SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
THE NETPLEX GROUP, INC.
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(Name of Registrant as Specified in Their Charters)
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(Name of Person(s) filing Proxy Statement, if other than 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:
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(2) Aggregate number of securities to which transaction applies:
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(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):
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(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
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/ / 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:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
PRELIMINARY PROXY MATERIAL
THE NETPLEX GROUP, INC.
8260 GREENSBORO DRIVE, SUITE 501
McLEAN, VIRGINIA 22102
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NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on June 29, 1998
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To The Shareholders:
NOTICE IS HEREBY GIVEN that the Annual Meeting of Shareholders
(the "Meeting") of THE NETPLEX GROUP, INC., a New York corporation ("Netplex" or
the "Company"), will be held at the offices of the Company located at 8260
Greensboro Drive, Suite 501, McLean, Virginia 22102, on June 29, 1998, at 10:00
a.m., local time, for the following purposes:
1. To elect five (5) members of the Board of Directors to serve
until the next Annual Meeting of Shareholders and until their successors have
been duly elected and qualified;
2. To approve the issuance of shares of Common Stock of the
Company to complete a private placement of the Company's Securities with certain
independent investors and their agent;
3. To approve an amendment to the certificate of incorporation of
Netplex increasing the number of authorized shares of the Netplex Common Stock,
par value $0.001 ("Common Stock") from 20,000,000 to 40,000,000 shares;
4. To approve an amendment to the certificate of incorporation of
Netplex to increase the number of authorized shares of the Netplex Preferred
Stock, par value $0.01 ("Preferred Stock") from 2,000,000 to 6,000,000 shares.
5. To approve an amendment to the Netplex 1995 Directors Stock
Option Plan, increasing the number of shares of Common Stock authorized to be
issued under the 1995 Directors' Stock Option Plan from 100,000 to 300,000
shares;
<PAGE>
6. To approve the Netplex 1998 Employee Stock Purchase Plan
("Stock Purchase Plan");
7. To ratify the appointment of KPMG Peat Marwick as the Netplex
independent auditors for the year 1998; and
8. To transact such other business as may properly be brought
before the Meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on June 4,
1998 as the record date for the determination of shareholders entitled to notice
of and to vote at the Meeting. Only shareholders of record on the stock transfer
books of Netplex at the close of business on that date are entitled to notice
and to vote at the Meeting.
By Order of the Board of Directors
ROBERT SKELTON
Secretary
Dated: June 4, 1998
WHETHER OR NOT YOU EXPECT TO BE PRESENT AT THE MEETING
YOU ARE URGED TO FILL IN, DATE, SIGN AND RETURN THE
ENCLOSED PROXY IN THE ENVELOPE THAT IS PROVIDED,
WHICH REQUIRES NO POSTAGE IF MAILED
IN THE UNITED STATES.
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<PAGE>
The Netplex Group, Inc.
8260 Greensboro Drive, Suite 501
McLean, Virginia 22102
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PROXY STATEMENT
FOR
ANNUAL MEETING OF SHAREHOLDERS
June 29, 1998
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INTRODUCTION
This Proxy Statement is being furnished to shareholders by the Board of
Directors of The Netplex Group, Inc., a New York corporation (the "Company"), in
connection with the solicitation of proxies for use at the 1998 Annual Meeting
of Shareholders of the Company (the "Meeting") to be held at the offices of the
Company located at 8260 Greensboro Drive - Suite 501, McLean Virginia 22102, on
June 29, 1998, at 10:00 a.m., local time, or at any adjournments thereof.
The approximate date on which this Proxy Statement and the accompanying
Proxy will first be sent or given to shareholders is June 5, 1998.
RECORD DATE AND VOTING SECURITIES
Only shareholders of record at the close of business on June 4, 1998,
the record date (the "Record Date") for the Meeting, will be entitled to notice
of, and to vote at, the Meeting and any adjournment(s) thereof. As of the close
of business on the Record Date, there were outstanding 9,143,825 shares of the
Netplex Common Stock, $.001 par value (the "Common Stock"). Each outstanding
share of Common Stock is entitled to one vote. There was no other class of
voting securities of the Company outstanding on the Record Date. A majority of
the outstanding shares of Common Stock present in person or by proxy is required
for a quorum.
VOTING OF PROXIES
Shares of Common Stock represented by Proxies, which are properly
executed, duly returned and not revoked, will be voted in accordance with the
instructions contained therein. If no instruction is indicated on the Proxy, the
shares of Common Stock represented thereby will be voted (i) For the election as
Directors of the persons who have been nominated by the Board of
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<PAGE>
Directors, (ii) For approval of the issuance of Common Stock necessary to
complete the private placement, (iii) For an amendment to the Netplex
Certificate of Incorporation to provide for an increase in the number of
authorized shares of Common Stock from 20,000,000 to 40,000,000, (iv) For the
amendment of the Netplex Certificate of Incorporation to provide for an increase
in the number of authorized shares of Preferred Stock, par value $0.01 from
2,000,000 to 6,000,000 shares, par value $0.01; (v) For an amendment of the
Netplex 1995 Directors' Stock Option Plan ("Directors' Plan") to provide for the
increase in the number of shares of Common Stock authorized for issuance
pursuant to the Directors' Plan from 100,000 to 300,000, (vi) For approval of
the Netplex 1998 Employee Stock Purchase Plan, (vii) For the ratification of the
appointment of KPMG Peat Marwick as the Netplex independent auditors for the
year ending December 31, 1998,and (viii) at the discretion of the person or
persons voting the Proxy with respect to any other matter that may properly be
brought before the Meeting. The execution of a Proxy will in no way affect a
shareholder's right to attend the Meeting and vote in person. Any Proxy executed
and returned by a shareholder may be revoked at any time thereafter if written
notice of revocation is given to the Secretary of the Company prior to the vote
to be taken at the Meeting, or by execution of a subsequent proxy which is
presented at the Meeting, or if the shareholder attends the Meeting and votes by
ballot, except as to any matter or matters upon which a vote shall have been
cast pursuant to the authority conferred by such Proxy prior to such revocation.
Abstentions and broker non-votes are counted for purposes of determining the
presence or absence of a quorum for the transaction of business.
The cost of solicitation of the Proxies being solicited on behalf of
the Board of Directors will be borne by the Company. In addition to the use of
the mails, proxy solicitation may be made personally or by telephone, or
telegraph by officers, directors and employees of the Company. The Company will,
upon request, reimburse banks, brokerage firms and other custodians for their
reasonable expenses in sending soliciting material to the beneficial owner of
the shares.
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<PAGE>
SECURITY OWNERSHIP
Principal Shareholders
The following table sets forth information concerning ownership of the
Company's Common Stock as of June 4, 1998 by each person known by the Company to
be the beneficial owner of more than five percent of the Common Stock.
Number of Shares of Common Stock
Name of Beneficial Owner Beneficially Owned(1) Percent of Class
Gene Zaino 1,329,850(2) 17.4%
8260 Greensboro Drive
McLean, VA 22102
Stan Fischer 448,420(3) 5.9%
225 West 34th Street
New York, NY 10001-2887
Scott Pogoda 616,072(4) 8.2%
PO Box 10229
Zephyr Cove, NY 89448
Zanett Lombardier, Ltd. 1,076,040 10.7%
225 West 34th Street
New York, NY 10001-2887
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and generally includes voting or
investment power with respect to securities. Shares of Common Stock
subject to options or warrants currently exercisable, or exercisable
within 60 days, are deemed outstanding for computing the percentage of
the person holding such options or warrants but are not deemed
outstanding for computing the percentage of any other person. The
Company is not aware of any 5% beneficial holders of its Common Stock,
other than the persons specified in the table above.
(2) Includes 73,420 shares of Common Stock, subject to options or warrants.
(3) Includes 19,809 shares of Common Stock subject to options or warrants.
Mr. Fischer is an employee and member of the senior management team of
the Company but is not an Executive Officer of the Company.
(4) Consists solely of warrants to purchase shares of Common Stock (See
"Proposal II" below.)
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<PAGE>
Officers and Directors Stock Ownership
The following table sets forth beneficial ownership of Netplex Common
Stock as of the Record Date by each Director and nominee for Director and each
executive officer of the Company and by all executive officers and directors who
if elected will continue in office after the annual meeting as a group.
<TABLE>
<CAPTION>
Name of Beneficial Owner Number of Common Shares Percent of Common Stock
- ------------------------ ----------------------- -----------------------
<S> <C> <C>
Gene Zaino 1,329,850(1) 17.4%
Deborah Schondorf-Novick 16,250(2) *
Richard Goldstein 16,000(3) *
Neil Luden 100,000(4) *
Frank Lagattuta 8,000 *
Matthew Jones 0 *
Robert Skelton 0 *
Steven L. Hanau 15,000 *
All continuing directors and
executive officers as a Group
(7 persons) 1,385,100(5) 18.9%
</TABLE>
* Less than 1%.
(1) Includes 73,420 shares of Common Stock subject to options or warrants.
(2) Consists of 16,250 shares of Common Stock subject to options or
warrants, but excludes 45,968 shares of Common Stock and 26,468
warrants as to which Ms. Schondorf-Novick disclaims beneficial
ownership and which are held by GKN Securities Corp., of which she is a
Senior Vice President.
(3) Includes 7,500 shares of Common Stock subject to options.
(4) Consists of 100,000 shares of Common Stock subject to options.
(5) Includes shares of Common Stock subject to options or warrants.
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<PAGE>
Executive Officers
The following table sets forth the names and ages of all executive officers, the
positions and offices with the Company held by each executive officer and the
period served:
Name Age Title Period Served
- ---- --- ----- -------------
Gene Zaino 40 President, Chief Executive 1995 - present
Officer, and Chairman
Robert Skelton 36 Vice President Human Resources, 1996 - present
General Counsel and Secretary
Matthew Jones 36 Chief Financial Officer and 1996 - present
Treasurer
Information concerning Mr. Zaino is provided under "Election Of Directors."
Robert Skelton joined the Company as its Vice President of Human Resources and
General Counsel in September 1996 and became its Secretary in November 1996.
From November 1990 to June 1996, Mr. Skelton served in similar capacities for
Central Atlantic Toyota Distributors, Inc. and Quality Port Processors, Inc.,
subsidiaries of Toyota Motor Sales, USA. From July 1986 through October 1990,
Mr. Skelton was an attorney with the law firm of Webster, Chamberlain & Bean in
Washington D.C. Mr. Skelton holds a Bachelor of Arts in Political Science and
Modern Language from Union College and a Juris Doctor from George Washington
University. Mr. Skelton is an attorney and a member of the District of Columbia,
Maryland, and Virginia Bars.
Matthew Jones joined the Company as its Chief Financial Officer in September
1996 and became its Treasurer in November 1996. From August 1992 through August
1996, Mr. Jones served as the Director of Finance for Telos Corporation, a
Virginia based systems integrator and computer services provider. From July 1984
to August 1992, Mr. Jones was employed in various capacities with Price
Waterhouse - lastly as an audit manager. Mr. Jones holds a Bachelor of Science
in Business Administration - Accounting from California State University,
Northridge and is a Certified Public Accountant.
Certain Related Transactions
In January 1997, on the occasion of its move from New York to McLean, Virginia,
the Company loaned $150,000 to Gene Zaino, its chief executive officer, for
relocation expenses. The loan
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bears interest at 8% per annum and is due upon demand. The Company does not
intend to demand payment of the loan during 1998, and thus the amount is
classified as long-term debt on the Company's consolidated balance sheet at
December 31, 1997. At December 31, 1997, the outstanding amount due under the
loan was approximately $161,000, including approximately $11,000 in accrued
interest.
The Company contracted with a company owned by Scott Pogoda, a principal
shareholder for the development of the software to be used to maintain the
Company's Centralized National Technical Database. The Company paid Mr. Pogoda
$150,000 and had a remaining obligation of approximately $50,000 at December 31,
1997 related to the development of this software.
Ms. Schondorf-Novick, who is presently a director of the Company is a Senior
Vice President of GKN Securities Corp., which acted as placement agent of a 1996
private placement of $3,500,000 Class A Convertible Preferred Shares consummated
by the Company in 1996. The Company paid GKN Securities Corp. $432,500 in fees
associated with the completion of this transaction.
Committees
The Company has the following standing committees: an Audit Committee,
a Compensation Committee and a Stock Option Committee. Since July 1996, the
Audit Committee has been comprised of Richard Goldstein and Deborah
Schondorf-Novick and is charged with reviewing the Company's annual audit and
meeting with the Company's independent auditors to review the Company's internal
controls and financial management practices. The Compensation Committee, which
is comprised of Richard Goldstein and Frank Lagattuta recommends to the Board of
Directors compensation for the Company's Chief Executive and other principal
executive officers. The Stock Option Committee administers the Company's 1992
Incentive and Non-Qualified Stock Option Plan, and its 1995 Stock Option Plan
for Consultants. The members of the Stock Option Committee are Frank Lagattuta
and Richard Goldstein. Mssrs. Lagattuta and Goldstein and Ms. Schondorf-Novick
are independent directors.
During the fiscal year ended December 31, 1997, the Compensation
Committee held six meetings and the Stock Option Committee held six meetings.
The Board of Directors held five meetings during the fiscal year ended
December 31, 1997. All of the Directors attended each meeting except for one
meeting at which Mr. Goldstein was absent. From time to time, the Board acted by
unanimous written consent pursuant to the laws of the State of New York.
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<PAGE>
Compensation of Directors and Executive Officers
The following table sets forth, for the fiscal years indicated, all compensation
the Company paid to Gene Zaino, President and Chief Executive Officer and Robert
Skelton, Vice President - Human Resources, General Counsel and Secretary. In
June 1996, the Company then called CompLink merged with (and changed its name
to) Netplex and America's Work Exchange, Limited, compensation paid for periods
prior to June 1996 constitutes compensation paid by those companies. The Company
had no executive officers, other than Mr. Zaino and Mr. Skelton, whose salary
exceeded $100,000 for year ended December 31, 1997. The total compensation paid
to all executive officers of the Company as a group in the year ended December
31, 1997 was $330,273.
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Annual Compensation Compensation
---------------------------------- Awards
------
Shares
Fiscal Other Annual Underlying All Other
Name and Principal Position Year Salary Bonus Compensation Options(#) Compensation
- --------------------------- ---- ------ ----- ------------ ---------- ------------
<S> <C> <C> <C> <C> <C> <C>
Gene Zaino, President (1) 1997 $130,000 - 0 - - 0 - 600,000(3) $ 4,563
1996 $116,423 - 0 - - 0 - - 0 - $ 27,125(2)
1995 $ 86,100 - 0 - - 0 - 615,000(3) $ 5,425(2)
Robert Skelton, Secretary 1997 $100,000 - 0 - - 0 - 70,000(3) $ 2,903
1996 $ 32,731 - 0 - - 0 - 50,000(3) $ 2,000
</TABLE>
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(1) Mr. Zaino is employed under an employment agreement pursuant to which
he is paid a base salary of $130,000 per annum. See "Employment and
Related Agreements."
(2) Mr. Zaino received $5,425 per month from December 1995 through May 1996
pursuant to a consulting agreement with the Company.
(3) See "Stock Option Grants" below.
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<PAGE>
Stock Option Grants
During 1997 Mr. Zaino agreed to cancel options previously issued to him
to purchase 600,000 shares of the Company's Common Stock at a price of $2.90 per
share. In exchange the Company granted options to purchase 600,000 shares of the
Company's Common Stock to Mr. Zaino at $0.97. Options on 70,000 shares granted
to Mr. Skelton in 1996 and 1997 under the Employee Stock Option Plan were
canceled in December 1997 and options to purchase 70,000 shares of Common Stock
at $0.97 were granted to Mr. Skelton. The following table sets forth further
information with respect to options granted to Messrs. Zaino and Skelton:
<TABLE>
<CAPTION>
Name Number of Shares Percent of Total Options Granted Per Share Exercise Expiration Date
Underlying Options to Employees in 1997 Price
Granted
---- ---------------- -------------------------------- ------------------ ---------------
<S> <C> <C> <C> <C>
Gene Zaino 600,000 25% $0.97 December 20, 2007
Robert Skelton 70,000 3% $0.97 December 20, 2007
</TABLE>
Mr. Zaino and Mr. Skelton exercised no options in the fiscal year ended
December 31, 1997. At December 31, 1997 Mr. Zaino held options to purchase
600,000 shares and Mr. Skelton held options to purchase 70,000 shares of Common
Stock. All options were unexercisible. At December 31, 1997 the closing price
per share of the Company's Common Stock as reported by the NASDAQ was $0.875.
The exercise price per share for the option shares exceeded their fair market
value on December 31, 1997.
Employment and Related Agreements.
Mr. Zaino is employed under a three-year employment agreement,
effective as of June 7, 1996, pursuant to which he is paid a base salary of
$130,000 per annum, subject to increase by the Company's Board. Mr. Zaino is
also entitled to receive an annual bonus based on the financial and operating
performance of the Company. Mr. Skelton is paid a base salary of $100,000. Mr.
Skelton may also receive an annual bonus at the sole discretion of the Company's
President.
The Company obtained key-person life insurance in the amount of $1
million on the life of Mr. Zaino.
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<PAGE>
PROPOSAL I - ELECTION OF DIRECTORS
The persons listed below are nominees for election as directors at the
Annual Meeting. Unless otherwise specified, all Proxies received will be voted
in favor of the election of Gene Zaino, Deborah Schondorf-Novick , Richard
Goldstein, Frank Laguttuta, and Steven L. Hanau. Directors shall be elected by a
plurality of the votes cast, in person or by proxy, at the Meeting. Management
has no reason to believe that any of the nominees will be unable or unwilling to
serve as a director, if elected. Should any of the nominees not remain a
candidate for election at the date of the Meeting, no substitute candidate will
be selected and the Proxies will be voted only in favor of those nominees still
standing for election. The following table sets forth the ages of the nominees
for director and the positions they hold in the Company:
Name Age Position A Director Since
- ---- --- -------- ----------------
Gene Zaino 40 President, Chief Executive 1995
Officer and Chairman
Deborah Schondorf-Novick 33 Director 1995
Richard Goldstein 45 Director 1996
Frank C. Laguttuta 54 Director 1997
Steven L. Hanau 53 Nominee -
Gene Zaino has been Chairman and Chief Executive Officer of Netplex since June
1996 and a director since August 1995. Prior to becoming the Chairman and Chief
Executive Officer of Netplex, Mr. Zaino, since April 1994, was the Chairman and
Chief Executive Officer of The Netplex Group, Inc., a McLean, Virginia based
network systems integrator. From May 1993 to January 1994, Mr. Zaino was Area
Vice President --- Northeast for Control Data Systems, Inc. Prior thereto, Mr.
Zaino held positions at Evernet Systems, Inc. from January 1990 to May 1993, the
most recent being Regional Vice President -- MidAtlantic. In 1983, Mr. Zaino
become the President and founder of Management Information Solutions, Inc. which
was a computer consulting and systems integrator. In 1990, MIS was acquired by
Evernet and Evernet was subsequently acquired by Control Data in 1993. Mr. Zaino
is a Certified Public Accountant.
Deborah Novick has been a Director of the Company since August, 1995 and has
served in a variety of capacities at GKN Securities Corp., a New York based
investing banking company, since August 1992, including most recently Senior
Vice President -- Investment Banking. Prior thereto, Ms. Novick was a Senior
Analyst with Value Line, Inc. from August 1989 until August 1992. Ms. Novick
holds a Bachelor of Science degree from Cornell University.
Richard Goldstein has served as a Director of the Company since July 1996. Mr.
Goldstein has been a Partner of Tocci, Goldstein and Company, L.L.P., a New York
City based C.P. A. firm
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<PAGE>
since 1992. Prior thereto, Mr. Goldstein was a Tax Partner with KPMG Peat
Marwick LLP. Mr. Goldstein holds a Bachelor of Business Administration in
Accounting and Master of Business Administration in Taxation from the City
University of New York and is a Certified Public Accountant.
Frank Laguttuta became a Director of the Company in September 1997. Mr.
Lagattuta has been serving since 1996 as the President and chief operating
officer of CompuLaw, Ltd. of Los Angeles, California. Prior thereto, he was the
Vice President of Sales and Marketing for Saft America, Inc. form 1993 to 1996.
Prior thereto, Mr. Lagattuta was the Vice President of Sales and Marketing for
BISS Sales, Inc. from 1991 to 1993. Mr. Lagattuta holds a Bachelor of Science
degree in Accounting from Canisius College and a Master of Business
Administration in Finance and Accounting from the University of Southern
California.
Steven L. Hanau has headed Wang Laboratories, Inc.'s worldwide outsourcing
business since April of 1997. Mr. Hanau came to Wang with the acquisition of
I-NET where he spent eight years, rising to the presidency of its Enterprise
Services Group. During a 22-year career with the U.S. Army, he held high level
positions with the Army Chief of Staff and Office of the Secretary of Defense.
Mr. Hanau is a graduate of the United States Military Academy and holds advanced
degrees in operations research from Stanford University and in business
administration from Long Island University.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE ELECTION OF EACH OF THE
NOMINEES.
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<PAGE>
PROPOSAL II -- TO APPROVE ISSUANCE OF SHARES OF COMMON STOCK OF
THE COMPANY TO COMPLETE THE PRIVATE PLACEMENT OF
THE COMPANY'S SECURITIES WITH CERTAIN INDEPENDENT
INVESTORS AND THEIR AGENT.
The following is a description of the terms of a private placement of
the Company's securities effected on April 7, 1998. The Company's ability to
fulfill its obligations without suffering a penalty necessitates shareholder
approval of the issuance of Common Stock required to complete the transaction.
On April 7, 1998 (the "First Closing"), the Company consummated a
private placement (the "1998 Private Placement") whereby it issued 1,500 units
("Units"),each consisting of one Prepaid Common Stock Purchase Warrant ("Prepaid
Warrants") entitling the holder of the Prepaid Warrant (the "Holder") to acquire
such number of shares of Common Stock as is equal to $1,000 divided by an
adjustable exercise price (see "Exercise Rights of Prepaid Warrant" below) and
(b) warrants (the "Incentive Warrants") to purchase 52 shares of Common Stock at
an exercise price of $1.47 per share. The net proceeds of the sale of 1,500
Units ($1,312,500 before Company expenses) have been used for working capital
and general corporate purposes. In connection with the 1998 Private Placement,
the Company issued to The Zanett Securities Corporation ("Zanett"), for its
services as placement agent, warrants ("Agent Warrants" and collectively with
the Incentive Warrants, the "Warrants"), with similar terms and conditions as
the Incentive Warrants, to purchase 39,000 shares of Common Stock at an exercise
price of $1.47 per share. In addition to the Agent Warrants, Zanett also
received a placement agent fee equal to 9.78% of the aggregate gross proceeds
received by the Company from the sale of the Units and a non-accountable expense
allowance equal to 2.75% of the aggregate gross proceeds received by the Company
from the sale of the Units.
The Company is obligated to register the resale of the Common Stock
underlying the Prepaid Warrants and the Warrants. Until such time as the
registration statement relating to such resale is declared effective by the
Securities and Exchange Commission, the Holders of the Prepaid Warrants and the
Warrants may not transfer such securities or the Common Stock issuable in
connection therewith unless they comply with an exemption from such registration
requirements.
Pursuant to the terms of the Securities Purchase Agreement dated as of
March 31, 1998 (the "Securities Purchase Agreement"), among the Company and
Zanett Lombardier, Ltd. and David McCarthy (the "Purchasers"), the Purchasers
may purchase up to an additional 1,500 Units (the "Second Closing") if the
Company satisfies certain other conditions, which may be waived by the
Purchasers, including recording three consecutive quarters of increased profits
and revenues, excluding any extraordinary items. To date, the Company has not
satisfied this condition and there can be no assurance that the Second Closing
will be consummated. If such
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Second Closing is consummated, the Company would be obligated to issue
additional Agent Warrants to Zanett to purchase such number of shares of Common
Stock as is equal to 13 shares of the Company's Common Stock for each Unit
purchased at the Second Closing, or an aggregate of up to 39,000 shares of
Common Stock based on the sale of 1,500 Units. The exercise price of the Prepaid
Warrants and the Warrants to be issued in connection with the potential Second
Closing would be based on the bid price of the Common Stock at the time of the
Second Closing. Other than the exercise price, the terms of the Prepaid Warrants
and Warrants would be the same as the terms governing the Prepaid Warrants and
Warrants issued in connection with the First Closing.
As described herein, pursuant to Marketplace Rule 4310(c)(25)(H) of the
NASDAQ Stock Market (the "SmallCap Market"), stockholder approval is required
when a company issues common stock in a private placement in excess of 19.9% of
the number of shares of common stock outstanding before the issuance at a price
which is lower than the higher of book value or market value of the Common
Stock. Since the number of shares of Common Stock issuable upon the exercise of
the Prepaid Warrants is not determinable, the Company may be required to issue
an amount of shares upon the exercise of the Prepaid Warrants and the Warrants
which exceeds the 19.9% limitation. Accordingly, stockholder approval is
required to enable the Company to exceed the 19.9% limitation with respect to
the issuance of Common Stock underlying the Prepaid Warrants. In addition, since
the transactions contemplated by the Second Closing may be combined with the
First Closing, the Company needs stockholder approval to ensure that it may
consummate the Second Closing if the other conditions of the Second Closing are
satisfied.
The terms of the Prepaid Warrants, the Incentive Warrants and the Agent
Warrants were determined by the Board of Directors of the Company. A form of
each of the Prepaid Warrant and the Warrant was filed as an exhibit to the
Company's Form 10-KSB for the fiscal year ended December 31, 1997 (the "Form
10-KSB") and the following summary of the terms of the Prepaid Warrants and the
Warrants are qualified in their entirety by reference to the form of each of the
Prepaid Warrant and the Warrant filed as an exhibit to the Form 10-KSB,
respectively.
Exercise Rights of Prepaid Warrants. Each Prepaid Warrant is exercised
at the option of the Holder into the number of shares of Common Stock determined
by dividing the initial purchase price of $1,000 by the "Exercise Price," which
is the lesser of (a) the fixed exercise price (which initially is $1.47) and (b)
the average of the five (5) lowest closing bid prices for the Common Stock
during the twenty (20) consecutive trading days immediately preceding the
exercise multiplied by the "Exercise Percentage." The "Exercise Percentage" is
(a) 100% prior to the 91st day following the First Closing, (b) 85% for the
period on or after the 91st day following the First Closing and before the 151st
day following the First Closing, (c) 75% for the period on or after the 151st
day following the First Closing and before the 211th day following the First
Closing and (d) 65% for the period on or after the 211th day following the First
Closing. In addition, the Exercise Percentage will be reduced upon the
occurrence of certain events including
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a 10% reduction in the Exercise Percentage if the Company is unable to obtain
stockholder approval of this Proposal on or before July 31, 1998.
Cap Amount and Default Payment in the Event That the Cap Amount is Not
Eliminated. Pursuant to Rule 4310(c)(25)(H) of the Nasdaq SmallCap Market, the
Company may not issue more than 1,566,000 shares of Common Stock (19.9% of the
total shares of the Company's Common Stock outstanding on the First Closing less
the maximum number of shares issuable upon the exercise of all Warrants) without
stockholder approval of this Proposal (the "Cap Amount"). The Cap Amount is
allocated pro rata among the Holders. If the unissued portion of any Holder's
Cap Amount is less than 135% of the number of shares of Common Stock then
issuable upon exercise of such Holder's Prepaid Warrant (a "Trading Market
Trigger Event") and the Company fails to eliminate the prohibitions that have
resulted in the existence of the Cap Amount within 90 days of a Trading Market
Trigger Event, the Company is required to make a cash payment (the "Default
Amount") as follows: the amount outstanding on the Prepaid Warrant divided by
the exercise price of the Prepaid Warrant multiplied by the highest closing bid
price of the Common Stock during the period beginning on the date that the
Company receives a default notice and ending on the day immediately preceding
the date of payment of the Default Amount.
Other Events of Default For The Prepaid Warrants. If a Holder tenders
his or her Prepaid Warrant for exercise and does not receive Common Stock
certificates within certain specified periods for all of the shares of Common
Stock to which such Holder is entitled (except in certain specified
circumstances), then the Holder can receive a default payment and in the event
that the Company continues to fail to deliver the certificates, the Exercise
Percentage will be further reduced. In addition, Holders can receive the Default
Amount upon the occurrence of certain events, including if the Company's Common
Stock is not listed for trading on the New York Stock Exchange, the American
Stock Exchange, the Nasdaq National Market or the SmallCap Market.
Anti-Dilution Provisions of Prepaid Warrants. The Exercise Price is
adjusted if there is a stock split, stock dividend, combination,
reclassification or similar event with respect to the Common Stock, if certain
distributions with respect to shares of Common Stock are made, if certain
purchase rights are distributed and in the event of certain mergers, certain
consolidations, sale or transfer of all or substantially all of the Company's
assets and certain share exchanges.
Incentive Warrants and Agent Warrants. Subject to certain exceptions,
the exercise price of the Warrants is adjusted in the event the Company issues,
grants or sells any warrants, rights or options (whether or not immediately
exercisable) to purchase Common Stock or securities that are convertible into or
exchangeable for Common Stock at a price per share that is not based on a
percentage of the market price of the Common Stock ("Fixed Price") or that may
be converted into or exchanged for Common Stock at a Fixed Price that is less
than the then exercise price of such Warrants. In such event, the exercise price
of the Warrants is reduced to
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such Fixed Price and the number of shares issuable on exercise of the Warrants
is adjusted so that it equals the number of shares issuable under the Warrants
immediately prior to the adjustment multiplied by the per share exercise price
prior to the adjustment divided by the exercise price after the adjustment.
In the event of a stock split, stock dividend, recapitalization,
reorganization, reclassification or other subdivision of the Common Stock, the
exercise price of the Warrants and the number of shares of Common Stock issuable
on exercise of the Warrants are proportionately adjusted. The exercise price of
the Warrants and the number of shares issuable on exercise are also adjusted in
the event of certain mergers and consolidations, in the event of any sale or
conveyance of all or substantially all of the Company's assets, in the event of
certain distributions of its assets and in the event the Company distributes
certain purchase rights.
The Nasdaq Rule
Rule 4310(c)(25)(H) of the Nasdaq SmallCap Market, which is applicable
to the Company because the Company's shares of Common Stock are presently
included for quotation on the Nasdaq SmallCap Market sets forth the corporate
governance standards for such securities. Section (c)(25)(H) of Rule 4310
provides:
(i)Each [Nasdaq SmallCap Market] issuer shall require shareholder
approval of a plan or arrangement under subparagraph a. below or, prior
to the issuance of designated securities under subparagraph b., c., or
d. below:
. . . d. in connection with a transaction other than a public
offering involving:
1. the sale or issuance by the issuer of common stock
(or securities convertible into or exercisable for common
stock) at a price less than the greater of book or market
value which together with sales by officers, directors or
substantial shareholders of the company equals 20% or more
of common stock or 20% or more of the voting power
outstanding before the issuance; or
2. the sale or issuance by the company of common stock
(or securities convertible into or exercisable for common
stock) equal to 20% or more of the common stock or 20% or
more of the voting power outstanding before the issuance for
less than the greater of book or market value of the stock.
Nasdaq Rule 4310 provides that the limit set forth in subparagraph d.
does not apply if a company's stockholders approve the issuance of the
securities subject to the rule. In the event stockholder approval is not
obtained, the Company will be required to pay to the Holders the Default Amount.
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Stockholder Approval
The Board desires to be able to issue shares of Common Stock in
connection with the Prepaid Warrants and on the exercise of the Incentive
Warrants and the Placement Agent Warrants without regard to the limits of Nasdaq
Rule 4310. The Board believes it would be in the best interests of the Company
if the Company could issue such shares of Common Stock to the Holders rather
than being required to pay the Default Amount to the Holders of the Prepaid
Warrants. The Board believes this provision could result in a forced payment by
the Company at a time when the Company might not have, and could not raise, the
cash necessary to make such payment. The Board desires to have the ability to
retain cash for the use of the Company for other purposes. In addition, the
Board believes it is in the best interests of the Company to obtain approval of
this proposal so that it may consummate the Second Closing if and when the other
conditions of the Second Closing are satisfied.
To date, 1,500 Prepaid Warrants have been issued. As of May 20, 1998,
the Exercise Price on the Prepaid Warrants was $1.47 per share and the 1,500
Prepaid Warrants were exercisable into approximately 1,020,408 shares of Common
Stock. If stockholder approval of this proposal is not obtained, the Default
Amount would be approximately $0 for each Prepaid Warrant.
Vote Required
The affirmative vote of the holders of a majority of the Common Stock
present or represented and entitled to vote at the Meeting is required to
approve the Proposal to (i) eliminate the restriction on the number of shares of
Common Stock issuable in connection with the Prepaid Warrants and (ii) enable
the Company to consummate the Second Closing contemplated by the Securities
Purchase Agreement if the other closing conditions of the Second Closing are
satisfied. An abstention from voting by a stockholder present in person or
represented by proxy at the Meeting has the same effect as a vote against the
matter. Broker non-votes, however, are not considered shares entitled to vote on
this proposal and are not included in determining whether the proposal is
approved. The holders of shares of Common Stock representing 42% of the
outstanding shares of Common Stock have executed voting agreements which state
that they will vote in favor of this proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE APPROVAL OF THE
ISSUANCE OF SHARES OF COMMON STOCK OF THE COMPANY TO COMPLETE THE PRIVATE
PLACEMENT OF THE COMPANY'S SECURITIES WITH CERTAIN INDEPENDENT INVESTORS AND
THEIR AGENT.
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PROPOSAL III - TO INCREASE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK.
The Board of Directors has unanimously approved and recommends to
stockholders that they consider and approve a proposal to amend the Company's
Amended and Restated Certificate of Incorporation to increase the number of
authorized shares of the Company's Common Stock, par value $.001 per share, from
20,000,000 shares to 40,000,000 shares. On April 7, 1998, the Company completed
the 1998 Private Placement. It is a condition of the Securities Purchase
Agreement that the Company's stockholders approve this amendment to ensure that
the Company has a sufficient amount of Common Stock reserved for issuance upon
the exercise of the Prepaid Warrants and the Warrants. As of the Record Date,
the Company had issued an aggregate of 9,143,825 shares of Common Stock and had
reserved substantially all of its authorized but unissued shares of Common Stock
for issuance upon exercise of stock options, the Prepaid Warrants, the Warrants
and certain other warrants previously issued by the Company. If the proposed
amendment is approved, the first paragraph of Article Four of the Company's
Amended and Restated Certificate of Incorporation would be amended to substitute
the phrase "40,000 shares of Common Stock, $.001 par value per shares ('Common
Stock')" for the existing phrase "20,000 shares of Common Stock, $.001 per value
per share ('Common Stock')".
The proposed amendment to the Company's Amended and Restated
Certificate of Incorporation is being recommended as required by the Securities
Purchase Agreement. In addition, the proposed amendment is being recommended
because the Board of Directors believes that having shares authorized and
available for issuance will provide the Company with greater flexibility in
acting upon the proposed transactions. Other than upon the exercise of the
Prepaid Warrants, the Warrants or other presently outstanding options or
warrants or in connection with the Second Closing, the Company has no current
plans or intentions to issue any of such newly authorized shares.
The additional shares of Common Stock for which authorization is sought
would be identical to the shares of Common Stock now authorized. Holders of
Common Stock do not have preemptive rights to subscribe to additional securities
which may be issued by the Company.
Vote Required
Under the New York Business Corporation Law, the affirmative vote of
the holders of a majority of the shares of Common Stock entitled to vote at the
Annual Meeting is required to amend the Company's Certificate of Incorporation
to increase the authorized capital stock of the Company to 40,000,000 shares of
Common Stock. Accordingly, broker non-votes and abstentions will be treated as a
vote against the proposal.
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Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
APPROVAL OF AN INCREASE IN AUTHORIZED COMMON STOCK OF THE COMPANY.
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PROPOSAL IV - TO INCREASE NUMBER OF AUTHORIZED SHARES OF PREFERRED
STOCK
The Board of Directors proposes that the shareholders approve an
amendment to the Amended and Restated Certificate of Incorporation of Netplex to
increase the number of authorized shares of Preferred Stock from 2,000,000 to
6,000,000 shares ("Preferred Stock Amendment").
The Board of Directors believes it is in Netplex and its shareholders
best interests to approve the Preferred Stock Amendment because all shares of
the Company's presently authorized Preferred Stock have been designated by the
Board of Directors as Class A 10% Convertible Preferred Stock ("Class A
Preferred Stock") and has been reserved for the 1996 Private Placement. The
availability of additional shares of Preferred Stock is desirable because the
Company has the right, in lieu of paying some or all of the Preferred Dividend
in cash, to issue shares of Class A Preferred Stock to holders of Class A
Preferred Stock. Additional Preferred Stock may also prove useful in connection
with financing the capital needs of the corporation, possible future
acquisitions and mergers, or other purposes. The authorization will enable
Netplex to act promptly if appropriate circumstances arise which require the
issuance of such shares.
The additional shares of Preferred Stock would be issuable from time to
time, in one or more series and with such rights, preferences and privileges as
determined by the Board of Directors at the time of issuance. In establishing
the terms of a series of Preferred Stock, the Board of Directors would be
authorized to set, among other things, the number of shares, the dividend rate
and preferences, the cumulative or non-cumulative nature of dividends, the
redemption provisions, the sinking fund provisions, the conversion rights, the
amounts payable, and preferences, in the event of the voluntary or involuntary
liquidation of the Company, and the voting rights in addition to those required
by law, provided, however, that no class or series of any class of the Company's
Capital stock can have equal or greater rights than those of the Class A
Preferred Stock with respect to dividends or upon liquidation, winding-up or
dissolution of the Company. Such terms could include provisions prohibiting the
payment of Common Stock dividends or purchases by the Company of Common Stock in
the event dividends or sinking fund payments on the Preferred Stock were in
arrears. In the event of liquidation, the holders of Preferred Stock of each
series might be entitled to receive an amount specified for such series by the
Board of Directors before any payment could be made to the holders of Common
Stock.
The authorization of new shares of Preferred Stock will not, by itself,
have any effect on the rights of the holders of shares of Common Stock.
Nonetheless, the issuance of one or more series of Preferred Stock could affect
the holders of shares of the Common Stock in a number of respects, including the
following: (a) if voting rights are granted to any newly issued series of
Preferred Stock, the voting power of the Common Stock will be diluted, (b) the
issuance of Preferred Stock may result in a dilution of earnings per share of
the Common Stock, (c)
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dividends payable on any newly issued series of Preferred Stock will reduce the
amount of funds available for payment of dividends on the Common Stock and (d)
certain future amendments to the Amended and Restated Certificate of
Incorporation affecting the Preferred Stock may require approval by the separate
vote of the holders of the Preferred Stock or in some cases the holders of
shares of one or more series of Preferred Stock (in addition to the approval of
the holders of shares of the Common Stock) before action can be taken by the
Company.
If the proposed amendment is approved, the first paragraph of Article
Fourth of the Company's Amended and Restated Certificate of Incorporation would
be amended to substitute the phrase "6,000,000 shares of Preferred Stock, $.01
par value per shares ('Preferred Stock')" for the phrase "2,000,000 shares
Preferred Stock, $.01 par value per share ('Preferred Stock')".
The Board of Directors has unanimously determined that the proposed
Preferred Stock Amendment is in the best interests of the Company and its
shareholders.
Vote Required
The affirmative vote of the holders of at least a majority of the
issued and outstanding shares of the Company's Common Stock entitled to vote at
the Meeting is required for the Proposed Preferred Stock Amendment to be
effective. Accordingly, broker non-votes and abstentions will be treated as a
vote against the proposal.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
APPROVAL OF THE PREFERRED STOCK AMENDMENT INCREASING THE NUMBER OF AUTHORIZED
SHARES OF PREFERRED STOCK FROM 2,000,000 TO 6,000,000.
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PROPOSAL V - AMENDMENT TO THE DIRECTORS' STOCK OPTION PLAN
The Board of Directors proposes that the stockholders approve an
amendment to the Directors' Plan to increase the number of shares reserved for
issuance pursuant to the exercise of options granted under the Directors' Plan
from 100,000 shares of Common Stock to 300,000 shares, so that more options can
be issued pursuant to the Plan.
The purpose of the Directors' Plan is to secure for the Company and its
shareholders the benefits arising from stock ownership by its Directors. The
Directors' Plan will provide a means whereby such Directors may purchase shares
of Common Stock pursuant to options granted in accordance with the Directors'
Plan. Any Director of the Company who is not a full or part-time employee
thereof is eligible to participate in the Directors' Plan (each an "Eligible
Director"). The Board of Directors believes it is in the Company's and its
shareholders' best interests to approve the Amendment because it would enable
the Company to continue to grant options under the Directors' Plan which makes
the available additional incentives inherent in the ownership of Common Stock
and helps the Company retain the services of eligible directors. The Company has
granted options to purchase Common Stock to the following persons: Richard
Goldstein, 15,000 options; Frank Lagattuta, 15,000 options; Deborah
Schondorf-Novick, 15,000 options; and Neil Luden, 15,000 options.
Administration of the Directors' Plan
The Directors' Plan is administered by the Board of Directors, which
has full and complete authority to adopt such rules and regulations and to make
all such other determinations not inconsistent with the Directors' Plan as may
be necessary for the administration thereof.
The Board of Directors is authorized to amend, suspend or terminate the
Directors' Plan, except that it is not authorized without shareholder approval
(except with regard to adjustments resulting from changes in capitalization) to
(i) increase the maximum number of shares that may be issued pursuant to the
exercise of options granted under the Directors' Plan; (ii) change the minimum
price per share at which an option may be exercised pursuant to the Directors'
Plan; (iii) increase the maximum term of any option granted under the Directors'
Plan; or (iv) permit the granting of options to anyone other than those eligible
as set forth in the Directors' Plan.
Unless the Directors' Plan is terminated earlier by the Board of
Directors, it will terminate on May 30, 2005.
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<PAGE>
Common Stock Subject to the Directors' Plan
The shares of Common Stock to be issued under the Directors' Plan,
pursuant to the exercise of options granted thereunder, may be either authorized
but unissued shares or reacquired shares. The number of shares of Common Stock
reserved for issuance under the Directors' Plan will be subject to adjustment to
prevent dilution in the event of a stock split, combination of shares, stock
dividend or certain other events. If an option granted under the Directors'
Plan, or any portion thereof, shall expire or terminate for any reason without
having been exercised in full, the unpurchased shares of Common Stock covered by
such option shall be available for future grants of options.
The Directors' Plan, as proposed, would authorize the issuance of a
maximum of 300,000 shares of Common Stock, subject to adjustment, pursuant to
the exercise of options granted thereunder.
Grant of Options
Each Eligible Director receives the grant of an option to purchase
15,000 shares of Common Stock on the date such Eligible Director is first
elected as a member of the Board of Directors.
Option Price
The exercise price of each option is the Fair Market Value (as
hereinafter defined) for each share of Common Stock subject to an option. Fair
Market Value means the closing sales price of the Common Stock as quoted on the
SmallCap Market on the date of grant of any option or on the preceding date on
which the Common Stock is traded if no shares were traded on the date of grant.
If the Common Stock is not quoted on the SmallCap Market, Fair Market Value
shall be deemed to be the average of the high bid and asked prices of the Common
Stock in the over-the-counter market on the date of grant, or the next preceding
date on which the last prices were recorded by the National Quotation Bureau.
Registration of Shares
The Company intends to file a registration statement under the
Securities Act, with respect to the additional shares of Common Stock issuable
pursuant to the Directors' Plan subsequent to the approval by the Company's
shareholders.
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Vote Required
The affirmative vote of holders of a majority of the shares of Common
Stock present, in person or by proxy, is required for approval of the Directors'
Plan. Broker non-votes and proxies marked "abstain" with respect to this
proposal will be counted towards a quorum. Abstentions will be counted as a vote
against the proposal and broker non-votes will not be counted for purposes of
determining whether this proposal has been approved.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE "FOR" THE APPROVAL OF
THE DIRECTORS' PLAN.
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PROPOSAL VI - APPROVAL OF 1998 EMPLOYEE STOCK PURCHASE PLAN
Effective May 20, 1998 the Board of Directors of the Company adopted
the 1998 Employee Stock Purchase Plan (the "Plan"), which is set forth in
Exhibit A to this Proxy Statement. The Plan will not become effective unless it
is approved by the holders of record of a majority of the shares of Common Stock
present in person or represented by proxy at the Meeting.
The Plan is intended to encourage stock ownership by all eligible
employees of the Company and participating subsidiaries so that they may share
in the fortunes of the Company by acquiring a, or increasing their, proprietary
interest in the Company. The Plan is designed to encourage employees to remain
in the employ of the Company.
The following discussion of the principal features and effects of the
Plan is qualified in its entirety by reference to the text of the Plan set forth
in Exhibit A hereto.
Administration of the Plan
Primary authority for administration of the Plan is held by the Board
of Directors (the "Board"). The Board shall establish a committee composed of
members of the Board to administer the Plan, which committee shall have such of
the power and authority vested in the Board under the Plan as the Board may
delegate to it, including the power and authority to interpret any provision of
the Plan or any option under it.
Shares Subject to the Plan
The shares subject to the Plan shall be shares of the Company's Common
Stock acquired by the Company in the open market. The aggregate number of shares
of Common Stock which may be issued pursuant to the Plan is 1,000,000 subject to
increase or decrease by reason of stock splits, reorganizations, mergers,
reclassifications and the like.
Employees Eligible to Participate
Any person who is in the employ of the Company or any of its
participating subsidiaries is eligible to receive options under the Plan,
except: that employees whose customary employment is less than 20 hours per week
and further provided (i) that no employee who after the grant of options
hereunder owns shares (including all shares which may be purchased under
outstanding options granted under the Plan) possessing 5% or more of the total
combined voting
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<PAGE>
power or value of all classes of shares of the Company or of its parent or
subsidiary corporations shall be eligible to participate, and (ii) no employee
shall be granted an option which permits his rights to purchase Common Stock
under the Plan to accrue at a rate which exceeds $25,000 of fair market value of
such stock (determined at the time such option is granted) for each calendar
year which such option is outstanding at any time. An eligible employee may be
come a participant by completing, signing and filing an enrollment agreement and
any other necessary papers with the Company. Payroll deductions for a
participant shall commence the first pay date before the termination date of
such offering, unless earlier terminated by the employee.
Offerings; Options
On each Offering Date, the Plan shall be deemed to have granted to the
participant any option for as many full shares of Common Stock as he shall be
able to purchase with the payroll deductions credited to his account during his
participation in that Offering Period. Offerings shall commence on the first day
of each subsequent calendar quarter and terminate on the last day of each such
quarter (each an "Offeing Period") until this Plan is terminated by the Board or
no additional shares of Common Stock of the Company are available for purchase
under the Plan.
Each employee who continues to be a participant in an Offering Period
on the last business day of that Offering Period shall be deemed to have
exercised his option on such date and shall be deemed to have purchased from the
Company such number of full shares of Common Stock reserved for the purpose of
the Plan as his accumulated payroll deductions on such date will pay for at the
purchase price.
If the total number of shares for which options are to be granted on
any date exceeds the number of shares of Common Stock available, the Company
shall make a pro rata allocation of the shares of Common Stock remaining
available in as nearly a uniform manner as shall be practical and as it shall
determine to be equitable.
Price
The purchase price per share shall be the lesser of (i) the fair market
value of the shares of Common Stock on the Offering Date and (ii) the fair
market value of the Common Stock on the last business day of the Offering.
Termination and Transferability of Employee's Rights
An employee's rights under the Plan will terminate when he ceases to be
an employee
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provided that, if an employee's employment shall be terminated by reason of
normal retirement, death or disability prior to the end of the current offering,
he , his designated beneficiary or legal representative, as the case may be,
shall have the right, within ninety (90) days thereafter, to elect to have the
balance in his account either paid to him in cash or applied at the end of the
current offering toward the purchase of Common Stock.
No participant shall be permitted to transfer or encumber either the
payroll deductions credited to his account or any rights under the Plan other
than by will or the laws of descent and distribution.
Amendment or Discontinuance of the Plan
The Board shall have the right to amend, modify or terminate the Plan
at any time without notice; provided, however, that no employee's existing
rights under any Offering already made may be adversely affected thereby. Upon
any termination of the Plan, all payroll deductions not used to purchase stock
will be refunded.
Federal Income Tax Consequences
It is intended that options issued pursuant to the Plan shall
constitute options issued pursuant to an "employee stock purchase plan" within
the meaning of Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code").
The participants will not recognize taxable income on the exercise of
any option. In accordance with Section 423 (c) of the Code, in the event of any
disposition of the shares of Common Stock by participants, there shall be
included as compensation in his or her gross income for the taxable year in
which such disposition is made, assuming the holding period requirements for
Section 423 (a) of the Code are satisfied, or for the taxable year following the
death of the participating employee, an amount equal to the lesser of : (i) the
excess of the fair market value of the Common Stock at the time of such
disposition or death over the amount paid for such share under the Plan; and
(ii) the excess of the fair market value of the Common Stock at the time the
option was granted over the option price.
The foregoing is no more than a summary of the federal income tax
provisions relating to the grant and exercise of options and stock appreciation
rights under the Plan and the sale of shares acquired under the Plan. Individual
circumstances may vary these results. The federal income tax laws and
regulations are constantly being amended, and each participant should rely upon
his own tax counsel for advice concerning the federal income tax provisions
applicable to the Plan.
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Vote Required
The affirmative vote of the holders of a majority of the shares of
Common Stock present, in person or by proxy, is required for approval of the
Plan.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
PROPOSED PLAN.
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PROPOSAL VII - RATIFICATION OF APPOINTMENT OF INDEPENDENT
AUDITORS
The Board of Directors has appointed KPMG Peat Marwick as the Company's
independent auditors. Although the selection of auditors does not require
ratification, the Board of Directors has directed that the appointment of KPMG
Peat Marwick be submitted to shareholders for ratification due to the
significance of their appointment to the Company. If shareholders do not ratify
the appointment of Peat Marwick, the Board of Directors will consider the
appointment of other certified public accountants. a representative of KPMG Peat
Marwick will be present at the Meeting and will have the opportunity to make a
statement if he or she desires to do so and will be available to respond to
appropriate questions.
Broker non-votes and proxy cards marked "abstain" with respect to this
proposal will be counted towards a quorum. Abstentions will be counted as a vote
against this proposal and broker non-votes will not be counted for purposes of
determining whether this proposal has been approved.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" THE
RATIFICATION OF THE APPOINTMENT OF KPMG PEAT MARWICK AS THE COMPANY'S
INDEPENDENT AUDITORS.
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ANNUAL REPORT
All shareholders of record as of June 4, 1998 have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997. The Form 10-KSB contains
certified consolidated financial statements of the Company and its subsidiaries
for the fiscal year ended December 31, 1997.
By Order of the Company,
Robert Skelton
Secretary
Dated: June , 1998
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<PAGE>
Exhibit A
THE NETPLEX GROUP, INC. 1998 EMPLOYEE STOCK PURCHASE PLAN
ARTICLE I - PURPOSE
1.01 Purpose.
The Netplex Group, Inc. 1998 Employee Stock Purchase Plan is
intended to provide a method whereby employees of The Netplex Group, Inc. and
its subsidiary corporations (hereinafter referred to, unless the context
otherwise requires, as the "Company") will have an opportunity to acquire a
proprietary interest in the Company through the purchase of shares of the Common
Stock of the Company. The shares of Common Stock of the Company subject to the
Plan shall be shares acquired by the Company in the open market. It is the
intention of the Company to have the Plan qualify as an "employee stock purchase
plan" under Section 423 of the Internal Revenue Code of 1986, as amended (the
"Code"). The provisions of the Plan shall be construed so as to extend and limit
participation in a manner consistent with the requirements of that section of
the Code.
ARTICLE II - DEFINITIONS
2.01. Base Pay.
"Base Pay" shall mean regular straight-time earnings excluding
payments for overtime, shift premium, bonuses and other special payments,
commissions and other marketing incentive payments.
2.02. Committee.
"Committee" shall mean the individuals described in Article
XI.
2.03. Employee.
"Employee" means any person who is customarily employed on a
full-time or part-time basis by the Company and is regularly scheduled to work
more than 20 hours per week.
2.04. Subsidiary Corporation.
"Subsidiary Corporation" shall mean any present or future
corporation which (i) would be a "subsidiary corporation" of the Company as that
term is defined in Section 424 of the Code and (ii) is designated as a
participant in the Plan by the Committee.
<PAGE>
ARTICLE III - ELIGIBILITY AND PARTICIPATION
3.01. Initial Eligibility.
Any employee who shall have completed thirty (30) days'
employment and shall be employed by the Company on the date his participation in
the Plan is to become effective shall be eligible to participate in offerings
under the Plan which commence on or after the first day of the month after the
expiration of such 30 day employment period.
3.02. Leave of Absence.
For purposes of participation in the Plan, a person on leave
of absence shall be deemed to be an employee for the first 90 days of such leave
of absence and such employee's employment shall be deemed to have terminated at
the close of business on the 90th day of such leave of absence unless such
employee shall have resumed to regular full-time or part-time employment (as the
case may be) prior to the close of business on such 90th day. Termination by the
Company of any employee's leave of absence, other than termination of such leave
of absence on return to full-time or part-time employment, shall terminate an
employee's employment for all purposes of the Plan and shall terminate such
employee's participation in the Plan and right to exercise any option.
3.03. Restrictions on Participation.
Notwithstanding any provisions of the Plan to the contrary, no
employee shall be granted an option to participate in the Plan:
(a) if, immediately after the grant, such employee would own
stock, and/or hold outstanding options to purchase stock, possessing 5% or more
of the total combined voting power or value of all classes of stock of the
Company (for purposes of this paragraph, the rules of Section 424(d) of the Code
shall apply in determining stock ownership of any employee); or
(b) which permits his rights to purchase stock under all
employee stock purchase plans of the Company to accrue at a rate which exceeds
$25,000 in fair market value of the stock (determined at the time such option is
granted) for each calendar year in which such option is outstanding.
3.04. Commencement of Participation.
An eligible employee may become a participant by completing an
authorization for a payroll deduction on the form provided by the Company and
filing it with the office of the Vice President - Human Resources of the Company
on or before the date set therefor by the Committee, which date shall be prior
to the Offering Commencement Date for the Offering (as such terms are defined
below). Payroll deductions for a participant shall commence on the applicable
Offering Commencement Date when his authorization for a payroll deduction
becomes effective and shall end on the Offering Termination Date of the Offering
to which such authorization is applicable unless sooner terminated by the
participant as provided in Article VIII.
ARTICLE IV - OFFERINGS
4.01. Quarterly Offerings.
The Plan will be implemented by quarterly offerings of the
Company's Common Stock (each, the "Offering", or collectively, the "Offerings")
each beginning, respectively, on the 1st day of each calendar quarter ("Offering
Commencement Date") and ending on the last day of such calendar quarter
("Offering Termination Date").
ARTICLE V - PAYROLL DEDUCTIONS
5.01. Amount of Deduction.
At the time a participant files his authorization for payroll
deduction, he shall elect to have deductions made from his pay on each payday
during the time he is a participant in an Offering at the rate of 1, 2, 3, 4, 5,
6, 7, 8, 9 or 10% of his base pay in effect at the Offering Commencement Date of
such Offering. In the case of a part-time hourly employee, such employee's base
pay during an Offering shall be determined by multiplying such employee's hourly
rate of pay in effect on the Offering Commencement Date by the number of
regularly scheduled hours of work for such employee during such Offering.
Notwithstanding the foregoing, the Committee shall have the right, pursuant to
11.02 hereof, to establish a minimum payroll deduction as a condition of
participation in the Plan.
5.02. Participant's Account.
All payroll deductions made for a participant shall be
credited to his account under the Plan. A participant may not make any separate
cash payment into such account except when on leave of absence and then only as
provided in Section 5.04.
5.03. Changes in Payroll Deductions.
A participant may discontinue his participation in the Plan as
provided in Article VIII, but no other change can be made during an Offering
and, specifically, a participant may not alter the amount of his payroll
deductions for that Offering.
5.04. Leave of Absence.
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If a participant goes on a leave of absence, such participant
shall have the right to elect: (a) to withdraw the balance in his or her account
pursuant to Section 7.02, (b) to discontinue contributions to the Plan but
remain a participant in the Plan, or remain a participant in the Plan during
such leave of absence, authorizing deductions to be made from payments by the
Company to the participant during such leave of absence and undertaking to make
cash payments to the Plan at the end of each payroll period to the extent that
amounts payable by the Company to such participant are insufficient to meet such
participant's authorized Plan deductions.
ARTICLE VI - GRANTING OF OPTION
6.01. Number of Option Shares.
On the Commencement Date of each Offering, a participating
employee shall be deemed to have been granted an option to purchase a maximum
number of shares of the stock of the Company equal to an amount determined as
follows: an amount equal to (i) that percentage of the employee's base pay which
he has elected to have withheld (but not in any case in excess of 10 %)
multiplied by (ii) the employee's base pay during the period of the Offering
(iii) divided by the market value of the stock of the Company on the applicable
Offering Commencement Date. The market value of the Company's stock shall be
determined as provided in paragraphs (a) and (b) of Section 6.02 below. An
employee's base pay during the period of an offering shall be determined by
multiplying, in the case of a one-year offering, his normal weekly rate of pay
(as in effect on the last day prior to the Commencement Date of the particular
offering) by 52 or the hourly rate by 2,080 or, in the case of a six-month
offering, by 26 or 1040, as the case may be, provided that, in the case of a
part time hourly employee, the employee's base pay during the period of an
offering shall be determined by multiplying such employee's hourly rate by the
number of regularly scheduled hours of work for such employee during such
Offering.
6.02. Option Price.
The option price of stock purchased with payroll deductions
made during an Offering for a participant therein shall be the lower of:
(a) the closing price of the stock on the Offering
Commencement Date or the nearest prior business day on which trading occurred on
the NASDAQ National Market System; or
(b) the closing price of the stock on the Offering Termination
Date or the nearest prior business day on which trading occurred on the NASDAQ
National Market System. If the Common Stock of the Company is not admitted to
trading on any of the aforesaid dates for which closing prices of the stock are
to be determined, then reference shall be made to the fair market value of the
stock on that date, as determined on such basis as shall be established or
specified for the purpose by the Committee.
ARTICLE VII - EXERCISE OF OPTION
7.01. Automatic Exercise.
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Unless a participant gives written notice to the Company as
hereinafter provided, his option for the purchase of stock with payroll
deductions made during any Offering will be deemed to have been exercised
automatically on the Offering Termination Date applicable to such offering, for
the purchase of the number of full shares of stock which the accumulated payroll
deductions in his account at that time will purchase at the applicable option
price (but not in excess of the number of shares for which options have been
granted to the employee pursuant to Section 6.01), and any excess in his account
at that time shall be carried over into the next Offering Period, or if there is
none, shall be returned to him.
7.02. Withdrawal of Account.
By written notice to the Vice President -Human Resources of
the Company at any time prior to the Offering Termination Date applicable to any
Offering, a participant may elect to withdraw all the accumulated payroll
deductions in his account at such time.
7.03. Fractional Shares.
Fractional shares will not be issued under the Plan and any
accumulated payroll deductions which would have been used to purchase fractional
shares will be returned to any participant promptly following the termination of
an Offering, without interest.
7.04. Transferability of Option.
During a participant's lifetime, options held by such
participant shall be exercisable only by that participant.
7.05 Delivery of Stock.
As promptly as practicable after the Offering Termination Date
of each Offering, the Company will deliver to each participant, as appropriate,
the stock purchased upon exercise of his option.
7.06 Expenses
The Company will bear the expenses of administering the Plan.
ARTICLE VIII - WITHDRAWAL
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8.01. In General.
As indicated in Section 7.02, a participant may withdraw
payroll deductions credited to his account under the Plan at any time by giving
written notice to the Vice President - Human Resources of the Company. All of
the participant's payroll deductions credited to his account will be paid to him
promptly after receipt of his notice of withdrawal, and no further payroll
deductions will be made from his pay during such Offering. The Company may, at
its option, treat any attempt to borrow by an employee on the security of his
accumulated payroll deductions as an election, under Section 3.02, to withdraw
such deductions.
8.02. Effect on Subsequent Participation.
A participant's withdrawal from any Offering will not have any
effect upon his eligibility to participate in any succeeding Offering or in any
similar plan which may hereafter be adopted by the Company.
8.03. Termination of Employment.
Upon termination of the participant?s employment for any
reason, including retirement (but excluding death while in the employ of the
Company or continuation of a leave of absence for a period beyond 90 days), the
payroll deductions credited to his account will be returned to him, or, in the
case of his death subsequent to the termination of his employment, to the person
or persons entitled thereto under Section 12.01.
8.04. Termination of Employment Due to Death.
Upon termination of the participant?s employment because of
his death, his beneficiary (as defined in Section 12.01) shall have the right to
elect, by written notice given to the Vice President - Human Resources of the
Company prior to the earlier of the Offering Termination Date or the expiration
of a period of sixty (60) days commencing with the date of the death of the
participant, either:
(a) to withdraw all of the payroll deductions credited to the
participant's account under the Plan, or
(b) to exercise the participant's option for the purchase of
stock on the Offering Termination Date next following the date of the
participant's death for the purchase of the number of full shares of stock which
the accumulated payroll deductions in the participant's account at the date of
the participant's death will purchase at the applicable option price, and any
excess in such account will be returned to said beneficiary, without interest.
In the event that no such written notice of election shall be
duly received by the office of the Treasurer of the Company, the beneficiary
shall automatically be deemed to have elected, pursuant to paragraph (b), to
exercise the participant's option.
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8.05. Leave of Absence.
A participant on leave of absence shall, subject to the
election made by such participant pursuant to Section 5.04, continue to be a
participant in the Plan so long as such participant is on continuous leave of
absence. A participant who has been on leave of absence for more than 90 days
and who therefore is not an employee for the purpose of the Plan shall not be
entitled to participate in any offering commencing after the 90th day of such
leave of absence. Notwithstanding any other provisions of the Plan, unless a
participant on leave of absence returns to regular full time or part time
employment with the Company at the earlier of: (a) the termination of such leave
of absence or (b) three months from the 90th day of such leave of absence, such
participant's participation in the Plan shall terminate on whichever of such
dates first occurs.
ARTICLE IX - INTEREST
9.01. Payment of Interest.
No interest will be paid or allowed on any money paid into the
Plan or credited to the account of any participant; provided, however, that
interest shall be paid on any and all money which is distributed to an employee
or his beneficiary pursuant to the provisions of Sections 7.02, 8.01, 8.03, 8.04
and 10.01. Such distributions shall bear simple interest during the period from
the date of withholding, to the date of return at the regular passbook savings
account rates per annum in effect at the [name bank], during the applicable
offering period or, if such rates are not published or otherwise available for
such purpose, at the regular passbook savings account rates per annum in effect
during such period at another major commercial bank selected by the Committee.
Where the amount returned represents an excess amount in an employee's account
after such account has been applied to the purchase of stock, the employee's
withholding account shall be deemed to have been applied first toward purchase
of stock under the Plan, so that interest shall be paid on the more recent
withholdings during the period which results in the excess amount.
ARTICLE X - STOCK
10.01. Maximum Shares.
The maximum number of shares which shall be issued under the
Plan, subject to adjustment upon changes in capitalization of the Company as
provided in Section 12.04, shall be 1,000,000 shares of the Company's common
stock. If the total number of shares for which options are exercised on any
Offering Termination Date in accordance with Article VI exceeds the maximum
number of shares for the applicable offering, the Company shall make a pro rata
allocation of the shares available for delivery and distribution in an nearly a
uniform manner as shall be practicable and as it shall determine to be
equitable, and the balance of payroll deductions credited to the account of each
participant under the Plan shall be returned to him as promptly as possible.
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10.02. Participant's Interest in Option Stock.
The participant will have no interest in stock covered by his
option until such option shall have been exercised.
10.03. Registration of Stock.
Stock to be delivered to a participant in any Offering under
the Plan will be registered in the name of the participant, or, if the
participant so directs, by written notice to the Vice President - Human
Resources prior to the Offering Termination Date applicable thereto, in the
names of the participant and one such other person as may be designated by the
participant, as joint tenants with rights of survivorship or as tenants by the
entireties, to the extent permitted by applicable law.
10. 04. Restrictions on Exercise.
The Board of Directors may, in its discretion, require as
conditions to the exercise of any option that the shares of Common Stock
reserved for issuance upon the exercise of the option shall have been duly
listed, upon official notice of issuance, upon a stock exchange, and that
either:
(a) a Registration Statement under the Securities Act of 1933,
as amended, with respect to said shares shall be effective, or
(b) the participant shall have represented at the time of
purchase, in form and substance satisfactory to the Company, that it is his
intention to purchase the shares for investment and not for resale or
distribution.
ARTICLE XI - ADMINISTRATION
11.01. Appointment of Committee.
The Board of Directors shall appoint a committee (the
"Committee") to administer the Plan, which shall consist of no fewer than two
members of the Board of Directors. No member of the Committee shall be eligible
to purchase stock under the Plan.
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11.02. Authority of Committee.
Subject to the express provisions of the Plan, the Committee
shall have plenary authority in its discretion to interpret and construe any and
all provisions of the Plan, to adopt rules and regulations for administering the
Plan, and to make all other determinations deemed necessary or advisable for
administering the Plan. The Committee's determination on the foregoing matters
shall be conclusive.
11. 03. Rules Covering the Administration of the Committee.
The Board of Directors may from time to time appoint members
of the Committee in substitution for or in addition to members previously
appointed and may fill vacancies, however caused, in the Committee. The
Committee may select one of its members as its Chairman and shall hold its
meetings at such times and places as it shall deem advisable and may hold
telephonic meetings. A majority of its members shall constitute a quorum. All
determinations of the Committee shall be made by a majority of its members. The
Committee may correct any defect or omission or reconcile any inconsistency in
the Plan, in the manner and to the extent it shall deem desirable. Any decision
or determination reduced to writing and signed by a majority of the members of
the Committee shall be as fully effective as if it had been made by a majority
vote at a meeting duly called and held. The Committee may appoint a secretary
and shall make such rules and regulations for the conduct of its business as it
shall deem advisable.
ARTICLE XII - MISCELLANEOUS
12.01. Designation of Beneficiary.
A participant may file a written designation of a beneficiary
who is to receive any stock and/or cash. Such designation of beneficiary may be
changed by the participant at any time by written notice to the Treasurer of the
Company. Upon the death of a participant and upon receipt by the Company of
proof of identity and existence at the participants death of a beneficiary
validly designated by him under the Plan, the Company shall deliver such stock
and/or cash to such beneficiary. In the event of the death of a participant and
in the absence of a beneficiary validly designated under the Plan who is living
at the time of such participant's death, the company shall deliver such stock
and/or cash to the executor or administrator of the estate of the participant,
or if no such executor or administrator has been appointed (to the knowledge of
the Company), the Company, in its discretion, may deliver such stock and/or cash
to the spouse or to any one or more dependents of the participant as the Company
may designate. No beneficiary shall, prior to the death of the participant by
whom he has been designated, acquire any interest in the stock or cash credited
to the participant under the Plan, except as provided in Section 10.03 hereof.
12.02. Transferability.
Neither payroll deductions credited to a participant's account
nor any rights with regard to the exercise of an option or to receive stock
under the Plan may be assigned, transferred, pledged,
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or otherwise disposed of in any way by the participant other than by will or the
laws of descent and distribution. Any such attempted assignment, transfer,
pledge or other disposition shall be without effect, except that the Company may
treat such act as an election to withdraw funds in accordance with Section 7.02.
12.03. Use of Funds.
All payroll deductions received or held by the Company under
this Plan may be used by the Company for any corporate purpose and the Company
shall not be obligated to segregate such payroll deductions.
12.04. Adjustment Upon Changes in Capitalization.
(a) If, while any options are outstanding, the I outstanding
shares of Common Stock of the Company have increased, decreased, changed into,
or been exchanged for a different number or kind of shares or securities of the
Company through reorganization, merger, recapitalization, reclassification,
stock split, reverse stock split or similar transaction, appropriate and
proportionate adjustments may be made by the Committee in the number and/or kind
of shares which are subject to purchase under outstanding options and on the
option exercise price or prices applicable to such outstanding options. In
addition, in any such event, the number and/or kind of shares which may be
offered in the Offerings described in Article IV hereof shall also be
proportionately adjusted. No adjustments shall be made for stock dividends. For
the purposes of this Paragraph, any distribution of shares to shareholders in an
amount aggregating 20% or more of the outstanding shares shall be deemed a stock
split and any distributions of shares aggregating less than 20 % of the
outstanding shares shall be deemed a stock dividend.
(b) Upon the dissolution or liquidation of the Company, or
upon a reorganization, merger or consolidation of the Company with one or more
corporations as a result of which the Company is not the surviving corporation,
or upon a sale of substantially all of the property or stock of the Company to
another corporation, the holder of each option then outstanding under the Plan
will thereafter be entitled to receive at the next Offering Termination Date
upon the exercise of such option for each share as to which such option shall be
exercised, as nearly as reasonably may be determined, the cash, securities
and/or property which a holder of one share of the Common stock was entitled to
receive upon and at the time of such transaction. The Board of Directors shall
take such steps in connection with such transactions as the Board shall deem
necessary to assure that the provisions of this Section 12.04 shall thereafter
be applicable, as nearly as reasonably may be determined, in relation to the
said cash, securities and/or property as to which such holder of such option
might thereafter be entitled to receive.
12.05. Amendment and Termination.
The Board of Directors shall have complete power and authority
to terminate or amend the Plan; provided, however, that the Board of Directors
shall not, without the approval of the shareholders of the Corporation (i)
increase the maximum number of shares which may be issued
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under any Offering (except pursuant to Section 12.04); (ii) amend the
requirements as to the class of employees eligible to purchase stock under the
Plan or permit the members of the Committee to purchase stock under the Plan. No
termination, modification, or amendment of the Plan may, without the consent of
an employee then having an option under the Plan to purchase stock, adversely
affect the rights of such employee under such option.
12.06. Effective Date.
The Plan shall become effective upon the approval of the
holders of the majority of the Common Stock present and represented at an annual
meeting of the shareholders held on or before [_____, 19_.] If the Plan is not
so approved, the Plan shall not become effective.
12.07. No Employment Rights.
The Plan does not, directly or indirectly, create any right
for the benefit of any employee or class of employees to purchase any shares
under the Plan, or create in any employee or class of employees any right with
respect to continuation of employment by the Company, and it shall not be deemed
to interfere in any way with the Company's right to terminate, or otherwise
modify, an employee's employment at any time.
12.08. Effect of Plan.
The provisions of the Plan shall, in accordance with its
terms, be binding upon, and inure to the benefit of, all successors of each
employee participating in the Plan, including, without limitation, such
employee's estate and the executors, administrators or trustees thereof, heirs
and legatees, and any receiver, trustee in bankruptcy or representative of
creditors of such employee.
12.09. Governing Law.
The law of the State of Virginia will govern all matters
relating to this Plan except to the extent it is superseded by the laws of the
United States.
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REVOCABLE PROXY - THE NETPLEX GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD PF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Gene Zaino and Robert Skelton,
and each of them, proxies, with full powers of substitution, to act for and in
the name of the undersigned to vote all shares of Common Stock, $.01 par value,
(the "Common Stock"), of The Netplex Group, Inc. (the "Company" or "Netplex"),
which the undersigned is entitled to vote at the Annual Meeting of Stockholders
(the "Annual Meeting") and any adjournment thereof. The Annual Meeting will be
held at the offices of the Company located at 8260 Greensboro Drive, Suite 501,
McLean, Virginia 22102, on June 29, 1998, at 10:00 a.m., local time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR
DIRECTORS LISTED BELOW AND "FOR" PROPOSALS 2 THROUGH 8
1. ELECTION OF DIRECTORS
__ FOR all nominees listed below __ WITHHOLD AUTHORITY
(except as marked to the to vote for all nominees
contrary below) listed below
Gene Zaino, Deborah Schondorf-Novick, Richard Goldstein, Frank C. Laguttuta, and
Steven L. Hanau,
(Instruction: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
- --------------------------------------------------------------------------------
2. The approval of a proposal (a) to eliminate the restriction on the
number of shares of common stock issuable in connection with the
prepaid warrants and on exercise of the incentive warrants and the
agent warrants and (b) to permit a potential second closing.
FOR __ AGAINST__ ABSTAIN__
3. The approval of the amendment of the Netplex Certificate of
Incorporation to provide for an increase in the number of authorized
shares of Common Stock from 20,000,000 to 40,000,000.
FOR __ AGAINST__ ABSTAIN__
4. The approval of the amendment to the Netplex Certificate of
Incorporation to provide for an increase in the number of authorized
shares of Preferred Stock, par value $0.01 ("Preferred Stock") from
2,000,000 to 6,000,000 shares, par value $0.01.
FOR __ AGAINST __ ABSTAIN __
5. The approval of the amendment of the Netplex 1995 Directors' Stock
Option Plan ("Directors' Plan") to provide for the increase in the
number of shares of Common Stock reserved for issuance pursuant to the
Directors' Plan from 100,000 to 300,000.
FOR __ AGAINST __ ABSTAIN __
6. The approval of the Netplex 1998 Employee Stock Purchase Plan.
FOR __ AGAINST __ ABSTAIN __
<PAGE>
7. The approval of the appointment of KPMG Peat Marwick as the Netplex
independent auditors for the fiscal year ending December 31, 1998.
FOR __ AGAINST __ ABSTAIN __
8. The approval of such other matters that may properly be brought before
the Meeting in accordance with the judgment of the person or persons
voting the Proxy.
FOR __ AGAINST __ ABSTAIN __
The shares represented by this proxy will be voted as directed by the
undersigned. IF NO INSTRUCTIONS ARE SPECIFIED, THE UNDERSIGNED'S VOTE WILL BE
CAST "FOR" THE ELECTION OF THE NOMINEES NAMED IN PROPOSAL 1, "FOR" PROPOSALS 2
THROUGH 7 AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS PRESENTED
AT THE ANNUAL MEETING. At the present time, the Board of Directors knows of no
other business to be presented at the Annual Meeting.
The undersigned stockholder may revoke this proxy at any time
before it is voted by delivering to the Secretary of the Company either a
written revocation of the proxy or a duly executed proxy bearing a later date,
or by appearing at the Annual Meeting and voting the shares subject to the proxy
by written ballot.
In their discretion, the proxies are authorized to vote upon
such other business as may properly come before the Annual Meeting and any
adjournment thereof.
Please sign exactly as your name appears on the certificate or
certificate or certificates representing shares to be voted by this proxy. When
shares are held jointly, both holders should sign. When signing as attorney,
executor, administrator, trustee or guardian, please give your full title. If
the signer is a corporation, the full corporate name should be signed by a duly
authorized officer.
-------------------------------
Signature
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Signature, if held jointly
Date: __________________, 1998
PLEASE COMPLETE, DATE, SIGN AND MAIL
THIS PROXY CARD IN THE ENCLOSED
PREPAID ENVELOPE.
