<PAGE>
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
Filed by the Registrant X
Filed by a Party other than the Registrant [_]
Check the appropriate box:
[_] Preliminary Proxy Statement
[_] Confidential, for Use of the Commission Only (as permitted by Rule 14a-6
(e)(2))
[X] Definitive Proxy Statement
[_] Definitive Additional Materials
[_] Soliciting Material Pursuant Under Rule 14a-12
The Netplex Group, Inc.
--------------------------------------------------------------------------------
(Name of Registrant as Specified In Its Charter)
--------------------------------------------------------------------------------
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
X No fee required.
[_] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
-------------------------------------------------------------------------
(2) Aggregate number of securities to which transaction applies:
-------------------------------------------------------------------------
(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (set forth the amount on which
the filing fee is calculated and state how it was determined):
-------------------------------------------------------------------------
(4) Proposed maximum aggregate value of transaction:
-------------------------------------------------------------------------
(5) Total fee paid:
-------------------------------------------------------------------------
[_] Fee paid previously with preliminary materials.
[_] Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee
was paid previously. Identify the previous filing by registration statement
number, or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
-------------------------------------------------------------------------
(2) Form, Schedule or Registration Statement No.:
-------------------------------------------------------------------------
(3) Filing Party:
-------------------------------------------------------------------------
(4) Date Filed:
-------------------------------------------------------------------------
<PAGE>
THE NETPLEX GROUP, INC.
1800 ROBERT FULTON DRIVE, SECOND FLOOR
RESTON, VIRGINIA 20191-9992
___________
NOTICE OF ANNUAL MEETING OF SHAREHOLDERS
to be held on June 30, 2000
___________
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 Executive Conference Center, Conference Room 3,
8201 Greensboro Drive, McLean, Virginia 22102, on June 30, 2000, at 10:00 a.m.,
local time, for the following purposes:
1. To elect two (2) members of the Board of Directors to serve for
three year terms or until their successors have been duly elected and qualified.
2. To approve an amendment to the Certificate of Incorporation of the
Company, as previously amended (the "Certificate of Incorporation"), to increase
the number of authorized shares of common stock of the Company, par value $.001
per share (the "Common Stock") from 40,000,000 shares to 100,000,000 shares.
3. To ratify the selection of Grant Thornton LLP as the Company's
auditors for the year ending December 31, 1999 and to approve the selection of
Grant Thornton LLP as the Company's auditors for the year ending December 31,
2000.
4. To approve the issuance of the shares of Common Stock issuable
upon conversion of the Series D Preferred Stock and related warrants.
5. 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 May 12,
2000, 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 M. SKELTON
Secretary
Dated: June 4, 2000
<PAGE>
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.
THE NETPLEX GROUP, INC.
1800 ROBERT FULTON DRIVE, SECOND FLOOR
RESTON, VIRGINIA 20191-9992
___________
PROXY STATEMENT
FOR
2000 ANNUAL MEETING OF SHAREHOLDERS
June 30, 2000
___________
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 2000 Annual Meeting
of Shareholders of the Company (the "Meeting") to be held at the Executive
Conference Center, Conference Room 3, 8201 Greensboro Drive, McLean, Virginia
22102, on June 30, 2000, 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 7, 2000.
RECORD DATE AND VOTING SECURITIES
Only shareholders of record at the close of business on May 12, 2000, 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 17,970,687 shares of the
Company's 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 a proxy which is properly executed,
duly returned and not revoked (a "Proxy") will be voted in accordance with the
instructions contained therein. If no instruction is indicated on the Proxy, the
shares of Common Stock
<PAGE>
represented thereby will be voted (i) For the election as Directors of the
persons who have been nominated by the Board of Directors to serve for three
year terms as set forth in Proposal I and until their successors have been duly
elected and qualified, (ii) For approval of the amendment to the Certificate of
Incorporation to increase the number of authorized shares of Common Stock from
40,000,000 shares to 100,000,000 shares, (iii) For ratification of Grant
Thornton LLP as the Company's auditors for the year ending December 31, 1999,
and for approval and ratification of Grant Thornton LLP as the Company's
auditors for the year ending December 31, 2000, (iv) For the issuance of the
shares of Common Stock issuable upon conversion of the Series D Preferred Stock
(as defined in Proposal IV below) and related warrants, and (v) 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 owners of
shares of Common Stock.
-2-
<PAGE>
SECURITY OWNERSHIP
The following table sets forth information concerning ownership of the Company's
Common Stock, as of March 31, 2000, by each person known by the Company to be
the beneficial owner of more than five percent of the Common Stock, each
director, each nominee for Director, each executive officer, and by all
directors and executive officers of the Company as a group.
Name of Beneficial Owner Number of Shares of Common Stock
Beneficially Owned (1)
Number Percent
------ -------
Gene Zaino 1,938,350(2) 10.9%
The Netplex Group, Inc.
1800 Robert Fulton Drive, Second Floor
Reston, Virginia 20191
Kern Capital Management, LLC 1,390,2000 7.8%
114 West 47/th/ Street, Suite 1926
New York, NY 10036
-3-
<PAGE>
Name of Beneficial Owner Number of Shares of Common Stock
Beneficially Owned (1)
Number Percent
------ -------
Waterside Capital Corporation 956,264(3) 5.4%
300 East Main Street
Suite 1380
Norfolk, VA 23510
Pamela Fredette 100,000(4) *
Robert Skelton 77,047(5) *
Richard Goldstein 30,000(6) *
Steve Hanau 15,000(6) *
J. Alan Lindauer 12,500(7) *
Walton E. Bell, III 61,666(8) *
All directors and 2,234,578(9) 12.5%
Executive officers as a
Group (7 persons)
---------------------
* Less than 1%.
(1) Beneficial ownership is determined in accordance with the rules of the
Securities and Exchange Commission and, unless otherwise indicated, includes
sole voting and 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 outstanding Common Stock beneficially owned by the person
holding such options or warrants but are not deemed outstanding for
computing the percentage beneficially owned by any other person. Based
solely on a review of Schedules 13G and 13D that have been filed and
delivered to the Company, 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 673,420 shares of Common Stock, subject to currently exercisable
options and warrants.
(3) Consists of 656,264 shares that would result from the conversion of the
Company's Class C Convertible Preferred Stock and 300,000 Common Stock
purchase warrants.
(4) Holds options to purchase 365,000 shares of Common Stock, of which 100,000
are currently exercisable.
(5) Includes 75,000 shares of Common Stock subject to currently exercisable
options.
(6) Consists of 15,000 shares of Common Stock subject to currently exercisable
options.
(7) Consists of 7,500 shares of Common Stock subject to currently exercisable
options and 5,000 shares of Common Stock owned.
(8) Holds options to purchase 110,000 shares of Common Stock, of which 36,666
are currently exercisable and 25,000 options that are exercisable within 60
days.
(9) Includes 947,586 shares of Common Stock subject to currently exercisable
options and warrants.
-4-
<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 42 Chief Executive Officer 1995 - present
and Chairman
Pamela Fredette 48 President 1999 - present
Robert M. Skelton 38 Vice President - Corporate 1996 - present
Development, General
Counsel and Secretary
Walton E. Bell, III 58 Chief Financial Officer and 1998 - present
Treasurer
Information concerning Ms. Fredette is provided under "Proposal I - Election of
Two (2) Members of the Board of Directors to Serve for Three Year Terms and
Until Their Successors Have Been Duly Elected and Qualified."
-5-
<PAGE>
Gene Zaino has been a director of the Company since August 1995 and became its
Chief Executive Officer and Chairman upon completion of the merger with Netplex
in June 1996. From November 1995 through the completion of the merger, Mr. Zaino
functioned in the capacity of Chief Executive Officer. Mr. Zaino started his
career at KPMG L.L.P. in 1980. He was a founding principal of a subsidiary of
Evernet Systems, Inc., which was acquired by Control Data Systems, Inc. in 1993.
In January 1994, Mr. Zaino developed the business plan that led to the formation
of Netplex. Mr. Zaino is a graduate of the University of Pennsylvania's Wharton
School of Business and is a Certified Public Accountant.
Robert M. 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.
Walton E. Bell, III joined the Company in June 1998 as its Chief Financial
Officer and became its Treasurer in August 1998. Prior thereto, he was the Chief
Financial Officer of Boat US from 1995 to 1998. Prior thereto, Mr. Bell was the
Chief Financial Officer of A.J. Dwoskin & Associates, Inc. from 1993 to 1995.
From 1987 to 1993, Mr. Bell was the Chief Executive Officer of Sector
Technology, Inc. Mr. Bell also spent 22 years with Arthur Andersen (from 1966 to
1987) achieving partner status and establishing a microcomputer-consulting
group. Mr. Bell holds a Bachelor of Science Degree in Accounting from Abilene
Christian College in Abilene, Texas, and is a Certified Public Accountant.
Certain Related Transactions
In January 1997 the Company loaned $150,000 to Mr. Zaino, its chief executive
officer, for relocation expenses. The loan bears interest at 8% per annum. The
note and accrued interest were paid in January 2000.
In April 2000 the Company loaned $120,000 to Mr. Skelton, its Secretary and
General Counsel. The loan bears an interest rate of 6.6% per annum. One-half of
the principal amount must be repaid by December 31, 2000, and the balance by
December 31, 2001.
Mr. Lindauer, is a director of the Company and the President, Chief Executive
Officer and Director of Waterside Capital Corporation ("WTC"), the holder of the
Company's Class C preferred shares. On January 28, 1999, WTC lent the Company
$800,000 under a subordinated note. On December 15, 1999 the subordinated note
was exchanged for an increase in the number of shares that the Company's Class C
Convertible Preferred Stock is convertible into.
The Company paid $45,064 in 1999, $23,756 in 1998 and $28,800 in 1997 for
accounting,
-6-
<PAGE>
tax and consulting services to an accounting firm, in which Mr. Goldstein, a
director of the Company, is a partner.
Committees
The Company has the following standing committees: an Audit Committee, a
Compensation Committee and a Stock Option Committee. The Company does not have a
Nominating Committee. The functions normally performed by a Nominating Committee
are performed by the Board of Directors. The Board will not consider nominations
from security holders. The Audit Committee is comprised of Richard Goldstein and
J. Alan Lindauer 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 Steven Hanau, recommends to the Board of
Directors compensation for the Company's Chief Executive Officer and other
executive officers. The Stock Option Committee administers the Company's 1992
Incentive and Nonqualified Stock Option Plan, and its 1995 Stock Option Plan for
Consultants. The members of the Stock Option Committee are Steven Hanau and
Richard Goldstein. Messrs. Hanau, Goldstein and Lindauer are independent
directors.
During the fiscal year ended December 31, 1999, the Board of Directors, the
Compensation Committee, the Stock Option Committee and the Audit Committee each
held four meetings. Each of the directors attended no less than 75% of the
meetings of the Board of Directors and each committee to which such director was
assigned. From time to time, the Board acted by unanimous written consent
pursuant to the laws of the State of New York.
Compensation of Directors and Executive Officers
Members of the Board of Directors are not paid to attend meetings; however,
each member receives 15,000 options to purchase the Common Stock when the member
is first elected to the Board. Beginning in 1999, each member who serves for
more than two years will receive an additional 10,000 options for each year of
service beyond two years. To date, options to purchase 120,000 shares at
exercise prices ranging from $1.06 to $3.56 per share have been granted to
Directors. In February 2000, each outside director received a bonus of $10,000.
The following table sets forth, for the fiscal years indicated, all
compensation the Company paid to Gene Zaino, Chief Executive Officer; Pamela
Fredette, President; Robert M. Skelton, Vice President - Corporate Development,
General Counsel and Secretary; and Walton Bell III, Chief Financial Officer. The
Company had no other executive officers, whose salary and bonus exceeded
$100,000 for the year ended December 31, 1999.
-7-
<PAGE>
Summary Compensation Table
<TABLE>
<CAPTION>
Long-Term
Compensation
Annual Awards
------
Compensation
Securities
Fiscal Underlying All Other
Name and Principal Position Year Salary($) Options(#) Compensation($)
--------------------------- ---- --------- ---------- ---------------
<S> <C> <C> <C> <C>
Gene Zaino, Chief Executive 1999 $744,537 7,500 $13,000
Officer(1)
1998 $140,747 $15,000
1997 $130,000 600,000 (3) $ 4,563
Pamela Fredette, President (2) 1999 $119,683 365,000 $ 704
Robert Skelton, Secretary 1999 $119,990 $ 3,000
1998 $101,988 15,000 $11,000
1997 $100,000 70,000 (3) $ 2,903
Walton Bell III, Chief 1999 $112,000 110,000
Financial Officer
</TABLE>
------------------------
(1) Mr. Zaino is employed under an employment agreement pursuant to which as of
January 1, 2000, he is paid a base salary of $275,000. As of January 1,
1999, Mr. Zaino received a base salary of $163,000, and effective upon
signing of his employment agreement, as of June 7, 1999, he received a base
salary of $225,000. See "Executive Compensation of Directors and Executive
Officers -- Employment and Related Agreements." Mr. Zaino received a bonus
approved by the Board in January 2000 of $545,902, the net proceeds of
which were used to repay the loan from the Company. The bonus was
accrued in 1999.
(2) Ms. Fredette is employed under an employment agreement pursuant to which
she is paid a base salary of $225,000. See "Executive Compensation of
Directors and Executive Officers -- Employment and Related Agreements." Ms.
Fredette received a bonus of $50,000 in January 2000, which was accrued in
1999.
(3) Options to purchase 600,000 shares, issued to Mr. Zaino in 1995 under the
Company's 1992 Incentive and Nonqualified Stock Option Plan ("the Plan"),
were canceled in December 1997 and replaced by options to purchase 600,000
shares at a lower exercise price. None of Mr. Zaino's options have been
exercised and 600,000 are vested as of December 31, 1999. Options to
purchase 70,000 shares granted to Mr. Skelton in 1996 and 1997 under the
Plan were canceled in December 1997 and replaced by options to purchase
70,000 shares at a lower exercise price. None of Mr. Skelton's options have
been exercised and 70,000 shares are vested as of December 31, 1999.
-8-
<PAGE>
Aggregated Option Exercises and Fiscal Year-end Option Values
<TABLE>
<CAPTION>
Number of Securities
Underlying Value of Unexercised In-The-Money
Unexercised Options at Options at
December 31, 1999(1) December 31, 1999($)(1)
-------------------- -----------------------
Name Exercisable/Unexercisable Exercisable/Unexercisable
---- ------------------------- -------------------------
<S> <C> <C> <C> <C>
Gene Zaino 615,000 7,500 $6,209,550 $ 62,100
Pamela Fredette 25,000 340,000 $ 203,250 $3,138,350
Robert Skelton 70,000 15,000 $ 711,200 $ 149,700
Walton E. Bell III 33,333 76,667 $ 326,184 $ 752,178
</TABLE>
______________
(1) At December 31, 1999 the closing price of the Company's Common Stock on the
Nasdaq SmallCap Market was $11.13.
Employment and Related Agreements
Mr. Zaino is employed under an employment agreement through June 2002
pursuant to which he is currently paid a base salary of $275,000 per annum. Mr.
Zaino is also entitled to receive an annual bonus based on the financial and
operating performance of the Company. The Board approved and determined to grant
Mr. Zaino additional compensation in the form of annual cash incentive
compensation. In January 2000, Mr. Zaino received annual cash incentive
compensation of $545,902. This bonus was accrued in 1999. In addition, pursuant
to his employment agreement, Mr. Zaino may also receive an annual bonus at the
sole discretion of the Board, based upon the financial and operating performance
of the Company, which shall not exceed 60% of base salary.
The Company has and is the beneficiary under a key-person life insurance
policy for $2 million on Mr. Zaino.
Ms. Fredette is employed under an employment agreement through May 2002
pursuant to which she is currently paid a base salary of $225,000 per annum.
Ms. Fredette is also entitled to receive an annual bonus based on the
financial and operating performance of the Company. In addition, pursuant to her
employment agreement, Ms. Fredette may also receive an annual bonus at the sole
discretion of the Board.
The Company has and is the beneficiary under a key-person life insurance
policy for $1 million on Ms. Fredette.
-9-
<PAGE>
Report Of The Compensation Committee
Overall Policy
The Board of Directors of the Company establishes the overall goals and
objectives of the Company and the policies to be followed in pursuing those
goals and objectives, including the selection of necessary key management
personnel, and auditing the performance of those personnel. The major
responsibility for assisting in satisfying the compensatory aspect of the
overall supervisory duty of the Board rests with the Compensation Committee. The
membership of the Compensation Committee (collectively the "Committee") is
composed of independent non-employee directors who do not participate in any
executive compensation plan. In order to achieve the overall goals and
objectives of the Company, and recognizing the interest of the shareholders in
that achievement, the Committee has developed and maintains an executive
compensation policy based on a philosophy that links executive compensation to
individual and corporate performance, and return to shareholders. This policy
enables the Company to attract and retain highly motivated executive personnel
of outstanding ability and initiative, and creates an identity of interests
between executives and the Company's shareholders. The Company's executive
compensation plan consists of basic cash compensation, the opportunity for
annual cash incentive compensation, based on individual and corporate
performance, and continuing stock-based compensation, geared to corporate
performance. The Committee administers the Company's cash incentive compensation
policy and also comprises the Company's Stock Option Committee, which
administers the provisions of the stock-based compensation plan. The Committee
takes various factors into consideration when establishing and reviewing
executive compensation. There follows an explanation of general principles
governing basic cash compensation, annual cash incentive compensation, stock-
based incentive compensation and the factors considered in establishing basic
cash compensation for 1999.
Basic Cash Compensation
The Committee, in determining basic cash compensation of the executive
officers of the Company, considers corporate profitability, financial condition
and the planned compensation budget for the Company. The Committee also
considers the performance and compensation levels of other companies as more
fully set forth under the caption "1999 Compensation". The Committee does not
consider these factors by any formula and does not assign specific weight to any
given factor. Instead, the Committee applies its collective business judgment to
reach a consensus on compensation fair to the Company, its shareholders and its
executive officers. Under an executive employment agreement, the basic cash
compensation of Mr. Zaino and Ms. Fredette is no less than $275,000 and $225,000
per year, respectively.
Annual Cash Incentive Compensation
In addition to basic cash compensation, the Committee, has developed an
informal annual cash incentive compensation policy, which is based on corporate
profitability, financial condition, the planned compensation budget for the
Company and subjective appraisal by the Committee, with the advice of the
President, of the executive officer's performance. The Committee does not
consider these factors by any formula and does not assign specific weight to any
given factor. Instead, the Committee applies its collective
-10-
<PAGE>
business judgment to reach a consensus on incentive compensation that is fair to
the Company, its shareholders and its executive officers. All four of the
current executive officers of the Company are considered by the Committee to
have responsibilities that directly affect corporate performance and
profitability and, accordingly, are currently eligible to receive cash incentive
compensation. Specific awards are chosen annually by the Committee. To date, the
Committee has not awarded cash incentive compensation, except as set forth
above. Cash incentive compensation paid to those executive officers named in the
Summary Compensation Table wills be reflected in the Table under the caption
"Salary."
Stock-Based Incentive Compensation
The 1992 Incentive and Nonqualified Stock Option Plan and the 1995 Stock
Option Plan for Consultants are is designed to create a common interest between
key employees, including executive officers, consultants and shareholders on a
long-term basis. Its purpose is to encourage participants to maintain and
increase their proprietary interests as shareholders in the Company and to
benefit from the long-term performance of the Company. The Committee believes
that a close linking of shareholder and key employee interests through the grant
of stock options is important to the continuing success of the Company because
stock options have no realizable value unless the price of the Common Stock
increases. The exercise price of the stock options equals the market price of
the Common Stock on the date of grant and the options have a ten year life. The
Plan is administered by the Committee, which comprises the Company's Stock
Option Committee. The Committee employs the same principles with respect to
stock-based incentive compensation as it does with respect to grants of cash
incentive compensation.
1999 Compensation
The Committee, in determining the 1999 basic cash compensation of the
executive officers of the Company, considered the factors described in this
Report. Gene Zaino is Chairman of the Board and Chief Executive Officer of the
Company and, as such, has the ultimate management responsibility for the
strategic direction, performance, operating results and financial condition of
the Company, and the execution of corporate policies and procedures. In 1998,
Ms. Fredette served as President, Robert M. Skelton served as Vice President--
Corporate Development, General Counsel and Secretary and Walton E. Bell, III
served as Chief Financial Officer and Treasurer. As of January 1, 1999, the
1999 basic cash compensation of Mr. Zaino was $163,000 pursuant to his
employment agreement with the Company. Effective upon signing of a new
employment agreement, as of June 7, 1999, Mr. Zaino's basic cash compensation
was increased to $225,000, and as of January 1, 2000, pursuant to his employment
agreement, Mr. Zaino receives a base salary of $275,000. In determining the
basic cash compensation of Messrs. Zaino, Skelton and Bell and Ms. Fredette, the
Committee considered the Company's earnings and other indicia of the Company's
financial performance and comparable information for other companies in the
Company's peer group. Further, the Committee was aware that no cash incentive
compensation payments to such executive officers would be made in 1999
attributable to 1998 performance under the Committee's annual cash incentive
compensation policy and of the extent to which outstanding performance-based
options under the 1992 Incentive
-11-
<PAGE>
and Nonqualified Stock Option Plan would become exercisable in 1999. In
determining the 1999 cash and stock-based incentive compensation for Messrs.
Zaino, Skelton and Bell and Ms. Fredette, the Committee considered the 1999
earnings of the Company, other indicia of the Company's financial performance
and comparable information for other companies in the Company's peer group. The
Committee did not award any cash or stock-based incentive compensation to
executive officers for 1999 performance, except as noted above.
/s/ THE COMPENSATION COMMITTEE
Richard Goldstein
Steven Hanau
-12-
<PAGE>
Performance Graph
[GRAPH APPEARS HERE]
Performance Graph
<TABLE>
<CAPTION>
Per $100
ntpl nasdaq h&p tech NTPL Nasdaq Chase H&Q Tech.
<S> <C> <C> <C> <C> <C> <C> <C>
Dec-94 4.25 751.96 538.63 Dec-94 $100.00 $100.00 $100.00
Dec-95 2.625 1052.13 803.01 Dec-95 $ 61.76 $139.92 $149.08
Dec-96 3.25 1291.03 996.67 Dec-96 $ 76.47 $171.69 $185.04
Dec-97 0.9375 1570.35 1164.75 Dec-97 $ 22.06 $208.83 $216.24
Dec-98 1.0625 2192.69 1809.97 Dec-98 $ 25.00 $291.60 $336.03
----------------------
Dec-99 11.125 4069.31 4034.92 Dec-99 $261.76 $541.16 $749.11
----------------------
multiplier 23.52941 0.132986 0.185656
</TABLE>
The above graph demonstrates a comparison of cumulative total returns based upon
an initial investment of $100.00 in the Company's Common Stock as compared with
the Chase Hambrecht & Quist Technology Index and the Nasdaq Stock Market-U.S.
Index. The stock price performance shown on the graph is not necessarily
indicative of future price performance and only reflects the Company's relative
stock price on December 30, 1994, December 29, 1995, December 31, 1996, December
31, 1997, December 31, 1998, and December 31, 1999.
THE INFORMATION CONTAINED IN THE STOCK PERFORMANCE GRAPH SHALL NOT BE DEEMED TO
BE `SOLICITING MATERIAL' OR TO BE FILED WITH THE SEC, NOR SHALL SUCH INFORMATION
BE INCORPORATED BY REFERENCE INTO ANY FUTURE FILING UNDER THE SECURITIES ACT OR
THE EXCHANGE ACT, EXCEPT TO THE EXTENT THE COMPANY SPECIFICALLY INCORPORATES IT
BY REFERENCE INTO SUCH FILING.
Auditors
For the year ending December 31, 1999, Grant Thornton LLP, independent
certified public accountants, examined the financial statements of the Company.
The Company is proposing that the shareholders ratify the selection of Grant
Thornton LLP as the Company's auditors for the year ending December 31, 1999,
and that the shareholders approve the appointment of Grant Thornton LLP as the
Company's auditors for the year ending December 31, 2000.
During 1999, there were no disagreements between the Company and Grant
Thornton LLP on any matter of accounting principles or practices, financial
statement
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<PAGE>
disclosure, or auditing scope or procedures. A representative of Grant Thornton
LLP is expected to be present at the Annual Meeting and will be provided with an
opportunity to make a statement and to respond to appropriate questions from
shareholders.
As reported on the Company's Form 8-K filed May 21, 1999, on May 14, 1999,
KPMG LLP resigned as the Company's independent accountants. According to the
Form 8-K, the reports of KPMG LLP on the financial statements for each of the
Company's fiscal years ended December 31, 1998 and 1997 did not contain adverse
opinions or disclaimers of opinion, and were not qualified or modified as to
uncertainty, audit scope, or accounting principles. Additionally, the Form 8-K
stated that in connection with the audits of the Company's consolidated
financial statements for each of the two fiscal years ended December 31, 1998
and 1997, and in the interim period subsequent to December 31, 1998, preceding
the date of KPMG's resignation, there were no "disagreements" with KPMG on any
matter of accounting principles or practices, financial statement disclosure or
auditing scope or procedure which "disagreement" if not resolved to the
satisfaction of KPMG would have caused KPMG to make reference to the matter in
their report.
As provided by the Company's Form 8-K filed June 2, 1999 (and exhibits
thereto), by letter purported to be dated May 13, 1999, delivered to the
Company's audit committee by facsimile on May 21, 1999, KPMG advised the Company
that KPMG believed that there was a matter involving the Company's internal
control structure and its operation that KPMG considered to be a reportable
condition under standards established by The American Institute of Certified
Public Accountants ("reportable condition"). In the letter dated May 13, 1999,
and an ensuing letter addressed to the Securities and Exchange Commission in
response to the Company's Item 4 disclosures set forth in the Form 8-K filed May
21, 1999 (such letters filed as Exhibits 16.1 and 16.2, respectively, to the
Form 8-K filed June 2, 1999), KPMG stated that the matter referred to a lack of
an adequate system of financial reporting, and more specifically, indicated
that: (i) during KPMG's audit of the Company's 1998 financial statements KPMG
noted that the Company had to seek extensions on several of its required filings
with the Securities and Exchange Commission and that the Company had to amend
the Forms 10-Q previously filed for the first three quarters of 1998; (ii) KPMG
believed that the Company's system of financial reporting was not adequate to
enable the Company to report accurate and timely financial information; (iii)
KPMG believed that the Company's process for accumulating financial data did not
provide management with sufficient time to evaluate the data in an effort to
ensure accurate financial reporting, nor to enable the Company to meet financial
reporting deadlines in a timely manner; and (iv) KPMG believed that the
Company's system of financial reporting did not include a periodic process of
evaluating the Company's financial reporting policies in light of significant
events or changes in circumstances which might impact those policies.
As set forth in the Company's Form 8-K filed June 2, 1999, the Company
disagreed with KPMG's assertion of a "reportable condition" and furthermore, the
Company was of the view that the "reportable condition" described in KPMG's
letter did not rise to the level of a "reportable event" as defined in Item 304
of Regulation S-K. Because KPMG resigned before the Company received either
letter, neither the Company or its audit
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<PAGE>
committee had an opportunity to discuss the matters with KPMG.
The reports of the Company's principal accountants on the financial
statements for the past two fiscal years contained no adverse opinion or
disclaimer of opinion, and were not qualified or modified as to uncertainty,
audit scope, or accounting principles. In connection with its audits for the two
most recent fiscal years, there have been no disagreements with the Company's
principal accountants on any matter of accounting principles or practices,
financial statement disclosure, or auditing scope or procedure, which
disagreements, if not resolved to the satisfaction of the Company's principal
accountants would have caused them to make reference thereto in their report on
the financial statements for such years.
The Company engaged the firm of Grant Thornton LLP, as of November 13,
1999, to act as the Company's independent accountants. The engagement of Grant
Thornton LLP was approved by the Company's audit committee and Board of
Directors. The Company authorized KPMG LLP to respond fully to any inquiries of
Grant Thornton, LLP. The Company has not consulted with Grant Thornton LLP
regarding the application of accounting principles as to a specified transaction
or the type of opinion that might be rendered on the Company's financial
statements or any matter that was either the subject of a disagreement or a
reportable event prior to their engagement as the Company's independent
accountants.
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PROPOSAL I - ELECTION OF TWO (2) MEMBERS OF THE BOARD OF DIRECTORS TO SERVE
FOR THREE YEAR TERMS AND UNTIL THEIR SUCCESSORS HAVE BEEN DULY ELECTED AND
QUALIFIED.
At the Meeting, two of the six directors of the Company will be elected by
the shareholders to serve for three year terms, or until their successors are
duly elected and qualify. Unless otherwise specified, all Proxies received will
be voted in favor of the election of J. Alan Lindauer, and Pamela Fredette.
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 currently hold with the
Company:
Name Age Class Position Director Since
---- --- ----- -------- --------------
J. Alan Lindauer* 60 Director 1998
Pamela Fredette 48 President and Director 1999
---------------------
* Mr. Lindauer has been nominated pursuant to the 1998 Private Placement
Agreement with Waterside Capital Corporation.
J. Alan Lindauer became a director of the Company in November 1998. Mr.
Lindauer has also been serving as a director of Waterside Capital Corporation
since July 1993 and was named as its President and Chief Executive Officer in
March 1994. Mr. Lindauer has also served as President of JTL, Inc., since 1986.
Also since 1986, Mr. Lindauer has served as a director of Commerce Bank of
Virginia. In 1963, Mr. Lindauer started Minute-Man Fuels and managed the Company
until 1985. Mr. Lindauer holds a Bachelor of Business Administration in
Accounting and a Master of Business Administration from Old Dominion University.
He is a Certified Management Consultant.
Pamela Fredette is currently the President of the Company and became a
director of the Company in 1999. Ms. Fredette was the President of Computer
Horizon's solutions group, Horizon Consulting, Inc. from December 1995 through
January 1999. Ms. Fredette joined Horizons Consulting in 1993 as a practice
director, and was soon promoted to Vice President and then Senior Vice President
of Solutions Operations. Prior thereto, Ms. Fredette was the founder and owner
of two consulting companies, and she has also held management positions for
International Paper Company and Prudential Insurance Company. Ms. Fredette
received a bachelor's degree in Liberal Arts from Rutgers University and a
master's degree in Computer Science from New Jersey Institute of Technology.
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<PAGE>
Vote Required
Directors shall be elected by a plurality of the votes cast, in person or
by proxy, at the Meeting. Broker non-votes and proxies marked "abstain" will be
counted towards a quorum but are not considered votes cast in the election of
directors.
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 AN AMENDMENT TO THE CERTIFICATE OF INCORPORATION TO
INCREASE THE NUMBER OF AUTHORIZED SHARES OF COMMON STOCK FROM 40,000,000 SHARES
TO 100,000,000 SHARES.
The Board of Directors is requesting shareholder approval of an amendment
to Article Fourth of the Company's Certificate of Incorporation to increase the
number of shares of Common Stock authorized for issuance by the Company from
40,000,000 to 100,000,000 shares (the "Charter Amendment"). As of the Record
Date, 17,970,687 shares of the Company's Common Stock were issued and
outstanding. In addition, the Company has reserved for issuance (i) 4,239,363
shares of the Company's Common Stock, all of which shares have been reserved
pursuant to the 1992 Incentive and Nonqualified Stock Option Plan, and (ii)
800,000 shares of the Company's Common Stock, all of which shares have been
reserved pursuant to the 1995 Stock Option Plan for Consultants. The Board of
Directors has determined that it is advisable and in the best interests of the
Company to have additional shares of Common Stock available for issuance. The
Board of Directors believes that the proposed increase in the number of shares
of Common Stock authorized for issuance is desirable because such an increase
will enhance the Company's flexibility in connection with possible future
actions by the Company, such as stock splits, stock dividends, financings,
acquisitions or actions for other corporate purposes. The Board of Directors
does not have any current plans or proposals to issue any portion of the shares
to be authorized pursuant to the Charter Amendment. The Board of Directors has
approved the adoption of the Charter Amendment, subject to shareholder approval
at the Meeting.
If the Charter Amendment is adopted, the additional shares of Common
Stock authorized for issuance as a result of such amendment may be issued by
direction of the Board of Directors at such times, in such amounts, for such
consideration, and upon such terms as the Board of Directors may determine,
without further approval of the shareholders, unless in any specific instances
such approval is expressly required by regulatory agencies or otherwise.
Approval of the Charter Amendment by the shareholders could have an anti-
takeover effect, because additional shares of Common Stock could be issued
(within the limits imposed by applicable law) in one or more transactions that
could make a change in control or takeover of the Company more difficult. While
it may be deemed to have potential anti-takeover effects, the proposed Charter
Amendment is not prompted by any specific effort or takeover threat currently
perceived by management, and management does not presently intend to propose
other anti-takeover measures. Additional shares could be issued by the Company
to persons who might side with the Board of Directors in opposing a takeover bid
that the Board determines is not in the best interests of the Company and its
shareholders. Such an issuance could diminish the voting power of existing
shareholders who favor a change in control, and the ability to issue the shares
could discourage an attempt by another person or entity to acquire control of
the Company since the issuance of new shares of Common Stock could be used to
dilute the stock ownership of such person or entity. The Board of Directors
believes that the Charter Amendment would enable the Board of Directors to use
its discretion to protect shareholder value.
In addition, the issuance of additional shares of Common Stock would dilute
the
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<PAGE>
existing shareholders' equity interest in the Company. Shareholders of the
Company have no preemptive rights to purchase additional shares. The Board of
Directors would carefully consider the potential benefits and detriments should
it contemplate any dilutive issuance of stock.
Vote Required
The affirmative vote of at least a majority of the shares of Common Stock
entitled to vote on this proposal at the Meeting cast, in person or by proxy, is
required for approval of the Charter Amendment. Broker non-votes and proxies
marked "abstain" with respect to this proposal will be counted towards a quorum
but are not considered votes cast.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS OF THE COMPANY RECOMMENDS A VOTE "FOR" APPROVAL OF
THE INCREASE IN THE NUMBER OF AUTHORIZED COMMON STOCK FROM 40,000,000 SHARES TO
100,000,000 SHARES.
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<PAGE>
PROPOSAL III -- TO RATIFY THE SELECTION OF GRANT THORNTON LLP AS THE COMPANY'S
AUDITORS FOR THE YEAR ENDED DECEMBER 31, 1999, AND TO APPROVE THE SELECTION OF
GRANT THORNTON LLP AS THE COMPANY'S AUDITORS FOR THE YEAR ENDING DECEMBER 31,
2000.
The management of the Company selected Grant Thornton LLP as the Company's
independent auditors to audit the books, records and accounts of the Company for
the fiscal year ended December 31, 1999. In addition, the Company has selected
Grant Thornton LLP as the Company's independent auditors for the fiscal year
ending December 31, 2000.
The affirmative vote of the holders of a majority of the Company's Common
Stock represented and voting at the Meeting will ratify the selection of Grant
Thornton LLP for the fiscal year ended December 31, 1999 and approve and ratify
the selection of Grant Thornton LLP for the fiscal year ending December 31,
2000.
A representative of Grant Thornton LLP is expected to be present at the
Meeting. The representative will have the opportunity to make a statement and
will be available to answer questions from shareholders.
Vote Required
The affirmative vote of a majority of the votes cast, in person or by
proxy, is required for the ratification and approval of Grant Thornton LLP as
the Company's independent auditors for the fiscal years ending December 31, 1999
and 2000. Broker non-votes and proxies marked "abstain" with respect to this
proposal will be counted towards a quorum but are not considered votes cast.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE RATIFICATION OF GRANT
THORNTON LLP AS THE COMPANY'S AUDITORS FOR THE YEAR ENDED DECEMBER 31, 1999 AND
APPROVING AND RATIFYING THE SELECTION OF GRANT THORNTON LLP AS THE COMPANY'S
AUDITORS FOR THE YEAR ENDING DECEMBER 31, 2000.
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<PAGE>
PROPOSAL IV - TO APPROVE THE ISSUANCE OF THE SHARES OF COMMON STOCK ISSUABLE
UPON CONVERSION OF THE SERIES D PREFERRED STOCK AND RELATED WARRANTS
Board Approval of the Series D Preferred Stock Private Placement
During the first quarter of 2000, the Company required additional working
capital for current and prospective operations. The Company explored a number of
possibilities, but ultimately determined that a private placement transaction
whereby the Company would issue preferred stock which was convertible into
Common Stock at a fixed conversion price, subject to certain adjustments, and
related warrants would be the best alternative to raise the working capital it
required. The securities that the Board ultimately decided to approve were a new
series of convertible preferred stock designated as the Series D Convertible
Preferred Stock (the "Series D Preferred Stock") and related warrants to be
issued to certain institutional investors pursuant to a certain Securities
Purchase Agreement, dated March 28, 2000, by and among the Company, HFTP
Investment L.L.C., Fisher Capital Ltd., and Wingate Capital Ltd. (the
"Securities Purchase Agreement"). Among other things, the Board considered
primarily the economic terms of the proposed transaction, namely, the amount of
funds which could be raised, whether the securities were a debt or equity
instruments, any required dividends, whether or not the securities were
convertible and if so, the conversion provisions. The Board also considered the
risk factors associated with securities with a conversion formula, registration
obligations, Nasdaq requirements, and the possible triggering of penalty and
redemption provisions in certain circumstances. In the final analysis, the Board
decided that considering the Company's operating and financial situation, the
risk factors did not outweigh the benefits of the funding to be secured by the
issuance of the Series D Preferred Stock and related warrants.
Nasdaq Rules; Shareholder Approval Pursuant to Securities Purchase Agreement;
and Consequences of Failure to Obtain Shareholder Approval
Under Nasdaq rules, as a condition of continued listing, the Company is
required to obtain shareholder approval of the sale or issuance of Common Stock
(or securities convertible into Common Stock) by the Company equal to 20% or
more of the Common Stock before the issuance at a price less than the greater of
book or market value (the "Nasdaq 20% Rule"). Shareholder approval is also
required in connection with transactions which are deemed to be a "change in
control" under Nasdaq rules. Although the Company does not believe that the
issuance of the Series D Preferred Stock constitutes a "change in control," if
the transaction were to be so construed, the approval being sought would also be
effective to satisfy that Nasdaq requirement. In addition, the Company agreed
with the purchasers of the Series D Preferred Stock to use its best efforts to
solicit its shareholders' approval of such sale or issuance of Common Stock if
the number of shares of Common Stock into which the Series D Preferred Stock
could be converted and the related warrants exercised
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<PAGE>
equals or exceeds 15% of the number of shares of Common Stock issued and
outstanding immediately prior to the closing date with respect to the purchase
and sale of the Series D Preferred Stock.
Due to the decline in the market price of the Common Stock and because the
Series D Preferred Stock is convertible into Common Stock at a rate based upon
120% of the average of the dollar volume-weighted average prices of the Common
Stock on the Nasdaq Small Cap Market for the 30 consecutive trading days
beginning on and including April 4, 2000, which was $5.87 per share, the number
of shares of Common Stock that the Company shall be required to issue upon
conversion of the Series D Preferred Stock and exercise of the related warrants
exceeds 15%. Furthermore, upon the issuance of the additional shares of Series D
Preferred Stock and related additional warrants pursuant to the occurrence of a
Call Trigger Date (as defined and further explained in "Additional Information
About the Series D Preferred Stock and Warrants" below) the Company may be
required to issue 20% or more of the shares of Common Stock outstanding on the
date of the issuance of the Series D Preferred Stock and at prices less than the
greater of book or market value at the time of the issuance ($11.8125 per
share). The terms of the Series D Preferred Stock and the related warrants (as
more fully described below) provide that shares of Common Stock issuable upon
conversion of the Series D Preferred Stock and exercise of the related warrants
may not be issued if such issuance would violate Nasdaq rules (i.e., issuances
of Common Stock in excess of approximately 3,557,771 shares without shareholder
approval--which represents approximately 19.99% of the Company's outstanding
Common Stock on the date of issuance). Thus, upon approval of the proposal, the
Company may be required to issue shares of Common Stock equal to 20% or more of
the shares of Common Stock outstanding on the date of issuance. If the Company
does not obtain shareholder approval and is not obligated to issue shares
pursuant to the Certificate of Amendment of the Company's Certificate of
Incorporation (filed in connection with the Securities Purchase Agreement), the
Company will be required to redeem all or a portion of the Series D Preferred
Stock if requested by the holders of the Series D Preferred Stock. If the
Company fails to redeem any Series D Preferred Stock as requested, the holders
of at least two-thirds of the outstanding Series D Preferred Stock have the
right to require that the Company voluntarily delist its shares of Common Stock
from the Nasdaq Stock Market. In that event, trading in the Company's shares
would likely decrease substantially, and the price of the Common Stock may
decline.
Further, the holders could argue that failure to obtain such shareholder
approval was a breach of the Company's obligations under the operative
transaction documents which had a Material Adverse Effect (as defined in the
Securities Purchase Agreement). If such an argument were successful, the Company
may be obligated to redeem all of the outstanding shares of Series D Preferred
Stock without regard to whether or not the Company was able to issue any
additional shares of Common Stock. If the Company is required to redeem all of
the shares of Series D Preferred Stock submitted for redemption within five
business days, the holders can attempt to require the Company to redeem those
shares it is able to redeem and have the Company pay interest to the holders on
any shares which were not redeemed as required at 2.0% per month.
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<PAGE>
Vote Required
The proposal requires the affirmative vote of a majority of the votes cast,
in person or by proxy, by the holders of Common Stock. Broker non-votes and
proxies marked "abstain" with respect to this proposal will be counted towards a
quorum but are not considered votes cast.
Recommendation of the Board of Directors
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE SERIES D PREFERRED STOCK
PROPOSAL.
SUMMARY OF TRANSACTION TERMS PURSUANT TO THE SECURITIES PURCHASE AGREEMENT
The following is a summary of the material terms of the Series D Preferred
Stock, which terms are qualified in their entirety by reference to the full text
of the underlying documents which are filed as exhibits to the Form 8-K of the
Company filed on April 3, 2000 (the "Form 8-K"), such documents can also be
obtained from the Secretary of the Company at the Company's principal office set
forth above. The underlying documents for the Series D Preferred Stock are a
Securities Purchase Agreement, Certificate of Amendment of the Certificate of
Incorporation of The Netplex Group, Inc. relating to the Series D Preferred
Stock (the "Certificate of Amendment"), and a certain Registration Rights
Agreement, all filed as exhibits to the Form 8-K. In addition, a Form of
Warrant is also filed as an exhibit to the Form 8-K.
As described above, the Company entered into a Securities Purchase
Agreement dated March 28, 2000 pursuant to which the Company agreed to issue
from time to time shares of Series D Preferred Stock and related warrants to
purchase Common Stock. The purchasers represented to the Company that they were
"accredited investors." None of the purchasers represented that it was an
affiliate of the Company. None of the purchasers are an officer or director of
the Company.
Series D Preferred Stock
GENERAL
On March 29, 2000, the Company issued 10,000 shares of its Series D
Convertible Preferred Stock, $1,000 stated value per share (sometimes, the
"Initial Series D Preferred Stock), and warrants to purchase 1,165,644 shares
of Common Stock with a current warrant exercise price of $5.87 per share in a
private placement to institutional investors. The net proceeds of the offering,
after expenses, were approximately $9.5 million.
The terms of the Series D Preferred Stock included in this Proxy Statement
are complex and are only briefly summarized herein. To obtain further
information concerning the rights, preferences and terms of the Series D
Preferred Stock,
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<PAGE>
please refer to the full description contained in the Company's current report
on Form 8-K and exhibits filed with the Securities Exchange Commission on April
3, 2000.
DIVIDENDS
The Series D Preferred Stock carry a dividend rate of 7% per annum, payable
quarterly or upon conversion or redemption. At the Company's option, the
quarterly dividend may be paid in cash or shares of Common Stock, subject to
satisfaction of certain conditions described below. If the Company chooses to
pay dividends in shares of Common Stock, the number of shares to be issued in
payment of the dividend on each share of the Series D Preferred Stock will be
equal to the accrued dividends (plus any unpaid default interest) divided by the
applicable conversion price as described below.
The applicable conversion price will be equal to the average of the closing
sale prices for the Common Stock on each of the 10 consecutive trading days
immediately preceding the date of determination. For example, if the Company had
elected to pay dividends in shares of Common Stock on May 19, 2000, the average
of the closing sale prices for the Common Stock on each of the 10 consecutive
trading days immediately preceding May 19, 2000 was $3.46 per share, and the
Company would have been required to issue 2.8268 shares of Common Stock in lieu
of a cash dividend on each share of Series D Preferred Stock (an aggregate of
28,268 shares based on 10,000 shares of Series D Preferred Stock issued and
outstanding), calculated as follows, where N represents the number of days since
the issuance of the shares (in this case N is 51 days):
(0.07) (N/365) ($1,000) = 2.8268
-----------------------
$3.46
The Company will not have the right to pay dividends in shares of Common
Stock if a triggering event (as defined in Section 3(b) of the Certificate of
Amendment of the Certificate of Incorporation of the Netplex Group, Inc.
relating to the Series D Preferred Stock) has occurred and is continuing or the
registration statement covering the shares of Common Stock underlying the Series
D Preferred Stock is not effective and available for resale of all shares
required to be registered. Triggering events include the following:
-- the failure of an applicable registration statement to be
declared effective by the SEC on or prior to the date required by the
terms of the Registration Rights Agreement (which was filed as an
exhibit to the Report on Form 8-K the Company filed on April 3, 2000);
-- if while such registration statement is required to be maintained
effective, the effectiveness of the registration statement lapses for
any reason (including, without limitation, the issuance of a stop
order) or is unavailable to the holder of the preferred shares for
sale of all shares to be registered, in accordance with the terms of
the Registration Rights Agreement, and such lapse or unavailability
continues for a period of five consecutive trading days or for more
than an aggregate of 10 trading days in any 365-day period;
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<PAGE>
-- the suspension or delisting from trading of the Company's Common
Stock on the Nasdaq SmallCap Market, the Nasdaq National Market, the
American Stock Exchange or the New York Stock Exchange for a period of
at least five consecutive trading days or for more than 10 trading
days in any 365-day period;
-- Company notice to any holder of Series D Preferred Stock of the
Company's intent not to comply with a request for conversion tendered
in accordance with the terms of the Series D Preferred Stock;
-- the Company's failure to issue shares of Common Stock upon
conversion prior to the 10th business day after the required date of
delivery;
-- the Company's failure to issue shares of Common Stock after a
proper request from a holder of the Series D Preferred Stock due to
the Company's compliance with the limitation on the number of shares
the Company may issue in accordance with the applicable rules of the
Nasdaq SmallCap Market; or
-- the breach of any representation, warranty, covenant or other
term or condition of the documents governing the issuance of the
Series D Preferred Stock unless the breach would not have a material
adverse effect or in the case of a breach of a covenant which is
curable, only if such breach continues for a period of at least 20
days.
MATURITY DATE
The Initial Series D Preferred Stock matures on March 29, 2002, subject to
extension in certain circumstances, at which time the Initial Series D Preferred
Stock may be redeemed at the Company's option. If the Company elects to redeem
any Initial Series D Preferred Stock outstanding on March 29, 2002, the amount
required to be paid will be equal to the liquidation preference of the Series D
Preferred Stock, which equals the price originally paid for such shares plus
"accretion" (as defined below). If any shares of Initial Series D Preferred
Stock remain outstanding on the date which is 45 business days after March 29,
2002, the Company will be required to convert such preferred stock and issue
shares in an amount determined by dividing the sum of $1,000 plus accretion by
the applicable conversion price. The applicable conversion price at such time
will be 95% of the dollar volume-weighted average price of the Common Stock on
the date which is 45 business days after March 29, 2002. "Accretion" equals
(.07)(N/365)($1,000), where N is the number of days between March 29, 2000 (in
the event no dividends have been paid on shares of the Initial Series D
Preferred Stock as of the date of determination) and the date of determination,
plus any unpaid default interest.
During the period beginning on and including the date which is two business
days after March 29, 2002 and ending on and including the date which is 45
business days after
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<PAGE>
March 29, 2002, no holder of Series D Preferred Stock shall be entitled to sell
a number of shares of Common Stock issued pursuant to the conversion of such
preferred stock in excess of the greater of:
(I) the product of:
. the result of (i) the aggregate conversion amount of all such
shares of Series D Preferred Stock held by such holder on the date
which is two business days after March 29, 2002, divided by (ii)
95% of the lowest dollar volume-weighted average price of the
Common Stock during the period beginning on and including the date
which is two business days after March 29, 2002 and ending on and
including the date as of which the determination is being made,
multiplied by
. the result of (X) the number of business days during the period
beginning on and including the date which is two business days
after March 29, 2002 and ending on and including the date as of
which the determination is being made, divided by (Y) 45, and
(II) 15% of the daily trading volume for the Common Stock on such date of
determination, multiplied by (w) the result of (A) the number of
shares of Series D Preferred Stock purchased by such holder on March
29, 2000, divided by (B) the total number of shares of Series D
Preferred Stock purchased on March 29, 2000.
CONVERSION
The number of shares of Common Stock to be issued upon conversion of a
share of Initial Series D Preferred Stock is determined by dividing the sum of
$1,000 (the amount paid for that share), plus accretion, by $5.87 (the
conversion price, which is subject to adjustment upon the occurrence of certain
events). The conversion price of $5.87 is the result of 120% of the average of
the dollar volume-weighted average prices of the Common Stock for the 30
consecutive trading days beginning on and including April 4, 2000.
The conversion rate for the Series D Preferred Stock will be reduced (and
the Company will be obligated to pay certain cash damages) if the Company fails
to deliver shares of Common Stock within 12 business days after being notified
of conversion of the Series D Preferred Stock and the holder exercises its right
to void its conversion notice. In such case, the conversion price will be
reduced to the lesser of (i) the conversion price then in effect or (ii) the
lowest closing sale price during the period beginning on the conversion date and
ending on the date such holder voided its conversion notice. The Series D
Preferred Stock (and the related warrants) also contain anti-dilution protection
which adjusts the conversion rate of the Series D Preferred Stock (and the
exercise price of the warrants) in the event the Company is deemed to have
issued Common Stock at a price less than the conversion rate then in effect (in
the case of the Series D Preferred Stock) or the exercise price (in the case of
the warrants), subject to certain exceptions.
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<PAGE>
The Company is not obligated to issue any shares of Common Stock upon
conversion of the Series D Preferred Stock if the issuance of such shares of
Common Stock would exceed that number of shares of Common Stock which the
Company may issue upon conversion of the Series D Preferred Stock without
breaching its obligations under the rules or regulations of the Nasdaq SmallCap
Market, except that such limitation shall not apply in the event that the
Company (a) obtains shareholder approval as required by the applicable rules of
the Nasdaq SmallCap Market for issuances of Common Stock in excess of such
amount or (b) obtains a written opinion from its outside counsel that such
approval is not required, which opinion must be reasonably satisfactory to the
holders of at least two-thirds (2/3) of the Series D Preferred Stock then
outstanding. Until such approval or written opinion is obtained, no holder of
Series D Preferred Stock will be issued, upon conversion of such preferred
stock, shares of Common Stock in an amount greater than the product of (i) the
amount of the limitation described above multiplied by (ii) a fraction, the
numerator of which is the number of shares of Series D Preferred Stock issued to
such holder on March 29, 2000 and the denominator of which is the aggregate
amount of all shares of Series D Preferred Stock issued to the holders on March
29, 2000.
In addition, no holder may convert any Series D Preferred Stock exceeding
the number of shares which, upon giving effect to such conversion, would cause
the holder's beneficial ownership to exceed 4.99% of the Common Stock then
outstanding (excluding any shares of Common Stock underlying Series D Preferred
Stock that have not been converted and warrants that have not been exercised).
REDEMPTION
If a triggering event as described under "Series D Preferred Stock -
Dividends" occurs, the holders of the Series D Preferred Stock will have the
right to require the Company to redeem all or a portion of any outstanding
shares of Series D Preferred Stock for cash. The redemption price in such a
case is the greater of:
(I) 125% of the price paid for the shares of Series D Preferred Stock
plus accretion, and
(II) the product of:
. the quotient obtained by dividing (A) the price paid
for the shares of Series D Preferred Stock plus accretion
and (B) the applicable conversion price in effect at such
time the holder delivers a notice of redemption and
. the closing sale price of the Common Stock on the
trading day immediately before the day of the happening of
the event that gives the holders the right to redeem.
The holders also may redeem the Series D Preferred Stock upon a change of
control of the
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Company at a redemption price equal to the greater of:
(I) 125% of the price paid for the shares of Series D Preferred Stock
plus accretion, and
(II) the product of:
. the quotient obtained by dividing (A) the price paid
for the shares of Series D Preferred Stock plus accretion
and (B) the applicable conversion price in effect at such
time the holder delivers a notice of redemption and
. the average closing sales price of the Common Stock
during the five trading days immediately preceding the date
the holders give notice of their election to redeem upon
change of control.
LIQUIDATION PREFERENCE
In the event of liquidation of the Company, the holders of the Series D
Preferred Stock will be entitled to a liquidation preference before any amounts
are paid to the holders of any of the Company's capital stock of any class
junior in rank to the Series D Preferred Stock. The liquidation preference is
equal to the amount originally paid for the shares of Series D Preferred Stock,
or $1,000 per share, plus accretion on any outstanding shares of Series D
Preferred Stock.
WARRANTS
In connection with the sale of the Initial Series D Preferred Stock, the
Company issued warrants to purchase up to 1,165,644 shares of Common Stock,
which is based on the product of 10,000 multiplied by the result of (A) $570,
divided by (B) the average of the dollar volume-weighted average price of the
Common Stock on the Nasdaq SmallCap Market for the 30 trading days after April
3, 2000 ($4.89 per share), exercisable at the price of $5.87 per share, which
represents 120% of the dollar volume-weighted average price for the Common Stock
on the Nasdaq SmallCap Market for the 30 consecutive trading days beginning on
and including April 3, 2000. These warrants expire on March 29, 2003. The
exercise price and number of shares that may be purchased upon exercise of the
warrants are subject to adjustment upon the occurrence of certain dilution
events. The Company intends to use the proceeds, if the warrants are exercised,
for working capital and general corporate purposes.
VOTING RIGHTS
Other than as required by law, the holders of the Series D Preferred Stock
have no voting rights except that the consent of holders of at least two-thirds
of the outstanding shares of Series D Preferred Stock will be required to effect
any change in the Company's Certificate of Incorporation that would change any
of the rights of the shares of Series D
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Preferred Stock.
ADDITIONAL INFORMATION ABOUT THE COMPANY'S SERIES D PREFERRED STOCK AND WARRANTS
In certain circumstances, the holders of the Initial Series D Preferred
Stock may have the right to purchase and the Company may be required to sell
additional Series D Preferred Stock and warrants. At any time during the period
beginning on and including the Call Trigger Date (as defined below) and ending
on and including the date which is 2 years after the Call Trigger Date, the
holders of the Initial Series D Preferred Stock will be able to purchase an
aggregate of 5,000 additional shares of Series D Preferred Stock and related
warrants for Common Stock at a purchase price of $1,000 per share of Series D
Preferred Stock. "Call Trigger Date" shall mean:
(I) the earlier of:
. the date the Company files its Form 10-Q for the three months
ended June 30, 2000, if such Form 10-Q does not disclose that on or
before August 1, 2000 it (x) consummated the Subsequent Financing
(as defined below), and (y) obtained a new credit facility with a
bank providing immediately available funds of at least $5,000,000
on commercially reasonable terms (the "Credit Facility") or
. August 14, 2000, if the Company fails to file its Form 10-Q for
the three months ended June 30, 2000 on or before August 14, 2000,
unless the Company has publicly disclosed prior to August 14, 2000
that on or before August 1, 2000 it (x) consummated the Subsequent
Financing and (y) obtained the Credit Facility, or
(II) any date subsequent to (y) the date the Company files its Form 10-Q
for the three months ended June 30, 2000 or (z) August 14, 2000 if the
Company fails to file such Form 10-Q on or before August 14, 2000, on which
the Company publicly discloses that the Credit Facility is not effective
and available, or a new credit facility with a bank which has terms which
are no less favorable to the Company than, and for an amount not less than,
the Credit Facility is not effective and available.
"Subsequent Financing" means the sale by the Company of shares of Common Stock
or securities convertible into or exercisable or exchangeable for shares of
Common Stock which (i) includes net proceeds to the Company of at least
$5,000,000 at the time such offering is consummated, (ii) is classified as
equity under U.S. Generally Accepted Accounting Principles, (iii) does not
include or involve, directly or indirectly, the exercise, conversion or exchange
of any securities or rights outstanding on March 28, 2000, and (iv) is not
pursuant to any agreement entered into by the Company prior to March 28, 2000
nor any amendment to any such agreement.
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In the event the holders of Initial Series D Preferred Stock purchase
additional shares of Series D Preferred Stock as discussed in the preceding
paragraph, it shall be on terms substantially similar to those described above,
except for a maturity date which is two years after the issuance of such
securities, and the applicable conversion price for the additional shares of
Series D Preferred Stock shall be 120% of the average of the dollar volume-
weighted average prices of the Common Stock for the 15 consecutive trading days
beginning on and including the first trading day after the Call Trigger Date. In
addition, if the holders of the Initial Series D Preferred Stock purchase
additional shares of Series D Preferred Stock, the holders of the Initial Series
D Preferred Stock shall receive for each additional share of Series D Preferred
Stock purchased, warrants to purchase shares of Common Stock equal to the result
of (a) $570, divided by (b) the average of the dollar volume-weighted average
prices of the Common Stock for the 15 consecutive trading days beginning on and
including the first trading day after the Call Trigger Date. All future warrants
to be issued upon the purchase of additional Series D Preferred Stock by the
holders of the Initial Series D Preferred Stock will be exercisable for Common
Stock at an exercise price of 120% of the average of the dollar volume-weighted
average prices of the Common Stock for the 15 consecutive trading days beginning
on and including the first trading day after the Call Trigger Date. Any
additional warrants will be exercisable until three years from the date such
warrants are issued.
OTHER MATTERS
Until the date which is 271 days after the closing of the Initial Series D
Preferred Stock purchase and sale, subject to certain exceptions, the Company
may not negotiate or contract with any party for any equity financing or issue
any equity securities or securities convertible or exchangeable into or for
equity securities in any form unless the Company has first delivered to each
holder of Series D Preferred Stock a written notice describing the proposed
transaction, and providing each holder an option to purchase a certain
participation percentage (equal to 75% of its pro rata portion of Series D
Preferred Stock (based on the number of shares of Initial Series D Preferred
Stock issued to each holder in relation to the total number of shares of Initial
Series D Preferred Stock issued to all holders)) of the securities to be issued
in such transaction.
RISKS ASSOCIATED WITH SERIES D PREFERRED STOCK CONVERSIONS
In connection with the Series D Preferred Stock, the following risks are
associated with Series D Preferred Stock conversions:
. to the extent that Common Stock received upon conversion is sold into
the market, and disregarding the manner in which such shares are sold as
well as any other factors such as reactions to the Company's operating
results and general market conditions which may be operative in the market
at such time, such sales may cause a decrease in the market price of the
Common Stock;
. short sales of the Common Stock may be attracted by or accompany
conversions and sales of Common Stock from conversions, which sales in the
aggregate could cause downward pressure upon the price of the Common Stock,
excluding the effect of other market factors possibly operative at the
time; and
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. conversions of the Series D Preferred Stock may result in substantial
dilution of the interests of the other holders of Common Stock. In this
regard, the ownership limitation which prohibits the purchasers from owning
more than 4.99% of the Common Stock of the Company only applies to shares
of Common Stock held at one time and does not prevent purchasers from
converting and selling some of their holdings and then later converting the
rest of their holdings.
In addition, the Company's Common Stock could be delisted by Nasdaq if
either: (i) the Company's stock price decreases below the $1 minimum bid price
as required by Nasdaq or the Company otherwise fails to satisfy the minimum
listing requirements of Nasdaq, including tangible net worth requirements. In
such an event, should such a delisting extend for five or more consecutive
trading days, a triggering event, as described in "Dividends" and "Redemption"
above, would occur and the holders of the Series D Preferred Stock could require
the Company to redeem the outstanding shares of Series D Preferred Stock.
Registration of Shares; Possible Adjustment of Conversion Price and Exercise
Price
In accordance with the terms of a Registration Rights Agreement with the
holders of the Initial Series D Preferred Stock, the Company has agreed to
register the resale of 175% of the number of shares of Common Stock issuable
upon conversion of the Series D Preferred Stock, determined as if the Series D
Preferred Stock were converted in full at the assumed conversion price of $5.87
per share, plus 175% of the number of shares of Common Stock issuable in lieu of
cash dividends payable on the Series D Preferred Stock, plus 175% of the number
of shares of Common Stock issuable upon exercise of the related warrants. The
Company agreed to use its best efforts to have the registration statement
declared effective by the Securities and Exchange Commission ("SEC") as soon as
practible, but in no event later than 120 days after the initial closing.
Pursuant to the Registration Rights Agreement, the Company has also agreed
to prepare additional registration statements (as necessary) covering the resale
of all of the additional common stock issuable upon conversion and/or exercise
of the additional Series D Preferred Stock and related warrants issued to the
holders of the Initial Series D Preferred Stock. The Company must file such
additional registration statements within 30 days after the applicable closing
relating to the purchase of additional Series D Preferred Stock and related
warrants. Each additional registration statement prepared pursuant to the
purchase of such additional shares and warrants must register for resale at
least 175% of the number of shares of Common Stock issuable upon conversion
and/or exercise of the additional Series D Preferred Stock and related warrants.
The Company must use its best efforts to cause such additional registration
statement(s) to be declared effective by the SEC no later than the date which is
120 days after the applicable closing of the purchase of such additional shares
and warrants.
Other Terms Relating to the Series D Preferred Stock
The transaction documents relating to the Series D Preferred Stock also
contain
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certain other representations, warranties, agreements, and indemnification
obligations of the Company. These include, among other things, the obligation of
the Company to hold a shareholders meeting on or before the earlier to occur of:
(a) the date which is 60 days after the proxy statement triggering date (the
first date after March 28, 2000, on which the sum of the Common Stock issued
upon conversion of any of the shares of the Series D Preferred Stock, Common
Stock issued upon exercise of the related warrants, and the issuance of Common
Stock upon conversion of the additional shares of Series D Preferred Stock and
exercise of related additional warrants (pursuant to the occurrence of a Call
Trigger Date) equals or exceeds 15% of the number of shares of Common Stock
issued and outstanding immediately prior to the closing date with respect to the
purchase and sale of the Series D Preferred Stock and (b) June 30, 2001, where
it includes a proposal recommending the approval of the issuance of the Series D
Preferred Stock and the warrants. If the Company fails to hold such meeting by
the required deadline, it will be subject to certain liquidated damages as set
forth in the Securities Purchase Agreement. The operative agreements also
contain provisions which (i) prohibit the Company from redeeming any of its
Common Stock, paying any cash dividends on its Common Stock, and making certain
distributions on its Common Stock without prior express written consent of the
holders of not less than two-thirds of the then outstanding Series D Preferred
Stock, (ii) limit the ability of the Company to issue any senior preferred stock
without prior express written consent of the holders of not less than two-thirds
of the then outstanding Series D Preferred Stock, and (iii) limit the Company
from entering into certain related party transactions.
The shares of Series D Preferred Stock are also subject to antidilution
provisions which are triggered in the event of certain stock splits,
recapitalizations, or other dilutive transactions, as well as issuances of
Common Stock at a price below the market price or the applicable conversion
price in effect, or the issuance of warrants, options, rights, or convertible
securities which have an exercise price or conversion price less than the market
price on the date of issuance or the applicable conversion price, other than for
certain previously outstanding securities and certain "excluded securities" (as
defined in the Certificate of Amendment).
Placement Agent Compensation
The placement agent for the Series D Preferred Stock was J.C. Bradford &
Co., LLC ("J.C. Bradford"). J.C. Bradford received a placement fee equal to 5%
of the funds raised. The placement agent will be able to retain its fees whether
or not shareholder approval sought hereby is obtained.
Use of Proceeds
The aggregate gross proceeds received by the Company from the issuance of
the shares of Series D Preferred Stock and related warrants was $10,000,000. The
net proceeds of the Series D Preferred Stock will be used for working capital
purposes.
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Interests of Certain Persons
None of the investors in the Series D Preferred Stock transactions is a
director, executive officer or, based upon representations to the Company by
such investors, a five percent or greater shareholder of the Company or an
affiliate of any such person or entity.
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SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as amended, requires
that the Company's directors and executive officers, and persons who own more
than 10% of a registered class of the Company's equity securities, file with the
Securities and Exchange Commission (the "Commission") initial reports of
ownership and reports of change in ownership of Common Stock of the Company. The
same persons are also required by Commission regulation to furnish the Company
with copies of all Section 16(a) forms that they file.
To the Company's knowledge, based solely on a review of the copies of such
reports furnished to the Company, and written representations that no other
reports were required during the fiscal year ended December 31, 1999, compliance
was made with all Section 16(a) filing requirements applicable to the Company's
executive officers, directors and persons who own more than 10% of a registered
class of the Company's equity securities.
SHAREHOLDER PROPOSALS
From time to time, shareholders of the Company submit proposals which they
believe should be voted upon at a meeting of shareholders or nominate persons
for election to the Board of Directors. The persons named in the accompanying
Proxy shall vote in their discretion with respect to any matter that may
properly be brought before the Meeting.
Pursuant to applicable rules under the Exchange Act, shareholder proposals
may be eligible for inclusion in the Company's 2001 Proxy Statement. Any such
shareholder proposals must be submitted in writing to the Secretary of the
Company no later than February 7, 2001. Shareholders interested in submitting
such a proposal are advised to contact knowledgeable counsel with regards to the
detailed requirements of such securities rules. It is suggested that proposals
be forwarded by certified mail, return receipt requested.
Shares of Common Stock represented by Proxies held by persons designated by
the Board of Directors shall vote in their discretion with respect to any matter
that may properly be brought before the 2001 Annual Meeting about which notice
was not received by the Company on or before April 23, 2001 unless the Company
announces another date.
OTHER MATTERS
At the date hereof, there are no other matters which the Board of Directors
intends to present or has reason to believe others will present at the Meeting.
If other matters come before the Meeting, the persons named in the accompanying
form of proxy will vote in accordance with their best judgment with respect to
such matters.
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ANNUAL REPORT
All shareholders of record as of May 12, 2000 have been sent, or are
concurrently herewith being sent, a copy of the Company's Annual Report on Form
10-K for the fiscal year ended December 31, 1999. The Form 10-K contains
certified consolidated financial statements of the Company and its subsidiaries
for the fiscal year ended December 31, 1999.
By Order of the Board of Directors,
Robert M. Skelton
Secretary
Dated: June 4, 2000
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FORM OF PROXY CARD
------------------
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR
DIRECTORS LISTED BELOW AND "FOR" PROPOSALS 2 THROUGH 5
1. The election of two (2) members of the Board of Directors of the persons
listed below to serve for three year terms or until their successors have been
duly elected and qualified:
FOR all nominees listed WITHHOLD AUTHORITY
Below (except as marked to vote for all nominees
To the contrary below) listed below
Nominees:
Pamela Fredette and J. Alan Lindauer
(Instruction: To withhold authority to vote for any individual nominee, print
that nominee's name on the line provided below.)
2. To approve an amendment to the Certificate of Incorporation of the Company,
as previously amended, to increase the number of authorized shares of common
stock of the Company, par value $.001 per share from 40,000,000 shares to
100,000,000 shares.
3. To ratify the selection of Grant Thornton LLP as the Company's auditors
for the year ending December 31, 1999 and to approve the selection of Grant
Thornton LLP as the Company's auditors for the year ending December 31, 2000.
4. To approve the issuance of the shares of Common Stock issuable upon
conversion of the Series D Preferred Stock and Related Warrants.
5. The approval of a proposal to transact such other business as may properly
be brought before the Meeting or any adjournment thereof.
SIGNATURE(S) ________________________________________ Date______________________
Please sign exactly as your name appears on the 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.
<PAGE>
REVOCABLE PROXY - THE NETPLEX GROUP, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS FOR
THE ANNUAL MEETING OF SHREHOLDERS
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, $.001 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 Shareholders (the
"Annual Meeting") and any adjournment thereof. The Annual Meeting will be held
at The Executive Conference Center, 8201 Greensboro Drive, Conference Room 3,
McLean, Virginia 22102, on June 30, 2000, at 10:00a.m., local time.
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,
3 AND 4 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 shareholder may revoke this proxy at any time before it is
voted by delivering to the Secretary of the Company wither a written revocation
of the proxy or a duly elected 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.
