As filed with the Securities and Exchange Commission on June 9, 1999
Registration No. 333-67321
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
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THE NETPLEX GROUP, INC.
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(Exact name of Registrant as specified in its charter)
New York 11-2824578
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(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification Number)
8260 Greensboro Drive, 5th Floor
McLean, Virginia 22102
(703) 356-3001
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(Address, including zip code, and telephone number, including area code, of
Registrant's principal executive offices)
Gene Zaino
President & Chief Executive Officer
The Netplex Group, Inc.
8260 Greensboro Drive, 5th Floor
McLean, Virginia 22102
(703) 356-3001
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(Name, address, including zip code, and telephone number, including area code,
of agent of service)
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Copies to:
Steven Wolosky, Esq.
Kenneth Schlesinger, Esq.
Olshan Grundman Frome Rosenzweig & Wolosky LLP
505 Park Avenue
New York, New York 10022
(212) 753-7200
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Approximate date of commencement of proposed sale to the public: As soon as
practicable after this Registration Statement becomes effective.
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If any of the securities being registered on this Form are to be offered on a
delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, check the following box. /X/
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, please check the following box and list
the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(c) under
the Securities Act, please check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. / /
The Prospectus contained within this Registration Statement also relates to
securities which were registered pursuant to Form S-3 Registration Statement
(Registration No. 333-16423)
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<PAGE>
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO SELL THESE SECURITIES AND IT IS NOT SOLICITING AN OFFER TO BUY THESE
SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
SUBJECT TO COMPLETION, DATED JUNE 9, 1999
PRELIMINARY PROSPECTUS
8,475,479 Shares of Common Stock
THE NETPLEX GROUP, INC.
Common Stock ($.001 par value)
and One (1) Warrant
The shareholders on pages 15-16 of this prospectus are offering and
selling 8,475,479 shares of our common stock. We are offering and reselling a
warrant to purchase up to 550,000 shares of common stock.
Our common stock is publicly traded on the Nasdaq SmallCap Market under
the symbol ("NTPL") and on the Boston Stock Exchange under the symbol ("NPL").
On June 8, 1999, the closing sales price for one share of our common stock on
the Nasdaq SmallCap Market was $2.6875.
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This investment involves a high degree of risk.
See "Risk Factors" on pages 4 through 9 of this prospectus.
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Neither the Securities and Exchange Commission nor any state securities
commission has approved or disapproved of these securities or determined if this
prospectus is truthful or accurate. Any representation to the contrary is a
criminal offense.
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The date of this prospectus is , 1999.
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<PAGE>
TABLE OF CONTENTS
Page
----
The Company.......................................... 3
Risk Factors........................................... 4
We have incurred operating losses and may
never become profitable............................ 4
We have negative working capital and may
be unable to obtain necessary funding to
expand and improve our business.................... 4
The timing of our revenues and the introduction
and market acceptance of our products may
vary resulting in significant variations in our
operating results.................................. 4
The future success of our business depends
on the continued services of Gene Zaino, our
President and Chief Executive Officer and our
ability to attract and retain technical, marketing,
sales and management personnel..................... 5
Our business is very competitive and subject
to rapid changes................................... 5
We may be liable for legal violations
committed by consultants we employ................. 6
We may be unable to satisfy guarantees
which we make to our customers due to
rapid changes in our business...................... 6
We have a significant amount of outstanding
warrants, options and preferred stock which
could adversely impact the price of our
common stock and our ability to obtain
additional funding................................. 7
We may be penalized if we fail to register
shares underlying warrants we issued in
September 1998..................................... 7
Future sales of restricted shares could decrease
the market price of our common stock and
impair our ability to raise capital................ 7
We have never paid and do not currently
intend to pay dividends............................ 8
We could be adversely affected if Year 2000
problems are significant........................... 8
Additional Information................................. 10
Where you can find more information.................... 10
Use of Proceeds........................................ 12
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<PAGE>
Selling Shareholders................................... 13
Plan of Distribution................................... 18
Legal Matters.......................................... 19
Experts................................................ 19
Indemnification for Securities Act
Liabilities.......................................... 19
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The Company
Based in McLean, Virginia with seven offices throughout the U.S., The
Netplex Group, Inc. together with its wholly owned subsidiaries, is an
information technology and electronic business services and solutions company
providing the people, technology, and processes to build, manage, and protect
business information systems. Through the strategic teaming of business
consulting practice areas, operating units, and wholly owned subsidiaries, we
believe that we are positioned to deliver:
o SPECIALIZED PRACTICE GROUPS - We provide specialized solutions
that build, manage and protect customers' information systems and
the networks upon which they run. Our four specialized practice
groups are called: (1) E-commerce Systems; (2) Enterprise Systems
Management; (3) Business Protection Services; and (4) Applied
Intelligence Group.
o REGIONAL OPERATIONS - We provide reliable systems and
infrastructure integration solutions, procure hardware and
software products and supply support for businesses within
specific regions through our Systems Integration Group, while our
Technical Consulting Services Group provides staff augmenting and
task outsourcing to our clients.
o CONTRACTOR RESOURCES - We provide business services for the
independent IT Consultant.
Our address is 8260 Greensboro Drive, 5th Floor, McLean, Virginia 22102
and our telephone number is (703) 356-3001. Our worldwide web site address is
WWW.NETPLEXGROUP.COM.
We were incorporated in New York under the name CompLink, Ltd. In 1996,
CompLink, Ltd. acquired and merged with The Netplex Group, Inc. and America's
Work Exchange, Inc. in a reverse merger. As part of such reverse merger,
CompLink, Ltd. changed its name to The Netplex Group, Inc. In 1997 and 1998, we
acquired Onion Peel Solutions L.L.C., The PSS group, Automated Business
Solutions, Keller Technology Group and Applied
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<PAGE>
Intelligence Group, Inc. of Oklahoma City. References to our, we or Netplex, in
this prospectus include all of these predecessor entities.
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<PAGE>
Risk Factors
An investment in the shares offered by this prospectus involves a high
degree of risk. You should carefully consider the following risk factors, as
well as information contained and incorporated by reference in this prospectus
before deciding to invest in our common stock.
We have incurred operating losses and may never become profitable.
While we had net income of $122,921 for the three months ended March
31, 1999, we had a net loss of $2,873,603 for the year ended December 31, 1997
and a net loss of $2,548,724for the year ended December 31, 1998. We are unsure
whether our operations will ever become profitable or that we will generate cash
flows sufficient to meet our costs and sustain our operations. We anticipate
that losses will continue until we earn enough from the sales of our products
and services to cover our costs.
We have negative working capital and may be unable to obtain the
necessary funding to expand and improve our business.
As of March 31, 1999, we had negative working capital of $324,740. We
believe that our existing resources will be adequate for our cash needs through
December 1999. Beyond such period, we may need to raise substantial additional
capital to pay for our operations. We are uncertain whether additional financing
will be available on acceptable terms or at all. If we raise additional funds by
issuing equity securities, our shareholders will be further diluted. If adequate
funds are unavailable, we may delay, curtail, reduce the scope of or eliminate
the expansion of our operations and/or our marketing and sales efforts which
could have a material adverse effect on our financial condition and business
operations.
The timing of our revenues and the introduction and market acceptance
of our products may vary resulting in significant variations in our operating
results.
Our revenues may vary due to:
o the number and dollar value of client engagements commenced and
completed during a quarter
o the number of working days in a quarter
o employee hiring and utilization rates
The timing of revenues is difficult to forecast because our sales cycle
for new clients is relatively long and may depend on the size and scope of
assignments and general economic conditions. Because a high percentage of our
expenses are relatively fixed, a change in the
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<PAGE>
timing of the beginning or end of client assignments, particularly at or near
the end of any quarter, could cause operating results to significantly vary from
quarter to quarter and result in reported losses for that quarter. In addition,
clients can terminate our engagement at will, resulting in a higher than
expected number of unassigned persons or higher severance expenses.
While we adjust professional staffs to reflect active projects, we must
maintain a sufficient number of senior professionals to oversee existing client
projects and help our sales force secure new client assignments. Because we
perform work on a fixed-price basis, we also bear the risk of cost overruns and
inflation. New product introductions and market acceptance of new and enhanced
versions of our products or the products of third parties may also significantly
affect our operating results.
The future success of our business depends on the continued services of
Gene Zaino, our President and Chief Executive Officer and our ability to attract
and retain technical, marketing, sales and management personnel.
Our future success depends in large part on the continued services of
Gene Zaino, our President and Chief Executive Officer. We have an employment
agreement with Mr. Zaino which expires in June 1999. Although our board of
directors has authorized a new three (3) year employment agreement for Mr. Zaino
to remain as President and Chief Executive Officer, we are unsure whether Mr.
Zaino will remain as President and Chief Executive Officer after June 30, 1999.
We have a $1,000,000 key man insurance policy on the life of Mr. Zaino.
Our success also depends in large part upon our ability to attract and
retain qualified technical project managers and information technology
personnel. We believe we need to hire additional technical personnel to improve
existing products and services and to develop new products and services and new
sales personnel to sell our products and services. The inability to attract new
personnel could have a material adverse effect our results of operations and
research and development efforts. It is difficult to locate technical,
marketing, sales and management personnel with the combination of skills and
attributes required to execute our strategy. Although we have attracted and
retained qualified employees, qualified project managers are in particularly
great demand and will remain a limited resource for the foreseeable future. Our
employees can terminate their employment at any time. Accordingly, we may be
unable to continue to retain and attract qualified project management.
Our business is very competitive and subject to rapid changes.
Many of our competitors have significantly greater financial, technical
and marketing resources, greater name recognition and generate greater systems
consulting and integration revenues than us. The information technology services
market is also highly fragmented and served by numerous local firms. Information
technology services is a highly competitive field, subject to rapid changes and
includes competitors from a variety of market segments, including:
o systems consulting and integration firms
o contract programming companies
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<PAGE>
o the professional service groups of computer equipment companies,
which include Hewlett-Packard Company, IBM, Unisys Corporation
and Digital Equipment Corporation
o facilities management and MIS outsourcing companies
o "Big Five" accounting firms
o general management consulting firms
Our competitors include Andersen Consulting, Technology Solutions Corporation,
Computer Task Group, Inc., Alternative Resources, Inc., Innovative Information
Systems, Inc., Cap Gemini America, The Registry, INS, Cambridge Technology
Partners, Electronic Data Systems Corporation and New Boston Systems, Inc.
We believe that the principal competitive factors in the information
technology services industry include:
o responsiveness to client needs
o speed or project implementation
o quality of service
o price
o project management capability
o technical expertise
We may be liable for legal violations committed by consultants we
employ.
Technical services firms face legal uncertainties, including the extent
of liability for violations of employment and discrimination laws. Our liability
can include violations of employment and discrimination laws committed by
consultants we provide to our customers. We believe we comply in all material
respects with all applicable rules, regulations and licensing requirements.
We may be unable to satisfy guarantees which we make to our customers
due to rapid changes in our business.
Occasionally, we must guarantee to our customers that the integrated
system which we are consulting will operate properly when completed. Due to
rapid changes in technology or other unforeseen developments we may be unable to
comply with such guarantees.
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<PAGE>
We have a significant amount of outstanding warrants, options and
preferred stock which could adversely impact the price of our common stock and
our ability to obtain additional funding.
We have outstanding:
o options and warrants to purchase an aggregate of 6,033,280 shares
of our common stock, not including the prepaid warrants, at a
weighted average exercise price per of $1.69 per share
o shares of convertible class a and class b preferred stock that
are immediately convertible into an aggregate of approximately
1,037,631 shares of common stock
o 1,500,000 shares of class c preferred stock outstanding which
will be convertible into shares of common stock in September
2003, at 25% of the then market price for our common stock. If
the class c preferred stock shares were convertible as of May 10,
1999, we would issue approximately 5,000,000 shares of common
stock
o prepaid warrants which as of April 30, 1999 are exercisable into
1,986,084 shares of common stock
The exercise of all of the outstanding warrants, including the prepaid warrants,
options and/or conversion of the outstanding convertible preferred stock would
dilute the then-existing shareholders' percentage ownership of our common stock,
and any sales in the public market could adversely affect prevailing market
prices for our common stock. Moreover, our ability to obtain additional equity
capital could be adversely affected since the holders of outstanding warrants,
options and preferred stock will likely exercise or convert these securities
when we probably could obtain any needed capital on terms more favorable than
those provided by these securities. We lack control over the timing of any
exercise or the number of shares issued or sold if exercises or conversions
occur.
We will be penalized if we fail to register shares underlying warrants
which we issued in September 1998.
We will incur penalties and costs under the terms of the prepaid
warrants issued in a private placement in September 1998 if we are unable to
register the shares of common stock issuable upon exercise of those warrants, or
if we fail to maintain listing on the Nasdaq SmallCap Market.
Future sales of restricted shares could decrease the market price of
our common stock and impair our ability to raise capital.
Future sales of common stock by existing shareholders under exemptions
from registration or through the exercise of outstanding registration rights
could materially adversely affect the market price of our common stock and could
materially impair our future ability to raise capital through an offering of
equity securities. A substantial number of shares of common
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<PAGE>
stock are, or will be in the near future, available for sale under exemptions
from registration or are being registered pursuant to registration rights and we
are unable to predict the effect, if any, that market sales of these shares or
the availability of these shares for future sale will have on the market price
of the common stock prevailing from time to time.
We have never paid and do not currently intend to pay dividends.
We have never paid dividends on our common stock. We intend to retain
any future earnings to finance our growth. In addition, dividends on common
stock are subject to the preferences for dividends on the preferred stock. Any
future dividends will depend upon our earnings, if any, our financial
requirements, and other factors.
We could be adversely affected if Year 2000 problems are significant.
Many currently installed computer systems and software products are
coded to accept only two-digit entries in the date code field. These date code
fields will need to accept four-digit entries to distinguish 21st century dates
from 20th century dates. This problem could result in system failures or
miscalculations causing disruptions of business operations. As a result, by
January 1, 2000, computer systems and/or software used by many companies may
need to be upgraded to comply with such "Year 2000" requirements. Significant
uncertainty exists in the software industry concerning the potential effects
associated with such compliance.
Our vendors, customers, suppliers and service providers are under no
contractual obligation to provide Year 2000 information to us. Generally, we
believe our key internal software systems are either compliant, the vendors
claim compliance, or the problems can be corrected by purchasing small amounts
of hardware, software or software upgrades, where necessary. We are also
continuing to assess the readiness of external entities, such as subcontractors,
suppliers, vendors, and service provides that interface with us.
Based on our assessments and current knowledge, we believe we will not,
as result of the Year 2000 issue, experience any material disruptions in
internal processes, information processing or services from outside
relationships. We believe that the Year 2000 issue will not pose significant
operational problems and we will be able to manage the total Year 2000
transition without any material effect on our results of operations or financial
condition. The most likely risks to us from Year 2000 issues are external, due
to the difficulty of validating all key third parties' readiness for Year 2000.
We have sought and will continue to seek confirmation of such compliance and
seek relationships which are complaint.
We currently anticipate that all internal systems and equipment will be
Year 2000 complaint by the end of the second quarter of 1999 and that the
associated costs will not have a material adverse effect on our results of
operations and financial condition. However, the failure to properly assess or
timely implement a material Year 2000 problem could result in a disruption of
our normal business activities or operations. These failures, depending on the
extent and nature, could materially and adversely effect our operations and
financial condition. To date, we have not developed a contingency plan.
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<PAGE>
We do not believe that the costs of our Year 2000 program have been or
are material to its financial position or results of operations. All expenses
have been charged against earnings as incurred and we intend to continue to
charge these costs against earning as the costs are incurred.
We do not engage in any Year 2000 work.
The estimates and conclusions set forth herein regarding Year 2000
compliance contain forward-looking statements and are based on management's
estimates of future events and information provided by third parties. We are
unsure if the estimates and information provided will prove to be accurate.
Risks to completing the Year 2000 project include the availability of resources,
our ability to discover and correct potential Year 2000 problems and the ability
of suppliers and other third parties to bring their system into Year 2000
compliance.
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ADDITIONAL INFORMATION
We have filed with the SEC a registration statement on Form S-3 under
the Securities Act, with respect to the resale of common stock and the resale of
a warrant, the exercise of the warrants, the conversion of the preferred stock
and the resale of a warrant. This prospectus, which constitutes a part of that
registration statement, does not contain all the information contained in that
registration statement and its exhibits. For further information with respect to
us and our common stock, you should consult the registration statement and its
exhibits. Statements contained in this prospectus concerning the provisions of
any documents are necessarily summaries of those documents, and each statement
is qualified in its entirety by reference to the copy of the document filed with
the SEC. The registration statement and any of its amendments, including
exhibits filed as a part of the registration statement or an amendment to the
registration statement, are available for inspection and copying through the
entities listed below. See "Where You Can Find More Information."
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and
other information with the SEC. You may read and copy any document we file at
the SEC's public reference rooms in Washington, D.C., New York, New York and
Chicago, Illinois. Please call the SEC at 1-800- SEC-0330 for further
information on the public reference rooms. Our SEC filings are also available to
the public from the SEC's website at "http://www.sec.gov."
The SEC allows us to "incorporate by reference" the information we file
with them, which means that we can disclose important information to you by
referring you to those documents. The information incorporated by reference is
considered to be part of this prospectus, and information that we file later
with the SEC will automatically update and supersede this information. We
incorporate by reference the documents listed below and any future filings we
will make with the SEC under Sections 13(a), 13(c), 14 or 15(d) of the
Securities Exchange Act of 1934:
(a) Annual Report on Form 10-K for the fiscal year ended December 31,
1998, as amended.
(b) Quarterly Report on Form 10-Q for the fiscal quarter ended March
31, 1999.
(c) Current Reports on Form 8-K filed with the SEC on May 21, 1999
and June 2, 1999.
(d) The description of the Company's common stock contained in the
Company's Registration Statement on Form 8-A filed with the SEC on
March 8, 1993.
You may request a copy of the filings, at no cost, by writing or
telephoning the following address:
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<PAGE>
Mr. Walton Bell
Chief Financial Officer
8260 Greensboro Drive
5th Floor
McLean, Virginia 22102
(703) 356-3001.
When you are deciding whether to purchase the shares being offered by
this prospectus, you should rely on the information incorporated by reference or
provided in this prospectus or any supplement. We have not authorized anyone
else to provide you with different information. We are not making any offer of
the shares in any state where the offer is not permitted. You should not assume
that the information in this prospectus or any supplement is accurate as of any
date other than the date on the front of those documents.
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USE OF PROCEEDS
The shares of common stock offered by this prospectus are being
registered for the account of the selling shareholders identified in this
prospectus. See "Selling Shareholders." All net proceeds from the sale of the
common stock will go to the shareholders who offer and sell their shares of
common stock. We will bear all expenses in connection with the preparation of
this prospectus. We will not receive any part of the proceeds from ^ sales of
common stock by the selling shareholders, the sale of warrants to purchase up
to 550,000 of common stock, the conversion of the preferred stock or the
exercise of the prepaid warrants. We will, however, receive proceeds from the
exercise price of warrants issued in September 1998 being offered in this
prospectus. If all of the warrants are exercised, we will realize gross proceeds
in the amount of $1,153,750. Such proceeds will be contributed to working
capital and will be used for general corporate purposes.
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<PAGE>
SELLING SHAREHOLDERS
The following list of selling shareholders includes:
o the number of shares of common stock currently owned by each
selling shareholder
o the number of shares being offered for resale by this prospectus
by each selling shareholder; and
o the number and percentage of shares of common stock to be held by
each selling shareholder after the completion of this offering.
Except as otherwise indicated in the footnotes to such table, no such
selling shareholder has been an officer, director or employee of Netplex for the
past three years. The registration of the shares does not necessarily mean that
the selling shareholders will sell all or any of the shares.
The selling shareholders provided us with all information with respect
to their share ownership. Because the selling shareholders may sell all or part
of their shares, we are unable to estimate the number of shares that will be
held by any selling shareholders upon termination of any offering made hereby.
In addition, beneficial ownership is determined in accordance with SEC rules and
generally include voting or investment power with respect to securities. Shares
of common stock subject to options, warrants and convertible preferred stock
currently exercisable or convertible, or exercisable or convertible within sixty
(60) days, are counted as outstanding for computing the percentage of the person
holding such options or warrants but are not counted as outstanding for
computing the percentage of any other person. See "Plan of Distribution."
In connection with the shares issuable upon exercise of the prepaid
warrants, we granted the selling shareholders certain registration rights
pursuant to which we agreed to keep the registration statement, of which this
prospectus is a part, effective until the date that all of the shares have been
sold pursuant to the registration statement. We have agreed to indemnify the
selling shareholders and each of their officers, directors, employees, partners,
legal counsel and accountants, and each underwriter, if any, and each person who
controls any such underwriter, against certain expenses, claims, losses, damages
and liabilities (or action in respect thereof). We will pay the expenses of
registering the shares under the Securities Act, including registration and
filing fees, blue sky expenses, printing expenses, accounting fees,
administrative expenses and our own counsel fees.
Pursuant to Rule 416 under the Securities Act, selling shareholders may
also offer and sell shares issued with respect to the prepaid warrants and/or
the other warrants, options and preferred stock as a result of stock splits,
stock dividends or similar transactions and the effect of anti-dilution
provisions contained in the underlying documents. In addition, in the case of
the shares underlying the prepaid warrants, there may be changes in the number
of shares offered hereby due to changes in the exercise price of the prepaid
warrants in accordance with the terms
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<PAGE>
thereof. This is not intended to constitute a prediction as to the number of
shares into which the prepaid warrants will be exercised. Moreover, in the case
of the shares underlying the prepaid warrants, the number of shares owned and
offered for sale hereby represents an estimate of the number of shares of common
stock issuable upon conversion of or otherwise with respect to the prepaid
warrants, based on 200% of the number of shares of common stock issuable at an
exercise price of $1.47 in accordance with Rule 416 and the terms of the prepaid
warrants.
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<TABLE>
<CAPTION>
Number of Shares of Common Shares to be
Stock Beneficially Owned Prior Sold in Offering Shares Beneficially
Name to Offering Offering(1) Owned After Offering
---- -------------------------------- ---------------- --------------------
Number Percentage Number Percent
------ ---------- ----- -------
<S> <C> <C> <C> <C> <C>
Leon Atkin 50,000 * 50,000 0 0
James Daleen 10,000 * 10,000 0 0
Paul Edelman 20,000 * 20,000 0 0
George Gellert 265,000(2) 2.3 125,000 140,000 1.2
Neil Glassberg 20,000 * 20,000 0 0
Natalie Gonnen 50,000 * 50,000 0 0
Cyra Kerven 10,000 * 10,000 0 0
Todd Koffman 30,000 * 30,000 0 0
Louis Rosenwein 285,000(3) 2.4 125,000 160,000 1.4
Harold Stangler 6,000 * 6,000 0 0
Stuart Wachnin 22,500(4) * 5,000 17,500 *
J. Craig Jones 175,826 1.5 167,493 8,333 *
Stephen S. Turner 247,531 2.1 239,198 8,333 *
David C. Turner 19,761 * 19,761 0 0
Steven S. McBryde 20,890 * 19,761 0 0
Timothy Shelton 20,890 * 20,890 0 0
William K. Bell 32,977 * 24,644 8,333 *
The ViaLink Company 1,287,540 11.1 1,287,540 0 0
Waterside Capital 3,000,000(5) 25.8 3,000,000 0 0
Corporation
Goldman Sachs 1,432,134(10) 12.3(9) 1,432,134 0 0
Performance Partners, LP
Goldman Sachs 1,162,311(10) 10.0(10) 1,162,311 0 0
Performance Partners
(Offshore), LP
Claudio Guazzoni(6) 44,439 * 32,006 12,433 *
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</TABLE>
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<TABLE>
<CAPTION>
Number of Shares of Common Shares to be
Stock Beneficially Owned Prior Sold in Offering Shares Beneficially
Name to Offering Offering(1) Owned After Offering
---- -------------------------------- ---------------- --------------------
Number Percentage Number Percent
------ ---------- ------ -------
<S> <C> <C> <C> <C> <C>
Steven S. McBryde 20,890 * 19,761 0 0
Timothy Shelton 20,890 * 20,890 0 0
David McCarthy(7) 66,407 * 32,006 34,401 *
Samuel L. Milbank(8) 30,960 * 22,672 8,288 *
Augie LaTorre(9) 21,388 * 15,538 5,850 *
Ferris, Baker and Watts, 150,000 1.4 150,000 0 0
Inc.
Richard Prinz 40,000 * 40,000 0 0
Steven Shea 25,000 * 25,000 0 0
John Hagan 20,000 * 20,000 0 0
Peter Malekian 10,000 * 10,000 0 0
Charles Place 3,000 * 3,000 0 0
Mark Rust 2,000 * 2,000 0 0
Douglas Austin 204,512(11) 1.7 120,455 84,057 *
Steven Giles 197,845(11) 1.7 120,455 77,400 *
Kirby Joss 10,548(11) * 5,948 4,600 *
Janet Fischer 26,870(11) * 14,870 12,000 *
Brian Weaver 40,740(11) * 29,740 11,000 *
Charles Craft 7,548 * 5,948 1,600 *
</TABLE>
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* Less than one percent
(1) Assumes that all of the shares held by the selling shareholders and being
offered under this prospectus are sold, and that the selling shareholders
acquire no additional shares of common stock before the completion of this
offering. The actual number of shares of common stock offered by this
prospectus is subject to change and could be materially greater or less
than the estimated amount indicated, depending upon a number of factors,
including with respect to all selling shareholders whether the number of
shares of common stock outstanding have been adjusted to account for any
stock dividend, stock split and similar transactions or adjustment and, in
addition, with respect to the holders of prepaid warrants, if converted
during the first year, 125% of $1.3938 and thereafter the lower of (i) 80%
of the average of the three lowest closing bid prices of common stock for
the twenty trading days prior to the date of exercise and (ii) $1.3938, and
whether any of the prepaid warrants have been redeemed.
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(2) Includes 125,000 shares of common stock purchased in a private placement in
August 1998 and 140,000 shares of common stock purchased in a private
placement in March 1998.
(3) Includes 125,000 shares of common stock purchased in a private placement in
August 1998 and 160,000 shares of common stock purchased in a private
placement in March 1998.
(4) Includes 5,000 shares of common stock purchased in a private placement in
August 1998 and 17,500 shares of common stock purchased in a private
placement in March 1998.
(5) Includes 2,450,000 shares of common stock reserved for the conversion of
the class c preferred stock and 550,000 shares of common stock reserved for
conversion of the private placement warrants.
(6) Principal of The Zanett Securities Corporation. Includes 16,956 shares of
common stock and 27,483 private placement warrant shares.
(7) Principal of The Zanett Securities Corporation. Includes 27,483 private
placement warrant shares, 21,968 prepaid warrant shares and 16,956 shares
of common stock.
(8) Principal of The Zanett Securities Corporation. Includes 12,638 shares of
common stock and 18,322 private placement warrant shares.
(9) Principal of The Zanett Securities Corporation. Includes 8,450 shares of
common stock and 12,938 private placement warrant shares.
(10) Except under certain circumstances, none of the selling shareholders may
exercise the prepaid warrants to the extent that such exercise would cause
the selling shareholder to beneficially own more than 4.99% of our total
outstanding common stock. Therefore, the number of shares listed here and
which a selling shareholder may sell pursuant to this prospectus may exceed
the number of shares such selling shareholder may beneficially own as
determined pursuant to Section 13(d) of the Securities Exchange Act of
1934.
(11) Includes the currently exercisable portion of employee stock options.
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PLAN OF DISTRIBUTION
The selling shareholders may offer their shares at various times in one or
more of the following transactions:
o ordinary brokers transactions, which may include long or short sales
o cross or block trades or otherwise on Nasdaq
o purchases by brokers, dealers or underwriters as principal and resale
by such purchasers for their own accounts pursuant to this prospectus
o "at the market" to or through market makers or into an existing market
for the common stock
o in other ways not involving market makers or established trading
markets, including direct sales to purchasers or sales effected
through agents
o options, swaps or other derivatives
o any combination of the foregoing, or by any other legally available
means
o in connection with short sales of shares of common stock
o option or other transactions
Brokers, dealers, underwriters or agents participating in the distribution
of the shares of common stock may receive compensation in the form of discounts,
concessions or commission from the selling shareholders and/or the purchasers of
shares of common stock for whom such broker-dealers may act as agent or to whom
they may sell as principal, or both, which compensation as to a particular
broker-dealer may be in excess of customary commissions. The selling
shareholders and any broker-dealers acting in connection with the sale of the
shares of common stock hereunder may be deemed to be underwriters within the
meaning of Section 2(11) of the Securities Act because of the number of shares
of common stock to be sold or reserved by such persons or entities or the manner
of sale of such shares, or both. If a selling shareholder or any broker-dealer
or other holders were determined to be underwriters any commissions received by
them and any profit realized by them on the resale of shares of common stock as
principals may be deemed underwriting compensation under the Securities Act.
Neither we nor any selling shareholder can presently estimate the amount of such
compensation. We don't know of existing arrangements between any selling
shareholder and any other shareholder, dealer, underwriter or agent relating to
the sale or distribution of the shares.
The selling shareholders have represented to us that any purchase or sale
of shares of common stock by them will comply with Regulation M promulgated
under the Securities
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<PAGE>
Exchange Act of 1934. In general, Rule 102 under Regulation M prohibits any
person connected with a distribution of our common stock from directly or
indirectly bidding for, or purchasing for any account in which he or she has a
beneficial interest, any of our common stock or any right to purchase our common
stock, for a period of one business day before and after completion of his or
her participation in the distribution.
During the time a selling shareholder participates in a distribution, Rule
104 under Regulation M prohibits the selling shareholders and any other persons
engaged in the distribution from engaging in any stabilizing bid or purchasing
our common stock except for the purpose of preventing or retarding a decline in
the open market price of our common stock. No such person may effect any
stabilizing transaction to facilitate any offering at the market. Inasmuch as
the selling shareholders will be reoffering and reselling our common stock at
the market, Rule 104 prohibits them from effecting any stabilizing transaction
in contravention of Rule 104 with respect to our common stock.
There can be no assurance that the selling shareholders will sell any or
all of the shares offered by them hereunder or otherwise.
LEGAL MATTERS
For purposes of this offering Olshan Grundman Frome Rosenzweig & Wolosky
LLP, New York, New York is giving its opinion on the validity of the shares.
Members of such firm have options to purchase shares of our common stock.
EXPERTS
The financial statements of The Netplex Group, Inc. and subsidiaries as of
December 31, 1998 and 1997, and for each of the years in the three-year period
ended December 31, 1998, have been incorporated by reference herein and in the
registration statement in reliance upon the report of KPMG LLP, independent
certified public accountants, incorporated by reference herein, and upon the
authority of said firm as experts in accounting and auditing.
INDEMNIFICATION FOR SECURITIES ACT LIABILITIES
Our amended and restated certificate of incorporation allows us indemnify
to the fullest extent permitted by New York law our directors, officers,
employees and agents. We may indemnify them only we determine that their conduct
did not violate the law. In addition, the amended and restated certificate of
incorporation eliminates the personal liability of directors to us and our
shareholders for money damages if they for breach their duty as directors.
The New York law also permits us to indemnify a director or officer against
judgments, fines, amounts paid in settlement and reasonable expenses of
litigation, except when we bring the case against them, or if a case if brought
by our shareholders against them on our behalf. We can indemnify a director or
officer if he acted in good faith and for a purpose he reasonably believed
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to be in our best interests. However, no indemnification is permitted in an
action by the us, or our shareholders on our behalf, in connection with the
settlement or other disposition of a threatened or pending action or in
connection with any claim, issue or matter which as to which a director or
officer is liable to us, unless a court determines we should pay a portion. In
addition, New York law provides that a director or officer shall be indemnified
if he is successful in the litigation on the merits or otherwise.
Permitted indemnification as described above may only be made if it is
authorized by our board of directors, in each specific case, based upon a
determination that the applicable standard of conduct has been met or that
indemnification is proper under New York law. The board of directors can
authorize indemnification, either acting as a quorum of disinterested directors
or based upon an opinion by independent legal counsel, or if the shareholders
decide that indemnification is proper because the applicable standard of conduct
has been met. Upon application of the person seeking indemnification, a court
may also award indemnification upon a determination that the standards outlined
above have been met. We may also authorize the advancement of litigation
expenses to a director or officer upon receipt of an undertaking by him to repay
such expenses, if it is ultimately determined that he is not entitled to be
indemnified by us..
We have also agreed to indemnify our directors and executive officers
pursuant to indemnification agreements. We will pay all expenses, losses,
claims, damages and liability incurred by our directors or executive officers
for or as a result of action taken or not taken while they were acting as
directors, officers, employees or agents.
Although the indemnification for liabilities arising under the
Securities Act may be permitted to our directors, officers and controlling
persons as discussed above, we have been advised that in the opinion of the SEC
this indemnification is against public policy as expressed in the Securities Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities, other than the payment by us of expenses incurred or
paid by one of our directors, officers or controlling persons in the successful
defense of any action, suit or proceeding, is asserted by that director, officer
or controlling person in connection with the securities being registered, we
will, unless in the opinion of our counsel the matter has been settled by
controlling precedent, submit to a court of appropriate jurisdiction the
question of whether such indemnification by us is against public policy as
expressed in the Securities Act and will be governed by the final adjudication
of such issue.
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<PAGE>
We have not authorized any dealer, salesperson or other person to give any
information or represent anything not contained in this prospectus. You must not
rely on any unauthorized information. This prospectus does not offer to sell or
buy any shares in any jurisdiction where it is unlawful. The information in this
prospectus is current only as of _______, 1999.
-----------
8,475,479 Shares of Common Stock
THE NETPLEX GROUP, INC.
--------
PROSPECTUS
--------
___________, 1999
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INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
-------------------------------------------
The expenses in connection with the issuance and distribution of the
securities being registered, all of which, will be paid by the Registrant, are
as follows:
SEC Registration Fee..................... $ 2,736.53
Accounting Fees and Expenses............. 10,000.00
Legal Fees and Expenses.................. 15,000.00
Blue Sky Fees and Expenses............... 10,000.00
Miscellaneous Expenses................... 12,263.47
-----------
Total.................................... $50,000.00
===========
Item 15. Indemnification of Directors and Officers.
-----------------------------------------
Except as hereinafter set forth, there is no statute, charter
provision, by-law, contract or other arrangement under which any controlling
person, director or officer of the Company is insured or indemnified in any
manner against liability which he may incur in his capacity as such.
The Company's authority to indemnify its directors and officers is
governed by the provisions of Article 7 of the New York Business Corporation Law
(the "BCL").
Section 722 of the BCL provides that a corporation may indemnify
directors and officers as well as other employees and individuals against
judgments, fines, amounts paid in settlement, and reasonable expenses, including
attorneys' fees, in connection with actions or proceedings, whether civil or
criminal (other than an action by or in the right of the corporation--a
"derivative action"), if they acted in good faith and in a manner they
reasonably believed to be in or not opposed to the best interests of the
corporation, and, with respect to any criminal action or proceeding, had no
reasonable cause to believe their conduct was unlawful. A similar standard is
applicable in the case of derivative actions, except indemnification only
extends to amounts paid in settlement and reasonable expenses (including
attorneys' fees) incurred in connection with the defense or settlement of such
actions, and the statute does not apply in respect of a threatened action, or a
pending action that is settled or otherwise disposed of, and requires court
approval before there can be any indemnification where the person seeking
indemnification has been found liable to the corporation. Section 721 of the BCL
provides that Article 7 of the BCL is not exclusive of other indemnification
that may be granted by a corporation's certificate of incorporation,
disinterested director vote, shareholder vote, agreement or otherwise.
A more specific description of the relevant law is provided below.
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<PAGE>
Section 721 Nonexclusivity of Statutory Provisions for Indemnification
of Directors and Officers -- The indemnification and advancement of expenses
granted pursuant to, or provided by, this article shall not be deemed exclusive
of any other rights to which a director or officer seeking indemnification or
advancement of expenses may be entitled, whether contained in the certificate of
incorporation or the by-laws or, when authorized by such certificate of
incorporation or by-laws, (i) a resolution of shareholders, (ii) a resolution of
directors, or (iii) an agreement providing for such indemnification, provided
that no indemnification may be made to or on behalf of any director or officer
if a judgment or other final adjudication adverse to the director or officer
establishes that his acts were committed in bad faith or were the result of
active and deliberate dishonesty and were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit or other
advantage to which he was not legally entitled. Nothing contained in this
article shall affect any rights to indemnification to which corporate personnel
other than directors and officers may be entitled by contract or otherwise under
law.
Section 722 Authorization for Indemnification of Directors and
Officers--(a) A corporation may indemnify any person, made, or threatened to be
made, a party to an action or proceeding other than one by or in the right of
the corporation to procure a judgment in its favor, whether civil or criminal,
including an action by or in the right of any other corporation of any type or
kind, domestic or foreign, or any partnership, joint venture, trust, employee
benefit plan or other enterprise, which any director or officer of the
corporation served in any capacity at the request of the corporation, by reason
of the fact that he, his testator or intestate, was a director or officer of the
corporation, or served such other corporation, partnership, joint venture,
trust, employee benefit plan or other enterprise in any capacity, against
judgments, fines, amounts paid in settlement and reasonable expenses, including
attorneys' fees actually and necessarily incurred as a result of such action or
proceeding, or any appeal therein, if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation and, in criminal actions or proceedings, in addition, had no
reasonable cause to believe that his conduct was unlawful.
(b) The termination of any such civil or criminal action or
proceeding by judgment, settlement, conviction or upon a plea of nolo
contendere, or its equivalent, shall not in itself create a presumption that any
such director or officer did not act, in good faith, for a purpose which he
reasonably believed to be in, or, in the case of service for any other
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise, not opposed to, the best interests of the corporation or that
he had reasonable cause to believe that his conduct was unlawful.
(c) A corporation may indemnify any person made, or threatened to be
made, a party to an action by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he, his testator or intestate,
is or was a director or officer of the corporation, or is or was serving at the
request of the corporation as a director or officer or any other corporation of
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<PAGE>
any type or kind, domestic or foreign, of any partnership, joint venture, trust,
employee benefit plan or other enterprise, against amounts paid in settlement
and reasonable expenses, including attorneys' fees, actually and necessarily
incurred by him in connection with the defense or settlement of such action, or
in connection with an appeal therein if such director or officer acted, in good
faith, for a purpose which he reasonably believed to be in, or, in the case of
service for any other corporation or any partnership, joint venture, trust,
employee benefit plan or other enterprise, not opposed to, the best interests of
the corporation, except that no indemnification under this paragraph shall be
made in respect of (1) a threatened action, or a pending action which is settled
or otherwise disposed of, or (2) any claim issue or matter as to which such
person shall have been adjudged to be liable to the corporation, unless and only
to the extent that the court in which the action was brought, or, if no action
was brought, any court of competent jurisdiction, determines upon application
that, in view of all the circumstances of the case, the person is fairly and
reasonably entitled to indemnity for such portion of the settlement amount and
expenses as the court deems proper.
(d) For the purpose of this section, a corporation shall be deemed to
have requested a person to serve an employee benefit plan where the performance
by such person of his duties to the corporation also imposes duties on, or
otherwise involves services by, such person to the plan or participants or
beneficiaries of the plan; excise taxes assessed on a person with respect to an
employee benefit plan pursuant to applicable law shall be considered fines; and
action taken or omitted by a person with respect to an employee benefit plan in
the performance of such person's duties for a purpose reasonably believed by
such person to be in the interest of the participants and beneficiaries of the
plan shall be deemed to be for a purpose which is not opposed to the best
interests of the corporation.
Section 723 Payment of Indemnification Other Than By Court Award--(a) A
person who has been successful, on the merits or otherwise, in the defense of a
civil or criminal action or proceeding of the character described in section 722
shall be entitled to indemnification as authorized in such section.
(b) Except as provided in paragraph (a), any indemnification under
section 722 or otherwise permitted by section 721, unless ordered by a court
under section 724 (Indemnification of directors and officers by a court), shall
be made by the corporation, only if authorized in the specific case:
(1) By the board acting by a quorum consisting of directors who
are not parties to such action or proceeding upon a finding that the director or
officer has met the standard of conduct set forth in section 722 or established
pursuant to section 721, as the case may be, or,
(2) If a quorum under subparagraph (1) is not obtainable or,
even if obtainable, a quorum of disinterested directors so directs;
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<PAGE>
(A) By the board upon the opinion in writing of
independent legal counsel that indemnification is proper in the
circumstances because the applicable standard of conduct set
forth in such sections has been met by such director or officer,
or
(B) By the shareholders upon a finding that the director
or officer has met the applicable standard of conduct set forth
in such sections.
(C) Expenses incurred in defending a civil or criminal
action or proceeding may be paid by the corporation in advance of
the &al disposition of such action or proceeding upon receipt of
an undertaking by or on behalf of such director or officer to
repay such amount as, and to the extent, required by paragraph
(a) of section 725.
Section 724 Indemnification of Directors and Officers by a Court--(a)
Notwithstanding the failure of a corporation to provide indemnification, and
despite any contrary resolution of the board or of the shareholders in the
specific case under section 723 (Payment of indemnification other than by court
award), indemnification shall be awarded by a court to the extent authorized
under section 722 (Authorization for indemnification of directors and officers),
and paragraph (a) of section 723.
Application therefor may be made, in every case, either:
(1) In the civil action or proceeding in which the expenses
were incurred or other amounts were paid, or
(2) To the supreme court in a separate proceeding, in which
case the application shall set forth the disposition of any previous
application made to any court for the same or similar relief and also
reasonable cause for the failure to make application for such relief in
action or proceeding in which the expenses were incurred or other
amounts were paid.
(b) The application shall be made in such manner and form as may be
required by the applicable rules of court or, in the absence thereof, by
direction of a court to which it is made. Such application shall be upon notice
to the corporation. The court may also direct that notice be given at the
expense of the corporation to the shareholders and such other persons as it may
designate in such manner as it may require.
(c) Where indemnification is sought by judicial action, the court may
allow a person such reasonable expenses, including attorneys' fees, during the
pendency of the litigation as are necessary in connection with his defense
therein, if the court shall find that the defendant has by his pleadings or
during the course of the litigation raised genuine issues of fact or law.
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<PAGE>
Section 725 Other Provisions Affecting Indemnification of Directors and
Officers--(a) All expenses incurred in defending a civil or criminal action or
proceeding which are advanced by the corporation under paragraph (c) of section
723 (Payment of indemnification other than by court award) or allowed by a court
under paragraph (c) of section 724 (Indemnification of directors and officers by
a court) shall be repaid in case the person receiving such advancement or
allowance is ultimately found, under the-procedure set forth in this article,
not to be entitled to indemnification or, where indemnification is granted, to
the extent the expenses so advanced by the corporation or allowed by the court
exceed the indemnification to which he is entitled:
(b) No indemnification, advancement or allowance shall be made under
this article in any circumstance where it appears:
(1) That the indemnification would be inconsistent with the law
of the jurisdiction of incorporation of a foreign corporation which
prohibits or otherwise limits such indemnification;
(2) That the indemnification would be inconsistent with a
provision of the certificate of incorporation, a by-law, a resolution
of the board or of the shareholders, an agreement or other proper
corporate action, in effect at the time of the accrual of the alleged
cause of action asserted in the threatened or pending action or
proceeding in which the expenses were incurred or other amounts were
paid, which prohibits or otherwise limits indemnification; or
(3) If there has been a settlement approved by the court, that
the indemnification would be inconsistent with any condition with
respect to indemnification expressly imposed by the court in approving
the settlement.
(c) If any expenses or other amounts are paid by way of
indemnification, otherwise than by court order or action by the shareholders,
the corporation shall, not later than the next annual meeting of shareholders
unless such meeting is held within three months from the date of such payment,
and in any event, within fifteen months from the date of such payment, mail to
its shareholders of record at the time entitled to vote for the election of
directors a statement specifying the persons paid, the amounts paid, and the
nature and status at the time of such payment of the litigation or threatened
litigation.
(d) If any action with respect to indemnification of directors and
officers is taken by way of amendment of the by-laws, resolution of directors,
or by agreement, then the corporation shall, not later than the next annual
meeting of shareholders, unless such meeting is held within three months from
the date of such action, and, in any event, within fifteen months from the date
of such action, mail to its shareholders of record at the time entitled to vote
for the election of directors a statement specifying the action taken.
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<PAGE>
(e) Any notification required to be made pursuant to the foregoing
paragraph (c) or (d) of this section by any domestic mutual insurer shall be
satisfied by compliance with the corresponding provisions of section one
thousand two hundred sixteen of the insurance law.
(f) The provisions of this article relating to indemnification of
directors and officers and insurance therefor shall apply to domestic
corporations and foreign corporations doing business in this state, except as
provided in section 1320 (Exemption from certain provisions).
Section 726 Insurance for Indemnification of Directors and
Officers--(a) Subject to paragraph (b), a corporation shall have power to
purchase and maintain insurance:
(1) To indemnify the corporation for any obligation which it
incurs as a result of the indemnification of directors and officers
under the provisions of this article, and
(2) To indemnify directors and officers in instances in which
they may be indemnified by the corporation under the provisions of
this article, and
(3) To indemnify directors and officers in instances in which
they may not otherwise be indemnified by the corporation under the
provisions of this article provided the contract of insurance covering
such directors and officers provides, in a manner acceptable to the
superintendent of insurance, for a retention amount and for
co-insurance.
(b) No insurance under paragraph (a) may provide for any payment,
other than cost of defense, to or on behalf of any director or officer.
(1) if a judgment or other final adjudication adverse to the
insured director or officer establishes that his acts of active and
deliberate dishonesty were material to the cause of action so
adjudicated, or that he personally gained in fact a financial profit
or other advantage to which he was not legally entitled, or
(2) in relation to any risk the insurance of which is
prohibited under the insurance law of this state.
(c) Insurance under any or all subparagraphs of paragraph (a) may be
included in a single contract or supplement thereto. Retrospective rated
contracts are prohibited.
(d) The corporation shall, within the time and to the persons
provided in paragraph (c) of section .725 (Other provisions affecting
indemnification of directors or officers), mail a statement in respect of any
insurance it has purchased or renewed under this section, specifying the
insurance carrier, date of the contract, cost of the insurance, corporate
positions insured, and a statement explaining all sums, not previously reported
in a statement to shareholders, paid under any indemnification insurance
contract.
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<PAGE>
(e) This section is the public policy of this state to spread the
risk of corporate management, notwithstanding any other general or special law
of this state or of any other jurisdiction including the federal government.
The Company's Amended and Restated Certificate of Incorporation
provides that the personal liability of the directors of the Company to the
Company or its shareholders for damages for any breach of duty as directors, is
eliminated, provided that nothing shall limit the liability of any Director if a
judgment or other final adjudication adverse to him establishes that his acts or
omissions were in bad faith or involved international misconduct.
The Company has also entered into indemnification agreements with each
of its officers and directors.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 to this
Registration Statement, the Company has agreed to indemnify the Underwriters and
the Underwriters have agreed to indemnify the Company and its directors,
officers and controlling persons against certain civil liabilities that may be
incurred in connection with this offering, including certain liabilities under
the Securities Act of 1933, as amended (the "Securities Act").
Item 16. Exhibits and Financial Statement Schedules
(a) Exhibit Number
------
*****4(a) -- Certificate of Designations, Preferences and
other Rights and Qualifications of Class B
Convertible Preferred Stock.
*****4(b) -- Certificate of Amendment of the Certificate
of Incorporation of The Netplex Group, Inc.
*****4(c) -- Investor Rights Agreement dated September 30,
1998.
*****4(d) -- Registration Rights Agreement (between
Netplex and Waterside Capital) dated
September 30, 1998.
*****4(e) -- Stock Purchase Warrant dated September 30,
1998.
*****4(f) -- Placement Agency Agreement dated September
25, 1998.
*****4(g) -- Incentive Stock Purchase Warrant.
*****4(h) -- Prepaid Common Stock Purchase Warrant.
*****4(i) Registration Rights Agreement (between
Netplex and the Initial Investors) dated
September 25, 1998.
*****4(j) Securities Purchase Agreement dated September
25, 1998.
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******5 -- Opinion of Olshan Grundman Frome & Rosenzweig
LLP
******23 -- Consent of KPMG LLP.
******23(c) -- Consent of Olshan Grundman Frome & Rosenzweig
LLP (contained in their opinion included
under Exhibit 5)
*****24 -- Power of Attorney, included on Page II-9.
- -------------------
* Incorporated by reference to the Registrant's Registration Statement on
Form S-3 filed with the Securities and Exchange Commission on November
19, 1996 (Commission File No. 333-16423), as amended.
** Incorporated by Reference to the Registrant's Registration Statement on
Form SB-2 filed with the Securities and Exchange Commission on January
28, 1993 (Commission File No. 33-57546), as amended.
*** Incorporated by reference to the Registrant's Annual Report on Form
10-KSB for the fiscal year ended December 31, 1997.
**** To be filed by amendment.
***** Previously filed.
****** Filed herewith.
Item 17. Undertakings.
- ------- ------------
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual report pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrant pursuant to the foregoing provisions, or otherwise, the
Registrant has been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the
Securities Act of 1933 and is, therefore, unenforceable. In the event that a
claim for indemnification against such liabilities (other than the payment by
the Registrant of expenses incurred or paid by a director, officer or
controlling person of the Registrant in the successful defense of any action,
suit or proceeding) is asserted by such director, officer or controlling person
in connection with the securities being registered, the Registrant will, unless
in the opinion of its counsel the matter has been settled by controlling
precedent, submit to a court of appropriate jurisdiction the question whether
such indemnification by it is against public policy as expressed in the
Securities Act of 1933 and will be governed by the final adjudication of such
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<PAGE>
issue.
The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are being
made, a post-effective amendment to this registration statement;
(i) To include any prospectus required by Section 10(a)(3) of
the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events arising
after the effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement;
(iii) To include any material information with respect to the
plan of distribution not previously disclosed in the registration statement or
any material change to such information set forth in the registration statement;
provided, however, that paragraphs (1)(i) and (1)(ii) shall not apply if the
information required to be included in a post-effective amendment by those
paragraphs is contained in periodic reports filed by the registrant pursuant to
Section 13 or Section 15(d) of the Exchange Act that are incorporated by
reference in the Registration Statement;
(2) That, for the purpose of determining any liability under the
Securities Act of 1933, each such post-effective amendment shall be deemed to be
a new registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective
amendment any of the securities being registered which remain unsold at the
termination of this offering.
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SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Exchange
Act, the Registrant certifies that it has reasonable grounds to believe that it
meets all of the requirements for filing on Form S-3 and has duly caused this
report to be signed on its behalf by the undersigned, thereunto duly authorized,
in the Town of McLean, State of Virginia, on the 7th day of June, 1999.
THE NETPLEX GROUP, INC.
By: /s/ Gene Zaino
-------------------------
Gene Zaino,
Chairman, President &
Chief Executive Officer
SIGNATORIES
Pursuant to the requirements of the Securities Act of 1933, as amended,
this Report has been signed by the following persons on behalf of the Registrant
and in the capacities and on the date indicated. Each of the undersigned
officers and directors of The Netplex Group, Inc. hereby constitutes and
appoints Gene Zaino and Robert Skelton as true and lawful attorney-in-fact and
agent with full power of substitution and resubstitution, for him in his name in
any and all capacities, to sign any and all amendments (including post-effective
amendments) to this Report and to file the same, with all exhibits thereto, and
other documents in connection therewith, with the Securities and Exchange
Commission and to prepare any and all exhibits thereto, and other documents in
connection therewith, granting unto said attorneys-in-fact and agents, full
power and authority to do and perform each and every act and thing requisite or
necessary to be done to enable The Netplex Group, Inc. to comply with the
provisions of the Securities Act of 1933, as amended, and all requirements of
the Securities and Exchange Commission, as fully to all intents and purposes as
he might or could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute or substitutes, may lawfully do or
cause to be done by virtue hereof.
Signature Title Date
/s/ Gene Zaino Chairman, President and June 7, 1999
- -------------------------- Chief Executive Officer
Gene Zaino (Principal Executive
Officer)
/s/ Walton E. Bell III Chief Financial Officer June 7, 1999
- -------------------------- and Treasurer (Principal
Walton E. Bell III Financial Officer)
II-10
<PAGE>
* Director June 7, 1999
- -------------------------
Richard Goldstein
* Director June 7, 1999
- -------------------------
Deborah Schondorf-Novick
* Director June 7, 1999
- -------------------------
Steven Hanau
* Vice President and June 7, 1999
- ------------------------- Director
Frank C. Laguttuta
By: /s/Robert Skelton
Robert Skelton
Attorney-in-fact
II-11
OLSHAN GRUNDMAN FROME ROSENZWEIG & WOLOSKY LLP
505 PARK AVENUE, NEW YORK, NEW YORK 10022
(212) 753-7200
June 9, 1999
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: The Netplex Group, Inc.
Commission File No. 333-67321
Registration Statement on Form S-3
----------------------------------
Gentlemen:
Reference is made to the Registration Statement on Form S-3 dated June
9, 1999, as amended, (the "Registration Statement"), filed with the Securities
and Exchange Commission by The Netplex Group, Inc., a New York corporation (the
"Company"). The Registration Statement relates to the resale of an aggregate of
8,475,479 shares (the "Shares") of the Company's Common Stock, $.001 par value,
and 550,000 Shares of Common Stock issuable upon exercise of an outstanding
warrant.
We advise you that we have examined original or copies certified or
otherwise identified to our satisfaction of the Certificate of Incorporation and
By-laws of the Company, minutes of meetings of the Board of Directors and
shareholders of the Company, the Registration Statement, and such other
documents, instruments and certificates of officers and representatives of the
Company and public officials, and we have made such examination of the law as we
have deemed appropriate as the basis for the opinion hereinafter expressed. In
making such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals,
<PAGE>
June 9, 1999
Page -2-
and the conformity to original documents of documents submitted to us as
certified or photostatic copies.
Based upon the foregoing, we are of the opinion that:
The Shares have been duly authorized and reserved for and, either are
legally issued, fully paid and non-assessable or when issued in accordance with
the terms of the warrants, will be legally issued, fully paid and
non-assessable.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and we further consent to the reference to this firm
under the caption "Legal Matters" in the Registration Statement and the
Prospectus forming a part thereof. We advise you that certain members of this
firm hold options to purchase Common Stock of the Company.
Very truly yours,
OLSHAN GRUNDMAN FROME ROSENZWEIG
& WOLOSKY LLP
Exhibit 23(a)
Accountants' Consent
The Board of Directors
The Netplex Group, Inc.:
We consent to the use of our report, incorporated herein by reference, and to
the reference to our firm under the heading "Experts" in the prospectus.
KPMG LLP
McLean, Virginia
June 9, 1999
II-12
