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. ___)
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Check the appropriate box:
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Only(as permitted by Rule 14a-6(e)(2))
[ X][X] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Rule 14a-12
ePlus inc.
- --------------------------------------------------------------------------------___________________ePlus inc._____________________
(Name of Registrant as Specified in Its Charter)
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ePlus inc.
400 Herndon Parkway
Herndon, VA 20170
August 21, 200024, 2001
Dear Stockholder:
You are cordially invited to attend the annual meeting of Stockholders of ePlus
inc. on September 20, 2000.2001. The annual meeting will begin at 10:30 a.m. local
time at the Hyatt Regency Reston, 1800 Presidents Street, Reston, VA 20191.
The formal notice of the meeting follows on the next page. In addition,
information regarding each of the matters you will be asked to vote on at the
annual meeting is contained in the attached proxy statement. We urge you to read
the proxy statement carefully. Mailing of proxy materials will begin on August
24, 2000,2001, to all stockholders of record at the close of business on July 28,
2000.2001. The mailings will include the proxy, proxy card, return envelope, and the
ePlus 20002001 annual report.
It is important that you vote at the annual meeting. Whether or not you plan to
attend in person, we urge you to complete, date, and sign the enclosed proxy
card and return it as promptly as possible in the accompanying envelope. If you
are a stockholder of record and do attend the meeting and wish to vote your
shares in person, even after returning your proxy, you still may do so.
We look forward to seeing you in Reston, Virginia on September 20, 2000.2001.
Very truly yours,
/s/Phillip G. Norton
Phillip G. Norton, President
EPLUS INC.
400 Herndon Parkway
Herndon, VA 20170
----------------------------------------
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
to be held September 20, 2000
----------------------------------------2001
To the stockholders of ePlus inc.:
The annual meeting of stockholders of ePlus inc., a Delaware corporation, will
be held on September 20, 2000,2001, at the Hyatt Regency Reston, 1800 Presidents
Street, Reston, VA 20191, at 10:30 a.m. local time for the purposes stated
below:
1. To elect two Class III directors, each to serve a term of three years and
until their successors have been duly elected and shall qualify.
2. To approve and adopt an amendment to the ePlus inc. Certificate of
Incorporation to increase the number of shares of our authorized stock from
27 million shares (consisting of 25 million shares of common stock, par
value $0.01, and 2 million preferred shares) to 52 million shares
(consisting of 50 million shares of common stock, par value $0.01, and 2
million preferred shares).
3. To ratify the appointment of Deloitte & Touche LLP as our independent
auditors for our fiscal year ending March 31, 2001.
4.2002.
3. To transact such other business as may properly come before the annual
meeting.
Under the provisions of our Bylaws, and in accordance with Delaware law, the
board of directors has fixed the close of business on July 28, 2000,2001, as the
record date for stockholders entitled to notice of and to vote at the annual
meeting,
Whether or not you expect to be present at the meeting, please date and sign the
enclosed from of proxy and mail it promptly in the enclosed envelope to First
Union National Bank, 1525 W.T. Harris Blvd., 3C3, Charlotte, NC 28288-1113.
ePlus inc.
/s/Kleyton L. Parkhurst
August 24, 20002001 Kleyton L. Parkhurst, Secretary
ePlus inc.
PROXY STATEMENT
Table of Contents
INFORMATION ABOUT ePlus INC..............................................................................1INC.......................................................................1
INFORMATION ABOUT THE ANNUAL MEETING.....................................................................1MEETING..............................................................1
INFORMATION ABOUT THE PROXY STATEMENT....................................................................1STATEMENT.............................................................1
INFORMATION ABOUT VOTING.................................................................................2VOTING..........................................................................2
QUORUM REQUIREMENTS......................................................................................2REQUIREMENTS...............................................................................2
VOTING REQUIREMENTS .....................................................................................3REQUIREMENTS...............................................................................3
Proposal 1............................................................................................31........................................................................................3
Proposal 2............................................................................................32........................................................................................3
Proposal 3............................................................................................33........................................................................................3
Effect of Abstentions and Broker Non-votes............................................................3Non-votes........................................................3
DISSENTER'S RIGHTS OF APPRAISAL..........................................................................3APPRAISAL...................................................................3
VOTING SECURITIES, PRINCIPAL HOLDERS THEREOF, AND MANAGEMENT ............................................3MANAGEMENT......................................3
DIRECTORS AND EXECUTIVE OFFICERS.........................................................................6OFFICERS..................................................................6
Section 16(a) Beneficial Ownership Reporting Compliance...............................................8Compliance...........................................8
The Board of Directors................................................................................9Directors............................................................................9
Director Compensation................................................................................10Compensation............................................................................10
Committees of the Board of Directors.................................................................10Directors.............................................................10
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS........................................................11OFFICERS.................................................11
Summary Compensation Table...........................................................................11Table.......................................................................11
Option Grants in Last Fiscal Year....................................................................11Year................................................................11
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-end Option/SAR Values............12Values........12
Report Of The Compensation Committee.................................................................13Committee.............................................................13
Employment Contracts and Termination of Employment and Change in Control Arrangements................13Arrangements............13
Compensation Committee Interlocks and Insider Participation..........................................15Participation......................................15
PERFORMANCE GRAPH.......................................................................................15GRAPH................................................................................15
CERTAIN TRANSACTIONS....................................................................................16
Saga Systems, Inc. ..................................................................................17TRANSACTIONS.............................................................................16
TC Plus LLC..........................................................................................16LLC......................................................................................16
Advances and Loans to Employees and Stockholders.....................................................17Stockholders.................................................17
Reimbursement of Certain Expenses....................................................................17Expenses................................................................17
Sale of Equity Investment............................................................................17Investment........................................................................17
Indemnification Agreements...........................................................................17Agreements.......................................................................17
Future Transactions..................................................................................18Transactions..............................................................................18
PROPOSAL 1..............................................................................................181.......................................................................................18
PROPOSAL 2..............................................................................................192.......................................................................................19
PROPOSAL 3..............................................................................................213.......................................................................................21
OTHER PROPOSED ACTION...................................................................................21ACTION............................................................................21
STOCKHOLDER PROPOSALS AND SUBMISSIONS...................................................................21SUBMISSIONS............................................................21
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION.................................................A-1INCORPORATION. A-1
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INFORMATION ABOUT ePLUS INC.
ePlus inc. provides an Internet-based, business-to-business supply chain
management solutionssolution for information technology and other operating resources. On
November 2, 1999, we introduced our remotely-hosted electronic commerce
solution, ePlusSuite, which combines Internet-based tools with dedicated
customer service to provide a comprehensive outsourcing solution for the
automated procurement, management, financing and disposition of operating
resources. The address of our principal executive office is 400 Herndon Parkway,
Herndon, Virginia 20170 and our telephone number at that address is (703)
834-5710. Our Website is located at www.ePlus.com.
INFORMATION ABOUT THE ANNUAL MEETING
Our annual meeting will be held on September 20, 20002001 at 10:30 A.M. local time,
at the Hyatt Regency Reston, 1800 Presidents Street, Reston, VA 20191.
The annual meeting has been called to consider and take action on the following
proposals:
(1) to elect two Class III directors, each to serve a term of three years until
his successor has been duly elected and shall qualify,
(2) to approve and adopt an amendment to the ePlus inc. Certificate of
Incorporation to increase the number of shares of our authorized stock from
27 million shares (consisting of 25 million shares of common stock, par
value $0.01, and 2 million preferred shares) to 52 million shares
(consisting of 50 million shares of common stock, par value $0.01, and 2
million preferred shares),
(3) to ratify the appointment of Deloitte & Touche LLP as our independent
auditors for the our fiscal year ending March 31, 2001,2002, and
(4)(3) to transact such other business as may properly come before the meeting.
Our board of directors has unanimously approved each of the proposals and
recommends that you vote in favor of each of the proposals. All of the holders
of record of our common stock of ePlus at the close of business on July 28,
2000,2001, the record date, will be entitled to vote at the annual meeting.
INFORMATION ABOUT THE PROXY STATEMENT
We sent you this proxy statement because ePlus' board of directors is soliciting
your proxy to vote at the annual meeting. If you own ePlus common stock in more
than one account, such as individually and also jointly with your spouse, you
may receive more than one set of these proxy materials. To assist us in saving
money and to provide you with better shareholder services, we encourage you to
have all of your accounts registered in the same name and address. You may do
this by contacting our transfer agent, First Union National Bank at (800)
829-8432. This proxy statement contains information that we are -1-
required to
provide to you under the rules of the Securities and Exchange Commission and is
designed to assist you in voting your shares. On August 18,
2000,24, 2001, we began
mailing these proxy materials to all shareholders of record at the close of
business on July 28, 2000.2001.
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INFORMATION ABOUT VOTING
Shareholders can vote in person at the annual meeting or by proxy. To vote by
proxy, please mail the enclosed proxy card in the enclosed envelope. Please sign
and date your proxy card before mailing.
Each share of ePlus common stock is entitled to one vote on all matters
presented at the annual meeting. If your shares are held in the name of a bank,
broker or other holder of record, you will receive instructions from the holder
of record that you must follow in order for your shares to be voted. If your
shares are not registered in your own name and you plan to attend the annual
meeting and vote your shares in person, you should contact your broker or agent
in whose name your shares are registered to obtain a broker's proxy card and
bring it annual meeting in order to vote. If you vote by proxy, the individuals
named on the card (your proxy holders) will vote your shares in the manner you
indicate. You may specify whether your shares should be voted for or if
authority to vote is withheld as to the nominees for director and whether your
shares should be voted for or against each of the other proposals. If you sign
and return the card without indicating your instructions, your shares will be
voted for:
- - The election of both the Class III nominees for director; and
- - The approval of the proposal to amend the ePlus Certificate of
Incorporation to increase the number of shares of our authorized stock
from 27 million shares (consisting of 25 million shares of common
stock, par value $0.01, and 2 million preferred shares) to 52 million
shares (consisting of 50 million shares of common stock, par value
$0.01, and 2 million preferred shares),
- - The ratification of the appointment of Deloitte & Touche LLP as our
independent auditors for the fiscal year ending March 31, 2001.2002.
You may revoke or change your proxy at any time before it is voted by sending a
written notice of your revocation to ePlus' Corporate Secretary, Kleyton L.
Parkhurst.
QUORUM REQUIREMENTS
As of July 28, 2000,2001, the record date for this solicitation of proxies, there
were 9,671,58910,153,007 shares of common stock outstanding. The holders of record of a
majority of the shares of common stock entitled to vote at the meeting, present
in person or by proxy, will constitute a quorum for the transaction of business
at the annual meeting or any adjournment thereof. If a quorum should not be
present, the annual meeting may be adjourned until a quorum is obtained.
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VOTING REQUIREMENTS
Proposal 1
To be elected as a Class III Director, a nominee must be one of the two persons
receiving the greatest number of affirmative votes cast at the meeting for Class
III Directors.
Proposal 2
To be approved, Proposal 2 requires the affirmative vote of the holders
of a majority of the shares of common stock outstanding and entitled to vote on
the proposal.
Proposal 3
To be approved, Proposal 3 requires the affirmative vote of the holders of at
least a majority of the shares present in person or represented by proxy at the
meeting and entitled to vote on the proposal.
Effect of Abstentions and Broker Non-votes
Abstentions and broker non-votes will be counted only for the purpose of
determining the existence of a quorum, but will not be counted as an affirmative
vote for the purposes of determining whether a proposal has been approved.
Therefore, an abstention or a broker non-vote will not have any effect on the
votes for Proposals 1 and 3, but will have the effect as a vote against
Proposal 2.
All Proxiesproxies received will be voted in accordance with the choices specified on
such proxies. Proxies will be voted in favor of a proposal if no contrary
specification is made. All valid proxies obtained will be voted at the
discretion of the board of directors with respect to any other business that may
come before the annual meeting.
We may solicit proxies by use of the mails, and may also be made in person or by
telephone, e-mail or other electronic communications. We will bear the cost of
soliciting proxies in the accompanying form. We may reimburse brokerage firms
and others for their expenses in forwarding proxy materials to the beneficial
owners and soliciting them to execute the proxies.
DISSENTERS' RIGHTS OF APPRAISAL
The board of directors does not propose any action for which the laws of the
state of Delaware, or the Certificate of Incorporation, Bylaws or corporate
resolutions of ePlus provide a right of a stockholder to dissent and obtain
payment for shares.
VOTING SECURITIES, PRINCIPAL HOLDERS
THEREOF, AND MANAGEMENT
The following table sets forth certain information as of July 28, 2001, the
Record
Daterecord date with respect to: (1) each executive officer, Directordirector and the
Directordirector
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nominees; (2) all executive officers and Directorsdirectors of ePlus as a group; and (3)
all persons known by the ePlus to be the beneficial owners of five percent or
more of our common stock.
NUMBER OF
SHARES % OF
BENEFICIALLY UTSTANDING
NAME OF BENEFICIAL OWNER(1)(2) OWNED SHARES
------------------------------ ------------ ----------
Phillip G. Norton(3) 2,370,000 24.5%
Bruce M. and Elizabeth D. Bowen(4) 857,500 8.9%
Steven J. Mencarini(5) 44,040 *
Kleyton L. Parkhurst(6) 193,000 2.0%
C. Thomas Faulders, III(7) 13,507 *
Terrence O'Donnell(8) 30,000 *
Carl J. Rickertsen(9)(10) 1,661,067 17.2%
Dr. Paul G. Stern(9) 1,641,067 17.0%
All directors and named executive officers as a group (8 Individuals) 5,169,114 53.4%
TC Plus, LLC(9) 1,641,067 17.0%
Eric D. Hovde(11) 501,424 5.2%
- -------------------------------------------------------------------------------------------------------------------NUMBER OF
SHARES% OF
BENEFICIALLY OUTSTANDING
NAME OF BENEFICIAL OWNER (1)(2) OWNED SHARES
------------------------------- ----- ------
Phillip G. Norton (3) 2,371,000 24.5%
Bruce M. and Elizabeth D. Bowen (4) 817,500 8.9%
Steven J. Mencarini (5) 44,040 *
Kleyton L. Parkhurst (6) 163,000 2.0%
C. Thomas Faulders, III (7) 13,507 *
Terrence O'Donnell (8) 30,000 *
Lawrence Herman -- *
Thomas L. Hewitt -- *
All directors and named executive
officers as a group (8 Individuals) 3,439,047 33.8%
TC Plus, LLC(9) 1,015,552 9.98%
Eric D. Hovde(10) 560,024 5.2%
Invista Capital Management LLC 1,423,871 10.7%
Firsthand Capital Management, Inc. 832,300 8.6%
--------------------------
* less than 1%
(1) The business address of Messrs. Norton, Bowen, Mencarini, Parkhurst,
Faulders, O'Donnell, Herman, Hewitt is 400 Herndon Parkway, Herndon Virginia,
20170. The business address of TC Plus, LLC is 1455 Pennsylvania Avenue, N.W.,
Suite 350, Washington, D.C. 20004. The business address of Mr. Hovde is 1826
Jefferson Place, N.W., Washington, D.C. 20036. The business address of Invista
Capital Management LLC is 699 Walnut, 1900 Hub Tower, Des Moines, Iowa
50392-0088. The business address of Firsthand Capital Management, Inc. is 125
South Market, Suite 1200, San Jose, California 95113.
(2) Unless otherwise indicated and subject to community property laws where
applicable, each of the stockholders named in this table has sole voting and
investment power with respect to the shares shown as beneficially owned by such
stockholder. A person is deemed to be the beneficial owner of securities that
can be acquired by such person within 60 days from the date of this prospectus
upon exercise of options or warrants. Each beneficial owner's percentage
ownership is determined by assuming options or warrants that are held by such
person (but not by any other person) and that are exercisable within 60 days
from the date of this prospectus have been exercised. The ownership amounts
reported for persons who we know own 5% or more of our common stock are based on
the Schedules 13D and 13G filed with the SEC by such persons, unless we have
reason to believe that the information contained in those filings is not
complete or accurate.
(3) Includes 2,040,000 shares held by J.A.P. Investment Group, L.P., a Virginia
limited partnership, of which J.A.P., Inc., a Virginia corporation, is the sole
general partner. The limited partners are: Patricia A. Norton, trustee for the
benefit of Phillip G. Norton, Jr., u/a dated as of July 20, 1983; Patricia A.
Norton, the spouse of Mr. Norton, trustee for the benefit of Andrew L. Norton,
u/a dated as of July 20, 1983; Patricia A. Norton, trustee for the benefit of
Jeremiah O. Norton, u/a dated as of July 20, 1983; and Patricia A. Norton.
Patricia A. Norton is the sole stockholder of J.A.P., Inc., and Mr. Norton is
the sole director and President of J.A.P., Inc. Mr. Norton and J.A.P. Investment
Group, L.P. are parties to a stockholders agreement with TC Plus, LLC, Bruce M.
Bowen, and Kevin M. Norton and Patrick J. Norton who Mr. Norton's brothers. Also
includes 330,000 shares of common stock that Mr. Norton has rights to acquire
pursuant to vested options and are immediately exercisable. See "Certain
Transactions--TC Plus LLC."
(4) Includes 520,000 shares held by Mr. and Mrs. Bowen, as tenants by the
entirety, and includes 160,000 shares held by Bowen Holdings L.C., a Virginia
limited liability company, composed of Mr. Bowen and three minor children of
whom Mr. Bowen is legal guardian and for which shares Mr. Bowen serves as
manager. Also includes 145,500 shares of common stock that Mr. Bowen has rights
to acquire pursuant to vested options and are immediately exercisable. Mr. Bowen
is party to a stockholders agreement with TC Plus, LLC, Phillip G. Norton, Kevin
M. Norton and Patrick J. Norton. See "Certain Transactions--TC Plus LLC."
(5) Includes 44,040 shares of common stock issuable to Mr. Mencarini under
currently exercisable options.
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(6) Includes 13,000 shares held by Kleyton L. Parkhurst and 150,000 shares of
common stock issuable to Mr. Parkhurst under currently exercisable options.
(7) Includes 13,507 shares of common stock issuable to Mr. Faulders under
currently exercisable options.
(8) Includes 30,000 shares of common stock issuable to Mr. O'Donnell under
currently exercisable options.
(9) Includes 1,015,552 shares of our common stock owned by TC Plus, LLC. Thayer
Equity Investors III, L.P. is the managing member of TC Plus, LLC. TC Equity
Partners, L.L.C. is the sole general partner of Thayer Equity Investors III,
L.P., and has sole voting and investment power with respect to the shares of our
common stock held by TC Plus, LLC. TC Plus, LLC is party to a stockholders
agreement with Phillip G. Norton, J.A.P. Investment Group, L.P., Bruce M. Bowen,
Kevin M. Norton and Patrick J. Norton which, among other things, grants TC Plus,
LLC authority to effectively appoint two members of our board of directors.
Currently, TC Plus does not exercise its right to appoint directors of ePlus
pursuant to vested options and are immediately exercisable. See "Certain
Transactions--TC Plus LLC."
(4) Includes 560,000 shares held by Mr. and Mrs. Bowen, as tenants by the
entirety, and includes 160,000 shares held by Bowen Holdings L.C., a Virginia
limited liability company, composed of Mr. Bowen and three minor children of
whom Mr. Bowen is legal guardian and for which shares Mr. Bowen serves as
manager. Also includes 137,500 shares of common stock that Mr. Bowen has rights
to acquire pursuant to vested options and are immediately exercisable and
excludes 7,500 options to acquire shares of common stock which are not vested
and not immediately exercisable. Mr. Bowen is party to a stockholders agreement
with TC Plus, LLC, Phillip G. Norton, Kevin M. Norton and Patrick J. Norton. See
"Certain Transactions--TC Plus LLC."
(5) Includes 44,040 shares of common stock issuable to Mr. Mencarini under
currently exercisable options and excludes 46,660 options to acquire shares of
common stock which are not vested and not immediately exercisable.
-4-
(6) Includes 13,000 shares held by Kleyton L. Parkhurst; 30,000 shares held by
three minor children of Kleyton L. Parkhurst, all of which shares are voted by
Kleyton L. Parkhurst, Custodian, under the Virginia Uniform Gift to Minors Act;
and 150,000 shares of common stock issuable to Mr. Parkhurst under currently
exercisable options and excludes 60,000 options to acquire shares of common
stock which are not vested and not immediately exercisable.
(7) Includes 13,507 shares of common stock issuable to Mr. Faulders under
currently exercisable options.
(8) Includes 30,000 shares of common stock issuable to Mr. O'Donnell under
currently exercisable options.
(9) Includes 1,641,067 shares of our common stock owned by TC Plus, LLC. Thayer
Equity Investors III, L.P. is the managing member of TC Plus, LLC. TC Equity
Partners, L.L.C. is the sole general partner of Thayer Equity Investors III,
L.P., and has sole voting and investment power with respect to the shares of our
common stock held by TC Plus, LLC. Messrs. Frederic V. Malek and Carl J.
Rickertsen and Dr. Paul G. Stern are members of TC Equity Partners, L.L.C. and
share power to vote and dispose of shares of our common stock, except for the
20,000 shares of our common stock underlying the options over which Mr.
Rickertsen has sole voting and dispositive power. TC Plus, LLC is party to a
stockholders agreement with Phillip G. Norton, J.A.P. Investment Group, L.P.,
Bruce M. Bowen, Kevin M. Norton and Patrick J. Norton which, among other things,
grants TC Plus, LLC authority to effectively appoint two members of our board of
directors. Both Mr. Rickertsen and Dr. Stern are directors of ePlus and serve
pursuant to appointment by TC Plus, LLC under the terms of the stockholders agreement. See "Certain Transactions--TC Plus LLC."
(10) Includes 20,000 shares of common stock issuable to Mr. Rickertsen under
currently exercisable options.
(11) Includes 402,600 shares beneficially owned as a managing member of Hovde
Capital, L.L.C; 19,000 shares beneficially owned as a trustee for the Hovde
Financial, Inc. Profit Sharing Plan and Trust; 30,000 shares beneficially owned
as managing member of Hovde Acquisition, L.L.C.; 17,000 shares beneficially
owned as a trustee for The Eric D. Hovde Foundation; and 32,824 shares held
directly by Eric D. Hovde.
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DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position with ePlus of
each person who is an executive officer, director or significant employee.
NAME AGE POSITION CLASS
Phillip G. Norton.....................56 Chairman of the Board, III
President and Chief
Executive Officer
Bruce M. Bowen........................48 Director and Executive Vice III
President
Steven J. Mencarini...................45 Senior Vice President and
Chief Financial Officer
Kleyton L. Parkhurst..................37 Senior Vice President,
Secretary, and Treasurer
Terrence O'Donnell....................56 Director II
Carl J. Rickertsen....................40 Director II
C. Thomas Faulders, III...............50DIRECTORS AND EXECUTIVE OFFICERS
The following table sets forth the name, age and position with ePlus of
each person who is an executive officer, director or significant employee.
NAME AGE POSITION CLASS
Phillip G. Norton..................57 Chairman of the Board, III
President and Chief
Executive Officer
Bruce M. Bowen.....................49 Director and Executive Vice III
President
Steven J. Mencarini................46 Senior Vice President and
Chief Financial Officer
Kleyton L. Parkhurst...............38 Senior Vice President,
Secretary, and Treasurer
Terrence O'Donnell.................57 Director II
Thomas L. Hewitt ..................62 Director II
C. Thomas Faulders, III............50 Director I
Lawrence Herman....................61 Director I
Dr. Paul G. Stern.....................61 Director I
The name and business experience during the past five years of each director,
executive officer and key employee of ePlus are described below.
Phillip G. Norton joined ePlus in March 1993 and has served since then as its
Chairman of the Board and Chief Executive Officer. Since September 1, 1996, Mr.
Norton has served as President of ePlus. From October 1990 through March 1993,
Mr. Norton was an investor and devoted the majority of his time to managing his
personal investments. From October 1992 to March, 1993, Mr. Norton served as a
consultant to ePlus and engaged in private investment activity. Prior to 1990,
Mr. Norton was President and Chief Executive officer of PacifiCorp Capital, Inc.
(formerly Systems Leasing Corporation), a wholly owned indirect subsidiary of
PacifiCorp, Inc., an information technology leasing company and an SEC reporting
entity. Mr. Norton started his leasing career as the National Sales Manager at
Federal Leasing, Inc. Mr. Norton is a 1966 graduate of the U.S. Naval Academy.
Phillip G. Norton and Kevin M. Norton are brothers.
Bruce M. Bowen founded ePlus in 1990 and served as its President until September
1, 1996. Since September 1, 1996, Mr. Bowen has served as a director and
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Executive Vice President of ePlus, and from September 1, 1996 to June 18, 1997,
he served as Chief Financial Officer. Mr. Bowen has been a director of ePlus
since it was formed. Prior to founding ePlus, from 1986 through 1990, Mr. Bowen
was Senior Vice President of PacifiCorp Capital, Inc. Prior to his tenure at
PacifiCorp Capital Inc., Mr. Bowen was with Systems Leasing Corporation and
Federal Leasing, Inc., where his leasing career started in 1975. Mr. Bowen is a
past President of the Association of Government Leasing and Finance and
currently serves as Vice-Chairman for the State and Local Public Enterprise
Committee of the Information Technology Association of America. Mr. Bowen is a
1973 graduate of the University of Maryland and in 1978 received a Masters of
Business Administration from the University of Maryland.
Steven J. Mencarini joined ePlus in June of 1997 as Senior Vice President and
Chief Financial Officer. Prior to joining ePlus, Mr. Mencarini was Controller of
the Technology Management Group of Computer Sciences Corporation, a New York
Stock Exchange company and one of the nation's three largest information
technology outsourcing organizations. Mr. Mencarini joined CSC in 1991 as
Director of Finance and was promoted to Controller in 1996. Prior to working at
CSC, Mr. Mencarini was the Vice President-Finance of PacifiCorp Capital from
1981 to 1991, and was Senior Auditor of Deloitte Haskins & Sells from 1979 to
1981. Mr. Mencarini is a 1976 graduate of the University of Maryland and has a
Masters of Taxation from American University.
Terrence O'Donnell joined ePlus' board of directors upon the completion of
ePlus' Initial Public Offering. Mr. O'Donnell is a partner with the law firm of
Williams & Connolly in Washington, D.C. and Executive Vice President and General
Counsel of Textron, Inc. Mr. O'Donnell has practiced law with Williams &
Connolly since 1977, with the exception of the period from 1989 through 1992
when he served as general counsel to the U.S. Department of Defense. Prior to
commencing his law practice, Mr. O'Donnell served as Special Assistant to
President Ford from 1974 through 1976 and as Deputy Special Assistant to
President Nixon from 1972 through 1974. Mr. O'Donnell presently also serves as a
director of IGI, Inc., a Nasdaq National Market Company (Nasdaq: "IG"). IGI
produces and markets animal health products such as poultry vaccines, veterinary
pharmaceuticals, nutritional supplements and grooming aids. IGI also produces
and markets consumer cosmetics and skin care products. Mr. O'Donnell is a 1966
graduate of the U.S. Air Force Academy, and in 1971, received a Juris Doctor
from Georgetown University Law Center.
Carl J. RickertsenThomas L. Hewitt joined ePlus'the board of directors uponon June 18, 2001. Mr. Hewitt is
currently the completionfounder and CEO of ePlus' Initial Public Offering.Global Governments, Inc. The business is
focused on strategic planning and marketing in the international government
information technology (IT) marketplace. This company was incorporated in
January 2000. Mr. RickertsenHewitt's primary area of expertise is in providing strategic
planning and in the management of client marketing and sales activities within
the government marketplace. In December 1984, Tom Hewitt founded Federal
Sources, Inc., (FSI) as a partnermarket research and consulting firm focused on IT in
Thayer Capital
Partners, a $364 million institutional private equity fund based in Washington,
D.C. Mr. Rickertsen has beenthe federal government. The firm's products and services grew to include state
and local governments. The firm provides client companies with Thayer Capital Partners since September 1994.market research,
trend analysis and tracking of major government programs, opportunity
identification, and training to assist clients with market expansion. Prior to
his tenure at Thayer Capital Partners,FSI, Mr. Rickertsen acted as a
private financial consultant from 1993 through 1994 andHewitt was a partnerSenior Vice President of Hancock
Park Associates,Kentron, which was acquired by
PRC. Has also served a private equity investment firm,Chairman of the Board of Business World, Inc., and with
Boeing Computer Services for six years. In 1998 Virginia Governor James S.
Gilmore, III appointed Mr. Hewitt to his Commission on Information Technology,
which included top leaders of the technology industry from 1989 through 1993. Prior
to that,around the world. Mr.
Rickertsen was associated with Brentwood AssociatesHewitt received his Bachelor of Science in Aeronautical Engineering from 1987
through 1989 and was a Financial Analyst with Morgan Stanley & Co., Incorporated
from 1983 through 1985. Mr. Rickertsen is a director of SAGA Software, Inc. Mr.
Rickertsen is a 1983 graduate of StanfordNorth
Carolina State University and in 1987, received a
Mastershis masters of Business Administration from Harvard Graduate School of Business
Administration.Long
Island University.
C. Thomas Faulders, III joined the board of directors on July 14, 1998. Mr.
Faulders is the Chairman, President and Chief Executive Officer of LCC
International, Inc. (Nasdaq: "LCCI") and is Chairman of Telesciences, Inc.
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(Nasdaq: "TLSI"), formerly Axiom Inc. (Nasdaq: "AXIM") a provider of real-time
billing data collection and processing, fraud management and traffic management
systems. Mr. Faulders was most recently Executive Vice President, Treasurer and
Chief Financial Officer of BDM International, Inc., a prominent systems
integration company which is a wholly owned subsidiary of TRW, Inc. Prior to
BDM, Mr. Faulders was Vice President and Chief Financial Officer of Comsat
Corporation; Senior Vice President, Business Marketing and Vice President, and
Vice President and Treasurer of MCI Communications Corporation; and Treasurer of
Satellite Business Systems. Mr. Faulders was in the U.S. Navy from 1971 to 1979.
He is a 1971 graduate of the University of Virginia and has an MBA from the
Wharton School of the University of Pennsylvania, Class of 1981. Mr. Faulders is
on the board of directors of Intersolv, Inc., a software development company
(Nasdaq: "ISLI"), Universal Technology and Systems, Inc., a private company, and
the Ronald Reagan Institute for Emergency Medicine at George Washington
University Hospital, the Northside Hospital Advisory Board in Atlanta, and the
Leukemia Society of America.
Mr. FauldersLawrence Herman, one of KPMG Consulting's most senior state and local government
managing directions, is responsible for managing national alliances with
e-government and enterprise software companies. He has directed a statewide
performance audit of North Carolina, resulting in a strategic fiscal plan. He
further directed a statewide fiscal strategy for the Commonwealth of Kentucky's
Governor's Commission on Quality and Efficiency. The Commission consisted of 53
private sector and public sector leaders, and studies all aspects of Kentucky's
$4 billion general fund. A graduate of Tufts University and Harvard Business
School, he has been nominatedwith KPMG for re-election as
a Class I Director atover thirty-three years, in addition to two
years on an executive exchange program with the 2000 annual meeting.
Dr. Paul G. Stern is a PartnerWhite House Office of Management
and Co-founder of Thayer Capital Partners, L.L.P.
and Arlington Capital Partners, L.L.P. Dr. Stern has been a director of ePlus
since October, 1998. Dr. Stern is a director of Aegis Communications, Inc.,
Whirlpool Corporation, The Dow Chemical Company and SAGA Software, Inc. Dr.
Stern was a Special Limited Partner at Forstmann Little & Co. from 1993 to 1995,
Vice Chairman and CEO from 1989 to 1990, Chairman and CEO from 1990 to 1993, and
Chairman of the Board from 1990 to1993. He was President of Unisys Corporation
(formerly Burroughs Corporation) form 1982 to 1987. He is a board member of the
Lauder Institute and the University of Pennsylvania's School of Engineering and
Applied Science and the Wharton School. Dr. Stern is a member of the Board of
Trustees, Library of Congress, and the Treasurer of the John F. Kennedy Center
for the Performing Arts in Washington, D.C. Dr. Stern has been nominated for
re-election as a Class I Director at the 2000 annual meeting.Budget.
Kleyton L. Parkhurst joined ePlus in 1991 as Director of Finance. Since
September 1, 1996, he has served as Secretary and Treasurer of ePlus, and since
July, 1998, as Senior Vice President of Corporate Development. Mr. Parkhurst is
responsible for all of ePlus' financing activities, mergers and acquisitions,
investor relations, and he manages ePlus' bank facilities. Mr. Parkhurst has
syndication expertise in commercial nonrecourse debt, federal government leases,
state and local taxable and tax-exempt leases, and computer lease equity
placements. From 1988 through 1991, Mr. Parkhurst was an Assistant Vice
President of PacifiCorp Capital, Inc. Mr. Parkhurst is a 1985 graduate of
Middlebury College.
Each officer of ePlus is chosen by the board of directors and holds his or her
office until his or her successor shall have been duly chosen and qualified or
until his or her death or until he or she shall resign or be removed as provided
by the Bylaws.
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), requires ePlus' officers and directors, and persons who own more than ten
percent of a registered class of ePlus' equity securities, to file
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reports of ownership and changes in ownership of equity securities of ePlus with
the SEC and NASDAQ National Market. Officers, directors and
greater-than-ten-percent stockholders are required by SEC regulation to furnish
ePlus with copies of all Section 16(a) forms that they file.
Based solely upon a review of Forms 3, Forms 4 and Forms 5 furnished to ePlus
pursuant to Rule 16a-3 under the Exchange Act, ePlus believes that all such
forms required to be filed pursuant to Section 16(a) of the Exchange Act were
timely filed, as necessary, by the officers, directors and security holders
required to file.
The Board of Directors
ePlus' Bylaws as amended provide that the number of Directors of ePlus shall be
six, until this number is amended by a resolution duly adopted by the board of
directors or the Stockholders (subject to certain provisions of the Bylaws
relating to the entitlement of holders of preferred stock to elect directors).
Our board of directors is divided into three classes: Class I, comprised of two
Directors; Class II, comprised of two Directors; and Class III, comprised of two
Directors. Subject to the provisions of the Bylaws, at each annual meeting of
Stockholders, the successors to the class of Directors whose term shall then
expire shall be elected to hold office for a term expiring at the third
succeeding annual meeting of Stockholders. Each Director shall hold office until
his or her successor shall have been duly elected and shall qualify or until he
or she shall resign or shall have been removed in the manner provided in the
Bylaws.
The members of the three classes of directors are as follows: Class I-C. Thomas
Faulders III and Dr. Paul G. Stern,Lawrence Herman, Class II--Terrence O'Donnell and Carl J. Rickertsen,Thomas L.
Hewitt, and Class III-- Phillip G. Norton and Bruce M. Bowen. The Class I
Directors will stand for re-election at the annual meeting of stockholders in
2000;2003; Class II Directors are expected to stand for re-election at the annual
meeting of stockholders in 2001, and Class III Directors are expected to stand
for re-election at the annual meeting of stockholders in 2002. Each member of
the board of directors then elected will serve for a term of three years or
until a successor has been elected and qualified. The classification of the
board of directors, with staggered terms of office, was implemented for the
purpose of maintaining continuity of management and of the board of directors.
Directors SternHerman and RickertsenHewitt serve at the direction of TC Plus LLC, a major
investor of ours. See "Certain Transactions--T.C.Transactions--TC Plus LLC."
The board of directors met four times during the fiscal year ended March 31,
2000.2001. The Compensation Committee held one meeting and the Audit Committee held
two meetings during the fiscal year ended March 31, 2000.2001. No incumbent Director
attended fewer than 75% of the total number of meetings held by the board of
directors and the meetings of any committee on which the director served.
There are no material proceedings to which any Director, officer or affiliate of
ePlus, any owner of record or beneficially of more than five percent of any
class of voting securities of ePlus, or any associate of any such Director,
officer, affiliate of ePlus or security holder is a party adverse to ePlus or
any of its subsidiaries or has a material interest adverse to ePlus or any of
its subsidiaries.
-9-
Director Compensation
Directors who are also employees of ePlus do not currently receive any
compensation for service as members of the board of directors. Each outside who
is not affiliated with TC Plus LLC receives an annual grant of 10,000 stock
options, and $500 for each special committee meeting. All directors will be
reimbursed for their out-of-pocket expenses incurred to attend board or
committee meetings.
Committees of the Board of Directors
Audit Committee.
The audit committee of the board of directors (the "Audit Committee") is
responsible for making recommendations to the board concerning the engagement of
independent public accountants, monitoring and reviewing the quality and
activities of ePlus' internal and external audit functions and monitoring the
adequacy of ePlus' operating and internal controls as reported by management and
the external or internal auditors. The members of the Audit Committee are C.
Thomas Faulders III, Terrence O'Donnell and Carl J. Rickertsen.Lawrence Herman. During the fiscal
year, two meetings of the audit committee were held.
Compensation Committee.
The compensation committee of the board of directors (the "Compensation
Committee") is responsible for reviewing the salaries, benefits and other
compensation, including stock based compensation, of Mr. Norton and Mr. Bowen
and making recommendations to the board of directors based on its review. The
members of the Compensation Committee are Terrence O'Donnell, C. Thomas Faulders
III and Carl J. Rickertsen.Thomas Hewitt. Mr. Norton and Mr. Bowen, as directors, will not vote on
any matters affecting their personal compensation. Mr. Bowen and Mr. Norton will
be responsible for reviewing and establishing salaries, benefits and other
compensation, excluding stock based compensation, for all other employees.
During the fiscal year, one meeting of the Compensation Committee was held.
Stock Incentive Committee
The stock incentive committee of the board of directors (the "Stock Incentive
Committee") is authorized to award stock, and various stock options and rights
and other stock based compensation grants under ePlus' Master Stock Incentive
Plan and its component plans, which include the Amended and Restated Incentive
Stock Option Plan, the Amended and Restated Outside Director Stock Option Plan,
the Amended and Restated Nonqualified Stock Option Plan, and the Employee Stock
Purchase Plan. The members of the Stock Incentive Committee presently are Mr.
Bowen, , Mr. Rickertsen,Hewitt and Mr. Norton. Except for formula plan grants to the
outside directors under the Amended and Restated Outside Director Stock Option
Plan and grants that are approved by a majority of the disinterested members of
the board of directors, no member of the Stock Incentive Committee or the
Compensation Committee is eligible to receive grants under the Stock Incentive
Plan or the Long Term Compensation Plan. During the fiscal year, one meetings of
the Stock Incentive Committee was held.
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Nominating Committee.
Pursuant to the terms of the amended and restated stockholders agreement with TC
Plus, LLC, Carl J. Rickertsen andThomas Hewittand Bruce M. Bowen act as a nominating committee to
nominate two persons to serve as directors who are not our employees. See
"Certain Transactions--TC Plus LLC." The nominating committee will consider
nominations by stockholders made in writing to the Chairman of the Board of
ePlus.DuringePlus. During the fiscal year, one meeting of the nominating committee was held.
COMPENSATION OF DIRECTORS AND EXECUTIVE OFFICERS
Summary Compensation Table
The following table provides certain summary information concerning the
compensation earned, for services rendered in all capacities to ePlus, by ePlus'
Chief Executive Officer and certain other executive officers (together with the
Chief Executive Officer, the "Named Executive Officers") of ePlus for the fiscal
years ended March 31, 1998, 1999, 2000 and 2000.2001. Certain columns have been omitted
from this summary compensation table as they are not applicable.
ANNUAL COMPENSATION
-------------------
Long Term
Compensation
Bonus/ Awards All Other
Name and Principal Position Year Salary Commission Options/SARs Compensation
- --------------------------- ---- -------- --------------- ---------- ------------ ------------
Phillip G. Norton 2000 233,333(2) $132,000 175,0002001 250,000 147,773 1,500(1)
Chairman, Chief Executive 1999 200,000 --2000 233,000 132,000 175,000 1,500(1)
Officer and President 19981999 200,000 - 348(1)1,500(1)
Bruce M. Bowen 2000 191,667(2)2001 225,000 100,000 115,000 1,500(1)
Director, Executive Vice President 2000 191,667 100,000 115,000 1,500(1)
1999 150,000 0 1,500(1)
1998 150,000 10,000 1,500(1)
Kleyton L. Parkhurst 2000 140,000(2) 60,0002001 175,000(2) 70,000 20,000 1,500(1)
Senior Vice President 2000 140,000 60,000 1,500(1)
Secretary and Treasurer 1999 120,000 65,000 1,500(1)
Secretary and Treasurer 1998 120,000 20,000 1,500(1)
Steven J. Mencarini 2001 168,751(3) 25,000 1,500(1)
Chief Financial Officer, Senior 2000 150,000 25,000 20,000 1,500(1)
Chief Financial Officer, Senior 1999 137,500(3) 20,000 775(1)
Vice President 1998 97,596 -- --
- ----------------------------1999 137,500 20,000 775(1)
(1) Employer 401(k) plan match.
(2) Difference in salary represents a salary increase effective 8/01/9910/4/00 to
the
amount of $250,000 per year for Phillip Norton, a salary increase effective
8/01/99 to $225,000 per year for Bruce Bowen, and a salary increase effective
8/01/99 to $150,000 per year for Kleyton Parkhurst$200,000.
(3) Difference in salary represents a salary increase effective 10/01/987/1/00 to
$150,000$175,000 per year.
Option Grants in Last Fiscal Year
The following table sets forth certain information with respect to options
granted during the last fiscal year to the Named Executive Officers in the above
Summary Compensation Table.
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Percent of
Number of Total
Securities Options/SARS Potential Realizable Value at
Underlying Granted to Exercise or Assumed Annual Rates of Stock
Options/SARS Employees in Base Price Expiration Price Appreciation for Option
Name Granted (#) Fiscal Year(3)Year ($/Sh) Date Term (4)(3)
---- ----------- ------------- ---------- --------------------- ------ ---- --------
5% ($) 10% ($)
------ -------
Phillip G. Norton 175,000(1)(2) 30.36% $7.75 08/11/2009 $852,938 $2,161,513
Bruce M. Bowen 115,000(1)(2) 19.95% $7.75 08/11/2009 560,502 1,420,423
Kleyton L. Parkhurst 20,000(1)(2) 3.47% $7.75 08/11/2009 97,479 247,03030,000(1) 5.2% $ 17.38 9/13/10 327,811 830,738
Steven J. Mencarini 20,000(1)(2) 3.47% $7.75 08/11/2009 97,479 247,030
- ------------------------------10,000(1) 1.7% $ 17.38 9/13/10 109,270 276,913
5,000(1) 0.9% $ 7.75 12/27/10 24,370 61,758
(1) TheAll options were granted to Mr. Norton, Mr. Bowen, Mr. Parkhurst and Mr.
Mencarini on August 11, 1999 under the Long-Term Incentive Plan.long-term incentive plan. Options
vest over three years at 20%, 30% and 50%.
(2) Options become exercisable on their one year anniversary date.
(3) Based on an aggregate of 576,400579,250 shares granted during fiscal year 20002001
to certain employees of ePlus.
(4)(3) Potential realizable value is calculated based on an assumption that
the price of ePlus' common stock will appreciate at the assumed annual
rates shown (5% and 10%), compounded annually, from the date of grant of
the option until the end of the option term (10 years). The 5% and 10%
assumed rates of appreciation are required by the rules of the SEC and do
not represent ePlus' estimate of future market prices of the common stock.
Aggregated Option/SAR Exercises in Last Fiscal Year and Fiscal Year-end
Option/SAR Values
The following table sets forth certain information with respect to options
exercised during ePlus' fiscal year ended March 31, 20002001 by the Named Executive
Officers in the Summary Compensation Table, and with respect to unexercised
options held by such persons at the end of fiscal year 2000.2001.
Shares
Acquired Number of Securities Value of Unexercised in the
On Value Underlying Unexercised Money Options/SARs at
Name Exercise Realized Options/SARS at FY-End (#) FY-End ($)(1)
---- -------- -------- -------------------------- ----------------------------------------
Exercisable Unexercisable Exercisable Unexercisable
----------- ------------- ----------- -------------
Philip G. Norton --- --- 142,500 187,500 $3,424,687 $4,696,562323,750 6,250 $309,200 $0
Bruce M. Bowen --- --- 22,500 122,500 527,812 3,080,312145,000 0 172,000 0
Kleyton L. Parkhurst --- --- 115,000 65,000 3,024,375 1,590,625155,000 55,000 318,800 11,000
Steven J. Mencarini --- --- 19,780 60,920 430,752 1,440,66055,920 39,780 43,675 22,075
(1) Based on a closing bid price of $33.125$9.19 per share as of the close of business
on March 31, 2000.2001.
-12-
Report Of The Compensation Committee
The Compensation Committee is composed of four directors who are not employees
of ePlus or any of its subsidiaries. The Committee makes recommendations to the
board of directors as the amount and form of compensation for Mr. Norton and Mr.
Bowen and is responsible for granting stock options and restricted stock to Mr.
Norton and Mr. Bowen.
The compensation programs of ePlus are designed to align compensation with
business objectives and performance, and to enable ePlus to attract, retain and
reward executives who contribute to the long-term success of ePlus. The
Committee believes that executive pay should be linked to performance.
Therefore, ePlus provides an executive compensation program which includes base
pay, potential cash bonus, and long-term incentive opportunities through the use
of stock options.
The role of the Compensation Committee is limited to the review of the
compensation, excluding stock-based compensation for Mr. Norton and Mr. Bowen,
who are principal shareholders of ePlus. During the fiscal year ending March 31,
2000, the Compensation Committee raised Mr. Norton's base salary from $200,000
per year to $250,000 per year and the grant of 175,000 options, and raised Mr.
Bowen's base salary from $150,000 per year to $225,000 per year and the grant of
115,000 options.
Section 162(m) of the Internal Revenue
Code imposes a limit, with certain exceptions, on the amount that a
publicly-held corporation may deduct in any year for the compensation paid with
respect to its five most highly compensated executive officers. While the
Committee cannot predict with certainty how ePlus' compensation tax deduction
might be affected, the Committee tries to preserve the tax deductibility of all
executive compensation while maintaining flexibility with respect to ePlus'
compensation programs as described in this report.
BY THE COMPENSATION COMMITTEE
Terrence O'Donnell, C. Thomas Faulders III
Carl J. Rickertsen
Dr. Paul G. Sternand Lawrence Herman
Employment Contracts and Termination of Employment and Change in Control
Arrangements
The Company has entered into employment agreements with Phillip G. Norton, Bruce
M. Bowen, and Kleyton L. Parkhurst, each effective as of September 1, 1996, and
with Steven J. Mencarini effective as of June 18, 1997. Each employment
agreement provides for an initial term of three years, and is subject to an
automatic one-year renewal at the expiration thereof unless ePlus or the
employee provides notice of an intention not to renew at least three months
prior to expiration.
-13-
The current annual base salary ($250,000 in the case of Phillip G. Norton;
$225,000 in the case of Bruce M. Bowen; $150,000$200,000 in the case of Kleyton L.
Parkhurst and $175,000 in the case of Steven J. Mencarini) are in effect and
each employee may be eligible for commissions or performance bonuses. The
performance bonus for Phillip G. Norton for each fiscal year is equal to 5% of
the increase in the Company's net income before taxes over net income before
taxes for the preceding fiscal year, not to exceed $150,000 for any fiscal year.
The performance bonus forand Bruce M. Bowen, for each fiscal year is equal to 5%discretionary
based on performance of the increase in ePlus' net income before taxes over net income before one-time
charges before taxes forCompany as approved by the preceding fiscal year, not to exceed $100,000 for
any fiscal year.Compensation Committee.
The performance bonus for Kleyton L. Parkhurst and Steven J. Mencarini are paid
based upon performance criteria established by Phillip G. Norton and Bruce M.
Bowen.
Under the employment agreements, each receives certain other benefits including
medical, insurance, death and long term disability benefits, 401(k), and
reimbursement of employment related expenses. Mr. Bowen's country club dues are
paid by ePlus. The employment agreements of Messrs. Norton, Bowen and Mencarini
contain a covenant not to compete on the part of each, whereby in the event of a
voluntary termination of employment, upon expiration of the term of the
agreement or upon the termination of employment by ePlus for cause, each are
subject to restrictions upon acquiring, consulting with or otherwise engaging in
or assisting in the providing of capital needs for competing business activities
or entities within the United States for a period of one year after the date of
such termination or expiration of the term of the employment agreement.
Under his original employment agreement, Phillip G. Norton was granted options
to acquire 130,000 shares of common stock at a price per share equal to $8.75
per share. These options have a ten year term, and became exercisable and
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vested 25% on November 20, 1996, and the balance will be exercisable and vest in
25% increments over three years on November 20, 1997, November 27, 1998, and
November 20, 1999, respectively, subject to acceleration upon certain
conditions. Mr. Norton was also granted 25% incentive stock options in February,
1998 at $12.65 per share and 175,000 options at $7.75 per share in August, 1999.
ePlus had paid a $120,000 annual guarantee fee payable in $10,000 monthly
payments to Patricia A. Norton, wife of Phillip G. Norton, in consideration of
providing certain guarantees and collateral for the NationsBank and First Union
Facilities. This fee was terminated when the secured credit facilities were
terminated and the guarantee released.
Under his original employment agreement, Bruce M. Bowen was granted options to
acquire 15,000 shares of common stock at a price equal to $8.75 per share. These
options have a ten year term, and became exercisable and vested 25% on November
20, 1996, and the balance will be exercisable and vest in 25% increments over
three years on November 20, 1997, November 27, 1998, and November 20, 1999,
respectively, subject to acceleration upon certain conditions. Mr. Bowen was
also granted 15,000 options in February, 1998 at $11.50 per share and 115,00
options in August, 1999 at $7.75 per share.
Under his original employment agreement, Kleyton L. Parkhurst was granted
options to acquire 100,000 shares of common stock at a price per share equal to
$6.40 per share. These options have a ten year term, and became exercisable and
vested 25% on November 20, 1996, and the balance will become exercisable and
vest in 25% increments over three years on November 20, 1997, November 20, 1998,
and November 20, 1999, respectively, subject to acceleration upon certain
conditions. Mr. Parkhurst was also granted 10,000 options at $11.50 per share in
February, 1998 and 50,000 options in September 1998 at an $8.75 per share, and
20,000 options in August, 1999 at $7.75 per share, and 30,000 options in May,
2000 at $18.75 per share.
In connection with his original employment, Steven J. Mencarini was granted
incentive stock options to acquire 16,200 shares of common stock at a price
equal to $12.75 per share. These options have a ten year term, and will be
exercisable and vest 20% at the end of each year of service over five years, and
are subject to acceleration upon certain conditions. Mr. Mencarini was also
granted 5,100 options in September 1997 at $13.75 per share, 9,400 options in
December 1997 at $12.35 per share, 5,000 options in February 1998 at $11.50 per
share and 25,000 options in October 1998 at $8.00 per share, and 10,000 options
in May 2000 at $18.75 per share.
ePlus maintains key-man life insurance on Mr. Norton in the amount of $10
million. ePlus maintains key-man life insurance on Mr. Norton in the form of two
separate policies, one with the First Colony Life Insurance Company and the
second with CNA/Valley Forge, each in the amount of $5 million.
Compensation Committee Interlocks and Insider Participation
For the year ended March 31, 2000,2001, all decisions regarding executive
compensation were made by the Compensation Committee when applicable or by Mr.
Norton as President. None of the executive officers of ePlus currently serves on
the Compensation Committee of another entity or any other committee of the board
of directors of another entity performing similar functions. For a description
of transactions between ePlus and Mr. Bowen, see "Certain Transactions."
PERFORMANCE GRAPH
The following graph shows the value as of March 31, 20002001 of a $100 investment
made on November 15, 1996 in ePlus' common stock (with dividends, if any,
reinvested), as compared with similar investments based on (1) the value of the
NASDAQ Stock Market Index (U.S.) (with dividends reinvested) and (2) the value
of the NASDAQ financial index. The stock performance shown below is not
necessarily indicative of future performance.
3/97 3/98 3/99 3/00 3/01
---- ---- ---- ---- ----
EPLUS INC. 126.32 144.74 86.84 348.68 104.91
NASDAQ STOCK MARKET (U.S.) 96.97 147.03 198.62 369.17 613.48
NASDAQ FINANCIAL 109.54 170.18 153.30 145.89 713.28
-15-
CERTAIN TRANSACTIONS
TC Plus LLC
On October 23, 1998, we sold 1,111,111 shares of common stock at a price of
$9.00 per share and a warrant to acquire an additional 1,090,909 shares of our
common stock at an exercise price of $11.00 per share, subject to certain
anti-dilution adjustment, to TC Plus, LLC, formerly named TC Leasing, LLC, for
total consideration of $10 million. TC Plus, LLC is controlled by Thayer Equity
Investors III, L.P., a private equity investment fund. TC Equity Partners,
L.L.C. is the sole general partner of Thayer Equity Investors III, L.P.
The stock purchase agreement entered into in connection with the transaction
imposed certain super-majority voting requirements on our board of directors and
restricted our ability to engage in mergers or other material transactions. We
also entered into a stockholders agreement with TC Plus, LLC, Phillip G. Norton,
Bruce M. Bowen, J.A.P. Investment Group, L.P., Kevin M. Norton and Patrick J.
Norton. The stockholders agreement as originally entered into provided for
restrictions on transfers of shares, restriction on the issuance of shares,
board representation, the forced sale of ePlus by TC Plus, LLC in certain
circumstances and registration rights.
The warrant gave us the right to require TC Plus, LLC to exercise the warrant if
our common stock closes at or above $11.00 per share for 20 consecutive days. On
December 23, 1999, this condition was satisfied, and we gave notice to TC Plus,
LLC to require exercise.
On February 25, 2000, we entered into an agreement with TC Plus, LLC, which was
amended on April 11, 2000, to defer the obligation of TC Plus, LLC to exercise
the warrant and to permit TC Plus, LLC to exercise the warrant simultaneously
with a follow-on public offering of common stock on a cashless basis in exchange
for a commitment by TC Plus, LLC to waive certain provisions of the stock
purchase agreement and amend the stockholders agreement. Upon the cashless
exercise of the warrant, which was transacted on April 14, 2000, we issued to TC
Plus, LLC 709,956 shares of our common stock.
The agreement, as amended, provides for the waiver of all super-majority voting
requirements and restrictions on mergers and material transactions contained in
the stock purchase agreement. The stockholders agreement, as amended, has the
following provisions:
- --- Our board of directors will have six members with two directors
designated by TC Plus, LLC, two directors designated by the management
stockholders party to the agreement and two directors who are not our
employees designated by a nominating committee comprised of one individual
designated by TC Plus, LLC and one individual designated by the management
stockholders party to the agreement. The two directors
named byCurrently, TC Plus, LLC will continuedoes not
exercise its right to be Carl J. Rickertsen, who has
served as a director since November 1996, and Paul G. Stern.appoint directors of ePlus pursuant to the
stockholders agreement. Phillip G. Norton and Bruce M. Bowen serve as the
directors designated by the management stockholders.
- --- TC Plus, LLC has the right to demand registration of its shares on three
separate occasions. TC Plus, LLC also has the right to include its shares
in any other registration by us of our common stock. We are responsible for
all of the registration expenses incurred in connection with TC Plus, LLC's
exercise of these registration rights.
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- --- If we agree to purchase any shares of our common stock held by the
management stockholders party to the agreement, we must give notice to TC
Plus, LLC. If TC Plus, LLC wishes to participate, we must purchase its
shares on the same terms and conditions.
- --- Shares held by stockholders party to the stockholders agreement are no
longer subject to the terms of the agreement when they are transferred in a
registered offering or pursuant to Rule 144 under the Securities Act.
- --- All rights and obligations under the stockholders agreement terminate
when TC Plus, LLC no longer holds 5% of our outstanding stock and shall
remain terminated even if TC Plus, LLC later acquires 5% or more of our
outstanding stock. SAGA Systems, Inc.
During the fiscal year ending March 31, 2000, we leased equipment having a
value of $1,240,119 to SAGA Systems, Inc., an affiliate of TC Plus, LLC for a
total lease payment amountcurrently holds 1,015, 552 or approximately
9.98% of $142,844. Directors Rickertsen and Stern are board
membersour outstanding shares of SAGA Systems.common stock.
Advances and Loans to Employees and Stockholders
ePlus has in the past provided loans and advances to employees and certain
stockholders. Such balances are to be repaid from personal funds or commissions
earned by the employees/stockholders on successful sales or financing
arrangements obtained on behalf of ePlus. Loans and advances totaled $94,693 for
the year ended March 31, 2000.2001.
Reimbursement of Certain Expenses
ePlus leases certain office space from entities which are owned, in part, by
executives of subsidiaries of the Company. During the year ended March 31, 2000,2001,
rent expense paid to these related parties was $228,000.
Sale of Equity Investment
On May 23, 2000, ePlus Capital, Inc., a wholly-owned subsidiary of ours,
exercised a warrant and sold 3,450,000 shares of the common stock of solven.com
inc. to Immedient Corporation in exchange for a cash payment of $344,891, a
warrant to purchase 222,500 shares of unregistered common stock of Immedient at
an exercise price of $10.00 per share, and 260,953 shares of unregistered common
stock of Immedient Corporation. Immedient is an affiliate of Thayer Capital
Partners,Equity
Investors III, L.P. which is the managing member of which Directors Stern and Rickertsen are partners.TC Plus, LLC.
Indemnification Agreements
ePlus has entered into separate but identical indemnification agreements (the
"Indemnification agreements") with each director and executive officer of ePlus
and expects to enter into Indemnification Agreements with persons who become
directors or executive officers in the future. The Indemnification Agreements
provide that ePlus will indemnify the director or officer (the "Indemnitee")
against any expenses or liabilities in connection with any proceeding in which
such Indemnitee may be involved as a party or otherwise, by reason of the fact
that such Indemnitee is or was a director or officer of ePlus or by reason of
any action taken by or omitted to be taken by such Indemnitee while acting as an
officer or director of ePlus, provided that such indemnity shall only apply if;
(1) the Indemnitee was acting in good faith and in a manner the
Indemnitee reasonably believed to be in the best interests of ePlus,
and, with respect to any criminal action, had no reasonable cause to
believe the Indemnitee's conduct was unlawful,
(2) the claim was not made to recover profits made by such Indemnitee
in violation of Section 16(b) of the Exchange Act, as amended, or any
successor statute,
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(3) the claim was not initiated by the Indemnitee, or
(4) the claim was not covered by applicable insurance, or
(5) the claim was not for an act or omission of a director of ePlus
from which a director may not be relieved of liability under Section
103(b)(7) of the DGCL. Each Indemnitee has undertaken to repay ePlus
for any costs or expenses paid by ePlus if it shall ultimately be
determined that such Indemnitee is not entitled to indemnification
under the Indemnification Agreements.
Future Transactions
ePlus' policy requires that all material transactions between ePlus and its
officers, directors or other affiliates must be approved by a majority of the
disinterested members of the board of directors of ePlus, and be on terms no
less favorable to ePlus than could be obtained from unaffiliated third parties.
PROPOSAL 1
To Elect Two Class III Directors To Serve For Three Years And Until Their
Respective Successors Have Been Duly Elected And Shall Qualify.
The board of directors has concluded that the re-election of C.Terrence O'Donnell
and Thomas Faulders, III and Dr. Paul G. SternL. Hewitt as Class III Directors is in the best interest of ePlus and
recommends stockholder approval of the re-election of C.Terrence O'Donnell and
Thomas Faulders, III and Dr. Paul G. SternL. Hewitt as Class III directors. The remaining four Directors will
continue to serve in their positions for the remainder of their terms.
Biographical information concerning Mr. Faulders, Dr. Stern,O'Donnell and Mr. Hewitt, and ePlus'
other Directors can be found under "Directors and Executive Officers."
Unless otherwise instructed or unless authority to vote is withheld, all proxies
will be voted for the election of C.Terrence O'Donnell and Thomas Faulders, III and Dr. Paul
G. SternL. Hewitt as
Class III Directors. Although the board of directors of ePlus does not
contemplate that such nominees will be unable to serve, if such a situation
arises prior to the annual meeting, the persons named in the enclosed proxy will
vote for the election of such other person or persons as may be nominated by the
board of directors.
Vote Required for Approval. The two persons receiving the greatest number of
affirmative votes cast at the annual meeting will be elected as Class III
directors.
The board of directors unanimously recommends a vote for the election of
C.Terrence O'Donnell and Thomas Faulders III and Dr. Paul G. SternL. Hewitt as Class III directors.
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PROPOSAL 2
To Approve And Adopt An Amendment To The Certificate Of Incorporation To
Increase The Number Of Shares Of Authorized Stock Of ePlus From 27 Million
Shares (25 Million Shares Of Common Stock, Par Value $0.01, And 2 Million
Preferred Shares) To 52 Million Shares (50 Million Shares Of Common Stock, Par
Value $0.01, And 2 Million Preferred Shares).
The board of directors has adopted a resolution declaring it advisable and
in the best interests of ePlus and its stockholders that ePlus' Certificate of
Incorporation be amended to provide for an increase in the authorized number of
shares of stock of ePlus from twenty-seven million shares (25 million shares of
common stock, par value $0.01, and 2 million preferred shares) to fifty-two
million shares (50 million shares of common stock, par value $0.01, and 2
million preferred shares). Such resolution also recommends that such amendment
be approved and adopted by ePlus' stockholders and directs that such proposal be
submitted to ePlus' stockholders at the annual meeting.
If Proposal 2 is approved by the ePlus' stockholders, the board of
directors would have authority to issue up to fifty million (50,000,000) shares
of common stock and to designate and issue up to two million (2,000,000) shares
of preferred stock to such persons, for such consideration and with such rights
and preferences as the board of directors may determine without further action
by the stockholders except as may be required by law. As of the date hereof,
ePlus has not designated or issued any shares of preferred stock and the
proposal will not change the authorized number of shares of preferred stock. As
of the record date there were 9,671,589 shares of common stock issued and
outstanding. The board of directors of ePlus has reserved 1,567,945 shares of
common stock for issuance pursuant to the exercise of outstanding stock options.
57,500 shares of common stock for issuance pursuant to various warrant
agreements, and, in addition, 691,462 shares of common stock have been reserved
in connection with the Long Term Incentive Plan. Accordingly, there remain
13,011,504 shares of common stock which are unissued and are not reserved for
any specific purpose. The board of directors has proposed the increase in and
classification of the authorized capital stock to provide shares which could be
used for a variety of corporate purposes, including stock splits, mergers, the
raising of additional capital (including public and private offerings of
securities), acquisitions and implementation of incentive and other option and
stock ownership plans. While the board of directors believes it important that
ePlus have the flexibility that would be provided by having additional
authorized capital stock available and by having the ability to designate and
issue additional classes thereof, ePlus does not currently have any binding
commitments or arrangements that would require the issuance of such stock. ePlus
regularly evaluates potential acquisition opportunities and engages in
discussions regarding potential acquisition opportunities from time to time. The
contemplated terms of these potential acquisition transactions may involve
payment of a material portion of the acquisition price in the form of common
stock. If ePlus completes any such acquisitions, ePlus may also grant stock
options to key employees of the acquired businesses as part of such
transactions. The board of directors believes it would be in ePlus' best
interest, therefore, to have such additional shares of authorized stock
available to enable ePlus to take advantage of opportunities for possible future
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acquisitions, raising capital for future growth and the continued use of stock
incentive and option plans. If such opportunities arise in the future,
significant amounts of capital stock may be issued by ePlus' board of directors
without further authorization by ePlus' stockholders. Such issuance's could have
a significant dilutive effect on the current stockholders of ePlus.
It is possible that the additional capital stock that would be authorized
by the proposed amendment could be issued in a transaction that might discourage
offers by takeover bidders or make such offers more difficult or expensive to
accomplish, although the board of directors has no current plans for any such
use of the capital stock. For example, the board of directors could approve the
issuance of stock, or grant rights or stock options for such issuance, to
persons, firms or entities that are known to be friendly to management of ePlus.
The board of directors could also approve the issuance of additional shares of
capital stock having classes, series, rights and preferences (including the
number of votes applicable to each share of such class or series of capital
stock) which may render it more difficult in the future for takeover bidders or
others to accomplish takeovers or changes in control of ePlus. Any issuance of
capital stock must be made for proper business purposes and for proper
consideration from the recipient. Designation of certain classes, series, rights
and preferences with respect to ePlus' capital stock would be subject to
applicable rules and regulations of the exchange on which such securities are
listed for quotation (currently, the Nasdaq National Market(R)). The text of the
proposed amendment to the Certificate of Incorporation is set forth in full in
Appendix A hereto and reference is made thereto for a complete statement of its
terms. The amendment to the Certificate of Incorporation will become effective
upon approval by the stockholders and the filing of a Certificate of Amendment
to the Certificate of Incorporation containing such amendment with the Secretary
of State of Delaware. If approved by the stockholders, ePlus anticipates that
the Certificate of Amendment to the Certificate of Incorporation will be filed
as soon as practicable.
Vote Required for Approval. The affirmative vote of the holders of a
majority of the shares of common stock outstanding and entitled to vote on the
proposal is required for approval of Proposal 2.
The board of directors unanimously recommends a vote FOR the approval of
the amendment to the Certificate of Incorporation.
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PROPOSAL 3
To Ratify The Appointment Of Deloitte & Touche LLP As ePlus' Independent
Auditors For ePlus' Fiscal Year Ending March 31, 2001.2002.
Subject to stockholder ratification, the board of directors has reappointed the
firm of Deloitte and Touche LLP as the independent auditors to examine ePlus'
financial statements for the fiscal year ending March 31, 2001.2002. Deloitte &
Touche has audited ePlus' and its principal operating subsidiary, ePlus inc.'s
books since 1990. If the stockholders do not ratify this appointment, other
independent auditors will be considered by the board of directors upon
recommendation of the Audit Committee.
Representatives of Deloitte & Touche are expected to attend the annual meeting
and will have the opportunity to make a statement if they desire and to respond
to appropriate questions.
Vote Required for Approval. The affirmative vote of the holders of at least a
majority of the shares of common stock present in person or by proxy and
entitled to vote at the annual meeting on the proposal will constitute approval
of Proposal 3.2.
The board of directors unanimously recommends a vote FOR the approval of the
ratification of the approval of Deloitte & Touche LLP as independent auditors.
OTHER PROPOSED ACTION
The board of directors does not intend to bring any other matters before the
annual meeting, nor does the board of directors know of any matters which other
persons intend to bring before the annual meeting. If, however, other matters
not mentioned in this Proxy Statement properly come before the annual meeting,
the persons named in the accompanying form of proxy will vote thereon in
accordance with the recommendation of the board of directors.
Stockholders should note that ePlus' Bylaws provide that in order for a
stockholder to bring business before a meeting or to make a nomination for the
election of directors, such stockholder must give written notice complying with
the requirements of the Bylaws to the Secretary of ePlus not later than 90 days
in advance of such meeting or, if later, the seventh day following the first
public announcement of the date of such meeting.
STOCKHOLDER PROPOSALS AND SUBMISSIONS
If any stockholder wishes to present a proposal for inclusion in the proxy
materials to be solicited by ePlus' board of directors with respect to the next
annual meeting of stockholders, that proposal must be presented to ePlus'
management prior to April 20, 2001.24, 2002.
Whether or not you expect to be present at the annual meeting, please sign and
return the enclosed proxy card promptly. Your vote is important. If you are a
stockholder of record and attend the annual meeting and wish to vote in person,
you may withdraw your proxy at any time prior to the vote.
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APPENDIX A
PROPOSED AMENDMENT TO THE CERTIFICATE OF INCORPORATION
Below is the full text of the proposed amendment to the ePlus Certificate
of Incorporation. The only change to the Certificate of Incorporation affected
by this amendment is to increase the number of authorized shares ePlus' stock,
as described in the proxy statement.
The Corporation's certificate of incorporation hereby is amended by
striking out existing Article "FOURTH" thereof and replacing it with the
following new Article "FOURTH":
"FOURTH"
The total number of shares of all classes of stock which the
Corporation shall have authority to issue is fifty-two million
(52,000,000) shares consisting of fifty million (50,000,000) shares of
common stock having a par value of $.01 per share (the "Common Stock")
and two million (2,000,000) shares of preferred stock having a par
value of $.01 per share (the "Preferred Stock").
The Board of Directors of the Corporation is authorized,
subject to limitations prescribed by law, to provide by resolution or
resolutions for the issuance of shares of the Preferred Stock as a
class or in series, and, by filing a certificate of designations,
pursuant to the Delaware General Corporation Law, setting forth a copy
of such resolution or resolutions to establish from time to time the
number of shares to be included in each such series and to fix the
designation, powers, preferences and rights of the shares of the class
or of each such series and the qualifications, limitations, and
restrictions thereof. The authority of the Board of Directors with
respect to the class or each series shall include, but not be limited
to, determination of the following:
a) the number of shares constituting any series and the
distinctive designation of that series;
b) the dividend rate of the shares of the class or of any series,
whether dividends shall be cumulative, and if so, from which date or
dates, and the relative rights of priority, if any of payment of
dividends on shares of the class or of that series;
c) whether the class or any series shall have voting rights, in
addition to the voting rights provided by law, and if so, the terms of
such voting rights;
d) whether the class or any series shall have conversion
privileges and, if so, the terms and conditions of conversion,
including provision for adjustment of the conversion rate in such
events as the Board of Directors shall determine;
e) whether or not the shares of the class or of any series shall
be redeemable, and, if so, the terms and conditions of such
redemption, including the date or dates upon or after which they shall
be redeemable and the amount per share payable in case of redemption,
which amount may vary under different conditions and at different
redemption dates;
f) whether the class or any series shall have a sinking fund for
the redemption or purchase of shares of the class or of that series,
and if so, the terms and amount of such sinking fund;
g) the rights of the shares of the class or of any series in the
event of voluntary or involuntary dissolution or winding up of the
Corporation, and the relative rights of priority, if any, of payment
of shares of the class or of that series; and
h) any other powers, preferences, rights, qualifications,
limitations and restrictions of the class or of that series.
All rights accruing to the outstanding shares of the Corporation
not expressly provided for to the contrary herein or in any
certificate of designation shall be vested exclusively in the Common
Stock."
A-1-19-
[FORM OF PROXY CARD]
ePLUS INC. PROXY
ANNUAL MEETINGS OF STOCKHOLDERS OF
ePLUS INC.
ON SEPTEMBER 20, 20002001
THE PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned hereby appoints Phillip G. Norton, Bruce M. Bowen and C. Thomas
Faulders, III, Terrence O'Donnell, Dr. Paul G. Stern, and Carl J. Rickertsen, and each or any of them, proxies, with power of substitution, to
vote all shares of the undersigned at the annual meeting of stockholders of
ePlus inc., a Delaware corporation (the "Company"), to be held on September 20,
20002001 at 10:30 a.m. at Hyatt Regency Reston, 1800 Presidents Street, Reston, VA
20191, or at any adjournment thereof, upon the matters set forth in the Proxy
Statement for such meeting, and in their discretion, upon such other business as
may properly come before the meeting.
1. TO ELECT TWO CLASS III DIRECTORS TO SERVE FOR THREE YEARS AND UNTIL THEIR
SUCCESSORS HAVE BEEN DULY ELECTED AND SHALL QUALIFY.
TO VOTE FOR BOTH THE NOMINEES LISTED BELOW
[ ]FOR BOTH THE NOMINEES LISTED BELOW [ ]WITHHOLD AUTHORITY
C. Thomas Faulders III. Dr. Paul G. SternL. Hewitt Terrence O'Donnell
OR TO VOTE FOR EACH NOMINEE SEPARATELY
C. Thomas Faulders IIIL. Hewitt [ ]FOR [ ]WITHHOLD AUTHORITY
Dr. Paul G. SternTerrence O'Donnell [ ]FOR [ ]WITHHOLD AUTHORITY
2. TO APPROVE AND ADOPT AN AMENDMENT TO THE EPLUS' CERTIFICATE OF INCORPORATION
TO INCREASE THE NUMBER OF SHARES OF OUR AUTHORIZED STOCK FROM 27 MILLION SHARES
(CONSISTING OF 25 MILLION SHARES OF COMMON STOCK, PAR VALUE $0.01, AND 2 MILLION
PREFERRED SHARES) TO 52 MILLION SHARES (CONSISTING OF 50 MILLION SHARES OF
COMMON STOCK, PAR VALUE $0.01, AND 2 MILLION PREFERRED SHARES).
[ ]FOR [ ]AGAINST [ ]ABSTAIN
3. TO RATIFY THE APPOINTMENT OF DELOITTE & TOUCHE LLP AS ePLUS' INDEPENDENT
AUDITORS FOR ePLUS' FISCAL YEAR ENDING MARCH 31, 2001.2002.
[ ]FOR [ ]AGAINST [ ]ABSTAIN
Dated: , 20002001
Signature:
Signature if held jointly:
NOTE: When shares are held by joint tenants, both should sign. Persons signing
as Executor, Administrator, Trustee, etc. should so indicate. Please sign
exactly as the name appears on the proxy.
THE SHARES REPRESENTED BY ALL PROXIES RECEIVED WILL BE VOTED IN ACCORDANCE WITH
THE CHOICES SPECIFIED ON SUCH PROXIES. THE SHARES REPRESENTED BY A PROXY WILL BE
VOTED IN FAVOR OF A PROPOSAL IF NO CONTRARY SPECIFICATION IS MADE. ALL VALID
PROXIES OBTAINED WILL BE VOTED AT THE DISCRETION OF THE BOARD OF DIRECTORS WITH
RESPECT TO ANY OTHER BUSINESS THAT MAY COME BEFORE THE ANNUAL MEETING.
PLEASE MARK, SIGN AND RETURN THIS PROXY CARD PROMPTLY USING
THE ENCLOSED ENVELOPE.