SCHEDULE 14A
(Rule 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934 (Amendment No. )
Filed by the registrant /X/
Filed by a party other than the registrant / /
Check the appropriate box:
/X/ Preliminary Proxy Statement
/ / Confidential, for Use of the Commission Only (as permitted by Rule
14a-6(e)2))
/ / Definitive Proxy Statement
/ / Definitive Additional Materials
/ / Soliciting Material Pursuant to Rule 14a-11(c) or Rule 14(a)-12
ENTERACTIVE, INC.
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(Name of Registrant as Specified in Their Charters)
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(Name of Person(s) filing Proxy Statement, if other than Registrant)
Payment of filing fee (check the appropriate box):
/X/ No fee required.
/ / Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and
0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
(5) Total fee paid:
<PAGE>
/ / Fee paid previously with preliminary materials.
/ / Check box if any part of the fee is offset as provided by Exchange
Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was
paid previously. Identify the previous filing by registration statement number,
or the form or schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement no.:
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(3) Filing Party:
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(4) Date Filed:
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ENTERACTIVE, INC
25 WEST 45TH STREET
SUITE 306
NEW YORK, NY 10036
NOTICE OF
ANNUAL MEETING
TO BE HELD JUNE 22, 1998
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 Harvard Club of New York City,
27 West 44th Street, New York, New York, 10036 on Monday, June 22, 1998,
commencing at 10:00 A.M., for the following purposes:
1. To elect six 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 1994 Incentive and
Non-Qualified Stock Option Plan increasing the number of
shares of the Company's Common Stock, $.01 par value (the
"Common Stock") that may be subject to options granted
thereunder from 2,500,000 to 3,250,000;
3. To approve the issuance of Common Stock in excess of 19.9%
of the Company's issued and outstanding Common Stock in
connection with a private placement of the Company's Common
Stock;
4. To approve an amendment to the Company's Certificate of
Incorporation changing the name of the Company from
"Enteractive, Inc." to "Cornerstone Internet Solutions
Company"; and
5. 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 May 13, 1998
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
May 30, 1998
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.
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ENTERACTIVE, INC.
25 WEST 45TH STREET
SUITE 306
NEW YORK, NY 10036
PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MONDAY, JUNE 22, 1998
This Proxy Statement and form of proxy are first being mailed to
holders of (i) common stock, $.01 par value (the "Common Stock"), (ii) Class A
Preferred Stock, $.01 par value (the "Class A Preferred Stock"), (iii) Class B
Preferred Stock, $.01 par value (the "Class B Preferred Stock") and (iv) Class C
Preferred Stock, $.01 par value (the "Class C Preferred Stock"), (collectively,
the "stockholders") of Enteractive, Inc. (the "Company") on or about May 30,
1998, 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., local time, on
Monday, June 22, 1998, at the Harvard Club of New York City, 27 West 44th
Street, New York, New York 10036, 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, 1997, is being mailed with this Proxy
Statement.
As of May 13, 1998, the record date for the Annual Meeting (the
"Record Date"), there were outstanding [ ] shares of Common Stock. In addition,
as of the Record Date, there were outstanding an aggregate of 6,720 shares of
Class A Preferred Stock and Class C Preferred Stock and also 2,000 shares of
Class B Preferred Stock. The Class A Preferred Stock and the Class C Preferred
Stock are sometimes collectively referred to herein as the Preferred Stock.
Holders of record of the Company's Common Stock, Preferred Stock and Class B
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 Annual
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 May 14, 1998, at the Company's offices located at 25 West 45th Street,
Suite 306, New York, New York 10036 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 Board, (ii) FOR the approval of the amendment to the
Company's 1994 Incentive and Non-Qualified Stock Option Plan (the "1994 Plan"),
(iii) FOR the approval of the issuance of shares of Common Stock in excess of
19.9% of the Company's issued and outstanding Common Stock in connection with a
private placement of Common Stock and (iv) FOR the approval of an amendment to
the Company's Certificate of Incorporation to change the name of the Company
from "Enteractive, Inc." to "Cornerstone Internet Solutions Company." The Board
does not know of any other matters that may be brought before the Annual 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
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<PAGE>
the Company. Proxy materials may also be distributed through brokers, 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 Class A Preferred Stock
are entitled to 1,025 votes per share, aggregating 6,885,246 votes for all
outstanding 6,885,246 shares of Preferred Stock. Holders of each share of Class
B Preferred Stock are entitled to 1,000 votes per share, aggregating 2,000,000
votes for all outstanding shares of Class B Preferred Stock. The shares of
Common Stock, Preferred Stock and Class B Preferred Stock will vote together as
a single class on all of the proposals.
The holders of a majority of the outstanding shares of Common Stock,
Preferred Stock and Class B Preferred Stock, whether present in person or
represented by proxy, will constitute a quorum for the election of directors,
the vote on the amendment to the 1994 Plan, the proposal to authorize the
issuance of Common Stock in excess of 19.9% of the Company's issued and
outstanding Common Stock in connection with a private placement, and the
proposal to change the name of the Company and, any other matters that may come
before the Annual Meeting. 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 votes cast by holders of Common Stock,
Preferred Stock and Class B Preferred Stock, voting together as a single class,
is required to approve the amendment to the 1994 Plan and the proposal to
authorize the issuance of Common Stock in excess of 19.9% of the issued and
outstanding Company's Common Stock in connection with a private placement. In
tabulating the votes on the amendment to the 1994 Plan and the proposal to
authorize the issuance of Common Stock in excess of 19.9% of the Company's
issued and outstanding Common Stock in connection with a private placement,
shares as to which a stockholder abstains are considered shares entitled to vote
on the applicable amendment or the issuance of the Common Stock and therefore an
abstention would have the effect of a vote against the amendment or the issuance
of the Common Stock. Broker non-votes, however, are not considered shares
entitled to vote on the applicable amendment or the issuance of the Common Stock
and are not included in determining whether such amendment or the issuance of
the Common Stock is approved. The affirmative vote of a majority of the
outstanding shares of Common Stock and Preferred Stock and Class B Preferred
Stock, voting together as a single class, entitled to vote thereon, 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.
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<PAGE>
PRINCIPAL SECURITY HOLDERS
The following table sets forth beneficial ownership (as it relates to
dispositive power) of the Company's Common Stock and Preferred Stock as of May
13, 1998 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. The holders of the Class B Preferred Stock are Applewood
Associates, L.P. (1,500 shares or 75% of the outstanding Class B Preferred
Stock, and Woodland Partners and Dalewood Associates, L.P., each of which own
250 shares or 12.5% of the outstanding Class B Preferred Stock. As stated under
"Voting Rights" above, holders of each share of Preferred Stock are entitled to
1,025 votes per share, aggregating 6,885,246 votes for all outstanding shares of
Preferred Stock. Holders of each share of Class B Preferred Stock are entitled
to 1,000 votes per share, aggregating 2,000,000 votes for all outstanding share
of Class B Preferred Stock. Accordingly, beneficial ownership of Common Stock as
it relates to voting power will be higher than the amounts reflected in the
table below with respect to those stockholders who hold Preferred Stock.
<TABLE>
<CAPTION>
Common Stock Preferred Stock
---------------------------------------- ---------------------------------
Name and Address of Number of % of Number % of
Beneficial Owner Shares(1) Class of Shares Class
- ------------------------------------- ------------------------ -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Barry Rubenstein 2,957,686(2) 29.5% 4,560(2) 67.9%
68 Wheatley Road
Brookville, NY
11545
Woodland Venture Fund 821,002(3) 8.5% 560(3) 8.3%
68 Wheatley Road
Brookville, NY
11545
Seneca Ventures 821,002(4) 8.5% 560(4) 8.3%
68 Wheatley Road
Brookville, NY
11545
Woodland Services Corp. 821,002(5) 8.5% 560(5) 8.3%
68 Wheatley Road
Brookville, NY
11545
Woodland Partners 821,002(6) 8.5% 560(6) 8.3%
68 Wheatley Road
Brookville, NY
11545
Irwin Lieber 1,759,684(7) 18.6% 4,000(7) 59.5%
767 Fifth Avenue,
45th Floor
New York, NY 10153
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Common Stock Preferred Stock
---------------------------------------- ---------------------------------
Name and Address of Number of % of Number % of
Beneficial Owner Shares(1) Class of Shares Class
- ------------------------------------- ------------------------ -------------- ----------------- --------------
<S> <C> <C> <C> <C>
21st Century 1,032,951(8) 10.9% 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 1,032,951(9) 10.9% 2,000(11) 29.8%
Communications Partners,
L.P.
767 Fifth Avenue
45th Floor
New York, NY 10153
21st Century 1,032,951(10) 10.9% 2,000(11) 29.8%
Communications T-E
Partners, L.P.
767 Fifth Avenue
45th Floor
New York, NY 10153
Michael J. Marocco 1,032,951(12) 10.9% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
John Kornreich 1,032,951(12) 10.9% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
Harvey Sandler 1,032,951(12) 10.9% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
Andrew Sandler 1,032,951(12) 10.9% 2,000(12) 29.8%
767 Fifth Avenue
45th floor
New York, NY 10153
Barry Fingerhut 1,737,684(13) 18.4% 4,000(13) 59.5%
767 Fifth Avenue
45th floor
New York, NY 10153
Applewood Associates, 703,733(14) 7.5% 2,000(14) 29.8%
L.P.
68 Wheatley Road
Brookville, NY
11545
Applewood Capital 703,733(14) 7.5% 2,000(14) 29.8%
Corp.
68 Wheatley Road
Brookville, NY
11545
Seth Lieber 703,733(14) 7.5% 2,000(14) 29.8%
767 Fifth Avenue
New York, NY 10153
</TABLE>
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<PAGE>
<TABLE>
<CAPTION>
Common Stock Preferred Stock
---------------------------------------- ---------------------------------
Name and Address of Number of % of Number % of
Beneficial Owner Shares(1) Class of Shares Class
- ------------------------------------- ------------------------ -------------- ----------------- --------------
<S> <C> <C> <C> <C>
Jonathan Lieber 703,733(14) 7.5% 2,000(14) 29.8%
767 Fifth Avenue
New York, NY 10153
Marilyn Rubenstein 821,002(15) 8.7% 560(15) 8.3%
68 Wheatley Road
Brookville, NY 11545
The Marilyn and 821,002(16) 8.7% 560(16) 8.3%
Barry Rubenstein
Family Foundation
68 Wheatley Road
Brookville, NY 11545
Eli Oxenhorn 600,500(17) 6.0% 0 *
56 The Intervale
Roslyn Estates, NY
11576
Andrew Gyenes 623,611(18) 6.0% 0 *
Kenneth Gruber 161,111(19) 1.7% 0 *
Harrison Weaver 40,000(20) 0.4% 0 *
Rino Bergonzi 25,000(21) 0.3% 0 *
Peter Gyenes 23,000(22) 0.2% 0 *
Edward Schroeder 52,777(23) 0.6% 0 *
Ronald Cuneo 50,000(24) 0.5% 0 0
All directors and 967,499(25) 9.0% 0 *
executive officers as a
group
</TABLE>
* 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 6 to a Schedule 13D filed on February 22,
1998 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, 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"), Brian Rubenstein and
Rebecca Rubenstein (the "February 1998 13D"), Barry Rubenstein has sole
beneficial ownership of 323,000 shares of Common Stock (including
175,000 shares of Common Stock underlying presently exercisable
options). Mr. Rubenstein may also
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<PAGE>
be deemed to share beneficial ownership of 2,634,686 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
1,032,951 shares of Common Stock; (ii) a trustee of the Foundation; and
(iii) a general partner of each of Applewood, Seneca, the Woodland Fund
and Woodland Partners. In addition, Mr. Rubenstein shares beneficial
ownership of 4,560 shares and 1,750 shares of Preferred Stock and Class
B Preferred Stock, respectively 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 1998 13D, the Woodland Fund has sole beneficial
ownership of 214,415 shares of Common Stock. The Woodland Fund may also
be deemed to share beneficial ownership of 606,587 shares of Common
Stock (including 175,000 Shares of Common Stock underlying presently
exercisable options) 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 and 250 shares of Preferred Stock and Class B
Preferred Stock, respectively, 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 1998 13D, Seneca has sole beneficial ownership of
143,636 shares of Common Stock. Seneca may also be deemed to share
beneficial ownership of 677,366 shares of Common Stock (including
175,000 Shares of Common Stock underlying presently exercisable
options) 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 1998 13D, Woodland Corp. shares beneficial
ownership of 821,002 Shares of Common Stock 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 1998 13D, Woodland Partners has sole beneficial
ownership of 35,714 shares of Common Stock. Woodland Partners may also
be deemed to share beneficial ownership of 785,288 shares of Common
Stock (including 175,000 shares of Common Stock underlying presently
exercisable options) with the Woodland Fund, Seneca, Woodland Corp.,
and the Foundation. In addition, Woodland Partners has sole beneficial
ownership of 160 shares and 250 Shares of Preferred Stock and Class B
Preferred Stock, respectively 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 1998 13D, Irwin Lieber has sole beneficial
ownership of 23,000 shares of Common Stock. 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
1,736,684 shares of Common Stock. 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 1998 13D, this amount includes 89,610 shares of
Common Stock. 21st Foreign disclaims beneficial ownership of 701,169
shares of Common Stock owned by 21st Partners and 242,172 shares of
Common Stock owned by 21st T-E.
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<PAGE>
(9) Based on the February 1998 13D, this amount includes 701,169 shares of
Common Stock. 21st Partners disclaims beneficial ownership of 242,172
shares of Common Stock owned by 21st T-E and 89,610 shares of Common
Stock owned by 21st Foreign.
(10) Based on the February 1998 13D, this amount includes 242,172 shares of
Common Stock. 21st T-E disclaims beneficial ownership of 701,169 shares
of Common Stock owned by 21st Partners and 89,610 shares of Common
Stock owned by 21st Foreign.
(11) Beneficial ownership of these shares of Class A Preferred Stock is
shared by 21st Foreign, 21st T-E, and 21st Partners.
(12) Based on the February 1998 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
1,032,951 shares of Common Stock 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 1998 13D, Barry Fingerhut has sole beneficial
ownership of 1,000 shares of Common Stock. 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 1,736,684 shares of Common Stock and 4,000 and 1,500 shares of
Preferred Stock and Class B Preferred Stock, respectively. Mr.
Fingerhut disclaims beneficial ownership of these securities, except to
the extent of his equity interest therein.
(14) Based on the February 1998 13D, these amounts include 703,733 shares of
Common Stock, 2,000 shares of Preferred Stock beneficially owned by
Applewood and 1,500 shares of Class B 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 1998 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 821,002 shares of Common Stock (including 175,000 shares
of Common Stock underlying presently exercisable Common Stock Warrants)
and 560 and 250 shares of Class A Preferred Stock and Class B Preferred
Stock, respectively. Ms. Rubenstein disclaims beneficial ownership of
these securities, except to the extent of her equity interest therein.
(16) Based on the February 1998 13D, the Foundation has sole beneficial
ownership of 104,237 shares of Common Stock. In addition, the
Foundation may be deemed to share beneficial ownership of 716,765
shares of Common Stock (including 175,000 shares of Common Stock
underlying presently exercisable Options) and 560 and 250 shares of
Preferred Stock and Class B Preferred Stock, respectively 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) Based on the April 23, 1998 Schedule 13D filed by Mr. Eli Oxenhorn,
these share amounts consist of 200,500 shares of Common Stock issuable
upon the exercise of presently exercisable options or warrants held by
Mr. Oxenhorn
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and 400,000 shares of Common Stock issuable upon the exercise of
presently exercisable options or warrants held by an entity of which
Mr. Oxenhorn is a General Partner.
(18) Consists of 594,699 shares of Common Stock issuable upon exercise of
presently exercisable options.
(19) Consists of 151,389 shares of Common Stock issuable upon exercise of
presently exercisable options.
(20) Consists of 20,000 shares of Common Stock issuable upon exercise of
presently exercisable options and 20,000 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.
(21) Consists of 5,000 shares of Common Stock owned by Mr. Bergonzi and
20,000 shares of Common Stock issuable upon exercise of presently
exercisable options granted pursuant to the Outside Directors' Plan.
(22) Consists of 3,000 shares of Common Stock owned by Mr. Peter Gyenes and
20,000 shares of Common Stock issuable upon exercise of presently
exercisable options granted pursuant to the Outside Directors' Plan.
(23) Consists of 52,777 shares of Common Stock issuable upon the exercise of
presenting exercisable options.
(24) Consists of 50,000 shares of Common Stock issuable upon the exercise of
presently exercisable options.
(25) Also includes presently exercisable options to purchase 959,499 shares
of Common Stock.
ELECTION OF DIRECTORS
Six 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 six 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.
Director
Name Age Position Since
- ----------------- --- --------------------------- --------
Andrew Gyenes 62 Chairman of the Board 1994
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Director
Name Age Position Since
- ----------------- --- --------------------------- --------
Edward Schroeder 48 President and Chief Executive 1997
Officer
Rino Bergonzi 52 Director 1995
Peter Gyenes 52 Director 1995
Harrison Weaver 66 Director 1993
Ronald Cuneo 55 Director 1997
Andrew Gyenes has been Chairman of the Board since January 1994 and
Chief Executive Officer of the Company from January 1994 to December 1997. He
was 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).
Edward Schroeder has been the Company's President and Chief Executive
Officer and a member of the Board of Directors since December 1997. From
September 1997 to December 1997 Mr. Schroeder was a Vice President and General
Manager of USWeb Cornerstone ("USWeb"), a wholly-owned subsidiary of the
Company. Before joining USWeb, Mr. Schroeder had been affiliated with IBM
Corporation for over 25 years. Most recently he was the Vice President,
Northeast Area.
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. Mr. Bergonzi is a Director of CrossZ Software Corporation, a
public company which develops and markets proprietary business intelligence
software solutions.
Peter Gyenes has served as a director of the Company since January
1995. Mr. Gyenes has served as Chairman and Chief Executive Officer and
Executive Vice President, International Operations and Worldwide Sales, of
Ardent Software, Inc., formerly VMARK Software, Inc. ("Ardent") since August
1996. From May 1996 to August 1996, he served as Executive Vice President,
International Operations of Ardent. 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 and
the Chairman of the Board and Chief Executive Officer of Continuum from December
1991 to June 1996. In 1995, Continuum filed for bankruptcy. He is the
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founder and President of Weaver Associates, a diversified printing concern
located in Cranford, New Jersey, which has been in business for over 25 years.
Ronald Cuneo has been a director of the Company since December 1997.
Mr. Cuneo is currently a consultant. Mr. Cuneo was President of Wang Federal,
Inc. from 1995 to 1997 a major worldwide systems integrator and provider of
software services and products to the Federal Government. Prior thereto Mr.
Cuneo had 25 years of increasing senior management experience in various
divisions of Honeywell.
BOARD MEETINGS AND STANDING COMMITTEES
The Board held three meetings during the Company's last fiscal year
ended May 31, 1997. From time to time, members of the Board of Directors act by
unanimous written consent pursuant to the laws of the State of Delaware.
Messrs. Bergonzi and Weaver are members of the Audit Committee. The
Audit Committee annually recommends to the Board of Directors independent public
accountants to serve as auditors of the Company's books, records and accounts,
reviews the scope of the audits performed by such auditors and the audit reports
prepared by them, and reviews and monitors the Company's internal accounting
procedures. The Audit Committee held one meeting during the Company's last
fiscal year.
Messrs. Bergonzi and Weaver are members of the Compensation and Stock
Option Committee, which recommends to the Board of Directors compensation for
the Company's key employees and administers the 1994 Plan, the 1994 Consultant
Stock Option Plan, and the Outside Directors' Plan and awards stock options
pursuant to each. The Compensation and Stock Option Committee held no meetings
during the Company's last fiscal year. From time to time, members of the
Compensation and Stock Option Committee act by unanimous written consent
pursuant to the laws of the State of Delaware.
The Company does not have a standing nominating committee.
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, 1997 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. In December 1997, Mr. Cuneo was granted options to purchase
5,000 shares under 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
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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 May 1, 1998, are as follows:
Name Age Position
- ------------------------ ---- --------------------------------------------
Andrew Gyenes........... 62 Chairman of the Board
Edward Schroeder........ 48 President and Chief Executive Officer
Kenneth Gruber.......... 46 Vice President, Chief Financial
Officer and Secretary
Andrew Gyenes, Chairman of the Board and Edward Schroeder, President
and Chief Executive Officer, 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.
EXECUTIVE COMPENSATION
The following table sets forth, for fiscal 1997, 1996 and 1995, all
compensation awarded to, earned by or paid to Andrew Gyenes, the Chairman of the
Board of the Company and Kenneth Gruber, Vice President, Chief Financial Officer
and Secretary, the only other executive officer of the Company whose annual
salary and bonus exceeded $100,000 during the fiscal year ended May 31, 1997
(the "Named Executive Officers.")
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
Annual Long-Term
Compensation Compensation
---------------------------------------------- -------------------
Awards
Name and Other Securities
Principal Fiscal Salary Bonus Annual Underlying
Position Year ($) ($) Compensation Options
- ------------------------- -------------- -------------- ----------- ---------------- -------------------
<S> <C> <C> <C> <C> <C>
Andrew Gyenes 1997 $100,000 -- $13,357(1) 575,000(2)
Chairman of the
Board 1996 $100,000 -- $13,357(1) 100,000 (2)
1995 $100,000 -- --
Kenneth Gruber 1997 $ 87,000 $20,000 $11,787(1) 125,000 (2)
Vice President, 1996 $ 80,000 $20,000 $11,787(1) 25,000 (2)
Chief Financial 1995(3) $ 11,667 -- -- 75,000 (2)
</TABLE>
- -----------------
(1) Represents payments by the Company for a leased automobile and related
insurance and amounts paid by the Company toward health insurance
premiums.
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<PAGE>
(2) Represents options to purchase shares of the Company's Common Stock
granted under the Company's 1994 Incentive and Non-qualified Plan (the
"1994 Plan"). None of such options have been exercised.
(3) Mr. Gruber's employment commenced November 7, 1994.
STOCK OPTION GRANTS
The following table provides further information with respect to the
options granted in fiscal 1997 to Mr. Gyenes and Mr. Gruber under the 1994 Plan.
STOCK OPTION TABLE
<TABLE>
<CAPTION>
% of Total
Number of Options
Securities Granted to Exercise
Name and Principal Underlying Employees in or Base Expiration
Position Option Fiscal Year Price Date
- ---------------------------- ------------------- ---------------------- --------------- ---------
<S> <C> <C> <C> <C>
Andrew Gyenes 300,000 20% $3.00 8/15/01
Chairman of the
Board 275,000 19% $1.625 5/7/02
Kenneth Gruber 50,000 3% $3.00 8/15/01
Vice President,
Chief Financial 75,000 5% $1.625 5/7/02
Officer
</TABLE>
FISCAL YEAR END OPTION VALUES
No options were exercised by the Named Executive Officers during fiscal
1997. 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, 1997, 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, 1997, which was $1.875.
<TABLE>
<CAPTION>
FISCAL YEAR END OPTION VALUES
Number of Securities
Underlying Unexercised Value of Unexercised in-the
Options at FY End (#) Money Options at FY-End ($)
Name Exercisable/ Unexercisable Exercisable/ Unexercisable
- -------------------------- ---------------------------------------- ---------------------------
<S> <C> <C>
Andrew Gyenes 363,889/536,111 $0/$68,750
Kenneth Gruber 178,472/146,528 $0/$18,750
</TABLE>
CERTAIN TRANSACTIONS
In February 1997, the Company consummated a private placement of 2,000
shares of Class B Preferred Stock at a purchase price of $1,000 per share. The
following entities which may be deemed to be 5% stockholders of the Company
purchased Class B Preferred Stock in the private placement: Applewood
Associates, L.P. (1,500 Shares) and Woodland Partners (250 Shares).
In December 1996, the Company consummated a private placement of 84
units at a purchase price of $100,000 per unit, each unit consisting of 80
shares of Class A Preferred Stock and 50,000 Common Stock Purchase Warrants to
purchase in the aggregate 4,200,000 shares of Common Stock at an exercise price
of $4.00 per
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<PAGE>
share. The following entities which may be deemed to be 5% stockholders of the
Company purchased units in the private placement: Applewood Associates, L.P. (25
units), Seneca Ventures (2 units), 21st Century Communications-Foreign Partners,
L.P. (2.28 units), 21st Century Communications T-E Partners, L.P. (5.77 units),
Woodland Partners (2 units) and Woodland Venture Fund (3 units). In February
1997, the Company consummated an exchange offer whereby the Company issued one
share of Common Stock for every 2.8 Common Stock Purchase Warrants tendered in
the exchange offer.
On December 4, 1996, the Company entered into an agreement (the
"Enteractive Affiliates Agreement") with USWeb Corporation ("USWeb") pursuant to
which the Company became an affiliate of USWeb and a member of USWeb's Network
of independent affiliates. Investors in USWeb include 21st Century
Communications Partners, L.P., and Wheatley Partners, L.P. Such entity is
controlled by Wheatley Partners, LLC, a limited liability company which is the
general partner of Wheatley Partners, L.P. The members and officers of Wheatley
Partners, LLC include Barry Rubenstein, Irwin Lieber, Seth Lieber and Jonathan
Lieber, each of whom may be deemed 5% stockholders of the Company. Barry
Rubenstein is also a Director of USWeb.
All of the above transactions resulted from arms-length negotiations
and were approved by the independent members of the Company's Board of Directors
who did not have an interest in the transaction. The Company believes that the
terms of such transaction were on terms that were no less favorable than were
available from unaffiliated third parties. Future and ongoing transactions with
affiliates of the Company, if any, will be on terms believed by the Company to
be no less favorable than are available from unaffiliated third parties and will
be approved by a majority of the independent members of the Company's Board of
Directors who do not have an interest in the transaction.
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<PAGE>
APPROVAL OF AMENDMENT TO THE COMPANY'S
1994 INCENTIVE AND NON-QUALIFIED STOCK OPTION PLAN
INCREASING THE NUMBER OF COMMON SHARES THAT MAY BE
SUBJECT TO OPTIONS GRANTED THEREUNDER FROM 2,500,000 TO 3,250,000
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 and amendments thereto, options to purchase an
aggregate of 2,500,000 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 Amendment to the 1994 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 2,500,000 to 3,250,000. 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.
Summary of 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.
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<PAGE>
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. Please see "Executive Compensation -- Stock
Option Table" with respect to options granted under the 1996 Plan to Messrs.
Gyenes and Gruber.
Required Vote
Approval of this proposal requires the affirmative vote of a majority
of the total votes cast on the proposal in person or by proxy.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE APPROVAL
OF THE AMENDMENT TO THE 1994 PLAN
INCREASING THE NUMBER OF COMMON SHARES
THAT MAY BE SUBJECT TO OPTIONS GRANTED
THEREUNDER FROM 2,500,000 TO 3,250,000
APPROVAL OF THE ISSUANCE
OF COMMON STOCK IN CONNECTION WITH A
PRIVATE PLACEMENT OF COMMON STOCK
PROPOSAL 3
On May 18, 1998, the Board approved a private offering of the Company's
shares of Common Stock to be offered on a "best efforts minimum $1,000,000,
maximum $4,000,000" basis (the "Offering"). Pursuant to the terms of the
proposed Offering, the per share price of Common Stock to be offered will be
$1.25. As described below, under applicable rules of the NASDAQ Stock Market,
stockholder approval is required in the event that the Company issues shares of
Common Stock in the Offering in excess of 19.9% of the number of shares of
Common Stock outstanding as of the commencement of the Offering.
The Company has entered into an agreement (the "Placement Agency
Agreement") with GKN Securities Corp. (the "Placement Agent") pursuant to which
the Placement Agent has agreed to serve as the Company's exclusive agent for the
term of the Offering. Under the terms of the Placement Agency Agreement, the
Company will issue the Placement Agent an option (the "Placement Agent Option")
to purchase ten percent of the shares of Common Stock which are sold in the
proposed Offering at an option price of $1.375 per share. Accordingly, if the
minimum amount of proceeds is received in the Offering, the Company will issue
800,000 shares of Common Stock and a Placement Option to GKN to purchase 80,000
shares of Common Stock, and if the maximum amount of proceeds is received, the
Company will issue 3,200,000 shares of Common Stock and a Placement Option to
GKN to purchase 320,000 shares of Common Stock. The Offering will terminate on
June 30, 1998, unless extended by the Company and the Placement Agent to July
31, 1998.
Notwithstanding the foregoing, pursuant to Marketplace Rule 4310[c][25]
(the "Stockholder Approval Requirement") of The Nasdaq Stock Market ("SmallCap
Market"), stockholder approval is required when a company issues common stock in
a private placement in excess of 19.9% of the number of shares of common stock
outstanding before the issuance when, as in the case of the Offering, the sales
price is lower than the higher of the book value or market value of the Common
Stock. Under the Stockholder Approval Requirement, the shares of Company Common
Stock issuable upon the exercise of the Placement Option are included in the
calculation. Accordingly, as of May 18, 1998 the Company had 9,502,593 shares of
Common Stock outstanding and the Placement Option entitles the Placement Agent
to purchase 10% of the shares of Common Stock sold in the Offering, the Company
will be required to receive stockholder approval for the issuance of shares of
Common Stock in excess of 1,719,105 (the "Cap Amount"). If the stockholders do
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<PAGE>
not approve the proposal, the Company will sell up to 1,719,105 shares of Common
Stock in the Offering.
Under the terms of the Placement Agency Agreement, in addition to the
Placement Agent Option, the Company has agreed to pay to the Placement Agent a
commission equal to 10% of the aggregate purchase price of the Common Stock sold
and a non-accountable expense allowance equal to 3% of the aggregate purchase
price of the Common Stock. Accordingly, if the aggregate purchase price of the
Common Stock sold in the Offering will equal $1,000,000, the commission payable
to the Placement Agent is $100,000 and the non-accountable expense allowance
payable to the Placement Agent will equal $30,000, and if the aggregate purchase
price of the Common Stock sold in the Offering is $4,000,000, the commission
payable to the Placement Agent will equal $400,000 and the nonaccountable
expense allowance payable to the Placement Agent will equal $120,000.
The Board believes it would be in the best interests of the Company to
approve the proposed Offering so that the Company is able to issue shares of
Common Stock in excess of the Cap Amount in the Offering. The Company intends to
use the net proceeds from the sale of shares of Common Stock in excess of the
Cap Amount for marketing and sales activities, including the salaries of
additional marketing and sales personnel, research and development, including
the salaries of additional research and development personnel, and working
capital and general corporate purposes. Failure to obtain stockholder approval
for this proposal would severely limit the Company's ability to undertake
necessary marketing and sales activities and research and development and
deplete cash reserves necessary for working capital and general corporate
purposes. Accordingly, the Company's financial position could be adversely
affected and the Company could be required to forego certain opportunities for
expansion and curtail certain business operations.
Required Vote
Approval of this proposal requires the affirmative vote of a majority
of the total votes cast on the proposal in person or by proxy.
THE BOARD RECOMMENDS A VOTE IN FAVOR
OF THE APPROVAL OF THE PROPOSED
ISSUANCE OF COMMON STOCK IN
CONNECTION WITH A PRIVATE PLACEMENT
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<PAGE>
APPROVAL OF AMENDMENT TO THE COMPANY'S CERTIFICATE
OF INCORPORATION TO CHANGE THE NAME OF THE COMPANY
FROM "ENTERACTIVE, INC." TO
"CORNERSTONE INTERNET SOLUTIONS COMPANY."
The Board has approved an amendment to Article 1 of the Company's
Certificate of Incorporation to change the name of the Company from
"Enteractive, Inc." to "Cornerstone Internet Solutions Company." The Company
believes the name change reinforces the Company's transition from being a
developer, publisher and marketer of interactive multimedia products to offering
products and services to customers for the design, development, operation and
maintenance of customer Intranets or sites on the Internet and World Wide Web.
The Company believes Cornerstone Internet Solutions Company more accurately
reflects its new business direction and eliminates any confusion about its line
of business. The Board has therefore recommended the change of the Company's
name because it believes that the new name better reflects the business of the
Company.
The Board of Directors recommends that stockholders consider and
approve a proposal to amend Article 1 of the Certificate of Incorporation. The
text of the proposed amendment is as follows:
"First: The name of the corporation is: Cornerstone Internet Solutions
Company"
If this amendment is adopted, stockholders will not be required to
exchange outstanding stock certificates for new certificates.
Required Vote
The affirmative vote of the holders of a majority of the shares of
Common Stock, the Preferred Stock and the Class B Preferred Stock voting
together as a single class is required for approval of the proposal to amend the
Company's Certificate of Incorporation.
THE BOARD RECOMMENDS A VOTE IN FAVOR OF THE
APPROVAL OF THE AMENDMENT TO THE CERTIFICATE
OF INCORPORATION CHANGING THE NAME OF THE COMPANY
SUBMISSION OF STOCKHOLDER PROPOSALS
Proposals of stockholders intending to be presented at the Company's
1999 Annual Meeting of Stockholders must be received by the Company, 584
Broadway, Suite 509, New York, New York 10012 by November 3, 1998 in order to be
considered for inclusion in the 1999 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 fiscal year ending May 31, 1998.
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.
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<PAGE>
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, as
amended for the fiscal year ended May 31, 1997 and Forms 10-QSBs, as amended for
the quarterly periods ended August 31, 1997 and November 30, 1997 and the Form
10-QSB for the quarterly period ended February 28, 1998 are available, upon
written request, at no charge to all stockholders. For a copy, write to
Enteractive, Inc., 584 Broadway, Suite 509, New York, New York 10012 Attention:
Investor Relations Department.
By Order of the Board of Directors
Kenneth Gruber
Secretary
New York, New York
May 29, 1998
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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,
Class A Preferred Stock, $.01 par value and Class B Preferred Stock, $.01 par
value, 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 Harvard Club of New
York City, 27 West 44th Street, New York, New York 10036 on Monday, June 22,
1998 at 10:00 a.m., local time.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" THE NOMINEES FOR
DIRECTORS LISTED BELOW AND "FOR" PROPOSALS 2 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
Ronald Cuneo, Edward Schroeder, Rino Bergonzi, Andrew Gyenes,
Peter Gyenes 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 the amendment to the Company's 1994 Incentive and
Non-Qualified Stock Option Plan.
FOR / / AGAINST / / ABSTAIN / /
3. The approval of issuance of Common Stock in excess of 19.9% of the
Company's issued and outstanding Company's Common Stock in connection with
a private placement of the Company's Common Stock.
FOR / / AGAINST / / ABSTAIN / /
4. The approval of the amendment to the Company's Certificate of Incorporation
changing the Company's name.
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, "FOR" PROPOSAL 4 AND IN THE DISCRETION OF THE PROXIES AS TO
ANY OTHER MATTERS PRESENTED AT THE ANNUAL MEETING. At the present time, the
Board of Directors knows of no other business to be presented at the Annual
Meeting.
The undersigned 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.
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<PAGE>
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: _________________________, 1998
PLEASE COMPLETE, DATE, SIGN AND MAIL THIS PROXY CARD
IN THE ENCLOSED PREPAID ENVELOPE.
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