Software, CP. Stockholders are cautioned against drawing any
conclusions from the data contained therein, as past results are not
necessarily indicative of future performance. This graph in no way reflects
the Company's forecast of future financial performance.
The graph and the related disclosure contained in this section of the
Proxy Statement should not be incorporated by reference into any prior filings
by the Company under the Securities and Exchange Act of 1934 that incorporated
future filings or portions thereof (including this Proxy Statement or the
Executive Compensation section of this Proxy Statement).
EMPLOYMENT AGREEMENTS
ROBERT S. BOWEN
COMNET Agreement. The Company has entered into an amended and
restated employment agreement with Mr. Bowen, as President and Chief Executive
Officer of the Company, dated as of January 28, 1992 (the "COMNET Agreement").
The COMNET Agreement was ratified by the stockholders at the January 22, 1993
meeting. The COMNET Agreement expires on June 30, 1998, and provides for a
current total base salary of $325,770 per annum adjusted annually (effective
each July 1) by the greater of changes in the area cost of living or the
average salary percentage increase for Company employees as part of the annual
budget presented to the Board as part of the annual budget. The COMNET
Agreement provides for a bonus payable to Mr. Bowen equal to 7-1/2% of the
first $1,000,000 of consolidated net income before taxes, with certain
adjustments as defined, and 10% of all such consolidated net income in excess
of $1,000,000. Consolidated net income includes all earnings attributable to
Group 1 and any of the Company's business operations or subsidiaries directly
related to the particular lines of business engaged in by Group 1 or any other
COMNET subsidiary as of July 1, 1991, from any source, including gain or loss
on the sale of stock or assets of the Company and its subsidiaries, but subject
to certain specified deletions, including the Cap Amount provisions, described
below. Specified deletions from earnings include, among other items, any
provisions for taxes, any bonus payable under the
9
<PAGE> 11
COMNET Agreement, any excess of interest income over interest expense from the
Company's or its affiliates' investments, any charge to income associated with
the exercise of stock options and any interest or dividend income from, or gain
from the sale of, securities held for investment at the time Mr. Bowen joined
the Company. The 7-1/2% and 10% calculations apply to gain realized upon a
sale of Group 1 and included in consolidated net income only to the extent that
such gain does not exceed an amount (the "Cap Amount") equal to the gain that
the Company would realize on a disposition, if any, of its interest in Group 1
at a price per share of $21.125. The COMNET Agreement provides that with
respect to any pretax gain (net of expenses) realized upon a disposition of
Group 1 in excess of the Cap Amount described above, Mr. Bowen will be entitled
to the following percentages of such gain: $0 to $3.3 million - 1%; above $3.3
to $6.6 million - 2%; above $6.6 to $9.9 million - 3%; above $9.9 to $13.2
million - 4%; and above $13.2 million - 5%. Further, any bonus under the
COMNET Agreement will be offset by 40% of all fees therefore received by Mr.
Bowen under the Bowen Fee Agreement (described below).
If Mr. Bowen terminates his employment with the Company during the
term of the COMNET Agreement because of his disability, he will be entitled to
receive his base salary and his bonuses, prorated through the date of
termination, and any options previously granted to him will, to the extent
exercisable on Mr. Bowen's date of employment termination, continue to be
exercisable for 12 months following such termination date. If Mr. Bowen's
employment with the Company is terminated during the term of the COMNET
Agreement because of his death, his estate will be entitled to receive his base
salary and his bonuses, prorated through the date of termination, and any
options previously granted to Mr. Bowen will, to the extent exercisable on Mr.
Bowen's date of termination of employment, continue to be exercisable for six
months following Mr. Bowen's death.
If Mr. Bowen terminates his employment with the Company for any reason
other than death or disability or is discharged by the Company for cause, Mr.
Bowen will be entitled to receive his base salary, prorated through his date of
termination, and his bonus earned and all of his options will be treated as
provided in the instruments or agreements governing such options. If the
Company terminates Mr. Bowen's employment without cause, Mr. Bowen will be
entitled to receive his salary, as adjusted, fringe benefits and bonuses
throughout the remaining term of the COMNET Agreement, as if it had not been
terminated, and all of his options, including those that had not yet vested,
will continue to vest or be exercisable as if Mr. Bowen's employment had not
been terminated but had continued for the outstanding balance of the term of
the COMNET Agreement, and Mr. Bowen will be afforded the maximum length of time
permissible to exercise such options; provided, however, that if such vesting
of options after termination is prohibited, the Company shall, at such time as
the options would have vested (the "Vesting Date"), pay Mr. Bowen in cash the
difference between the average reported price for the Common Stock over the 20
days immediately preceding the Vesting Date and the exercise price of the stock
options on the Vesting Date.
Group 1 Agreement. Group 1 entered into an amended and restated
employment agreement with Mr. Bowen, a director, as Chief Executive Officer of
Group 1 dated as of January 28, 1992 (the "Group 1 Agreement"). Salary and
incentive compensation paid under the Group 1 Agreement are not to be
duplicated by payments under the COMNET Agreement, so long as the COMNET
Agreement is effective. The Group 1 Agreement also expires on July 1, 1999 and
provides for a salary of not less than $187,216 per annum subject to
adjustments (effective each July 1) depending upon the amount of professional
time dedicated to Group 1 vis-a-vis the Company and adjusted annually by the
greater of any changes in the area cost of living index or the average salary
percentage increase for employees approved by the Group 1 Board as part of its
annual budget.
The Group 1 Agreement also includes an annual incentive bonus equal to
7-1/2% of the first $1,000,000 of consolidated net income of Group 1 before
taxes with certain adjustments as defined, and 10% of such income in excess of
$1,000,000, such bonus to be no greater than that determined under a similar
bonus program related to the consolidated earnings of the Company as long as
the program relating to the Company is effective. Consolidated net income as
defined in the Group 1 Agreement includes all earnings of Group 1 and its
subsidiaries from any source, subject to certain specified deletions but
including gain or loss on the sale of stock or assets of Group 1 and/or a
subsidiary. Specified deletions from net income include, among other items,
any provision for taxes, any bonus payable under the Group 1 Agreement, any
excess of interest income from bank and
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other cash deposits over interest expense from loans or other financing, and
any charge to income associated with the exercise of stock options.
If Mr. Bowen's employment with Group 1 during the term of the Group 1
Agreement is terminated because of his disability or death, his base salary and
bonus will be prorated through the date of termination. If Mr. Bowen
terminates his employment with Group 1 for any reason other than death or
disability or he is discharged by Group 1 for cause, Mr. Bowen is entitled to
his base salary, equitably prorated, and any bonuses earned for any fiscal year
prior to the fiscal year in which his termination of employment occurred. If
Group 1 terminates Mr. Bowen's employment without cause, Mr. Bowen is entitled
to receive his salary, fringe benefits and bonuses throughout the remaining
term of the Group 1 Agreement. Upon any termination of Bowen's employment
under the Group 1 Agreement, all options held by Bowen to purchase Group 1's
common stock will be treated as provided in the instruments or agreements
governing such options.
The Group 1 Agreement also provides that as long as the Company owns
25% or more of Group 1's common stock, Mr. Bowen will receive no additional
compensation under the Group 1 Agreement, but Mr. Bowen's aggregate
compensation payable under his employment agreement with the Company will be
allocated between the Company and Group 1 based on the proportion of his time
spent working for each of such companies. If the Company ceases to own 25% or
more of Group 1's common stock, (i) Mr. Bowen's annual salary under the Group 1
Agreement is increased to the greater of $240,000 or 160% of the then current
base salary of Group 1's Chief Operating Officer, adjusted upward or downward
to the extent that the proportion of Mr. Bowen's time spent working for Group 1
is greater or lesser than 50% and adjusted for changes in the cost of living,
(ii) Mr. Bowen's annual salary under his employment agreement with the Company
is reduced to reflect only the proportion of his time spent working for the
Company's businesses other than Group 1 and (iii) Mr. Bowen becomes entitled to
receive incentive bonus compensation from Group 1 as follows: (A) if the
Company disposes of its interest in Group 1 in a registered public offering,
then for each fiscal year, if Group 1's earnings equal budget targets
established by Group 1's board of directors in its reasonable business
judgment, then Mr. Bowen's bonus shall be the greater of $200,000 or 160% of
the bonus payable to Group 1's Chief Operating Officer, and if Group 1's
earnings are greater or lesser than such targets, then Mr. Bowen's bonus will
vary from the amount payable to him at the target earnings level to the same
proportional extent as the variation in the bonus payable to Group 1's Chief
Operating Officer; and (B) if the Company disposes of its interest in Group 1
other than in a registered public offering, then Mr. Bowen's bonus shall be as
determined by Group 1's board of directors, without the participation of any
directors affiliated with the Company.
RONALD F. FRIEDMAN
Group 1 has entered into an employment agreement dated October 31,
1990, with Ronald F. Friedman, a director, as President and Chief Operating
Officer of Group 1. The agreement, as amended, expires on March 31, 1999 and
provides for annual base compensation of $183,400 per annum (adjusted as of
April 1, 1995), which may be further adjusted annually for merit increases upon
approval of Group 1's compensation committee. Under his employment agreement,
Mr. Friedman is entitled to receive an annual bonus for the fiscal year ending
March 31, 1997 based on a percentage of Group 1's net income before income
taxes, interest expense, management fees and bonus amounts paid to or for the
benefit of Mr. Friedman and Group 1's Chief Executive Officer and Chief
Financial Officer ("Adjusted Net Income"), which bonus plan for fiscal year
1996 varied from 7.4% of Adjusted Net Income over $5.6 million, up to a maximum
of 9% of Adjusted Net Income over $9.0 million. The bonus is based upon both
achievement of a certain level of Adjusted Net Income and satisfactory growth
over actual prior year results in the opinion of Group 1's compensation
committee and board of directors. If Mr. Friedman retires or becomes totally
and permanently disabled, Mr. Friedman shall be entitled to receive all earned
but unpaid bonuses and any subsequent bonus installments. In the case of
death, all earned but unpaid bonuses and subsequent bonus installments shall be
paid promptly in one sum. If Mr. Friedman is terminated for cause or resigns
under circumstances which would justify termination for cause, all unpaid
bonuses will be forfeited and no longer be payable. If a change in control of
Group 1 occurs, Mr. Friedman, at his option, has the right to resign his
position with Group 1 and Group 1 will continue to pay his compensation and
provide him with employee benefits for one year or until the expiration date of
the employment agreement, whichever is the shorter period, and will pay Mr.
Friedman, as a
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lump sum, all earned but unpaid bonuses. In addition, bonuses will be paid on
a pro-rata basis for the period through the nearest full fiscal quarter prior
to resignation.
FEE AGREEMENTS WITH MESSRS. MANNING, BOWEN AND FRIEDMAN
The Company has agreed, pursuant to separate fee agreement dated as of
January 28, 1992, to pay Mr. Manning fees of 1/2% of the total consideration
paid on acquisitions, and 1/2% of the pre-tax gain (net of expenses) on
dispositions of the Company's or its subsidiaries' businesses. Fees payable
with respect to a disposition, if any, by the Company of its holdings in Group
1 would be payable only if, and to the extent that, the consideration the
Company receives exceeds $50,000,000. The term of this agreement extends until
January 27, 2002, unless earlier terminated because Mr. Manning is no longer a
director, officer or employee of the Company. This agreement was approved by
the stockholders at the January 22, 1993 meeting. Mr. Manning has earned
$3,527 according to this fee agreement during fiscal year 1996.
The Company has entered into a fee agreement dated as of January 28,
1992 (the "Bowen Fee Agreement") with Mr. Bowen. The Bowen Fee Agreement was
approved by the stockholders at the January 22, 1993 meeting. Under the Bowen
Fee Agreement, Mr. Bowen will be entitled to a fee of 1/2% of the total
consideration payable on acquisitions and 1/2% of the pre-tax gain (net of
expenses) on dispositions of the Company's or its subsidiaries' businesses.
However, this fee will not be paid with respect to a disposition, if any, of
Group 1 or any of the Company's business operations or subsidiaries directly
related to the particular lines of business engaged in by such companies as of
July 1, 1991, which shall remain subject to the incentive compensation
arrangements in Mr. Bowen's amended and restated employment agreement with the
Company.
The term of the Bowen Fee Agreement extends until January 27, 2002,
unless Mr. Bowen is no longer a director, officer or employee of the Company,
provided that if Mr. Bowen's employment is terminated without cause (as defined
in his amended and restated employment agreement), the Company must either
continue this agreement until January 27, 2002 or pay Mr. Bowen the incentive
bonus upon a disposition, if any, of the Company's interests in Group 1 to
which Mr. Bowen would have been entitled under his employment agreement with
the Company as in effect prior to its January 28, 1992 amendment and
restatement. Mr. Bowen has earned $3,527 according to this fee agreement during
fiscal year 1996.
The Company has entered into a fee agreement with Mr. Friedman dated
as of January 28, 1992, which was approved by the stockholders at the January
22, 1993 meeting. Pursuant to this fee agreement, Mr. Friedman will be
entitled to receive on disposition, if any, of the Company's interest in Group
1 or on the sale by Group 1 or any of its subsidiaries of any business unit or
line of business of Group 1 or any of its subsidiaries, a fee in an amount
equal to the following percentages of the Company's pre-tax gain (net of
expenses) to the extent such gain exceeds $21.125 per share of Group 1: $0 to
$3.3 million - 0.5%; above $3.3 to $6.6 million - 1%; above $6.6 to $9.9
million 1.5%; above $9.9 to $13.2 million - 2%; and above $13.2 million - 2.5%.
Such fee shall only be payable, however, if Group 1's net operating income
increases at an average annualized rate of 20% or more from 1991 until such
disposition. If Group 1's net operating income increases at an average
annualized rate of 15% or more, but less than 20%, Mr. Friedman will be
entitled to one-half the fee set forth above. The term of this agreement
extends until January 27, 2002, unless Mr. Friedman is no longer a director,
officer or employee of the Company. Because no such disposition has been made,
no payments have been made to Mr. Friedman under his fee agreement.
BONUS PROGRAMS TO OTHER EXECUTIVES
Mr. Crew is entitled to an annual incentive bonus for the fiscal year
ended March 31, 1997 to be calculated on the basis of Group 1's profit
performance as compared to internal profit targets. Mr. Weiss is entitled to
an annual bonus for fiscal year ended March 31, 1997 calculated on the basis
the Company's profit performance as compared to internal profit targets and the
achievement of certain other objectives.
DEFERRED COMPENSATION ARRANGEMENTS
The Company has adopted a Deferred Compensation Plan by which certain
members of senior management have the option of deferring the receipt of
amounts of their annual
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bonus compensation, if any, and/or their base compensation (the "Deferred
Compensation Plan"). The Deferred Compensation Plan is intended by the Company
to qualify as an unfunded plan for federal income tax purposes and the Employee
Retirement Income Security Act (ERISA). The Deferred Compensation Plan is
administered by the Company. The expenses associated with the establishment
and administration of the Deferred Compensation Plan are borne by the Company.
Any expenses, however, of implementing any investment option selected by a
participant are charged against that participant's account.
The compensation, that is deferred, is paid into a trust designated
solely to administer the Deferred Compensation Program. Currently, Mr. Bowen
is the only participant in the Company's Deferred Compensation Plan.
EXECUTIVE SUPPLEMENTARY BENEFITS
The Company provides certain of its executive officers with group
health insurance and disability insurance policies that are not available to
all salaried employees. These supplementary benefits to such executive
officers are limited to the cost of the premiums for the coverage. The
aggregate cost is less than $25,000 per year for each covered executive
officer.
BOWEN LOAN AGREEMENT
On January 23, 1992, the Company entered into a Loan Agreement with
Mr. Bowen under which the Company agreed to loan him $235,000 on the following
terms: (i) the loan was made in three installments ($78,334 on the date of the
Loan Agreement and $78,333 on the first and second anniversary dates
thereafter); (ii) in consideration of each advance of funds, Mr. Bowen
delivered a promissory note to the Company; (iii) each promissory note will be
deemed satisfied in full and canceled if, as of its due date, July 1, 1998, Mr.
Bowen has complied with certain conditions set forth in the Loan Agreement
including, without limitation, Mr. Bowen tendering his services to the Company
or an affiliate of the Company and complying with certain provisions of his
employment agreement with the Company; and (iv) upon Mr. Bowen's death or
disability, such promissory notes will be deemed satisfied and canceled
provided the conditions in clause (iii) above have been satisfied up to the
date of such death or disability.
FRIEDMAN LOAN AGREEMENT
On March 1, 1993, the Company entered into a loan agreement by which
it has loaned Mr. Friedman $375,000. Mr. Friedman has delivered promissory
notes to the Company for the loan amount, plus interest. Under this loan, all
installments, plus accrued interest and other charges (if any) under all of
these notes shall be satisfied in full by June 1, 1997, interest under all such
notes shall accrue at prime plus 2 percent, and interest commenced on June 30,
1993 and principal and interest are payable beginning July 30, 1995. All such
notes are secured by a second mortgage on Mr. Friedman's residence and by any
proceeds from the exercise of stock options and subsequent disposition of such
option shares that Mr. Friedman holds in the Company or Group 1. The principal
and interest balance on the loan outstanding as of March 31, 1996 was $415,547.
INDEMNIFICATION AGREEMENTS; DIRECTORS AND OFFICERS LIABILITY INSURANCE
INDEMNIFICATION AGREEMENTS. Each current member of the Board of
Directors is signatory to an indemnification agreement (the "Indemnification
Agreement") with the Company. Each Indemnification Agreement provides that the
Company shall indemnify the director or officer who is a party to the agreement
(an "Indemnitee") if he was or is a party to or threatened to be made a party
to any threatened, pending or completed action, suit or proceeding (except a
derivative proceeding) by reason of the fact that he is or was a director or
officer of the Company, or is or was serving at its request in certain
capacities for another entity, against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement (if such settlement is approved
in advance by the Company) incurred in connection with such actions, suits or
proceedings. The indemnification is limited to instances where the Indemnitee
acted in good faith and in a manner he reasonably believed to be in, or not
opposed to, the best interests of the Company, and with respect to any criminal
action, had no reasonable cause to believe his conduct was unlawful. With
respect to derivative proceedings, the Indemnification Agreement provides
indemnification similar to that provided in the Indemnification
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Agreement for non-derivative proceedings discussed above, except that
indemnification is allowed only to the extent determined to be fair and
reasonable by the court.
The Indemnification Agreement provides that if a director or officer
is entitled to indemnification for some or a portion of the expenses,
judgments, fines or penalties actually or reasonably incurred by him in the
investigation, defense, appeal or settlement of any civil or criminal action,
suit or proceeding, the Company shall nevertheless indemnify him to the extent
to which he is entitled. By the terms of the Indemnification Agreement, its
benefits are not available for expenses or liabilities paid directly to the
Indemnity under a policy of officers' and directors' insurance maintained by
the Company or in several other instances such as if a court determines that
each material assertion made by the Indemnitee in that proceeding was not made
in good faith or was frivolous, or if the claim arises from the purchase and
sale by the Indemnitee of securities in violation of Section 16(b) of the
Exchange Act, or similar successor statute.
DIRECTORS AND OFFICERS LIABILITY INSURANCE. The Company currently
maintains a Directors and Officers liability policy with an aggregate limit of
liability of $5,000,000. Deductibles under this policy range from $5,000 per
officer or director for each claim to $50,000 in the aggregate for certain
covered claims. This policy does not cover, among other matters, dishonest,
fraudulent, or criminal behavior.
401(k) PLAN
In January, 1994, the Company adopted the COMNET Corporation and
Subsidiaries 401(k) Retirement Savings Plan and Trust (the "401(k) Plan"). The
401(k) Plan provides for a contribution to be made by the Company and its
subsidiaries out of current operating earnings based upon the contributions
made by participating employees.
All employees of the Company or its subsidiaries who have been
employed for at least three months are eligible to participate in the 401(k)
Plan. Participants in the 401(k) Plan may contribute from 1% to 15% of their
compensation from the Company or its subsidiary (up to a limit of $9,500) in a
calendar year. The Company or the relevant subsidiary will make contributions
to an employee's 401(k) Plan account equal to the sum of the following: (i)
$.75 for each $1.00 a participant contributes up to 2% of the participant's
compensation and (ii) $.50 for each $1.00 the participant contributes for the
next 1% of the participant's compensation. Participants are 100% vested in the
contributions, and earnings thereon, they make to the 401(k) Plan out of their
compensation. Participants vest in Company contributions, and earnings
thereon, at a rate of 20% per year of employment with the Company or its
subsidiary, up to 100%. However, if a participant's employment with the
Company or its subsidiary terminates because of retirement, death or disability
(as defined in the 401(k) Plan), 100% of the Company contributions, and their
earnings thereon, become 100% vested.
CERTAIN TRANSACTION
The Company has used the services of Kaye Insurance Associate, L.P.
("Kaye Insurance") of New York, New York to obtain directors and officers
liability insurance coverage for the current fiscal year. A description of
this coverage is set out above in "Executive Officers and Compensation --
Indemnification Agreements; Directors and Officers Liability Insurance."
Richard H. Eisenberg, a director of the Company, is also a Senior Vice
President of Kaye Insurance. The Company's payment for this coverage is
$90,800 - which includes compensation to Kaye Insurance for its services that
does not exceed $5,000.
INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
Coopers & Lybrand, L.L.P. has audited the Company's financial
statements for the fiscal years ending March 31, 1996, 1995 and 1994.
A representative of Coopers & Lybrand is expected to be present at the
Annual Meeting. The representative will be afforded an opportunity to make a
statement and will be available to respond to appropriate questions by
stockholders.
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STOCKHOLDERS' PROPOSALS
Stockholders are entitled to submit proposals on matters appropriate
for stockholder action consistent with regulations of the Securities and
Exchange Commission. Should a stockholder intend to present a proposal at the
Company's next annual meeting, it must be received by the Secretary of the
Company, 4200 Parliament Place, Suite 600, Lanham, Maryland 20706-1860, no
later than February 10, 1997, in order to be included in the Company's proxy
statement and form of proxy relating to that meeting.
SOLICITATION PROCEDURES
Officers and regular employees of the Company, without extra
compensation, may solicit the return of proxies by mail, telephone, telegram
and personal interview. Certain holders of record such as brokers, custodians
and nominees, are being requested to distribute proxy materials to beneficial
owners and to obtain such beneficial owner's instructions concerning the voting
of proxies. The cost of solicitation of proxies (including the cost of
reimbursing banks, brokerage houses, and other custodians, nominees and
fiduciaries for their reasonable expenses in regard to the proxy soliciting
materials) will be paid by the Company.
MISCELLANEOUS
Management does not intend to present any other matters at the Annual
Meeting. If other matters are properly presented at the Annual Meeting, the
persons named as proxies will vote them in accordance with their best judgment.
Where information contained in this Proxy Statement rests particularly
within the knowledge of a person other than the Company, the Company has relied
upon information furnished by such person or contained in filings made by such
person with the Securities Exchange Commission.
By Order of the Board of Directors
/s/ Edward Weiss
-------------------------
Edward Weiss
Secretary
Dated: July 29, 1996
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COMNET CORPORATION
4200 PARLIAMENT PLACE, SUITE 600
LANHAM, MARYLAND 20706-1844
PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS OF COMNET CORPORATION
FOR THE ANNUAL MEETING OF STOCKHOLDERS
SEPTEMBER 12, 1996
The undersigned hereby appoints Edward Weiss, as true and lawful
attorney and proxy of the undersigned, with full power of substitution, for and
in the name of the undersigned, to vote and otherwise act at the Annual Meeting
of Stockholders of COMNET Corporation (the "Company") to be held on Thursday,
September 12, 1996, at 9:30 a.m. at Prudential Securities, One Liberty Plaza,
New York, New York 10292, and at any adjournment or postponement thereof (the
"Annual Meeting"), with respect to all shares of Common Stock and 6% Preferred
Stock of the Company which the undersigned would possess if personally present,
on the following matters.
1. Election of Directors
FOR all nominees listed below
---- (Except as marked to the contrary below)
WITHHOLD AUTHORITY to vote for all nominees listed below
----
(Instruction: To withhold authority to vote for any individual
nominee, strike a line through the nominee's name in the list
below.)
Mr. Robert S. Bowen
Mr. Ronald F. Friedman
Mr. Charles A. Crew
There is no assurance that any of the Company's nominees will serve as
directors if any other nominees are elected to the Board.
THIS PROXY, WHEN PROPERLY EXECUTED, WILL BE VOTED IN THE MANNER
DIRECTED HEREIN BY THE UNDERSIGNED STOCKHOLDER(S). IF NO DIRECTION IS MADE,
THIS PROXY WILL BE VOTED TO ELECT THE INDIVIDUALS NAMED IN PROPOSAL ONE.
In their discretion, the appointed proxies may also vote upon any
other matters which the persons making the solicitation do not know, a
reasonable time before the solicitation and that properly come before the
Annual Meeting or any adjournment or postponement thereof, including the
election of any person to any office for which a nominee is named in the proxy
statement and such nominee is unable to serve for good cause.
The undersigned hereby ratifies and confirms that the aforesaid
attorneys and proxies may do hereunder.
Dated: , 1996
- ------------------------------- -------------
(Signature of Stockholder)
Dated: , 1996
- ------------------------------- -------------
(Signature of Stockholder)
(Please sign exactly as your name appears hereon. When signing as attorney,
executor, administrator, trustee, guardian or corporate official, please give
your full official title. If shares are held jointly, each holder should
sign.)
TO INSURE A QUORUM AND TO AVOID THE EXPENSE AND DELAY OF SENDING FOLLOW-UP
LETTERS, PLEASE FILL IN, SIGN, DATE AND MAIL THIS PROXY IN THE ENCLOSED POSTAGE
PAID ENVELOPE.
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