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
[X ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-11(c) or
Rule 14a-12
ENTERACTIVE, INC.
(Name of Registrants as Specified in Their Charters)
______________________________________________________________
(Name of Person(s) Filing Proxy Statement, if Other Than
the Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] No fee required.
[ ] Fee computed on table below per Exchange Act Rules
14a-6(i)(1) and 0-11.
(1) Title of each class of securities to which transaction
applies:
_______________________________________________________________
(2) Aggregate number of securities to which
transaction applies:
_______________________________________________________________
(3) Per unit price or other underlying value of
transaction computed pursuant to Exchange Act Rule 0-11
(set forth the amount on which the filing fee is
calculated and state how it was determined)::
_______________________________________________________________
(4) Proposed maximum aggregate value of
transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials:
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[ ] Check box if any part of the fee is offset as
provided by Exchange Act Rule 0-11(a)(2) and identify the
filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement
number, or the form or schedule and the date of its
filing.
(1) Amount previously paid:
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ENTERACTIVE, INC
110 W. 40TH STREET
SUITE 2100
NEW YORK, NY 10018
NOTICE OF
ANNUAL MEETING
TO BE HELD APRIL 3, 1997
To the Stockholders of
ENTERACTIVE, INC.
The Annual Meeting of Stockholders of ENTERACTIVE, INC., a
Delaware corporation (the "Company"), is to be held at the
Westbury Hotel, 15 East 69th Street, New York, New York, 10021 on
Thursday, April 3, 1997, commencing at 10:00 A.M., for the
following purposes:
1. To elect seven directors for the Company to hold office
until the next annual meeting of stockholders and until
their respective successors are duly elected and
qualified;
2. To approve an amendment to the Company's Certificate of
Incorporation increasing the authorized number of
shares of Common Stock;
3. To approve amendments to the Company's 1994 Incentive
and Non-Qualified Stock Option Plan; and
4. To transact such other business as may properly come
before the Annual Meeting.
The accompanying Proxy Statement contains further
information with respect to these matters.
Only stockholders of record at the close of business on
February 3, 1997 are entitled to receive notice of and to vote at
the meeting or any adjournment thereof.
By order of the Board of Directors
Kenneth Gruber
Secretary
New York, New York
March 3, 1997
WHETHER OR NOT YOU PLAN TO ATTEND THE MEETING, PLEASE SIGN AND
DATE THE ENCLOSED PROXY, WHICH IS SOLICITED BY THE BOARD OF
DIRECTORS OF THE COMPANY, AND RETURN IT TO THE COMPANY IN THE
PREADDRESSED ENVELOPE PROVIDED FOR THAT PURPOSE. ANY STOCKHOLDER
MAY REVOKE HIS PROXY AT ANY TIME BEFORE THE MEETING BY WRITTEN
NOTICE TO SUCH EFFECT, BY SUBMITTING A SUBSEQUENTLY DATED PROXY
OR BY ATTENDING THE MEETING AND VOTING IN PERSON.
ENTERACTIVE, INC.
110 W. 40TH STREET
SUITE 2100
NEW YORK, NY 10018
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD THURSDAY, APRIL 3, 1997
This Proxy Statement and form of proxy are first being
mailed to holders of the Company's common stock, $.01 par value
(the "Common Stock"), and holders of the Company's Class A
Preferred Stock, $.01 par value (the "Preferred Stock"),
(collectively, the "stockholders") of Enteractive, Inc. (the
"Company") on or about March 3, 1997, and are furnished in
connection with the solicitation of proxies by the Board of
Directors (the "Board") of the Company, for use at the Annual
Meeting of Stockholders (the "Annual Meeting") to be held at
10:00 A.M. on Thursday, April 3, 1997, at the Westbury Hotel, 15
East 69th Street, New York, New York, 10021, and at any and all
adjournments thereof.
A copy of the Company's Annual Report, including financial
statements for the fiscal year ended May 31, 1996, is being
mailed with this Proxy Statement.
As of February 3, 1997, the record date for the Annual
Meeting (the "Record Date"), there were outstanding 7,679,441
shares of Common Stock. In addition, as of the Record Date,
there were outstanding 6,720 shares of Preferred Stock. Only
holders of record of the Company's Common Stock and Preferred
Stock at the close of business on the Record Date are entitled to
vote at the Annual Meeting. A list of stockholders entitled to
vote at the meeting, arranged alphabetically and showing the
address of each stockholder and the number of shares registered
in the name of each stockholder, will be available March 24, 1997
at the Company's offices located at 110 W. 40th Street, Suite
2100, New York, New York, 10018 for examination by any
stockholder. The list will also be available at the meeting for
examination by any stockholder.
All proxies duly executed and received by the Secretary
prior to the Annual Meeting, unless previously revoked, will be
voted on all matters presented at the Annual Meeting in
accordance with the specifications made in such proxies. Except
as provided below, in the absence of specified instructions,
proxies so received will be voted (i) FOR the election of the
named nominees to the Company's Board, (ii) FOR the approval of
the amendment to the Company's Certificate of Incorporation
increasing the authorized number of shares of Common Stock, and
(iii) FOR the approval of the amendments to the Company's 1994
Incentive and Non-Qualified Stock Option Plan (the "1994 Plan").
The Board does not know of any other matters that may be brought
before the meeting nor does it foresee or have reason to believe
that proxy holders will have to vote for substitute or alternate
nominees. In the event that any other matter should come before
the meeting or any nominee is not available for election, the
persons named in the enclosed proxy will have discretionary
authority to vote all proxies with respect to such matters in
accordance with their best judgment.
The cost of this proxy solicitation will be borne by the
Company. It is expected that the solicitation of proxies will be
primarily by mail, but proxies may also be solicited personally
or by telephone by regular employees of the Company. Proxy
materials may also be distributed through brokers, custodians,
and other nominees or fiduciaries to beneficial owners of Common
Stock and Preferred Stock, and the Company expects to reimburse
such parties for their charges and expenses in connection
therewith.
A proxy may be revoked at any time before being voted by
written notice to such effect received by the Secretary of the
Company before the proxy is voted at the Annual Meeting, by
delivery to the Secretary of the Company of a later dated proxy,
or by a vote cast in person at the Annual Meeting, but no
revocation will affect any vote previously taken.
VOTING RIGHTS
Holders of each share of Common Stock are entitled to one
vote for each share held on all matters. Holders of each share
of Preferred Stock are entitled to 992 votes per share,
aggregating 6,666,240 votes for all outstanding shares of
Preferred Stock. The shares of Common Stock and Preferred Stock
will vote together as a single class on the election of
directors, the amendment to the Certificate of Incorporation, and
the amendments to the 1994 Plan. In addition, the shares of
Common Stock will vote as a separate class on the amendment to
the Certificate of Incorporation.
The holders of a majority of the outstanding shares of
Common Stock and Preferred Stock, whether present in person or
represented by proxy, will constitute a quorum for the election
of directors, the vote on the amendments to the 1994 Plan, any
other matters that may come before the meeting, and, when the
holders of Common Stock and Preferred Stock are voting together
as a single class, for the vote on the amendment to the
Certificate of Incorporation. The holders of a majority of the
outstanding shares of Common Stock, whether present in person or
represented by proxy, will constitute a quorum when such holders
are voting as a separate class on the amendment to the
Certificate of Incorporation. Abstentions are counted as present
in determining whether the quorum requirements are satisfied.
Proxies returned by brokers as "non-votes" on behalf of shares
held in street name because beneficial owners' discretion has
been withheld as to one or more matters on the agenda for the
Annual Meeting will not be treated as present for purposes of
determining a quorum for the Annual Meeting unless they are voted
by the broker on at least one matter on the agenda.
A plurality of the total votes cast by holders of Common
Stock and Preferred Stock, voting together as a single class, is
required for the election of directors. In tabulating the vote
on the election of directors, abstentions will be disregarded and
will have no effect on the outcome of such vote. The affirmative
vote of a majority of the outstanding shares of Common Stock and
Preferred Stock, voting together as a single class, entitled to
vote thereon, together with a majority of the outstanding shares
of Common Stock entitled to vote thereon, voting as a separate
class, is required to approve the amendment to the Company's
Certificate of Incorporation. Accordingly abstentions and broker
non-votes will have the same effect as a negative vote. The
affirmative vote of a majority of the votes cast by holders of
Common Stock and Preferred Stock, voting together as a single
class, is required to approve the amendments to the 1994 Plan.
In tabulating the votes on the amendments to the 1994 Plan,
shares as to which a stockholder abstains are considered shares
entitled to vote on the applicable amendments and therefore an
abstention would have the effect of a vote against the
amendments. Broker non-votes, however, are not considered shares
entitled to vote on the applicable amendments and are not
included in determining whether such amendments are approved.
PRINCIPAL SECURITY HOLDERS
The following table sets forth beneficial ownership of the
Company's Common Stock and Preferred Stock as of February 11,
1997 by (a) each stockholder known by the Company to be the
beneficial owner of five percent or more of the outstanding
Common Stock and Preferred Stock, (b) each director and Named
Executive Officer (as defined below) of the Company individually,
and (c) all directors and executive officers as a group. Except
as otherwise indicated in the footnotes below, (x) the Company
believes that each of the beneficial owners of the Common Stock
and Preferred Stock listed in the table, based on information
furnished by such owner, has sole investment and voting power
with respect to such shares, and (y) where no address is
indicated, the address of the beneficial owner is the address of
the principal executive offices of the Company.
Common Stock Preferred Stock
---------------- --------------------
Name and Address of Number of % of Number % of
Beneficial Owner Shares(1) Class of Shares Class
Barry Rubenstein 4,418,329(2) 41.2% 4,560(2) 67.9%
68 Wheatley Road
Brookville, NY
11545
Woodland Venture 1,074,503(3) 13.0% 560(3) 8.3%
Fund
68 Wheatley Road
Brookville, NY
11545
Seneca Ventures 1,074,503(4) 13.0% 560(4) 8.3%
68 Wheatley Road
Brookville, NY
11545
Woodland Services 1,074,503(5) 13.0% 560(5) 8.3%
Corp.
68 Wheatley Road
Brookville, NY
11545
Woodland Partners 1,074,503(6) 13.0% 560(6) 8.3%
68 Wheatley Road
Brookville, NY
11545
Irwin Lieber 3,385,826(7) 33.3% 4,000(7) 59.5%
767 Fifth Avenue,
45th Floor
New York, NY 10153
21st Century 1,836,522(8) 20.6% 2,000(11) 29.8%
Communications
Foreign Partners,
L.P.
c/o Fiduciary
Trust(Cayman)Limited
P.O. Box 1062
Grand Cayman,
B.W.I.
21st Century 1,836,522(9) 20.6% 2,000(11) 29.8%
Communications
Partners, L.P.
767 Fifth Avenue
45th Floor
New York, NY 10153
21st Century 1,836,522(10) 20.6% 2,000(11) 29.8%
Communications T-E
Partners, L.P.
767 Fifth Avenue
45th Floor
New York, NY 10153
Michael J. Marocco 1,836,522(12) 20.6% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
Barry Lewis 1,836,522(12) 20.6% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
John Kornreich 1,836,522(12) 20.6% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
Harvey Sandler 1,836,522(12) 20.6% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
Andrew Sandler 1,836,522(12) 20.6% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
Barry Fingerhut 3,363,826(13) 33.0% 4,000(13) 59.5%
767 Fifth Avenue
45th floor
New York, NY 10153
Applewood 1,507,304(14) 16.9% 2,000(14) 29.8%
Associates, L.P.
68 Wheatley Road
Brookville, NY
11545
Applewood Capital 1,507,304(14) 16.9% 2,000(14) 29.8%
Corp.
68 Wheatley Road
Brookville, NY
11545
Seth Lieber 1,507,304(14) 16.9% 2,000(14) 29.8%
767 Fifth Avenue
New York, NY 10153
Jonathan Lieber 1,507,304(14) 16.9% 2,000(14) 29.8%
767 Fifth Avenue
New York, NY 10153
Marilyn Rubenstein
68 Wheatley Road
Brookville, NY 1,074,503(15) 13.0% 560(15) 8.3%
11545
The Marilyn and
Barry Rubenstein
Family Foundation 1,074,503(16) 13.0% 560(16) 8.3%
Andrew Gyenes 258,333(17) 3.4% 0 *
Michael Alford 163,275 2.1% 0 *
Ken Gruber 58,333(18) * 0 *
Harrison Weaver 35,000(19) * 0 *
Rino Bergonzi 25,000(20) * 0 *
Peter Gyenes 21,000(21) * 0 *
Randal Hujar 303,651 4.0% 0 *
Steven Fischer 0 * 0 *
John Ramo 0 * 0 *
All directors and 1,153,969(22) 15.0% 0 *
executive
officers as a
group
* less than 1%
(1) Beneficial ownership is determined in accordance with the rules
of the Securities and Exchange Commission and generally includes
any person who, directly or indirectly, through any contract,
arrangement, understanding or otherwise, has or shares voting or
investment power with respect to securities. Shares of Common
Stock issuable upon the exercise of options, warrants and
convertible notes currently exercisable or convertible, or
exercisable or convertible within 60 days are deemed outstanding
for computing the percentage ownership of the person holding such
options or warrants or convertible notes but are not deemed
outstanding for computing the percentage ownership of any other
person.
(2) Based on Amendment Number 3 to a Schedule 13D filed on February
11, 1997 by Barry Rubenstein, Woodland Venture Fund ("Woodland
Fund"), Seneca Ventures ("Seneca"), Woodland Services Corp.
("Woodland Corp."), 21st Century Communications Partners, L.P.
("21st Partners"), 21st Century Communications T-E Partners, L.P.
("21st T-E"), 21st Century Communications Foreign Partners, L.P.
("21st Foreign"), Michael J. Marocco, Barry Lewis, John
Kornreich, Harvey Sandler, Andrew Sandler, Barry Fingerhut, Irwin
Lieber, Woodland Partners, Applewood Associates, L.P.
("Applewood"), Applewood Capital Corp. ("Applewood Capital"),
Seth Lieber, Jonathan Lieber, Marilyn Rubenstein, The Marilyn and
Barry Rubenstein Family Foundation (the "Foundation"), and Brian
Rubenstein (the "February 1997 13D"), Barry Rubenstein has sole
beneficial ownership of 332,500 shares of Common Stock (including
185,000 shares of Common Stock underlying presently exercisable
options). Mr. Rubenstein may also be deemed to share beneficial
ownership of 4,085,829 shares of Common Stock by virtue of being:
(i) a stockholder, officer and director of InfoMedia Associates,
Ltd. ("InfoMedia") which is a general partner of 21st Partners,
21st T-E and 21st Foreign which collectively hold 1,836,522
shares of Common Stock (including 1,250,000 shares of Common
Stock underlying presently exercisable warrants issued in
connection with the Company's public offering in May 1996 (the
"Common Stock Warrants")); (ii) a trustee of the Foundation which
holds 123,237 shares of Common Stock (including 20,000 shares of
Common Stock underlying presently exercisable Common Stock
Warrants); and (iii) a general partner of each of Applewood,
Seneca, the Woodland Fund and Woodland Partners which hold an
aggregate of 2,126,070 shares of Common Stock (including
1,580,000 shares of Common Stock underlying presently exercisable
Common Stock Warrants). In addition, Mr. Rubenstein shares
beneficial ownership of 4,560 shares of Preferred Stock with the
above listed entities. Mr. Rubenstein disclaims beneficial
ownership of these securities, except to the extent of his equity
interest therein.
(3) Based on the February 1997 13D, the Woodland Fund has sole
beneficial ownership of 310,844 shares of Common Stock (including
150,000 shares of Common Stock underlying presently exercisable
Common Stock Warrants). The Woodland Fund may also be deemed to
share beneficial ownership of 763,659 shares of Common Stock
(including 200,000 shares of Common Stock underlying presently
exercisable Common Stock Warrants) with Seneca, Woodland Corp.,
Woodland Partners, and the Foundation. In addition, the Woodland
Fund has sole beneficial ownership of 240 shares of Preferred
Stock and shares beneficial ownership of 320 shares of Preferred
Stock with the above listed entities. The Woodland Fund
disclaims beneficial ownership of these securities, except to the
extent of its equity interest therein.
(4) Based on the February 1997 13D, Seneca has sole beneficial
ownership of 207,922 shares of Common Stock (including 100,000
shares of Common Stock underlying presently exercisable Common
Stock Warrants). Seneca may also be deemed to share beneficial
ownership of 866,581 shares of Common Stock (including 250,000
shares of Common Stock underlying presently exercisable Common
Stock Warrants) with the Woodland Fund, Woodland Corp., Woodland
Partners, and the Foundation. In addition, Seneca has sole
beneficial ownership of 160 shares of Preferred Stock and shares
beneficial ownership of 400 shares of Preferred Stock with the
above listed entities. Seneca disclaims beneficial ownership of
these securities, except to the extent of its equity interest
therein.
(5) Based on the February 1997 13D, Woodland Corp. shares beneficial
ownership of 1,074,503 shares of Common Stock (including 350,000
shares of Common Stock underlying presently exercisable Common
Stock Warrants) and 560 shares of Preferred Stock with the
Woodland Fund, Seneca, Woodland Partners, and the Foundation.
Woodland Corp. disclaims beneficial ownership of these
securities, except to the extent of its equity interest therein.
(6) Based on the February 1997 13D, Woodland Partners has sole
beneficial ownership of 100,000 shares of Common Stock (including
100,000 shares of Common Stock underlying presently exercisable
Common Stock Warrants). Woodland Partners may also be deemed to
share beneficial ownership of 974,503 shares of Common Stock
(including 250,000 shares of Common Stock underlying presently
exercisable Common Stock Warrants) with the Woodland Fund,
Seneca, Woodland Corp., and the Foundation. In addition,
Woodland Partners has sole beneficial ownership of 160 shares of
Preferred Stock and shares beneficial ownership of 400 shares of
Preferred Stock with the above listed entities. Woodland
Partners disclaims beneficial ownership of these securities,
except to the extent of its equity interest therein.
(7) Based on the February 1997 13D, Irwin Lieber has sole beneficial
ownership of 42,000 shares of Common Stock (including 37,000
shares of Common Stock underlying presently exercisable Common
Stock Warrants). By virtue of being a stockholder, officer and
director of InfoMedia and a general partner of Applewood, Irwin
Lieber may be deemed to share beneficial ownership of 3,343,826
shares of Common Stock (including 2,500,000 shares of Common
Stock underlying presently exercisable Common Stock Warrants).
In addition, Mr. Lieber shares beneficial ownership of 4,000
shares of Preferred Stock with the above listed entities. Mr.
Lieber disclaims beneficial ownership of these securities, except
to the extent of his equity ownership therein.
(8) Based on the February 1997 13D, this amount includes 48,896
shares of Common Stock and 114,000 shares of Common Stock
underlying presently exercisable Common Stock Warrants. 21st
Foreign disclaims beneficial ownership of 398,490 shares of
Common Stock and 847,500 shares of Common Stock underlying
presently exercisable Common Stock Warrants owned by 21st
Partners and 139,136 shares of Common Stock and 288,500 shares of
Common Stock underlying presently exercisable Common Stock
Warrants owned by 21st T-E.
(9) Based on the February 1997 13D, this amount includes 398,490
shares of Common Stock and 847,500 shares of Common Stock
underlying presently exercisable Common Stock Warrants. 21st
Partners disclaims beneficial ownership of 139,136 shares of
Common Stock and 288,500 shares of Common Stock underlying
presently exercisable Common Stock Warrants owned by 21st T-E and
48,896 shares of Common Stock and 114,000 shares of Common Stock
underlying presently exercisable Common Stock Warrants owned by
21st Foreign.
(10) Based on the February 1997 13D, this amount includes 139,136
shares of Common Stock and 288,500 shares of Common Stock
underlying presently exercisable Common Stock Warrants. 21st T-E
disclaims beneficial ownership 398,490 shares of Common Stock and
847,500 shares of Common Stock underlying presently exercisable
Common Stock Warrants owned by 21st Partners and 48,896 shares of
Common Stock and 114,000 shares of Common Stock underlying
presently exercisable Common Stock Warrants owned by 21st
Foreign.
(11) Beneficial ownership of these shares of Preferred Stock is shared
by 21st Foreign, 21st T-E, and 21st Partners.
(12) Based on the February 1997 13D, Messrs. Marocco, Lewis,
Kornreich, H. Sandler and A. Sandler are each the sole
stockholder, officer and director of an entity which is a general
partner of an entity which is a general partner of 21st Partners,
21st T-E and 21st Foreign. Accordingly, they may each be deemed
to share beneficial ownership of 1,836,522 shares of Common Stock
(including 1,250,000 shares of Common Stock underlying presently
exercisable Common Stock Warrants) and 2,000 shares of Preferred
Stock which are collectively held by 21st Partners, 21st T-E and
21st Foreign. Each individual disclaims beneficial ownership of
these securities, except to the extent of his equity interest
therein.
(13) Based on the February 1997 13D, Barry Fingerhut has sole
beneficial ownership of 20,000 shares of Common Stock underlying
Common Stock Warrants. By virtue of being a stockholder, officer
and director of InfoMedia and a general partner of Applewood,
Barry Fingerhut may be deemed to share beneficial ownership of
3,343,826 shares of Common Stock (including 2,500,000 shares of
Common Stock underlying presently exercisable Common Stock
Warrants) and 4,000 shares of Preferred Stock. Mr. Fingerhut
disclaims beneficial ownership of these securities, except to the
extent of his equity interest therein.
(14) Based on the February 1997 13D, these amounts include 257,304
shares of Common Stock, 1,250,000 shares of Common Stock
underlying Common Stock Warrants and 2,000 shares of Preferred
Stock beneficially owned by Applewood. By virtue of being a
general partner of Applewood, Applewood Capital may be deemed to
share beneficial ownership of these shares. In addition, by
virtue of being officers of Applewood Capital, Seth and Jonathan
Lieber may also be deemed to share beneficial ownership of these
shares. Applewood Capital, Seth Lieber, and Jonathan Lieber each
disclaim beneficial ownership of these securities, except to the
extent of their equity interests therein.
(15) Based on the February 1997 13D, by virtue of being a general
partner of Woodland Partners, a trustee of the Foundation, and
the wife of Barry Rubenstein, Marilyn Rubenstein may be deemed to
share beneficial ownership of 1,074,503 shares of Common Stock
(including 350,000 shares of Common Stock underlying presently
exercisable Common Stock Warrants) and 560 shares of Preferred
Stock. Ms. Rubenstein disclaims beneficial ownership of these
securities, except to the extent of her equity interest therein.
(16) Based on the February 1997 13D, the Foundation has sole
beneficial ownership of 123,237 shares of Common Stock (including
20,000 shares of Common Stock underlying presently exercisable
Common Stock Warrants). In addition, the Foundation may be
deemed to share beneficial ownership of 951,266 shares of Common
Stock (including 350,000 shares of Common Stock underlying
presently exercisable Common Stock Warrants) and 560 shares of
Preferred Stock with Mr. and Ms. Rubenstein, the Woodland Fund,
Seneca, Woodland Corp. and Woodland Partners. The Foundation
disclaims beneficial ownership of these securities, except to the
extent of its equity interest therein.
(17) Consists of 258,333 shares of Common Stock issuable upon exercise
of presently exercisable options.
(18) Consists of 58,333 shares of Common Stock issuable upon exercise
of presently exercisable options.
(19) Consists of 20,000 shares of Common Stock issuable upon exercise
of presently exercisable options and 15,000 shares of Common
Stock issuable upon exercise of presently exercisable options
granted pursuant to the 1995 Stock Option Plan for Outside
Directors (the "Outside Directors' Plan"). Excludes 50,000
presently exercisable options held by The Continuum Group, Inc.,
which options Mr. Weaver disclaims beneficial ownership of.
(20) Consists of 5,000 shares of Common Stock owned by Mr. Bergonzi,
5,000 shares of Common Stock issuable upon exercise of presently
exercisable Common Stock Warrants and 15,000 shares of Common
Stock issuable upon exercise of presently exercisable options
granted pursuant to the Outside Directors' Plan.
(21) Consists of 3,000 shares of Common Stock owned by Mr. Peter
Gyenes, 3,000 shares of Common Stock issuable upon exercise of
presently exercisable Common Stock Warrants and 15,000 shares of
Common Stock issuable upon exercise of presently exercisable
options granted pursuant to the Outside Directors' Plan.
(22) Also, includes presently exercisable options to purchase 28,510
shares of Common Stock and 564,518 shares of Common Stock held by
certain executive officers who are not Named Executive Officers.
ELECTION OF DIRECTORS
Seven directors are to be elected at the Annual Meeting to
hold office until the next annual meeting of stockholders and until
their respective successors shall have been elected and qualified.
Except as herein stated, the proxies solicited hereby will be voted
FOR the election of the seven nominees listed below, unless
otherwise directed. Each nominee elected is expected to serve
until the next annual meeting and until his successor shall be duly
elected and qualified.
The Board has been informed that all persons listed below are
willing to serve as directors, but in case any one or more of the
nominees is unable or unwilling to stand for election or serve if
elected, the named proxies will vote for such person or persons as
they in their discretion may choose to replace any such nominee.
The Board has no reason to believe that any nominees will be unable
or unwilling to stand for election or serve if elected.
THE BOARD UNANIMOUSLY RECOMMENDS A VOTE IN
FAVOR OF THE ELECTION OF THE BELOW LISTED
NOMINEES AS DIRECTORS
The name, age, principal occupation for the last five years,
selected biographical information, and period of previous service
as a director of the Company with respect to each such nominee are
set forth below. The principal occupations listed refer to
positions with the Company unless otherwise indicated.
Name Age Position Director
Since
Andrew Gyenes 61 Chairman of the Board and 1994
Chief Executive Officer
Michael Alford 51 Vice President, Executive 1994
Producer and Director
Rino Bergonzi 51 Director 1995
Peter Gyenes 51 Director 1995
Harrison 65 Director 1993
Weaver
Randal Hujar 37 Vice President, Marketing and
Sales
Steven Fischer 51
Andrew Gyenes has been Chairman of the Board and Chief
Executive Officer of the Company since May 1994. He was Chief
Executive Officer, President and a director of the Company from
January 1994 through May 1994. For more than five years before
joining the Company, Mr. Gyenes was Vice President of Gyenes & Co.,
a computer software consulting company, and Marketing Manager of
Ann-Mar Manufacturing, Inc. ("Ann-Mar"), a family owned textile
company. Mr. Gyenes continued in both positions on a part-time
basis through January 1995, and since January 1995, has been a
consultant to Ann-Mar. Most of Mr. Gyenes' career has been in the
computer industry, including positions with Warner Communications
(last serving as an Assistant Vice President responsible for
Worldwide Information Systems), with IBM Corporation (last serving
as Eastern Regional Manager for Scientific Systems at Service
Bureau Corporation, a former wholly-owned IBM subsidiary), and with
Western Union (last serving as Assistant Vice President of Data
Processing).
Michael Alford has been a director of the Company since May
1994. Since July 1996, he has been Vice President, Executive
Producer. From 1994 through 1996, he was Vice President,
Development of the Company. From 1992 through May 1994, he was the
Vice President, Development and a director of Sonic Images
Production, Inc., the Company's predecessor in interest. Prior to
1992, Mr. Alford was department head of Versar Incorporated, an
environmental consulting firm, for more than five years.
Rino Bergonzi has served as a director of the Company since
January 1995. Since November 1993, Mr. Bergonzi has served as Vice
President and Division Executive of Corporate Information
Technology Services at AT&T, and has 25 years of experience in the
information services field that includes working for such companies
as Western Union, United Parcel Service Information Services and
EDS Corp.
Peter Gyenes has served as a director of the Company since
January 1995. Mr. Gyenes has served as Executive Vice President,
International Operations and Worldwide Sales of VMARK Software,
Inc. ("VMARK") since August 1996. From May 1996 to August 1996, he
served as Executive Vice President, International Operations of
VMARK. Mr. Gyenes served as President and Chief Executive Officer
of Racal InterLan, Inc., a leading supplier of local area
networking products, from May 1995 to May 1996. Since January
1986, he has also served as a director of Axis Computer Systems,
Inc. From January 1994 to April 1995, he was President of the
Americas Division of Fibronics International, Inc. and, from August
1990 to December 1993, Vice President and General Manager of Data
General Corporation's international operations and mini-computer
business unit. Mr. Gyenes has also held management, marketing,
sales and technical positions with Encore Computer, Prime Computer,
Xerox and IBM. Mr. Peter Gyenes is the brother of Andrew Gyenes,
Chairman of the Board and Chief Executive Officer of the Company.
Harrison Weaver has been a director of the Company since
December 1993. He was a Vice President of the Company from
December 1993 through May 1994. He has been a director of The
Continuum Group, Inc. ("Continuum") since 1987, the Chairman of the
Board and Chief Executive Officer of Continuum since December 1991
and the President of Continuum since August 1994. He is the
founder and President of Weaver Associates, a diversified printing
concern located in Cranford, New Jersey, which has been in business
for over 25 years.
Randal Hujar has been a Vice President of the Company since
February 29, 1996 and Vice President of Marketing and Sales since
April 1996. Prior to joining the Company, Mr. Hujar was President,
Chief Executive Officer, and a director of Lyriq International
Corp. ("Lyriq") from its founding in December 1991 until the
Company's acquisition of Lyriq in February, 1996. See "Certain
Transactions."
Steven Fischer has served as Senior Vice President and
Regional Manager of Transamerica Business Credit Corporation since
March 1992. From February 1981 through March 1992, Mr. Fischer
served as Vice President and Regional Manager of Citibank, N.A.
Mr. Fischer has served as a director of ScanSource Inc. since
December 1995.
Pursuant to the terms of an Agreement and Plan of Merger dated
as of February 28, 1996 (the "Merger Agreement") by and among the
Company, Enteractive Acquisitions Corp., Lyriq, Randal Hujar, and
Gary Skiba whereby the Company acquired Lyriq in a stock for stock
merger, the Company agreed to use its best efforts to have one
designee named jointly by Messrs. Hujar and Skiba elected to the
Board of the Company as soon as practicable following the closing
of the merger. Such obligation continues in effect until the
earlier of (i) February 28, 1998, and (ii) the occurrence of two
consecutive profitable fiscal quarters for the Company. Under the
terms of the Merger Agreement, the designee named by Messrs. Hujar
and Skiba must be reasonably satisfactory to the Company, and the
first designee is to be Mr. Hujar. The Merger Agreement also
provides that Messrs. Hujar and Skiba will be invited to attend
meetings of the Board of the Company in their capacity as officers
of the Company, except where such may be unwarranted under the
circumstances, until Mr. Hujar first becomes a director of the
Company. A further discussion of the merger is provided in
"Certain Transactions."
BOARD MEETINGS AND STANDING COMMITTEES
The Board held 11 meetings during the Company's last fiscal
year ended May 31, 1996.
Messrs. Bergonzi and Weaver are members of the Audit
Committee, which recommends to the Board the appointment of the
independent auditors and reviews the results and scope of the audit
and the other services provided by the Company's independent
accountants. The Audit Committee held no meetings during the
Company's last fiscal year.
Messrs. Bergonzi and Weaver are members of the Compensation
and Stock Option Committee, which is charged with determining the
compensation of the officers of the Company and administering the
1994 Plan, the 1994 Consultant Stock Option Plan, and the Outside
Directors' Plan. The Compensation and Stock Option Committee held
2 meeting during the Company's last fiscal year.
The Company does not have a standing nominating committee.
Each of the incumbent directors attended 75% or more of the
aggregate number of meetings of the Board and committees on which
he served during the fiscal year ended May 31, 1996.
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934, as
amended, requires the Company's directors, executive officers, and
persons who own more than 10% of a registered class of the
Company's equity securities, to file initial reports of ownership
and reports of changes in ownership of the Common Stock and other
equity securities of the Company with the Securities and Exchange
Commission (the "SEC"). Executive officers, directors and
beneficial owners of greater than 10% of the Common Stock are
required by SEC regulation to furnish the Company with copies of
all Section 16(a) forms they file.
To the Company's knowledge, based solely on its review of the
copies of such forms furnished to the Company and written
representations from certain reporting persons that no other
reports on forms were required for such persons, during the fiscal
year ended May 31, 1996 all Section 16(a) filing requirements
applicable to its officers, directors and greater than 10% owners
were complied with.
COMPENSATION OF DIRECTORS
Directors do not receive a fee for attending Board or
committee meetings. All directors are reimbursed for all ordinary
travel expenses related to attendance at Board or committee
meetings.
Under the terms of the Outside Directors' Plan, each of
Messrs. Bergonzi, Peter Gyenes and Weaver (being all of the
non-employee directors) were granted non-qualified options to
purchase 5,000 shares of Common Stock on January 1, 1995, subject
to stockholder approval of the Outside Directors' Plan. Pursuant
to the terms of the Outside Directors' Plan, each non-employee
director will be granted on January 1 of each year, non-qualified
stock options to purchase 5,000 shares of Common Stock, provided
the director is serving on the Board on the date of the grant.
Grants under the Outside Directors' Plan will be 100% vested as of
the date of grant.
No other director receives compensation for his services as
such.
EXECUTIVE OFFICERS
The executive officers of the Company as of February 3, 1997, are
as follows:
Name Age Position
Andrew Gyenes..... 61 Chairman of the Board and Chief Executive
Officer
Michael Alford.... 51 Vice President, Executive Producer and
Director
Kenneth Gruber.... 44 Vice President, Chief Financial Officer and
Secretary
Randal Hujar...... 37 Vice President, Marketing and Sales
Gary Skiba........ 34 Vice President, Chief Technology Officer
Jon Singer..........33 Vice President, Director of Development
Andrew Gyenes, Chairman of the Board and Chief Executive
Officer. See information under "Election of Directors."
Michael Alford, Vice President, Executive Producer. See
information under "Election of Directors."
Kenneth Gruber has been Vice President and Chief Financial
Officer of the Company since November 7, 1994. He has been
Secretary of the Company since September 1995. Prior to joining
the Company, Mr. Gruber was employed by Children's Television
Workshop ("CTW") since 1984, and served as CTW's Vice President and
Chief Financial Officer from 1993 to November 1994, as CTW's Vice
President of Finance and Administration from 1989 to 1993 and as
Vice President of Finance from 1988 to 1989.
Jon Singer has been Vice President, Director of Development
since July, 1996. From May 1994 to June 1996, he was the Vice
President of Software Development for the Company. From December
1992 to May 1994, he held a similar position with Sonic Images
Production, Inc. ("Sonic"). From December 1990 to December 1992 he
was a software engineer with Sonic.
Randal Hujar, Vice President, Marketing and Sales. See
information under "Election of Directors."
Gary Skiba has been a Vice President of the Company since
February 29, 1996 and Chief Technology Officer since July 16, 1996.
Prior to joining the Company, Mr. Skiba was Chairman of the Board
and Chief Technical Officer of Lyriq from its founding in December
1991 through the Company's acquisition of Lyriq in February, 1996.
See "Certain Transactions."
EXECUTIVE COMPENSATION
The following table sets forth, for fiscal 1996, 1995 and
1994, all compensation awarded to, earned by or paid to Andrew
Gyenes, the Chairman of the Board and Chief Executive Officer of
the Company, Kenneth Gruber, Vice President, Chief Financial
Officer and Secretary and John Ramo, formerly President and Chief
Operating Officer, the only executive officers of the Company whose
annual salary and bonus exceeded $100,000 during the fiscal year
ended May 31, 1996 (the "Named Executive Officers.")
SUMMARY COMPENSATION TABLE
Annual Long-Term
Compensation Compensation
Awards
Securities
Name and Other Underlying
Principal Fiscal Salary Bonus Annual Options
Position Year ($) ($) Compensa-
tion
Andrew Gyenes 1996 $100,000 $16,369(1) 100,000 (2)
Chairman of 1995 $100,000
the Board 1994 $ 40,705
and Chief 225,000 (3)
Executive
Officer
John Ramo 1996 $105,000 $14,763(5)
President and 1995 $105,000
Chief 1994 $104,331
Operating
Officer (4)
Kenneth Gruber 1996 $ 80,000 $20,00 $14,091(7) 25,000 (8)
Vice 1995 $ 11,667 0
President, 1994 75,000 (9)
Chief
Financial
Officer (6)
(1) This amount includes $7,104 that the Company paid for a leased
car and related insurance and $8,580 the Company paid towards
Mr. Gyenes' health insurance premium.
(2) Represents options to purchase 100,000 shares of the Company's
Common Stock granted on June 12, 1995 under the 1994 Plan, of
which one-third became exercisable June 12, 1996. None of such
options have been exercised.
(3) Represents options to purchase 125,000 shares of Common Stock
granted on January 3, 1994 under the 1994 Plan, which became
exercisable January 3, 1995 and 100,000 options to purchase
Common Stock granted February 1, 1994 under the 1994 Plan,
which became exercisable February 1, 1995. None of such
options have been exercised.
(4) Mr. Ramo served as President and Chief Executive Officer of
the Company until his resignation from such positions on
August 1, 1996. At that time, the Company and Mr. Ramo agreed
to the terms of a separation agreement under which Mr. Ramo
received a lump-sum payment of $132,461 representing the
remaining balance of compensation due to him under his
employment agreement through its original expiration date of
October 20, 1997. See "Certain Transactions."
(5) This amount includes $5,436 that the Company paid for a leased
car and related insurance and $4,364 the Company paid towards
Mr. Ramo's life insurance premiums.
(6) Mr. Gruber's employment commenced on November 7, 1994.
(7) This amount includes $6,807 that the Company paid for a leased
car and related insurance and $7,247 the Company paid towards
Mr. Gruber's health insurance premium.
(8) Represents options granted to purchase 25,000 shares of Common
Stock on June 12, 1995 under the 1994 Plan, of which one-third
became exercisable June 12, 1996. None of such options have
been exercised.
(9) Represents options to purchase 75,000 shares of Common Stock
granted on November 7, 1994 under the 1994 Plan, of which
one-third became exercisable November 7, 1995 and one-third
became exercisable in November 1996. None of such options have
been exercised.
STOCK OPTION GRANTS
The following table provides further information with respect
to the options granted in fiscal 1996 to Mr. Gyenes and Mr. Gruber
under the 1994 Plan.
STOCK OPTION TABLE
% of Total
Number of Options
Name and Securities Granted to
Principal Underlying Employees in Exercise or Expiration
Position Option Fiscal Year Base Price Date
Andrew Gyenes
Chairman of the
Board and Chief
Executive
Officer 100,000 63% $3.00 6/12/00
Kenneth Gruber
Vice President,
Chief Financial
Officer 25,000 16% $3.00 6/12/00
FISCAL YEAR END OPTION VALUES
No options were exercised by the Named Executive Officers
during fiscal 1996. The following table shows, for Mr. Gyenes and
Mr. Gruber, the number of shares covered by both exercisable and
unexercisable employee stock options as of May 31, 1996, and the
values for "in-the-money" options, which represent the positive
spread between the exercise price of any outstanding stock option
and the price of the Common Stock as of May 31, 1996, which was
$4.375.
FISCAL YEAR END OPTION VALUES
Number of Securities Value of Unexercised
Underlying Unexer- in-the Money Options
cised Options at FY-End ($)
at FY End (#) Exer- Exercisable/
Name cisable/Unexercisable Unexercisable
Andrew Gyenes 258,333/66,667 $501,458/$91,667
Kenneth Gruber 33,333/66,667 $27,083/$54,167
EMPLOYMENT CONTRACTS
The Company entered into an employment agreement with Andrew
Gyenes dated January 3, 1994, as amended, which expires October 20,
1997. Mr. Gyenes has agreed to devote such of his working time and
attention to the business of the Company as the Board deems
necessary for him to effectively perform his duties under his
agreement. Mr. Gyenes currently serves as a consultant to Ann-Mar
Manufacturing Inc., which is engaged in textiles, and is permitted
by the terms of his agreement to continue to serve in such capacity
so long as such activity will not prevent him from performing his
obligations on behalf of the Company. Mr. Gyenes has also agreed
not to compete with the business of the Company for a period of one
year following termination of his employment agreement. Pursuant
to his employment agreement, Mr. Gyenes is entitled to receive an
annual salary of $100,000. In addition, pursuant to the employment
agreement, Mr. Gyenes received options under the 1994 Plan to
purchase 125,000 shares of Common Stock at an exercise price of
$2.35 per share, which are currently exercisable.
Mr. Ramo served as President of the Company under an
employment agreement which had an expiration date of October 20,
1997. Upon Mr. Ramo's resignation from his positions as President,
Chief Operating Officer and director of the Company on August 1,
1996, Mr. Ramo and the Company terminated his employment agreement.
Pursuant to the terms of the separation agreement, Mr. Ramo may not
compete with the business of the Company before May 21, 1998. See
"Certain Transactions."
CERTAIN TRANSACTIONS
In January 1996, the Company consummated a $2,700,000 bridge
financing (the "January 1996 Private Placement")in which 21st
Foreign, 21st Partners, 21st T-E, Seneca, Woodland Fund, the
Foundation, Applewood and Dalewood Associates, L.P. ("Dalewood")
purchased $100,000, $850,000, $300,000, $100,000, $200,000,
$100,000, $250,000 and $200,000 principal amount of Unsecured
Convertible Promissory Notes ("Convertible Notes"), respectively
and 20,000, 170,000, 60,000, 20,000, 40,000, 20,000, 50,000 and
40,000 warrants (the "January 1996 Warrants"), respectively. Upon
the consummation of the Company's public offering in May 1996, all
of the January 1996 Warrants were converted into the same number of
Common Stock Warrants. In addition, all of the Convertible Notes
held by 21st Foreign, 21st Partners, 21st T-E, Applewood, Seneca
and Woodland Fund were converted into (a) 32,922; 279,835; 98,765;
82,305; 32,922; and 65,844 shares of Common Stock, respectively,
and (b) 65,844; 559,671; 197,531; 164,608; 65,844; and 131,688
Common Stock Warrants, respectively. The $100,000 principal amount
of Convertible Notes held by the Foundation and the $200,000
principal amount of Convertible Notes held by Dalewood were not
converted, but instead, were paid in full by the Company. The
Common Stock Warrants are presently exercisable into one share of
Common Stock for each Common Stock Warrant. The Company was
advised that on May 16, 1996 such entities sold Common Stock
Warrants held by them. A further description of Mr. Rubenstein's
relationship with the above-described entities is provided in
"Principal Security Holders."
In February 1996, the Company acquired Lyriq, a developer and
publisher of interactive multimedia software, through a merger in
which Lyriq became a wholly-owned subsidiary of the Company.
Pursuant to the terms of the Merger Agreement, Messrs. Hujar and
Skiba received 303,651 and 310,867 shares of the Company's Common
Stock, respectively, upon the closing of the merger. In addition,
Messrs. Hujar and Skiba became executive officers of the Company.
In May 1996, the Company repurchased under a Stock Purchase
Agreement dated December 28, 1995, an aggregate of 1,000,000 shares
of Common Stock, for an aggregate purchase price of $1,000,000,
from John Ramo, Jolie Barbiere, Zenon Slawinski and Michael Alford,
each of whom, at the time, was a director and/or executive officer
of the Company. Under the terms of the purchase agreement, one
third of the purchase price was paid at the closing and the balance
was to be paid on the first and second anniversaries of the
closing. Of the aggregate amount, the Company purchased 347,138
shares from Mr. Ramo, 315,271 shares from Ms. Barbiere, 216,961
shares from Mr. Slawinski and 120,630 shares from Mr. Alford.
In August 1996, the Company entered into separation agreements
with John Ramo, President, Chief Operating Officer and a director
of the Company, and Mr. Ramo's wife, Jolie Barbiere, a vice
president and director of the Company. Pursuant to the separation
agreements: Mr. Ramo resigned his officer positions and received a
lump sum payment of $132,461 representing the remaining balance of
compensation due him under his employment agreement through its
original termination date of October 20, 1997; Ms. Barbiere's
employment agreement, which expired July 16, 1996, was not renewed,
and she received a lump sum severance payment of $40,000; and both
Mr. Ramo and Ms. Barbiere resigned as members of the Board. In
addition, the parties agreed that a substantial portion of the
remaining payments due under the Stock Purchase Agreement, in
respect of the Common Stock purchased from Mr. Ramo and Ms.
Barbiere, would be accelerated. As part of Mr. Ramo's and Ms.
Barbiere's separation agreements, a stockholders agreement by and
among the Company, Andrew Gyenes, John Ramo, Jolie Barbiere, Zenon
Slawinski and Michael Alford, which agreement provided for certain
rights of refusal with respect to the issuance of Company
securities and certain rights with respect to the election of
directors, was terminated. The Company also entered into a
separation agreement with Zenon Slawinski in August 1996. Pursuant
to the separation agreement, Mr. Slawinski's employment agreement,
which expired July 15, 1996, was not renewed and he received a lump
sum severance payment of $40,000. No payments due Mr. Slawinski
under the Stock Purchase Agreement were accelerated at that time.
In October 1996, the Company agreed to further accelerate the
remaining amounts due Mr. Ramo and Ms. Barbiere and to accelerate
the remaining amounts due Mr. Slawinski under the Stock Purchase
Agreement if GKN Securities Corp. ("GKN") could locate a buyer for
all of the remaining shares of the Company's Common Stock then
owned by Mr. Ramo, Ms. Barbiere, and Mr. Slawinski at a specified
purchase price. In January 1997, Mr. Ramo, Ms. Barbiere and Mr.
Slawinski sold such shares, through GKN, and the Company paid Mr.
Ramo, Ms. Barbiere and Mr. Slawinski approximately $160,000,
$175,000 and $148,000, respectively, which amounts included accrued
interest, in full satisfaction of its obligations under the Stock
Purchase Agreement.
All of the above transactions resulted from arms-length
negotiations and were approved by a majority of the independent
members of the Board who did not have interests in the
transactions.
AMENDMENT OF THE CERTIFICATE OF INCORPORATION TO INCREASE THE
NUMBER OF AUTHORIZED SHARES OF COMMON STOCK TO 50,000,000
The Board has adopted a resolution providing that Article
Fourth of the Certificate of Incorporation be amended to increase
the number of shares of Common Stock which the Company is
authorized to issue from 30,000,000 to 50,000,000 shares, subject
to stockholder approval. The full text of the proposed amendment
is attached to this Proxy Statement as Exhibit A.
As of February 3, 1997, there were 7,679,441 shares of Common
Stock issued and outstanding, and no shares of Common Stock were
held as treasury stock. 2,369,390 unexercised options for
2,369,390 shares of Common Stock were outstanding. 962,610 shares
of Common Stock were reserved for future option grants under the
plans and 10,271,468 shares of Common Stock were reserved for
issuance upon exercise of the Common Stock Warrants. In addition,
6,720 shares of Preferred Stock are outstanding and are convertible
commencing on April 30, 1998, at the holders' option, into
6,666,240 shares of Common Stock and such number of shares of
common stock have been reserved for conversion of the Preferred
Stock. The additional 20,000,000 shares of Common Stock, if
approved, would increase the number of authorized, unissued, and
unreserved shares to 22,050,851. The additional shares would be
part of the existing class of Common Stock and, if and when issued,
would have the same rights and privileges as the shares of Common
Stock presently outstanding.
Although the Board has no present plans for the issuance of
Common Stock, the additional shares of Common Stock that would be
authorized but unissued and not reserved for issuance would be
available to the Company for issuance in connection with general
corporate purposes, including, without limitation, stock splits,
stock dividends, dividend reinvestment plans and other employee
benefit plans, raising additional capital and acquisitions. The
Board believes that additional authorized Common Stock would give
the Company greater flexibility in executing its business
strategies by allowing the Company to issue shares of Common Stock
without the expense and delay of a stockholders' meeting to
authorize additional shares if and when the need arises. However,
the Company has no agreements, understandings, commitments or plans
with respect to the sale or issuance of additional shares of Common
Stock other than pursuant to its 1994 Plan, 1994 Stock Option Plan
for Consultants, and its Outside Directors' Plan.
The proposed amendment of the Certificate of Incorporation is
not being recommended in response to any specific effort of which
management is aware to obtain control of the Company. However, it
should be noted that shares of authorized and unreserved Common
Stock could be issued to a holder who might thereby obtain
sufficient voting power to create voting impediments that would
frustrate third parties seeking to gain control of the Company
against the wishes of the Board, whether or not such a takeover bid
is in the best interest of the stockholders.
It should also be noted that the issuance of additional shares
of Common Stock by the Company may, depending upon the
circumstances under which the shares are issued, reduce
stockholders' equity per share and may reduce the percentage of
ownership of Common Stock of existing stockholders. The issuance
of additional shares of Common Stock in payment of a stock dividend
or to effect a stock split, however, would not reduce the
percentage of ownership of the Company by existing stockholders or
reduce any stockholder's interest in the earnings of the Company.
Stockholders have no preemptive right to subscribe for or purchase
any additional shares of Common Stock issued by the Company.
The additional shares of Common Stock would be available for
issuance without further action by the stockholders and without the
accompanying delay and expense involved in calling a special
meeting of stockholders, unless such action is required by
applicable law or the rules of any stock exchange on which the
Company's securities may be listed. The Company's Common Stock is
presently traded on the NASDAQ SmallCap Market and the Boston
Stock Exchange.
Proxies received which contain no instructions to the contrary
will be voted FOR approval of the proposed amendment to the
Certificate of Incorporation. The affirmative vote of a majority
of the outstanding shares of Common Stock and Preferred Stock,
voting together as a single class, entitled to vote thereon,
together with the majority of the outstanding shares of Common
Stock entitled to vote thereon, voting as a separate class, is
required for its approval. If the proposal is approved by the
stockholders, the amendment to the Certificate of Incorporation
would become effective upon the filing of the amendment of the
Certificate of Incorporation with the Secretary of State of
Delaware, which would occur as soon as practicable following the
approval of the proposal by the stockholders.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL OF THE
AMENDMENT TO THE CERTIFICATE OF INCORPORATION INCREASING THE AUTHORIZED
NUMBER OF SHARES OF COMMON STOCK
APPROVAL OF AMENDMENTS TO THE COMPANY'S
1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
GENERAL
The Company has adopted the 1994 Incentive and Non-Qualified
Stock Option Plan (the "1994 Plan") to attract, retain and provide
incentive to employees. Under the 1994 Plan, options to purchase
an aggregate of 1,500,000 shares of Common Stock (subject to
adjustment in the event of certain corporate events) may be granted
from time to time to employees of the Company or of any subsidiary.
SUMMARY OF THE AMENDMENTS TO THE INCENTIVE PLAN
The Board has approved an amendment to the 1994 Plan, subject
to stockholder approval, which would increase the number of shares
of Common Stock authorized for issuance upon exercise of the
options granted pursuant to the 1994 Plan from 1,500,000 to
2,500,000. The Board believes that the proposed increase in the
number of shares available for issuance under the 1994 Plan is
necessary to continue the effectiveness of the Plan in attracting,
motivating and retaining employees with appropriate experience and
ability and to increase the grantees' alignment of interest with
the Company's stockholders.
The Board has also approved amendments to the 1994 Plan to
enable the 1994 Plan to comply with the amended Rule 16b-3 ("Rule
16b-3") promulgated under Section 16 of the Securities Exchange Act
of 1934, as amended. The amendments provide that, unless otherwise
determined by the Board, the 1994 Plan may be administered by a
committee of "non-employee directors" within the meaning of Rule
16b-3, or by the entire Board, and that the Board may amend the
1994 Plan without stockholder approval unless such approval is
required for the 1994 Plan to comply with Rule 16b-3, or is
required by other provisions of applicable law. In addition, the
amendments update the 1994 Plan section providing that the 1994
Plan will be administered in compliance with amended Rule 16b-3.
SUMMARY OF PLAN
The following summary of certain features of the 1994 Plan is
qualified in its entirety by reference to the 1994 Plan, as
amended, which is attached hereto as Exhibit B.
The 1994 Plan was adopted by the Board on January 3, 1994, and
ratified by action of written consent by the then sole stockholder
of the Company on April 11, 1994. The 1994 Plan was amended by the
Board on August 17, 1994 and the amendment was ratified by an
affirmative vote of the holders of a majority of the outstanding
Common Shares of the Company on August 17, 1994. The 1994 Plan was
further amended by the Board on March 14, 1996 by an Action by
Unanimous Written Consent of the Board. As a result of such
amendments, 1,500,000 shares of Common Stock are authorized for
issuance upon exercise of options granted pursuant to the 1994
Plan.
The 1994 Plan is administered by the Compensation and Stock
Option Committee, which consists of two non-employee directors.
The Compensation and Stock Option Committee is generally empowered
to interpret the 1994 Plan, prescribe rules and regulations
relating thereto, determine the terms of the option agreements,
amend them with the consent of the optionee, determine the
employees to whom options are being granted, and determine the
number of shares subject to each option and the exercise price
thereof. Under the 1994 Plan, the per-share exercise price for
incentive stock options ("ISOs") will not be less than 100% of the
fair market value of a share of Common Stock on the date the option
is granted (110% of fair market value on the date of grant of an
ISO if the optionee owns more than 10% of all classes of stock of
the Company) and for non-qualified stock options ("NQSOs") will not
be less than 75% of the fair market value of the Common Stock on
the date of grant. Upon exercise of an option, the optionee may
pay the purchase price in cash, by check or, as determined by the
Compensation and Stock Option Committee, with previously acquired
securities of the Company, provided that, with respect to incentive
stock options applicable holding requirements under the Internal
Revenue Code of 1986 (the "Code") are satisfied.
Options granted pursuant to the 1994 Plan may be designated as
ISOs, with the attendant tax benefits provided under Sections 421
and 422 of the Code. Accordingly, the 1994 Plan provides that the
aggregate fair market value (determined at the time an ISO is
granted) of the Common Stock subject to ISOs exercisable for the
first time by an employee during any calendar year (under all plans
of the Company and its subsidiaries) may not exceed $100,000.
The Board may amend, suspend or terminate the 1994 Plan;
provided, however, that the 1994 Plan may not be amended without
stockholder approval to the extent that such approval is required
(i) for the 1994 Plan to meet the requirements of Rule 16b-3, or
(ii) by any other provision of applicable law. The Compensation
and Stock Option Committee may amend the terms of options
previously granted; provided, however, that no such amendment may
impair an optionee's rights under an option previously granted
without the consent of the optionee.
Options may not be transferred other than by will or the laws
of descent and distribution, and options may be exercised solely by
the optionee during his or her lifetime. No options may be granted
pursuant to the 1994 Plan on or after January 3, 2004. The market
value of Common Stock as of February 11, 1997, was
$2.875 per share.
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is a brief summary of the principal
United States federal income tax consequences under current federal
income tax laws relating to awards under the 1994 Plan. This
summary is not intended to be exhaustive and, among other things,
does not describe state, local or foreign income and other tax
consequences.
Incentive Stock Options ("ISOs")
No taxable income will be realized by an optionee upon the
grant or timely exercise of an ISO. If shares are issued to an
optionee pursuant to the timely exercise of an ISO and a
disqualifying disposition of such shares is not made by the
optionee (i.e. no disposition is made within two years after the
date of grant or within one year after the receipt of shares by
such optionee, whichever is later), then (i) upon sale of the
shares, any amount realized in excess of the exercise price of the
ISO will be taxed to the optionee as a long-term capital gain and
any loss sustained will be a long-term capital loss, and (ii) no
deduction will be allowed to the Company. However, if shares
acquired upon the timely exercise of an ISO are disposed of prior
to satisfying the holding period described above, generally (a) the
optionee will realize ordinary income in the year of disposition in
an amount equal to the excess (if any) of the fair market value of
the shares at the time of exercise (or, if less, the amount
realized on the disposition of the shares) over the exercise price
thereof, and (b) subject to the provisions of Section 162(m) of the
Code, the Company will be entitled to deduct an amount equal to
such income. Any additional gain recognized by the optionee upon a
disposition of shares prior to satisfying the holding period
described above will be taxed as a short-term or long-term capital
gain, as the case may be, and will not result in any deduction for
the Company.
If an ISO is not exercised on a timely basis, the option will
be treated as an NQSO. Subject to certain exceptions, an ISO
generally will not be exercised on a timely basis if it is
exercised more than three months following termination of
employment.
The amount that the fair market value of shares of the Common
Stock on the exercise date of an ISO exceeds the exercise price
generally will constitute an item that increases the optionee's
"alternative minimum taxable income."
In general, the Company will not be required to withhold
income or payroll taxes on the timely exercise of an ISO.
Nonqualified Stock Options ("NQSOs")
In general, an optionee will not be subject to tax at the time
an NQSO is granted. Upon exercise of an NQSO where the exercise
price is paid in cash, the optionee generally must include in
ordinary income at the time of exercise an amount equal to the
excess, if any, of the fair market value of the shares of Common
Stock at the time of exercise over the exercise price. The
optionee's tax basis in the shares acquired upon exercise will
equal the exercise price plus the amount taxable as ordinary income
to the optionee. The federal income tax consequences of an
exercise of an NQSO where the exercise price is paid in previously
owned shares of Common Stock are generally similar to those where
the exercise price is paid in cash. However, the optionee will not
be subject to tax on the surrender of such shares, and the tax
basis of the shares acquired on exercise that are equal in number
to the shares surrendered will be the same as the optionee's tax
basis in such surrendered shares.
The Company generally will be entitled to a deduction in the
amount of an optionee's ordinary income at the time such income is
recognized by the optionee upon the exercise of a NQSO, subject to
the provisions of Section 162(m) of the Code. Income and payroll
taxes are required to be withheld for optionees on the amount of
ordinary income resulting from the exercise of an NQSO.
NEW PLAN BENEFITS
Grants under the 1994 Plan are generally made at the
discretion of the Compensation and Stock Option Committee and are
therefore not determinable with respect to dollar value or amount.
The following table sets forth the total number of Options granted
under the 1994 Plan during the 1996 and 1997 fiscal years and the
dollar value of such Options as of February 3, 1997 based on the
closing trading price of the Common Stock on such date.
NEW PLAN BENEFITS
1994 PLAN
Number of
Options Granted
in Fiscal 1996
Name and Position Dollar Value ($) and 1997
Andrew Gyenes $37,500 300,000
John Ramo 0 0
Ken Gruber $ 6,250 50,000
Executive Group $50,000 400,000
Non-Executive Director Group 0 0
Non-Executive Officer Group $21,813 222,500
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL
OF THE AMENDMENTS TO THE 1994 PLAN
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intending to be presented at the
Company's 1998 Annual Meeting of Stockholders must be received by
the Company, 110 West 40th Street, Suite 2100, New York, New York,
10018, by November 3, 1997 in order to be considered for inclusion
in the 1998 Proxy Statement.
RELATIONSHIP WITH INDEPENDENT AUDITORS
The Audit Committee of the Board of the Company approved the
engagement of the independent auditing firm of KPMG Peat Marwick
LLP to serve as the Company's independent auditors for the year
ended May 31, 1997.
Representatives of KPMG Peat Marwick LLP are expected to be
available at the Annual Meeting and will have the opportunity to
make a statement if they so desire. Such representatives are
expected to be available to respond to appropriate questions from
stockholders.
AVAILABILITY OF FORM 10-KSB
The Company has mailed a copy of its Annual Report to each
stockholder entitled to vote at this meeting. A copy of the
Company's Form 10-KSB for the fiscal year ended May 31, 1996 and
Forms 10-QSB for the quarterly periods ended August 31, 1996 and
November 30, 1996 are available, upon written request, at no charge
to all stockholders. For a copy, write to Enteractive, Inc., 110
W. 40th Street, Suite 2100, New York, New York, 10018, Attention:
Investor Relations Department.
By Order of the Board of Directors
Kenneth Gruber
Secretary
New York, New York
March 3, 1997
Exhibit A
PROPOSED AMENDMENT TO CERTIFICATE OF INCORPORATION
The Certificate of Incorporation is hereby amended by deleting
the first paragraph of Article FOURTH thereof in its entirety and
substituting the following paragraph in lieu thereof:
"The total number of shares of capital stock which the
Company shall have authority to issue is fifty-two
million (52,000,000) shares, of which fifty million
(50,000,000) shares are to be shares of Common Stock, par
value $.01 per share, and two million (2,000,000) shares
are to be shares of Preferred Stock, par value $.01 per
share."
Exhibit B
1994 INCENTIVE AND NONQUALIFIED STOCK OPTION PLAN OF
ENTERACTIVE, INC
1. PURPOSE OF THE PLAN
This 1994 Incentive and Nonqualified Stock Option Plan
(the "Plan") is intended as an incentive, to retain in the employ
of Enteractive, Inc. (the "Company") and any Subsidiary of the
Company (within the meaning of Section 424(f) of the Internal
Revenue Code of 1986, as amended (the "Code")), persons of
training, experience and ability, to attract new employees whose
services are consider valuable, to encourage the sense of
proprietorship and to stimulate the active interest of such persons
in the development and financial success of the Company and its
Subsidiaries.
It is further intended that certain options granted
pursuant to the Plan shall constitute incentive stock options
within the meaning of Section 422 of the Code ("Incentive Options")
while certain other options granted pursuant to the Plan shall be
nonqualified stock options ("Nonqualified Options"). Incentive
Options and the Nonqualified Options are hereinafter referred to
collectively as "Options".
2. ADMINISTRATION OF THE PLAN
The Board of Directors of the Company (the "Board") shall
appoint and maintain as administrator of the Plan a Committee (the
"Committee") consisting of two or more directors of the Company, or
the entire Board. Unless otherwise determined by the Board, no
person shall be eligible to service on the Committee unless he is
then a "non-employee director" within the meaning of Rule 16b-3 of
the Securities and Exchange Commission ("Rule 16b-3") promulgated
under the Securities Exchange Act of 1934, as amended (the "Act"),
if and as Rule 16b-3 is then in effect. The members of the
Committee shall serve at the pleasure of the Board.
The Committee, subject to Section 3 hereof, shall have
full power and authority to designate recipients of Options, to
determine the terms and conditions of respective Option agreements
(which need not be identical) and to interpret the provisions and
supervise the administration of the Plan. Subject to Section 7
hereof, the Committee shall have the authority, without limitation,
to designate which Options granted under the Plan shall be
Incentive Options and which shall be Nonqualified Options. To the
extent any Option does not qualify as an Incentive Option, it shall
constitute a separate Nonqualified Option. Notwithstanding any
provision in the Plan to the contrary, no Options may be granted
under the Plan to any member of the Committee during the term of
his membership on the Committee.
Subject to the provisions of the Plan, the Committee
shall interpret the Plan and all Options granted under the Plan,
shall make such rules as it deems necessary for the proper
administration of the Plan, shall make all other determinations
necessary or advisable for the administration of the Plan and shall
correct any defects or supply any omission or reconcile any
inconsistency in the Plan or in any Options granted under the Plan
in the manner and to the extent that the Committee deems desirable
to carry the Plan or any Options into effect. The act or
determination of a majority of the Committee shall be deemed to be
the act or determination of the Committee and any decision reduced
to writing and signed by all of the members of the Committee shall
be fully effective as if it had been made by a majority at a
meeting duly held. Subject to the provisions of the Plan, any
action taken or determination made by the Committee pursuant to
this and the other paragraphs of the Plan shall be conclusive on
all parties.
3. DESIGNATION OF OPTIONEES
The persons eligible for participation in the Plan as
recipients of Options ("Optionees") shall include only full-time
key employees (including full-time key employees who also serve as
directors) of the Company or any Subsidiary. In selecting
Optionees, and in determining the number of shares to be covered by
each Option granted to Optionees, the Committee may consider the
office or position held by the Optionee, the Optionee's degree of
responsibility for and contribution to the growth and success of
the Company or any Subsidiary, the Optionee's length of service,
age, promotions, potential and any other factors which the
Committee may consider relevant. An employee who has been granted
an Option hereunder may be granted an additional Option or Options,
if the Committee shall so determine.
4. STOCK RESERVED FOR THE PLAN
Subject to adjustment as provided in Section 7 hereof, a
total of two million five hundred thousand (2,500,000) shares of
common stock, $.01 par value ("Stock"), of the Company shall be
subject to the Plan. The shares of Stock subject to the Plan shall
consist of unissued shares or previously issued shares reacquired
and held by the Company or any Subsidiary of the Company, and such
amount of shares of Stock shall be and is hereby reserved for such
purpose. Any of such shares of Stock which may remain unsold and
which are not subject to outstanding Options at the termination of
the Plan shall cease to be reserved for the purpose of the Plan,
but until termination of the Plan the Company shall at all times
reserve a sufficient number of shares of Stock to meet the
requirements of the Plan. Should any Option expire or be cancelled
prior to its exercise in full or should the number of shares of
Stock to be delivered upon the exercise in full of an Option be
reduced for any reason, the shares of Stock theretofore subject to
such Option may again be subject to an Option under the Plan.
5. TERMS AND CONDITIONS OF OPTIONS
Options granted under the Plan shall be subject to the
following conditions and shall contain such additional terms and
conditions, not inconsistent with the terms of the Plan, as the
Committee shall deem desirable:
(a) Option Price. The purchase price of each share of
Stock purchasable under an Option shall be determined by the
Committee at the time of grant but shall not be less than 100% of
the fair market value of such share of Stock on the date the Option
is granted in the case of an Incentive Option and not less than 75%
of the fair market value of such share of Stock on the date the
Option is granted in the case of a non-Incentive Option; provided,
however, that with respect to an Incentive Option, in the case of
an Optionee who at the time such Option is granted, owns (within
the meaning of Section 424(d) of the Code) more than 10% of the
total combined voting power of all classes of stock of the Company
or of any Subsidiary, then the purchase price per share of Stock
shall be at least 110% of the Fair Market Value (as defined below)
per share of Stock at the time of grant. The exercise price for
each Incentive Option shall be subject to adjustment as provided in
Section 7 below. The fair market value ("Fair Market Value") means
the closing price of publicly traded shares of Stock on the
national securities exchange on which shares of Stock are listed
(if the shares of Stock are so listed) or on the NASDAQ National
Market System or NASDAQ over-the-counter system (if the shares of
Stock are regularly quoted on the NASDAQ National Market System or
NASDAQ over-the-counter system), or, if not so listed or regularly
quoted, the mean between the closing bid and asked prices of
publicly traded shares of Stock in the Over-The-Counter Electronic
Bulletin Board, or, if such bid and asked prices shall not be
available, as reported by any nationally recognized quotation
service selected by the Company, or as determined by the Committee
in a manner consistent with the provisions of the Code.
(b) Option Term. The term of each Option shall be fixed
by the Committee, but no Option shall be exercisable more than ten
years after the date such Option is granted; provided, however,
that in the case of an Optionee who, at the time an Incentive
Option is granted, owns more than 10% of the total combined voting
power of all classes of stock of the Company or any Subsidiary,
then such Incentive Option shall not be exercisable with respect to
any of the shares subject to such Incentive Option later than the
date which is five years after the date of grant.
(c) Exercisability. Subject to paragraph (j) of this
Section 5, Options shall be exercisable at such time or times and
subject to such terms and conditions as shall be determined by the
Committee at grant, provided, however, that except as provided in
paragraphs (f) and (g) of this Section 5, unless a shorter or
longer vesting period is otherwise determined by the Committee at
grant, Options shall be exercisable as follows: up to thirty-three
(33%) percent of the aggregate initial shares of Stock purchasable
under an Option shall be exercisable commencing one year after the
date of grant, an additional thirty-four (34%) percent of the
aggregate initial shares of Stock purchasable under an Option shall
be exercisable commencing two years after the date of grant and up
to an additional thirty-three (33%) percent of the aggregate
initial shares of Stock purchasable under an Option shall be
exercisable commencing three years from the date of grant. The
Committee may waive such installment exercise provision at any time
in whole or in part based on performance and/or such other factors
as the Committee may determine in its sole discretion, provided,
however, no Option shall be exercisable until more than six months
have elapsed from the date of grant of such Option.
(d) Method of Exercise. Options may be exercised in
whole or in part at any time during the option period, by giving
written notice to the Company specifying the number of shares to be
purchased, accompanied by payment in full of the purchase price, in
cash, by check or such other instrument as may be acceptable to the
Committee. As determined by the Committee, in its sole discretion,
at or after grant, payment in full or in part may also be made in
the form of Stock owned by the Optionee (based on the Fair Market
Value of the Stock on the trading day before the Option is
exercised); provided, however, that if such Stock was issued
pursuant to the exercise of an Incentive Option under the Plan, the
holding requirements for such Stock under the Code shall have first
been satisfied. An Optionee shall have the rights to dividends or
other rights of a stockholder with respect to shares subject to the
Option after (i) the Optionee has given written notice of exercise
and has paid in full for such shares and (ii) becomes a stockholder
of record.
(e) Non-transferability of Options. Options are not
transferable and may be exercised solely by the Optionee during his
lifetime or after his death by the person or persons entitled
thereto under his will or the laws of descent and distribution.
Any attempt to transfer, assign, pledge, hypothecate or otherwise
dispose of, or to subject to execution, attachment or similar
process, any Option contrary to the provisions hereof shall be void
and ineffective and shall give no right to the purported
transferee.
(f) Termination by Death. Unless otherwise determined
by the Committee at grant, if any Optionee's employment with the
Company or any Subsidiary terminates by reason of death, the Option
may thereafter be immediately exercised, to the extent then
exercisable (or on such accelerated basis as the Committee shall
determine at or after grant), by the legal representative of the
estate or by the legatee of the Optionee under the will of the
Optionee, for a period of one year from the date of such death or
until the expiration of the stated term of such Option as provided
under the Plan, whichever period is shorter.
(g) Termination by Reason of Disability. Unless
otherwise determined by the Committee at grant, if any Optionee's
employment with the Company or any Subsidiary terminates by reason
of total and permanent disability as determined under the Company's
long term disability policy ("Disability"), any Option held by such
Optionee may thereafter be exercised, to the extent it was
exercisable at the time of termination due to Disability (or on
such accelerated basis as the Committee shall determine at or after
grant), but may not be exercised after one year from the date of
such termination of employment or the expiration of the stated term
of such Option, whichever period is shorter; provided, however,
that, if the Optionee dies within such one-year period, any
unexercised Option held by such Optionee shall thereafter be
exercisable to the extent to which it was exercisable at the time
of death for a period of one year from the date of such death or
for the stated term of such option, whichever period is shorter.
(h) Termination by Reason of Retirement. Unless
otherwise determined by the Committee at grant, if any Optionee's
employment with the Company or any Subsidiary terminates by reason
of Normal or Early Retirement (as such terms are defined below),
any Option held by such Optionee may thereafter be exercised to the
extent it was exercisable at the time of such Retirement (as
defined below) (or on such accelerated basis as the Committee shall
determine at or after grant), but may not be exercised after three
months from the date of such termination of employment or the
expiration of the stated term of such Option, whichever period is
shorter; provided, however, that, if Optionee dies within such
three-month period, any unexercised Option held by such Optionee
shall thereafter be exercisable, to the extent to which it was
exercisable at the time of death, for a period of one year from the
date of such death or for the stated term of such Option, whichever
period is shorter.
For purposes of this paragraph (h), Normal Retirement
shall mean retirement from active employment with the Company or
any Subsidiary on or after the normal retirement date specified in
the applicable Company or Subsidiary pension plan. Early
Retirement shall mean retirement from active employment with the
Company or any Subsidiary pursuant to the early retirement
provisions of the applicable Company or Subsidiary pension plan.
Retirement shall mean Normal or Early Retirement.
(i) Other Termination. Unless otherwise determined by
the Committee at grant, if any Optionee's employment with the
Company or any Subsidiary terminates for any reason other than
death, Disability or Retirement, the Option shall thereupon
terminate, except that the exercisable portion of any Option which
was exercisable on the date of such termination of employment may
be exercised for the lesser of three months from the date of
termination or the balance of such Option's term if the Optionee's
employment with the Company or any Subsidiary is involuntarily
terminated by the Optionee's employer without Cause. Cause shall
mean a felony conviction or the failure of any Optionee to contest
prosecution for a felony or an Optionee's willful misconduct or
dishonesty, any of which is harmful to the business or reputation
of the Company or any Subsidiary. The transfer of an Optionee from
the employ of the Company to a Subsidiary, or vice versa, or from
one Subsidiary to another, shall not be deemed to constitute a
termination of employment for purposes of the Plan.
(j) Limit on Value of Incentive Option. The aggregate
Fair Market Value, determined as of the date the Option is granted,
of the Stock for which Incentive Options are exercisable for the
first time by any Optionee during any calendar year under the Plan
(and/or any other stock option plans of the Company or any
Subsidiary) shall not exceed $100,000.
(k) Transfer of Incentive Option Shares. The stock
option agreement evidencing any Incentive Options granted under
this Plan shall provide that if the Optionee makes a disposition,
within the meaning of Section 424(c) of the Code and regulations
promulgated thereunder, of any share or shares of Stock issued to
him pursuant to his exercise of an Incentive Option granted under
the Plan within the two-year period commencing on the day after the
date of the grant of such Incentive Option or within a one-year
period commencing on the day after the date of transfer of the
share or shares to him pursuant to the exercise of such Incentive
Option, he shall, within ten days of such disposition, notify the
Company thereof and immediately deliver to the Company any amount
of federal income tax withholding required by law.
6. TERMS OF PLAN
No Option shall be granted pursuant to the Plan on or
after the tenth anniversary of the date the Plan is approved by the
Board, but Options granted may extend beyond that date.
7. CAPITAL CHANGE OF THE COMPANY
In the event of any merger, reorganization,
consolidation, recapitalization, stock dividend, or other change in
corporate structure affecting the Stock, the Committee shall make
an appropriate and equitable adjustment in the number and kind of
shares reserved for issuance under the Plan and in the number and
option price of shares subject to outstanding Options granted under
the Plan, to the end that after such event each Optionee's
proportionate interest shall be maintained as immediately before
the occurrence of such event.
8. PURCHASE FOR INVESTMENT
Unless the Options and shares covered by the Plan have
been registered under the Securities Act of 1933, as amended, or
the Company has determined that such registration is unnecessary,
each person exercising an Option under the Plan may be required by
the Company to give a representation in writing that he is
acquiring the shares for his own account for investment and not
with a view to, or for sale in connection with, the distribution of
any part thereof.
9. TAXES
The Company may make such provisions as it may deem
appropriate, consistent with applicable law, in connection with any
Options granted under the Plan with respect to the withholding of
any taxes or any other tax matters.
10. EFFECTIVE DATE OF PLAN
The Plan shall be effective on the date it is approved by
the Board; provided, however, that the Plan shall subsequently be
approved by majority vote of the Company's stockholders in the
manner contemplated by Rule 16b-3 within one (l) year from the date
approved by the Board.
11. AMENDMENT AND TERMINATION
The Board may amend, suspend or terminate the Plan;
provided, however, that the Plan may not be amended without
stockholder approval to the extent that such approval is required
(a) for the Plan to meet the requirements of Rule 16b-3 under the
Act, or (b) by any other provision of applicable law.
The Committee may amend the terms of any Option therefore
granted, prospectively or retroactively, but no such amendment
shall impair the rights of any Optionee without his consent. The
Committee may also substitute new Options for previously granted
Options, including options granted under other plan applicable to
the participant and previously granted Options having higher option
prices, upon such terms as the Committee may deem appropriate.
12. GOVERNMENT REGULATIONS
The Plan, and the granting and exercise of Options
hereunder, and the obligation of the Company to sell and deliver
shares under such Options, shall be subject to all applicable laws,
rules and regulations, and, to such approvals by any governmental
agencies or national securities exchanges as may be required.
13. RULE 16B-3 COMPLIANCE
The Company intends that the Plan meet the requirements
of Rule 16b-3 and that grants and transactions pursuant to the Plan
will be exempt from the operations of Section 16(b) of the Act. In
all cases, the terms, provisions, conditions and limitations of the
Plan shall be construed and interpreted consistent with the
Company's intent as stated in this Section 13.
14. GENERAL PROVISIONS
(a) Certificates. All certificates for shares of Stock
delivered under the Plan shall be subject to such stock transfer
orders and other restrictions as the Committee may deem advisable
under the rules, regulations, and other requirements of the
Securities and Exchange Commission, any stock exchange upon which
the stock is then listed and any applicable Federal or state
securities law, and the Committee may cause a legend or legends to
be placed on any such certificates to make appropriate reference to
such restrictions.
(b) Employment Matters. The adoption of the Plan shall
not confer upon any Optionee of the Company or any Subsidiary, any
right to continued employment (or, in case the Optionee is also a
director, continued retention as a director) with the Company or a
Subsidiary, as the case may be, nor shall it interfere in any way
with the right of the Company or Subsidiary to terminate the
employment of its employees at any time.
(c) Limitation of Liability. No member of the Board or
the Committee, or any officer or employee of the Company acting on
behalf of the Board or the Committee, shall be personally liable
for any action, determination, or interpretation taken or made in
good faith with respect to the Plan, and all members of the Board
or the Committee and each and any officer or employee of the
Company acting on their behalf shall, to the extent permitted by
law, be fully indemnified and protected by the Company in respect
of any such action, determination or interpretation.
(d) Registration of Options. Notwithstanding any other
provision in the Plan, no Option may be exercised unless and until
the Stock to be issued upon the exercise thereof has been
registered under the Securities Act of 1933 and applicable state
securities laws, or are, in the opinion of counsel to the Company,
exempt from such registration. The Company shall not be under any
obligation to register, under applicable federal or state
securities laws, any Stock to be issued upon the exercise of an
Option granted hereunder, or to comply with an appropriate
exemption from registration under such laws in order to permit the
exercise of an Option and the issuance and sale of the Stock
subject to such Option however, the Company may in its sole
discretion register such Stock at such time as the Company shall
determine. If the Company chooses to comply with such an exemption
from registration, the Stock issued under the Plan may, at the
direction of the Committee, bear an appropriate restrictive legend
restricting the transfer or pledge of the Stock represented
thereby, and the Committee may also give appropriate stop-transfer
instructions to the transfer agent to the Company.
REVOCABLE PROXY -- ENTERACTIVE, INC.
THIS PROXY IS SOLICITED BY THE BOARD OF DIRECTORS
FOR THE ANNUAL MEETING OF STOCKHOLDERS
The undersigned hereby appoints Andrew Gyenes and
Kenneth Gruber, and each of them, proxies, with full powers of
substitution, to act for and in the name of the undersigned to
vote all shares of common stock, $.01 par value (the "Common
Stock"), and Class A Preferred Stock, $.01 par value (the
"Preferred Stock"), of ENTERACTIVE, INC. (the "Company"), which
the undersigned is entitled to vote at the Annual Meeting of
Stockholders (the "Annual Meeting") and any adjournment thereof.
The Annual Meeting will be held at the Westbury Hotel, 15 East
69th Street, New York, New York, 10021 on April 3, 1997 at 10:00
A.M., local time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR
DIRECTORS LISTED BELOW AND "FOR" PROPOSALS 2 AND 3.
1. ELECTION OF DIRECTORS
_____ _____
/____/ FOR all nominees listed below /_____/ WITHHOLD AUTHORITY
(except as marked to the to vote for all
contrary below) nominees listed below
Michael Alford, Rino Bergonzi, Steven Fischer, Andrew Gyenes,
Peter Gyenes, Randal Hujar and Harrison Weaver
(INSTRUCTION: To withhold authority to vote for any individual
nominee, print that nominee's name on the line provided below.)
_________________________________________________________________
2. The approval of an amendment to the Company's
Certificate of Incorporation increasing the authorized number of
shares of Common Stock.
FOR ____ AGAINST ____ ABSTAIN ____
/____/ /____/ /____/
3. The approval of amendments to the Company's 1994
Incentive and Non-Qualified Stock Option Plan.
FOR ____ AGAINST ____ ABSTAIN ____
/____/ /____/ /____/
The shares represented by this proxy will be voted as
directed by the undersigned. IF NO INSTRUCTIONS ARE SPECIFIED,
THE UNDERSIGNED'S VOTE WILL BE CAST "FOR" THE ELECTION OF THE
NOMINEES NAMED IN PROPOSAL 1, "FOR" PROPOSAL 2, "FOR" PROPOSAL 3
AND IN THE DISCRETION OF THE PROXIES AS TO ANY OTHER MATTERS
PRESENTED AT THE ANNUAL MEETING. At the present time, the Board
of Directors knows of no other business to be presented at the
Annual Meeting.
The undersigned stockholder may revoke this proxy at
any time before it is voted by delivering to the Secretary of the
Company either a written revocation of the proxy or a duly
executed proxy bearing a later date, or by appearing at the
Annual Meeting and voting the shares subject to the proxy by
written ballot.
In their discretion, the proxies are
authorized to vote upon such other business
as may properly come before the Annual
Meeting and any adjournment thereof.
Please sign exactly as your name appears on
the certificate or certificates representing
shares to be voted by this proxy. When
shares are held jointly, both holders should
sign. When signing as attorney, executor,
administrator, trustee or guardian, please
give your full title. If the signer is a
corporation, the full corporate name should
be signed by a duly authorized officer.
_____________________________________
Signature
_____________________________________
Signature, if held jointly
Date: _________________________, 1997
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD
IN THE ENCLOSED PREPAID ENVELOPE.
