ENOTE COM INC, DEF 14A, 2000-05-23

ENOTE COM INC
DEF 14A, 2000-05-23
TELEPHONE & TELEGRAPH APPARATUS

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<PAGE>
SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934

Filed by the Registrant /X/
Filed by a party other than the Registrant / /

Check the appropriate box:
/ / 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 Section 240.14a-11(c) or Section
240.14a-12

ENOTE.COM INC.
- --------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)

- --------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

/X/ 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:

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<PAGE>
ENOTE.COM INC.
185 ALLEN BROOK LANE
WILLISTON, VERMONT 05495
(802) 288-9000

May 22, 2000

Dear Stockholder:

You are cordially invited to attend the Annual Meeting of Stockholders of
eNote.com Inc. (the "Company"), which will be held on June 22, 2000 at
2:00 p.m. Eastern Daylight Savings Time at the Radisson Hotel located at 60
Battery Street, Burlington, Vermont.

The following Notice of Annual Meeting of Stockholders and Proxy Statement
describe the items to be considered by the stockholders and contain certain
information about the Company and its directors and officers.

Please sign and return the enclosed proxy card as soon as possible in the
envelope provided so that your shares can be voted at the meeting in accordance
with your instructions. Even if you plan to attend the meeting, we urge you to
sign and promptly return the proxy card. You can revoke it at any time before it
is exercised at the meeting or vote your shares personally if you attend.

We look forward to seeing you.

Sincerely,

/s/ John R. Varsames

John R. Varsames
President and Chief Executive Officer
<PAGE>
ENOTE.COM INC.
185 ALLEN BROOK LANE
WILLISTON, VERMONT 05495
(802) 288-9000

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON JUNE 22, 2000

The Annual Meeting of Stockholders of eNote.com Inc. (the "Company") will be
held at the Radisson Hotel, 60 Battery Street, Burlington, Vermont on June 22,
2000 at 2:00 p.m. Eastern Daylight Savings Time, for the following purposes:

1. To elect two directors for a three-year term;

2. To vote upon an amendment to the Certificate of Incorporation of the
Company to increase the number of authorized shares of Common Stock from
25,000,000 to 50,000,000 and the number of authorized shares of Preferred
Stock from 5,000,000 to 25,000,000;

3. To approve the 1999 Non-Employee Directors' Stock Option Plan;

4. To approve the 2000 Incentive Stock Plan;

5. To ratify the Board of Directors' selection of Deloitte & Touche LLP as
the Company's independent auditors for the year ending December 31, 2000;
and

6. To transact such other business as may properly come before the meeting
and any adjournments thereof.

Stockholders of record at the close of business on May 9, 2000 will be
entitled to notice of and to vote at the meeting and any adjournments thereof.

By Order of the Board of Directors
/s/ John R. Varsames

John R. Varsames
President and Chief Executive Officer

Dated: May 22, 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 ASSURE REPRESENTATION OF YOUR SHARES.
<PAGE>
ENOTE.COM INC.
185 ALLEN BROOK LANE
WILLISTON, VERMONT 05495
(802) 288-9000

PROXY STATEMENT FOR
ANNUAL MEETING OF STOCKHOLDERS

This Proxy Statement is furnished to the holders of common stock, $.01 par
value ("Common Stock"), of eNote.com Inc., a Delaware corporation (the
"Company"), in connection with the solicitation of proxies for use at the Annual
Meeting of Stockholders to be held on June 22, 2000 and at any adjournment of
that meeting. The enclosed proxy is solicited on behalf of the Board of
Directors of the Company. Each properly signed proxy will be voted in accordance
with the instructions contained therein and, if no choice is specified, the
proxy will be voted in favor of the proposals set forth in the Notice of Annual
Meeting.

A person giving the enclosed proxy has the power to revoke it by written
notice to the Secretary of the Company, by giving a later-dated proxy, or by
revoking it in person at the meeting. Proxies and notices of revocation should
be mailed or delivered to American Stock Transfer & Trust Company (the "Transfer
Agent") 40 Wall Street, 46(th) Floor, New York, N.Y. 10005 for receipt by the
Transfer Agent no later than two business days prior to the 2000 Annual Meeting,
or should be deposited with the President or Secretary of the Company
immediately prior to the commencement of the 2000 Annual Meeting.

The approximate date on which this Proxy Statement and the enclosed proxy
will first be sent to stockholders is May 22, 2000. The Company's Annual Report
on Form 10-KSB is being mailed together with this Proxy Statement in
satisfaction of the Company's obligation to deliver an Annual Report to
Stockholders. The Company's principal executive offices are located at 185 Allen
Brook Lane Williston, Vermont 05495.

Only holders of the Company's Common Stock and Preferred Stock of record on
the stock transfer books of the Company at the close of business on May 9, 2000
(the "Record Date") will be entitled to vote at the meeting and at any
adjournment thereof. There were 11,024,765 shares of Common Stock and 5,000,000
shares of Preferred Stock outstanding at the close of business on the Record
Date.

Each share of Common Stock and each share of Preferred Stock is entitled to
one vote. The affirmative vote of the holders of a plurality of the shares
represented at the meeting, at which a quorum is present, is required for the
election of directors. The affirmative vote of a majority of the outstanding
shares of Common Stock and Preferred Stock voting as single class is required
for approval of the amendments to the Company's Certificate of Incorporation.
Approval of the other matters which are before the meeting will require the
affirmative vote at the meeting, at which a quorum is present, of the holders of
a majority of the shares of Common Stock and Preferred Stock voting as a single
class with respect to such matters. Votes will be tabulated by the Transfer
Agent, subject to the supervision of persons designated by the Board of
Directors as inspectors.

Under the Company's By-Laws, a quorum at the meeting will consist of a
majority of the outstanding shares of Common Stock and Preferred Stock as of the
Record Date. Shares voted to abstain or to withhold as to a particular matter
(including shares as to which a nominee, such as a broker holding shares in
street name for a beneficial owner, has no voting authority in respect of such
matter) will be deemed represented for quorum purposes but will not be deemed to
be voting on such matters and, therefore, will not be the equivalent of negative
votes as to such matters. It is the position of the Securities and Exchange
Commission (the "SEC"), however, that, for purposes of approval pursuant to
Rule 16b-3 under the Securities Exchange Act of 1934 (the "1934 Act") of the
third and fourth proposals listed on the Notice of Annual Meeting, abstentions
will be deemed the equivalent of negative votes.
<PAGE>
STOCK OWNERSHIP OF DIRECTORS,
EXECUTIVE OFFICERS AND PRINCIPAL STOCKHOLDERS

The following table sets forth certain information regarding beneficial
ownership of the Company's Common Stock and Preferred Stock as of May 9, 2000 by
(a) each director of the Company, (b) each of the executive officers named in
the Summary Compensation Table below, (c) all directors and executive officers
as a group and (d) each person known to the Company to own beneficially 5% or
more of its Common Stock. Except as otherwise indicated, each such person has
sole investment and voting power with respect to the shares shown as being
beneficially owned by such person, based on information provided to the Company.

<TABLE>
<CAPTION>
NUMBER OF SHARES PERCENT OF
NUMBER OF SHARES OF PERCENT OF OF PREFERRED STOCK OUTSTANDING
COMMON STOCK OUTSTANDING BENEFICIALLY PREFERRED
NAME BENEFICIALLY OWNED COMMON STOCK OWNED STOCK
- ---- ------------------- ------------ ------------------ -----------
<S> <C> <C> <C> <C>
John R. Varsames............ 7,100,000(1)(2) 64.40% -- 0%
Michael T. Grennan.......... 250,000(3) 2.27% -- 0%
Leopold Abraham II.......... 11,000(4) * -- 0%
Stanley M. Blau............. 10,000(4) * -- 0%
James Bowman................ 10,000(4) * -- 0%
Charles W. Quatt............ 14,000(4) * -- 0%
Victor Reichenstein......... 130,000(4) 1.18% -- 0%
Executive Officers and
Directors as a Group (8
persons).................. 7,515,000 67.95% -- 0%
Burton G. Friedlander....... 7,424,100(5)(6)(7) 41.75% 5,000,000 100%
</TABLE>

- ------------------------

* less than 1%

(1) Mr. Varsames shares beneficial ownership of 7,080,000 shares of Common Stock
with his wife, Heidi A. Varsames. Mr. Varsames holds sole voting power of
these 7,080,000 shares pursuant to a proxy from his wife.

(2) Includes 20,000 shares of Common Stock held of record by the adult children
of Mr. and Mrs. Varsames, Kristen Varsames and Lori A. Varsames.
Mr. Varsames holds sole voting power over these 20,000 shares pursuant to
proxies from Kristen Varsames and Lori A. Varsames.

(3) Mr. Grennan's reported holdings do not include 1,000 shares that are held by
his father, as to which he disclaims beneficial ownership.

(4) Includes 10,000 shares which may be acquired within sixty days after May 9,
2000 by exercise of stock options by non-employee directors pursuant to
grants made under 1999 Non-Employee Directors' Stock Option Plan provided
that such plan is approved by the Company's stockholders.

(5) Includes 5,000,000 shares of Common Stock issuable upon conversion of
5,000,000 shares of Preferred Stock and 2,000,000 shares of Common Stock
issuable upon exercise of immediately exercisable warrants.

(6) Mr. Friedlander exercises voting and investment control over shares of
Common Stock and Preferred Stock held by Friedlander International Limited
("FIL") and Friedlander Limited Partnership ("FLP") through their investment
manager, Friedlander Capital Management Corp. ("FCMC") of which
Mr. Friedlander is the sole Stockholder.

(7) Information as to Mr. Friedlander, FIL, FLP and FCMC is based on a Statement
on Schedule 13D filed by Mr. Friedlander and FCMC with the Commission on
July 15, 1999 and a Form 4 for June 1999

2
<PAGE>
provided by Mr. Friedlander and FCMC, and the Company assumes no
responsibility for such information.

During the second quarter of 1999 the Company experienced a change of
control through a series of transactions. On April 5, 1999, the Company acquired
the outstanding stock of Navis Technologies, Ltd. ("Navis") in exchange for
8,000,000 shares of Common Stock (the "Navis Transaction"). John R. Varsames,
the former President and majority stockholder of Navis, acquired 7,100,000 of
the 8,000,000 shares and was appointed President and Chief Executive Officer of
the Company. On April 6, 1999, the Company issued 5,000,000 shares of
convertible Preferred Stock and 2,000,000 Common Stock Purchase Warrants to
Friedlander International Limited ("Friedlander") for $5,000,000 in cash (the
"Friedlander Transaction"). In addition, pursuant to the terms and conditions
set forth in the Stock Purchase Agreement dated as of April 6, 1999 underlying
the Friedlander Transaction, Friedlander was granted the right to designate two
of the Company's directors for a period of time ending upon the earlier of
April 6, 2004 or Friedlander beneficially owning less than 10% of the Company's
outstanding shares of Common Stock.

ELECTION OF DIRECTORS
(ITEM 1 OF NOTICE)

There are currently seven members of the Board of Directors, divided into
three classes with terms expiring respectively at the 2000, 2001 and 2002 Annual
Meetings of Stockholders. The Board has fixed the number of directors for the
ensuing year at seven and nominated Messrs. Bowman and Reichenstein, whose terms
are expiring, for reelection. Directors elected at the meeting will serve a
three-year term expiring at the time of the Annual Meeting of Stockholders in
2003 and when their successors are elected and qualified. The shares represented
by the enclosed proxy will be voted to elect each nominee unless such authority
is withheld by marking the proxy to that effect. Each nominee has agreed to
serve, but in the event a nominee becomes unavailable for any reason, the proxy,
unless authority has been withheld as to such nominee, may be voted for the
election of a substitute.

The following information is furnished with respect to each nominee for
election as a director and for each director whose term of office will continue
after the meeting.

James Bowman................ 48 Mr. Bowman became a director of the Company in November 1999 and his
term expires at the Annual Meeting of Stockholders in 2000. Since
1982, Mr. Bowman has been a Senior Partner at Forbes Consulting, a
market research and consulting company.

Victor Reichenstein......... 75 Mr. Reichenstein became a director of the Company in November 1999
and his term expires at the Annual Meeting of Stockholders in 2000.
Mr. Reichenstein was the President and a director of the Company
(when it was formerly known as Webcor Electronics, Inc.) from 1971
until the Company filed for bankruptcy in 1989. Since 1989, Mr.
Reichenstein has been a private investor at Vicel Inc., an
investment firm. From 1993 to 1995, he served as a director of
Safeskin Corporation, a company engaged in the manufacture of
disposable gloves.
</TABLE>

3
<PAGE>

Stanley M. Blau............. 62 Mr. Blau became a director of the Company in November 1999 and his
term expires at the Annual Meeting of Stockholders in 2001. Mr. Blau
was designated as a director by Friedlander. Mr. Blau is currently
retired and has not been employed since 1996. Mr. Blau served on the
board of directors of Executone Information Systems, Inc., a
developer and distributor of voice and data communication systems,
from 1988 until 1999, and served as the Vice Chairman of the board
of directors from 1988 until 1996. Since 1998, Mr. Blau has been a
partner in PS Capital LLC, a firm investing in high technology
startup companies in the Internet, e-commerce and telecommunications
fields.

Michael T. Grennan.......... 46 Mr. Grennan is a Certified Public Accountant and has served as the
Secretary, Treasurer and Chief Financial Officer of the Company
since April 1999 and became a director of the Company in November
1999. His term as a Director of the Company expires at the Annual
Meeting of Stockholders in 2001. Prior to joining the Company, Mr.
Grennan worked for seven years as a self-employed business and
financial consultant. Previously, Mr. Grennan worked for 14 years in
public accounting, first on the audit staff of Coopers & Lybrand,
and then as a staff member, manager and partner of the accounting
firm of Urbach, Kahn, and Werlin, PC.

Charles W. Quatt............ 53 Mr. Quatt became a director of the Company in December 1999 and his
term expires at the Annual Meeting of Stockholders in 2001. Mr.
Quatt is currently the founder and President of Quatt Associates,
Inc., a management consulting firm. Prior to founding Quatt
Associates, from 1987 to 1996, Mr. Quatt was a manager and
consultant with the Hay Group. Mr. Quatt currently serves as a
director of the Hay Group.

Directors Whose Terms Expire in 2002

Leopold Abraham II.......... 72 Mr. Abraham became a director of the Company in November 1999 and
his term expires at the Annual Meeting of Stockholders in 2002. Mr.
Abraham was designated as a director by Friedlander. Mr. Abraham
served as Chairman and Chief Executive Officer of Associated
Merchandising Corporation, a retail merchandising and sourcing
organization, from 1977 until his retirement in 1993. Since retiring
from Associated Merchandising, Mr. Abraham was a director of Liz
Claiborne, Inc. from 1993 to 1998. He currently serves on the boards
of directors of: R.G. Barry Corp., a manufacturer of comfort
footwear (since 1993); Signet Group, plc, an operator of retail
jewelry stores in the United States and the United Kingdom (since
1994); Galey & Lord, Inc., a manufacturer of textile products (since
1993); and the Smith Barney Funds Board (since 1994).
</TABLE>

4
<PAGE>

<TABLE>
<CAPTION>
POSITION WITH THE COMPANY; PRINCIPAL OCCUPATION AND BUSINESS
NAME AGE EXPERIENCE DURING LAST FIVE YEARS; DIRECTORSHIPS OF PUBLIC COMPANIES
- ---- -------- --------------------------------------------------------------------
<S> <C> <C>
John R. Varsames............ 48 Mr. Varsames has served as the President and Chief Executive Officer
of the Company since April 1999 and became a director of the Company
in November 1999. His term as a director expires at the Annual
Meeting of Stockholders in 2002. In June 1996, Mr. Varsames founded
and became the Chief Executive Officer of Navis Technologies, Inc.
From 1994 to 1996 Mr. Varsames served initially as a consultant and
then Vice President for AirMouse Remote Controls and its AirMarket
Interactive System. From 1984 to 1994 he was the President and Chief
Executive Officer of Northshore Companies, a construction,
development and real estate investment firm.
</TABLE>

Charles W. Quatt is the brother-in-law of John R. Varsames.

BOARD OF DIRECTORS AND COMMITTEE MEETINGS

The Board of Directors has Audit and Compensation Committees. It does not
have a nominating or similar committee.

The Audit Committee reviews the internal accounting procedures of the
Company and consults with and reviews the services provided by the Company's
independent auditors. The directors currently serving on the Audit Committee are
Stanley M. Blau and Victor Reichenstein, who were appointed on March 17, 2000.
The Audit Committee held no meetings during 1999.

The Compensation Committee reviews and recommends to the Board the
compensation and benefits of all officers of the Company and reviews general
policy relating to compensation and benefits of employees of the Company. The
Compensation Committee also administers the issuance of stock options. The
directors currently serving on the Compensation Committee are Leopold Abraham
II, Charles W. Quatt and James Bowman, who were appointed on December 6, 1999.
The Compensation Committee held no meetings during 1999.

During 1999, the Board of Directors of the Company held one meeting. Each
incumbent director attended that meeting.

EXECUTIVE COMPENSATION

The following table sets forth the compensation paid or accrued for services
rendered in 1999 by the Chief Executive Officer and the other two executive
officers of the Company (the "Named Executive Officers"). Prior to April 1999,
the Company did not have any operations and Sally A. Fonner served as the sole
executive officer and sole director until her resignation as an officer and a
director on April 5, 1999 and November 6, 1999, respectively. Ms. Fonner
received no compensation other than the following which was paid to Capston
Network Company ("Capston") in connection with a plan of reorganization approved
by the Company's stockholders (i) 181,389 shares of the Company's Common Stock
and (ii) $150,000 in cash (Capston actually received $250,000 in cash but
$100,000 was paid out to other individuals in connection with the
transaction--see Related Transactions). Ms. Fonner is an affiliate of Capston.

5
<PAGE>

<TABLE>
<CAPTION>
LONG TERM
ANNUAL COMPENSATION COMPENSATION
----------------------------------------- -------------
NAME AND OTHER ANNUAL SHARES UNDER
PRINCIPAL POSITION YEAR SALARY ($) BONUS ($) COMPENSATION ($) OPTION AWARDS
- --------------------------------------- -------- ---------- --------- ---------------- -------------
<S> <C> <C> <C> <C> <C>
John R. Varsames....................... 1999 114,944 -- -- n/a
President and Chief 1998 127,076 -- --
Executive Officer(1) 1997 72,950 -- --
Michael T. Grennan..................... 1999 93,877 -- -- n/a
Secretary, Treasurer and
Chief Financial
Officer(2)
Daniel J. Peterson..................... 1999 32,791 -- -- n/a
Vice President of Business
Development(3)
</TABLE>

- ------------------------

(1) John R. Varsames was appointed President and Chief Executive Officer of the
Company on April 5, 1999. The salary reflected for 1999 is the actual amount
paid to Mr. Varsames for his service from the time he was appointed through
December 31, 1999. The Compensation reflected for years 1998 and 1997 was
the compensation received by Mr. Varsames in his capacity as the President
and Chief Executive Officer of Navis Technologies, Inc.

(2) Michael T. Grennan was appointed Secretary, Treasurer and Chief Financial
Officer on April 5, 1999. The salary reflected for 1999 is the actual amount
paid to Mr. Grennan for his service from the time he was appointed through
December 31, 1999.

(3) Daniel J. Peterson was appointed Vice President of Business Development on
September 1, 1999. The salary reflected for 1999 is the actual amount paid
to Mr. Peterson for his service from the time he was appointed through
December 31, 1999.

None of the named executive officers held or were issued options to acquire
shares of the Company's Common Stock during the year ending December 31, 1999.

DIRECTOR COMPENSATION

Each director of the Company who is not an employee of the Company is
reimbursed for reasonable out-of-pocket expenses incurred in attending meetings.
In addition, provided the 1999 Non-Employee Directors' Stock Option Plan (the
"1999 Director Plan") is approved by the stockholders, non-employee directors
are entitled to certain option grants. Under the 1999 Director Plan each
non-employee director receives (i) upon first being elected to the board an
option for 20,000 shares which vests over one year and (ii) annually, at the
time of the annual meeting, an option for 5,000 shares which vests over one
year. Pursuant to the 1999 Director Plan, options vest upon any
change-in-control of the Company.

SECTION 16 REPORTING

For the year ended December 31, 1999, the following persons who were
directors, officers, or beneficial owners of more than 10% of the Common Stock
during such year, failed to file on a timely basis reports required by
Section 16(a) of the Exchange Act during such year or any prior fiscal year.
Sally Fonner, who is no longer a Director of the Company, did not timely file a
Form 3 when she was elected a Director on March 23, 1999, but filed a Form 3 on
May 7, 1999 reporting her status as a Director as well as the securities that
she beneficially owned as of the filing date. Daniel J. Peterson was appointed
as an executive officer on December 6, 1999, but did not timely file the
required Form 3 which was filed on May 12, 2000. Charles W. Quatt became a
Director on December 6, 2000, but has yet to file the required Form 3. The
following Directors each failed to file the required Form 4 in connection with
stock option grants made pursuant to the 1999 Non-Employee Directors' Stock
Option Plan on December 6, 1999:

6
<PAGE>
Leopold Abraham II, Stanley M. Blau, James Bowman, Charles W. Quatt and Victor
Reichenstein. The Company has notified each officer and director of any failure
to file and the Company anticipates that each such officer and director will
file all required forms during the second quarter of 2000.

RELATED TRANSACTIONS

On April 5, 1999, the Company acquired Navis in a transaction whereby the
stockholders of Navis exchanged all of their Navis stock for 8,000,000 shares of
newly issued Common Stock (or approximately 80% of the Company's then
outstanding Common Stock), and Navis became a wholly-owned subsidiary of the
Company. Pursuant to the Navis transaction, Mr. Varsames became the beneficial
owner of approximately 71% of the Company's then outstanding Common Stock, was
appointed President and Chief Executive Officer of the Company, and acquired the
contractual right to designate individuals for appointment to the Board.
Mr. Varsames shares beneficial ownership of 7,080,000 shares of Common Stock
with his wife, Heidi A. Varsames. Prior to the Navis Transaction, Mr. Varsames
was not a director, officer or stockholder of, or otherwise related to, the
Company.

On April 6, 1999, the Company entered into the Friedlander Transaction,
pursuant to which Friedlander purchased Preferred Stock and Warrants convertible
into and exercisable for, respectively, approximately 41% of the then
outstanding Common Stock and was granted the contractual right to designate two
individuals for appointment to the Board. Prior to the Friedlander Transaction,
neither Friedlander nor Mr. Friedlander was a director, officer or stockholder
of, or otherwise related to, the Company. Mr. Friedlander designated Mr. Blau
and Mr. Abraham as Directors, each of whom was appointed in November 1999.

In connection with the Navis Transaction and Friedlander Transaction, the
Company agreed to issue 1,460,000 shares of Common Stock to certain consultants
and advisors, including 540,000 shares of Common Stock that were issued to
persons designated by Capston, 270,000 shares of Common Stock that were issued
to legal counsel for the parties and 650,000 shares of Common Stock that were
issued to certain financial consultants as finders' fees. Ms. Fonner was so
designated by Capston to receive 180,600 of such 540,000 shares of Common Stock.
George W. Schiele received 600,000 of the 650,000 shares of Common Stock issued
as finders' fees. Mr. Schiele transferred 250,000 of the 600,000 shares to
Mr. Friedlander. Mr. Friedlander was recruited by Mr. Schiele to perform
services for the Company and thereby became entitled to 250,000 shares based on
a Statement on Schedule 13G filed on July 1, 1999 by Mr. Schiele. In addition to
the above mentioned stock compensation, upon the closing of the Navis
Transaction, Navis paid $250,000 (the "Cash Compensation") in cash to Capston,
$100,000 of which Capston, in turn, paid to Mr. Schiele and another individual
($50,000 each) who acted as finders in connection with the Navis Transaction,
and the remaining $150,000 was retained by Capston. An oral agreement (the "Cash
Condition Agreement") between Capston and Navis provided that Capston's $150,000
portion of the Cash Compensation is subject to repayment in the event that the
Common Stock fails to trade at or above $5.00 per share on a national securities
exchange or in the National Association of Securities Dealers' SmallCap Market
for at least 45 consecutive trading days within the six months immediately
following the closing of the Navis Transaction. The Cash Condition Agreement was
later modified to provide that the relevant time period for such trading would
be the four months immediately following the filing of the Report on
Form 10-KSB for the fiscal year ending March 31, 1999, rather than the six
months immediately following the Navis Transaction.

Between April 7, 1998 and March 23, 1999, Navis issued 15 separate 12%
Promissory Notes (the "Varsames Notes") to Mr. Varsames in an aggregate
principal amount of approximately $223,647. The Varsames Notes are payable on
demand, and on March 29, 1999, April 9, 1999 and June 9, 1999, Navis repaid an
aggregate of approximately $250,147 principal amount of Varsames Notes and
approximately $17,081 accrued interest thereon. Navis is a wholly-owned
subsidiary of the Company.

7
<PAGE>
Ms. Fonner and Capston agreed to reimburse the Company $150,000 (the
"Reimbursement") for legal fees incurred by the Company. The Reimbursement has
yet to be received by the Company.

The Company leases approximately 14,500 square feet of office and light
manufacturing space in Williston, Vermont from Airmouse House Ltd. Partnership.
This lease expires in 2004 and calls for rent of approximately $8,333 per month
in 1999, with amounts generally increasing annually thereafter to reflect cost
of living related increases. Mr. Varsames is a general partner of Airmouse
House Ltd. Partnership. The terms of the lease were determined by arms-length
negotiation between the parties and are no more favorable than if the lease was
between unrelated parties.

The Company has retained Forbes Consulting Group, Inc. ("Forbes") to perform
certain consumer market research and consulting services. The Company has made
payments aggregating approximately $118,447 to Forbes through the first quarter
of 2000. Mr. Bowman is a senior partner of Forbes.

CHANGE IN ACCOUNTANT

On September 22, 1999, the Company engaged Deloitte & Touche LLP, New York,
New York, as independent auditors, to audit the Company's financial statements
for the year ended December 31, 1999 and, consequently, ended the engagement of
Want & Ender, CPA, P.C., New York, New York. Such actions were approved by the
Board of Directors as of November 11, 1999. Want & Ender neither resigned nor
declined to stand for re-election. None of Want & Ender's reports on the
financial statements of the Company for either of the two years ended
December 31, 1998 and December 31, 1997 contained an adverse opinion or
disclaimer of opinion, or was modified as to uncertainty, audit scope, or
accounting principles. The Company had no disagreements with Want & Ender on any
matter of accounting principles or practices, financial statements disclosure,
or auditing scope or procedure which could have caused them to make reference to
the subject matter of such disagreement in connection with their report.

Accountants from Deloitte & Touche LLP anticipate being present at the
Annual Meeting of Stockholders to be held on June 22, 2000. They will have the
opportunity to make a statement if they desire to do so and are expected to be
available to respond to appropriate questions.

AMENDMENT TO CERTIFICATE OF
INCORPORATION TO INCREASE THE NUMBER OF AUTHORIZED SHARES
(ITEM 2 OF NOTICE)

Article Four of the Certificate of Incorporation of the Company currently
authorizes the issuance of 25,000,000 shares of Common Stock and 5,000,000
shares of Preferred Stock.

As of May 9, 2000, there were 11,024,765 shares of Common Stock outstanding.
Therefore, 13,975,235 authorized shares of Common Stock remained available for
issuance without further action by the stockholders of the Company, of which
8,295,226 are reserved for issuance under the Company's various stock option
plans, outstanding warrants and outstanding convertible debentures. As of
May 9, 2000, there were 5,000,000 shares of Preferred Stock outstanding.
Therefore, no shares of Preferred Stock remain available for issuance without
further action by the stockholders of the Company.

On May 1, 2000, the Board of Directors of the Company proposed and declared
advisable an amendment to the Certificate of Incorporation increasing the
authorized shares of Common Stock from 25,000,000 to 50,000,000 and the
authorized shares of Preferred Stock from 5,000,000 to 25,000,000. The proposed
amendment would have no effect upon the terms of the Common Stock. The Preferred
Stock would be subject to and have such preferences, limitations and relative
rights, including without limitation, dividend rates, conversion prices, voting
rights, redemption prices and similar matters, as the Company's Board of
Directors shall determine from time to time.

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The Board of Directors believes that the proposed increase in authorized
shares of Common Stock and Preferred Stock is desirable to enhance the Company's
flexibility in connection with possible future actions, such as financings,
acquisitions or stock splits. Having such authorized shares available for
issuance in the future would allow shares of Common Stock and/or Preferred Stock
to be issued for such purposes without the expense and delay of further
stockholder action. There is no current plan or proposal to issue any of the
additional shares proposed to be authorized.

ANTI-TAKEOVER EFFECT

The increased number of authorized shares could also be used to make more
difficult a change of control of the Company which the Board of Directors
determines not to be in the best interests of its stockholders. For instance,
such shares could be issued in public or private financing transactions to
persons who might side with the Board of Directors in opposing a takeover bid.
The Board of Directors is not currently aware of any efforts by any person to
gain control of the Company.

RISK OF DILUTION

By increasing the authorized number of shares of Common Stock and Preferred
Stock, the Board of Directors of the Company may issue shares of Common Stock
and/or Preferred Stock without further stockholder action. If the Company issues
additional shares of Common Stock or securities convertible into or exchangeable
for Common Stock, the percentage ownership of the Company's then-existing
stockholders will decrease. Furthermore, if the Company issues additional shares
of Preferred Stock, the terms of such Preferred Stock may provide that the
holders of such Preferred Stock are entitled to receive dividends and/or
distributions upon liquidation prior to the holders of Common Stock.
Furthermore, any such Preferred Stock may have class voting rights, conversion
features and/or antidilution protections of which the Common Stock does not have
the benefit.

The Board of Directors recommends a vote FOR the proposal to amend the
Certificate of Incorporation. If the enclosed proxy card is returned, the shares
represented by the proxy will be voted to approve the proposed amendment unless
the proxy indicates to the contrary and may be voted in favor of adjournment of
the meeting in order to permit further solicitation of proxies with respect to
the proposed amendment if sufficient votes in favor of the proposed amendment
have not been received. The affirmative vote of a majority of the outstanding
shares of Common Stock is required for approval of the amendment.

APPROVAL OF 1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN
(ITEM 3 OF NOTICE)

GENERAL

On December 6, 2000, the Board of Directors of the Company adopted the 1999
Non-Employee Directors' Stock Option Plan (the "1999 Director Plan"). The 1999
Director Plan provides for the grant of nonstatutory stock options to the
Company's non-employee directors. As of May 9, 2000 the Company had 5
non-employee directors that could participate in the 1999 Director Plan. On
May 9, 2000, the average of the closing bid and ask price of the Company's
Common Stock was $3.75.

The Board of Directors believes that approval of the 1999 Director Plan is
in the best interests of the Company because it will provide the Company with
sufficient equity-based incentives to attract and retain qualified directors and
to provide incentives for such persons to exert maximum efforts for the success
of the Company. The Board of Directors recommends a vote FOR the proposal to
approve the 1999 Director Plan. If the enclosed proxy card is returned, the
shares represented by the proxy will be voted to approve the 1999 Director Plan
unless the proxy indicates to the contrary and may be voted in favor of
adjournment of the meeting in order to permit further solicitation of proxies
with respect to the 1999 Director Plan if

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sufficient votes in favor of approving the Plan have not been received. The
affirmative vote of a majority of the shares of Common Stock voting on the
matter is required for approval of the 1999 Director Plan.

Approval by stockholders of the adoption of the 1999 Director Plan is sought
in order to meet the stockholder approval requirements of (i) Rule 16b-3 under
the 1934 Act, which, in the case of certain option plans that have been approved
by stockholders, prevents the grant of options to directors from being deemed
"purchases" for purposes of the profit recapture provisions of Section 16(b) of
that Act and (ii) Section 162(m) of the Code, which among other qualifications
requires stockholder approval of any option plan to exempt the spread (the
difference between the exercise price and the market value at the time of
exercise) of options from the limitation on deductibility under that section.

There follows a brief but not comprehensive summary of the 1999 Director
Plan. The 1999 Director Plan was filed as an exhibit to the Company's Annual
Report on Form 10-KSB filed with the Commission on April 28, 2000 and a copy of
the 1999 Plan will be provided to any requesting stockholder, free of charge.

ADMINISTRATION

The 1999 Director Plan provides that it is to be administered by the Board.

SHARES SUBJECT TO THE 1999 DIRECTOR PLAN

The aggregate number of shares of the Company's Common Stock which may be
issued under the 1999 Director Plan is 200,000 shares. If any options expire or
are terminated without having been exercised in full, the applicable shares will
again be available for issuance under the 1999 Director Plan. Options to acquire
100,000 shares with an exercise price equal to $0.97 were granted to each of the
incumbent non-employee directors on December 6, 1999.

STOCK OPTION TERMS

Pursuant to the terms of the 1999 Director Plan, non-employee directors
shall automatically be granted an initial option upon becoming a director to
receive 20,000 shares (the "Initial Option"). The exercise price per share for
each Initial Option shall be equal to 25% of the fair market value on the grant
date as determined in accordance with the terms of the 1999 Director Plan. Each
Initial Option shall vest over the course of one year at a rate equal to 50% for
each semi-annual period.

In addition to the Initial Option, each non-employee director shall
automatically be granted an option on the date of each Annual Meeting of the
Company's stockholders to acquire 5,000 shares (the "Subsequent Options"). The
exercise price per share for each Subsequent Option shall be equal to 100% of
the fair market value on the grant date as determined in accordance with the
terms of the 1999 Director Plan. The Subsequent Options shall vest a rate equal
to 100% on the anniversary of the grant date.

No option will be exercisable after the expiration of ten years from the
date it was granted.

Options granted under the 1999 Directors Plan may not be transferred except
by will or by the laws of descent and distribution or pursuant to a qualified
domestic relations order. The optionee may designate a third party who, in the
event of the death of the optionee, will be entitled to exercise the vested
options, but only within the period ending on the earlier of (i) twelve months
following the date of death or (ii) the expiration of the term of the option as
set forth in the specific option agreement. In the event an optionee's status as
director terminates as a result of disability, the optionee's vested options
must be exercised within the same time frame.

In the event an optionee is terminated as a director (other than by death or
disability), the optionee may exercise his or her vested options only within the
period of time ending on the earlier of (i) 60 days after termination or
(ii) expiration of the option's term. If the Board determines that the optionee
has

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committed embezzlement, fraud, dishonesty, nonpayment of an obligation owed to
the Company, breach of fiduciary duty or deliberate disregard of the Company
rules resulting in loss, damage or injury to the Company, or if an Optionee
makes an unauthorized disclosure of any Company trade secret or confidential
information, engages in any conduct constituting unfair competition, induces any
Company customer to breach a contract with the Company or induces any principal
for whom the Company acts a agent to terminate such agency relationship than
neither the Optionee nor his estate shall be entitled to exercise any Option
whatsoever.

All options granted under the 1999 Director Plan shall vest in its entirety
and be exercisable in full immediately prior to certain significant corporate
transactions such as a dissolution, liquidation, sale of substantially all of
the assets or a merger into another corporation.

AMENDMENT AND TERMINATION

The 1999 Director Plan authorizes the Board of Directors to discontinue,
suspend or amend the 1999 Director Plan, except that no amendment will be
effective without stockholders' approval to the extent required by Rule 16b-3
under the Exchange Act (or any other applicable law or regulation). The 1999
Director Plan will terminate on December 6, 2009.

FEDERAL INCOME TAX CONSEQUENCES UNDER THE 1999 DIRECTOR PLAN

Set forth below is a general summary of the federal income tax consequences
related to options awarded under the 1999 Director Plan. It is not intended to
be exhaustive, and in particular does not address state, municipal or foreign
tax laws or the individual circumstances of participants. In addition,
administrative and judicial interpretations of the application of the federal
income tax laws are subject to change.

CONSEQUENCES TO THE OPTION HOLDER. All options granted pursuant to the 1999
Director Plan shall be nonqualified or nonstatutory stock options. There are no
federal income tax consequences to the option holder solely by reason of the
grant of stock options under the 1999 Director Plan. Upon the exercise the
optionee will generally recognize ordinary income in an amount equal to the
excess of fair market value of the shares at the time of exercise over the
amount paid as the exercise price. The optionee's tax basis in the shares
acquired pursuant to the exercise of an option will be the amount paid upon
exercise plus the amount of ordinary income recognized by the optionee upon
exercise.

If the optionee disposes of shares acquired upon exercise of a stock option
in a taxable transaction, the option holder will recognize capital gain or loss
in an amount equal to the difference between his/her basis (as discussed above)
in the shares sold and the total amount realized upon disposition. Any such
capital gain or loss will be long-term capital gain or loss if the shares were
held for more than one year from the date such shares were transferred to the
option holder.

CONSEQUENCES TO THE COMPANY. There are no federal income tax consequences
to the Company by reason of the grant of nonstatutory stock options. At the time
the option holder recognizes ordinary income from the exercise of a nonstatutory
stock option, the Company will be entitled to a federal income tax deduction in
the amount of the ordinary income so recognized (as described above), provided
that the Company satisfies its tax reporting obligations described below. The
Company will be required to report to the Internal Revenue Service any ordinary
income recognized by any option holder by reason of the exercise of a
nonstatutory stock.

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APPROVAL OF 2000 INCENTIVE STOCK PLAN

(ITEM 4 OF NOTICE)

GENERAL

On March 17, 2000, the Board of Directors of the Company adopted the 2000
Incentive Stock Plan (the "2000 Plan"). The 2000 Plan provides for the grant of
incentive stock options to employees and nonstatutory stock options, stock
appreciation rights, stock bonuses, rights to purchase restricted stock and
other awards based on the Company's Common Stock (collectively, "Stock Awards")
to employees and consultants. As of May 9, 2000 the Company had approximately 50
employees and 3 consultants that could participate in the 2000 Plan. On May 9,
2000, the average of the closing bid and ask price of the Company's Common Stock
was $3.75. The Company's 1997 Incentive Stock Plan will be superseded by the
2000 Plan and no further grants under the 1997 Plan will be made after adoption
of the 2000 Plan. Options granted previously under the 1997 Plan will continue
to be governed by the terms of the 1997 Plan.

The Board of Directors believes that approval of the 2000 Plan is in the
best interests of the Company because it will provide the Company with
sufficient equity-based incentives to attract and retain qualified employees and
consultants and to provide incentives for such persons to exert maximum efforts
for the success of the Company. The Board of Directors recommends a vote FOR the
proposal to approve the 2000 Plan. If the enclosed proxy card is returned, the
shares represented by the proxy will be voted to approve the 2000 Plan unless
the proxy indicates to the contrary and may be voted in favor of adjournment of
the meeting in order to permit further solicitation of proxies with respect to
the 2000 Plan if sufficient votes in favor of approving the Plan have not been
received. The affirmative vote of a majority of the shares of Common Stock
voting on the matter is required for approval of the 2000 Plan.

Approval by stockholders of the adoption of the 2000 Plan is sought in order
to meet the stockholder approval requirements of (i) Section 422 of the Code,
which requires stockholder approval of an incentive stock option plan,
(ii) Rule 16b-3 under the 1934 Act, which, in the case of certain option plans
that have been approved by stockholders, prevents the grant of options to
directors, executive officers and certain other affiliates from being deemed
"purchases" for purposes of the profit recapture provisions of Section 16(b) of
that Act and (iii) Section 162(m) of the Code, which among other qualifications
requires stockholder approval of any option plan to exempt the spread (the
difference between the exercise price and the market value at the time of
exercise) of options from the limitation on deductibility under that section.

There follows a brief but not comprehensive summary of the 2000 Plan. The
2000 Plan was filed as an exhibit to the Company's Annual Report on Form 10-KSB
filed with the Commission on April 28, 2000 and a copy of the 2000 Plan will be
provided to any requesting stockholder, free of charge.

ADMINISTRATION

The 2000 Plan provides that it is to be administered by a committee (the
"Committee") composed of not fewer than two members, all of which will be
"disinterested persons" within the meaning of the securities laws. Subject to
the provisions of the 2000 Plan, the Committee has the authority to determine
(i) which persons eligible under the 2000 Plan will be granted Stock Awards;
(ii) when and how the Stock Awards will be granted; (iii) whether the Stock
Award will be an incentive stock option, a nonstatutory stock option, a stock
bonus, a right to purchase restricted stock, a stock appreciation right, another
stock-based award or a combination of the foregoing; (iv) the number of shares
involved; (v) the exercise or purchase price; (vi) the type and duration of
transfer or other restrictions; and (vii) any other terms of a Stock Award.

SHARES SUBJECT TO THE 2000 PLAN

The aggregate number of shares of the Company's Common Stock which may be
issued under the 2000 Plan is initially 1,000,000 shares. This pool of reserved
stock is subject to semi-annual upward

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adjustment such that the total number of shares issuable under the Plan after
each adjustment is equal to or greater than 10% of the Company's issued and
outstanding Common Stock.

If any stock options expire or are terminated without having been exercised
in full, the applicable shares will again be available for issuance under the
2000 Plan. No Stock Awards have been granted to date.

STOCK OPTIONS

The exercise price per share of each incentive stock option granted under
the 2000 Plan will be not less than the fair market value of the Company's
Common Stock on the date of the grant of the option as determined pursuant to
the 2000 Plan (the "Fair Market Value"). The aggregate fair market value
(determined as of the time such option is granted) of the Common Stock for which
any employee may have incentive stock options vest in any calendar year may not
exceed $100,000. The exercise price per share of each nonstatutory stock option
granted will be determined by the Committee.

Options granted under the 2000 Plan will vest (become exercisable) either
initially or in periodic installments as determined by the Committee. No option
will be exercisable after the expiration of ten years from the date it was
granted.

During the optionee's lifetime, an incentive stock option will be
exercisable only by the optionee and will not be transferable except by will or
by the laws of descent and distribution. A nonstatutory stock option may be
transferred by will or by the laws of descent and distribution or by gift or a
domestic relations order to certain family members. The optionee may designate a
third party who, in the event of the death of the optionee, will be entitled to
exercise the vested options, but only within the period ending on the earlier of
(i) twelve months following the date of death or (ii) the expiration of the term
of the option as set forth in the specific option agreement. In the event an
optionee's status as an employee or consultant terminates as a result of
disability, the optionee's vested options must be exercised within the same time
frame.

In the event an optionee is terminated as an employee or consultant (other
than by death, disability or retirement), the optionee may exercise his or her
vested options only within the period of time ending on the earlier of
(i) 30 days after termination or (ii) expiration of the option's term. If the
optionee is terminated for "cause," all options will terminate immediately. As
used in the 2000 Plan, "cause" means (i) the conviction of the optionee by a
court of competent jurisdiction as to which no further appeal can be taken of a
crime involving moral turpitude; (ii) the proven commission by the optionee of
an act of fraud upon the Company; (iii) the willful and proven misappropriation
of any funds or property of the Company by the optionee; (iv) the willful,
continued and unreasonable failure by the optionee to perform duties assigned to
him and agreed to by him; (v) the knowing engagement by the optionee in any
direct, material conflict of interest with the Company without compliance with
the Company's conflict of interest policy, if any, then in effect; (vi) the
knowing engagement by the optionee, without the written approval of the Board of
Directors of the Company, in any activity which competes with the business of
the Company or which would result in a material injury to the Company; or
(vii) the knowing engagement in any activity which would constitute a material
violation of the provisions of the Company's policies and procedures manual or
other analogous employee handbook, if any, then in effect.

STOCK BONUSES AND RESTRICTED STOCK

Grants of stock bonuses and restricted stock involve the issuance of shares
to the recipient subject to transfer restrictions, employment restrictions,
vesting restrictions. As the conditions are satisfied, the repurchase
restrictions lapse and the recipient is then free to hold or sell the shares
free of contractual restrictions and the risk of forfeiture. Grants of
unrestricted stock involve the issuance of shares free of any transfer
restrictions or the risk of forfeiture. The Committee will have discretion to
determine the number of shares to be granted, whether or not they will be
restricted (and, if so, the terms of the restrictions) and the amount and form
of consideration to be paid for the shares granted.

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STOCK APPRECIATION RIGHTS

The grant of stock appreciation rights entitles the holder to a cash
distribution based on the increase in Fair Market Value per share of a
designated amount of the Company's Common Stock. The Committee will have the
authority to issue three types of stock appreciation rights under the 2000 Plan.

AMENDMENT AND TERMINATION

The 2000 Plan authorizes the Board of Directors to discontinue, suspend or
amend the 2000 Plan, except that no amendment will be effective without
stockholders' approval if the amendment (i) increases the number of shares of
Common Stock that may be issued under the Plan, (ii) materially increases the
benefits accruing to individuals holding incentive awards or (iii) materially
modifies the requirements as to eligibility for participation in the plan. The
2000 Plan will terminate on March 17, 2010.

FEDERAL INCOME TAX CONSEQUENCES UNDER THE 2000 PLAN

Set forth below is a general summary of the federal income tax consequences
related to options awarded under the 2000 Plan. It is not intended to be
exhaustive, and in particular does not address state, municipal or foreign tax
laws or the individual circumstances of participants. In addition,
administrative and judicial interpretations of the application of the federal
income tax laws are subject to change.

CONSEQUENCES TO THE OPTION HOLDER. There are no federal income tax
consequences to the option holder solely by reason of the grant of incentive
stock options or nonstatutory stock options under the 2000 Plan. The exercise of
an incentive stock option is not a taxable event for regular federal income tax
purposes if certain requirements are satisfied, including the restriction
providing that the option holder generally must exercise the option no later
than three months following termination of his employment. However, the exercise
of an incentive stock option may give rise to an alternative minimum tax
liability (see discussion below).

Upon the exercise of a nonstatutory stock option, the option holder will
generally recognize ordinary income in an amount equal to the excess of fair
market value of the shares at the time of exercise over the amount paid as the
exercise price. The ordinary income recognized in connection with the exercise
by an option holder of a nonstatutory stock option will be subject to both
income and employment tax withholding. The option holder's tax basis in the
shares acquired pursuant to the exercise of an option will be the amount paid
upon exercise plus, in the case of a nonstatutory stock option, the amount of
ordinary income recognized by the option holder upon exercise. If any option
holder disposes of shares acquired upon the exercise of an incentive stock
option in a taxable transaction, and such disposition occurs more than two years
from the date on which the option is granted and more than one year after the
date on which the shares are transferred to the option holder pursuant to the
exercise of the incentive stock option (a "qualifying disposition"), the option
holder will recognize long-term capital gain or loss equal to the difference
between the amount realized upon such disposition and the option holder's
adjusted basis in such shares (generally the exercise price).

If the option holder disposes of shares acquired upon the exercise of an
incentive stock option (other than in certain tax-free transactions) within two
years from the date on which the incentive stock option is granted or within one
year after the transfer of the shares to the option holder pursuant to the
exercise of the incentive stock option (a "disqualifying disposition"), then at
the time of disposition the option holder will generally recognize ordinary
income equal to the lesser of (i) the excess of such shares' fair market value
on the date of exercise over the exercise price paid by the option holder or
(ii) the option holder's actual gain (i.e. the excess, if any, of the amount
realized on the disposition over the exercise price paid by the option holder).
If the total amount realized on a taxable disposition (including return of
capital and capital gain) exceeds the fair market value on the date of exercise,
then the option holder will recognize a capital gain in the amount of such
excess. If the option holder incurs a loss on the disposition (i.e., if the
total amount realized is less than the exercise price paid the option holder),
then the loss will be a capital loss.

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If any option holder disposes of shares acquired upon exercise of a
nonstatutory stock option in a taxable transaction, the option holder will
recognize capital gain or loss in an amount equal to the difference between
his/her basis (as discussed above) in the shares sold and the total amount
realized upon disposition. Any such capital gain or loss (and any capital gain
or loss recognized on a disqualifying disposition of shares acquired upon
exercise of incentive stock options as discussed above) will be long-term
capital gain or loss if the shares were held for more than one year from the
date such shares were transferred to the option holder.

Alternative minimum tax ("AMT") is imposed in addition to, but only to the
extent it exceeds, the option holder's regular income tax for the taxable year.
Generally, AMT is computed at the rate of 26% on the excess of a taxpayer's
alternative minimum taxable income ("AMTI") over the exemption amount, but only
if such excess amount does not exceed $175,000 ($87,500 in the case of married
individuals filing separate returns). The AMT tax rate is 28% of such excess
amount over the $175,000 ($87,500) amount. For these purposes, the exemption
amount is $45,000 for joint returns or returns of surviving spouses ($33,750 for
single taxpayers and $22,500 for married individuals filing separate returns),
reduced by 25% of the excess of AMTI over $150,000 for joint returns or returns
of surviving spouses ($112,500 for single taxpayers and $75,000 for married
individuals filing separate returns). A taxpayer's AMTI is essentially the
taxpayer's taxable income adjusted pursuant to the AMT provisions and increased
by items of tax preference.

The exercise of incentive stock options (but not nonstatutory stock options)
will generally result in an upward adjustment to the option holder's AMTI in the
year of exercise by an amount equal to the excess, if any, of the fair market
value of the stock on the date of exercise over the exercise price. The basis of
the stock acquired for AMT purposes, will equal the exercise price increased by
the prior upward adjustment of the taxpayer's AMTI due to the exercise of the
option. This will result in a corresponding downward adjustment to the option
holder's AMTI in the year of disposition of the stock. The AMT paid with respect
to the exercise of an incentive stock option is allowed as a credit against the
regular tax liability of the option holder in a subsequent year when he disposes
of the stock; therefore, imposition of the AMT at the time of exercise of an
incentive stock option may not increase the aggregate amount of income tax paid
by the option holder, but instead may only affect the timing of such payments.

CONSEQUENCES TO THE COMPANY. There are no federal income tax consequences
to the Company by reason of the grant of incentive stock options or nonstatutory
stock options or the exercise of incentive stock options (other than
disqualifying dispositions). At the time the option holder recognizes ordinary
income from the exercise of a nonstatutory stock option, the Company will be
entitled to a federal income tax deduction in the amount of the ordinary income
so recognized (as described above), provided that the Company satisfies its tax
reporting obligations described below. To the extent the option holder
recognizes ordinary income by reason of a disqualifying disposition of the stock
acquired upon exercise of incentive stock options, the Company will be entitled
to a corresponding deduction in the year in which the disposition occurs,
provided that the Company satisfies a tax reporting obligation described below.
The Company will be required to report to the Internal Revenue Service any
ordinary income recognized by any option holder by reason of the exercise of a
nonstatutory stock option or the disqualifying disposition of stock acquired
upon exercise of incentive stock options. The Company will be required to
withhold income and employment taxes (and pay the employer's share of employment
taxes) with respect to ordinary income recognized by the option holder upon the
exercise of nonstatutory stock options.

TAX TREATMENT OF RESTRICTED STOCK. An employee who receives a restricted
stock award under the 2000 Plan generally will not recognize taxable income at
the time the award is received, but will recognize ordinary compensation income
when the transfer and forfeiture restrictions lapse in an amount equal to the
excess of the aggregate fair market value, as of the date the restrictions
lapse, over the amount, if any, paid by the employee for the restricted stock.
Alternatively, an employee receiving stock may elect, in accordance with
Section 83(b) of the Code, to treat as ordinary income the excess of the fair
market value of the shares of restricted stock at the time of grant over the
amount if any, paid by the employee,

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notwithstanding the transfer and forfeiture restrictions on the stock. All such
taxable amounts are deductible by the Company at the time and in the amount of
the ordinary compensation income recognized by the employee. The full amount of
dividends or other distributions of property made with respect to restricted
stock prior to the lapse of the transfer and forfeiture restrictions will
constitute ordinary compensation income to the employee and the Company will be
entitled to a deduction at the same time and in the same amount.

TAX TREATMENT OF UNRESTRICTED STOCK. Upon receiving an award of
unrestricted stock under the 2000 Plan, the employee will realize ordinary
income to the extent of the fair market value (determined at the time of
transfer to the employee) of such shares, over the amount, if any paid by the
employee for the shares. Such taxable amounts will be deductible as compensation
by the Company.

TAX TREATMENT OF CASH DISTRIBUTIONS PURSUANT TO STOCK APPRECIATION
RIGHTS. Employees receiving a cash distribution pursuant to stock appreciation
rights issued under the 2000 Plan will realize ordinary income in the amount of
such cash distribution. Such taxable amounts will be deductible as compensation
by the Company.

LIMITATION ON DEDUCTION UNDER SECTION 162(M) OF THE CODE. Section 162(m) of
the Code generally limits an employer's income tax deduction for compensation
paid to certain key executives of a public company to $1,000,000 per executive
per year. The deduction limitation of Section 162(m) does not apply, however, to
certain performance-based compensation arrangements, including plans providing
for stock options having an exercise price of not less than 100% of fair market
value (determined at the time the options are granted), which establish specific
performance goals and/or limits on awards, which are administered by a committee
composed exclusively of "outside" directors, and are disclosed to and approved
by the stockholders of the public company.

RATIFICATION OF SELECTION OF
INDEPENDENT AUDITORS

(ITEM 5 OF NOTICE)

On the recommendation of the Audit Committee, the Board of Directors has
selected Deloitte & Touche LLP independent certified public accountants, as
auditors of the Company for the year ending December 31, 2000. This firm audited
the accounts and records of the Company for the year ending December 31, 1999.

The selection of independent auditors is not required to be submitted to a
vote of the stockholders. The Board believes, however, it is appropriate as a
matter of policy to request that the stockholders ratify the appointment. If the
stockholders do not ratify the appointment, the Board will reconsider its
selection.

STOCKHOLDER PROPOSALS FOR 2001 MEETING

Proposals of stockholders intended to be presented at the 2001 Annual
Meeting of Stockholders must be received on or before January 15, 2001 for
inclusion in the proxy materials relating to that meeting. Any such proposals
should be sent to the Company at its principal offices and addressed to the
Chief Financial Officer. Other requirements for inclusion are set forth in
Rule 14a-8 under the 1934 Act.

OTHER MATTERS

The Company has no knowledge of any matters to be presented for action by
the stockholders at the Annual Meeting other than as set forth above. However,
the enclosed proxy gives discretionary authority to the persons named therein to
act in accordance with their best judgment in the event that any additional
matters should be presented.

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The Company will bear the cost of the solicitation of proxies, including
charges and expenses of brokerage firms and others for forwarding solicitation
material to beneficial owners of Common Stock.

The Information required by Item 13(a) of Rule 14a-101 promulgated under the
1934 Act, as amended, is incorporated by reference to the Company's 1999 Annual
Report on Form 10-KSB which was filed with the Commission on April 28, 2000 and
which will be provided to the stockholders of the Company along with this proxy
statement.

By order of the Board of Directors

/s/ John R. Varsames
John R. Varsames
President and Chief Executive Officer

May 22, 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. A prompt response will
greatly facilitate arrangements for the 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.

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APPENDIX I

ENOTE.COM INC.

1999 NON-EMPLOYEE DIRECTORS' STOCK OPTION PLAN

SECTION 1. PURPOSES OF THE PLAN. The purposes of this 1999 Non-Employee
Directors' Stock Option Plan are to attract and retain the best available
individuals for service as Directors of the Company, to provide additional
incentive to the Outside Directors of the Company to serve as Directors, and to
encourage their continued service on the Board. All options granted hereunder
shall be non-statutory stock options.

SECTION 2. DEFINITIONS. As used herein, the following definitions shall
apply:

(a) "Board" means the Board of Directors of the Company.

(b) "Change of Control" means a sale of all or substantially all of the
Company's assets, or any merger or consolidation of the Company with or into
another corporation other than a merger or consolidation in which the holders of
more than 50% of the shares of capital stock of the Company outstanding
immediately prior to such transaction continue to hold (either by the voting
securities remaining outstanding or by their being converted into voting
securities of the surviving entity) more than 50% of the total voting power
represented by the voting securities of the Company, or such surviving entity,
outstanding immediately after such transaction.

(d) "Common Stock" means the Common Stock of the Company.

(e) "Company" means eNote.com Inc., a Delaware corporation.

(f) "Continuous Status as a Director" means the absence of any interruption
or termination of service as a Director.

(g) "Corporate Transaction" means a dissolution or liquidation of the
Company, a sale of all or substantially all of the Company's assets, or a
merger, consolidation or other capital reorganization of the Company with or
into another corporation.

(h) "Director" means a member of the Board.

(i) "Employee" means any person, including any officer or Director employed
by the Company or any Parent or Subsidiary of the Company. The payment of a
director's fee by the Company shall not be sufficient in and of itself to
constitute "employment" by the Company.

(j) "Exchange Act" means the Securities Exchange Act of 1934, as amended.

(k) "Option" means a stock option granted pursuant to the Plan. All options
shall be non-statutory stock options (i.e., options that are not intended to
qualify as incentive stock options under Section 422 of the Code).

(l) "Optioned Stock" means the Common Stock subject to an Option.

(m) "Optionee" means an Outside Director who receives an Option.

(n) "Outside Director" means a Director who is not an Employee.

(o) "Parent" means a "parent corporation," whether now or hereafter
existing, as defined in Section 424(e) of the Code.

(p) "Plan" means this 1999 Non-Employee Directors' Stock Option Plan.

(q) "Share" means a share of the Common Stock, as adjusted in accordance
with Section 11 of the Plan.
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(r) "Subsidiary" means a "subsidiary corporation," whether now or hereafter
existing, as defined in Section 424(f) of the Code.

SECTION 3. STOCK SUBJECT TO THE PLAN. Subject to the provisions of Section
11 of the Plan, the maximum aggregate number of Shares which may be optioned and
issued under the Plan is 200,000 Shares of Common Stock (the "Pool"). The Shares
maybe authorized, but unissued, or reacquired Common Stock. If an Option should
expire or become unexercisable for any reason without having been exercised in
full, the unpurchased Shares which were subject thereto shall, unless the Plan
has been terminated, become available for future grant under the Plan. In
addition, any Shares of Common Stock that are retained by the Company upon
exercise of an Option in order to satisfy the exercise price for such Option, or
any withholding taxes due with respect to such exercise, shall be treated as not
issued and shall continue to be available under the Plan. If Shares that were
acquired upon exercise of an Option are subsequently repurchased by the Company,
such Shares shall not in any event be returned to the Plan and shall not become
available for future grant under the Plan.

SECTION 4. ADMINISTRATION OF AND GRANTS OF OPTIONS UNDER THE PLAN.

(a) ADMINISTRATOR. Except as otherwise required herein, the Plan shall be
administered by the Board.

(b) PROCEDURE FOR GRANTS. All grants of Options hereunder shall be
automatic and nondiscretionary and shall be made strictly in accordance with the
following provisions:

(i) No person shall have any discretion to select which Outside
Directors shall be granted Options or to determine the number of Shares to
be covered by Options granted to Outside Directors.

(ii) Each Outside Director shall be automatically granted an Option to
purchase 20,000 Shares (the "First Option") on the date on which such person
first becomes an Outside Director after the effective date of this Plan,
whether through election by the stockholders of the Company or appointment
by the Board of Directors to fill a vacancy. Each Outside Director serving
on the Board on the effective date of this Plan shall be granted the First
Option.

(iii) Each Outside Director shall be automatically granted an Option to
purchase 5,000 Shares (the "Subsequent Option") on the date of each Annual
Meeting of the Company's stockholders immediately following which such
Outside Director is serving on the Board, provided that, on such date, he or
she shall have served on the Board for at least six (6) months prior to the
date of such Annual Meeting.

(iv) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, in the event that a grant would cause the number of Shares
subject to outstanding Options plus the number of Shares previously
purchased upon exercise of Options to exceed the Pool, then each such
automatic grant shall be for that number of Shares determined by dividing
the total number of Shares remaining available for grant by the number of
Outside Directors receiving an Option on the automatic grant date. Any
further grants shall then be deferred until such time, if any, as additional
Shares become available for grant under the Plan through action of the
stockholders to increase the number of Shares which may be issued under the
Plan or through cancellation or expiration of Options previously granted
hereunder.

(v) Notwithstanding the provisions of subsections (ii) and
(iii) hereof, any grant of an Option made before the Company has obtained
stockholder approval of the Plan in accordance with Section 17 hereof shall
be conditioned upon obtaining such stockholder approval of the Plan in
accordance with Section 17 hereof.

(i) each Option shall be exercisable only while the Outside Director
remains a Director of the Company, except as set forth in Section 9 below;

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(ii) with respect to the First Options the exercise price per Share
shall be 25% of the fair market value per Share on the date of grant of each
Option, determined in accordance with Section 8 hereof;

(iii) with respect to the Subsequent Option the exercise price per
Share shall be equal to 100% of the fair market value per Share on the date
of grant of each such option, determined in accordance with Section 8
hereof; and

(iv) each First Option shall vest at the rate of 50% of the total
shares per semi-annual period commencing on June 6, 2000.

(v) each Subsequent Option shall vest at the rate of 100% of the total
shares on the anniversary of the grant date.

(d) POWERS OF THE BOARD. Subject to the provisions and restrictions of the
Plan, the Board shall have the authority, in its discretion: (i) to determine,
upon review of relevant information and in accordance with Section 8(b) of the
Plan, the fair market value of the Common Stock; (ii) to determine the exercise
price per Share of Options to be granted, which exercise price shall be
determined in accordance with Section 8 of the Plan; (iii) to interpret the
Plan; (iv) to prescribe, amend and rescind rules and regulations relating to the
Plan; (v) to authorize any person to execute on behalf of the Company any
instrument required to effectuate the grant of an Option previously granted
hereunder; and (vi) to make all other determinations deemed necessary or
advisable for the administration of the Plan.

(e) EFFECT OF BOARD'S DECISION. All decisions, determinations and
interpretations of the Board shall be final and binding on all Optionees and any
other holders of any Options granted under the Plan.

(f) SUSPENSION OR TERMINATION OF OPTION. If the Chief Executive Officer or
his or her designee reasonably believes that an Optionee has committed an act of
misconduct, such officer may suspend the Optionee's right to exercise any option
pending a determination by the Board (excluding the Outside Director accused of
such misconduct). If the Board (excluding the Outside Director accused of such
misconduct) determines an Optionee has committed an act of embezzlement, fraud,
dishonesty, nonpayment of an obligation owed to the Company, breach of fiduciary
duty or deliberate disregard of the Company rules resulting in loss, damage or
injury to the Company, or if an Optionee makes an unauthorized disclosure of any
Company trade secret or confidential information, engages in any conduct
constituting unfair competition, induces any Company customer to breach a
contract with the Company or induces any principal for whom the Company acts as
agent to terminate such agency relationship, neither the Optionee nor his or her
estate shall be entitled to exercise any Option whatsoever. In making such
determination, the Board of Directors (excluding the Outside Director accused of
such misconduct) shall act fairly and shall give the Optionee an opportunity to
appear and present evidence on Optionee's behalf at a hearing before the Board
or a committee of the Board.

SECTION 5. ELIGIBILITY. Options may be granted only to Outside Directors.
All Options shall be automatically granted in accordance with the terms set
forth in Section 4(b) above. An Outside Director who has been granted an Option
may, if he or she is otherwise eligible, be granted an additional Option or
Options in accordance with such provisions. The Plan shall not confer upon any
Optionee any right with respect to continuation of service as a Director or
nomination to serve as a Director, nor shall it interfere in any way with any
rights which the Director or the Company may have to terminate his or her
directorship at any time.

SECTION 6. TERM OF PLAN; EFFECTIVE DATE. The Plan shall become effective
on the date that the Plan is approved by the Board of Directors subject to the
approval of the Plan by the Company's stockholders as provided for in Section 17
hereof. It shall continue in effect for a term of ten (10) years unless sooner
terminated under Section 13 of the Plan.

SECTION 7. TERM OF OPTIONS. The term of each Option shall be ten (10)
years from the date of grant thereof unless an Option terminates sooner pursuant
to Section 9 below.

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SECTION 8. CONSIDERATION.

(a) FAIR MARKET VALUE. The fair market value of a share of Common Stock on
any date shall be (i) the straight average of the closing sales price over the
five (5) preceeding business days, of a share of Common Stock as reported on the
principal securities exchange on which shares of Common Stock are then listed or
admitted to trading or (ii) if not so reported, the average of the closing bid
and asked prices for a share of Common Stock over the five (5) preceeding
business days as quoted on the National Association of Securities Dealers
Automated Quotation System ("Nasdaq") or (iii) if not quoted on Nasdaq, the
average of the closing bid and asked prices for a share of Common Stock as
quoted by the National Quotation Bureau's "Pink Sheets" or the National
Association of Securities Dealers' OTC Bulletin Board System over the five
(5) preceding business days. If the price of a share of Common Stock shall not
be so reported, the Fair Market Value of a share of Common Stock shall be
determined by the Board in its absolute discretion.

(b) FORM OF CONSIDERATION. The consideration to be paid for the Shares to
be issued upon exercise of an Option shall consist entirely of cash, check,
other Shares of Common Stock having a fair market value on the date of surrender
equal to the aggregate exercise price of the Shares as to which the Option shall
be exercised (which, if acquired from the Company, shall have been held for at
least six months), or any combination of such methods of payment and/or any
other consideration or method of payment as shall be permitted under applicable
corporate law.

SECTION 9. EXERCISE OF OPTION.

(a) PROCEDURE FOR EXERCISE; RIGHTS AS A STOCKHOLDER. Any Option granted
hereunder shall be exercisable at such times as are set forth in Section 4(b)
above; provided, however, that no Options shall be exercisable prior to
stockholder approval of the Plan in accordance with Section 17 below has been
obtained. An Option may not be exercised for a fraction of a Share. An Option
shall be deemed to be exercised when written notice of such exercise has been
given to the Company in accordance with the terms of the Option by the person
entitled to exercise the Option and full payment for the Shares with respect to
which the Option is exercised has been received by the Company. Full payment may
consist of any consideration and method of payment allowable under Section 8(c)
of the Plan. Until the issuance (as evidenced by the appropriate entry on the
books of the Company or of a duly authorized transfer agent of the Company) of
the stock certificate evidencing such Shares, no right to vote or receive
dividends or any other rights as a stockholder shall exist with respect to the
Optioned Stock, notwithstanding the exercise of the Option. A share certificate
for the number of Shares so acquired shall be issued to the Optionee as soon as
practicable after exercise of the Option. No adjustment will be made for a
dividend or other right for which the record date is prior to the date the stock
certificate is issued, except as provided in Section 11 of the Plan. Exercise of
an Option in any manner shall result in a decrease in the number of Shares which
thereafter may be available, both for purposes of the Plan and for sale under
the Option, by the number of Shares as to which the Option is exercised.

(b) TERMINATION OF CONTINUOUS STATUS AS A DIRECTOR. If an Outside Director
ceases to serve as a Director, he or she may, but only within sixty (60) days
after the date he or she ceases to be a Director of the Company, exercise his or
her Option to the extent that he or she was entitled to exercise it at the date
of such termination. Notwithstanding the foregoing, in no event may the Option
be exercised after its term as set forth in Section 7 has expired. To the extent
that such Outside Director was not entitled to exercise an Option at the date of
such termination, or does not exercise such Option (to the extent he or she was
entitled to exercise) within the time specified above, the Option shall
terminate and the Shares underlying the unexercised portion of the Option shall
revert to the Plan.

(c) DISABILITY OF OPTIONEE. Notwithstanding Section 9(b) above, in the
event a Director is unable to continue his or her service as a Director with the
Company as a result of his or her total and permanent disability (as defined in
Section 22(e)(3) of the Code), he or she may, but only within twelve (12) months
from the date of such termination, exercise his or her Option to the extent he
or she was entitled to

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exercise it at the date of such termination. Notwithstanding the foregoing, in
no event may the Option be exercised after its term set forth in Section 7 has
expired. To the extent that he or she was not entitled to exercise the Option at
the date of Termination, or if he or she does not exercise such Option (to the
extent he or she was entitled to exercise) within the time specified above, the
Option shall terminate and the Shares underlying the unexercised portion of the
Option shall revert to the Plan.

(d) DEATH OF OPTIONEE. In the event of the death of an Optionee: (i) during
the term of the Option who is, at the time of his or her death, a Director of
the Company and who shall have been in Continuous Status as a Director since the
date of grant of the Option or (ii) within three (3) months after the
termination of Continuous Status as a Director, the Option may be exercised, at
any time within twelve (12) months following the date of death, by the
Optionee's estate or by a person who acquired the right to exercise the Option
by bequest or inheritance, but only to the extent of the right to exercise that
had accrued at the date of death or the date of termination, as applicable.
Notwithstanding the foregoing, in no event may the Option be exercised after its
term set forth in Section 7 has expired. To the extent that an Optionee was not
entitled to exercise the Option at the date of death or termination or if he or
she does not exercise such Option (to the extent he or she was entitled to
exercise) within the time specified above, the Option shall terminate and the
Shares underlying the unexercised portion of the Option shall revert to the
Plan.

SECTION 10. NONTRANSFERABILITY OF OPTIONS. The Option may not be sold,
pledged, assigned, hypothecated, transferred or disposed of in any manner other
than by will or by the laws of descent or distribution or pursuant to a
qualified domestic relations order (as defined by the Code or the rules
thereunder). The designation of a beneficiary by an Optionee does not constitute
a transfer. An Option may be exercised during the lifetime of an Optionee only
by the Optionee or a transferee permitted by this Section.

SECTION 11. ADJUSTMENTS UPON CAPITALIZATION CHANGES; CORPORATE
TRANSACTIONS.

(a) ADJUSTMENT. Subject to any required action by the stockholders of the
Company, the number of shares of Common Stock covered by each outstanding
Option, the number of Shares of Common Stock set forth in Sections 4(b)(ii) and
(iii) above, and the number of Shares of Common Stock which have been authorized
for issuance under the Plan but as to which no Options have yet been granted or
which have been returned to the Plan upon cancellation or expiration of an
Option, as well as the price per Share of Common Stock covered by each such
outstanding Option, shall be proportionately adjusted for any increase or
decrease in the number of issued Shares of Common Stock resulting from a stock
split, reverse stock split, stock dividend, combination or reclassification of
the Common or any other increase or decrease in the number of issued Shares of
Common Stock effected without receipt of consideration by the Company; provided,
however, that conversion of any convertible securities of the Company shall not
be deemed to have been "effected without receipt of consideration." Such
adjustment shall be made by the Board, whose determination in that respect shall
be final, binding and conclusive. Except as expressly provided herein, no
issuance by the Company of shares of stock of any class, or securities
convertible into shares of stock of any class, shall affect, and no adjustment
by reason thereof shall be made with respect to, the number or price of shares
of Common Stock subject to an Option.

(b) CORPORATE TRANSACTIONS. In the event of a Corporate Transaction, each
option granted pursuant to this Plan shall immediately vest in its entirety and
be exercisable in full immediately prior to such Corporate Transaction. In the
event of a Corporate Transaction including a Change of Control, and except as
otherwise provided in a Stock Option Agreement issued under the Plan, each
outstanding Option shall be assumed or an equivalent option shall be substituted
by the successor corporation or a Parent or Subsidiary of such successor
corporation, unless the successor corporation does not agree to assume the
outstanding Options or to substitute equivalent options, in which case the
Options shall terminate upon the consummation of the transaction. For purposes
of this Section 11(b), an Option shall be considered assumed, without
limitation, if, at the time of issuance of the stock or other consideration upon
such

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Corporate Transaction or Change of Control, each Optionee would be entitled to
receive upon exercise of an Option the same number and kind of shares of stock
or the same amount of property, cash or securities as the Optionee would have
been entitled to receive upon the occurrence of such transaction if the Optionee
had been, immediately prior to such transaction, the holder of the number of
Shares of Common Stock covered by the Option at such time (after giving effect
to any adjustments in the number of Shares covered by the Option as provided for
in this Section 11 and after giving effect to the acceleration of vesting
provided for in the first sentence of this Section 11(b)); provided, however,
that if such consideration received in the transaction was not solely common
stock of the successor corporation or its Parent, the Board of Directors may,
with the consent of the successor corporation, provide for the consideration to
be received upon exercise of the Option to be solely common stock of the
successor corporation or its Parent equal to the Fair Market Value of the per
Share consideration received by holders of Common Stock in such transaction.

(c) CERTAIN DISTRIBUTIONS. In the event of any distribution to the
Company's stockholders of securities of any other entity or other assets (other
than dividends payable in cash or stock of the Company) without receipt of
consideration by the Company, the Board of Directors may, in its discretion,
appropriately adjust the price per Share of Common Stock covered by each
outstanding Option to reflect the effect of such distribution.

SECTION 12. TIME OF GRANTING OPTIONS. The date of grant of an Option
shall, for all purposes, be the date determined in accordance with Section 4(b)
hereof. Notice of the determination shall be given to each Outside Director to
whom an Option is so granted within a reasonable time after the date of such
grant.

SECTION 13. AMENDMENT AND TERMINATION OF THE PLAN.

(a) AMENDMENT AND TERMINATION. The Board may amend or terminate the Plan
from time to time in such respects as the Board may deem advisable; provided
that, to the extent necessary and desirable to comply with Rule 16b-3 under the
Exchange Act (or any other applicable law or regulation), the Company shall
obtain approval of the stockholders of the Company to Plan amendments to the
extent and in the manner required by such law or regulation.

(b) EFFECT OF AMENDMENT OR TERMINATION. Any such amendment or termination
of the Plan that would impair the rights of any Optionee shall not affect
Options already granted to such Optionee and such Options shall remain in full
force and effect as if this Plan had not been amended or terminated, unless
mutually agreed otherwise between the Optionee and the Board, which agreement
must be in writing and signed by the Optionee and the Company.

SECTION 14. CONDITIONS UPON ISSUANCE OF SHARES. Notwithstanding any other
provision of the Plan or any agreement entered into by the Company pursuant to
the Plan, the Company shall not be obligated, and shall have no liability for
failure, to issue or deliver any Shares under the Plan unless such issuance or
delivery would comply with the legal requirements relating to the administration
of stock option plans under applicable U.S. state corporate laws, U.S. federal
and applicable state securities laws, the Code, any stock exchange or Nasdaq
rules or regulations to which the Company may be subject and the applicable laws
of any other country or jurisdiction where Options are granted under the Plan,
as such laws, rules, regulations and requirements shall be in place from time to
time (the "Applicable Laws"). Such compliance shall be determined by the Company
in consultation with its legal counsel. As a condition to the exercise of an
Option, the Company may require the person exercising such Option to represent
and warrant at the time of any such exercise that the Shares are being purchased
only for investment and without any present intention to sell or distribute such
Shares if, in the opinion of counsel for the Company, such a representation is
required by law.

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SECTION 15. RESERVATION OF SHARES. The Company, during the term of this
Plan, will at all times reserve and keep available such number of Shares as
shall be sufficient to satisfy the requirements of the Plan.

SECTION 16. OPTION AGREEMENT. Options shall be evidenced by written option
agreements in such form as the Board shall approve.

SECTION 17. STOCKHOLDER APPROVAL. The Plan was adopted by the Board of
Directors effective December 6, 1999 and is subject to approval by the
stockholders of the Company in accordance with applicable law, and the
requirements of Rule 16b-3 under Section 16(b) of the Exchange Act. Awards may
be granted under the Plan at any time prior to the receipt of such shareholder
approval; provided, however, that each such grant shall be subject to such
approval. Without limitation on the foregoing, no Option may be exercised prior
to the receipt of such approval. If the Plan is not approved by the Company's
stockholders, then the Plan and all Options then outstanding hereunder shall
automatically terminate and be of no force and effect.

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APPENDIX II

ENOTE.COM, INC.
2000 INCENTIVE STOCK PLAN

1. PURPOSE OF THE PLAN

This 2000 Incentive Stock Plan is intended to promote the interests of
eNote.com, Inc., a Delaware corporation (the "Company"), by providing the
Employees of and Consultants to the Company and its Subsidiaries, who will be
largely responsible for the management, growth and protection of the business
of the Company, with a proprietary interest in the Company.

2. DEFINITIONS

As used in the Plan, the following definitions apply to the terms
indicated below.

(a) "Board of Directors" shall mean the Board of Directors of eNote.com,
Inc., a Delaware corporation.

(b) "Cause," when used in connection with the termination of a
Participant's employment with the Company, shall mean the termination of the
Participant's employment by the Company by reason of (i) the conviction of the
Participant by a court of competent jurisdiction as to which no further appeal
can be taken of a crime involving moral turpitude; (ii) the proven commission by
the Participant of an act of fraud upon the Company; (iii) the willful and
proven misappropriation of any funds or property of the Company by the
Participant; (iv) the willful, continued and unreasonable failure by the
Participant to perform duties assigned to him and agreed to by him; (v) the
knowing engagement by the Participant in any direct, material conflict of
interest with the Company without compliance with the Company's conflict of
interest policy, if any, then in effect; (vi) the knowing engagement by the
Participant, without the written approval of the Board of Directors of the
Company, in any activity which competes with the business of the Company or
which would result in a material injury to the Company; or (vii) the knowing
engagement in any activity which would constitute a material violation of the
provisions of the Company's policies and procedures manual or other analogous
employee handbook, if any, then in effect.

(d) "Change in Control" shall mean:

(1) a "change in control" of the Company, as that term is contemplated
in the federal securities laws; or

(2) the occurrence of any of the following events:

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(A) any Person becomes, after the effective date of this Plan, the
"beneficial owner" (as defined in Rule 13d-3 promulgated under the Exchange
Act), directly or indirectly, of securities of the Company representing 40% or
more of the combined voting power of the Company's then outstanding securities;
provided, that the acquisition of additional voting securities, after the
effective date of this Plan, by any Person who is, as of the effective date of
this Plan, the beneficial owner, directly or indirectly, of 10% or more of the
combined voting power of the Company's then outstanding securities, shall not
constitute a "Change in Control" of the Company for purposes of this Section
2(d).

(B) a majority of individuals who are nominated by the Board of
Directors for election to the Board of Directors on any date, fail to be elected
to the Board of Directors as a direct or indirect result of any proxy fight or
contested election for positions on the Board of Directors, or

(3) the Board of Directors determines in its sole and absolute
discretion that there has been a change in control of the Company.

(e) "Code" shall mean the Internal Revenue Code of 1986, as amended
from time to time.

(f) "Committee" shall mean the Compensation Committee of the Board of
Directors or such other committee as the Board of Directors shall appoint from
time to time to administer the Plan.

(g) "Common Stock" shall mean the Company's Common Stock, par value
$.01 per share.

(h) "Company" shall mean eNote.com, Inc., a Delaware corporation, and
each of its Subsidiaries, and its successors.

(i) "Consultant" shall mean any natural person, including an advisor,
who renders bona fide services to the Company or any Subsidiary, and is
compensated for such services, provided, however, that such services are not
rendered in connection with the offer or sale of securities in a capital raising
transaction and do not directly or indirectly promote or maintain a market for
the company's securities.

(j) "Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.

(k) "Employee" shall mean any person, including officers and directors,
employed by the Company or any Subsidiary of the Company.

(l) the "Fair Market Value" of a share of Common Stock on any date
shall be (i) the straight average of the closing sales price over the five (5)
preceding business days,

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of a share of Common Stock as reported on the principal securities exchange on
which shares of Common Stock are then listed or admitted to trading or (ii) if
not so reported, the average of the closing bid and asked prices for a share of
Common Stock over the five (5) preceding business days as quoted on the National
Association of Securities Dealers Automated Quotation System ("Nasdaq") or (iii)
if not quoted on Nasdaq, the average of the closing bid and asked prices for a
share of Common Stock as quoted by the National Quotation Bureau's "Pink Sheets"
or the National Association of Securities Dealers' OTC Bulletin Board System
over the five (5) preceding business days. If the price of a share of Common
Stock shall not be so reported, the Fair Market Value of a share of Common Stock
shall be determined by the Committee in its absolute discretion.

(m) "Family Member" shall include (i) a participant's child, stepchild,
grandchild, parent, stepparent, grandparent, spouse, sibling, mother-in-law,
father-in-law, son-in-law, daughter-in-law, brother-in-law, sister-in-law,
niece, nephew or former spouse and shall include adoptive relationships, or (ii)
any person sharing the participant's household other that a tenant or employee.

(n) "Family Entity" shall mean any (i) entity in which more than 50% of
the voting interests are held by the participant and/or Family Members or (ii)
any trust in which the participant and/or Family Members have more than 50% of
the beneficial interest.

(o) "Incentive Award" shall mean an Option, a share of Restricted
Stock, a Stock Appreciation Right, a Stock Bonus or Cash Bonus granted pursuant
to the terms of the Plan.

(p) "Incentive Stock Option" shall mean an Option which is an
"incentive stock option" within the meaning of Section 422 of the Code and which
is identified as an Incentive Stock Option in the agreement by which it is
evidenced.

(q) "Issue Date" shall mean the date established by the Committee on
which certificates representing shares of Restricted Stock shall be issued by
the Company pursuant to the terms of Section 7(d) hereof.

(r) "Non-Qualified Stock Option" shall mean an Option which is not an
Incentive Stock Option and which is identified as a Non-Qualified Stock Option
in the agreement by which it is evidenced.

(s) "Option" shall mean an option to purchase shares of Common Stock of
the Company granted pursuant to Section 6 hereof. Each Option shall be
identified as either an Incentive Stock Option or a Non-Qualified Stock Option
in the agreement by which it is evidenced.

(t) "Participant" shall mean an Employee or Consultant to the Company
to whom an Incentive Award is granted pursuant to the Plan, and, upon his death,
his

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successors, heirs, executors and administrators, as the case may be, to the
extent permitted hereby.

(u) "Person" shall mean a "person," such term is used in Sections 13(d)
and 14(d) of the Exchange Act, and the rules and regulations in effect from time
to time thereunder.

(v) a "Stock Appreciation Right" shall represent the right to receive
in cash the Fair Market Value of a share of Common Stock of the Company, which
right is granted pursuant to Section 8 hereof and subject to the terms and
conditions contained therein.

(w) "2000 Plan" shall mean the eNote.com, Inc. 2000 Incentive Stock
Plan, as it may be amended from time to time.

(x) "Qualified Domestic Relations Order" shall mean a qualified
domestic relations order as defined in the Code, in Title I of the Employee
Retirement income Security Act, or in the rules and regulations as may be in
effect from time to time thereunder.

(y) "Reserved Shares" shall be that number of shares of Common Stock
reserved for issuance over the term of plan as calculated in accordance with
Section 3 hereof.

(z) a share of "Restricted Stock" shall mean a share of Common Stock
which is granted pursuant to the terms of Section 7 hereof and which is subject
to the restrictions set forth in Section 7(b) hereof for so long as such
restrictions continue to apply to such share.

(aa) "Securities Act" shall mean the Securities Act of 1933, as amended
from time to time.

(bb) "Stock Bonus" shall mean a grant of a bonus payable in shares of
Common Stock pursuant to Section 9 hereof.

(cc) "Subsidiary" or "Subsidiaries" shall mean any and all corporations
in which at the pertinent time the Company owns, directly or indirectly, stock
vested with 50% or more of the total combined voting power of all classes of
stock of such corporations within the meaning of Section 424(f) of the Code.

(dd) "Vesting Date" shall mean the date established by the Committee on
which a share of Restricted Stock or a Incentive Award may vest.

3. STOCK SUBJECT TO THE PLAN

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Under the Plan, the Committee may grant to Participants (i) Options,
(ii) shares of Restricted Stock, (iii) Stock Appreciation Rights, (iv) Stock
Bonuses and (v) Cash Bonuses.

The Committee may grant Options, shares of Restricted Stock and Stock
Appreciation Rights under the Plan with respect to the number of Reserved
Shares. The number of Reserved Shares initially reserved for issuance over the
term of the Plan shall be limited to 1,000,000 shares. This number shall be
subject to an automatic semi-annual adjustment, calculated on the last trading
day of December and June of each year during the term of this 2000 Plan, which
shall increase the number of Reserved Shares by that amount necessary to equate
the total Reserved Shares under the Plan immediately following each adjustment
to 10% of the Company's issued and outstanding Common Stock, provided, however,
that such adjustment shall never decrease the number of Reserved Shares and
shall be inapplicable to the extent the total number of Reserved Shares is equal
to or greater than 10% of the Company's issued and outstanding Common Stock on
the date of any such adjustment. The grant of a Cash Bonus shall not reduce the
number of shares of Common Stock with respect to such Options, shares of
Restricted Stock, Stock Appreciation Rights Stock or Stock Bonuses which may be
granted pursuant to the Plan.

If any outstanding Option expires, terminates or is canceled for any
reason, the shares of Common Stock subject to the unexercised portion of such
Option shall again be available for grant under the Plan. If any shares of
Restricted Stock or Stock Incentive Right, or any shares of Common Stock granted
in a Stock Bonus are forfeited or canceled for any reason, such shares shall
again be available for grant under the Plan.

Shares of Common Stock issued under the Plan may be either newly issued
or treasury shares, at the discretion of the Committee.

4. ADMINISTRATION OF THE PLAN

The Plan shall be administered by a Committee of the Board of Directors
consisting of two or more persons, each of whom shall be a "disinterested
person" within the meaning of Rule 16b-3(c)(2) promulgated under Section 16 of
the Exchange Act. The Committee shall from time to time designate the Employees
of and Consultants to the Company who shall be granted Incentive Awards and the
amount and type of such Incentive Awards.

The Committee shall have full authority to administer the Plan,
including authority to interpret and construe any provision of the Plan and the
terms of any Incentive Award issued under it and to adopt such rules and
regulations for administering the Plan, as it may deem necessary. Decisions of
the Committee shall be final and binding on all parties.

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<PAGE>

The Committee may, in its absolute discretion (i) accelerate the date
on which any Option granted under the Plan becomes exercisable, (ii) extend the
date on which any Option granted under the Plan ceases to be exercisable, (iii)
accelerate the Vesting Date or Issue Date, or waive any condition imposed
pursuant to Section 7(b) hereof, with respect to any share of Restricted Stock
granted under the Plan and (iv) accelerate the Vesting Date or waive any
condition imposed pursuant to Section 8 hereof, with respect to any Stock
Appreciation Right granted under the Plan.

In addition, the Committee may, in its absolute discretion, grant
Incentive Awards to Participants on the condition that such Participants
surrender to the Committee for cancellation such other Incentive Awards
(including, without limitation, Incentive Awards with higher exercise prices) as
the Committee specifies. Notwithstanding Section 3 hereof, Incentive Awards
granted on the condition of surrender of outstanding Incentive Awards shall not
count against the limits set forth in such Section 3 until such time as such
Incentive Awards are surrendered.

Whether an authorized leave of absence, or absence in military or
government service, shall constitute termination of employment shall be
determined by the Committee in its absolute discretion.

No member of the Committee shall be liable for any action, omission, or
determination relating to the Plan, and the Company shall indemnify and hold
harmless each member of the Committee and each other director or employee of the
Company to whom any duty or power relating to the administration or
interpretation of the Plan has been delegated from and against any cost or
expense (including attorneys' fees) or liability (including any sum paid in
settlement of a claim with the approval of the Committee) arising out of any
action, omission or determination relating to the Plan, unless, in either case,
such action, omission or determination was taken or made by such member,
director or employee in bad faith and without reasonable belief that it was in
the best interests of the Company.

5. ELIGIBILITY

The persons who shall be eligible to receive Incentive Awards pursuant to
the Plan shall be such Employees of the Company and certain Consultants to the
Company, as the Committee, in its absolute discretion, shall select from time to
time.

6. OPTIONS

The Committee may grant Options pursuant to the Plan, which Options shall
be evidenced by agreements in such form as the Committee shall from time to
time approve. Options shall comply with and be subject to the following terms
and conditions:

(a) Identification of Options

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<PAGE>

All Options granted under the Plan shall be clearly identified in the
agreement evidencing such Options as either Incentive Stock Options or as
Non-Qualified Stock Options.

(b) Exercise Price

The exercise price of any Non-Qualified Stock Option granted under the
Plan shall be such price as the Committee shall determine on the date on which
such Non-Qualified Stock Option is granted; provided, that such price may not be
less than the minimum price required by law. Except as provided in Section 6(d)
hereof, the exercise price of any Incentive Stock Option granted under the Plan
shall be not less than 100% of the Fair Market Value of a share of Common Stock
on the date on which such Incentive Stock Option is granted.

(1) Each Option shall be exercisable on such date or dates
during such period and for such number of shares of Common Stock as shall be
determined by the Committee on the day on which such Option is granted and set
forth in the agreement evidencing the Option; provided, however, that no Option
shall be exercisable after the expiration of ten years from the date such Option
was granted; and, provided, further, that each Option shall be subject to
earlier termination, expiration or cancellation as provided in the Plan.

(2) Each Option shall be exercisable in whole or in part with
respect to whole shares of Common Stock. The partial exercise of an Option shall
not cause the expiration, termination or cancellation of the remaining portion
thereof. Upon the partial exercise of an Option, the agreement evidencing such
Option shall be returned to the Participant exercising such Option together with
the delivery of the certificates described in Section 6(c)(5) hereof.

(3) An Option shall be exercised by delivering notice to the
Company's principal office, to the attention of its Secretary, no fewer than
five business days in advance of the effective date of the proposed exercise.
Such notice shall be accompanied by the agreement evidencing the Option, shall
specify the number of shares of Common Stock with respect to which the Option is
being exercised and the effective date of the proposed exercise, and shall be
signed by the Participant. The Participant may withdraw such notice at any time
prior to the close of business on the business day immediately preceding the
effective date of the proposed exercise, in which case such agreement shall be
returned to the Participant. Payment for shares of Common Stock purchased upon
the exercise of an Option shall be made on the effective date of such exercise
either (i) in cash, by certified check, bank cashiers check or wire transfer or
(ii) subject to the approval of the Committee, in shares of Common Stock owned
by the

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<PAGE>

Participant and valued at their Fair Market Value on the effective date of such
exercise, or (iii) partly in shares of Common Stock with the balance in cash, by
certified check, bank cashiers check or wire transfer. Any payment in shares of
Common Stock shall be effected by the delivery of such shares to the Secretary
of the Company, duly endorsed in blank or accompanied by stock powers duly
executed in blank, together with any other documents and evidences as the
Secretary of the Company shall require from time to time.

(4) Any Option granted under the Plan may be exercised by a
broker-dealer acting on behalf of a Participant if (i) the broker-dealer has
received from the Participant or the Company a duly endorsed agreement
evidencing such Option and instructions signed by the Participant requesting the
Company to deliver the shares of Common Stock subject to such Option to the
broker-dealer on behalf of the Participant and specifying the account into which
such shares should be deposited, (ii) adequate provision has been made with
respect to the payment of any withholding taxes due upon such exercise and (iii)
the broker-dealer and the Participant have otherwise complied with Section
220.3(e)(4) of Regulation T, 12 CFR Part 220.

(5) Certificates for shares of Common Stock purchased upon the
exercise of an Option shall be issued in the name of the Participant and
delivered to the Participant as soon as practicable following the effective date
on which the Option is exercised; provided, however, that such delivery shall be
effected for all purposes when a stock transfer agent of the Company shall have
deposited such certificates in the United States mail, addressed to the
Participant.

(6) During the lifetime of a Participant each Option granted
to him shall be exercisable only by him or, in the case of a non-qualified stock
option, a Family Member or Family Entity of such participant. No Option shall be
assignable or transferable by a participant except by (i) will or by the laws of
descent and distribution or in the case of a non-qualified stock option (ii)
pursuant to a gift or a domestic relations order to a Family Member or Family
Entity.

(d) Limitations on Grant of Incentive Stock Options

(1) The aggregate Fair Market Value of shares of Common Stock
with respect to which "incentive stock options" (within the meaning of Section
422, without regard to Section 422(d) of the Code) are exercisable for the first
time by a Participant during any calendar year under the Plan (and any other
stock option plan of the Company, or any subsidiary of the Company shall not
exceed $100,000. Such Fair Market Value shall be determined as of the date on
which each such Incentive Stock Option is granted. If such aggregate Fair Market
Value of shares of Common Stock underlying such Incentive Stock Options exceeds
$100,000, then Incentive Stock Options granted hereunder to such Participant
shall, to the extent and in the order required by regulations promulgated under
the Code (or any other authority having the force of Regulations), automatically
be deemed to be Non-Qualified Stock Options, but all other terms and

8
<PAGE>

provisions of such Incentive Stock Options shall remain unchanged. In the
absence of such Regulations (and authority), or if such Regulations (or
authority) require or permit a designation of the options which shall cease to
constitute Incentive Stock Options, Incentive Stock Options shall, to the extent
of such excess and in the order in which they were granted, automatically be
deemed to be Non-Qualified Stock Options, but all other terms and provisions of
such Incentive Stock Options shall remain unchanged.

(2) No Incentive Stock Option may be granted to an individual
if, at the time of the proposed grant, such individual owns, directly or
indirectly (based on the attribution rules in Section 424(d) of the Code) stock
possessing more than ten percent of the total combined voting power of all
classes of stock of the Company or any of its subsidiaries, unless (i) the
exercise price of such Incentive Stock Option is at least 110% of the Fair
Market Value of a share of Common Stock at the time such Incentive Stock Option
is granted and (ii) such Incentive Stock Option is not exercisable after the
expiration of five years from the date such Incentive Stock Option is granted.

(e) Effect of Termination of Employment or Service

(1) If the employment or service of a Participant with the
Company shall terminate for any reason other than Cause, permanent and total
disability (within the meaning of Section 22(e)(3) of the Code) or the death of
the Participant (i) Options granted to such Participant, to the extent that they
were exercisable at the time of such termination, shall remain exercisable until
the expiration of one month after such termination, on which date they shall
expire, and (ii) Options granted to such Participant, to the extent that they
were not exercisable at the time of such termination, shall expire at the close
of business on the date of such termination; provided, however, that no Option
shall be exercisable after the expiration of its term.

(2) If the employment of a Participant with the Company shall
terminate as a result of the permanent and total disability (within the meaning
of Section 22(e)(3) of the Code) of the Participant, the voluntary retirement of
the Participant in accordance with the Company's retirement policy as then in
effect or the death of the Participant (i) Options granted to such Participant,
to the extent that they were exercisable at the time of such termination, shall
remain exercisable until the expiration of one year after such termination, on
which date they shall expire, and (ii) Options granted to such Participant, to
the extent that they were not exercisable at the time of such termination, shall
expire at the close of business on the date of such termination; provided,
however, that no Option shall be exercisable after the expiration of its term.

(3) In the event of the termination of a Participant's
employment for Cause, all outstanding Options granted to such Participant shall
expire at the commencement of business on the date of such termination.

(f) Acceleration of Exercise Date Upon Change in Control

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<PAGE>

Upon the occurrence of a Change in Control, each Option granted under
the Plan and outstanding at such time shall become fully and immediately
exercisable and shall remain exercisable until its expiration, termination or
cancellation pursuant to the terms of the Plan.

7. RESTRICTED STOCK

The Committee may grant shares of Restricted Stock pursuant to the
Plan. Each grant of shares of Restricted Stock shall be evidenced by an
agreement in such form as the Committee shall from time to time approve. Each
grant of shares of Restricted Stock shall comply with and be subject to the
following terms and conditions:

(a) Issue Date and Vesting Date

At the time of the grant of shares of Restricted Stock, the Committee
shall establish an Issue Date or Issue Dates and a Vesting Date or Vesting Dates
with respect to such shares. The Committee may divide such shares into classes
and assign a different Issue Date and/or Vesting Date for each class. Except as
provided in Sections 7(c) and 7(f) hereof, upon the occurrence of the Issue Date
with respect to a share of Restricted Stock, a share of Restricted Stock shall
be issued in accordance with the provisions of Section 7(d) hereof. Provided
that all conditions to the vesting of a share of Restricted Stock imposed
pursuant to Section 7(b) hereof are satisfied, and except as provided in
Sections 7(c) and 7(f) hereof, upon the occurrence of the Vesting Date with
respect to a share of Restricted Stock, such share shall vest and the
restrictions of Section 7(c) hereof shall cease to apply to such share.

(b) Conditions to Vesting

At the time of the grant of shares of Restricted Stock, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such shares as it in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any class or classes of shares of
Restricted Stock, that the Participant or the Company achieve certain
performance criteria, such criteria to be specified by the Committee at the time
of the grant of such shares.

Prior to the vesting of a share of Restricted Stock, no transfer of a
Participant's rights with respect to such share, whether voluntary or
involuntary, by operation of law or otherwise, shall vest the transferee with
any interest or right in or with respect to such share, but immediately upon any
attempt to transfer such rights, such share, and all of the

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<PAGE>

rights related thereto, shall be forfeited by the Participant and the transfer
shall be of no force or effect.

(d) Issuance of Certificates

(1) Except as provided in Sections 7(c) or 7(f) hereof,
reasonably promptly after the Issue date with respect to shares of Restricted
Stock, the Company shall cause to be issued a stock certificate, registered in
the name of the Participant to whom such shares were granted, evidencing such
shares: provided, that the Company shall not cause to be issued such a stock
certificates unless it has received a stock power duly endorsed in blank with
respect to such shares. Each such stock certificate shall bear the following
legend:

The transferability of this certificate and the shares of stock
represented hereby are subject to the restrictions, terms and
conditions (including forfeiture and restrictions against transfer)
contained in the eNote.com, Inc. - 2000 Incentive Stock Plan and an
Agreement entered into between the registered owner of such shares
and eNote.com, Inc. A copy of the Plan and Agreement is on file in
the office of the Secretary of eNote.com, Inc. 185 Allen Brook Lane,
Williston, Vermont 05495.

Such legend shall not be removed from the certificate evidencing such shares
until such shares vest pursuant to the terms hereof.

(2) Each certificate issued pursuant to Paragraph 7 (d)(1)
hereof, together with the stock powers relating to the shares of Restricted
Stock evidenced by such certificate, shall be held by the Company. The Company
shall issue to the Participant a receipt evidencing the certificates held by it
which are registered in the name of the Participant.

(e) Consequences Upon Vesting

Upon the vesting of a share of Restricted Stock pursuant to the terms
hereof, the restrictions of Section 7(c) hereof shall cease to apply to such
share. Reasonably promptly after a share of Restricted Stock vests pursuant to
the terms hereof, the Company shall cause to be issued and delivered to the
Participant to whom such shares were granted, a certificate evidencing such
share, free of the legend set forth in Paragraph 7 (d)(1) hereof, together with
any other property of the Participant held by Company pursuant to Section 7(d)
hereof, provided, however, that such delivery shall be effected for all purposes
when the Company shall have deposited such certificate and other property in the
United States mail, addressed to the Participant.

(f) Effect of Termination of Employment

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<PAGE>

(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting of shares of
Restricted Stock granted to such Participant, a portion of such shares, to the
extent not forfeited or canceled on or prior to such termination pursuant to any
provision hereof, shall vest on the date of such termination. The portion
referred to in the preceding sentence shall be determined by the Committee at
the time of the grant of such shares of Restricted Stock and may be based on the
achievement of any conditions imposed by the Committee with respect to such
shares pursuant to Section 7(b). Such portion may equal zero.

(2) In the event of the termination of a Participant's
employment for Cause, all shares of Restricted Stock granted to such Participant
which have not vested as of the date of such termination shall immediately be
forfeited.

(g) Effect of Change in Control

Upon the occurrence of a Change in Control, all shares of Restricted
Stock which have not theretofore vested (including those with respect to which
the Issue Date has not yet occur-red) shall immediately vest.

8. STOCK APPRECIATION RIGHTS

The Committee may grant Stock Appreciation Rights pursuant to the Plan.
Each grant of Stock Appreciation Rights shall be evidenced by an agreement in
such form as the Committee shall from time to time approve. Each grant of Stock
Appreciation Rights shall comply with and be subject to the following terms and
conditions:

(a) Vesting Date

At the time of the grant of Stock Appreciation Rights, the Committee
shall establish a Vesting Date or Vesting Dates with respect to such rights. The
Committee may divide such shares into classes and assign a different Vesting
Date for each class. Provided that all conditions to the vesting of a Stock
Appreciation Right imposed pursuant to Section 8(c) hereof are satisfied, and
except as provided in Section 8(d) hereof, upon the occurrence of the Vesting
Date with respect to Stock Appreciation Rights, such right shall vest.

(b) Benefit Upon Vesting

Upon the vesting of a Stock Appreciation Right, a Participant shall be
entitled to receive in cash, within 90 days of the date on which such right
vests, an amount in cash in a lump sum equal to the sum of (i) the Fair Market
Value of a share of Common Stock of the Company on the date on which such Stock
Appreciation Right vests and (ii) the aggregate amount of cash dividends paid
with respect to a share of Common Stock of the

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<PAGE>

Company during the period commencing on the date on which the Stock Appreciation
Right was granted and terminating on the date on which such right vests.

At the time of the grant of Stock Appreciation Rights, the Committee
may impose such restrictions or conditions, not inconsistent with the provisions
hereof, to the vesting of such rights as it, in its absolute discretion deems
appropriate. By way of example and not by way of limitation, the Committee may
require, as a condition to the vesting of any class or classes of Stock
Appreciation Rights, that the Participant or the Company achieve certain
performance criteria, such criteria to be specified by the Committee at the time
of the grant of such rights.

(d) Effect of Termination of Employment

(1) If the employment of a Participant with the Company shall
terminate for any reason other than Cause prior to the vesting of Stock
Appreciation Rights granted to such Participant a portion of such rights, to the
extent not forfeited or canceled on or prior to such termination pursuant to any
provision hereof, shall vest on the date of such termination. The portion
referred to in the preceding sentence shall be determined by the Committee at
the time of the grant of such Stock Appreciation Right and may be based on the
achievement of any conditions imposed by the Committee with respect to such
rights pursuant to Section 8(c). Such portion may equal zero.

(2) In the event of the termination of a Participant's employment
for Cause, all Stock Appreciation Rights granted to such Participant which have
not vested as of the date of such termination shall immediately be forfeited.

(e) Effect of Change in Control

Upon the occurrence of a Change in Control, all Stock Appreciation
Rights which have not theretofore vested shall immediately vest.

9. STOCK BONUSES

The Committee may, in its absolute discretion, grant Stock Bonuses in
such amounts as it shall determine from time to time. A Stock Bonus shall be
paid at such time and subject to such conditions as the Committee shall
determine at the time of the grant of such Stock Bonus. Certificates for shares
of Common Stock granted as a Stock Bonus shall be issued in the name of the
Participant to whom such grant was made and delivered to such Participant as
soon as practicable after the date on which such Stock Bonus is required to be
paid.

10. CASH BONUSES

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<PAGE>

The Committee may, in its absolute discretion, grant in connection with
any grant of Restricted Stock or Stock Bonus or at any time thereafter, a cash
bonus, payable promptly after the date on which the Participant is required to
recognize income for federal income tax purposes in connection with such
Restricted Stock or Stock Bonus, in such amounts as the Committee shall
determine from time to time; provided, however, that in no event shall the
amount of a Cash Bonus exceed the Fair Market Value of the related shares of
Restricted Stock or Stock Bonus on such date. A Cash Bonus shall be subject to
such conditions as the Committee shall determine at the time of the grant of
such Cash Bonus.

11. ADJUSTMENT UPON CHANGES IN COMMON STOCK

(a) Outstanding Restricted Stock and Stock Appreciation Rights

Unless the Committee in its absolute discretion otherwise determines, if
a Participant receives any securities or other property (including dividends
paid in cash) with respect to a share of Restricted Stock, the Issue Date with
respect to which occurs prior to such event, but which has not vested as of the
date of such event, as a result of any dividend, stock split, recapitalization,
merger, consolidation, combination, exchange of shares or otherwise, such
securities or other property will not vest until such share of Restricted Stock
vests, and shall be held by the Company pursuant to Paragraph 7 (d) (2) hereof.

The Committee may, in its absolute discretion, adjust any grant of
shares of Restricted Stock, the Issue Date with respect to which has not
occurred as of the date of the occurrence of any of the following events, or any
grant of Stock Appreciation Rights, to reflect any dividend, stock split,
recapitalization, merger, consolidation, combination, exchange of shares or
similar corporate change as the Committee may deem appropriate to prevent the
enlargement or dilution of rights of Participants under the grant.

(b) Outstanding Options, Increase or Decrease in Issued Shares Without
Consideration

Subject to any required action by the shareholders of the Company, in
the event of any increase or decrease in the number of issued shares of Common
Stock resulting from a subdivision or consolidation of shares of Common Stock or
the payment of a stock dividend (but only on the shares of Common Stock), or any
other increase or decrease in the number of such shares effected without receipt
of consideration by the Company, the Committee shall proportionally adjust the
number of shares and the exercise price per share of Common Stock subject to
each outstanding Option.

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<PAGE>

Subject to any required action by the shareholders of the Company, if
the Company shall be the surviving corporation in any merger or consolidation
(except a merger of consolidation as a result of which the holders of shares of
Common Stock receive securities of another corporation), each Option outstanding
on the date of such merger or consolidation shall entitle the Participant to
acquire upon exercise the securities which a holder of the number of shares of
Common Stock subject to such Option would have received in such merger or
consolidation.

(d) Outstanding Options, Certain Other Transactions

In the event of a dissolution or liquidation of the Company, a sale of
all or substantially all of the Company's assets, a merger or consolidation
involving the Company in which the Company is not the surviving corporation or a
merger or consolidation involving the Company in which the Company is the
surviving corporation but the holders of shares of Common Stock receive
securities of another corporation and/or other property, including cash, the
Committee shall, in its absolute discretion, have the power to:

(1) cancel, effective immediately prior to the occurrence of
such event, each Option outstanding immediately prior to such event (whether or
not then exercisable), and, in full consideration of such cancellation, pay to
the Participant to whom such Option was granted an amount in cash, for each
share of Common Stock subject to such Option equal to the excess of (A) the
value, as determined by the Committee in its absolute discretion, of the
property (including cash) received by the holder of a share of Common Stock as a
result of such event over (B) the exercise price of such Option; or

(2) provide for the exchange of each Option outstanding
immediately prior to such event (whether or not then exercisable) for an option
on some or all of the property for which such Option is exchanged and, incident
thereto, make an equitable adjustment as determined by the Committee in its
absolute discretion in the exercise price of the option, or the number of shares
or amount of property subject to the option or, if appropriate, provide for a
cash payment to the Participant to whom such Option was granted in partial
consideration for the exchange of the Option.

(e) Outstanding Options. Other Changes

In the event of any change in the capitalization of the Company or
corporate change other than those specifically referred to in Sections 11 (b),
(c) or (d) hereof, the Committee may, in its absolute discretion, make such
adjustments in the number and class of shares subject to Options outstanding on
the date on which such change occurs and in the per share exercise price of each
such Option as the Committee may consider appropriate to prevent dilution or
enlargement of rights.

(f) No Other Rights

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<PAGE>

Except as expressly provided in the Plan, no Participant shall have any
rights by reason of any subdivision or consolidation of shares of stock of any
class, the payment of any dividend, any increase or decrease in the number of
shares of stock of any class or any dissolution, liquidation, merger or
consolidation of the Company or any other corporation. Except as expressly
provided in the Plan, no issuance by the Company of shares of stock of any
class, or securities convertible into shares of stock of any class, shall
affect, and no adjustment by reason thereof shall be made with respect to, the
number of shares of Common Stock subject to an Incentive Award or the exercise
price of any Option.

12. RIGHTS AS A SHAREHOLDER

No person shall have any rights as a shareholder with respect to any
shares of Common Stock covered by or relating to any Incentive Award granted
pursuant to this Plan until the date of the issuance of a stock certificate with
respect to such shares. Except as otherwise expressly provided in Section 11
hereof, no adjustment to any Incentive Award shall be made for dividends or
other rights for which the record date occurs prior to the date such stock
certificate is issued.

13. NO SPECIAL EMPLOYMENT RIGHTS; NO RIGHT TO INCENTIVE AWARD

Nothing contained in the Plan or any Incentive Award shall confer upon
any Participant any right with respect to the continuation of his employment by
the Company or interfere in any way with the right of the Company, subject to
the terms of any separate employment agreement to the contrary, at any time to
terminate such employment or to increase or decrease the compensation of the
Participant from the rate in existence at the time of the grant of an Incentive
Award.

No person shall have any claim or right to receive an Incentive Award
hereunder. The Committee's granting of an Incentive Award to a Participant at
any time shall neither require the Committee to grant an Incentive Award to such
Participant or any other Participant or other person at any time nor preclude
the Committee from making subsequent grants to such Participant or any other
Participant or other person.

14. SECURITIES MATTERS

(a) The Company shall be under no obligation to effect the registration
pursuant to the Securities Act of any shares of Common Stock to be issued
hereunder or to effect similar compliance under any state laws. Notwithstanding
anything herein to the contrary, the Company shall not be obligated to cause to
be issued or delivered any

16
<PAGE>

certificates evidencing shares of Common Stock pursuant to the Plan unless and
until the Company is advised by its counsel that the issuance and delivery of
such certificates is in compliance with all applicable laws, regulations of
governmental authority and the requirements of any securities exchange on which
shares of Common Stock are traded. The Committee may require, as a condition of
the issuance and delivery of certificates evidencing shares of Common Stock
pursuant to the terms hereof, that the recipient of such shares make such
covenants, agreements and representations, and that such certificates bear such
legends, as the Committee, in its sole discretion, deems necessary or desirable.

(b) The exercise of any Option granted hereunder shall only be effective
at such time as counsel to the Company shall have determined that the issuance
and delivery of shares of Common Stock pursuant to such exercise is in
compliance with all applicable laws, regulations of governmental authorities and
the requirements of any securities exchange on which shares of Common Stock are
traded. The Company may, in its sole discretion, defer the effectiveness of any
exercise of an Option granted hereunder in order to allow the issuance of shares
of Common Stock pursuant thereto to be made pursuant to registration or an
exemption from registration or other methods for compliance available under
federal or state securities laws. The Company shall inform the Participant in
writing of its decision to defer the effectiveness of the exercise of an Option
granted hereunder. During the period that the effectiveness of the exercise of
an Option has been deferred, the Participant may, by written notice, withdraw
such exercise and obtain the refund of any amount paid with respect thereto.

15. WITHHOLDING TAXES

Whenever shares of Common Stock are to be issued upon the exercise of an
Option, the occurrence of the Issue Date or Vesting Date with respect to a share
of Restricted Stock or the payment of a Stock Bonus, the Company shall have the
right to require the Participant to remit to the Company in cash an amount
sufficient to satisfy federal, state and local withholding tax requirements, if
any, attributable to such exercise, occurrence or payment prior to the delivery
of any certificate or certificates for such shares. In addition, upon the grant
of a Cash Bonus or the making of a payment with respect to a Stock Appreciation
Right the Company shall have the right to withhold from any cash payment
required to be made pursuant thereto an amount sufficient to satisfy the
federal, state and local withholding tax requirements, if any, attributable to
such exercise or grant.

16. AMENDMENT OF THE PLAN

The Board of Directors may at any time suspend or discontinue the Plan
or revise or amend it in any respect whatsoever, provided, however, that without
approval of the shareholders no revision or amendment shall (i) except as
provided in Section 11 hereof, increase the number of shares of Common Stock
that may be issued under the Plan, (ii) materially increase the benefits
accruing to individuals holding Incentive Awards granted

17
<PAGE>

pursuant to the Plan or (iii) materially modify the requirements as to
eligibility for participation in the Plan.

17. NO OBLIGATION TO EXERCISE

The grant to a Participant of an Option shall impose no obligation upon
such Participant to exercise such Option.

18. TRANSFERS UPON DEATH

Upon the death of a Participant, outstanding Incentive Awards granted
to such Participant may be exercised only by the executors or administrators
of the Participant's estate or by any person or persons who shall have
acquired such right to exercise by will or by the laws of descent and
distribution. No transfer by will or the laws of descent and distribution of
any Incentive Award, or the right to exercise any Incentive Award, shall be
effective to bind the Company unless the Committee shall have been furnished
with (a) written notice thereof and with a copy of the will and/or such
evidence as the Committee may deem necessary to establish the validity of the
transfer and (b) an agreement by the transferee to comply with all the terms
and conditions of the Incentive Award that are or would have been applicable
to the Participant and to be bound by the acknowledgments made by the
Participant in connection with the grant of the Incentive Award.

19. EXPENSES AND RECEIPTS

The expenses of the Plan shall be paid by the Company. Any proceeds
received by the Company in connection with any Incentive Award will be used
for general corporate purposes.

20. FAILURE TO COMPLY

In addition to the remedies of the Company elsewhere provided for
herein, failure by a Participant to comply with any of the terms and
conditions of the Plan or the agreement executed by such Participant
evidencing an Incentive Award, unless such failure is remedied by such
Participant within ten days after having been notified of such failure by the
Committee, shall be grounds for the cancellation and forfeiture of such
Incentive Award, in whole or in part as the Committee, in its absolute
discretion, may determine.

21. EFFECTIVE DATE AND TERM OF PLAN

The Plan was adopted by the Board of Directors effective March 17,
2000 subject to approval by the shareholders of the Company in accordance with
applicable law, the requirements of Section 422 of the Code and the
requirements of Rule 16b-3

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under Section 16(b) of the Exchange Act. No Incentive Award may be granted
under the Plan after _______, 2010. Incentive Awards may be granted under the
Plan at any time prior to the receipt of such shareholder approval; provided,
however, that each such grant shall be subject to such approval. Without
limitation on the foregoing, no Option may be exercised prior to the receipt
of such approval, no share certificate shall be issued pursuant to a grant of
Restricted Stock or Stock Bonus prior to the receipt of such approval and no
Cash Bonus or payment with respect to a Stock Appreciation Right shall be paid
prior to the receipt of such approval. If the Plan is not approved by the
Company's shareholders, then the Plan and all Incentive Awards then
outstanding hereunder shall forthwith automatically terminate and be of no
force and effect.

<PAGE>

ENOTE.COM INC.

PROXY SOLICITED BY THE BOARD OF DIRECTORS FOR ANNUAL MEETING ON JUNE 22, 2000

The undersigned stockholder of eNote.com Inc. hereby acknowledges
receipt of the Notice of Annual Meeting and related Proxy Statement and
appoints John R. Varsames and Michael T. Grennan, or either one or both of
them, attorneys and proxies for the undersigned with power of substitution in
each to act for and to vote, as designated on the reverse side, with the same
force and effect as the undersigned, all shares of eNote.com Inc. Common
Stock standing in the name of the undersigned at the Annual Meeting of
Stockholders of eNote.com Inc. to be held at on June 22, at 2:00 p.m. Eastern
Daylight Savings Time at the Radisson Hotel, 60 Battery Street, Burlington,
Vermont.

WHEN PROPERLY EXECUTED, THIS PROXY WILL BE VOTED IN THE MANNER DIRECTED HEREIN
BY THE UNDERSIGNED STOCKHOLDER. IF NO DIRECTION IS MADE, THIS PROXY WILL BE
VOTED "FOR" THE NOMINEES FOR DIRECTOR AND "FOR" ALL OTHER PROPOSALS. THE PROXY
WILL BE VOTED IN ACCORDANCE WITH THE HOLDERS' BEST JUDGMENT AS TO ANY OTHER
MATTER.

SEE REVERSE SIDE. If you wish to vote in accordance with the Board of Directors'
recommendations, just sign on the reverse side. You need not mark any boxes.

PLEASE VOTE, DATE AND SIGN ON REVERSE AND RETURN PROMPTLY IN THE ENCLOSED
ENVELOPE.

Please sign exactly as your name(s) appear(s) on the books of the Corporation.
Joint owners should each sign personally. Trustees and other fiduciaries should
indicate the capacity in which they sign, and where more than one name appears,
a majority must sign. If a corporation or partnership, this signature should be
that of an authorized officer who should state his or her title.

HAS YOUR ADDRESS CHANGED? DO YOU HAVE ANY COMMENTS?

- ------------------------------- -----------------------------------

<PAGE>

Please mark the boxes on the proxy card to indicate how your shares
should be voted, then sign and date the card, detach it and return it in the
enclosed postage paid envelope.

PLEASE MARK VOTES AS IN THIS EXAMPLE [X]

Mark box at right if an address change or comment has been
noted on the reverse side of this card. [ ]

1. ELECT DIRECTORS:

JAMES BOWMAN VICTOR REICHENSTEIN

FOR WITHHOLD FOR WITHHOLD
[ ] [ ] [ ] [ ]

2. APPROVE AMENDMENT TO THE COMPANY'S CERTIFICATE OF INCORPORATION
INCREASING THE AUTHORIZED NUMBER OF SHARES OF COMMON STOCK AND
PREFERRED STOCK ISSUABLE THEREUNDER:

FOR AGAINST WITHHOLD
[ ] [ ] [ ]

3. APPROVE THE ADOPTION OF THE COMPANY'S 1999 NON-EMPLOYEE DIRECTORS'
STOCK OPTION PLAN:

FOR AGAINST WITHHOLD
[ ] [ ] [ ]

4. APPROVE THE ADOPTION OF THE COMPANY'S 2000 INCENTIVE STOCK PLAN

FOR AGAINST WITHHOLD
[ ] [ ] [ ]

5. RATIFY THE BOARD OF DIRECTORS' SELECTION OF DELOITTE & TOUCHE LLP AS
INDEPENDENT AUDITORS.

FOR AGAINST WITHHOLD
[ ] [ ] [ ]

IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER MATTERS
AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF.

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR PROPOSALS 1, 2, 3, 4 AND 5.

Please be sure to sign and date this Proxy.

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<S> <C> <C>
Dated: _____, 2000 __________________________ ________________________________________
(Signature of Stockholder) (Signature of Joint Stockholder, if any)

</TABLE>